Date Of Judgment 28-06-2018, I.t.a v. The Commissioner Of Income Tax & Another 2/13

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 28 DAY OF JUNE 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.37/2017 BETWEEN : GOPAL S. PANDIT PROP: PANDIT DEVELOPERS“HMPORIUM”, COMMERCIAL COMPLEXII] FLOOR, OLD PUMP WELL ROADKANAKANADYMANGALORE-5 /5002.. APPEHLLANT| (BY SRI R.CHANDRASHEKAR, ADV.) AND ; 1]THE COMMISSIONBR OF INCOMB TAX C.R. BUILDING|MANGALORE -57/5001MANGALORE -57/5001 oD THER DEPUTY COMMISSIONER OF INCOME TAXCRHNTRAL CIRCLEMANGALORE -57/5001~ RESPONDENTS (BY SRI JEEVAN J. NEERALGI, ADV.) THIS INCOMB TAX APPBAL UNDEBR SECTION J6O0-A OINCOME TAX ACT 1961, ARISING OUT OF ORDER DATED|27.07.2016 PASSED IN ITA NO.1188/BANG/2013, FOR THE)ASSESSMENT YEAR 2007-08, PRAYING TO (1) FORMULATE THESUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, [2] ALLOW,THR APPBAL OF THE APPBRLLANT MODIFYING THR ORDER OFTHERE INCOME TAX APPELLATE TRIBUNAL DATED 27.07.2016 I ITA No.1188/BANG/2013 AND DIRECT TO THE SECOND.RESPONDENT TO PASS APPROPRIATE ORDER IN ACCORDANCEWITH LAW AND BIC.| THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,|Dr. VINEET KOTHARI, J., DELIVERED THE FOLLOWING: JU DGMENT Mr. R.Chandrashekar,Adv. for Appellant — Assessee.Mr. Jeevan J. Neeralg1,Adv. for Respondents—Revenue. | In the present Appeal filed by the Assessee againstthe Order of the learned Income Tax Appellate Tribunal,Annexure-A dated2/.07.2016,the following twopurported substantial questions of law have beensuggested by the Assessee. | [|Whether,OTLthe factsandinthecircumstancesofthe Case,AppellateTribunal was correct in holding that.Joint|Commissioner while granting an approvalu/s.153D of the Act, to an order passedu/s.153A of the Act, no opportunity need tobe provided to the Appellant?P LI.Whether, on the facts and circumstances ofthe appellant’s case, the Appellate Tribunalis right in holding the seized material Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 3/13 corroborates the income fixed under the|head “Pooja”, though seized material doesnot disclose such income from “Pooja”? TT.Whether, the Appellate Tribunal is right in|its conclusion that the noting in the dairyrepresents payment in lakhs and the sumofRs. 19lakhs|1San.unexplainedexpenditure assessable in the year 2007-OS8?its conclusion that the noting in the dairyrepresents payment in lakhs and the sumofRs. 19lakhs|1San.unexplainedexpenditure assessable in the year 2007-OS8? ?)As far as these issues are concerned, wehave already dismissed the connected Appeal of theAssessee, namely,I.T.A. No.36/2017in the case of.‘Gopal. V. Pandit v. The Commissioner of IncomeTax & Another’in which as regards first question, we.have held that in the absence of specific provision inSection153Dof the Income Tax Act, 1961, |'Act' for|short]thepresentAuthority,|namely,JointCommissioner is not expected to give an opportunity ofhearing to the Assessee before giving an approval to theDraft Assessment Order to be passed by the lower Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 4/13 Authority, namely, Deputy Commissioner. The relevant portion is quoted below for ready reference. ?)As far as these issues are concerned, wehave already dismissed the connected Appeal of theAssessee, namely,I.T.A. No.36/2017in the case of.‘Gopal. V. Pandit v. The Commissioner of IncomeTax & Another’in which as regards first question, we.have held that in the absence of specific provision inSection153Dof the Income Tax Act, 1961, |'Act' for|short]thepresentAuthority,|namely,JointCommissioner is not expected to give an opportunity ofhearing to the Assessee before giving an approval to theDraft Assessment Order to be passed by the lower Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 4/13 Authority, namely, Deputy Commissioner. The relevant portion is quoted below for ready reference. €8Having heard the learned Counsel forthe parties, we are satisfied that the internal|guidelines issued by the Central Board ofDirect Taxes, as urged by the learned Counselfor the Assessee, bereft of the statutoryprovisions in SectionLT53| of the Act cannotbind the approving Authority, namely, the|Joint Commissioner to comply with the.principles of natural justice by the saidAuthority. TheAssessingAuthorityundoubtedly has of course given adequate|and reasonable opportunity of hearing to the|Assessee and all objections on merits wereconsidered by him. Merely because, Section|YT53of the Act requires a prior approval of|the Draft Assessment Order by the higher|Authority, namely, the Joint Commissioner inthe present case, because the Assessment|Order was passed by the Authority below the|rank|of|theJointCommiussioner,the|provisions of the Act do not mandate that afresh round of opportunity of hearing should Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 5/13 be given to the Assessee by such Authority,|namely, Joint Commissioner also even for|approving Draft Assessment Order. It is not a|case where the Assessee did not have any|opportunity of hearing before any of the|Authorities to defend his case and some.assessment of tax has been made againsthim fastening the liability of tax against the|Assessee. The Assessing Authority as wellas the two Appellate Authorities who have.concurrent powers of assessment as are|available with the Assessing Authority, have|admittedly heard the Assessee on the merits|of the case. Therefore, we are of the opinion|that no substantial question of law in this|regard can be said to be arising on the basis|of the office guidelines which are for internal|purposes of the Department. They are noteven Statutory instructions issued u/s. 119 of|the Act, which tf beneficial to Assessee have|been held to be binding on the Authorities ofthe Department. The Assessee has also not|been able to point out any prejudice caused to|him on account of approving Authority not|giving him an opportunity of hearing.” Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 6/13 3.Even as far aS second question raised beforeus 1S concerned, we have held that the same does notgive rise to any Substantial question of law as it is amatter of estimate based on the relevant material seized|during the course of search and the statement recordedof the Assessee u/s. 132/4] of the Act as to what was_the income of the Assessee who was working as Priestduring the relevant period. 4.The relevant findings of the learned Tribunal are quoted below for ready reference. “O77. We have heard the learned AuthorisedRepresentative as well as learned DepartmentalRepresentativeand considered|therelevantmaterial on record. The first objection by thelearned Authorised Representative is that theoriginal assessment was completed under Section143(3) and that the original assessment wascompleted under Section 143(3) and in _ threassessment under Section 153A, no addition|can be made except based on seized material. Wefind that the Assessing Officer has placed a copy Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 7/13 4.The relevant findings of the learned Tribunal are quoted below for ready reference. “O77. We have heard the learned AuthorisedRepresentative as well as learned DepartmentalRepresentativeand considered|therelevantmaterial on record. The first objection by thelearned Authorised Representative is that theoriginal assessment was completed under Section143(3) and that the original assessment wascompleted under Section 143(3) and in _ threassessment under Section 153A, no addition|can be made except based on seized material. Wefind that the Assessing Officer has placed a copy Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 7/13 of the seized material at page 10 of theassessment order which clearly shows differententries recorded by the assessee including anentry of Mandir and Pooja of Rs.35 lakhs for theFLY.2005-06. Therefore, the addition made by theAssessing Officer is not based merely onstatement recorded under Section 132(4) of theAct. It is pertinent to note that the assessee in the)Statement had estimated the undisclosed incomeof Rs.75 lakhs for 3 assessment years underconsideration which matches the figures andamounts shown in the seized document relatingto Pooja income of Rs.35 lakhs, Rs.20 lakhs andRs.20 lakhs for the Assessment Year 2006-07 to2008-09 respectively. We find that there is noambiguity in the statement of assessee regardingthe Pooja income which has been _ clearlcorroborated by the seized material. Thus whenthere is a sufficient evidence seized materialwhich corroborates the statement of the assesseerecorded under Section 132(4) on 23.2.2009 thenthe subsequent retraction of the statement by theassessee without any corroborating evidencecannot be accepted as the assessee has notexplained the statement and how the incomeSholwn in the seized material is not correct.Therefore mere retraction of statement without Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 8/13 explaining circumstances as well as corroboratingevidence, it cannot be accepted being an afterthought. Accordingly, we do not find anysubstance in this ground of the assessee and the|Same is dismissed.” 5.As regards the third question, we do not findany substantial question of law arising on this issue,which relates to the factual aspects, in view of thecategorical finding returned by the Tribunal. Therelevant findings of the learned Tribunal are quotedbelow for ready reference. The Tribunal in paragraphs46 to 49, has held as under: “46. During the course of search the documentwas seized and from analysis of page 75 of theseized material, the Assessing Officer noted thatthe assessee has paid total amounting to Rs.19lakhs to oneMr. Hiren Kumar Patel. Theassessee claimed that the figure written as 19represents only Rs.19,000 and not Rs.19 lakhs.The assessing Officer noted that the amountmentioned in the seized material are in the formof abbreviation and which represent the amountin lakhs, not in thousands. The Assessing Officer Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 9/13 has observed that the assessee himself haswritten Rs. 19 lakhs in the form of “19°. Therefore,the Assessing Officer treated this amount asRs.19 lakhs as against the claim of Rs.19,O000.The CIT [Appeals] has confirmed the action of theAssessing Officer. Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 9/13 has observed that the assessee himself haswritten Rs. 19 lakhs in the form of “19°. Therefore,the Assessing Officer treated this amount asRs.19 lakhs as against the claim of Rs.19,O000.The CIT [Appeals] has confirmed the action of theAssessing Officer. 47.BeforeUS,the learnedAuthorised|Representative of he assessee has submitted thatthere is nothing on record to prove that theassessee has paid the alleged amount of Rs.58'lakhs to Mr. Hirenkumar Patel. He had submittedthat the amounts noted down in the margins ofthe dairy entry assessee right from the beginninghas explained this before the Assessing Officer.He has not paid the alleged amount of Rs.58lakhs as stated by the Assessing Officer what thepayments were made, the same were recorded inthe books of account. The learned AuthorisedRepresentatwe has submitted that the paymentsmade during the year under consideration wereonly Rs.82.50 lakhs and the same is recorded inthe books of account. There is no material onrecord to say that the assessee has taken thesaid sum of Rs.58 lakhs from Mr. HirenkumarPatel. The learned Authorised Representative has|further submitted that it is only an allegation and Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 10/13 assumption of the Assessing Officer and not areal transaction of payment made by _ thaASSCSSCEC 48.Ontheother|hand,thelearnedDepartmental Representative has submitted thatthe Assessing Officer has analysed the entries atpage No.75 of the seized material as reproducedby the Assessing Officer at page SO of theassessment order from which it ts clear that theassessee has paid a sum of Rs.1& lakhs on)7.6.2006 and again paid Rs.1 lakh on 18.8.2006,total amounting to Rs.19 lakhs which has beenwritten in the margin as a figure of 19. Thereforethe remaining amount written in the margin in theabbreviated amounting to Rs.19 lakhs which has|been written in the margin as a figure of 19.Therefore the remaining amount written in themargin in the abbreviated form represents theamounts in lakhs and not in thousands as'claimed by the assessee. He has relied upon theorders of the authorities below. 49.We have considered the rival submissions|as well as the relevant material on record. TheAssessing Officer made total addition of Rs.58lakhs on account of undisclosed investment beingpayment made by the assessee out of the books Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 11/13 to one Mr. Hirenkumar Patel. The CIT [Appeals]while confirming the addition has granted thebenefit of telescoping to the extent of an additionof Rs.39 lakhs on account of Pooja income andtherefore confirmed addition of remaining amountof Rs.19 lakhs. The limited controversy before usis whether the qbbreviated or coded amountswritten in the margins of the diary at page 75 ofthe seized material represents the amounts inlakhs or in thousands. The Assessing Officer hasconsidered these amounts as payments made bythe assessee in lakhs and therefore calculatedthe total payment made by the assessee out ofbooks of Rs.58 lakhs. For ready reference wereproduce the entries as well as the numberswritten in| Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 12/13 Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 12/13 From the numbers written in the margin it is clearthat the Assessing Officer took the first numberbeing 19 as sum total ofRs.18 lakhs + Rs. 1 lakh,the payment made by the assessee on 17.8.2006respectively. The other numbers mentioned in themargins are not recorded in the books of accountstherefore those were considered by the AssessingOfficer as payment out of books. As it is apparentfrom these numbers written in the margin that aproper care was taken for distinguishing theamounts in thousands by putting a point |./ beforethe number as in the case of last number writtenas 0.5. Therefore the other numbers written in themargin with the dates clearly indicates thepayment made by the assessee in lakhs.Therefore we do not find any error or illegality inthe orders of the authorities below on this issueand confirm the addition of Rs.19 lakhs assustained by the CIT [Appeals]. Therefore we do not find any error or illegality inthe orders of the authorities below on this issueand confirm the addition of Rs.19 lakhs assustained by the CIT [Appeals/.” 6.Having heard the learned Counsel for the parties, we are satisfied that no substantial question of Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 13/13 law arises. The Appeal of the Assessee is liable to be dismissed and the same is accordingly dismissed. Nocosts. NC Sd/-.JUDGE. Sd/-.JU DGE