Commissioner Of Income Tax-Central, Jaipur v. Ashok Kumar Govadia

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JODHPUR ORDER Commissioner of Income Tax-Central, JaipurVs.Ashok Kumar Govadia D.B.INCOME TAX APPEAL NO.82/2010 ... Date of Order :: 4[th] August 2010. PRESENT HON'BLE THE CHIEF JUSTICE MR. JAGDISH BHALLAHON'BLE MR. JUSTICE DINESH MAHESHWARI Mr.K.K.Bissa for the appellant. <><><> BY THE COURT: This appeal under Section 260-A of the Income Tax Act,1961 ['the Act'] by the appellant (Revenue) is directed againstthe judgment and order dated 11.03.2010 passed by theIncome Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ['theTribunal'] in IT(SS)A No.05/JU/2006 for the block periodrelevant for the assessment years 1997-1998 to 2002-2003and upto 28.05.2002. Put in brief, the relevant background aspects of thematter are that the respondent assessee is an individual anda partner of the firm M/s. Govadia Jewellers. A search andseizure action was carried out under Section 132 of the Act on28.05.2002 at the residential and business premises of theGovadia Group of which, the assessee is said to be a member. A notice under Section 158BC of the Act was issuedto the assessee who filed a return on 10.12.2002 declaringincome of Rs.4,00,000/- for the block period assessmentyears 1997-1998 to 2002-2003 and upto 28.05.2002. Theassessment proceedings were completed by the AsssessingOfficer ('the AO') by the order dated 20.05.2004 whiledetermining total undisclosed income of the assessee atRs.16,73,650/-. Aggrieved by the aforesaid order dated 20.05.2004, theassessee preferred an appeal that was considered and partlyallowed by the Commissioner of Income Tax (Appeals),Udaipur ['the CIT (A)'] by the order dated 18.10.2005 whereinthe learned CIT (A) granted relief to the assessee on variousscores, as noticed infra. Aggrieved by the order dated 18.10.2005 so passed bythe CIT (A), the appellant (Revenue) filed an appeal before theTribunal that has been partly allowed by the impugned orderdated 11.03.2010. In the appeal before the Tribunal, theappellant (Revenue) raised different grounds, which havebeen summarised at the outset by the Tribunal and arereproduced hereunder for ready reference:- “1. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.25101/- made on account ofunexplained cash found from his residence as perannexure-C-1 to Panchnama dated 28/05/2002. 2. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.505552/- made on account ofunexplained investment in construction of residentialhouse. 3.On the facts and in the circumstances of thiscase, the learned CIT (A), Udaipur has erred indeleting the addition of Rs.244447/- made in accountof unexplained expenditure incurred for houseexpenses of the assessee. 4. On the facts and the circumstances of this case,the learned CIT (A) Udaipur, has erred in deleting theaddition of Rs.75000/- out of total addition ofRs.100000/- made on account of unaccountedexpenditure incurred on Ring Ceremony. 5. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.100000/- made on account ofunaccounted expenditure incurred on celebration of25[th] marriage anniversary. 6. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.74800/- made on account ofunexplained deposits in bank account of silver jubleecelebration. 7. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.168000/- made on account ofunaccounted expenditure incurred in purchase ofvaluable items. 5. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.100000/- made on account ofunaccounted expenditure incurred on celebration of25[th] marriage anniversary. 6. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.74800/- made on account ofunexplained deposits in bank account of silver jubleecelebration. 7. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.168000/- made on account ofunaccounted expenditure incurred in purchase ofvaluable items. 8. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.132000/- and Rs.88746/- made onaccount unexplained investment in FDRs and interestthereon respectively. 9. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.30000/- and Rs.5000/- made onaccount unexplained investment in IVPs and interestthereon respectively. 10. On the facts and the circumstances of this case,the learned CIT (A), Udaipur has erred in deleting theaddition of Rs.20000/- made on Protective basis onaccount unexplained investment in renovation ofshop. 11. The learned CIT (A) has erred in law and factswhile deleting the surcharge levied as the FinanceAct clearly laid down that the surcharge is leviableeon rate prescribed U/s 113 of the Act, Section 113prescribes rate for block period only. The rates forblock period would be governed by charging section4 of the act, which says that rate prescribed underCentral Act would be applicable to income ofprevious year.” So far as the grounds Nos.1, 4, 6, 8 and 9 aforesaidrelating to the alleged unexplained items of cash, expenditure,deposit and investments are concerned, the Tribunal foundthe learned CIT (A) justified in accepting the explanations ofthe assessee with reference to the material on record and thecustoms of the family; and found no reason to interfere. So far as the ground No.2 aforesaid relating toinvestment in construction of residential house is concerned,the Tribunal found no reason to interfere with the discountallowed at 10% towards self supervision charges but then,considered it proper to modify the order passed by the CIT (A)in relation to the rebate for the difference between CPWDrates and PWD rates; and, instead of 20%, allowed this rebateat 15%. The Tribunal also found some incongruity in thestatement of the assessee regarding the amount alreadybrought to tax on account of unexplained investment in thehouse property by himself or as contribution by other membersof family; and directed the Assessing Officer to carry out thenecessary verification. In relation to this ground, the Tribunalsaid,- “6........The report of DVO elucidating cost ofconstruction at Rs.7,94,600/- was brought to thenotice of the assessee and put to him for makingcomments. The assessee, however, made generalcomments and the ld. CIT (A) finding that the DVOallowed only 7.5% discount towards self supervisioncharges, directed him to allow discount for 10%.Allowing of 10% discount, however, appears to beproper and in conformity with the practice prevalent atvarious benches in similar cases which the ld. CIT (A)is found to have stated in his order. The discount soallowed at 10% as against 7.5% allowed by the DVO,does not call for any interference. As regards allowing “6........The report of DVO elucidating cost ofconstruction at Rs.7,94,600/- was brought to thenotice of the assessee and put to him for makingcomments. The assessee, however, made generalcomments and the ld. CIT (A) finding that the DVOallowed only 7.5% discount towards self supervisioncharges, directed him to allow discount for 10%.Allowing of 10% discount, however, appears to beproper and in conformity with the practice prevalent atvarious benches in similar cases which the ld. CIT (A)is found to have stated in his order. The discount soallowed at 10% as against 7.5% allowed by the DVO,does not call for any interference. As regards allowing rebate of 20% being difference between CPWD rateand PWD rates, the Hon'ble High Court of Judicatureof Rajasthan has already expressed a view that PWDrates have to be allowed for the properties constructedin the State of Rajasthan. A reference to this may bemade of the decision in the case of CIT vs. Raj Kumar(1990) 182 ITR 436 (All.). It however, remains thatplacing of rates of PWD is a question of fact whichdepends on various factors such as location ofproperty, quality of construction and the material usedetc. The ld. CIT (A), however, allowed a generalrebate of 20% which appears to have excessive andirrelevant to the material on record. We, therefore,consider it proper to allow rebate of 15% for thedifference between CPWD rates and PWD rates. Theadjusted cost worked out after allowing the aforesaidadjustment shall be taken as cost of construction ofthe property. The expenditure incurred to the extentof Rs.4,49,138/- is found to have been met out ofknown sources by appreciating the facts on recordbefore the ld. CIT (A), as against Rs.2,89,048/-accepted by the Assessing Officer. The action of theld. CIT (A) in that respect does not call for anyinterference. In this view of the matter, the differencebetween adjusted cost worked out as aforesaid on thebasis of DVO's report and the cost so estimated atRs.4,49,138/- from the known sources shall be theamount of unexplained investment that has to betaken as undisclosed income. The assessee,however, has claimed that an amount of Rs.200000/-has already been offered for taxation as hisundisclosed income covering the investment inconstruction of property, unexplained gold and silverjewellery, cash etc. That besides, we also find awhisper that the amount of Rs.1,50,000/- is stated tohave been stated out of undisclosed income of thefamily members. These statements appear to becontradictory. The Assessing Officer shall verify thisfact as to how much amount has factually be broughtto tax as undisclosed income on account ofunexplained investment in the house property in hishands or as contribution by other family members.Any amount as such that is found to have been taxedas undisclosed income shall further be reduced fromthe undisclosed investment worked out as aforesaidand balance thereof shall also be brought to tax asundisclosed income for the block period. TheAssessing Officer, however, shall ensure thatunexplained investment, if any, on this account, is nottaxed twice, i.e., once as declaration of undisclosedincome by the assessee in his return and again asdifference between the cost worked out onappreciation of evidence and cost/investment founddisclosed from known sources and met out from thedeclared sources. Accordingly, the order of the ld.CIT (A) stands modified for sustaining the addition asundisclosed income in construction of house.” In ground No.3 relating to addition on low house holdwithdrawals, though the Tribunal found CIT (A) not justified indeleting whole of the addition but at the same time, found theAO's estimate on undisclosed income to be excessive andunreasonable; and proceeded to work out the annual drawingson the basis of the facts on record so as to reach to the figureof undisclosed income; and modified the order of CIT (A)accordingly. In ground No.3 relating to addition on low house holdwithdrawals, though the Tribunal found CIT (A) not justified indeleting whole of the addition but at the same time, found theAO's estimate on undisclosed income to be excessive andunreasonable; and proceeded to work out the annual drawingson the basis of the facts on record so as to reach to the figureof undisclosed income; and modified the order of CIT (A)accordingly. The Tribunal, of course, allowed ground No. 5 as raisedin the appeal relating to expenditure on 25[th] marriageanniversary celebrations but not the ground No.6 regardingdeletion of addition of Rs.74,800/- out of cash gift received inthose celebrations. In relation to ground No.7 pertaining to unaccountedexpenditure on valuable items, the Tribunal partly acceptedthe submissions of the appellant (Revenue) and assessed theadjusted value of the items in question at Rs.1,28,000/- asagainst that assessed by the Assessing Officer atRs.1,68,000/-. However, the Tribunal found the part ofsubmissions of assessee towards the amount alreadydisclosed requiring verification by the Assessing Officer and said,- “16........Taking all the facts into consideration, theadjusted value of household items works out toRs.1,28,000/- as against Rs.1,68,000/- adopted by theAssessing Officer. Since the amount of Rs.26,683/- isfound available for making investment in householdgoods, the same also is found to have fairly beenaccepted for financing the aforesaid items. The rest ofthe amount needs to be treated as unexplained. Theassessee's case, however, is that he has alreadydisclosed an income of Rs.35,000/- on account ofadjusted value of household items works out toRs.1,28,000/- as against Rs.1,68,000/- adopted by theAssessing Officer. Since the amount of Rs.26,683/- isfound available for making investment in householdgoods, the same also is found to have fairly beenaccepted for financing the aforesaid items. The rest ofthe amount needs to be treated as unexplained. Theassessee's case, however, is that he has alreadydisclosed an income of Rs.35,000/- on account of unexplained investment in such assets. The assessingofficer needs to verify this fact and allow credit thereoffor sustaining the addition as undisclosed income onaccount of unexplained investment. The order of theld. CIT (A), accordingly, stands modified. The groundraised in appeal stands partly allowed.” In relation to ground No.10 pertaining to unexplained investment in renovation of shop also, the Tribunal found the matter requiring reconsideration by the AO and said,- “23. We have heard the parties and have perusedthe material on record. The assessee's case beforethe authorities below is that in the return ofundisclosed income filed for the block period, therespondent-assessee himself has declaredRs.200000/- as his undisclosed income on accountof investment in renovation of shop. That being so,the ld. CIT (A) could not have deleted the income sodeclared though stated to have been taxed by theAssessing Officer on protective basis. It, however,sounds reasonable that the same income cannot betaxed twice in the hands of the assessee – once asper disclosure of undisclosed income made in hisreturn by him and again on protective basis. Thisfact needs to be verified by the Assessing Officer.We, therefore, restore the matter back to theAssessing Officer, who shall ensure inclusion of Rs.2 lacs as assessee's undisclosed income on thebasis of declaration made by him in the return ofincome and shall decide the issue accordingly.” The Tribunal further proceeded to allow ground No. 11with reference to the decision of the Hon'ble Supreme Court inthe case of CIT vs. Suresh N.Gupta: (2008) 214 CTR 274. The Tribunal further proceeded to allow ground No. 11with reference to the decision of the Hon'ble Supreme Court inthe case of CIT vs. Suresh N.Gupta: (2008) 214 CTR 274. The appellant (Revenue) seeks to question the order sopassed by the Tribunal particularly in relation to the groundsthat have not been allowed or that have been decided partlyagainst it by the Tribunal and substantial questions of lawhave been suggested in that regard. Having heard the learned counsel for the appellant andhaving perused the material placed on record, we are clearlyof opinion that none of the grounds suggested could be said to be leading to any substantial question of law worthconsideration in this case. Hereinabove, we have referred to all the grounds thatwere raised before the Tribunal and the summary of thefindings of the Tribunal. In our considered opinion, everyaspect sought to be questioned in this appeal essentiallyrelates to the question of fact. The Tribunal in its considereddecision has dealt with each and every item and ground inmeticulous details; and we find absolutely no reason to showinterference in this case at the instance of the appellant(Revenue) particularly when the matter relates only to thequestions of fact and no case of perversity is made out. In relation to the grounds on which there are concurrentfindings by the CIT (A) and the Tribunal, there does not ariseany question of law what to say of a substantial one. In relationto some other items like expenditure on household, theTribunal has consciously modified the order of CIT (A) afterproper appreciation of the record. In relation to some of theother grounds like unexplained investments in construction ofhouse and renovation of shop and valuable items, the Tribunalhas consciously taken note of all the facts and after recordingnecessary findings, has remitted the issues to the AssessingOfficer for necessary enquiry and findings. The matters thereinalso relate to the questions of fact. The contention sought to be urged in this appeal whilequestioning the rebate of 15% for conversion from CPWD toPWD rates is worthless. In fact, the CIT (A) allowed such rebate at 20% that has been reduced by the Tribunal to 15%.The CPWD rates are neither of unquestionable standard norare having statutory character so that the assessment has tobe made on their basis alone. On the contrary, the Tribunalhas taken conscious note of the earlier decisions to the effectthat PWD rates have to be allowed for the purpose ofconstruction in the State of Rajasthan. On the rebate asallowed by the Tribunal for the purpose of conversion to PWDrates from the estimate made on the basis of CPWD rates, nosubstantial question of law arises for consideration. Then, the order remitting some of the relevant questionsfor enquiry does not finally decide the rights of the parties. Ithas only afforded an opportunity to the assessee to place itscase before the AO and to get the issues tried in accordancewith law. It cannot be disputed that the Tribunal whileexercising the appellate powers has the jurisdiction to remitthe question/s to AO or to the First Appellate Authority as itmay deem fit and proper depending upon the facts of eachcase. In such circumstances , if in the facts of this case, theTribunal formed an opinion to remit some of the questions toAO for re-determination, no fault can be found in its approach. No substantial question of law is made out in this casewithin the meaning of Section 260-A of the Act. The appeal fails and is, accordingly, dismissed. (DINESH MAHESHWARI),J. (JAGDISH BHALLA),CJ.