V M DAWRA V. COMMISSIONER OF INCOME TAX and O

ITA/57/2002

AI Insights

The case involves multiple income tax appeals related to undisclosed income and the application of block assessment provisions under the Income Tax Act. The appellants, including V.M. Dawra and associated companies, challenged the tribunal's decision which had sustained additions to their income as undisclosed funds. The primary legal contention revolved around the consistency of the tribunal's application of the law across similar cases within the same group. The court examined whether the tribunal's decision was perverse and if the principle of parity was maintained in the application of the law. The court's decision emphasized the need for uniformity in legal outcomes for similar cases, leading to the allowance of the appeals.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 685202 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 25-07-2017
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R B MATHUR; K D MATHUR; PRATEEK KEDAWAT
• Assessee Lawyers: SANJAY JHANWAR; ARCHANA
• Keywords: Block assessment; Double additions; Parity; Unaccounted money; Undisclosed income
• Section: 68; 69; 158(BC)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 57 / 2002 V M Dawra, 342, Rajmal Ka Talab, Jaipur ----Appellant Versus 1. Commissioner Of Income Tax, NCRB Building Statue Circle, Jaipur. 2. Dy. Commissioner of Income Tax Spl. Range-2, Jaipur. ----Respondents Connected With D.B. Income Tax Appeal No. 35 / 2007 Terry Fab India Ltd, Village Chandwaji, Tehsil Amer, District Jaipur through its Director Shri Vishwa Mitra Dawra S/o Lt. Sh. Gokul Chand Dawra aged around 54 years r/o 342, Rajmal Ka Talab, Jaipur ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-7, Jaipur. ----Respondent D.B. Income Tax Appeal No. 304 / 2008 M/s Terry Finance Ltd. 2nd Floor, Khandaka Mansion, Panch Batti, M.I. Road, Jaipur through its Director Shri Vishwa Mitra Dawra s/o Lt. Sh. Gokul Chand Dawra aged around 54 years R/o 342, Rajmal Ka Talab, Jaipur ----Appellant Versus The Income Tax Officer, Ward 6(2), Jaipur ----Respondent D.B. Income Tax Appeal No. 320 / 2008 Kanta Rani Dawra W/o Shri V.M. Dawra aged about 51 years, R/o 342, rajamal ka talab, Chandi Ki Taksal, Jaipur. ----Appellant Versus The Income Tax Officer, ACIT Circle-5, Jaipur ----Respondent (2 of 8) [ITA-57/2002] _____________________________________________________ For Appellant(s) : Mr. Sanjay Jhanwar and Ms. Archana For Respondent(s) : Mr. R.B. Mathur Mr. K.D. Mathur and Mr. Prateek Kedawat _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 25/07/2017 1. Since in all these appeals, common questions of law and facts and involved, they are decided by this common judgment. 2. Before proceeding with the matter, it will not be out of place to mention here that the statement was made by Mr. Jhanwar that everything is recovered by auctioning the house and the factory. Today, he stated that there is no scope for recovery of any amount from the appellant. However, the matter is decided by wasting the precious judicial time of more than 40 to 45 minutes by hearing both the counsel. Therefore, now we are proceeding with the matter. 3. By way of these appeals, the appellants have challenged the judgment and order passed by the tribunal whereby the tribunal has allowed the appeal of the assessee only for the statistical purpose but has rejected the substantial relief. 4. While admitting the appeals, the following question of law has been framed by this Court:- (3 of 8) [ITA-57/2002] D.B. Income Tax Appeal No.57/2002 admitted on 03.07.2002:- “Whether on the facts and in the circumstances of the case, the tribunal was justified in sustaining an addition of Rs.119.73 lakhs and treated as undisclosed income of the appellant, irrespective of the fact that inter-transactions are involved in group of the cases including the appellant and other cases of group have been set-aside by the Tribunal for making full inquiry and investigation t reach on the final conclusion, such duality of approach of Tribunal does not make the impugned order of the Tribunal as perverse?” D.B. Income Tax Appeal No.35/2007 admitted on 02.05.2017:- “Whether on the facts and in the circumstances of the case, the tribunal was justified in sustaining an addition of Rs.119.73 lakhs and treated as undisclosed income of the appellant, irrespective of the fact that inter-transactions are involved in group of the cases including the appellant and other cases of group have been set-aside by the Tribunal for making full inquiry and investigation to reach on the final conclusion, such duality of approach of Tribunal does not make the impugned order of the Tribunal as perverse?” D.B. Income Tax Appeal No.304/2008 admitted on 05.11.2008:- (i) Whether the provisions of Section 69 are attracted when the transaction of investment is duly recorded in the books of account and the source of such investment are reflected in the books of account itself? (ii) Whether it is correct to make additions u/s 669 of the Act on account of the alleged unexplained investment in respect of deposits in the bank when the same has been made out of assets/amounts available with the appellant at the beginning of the accounting year and subsequently out of the realization of the opening assets? (4 of 8) [ITA-57/2002] D.B. Income Tax Appeal No.320/2008 admitted on 04.11.2008:- (i) Once the Income Tax Department has chosen to tax the complete unaccounted Income of whole group amounting to Rs.119.76 Lacs in the hands of Shri V.M. Dawra, head of the group and husband of the appellant, on the basis of working of unaccounted income of all persons/companies and concerns of the group including the appellant, then whether again making the addition on the basis of some entries from the books of the appellant would not tantamount to double additions? (ii) Whether the additions can be made in Block Assessment without any evidence or material found/discovered as a result of search and merely on the basis of inquiry during the course of Assessment Proceedings? (iii) Whether the action of learned Income Tax Appellate Tribunal in upholding the addition to the exdtent of Rs.35,11,063/- & 2,30,000/- u/s. 68/69 has not resulted in double taxable of the same amount in two hands as the addition of same amount stands covered by the amount of addition made in the hands of Sh. V.M. Dawra and whether in view of the same, in addition to this extent in the hands of the appellant is not unjustified?” 5. Mr. Jhanwar counsel for the appellant has taken us to Para 5 of the order of tribunal which reads as under:- “The genesis of the funds, which have flowed into company’s offers, by way of promoters equity, through the medium of directors, proprietorship concerns/associated concerns their dummy concerns was enquired into for its veracity/genuinness. Vide letter dated 27.1.97, on the basis of the outcome of this working, as discussed in th case of the director Shri V.M. Dawra, an amount of Rs.11973000/- was admitted as undisclosed funds in promoters’ quota. It transpired that in the absence of genuine sources, within the meaning of Sec.68 of the Act, the amount of Rs.1.19 crores constitutes the undisclosed income of the assessee company, the actual source of which appears to be over capitalisation, for the asstt. Years 95-96. It may be mentioned that this working was in respect of the unaccounted investment channelised through the (5 of 8) [ITA-57/2002] Director Shri V.M. Dawra.” 6. He contended that in the case of Vimal Choudhary, one of the Director, the matter was remanded back to the authority and the relief was granted which was not challenged by the Department and the matter has attained finality. In the case of Mr. U.S. Baid, the appeal was preferred but the same covered by the Circular under Low Tax Effect. 7. Mr. Sanjay Jhanwar counsel for the appellant has taken us to para 6 of the order of the Tribunal which shows the calculation of the each of the Director namely Mr. V.M. Dawra-Rs.11973000/-, in the case of the Mr. Vimal Choudhary-Rs.5899740/-, in the case of Mr. U.S. Baig-Rs.1750000/- and as stated hereinabove that there are different stands, therefore he contended that on the ground of parity if the department has accepted the case of Mr. Vimal Choudhary, then the case of Mr. V.M. Dawra also deserves to be allowed and parity may be maintained. 8. He further contended that the tribunal while observing that in case a company where block assessment account made by the Chartered Accountant was accepted, an application was preferred under Section 256(1) to seek permission, with reference to the question of law to the High Court but the same was rejected against which the Department has not preferred any appeal. Thus, the company matter stood final. 9. He has also pointed out Para 17 of the order of the Tribunal which reads as under:- (6 of 8) [ITA-57/2002] “The appellant did not file any return of block period. Before the DCIT (Assessment), M/s Kalani and Co., Chartered Accountants, through a letter dated 21.1.97 signed by Shri Sanjay Jhanwar who has also appeared before us and argued the present appeal submitted a note on “brief facts and the case” and a note on “working on the basis of regular books, bank accounts and other information.” The brief facts in the note are stated to have been supported by a number of annexures submitted with the said letter written regarding Dawra group cases and Terry Fab India Ltd. Duing the course of block assessment proceedings.” 10. He has taken us to the provisions of Section 158 BC of the Income Tax Act and explanation thereto and contended that in view of the parity, the block assessment of the company when source of income is known, at the most observations which are made or statement which was recorded reads as under:- “Our working is being prepared and submitted to you without prejudice to assessee’s claim that it has not earned anything out of all these transactions. The assessee claims that funds have been arranged from various sources and have been utilised.” 11. He contended that in spite of that if any material was found, it can’t be added in the income of the Director. He further contended that without there being any material, the income could not have been added merely on the letter written by the Charted Accountant. 12. Mr. R.B. Mathur, counsel for the respondent has taken us to para 6 of the order to the Tribunal which reads as under:- “Summarily it can be said that the total unaccounted money involved in case of Terryfab (I) Ltd. (including its promoters is Rs.119.73 lacs. (7 of 8) [ITA-57/2002] Since the unaccounted money to this extent was to be utlised for the purpose of investment in Terryfab (I) Ltd., it was necessary to channelise the said money through different routes and medium so that it stands as explained receipts in the hands of Terryfab (I) Ltd. This job of channelising the unaccounted money was done by Shri V.M. Dawra for and on behalf of all promoters (who have actually arranged such money) by floating a number of concerns. The only thing which has been done in this working apart from quantifying the unaccounted money is that the root and route of the channelisation of unaccounted money has been found out. However, the point of origin of the unaccounted money/source thereof has still to be investigated, which does not come out of the records. At the same time we assert that an accountant investigation suggests that the unaccounted money has been originated in the hands of the company Terryfab (I) Ltd. (may be in the form of direct loan raised or advances taken or over capitalisation). After such origin the money has been channelised through a long route to make it difficult for anybody to relate back the source to the origin.” and contended that the view taken by the tribunal is just and proper. 13. We have heard counsel for the parties. 14. First of all, on the question of company, in view of the fact that the original order which was passed under Section 256(1), in which relief was granted and permission was not granted by the Tribunal which was not challenged. In that view of the matter, the order of the company would stand final. 15. In the case of V.M. Dawra, in view of the statement which was made, since the source of income is to be established by the department and they cannot merely rely on a letter written by the Chartered Accountant, in that view of the matter, the contention raised by counsel for Mr. V.M. Dawra is required to be accepted. (8 of 8) [ITA-57/2002] Even otherwise in the case of Mr. Vimal Choudhary, the matter was remanded back to the authority and the relief was granted which was not challenged by the department. On the basis of reasoning given by the tribunal, if in one case, the department has not challenged the order of the tribunal which was remitted back and relief granted in favour of the assessee. 16. In our considered opinion, on the principle of parity, Mr. V.M. Dawra is required to be granted the same relief. 17. In that view of the matter, the issue is answered in favour of the assessee and against the department. 18. The appeal stands allowed. 19. In view of the order passed in Appeal No.57/2002 in the case of V.M. Dawra, all other appeals stand disposed of. A copy of this order be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Jyoti Item No.4-7 "