Delhi High Court

S. K. Gupta vs Deputy Commissioner Of Income Tax on 20 July, 1998

Equivalent citations: (1998) 62 TTJ Del 666

ORDER

R. Swarup, VP

These appeals, by the assessee, are directed against the orders of the Commissioner (Appeals). For the sake of convenience all the appeals were heard together and are disposed of by a common order.

ITA Nos. 4872 & 4873/Del/1994

2. The only common ground raised in these appeals is whether the Commissioner (Appeals) was justified in upholding the assessment on protective basis in the hands of the assessee HUF as against the assessee's claim that assessment ought to have been completed on substantive basis in the hands of the HUF.

3. The facts, in brief, are that for the assessment years 1988-89 and 1989-90 the assessee filed returns in the status of HUF declaring incomes of Rs. 12,220 and Rs. 12,250 respectively. In response to notice issued under section 143(2) by the assessing officer it was stated on behalf of the assessee that the HUF of S. K. Gupta came into existence as a result of gift of Rs. 5,000 made by Suraj Bhan, father of S. K. Gupta in 1979 on the occasion of 'Karanchedan' ceremony of Master Deepak, Sarika and Rajni, all children of S. K. Gupta. The gift was made by the father of S. K. Gupta for the benefit of his HUF and the amount was utilised in petty business of Khaddar in different years. The assessing officer for the reasons recorded in the assessment order, rejected the explanation of the assessee added the entire amount shown for both the assessment years in question in the individual hands of S. K. Gupta treating the same as his undisclosed income. He, however, completed the assessments in the hands of the assessee-HUF on protective basis at the income disclosed in the returns. On appeal, the Commissioner (Appeals) upheld the action of the assessing officer aggrieved against the order of the Commissioner (Appeals) the assessee is now in second appeal before the Tribunal.

4. The authorised representative of the assessee reiterated the submissions as made before the authorities below. He further submitted that returns for earlier years 1985-86 to 1987-88 in the status of HUF were filed under the Amnesty Scheme and the same were completed by the assessing officer as returned by the assessee and no action under section 263 or 148 has been taken there against and as such the assessments for the said years stand accepted by the department and the assessing officer, therefore, was unjustified in disbelieving the factum of the gift of Rs. 5,000 made by Suraj Bhan father of S. K. Gupta. In support of his contention the assessee also furnished a certificate from Suraj Bhan confirming the gift of Rs. 5,000 before the lower authorities. He further contended that for assessment year 1988-89 the addition of Rs. 12,220 made by the assessing officer in the hands of individual has since been deleted by the Commissioner (Appeals) vide his order, dated 17-1-1991, in appeal No. 312/91-92 on the ground that like addition had been confirmed in the case of the firm S. K. Gupta & Co. The learned authorised representative has submitted before us that the Tribunal vide its order dated 21-4-1998 in ITA Nos. 351/D/92, 5470/D/95, 5471/D/93 and 1576/D/92 for assessment years 1986-87 to 1988-89 in the case of S. K. Gupta & Co. has quashed the orders of the assessing officer. On the strength of the aforementioned orders of the Commissioner (Appeals) and the Tribunal the learned counsel submitted that as on date since no substantive assessment exists either in the hands of individual or in the case of S. K. Gupta & Co. the assessment made in the case of the assessee ought to be treated on substantive basis. Lastly, he contended that the authorities below were not justified in rejecting the contention of the assessee wherein he had submitted that since the HUF was carrying on the business of purchase and sale of Khaddar on petty scale, no record had been maintained with regard to the business activity carried on by the appellant. Accordingly, the learned authorised representative submitted that the orders of the authorities below may be quashed and the assessing officer may be directed to treat the assessment in the hands of the assessee-HUF on substantive basis,

5. On the other hand the learned Departmental Representative strongly placed reliance on the orders of the authorities below.

6. We have heard the submissions of the parties and have gone through the entire material available on record including the order of the Tribunal in the case of S. K. Gupta & Co. for the assessment years 1986-87 to 1988-89, a copy of which is available on record. There is no denying the fact that the returns filed by the assessee in the status of HUF under the Amnesty Scheme for assessment year 1985-86 to 1987-88 were accepted and completed by the assessing officer and no proceeding under section 263 or section 148 was taken by the department. For the assessment years in question the assessing officer rejected the claim of the assessee on the ground that the assessee failed to prove the nucleus of HUF by placing material evidence on record and that the income disclosed in the status of HUF virtually was the undisclosed income of the individual. Accordingly, the assessing officer added the income in the hands of the individual and made assessment of income disclosed in the hands of HUF on protective basis. Admittedly the addition of Rs. 12,220 made by the assessing officer in the hands of the individual for assessment year 1988-89 has been deleted by the Commissioner (Appeals) vide his order, dated 17-1-1991, on the ground that like addition had been confirmed in the case of firm S. K. Gupta & Co. We also find that in the case of the firm for assessment years 1986-87 to 1988-89 the Tribunal vide its order, dated 21-4-1998, has quashed the assessment orders. It will, therefore, be presumed that at present there is no substantive assessment of the amount disclosed by the assessee in the status of HUF and for the purpose the consequential effect of the Tribunal's order, dated 21-4-1998, in firm's case for assessment years 1986-87 to 1988-89 is to be considered. Accordingly, order of the Commissioner (Appeals) is set aside and the matter is restored to the file of the assessing officer with the direction to redo the assessment of the amount disclosed by the assessee in the status of HUF after taking into consideration the consequential effect of the Tribunal's order, dated 21-4-1998, in the case of firm S. K. Gupta & Co. Order accordingly.

ITA No. 354/Del/1992

7. The first ground raised by the assessee is as under :

"That the learned Commissioner (Appeals) has erred both in law and on facts in upholding the adverse findings recorded by the assessing officer regarding levy of penalty for concealment of income. The conclusion drawn by the learned Commissioner (Appeals) are based on complete misappreciation of the submissions made as well as the facts of the case."

8. The learned counsel at the very outset contended before us that in quantum matter the authorities below were not justified in recording a finding about levy of penalty for concealment. Accordingly, he contended that the finding of the authorities below about concealment may be quashed from the orders impugned. The learned Departmental Representative did not seriously controvert the submissions made by the learned counsel in this regard. In our considered opinion in quantum matter the finding regarding levy of penalty for concealment is uncalled for. Accordingly, we quash the finding of the Commissioner (Appeals) to that extent recorded by him while adjudicating ground No. 1 raised before him. Order accordingly.

9. Ground No. 2 raised by the assessee is as under :

"That the learned Commissioner (Appeals) has erred in upholding an addition of Rs. 6,000 towards alleged low household withdrawals. The learned Commissioner (Appeals) has failed to appreciate that the burden which lay upon the assessing officer to establish that the assessee had incurred an expenditure, which remained unexplained, since had not been discharged, there was no justification for making any addition on this account. In fact, the relief of Rs. 15,000 has been allowed on totally irrelevant and insufficient considerations."

10. We have heard the submissions of the parties and have gone through the relevant material available on record. The assessment year involved is 1988-89. The assessee's family consists of self, wife and three children. During the year the assessee had shown withdrawal of Rs. 9,000 besides withdrawal of Rs. 6,000 by the wife. The assessing officer considered the withdrawal for household as insufficient and estimating the same at Rs. 36,000 made an addition of Rs. 21,000 under this head. On appeal the Commissioner (Appeals) reduced the addition for low household withdrawal to Rs. 6,000, by observing that addition of Rs. 15,000 was also made in the case of firm S. K. Gupta & Co. to cover inadequate drawing of partners. Giving credit of Rs. 15,000 added in the firm's hand, the Commissioner (Appeals) reduced the addition to Rs. 6,000. Looking to the size of the assessee's family and also taking into consideration the fact that no house-rent was being paid and the children were studying in local Hindi medium schools, in our considered opinion there was no justification to uphold the addition of Rs. 6,000, on account of low household withdrawals. Accordingly, addition of Rs. 6,000 sustained by the Commissioner (Appeals) is quashed.

11. Ground Nos. 3 to 6 raised by the assessee are as under:

"3 That the learned Commissioner (Appeals) has further erred in not appreciating the submissions made by the assessee with regard to an addition of Rs. 35,813 on account of alleged unexplained investment in the construction of building on the plot at Shibbanpura made on protective basis in the hands of the assessee. The learned Commissioner (Appeals) ought to have deleted the said addition as unjustifiably made instead of deleting the same on altogether irrelevant grounds.

4. That the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 1,25,000 being the alleged unexplained investment in the FDR's in the names of appellant's children on the ground that similar addition stood confirmed in the case of the firm. The learned Commissioner (Appeals) ought to have deleted the aforesaid addition for the reason that the same stood explained in the hands of the appellant on the basis of evidence placed on record.

5. That likewise the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 12,200, being the income claimed to be belonging to S. K. Gupta & Sons HUF, on the ground that similar addition has been sustained in the case of record. The learned Commissioner (Appeals) has disregarded the relevant material available on record to establish that the said income belonged to the aforesaid HUF

6. That likewise the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 64,536 on altogether irrelevant ground. The learned Commissioner (Appeals) ought to have recorded a categorical finding that the said amount did not represent the unexplained investment either of the firm or of the instant assessee and instead the same stood explained in the hands of various persons in whose names the investment stood."

12. The learned Departmental Representative at the outset contended before us that the Commissioner (Appeals) has deleted the additions in the hands of the assessee in respect of the aforesaid grounds and as such the assessee is not aggrieved in any manner. On the other hand the learned counsel contended that the Commissioner (Appeals) has deleted the additions on irrelevant grounds and there was sufficient material on record to delete the aforesaid additions on merit.

13. We have considered the submissions of the parties and have gone through the entire material available on record. The Commissioner (Appeals) has deleted the additions in respect of the aforesaid issues on the ground that like additions have been made in the case of the firm S. K. Gupta & Co. and as such the same deserved deletion in the hands of the present assessee. We find that the Tribunal vide its order, dated 21-4-1998, in the case of firm S. K. Gupta & Co. has quashed the assessment orders for assessment years 1986-87 to 1988-89 and the assessee would have second inning while giving consequential effect of Tribunal's order in firm's case. Since the additions made in respect of the aforesaid issues though on different ground, the assessee is not aggrieved in any manner. Accordingly, ground Nos. 3 to 6 raised by the assessee have become infructuous and the same stand dismissed as such.

14. Ground No. 7 raised by the assessee is as under :

"That the learned Commissioner (Appeals) has further erred in upholding the addition of Rs. 19,943 being the income claimed to be belonging to assessee's wife. The submissions made and evidence produced by the assessee have arbitrarily been rejected. No valid reason or basis has been given while upholding the aforesaid addition. "

15. The authorised representative of the assessee contended before us that the Commissioner (Appeals) has wrongly sustained the addition of Rs. 19,943 representing income of assessee's wife Smt. Pushpa Gupta holding that the house property in her name as well as income therefrom was assessable in the appellant's hands. He contended that the house property belonged to the wife of applicant Smt. Pushpa Gupta and the same was accepted by the department in assessment year 1992-93 when the assessment was framed under section 143(3) vide order, dated 18-10-1994. The case was selected for scrutiny and after detailed enquiry the department accepted the return of Rs. 22,080 as income from house property. Therefore, on same facts the department cannot deviate from a view already taken earlier and the Commissioner (Appeals) was not justified in sustaining the addition of Rs. 19,943 in the hands of the assessee as income from the house property. He has drawn our attention to p. 70 of the paper-book, i.e., assessment order in the case of Smt. Pushpa Gupta for the assessment year 1992-93. In support he also relied upon the ratio of decision ITO v. Ghanshyam bhai R. Thakkar (1996) 56 TTJ (Ahd-Trib) 460. He further contended that there is no material on record to deviate from the established position that the property belonged to the wife of the assessee. He contended that the statement of Smt. Pushpa Gupta was recorded on oath and a copy of which is available on the record. He contended that no opportunity to cross-examine the witness was given to the assessee. Therefore, this statement cannot be against the assessee. Moreover, in the statement itself Smt. Pushpa Devi had fully established that she had sufficient source to construct the house. He further contended that the assessment of Smt. Pushpa Gupta was accepted for the assessment year 1988-89 and income from house property was accepted and the department had already held that the house in question belonged to Smt. Pushpa Gupta. The said assessment order still holds good and no order under section 263 has been passed or proceedings under section 148 initiated.

He, therefore, contended that the Commissioner (Appeals) has not discussed the material facts in the impugned order and he was not justified in deciding the issue against the assessee without recording sound reasons and the assessment orders already framed in the hands of Smt. Pushpa Gupta.

16. On the other hand, the learned Departmental Representative strongly placed reliance on the order of the Commissioner (Appeals).

17.We have considered the submissions of the parties and have gone through the entire material available on record including the paper-book and the documents to which our attention was drawn by the learned counsel. It is correct to say that in the past the department has accepted that Smt. Pushpa Gupta was the owner of the house and she derived income from that house and the same was assessed in her hands. There is no change in the facts and circumstances of the case. It was not proper for the department to deviate from the settled position. It is settled law that no different decision can be taken on identical facts in different years or in different hands. In view of these facts the Commissioner (Appeals) was not justified in sustaining the addition in the hands of the assessee. The addition is accordingly deleted.

18. Ground Nos. 8 and 9 raised by the assessee are as under:

"8. That likewise the learned Commissioner (Appeals) has erred in upholding the addition of Rs. 55,000 being the amount appearing in the balance sheet of the assessee's wife representing loans in the names of various persons. The learned Commissioner (Appeals) has failed to appreciate that there was no material on record which indicated that the said amount represented the alleged undisclosed income of the assessee.

9. That in doing so, the reliance placed on the statements recorded at the time of search is totally uncalled for. The reasons given for upholding the aforesaid addition are insufficient to lead to a conclusion that the said amount represented the undisclosed income of the assessee."

19. The learned counsel contended that the Commissioner (Appeals) failed to appreciate the material evidence on record which fully established that the said amount did not represent the undisclosed income of the assessee. He contended that the assessee has fully established his case. He further contended that there is no material contradiction in the statement of wife of the assessee. Moreover, there was no opportunity provided to the assessee to cross-examine her. Therefore, her statement cannot be read against the assessee. He further contended that the wife of the assessee had sufficient income and she had taken loan of Rs. 40,000 from HUF and Rs. 5,000 each from Sarika (daughter), Rajiv (nephew) and Deepak (son) and as such there was sufficient material on record to establish that Rs. 55,000 was rightly shown in the balance sheet of appellant's wife. He has drawn our attention to para 10.2 of Commissioner (Appeals)'s order whereby the Commissioner (Appeals) has upheld the action of the assessing officer sustaining the addition of Rs. 55,000. According to learned counsel the Commissioner (Appeals) has not recorded his own reasons for sustaining the addition and only stated that he was in agreement with the assessing officer that the addition in question was based on clear finding that there was no income nor was there any nexus to earn any income in the hands of the HUF of the appellant. This finding was recorded without any rhyme or reason. Similarly the three additions of Rs. 5,000 each were also confirmed without any finding by the Commissioner (Appeals). He, therefore, urged that the addition sustained by the Commissioner (Appeals) of Rs. 55,000 in the hands of the assessee may be deleted. He has also drawn our attention to pp. 19 and 70 of the paper-book to contend that Smt. Pushpa Gupta, wife of the assessee, was assessed by the Income-tax authorities and the assessment orders still hold good.

20. On the other hand the learned Departmental Representative strongly placed reliance on the orders of the authorities below and contended that the Commissioner (Appeals) was fully justified in sustaining the addition of Rs. 55,000.

21. We have considered the submissions of the parties and have gone through the entire material on record including the assessment orders in the case of Smt. Pushpa Gupta. It is clear that Smt. Pushpa Gupta was assessed to tax and income from house property was accepted by the department. The status of HUF was not accepted by the department and the firm was assessed in the status of Association of Persons. The Tribunal has quashed the assessment order in the case of firm and consequential effect of this order is to be considered. Besides, the Commissioner (Appeals) has not passed a speaking order and he has not recorded reasons for sustaining the finding of the assessing officer. He has simply agreed with the finding of the assessing officer without recording reasons and in this way the finding of the Commissioner (Appeals) is not in accordance with law. Therefore, the order of the Commissioner (Appeals) on the issue in question is set aside and the matter is restored to the file of the assessing officer to adjudicate the issue in question afresh in the light of our observation above and after affording reasonable opportunity of being heard to the assessee. Order accordingly.

22. Ground No. 10 raised in this appeal is as under :

"That the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 1,10,000 being the alleged unexplained credit in the bank account of the assessee's mother, on the ground that similar addition has been upheld in the case of the firm. The learned Commissioner (Appeals) ought to have held that the said amount stood explained in the hands of the assessee's mother and no addition is called for either in the hands of the appellant or the firm."

The aforesaid ground was not pressed on behalf of the assessee at the hearing. Accordingly, ground No. 10 is rejected as not pressed for.

23. Ground Nos. 11 to 13 raised in this appeal are as under :-

"11. That the learned Commissioner (Appeals) has further erred in merely restoring the issue to the assessing officer in respect of the addition of Rs. 2,49,000 made on the basis of various seized papers, instead of deleting the same. The learned Commissioner (Appeals) on the basis of detailed evidence available before him ought to have deleted the aforesaid addition as such. No basis or material has been brought on record on the basis of which it could be said that the matter required further investigation.

12. In any case, the set aside is otherwise too unsustainable in law inasmuch as the learned Commissioner (Appeals) has failed to issue any direction on the basis of which, the learned assessing officer is required to complete the assessment."

13. That the learned Commissioner (Appeals) has further erred in rejecting the ground regarding grant of fair and reasonable opportunity to the assessee. The finding that sufficient opportunity had been allowed to the assessee is incorrect and unsustainable being contrary to material on record."

The authorised representative of the assessee contended that the Commissioner (Appeals) on the basis of material available on record would have decided the issue on merit but he did not do so hence the Tribunal may record a finding of fact on the basis of material available on record.

On the other hand the Departmental Representative contended that the Commissioner (Appeals) has set aside the issue to the file of the assessing officer with the direction to decide the same in accordance with law after affording reasonable opportunity of being heard to the assessee. He contended that the Commissioner (Appeals) was fully justified in affording fresh opportunity to the assessee because the assessing officer has not afforded adequate opportunity of hearing. Hence the finding of the Commissioner (Appeals) is perfectly in order and the assessee in fact has no grievance at all.

We have considered the rival submissions and have gone through the relevant material on record. The Commissioner (Appeals) vide para 12 of the order impugned has examined the matter in detail and rightly came to the conclusion that the assessing officer had not examined the entire material on record and had made the addition in question without any evidence and sound basis. He, therefore, restored the matter back to the file of the assessing officer with the direction to examine the material in detail and to decide the issue in accordance with law. The finding of the Commissioner (Appeals) in our considered opinion is perfectly in order and we see no justification to take a contrary view in the matter. Accordingly, order of the Commissioner (Appeals) on the issue in question is upheld.

24. Ground no. 14 raised in this appeal is as under:

"That the learned Commissioner (Appeals) has further erred in allowing only consequential relief regarding interest charged under section 139(8) and section 217 of the Act. The learned Commissioner (Appeals) ought to have cancelled the interest so charged."

25. We have heard the rival submissions of the issue in question. The learned counsel conceded that the levy of interest under sections 139(8) and 217 is consequential in nature. Accordingly, the assessing officer is directed to recalculate the interest, if any, while giving effect to Tribunal's order.

26. In the result, ITA Nos. 4872 and 4873/Del/1994 are allowed for statistical purposes. ITA No. 354/Del/1992 is partly allowed.