SHRI VIJAY MAKHIJA S/O SHRI GOVIND RAM MAKHIJA vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX-I

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ITA/82/2019HC RajasthanRJHC02056885201916 September 2019Author: S. RAVINDRA BHAT,PRAKASH GUPTA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the concurrent findings of the lower appellate authorities and the ITAT were correct and no error of law was committed. The Court reasoned that there was no obligation on the part of the Revenue to examine the seller of the property to determine its value, profit, or real cost. This was because an incriminating document related to the transaction was seized from the assessee's possession. The assessee had the opportunity to summon the seller for any necessary clarification. Therefore, the addition of ₹23,78,500 was upheld. The appeal was dismissed.

What were the facts?

The assessee, Shri Vijay Makhija, is challenging concurrent findings of the lower appellate authorities and the Income Tax Appellate Tribunal (ITAT) where a sum of ₹23,78,500 was taxed in his hands. This taxation arose from search proceedings under Section 153A of the Income Tax Act. The search was conducted on the assessee's premises and those of his elder brother, Prakash Makhija, on October 12, 2011. During the search, Prakash Makhija stated that the assessee paid an undisclosed amount of ₹6 lakhs for the purchase of immovable property. The assessee admitted this and surrendered the ₹6 lakhs. The Assessing Officer (AO) relied on a document found during the search, determining the property's true value at ₹20,75,000. This amount, including the surrendered sum and adjusted registration charges, was brought to tax. The CIT(A) and ITAT upheld this.

What were the issues?

1. Whether the addition of ₹11,53,500 by the revenue was valid, considering the seller of the property was not examined (Section 153A of the Income Tax Act). Assessee's Contentions: - The revenue failed to examine the seller of the property, which was a prerequisite for adding back the sum of ₹11,53,500. - If any addition was to be made, it should have been limited to the amount surrendered by the assessee, which was ₹6 lakhs. Revenue's Contentions: - The revenue did not record any specific contentions in the judgment. However, the High Court's reasoning implies that examining the seller was not obligatory given the incriminating document seized from the assessee's possession.

Which sections of the Income-tax Act were involved?

Section 153A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 82/2019 Shri Vijay Makhija S/o Shri Govind Ram Makhija, Aged About 38 Years, (Approx) B/c Makhija C/o Of M/s Bharat Traders, Old Dhan Mandi, Kota ----Appellant Versus 1. The Principal Commissioner Of Income Tax-I, N.c.r. Building, Statue Circle, C-Scheme, Jaipur 2. Assistant Commissioner Of Income Tax, Circle-3, N.c.r. Building, Statue Circle, C-Scheme, Jaipur ----Respondents For Appellant(s) : Mr.Naresh Gupta, Adv. For Respondent(s) : HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE PRAKASH GUPTA

Judgment 16/09/2019

1.

Urging that the Lower Appellate Authorities and ITAT fell into error of law the assessee questions the concurrent findings whereby a sum of `23,78,500/- was taxed in his hands in the course of search proceedings under Section 153A of the Income Tax Act.

2.

The assessee’s premises-as well as those of his elder brother Prakash Makhija, were searched on 12.10.2011. In the course of the search, Prakash Makhija made a statement admitting that `6 lakhs undisclosed amount was paid by the assessee for purchase of immovable property. The assessee admitted to this amount and surrendered the said sum of `6 lakhs. The A.O. relied upon a document found during the search and held that the true value of the transaction (i.e. purchase of property) was worth `20,75,000/- brought the compliance

(2 of 2) [ITA-82/2019] including the amount surrendered- a part of which was adjusted towards registration charges etc., to tax.

3.

This was upheld and affirmed by the Lower Appellate Authorities i.e. CIT(A) and ITAT.

4.

It is argued on behalf of the assessee that the revenue did not examine the seller of the property, without which it could not have added back the sum of `11,53,500/-. It was also urged that the addition if at all could have been made to the amount surrendered i.e. `6 lakhs.

5.

This Court is of the opinion that having regard to the concurrent findings, no error can be found with the order of the ITAT. There was no obligation on the part of the Revenue to examine the seller to determine the value the profit or the real cost, given that the incriminating document was seized from the assessee’s possession. The assessee could well have summoned that party, for any clarification.

6.

The appeal is accordingly dismissed. (PRAKASH GUPTA),J (S. RAVINDRA BHAT),CJ NAVAL KISHOR-Arun/90

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