High Court Of Andhra Pradesh
Gopal Lal Bhadruka vs. DCIT
Section : 158BD, 158BI
Madan B. Lokur, CJ. And Sanjay Kumar, J.
I.T.T.A. Nos. 367, 368 And 438 Of 2011
December 15, 2011
JUDGMENT
Madan B. Lokur, CJ. – This batch of appeals filed under section 260A of the Income-tax Act, 1961 (“the Act”) has been preferred against a common order dated November 26, 2010, passed by the Income-tax Appellate Tribunal, Hyderabad Bench “A”, Hyderabad.
2. The assessees before us are Gopal Lal Bhadruka, his son, Avadesh Bhadruka, and their firm, Ahura Holdings. In fact, the firm, Ahura Holdings, has two other partners but they are not concerned with these proceedings. Ahura Holdings is engaged, inter alia, in real estate and at the relevant time it was developing a property in the Secunderabad cantonment.
3. On June 26, 2006, and June 27, 2006, a search and seizure operation was conducted in the residential-cum-business premises of Gopal Bhadruka.
4. During the course of search and seizure operations, it came to light that Gopal had obtained a general power of attorney to develop the Secunderabad cantonment property belonging to two persons. The firm had developed 32 plots and had disposed them of to various persons. The search and seizure operations revealed that the sale consideration as per the sale deed did not tally with the actual payments made by the purchasers. In effect, there was a suppression of sale receipts. It appeared from a scrutiny of eight sale deeds that on-money was paid to Ahura Holdings by the vendees.
5. The statement of Gopal was recorded on more than one occasion, and in reply to certain questions, he confirmed the receipt of on-money but claimed that it was received in his hands and in the hands of Avadesh. Neither Ahura Holdings nor the other partners had anything to do with the receipt of on-money.
6. The Revenue also examined the purchasers of eight plots in respect of whom there was evidence of payment of on-money. Three of these persons admitted payment of on-money, while five persons denied the payment. There was no evidence with regard to payment of on-money for the remaining 24 plots by the vendees.
7. On these broad facts, proceedings were initiated by the Revenue under section 153A of the Act in respect of Gopal, while proceedings were initiated against Avadesh and Ahura Holdings under section 153C of the Act.
8. The main issue that arose for consideration before the Assessing Officer was with regard to suppression of sale proceeds and estimation of undisclosed income of Ahura Holdings.
9. The Assessing Officer passed an assessment order in respect of Ahura Holdings on a substantive basis, while protective assessments were made in respect of Gopal and Avadesh. The Assessing Officer rejected the contention of Gopal and Avadesh that on-money was received in their hands and held that there was sufficient evidence to show that the true sale proceeds had been suppressed and that Ahura Holdings had received on-money in respect of the transactions. On the basis of his best judgment, the Assessing Officer estimated the undisclosed income.
10. The assessees preferred appeals which came to be rejected in respect of the issues that we are concerned with by the Commissioner of Income-tax (Appeals). The appellate authority observed that there was sufficient material to conclude that Ahura Holdings had received on-money. By and large, the Commissioner of Income-tax (Appeals) agreed with the Assessing Officer in respect of the ratio of the on-money component to the purchase price as per the sale deeds.
11. Feeling aggrieved by the order passed by the Commissioner of Income-tax (Appeals), the assessees preferred appeals before the Tribunal. The Revenue also preferred appeals before the Tribunal, but we are only concerned with the appeals preferred by the assessees.
12. The primary question of law agitated before the Tribunal was whether, for the purpose of computing income under section 153A/153C of the Act, the Assessing Officer was required to confine himself only to the material found during the course of search operations. The Tribunal held against the assessees in this regard, and before us also the same question has been agitated by learned counsel for the assessees.
13. In respect of the protective assessments made in the case of Gopal and Avadesh, two additional contentions have been made to the effect that the Assessing Officer did not take into account the expenditure incurred in the development of the property and also that the Assessing Officer as well as the appellate authority failed to consider that the partners of Ahura Holdings had categorically stated that on-money was received by them and not by Ahura Holdings. In this regard, reference was made to the statement made by the other partners of the firm that on-money was not received by Ahura Holdings.
14. In our opinion, for the reasons mentioned below, the Tribunal has not committed any error in rejecting the contentions of the assessees and we are also of the opinion that no substantial question of law arises for consideration in these appeals.
15. There is no dispute that sections 153A, 153B and 153C were inserted in the Act by the Finance Act, 2003, with effect from June 1, 2003, in Chapter XIV thereof. These sections are applicable to search operations or requisitions made after May 31, 2003. Simultaneously, the Finance Act also inserted section 158BI in Chapter XIV-B of the Act.
16. The provisions of section 153A, section 153C and section 158BI of the Act, as they stood at the relevant time, read as follows :
“153A. Assessment in case of search or requisition.-Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made :
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years :
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate.
Explanation.-For the removal of doubts, it is hereby declared that, –
(i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section ;
(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.
153C. Assessment of income of any other person. – (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that the Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.
(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year-
(a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or
(b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or
(c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.
158BI. Chapter not to apply after certain date.-The provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003.”
17. By virtue of section 158BI of the Act, the various provisions of Chapter XIV-B of the Act are made inapplicable to proceedings under section 153A/153C of the Act. The effect of this is that while the provisions of Chapter XIV-B of the Act limit the inquiry by the Assessing Officer to those materials found during the search and seizure operation, no such limitation is found in so far as section 153A/153C of the Act are concerned. Therefore, it follows that for the purposes of section 153A/153C of the Act the Assessing Officer can take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee.
18. At this stage, we may mention that learned counsel for the assessees relied upon Manish Maheshwari v. Asst. CIT [2007] 289 ITR 341 (SC) for the purposes of interpreting section 158BB of the Act. We have gone through the decision cited by learned counsel and find that it does not support his case for the simple reason that the provisions Chapter XIV-B of the Act are not applicable to proceedings under section 153A/153C of the Act. Consequently, the principles of section 158BB of the Act cannot be imported for the purposes of interpreting section 153A/153C of the Act. The view expressed by the Supreme Court in Manish Maheshwari has no application to the present case.
19. Under these circumstances, in our opinion, since the interpretation of section 153A/153C of the Act is quite clear, no substantial question of law arises for consideration. We may in this context recall the words of the Supreme Court in Santosh Hazari v. Purushottam Tiwari (dead) [2001] 251 ITR 84 (SC) wherein it was said (page 90) :
“A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law.”
20. It was contended by learned counsel for the assessees that there was no evidence before the Assessing Officer to conclude that on-money was received by Ahura Holdings in respect of all the sale transactions. It was submitted that there may have been material with regard to eight such transactions but that does not mean that the same script was played out for all the transactions. We cannot agree. There was adequate material before the Assessing Officer in the form of eight sale deeds and in the form of replies given by Gopal to questions posed to him with regard to receipt of on-money to enable the Assessing Officer to come to an informed conclusion in this regard. Appreciation of the available material is within the domain of the Assessing Officer and this does not lead to any substantial question of law, unless the conclusions arrived at are perverse. That is not the position in this case.
21. In CST v. H. M. Esufali, H. M. Abdulali [1973] 90 ITR 271 (SC) ; [1973] 2 SCC 137 the Supreme Court noted the difficulty in making an assessment of the escaped turnover for the purposes of levy of sales tax in the following words (headnote) :
“In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the ‘best-judgment’ assessment no doubt should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his ‘best judgment’ and not of any one else’s.” (emphasis supplied)
In our opinion, these principles would equally apply for deciding whether, as, in the present case, the evidence of payment of on-money in some transactions would or would not relate to all similar transactions.
22. The next contention urged by learned counsel for the assessees is that though Gopal and Avadesh had stated that on-money was received by them and not by Ahura Holdings and this was also confirmed by the other two partners of the firm, yet the Assessing Officer completed the assessment in respect of Ahura Holdings on a substantive basis.
23. In our opinion, on an appreciation of the evidence, the Assessing Officer, the Commissioner of Income-tax (Appeals) as well as the Tribunal have all come to the same conclusion, namely, that the undisclosed income was that of Ahura Holdings. There is no perversity pointed out in the view that all of them have concurrently taken. We do not think that any substantial question of law arises in this regard nor is there is any occasion for us to interfere with the view taken concurrently by all the authorities.
24. Finally, it was argued that the expenditure incurred in the development of the plots was not taken into account. We have gone through the assessment order as well as the appellate order passed in respect of Ahura Holdings (I. T. T. A. No. 360 of 2011). We find that the Commissioner of Income-tax (Appeals) agreed with the assessee that disallowance on the cost of land was not justified. As regards legal fees and some development expenses, etc., the Assessing Officer was directed to have a fresh look into the matter. Consultancy fees paid to Sridev Sharma was disallowed since there was no evidence to show the payment. Therefore, it is not correct to say that the expenditure incurred was not considered by the Revenue. Moreover, the issue raised is purely one of fact, raising no question of law, let alone a substantial question of law.
25. No substantial question of law arises in these appeals. They are accordingly dismissed.
[Citation : 346 ITR 106]