2014 (8) TMI 968 - HC - Income Tax

Concealment of income - reopening of assessment - CBI had shared some information with the Income-tax Officer (ITO) on the basis of the said information the notice under section 148 was issued - petitioner filed a revision before the Commissioner under section 264 pleaded denial of proper opportunity before passing the best judgment assessment - Held that - Letter for Scrutiny assessment evidently disclose that the assessing authority observed that information was received from the CBI and authenticity of the said documents was not available ; therefore the petitioner has been called upon to furnish necessary information. The said averments does substantially corroborate the contention of the petitioner that the documents seized by the CBI and the said documents were out of the control of the petitioner when the best judgment assessment was made which is within couple of days after annexure F. The conduct of the petitioner in not filing the appeal and filing a revision may be a technical lapse wrong legal advice. The counsel for the petitioner submits that the substantial documents were out of control of the petitioner at the time when the best judgment assessment was passed but now he has secured necessary documents from the CBI. He is in a position to file return and explain his income and also the income of his wife. The best judgment assessment is thus set aside. It is just and proper that an opportunity should be given to the petitioner to file return to the assessing authority and assessment to be made on the merits. It is directed that the status quo order of seizure and seized articles shall be maintained subject to the result of the orders passed by the assessing authority. - Decided partly in favour of assessee.

Issues:
1. Best judgment assessment under section 147 of the Income-tax Act for the years 1996-97 to 2001-02.
2. Denial of proper opportunity before passing the best judgment assessment.
3. Revision filed under section 264 of the Income-tax Act.
4. Seizure of property documents by CBI.
5. Lack of cooperation from the bank in furnishing information.
6. Opportunity for the petitioner to explain income and seized property documents.
7. Setting aside the best judgment assessment and allowing the petitioner to file returns.

Analysis:

1. The petitioner, an assessee of Income-tax, faced a best judgment assessment under section 147 for the years 1996-97 to 2001-02 due to discrepancies between his known salary income and the value of properties found during CBI raids. The assessing authority issued notices, but the petitioner failed to file returns despite adjournments, leading to the assessment of tax and penalty amounting to over Rs. 1 crore.

2. The petitioner contended denial of proper opportunity before the best judgment assessment was passed. The revision filed under section 264 was dismissed, stating that sufficient opportunities were given. The petitioner argued that his wife, engaged in film production, was the source of the disputed income, but faced challenges in obtaining necessary documents and information.

3. The petitioner's failure to appeal and opting for a revision was criticized by the Revenue, emphasizing the lack of material presented beyond claiming denial of opportunity. The Income-tax Officer's letter highlighted the need for the petitioner to provide explanations regarding the seized documents from the CBI.

4. The assessing authority acknowledged the challenge faced by the petitioner in accessing relevant documents seized by the CBI. The court recognized the petitioner's subsequent ability to secure these documents, enabling him to file returns and explain the income discrepancies, leading to the setting aside of the best judgment assessment.

5. The court directed the petitioner to file returns within a month and mandated the assessing authority to conclude the case within three months. The status quo order on seized articles was to be maintained pending the assessment based on the merits, providing the petitioner with the opportunity to address the income discrepancies effectively.

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