2017 (1) TMI 1104 - HC - Income Tax

Admission of the appeal as per the provisions of Section 249(4) - the assessee had not paid the admitted tax - Held that - The said question is squarely covered against the Revenue in view of the decision of the Hon ble Supreme Court in the case of Commissioner of InocmeTax vs. Pawan Kumar Laddha (2010 (4) TMI 14 - SUPREME COURT ). The aforesaid is not disputed by the learned Counsel appearing on behalf of the Revenue. Under the circumstances, question No.(A) is answered in favour of the assessee and against the Revenue. Undisclosed income - whether the addition has wrongly been made, as peak of bank account has been considered as undisclosed income covered by the period of Settlement Commission Order - Held that - It is not in dispute that the order passed by the Settlement Commission has attained the finality. Therefore, considering Section 245F of the IT Act, when the order passed by the Settlement Commission has attained finality, the Assessing Officer was not justified in making the addition which has rightly been set aside by the learned Tribunal. After considering the observations made by the Settlement Commission which has been reproduced by the learned Tribunal in para 16, we are in complete agreement with the view taken by the learned Tribunal. No error has been committed by the learned Tribunal in holding so and in deleting the addition treating it as undisclosed income. Under the circumstances, the aforesaid question No.B is answered against the Revenue and in favour of the assessee Unaccounted cash payment made by the assessee in respect of booking of the plot in Radhe Acre Scheme - Held that - Department is not in a position to point out from the order passed by the Assessing Officer that the addition was made by the Assessing Officer on the allegation of any onmoney received from the assessee. Therefore, the learned Tribunal has rightly deleted the addition of ₹ 1 Crore and ₹ 38,98,600/for AY 199596 and AY 199697 respectively by passing a reasoned order. Considering the reasons assigned by the learned Tribunal while making the above addition, we are in complete agreement with the view taken by the learned Tribunal. When the Assessing Officer made the addition solely on the basis of statements of Shri Ashish Patel dated 25.04.1996 and 01.05.1996, which were subsequently retracted and there being no other material whatsoever on the basis of which the aforesaid addition could have been made in respect of unaccounted cash payment alleged to have been made by the assessee, we confirm the order passed by the learned Tribunal deleting the same. - Decided in favour of the assessee Unaccounted investment in unexplained bank account peak balance - Held that - Tribunal considered 60 days rotation period. While considering period of 60 days for rotation of funds, for working the peak, the learned Tribunal considered the observations made by the Settlement Commission. It is required to be noted that as such according to the assessee the period of 45 days for rotation of the funds was required to be considered for working the peak, however the learned Tribunal has not accepted the same and has considered the period of 60 days for rotation of funds for working the peak. While holding so the learned Tribunal has considered 32 undisclosed bank accounts also. When by cogent reasons the learned Tribunal has considered the period of 60 days for rotation of funds, the same is not required to be interfered with by this Court. We are in complete agreement with the view taken by the learned Tribunal.- Decided in favour of the assessee Unaccounted cash receipt on premium of transfer of booking of Plot No.181 in Radhe AcreII - whether the learned Tribunal is right in law and on facts in deleting the same by giving benefit of telescoping - Held that - The deletion of addition of ₹ 4,51,500/for AY 199697 in respect of unaccounted cash receipt of premium on transfer of booking of Plot No.181 in Radhe AcreII and the deletion of addition of ₹ 10 lakh and ₹ 14,36,000/for AY 199495 and 199596 respectively are hereby quashed and set aside and both the aforesaid issues / questions are remitted back to the learned Tribunal to consider the same afresh. Telescoping in respect made in respect of unexplained cash payment to Shri Girish Ruparel in lieu of entry from Reliable Finstock Services Ltd - Held that - The amount deposited in 32 unaccounted bank accounts earlier came to be considered by making the addition on undisclosed income by taking the peak. It has come on record that the amount of ₹ 61,54,735/paid by cash to Shri Girish Ruparel were in lieu of the cheques issued by the Reliable Finstock Services Ltd. which were deposited in 32 unaccounted bank accounts. Once that is so and once a peak is considered, there cannot be any double taxation as rightly held by the learned Tribunal. We are in complete agreement with the view taken by the learned Tribunal. Under the circumstances, question No.G is also answered against the Revenue and in favour of the assessee.

Summary

Issues Involved:
(A) Admission of appeal under Section 249(4) of the Act.
(B) Addition of ?14,68,470 as peak of bank account.
(C) Deletion of addition of ?1 crore and ?38,95,600 for unaccounted cash payment.
(D) Deletion of addition of ?1,68,70,889 for unexplained investment in bank accounts.
(E) Deletion of addition of ?4,51,500 for unaccounted cash receipt.
(F) Telescoping benefit for additions of ?10 lakhs and ?14,36,000.
(G) Telescoping benefit for addition of ?61,54,735.
(H) Telescoping benefit for addition on account of investment in assets.

Detailed Analysis:

Issue (A):
The court addressed whether the Appellate Tribunal was right in rejecting the preliminary objection raised by the Revenue regarding the admission of the appeal under Section 249(4) of the Act when the assessee had not paid the admitted tax. The court found that this issue was already settled against the Revenue in the Supreme Court case of Commissioner of Income Tax vs. Pawan Kumar Laddha (324 ITR 324). Therefore, the question was answered in favor of the assessee and against the Revenue.

Issue (B):
The court examined whether the Appellate Tribunal was right in holding that the addition of ?14,68,470 was wrongly made as the peak of the bank account, considered as undisclosed income covered by the period of the Settlement Commission Order. The Settlement Commission had already addressed these transactions, and its order had attained finality. Thus, the court agreed with the Tribunal’s decision to delete the addition, answering the question against the Revenue and in favor of the assessee.

Issue (C):
The court analyzed the deletion of the addition of ?1 crore and ?38,95,600 for the assessment years 1995-96 and 1996-97, respectively, related to unaccounted cash payments for booking plots in the Radhe Acre Scheme. The Tribunal found that the Assessing Officer based the addition solely on statements by one Shri Ashish Patel, who later retracted his statements. Without other supporting evidence, the Tribunal rightly deleted the additions. The court upheld this decision, answering the question against the Revenue and in favor of the assessee.

Issue (D):
The court considered the deletion of the addition of ?1,68,70,889 for the assessment year 1995-96, which was made on account of unexplained investment in bank accounts' peak balance. The Tribunal had considered a 60-day rotation period for the funds, which was a reasonable approach. The court found no reason to interfere with this decision, thus answering the question against the Revenue and in favor of the assessee.

Issue (E):
The court addressed the deletion of the addition of ?4,51,500 for the assessment year 1996-97 in respect of unaccounted cash receipts on the premium of transfer of booking of Plot No. 181 in Radhe Acre II. With the consent of both parties, the court remitted this issue back to the Tribunal for fresh consideration.

Issue (F):
The court examined the deletion of additions of ?10 lakhs and ?14,36,000 for the assessment years 1994-95 and 1995-96, respectively, made in respect of unaccounted investment in application and allotment as well as profit on sale of shares of Niko Set Ltd. This issue was also remitted back to the Tribunal for fresh consideration.

Issue (G):
The court reviewed the Tribunal's decision to give relief by way of telescoping for the addition of ?61,54,735, made in respect of unexplained cash payments to Shri Girish Ruparel in lieu of entry from Reliable Finstock Services Ltd. The Tribunal found that these cash payments were in lieu of cheques deposited in undisclosed bank accounts, and the peak had already been considered. Thus, there could not be double taxation. The court agreed with this reasoning, answering the question against the Revenue and in favor of the assessee.

Issue (H):
The court addressed whether the Tribunal was right in giving relief by way of telescoping in respect of additions made on account of investment in assets against the addition on account of sources of unaccounted income. This issue was interconnected with Issue (D) and was resolved in the same manner, with the court agreeing with the Tribunal's approach.

Conclusion:
The court disposed of the Tax Appeal by answering questions A, B, C, D, H, and G in favor of the assessee and against the Revenue. Questions E and F were remitted back to the Tribunal for fresh consideration.