RAMESHWAR LAL SONI vs. C.I.T.II,JODHPUR

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CCOIT/1/2010HC RajasthanRJHC01015173200807 March 2017Author: PUSHPENDRA SINGH BHATI4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, taking into consideration the judgments of the Division Bench of its own court in CIT, Jaipur-II vs. M/s. Somani Industries and the Gujarat High Court in Chetnaben J Shah vs. Income Tax Officer, held that the limitation period starts from January 3, 1997, and the assessment made beyond one year is barred by limitation. The Court found that the contention regarding limitation, being a mixed question of law and fact, could be raised at any time, and it was not necessary for it to have been raised before the third member. Consequently, the appeal filed by the Revenue was dismissed, and the issue of limitation was answered in favor of the assessee in the cross-objection and against the department. The operative direction was the dismissal of the Revenue's appeal.

What were the facts?

The appellant, Commissioner of Income Tax-II, Jodhpur, challenged an order of the Income Tax Appellate Tribunal (ITAT) that had allowed an appeal filed by the assessee, Shri Rameshwar Lal Soni, and dismissed the Revenue's appeal against the CIT(A)'s order. The ITAT's decision was based on a limitation issue concerning a search operation conducted on January 3, 1997. The Revenue argued that additions made by the Assessing Officer (AO) were based on documentary evidence and declarations made by the assessee during the search, which held evidentiary value. The Revenue also contended that financial statements produced by the assessee after the search were self-serving and that the benefit of telescoping/set-off was wrongly allowed. The High Court admitted the appeal and framed substantial questions of law.

What were the issues?

1. Whether, on the facts and in the circumstances, the ITAT was justified in dismissing the Revenue's appeal by ignoring that the AO's additions were based on documentary evidence and declarations made by the assessee under section 132(4) of the Income Tax Act, 1961, which have evidentiary value? (Question of law) 2. Whether, on the facts and in the circumstances, the ITAT was justified in relying on post-search financial statements produced by the assessee, considering them to be self-serving documents? (Question of law) 3. Whether, on the facts and in the circumstances, the ITAT was justified in allowing the benefit of telescoping/set-off without properly appreciating the facts and applicable law? (Question of law) Assessee's contentions: The matter is covered by the decision of the Division Bench of this Court in CIT, Jaipur-II vs. M/s. Somani Industries and the Gujarat High Court in Chetnaben J Shah vs. Income Tax Officer, which held that a one-year limitation period applies, making assessments beyond that period barred by limitation. The assessee also relied on CIT vs. Mangilal Rameshwar Lal for the cross-objection. Revenue's contentions: The third member of the ITAT erred in deciding the matter on the ground of limitation under Section 158 BD, as the appeal before the CIT(A) was not competent. The Revenue contended that a two-year limitation period should apply, not one year. It was argued that the contention regarding limitation should not have been allowed before the third member as it was not raised before the CIT(A). The Revenue argued that the assessment order had attained finality.

Which sections of the Income-tax Act were involved?

Section 132(4),Section 158 BD

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 34 / 2007 Commissioner of Income Tax-II, Aaykar Bhawan, Jodhpur. ----Appellant Versus Shri Rameshwar Lal Soni S/o Late Sh. Mangi Lal Soni, 22-A, Anand Mangal, Hanuwant Vihar Colony, Rai-Ka-Bagh, Jodhpur. ----Respondent Connected With D.B.CIV.CROS.OBJ.IT APP No. 1 / 2010 Shri Rameshwar Lal Soni S/o Late Shri Mangilal Soni, 22-A, Anand Mangal, Hanuwant Vihar Colony, Rai Ka Bagh, Jodhpur. ----Petitioner Versus Commissioner of Income Tax-II, Aaykar Bhawan, Jodhpur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sunil Bhandari for the Department. For Respondent(s) : Mr. Anjay Kothari for the Assessee. _____________________________________________________ HON'BLE THE ACTING CHIEF JUSTICE HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

Order 07/03/2017

1.

By way of this appeal, the appellant has challenged the impugned judgment and order of the Tribunal allowing the appeal preferred by the assessee and dismissing the appeal preferred by the Department against the order of CIT(A).

2.

This Court while admitting the appeal on 25.07.2007 framed the following substantial question of law:- (Uploaded on 23/06/2023 at 11:41:46 AM) (Downloaded on 28/10/2026 at 12:26:32 AM) (2 of 4) [ITA-34/2007]

(a) Whether on the facts and in the circumstances of the case, the learned ITAT was legally justified in dismissing the appeal filed by the Revenue ignoring the fact that the additions made by the AO were based on the documentary evidence and declaration made by the assessee during the course of search operation within the meaning of section 132(4) of the Act which were of utmost evidentiary value? (b) Whether on the facts and in the circumstances of the case, the learned ITAT was legally justified in accepting and relying on the receipt and payment account and financial statement etc. produced by the assessee which were prepared after the search operations and as such they were nothing but self- serving documents? (c) Whether on the facts and in the circumstances of the case, the learned ITAT was legally justified in allowing benefit of telescoping/set off without properly taking into account the facts and circumstances of the case and appreciating the law applicable?

3.

Counsel for the appellant has specifically contended that the third member while deciding the matter on the ground of limitation under Section 158 BD has committed serious error in appeal before the CIT(A) itself was not competent. In that view of the matter, the matter is required to be remitted back to the Tribunal where both the sides should be allowed to raise all (Uploaded on 23/06/2023 at 11:41:46 AM) (Downloaded on 28/10/2026 at 12:26:32 AM) (3 of 4) [ITA-34/2007]

contentions and the matter may be remitted back to the tribunal.

4.

It is further contended that in the considered opinion of Department, limitation of two years would apply and not of one year. It is further contended that in view of such contention was not raised before the CIT(A), such contention ought not to have been allowed before the third member for limitation. Therefore, the contention that the search which was made 03.01.1997, the amended provision will apply and appeal will be competent before the Tribunal, which he has not preferred and when he has approached the tribunal, the case became time barred and therefore, the assessment order has attained finality.

5.

Counsel for the respondent has contended that the matter is squarely covered by the decision of the Division Bench of this Court in Income Tax Appeal No.49/2003 (Commissioner of Income Tax, Jaipur-II, Jaipur Vs. M/s.Somani Industries, A-85, Road NO.9, VKI Area, Jaipur decided on 03.01.2017) (Hon’ble the Acting Chief Justice Mr. K.S. Jhaveri) was party and (Uploaded on 23/06/2023 at 11:41:46 AM) (Downloaded on 28/10/2026 at 12:26:32 AM) (4 of 4) [ITA-34/2007]

appellant.

7.

Taking into consideration the aforesaid two judgments of this Court as well as Gujarat High Court, we are of the considered opinion that the limitation will start from 03.01.1997 and assessment is beyond one year. In that view of the matter, the contention that the appeal is required to be preferred before the Tribunal and such contention was not raised before the third member and limitation issue is a mixed question of law and facts can be raised any time.

8.

In that view of the matter, the appeal deserves to be and is hereby dismissed. The issue of limitation is answered in favour of the assessee in the cross objection and against the department. (DR. PUSHPENDRA SINGH BHATI)J. (K.S. JHAVERI)ACTING C.J. Skant/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 23/06/2023 at 11:41:46 AM) (Downloaded on 28/10/2026 at 12:26:32 AM)

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