V M Dawra, 342, Rajmal Ka Talab, Jaipur v. Commissioner Of Income Tax, Ncrb Building Statue Circle,Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 57 / 2002 V M Dawra, 342, Rajmal Ka Talab, Jaipur ----Appellant Versus 1. Commissioner Of Income Tax, NCRB Building Statue Circle,Jaipur. 2. Dy. Commissioner of Income Tax Spl. Range-2, Jaipur. ----RespondentsConnected With Terry Fab India Ltd, Village Chandwaji, Tehsil Amer, District Jaipurthrough its Director Shri Vishwa Mitra Dawra S/o Lt. Sh. GokulChand Dawra aged around 54 years r/o 342, Rajmal Ka Talab,Jaipur ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-7, Jaipur. ----Respondent D.B. Income Tax Appeal No. 304 / 2008 M/s Terry Finance Ltd. 2[nd] Floor, Khandaka Mansion, Panch Batti, M.I. Road, Jaipur through its Director Shri Vishwa Mitra Dawra s/o Lt. Sh. Gokul Chand Dawra aged around 54 years R/o 342, RajmalKa Talab, Jaipur ----Appellant Versus The Income Tax Officer, Ward 6(2), Jaipur ----Respondent D.B. Income Tax Appeal No. 320 / 2008 Kanta Rani Dawra W/o Shri V.M. Dawra aged about 51 years, R/o 342, rajamal ka talab, Chandi Ki Taksal, Jaipur. ----Appellant Versus The Income Tax Officer, ACIT Circle-5, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sanjay Jhanwar and Ms. Archana For Respondent(s) : Mr. R.B. Mathur Mr. K.D. Mathur and Mr. Prateek Kedawat _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE INDERJEET SINGHJudgment 25/07/2017 1.Since in all these appeals, common questions of law andfacts and involved, they are decided by this common judgment. 2.Before proceeding with the matter, it will not be out of placeto mention here that the statement was made by Mr. Jhanwar thateverything is recovered by auctioning the house and the factory.Today, he stated that there is no scope for recovery of any amountfrom the appellant. However, the matter is decided by wasting theprecious judicial time of more than 40 to 45 minutes by hearingboth the counsel. Therefore, now we are proceeding with thematter. 3.By way of these appeals, the appellants have challenged thejudgment and order passed by the tribunal whereby the tribunalhas allowed the appeal of the assessee only for the statisticalpurpose but has rejected the substantial relief. 4.While admitting the appeals, the following question of lawhas been framed by this Court:- D.B. Income Tax Appeal No.57/2002 admitted on 03.07.2002:- “Whether on the facts and in the circumstances ofthe case, the tribunal was justified in sustainingan addition of Rs.119.73 lakhs and treated asundisclosed income of the appellant, irrespectiveof the fact that inter-transactions are involved ingroup of the cases including the appellant andother cases of group have been set-aside by theTribunal for making full inquiry and investigation treach on the final conclusion, such duality ofapproach of Tribunal does not make the impugnedorder of the Tribunal as perverse?” D.B. Income Tax Appeal No.35/2007 admitted on02.05.2017:- “Whether on the facts and in the circumstances ofthe case, the tribunal was justified in sustainingan addition of Rs.119.73 lakhs and treated asundisclosed income of the appellant, irrespectiveof the fact that inter-transactions are involved ingroup of the cases including the appellant andother cases of group have been set-aside by theTribunal for making full inquiry and investigationto reach on the final conclusion, such duality ofapproach of Tribunal does not make the impugnedorder of the Tribunal as perverse?” D.B. Income Tax Appeal No.304/2008 admitted on 05.11.2008:- D.B. Income Tax Appeal No.35/2007 admitted on02.05.2017:- “Whether on the facts and in the circumstances ofthe case, the tribunal was justified in sustainingan addition of Rs.119.73 lakhs and treated asundisclosed income of the appellant, irrespectiveof the fact that inter-transactions are involved ingroup of the cases including the appellant andother cases of group have been set-aside by theTribunal for making full inquiry and investigationto reach on the final conclusion, such duality ofapproach of Tribunal does not make the impugnedorder of the Tribunal as perverse?” D.B. Income Tax Appeal No.304/2008 admitted on 05.11.2008:- (i) Whether the provisions of Section 69 areattracted when the transaction of investment isduly recorded in the books of account and thesource of such investment are reflected in thebooks of account itself? (ii) Whether it is correct to make additions u/s669 of the Act on account of the allegedunexplained investment in respect of deposits inthe bank when the same has been made out ofassets/amounts available with the appellant at thebeginning of the accounting year and subsequentlyout of the realization of the opening assets? D.B. Income Tax Appeal No.320/2008 admitted on 04.11.2008:- (i) Once the Income Tax Department has chosento tax the complete unaccounted Income of wholegroup amounting to Rs.119.76 Lacs in the handsof Shri V.M. Dawra, head of the group andhusband of the appellant, on the basis of workingof unaccounted income of all persons/companiesand concerns of the group including the appellant,then whether again making the addition on thebasis of some entries from the books of theappellant would not tantamount to doubleadditions? (ii) Whether the additions can be made in BlockAssessment without any evidence or materialfound/discovered as a result of search and merelyon the basis of inquiry during the course ofAssessment Proceedings? (iii) Whether the action of learned Income TaxAppellate Tribunal in upholding the addition to theexdtent of Rs.35,11,063/- & 2,30,000/- u/s. 68/69has not resulted in double taxable of the sameamount in two hands as the addition of sameamount stands covered by the amount of additionmade in the hands of Sh. V.M. Dawra and whetherin view of the same, in addition to this extent inthe hands of the appellant is not unjustified?” 5.Mr. Jhanwar counsel for the appellant has taken us to Para 5 of the order of tribunal which reads as under:- “The genesis of the funds, which have flowed intocompany’s offers, by way of promoters equity, throughthemediumofdirectors,proprietorshipconcerns/associated concerns their dummy concernswas enquired into for its veracity/genuinness. Vide letterdated 27.1.97, on the basis of the outcome of thisworking, as discussed in th case of the director Shri V.M.Dawra, an amount of Rs.11973000/- was admitted asundisclosed funds in promoters’ quota. It transpired thatin the absence of genuine sources, within the meaningof Sec.68 of the Act, the amount of Rs.1.19 croresconstitutes the undisclosed income of the assesseecompany, the actual source of which appears to be overcapitalisation, for the asstt. Years 95-96. It may bementioned that this working was in respect of theunaccounted investment channelised through the Director Shri V.M. Dawra.” 6.He contended that in the case of Vimal Choudhary, one ofthe Director, the matter was remanded back to the authority andthe relief was granted which was not challenged by theDepartment and the matter has attained finality. In the case ofMr. U.S. Baid, the appeal was preferred but the same covered bythe Circular under Low Tax Effect. Director Shri V.M. Dawra.” 6.He contended that in the case of Vimal Choudhary, one ofthe Director, the matter was remanded back to the authority andthe relief was granted which was not challenged by theDepartment and the matter has attained finality. In the case ofMr. U.S. Baid, the appeal was preferred but the same covered bythe Circular under Low Tax Effect. 7.Mr. Sanjay Jhanwar counsel for the appellant has taken us topara 6 of the order of the Tribunal which shows the calculation ofthe each of the Director namely Mr. V.M. Dawra-Rs.11973000/-, inthe case of the Mr. Vimal Choudhary-Rs.5899740/-, in the case ofMr. U.S. Baig-Rs.1750000/- and as stated hereinabove that thereare different stands, therefore he contended that on the ground ofparity if the department has accepted the case of Mr. VimalChoudhary, then the case of Mr. V.M. Dawra also deserves to beallowed and parity may be maintained. 8.He further contended that the tribunal while observing thatin case a company where block assessment account made by theChartered Accountant was accepted, an application was preferredunder Section 256(1) to seek permission, with reference to thequestion of law to the High Court but the same was rejectedagainst which the Department has not preferred any appeal. Thus,the company matter stood final. 9.He has also pointed out Para 17 of the order of the Tribunalwhich reads as under:- “The appellant did not file any return of blockperiod. Before the DCIT (Assessment), M/sKalani and Co., Chartered Accountants, througha letter dated 21.1.97 signed by Shri SanjayJhanwar who has also appeared before us andargued the present appeal submitted a note on“brief facts and the case” and a note on“working on the basis of regular books, bankaccounts and other information.” The brief factsin the note are stated to have been supportedby a number of annexures submitted with thesaid letter written regarding Dawra group casesand Terry Fab India Ltd. Duing the course ofblock assessment proceedings.” 10.He has taken us to the provisions of Section 158 BC of theIncome Tax Act and explanation thereto and contended that in view of the parity, the block assessment of the company whensource of income is known, at the most observations which are made or statement which was recorded reads as under:- “Our working is being prepared andsubmitted to you without prejudice toassessee’s claim that it has not earnedanything out of all these transactions. Theassessee claims that funds have beenarranged from various sources and havebeen utilised.” 11.He contended that in spite of that if any material was found, it can’t be added in the income of the Director. He furthercontended that without there being any material, the income couldnot have been added merely on the letter written by the ChartedAccountant. 12.Mr. R.B. Mathur, counsel for the respondent has taken us topara 6 of the order to the Tribunal which reads as under:- “Summarily it can be said that the totalunaccounted money involved in case of Terryfab (I)Ltd. (including its promoters is Rs.119.73 lacs. 11.He contended that in spite of that if any material was found, it can’t be added in the income of the Director. He furthercontended that without there being any material, the income couldnot have been added merely on the letter written by the ChartedAccountant. 12.Mr. R.B. Mathur, counsel for the respondent has taken us topara 6 of the order to the Tribunal which reads as under:- “Summarily it can be said that the totalunaccounted money involved in case of Terryfab (I)Ltd. (including its promoters is Rs.119.73 lacs. Since the unaccounted money to this extent was tobe utlised for the purpose of investment in Terryfab(I) Ltd., it was necessary to channelise the saidmoney through different routes and medium so thatit stands as explained receipts in the hands ofTerryfab (I) Ltd. This job of channelising theunaccounted money was done by Shri V.M. Dawrafor and on behalf of all promoters (who haveactually arranged such money) by floating a numberof concerns. The only thing which has been done inthis working apart from quantifying theunaccounted money is that the root and route ofthe channelisation of unaccounted money has beenfound out. However, the point of origin of theunaccounted money/source thereof has still to beinvestigated, which does not come out of therecords. At the same time we assert that anaccountant investigation suggests that theunaccounted money has been originated in thehands of the company Terryfab (I) Ltd. (may be inthe form of direct loan raised or advances taken orover capitalisation). After such origin the money hasbeen channelised through a long route to make itdifficult for anybody to relate back the source to theorigin.” and contended that the view taken by the tribunal is just and proper. 13.We have heard counsel for the parties. 14.First of all, on the question of company, in view of the factthat the original order which was passed under Section 256(1), inwhich relief was granted and permission was not granted by theTribunal which was not challenged. In that view of the matter, theorder of the company would stand final. 15.In the case of V.M. Dawra, in view of the statement whichwas made, since the source of income is to be established by thedepartment and they cannot merely rely on a letter written by theChartered Accountant, in that view of the matter, the contentionraised by counsel for Mr. V.M. Dawra is required to be accepted. Even otherwise in the case of Mr. Vimal Choudhary, the matterwas remanded back to the authority and the relief was grantedwhich was not challenged by the department. On the basis ofreasoning given by the tribunal, if in one case, the departmenthas not challenged the order of the tribunal which was remittedback and relief granted in favour of the assessee. 16.In our considered opinion, on the principle of parity, Mr. V.M.Dawra is required to be granted the same relief. 17.In that view of the matter, the issue is answered in favour ofthe assessee and against the department. 18.The appeal stands allowed. 19. In view of the order passed in Appeal No.57/2002 in thecase of V.M. Dawra, all other appeals stand disposed of. A copy ofthis order be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Jyoti Item No.4-7