Ita/896/2008 Of The Commissioner Of Income Tax v. Mr. Naval Kumar Chhabra

1 IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 17 DAY OF NOVEMBER, 2014 PRESENT-: THER HON'BLE Mr.JUSTICH N.KUMAR ANT) THR HON'BLEB Mr.JUSTICE B.MANOHAR INCOME TAX APPEAL NO.896 OF 2008 BETWEEN 1,THR COMMISSIONER OF [INCOME-TAXCRENTRAL CIRCLEC.R.BUILDING|QUEENS ROAD|BANGALORECRENTRAL CIRCLEC.R.BUILDING|QUEENS ROAD|BANGALORE D)THR DY.COMMISSIONEBR OF INCOME-TA® CHRENTRAL CIRCLE-IIC.R.BUILDINGQUEENS ROAD|BANGALORE _APPBKELLANTS (BY SRI.K.V.ARAVIND, ADV.) AND MR.NAVAL KUMAR CHHABRANO.93/12, 1 CROSSNANDIDURGA ROADBENSON TOWNBANGALORE-560 O16| .. RESPONDENT (BY SRI.NAVAL KUMAR CHHABRA {V/O DT:13.10.2014})| Pp THIS APPEAL IS FILED UNDER 2600-A OF I.T.ACT, 1961ARISING OUT OF ORDEBR DATBKED 16.05.2008 PASSEKED IN [T(SSJA NO.15/BNG/2002 & COB NO.7/BNG/2002, FOR THE|BLOCK ASSEHESSMENIT PERIOD 1988-89 TO 1998-99 PRAYITHAT THIS HON’BLE COURT MAY BERK PLEASBD TO 2 FORMULATETHESUBSTANTIALQUESTIONS OF LAW STATED THEREIN,|QUESTIONS OF LAW STATED THEREIN,| 22 ALLOW THR APPBAL AND SHIT ASIDETHRORDERPASSEKDBY|THRITAT.BANGALOREIN.IT(SS)ANO.195/BNG/2002oaCOBNO.7/BNG/2002(INIT(SS)ANO.195/BNG/2002,DATED|16.05.2008, CONFIRMINGTHRORDEROF.THEAPPELLATECOMMISSIONER.AND|CONFIRM THR ORDER PASSED BY THE)DEBPUTY ASSISTANT COMMISSIONBR OFINCOMETAX,|CRNTRALCIRCLE-III,BANGALOREIN|THEINTKBRESTOF|JUSTICE AND EQUITY.| THIS APPEAL COMING ON FOR HEARING, THIS DAY,N.KUMAR, J.,DELIVERED THR FOLLOWING: JU DBoGMENT The revenue has preferred this appeal against the|concurrentfindingrecordedby both|theAppellateAuthorities holding that 23 bank accounts belongs to the.Hindu Undivided Family of the assessee and therefore, the|said amount cannot be assessed in the hands oft the.assessee. Accordingly, the order of assessment passed bythe Assessing Officer was held to be invalid. |There was a search in the case of assessee on11.07.1997, on the basis of some notings found in the)premises of the assessee’s accountant’s residence and some)vouchers etc., the department conducted enquiries with the|pank and found 23 bank accounts. The assessee controls |the business in three units in its own proprietary concernie., Naval Silks, his wife’s Gayathri Silks and his son’s|business Vipul Silks. The assessee’s father 8.P. Chhabrahas admitted his own separate business during the search.The assessee’s father filed a declaration under VDIS in.respect of the aforesaid 23 bank accounts claiming it to be)that of Hindu Undivided Family. The Assessing Authorityby a detailed order found that the said 23 bank accounts|actually belongs to the assessee and not to the Hindu|Undivided Family as claimed and therefore, it proceeded to.pass a block assessment order and levied tax at the rate of'60%. Aggrieved by the said order the assessee preferred an|appeal to the Commissioner of Income Tax (Appeals). a 3.|TheAppellateAuthorityproceeded|OT]the |footing that when the tather of the assessee filed adeclarationunderVDISOT]29.07.1997|admittingownership of all the 23 bank accounts and the business|transacted through his bank accounts and he also offeredthe entire credits in his bank accounts and undisclosed.turnover for the Assessment Year 1981-82 to 1996-97 and.disclosed net profit of little more that Rs. 15,00,000/- andthe said VDIS declaration was accepted. The said amounts|found in 2J3 bank accounts cannot be said to be theundisclosed income of the assessee. The AssessingAuthority obviously has ignored this vital aspect and has_come to a wrong conclusion. When once the income arising|out of some sources which is already taxed under the VDISin somebody’s hand, it cannot again be brought to tax inthe hands of another person. It is specifically covered bythe VDIS Act and therefore, the order of Assessment passed|under Section 158 BC in the hands of assessee was held tobe without any jurisdiction and cancelled. Aggrieved by the)said order, the revenue preferred an appeal. 5 5 4 iThe Tribunal after re-appreciation of the entireevidence on record held Satyapal Chhabra was holding 23|bank accounts from the records found in his bed room.They related to that 23 bank accounts and since he,apparently carried on the business with the funds that he!received from his tather and he having a son, claimed thatthe business as that of Hindu Undivided Family. TheTribunal observed that this may look like a tax planning,but without any information from the persons who sold |goods to the Hindu Undivided Family of Sathyapal Chhabra|and the buyers from Satyapal Chhabra to the contrary ie.,|they were doing business only with Naval Kumar Chhabrato come to a conclusion that the business belonged to the)assessee would be difficult and next to impossible. 5In coming to the said conclusion Tribunal failedto notice that on the date of such claim, Satyapal Chhabra|was aged 80 years. He has virtually stopped carrying on|business. When once, Satyapal Chhabra claimed after the|search that the amounts found in the 23 bank accountsbelongs to him and filed a VDIS declaration, it is for | 6 satyapal Chhabra to establish as to whom he has supplied|goods and who has made payments. Absolutely, no |evidence was placed on record. Untortunately, the Tribunal|has placed the burden of proving the facts on the revenue,the fact which is not within their knowledge. Ihe VDIS|declaration subsequently, came to be cancelled. The|Tribunal did not note the reasons for cancellation of the.certificate issued earlier. It proceeded on the assumptionthat it is for the revenue to establish by acceptableevidence as to whether the said money belongs to the!assessee, the person to whom the assessee had supplied)soods and the persons who had paid for the said goods. |They are all facts which are within the knowledge ofassessee or his father. 6.|section 106 of the Evidence Act- makes it clearthatwhen any fact is especially within the knowledge of any|person, the burden ofproving thatfact is upon him TT.Therefore, the Tribunal committed a _ seriouserror in placing the burden of proving the transactions inthe name of the assessee on revenue erroneously and) [ consequently, the said order is illegal and requires to beset-aside. Therefore, the proper course would be to set- |aside the impugned order, remit the matter back to the!Tribunal to look into the matter afresh and find out the.evidence adduced by the assessee and his father regarding|the status as well as the source of income and then decide.the case on merits. It must be pointed out that the First!Appellate Authority being the final Court on facts has_virtually, not performed its functions in the way, the |Appellate Authority should do. Under these circumstances,|ereater responsibility lies on the Tribunal to re-appreciatethe entire evidence on record and pass appropriate orders. | 3.|For the aforesaid reasons, we are not decidingthe substantial question of law framed in this case. Hence |we pass the following; ORDER %2&The appeal is allowed. %22&The impugned orders passed by both the Appellate Authorities are set-aside. GH. 8 %222&The matter is remitted to the Tribunal for fresh|consideration|and1N accordance | with law and in the light of the order | passed by this Court. Sd/-| JUDGE Sd/- JUDGE|