ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 2(1), vs. SHRI PRAVEEN SALUJA,

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TAXC/93/2018HC ChhattisgarhCGHC01018544201814 May 2019Author: HON'BLE THE CHIEF JUSTICE,HON'BLE THE CHIEF JUSTICE SHRI P. R. RAMACHANDRA MENON,HON'BLE SHRI JUSTICE MANINDRA MOHAN SHRIVASTAVA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn. The learned Standing Counsel for the Revenue conceded that the appeal was filed in June 2018. She brought to the Court's notice the 'new litigation policy' and a subsequent circular dated July 11, 2018, issued by the Central Board of Direct Taxes (CBDT). This circular mandates that the minimum value of litigation for approaching the High Court shall be Rs. 50,00,000/-. In the present case, the tax effect was only Rs. 34,01,999/-, which did not meet this requirement. The Court acknowledged that the Apex Court had held this circular to be retrospective, applying to pending litigations. Consequently, the Revenue sought permission to withdraw the appeal, which was granted. The appeal was accordingly dismissed as withdrawn.

What were the facts?

The Revenue is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) which granted relief to the Respondent-Assessee. The ITAT's order dated January 17, 2018, directed the Assessing Officer (AO) to delete an addition of Rs. 1,06,31,248/-. This addition was made during the assessment for the year 2007-2008, following a search and seizure operation. The operation reportedly unearthed excess stock of gold and silver jewellery/bullion, National Savings Certificates (NSCs) in the names of family members, and books of account. The AO had completed the assessment under Section 143(3) read with Section 153-B of the Income Tax Act, 1961, making an addition of Rs. 1,04,86,158/-.

What were the issues?

The Tribunal had to decide several questions of law and fact, framed as substantial questions of law by the Revenue. These included: 1. Whether the ITAT was justified in dismissing the appeal preferred by the Department. 2. Whether the ITAT was justified in upholding the order of the CIT(A) deleting the addition of Rs. 90,92,969/- made by the AO on account of unexplained excess stock of gold and silver. 3. Whether the ITAT was justified in upholding the CIT(A)'s finding that the excess gold and silver was disclosed under the VDIS '97 Scheme, despite the assessee failing to reconcile the excess stock and establish ownership. 4. Whether the ITAT was justified in upholding the CIT(A)'s order, ignoring that family members did not state during preliminary statements that their jewellery was kept in the stock of M/s Mahendra Jewellers. 5. Whether the ITAT was justified in upholding the CIT(A)'s order that disclosure in VDIS-97 gives immunity even when excess stock is detected during a search. 6. Whether the ITAT was justified in upholding the CIT(A)'s deletion of additions of Rs. 47,340/- and Rs. 6,10,223/- made under Section 69A based on loose papers. 7. Whether the ITAT was justified in upholding the CIT(A)'s order, ignoring Section 106 of the Evidence Act regarding the burden of proof on the assessee. 8. Whether the ITAT was justified in upholding the CIT(A)'s order, ignoring that adverse inference can be drawn against the assessee for failure to produce documents (relying on CIT Vs. Motor General Finance Ltd.). 9. Whether the ITAT was justified in confirming the CIT(A)'s order, giving a decision against the revenue despite no nexus between the conclusion and primary facts. 10. Whether the ITAT was justified in confirming the CIT(A)'s order which was contrary to evidence and AO's findings, accepting the assessee's submission and deleting an addition of Rs. 97,50,532/- in toto, rendering the decision perverse. The Revenue contended that the ITAT erred in deleting the additions. The Assessee's contentions, as reflected in the grounds of appeal, were that the excess stock was disclosed under VDIS '97, and that the CIT(A) and ITAT correctly appreciated the facts and law in deleting the additions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153-B,Section 69A

AI-generated summary — verify with the full judgment below

1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR TAXC No. 93 of 2018 Assistant Commissioner of Income Tax Circle-2(1), Bilaspur, Chhattisgarh. ---- Appellant Versus Shri Praveen Saluja, In Front Of Ghosh Nursingh Home Tirapara, Bilaspur, Chhattisgarh. ---- Respondent For Appellant : Ms. Naushina Ali, Advocate on behalf of Shri Amit Chaudhary, Advocate. For Respondent : None Hon'ble Shri P.R. Ramachandra Menon, Chief Justice Hon'ble Shri Manindra Mohan Shrivastava, Judge Judgment on Board Per P.R. Ramachandra Menon, Chief Justice 15/05/2019

1.

Challenge is at the instance of the Revenue. Grievance is against the order passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur (for short 'the Tribunal') granting relief to the Respondent-Assessee.

2.

The factual matrix reveals that assessment finalized in respect of year 2007- 2008 as per order dated 31.12.2008 (Annexure A/3) came to be affirmed by the appellate authority vide order dated 30.01.2011 (Annexure A/2). This was sought to be challenged by the Assessee by filing further appeal before the Tribunal which led to passing of the impugned order dated 17.01.2018 (Annxure A-1) whereby relief has been granted to the Assessee directing the Assessing Officer to delete the addition of Rs.1,06,31,248/-. This made the Revenue to challenge the said verdict contending that the unexplained excess stock of gold jewellery/bullion weighing 7.696 Kg valued at 2 Rs.47,79,969/- ad silver jewellery/bullion weighing 227 Kg valued at Rs.43,13,000/- were found and seized. Apart from these, 146 NSCs in the name of various persons of Saluja family were seized alongwith books of account and documents as per Panchnama. Consequently, assessment was completed for the assessment year 2007-08 under Section 143 (3) read with Section 153-B of the Income Tax Act, 1961 on 31.12.2008 by making addition and fixing the figure as to Rs.1,04,86,158/-.

3.

It is in the said circumstances that the above appeal has been filed, suggesting the following substantial questions of law:

"

1.

Whether in law and on facts & circumstances of the case, the Income-tax Appellate Tribunal is justified both in law and on facts in dismissing the appeal preferred by the Department?

2.

Whether in law and on facts & circumstances of the case, the ITAT is justified in upholding the order of CIT(A) deleting the addition of Rs.90,92,969/- made by the AO on account of unexplained excess stock of gold and silver unearthed as a result of search & seizure action in the case of the assessee?

3.

Whether in law and on facts & circumstances of the case, the ITAT is justified in upholding the order of CIT(A) that the excess amount of gold and silver of Rs.90,92,969/- found during search & seizure action had already been disclosed under the VDIS*97 Scheme, thereby without properly appreciating the fact that the assesses had failed to reconcile the excess stock during the course of assessment and more so when the failed to establish the authenticity and identity of the ownership of the jewelleries in the individual hands of family members during the assessment proceedings?

4.

Whether in law and on facts & circumstances of the case, the ITAT is justified in upholding the order of CIT(A) thereby ignoring the fact that none of the family members of the assessee in their preliminary statement recorded at the time of search stated that any of their jewelries were kept in the stock of M/s Mahendra Jewellers?

5.

Whether in law and on facts & circumstances of the case, the ITAT is justified in upholding the order of CIT(A) that disclosure of jewellery in VDIS-97 Scheme,

3 gives immunity to the assessee in a case where excess stock was detected during search & seizure operation executed on 31.01.2007?

6.

Whether in law and on facts & circumstances of the case, the ITAT is justified in upholding the order of CIT(A) deleting the additions of Rs.47,340/- and Rs.6,10,223/-, made by the AO on u/s 69A of the Act on the basis of loose papers found and seized during search & seizure action in the case of the assessee?

7.

Whether in law and on facts & circumstances of the case, the ITAT is justified in upholding the order of CIT(A), while CIT(A) erred in appreciating the fact that as per section 106 of Evidence Act where any fact is within the knowledge of any person, the burden of proving that fact is upon him, thus when certain transactions are recorded by the assessee then primary onus of explaining the transactions lies on the assessee and not on the Revenue?

8.

Whether in law and on facts & circumstances of the inference can be drawn against the assessee?

9.

Whether in law and on facts & circumstances of the case the ITAT is justified in confirming the order of Ld.CIT(A) thereby giving a decision in favour of the assessee and against the revenue though there is no nexus between the conclusion of fact and primary fact upon which conclusion is based?

10.

Whether in law and on facts & circumstances of the case, the ITAT is justified in confirming the order of CIT(A) who has been erred by giving a finding which is contrary to the evidence on record and findings by the AO, as the CIT(A) has accepted the submission of the assessee and deleted the addition of Rs.97,50,532/- in toto, which is factually incorrect, thereby rendering the decision, which is perverse?”

4.

When the matter is taken up for consideration, learned Standing Counsel for the Revenue fairly concedes that the appeal was filed way back in June, 2018. By virtue of the 'new litigation policy' and the circular issued subsequently on 11.07.2018 by the Central Board of Direct Taxes (CBDT), the subject matter of litigation for approaching the High Court shall be of a 4 minimum value of Rs. 50,00,000/- which requirement is not satisfied in the instant case, as in the present case, the tax effect is to the extent of Rs. 34,01,999/- only.

5.

This Court is also aware of the fact that the scope of the said circular was considered by the Apex Court and in terms of the contents of such circular, it has been held that the same is having retrospective application i.e. in respect of the pending litigations as well.

6.

In view of the above circumstances, the learned Standing Counsel seeks permission of this Court to withdraw this appeal.

7.

It is ordered accordingly. The appeal is dismissed as withdrawn. (P.R. Ramachandra Menon) (Manindra Mohan Shrivastava)

CHIEF JUSTICE JUDGE Anu

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