COMMISSIONER OF INCOME TAX ALW vs. MURARI LAL GUPTA

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ITA/138/2011HC RajasthanRJHC02035756200830 May 20176 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issues involved appreciation of evidence by all three authorities (AO, CIT(A), and ITAT). The Court noted that the original assessee, Murari Lal Gupta, had expired, and the return was filed by his legal heirs based on available documents. The Court observed that nothing was on record regarding the notice under Section 158BC/158BD. The Tribunal, being the last fact-finding authority, had made estimations based on original documents and after appreciating the evidence. The Court found no reason to interfere with the Tribunal's findings of fact. Therefore, the issues were required to be answered in favour of the assessee and against the department. The appeals were dismissed.

What were the facts?

These appeals by the Commissioner of Income Tax (CIT), Alwar, challenge the judgment of the Income Tax Appellate Tribunal (ITAT). The ITAT had partly allowed the assessee's appeal and dismissed the department's appeal, modifying the CIT(A)'s order. The assessee is Murari Lal Gupta and/or his legal heirs. The assessment years are not explicitly stated but relate to a block assessment period following a search and seizure under Section 132. The core dispute revolves around additions made by the Assessing Officer (AO) concerning agricultural income, household expenses, outstanding interest, land purchases, undisclosed investments and advances, outstanding advances, and opening capital. The assessee had filed a return under Section 158BC/BD after the search, as the original assessee had expired.

What were the issues?

The High Court admitted the appeals on the following substantial questions of law: 1. Whether the Tribunal was legally justified in deleting various additions and making estimations, especially when the assessee maintained no regular books of accounts, did not follow a consistent accounting system, and filed a return only under Section 158BC/BD after a search and seizure? 2. Whether, in the facts and circumstances, the Tribunal was justified in holding that the assessee had given advances not declared, yet estimating an addition of Rs. 3 lacs against Rs. 40 lacs based on seized documents regarding outstanding advances, while the CIT(A) had sustained an addition of Rs. 20 lacs? 3. Whether, in the facts and circumstances, the Tribunal was justified in allowing credit for opening balance of capital assets at Rs. 17,71,415/- against Rs. 2,50,000/- allowed by the CIT(A), when the increased amount was neither claimed in the return nor substantiated with documentary evidence or a revised return? 4. Whether, in the facts and circumstances, the Tribunal was justified in deleting the addition of Rs. 3,52,650/- made on account of advances realized, when the assessee's submission was not substantiated by documentary evidence that the amount was included in the amount realized after the death of the assessee? Assessee's Contention: The respondent (assessee) contended that the matter involved pure estimation and appreciation of facts, and therefore, no interference was required in the ITAT's order. Revenue's Contention: The appellant (revenue) argued that the Tribunal was not justified in deleting additions and making estimations, particularly given the assessee's lack of regular accounts and the circumstances of the return filing.

Which sections of the Income-tax Act were involved?

Section 132,Section 132A,Section 132B,Section 142,Section 143,Section 144,Section 145,Section 148,Section 158BC,Section 158BD

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. 138 / 2011 Commissioner Of Income Tax Alwar ----Appellant Versus Murari Lal Gupta ----Respondent D.B. Income Tax Appeal No. 466 / 2011 Commissioner Of Income Tax Alwar ----Appellant Versus Murari Lal Gupta & Ors ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain For Respondent(s) : Mr. P.K. Kasliwal _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR

Judgment 30/05/2017

1.

By way of these appeals, the appellants have assailed the judgment and order of the Tribunal whereby Tribunal has partly allowed the appeal of the assessee and dismissed the appeal of the department and modified the order of CIT(A).

2.

This Court while admitting the appeals framed following substantial question of law:-

(2 of 6) [ITA-138/2011]

2.

1 Appeal No.138/2011 admitted on 18.10.2016 “1. Whether tribunal was legally justified in deleting various additions and making estimation over estimation specifically when the assessee neither maintained any regular books of accounts nor followed any accounting system consistently and further the assessee never filed any return of income except the one filed u/s.158 BC/BD after the search and seizure u/s.132?

2.

Whether in the facts and circumstances of the case in law the Tribunal was justified in holding on one hand that the assessee had given advances which were not declared by the assessee and on the other hand addition of Rs.3 lacs only was estimated against Rs.40 lacs which was made on account of outstanding advances on the basis of seized documents and addition of Rs.20 lacs was sustained by the CIT(A)?

3.

Whether in the facts and circumstances of the case in law the Tribunal was justified in allowing the credit of opening balance of capital assets for Rs.17,71,415/- against Rs.2,50,000/- allowed by the CIT(A) on the basis of claim made by the assessee in the return of income, specifically when the balance increased amount was neither claimed in the return of income nor substantiated with any documentary evidence or revised return? ”

2.

2 Appeal No.466/2011 admitted on 18.10.2016 “ 1. Whether Tribunal was legally justified in deleting various additions and making estimation over estimation specifically when the assessee neither maintained any regular books of accounts nor followed any accounting system consistently and further the assessee never filed any return of income except the one filed u/s.158 BC/BD after the search and seizure u/s.132?

2.

Whether in the facts and circumstances of the case in law the Tribunal was justified in allowing the credit of opening balance of capital assets for Rs.17,71,415/- against Rs.2,50,000/- allowed by the CIT(A) on the basis of claim made by the assessee in the return of income, specifically when the balance increased amount was neither claimed in the return of income nor substantiated with any documentary evidence or revised return?

3.

Whether in the facts and circumstances of the (3 of 6) [ITA-138/2011]

case in law the Tribunal was justified in deleting the addition of Rs. 3,52,650/- made on account of advances realized specifically when the assessee made a submission only and failed to establish by way of any documentary evidence that the amount was included in the amount realized after the death of the assessee?”

3.

Counsel for the appellant has taken us to the observations made by the AO, CIT (A) and the Tribunal regarding Agricultural land, House Hold expenses, Outstanding interest on pawned jewellery, land purchased, undisclosed investment and advances, outstanding advances and opening capital which if taken in tabular form reads as under: Appeal No. 138/2011: Issue Assessment Order (Anx.-1) CIT(A) Order (Anx.-3) ITAT Order (Anx.-5) Q. NO. 1 Estimation: A. Agriculture Income Allowed Rs.7,62,575/- agaist Rs.15,15,320/- claimed by assessee Page-7, Bottom Estimated Rs.9,50,000/- Page-18, Para-7 Estimated Rs.12 lacs Page-8, Para-8 B. House Hold Expenses Rs.9,71,800/- Para-7, Page-8 Rs.5,50,000/- Para-10, Page26 Rs.3,50,000/- Para-16, Page-12 C. Outstanding Interest on Pawned Jewellery Rs.10,91,435/-, Page-4 Interest Deleted, Para- 5, Page-7 Interest Deleted, Para- 4, Page-4 D. Land Purchased Rs.3,67,440/-, Page-5, Para-6 Rs.3,34,440/-, Page-23 para-9 Deleted Addition, Page-10, Para-14 E. Undisclosed investment & advances Rs.15,00,000/-, Page- 15 Confirmed Rs.15,00,000/- Para- 13.3, Page-36 Deleted Addition, Para- 23, Page-14 Q. No. 2 Outstanding Advances Estimated for Rs.40 lacs Page 11, 12 Deleted addition of Rs.20 lacs and Reduced the addition to Rs.3 lacs Page-6,

(4 of 6) [ITA-138/2011]

confirmed Rs.20 lacs. Page-12, Para-6 Para-7 Q. No.3 Opening Capital Nil Allowed Rs.2.50 lacs Page-40, Para-15 Allowed Rs.17,71,415/- Page-15, Para-26 Appeal No. 466/2011: Issues Assessment Order (Anx.-1) CIT(A) Order (Anx.-3) ITAT Order (Anx.-5) Q.No.2 Opening Capital Nil Allowed Rs.2.50 lacs Page-40, Para-15 Allowed Rs.17,71,415/- Page-15, Para-26 Q. No.3 Interest on advances Rs.3,52,650/- Page-15, Para-(iv) Confirmed Rs.2,40,000/- Page-34, Para-13.2 Addition deleted Page- 13, Para-18

4.

Counsel for the respondent has contended that in view of the above, it is all of pure estimation and appreciation of facts and no interference is required to be made in the order of the Tribunal.

5.

We have heard Mrs. Jain and Mr Kasliwal.

5.

1 For the benefit of the parties, we reproduce the provisions of Section 158BC & 158BD which reads as under- “Procedure for block assessment. 158BC. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then,— [(a) the Assessing Officer shall— (i) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days;

(5 of 6) [ITA-138/2011]

(ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five days, as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forth his total income including the undisclosed income for the block period : Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter : Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return;] (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 [, section 144 and section 145] shall, so far as may be, apply; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; [(d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B.] Undisclosed income of any other person. 158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly.

5.

2 In view of the above, it is clear that it is all appreciation of evidence by all the three authorities and all the three authorities

(6 of 6) [ITA-138/2011]

has gone on the factual matrix. Nothing is on record regarding notice u/s 158BC/158BD. The return was filed by the legal heirs of the deceased are on the basis of documents which are available . The original assessee Murari Lal Gupta has expired, therefore, the legal heirs of the deceased, on the basis of the documents filed return as advised by the professional.

5.

3 In that view of the matter, the tribunal while considering the matter, being a last fact finding authority has estimated on the basis of original documents and after appreciation of evidence in which no interference is required to be made.

5.

4 Therefore, in the finding of fact the issues are required to be answered in favour of the assessee and against the department.

6.

The appeals stand dismissed. A copy of this judgment be placed in each file. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Brijesh 82 & 83.

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