Itta/188/2012 Of Shri Gyan Kumar Agarwal (Indl) v. The Asst. Commissioner Of Income Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD MONDAY, THE TWENTY THIRD DAY OF DECEMBERTWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE THE CHIEF JUSTICE ALOK ARADHEANDTHE HONOURABLE SRI JUSTICE J SREENIVAS RAOANDTHE HONOURABLE SRI JUSTICE J SREENIVAS RAO INCOME TAX TRIBUNAL APPEAL NOS: 47 AND 48 OF 2008188 AND 176 0F 2012 INCOME TAX TRIBUNAL APPEAL NO: 47 OF 20OB Appeal filed under Section 2604 of the Income Tax Act, 1961 against theOrder dated 19-'10-2007 passed in l.T.(SS)A.No. 137tHydt200\ for the Block period1997-98 to 2002-03 & upto 21-01-2003 on the file of the lncome Tax AppellateTribunal, Hyderabad Bench 'A', Hyderabad, preferred against the Order dated 22-08-2005 passed in Appeal No. 0420, 0422 &0423tCC-1, Hyd/CtT(A)-llHYD/2004-05 onthe file of the Commissioner of lncome Tax (Appeals)-|, 3'd Floor, Aayakar Bhavan,Basheerbagh, Hyderabad, preferred against the Assessment Order datgd 2841-2005 passed in PAN/GIR No. on the file of the AssistantCommissionef of lncome Tax, Central Circle-|, Hyderabad. Between: Shri Suni Aganral (HUF), 15-9-480, Mahaboobgunj, Hyderabad ...Appellant AND The Assistant Commissioner of lncome Tax, Central Circle-1, Hyderabad ...ResIrondent INCOME TAX TRIBUNAL APPEAL NO: 48 OF 2008 Appeal filed'under Section 2604 of the lncome Tax Act, ['1961 ]against theOrder dated 19-10-2007 passed in l.T.(SS)A.No. 138/H{d/2005 for the Block Period1997-98 to 2002-03 & upto 21-01-2003 on the file of the lncome Tax Appellate Tribunal, Hyderabad Bench ['A', ]Hyderabad, preferred against the Order dated 22-08-2005 passed in Appeal No. 0420, 0422 & O423|CC-1 , Hyd/ClT(A)-llHYD/2004-05 onthe file of the Commissioner of lncome Tax (Appeals)-|, 3'd Floor, Aayakar Bhavan,Basheerbagh, Hyderabad, preferred against the Assessment Order dated 31-01-2005 passed in PAN/GIR No. on the file of the AssistantCommissioner of lncome Tax, Central Circle-1, Hyderabad. Between: Shri Suni Aganval (lndl), 15-9480, Mahaboobgunj, Hyderabad ...Appellant AND The Asst, Commissioner of lncome Tax, Central Circle-1, Hyderabad ...Respondent INCOME TAX TRIBUNAL APPEAL NO: {88 OF 2012 Appeal filed under Section 260A of the lncome Tax Act, 1961 against theOrder dated 28-02-2006 passed in l.T.(SS)A.No. 151lHydl2005 for the Block Period1997-98 to 2002-03 & upto 2'l-01-2003 on the file of the lncome Tax AppellateTribunal, Hyderabad Bench 'B', Hyderabad, preferred against the Order dated 02-09-2005 passed in Appeal No 0424lCC-1, Hyd/ClT(A)-llHYU2004-O5 on the file of theCommissioner of lncome Tax (Appeals)-|, 3d Floor, Aayakar Bhavan, Basheerbagh,Hyderabad, preferred against the Assessment Order dated 31-01-2005 passed inPAN/GIR No. ABGPASTB0L on the file of the Assistant Commissioner of lncomeTax, Central Circle-|, Hyderabad. Between: Shri Gyan Kumar Aganrval (lndl), 15-9-480, Mahaboobgunj, Hyderabad ...Appellant AND The Asst. Commissioner of lncome Tax, Central Circle-|, Hyderabad ...Respondent INCOME TAX TRIBUNAL APPEAL NO: 196 0F 2012 Between: Shri Gyan Kumar Aganrval (lndl), 15-9-480, Mahaboobgunj, Hyderabad ...Appellant AND The Asst. Commissioner of lncome Tax, Central Circle-|, Hyderabad ...Respondent INCOME TAX TRIBUNAL APPEAL NO: 196 0F 2012 Appeal filed under Section 260A of the lncome Tax Act, 1961 against theOrder dated 28-O2-20OO passd in l.T.(SS)A.No. 139tHydt2OO5 for the Block PeriodOrder dated 28-O2-20OO passd in l.T.(SS)A.No. 139tHydt2OO5 for the Block Period1997-98 to 2002-03 & upto 21-01-2003 on the file of the lncome Tax AppellateTribunal, Hyderabad Bench 'B', Hyderabad, preferred against the Order dated 22-08-2005 passed in Appeal No. 0420, 0422 & 0423lCC-1, Hyd/ClT(A)-llHYD/04-05 onTribunal, Hyderabad Bench 'B', Hyderabad, preferred against the Order dated 22-08-2005 passed in Appeal No. 0420, 0422 & 0423lCC-1, Hyd/ClT(A)-llHYD/04-05 onthe file. of the Commissioner of Income Tax (Appeals)-I, 3'd Floor, Aayakar Bhavan,Basheerbagh, Hyderabad, preferred against the Assessment Order dated 31-01-2005 passed in PAN/GIR No. on the file of the AssistantCommissioner of lncome Tax, Central Circle-|, Hyderabad-Commissioner of lncome Tax, Central Circle-|, Hyderabad- Between:Shri Gyan KumarAgarwal , 15-9-480, Mahaboobgunj, Hyderabad ...Appellant AND The Asst. Commissioner of lncome Tax, Central Circle - ['1, ]Hyderabad ...Respondent MrAVASivaKartikeyaMs K Mamata ChoudarySenior Standing Counsel forlncome Tax Department Counsel for the Appellantin All the Appealsin All the Appeals Counsel for the Respondentin All the Appeals The Court delivered the following Common Judgment : THE HON'BLE THE CHIEF JUSTICE ALOK ARADHEAND THE HON'BLE SRIJUSTICE J.SREENIVAS RAO l.T.T.A.Nos.47 AND 48 OF 2008188 AND 196 0F 2012 COMMON JUDGMENT: (Per the Hon'ble Sri Jusfrbe J. Sreenivas Rao) Mr. A.V.A.Siva Kartikeya, learned counsel for the appellants. Ms. K.[Vlamata Choudary, Iearned Senior Standing Counsel forlncome Tax Department appears for the respondent. 2. |.T.T.A. Nc,.47 of 2008 and |.T.T.A. No.4B of 2008 are filed against the common order dated 19.10.2007 passed by the lncomeTax Appellate Tribunal, Hyderabad Bench 'A' in I.T. (S..S.)A.No. 1 37lHyd 12005 and l.r. (S. S. ) A. No. 1 3B/Hyd/2005. 3. |.T.T.A. No.18B of 2012 and t.T.T.A..No.196 of 20iZ are filedagainst the common order dated 28.02.2000 passed by the IncomeTax Appellate lribunal, Hyderabad Bench 'B' in l.T (S.S.)A. No.'1 5 1 /Hyd/2005 and l.T. (S.S. ) A. t Jo.'t 39/Hyd/2005. 4. 4. These appeals filed under Section 2604 of the lncome Tax Act,1961 (hereinafter referred to as 'the Act') were admitted on thefollowing substantial question of law: "Whether on the facts and circumstances of the case,the Tribunal erred in holding that the assessee had notdischarged the burden of proof and rebutted the presumptionavailable to the revenue under Section ['132(44) ]of thelncome Tax Act, 1961 while confirming the addition made bythe Assessing Officer?" 5. A common substantial question of law arises for considerationin these appeals. Therefore, these appeals were heard analogouslyand are being decided by this common [judgment. ]For the facility ofreference, facts from l.T.T.A.No.47 of 2008 are being referred to infra. 4. 4. These appeals filed under Section 2604 of the lncome Tax Act,1961 (hereinafter referred to as 'the Act') were admitted on thefollowing substantial question of law: "Whether on the facts and circumstances of the case,the Tribunal erred in holding that the assessee had notdischarged the burden of proof and rebutted the presumptionavailable to the revenue under Section ['132(44) ]of thelncome Tax Act, 1961 while confirming the addition made bythe Assessing Officer?" 5. A common substantial question of law arises for considerationin these appeals. Therefore, these appeals were heard analogouslyand are being decided by this common [judgment. ]For the facility ofreference, facts from l.T.T.A.No.47 of 2008 are being referred to infra. 6. On 21.01.2003, search and seizure operations under Section132 of the Act were conducted at the residential premises ofassessee namely Mr. Sunil Kumar Agarwal, his brother Mr. GyanKumar Agarwal and other members of his family. ln the said Searchand seizure operation, photo copies of share certificates of M/s. JivikaLeasing and Finance Limited were noticed. The said share certificatesare in the name of the assessee, Mr. Gyan Kumar Agarwal andmembers of his family. ln order to verify the source of [genuineness ]forinvesting in the shares, notice under Sectionl5S BD of the Act, dated04.07.2003 was issued. ln response, the assessee filed return ofincome for the block [period ]of Assessment Years from 1997-98 [to]2002-03 and for the [period ]from 01 .04.2002 lo 21.01.2003 in FormNo.2B on 04.08.2003 declaring undisclosed income as ['NlL'. ][The]/- assessee and his family members stated before the Assessing officerthat entire investment for ailotment of shares on the non-existingpersons was a sham transaction and further submitted that theinvestment was made in the year [.1994 ]only. Therefore, investmentmade by the assessee in the year'rgg3-94 does not fail within theblock period and there cannot be any addition with regard to theinvestment made in the shares.7. The Assistant Commissioner of lncome Tax after dueverification of the records and after considering the reply submitted bythe assessee, passed assessment order on 2g.01 .2OOS holding thatthe assessee's urrdisclosed income for the block period isRs.6,54,200A and after deducting the tax, the assessee is liable topay balance tax for an amount of Rs.4,.12,.158/_ and penalty underSection 158 BC and 158 BD of the Act. Aggrieved by the said order,the assessee fired appear before the commissioner of rncome Tax(Appeals)-|, Hyderabad and the appelrate authority dismissed theappeal by its common order dated Z2.OI.ZOOS. Thereupon, theassessee fited appeal vide l.T. (SS) A.No.137tHydl2OOS before thelncome Tax Appeilate Tribunar, Hyderabad Bench ,A, and the samewas dismissed on 19.10.2007. ln the above said factual backdrop, theassessee has?pproached this Court by filing this appeal. 8. Learned counsel for the assessees submitted that theassessee himself admitted that the purchase of shares in M/s. JivikaLeasing and Finance Limited in fictitious names and the entries wererecorded in the books of accounts of the Company for theassestment year ['1995-96 ]and the transaction fell outside purview ofthe block period. lt is further submitted that in the absence of anyevidence, the Assessing Officer came to conclusion that theundisclosed income is for the block period i.e., 1997-98 to 2002-03and for the period 01.04.2002 to 21 .01 .2003 is perverse. lt iscontended that the Commissioner of lncome Tax (Appeals)-1,Hyderabad and Tribunal affirmed the order of Assessing Officerwithout properly considering the grounds of the appeal. 8. Learned counsel for the assessees submitted that theassessee himself admitted that the purchase of shares in M/s. JivikaLeasing and Finance Limited in fictitious names and the entries wererecorded in the books of accounts of the Company for theassestment year ['1995-96 ]and the transaction fell outside purview ofthe block period. lt is further submitted that in the absence of anyevidence, the Assessing Officer came to conclusion that theundisclosed income is for the block period i.e., 1997-98 to 2002-03and for the period 01.04.2002 to 21 .01 .2003 is perverse. lt iscontended that the Commissioner of lncome Tax (Appeals)-1,Hyderabad and Tribunal affirmed the order of Assessing Officerwithout properly considering the grounds of the appeal. 9. lt is contended that the assessee invested in the shares in theyear 1994 in the name of fictitious persons who are not in existence,therefore, it falls beyond the block period. lt is submitted that theassessee discharged his initial burden to prove the factum that theundisclosed income not pertaining to the above said block period. lnspite of the same, the Tribunal erred in holding that the assessee hasnot discharged the burden, is contrary to the evidence on record. 10. Per contra, learned Senior Standing Counsel for lncome TaxDepartment submitted that the Assessing Officer after due verificationof the records passed the order on 28.01 .2005 by giving cogentfindings and the said order was confirmed by the Commissioner oflncome Tax (Appeals)-1, Hyderabad and further the appellate Tribunalalso dismissed the appeal and confirmed the orders of theCommissioner of lncome Tax (Appeals)-|, Hyderabad. lt is alsoargued that the findings of fact recorded by the Assessing Officer oflncome Tax as well as the Tribunal do not suffer from any infirmitywarranting interference of this Court in these appeals under Section2604 of the Act. 11. We have considered the rival submissions made by both sidesand have perused the record. The main grievance of the assessee isthat he invested in the shares in the ['year ]'1994 in the name offictitious persons who are not in existence and the same falls beyondthe block period concerned. The Tribunal while dismissing the appealspecifically held that the investment made by the assessee had notbeen disclosed to the lncome Tax Department even in the eadierassessment years. lt was further held that as per Section 1SB BB(2),in computing the undisclosed income of the block period, theprovisions of Sections 68, 69, 694, 698 and 69C of the Act will apply and the reference to the [financial ][year ][in ][those ][Sections ][shall ][be]construed as reference to [the ][relevant previous ][year falling ][in ][the]block period including the [previous ][year ][ending ][with the ][date ][of]search or requisition. [The Tribunal ][after ][considering ][the ][provisions ][of]Section 698 of the [Act ][held ][that the ][assessee ][was found ][to ][be ][the]owner of the valuable article [and ][the amount ][of ][investment ][on ][such]valuable article shall [be deemed ][to ][be ][the ][income of ][the ][assessee ][in]the financial [year ][in ][which ][such ][valuable ][article ][was ][found'] 12. Admittedly, the [search operation ][took ][place on 21 ][01 ][2003 ][and]the revenue authorities [found the share certificates and the assessee]was the owner of [the ][valuable ][article ][i.e., ][share ][certificates' ][The]record discloses that the [assessee ][has not ][placed ][any ][iota ][of]evidence to establish [that the investment ][was ][made ][in ][the ][year ][1994']It is trite law that the [initial burden lies ][upon ][the assessee to prove ][the]claim that the [investment was made ][in ][the year ][1994 ][and the same ][is]notpertainingtotheblockperiod.Thefindingsoffactrecordedbytheauthorities under [the Act ][are based ][on ][meticulous appreciation ][of]evidence on record. 13. The appellate [Tribunal ][while dismissing ][the ][appeal, ][confirmed] the order of the Commissioner [of ][lncome Tax (Appeals)-|, Hyderabad] 13. The appellate [Tribunal ][while dismissing ][the ][appeal, ][confirmed] the order of the Commissioner [of ][lncome Tax (Appeals)-|, Hyderabad] as well as the order of the Assessment Officer, by giving cogentreasons taking into account of the provisions of the Act. 14. This Court in an appeal under Section 2604 of the Act cannotinterfere with the findings of fact until and unless the same areshown to be perverse or based on no evidence. The findings of factrecorded by the authorities cannot be termed as perverse 15. ln view of the preceding analysis, the substantial question oflaw is answered against the assessees and in favour of revenue. 16. ln the result, we do not find any merit in these appeals. Thesame fails and are hereby dismissed. No costs. Miscellaneous petitions, pending if any, shall stand closed. Sd,- K. SRINIVASA RAOJorNT REGISTRAR')SECTION OFFICER /ffRUE COPY// \ To,1. The lncome Tax Appellate [Tribunal, Hyderabad Bench ]['A" ][Hyderabad]1. The lncome Tax Appellate [Tribunal, Hyderabad Bench ]['A" ][Hyderabad] 2. The lncome [Tax ][Appellate Tribunal, Hyderabad Bench 'B', Hyderabad] 3. The Commissioner'of [lncome ][Tax ][(Appeals)-;, ][3'd ][Floor, ][Aayakar ][Bhavan']Basheerbagh, HYderabadBasheerbagh, HYderabad 4.TheAssistantCommissioneroflncomeTax,CentralCircle-l,Hyderabad5. one CC to Ms K [Mamata Choudary, Senior Standing Counsel ][for ][lncome ][Tax]Department 5. one CC to Ms K [Mamata Choudary, Senior Standing Counsel ][for ][lncome ][Tax]Department 6. One CC to Mr A \/ A Siva [Kartikeya, Advocate ]IOPUC] 7. Two CD Copies Vtugh Vtugh% HIGH COURT DATED:2311212024 COMMON JUDGMENT lTTA.Nos.47 & 48 of 2008, 188 & 19G ot 2012 DISMISSING ALL THE APPEALS ,{ W