Itta/172/2013 Of The Commissioner Of Income Tax -1 v. R.s. Sudheesh

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI INCOME TAX APPELLATE TRIBUNAL APPEAL NO.172 OF 2013 DATED:3.7.2013 Between: The Commissioner of Income-tax –IHyderabad … Appellant And R.S. Sudeesh … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. NO.172 OF 2013 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be admitted on the following suggested questions of law. 1.“Whether, on the facts and in the circumstances of the case andin law, the order of the Tribunal is not perverse?in law, the order of the Tribunal is not perverse? 2.Whether, on the facts and in the circumstances of the case andin law, the Tribunal is correct in holding that the assessing officerfailed to bring any supporting evidence or material on record thatthe assessee was the real beneficiary of sale of shares in thename of M/s. Akhil Ceramics, M/s. Sri Chakra Cements Ltd.,Krishna Rama Industrial Investments Ltd.?in law, the Tribunal is correct in holding that the assessing officerfailed to bring any supporting evidence or material on record thatthe assessee was the real beneficiary of sale of shares in thename of M/s. Akhil Ceramics, M/s. Sri Chakra Cements Ltd.,Krishna Rama Industrial Investments Ltd.? 3.Whether, on the facts and in the circumstances of the case andin law, the Tribunal was justified in rejecting the appeal ofRevenue on the ground that the share transactions were recordedin books of account of three companies, without appreciating thestand of the Revenue that the assessee is the real beneficiary ofthe share transaction?in law, the Tribunal was justified in rejecting the appeal ofRevenue on the ground that the share transactions were recordedin books of account of three companies, without appreciating thestand of the Revenue that the assessee is the real beneficiary ofthe share transaction? 4.Whether, on the facts and in the circumstances of the case andin law, the Tribunal was justified in holding that assessment forblock period can only be done on the evidence found as a resultof search, without appreciating section 158BB (1) which clearlystates that the undisclosed income shall be computed based onevidence as a result of search as well as such other materials asare available with the Assessing Officer and further informationand evidences gathered during post search proceedings?in law, the Tribunal was justified in holding that assessment forblock period can only be done on the evidence found as a resultof search, without appreciating section 158BB (1) which clearlystates that the undisclosed income shall be computed based onevidence as a result of search as well as such other materials asare available with the Assessing Officer and further informationand evidences gathered during post search proceedings? 5.Whether, on the facts and in the circumstances of the case andin law, the Tribunal was justified in ignoring that further informationand evidences were gathered during post search proceedings byway of self-cheques, bank statements and statement of MD ofin law, the Tribunal was justified in ignoring that further informationand evidences were gathered during post search proceedings byway of self-cheques, bank statements and statement of MD of benami company and without appreciating and retraction of suchstatements were made after considerable period of time?” This appeal is filed against the judgment and order of thelearned Tribunal, dt.10.5.2012, in relation to block assessmentcovering the period of 1990-91 to 2000-01 upto 8.3.2001. 5.Whether, on the facts and in the circumstances of the case andin law, the Tribunal was justified in ignoring that further informationand evidences were gathered during post search proceedings byway of self-cheques, bank statements and statement of MD ofin law, the Tribunal was justified in ignoring that further informationand evidences were gathered during post search proceedings byway of self-cheques, bank statements and statement of MD of benami company and without appreciating and retraction of suchstatements were made after considerable period of time?” This appeal is filed against the judgment and order of thelearned Tribunal, dt.10.5.2012, in relation to block assessmentcovering the period of 1990-91 to 2000-01 upto 8.3.2001. There has been search and seizure in the establishment of therespondent/assessee. Thereupon, it has been noted by the learnedTribunal on fact that excepting seizure of certain documents, no otherassets like unaccounted cash, valuables were found from the premisesof the assessee. In one of the documents seized, certain notings couldbe found. While making post search enquiry, the Assessing Officerfound that the shares of M/s.AF were sold by three companies. Thelearned Tribunal, thereafter, on fact, found that when the incomearising out of sales of shares has been recorded in the books and thefinal accounts of the respective companies and declared to thedepartment in the returns filed by them prior to the date of search, byno stretch of imagination, they can be treated as undisclosed incomeof the assessee. It has been further found by the Tribunal that neitherthe seized material nor any other material brought on record by theAssessing Officer could establish any nexus between the assesseeand the sale of shares by the companies. It is settled position of law that in order to fasten the liability forpayment of tax, undisclosed income has to be ascertained and thisundisclosed income must result from the assets and properties, andmaterial unearthed during search and seizure. Unless these are done,post search seizure enquiry or investigation legally does not form thebasis of making block assessment. Block assessment basicallyrelates to undisclosed income and if no income is unearthed as aresult of search and seizure, no extraneous material can help theassessee to make an assessment, since it is a special procedure. Thelearned Tribunal has followed the correct legal position relying on theestablished principles of law laid down by the various High Courts, including Delhi and Calcutta High Courts. Under the circumstances, we dismiss the appeal as nosubstantial question of law is involved in this matter. No order as tocosts. ________________________ K.J. SENGUPTA, CJ______________________ G. ROHINI, J 3.7.2013 bnr