The Deputy Commissioner Of Incometax Investigation Circle, Faridabad v. Om Parkash Aggarwal (Huf

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITAa78a1999 Date of decision: 30.09.2014 The Deputy Commissioner of IncomeTax Investigation Circle, Faridabad.-.- Appellant VERSUS Om Parkash Aggarwal (HUF) ... Respondent CORAMHON;BLE MR. JUSTICEK RAJIVE BHALLHON;BLE MR. JUSTICE AMIT RAWAL Present"Mr.Tejinder K. Joshi, Advocate, for the appellant.Mr.Sanjay Bansal, Senior Advocate, withMs.Rajni Pal, Advocate, for the respondent. KOK oK RAJIVE BHALLA, J. (ORAL) The revenue is before us challenging order dated30.11.1998, passed by the Income Tax Appellate Tribunal, DelhiBench 'B', New Delhi, (hereinafter referred to as the ‘ITAT")dismissing an appeal filed by the revenue while accepting an appealfiled by the assessee. Before we refer to the arguments and record our opinion,it would be appropriate to briefly refer to the facts. The respondent-assessee is an HUF which filed its returnfor assessment year 1989-90, declaring an income of Rs.23,280/-alongwith agricultural income. The Income Tax Departmentsearched the business and residential premises of the assessee on ITA,78,1999 | 2 | 28.04.1988 and recovered cash and jewellery. The assesseesurrendered Rs.1,25,Q000/- as cash and Rs.75,000/- being the value oSilver articles seized trom the premises. The assessing officer passedan order making additions on account of declared cash, value ofSilver seized from the premises and unexplained investment inproperty during the assessment year 1988-89.The assessee acceptedthe assessment and deposited the tax demanded by the department.The assessing officer, however, included the surrendered income etc.in the assessment year 1989-90. Aggrieved by the assessment order, the assessee filed anappeal. The Commissioner of Income Tax (Appeals), Faridabad,(hereinafter referred to as the 'CIT(Appeals)') dismissed the appealbut granted relief by reducing the addition of Rs.75,000/- toRs.42,000/-. Both, the assessee and the revenue filed separate appeals.After due consideration of the arguments, the record and theimpugned orders, the ITAT set aside the order passed by the CIT(Appeals) as well as the assessment order primarily on the groundthat as additions, had already been made in the year 1988-89, theassessee had already discharged his tax liability in assessment year1988-89 and proceedings initiated under Section 263 of the IncomeTax Act, 1961 (hereinafter referred to as the ‘Act') had admittedlybeen dropped, the assessee could not be taxed once again for the ITA,78,1999 13| Same surrendered/recovered income in the subsequent assessmentyear 1939-90. Counsel for the revenue submits that as the search tookplace on 28.04.1988, the assessee was to be assessed for theseadditions in the year 1989-90, in view of Section 69-A of the Act,The mere fact that the assessee may have been wrongly assessed inassessment year 1988-89, does not absolve the assessee of hisliability to be assessed in assessment year 1989-90. If the assesseewas wrongly assessed in the year 1988-89, it could have filed anappeal and assessment if erroneous, would have been set aside. Thesubstantial question of law, therefore, must necessarily be answeredin favour of the revenue by setting aside the order passed by theITAT. Counsel for the respondent while not denying the factualmatrix of the revenue's plea, submits that as the assessee had alreadybeen assessed and paid the requisite tax, even if the assessment orderpassed in the present case is restored, the tax effect would be nil.The appeal in the present case is but an academic exercise and as theITAT has taken a rational view of the matter even if the substantialquestion of law is answered in favour of the revenue, the orderpassed by the ITAT may be affirmed. We have heard counsel for the parties, perused theimpugned orders as well as the substantial question of law, which ITA,78,1999 reads as follows: - Counsel for the respondent while not denying the factualmatrix of the revenue's plea, submits that as the assessee had alreadybeen assessed and paid the requisite tax, even if the assessment orderpassed in the present case is restored, the tax effect would be nil.The appeal in the present case is but an academic exercise and as theITAT has taken a rational view of the matter even if the substantialquestion of law is answered in favour of the revenue, the orderpassed by the ITAT may be affirmed. We have heard counsel for the parties, perused theimpugned orders as well as the substantial question of law, which ITA,78,1999 reads as follows: - “Whether on the facts and in the circumstances of thecase, the Hon'ble ITAT was justified in law in deletinglegally and correctly made additions in A.Y. 1989-90 justbecause some addition was not so correctly made in someother assessment year?” An answer to the substantial question of law framed doesnot pose any degree of difficulty as Section 69-A of the Actnecessarily requires an assessee, who is found to be owner of anymoney, bullion, jewellery, or valuable article, to be assessed in therelevant assessment year and not in the financial year in which theassessee was found to be owner or in possession of such money,bullion and jewellery etc. The assessing officer was, therefore,required to assess the assessee in assessment year 1989-90. ‘Thequestion of law is, therefore, answered in favour of the revenue in sofar as it concerns the year in which the assessee was required to beassessed but this answer, in our considered opinion, would notsuffice to set aside the order passed by the ITAT. Admittedly, though in violation of Section 69-A of theAct, the assessee was assessed for the declared income as well as theseized silver in assessment year 1988-89. It is not disputed that taxon the declared income and seized silver etc. was paid in compliancewith assessment order passed in assessment year 1988-89. Thus, ITA,78,1999 even if we were to hold by relying upon Section 69-A of the Act thatthe assessee was to be assessed, in view of the search dated28.04.1988, in assessment year 1989-90, the tax effect namely anybenefit to the revenue would be nil. The revenue having alreadyreceived tax payable by the assessee, restoration of the order passedby the assessing officer would not result in any revenue gain or lossto the revenue and, therefore, while holding that the assessee shouldhave been assessed in assessment year 1989-90, are in completeagreement with the opinion recorded by the ITAT, which reads asfollows: - “]......1n the circumstances, ordinarily the addition iscalled for in the A.Y. 1989-90, the one under appeal.However, it is a fact that the addition in this regard hasalready been made in A.Y. 1988-89. From the facts asstated above it is clear that in addition to the surrendermade by the assessee both in respect of the cash as well asjewellery, the assessing officer further added a sum ofRs.75,000/- bringing the total to Rs.2,75,000/-. Though thebasis were not given the fact remains that the additioncalled for from his point of view was the one as made. It isalso a fact that proceedings initiated under section 236 ofthe also dropped. It is not known whether they weredropped because the assessment for assessment year 1989-90 had been made or for the reasons given in the letter asaddressed to be the assessee or otherwise. The fact remainsthat the matter attained finality at the end of the learnedCommissioner of Income-tax (Administration). In thecircumstances, it is difficult to hold that the addition for the ITA,78,1999 | 6 | ITA,78,1999 | 6 | same items could be made 1n two assessment years. This 1smore so when the tacts pertaining to the search as well asthe explanation rendered by the assessee were before theassessing officer while framing assessment for assessmentyear 1988-89. No new facts had come to the notice of thesubsequent assessing officer to warrant the addition madefor assessment year 1989-90. In view of this it is notnecessary to offer comments on the merits of the addition. 8.Coming to the appeal filed by the revenue the orderof the Ld. CIT(A) has been challenged on the followinggrounds: - “On the facts and in the circumstances of the case,the Ld. CIT(A) has erred in law and factsthe Ld. CIT(A) has erred in law and facts (1)In restricting addition of Rs.65,000/- toR.40,553/- on account of unexplained investment insilver stock.R.40,553/- on account of unexplained investment insilver stock. (11)Restricting addition of Rs.96,226/- toRs.35,200/- on account of gold jewellery belongingto Smt.Shakuntala Devi.”Rs.35,200/- on account of gold jewellery belongingto Smt.Shakuntala Devi.” It would also be appropriate to point out that theCommissioner of Income Tax had initiated proceedings underSection 263 of the Act, a provision that enables the Commissioner torevisit an order or proceedings that have led to a loss of revenue orare in any manner prejudicial to the interest of the revenue. Theproceedings as admitted by counsel for the revenue and recorded bythe Income Tax Appellate Tribunal were dropped thereby in essencelending credence to the findings recorded by the Tribunal that even if ITA,78,1999 the assessment order passed in the assessment year 1989-90 is notrestored, it would not cause any loss to the revenue, Consequently, while answering the question of law infavour of the revenue, we are not inclined to set aside the orderpassed by the ITAT and, therefore, dismiss the appeal. 30.09.2014Shamsher S.Sabharwal | RAJIVE BHALLA |JUDGE|} AMIT RAWAL JUDGE