Bombay H.C : Where Commissioner (Appeals) not only examined author of seized document but also allowed Assessing Officer to cross-examine said author, there was no perversity or error of law apparent on face of record in order passed by Commissioner (Appeals) deleting addition of undisclosed income

High Court Of Bombay

CIT (Central) VS. Sairang Developers And Promoters (P.) Ltd.

Block Assessment Years : 1997-98 To 2002-03

Section : 69B, 132, 158BC

S.C. Dharmadhikari And G.S. Kulkarni, JJ.

IT Appeal No. 2603 Of 2011

April 28, 2014


1. This appeal challenges the order passed by the Income-tax Appellate Tribunal. The block assessment period from 1997-98 to 2002-03 was under consideration. The appeal was filed by the Revenue, and the Income-tax Appellate Tribunal was requested to quash and set aside the order passed by the Commissioner of Income-tax-I (Appeals), Pune, dated January 2, 2004/February 23, 2004.

2.The grievance of the Revenue was that the assessee is a private limited company. It is in the business of land development including purchasing of land, developing it by dividing into plots. The plots are sold. A search and seizure under section 132 of the Income-tax Act, 1961, was the subject matter of the proceedings. That was carried out on April 11, 2001. In response to the notice under section 158BC, the assessee filed a return declaring total undisclosed income of Rs. 15,57,000. The Assessing Officer completed the assessment under section 158BC(c) of the Income-tax Act by order dated April 29, 2003. He determined the total undisclosed income of Rs. 7,81,85,884 by making the addition of Rs. 7,66,28,884. The assessee, aggrieved by this assessment order carried the matter to the Commissioner of Income-tax (Appeals) who allowed the appeal of the assessee, quashed the order of the Assessing Officer. The Revenue approached the Tribunal and by the impugned order, the Tribunal also dismissed the appeal.

3. It is urged that there are substantial questions of law and specifically those enumerated at paragraphs 5, page 5 of the paper book, arising for determination and consideration in this appeal.

4. We find after perusing this memo of appeal and the order of the Tribunal that the attempt of the Revenue is to have a reappreciation and reappraisal of the factual materials. The only two papers which the Assessing Officer relied upon, namely page 17 of bundle No. 2 and paper No. 55 of bundle No. 2 have been referred to in details. After the seizure, the managing director of the company was required to explain the contents of the paper. The two statements were recorded. The matter has been discussed in detail by the Commissioner of Income-tax (Appeals) and the Tribunal. Upon a perusal of the explanation given by the managing director and the assessee, the Tribunal concluded that the matter has been elaborately and properly discussed by the Commissioner of Income-tax (Appeals). Once the version of the assessee and in details deserves acceptance, then, we do not find that any substantial question of law arises from the exercise undertaken by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. The Assessing Officer had a statement of the accountant before him but he did not examine the said accountant. The author of the document/paper also was not examined during the assessment proceedings. She, however, appeared before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) not only examined her but allowed the Assessing Officer to cross-examine the said deponent. The statement made in chief and the cross-examination, both have been referred by the Tribunal in adequate details. We do not find any perversity or error of law apparent on the face of record in the order passed by the Commissioner of Income-tax (Appeals) and which has been affirmed by the Tribunal.

5. Mr. Singh, appearing on behalf of the Revenue, in support of this appeal, has taken us through the orders by the Tribunal and the Commissioner of Income-tax (Appeals). He could not persuade us to hold that any substantial question of law arises for determination and consideration in this appeal. The finding of fact and particularly with regard to the seizure and the relevant documents itself, ought to have been given finality by the Revenue. After the appeal was argued and we showed our disinclination to entertain it, as it does not raise any substantial question of law, we gave Mr. Singh an opportunity to seek instructions as to whether the Revenue desires to withdraw this appeal or pursue it.

6. We could have immediately passed the final orders by dictating the same in open court after the arguments were concluded. However, we gave Mr. Singh an opportunity to take instructions from the concerned official. Mr. Singh submits that the concerned official has addressed a communication to him informing that the appeal was filed with the approval/ consultation with the Chief Commissioner of Income-tax, Pune/DGIT (Investment), Pune. The letter does not indicate that the said Chief Commissioner was unavailable. The letter further states that discussions would have to be held with all the authorities.

7. We do not find how officers lower down in the hierarchy can take decisions to file appeals and that too against the decision of the Tribunal. The tendency not to accept any adverse verdict on facts results in frivolous appeals being filed in this court. That causes huge loss to the public exchequer and results in wastage of precious judicial time of this court. All this ought to have been discouraged long time back. The High Court has not adopted a strict approach and that has possibly encouraged the Revenue in filing appeals to challenge essentially findings of fact and with regard to matters which should stand concluded at the level of the authorities. The officials should realize that the authorities like the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal are envisaged as appellate and possibly final fact finding authorities and at least the Tribunal is the last in that hierarchy. The fact finding, therefore, if demonstrably perverse or palpably erroneous and as would amount to unsettling the settled position in law alone should be questioned by filing appeals to this court. However, a routine exercise and by people who do not wish to take any responsibility, results in number of appeals being filed and pending. This benefits no one and rather defeats larger public interest. The revenue collection and equally the participation of the assessee in the exercise undertaken by the authorities to assess their income, therefore, is affected adversely. None takes a position or decision because of pendency of matters and for a long time. In these circumstances, while dismissing this appeal, we impose costs quantified at Rs. 50,000. The costs be paid to the assessee within four weeks from today. We at least now expect the authorities to take cognizance and initiate proceedings for recovery of this amount personally from such of the officers who do not take decisions or postpone them unendlessly.

8. A copy of this order be forwarded to the Commissioner of Income-tax III, Pune. It should also be forwarded to the Chief Commissioner of Income-tax, Pune, who may decide as to who should pay the costs personally as between them or anybody else who has brought about this situation.

9. A copy of the letter addressed to Mr. Singh is taken on file and marked exhibit X for identification.

[Citation : 364 ITR 593]