Itta/35/2001 Of Dr.p.ravindra Reddy v. Asst.commir.of Income Tax Hyd

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A.No.35 of 2001 DATED: 3.7.2013 Between:Dr. Ravindra Reddy,Hyderabad. … Appellant AndAssistant Commissioner of Income Tax,Hyderabad. … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA ANDTHE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A.No.35 OF 2001 Judgment:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is directed against the judgment and order ofthe learned Tribunal dated 23.5.2000. The appeal was admitted by this Court on 22.3.2001without formulating any substantial question of law ascontemplated under the provisions of Section 260-A of theIncome Tax Act, 1961 (for short ‘the Act’). It is the duty of theCourt to formulate the substantial questions of law. Therefore,the Court before proceeding to hear the appeal, formulated thefollowing substantial questions of law. i)Whether on the facts and circumstances of thecase, the Appellate Tribunal was right insustaining the assessment made under Section158 BD of the Act and holding that the samewas not barred by limitation ?case, the Appellate Tribunal was right insustaining the assessment made under Section158 BD of the Act and holding that the samewas not barred by limitation ? ii) Whether in the facts and circumstances of thecase, the Hon’ble Tribunal was right insustaining an addition of Rs.2,50,000/- to theextent of being alleged suppressed investmentin house construction as undisclosed income inthe face of the detailed explanation given by thecase, the Hon’ble Tribunal was right insustaining an addition of Rs.2,50,000/- to theextent of being alleged suppressed investmentin house construction as undisclosed income inthe face of the detailed explanation given by the appellant ? iii)Whether on the facts and circumstances of thecase, the Hon’ble Tribunal was correct inholding that the sum of Rs.1,05,000/- being giftsreceived on the occasion of house warmingceremony during the assessment year 1994-1995 appear to be mere “gifts of convenience”and disbelieve the explanation of the appellant ?case, the Hon’ble Tribunal was correct inholding that the sum of Rs.1,05,000/- being giftsreceived on the occasion of house warmingceremony during the assessment year 1994-1995 appear to be mere “gifts of convenience”and disbelieve the explanation of the appellant ? Learned counsel for the appellant submits that at the firstinstance, as far as the third point is concerned, he is notpressing the same. He leaves the matter with the Court todecide. Learned counsel for the appellant submits that the learned Tribunal is totally wrong in law while treating the presentcase under Section 158BD in order to hold that this case is notbarred by limitation under Section 158BE. He submits that thesearch admittedly was conducted in the assessee’s ownhouse also, of course, it is in continuation of the search andseizure of another person, namely, Dr. S.S. Reddy.Nonetheless, the material relied on for the purpose of thatassessment was found to be in consequence of searchconducted in the assessee’s own house. Therefore, in allpractical purposes, this case cannot come within the purview ofSection 158BD and therefore, the assessment order was notmade within the date of one year from the date of conductingthe search. The search was conducted on 20.9.1995 and thesearch warrant was issued on 13.12.1995 and the assessmentorder was issued on 31.12.1996. According to him, Section 158BE provides that: “(1) The order under Section 158BC shall bepassed _ According to him, Section 158BE provides that: “(1) The order under Section 158BC shall bepassed _ (a)within one year from the end of the month in whichthe last of the authorization for search under Section132 or for requisition under Section 132-A, as thecase may be, was executed in cases where a searchis initiated or books of account or other documents orany assets are requisitioned after the 30[th] day ofJune, 1995, but before the 1[st] day of January, 1997.the last of the authorization for search under Section132 or for requisition under Section 132-A, as thecase may be, was executed in cases where a searchis initiated or books of account or other documents orany assets are requisitioned after the 30[th] day ofJune, 1995, but before the 1[st] day of January, 1997. (b)Within two years from the end of the month in whichthe last of the authorizations for search underSection 132 or for requisition under Section 132A, asthe case may be, was executed in cases where asearch is initiated or books of account or otherdocuments or any assets are requisitioned on or afterthe 1[st] day of January, 1997.” the last of the authorizations for search underSection 132 or for requisition under Section 132A, asthe case may be, was executed in cases where asearch is initiated or books of account or otherdocuments or any assets are requisitioned on or afterthe 1[st] day of January, 1997.” According to the learned counsel, in this case, theassessment order has to be passed within one year, but notwithin two years. He submits that the addition of Rs.2,50,000/-which was spent on account of the house construction wasstated to be undisclosed income was totally incorrect and adetailed explanation was given by the appellant and suchexplanation could not have been disbelieved. Learned counsel for the respondent submits that thesearch was not conducted independently in the house of theassessee, but it was in continuation of the search and seizureconducted in the case of Dr. S.S. Reddy. Therefore, this casecomes within the purview of Section 158BD. He also draws ourattention to the findings of the learned Tribunal. We are of the view that if the appellant succeeds on thefirst point, then the other point need not be considered at all. From the records, we find that the search was admittedlyconducted in the house of the appellant on 20.9.1995 and thesearch warrant was issued on 13.12.1995 and assessmentorder was made on 31.12.1996. We fail to understand how thiscase will come within the purview of Section 158BD. Section 158BD provides as follows: “Where the Assessing Officer is satisfied that anyundisclosed income belongs to any person, otherwisethan the person with respect to whom search wasmade under Section 132 or whose books of accountor other documents or any assets were requisitionedunder Section 132A, then, the books of account, otherdocuments or assets seized or requisitioned shall behanded over to the Assessing Officer havingjurisdiction over such other person and that AssessingOfficer shall proceed under Section 158BC againstsuch other person and the provisions of this Chaptershall apply accordingly.” The learned counsel’s contention that it is a continuation ofsearch conducted in the house of Dr. S.S. Reddy and it was notan independent one is not acceptable to the Court as we havefound that two separate search warrants were issued. Therefore, whether it is a continuation or otherwise hardlymatters. The fact remains that the search was conducted in thehouse of the appellant on the strength of the separate warrantsand the material collected during the search and seizure wasrelied on during the block assessment. Therefore, it is incorrectthat the search was conducted for the block assessment. Therefore, this case cannot come within the purview of Section 158BD. The learned counsel’s contention that it is a continuation ofsearch conducted in the house of Dr. S.S. Reddy and it was notan independent one is not acceptable to the Court as we havefound that two separate search warrants were issued. Therefore, whether it is a continuation or otherwise hardlymatters. The fact remains that the search was conducted in thehouse of the appellant on the strength of the separate warrantsand the material collected during the search and seizure wasrelied on during the block assessment. Therefore, it is incorrectthat the search was conducted for the block assessment. Therefore, this case cannot come within the purview of Section 158BD. If this case does not come within the purview of Section158BD, then obviously the one year period mandated underSection 158BE admittedly had ended as the assessment orderwas passed beyond one year from the date of search, i.e., fromthe end of the month in which the last of the authorization forsearch under Section 132 was executed. It appears, thesearch was conducted on 20.9.1995, warrant was issued on13.12.1995 and the assessment order was passed on31.12.1996 admittedly, beyond one year period. Therefore, thecase is barred by limitation. Accordingly, we allow the appeal and set aside the ordersof block assessment. There shall be no order as to costs. ________________________ K.J. SENGUPTA, CJ ______________________ G. ROHINI, J 03.07.2013 pnb