GURSHARAN SINGH CHHABRA,NEW DELHI vs. ACIT CIRCLE-7(2), NEW DELHI

PDF · subscribers
ITSSA 1/DEL/2020Status: DisposedITAT Delhi09 July 20246 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeal before it was against an order passed by the CIT(A) which was based on an appeal improperly filed before the CIT(A). The Tribunal noted that the original block assessment order and the subsequent set-aside assessment order dated November 2, 2018, were both passed after obtaining prior approval of the Commissioner of Income Tax (CIT) or Principal CIT. For searches conducted prior to January 1, 1997, and assessments requiring prior approval of the CIT, the first appeal lay directly to the Tribunal under Section 253(1)(b) of the Act. Conversely, for searches on or after January 1, 1997, requiring prior approval of the Joint Commissioner, the appeal lay to the CIT(A) under Section 246A. Since the set-aside assessment order dated November 2, 2018, was passed after obtaining prior approval of the Principal CIT, the assessee should have filed a direct appeal to the Tribunal. The CIT(A) therefore lacked jurisdiction to adjudicate the appeal on merits. The Tribunal dismissed the assessee's appeal, granting liberty to file a fresh appeal directly to the Tribunal against the assessment order dated November 2, 2018, along with a delay condonation petition.

What were the facts?

This appeal before the Income Tax Appellate Tribunal (ITAT) concerns block assessment years 1985-86 to 1996-97 (up to 15.9.1995). The assessee, Gursharan Singh Chhabra, is challenging an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] dated March 6, 2020. This order confirmed additions made by the Assessing Officer (AO) in an assessment order dated November 2, 2018, passed under sections 254/158BC of the Income-tax Act, 1961. The original block assessment was completed on September 27, 1996, determining undisclosed income of Rs 2,14,66,973/-. A previous appeal to the Tribunal resulted in a remand. The Hon'ble Delhi High Court, in ITA 170/2005 dated July 5, 2018, directed the department to complete the remand proceedings. The AO then passed the set-aside assessment order on November 2, 2018, determining undisclosed income of Rs 3,49,080/-. The assessee appealed this to the CIT(A), who dismissed it on merits.

What were the issues?

1. Whether the addition of Rs 20,000/- on account of an amount paid to Shri Shabbir, confirmed by the CIT(A) due to the absence of cogent clarification from the assessee, is valid? (Question of law and fact, turning on Section 158BC). 2. Whether the addition of Rs 100,000/- on account of an amount paid to Shri Krishan Singh, confirmed by the CIT(A) due to the absence of cogent clarification from the assessee, is valid? (Question of law and fact, turning on Section 158BC). 3. Whether the addition of Rs 229,080/- (1/3rd share of Rs 678,240/-) on account of an amount paid to Shri S.K. Seth for property purchase, confirmed by the CIT(A) due to the absence of cogent clarification from the assessee, is valid? (Question of law and fact, turning on Section 158BC). Assessee's contentions: The assessee argued that the CIT(A)'s order was bad in law, wrong in facts, and against principles of natural justice. The assessee specifically challenged the confirmation of the three additions mentioned above on the grounds of lack of cogent clarification. The assessee also reserved the right to amend grounds. Revenue's contentions: The revenue did not explicitly record any contentions in the judgment regarding the merits of the additions. However, the judgment notes that the AO passed the order after obtaining prior approval of the Principal CIT.

Which sections of the Income-tax Act were involved?

Section 158BC,Section 254,Section 253(1)(b),Section 246A,Section 158BG

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI M. BALAGANESH

For Appellant: Shri Sanjiv Kumar Gambhir, CA
For Respondent: Ms. Rajinder Kaur, CIT DR
Hearing: 03/07/2024Pronounced: 09/07/2024

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER IT(SS)A No.1/Del/2020 Block Assessment Years 1985-86 to 1996-97 (upto 15.9.1995) Gursharan Singh Chhabra, Vs. ACIT, 33, Sukhdev Vihar, Circle-7(2), New Delhi New Delhi (Appellant) (Respondent) PAN:AAAPC0912D Assessee by : Shri Sanjiv Kumar Gambhir, CA Revenue by: Ms. Rajinder Kaur, CIT DR Date of Hearing 03/07/2024 Date of pronouncement 09/07/2024

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in IT(SS)A No.1/Del/2020, arises out of the order of the Commissioner of Income Tax (Appeals)-3, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 3/10090/18-19 dated 06.03.2020 against the order of assessment passed u/s 254/158BC of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 02.11.2018 by the Assessing Officer, ACIT, Circle-7(2), New Delhi (hereinafter referred to as „ld. AO‟).

2.

The assessee has raised the following grounds of appeal before us:-

“1. That the order passed by learned Commissioner of Income Tax (Appeals) is bad at law, wrong in facts and against the principles of natural justice. 2. That the learned Commissioner of Income (Appeals) has erred to confirm the addition of Rs 20,000/- on the ground of "in the absence of any cogent clarification" given by the Assessee in respect of amount paid to Shri Shabbir. Page | 1

3.

That the learned Commissioner of Income Tax (Appeals) has erred to confirm the addition of Rs 100,000/- on the ground of "in the absence of any cogent clarification" given by the Assessee in respect of amount paid to Shri Krishan Singh. 4. That the learned Commissioner of Income Tax (Appeals) has erred to confirm the addition of Rs 229,080/- being 1/3rd share of Rs 678,240/- on the ground of "in the absence of any cogent clarification" given by the Assessee in respect of amount paid to Shri S.K. Seth for purchase of property. 5. That the Appellant craves the right to add, amend, delete or substitute the Ground of Appeal at any time before the finalization of appeal proceedings.”

3.

We have heard the rival submissions and perused the materials available on record. Pursuant to the search conducted in the premises of the assessee on 15.9.95, block assessment stood completed in the hands of the assessee u/s 158BC of the Act for the Block Period 1.4.85 to 15.9.95 determining undisclosed income of Rs 2,14,66,973/- on 27.9.96. Since this search took place prior to 1.1.97, as per the then prevailing provisions of the Act, this block assessment was framed after obtaining the prior approval of the Administrative Commissioner of Income Tax (CIT) and hence first appeal was directed to Tribunal. The Tribunal in IT(SS) A No. 5570 (Del)/96 dated 23.6.2004 remanded back certain issues to the file of ld. AO to examine the following issues afresh after making certain observations thereon:-

Issue Additions ITAT Decision 1. Addition of Rs. 13,85,750/- on Remanded back to the account of description £t page 39 AO to check the to 41 of Annexure-A9 seized from ownership of farm premises of M/s Express Movers house and order (P) Ltd mentioned receipt and accordingly expense of Rs. 13,85,750/- and the same has not been accounted in the books. Page | 2 2 Addition of Rs. 20,000/- on Remanded Back stating account of description at page-64 the matter need re- of Annexure-A4 mentioned verification & AO will receipt of Rs. 20,000 and order accordingly. assessee failed to explain its accounting. 3 Addition of Rs. 19,40,533/- on Remanded Back stating account of unexplained the opportunity is to be investment of Rs. 5,98,000/- in giver, to assessee to M/s Dolly Farms & Resorts (P) explain the investment. Ltd, Investment of Rs. 5,53,533/- to Shri Ashish Seth vide cheque no 404025 dated 28/09/1993 and loan given to Smt. Dolly Chhabra of Rs. 7,89,000/-- 4. Addition of Rs. 1,00,000/- on Remanded back to the account of description at page-28 AO to verify whether of Annexure A3 show that Shri G the amount was S Chhabra paid Rs. 1,00,000/- to withdrawn from M/s Shri Krishan Singh on account of Dolly Farms & Resorts property measuring 5 bighas in Pvt Ltd and the same Khasra No. 484 dated 14/10/87. was disclosed in its Assessee has not furnished any books of accounts reply. 5. Addition of Rs.6,87,240/- on Remanded Back for account of description at verification of all related Annexure A4 & A5,which is a sale parties deed showing assessee purchased a land from S K Seth in total consideration of Rs. 6,78,240/- 6. Addition of Rs. 1,14,720/- on For Rs. 74,720/- account of description at page 42 remanded back to to 46 total expense of Rs. 74,720 assessee and Rs. plus 40,000/- and the same have 40,000/- confirmed been used in the construction of farm house purchased by GS Chhabra(HUF)

4.

Aggrieved by this Tribunal Order, the revenue preferred an appeal before the Hon‟ble Delhi High Court. The Hon‟ble High Court vide order in ITA 170/2005 dated 5.7.2018 instructed the department to complete the remand proceedings.

5.

In respect of search conducted prior to 01.01.1997, since the block assessment order is to be framed after obtaining the prior approval of the Administrative Commissioner of Income Tax in terms of Section 158BG of the Act, the first appeal was directed directly to Tribunal as per Section 253(1)(b) of the Act. For the sake of convenience, the provisions of section 253(1)(b) are reproduced below:-

“253. Appeals to the Appellate Tribunal.— (1) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order— (b) an order passed by an Assessing Officer under clause (c) of section 158BC, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; or]” 6. Pursuant to the amendment brought in Section 158BG of the Act w.e.f. 01.01.1997, wherein, the block assessment proceedings are to be framed by the AO after obtaining the prior approval of the Joint Commissioner instead of Commissioner of Income Tax in respect of search conducted on or after 01.01.1997, corresponding amendments were made in Section 246A of the Act (being the appealable orders before Commissioner Appeals). The amended provisions of Section 246A w.e.f 01.01.1997 are as under:-

“246A. Appealable orders before Commissioner (Appeals).— (1) [Any assessee or any deductor [or any collector] aggrieved] by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against— (k) an order of assessment made by an Assessing Officer under clause (c) of section 158BC, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997” 7. We find that in the instant case before us, the assessee had rightly preferred first appeal against the original block assessment order directly to the Tribunal. But in the second round of proceedings pursuant to the set aside assessment order framed by the ld AO u/s 254/ 158BC of the Act dated 02.11.2018, the assessee by applying the aforesaid amended provision w.e.f. 01.01.1997 erroneously had preferred an appeal to Commissioner (Appeals). It is pertinent to note that the second order i.e. the set aside assessment order dated 02.11.2018 was also passed after obtaining the prior approval of Pr. CIT-3, Delhi.

8.

The ld. AO in the second round of proceedings sought to examine the remanded issues in the light of observations of this Tribunal and passed an order u/s 254/158BC of the Act on 2.11.2018 determining undisclosed income of Rs 3,49,080/-. This order was also passed after obtaining the prior approval of Principal CIT -3, Delhi which fact is reflected in last para of the assessment order. Hence the assessee should have preferred direct appeal to the Tribunal. But assessee wrongly preferred an appeal before the Learned CIT(A). The ld. CIT(A) vide order dated 6.3.2020 dismissed the appeal of the assessee on merits, without appreciating the fact that he does not even possess jurisdiction to adjudicate this appeal. This appeal should have been dismissed by the ld. CIT(A) inlimine, as assessee had approached a wrong forum.

9.

Since the present appeal before us is against the illegal order passed by the ld. CIT(A) pursuant to the illegal appeal preferred by the assessee, we deem it fit and appropriate to dismiss this appeal with liberty given to the assessee to file fresh appeal directly to the Tribunal against the block assessment order dated 2.11.2018 with a delay condonation petition, which would be considered appropriately by the Bench. With these observations, we dismiss the appeal of the assessee.

In the result, the appeal of the assessee is dismissed. 10.

Order pronounced in the open court on 09/07/2024.

-Sd/- -Sd/- (SAKTIJIT DEY) (M. BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated:09/07/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi

More judgments on Section 158BC

All 487 judgments and leading authorities on Section 158BC →

Recent GST High Court judgments

Search GST case law →