THE COMMISSIONER OF INCOME TAX,THIRUVANA vs. C.SELVAKUMAR,L/H LATE N.CHELLAPPAN CHETT

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ITA/70/2008HC KeralaKLHC01026975200824 February 2009Author: HONOURABLE MR.JUSTICE K.SURENDRA MOHAN,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court acknowledged that the questions raised by the Revenue warranted reconsideration. However, the Court expressed reluctance to spend its time deciding the case on merits if the Revenue ultimately could not recover the tax arrears from the legal heirs. The Court noted that only one legal heir was made a respondent in the appeal. Therefore, the Court closed the appeal, granting the department the freedom to conduct an inquiry to identify all legal heirs and their assets. If all legal heirs are traced and found to possess assets, the department can file a petition before the High Court to review this judgment. The Court did not decide the substantive issues on merits.

What were the facts?

The Revenue (Commissioner of Income Tax) filed an appeal against a legal heir of the deceased assessee, N. Chellappan Chettiar. The assessment year in question is 1975-76. The assessee died before the completion of reassessment proceedings under Section 147 of the Income Tax Act. The disputed income relates to additions made under Section 69 of the Act concerning investments made by the assessee in banks under fictitious names. The assessee's manager had provided a statement confirming these investments. However, the assessee was not given an opportunity to explain the investments before the addition was made under Section 69A, which led the Tribunal to cancel the additions. The Revenue contended that the questions raised warranted reconsideration.

What were the issues?

1. Whether the Tribunal was justified in cancelling the additions made under Section 69A of the Income Tax Act, 1961, on the ground that the assessee was not afforded an opportunity to explain the investments. Assessee's Contention: The judgment does not record any specific contentions made by the assessee's legal heir. However, the Tribunal's decision to cancel the additions implies that the assessee's inability to explain the investments due to lack of opportunity was accepted. Revenue's Contention: The Revenue argued that the questions raised by them certainly called for reconsideration, implying that the Tribunal's decision to cancel the additions was erroneous and that the additions under Section 69A were justified, especially given the manager's statement about investments in bogus names. The Revenue believed the matter should be decided on merits.

Which sections of the Income-tax Act were involved?

Section 147,Section 69,Section 69A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 24TH FEBRUARY 2009 / 5TH PHALGUNA 1930 ITA.No. 70 of 2008() -------------------- ITA.131/COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: -------------------- COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT(S): --------------- C.SELAVA KUMAR AS LEGAL HEIR OF N.CHELLAPPAN CHETTIAR, PULIMOOTTIL HOUSE, MAYYANADU, KOLLAM. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24/02/2009, THE COURT ON 24/02/2009 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... I.T. Appeal No.70 of 2008 .................................................................... Dated this the 24th day of February, 2009.

JUDGMENT Ramachandran Nair, J. This appeal is filed by the Revenue against one of the legal heirs of the deceased assessee against whom massive demand of tax is raised. The assessment pertains to the year 1975-76 and the assessee died before completion of re-assessment under Section 147 of the Income Tax Act. Disputed income represent additions made under Section 69 of the Income Tax Act pertaining to investments of the assessee made in Banks under bogus names. The assessee's Manager had given clearcut statement about the investments made by the assessee in bogus names. However, assessee could not be given an opportunity to explain the investment before addition under Section 69A and that is the reason why Tribunal cancelled the additions. The questions raised by the Revenue certainly calls for reconsideration. However, we feel this court should not waste it's time to decide the case on merits, if ultimately Revenue cannot recover the arrears of tax from 2 legal heirs, one of whom only is made respondent in the appeal. We, therefore, close this appeal leaving freedom to the department to conduct enquiry about the legal heirs and their assets and move petition before this court to review this judgment, if all legal heirs are traced and if they are found to have assets.

C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms

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