Back
2011 Supreme(Kar) 985
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
V.G. Sabhahit, Ravi Malimath, JJ.
Commissioner of Income Tax —Appellant
Vs.
Late H.R. Basavaraj —Respondent
Income Tax Appeal No. 3010 of 2005
Decided on : 15-07-2011
Advocate Appeared:
Mr. E.R. Indra Kumar, for the Appellant
Mr. A. Shankar, Lava, for the Respondent
Headnote:INCOME TAX ACT, 1961 - Section 68: [V.G. Sabhahit & Ravi Malimath, JJ] Unexplained cash credit - Deletion of the particular sum by the Income Tax Appellate Tribunal representing unexplained cash credit on the ground that it does not represent undisclosed income - Held, The onus to prove that cash repayments were genuine were on the appellant, since the person who gave the confirmation has denied the same. Hence, the Assessing Officer was of the view that the monies due from the firm in the form of cash and debt dues amounting in all to Rs 39,68,357/- has remained unproved. Hence, the same was treated as unexplained cash credit under Section 68 of the Act. The Appellate Authority confirmed the said finding. The Tribunal was of the view that the addition cannot be sustained since there was no material during the course of search to indicate that the amount received from M/s.H.R.B. Syndicate is not genuine and that the undisclosed income is to be computed on the basis of the material fund during the search. Even otherwise, the Ledger Account clearly shows that these are the transactions with M/s. H.R.B. Syndicate and the payment of loan is by way of a cheque. That the provision of Section 68 are wholly inapplicable since it is not a case of cash credit. That the addition is purely based on suspicion and accordingly the Tribunal deleted the addition. The entire material relied upon by the Assessing Officer is not based on the material found during the course of search. It is a result of the examination and further enquiries made by him which cannot therefore form any basis at all. Moreover, the Ledger Accounts clearly shows that the payment is by way of a cheque drawn on valid bank and the transactions are that of M/s.H.R.B. Syndicate. Under these circumstances, to conclude that it is an unexplained cash credit is wholly without any basis. Further, it is not the case of cash credit to invoke the provisions of Section 68 of the Act. The order passed by the Tribunal is just and proper and does not call for any interference.
INCOME TAX ACT, 1961 - Sections 131 & 132(4): [V.G. Sabhahit & Ravi Malimath, JJ] Admitted undisclosed income declared in the block return - Undisclosed income admitted by the assessee in the statements recorded under the provisions of Sections 131 and 132 (4) of the Act - Income Tax Appellate Tribunal deleting the admitted undisclosed income of the assessee - Legality - Held, The admissions made cannot be retracted by the legal representatives of the person who made the admission. If at all it can be so done only by the concerned himself. In the instant case, the admissions made by Mr. ’X’ cannot be retracted by his legal representatives on the various grounds that are sought to be urged. In view of the admissions made the same become binding, it also binds the legal representatives. Moreover, the Income-Tax officials are not Police Officers. Even though the admissions are sought to be retracted not by the person who made it but, by the legal representatives, it would still amount to an admission and would bind the legal representatives. Further, Section 159 of the Act postulates that the legal representatives are liable to pay such sums as the deceased would be liable to pay. That any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representatives and may be continued against the legal representatives from the stage at which it stood on the date of death. Therefore, in terms of Section 159 the legal representatives get into the shoes of the deceased. They are therefore not permitted under law to withdraw any admissions made but are legally benefitted by any such admission made by the deceased. On facts, held, The legal representatives of the deceased Mr. ’X’, is a Trust and not an individual. The Trust being a beneficiary can therefore contend only so far as the unadmitted portions are concerned and cannot contest the admitted amounts. Under these circumstances, we are unable to accept the contention that the legal representatives are entitled to retract the contentions made by Mr. ’X’. Under these circumstances, the Tribunal was not justified in deleting the admitted undisclosed income of the assessee.
INCOME TAX ACT, 1961 - Assessment proceedings-: [V.G. Sabhahit & Ravi Malimath, JJ] Un explained credit voluntarily admitted by the assessee in the course of assessment proceedings - Tribunal deleting the same on the ground that it does not constitute undisclosed income - Held, When the assessee himself has offered the undisclosed income, the Tribunal grossly fell in error in holding that the addition of Rs 15,00,000/- is as a result of the examination of the balance sheet. The finding recorded by Tribunal is wholly unjust and opposed to the material available on record. On facts, Held, The appellant has admitted that the amount of Rs 15,00,000/- could not be explained and has since offered as undisclosed income for the block period. Under the provisions of Chapter XIV-B the authorities are not computing or re-computing the income as a result of the search but only to compute the undisclosed income, that has been found at the time of search. Under these circumstances, the Tribunal is not justified in deleting the same on the ground that it does not constitute undisclosed income.
Ravi Malimath , J.—This appeal is by the Revenue being aggrieved by the order of the Tribunal wherein the appeals filed by the assessee were partly allowed and the appeals filed by the Revenue were dismissed. The late Sri H. R. Basavaraj was an assessee. Search and seizure were conducted under the provisions of section 132 of the Income-tax Act, 1961, at his residential premises and that of his associates. In the course of the search, receipts, agreements and other documents were found. His statement was recorded as well as of other concerned persons. During the course of the search by his letter dated March 4, 1998, he offered a total undisclosed income of Rs.1.26 crores. Thereafter, a notice under section 158BC was issued to him. He filed the return of income for the block period on September 28, 1998, disclosing therein an undisclosed income of a sum of Rs.34,51,960. During the pendency of the assessment proceedings he died on September 6, 1999, Accordingly, the Assessing Officer by his letter dated November 12, 1999, proposed to treat his wife, sons and grandsons as his legal representatives. However, vide letter dated November 17, 1999, these persons informed the assessing authority that on the demise of Sri H. R. Basavaraj, the entire estate passed on to the H. R. B. Family Trust in terms of his last will and testament. Accordingly, the assessing authority proceeded to complete the assessment represented by the legal representatives, namely, the HRB Family Trust.
2. The assessing authority after affording adequate opportunities of hearing on various dates passed an assessment order on December 30, 1999, determining the total undisclosed income in a sum of Rs.2,66,67,510 which included the admitted undisclosed income of a sum of Rs.34,51,960. Aggrieved by the same, the assessees preferred an appeal before the Commissioner assailing the additions made in the course of block assessment including the admitted undisclosed income. By the order dated May 10, 2002, the Commissioner confirmed some of the additions made by the assessing authority and so far as the remaining additions are concerned rejected the same. Aggrieved by the same, three appeals each were filed by the assessee and the Revenue arising out of the block assessments and one appeal each by the assessee and the Revenue were filed arising out of the regular assessment under section 143(3). The Tribunal partly allowed the appeals of the assessee whereby some of the additions made by the assessing authority are confirmed by the appellate authority were deleted. Hence, the present appeal by the Revenue assailing the deletions made by the Tribunal and on other grounds.
3. The appeal was admitted to consider the following substantial questions of law:--
(1) Whether the Income-tax Appellate Tribunal (ITAT) is correct in law in deleting the undisclosed income admitted and declared for taxation in the block return filed under the provisions of section 158BC of the Income-tax Act, 1961 ?
(2) Whether the Income-tax Appellate Tribunal is correct in law in deleting the admitted undisclosed income declared in the block return when such undisclosed income is admitted by the assessee in the statements recorded under the provisions of sections 131 and 132(4) of the Income-tax Act, 1961, and also when such admitted income was not disputed by the assessee himself before the assessing authority at the stage of assessment ?
(3) Whether the Income-tax Appellate Tribunal is correct in law in deleting the admitted undisclosed income of Rs.17.5 lakhs relating to investment in Normandy Distilleries representing cash paid by the assessee when such unaccounted investment is evident from the seized material, confirmed by the assessee in his statement on oath and offered for tax in the block return ?
(4) Whether there is evidence and material justifying the Income-tax Appellate Tribunal to delete the admitted undisclosed income of the sum of Rs.17.5 lakhs relating to investment in Normandy
