2012 (7) TMI 303 - AT - Income Tax

Revisionary proceedings under Section 263 search unaccounted money assessee s wife admitted that unaccounted money belongs to her - assessment stood set aside by CIT in a revisionary proceedings under Section 263 - But, revisionary proceeding under Section 263 of the Act stood quashed by this Tribunal Held that - Order was already available with CIT(Appeals) when he was considering appeal of the assessee. The order of CIT(Appeals) was passed on 13.3.2009 and therefore, the argument of the assessee that the order of this Tribunal quashing the order under Section 263 of the Act was already available on record - CIT(Appeals) fell in gross error in not considering the order of this Tribunal quashing the proceedings under Section 263 of the Act - revisionary order having been quashed, CIT(Appeals) was duty bound to dispose of the assessee s appeal on merits - order of CIT(Appeals) set aside and matter remanded back to him for consideration afresh. Revisionary proceedings - deletion of addition - plea of the assessee that the money recovered from his house, purchase of real estate, recovery of gold biscuits and fixed deposits were all belonging to his wife Held that - Entire money had been treated by Revenue as a part of income of the wife of the assessee in her assessment - CIT(Appeals) was justified in placing reliance on the order of Hon ble Apex Court and in deleting the addition made in the hands of the assessee In favor of assessee Addition on account of investment made in the name of associated persons - assets belonged to his wife and not to him. However, the A.O. was of the opinion that the fixed deposits in the Punjab National Bank, though claimed as owned by assessee s wife, was not corroborated and therefore, had to be considered in assessee s hand Held that - In assessee s own case it was held that fixed deposits had to be explained only by the assessee s wife and not by the assessee. CIT(Appeals) also noted that such additions were made substantially in the hands of the assessee s wife also - IT(Appeals) was justified in deleting the addition for the impugned assessment year also In favor of assessee Maintainability of appeal - revisionary proceedings under Section 263 - CIT(Appeals) held the assessment to be not appealable since such assessment was done in pursuance of the direction of CIT under Section 263 of the Act Held that - CIT has requested the A.O. to make a fresh assessment in accordance with law - it cannot be said that any finality has been reached by virtue of the order of the CIT with regard to the items mentioned by him in the said order - it cannot be said that fresh order passed by the assessing authority pursuant to revisionary proceedings, was an order passed for giving effect to the directions of the revisioning authority per se. It was only an order passed in compliance of the directions of CIT - against such an order, appeal was maintainable before CIT(Appeals) - Appeal of the assessee for assessment year 1995-96 is allowed for statistical purposes.

Issues Involved:
1. Ownership of assets found during the search.
2. Validity of the original assessment and subsequent revisions.
3. Relevance of criminal court findings in tax proceedings.
4. Justifiability of additions made in reassessment.
5. Appeal rights against assessments following revisionary orders.

Issue-wise Detailed Analysis:

1. Ownership of Assets Found During the Search:
The primary issue was the ownership of assets found during a search at the assessee's residence, which included cash, gold biscuits, US dollars, and fixed deposits. The assessee claimed that these assets belonged to his wife, who was a director in two companies and a proprietress of two concerns. The Assessing Officer (A.O.) did not accept this explanation and proceeded to assess the assets in the hands of the assessee. However, the Hon'ble Apex Court in a related criminal proceeding under the Prevention of Corruption Act held that the assets belonged to the assessee's wife, thus exonerating the assessee.

2. Validity of the Original Assessment and Subsequent Revisions:
The original assessment was completed on 29.3.1996, which was later set aside by the Commissioner of Income Tax (CIT) under Section 263 of the Income-tax Act for not examining certain cash deposits. The Tribunal quashed the CIT's revisionary order, reinstating the original assessment. The CIT(Appeals) initially dismissed the appeal against the original assessment, considering it infructuous due to the revisionary order. However, the Tribunal found that the CIT(Appeals) erred by not considering the Tribunal's order quashing the revisionary proceedings and remitted the matter back to CIT(Appeals) for fresh consideration.

3. Relevance of Criminal Court Findings in Tax Proceedings:
The Tribunal acknowledged that findings from criminal proceedings, particularly under the Prevention of Corruption Act, held significant weight in tax proceedings. The Hon'ble Apex Court had acquitted the assessee, confirming that the assets belonged to his wife. The Tribunal emphasized that the burden of proof in corruption cases is more stringent than in tax cases, and thus, the findings of the Apex Court should be given appropriate weight in tax proceedings.

4. Justifiability of Additions Made in Reassessment:
The reassessment increased the assessed income due to alleged non-consideration of certain assets. The CIT(Appeals) deleted the additions based on the Apex Court's findings. The Tribunal upheld this deletion, noting that the Apex Court had conclusively determined that the assets belonged to the assessee's wife, and thus, no additions could be justified in the assessee's hands.

5. Appeal Rights Against Assessments Following Revisionary Orders:
The CIT(Appeals) dismissed the appeal against the assessment for the year 1995-96 on the grounds that it was made pursuant to a Section 263 order. The Tribunal disagreed, stating that the CIT's order merely directed the A.O. to reassess after considering the assessee's explanations. Therefore, the Tribunal held that the appeal was maintainable and remitted the matter back to CIT(Appeals) for fresh consideration.

Conclusion:
The Tribunal allowed the assessee's appeals for statistical purposes and dismissed the Revenue's appeals. The Tribunal directed the CIT(Appeals) to reconsider the appeals on merits, taking into account the findings of the Hon'ble jurisdictional High Court and the Hon'ble Apex Court. The Tribunal emphasized the binding nature of the Apex Court's findings on the ownership of the assets and the need for the CIT(Appeals) to pass appropriate orders in accordance with the law.

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