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Judgment
Pinaki Chandra Ghose, J.—This appeal was admitted u/s 260A of the Income Tax Act.
This appeal was admitted on the following questions:
Assessment Year 1993-1994
(i) Whether on the facts and circumstances of the case, the income tax Appellate Tribunal was justified in law in deleting the addition on account of benami business and also benami bank account though the benami business were accepted by the Assessee and his two relatives of their statement u/s 132(4) of the Income Tax Act, 1961?
(ii) Whether on the facts and circumstances of the case, the Tribunal was justified in law in deleting the addition by holding that the investment was made by the Assessee''s daughter though it was not recorded in the assesee''s daughter''s bank account?
(iii) Whether on the facts and circumstances of the case the income tax Appellate Tribunal was justified in law deleting the addition on account of benami investment ?
(iv) Whether on the facts and circumstances of the case, the income tax Appellate Tribunal was justified in law in deleting the addition on account of income derived by Shri Radheshyam Marodia and Dilip Marodia though they admitted that they were salary paid employees of the Assessee and the business was being done on behalf of the Assessee?
(v) Whether on the facts and circumstances of the case, income tax Appellate Tribunal was justified in law by accepting the additional evidence which were not filed before the Assessing Officer and deleted the addition on account of unexplained expenditure?
Assessment Year 1994-1995
(i) Whether on the facts and circumstances of the case, the income tax Appellate Tribunal was justified in law in deleting the addition on account of unexplained cash, unexplained investment and jewellery?
(ii) Whether on the facts and circumstances of the case, the income tax Appellate Tribunal was justified in law in deleting the addition of Rs. 50 lacs on account of disclosure made by the Assessee or his representative were not allowed to cross-examine?
(iii) Whether on the facts and circumstances of the case, the income tax Appellate Tribunal was erred in law in deleting the addition on account of jewellery because there was nothing on record to show that the Assessee or his representative were not allowed to cross-examine?
(iv) Whether on the facts and circumstances of the case, the Tribunal was justified in law in deleting the addition with regard to estimation of commission on account of various benami account and also on account of benami business?
(v) Whether on the facts and circumstances of the case, Tribunal was justified in law in deleting the addition of Rs. 2,65,240 on account of transaction recorded in loose sheet?
(vi) Whether on the facts and circumstances of the case, the Tribunal was justified in law in deleting the addition on account of business income derived by Dilip Marodia and Radheshyam Marodia though they admitted that they were salary paid employees of the Assessee ?
(vii) Whether the income tax Appellate Tribunal was justified in law in deleting the addition on account of marriage expenses?
The Learned Counsel in support of this appeal submitted that on July 15, 1993, a search was conducted at the residence of the Assessee, late Nandlal Sultania and also at the residence of his accountants, Shri Radheshyam Marodia and Shri Dilip Kumar Marodia. During the course of the search their statements on oath u/s 132(4) of the Income Tax Act, 1961 were recorded. Radheshyam in his statement stated that the Assessee was carrying on business in benami names and 49 bank pass books were seized from his residential premises. The UTI certificates for Rs. 68,000/- (face value) in respect of Children Gift Growth Fund Scheme were also found from the residence of the Assessee. According to the Assessee, units were Rs. 26,000/- were purchased by Smt. Anita Sultania, wife of Jaideo Sultania, his son, in the name of her minor daughter, Nitisha Sultania and Anita was an Assessee. Certificates worth Rs. 26,000/- were invested by Smt. Mina Patwari, his married daughter, on behalf of her minor son, Ajoy Kr. Agarwal and that she was assessed to tax. Certificates worth Rs. 16,000/-were stated to be acquired by Smt. Anita Sultania on behalf of her minor daughter, Shreya Sultania. The case of the department that the Assessee could not explain the source of money invested or produce bank accounts of the said Anita and Mina. The said certificates were found from the residence of the Assessee, the Assessing Officer considered it as a benami investment and added the amount in his total income under Sections 69/69A of the income tax Act for the assessment year 1993-1994.
It is further submitted that the Assessee and his accountant admitted that the Assessee was carrying on business in 14 benami names. However, in the subsequent statement, the Assessee stated that they were not in banami transactions and they were separately assessed to tax.
From the seized documents it is further submitted that the acknowledgement receipts of the filing of the returns were found from the premises of the Assessee. It is further submitted that the businesses were conducted by some employees of the Assessee and, in fact, investment was made by the Assessee and the cheques were signed by the benamdars who were utilised as per direction of the Assessee. The case of the department of fact that the Assessee did not file the details of their income.
Under these circumstances, the Assessing Officer added a sum of Rs. 3,96,946/- to the income of the Assessee in the assessment year 1993-1994. Deposits in various benami bank accounts aggregating to Rs. 19,42,029/- were added as income of the Assessee under Sections 69/69A of the Act in the assessment year 1993-1994 since the Assessee could not explain the source of investment. Both the accountants contended and stated in their statements that the bank accounts and the business in their names belonged to the Assessee. In this connection, the Assessing Officer added a sum of Rs. 76,370/- to the income of the Assessee in the assessment year 1993-1994. In the different names the Assessee made investment in Gayatri Apartment (P) Ltd. aggregating to Rs. 2,55,000/-. Similarly, a sum of Rs. 2,62,500/- was invested in Tridebesh Properties (P) Ltd. The said amount was also added to his income since there was no explanation given by the Assessee. On account of Profit and Loss Account of Chasnala Slurry the Assessing Officer added a sum of Rs. 1,88,442/- to the income of the Assessee and further since there was no explanation for a sum Rs. 62,500/- it was also added with regard to the investment made in Canara Bank for the said assessment year 1993-1994.
It is further submitted that the Assessee declared his income of Rs. 28,038/-from commission. Since no details was furnished. The Assessing Officer estimated the income from commission at Rs. 1,00,000/- for the assessment year 1993-1994. The Assessing Offer for the said assessment year computed income of the Assessee at Rs. 33,55,200/- as against Rs. 31,448/-, the return so filed by the Assessee.
It further appears in the appeal that the Appellate Authority allowed the appeal and deleted the additions. At the time of hearing the Learned Counsel appearing on behalf of the Respondent raised preliminary objections that the finding of the Learned income tax Appellate Tribunal and as the matter was a question of the fact, the appeal was misconceived.
It is submitted on behalf of the department that such objection can be raised at the time of the admission of the appeal and not thereafter. It is further pointed out that the second objection which sought to be raised on behalf of the Respondent that the assessment has been made on a dead person which is not sustainable in the eye of law.
It is further submitted that the Learned Tribunal has dealt with this question in detail and reversed the order of the Commissioner of Income Tax (Appeals). It is submitted that the assessment years involved in this appeal are 1993-1994 and 1994-1995. Shri Nandlal Sultania died on January 12, 1996. Therefore, return was duly submitted for the assessment year 1993-1994 and for the assessment year 1994-1995, his son, legal heir of the deceased filed the return. Therefore, it is submitted that the said assessments were valid and the Learned Counsel relied on the decision reported in the case of Kamalesh Kr. Meheta 1061 ITR 855 (Cal).
It is further submitted that the law is well settled that the income upto the date of the death of a person would be assessable. It is also provided in Section 159 of the said Act. It is further submitted that if there be an infirmity in the assessment in making the assessment on Nandlal Sultania, the defect is covered by the provisions of Section 292(b) and the validity of the assessment cannot be challenged.
It is further submitted that the Learned Tribunal has deleted the addition of Rs. 68,000/- on account of investment in Children Gift Growth Fund Scheme of UTI since the said investments were disclosed in income tax returns of the guardians of the minors and that the certificates were found in the common residence of the Assessee and the family members like Smt. Anita Sultania. The Learned Tribunal has also deleted the addition of Rs. 3,96,946/- since the person concerned did not accept that they were benami of Nandlal Sultania. Assessments were made in their hands and furthermore the statements of Radheshyam Marodia and Dilip Kumar Marodia were taken behind the back of the Assessee and the Assessee did not have any opportunity to cross-examine them and subsequently, both of them had retracted their statements.
The Learned Tribunal has also deleted the addition of Rs. 19,42,029/-relating to benami bank accounts on the ground that the bank accounts were reflected in the income tax assessment records of the holders thereof and the deposits were explained in their assessments. There is no linkage between the bank accounts and the Assessee and therefore, no reliance could be placed on the statements of Dilip Kumar Marodia and Radheshyam Marodia. The Learned Tribunal has also deleted the addition of Rs. 5,17,500/- as benami investment in share capital and share application of the two companies on the ground that the investments were shown in the income tax assessments of the respective holders. The Learned Tribunal also deleted the addition of Rs. 67,373/- on the ground that there was nothing on record to show that the income was earned by the Assessee. The addition of Rs. 62,500/- was also deleted by the Learned Tribunal on account of unexplained investment and expenditure on the ground that the amounts in question pertained to Sultaina Traders and were reflected in its books. The Learned Tribunal has also deleted the addition of Rs. 71,962/- to the commission income earned by the Assessee. In the absence of full details and supporting evidence the Learned Tribunal has held that commission income could be estimated at Rs.40,000/- as against Rs. 28,088/- shown by the Assessee and Rs. 1,00,000/-estimated by the Assessing Officer.
On March 29, 1996, the return for the assessment year 1994-1995 was filed and declared total income of Rs. 33,689/- by Shri Jaideo Sultania, legal heir of late Nandlal Sultania. Following the order for the assessment year 1993-1994 the Learned Tribunal has held that the assessment to be valid. The Assessing Officer made additions of unexplained cash, investment and jewellery amount to Rs. 2,47,640/-, Rs. 6,03,000/- and Rs. 1,26,562/- respectively, in the assessment year 1994-1995. Out of cash of Rs. 2,47,640/-, Rs. 2,42,640/- were seized at the time of search and it was contended by the Assessee that Rs. 1,00,000/- belonged to Smt. Anita Sultania, wife of Shri Jaideo Sultania, and Rs. 1,30,000/- belonged to Shyama Coal Co., a firm, in which Shri Nandlal Sultania was a partner in the capacity of Karta of the HUF. Rs. 10,000/- were stated to belong to Smt. Sushila Devi Sultania and the balance of Rs. 7,640/- to Mohit Kumar Sultania, son of late Sanwar Pd. Sultania, younger brother of late Nandlal Sultania. These facts were also supported by the said persons before the Assistant Director of income tax (Investment) in course of the proceedings u/s 132(5) of the Act. The Assessing Officer added a sum of Rs. 6,03,000/-, being the fixed deposit receipts, to the income of the Assessee, but explanation has been specifically given as it appears from the records and since explanation has been given it was accepted by the Learned Tribunal and deleted the addition of Rs. 5,50,000/-. As regards the balance amount of Rs. 53,000/- as the Commissioner of income tax (Appeals) was directed to adjudicate upon the issue. The Learned Tribunal also deleted the addition amount amounting to Rs. 1,26,552/- on account of jewelleries. The Assessing Officer made an addition of Rs. 50,00,000/- on account of disclosure. But after taking all the materials placed before the Learned Tribunal, the Learned Tribunal deleted the said amounts. It appears that the amounts so realized at the time of the search and seizure were all expenditure and no evidence was furnished by the Assessing Officer for addition of the said amounts to the income of the Assessee. As a result whereof, the Learned Tribunal has set aside the assessment and directed the Assessing Officer to re-examine the issue regarding addition of Rs. 1,00,000/-. The Learned Tribunal deleted the addition of Rs. 1,30,455/- of jewellery found from the residence of Shri Radheshyam Marodia.
It appears from the facts and the materials placed before us then the Learned Tribunal dealt with the matter expressly and has deleted the addition made by the Assessing Officer. It appears to us that all the questions of addition of the amounts have been dealt with the Learned Tribunal and after considering the facts of the case, it appears that the Learned Tribunal deleted the said addition.
The Learned Counsel appearing on behalf of the Appellant tried to contend before us that the tax so paid by the others could be reduced from the tax payable by the Assessee and such position has also been settled to law and relied upon the following decisions. It is the case of the department and has submitted by the Learned Counsel appearing on behalf of the department that the benami bank accounts were also admitted and which belonged to Shri Nandlal Sultania and the Learned Tribunal was also justified in deleting the additions on account of the benami business accepted by the Assessee and his two accountants in their statements u/s 132(4) of the income tax Act, 1961.
It was further submitted that the second question also to be answered in favour of the department and as such, the addition should be upheld. With regard to the third question it is submitted that the benami investments were admitted to be those of the Assessee. Therefore, the Learned Tribunal was not. correct in deleting the addition of Rs. 5,17,500/-.
It was further submitted that since Shri Radheshyam Marodia and Shri Dilip Kumar Marodia are employees of the Assessee and business was carried on their behalf, but the Assessee carried on business in the name of employees. Accordingly, the deletion which was made by the Learned Tribunal is incorrect. Accordingly, it is submitted that all the additions should be done by the Learned Tribunal and accordingly, it is submitted that all the questions should be answered in favour of the department.
On the contrary, it is submitted on behalf of the Respondent by the Learned Counsel that u/s 260A of the Income Tax Act, only substantial question of law could be gone into in this appeal and not on the question of fact. It is made clear in Sub-section (4) to Section 260Aof IT. Act, to the effect that the Respondents in such appeal be allowed to argue that no question of law are involved in this appeal and as such the appeal should be rejected.
It is humbly submitted that the question involved in this particular appeal are primarily questions of fact and not questions of law and certainly no substantial questions of law as envisaged u/s 260Aof the Income Tax Act are involved and as such, this Hon''ble Court should be pleased to reject the appeal.
This point has been explained by the Hon''ble Supreme Court in the case of SREE MEENAKSHI MILLS LIMITED Vs. COMMISSIONER OF Income Tax, MADRAS., reported in wherein the Court inter alia held that the question of facts arrived by the Tribunal were not to be disturbed by the High Court on a reference, unless it appeared that there was no evidence before the Tribunal.
Court laid down guidelines which subsequently was followed all over the country. This case was also followed in a case Commissioner of Income Tax, Calcutta Vs. Biju Patnaik, reported in and the proposition held in Minakshi Mills were reiterated specially in Paragraph-14 of the said judgment. The Court formulated the points as follows:
i) The pure question of law, such as construction of stature or document of title or decision of the Tribunal is open in reference to the High Court under the said section.
ii) When point for determination was mixed question of law and fact while the finding of the Tribunal on facts find was final, the decision as to the legal effect of those findings was a question of law which could be reviewed by the Court.
iii) The finding of fact was open to attack if there was no evidence to support it or if the finding is perverse.
It would appear from the order of the Tribunal as stated hereinabove that the same were not pure question of law as envisaged in the aforesaid judgment. The same were neither mixed question of law and fact. The inference of fact could not be gone into at this stage before this Hon''ble Court. The question formulated therein are neither question of law nor substantial question of law nor question of perversity or of no evidence as envisaged in the aforesaid judgment.
It is submitted that the assessment was made admittedly on 31st March, 1997 after the demise of Late Nandlal Sultania, Assessee. Therefore, the assessment is bad on the face of it. The legal representatives of Late Nandlal Sultania were not brought on records nor assessment has been made in their name and it was also held that no proper notice was served on the legal representatives including Jaideo Sultania.
It is not also disputed that the representatives of Jaideo Sultania and others appeared and filed various details and took steps in the matter in question. In this back ground, the Learned Tribunal held that it would not be proper to say that no opportunity was allowed to the legal representative at all.
With regard to the ground No. 2 our attention was drawn to the facts of this case and which is not in dispute that Anita and Mina were being assessed to tax in their individual capacities and the acquisition of units under consideration have been disclosed by in their individual Income Tax returns. Therefore, the Learned Tribunal came to the conclusion correctly that the question of benami is a question of fact and the same was found to be so by the Learned Tribunal and the Learned Tribunal on fact found that the said businesses were not benami business of the Assessee. In fact those businesses were separately assessed to Tax therefore they cannot be treated as the undisclosed income of the Assessee as has been rightly held by CIT. the said Radheshyam Marodia and Dilip Kumar Marodia duly filed the return and were being assessed to income tax for long time and the sources of income regarding deposits in bank account also stood established and reflected in the accounts filed by those individual assesses.
In the Ground No. 5, the Learned Tribunal held that the additions were made on surmise and conjectures and directed to be deleted. The Learned Tribunal came to such conclusion that since there is evidence on record to show that the deposits were related to the fund of the Assessee. CIT (Appeals) after going into the facts of the case concluded that the addition has not basis and is merely a matter of surmise and conjuncture. Therefore, in the ground No. 6, it is submitted that the ground is primarily a question of act and inference drawn from facts. The unexplained expenditure relates to M/s. Sultania Coal Traders and was also narrated and the Learned Tribunal duly accepted the position and in view of that confirmed the order of the CIT and that is also a question of fact. With regard to the second assessment year it was submitted that the persons concerned were assessed separately. The returns were also filed by them and therefore, it cannot be treated as an unexplained income of the Assessee. The FD Rs name of the Assessee were also assessed to tax separately. Therefore, on this ground it is submitted that the Learned Tribunal was correct and came to the conclusion. Further, the Learned Tribunal correctly assessed the facts and came to the conclusion.
It is further submitted that a reference has been made by the Learned Counsel appearing on behalf of the Revenue (Department) of three judgments reported in and wherein it was held that in case of declaration u/s 24(2) of the Finance Act 2 of 1965 i.e. voluntary disclosure had to relate to income actually earned by the declarant and the act granted immunity to the declarant alone and not to any other person to whom income really belonged. Thus by legal friction amounts credited by Section 24(3) of the Finance Act could not be invoked in assessment proceedings relating to any person other than person making a declaration under the act so as to rule out all the applicability of Section 68 of the Income Tax Act. It is significant that in the instant appeal it is not a case of any voluntary disclosure at all. Thus the proposition contained in the said judgment is not applicable to the facts of this case. The said three judgments have no application to the facts of this case. The inferences herein have been drawn purely on the question of fact and inference drawn on facts and as such no appeal lies therefrom u/s 260A of the Income Tax Act.
He also relied upon the decision reported in Commissioner of Income Tax, Calcutta Vs. Biju Patnaik, where it has specifically held as follows:
The income tax Officer has categorically found that Shri Mall was not assessed to income tax as an individual. He was assessed as a member of the joint family on an income of Rs. 15,000 to Rs. 17,000. The total wealth of the family was about half a lakh. It was not possible to purchase shares of the face value of Rs. 9 lakhs on his own. The shares from 1959 to 1964 had gradually appreciated in value. In other words even after deducting the loan incurred by acquiring these shares, the net worth of these shares during 1959 to 1967 was Rs. 21/2 lakhs to 71/2 lakhs. Shri Mall never filed his wealth-tax return which clearly showed that nowhere shares were treated as his own. These and other factors taken in conjunction led the income tax Officer to the conclusion that 39,000 shares belonged to Shri B. Patnaik. In that view of the matter the materials gathered by revenue subsequent to the decision in S.P. Jain''s case ( The Commissioner of Income Tax, Bihar and Orissa, Patna Vs. S.P. Jain, on the aforesaid lines should have been appreciated and considered by the Tribunal." "32. In our opinion therefore on the principles enunciated by this Court in several decisions mentioned hereinbefore, these questions as questions of law mentioned above do arise.
In these circumstances, after considering the facts of this case and the materials placed before us, we come to the conclusion that the Learned Tribunal correctly held and came to the conclusion. We do not find that there is any irregularity and illegality in the order so passed by the Learned Tribunal. Accordingly, we answer the questions in negative and in favour of the assesee and dismiss the appeal and affirm the order so passed by the Learned Tribunal.
Urgent Xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
Sankar Prasad Mitra, J.: I agree.