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

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JODHPUR :: ORDER:: Commissioner of Income Tax-Central, JaipurVs.Pawan Kumar Govadia D.B.INCOME TAX APPEAL NO.83/2010 ... 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 10.03.2010 passed by theIncome Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ['theTribunal'] in IT(SS)A No.06/JU/2006 for the block periodrelevant for the assessment years 1997-1998 to 2002-2003 andupto 28.05.2002. Put in brief, the relevant background aspects of thematter are that the respondent assessee is an individual and apartner of the firm M/s. Dhanraj Govadia & Sons. 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 issued to theassessee who filed a return on 10.12.2002 declaringundisclosed income of Rs.15,50,000/- for the block periodassessment years 1997-1998 to 2002-2003 and upto28.05.2002. The assessment proceedings were completed bythe Asssessing Officer ('the AO') by the order dated 20.05.2004while determining total undisclosed income of the assessee atRs.54,83,230/- 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 wherein thelearned 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 10.03.2010. In the appeal before the Tribunal, theappellant (Revenue) raised different grounds, which have beensummarised at the outset by the Tribunal and are reproduced 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. 86,230/- made on account ofunexplained cash found from his residence as perannexure-C to Panchnama dated 28/05/2002. 2.On the facts and in the circumstance of thiscase, the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs.210318/- made on account ofunexplained cash found from common tijori. 3.On the facts and in the circumstances of thiscase, the learned CIT (A), Udaipur has erred indeleting the addition of Rs.2,93,860/- made in account of unexplained investment in gold jewellery anddiamond found at the residence of the assessee. 4. On the facts and in the circumstance of this case,the Ld. CIT (A) Udaipur, has erred in deleting theaddition of Rs.1639107/- made on account ofunexplained investment in gold jewellery found fromstrong room. 5. On the facts and the circumstance of this case, theLd. CIT (A), Udaipur has erred in deleting the additionof Rs.2,31,468/- made on account of unexplainedinvestment in silver ornaments found from strongroom. 6. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs.3,57,731/- made on account ofunexplained expenditure incurred for householdexpenses of the assessee. 7. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs.7,88,442/- made on account ofunaccounted expenditure incurred on marriage ofassessee's daughter. 5. On the facts and the circumstance of this case, theLd. CIT (A), Udaipur has erred in deleting the additionof Rs.2,31,468/- made on account of unexplainedinvestment in silver ornaments found from strongroom. 6. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs.3,57,731/- made on account ofunexplained expenditure incurred for householdexpenses of the assessee. 7. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs.7,88,442/- made on account ofunaccounted expenditure incurred on marriage ofassessee's daughter. 8. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs. 1,67,290 made on account ofunexplainedinvestmentinacquiringofhousehold/valuable items found during the course ofsearch at the residence of the assessee. 9. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs. 1,50,731/- and Rs. 83,100/- made onaccount of unexplained investment in acquiring ofFDRs and accrued interest thereon respectively. 10. On the facts and in the circumstance of this case,the Ld. CIT (A), Udaipur has erred in deleting theaddition of Rs. 14,34,650/- made on account ofunexplained investment in construction of shops andresidential house. 11. Ld. CIT (A) has erred in law and facts whiledeleting the surcharge levied as the finance Act clearlylaid down that the surcharge is leviable on rateprescribed U/S 113 of the Act. Section 113 prescribedrate for block period only. The rates for block periodwould be governed by charging section 4 of the Act,which says that rate prescribed under central Actwould be applicable to income of previous year.” In relation to grounds Nos.1 and 2 relating tounexplained cash found respectively at the residence and in common Tijori, the Tribunal, after examining various aspects ofthe matter, found it justified to remit the matter to the AO for proper adjudication. The Tribunal said,- 13.....We, therefore, consider it proper and reasonableto remit the matter back to the Assessing Officer toconsider the explanation of the assessee in rightperspective and if need be, take material as may beadduced on record by the assessee and examine theclaim on merits and in accordance with law. He shall alsoallow credit of reasonable savings including pin money ofvarious family members and Stridhan with the ladies of thefamily etc. while adjudicating the issue in remandproceedings. He shall also ensure that the cash availablewith partnership firm as per their books of account andwith various other family members that is being claimedforming part of the aforesaid amount of Rs.3,00,161/- isnot claimed to have been utilized for explaining theformation of other assets found as a result of search orotherwise. The Assessing Officer shall also ensure that thepart of the undisclosed income of Rs.8,16,000/- fallen tothe share of the assessee declared in the return ofundisclosed income, is not brought to tax again on accountof unexplained cash to that extent. Ground No.1 & 2 inappeal stand answered accordingly.” In relation to grounds Nos.3,4 & 5 relating to differentjewelleries/ornaments, the Tribunal found procedural lapses onthe part of CIT (A) while accepting the contention of theassessee and again considered it proper to restore the matterto the file of AO for proper verification and decision. TheTribunal said,- In relation to grounds Nos.3,4 & 5 relating to differentjewelleries/ornaments, the Tribunal found procedural lapses onthe part of CIT (A) while accepting the contention of theassessee and again considered it proper to restore the matterto the file of AO for proper verification and decision. TheTribunal said,- “9.The ld. CIT (A) also did not consider theapplicability of section 69B for unexplainedinvestment found and assessable as undisclosedincome under Chapter XIV-B, but the surrender madeby various family members at the dictates of theirhead of the family and in order to maintain harmony inthe family, stood accepted even though suchsurrendered amount was not, in fact, the income thatcould be assessed as their undisclosed income intheir hands but was subsequent amount ofappropriation that at best could be taken asapplication of income of those persons, who in fact,have earned and as such, such unexplainedinvestment could be deemed to be their undisclosedincome. There are, thus, serious procedural lapsescommitted by the ld. CIT (A) in accepting thecorrectness of the annexure 5&6 on the basis of which additions have been deleted whereas correctand complete facts in that regard were neither laid onrecord nor enquired by him. We, therefore, consider itproper and justified to set aside his decision withrespect to gold ornaments and likewise for silverornaments as well and restore the matter to the file ofAssessing Officer so that the assessee has anopportunity to put up his case before him alongwithdocumentary evidence to the satisfaction of theAssessing Officer, who after making verification offacts shall reach a conclusion in accordance with law.Accordingly, this issue is restored to the AssessingOfficer and the respective grounds Nos. 3, 4 & 5raised by revenue in appeal, stand allowed forstatistical purposes only.” In ground No.6 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 relation to ground No.7 pertaining to unaccountedexpenditure incurred on marriage of the assessee's daughter,the Tribunal modified the orders of the subordinate authoritiesand sustained addition to the tune of Rs.2,25,000/- withreference to the statement of assessee and other co-relatedevidence. In relation to ground No.8 pertaining to unaccountedexpenditure on valuable items, the Tribunal did not agree withthe total deletion ordered by the CIT (A) but considered itproper to remit the matter to AO for necessary factual enquiryas to whom such assets belong to and for ensuring againstdouble taxation. The Tribunal while making observations on the safeguards for the Department and for the concerned persons said,- In relation to ground No.7 pertaining to unaccountedexpenditure incurred on marriage of the assessee's daughter,the Tribunal modified the orders of the subordinate authoritiesand sustained addition to the tune of Rs.2,25,000/- withreference to the statement of assessee and other co-relatedevidence. In relation to ground No.8 pertaining to unaccountedexpenditure on valuable items, the Tribunal did not agree withthe total deletion ordered by the CIT (A) but considered itproper to remit the matter to AO for necessary factual enquiryas to whom such assets belong to and for ensuring againstdouble taxation. The Tribunal while making observations on the safeguards for the Department and for the concerned persons said,- “20.We have heard the parties and perused theentire material on record. The ld. CIT (A) accepted thedisclosure of undisclosed income on the basis of suomoto allocation made by various family members inthe return of undisclosed income filed for the blockperiod. This neither factually nor legally is correct inview of the fact that the undisclosed income onaccount of household items/ valuables has to beascertained in the hands of the individual assessee towhom such household items belong. The undisclosedincome so determined and thereafter allocation ofsuch undisclosed income in any other hand would onlybe application of that income. We, therefore, set asidethe order of ld. CIT(A) and remit the matter back to theAssessing Officer so that undisclosed incomedetermined on the basis of factual finding of the factsas to whom such assets belong is first done andthereafter bring undisclosed income to tax. He shallensure that any amount forming part of suchundisclosed income determined shall not be addedtwice. It, however, transpires that some of theindividuals in this group have declared theirundisclosed income on the basis of allocation made atthe dictates or upon some private understandingbetween the family members and did not consider thefact that the undisclosed income so declared is neithertheir earned income nor deemed income. If their caseis that, they committed a mistake in making wrongdisclosure to that extent, it shall be open for them toget the mistake corrected from the stage theycommitted such mistake in the light of judgment in thecase of Ramesh Chandra & Co. vs. CIT(1987) 168 ITR375 (Bom.).” In relation to ground No.9 pertaining to FDRs andinterest thereon, the Tribunal found the matter requiring no interference while saying,- “23.We have heard the parties with reference tothe material on record. The assessee had offeredexplanation which was capable of examination.The Assessing Officer, however, failed to examinethe explanation of the assessee with respect tothe FDRs. The ld.CIT(A) examined the source andwas satisfied about the explanation of theassessee. He, thus, deleted the addition onappreciation of facts, which needs no interference.Accordingly, ground raised in appeal by theRevenue stand rejected.” In relation to ground No.10 pertaining to unexplainedinvestment in construction of shops and residential house, theTribunal found the order of CIT (A) silent on the materialaspects and in the totality of circumstances, considered itproper to remit the matter to the AO while observing,- “23.We have heard the parties with reference tothe material on record. The assessee had offeredexplanation which was capable of examination.The Assessing Officer, however, failed to examinethe explanation of the assessee with respect tothe FDRs. The ld.CIT(A) examined the source andwas satisfied about the explanation of theassessee. He, thus, deleted the addition onappreciation of facts, which needs no interference.Accordingly, ground raised in appeal by theRevenue stand rejected.” In relation to ground No.10 pertaining to unexplainedinvestment in construction of shops and residential house, theTribunal found the order of CIT (A) silent on the materialaspects and in the totality of circumstances, considered itproper to remit the matter to the AO while observing,- “27.We have heard the parties and haveperused the material on record. The ld. CIT(A) madeno reference to any material from which it could bediscerned that the approved valuer estimated the costof construction of the assessee's residential propertyin a harried and haphazard manner and made noverification of the actual cost of material and otherrelevant evidence. The ld. CIT(A) also did not makeany reference to such law that permits variation of10% in the cost of construction claimed and estimatedby the registered valuer. Any discount that can begiven is on the basis of appreciation of facts, vis a vis,type of construction, quality of material used and thearea in which property is constructed and otherrelevant factors relating to the actual cost ofconstruction. The order of the ld. CIT(A), however, issilent on all these aspects. The ld. CIT(A) also did notindicate as to how one property that came intoconsideration of the ld. Assessing Officer is to betaken as two properties. No municipal number orproperty identification as such has been spelt out inhis order before recording a finding that there are twoproperties and not one for which addition of Rs.14,34,950/- has been made as undisclosed incomeon account of unexplained investment in constructionof property for the period as under forming part of theblock period. In any event, the addition asunexplained investment in the property cannot bemade dehors material and it is also correct that theAssessing Officer cannot estimate the cost ofconstruction of the properties as he is not an expertfor making comment on technical matters in view ofthe decision of Hon'ble Supreme Court rendered inthe case of Sarswati Industrial Syndicate Ltd. vs. CIT(1999) 237 ITR 1 (SC). We, therefore, set aside theorder of the ld. CIT(A) and remit the matter back tothe Assessing Officer to take the decision afresh byconsidering aforesaid aspects and pass a speakingorder on the said issue in accordance with law.Needless to add, effective opportunity shall beallowed to the assessee.” 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 law havebeen suggested in that regard. Having heard the learned counsel for the appellant andhaving perused the material placed on record, we are clearly ofopinion that none of the grounds suggested could be said to beleading to any substantial question of law worth consideration inthis case. 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 law havebeen suggested in that regard. Having heard the learned counsel for the appellant andhaving perused the material placed on record, we are clearly ofopinion that none of the grounds suggested could be said to beleading to any substantial question of law worth consideration inthis 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 that is 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 of the items like expenditure on household and onmarriage, the Tribunal has consciously modified the order ofCIT (A) after proper appreciation of the record. In relation tosome of the other grounds like unexplained cash,jewelleries/ornaments, investments in construction of house MK and renovation of shop, and valuable items, the Tribunal hasconsciously taken note of all the facts and, after recording thenecessary findings, has remitted the issues to the AO forfurther enquiry and final conclusion. The matters therein alsorelate to the questions of fact. 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 while exercisingthe appellate powers has the jurisdiction to remit the question/sto AO or to the First Appellate Authority as it may deem fit andproper depending upon the facts of each case. In suchcircumstances, if in the facts of this case, the Tribunal formedan opinion to remit some of the questions to AO 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.