Itta/206/2007 Of Smt. Konda Radhika v. Asst. Commissioner Of Income-Tax

IN THE HIGH [COURTfOR ] AT HYDERABAD MONDAY, THE TWO THOUSAND PRESENT THE HONOURABLE ANDTHE HONOURABLE INME TAX TRIBUNA [N][OS: ][205 ] [206][ oF ][2007] INCOME TAX TRIBUNAL [N][O: 205 OF ][2007] Appeal filed under [Section 260A ][of ][the ][lncome ][Tax ][Act' ][1961 against ][the]orderdated15-12-2006passedinl.T.(SS).A.No.118/Hyd/03(BlockPeriod1989-90to 1999-2000) on [the ][file of the ][lncome ][Tax ][Appellate ][Tribunal' ][Hyderabad Bench]'A', Hyderabad, preferred against [the ][Order dated 03-07-2003 passed in ][Appeal ][No']556/DCIT,KRM/C|T(A).|ll/02{3onthefileoftheCommissioneroflncomeTax(Appeals - lll), Hyderabad [preferred against ][the ][Order ][dated ][30-08-2001 passed ][in]PAN/GIRNo.R-816onthefileoftheDeputyCommissioneroflncomeTax,Circle-1 , Karimnagar Between: Smt. Konda San.ieeva [Rani, ][Wo ][Konda]Ramesh, 4-1-817, [OsmanPura']Karimnagar District ...Appellant AND Asst. Commissioner [of lncome Tax, Circle-|, Karimnagar] ...Respondent INCOME TAX [ :2OG ] [2OO7] Appeal filed under [Section ][260A ][of ][the ][lncome ][Tax ][Act' ][1961 against ][the]orderdatedls-12-2oo6passedin|.T.(SS).A.No.119/Hyd/03(BlockPeriodl989.90to 1999-2000) [on ][the ][file of the ][lncome ][Tax ][Appellate Tribunal' ][Hyderabad ][Bench]'A', Hyderabad, preferred against [the ][Order ][dated ][15-07-2003 passed ][in ][Appeal ][N6']767lAClT KRM/ClT(A)-ltl/02-03 [on the ][tile ][of ][the ][Commissioner ][of ][lncome ][Tax] r (Appeals - lll), Hyderabad preferred against the order dated 30-09_2002 passed inPAN/GIR No ACrr. cir-i / R-956 on the fire of the Assistant commissioner oflncome Tax, Circle - I, Karimnagar. Between: Smt. Konda Radhika, 4-1-9t7, Osmanpura, Karimnagar ...Appellant AND Asst. Commissioner of lncome-Tax, Circle_1, Karimnagar ...RespondentMr AVA Siva KarikeyaRep Mr AV Krishna Koundinya(in Both the Appeats)Mr P Murali KrishnaSenior Counsel for lncome Tax(in Both the Appeals) Counsel for the AppellantCounsel for the RespondentCounsel for the Respondent The Court delivered the following Common Judgment : THE HON'BLE THE CHIEF JUSTICE ALOK ARADHEANDTHE HON'BLE SRI JUSTICE J.SREENTVAS RAO I.T.T.A. Nos.2OS and,2o6 of 2OO7 COMMON JUDGMENT:[(Per ]the Hon'ble the Chief Justice [Alok Aradhe)] Mr. A.V.A. Siva Kartikeya, learned counsel represents Mr. A.V. Krishna Koundinya, learned counselfor the appellants. Mr. P. Murali Krishna, learned counsel for [the]respondent (Revenue) 2. These appeals hled by the assessees under Section260-A of the Income Tax Act, 1961 (hereinafter referredto as "the 196 1 Act") emanate from common order dated15.12.2006 passed by the Income Tax Appellate Tribunal(hereinafter referred to as "the Tribunal"). 3. The subject matter of these appeals [pertains ][to]block period 1989-1990 to L999-2OOO. The appeals [were]admitted on the following substantial question of [law:] r.f "Whether the income tax appellate tribunalcommitted an error of law in reversing the u,ellreasoned order dated O3.OZ.2OO3 passed by 1.hereasoned order dated O3.OZ.2OO3 passed by 1.heCommissioner of Income Tax Appeals and idordering deletion of addition of a sum ofRs.4,00,000/- on account of unexplainedinvestment in the house property?,,unexplainedinvestment in the house property?,, 2. These appeals hled by the assessees under Section260-A of the Income Tax Act, 1961 (hereinafter referredto as "the 196 1 Act") emanate from common order dated15.12.2006 passed by the Income Tax Appellate Tribunal(hereinafter referred to as "the Tribunal"). 3. The subject matter of these appeals [pertains ][to]block period 1989-1990 to L999-2OOO. The appeals [were]admitted on the following substantial question of [law:] r.f "Whether the income tax appellate tribunalcommitted an error of law in reversing the u,ellreasoned order dated O3.OZ.2OO3 passed by 1.hereasoned order dated O3.OZ.2OO3 passed by 1.heCommissioner of Income Tax Appeals and idordering deletion of addition of a sum ofRs.4,00,000/- on account of unexplainedinvestment in the house property?,,unexplainedinvestment in the house property?,, 4. Facts giving rise to hling of the appeals brieflystated are that the husbands of the assessees, namely,Konda Ramesh and Konda Srinivas, are the partners ofM/s. Hanuman Parboiled Rice and Oil Mill, a partnershipfirm. A search under Sectiorl 132 of the 196 1 Act wasconducted on 09.03. 1999 at the residence of Sri KondaRamesh, namely, the husband of assessee inITTA.No.2OS of 2OOZ as well the office of the pertnershipfirm. The sea_rch operations were completed on05.05.1999. Certain material was found in theresidentia.l premises in respect of the expenditureincurred for construction of residentia_l-cum-shopping .i1 compiex at Osmanpura, [Karimnagar, ][which was ][seized']The husbands of [the ][assessees, ][during the ][course ][of]search operations, [made statements ][under ][Section ][132(41]of the [196 ][1 ][Act ][that ][total ][investment ][in ][the ][construction]was Rs.15 lakhs [whereas ][only ][a ][sum of Rs'7 lakhs ][was]accounted [lor.] 5. Thereafter, [show cause notices ][dated ][07'09'2000]under Section [1588D of ][the ][1961 ][Act ][were ][issued ][to ][the]assessees seeking [explanation ][on ][various ][points]mentioned in [the noLice. ][The ][assessees ][were asked ][to]show cause [why ][a ][sum of ][Rs'll ][lakhs ][should ][not ][be]brought to assessment [as ][undisclosed income ][for ][the]block period. [The ][assessees ][filed ][their returns ][showing]NIL as their undisclosed [income' ][The ][Assessing Oflicer']an order [dated ][30.08.200 ][1, ][inter ][alia ][held ][that ][the]by assessees' [husbands, ][during ][the ][course ][of ][search]had [categorically ][admitted ][that ][the ][total]proceedings, investmentintheconstructionwasRs.15lakhsonlyarrd the accounled portion was Rs.7 lakhs. The AssessingOfficer, on the basis of admission made under Section132(4) of the 196 1 Act during the course of searchproceedings . inter alia, held that there is no proof to thecontrarJr ancl accordingly treated the difference amount ofRs.8 lakhs as unexplained investment and since both theassessees had SOo/n share in the construction, he,therefore treated Rs.4 lakhs each as undisclosedinvestment lbr the block period in the hands of theASSCSSCCS. 6Being aggrieved, the assessees filed appeals beforethe Commissioner of Incorne Tax (Appeaf Thes). Commissioner by an order dated O3.O7.2OO3, inter alia,held that the Assessing Ofhcer erred in making theaddition of Rs.4 lakhs each as undisclosed income solelyon the basis of sworn statements made theirby the Commissioner of Incorne Tax (Appeaf Thes). Commissioner by an order dated O3.O7.2OO3, inter alia,held that the Assessing Ofhcer erred in making theaddition of Rs.4 lakhs each as undisclosed income solelyon the basis of sworn statements made theirby husbands at the time of search. It was further hekl thatthe statement.s made at the time of search cannot bethe statement.s made at the time of search cannot be 6Being aggrieved, the assessees filed appeals beforethe Commissioner of Incorne Tax (Appeaf Thes). Commissioner by an order dated O3.O7.2OO3, inter alia,held that the Assessing Ofhcer erred in making theaddition of Rs.4 lakhs each as undisclosed income solelyon the basis of sworn statements made theirby the Commissioner of Incorne Tax (Appeaf Thes). Commissioner by an order dated O3.O7.2OO3, inter alia,held that the Assessing Ofhcer erred in making theaddition of Rs.4 lakhs each as undisclosed income solelyon the basis of sworn statements made theirby husbands at the time of search. It was further hekl thatthe statement.s made at the time of search cannot bethe statement.s made at the time of search cannot be made the sole basis for making an order of [assessment.]It was also held that the Assessing Ofhcer [should ][have]referred the issue pertaining to the [cost ]of construction [to]the Valuation Celt and got the [valuation ][conducted ][by]the Departmental Valuation Oflicer and [should ][have]arrived at the correct cost [of ][construction. ] [finding ][was]recorded that in arry case the Assessing [Ofhcer should]have got the valuation done by the [Inspector attached ][to]him. Accordingly, the order [passed ][by ][the ][Assessing]Offrcer was set aside. 7. Being aggrieved by the aforesaid order, [ttre ][Revenue]hted the appea.ls before the Tribunal. [The ][Tribunal ][by ][a]common order dated 15.12.2006, [inter alia, held ][that ][the]husbands of the assessees in [the ][statements ][made ][under]Section L32{41 of the 1961 [Act had ][categorically ][stated]that the investment made on [the ][construction was ][Rs.15]lakhs. It was further held [that ][mere ][opinion of ][a valuer]cannot obliterate the statemerrts [made ][by the ][husbands] of the assessees. It was also held that in case thestatements made by the husbands of the assesseers at thetime of search were not correct, the assessees shouldhave brought some cogent materia-l to disprove the sameThe Tribunal therefore set aside the orders passed by theCommissioner of Income Tax (Appeals) and restored theaddition in case of both the assessees. Hence, theseappeals. 8. Learned counsel for the assessees submitted thatthe Tribunal ought to have appreciated that merestatements of the husbands of the assessees at the timeof search, cannot form the basis to assess the in<:ome ofthe assessees. It is submitted that the statements madeunder Section 132(4) of the 1961 Act during the course ofsearch proceedings ought to be accompanied by thematerial which may be coliected during the course ofsearch proceedings. g. In support of the aforesaid submissions, [reliance]has been [placed ]on [the ][decisions ][of the ][Delhi and ][the]erstwhile Andhra [Pradesh ][High Courts ][in ][Commissioner]andof tncome-Tax [vs. Harjeev ][Aganral ] Commissioner [of ][lncome-Tax, ][Hyderabad ][vs' ][Naresh]Kumar Agarwal2. 10. On the [other hand, ][learned ][counsel ][for ][Revenue ][has]submitted that [no ][substantial ][question ][of ][law ][arises ][for]consideration [in ][these ][appeals ][and ][the ][Tribunal ][has]recorded cogent [the ][reasons ][for ][setting ][aside ][the ][order]passed by the Commissioner [of ][Income ][Tax ][(Appeals)' ][It]is further submitted [that ][the ][Assessing ][Officer ][had]relied [on ][the ][statements ][recorded ][under ][Section]rightly i-32$l of the [1961 ][Act ][during ][the ][course ][of ][search]and [the ][Tribunat has ][rightly ][restored ][the]proceedings order [passed ][by the ][Assessing Offrcer'] t 120161 70 Taxmann.com 95 (Oelhi) ' 120151 [53 ][Tarmann.com 306 ][(Andhrsfraglesh)] 1 1. In support of his submissions, referenr:e has beenmade to Division Bench decisions of High Courts ofmade to Division Bench decisions of High Courts ofMadras and Kera,la in Thiru A.J. Ramesh Kumar vs.Deputy Commissioner of Income Tax a andCommissioner of Income-Tax vs. Hotel Meriyaa.Deputy Commissioner of Income Tax a andCommissioner of Income-Tax vs. Hotel Meriyaa. We have considered the rival submissions and have 12.perused the record. t 120161 70 Taxmann.com 95 (Oelhi) ' 120151 [53 ][Tarmann.com 306 ][(Andhrsfraglesh)] 1 1. In support of his submissions, referenr:e has beenmade to Division Bench decisions of High Courts ofmade to Division Bench decisions of High Courts ofMadras and Kera,la in Thiru A.J. Ramesh Kumar vs.Deputy Commissioner of Income Tax a andCommissioner of Income-Tax vs. Hotel Meriyaa.Deputy Commissioner of Income Tax a andCommissioner of Income-Tax vs. Hotel Meriyaa. We have considered the rival submissions and have 12.perused the record. 13. Section 132 of the 1961 Act deals with Search aldSeizure. Section B2g) of the said Act provides thatauthorized offrcer may during the course of search orseizure examine on oath any person who is found to be inpossession or control of any books of account,document.s, money, bullion, jewellery or other va_luablearticle or thing ald any statement made by such personduring such examinalion may thereafter be used inevidence in any proceeding und.er the Indiaa Income_Tax t 12022; 139 tarrnann.com 190 (Mad{atL'(2010) 19S Taxman 4S9 (Kerata)12022; 139 tarrnann.com 190 (Mad{atL'(2010) 19S Taxman 4S9 (Kerata) Act, 1922 or under the 1961 Act. Explalation to Section132(4) provides that examination of ary person relerredto in Section 132(4) may not be merely in respect of anybooks of account, other documents or assets found as aresult of the search, but also in respect of all mattersrelevant for the purposes of any investigation connectedwith any proceeding either under the Indian Income-TaxAct, 7922 or under the 1961 Act. 14. Thus, it is evident that a statement recorded underSection 132(4) of the 1961 Act is evidence within thepurview of evidence under Section ISBBD of the 196 1 Actread with Section 3 of the Indian Evidence Act, 1872 andSection 131 of the 1961 Act and is admissible inevidence. 15. The Supreme Court in Pullangode Rubber ProduceCo. Ltd vs. State of Keralas in paragraph 4 held asfollows: "4. There is material on record to showthat in respect of the assessment year 1963-64,the year previous to ttre one with which we areconcerned in this case, the Tribunal refused torefer similar questions which the assessee wantedit to refer to the High Court. But, at the instanceof the assessee those questions were referred tothe High Court as ordered by the High Court andthe High Court answered those questions infavour ol the assessee. It is no doubt true thatentries in the account books of the assesseeamount to an admission that the amount inquestion was laid out or . expended for thecultivation, upkeep or maintenance of immatureplalts from which no agricultural income u,asderived during the previous year. An admission isan extremely importaht -piece of evidence but itcannot be said that it is conclusive. It is open tothe person who made the admission to show that"it is incorrect. An admission is [an ][extremely ][important ][piece ][of]but [the ][same ][is ][not ][conclusive as ][it ][is ][open ][for]evidence, the person making [admission ][to ][show ][that ][it ][is incorrect']16. In ttre instant [cases, ][the husbands ][of ][the ][assessees]made statements [under ][Section ][B2$) ][of ][the ][1961 Act]during the course [of ][search' ][The ][fact ][that ][total ][cost ][of]construction [was ][Rs.15 ][lakhs ][was ][reiterated ][by ][the]assessees on [O3.05.1999. ][Once ][the ][statements ][were]recordedonoath,thestatementshadanevidentia4rvalue and the [presumption ][is ][that ][the ][statements ][made]under Section [132(41of ][the ][1961 ][Act ][are ][true ][ald ][correct]unless the [assessees ][plead ][that ][the ][statements ][have been]obtained forcibty [or by ][coercion ][or ][undue ][influence']Once the statements [are ][recorded ][under ][Section ][B2$l ][of]the 1961 Act, [the ][sarne ][can ][be ][used ][as ][evidence ][against]the assessees. [In ][such ][a ][case, ][the ][burden ][lies on ][the]assessees to [establish ][that ][the ][admission ][made ][in ][the]statements [is either ][incorrect ][or ][wrtrng'] 77. In the instaat cases, the assessees have tailed todischarge the said burden. It is not the case of theassessees that their husbands made statements eitherunder coercion or undue influence. No attempt has beenmade by the assessees to explain such a, admission.Therefore, in the facts and circumstances of the case, theTribuna.l rightly set aside the order passed by theCommissioner of Income_Tax (Appeals). It is pertinent to note that the Division Bench of theis pertinent to note that the Division Bench of thepertinent to note that the Division Bench of theto note that the Division Bench of thethat the Division Bench of thethe Division Bench of theBench of thethe 18.It is pertinent to note that the Division Bench of theis pertinent to note that the Division Bench of thepertinent to note that the Division Bench of theto note that the Division Bench of thethat the Division Bench of thethe Division Bench of theBench of thetheDelhi ald erstwhile Andhra pradesh High Courts inHarjeev Agarwal (supraf ald Naresh Kumar Aganrral(supraf did not consider the decision of the StrpremeCourt in [pullangode ]Rubber produce Co. Ltd (supraf.The aforesaid decisions a-re not applicable to the factsituation of the present cases.Delhi ald erstwhile Andhra pradesh High Courts inHarjeev Agarwal (supraf ald Naresh Kumar Aganrral(supraf did not consider the decision of the StrpremeCourt in [pullangode ]Rubber produce Co. Ltd (supraf.The aforesaid decisions a-re not applicable to the factsituation of the present cases. 19. In view of the preceding paragraphs and for theaforementioned reasons, the substarrtial question of law framed by this Court is answered in favour of theRevenue and against the assessees20. In the result, the appeals fail ald are herebydismissed. Miscellaneousapplications, if any pending, shallstand closed. There shall be no order as to costs. Sd/. K. SRINIVASAAOJOINT REGISSECTION OF ICER /ffRUE COPYII To, 1.The lncome Tax Appellate Tribunal, Hyderabad Bench ,A,, Hyderabad2The Commissioner of lncome Tax (Appeals _ lll), Hyderabad2The Commissioner of lncome Tax (Appeals _ lll), Hyderabad3,The Deputy Commissioner of lncome Tax, Circle_.1, Karimnagar4.The Assistant Commissioner of lncome Tax, Circle _ 1, Karimnagar4.The Assistant Commissioner of lncome Tax, Circle _ 1, Karimnagar 5,One CC to Sri AV Krishna Koundinya, Advocate 6.One CC to Sri P Murali Krishna, Advocate IOPUCI7.Two CD Copies7.Two CD Copies VA/ghYY HIGH COURTDATED:09112t2024 COMMON JUDGMENTlTTA.Nos.20s & 206 of ZOOT DISMISSING BOTH THE APPEALS !{r [r-tE ][ti ][i'..i, ],q-)2I 0E[ ['-.;]l' [l]1.r.'&\Drr ;,..\ t r.l--:-