Santosh Kumar Jha Son Of Shri Bhagwan Lal Jha Resident Of Flat v. Deputy Commissioner Of Income Tax Central Circle 2 Patna

IN THE HIGH COURT OF JUDICATURE AT PATNAMiscellaneous Appeal No.507 of 2015 ====================================================== Santosh Kumar Jha Son of Shri Bhagwan Lal Jha Resident of flat No. 122,Jamuna Apartment , Boring Road, Po S.K. Puri P.s Sk.Puri, District Patna. ... ... Appellant/s Versus Deputy Commissioner Of Income Tax Central Circle 2 Patna ... ... Respondent/s ====================================================== withMiscellaneous Appeal No. 195 of 2016 ====================================================== Santosh Kumar Jha Son of Shri Bhawan Lal Jha Resident of Flat, 22, JamunaApartment, Boring Road, P.O. S.K. Puri, PS S.K Puri, District Patna. ... ... Appellant/s Versus DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2PATNA ... ... Respondent/s ====================================================== Appearance :(In Miscellaneous Appeal No. 507 of 2015)For the Appellant/s: Mr. D.V.Pathy, Advocate For the Respondent/s: Mrs. Archana Sinha, Sr. SC, Income Tax (In Miscellaneous Appeal No. 195 of 2016)For the Appellant/s: Mr. D.V.Pathy, Advocate For the Respondent/s: Mrs. Archana Sinha, Sr. SC, Income Tax ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE RAJIV ROYCAV JUDGMENT(Per: HONOURABLE THE CHIEF JUSTICE) Date : 16-02-2024 The two appeals are by the assessee against acommon order of the Income Tax Appellate Tribunal, PatnaBench, in two appeals before the Tribunal, from the commonorder of the First Appellate Authority; one by the revenue andthe other by the assessee. 2. We shall first take up the appeal against therevenue’s appeal. In the appeal before the Tribunal, the revenuehad raised two grounds, one with respect to the relief granted tothe assessee by the First Appellate Authority with reference tothe amounts withdrawn by the assessee from different accountsmaintained and operated by him. This issue was remanded to theAssessing Officer for consideration and we find no question oflaw arising from the same. The next issue urged by the revenuewas with respect to the difference in the value of immovableproperties based on the valuation of the District ValuationOfficer, in excess of that shown in the registered deed. We have,on the date of hearing, rejected the appeal by the revenueagainst the said ground for reason of it being below the limitprescribed under the litigation policy. What remains is theassessee’s appeal for the assessment year 2005-06. 3. The only question arising from the above order is as to:- ‘Whether the assessment for the year 2005-06has to wait till the disposal of the suit filed bythe assessee, wherein he had claimed amountsfrom the State far in excess of that alreadydisbursed; which disbursed amounts also is claimed to have been utilized fully in providingflood relief ? 4. The entire assessment arises from an allegedscam, in which the assessee is said to have been involved. Theassessee was the proprietor of two concerns supplying materialsto the Bihar Government in its various Departments. In the year2004, 6 districts of Bihar were badly affected by floods andthere was a massive flood relief work initiated by the StateGovernment in conjunction with the Central Government.Tenders were apparently invited and received and the successfulbidder was the Bihar State Small Scale Industries CorporationLtd., Indra Bhawan Patna, a State Government undertaking. Theflood relief work was immediately commenced by the DistrictMagistrate, Patna, designated as the Nodal Officer with theMinistry of Home Affairs, Government of India acting as theNodal Agency. The State Government was overseeing the reliefwork through the Disaster Management Department, headed bythe Commissioner, Patna, under the direct supervision of theChief Secretary, Bihar. Funds were released and relief materialwere said to have been supplied, both by air and road. 5. Later, a scam came to light in which funds tothe extent of Rs.17.80 crores released by the State Government between 12.07.2004 to 06.08.2004 was siphoned off to afraudulent firm with the abbreviation ‘BSSSI’ which stands forBaba Satya Sai Enterprises; akin to the short form of Bihar StateSmall Scale Industries Corporation Ltd.; in the name of SanjeevKumar, a fictitious person. On inquiry, it was revealed that theaccounts in the name of the fraudulent firm was operated by theassessee; established through forensic reports of hand writingexperts and statement on oath by the Branch Manager of theBank. Funds were transferred from this account to several otheraccounts of the assessee and his family members and associatesaggregating to Rs.1678.45 lakhs. FIRs were lodged against theDistrict Magistrate, Patna the Computer Operator and theassessee; the first of whom expired in the course of theproceedings. 6. The assessment made against the assessee wasof the entirety of the amounts diverted from the amountssanctioned by the State Government. The assessee’s contentionitself was that he had supplied the material far in excess of thatreceived and he has to receive Rs.1317.09 lakhs from the StateGovernment. The assessee also asserted that he has suppliedrelief material to the extent of Rs.3097.09 lakhs and forrealization of the balance amounts, he has filed Title Suit of 5743 of 2014 in the Court of First Sub-Ordinate Judge, Patna. 7. The learned counsel for the appellant-assessee Sri. D.V. Pathy, specifically relied on the judgment of thelearned Single Judge in Civil Miscellaneous Jurisdiction CaseNo.1107 of 2023, wherein an expeditious consideration of thesuit was directed. Learned Standing Counsel for theDepartment, however, asserted that there was no substantiationof the purchases made of relief materials and in suchcircumstances, the entire income has to be assessed in the handsof the assessee. The fact that the assessee received the amountsby way of a fraud, would not deviate from the liability ofincome tax as against the money’s received in the hands of theassessee, which is income assessable to tax. The Departmentalso relied on Indraprastha Agencies v. Commissioner ofIncome Tax reported in (2004) 266 ITR 320. 8. We have to immediately notice that though theamounts were siphoned off and deposited in an account of afictitious firm, registered in the name of a fictitious person, theassessee admits to have utilized the said amounts in supplyingrelief material. There is also evidence to substantiate theoperation of the accounts by the assessee. Hence, as held by theTribunal, the assessee cannot wriggle out of the liability unless the purchases and the money spent on relief material issubstantiated, failing which the assessee would have to be taxedfor the entire money’s received in the accounts. 9. We do not think that there is any reason to keepthe matter pending till the suit is disposed off. As has beenrightly noticed by the Tribunal, neither would the findings of theAssessment Officer have a bearing on the disposal of the suitnor would the findings in the suit have a bearing on theassessment to be carried out. The assessee has not produced anymaterial before the Assessing Officer to substantiate thepurchases made by him, from the amounts disbursed by theState Government for the purpose of providing flood relief. TheTribunal has categorically noticed that no evidence was led bythe assessee before the Assessing Officer. 9. We do not think that there is any reason to keepthe matter pending till the suit is disposed off. As has beenrightly noticed by the Tribunal, neither would the findings of theAssessment Officer have a bearing on the disposal of the suitnor would the findings in the suit have a bearing on theassessment to be carried out. The assessee has not produced anymaterial before the Assessing Officer to substantiate thepurchases made by him, from the amounts disbursed by theState Government for the purpose of providing flood relief. TheTribunal has categorically noticed that no evidence was led bythe assessee before the Assessing Officer. 10. A contention was raised based on Section 50 ofthe Disaster Management Act, 2005, but no certificate ofutilization was produced by the assessee. The supply of reliefmaterial was the responsibility of the Corporation and if at all,the utilization certificate is obtained, it can only be by theCorporation. The assessee had no privity of contract either withthe State or the Corporation to supply relief material and there isno question of a utilization certificate issued under the Disaster Management Act coming to the rescue of the assessee. 11. We find absolutely no question of law arising in the case and the question framed is one on facts and not onlaw. The appeal against the order of the Tribunal, in the secondappeal filed by the assessee, would stand rejected. 12. Ordered accordingly. (K. Vinod Chandran, CJ) Rajiv Roy, J. I agree. (Rajiv Roy, J) sharun/- AFR/NAFRNAFRCAV DATE08.02.2024Uploading Date16.02.2024Transmission DateNA