Ita/721/2007 Of M/S Gudwill Housing Limited v. The Income-Tax Officer

IN THR HIGH COURT OF KARNATAKA AT BANGALOREDATED THIS THE 24[th]DAY OK MARCH 2014. PRESENT THR HON’BLE MR. JUSTICEK DILIP B BHOSALE AN 1 THR HON’BLE MR. JUSTICBK B MANOHAR I.T.A.NO.721/2007 BBRITWRE M/s.Gudwill Housing Limited,No.48, III Floor, Hitananda,Lavelle Road,Bangalore — 560 OO1,Rep by its Director,Mrs.Komala Ravi, Aged about 40 years,W/o Mr.V.R.Ravindra. _. APPBKRLLANT (By Sri.S.Parthasarathi, Adv.)AN): The Income Tax Officer,Ward 11(2), 4[th]Floor,R.P.Bhavan, Opp. RBI,Nrupathunga Road,Bangalore — 560 002. RBSPONDENT| (By Sri.K.V.Aravind, Adv.) This ITA is filed under Section 260-A of I.T.Act,1961, arising out of the order dated 30.05.2007 passedin ITA No.1441 to 1443/BANG/2004 & ITA No.1734 &1736/Bang/2004 for the Block Assessment Period1996-97, 1999-2000 & 1998-99, praying to formulatethe substantial questions of law stated therein andallow the appeal and set aside the order of the ITAT,Bangalore Bench ‘A’, Bangalore bearing ITA Nos.1441 to1443/B/2004 & ITA Nos.1734 & 1736/B/2004 dated30.05.2007, in the interest of justice and equity. This ITA coming on for hearing this day,|DILIP B. BHOSALE J. , delivered the following:- | PC:| This Income Tax Appeal, under Section 260A ofthe Income Tax Act, 1961 (for short ‘the Act’), is directedagainst the order dated 30.05.2007 passed by theIncome Tax Appellate Tribunal, Bangalore Bench-A (forshort ‘the Tribunal) disposing of ITA Nos.1441-1443 of2004 pertaining to the assessment years 1996-97, —1999-2000 and 1998-99. The Tribunal also decided| other four appeals filed by the revenue by the very sameorder. However, we are not concerned with the same,|since the order disposing of those appeals, is not thesubject matter of the instant appeal. The appeals beforethe Tribunal were directed against the orders ofCommissioner of Income Tax (Appeals) (for short,‘CIT(A)’)) dated 17.03.2004 and 25.03.2004, whereby©CIT(A) had partly allowed the appeals filed by theassessee. The appeals before the CIT(A) were directedagainst the assessment order dated 30.01.2003 passedby the Income Tax Officer, Ward-11(2), Bangalore (forshort, ‘Assessing Officer’). 2.|This Court while admitting the appeal on29.1.2008 formulated the following substantial question of law for consideration: "Whether.re-assessmentas|madeunder Section 147 oft the Act for the relevantassessment|Yea>#rin.theCa SEoT|theappellant were valid and thus sustainable?” 3.|Brietly stated the facts against which, thesubstantial question of law, as framed vide order dated29.01.2008, arises for our consideration are that theappellant-assessee constructed a building, during therelevant assessment years and had filed return ofincomedeclaringnilincome.Inthebuildingconstructed by the assessee, one M/s.Monalisa InteriorDecorators Private Limited (for short, ‘Monalisa’), hadpurchased the premises for running their own office. A.search was conducted of the premises of Monalisaunder Section 132 of the Act on 24.12.1999. Duringthe search, a fax message was seized revealing somepayment made by Monalisa to the assessee. Theamountthat|WaSdisclosedin.thefaxWaSRs.12,52,750/-. On the basis thereof, it was revealedthat the amount disclosed by the assessee in his return,having received from Monalisa, was only Rs.4,97,417/-. —In this backdrop, the Assessing Officer issued notice under Section 148 of the Act, reopening the assessmentfor the assessment years 1996-97, 1998-99 and 1999-2000 and added the amount of Rs.37,59,689/- for theassessment|VYCal1996-97,Rs.6,05,000/-{fOrthe.assessment year 1998-99 and Rs.7,16,642/- for theassessment year 1999-2000. The Tax liability, on thebasisoT|theadditionsWaSdeterminedaS|Rs.19,58,498/-,.Rs.3,79,397 /-andRs.3,959,147/-respectively. This order was challenged by the assesseein appeals before CIT(A). The CIT(A) confirmed the orderpassed by the Assessing Officer insofar as theseadditions are concerned. | under Section 148 of the Act, reopening the assessmentfor the assessment years 1996-97, 1998-99 and 1999-2000 and added the amount of Rs.37,59,689/- for theassessment|VYCal1996-97,Rs.6,05,000/-{fOrthe.assessment year 1998-99 and Rs.7,16,642/- for theassessment year 1999-2000. The Tax liability, on thebasisoT|theadditionsWaSdeterminedaS|Rs.19,58,498/-,.Rs.3,79,397 /-andRs.3,959,147/-respectively. This order was challenged by the assesseein appeals before CIT(A). The CIT(A) confirmed the orderpassed by the Assessing Officer insofar as theseadditions are concerned. | 3.1. The order of the CIT(A) was then confirmed bythe Tribunal. Before the Tribunal, the challenge wastwo fold. Firstly, on the ground of jurisdiction of re-opening of the assessment by issuing notice undersection 148 of the Act, and secondly, on merits. Insofar as the first ground of challenge raised before theTribunal is concerned, it appears from the observationsmade in Paragraph 2 of the order that, the said groundwas not seriously pressed on behalf of the assessee. —However, in the present case, the only substantialquestion of law raised by the assessee on which theappeal was admitted, is in respect of the jurisdiction ofthe Assessing Officer to reopen the assessment byissuing notice under Section 148 of the Act. No othercontentionOT|substantial|questionoT lawWaSurged/raised on behalf of the assessee. 4Mr.Parthasarathy,learnedCounsel]appearing for the appellant-assessee, at the outset,invited our attention to Section 158BA and Section|158BD in Chapter XIV-B of the Act to submit that theAssessing Officer had no option but to invoke theprovisions contained in Chapter XIV-B of the Act to proceed against the assessee on the basis of evidencefound as a result of the search made under Section 132of the Act, of the premises of Monalisa. He submittedthat it was not open to the Assessing Officer to reopenassessment under Section 147 by issuing notice undersection 148 of the Act. In short, he submitted that,having found the evidence regarding undisclosedincome during search, the only option open to theAssessing Officer was to invoke block assessment underChapter XIV-B of the Act. 5It is true that Section l1l58BD states thawhere the Assessing Officer is satisfied that anyundisclosed income belongs to any person, other thanthe person with respect to whom search was madeunder Section 132, then the books of accounts, other)documents or assets seized shall be handed over to theAssessing Officer having jurisdiction over such other person and that the Assessing Officer shall proceedunder Section 158BC against such other person and theprovisions of these Chapter shall apply accordingly. —This provision by itself, in our opinion, is not sufficientto hold that the Assessing Officer, on the facts and inthe circumstances, as occurred in the present case,could not have proceeded against the assessee undersection 147 by issuing notice under Section 148 of theAct. This provision fell for consideration of the DelhiHigh Court and the Allahabad High Court. TheAllahabad High Court in|COMMISSIONER OF [INCOMETAX VS. ABHYUDAYA BUILDERS (P) LTD., |2012] 340 ITR0310was considering not only these provisions but was|examining the same in the light of similar facts, as fallfor our consideration in the present case. While doingso, the Allahabad High Court placed reliance upon thejudgment of the Delhi High Court inJANKI BXPORTSINTERNATIONAL VS. UNION OF INDIA ((2005] 278 ITR| 0296)|to hold that the provisions contained in Section158BD of the Act are analogous to the provisionscontained in Section 147 of the Act, insofar as theprocedure that is required to be followed. Section 147.contemplates that if the Assessing Officer has reasons.to believe that there is escapement of income, thennotice can be issued under Section 148 of the Act.section 158BD of the Act provides that if the Assessingofficer is satisfied that any undisclosed income belongs.to any person other than the person with respect towhom search was made under Section 132 of the Act,upon such satisfaction, is required to forward therelevant documents, papers, etc. to the AssessingOfficer having jurisdiction over such other person inrespect of whom the undisclosed income has beendisclosed for block assessment. Thus, it is open to theAssessing Officer to proceed against the assessee, if hehas reason to believe that his income has either> escaped the assessment or whose undisclosed income isunearthed during the search conducted under Section132 of the Act of the premises of some other person. —From plain reading of these provisions, we do not findany impediment in proceeding against such person byissuing notice under Section 148 of the Act. In otherwords, Chapter XIV-B do not preclude the AssessingOfficer to proceed against such assessee by issuingnotice under Section 148 of the Act. The remedies,availableTOthe|ASSeSSIngOfficer,undertheseprovisions are independent of each other, and theprovisions being analogous, it is for the AssessingOfficer to opt for either of them in a situation, such asin the present case. The Legislature, in our opinion,has given choice to the Assessing Officer to eitherproceed under Chapter XIV-B or under Section 148 ofthe Act against the assessee, such as the one in thepresent case. 6.|In the present case, the Assessing Officerreopened the case under Section 147 by issuing noticeunder Section 148 and completed the assessment. Tillthe assessment was completed and till the matterreached the Tribunal, the assessee did not make anyerievance whatsoever. Even before the Tribunal, thoughthe ground of jurisdiction was raised, it was notseriously pressed by learned counsel appearing for theassessee and in this view of the matter, the Tribunalproceeded to consider merits of the case. In the presentappeal, the appellant chose to confine its challenge onlyon the ground of jurisdiction and did not raise challengeon merits. In this backdrop, we find no reason tointerfere with the order passed by the Tribunal. We aresatisfied that the Assessing Officer has option toproceed against the assessee by issuing notice underSection 148 of the Act in a situation as occurred in the|present case. Hence, we answer the substantial questions of law as formulated by this Court vide order dated 29.01.2008 against the assessee and in favour ofthe Revenue. TS|Before we part, we observe that no other|erounds were either raised or urged on behalf of the TS|Before we part, we observe that no other| assessee. The appeal is accordingly dismissed. No.COSTS. od/-|JUDGEod/-|JUDGE. Prs* / MP