DEEPAK G PARASWANI vs. THE COMMISSIONER OF INCOME TAX AURANGABAD AND ANR

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TA/5/2010HC BombayHCBM03031204200917 July 2012Author: HON'BLE SHRI JUSTICE B.P. DHARMADHIKARI,HON'BLE SHRI JUSTICE SUNIL P. DESHMUKH4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessees' apprehension that the ITAT had prejudicially sealed certain aspects was misconceived. The Court found that the ITAT had merely reproduced the contentions as part of its appreciation process. Crucially, the ITAT had specifically recorded that the CIT(A) had decided the issue on a legal ground rather than merits and had erred in not properly considering the retrospective effect of the amendment to Section 142A. Consequently, the ITAT had remitted the matter back to the CIT(A) for a de novo hearing. The High Court concluded that this direction by the ITAT meant all contentions available to the assessees were still open to be examined by the CIT(A). Therefore, no substantial question of law arose for consideration by the High Court.

What were the facts?

These appeals by the assessees, Shri Shankar G. Paraswani and Shri Deepak G. Paraswani, challenge a common order of the Income Tax Appellate Tribunal (ITAT). The dispute concerns the valuation of immoveable property in which both assessees hold a 50% share. The ITAT had disposed of appeals filed by the Revenue. The assessees' primary contention was that the alleged unexplained investment did not pertain to the relevant assessment years. They argued that the Commissioner of Income Tax (Appeals) [CIT(A)] had found the expenditure to be incurred prior to assessment year 2001-02, making the reference to the Director of Valuation (DVO) and the retrospective amendment of Section 142A of the Income Tax Act, 1961, irrelevant.

What were the issues?

1. Whether the ITAT erred in its appreciation of the facts and legal grounds concerning the retrospective amendment of Section 142A of the Income Tax Act, 1961, and its applicability to the assessment years in question, thereby prejudicing the assessee's right to a proper hearing? (Question of law and fact, concerning Section 142A). Assessee's Contention: The assessees argued that the expenditure was incurred prior to assessment year 2001-02, rendering the reference to the DVO and the retrospective amendment of Section 142A irrelevant. They also contended that the ITAT's order sealed certain aspects that should have remained open for them. Revenue's Contention: The Revenue contended that there was no substantial question of law involved in the appeals.

Which sections of the Income-tax Act were involved?

Section 142A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
(1) Tax Appeal Nos. 4 & 5 of 2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, AURANGABAD BENCH, AT AURANGABAD. Tax Appeal No. 4 of 2010 With Shri Shankar G. Paraswani, .. Appellant C/o. Shriman Shrimati Readymade, (Original Assessee) Tilak Path, Aurangabad, Maharashtra. versus 1. The Commissioner of Income Tax, Aurangabad. .. Respondents 2. Asstt. Commissioner of Income Tax, (Original Revenue) Circle-2, Aurangabad. ....................... Tax Appeal No. 5 of 2010 Shri Deepak G. Paraswani, .. Appellant C/o. Ding Dong, (Original Assessee) Tilak Path, Aurangabad, Maharashtra. versus 1. The Commissioner of Income Tax, Aurangabad. .. Respondents 2. Asstt. Commissioner of Income Tax, (Original Revenue) Circle-2, Aurangabad. ........................ (2) Tax Appeal Nos. 4 & 5 of 2010 Mr. R.R. Chandak, Advocate, for appellants in both appeals. Mr. Alok Sharma, Assistant Solicitor General, for respondent nos.1 and 2 in both appeals. ************* CORAM : B.P. DHARMADHIKARI & SUNIL P. DESHMUKH, JJ. DATE : 17TH JULY 2012

COURT'S ORDER (Per B.P. Dharmadhikari, J.) :

1.

Heard Adv. Mr. R.R. Chandak, for the appellants, and learned ASGI Mr. Alok Sharma, for the respondents.

2.

The issue is about the validity of the valuation of immoveable property in which both appellants have 50 % share. The Income Tax Appellate Tribunal [For short, "ITAT"] has disposed of the appeals of Revenue by common order. We, therefore, also propose to pass common order.

3.

Effort of Adv. Mr. Chandak is, to demonstrate that alleged unexplained investment, if any, did not pertain to assessment years relevant before the authorities in the present matter. He has argued that the Commissioner of Income Tax (Appeals) [For short, "CIT (Appeals)"] has recorded a finding that, that expenditure was incurred prior to assessment

(3) Tax Appeal Nos. 4 & 5 of 2010 year 2001-02. In this view of the matter, according to him, reference to DVO was uncalled for and hence, reference to judgment in the case of Smt. Amiya Bala Paul Vs. CIT, reported at [2003] 262 ITR 407 (S.C.), is also not necessary. According to him, even retrospective amendment of Section 142A of Income Tax Act, 1961, is not relevant.

4.

Learned ASGI Mr. Alok Sharma has attempted to show that there is no substantial question of law involved.

5.

We have perused the order passed by the ITAT. The ITAT has in paragraph 2 of the order, noted that amendment to Section 142A by Finance No.2 Act, 2004 has been brought into force from 15-11-1972. In this background, contention of present appellant, that they needed to be given an opportunity and that the assessment was completed before 30-9-2004, are also noted. The ITAT has found the contention of assessee's representative on applicability of proviso to Section 142A of Income Tax Act, without any substance. Showing these observations, Adv. Mr. Chandak contends that, thus, ITAT has placed seal upon certain aspects which are open to present assessee otherwise.

6.

After perusal of entire order of ITAT, we find above submission misconceived. The ITAT has reproduced the contentions and dealt with the same only as a part of its process of appreciation. However, it has specifically recorded that CIT (Appeals) had proceeded to decide the issue mainly on legal ground and not on merits and there was error in not properly considering retrospective effect of amendment in Section 142A of Income Tax Act. Because of this, it has placed matter back before CIT

(4) Tax Appeal Nos. 4 & 5 of 2010 (Appeals) "for de novo hearing".

7.

This later part of judgment of ITAT clearly shows that apprehensions communicated to this Court by Adv. Mr. Chandak are without any merit. All contentions available to present appellants are still open and can be looked into by CIT (Appeals).

8.

As ITAT has placed the matter back before CIT (Appeals), we do not find any substantial question of law arising. Appeals are accordingly dismissed. No costs.

(SUNIL P. DESHMUKH) (B.P. DHARMADHIKARI) JUDGE JUDGE ......................... bgp/ta4etc

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