Itta/455/2010 Of Smt.r.prabhavathi v. Asst.commissioner Of Income Tax

THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON'BLE SRI JUSTICE RAMESH RANGANATHAN ITTA No.455 of 2010 Dated:09.08.2010 Between: Smt.R.Prabhavahi. …Appellant and Asst.Commissioner of Income Tax,Central Circle, Tirupati. …Respondent THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON'BLE SRI JUSTICE RAMESH RANGANATHAN ITTA No.455 of 2010 JUDGMENT:(per Hon’ble Sri Justice Ramesh Ranganathan) This appeal, under Section 260A of the Income Tax Act, 1961(the Act), is preferred by the assessee against the order of the IncomeTax Appellate Tribunal, Hyderabad Bench, in IT(SS)A No.62/Hyd/07,dated 06.03.2009. Facts in brief are that the assessee, holder of a General Power ofAttorney (GPA) given to her by Sri P.Venkatasubbaiah on 17.12.1997in respect of 17 cents of land in Survey No.471, K.T.Road, Tirupati,entered into a joint venture agreement dated 17.01.1998 with adeveloper, M/s.Harini Constructions, Tirupati. The said agreementstipulated that the landowner, represented by GPA, would get 33 1/3%of the constructed area, and the rest would go to the developer. The share of the assessee, as per that agreement, worked out to six flatsand 2/3[rd] of the seventh flat. The assessee paid Rs.1,67,000/- for the1/3[rd] portion of the flat and got seven flats to her share. The developeralso paid Rs.4,99,845/- to the assessee in addition to giving her sevenflats. The assessee sold the seven flats for Rs.22,01,000/-. However,she neither accounted for receipt of Rs.4,99,845/- from the developer,nor for the sale proceeds of the seven flats. As the search and seizureoperation conducted on the husband of the assessee Sri R.Krishna Murthy, on 07.02.2003, revealed the aforesaidtransactions of the assessee, proceedings under Section 158BD of theAct was initiated. In the course of block assessment, the AssessingOfficer found that the assessee had paid Rs.6,00,000/-, to the ownerSri P.Venkatasubbaiah, before getting the GPA in respect of theaforesaid land. Taking into consideration the statement of thelandowner Sri P.Venkatasubbaiah, who was also cross examined bythe assessee, the Assessing Officer completed the block assessment,and treated the consideration received on the sale of seven flats,amounting to Rs.22,01,000/-, as the assessee’s undisclosed income. An assessment order dated 29.03.2006 was passed under Section158BD of the Act. In appeal, the Commissioner of Income Tax (Appeals) confirmedthe order of assessment. Thereafter, a second appeal was preferred tothe Tribunal. The Tribunal, in the order under appeal, noted that thequestion, which clinched the issue, was whether the assessee passedon the sale proceeds to the landowner as claimed by her. TheTribunal noted that the Assessing Officer had brought on recordevidence to the contrary in the form of deposition by the landownerwho, in the course of his statement during the assessmentproceedings, had confirmed having not received from the assesseeany amount other than Rs.6,00,000/-, which was received prior to theexecution of the GPA in favour of the assessee. The Tribunal alsoheld that, in the absence of any evidence brought on record by theassessee either to substantiate her claim of having passed on the saleproceeds to the landowner, or to contradict the statement of thelandowner before the Assessing Officer denying receipt of any amountother than Rs.6,00,000/-, the Assessing Officer was justified in treatingthe sale proceeds of Rs.22,01,000/- as the undisclosed income of theassessee. The Tribunal further held that there was no stipulation inthe GPA with regard to any commission to which the assessee, as anagent, would be entitled to, and on the contrary it was an undisputedfact on record that the assessee had paid only Rs.6,00,000/- to thelandowner so as to secure the GPA in her favour. The Tribunal held that it was for the assessee to substantiate that the sale proceedsreceived by her had been handed over to the landowner, and whenthere was evidence in the form of statement of the landlordcontradicting the stand of the assessee, it was for the assessee torebut the same by adducing any other evidence and, since theassessee had failed to discharge the onus that lay on her, the order ofthe lower authority did not necessitate interference. Before us Sri A.V.Krishna Koundinya, learned Counsel for theassessee, would reiterate the very same submissions urged before theTribunal before us also. He would further submit that since the Officer,who conducted search and seizure operation, had not recorded hissatisfaction that the undisclosed income belonged to the assessee, thevery initiation of proceedings under Section 158BD of the Act stoodvitiated. Learned Counsel would rely on Manish Maheshwari vAssistant Commissioner of Income Tax[[1]]. It is required to benoted that the contention regarding the failure of the Officer, whoconducted the search and seizure operation, to record his satisfaction,has been urged for the first time before us. As the question urged is amixed question of fact and law, it could not have been urged for thefirst time before this Court in proceedings under Section 260A of theAct, as an appeal thereunder lies only on a question of law. Evenotherwise the Supreme Court, in Manish Maheshwari, observed asunder:- “…..The condition precedent for invoking a block assessmentis that a search has been conducted under Section 132, ordocuments or assets have been requisitioned under Section132A. The said provision would apply in the case of anyperson in respect of whom search has been carried out underSection 132A or documents or assets have beenrequisitioned under Section 132A. Section 158BD, however,provides for taking recourse to a block assessment in termsof Section 158BC in respect of any other person, theconditions precedents wherefor are : (i) Satisfaction must berecorded by the Assessing Officer that any undisclosedincome belongs to any person, other than the person withrespect to whom search was made under Section 132 of theAct; (ii) The books of account or other documents or assetsseized or requisitioned had been handed over to theAssessing Officer having jurisdiction over such other person;and (iii) The Assessing Officer has proceeded under Section158BC against such other person. The conditions precedent for invoking the provisions ofSection 158BD, thus, are required to be satisfied before theprovisions of the said chapter are applied in relation to anyperson other than the person whose premises had beensearched or whose documents and other assets had been requisitioned under Section 132A of the Act….” The very fact that the records were transferred to the AssessingOfficer to enable him to proceed and assess the assessee for theundisclosed income, is by itself proof of the fact that the Officer, whohad conducted the search and seizure operation, was satisfied that theundisclosed income belonged to the assessee. As such, thecontention that no proceedings could have been initiated underSection 158BD of the Act must fail. The order of the Tribunal is a wellconsidered and reasoned order. We see no reason to take a viewcontrary thereto. The appeal fails and is, accordingly, dismissed. __________________(V.V.S.RAO, J) ______________________________(RAMESH RANGANATHAN, J) 09.08.2010vs [1](2007) 289 ITR 341 (SC)