Dismissed

Sri P. Rami Reddy v. Income Tax Officer

Telangana HC7 Jun 2023ITTA/415/2006

Case brief

AI extract

What is this about?

High Court bench dismissed the Income Tax Tribunal's appeal by appellant assessee challenging addition of gold jewellery value as unexplained income. Court upheld Tribunal's finding that assessee failed to discharge burden of proof and invalid VDIS offer still allowed use of information.

What did the court decide?

Appeal of the assessee is dismissed. I.A.No.1 of 2023 disposed of. No costs.

Sri P. Rami Reddy Vs Income Tax Officer — Income Tax | Telangana HC (2023)

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133111

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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WEDNESDAY ,THE SEVENTH DAY OF JUNE TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND

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THE HONOURABLE SRI JUSTICE N.TUKARAMJI

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I.A.NO.1 0F 2023

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IN/AND

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INCOME TAX TRIBUNAL APPEAL NO:415 OF 2006

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(lncome Tax Tribunal Appeal Under section 260-4 of the lncome Tax Act 1 961, against the order of the lncome Tax Appellate Trrbunal, Hyderabad Bench ,A,, Hyderabad in ITA No.49lHydt2\O2, for Assessment year 1998_1999, dated 31-03-2006, preferred against the order of the commissioner of lncome Tax Appeals-V, in Hyderabad, tTA No 677M t(3)/C|T(V)/200-02 dated 28_12_2001, preferred against the order of the lncome tax officer, ward-i (3), Hyderabad PAN/GlR No. F-891,dated 20-03-2001 )

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Between:

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Sri P. Rami Reddy, 201. Sai Nidhi Residency, Naqariuna Naoar Colonv. Sri Nagar Cotony, Hyderabad_500073 ...AppELLANTlAppeu(r AND

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lncome Tax Officer, Ward 1 (3) New Range-7, Hyderabad_500001.

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...RESPONDENT/RESPONDENT

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lA NO: 1 OF 2023

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Application under Section 151 cpc praying that in the circumstances stated in the affidavit filed in support of the petitron, the High court may be pleased to permit the Petitioner to raise additional substantia-i question oi law which is purely legal and relevant for adjudication in the interests oi justice.

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Counsel for the Appellant: SRI K.p. AMARNATH REDDY FOR SRt

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KARTHIK RAMANA PUTTAMREDDY

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Counsel for the Respondent: SRI J. V. PRASAD, SC FOR TNCOME TAX

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The Court made the following JUDGMENT:

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TH E IION]B I,EJIHE CHI ET TICE U AI B I{LryAN

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AND

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]HEJIOSLE SRI ICE N.TUKA BAIUT I.A.Nrr.1 of 202-l rnl& I.T.T.A. No.415 of 2006

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J llDGIrt-EN'I,^{ri lin t t,,: i.i,t h? t t..'.,,i:t(,tia/} Bhut,tn)

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Ifeard -&. K.P.Amamath Reddn leamed counsel for the

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appellant and M-r. J.V.Prasad, leamed Standing Counsel, Income Tax Depanment for rhe respondenr.

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This appeal has been preferred by the assessee as the appellant under Section 260A of the Income Tax Act, 1961 @iefly 'the Act' herehafter) againsr the order dated 31.a3.2006 passed by the Income fax Appeliate Tribunal, Hyderabad Bench 'A', H;derabad (briefly 'the^'Iribunal' hereinafter) ln I.T.A

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No.a9/H1d/2002 for the assessmenr year 1998-99.

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l. Though the appeal \as admined on 27.09.2006, no

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substantial question of iaw was framed. However, in rhe memo of appeal, appeilant has proposed the following quesrions as substantial questions of [aw:

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1.^\X/hether on the^{factsand in the circumstancesof thiscase,the} Tribunal was^{justified in uphotding the inclusion o[ a sum of} k.33,77,329.00^{in the taxableincome of the assesseeholding it} as the assessee's^{unexplainedincome forassessment} year 1998-99^?

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2.^tff/hether on the^{facts and in the circumstancesof the cxe, the} Tribunal wx^{jutifiedin holding that the declarationfiled bythe} assessee under the^{Voluntary Disclosureof IncomeScheme} of 1997 should be^{treated xa ,raliddocument,though} Secdon 67Q) of the^{FinanceAct, 1997 mandatesthat sucha} declaration shall be deemed^{to have never beenmade,when the} appropriate tax was not^{paid withinthe stipulatedtime ?}

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Whether on the facs and^{in the circumstances of the case' the} Tribunal was^justified in treating^one Part^{of the declaration as} valid evidence, and treating another^{part of the samedeclaration} as invalid evidence ?

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\X/hether on the facts and in^{the circumstancesof the case, the} Tribnnal was^justified in^{ignoringSecdon72 of the Finance} Act, 1997 which ensures^{secrecyof a declaration?}

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\X/hether on the facts and^{in the circumstances of the case, the} Tribunal was^justilied in^{rrukinguse of r.he declaration when} nnder Section 7 7 of the Finance^{Acr, 1997} ,^{tle declarationis not} admissible as evidence against^{a declarant ?}

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V{hether on the facts andⁱⁿ fie^{circumstances of the case, the} Tribunal was^jusdfied in upholding^{the additionin assessment} year 1998-99,^qzhereas any addition, if at^{all, couldhavebeen}

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made onlt' lor assessment v'trs 1978-79 to 1981-82, n*Lich hrd rlre:ldv become tirne-b:rrcrl. by the time the assess.ing officer made the relcvant 6sessm('nL ?

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\lherher⁽⁾ⁿ the f.rcts :rntl^Ln the circumstances oltthe^{case, the} 'IribLmel r.-a:, right in holJing, tlrat the assessee should explain the source oi his acqtLisition of the^jewellery even^{though the} ecquisition t,rok place^q'hen the assessee was^{a minor?}

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V4rether on the f:rcts and^r,r the circumstances^{of the case, the} 'fribunal was right in holding that the burden of proof *as on the assessec to demonstmtc^{thatthe jewellery was not acquired} cluring the accounting year^{,elevant to assessment yar 1998-99?} 9.^tff4rether on the facts and in the^{circumstances of the case, the} Tribunal ha<l the^jurisdiction to^{uphold the addition under} Section 69- A of the^{Act,s hereas the lower authority made the} addition u.nd,:r a different scction^{namely Section 69 of the Act?}

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Subsequently I.ANo.1 of^{2023 has been filed by the} appellant proposing an additional^{questionof law as under:}

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&/hether the Tribunal ancl lower authorities erred in sustaining the assessment under the^{Acr based on the declarationsubmitted} by the appe llant rrnder the^{VoluntaryDisclosureof Income} Scheme. 1997 when on thc ff,ce of the^{declaration. thereis no} income rrisrng out of the possession^{of gold jewellery and silver} utensfu rvhich^rv'ere acquted by way of inheriance^{berween the} peiod 1977-78 to 1980-81 on var-ious occasions ?.

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'nti;: 'r /?

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Appellant^{is an assesseeunder the Act having the smns of an} individual.^{He is in the restaurantbusiness'For the assessment} year under consideration,^{appellant had filed retum of income} on 03.03.1999^{declaring income of k'96,734'OOapan from} agricultural^{income of RS.35,OO0.OO.The case was selectedfor} scnrtiny^{v"4rereafter assessmentorder dated 20.03'2001 was passed} by the assessing^{officer underSection1a3(3) of the Act' Assessee} had filed declaration^{dated 24.12.1997tndersub-section(1) of} Section 65 of the^{Finance Lct, 1997 panlydeclaring goldjewellery} and silver utensils^{under the Voluntary Disclosureof Income} Scheme, 1997 P.irefly'the^{Scheme'hereinafter). FIe mentioned} that gold^jewellery and^{silver utensfu were purchasedby him and} also acquired by way of^{inheritanceon variousoccasions'} Flowever, the gold^{jewellerywas not disclosedin his incometax as} well as wealth tax reruns.^{Alongwith the disclosure, assessee had} submitted a^{valuation reportof gold jewellery and silverutensfuas} per which value of the^{gold jewellery and silverutensilswas}

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deternined .rt ik. 16.C.1,19 i.'ll Hou,ever, assessec failed^{to pay the} required tax unrler the Schenrt

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V4ren tl'.' asse ssing^,,fircer received^{infonnationregarding} such disclosure bythe^{asscsscc.he initiated enquiryandcalled upon} the assessee to lumish^{infonrutionregardingthe gold jewelleryand} silver utensils d isclosed^{undcrthe Scheme. However,assessee was} quite evasive in his^{reph' contending that such disclosurehad} become invrlid in^vierv ol^{n()n-Pa),rnent of ta-x. That aparl,afrcta} long penod of ten yearc^{assesseccouldnot be questioned as to how} he came in possession oi^{t lre gold jewelleryand silverutensils'} Such replyof^{theassessee\"s not accepted bythe assessingofficer'} By the assessm,:nt^{order dated 20.03.2001, he proceededto value} the gold^{jervellery and si.lver,.rtensils for the assessment} lear^r-rnder consideration and^{trcated the same as unexplainedinvestment} under Section 69A of^{the Act.}

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The aforesaid order ol^{the assessingofficerwasassailedby} the assessec bctore the first ,rppellate authoriry^{2.e.. Commissioner}

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of Income^{Tax (Appeals)-IV,Hlderabadftriefly 'CIT(A)'} lrereinafter).^{Bythe appellateorder dated28'12'2001'the appeal of} the assessee^{was dismrssed'\flhile dismissing the appeal of the} assessee,^{CIT(A) observedas under:}

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a. The^{assesseedid not deny possessionof the assets'}

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b. The^{assesseecategorically refused to provide anyevidencein} support of^{his claim that the impugned assetswere acquiredby} him in the^{financialyeas1977-78 to 198G81'}

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c. The AO^{was withinhis right to ask for such evidencesincethe} assessee^{vas only12 to Lllears old at the material point of dme} and the immuniry^{underthe \DIS 1997 v,ns notavailableto the} assessee.

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d. Thfud^{parry corroboration of the fact that the assetsin} question existed^{at dre time of declaration'in the form of a} valuation repon obtained^{froma registeredvaluer'is available'}

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Agairst^{the aforesaid order of qT($, assessee preferred} funher appeal^{before the Tribunal' Bytheorder dated 31'03'2006'} Tribunal upheld^{the order of the assessing officeras affirmed by} the CIT(A).^Relevant Ponion^{of the orderdated31'03'2006reads} as follows:

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7 . \t Irzrrt, Ircrtl r i,'.r] conrenrions. On a c,rrtiul considelerron oi rli.' l,rer. .rnci circunut;rnces of thc cirse, w'e are of rhe considc'rt'rl (,i,inion that the order of thc first appcllxtc .u.rthom. h,rs i,, be r"rpheld for the folloting reasoni.^-l-he .rsscssec ii.r. .,,,r,, ///lit) rt-tadt a decLrration before the^(f'l ,,{I'} I, on.l-l-12-199l it'hereir he stated that he is in possession ol cenain gold and jet.ellery. The factum ol thc assesst'.' lreing in possession of gold, jewellerr. s ilr-er rn.'nsils .rl, ,rrq uith cenain dirmonds is not denied enr.r'here in thc .,⁾ u:c oi proceedings. lhe claim that r,.4rete,-er is st.rted h\ rhe irssessee has to be accepted by the Revenue c,1rlrl()r be countenanced. In the declaration iilecl bv rhr .rss,'ssee. the factum of possessing gold etc., i: not in rlisputc fhc onlv dispute is to the r.aar of acqukition. The rss..':,s,', is dut1.[6*r.1 to substantiate his claim thet the;rssets in rprc'stion were acquied as long back as 1977-78 l'hen hc ''as^just L2 yearc old. This is a classic c:lse of an assessce oiiering no explanation as to the nature and sor-rrce of :rn irrvestment and to the )€ar of inl'estmcnt. The in,'estnrert in question u-as definitely not recorded in bools oi ,.rcc,,,-,,rr trs ,rdm.irted by the assessee himself. A third partr, r.,'. the registered raluer, had cenified thaL he h.rcl secn tlr(' items of jewellery and valued the same . None oi the c.rsl l.nrs re lied upon by the lelmed counsel i'or the ,uscsscc .l..rrl.,. srates that the burden of proof lics r.,ith rhc ,\s..ssirrg (Xficer on the issue of tear

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of investment^{'r"hene.'er he invokes the provisionso[ sec.} 69. The fact r-emains^{that the factum o[ the} ienellery^beng Ln the possession of the assessee,^{had come to the} knowledge oL the Revenue only^{during the previousyear} 1997- 98 relevant to asst. year^1,998-99.

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Co-i"g to the \DIS 1997^introduced by^the Finance Pct, 1997, u'e find that sub-sec. Q)^{of sec.67 oi} the Finance Act states:

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"I[ thc dcclarant fails to pay the tax in respect o[ the volr.urtarily disclosed income bcfore the expiry of three months from the^date of f LLng o[ rhe declaration, the declaration filed bv hrm shall be deemed never to have been made under this Scheme." [Emphasis oun]

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Nowhere it says that this declaration k not est in law nor that it carLnot form evidence based on which an assessment can be made. A plain reading of sec. 69 of the Income-ta-x Act, 1961, shows that when the assessee offers no explanation about the nature or sourae of the investment, the ralue of the investment may be deemed ro be rhe income o[ the assessee for the financial par. 9. In the case of Ashok Kumar Rastogi v. CIT, 59 ITR 4ll, the Hon'ble Allahabad Flgh Coun was corsidering an addition of Rs.50,000 in some unexplained business and the finding therein was that from the estirnated sale, it could not necessarily be inferred that the

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assessee hed invesred R.i:.C:C. Noq-hert in thi-r decision has a proposition bern I.rJ clotn br the I Ion'blc Cburt th.rt the ;(-) has to disch.ut..' the bLurlcn oi proc,i. Even in the other c.rse I;r\,\ rtlic.l L,pon bl the ,rsse ssc,), \'e itnd th:rt the pr,)position soug[r, to [-,e c.invessed is n()t sLrpPott by anl' of t)re^judqnrenrs.

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Thus, '*-e fuLlv asrce i ith the iindings oi the first appellate a,rthorill'in p,rr'.r:r.:rphs^-l end 4.i to^1.4 oi^his order.

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LookLng at the i'sLr,-' iront ,rnother .rng[e,^the assessee al.o falls^r.rit hir r thc embit of^{sec. 59A of the} Income-ux Act, 1961. l.Lr,rliecl at irorn^{an1-angle, the} appeal of the assessee^h.rs ti, be dismssed.

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\2. In th.' result. the^rrppe.rl ol-the^{assessee is dismissed.}

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Thus according to the^{-I'rit,unal,assessee had suo mottt madea} declaration beforc the revenue ot^{24.12.1997 stating that he was in} possession of certain gold^{jeu'ellery and silver utensils.Ffu never} denied possession of gold^{jewellcry and silverutensils at any stage} of the proceedings.^The only^{disputewas to the year of acquisition.} It was the duryol the assessei'to^{substantiate his claim that he had}

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acquired the golcl^jewellery and^{silverutensilslong back Since} assessee did not discharge his burden, assessing officer was jLstified

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in treating the same as undisclosed^investment of^{the assessee.} Since assessee did not paythe tax upon the^{voluntarydisclosure,he} could not avail benefit r.rnder the Scheme.^{Nonetheless, it was an} information r 4rich could be validly utilised by the assessing officer which he did.

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We see no eror or infirmity in the view taken by the Tribunal. No question of law much less anysubstantial question of Iaw arises in the appeal. Consequently, the questions proposed by the appellant are answered against the assessee and in favour of the revenue.

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11,. Resultantly, the appeal is dismissed and I.ANo.1 of 2023's

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disposed of. No costs.

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As a sequel, miscellaneous petirions, pending if any, stand

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closed

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Sd/. B.S.CHIRANJEEVI JOINT REGISTRAR //TRUE COPY// C-al SECTION OFFICER

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To, 1. The lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad 2. The Commissroner of lncome Tax Appeals-V, Hyderabad

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The lncome tax Officer. Ward-1 (3), Hyderabad.

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One CC to SRI KARTHIK RAMANA PUTTAMREDDY, Advocate [OPUC] 5. One CC to SRl. J. V. PRASAD (SC FOR INCOME TAX), Advocate [OPUC] 6. Two CD Copies

DL g.C

HIGH COURT

DATED:07/06/2023

JUDGMENT

r.A.NO.1 0F 2023 tN/AND ITTA.No.415 of 2006

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DISMISSING THE APPEAL AND

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I.A.NO.,I OF 2023IS DISPOSED OF

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Sri P. Rami Reddy v. Income Tax Officer

Case brief

What is this about?

What did the court decide?

Sri P. Rami Reddy v. Income Tax Officer

Case brief

What is this about?

What did the court decide?

What the court decided

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