Commissioner Of Income Tax v. S.c. Sethi

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR. ... D.B. INCOME TAX APPEAL NO.78/2005 Commissioner of Income Tax Versus S.C. Sethi Date of Order:10.3.2006 PRESENT HON'BLE MR.RAJESH BALIA, J.HON'BLE MR. JUSTICE R.P. VYAS Mr.K.K. Bissa, for the appellant. Mr.Rajendra Mehta, for the respondents. ... Heard the learned counsel for the parties. This appeal is directed against the order of IncomeTax Appellate Tribunal, Jodhpur Bench, Jodhpur dated20.2.2004. The substantial question of law, which according tothe appellant arises in this appeal has been stated asunder: “Whether on the facts and in the circumstances ofthe case and in law, the learned Tribunal was justified in upholding deletion of Rs.4,67,200/-following its earlier order for A.Y. 1994-95 holdingthat no addition can be made on the basis ofuncorroborated piece of evidence/ document found inthe course of search in third party, ignoring the factthat the records pertaining to the assessee werebeing kept by the person where the search wasconducted and the loose papers found during thecourse of search clearly indicate that not only theassessee was getting additional quarterly paymentsand perks over and above his salary, but theassessee was also himself dealing with thosepayments and perks on behalf of the employercompany? The factual matrix of the case is that according to thecase of the Revenue, a survey was conducted in pursuanceof search warrant issued against the premises of J.K.Industries/J.K. Tyre Ltd. In the course of search, certaindocuments were seized from the residence of one of theSr. Manager (Accounts) Sh. A.K. Chhajer. It is on the basisof some entry in loose papers seized from Sh. Chhajer,additions were made in the income of the respondent –assessee to the tune of Rs.4,67,200/- as income from undisclosed source by referring it to the emolumentsreceived from the employer over and above the one whichwere admitted to have been received by him. The firstassessment in the case of assesee was finalized assessingthe return filed on 29.6.1993. The original assessmentwas completed on 28.3.1996. The notice issued to Sh. A.K.Chhajer was not served on him and, therefore, he had notappeared before the Income Tax Officer so as to beavailable for cross-examination by the assessee. The assessment order dtd.28.3.1996 was subjectedto appeal by respondent – assessee Sh. Swaroop ChandSethi which was allowed by the Commissioner of IncomeTax (Appeals) vide his order dtd.12.9.1996. Apart fromthe aforesaid loose papers seized from Sh. A.K. Chhajer,no other incriminating material was before he AssessingOfficer. An affidavit was filed by Corporate Vice Presidentclearly stating that the Company had paid to Sh. S.C. Sethia sum of Rs.1,80,000/- on account of salary andRs.56,836/- on account of perquisite and duly deducted taxat source amounting to Rs.64,213/-. Full particulars ofsuch payments of salary and perquisite would appear fromthe salary certificate issued to Sh. S.C. Sethi. The saidcertificate truly and correctly records all payments of salary and perquisites made available to the assessee by thecompany. Save and except the amounts mentioned in theannexed certificate, no other sum of any naturewhatsoever was made by the company to Sh. S.C. Sethifrom any source whatsoever for his employment. The Corporate Vice President was not furtherexamined by the Assessing Officer. and perquisites made available to the assessee by thecompany. Save and except the amounts mentioned in theannexed certificate, no other sum of any naturewhatsoever was made by the company to Sh. S.C. Sethifrom any source whatsoever for his employment. The Corporate Vice President was not furtherexamined by the Assessing Officer. The Commissioner of Income Tax (Appeals) held thatnone of the entries in the seized documents, relied on bythe Assessing Officer indicates that the amount wasreceived by the assessee and the observation of AssessingOfficer that page No.67 and 71 indicates the receipt by theassessee is factually incorrect. Further it was noticed bythe learned CIT (A) that since the assessee has demandedcross-examination of Sh. A.K. Chhajer before loose papersseized from his residence could be used against theassessee, but such opportunity was not offered to theassessee, therefore, the assessment suffers fromprocedural errors. With these findings, the assessmentorder was set aside and the the assessing officer wasdirected to complete the assessment denovo. This order of CIT (A) was not challenged by theRevenue. The assessing officer in pursuance of aforesaiddirections again issued notices at the same address wherefrom the notices earlier addressed to Sh. A.K. Chhajedwere returned unserved and without seeking presence ofSh. A.K. Chhajed, has fallen back on his earlier assessmentreiterating the addition of Rs.4,67,200/- in the returnedincome of the assessee for the same reason as prevailedwith the assessing officer in the earlier assessment order. This order of assessment dtd. nil was subjected toappeal. The Commissioner of Income Tax (Appeals)referred to his earlier finding that none of the page No.67,71 and 80 indicate that the amount was paid by thecompany or received by the appellant and, therefore, theobservation of the Assessing Officer that page No.67 and71 indicate the receipts is factually incorrect. The learnedCIT (A) also relied on the fact that the assessing officerhas not still obtained attendance of said Sh. A.K. Chhajerfor being cross-examined by the assessee, therefore, theassessing officer could not have reinstated his earlierassessment order on very same material by ignoring the finding earlier recorded by the CIT(A). This order of CIT (A)was affirmed in appeal by the Income Tax AppellateTribunal which is subject matter of this appeal. The facts stated above clearly indicate that noquestion of law arises in this appeal. The finding recordedby the Tribunal are findings of fact affirming the earlierfinding of fact recorded by the Commissioner of IncomeTax (Appeals). Apparently when the loose papers by itselfdid not indicate receipt of alleged undisclosed income bythe assessee and peripheral reliance on the document wasnot earlier countenanced in absence of opportunity ofcross-examination of the persons from whose possessionthe loose papers were recovered. The fact that theassessing officer has not made any efforts to serve said Sh.A.K. Chhajer and secure his presence by invoking powersunder the Income Tax Act for securing presence of anywitness also goes to show that the assessing officer hasnot really made efforts to give effect to the directions ofCommissioner of Income Tax (Appeals) for makingavailable opportunity of cross-examining Sh. A.K. Chhajerto the assessee. It is also to be noticed that affidavit of corporate Vice President about total emoluments flowing from theemployer to assessee remains uncontroverted and couldnot have been ignored. In that view of the matter, the findings recorded bythe Tribunal being findings of fact do not give rise to thequestion of law. It is also to be noticed that affidavit of corporate Vice President about total emoluments flowing from theemployer to assessee remains uncontroverted and couldnot have been ignored. In that view of the matter, the findings recorded bythe Tribunal being findings of fact do not give rise to thequestion of law. Moreover another fact which is also not in disputethat for subsequent year 1994-95 on the very same facts,the assessment order had been set aside by theCommissioner of Income Tax (Appeals) and affirmed bythe Tribunal and such deletion of the very same incomehas not been subjected to appeal and has been acceptedby the department. Accordingly, the present appeal fails and is herebydismissed. No order as to costs. (R.P.VYAS),J. (RAJESH BALIA)J. SS/-