La No: 1 Of 2023 v. Prasad, Sc For Tncome Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD WEDNESDAY ,THE SEVENTH DAY OF JUNETWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYANAND THE HONOURABLE SRI JUSTICE N.TUKARAMJI I.A.NO.1 0F 2023IN/ANDINCOME TAX TRIBUNAL APPEAL NO:415 OF 2006 (lncome Tax Tribunal Appeal Under section 260-4 of the lncome Tax Act 1 961,against the order of the lncome Tax Appellate Trrbunal, Hyderabad Bench ,A,,Hyderabad in ITA No.49lHydt2\O2, for Assessment year 1998_1999, dated31-03-2006, preferred against the order of the commissioner of lncome Taxagainst the order of the lncome Tax Appellate Trrbunal, Hyderabad Bench ,A,,Hyderabad in ITA No.49lHydt2\O2, for Assessment year 1998_1999, dated31-03-2006, preferred against the order of the commissioner of lncome TaxAppeals-V, in Hyderabad, tTA No 677M t(3)/C|T(V)/200-02 dated 28_12_2001,preferred against the order of the lncome tax officer, ward-i (3), HyderabadPAN/GlR No. F-891,dated 20-03-2001 )PAN/GlR No. F-891,dated 20-03-2001 ) Between: Sri P. Rami Reddy, 201. Sai Nidhi Residency, Naqariuna Naoar Colonv. SriNagar Cotony, Hyderabad_500073 ...AppELLANTlAppeu(rAND lncome Tax Officer, Ward 1 (3) New Range-7, Hyderabad_500001. ...RESPONDENT/RESPONDENT lA NO: 1 OF 2023 Application under Section 151 cpc praying that in the circumstancesstated in the affidavit filed in support of the petitron, the High court may bepleased to permit the Petitioner to raise additional substantia-i question oi lawwhich is purely legal and relevant for adjudication in the interests oi justice.which is purely legal and relevant for adjudication in the interests oi justice. Counsel for the Appellant: SRI K.p. AMARNATH REDDY FOR SRtKARTHIK RAMANA PUTTAMREDDY Counsel for the Respondent: SRI J. V. PRASAD, SC FOR TNCOME TAX The Court made the following JUDGMENT: TH E IION]B I,EJIHE CHI ETTICE U AI B I{LryANAND ]HEJIOSLE SRIICE N.TUKABAIUTI.A.Nrr.1 of 202-l rnl& I.T.T.A. No.415 of 2006J llDGIrt-EN'I, [r ][i ][lin ][t ][t,,: i.i, ][t ][h? ][t ][t..'.,,i:t ][(,tia/ ]Bhut,tn) Ifeard -\&. K.P.Amamath Reddn leamed counsel for theappellant and M-r. J.V.Prasad, leamed Standing Counsel, IncomeTax Depanment for rhe respondenr. 2. This appeal has been preferred by the assessee as theappellant under Section 260A of the Income Tax Act, 1961 @iefly'the Act' herehafter) againsr the order dated 31.a3.2006 passed bythe Income fax Appeliate Tribunal, Hyderabad Bench 'A',H;derabad (briefly 'the ['Iribunal' ]hereinafter)lnI.T.ANo.a9/H1d/2002 for the assessmenr year 1998-99. l. Though the appeal\\asadminedon27.09.2006, nosubstantial question of iaw was framed. However, in rhe memo ofappeal, appeilant has proposed the following quesrions assubstantial questions of [aw: I 1. [\X/hether ]on the [facts ][and ][in ][the ][circumstances ][of ][this ][case, ][the]Tribunal was [justified ][in ][uphotding ][the ][inclusion ][o[ ][a ][sum ][of]k.33,77,329.00 [in ][the ][taxable ][income ][of ][the ][assessee ][holding ][it]as the assessee's [unexplained ][income ][for ][assessment]year 1998-99 [?] 2. [tff/hether ]on the [facts ][and in ][the ][circumstances ][of ][the ][cxe, ][the]Tribunal wx [jutified ][in ][holding ][that ][the declaration ][filed bythe]assessee under the [Voluntary Disclosure ][of ][Income ][Scheme]of 1997 should be [treated ][x ][a ][,ralid ][document, ][though]Secdon 67Q) of the [Finance ][Act, ][1997 mandates ][that ][such ][a]declaration shall be deemed [to ][have never been ][made, ][when ][the]appropriate tax was not [paid within ][the stipulated ][time ][?] 3. Whether on the facs and [in ][the circumstances ][of ][the ][case' ][the]Tribunal was [justified ]in treating [one ]Part [of ][the ][declaration ][as]valid evidence, and treating another [part ][of ][the ][same ][declaration]as invalid evidence ? 2. [tff/hether ]on the [facts ][and in ][the ][circumstances ][of ][the ][cxe, ][the]Tribunal wx [jutified ][in ][holding ][that ][the declaration ][filed bythe]assessee under the [Voluntary Disclosure ][of ][Income ][Scheme]of 1997 should be [treated ][x ][a ][,ralid ][document, ][though]Secdon 67Q) of the [Finance ][Act, ][1997 mandates ][that ][such ][a]declaration shall be deemed [to ][have never been ][made, ][when ][the]appropriate tax was not [paid within ][the stipulated ][time ][?] 3. Whether on the facs and [in ][the circumstances ][of ][the ][case' ][the]Tribunal was [justified ]in treating [one ]Part [of ][the ][declaration ][as]valid evidence, and treating another [part ][of ][the ][same ][declaration]as invalid evidence ? 4. \X/hether on the facts and in [the ][circumstances ][of ][the ][case, ][the]Tribnnal was [justified ]in [ignoring ][Secdon ][72 ][of ][the ][Finance]Act, 1997 which ensures [secrecy ][of ][a ][declaration ][?] 5. \X/hether on the facts and [in ][the circumstances ][of ][the ][case, ][the]Tribunal was [justilied ]in [rruking ][use ][of ][r.he ][declaration when]nnder Section 7 7 of the Finance [Acr, ][1997 ], [tle ][declaration ][is ][not]admissible as evidence against [a ][declarant ][?] 6. V{hether on the facts and [in ]fie [circumstances ][of ][the ][case, ][the]Tribunal was [jusdfied ]in upholding [the addition ][in ][assessment]year 1998-99, [qzhereas ]any addition, if at [all, could ][have ][been] l I made onlt' lor assessment v'trs 1978-79 to 1981-82, n*Lich hrdrlre:ldv become tirne-b:rrcrl. by the time the assess.ing officermade the relcvant 6sessm('nL ?rlre:ldv become tirne-b:rrcrl. by the time the assess.ing officermade the relcvant 6sessm('nL ? 7. \lherher [()n ]the f.rcts :rntl [Ln ]the circumstances oltthe [case, ][the]'IribLmel r.-a:, right in holJing, tlrat the assessee should explain thesource oi his acqtLisition of the [jewellery ]even [though ][the]ecquisition t,rok place [q'hen ]the assessee was [a ][minor ][?] 8. V4rether on the f:rcts and [r,r ]the circumstances [of ][the ][case, ][the]'fribunal was right in holding that the burden of proof *as onthe assessec to demonstmtc [that ][the jewellery ][was ][not ][acquired]cluring the accounting year [,elevant ][to ][assessment ][yar ][1998-99 ][?] 9. [tff4rether ]on the facts and in the [circumstances ][of ][the ][case, ][the]Tribunal ha<l the [jurisdiction ]to [uphold ][the ][addition ][under]Section 69- A of the [Act, ][s ][hereas ][the lower authority ][made the]addition u.nd,:r a different scction [namely Section ][69 ][of ][the ][Act ][?] 4. Subsequently I.ANo.1 of [2023 has been ][filed by ][the]appellant proposing an additional [question ][of ][law ][as ][under:] \&/hether the Tribunal ancl lower authorities erred in sustainingthe assessment under the [Acr ][based ][on ][the ][declaration ][submitted]by the appe llant rrnder the [Voluntary ][Disclosure ][of ][Income]Scheme. 1997 when on thc ff,ce of the [declaration. there ][is ][no]income rrisrng out of the possession [of ][gold jewellery ][and ][silver]utensfu rvhich [rv'ere ]acquted by way of inheriance [berween the]peiod 1977-78 to 1980-81 on var-ious occasions ?.the assessment under the [Acr ][based ][on ][the ][declaration ][submitted]by the appe llant rrnder the [Voluntary ][Disclosure ][of ][Income]Scheme. 1997 when on thc ff,ce of the [declaration. there ][is ][no]income rrisrng out of the possession [of ][gold jewellery ][and ][silver]utensfu rvhich [rv'ere ]acquted by way of inheriance [berween the]peiod 1977-78 to 1980-81 on var-ious occasions ?. II II 5. Appellant [is ][an ][assessee ][under ][the Act ][having the ][smns ][of ][an]individual. [He ][is ][in ][the ][restaurant ][business' ][For ][the ][assessment]year under consideration, [appellant ][had ][filed ][retum ][of ][income]on 03.03.1999 [declaring ][income ][of ][k'96,734'OO ][apan ][from]agricultural [income ][of ][RS.35,OO0.OO. ][The ][case ][was ][selected ][for]scnrtiny [v"4rereafter assessment ][order ][dated ][20.03'2001 was ][passed]by the assessing [officer ][under ][Section ][1a3(3) ][of ][the ][Act' ][Assessee]had filed declaration [dated ][24.12.1997 ][tnder ][sub-section ][(1) ][of]Section 65 of the [Finance ][Lct, ][1997 ][panly ][declaring ][gold ][jewellery]and silver utensils [under ][the ][Voluntary ][Disclosure ][of ][Income]Scheme, 1997 P.irefly'the [Scheme' ][hereinafter). FIe ][mentioned]that gold [jewellery ]and [silver ][utensfu ][were purchased ][by ][him ][and]also acquired by way of [inheritance ][on ][various ][occasions']Flowever, the gold [jewellery ][was ][not ][disclosed ][in ][his ][income ][tax ][as]well as wealth tax reruns. [Along ][with ][the disclosure, ][assessee ][had]submitted a [valuation report ][of ][gold jewellery and ][silver ][utensfu ][as]which value of the [gold ][jewellery ][and ][silver ][utensils ][was]per I \ deternined .rt ik. 16.C.1,19 i.'ll Hou,ever, assessec failed [to ][pay ][the]required tax unrler the Schenrt 6. V4ren tl'.' asse ssing [,,fircer ]received [infonnation ][regarding]such disclosure bythe [asscsscc. ][he ][initiated enquiryand ][called upon]the assessee to lumish [infonrution ][regarding ][the gold ][jewelleryand]silver utensils d isclosed [undcr ][the Scheme. However, ][assessee ][was]quite evasive in his [reph' ][contending ][that ][such ][disclosure ][had]become invrlid in [vierv ]ol [n()n-Pa),rnent ][of ][ta-x. ][That ][aparl, ][afrct ][a]long penod of ten yearc [assessec ][could ][not ][be ][questioned ][as ][to ][how]he came in possession oi [t ][lre ][gold ][jewellery ][and ][silver ][utensils']Such replyof [the ][assessee ][\\"s ][not ][accepted ][bythe ][assessing ][officer']By the assessm,:nt [order ][dated 20.03.2001, he proceeded ][to ][value]the gold [jervellery and ][si.lver ][,.rtensils ][for ][the ][assessment ]lear [r-rnder]consideration and [trcated ][the ][same ][as ][unexplained ][investment]under Section 69A of [the ][Act.] 7. The aforesaid order ol [the ][assessing ][officer ][was ][assailed ][by ]the assessec bctore the first ,rppellate authoriry [2.e.. ][Commissioner] I I of Income [Tax ][(Appeals)-IV, ][Hlderabad ][ftriefly ]['CIT(A)']lrereinafter). [Bythe ][appellate ][order ][dated28'12'2001' ][the ][appeal ][of]the assessee [was ][dismrssed' ][\flhile ][dismissing ][the ][appeal ][of ][the] assessee, [CIT(A) ][observed ][as ][under:] a. The [assessee ][did ][not deny ][possession ][of ][the ][assets'] b. The [assessee ][categorically refused ][to ][provide ][any ][evidence ][in]of [his ][claim that ][the ][impugned ][assets ][were acquired ][by]support him in the [financial ][yeas ][1977-78 ][to ][198G81'] c. The AO [was ][within ][his ][right ][to ][ask ][for ][such ][evidence ][since ][the]assessee [vas ][only ][12 ][to ][Lllears old ][at ][the material ][point ][of dme]and the immuniry [under ][the ][\DIS ][1997 v,ns ][not ][available ][to ][the]assessee. d. Thfud [parry corroboration ][of ][the fact that ][the ][assets ][in]existed [at ][dre ][time ][of ][declaration' ][in ][the ][form ][of ][a]question valuation repon obtained [from ][a ][registered ][valuer' ][is ][available'] 8. Agairst [the ][aforesaid ][order ][of ][qT($, ][assessee ][preferred] funher appeal [before the ][Tribunal' ][Bythe ][order ][dated 31'03'2006']Tribunal upheld [the ][order ][of ][the ][assessing ][officer ][as ][affirmed by]the CIT(A). [Relevant ]Ponion [of ][the ][order ][dated ][31'03'2006 ][reads]as follows: c. The AO [was ][within ][his ][right ][to ][ask ][for ][such ][evidence ][since ][the]assessee [vas ][only ][12 ][to ][Lllears old ][at ][the material ][point ][of dme]and the immuniry [under ][the ][\DIS ][1997 v,ns ][not ][available ][to ][the]assessee. d. Thfud [parry corroboration ][of ][the fact that ][the ][assets ][in]existed [at ][dre ][time ][of ][declaration' ][in ][the ][form ][of ][a]question valuation repon obtained [from ][a ][registered ][valuer' ][is ][available'] 8. Agairst [the ][aforesaid ][order ][of ][qT($, ][assessee ][preferred] funher appeal [before the ][Tribunal' ][Bythe ][order ][dated 31'03'2006']Tribunal upheld [the ][order ][of ][the ][assessing ][officer ][as ][affirmed by]the CIT(A). [Relevant ]Ponion [of ][the ][order ][dated ][31'03'2006 ][reads]as follows: 7 . \\t Irzrrt, Ircrtl r i,'.r] conrenrions. On a c,rrtiulconsidelerron oi rli.' l,rer. .rnci circunut;rnces of thc cirse,w'e are of rhe considc'rt'rl (,i,inion that the order of thc firstappcllxtc .u.rthom\. h,rs i,, be r"rpheld for the follotingreasoni. [-l-he ].rsscssec ii.r. .,,,r,, ///lit) rt-tadt a decLrrationbefore the [(f'l ]on.l-l-12-199l it'hereir he stated,,{I'} I, that he is in possession ol cenain gold and jet.ellery. Thefactum ol thc assesst'.' lreing in possession of gold,jewellerr. s ilr-er rn.'nsils .rl, ,rrq uith cenain dirmonds is notdenied enr.r'here in thc ., [) ]u:c oi proceedings. lhe claimthat r,.4rete,-er is st.rted h\ rhe irssessee has to be acceptedby the Revenue c,1rlrl()r be countenanced. In thedeclaration iilecl bv rhr .rss,'ssee. the factum of possessinggold etc., i: not in rlisputc fhc onlv dispute is to the r.aarof acqukition. The rss..':,s,', is dut1.[6*r.1 to substantiatehis claim thet the;rssets in rprc'stion were acquied as longback as 1977-78 l'hen hc ''as [just ]L2 yearc old. This is aclassic c:lse of an assessce oiiering no explanation as to thenature and sor-rrce of :rn irrvestment and to the of)€ar inl'estmcnt. The in,'estnrert in question u-as definitely notrecorded in bools oi ,.rcc,,,-,,rr trs ,rdm.irted by the assesseehimself. A third partr, r.,'. the registered raluer, hadcenified thaL he h.rcl secn tlr(' items of jewellery and valuedthe same . None oi the c.rsl l.nrs re lied upon by the lelmedcounsel i'or the ,uscsscc .l..rrl.,. srates that the burden ofproof lics r.,ith rhc ,\s..ssirrg (Xficer on the issue of tear II \ of investment ['r"hene.'er he ][invokes the provisions ][o[ ][sec.]69. The fact r-emains [that ][the ][factum ][o[ ][the ]ienellery [beng]Ln the possession of the assessee, [had ][come ][to ][the]knowledge oL the Revenue only [during ][the ][previous ][year]1997- 98 relevant to asst. year [1,998-99.]8. Co-i"g to the \DIS 1997 [introduced ]by [the]Finance Pct, 1997, u'e find that sub-sec. Q) [of ][sec.67 ][oi]the Finance Act states: "I[ thc dcclarant fails to pay the tax inrespect o[ the volr.urtarily disclosed incomebcfore the expiry of three months from the [date]of f LLng o[ rhe declaration, the declaration filedbv hrm shall be deemed never to have been madeunder this Scheme." [Emphasis oun] II \ of investment ['r"hene.'er he ][invokes the provisions ][o[ ][sec.]69. The fact r-emains [that ][the ][factum ][o[ ][the ]ienellery [beng]Ln the possession of the assessee, [had ][come ][to ][the]knowledge oL the Revenue only [during ][the ][previous ][year]1997- 98 relevant to asst. year [1,998-99.]8. Co-i"g to the \DIS 1997 [introduced ]by [the]Finance Pct, 1997, u'e find that sub-sec. Q) [of ][sec.67 ][oi]the Finance Act states: "I[ thc dcclarant fails to pay the tax inrespect o[ the volr.urtarily disclosed incomebcfore the expiry of three months from the [date]of f LLng o[ rhe declaration, the declaration filedbv hrm shall be deemed never to have been madeunder this Scheme." [Emphasis oun] Nowhere it says that this declaration k not est in law northat it carLnot form evidence based on which an assessmentcan be made. A plain reading of sec. 69 of the Income-ta-xAct, 1961, shows that when the assessee offers nothat it carLnot form evidence based on which an assessmentcan be made. A plain reading of sec. 69 of the Income-ta-xAct, 1961, shows that when the assessee offers noexplanation about the nature or sourae of the investment,the ralue of the investment may be deemed ro be rhethe ralue of the investment may be deemed ro be rheincome o[ the assessee for the financial par.9. In the case of Ashok Kumar Rastogi v. CIT, 59ITR 4ll, the Hon'ble Allahabad Flgh Coun was9. In the case of Ashok Kumar Rastogi v. CIT, 59ITR 4ll, the Hon'ble Allahabad Flgh Coun wascorsidering an addition of Rs.50,000 in some unexplainedbusiness and the finding therein was that from theestirnated sale, it could not necessarily be inferred that thebusiness and the finding therein was that from theestirnated sale, it could not necessarily be inferred that the tI I t assessee hed invesred R\.i:.C:C. Noq-hert in thi-r decisionhas a proposition bern I.rJ clotn br the I Ion'blc Cburtth.rt the ;\(-) has to disch.ut..' the bLurlcn oi proc,i. Even inthe other c.rse I;r\\,\ rtlic.l L,pon bl the ,rsse ssc,), \\'e itndth:rt the pr,)position soug[r, to [-,e c.invessed is n()t sLrpPottby anl' of t)re [judqnrenrs.] 10. Thus, '*-e fuLlv asrce i ith the iindings oi the firstappellate a,rthorill'in p,rr'.r:r.:rphs [-l ]end 4.i to [1.4 ]oi [his]order. 11. LookLng at the i'sLr,-' iront ,rnother .rng[e, [the]assessee al.o falls [r.rit ]hir r thc embit of [sec. ][59A ][of ][the]Income-ux Act, 1961. l.Lr,rliecl at irorn [an1- ][angle, ][the]appeal of the assessee [h.rs ]ti, be dismssed. \2. In th.' result. the [rrppe.rl ]ol-the [assessee is ][dismissed.] 9. Thus according to the [-I'rit,unal, ][assessee ][had ][suo ][mottt made ][a] declaration beforc the revenue ot [24.12.1997 ][stating ][that ][he ][was ][in]possession of certain gold [jeu'ellery ][and ][silver ][utensils. ][Ffu never]denied possession of gold [jewellcry ][and ][silver ][utensils ][at ][any ][stage]of the proceedings. [The ]only [dispute ][was ][to ][the ][year ][of ][acquisition.]It was the duryol the assessei'to [substantiate ][his ][claim that ][he ][had]acquired the golcl [jewellery ]and [silver ][utensils ][long ][back ][Since]assessee did not discharge his burden, assessing officer was jLstified I in treating the same as undisclosed [investment ]of [the ][assessee.]Since assessee did not paythe tax upon the [voluntarydisclosure, ][he]could not avail benefit r.rnder the Scheme. [Nonetheless, ][it ][was ][an]information r 4rich could be validly utilised by the assessing officerwhich he did. 10. We see no eror or infirmity in the view taken by the Tribunal. No question of law much less anysubstantial question ofIaw arises in the appeal. Consequently, the questions proposed bythe appellant are answered against the assessee and in favour of therevenue. 11,. Resultantly, the appeal is dismissed and I.ANo.1 of 2023'sdisposed of. No costs. As a sequel, miscellaneous petirions, pending if any, stand closed Sd/. B.S.CHIRANJEEVIJOINT REGISTRARC-al //TRUE COPY// SECTION OFFICER To, 1. The lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad 10. We see no eror or infirmity in the view taken by the Tribunal. No question of law much less anysubstantial question ofIaw arises in the appeal. Consequently, the questions proposed bythe appellant are answered against the assessee and in favour of therevenue. 11,. Resultantly, the appeal is dismissed and I.ANo.1 of 2023'sdisposed of. No costs. As a sequel, miscellaneous petirions, pending if any, stand closed Sd/. B.S.CHIRANJEEVIJOINT REGISTRARC-al //TRUE COPY// SECTION OFFICER To, 1. The lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad 2. The Commissroner of lncome Tax Appeals-V, Hyderabad 3. The lncome tax Officer. Ward-1 (3), Hyderabad. 4. One CC to SRI KARTHIK RAMANA PUTTAMREDDY, Advocate 5. One CC to SRl. J. V. PRASAD (SC FOR INCOME TAX), Advocate 6. Two CD Copies5. One CC to SRl. J. V. PRASAD (SC FOR INCOME TAX), Advocate 6. Two CD Copies DL g.C d HIGH COURT DATED:07/06/2023 JUDGMENTr.A.NO.1 0F 2023 tN/ANDITTA.No.415 of 2006 DISMISSING THE APPEAL ANDI.A.NO.,I OF 2023IS DISPOSED OFI.A.NO.,I OF 2023IS DISPOSED OF g\e75\2#* 1[a ] [IAIt']'o+'c-'{i, .t ,l,,o1r [lutlm].*rjt//\._et!sP \,,/'{'-----,