IT : Where assessee during course of survey conducted under section 133A had surrendered certain amount and in return of income filed claimed set off against this surrendered amount claiming that said amount was his income from business, surrendered amount formed income of assessee from business and it was entitled to get set off against said amount
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[2013] 35 taxmann.com 229 (Rajasthan)
HIGH COURT OF RAJASTHAN
Commissioner of Income-tax
v.
Ram Gopal Manda*
NARENDRA KUMAR JAIN AND ARUN BHANSALI, JJ.
D.B. IT APPEAL NO. 33 OF 2009†
MAY 13, 2013
Section 28(i), read with section 56, of the Income-tax Act, 1961 - Business income - Chargeable as [Surrendered amount] - Assessment year 2003-04 - During course of survey conducted under section 133A, assessee had surrendered a sum of Rs. 1.75 crores - In return of income for assessment year 2003-04, assessee claimed set off against this surrendered amount claiming that said amount was his income from business - Assessing Officer held that surrendered amount was income from other sources and accordingly disallowed claim of assessee for set off - Commissioner (Appeals) held that surrendered amount was an income of assessee from business and not from other sources as pointed out by Assessing Officer - He further held that assessee was entitled to get set off of Rs. 54 lakhs against total surrendered amount - Tribunal affirmed order of Commissioner (Appeals) - No perversity had been pointed out in finding of Commissioner (Appeals) as well as Tribunal to extent that surrendered amount was an income of assessee from business and not from other sources as held by Assessing Officer - Whether in facts and circumstances of case appeal preferred by revenue was liable to be dismissed- Held, yes [Paras 12 and 13] [In favour of assessee]
FACTS
| ■ | The competent authority conducted a survey under section 133A at the business premises of the assessee on 28-1-2003 and found certain incriminating documents/loose papers, etc. On the basis of the said material, the assessee had surrendered a sum of Rs. 1.75 crores vide his letter dated 31-1-2003 before the department. In the return of income for the assessment year 2003-04, the assessee claimed set off against this surrendered amount claiming that the said amount was his income from business. | |
| ■ | The Assessing Officer concluded that the surrendered amount was the income from other sources. He accordingly disallowed the claim of the assessee for set off. | |
| ■ | On appeal, the Commissioner (Appeals) held that the surrendered amount was an income of the assessee from business and not from other sources as pointed out by Assessing Officer. He further held that the assessee was entitled to get set off of Rs. 54 lakhs against total surrendered amount. | |
| ■ | On second appeal, the Tribunal affirmed the order of the Commissioner (Appeals). | |
| ■ | On appeal to High Court: |
HELD
| ■ | The question involved in the instant case is as to whether the surrendered amount of Rs. 1.75 crores should be treated as income of assessee from business or from other sources. [Para 9] | |
| ■ | From the conditions mentioned in the letter of surrender by the assessee, it is clear from condition Nos. (a), (b) and (c) that the assessee had claimed that the surrendered amount was income from the business. From the order of Assessing Officer, it appears that he considered only the condition Nos. (e) and (f) and not the condition Nos. (a),(b) and (c) at all. The Commissioner (Appeals) considered all the conditions mentioned in the letter of surrender and other facts and circumstances of the case and thereafter recorded a finding that the surrendered amount was an income of the assessee from business and not from other sources as held by Assessing Officer and consequently it was held that the assessee is entitled to get set off of Rs. 54 lakhs. [Para 10] | |
| ■ | Whether the surrendered amount is an income from business or from other sources is essentially a question of fact. In the instant case, the Commissioner (Appeals) as well as the Tribunal have recorded a concurrent finding of fact based on cogent material available before them that surrendered amount was an income of the assessee from business and not from other sources. The revenue is unable to point out any perversity in the said finding recorded by the Commissioner (Appeals) as well as the Tribunal. There is no dispute between the parties on the issue that in case the surrendered amount is treated as an income from business, then the assessee is entitled to get set off of the amount of Rs. 54 lakhs. [Para 11] | |
| ■ | In view of the above, the questions of law framed in the instant case cannot be said to be the questions of law. [Para 12] | |
| ■ | Therefore, the appeal preferred by the revenue was liable to be dismissed. [Para 13] |
K.K. Bissa for the Appellant. Dinesh Mehta for the Respondent.
ORDER
1. Heard learned counsel for parties.
2. This Court, while admitting the appeal, framed the following substantial questions of law on 15th February, 2011 :-
| (i) | Whether the Tribunal was justified in directing set off of Rs. 54,10,054/- as against the surrendered income of the assessee amounting to Rs. 1,29,07,00/- by upholding the finding of CIT (Appeals) on this issue? | |
| (ii) | Whether the finding recorded by the Tribunal in Paragraph 7 is factually sustainable in the absence of any discussion much less cogent discussion, more so when assessee was not represented? |
3. The relevant facts, for disposal of this appeal, are that during the course of survey under Section 133A conducted on 28-01-2003, certain incriminating documents/loose papers/note books etc. were found at the business premises of the assessee and on the basis of the said material, the assessee had surrendered a sum of Rs. 1,75,00,000/- vide his letter dated 31st January, 2003 before the department.
4. During the assessment proceedings, the assessee claimed set off against this surrendered amount claiming that the said income was from business. The Assessing Officer did not agree with the submission of assessee and came to a conclusion that the surrendered amount of Rs.1,75,00,000/- is an income from other sources vide assessment order dated 28th March, 2006 in respect of Financial Year 2002-2003 i.e. Assessment Year 2003-2004.
5. Being aggrieved with the assessment order passed by Assessing Officer, whereby set off was not allowed/the assessee preferred an appeal before the Appellate Authority. The Commissioner of Income Tax (Appeals)-II, Bikaner vide its order dated 18th December, 2006 (Annex.2) partly allowed the appeal filed by the assessee. The Commissioner of Income Tax discussed the matter in detail and came to a conclusion that assessee is entitled to get set off of Rs.54,10,054/- and directed the Assessing Officer to give set off of the said amount against total surrendered income. The Revenue preferred appeal before Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide its order dated 27th June, 2008 (Annex.1) dismissed the appeal of the Revenue and affirmed the finding of the Appellate Authority. Hence, the Revenue has preferred this appeal before this Court.
6. Submission of Mr. K.K. Bissa, learned counsel appearing on behalf of Revenue, is that learned Appellate Authority as well as Appellate Tribunal, both committed an illegality in treating the surrendered amount of Rs. 1,75,00,000/- as income of assessee from business, whereas the learned Assessing Officer was absolutely right in not allowing the set off by recording a finding that the said surrendered income was income of the assessee from other sources. He, therefore, submitted that orders passed by Appellate Authority as well as Income Tax Appellate Tribunal, both be set aside and order of Assessing Officer be restored.
7. Mr. Dinesh Mehta, learned counsel appearing on behalf of assessee, supported the impugned orders passed by Income Tax Appellate Tribunal as well as Appellate Authority and submitted that amount of Rs.1,75,00,000/- was surrendered with specific conditions, which were considered and dealt with by the Appellate Authority. He submitted that Assessing Officer did not consider all the facts including the conditions mentioned by assessee, while surrendering the amount. He further submitted that Appellate Authority quoted all the conditions, which were mentioned in the letter, while surrendering the amount of Rs.1,75,00,000/-. He referred the finding of the appellate authority and submitted that Revenue is unable to point out any perversity in the finding recorded by the Appellate Authority as well as Appellate Tribunal. He, therefore, submitted that there is no force in the submission of learned counsel for Revenue. He also submitted that the questions framed in the present case are not the questions of law, therefore, this appeal is liable to be dismissed.
8. We have considered the submissions of learned counsel for parties and examined the impugned orders passed by Appellate Authority as well as Income Tax Appellate Tribunal and also the assessment order and other documents available on record.
9. From the various orders as well as submissions of learned counsel for the parties, it appears that the question involved in the present case is as to whether the surrendered amount of Rs.1,75,00,000/- should be treated as income of Assessee from business or from other sources. The Appellate Authority as well as Income Tax Appellate Tribunal, both have recorded a finding that the said surrendered amount was an income of the assessee from business and not from other sources as pointed out by Assessing Officer. The conditions mentioned in the letter of surrender by assessee are reproduced, as under :-
| "a. | The notebooks and loose papers contain entries pertaining to my business | |
| b. | I have examined the entries and after discussion about such entries with the worthy CIT, Bikaner, I offer income of Rs. 1.75 crores to tax for the current year 2002-03 | |
| c. | The surrendered income covers all the entries appearing in such notebooks and loose papers, | |
| d. | I am surrendering this income to purchase peace and in full and final settlement of my case. It is requested that no action to levy of penalty and prosecution etc. will be taken against me, | |
| e. | It is to cooperate with the department that I have surrendered the above income over all above the regular income to be declared for the financial year 2002-03 which shall not be less than the income disclosed for the Assessment Year 2002-03, | |
| f. | The tax on the above income surrendered will be paid as agreed by the worthy CIT, Bikaner, | |
| g. | I request that my above submission may be accepted so that no dispute at all in my case once for all which I have surrendered the above income of Rs. 1.75 crore for the Assessment Year 2002-03." |
10. From the conditions quoted above, it is clear from Condition Nos. a, b and c that the assessee had claimed that the surrendered amount was income from the business. From the order of Assessing Officer, it appears that Assessing Officer considered only the condition No. e & f and not the condition Nos. a, b and c at all. The Commissioner of Income Tax (Appeals) considered all the conditions mentioned in the letter of surrender and other facts and circumstances of the case and thereafter recorded a finding that the surrendered amount was an income of the assessee from business and not from other sources as held by Assessing Officer and consequently it was held that assessee is entitled to get set off of Rs.54,10,054/-.
11. Whether the surrendered amount is an income from business or from other sources is essentially a question of fact. In the present case, the Commissioner of Income Tax (Appeals) as well as Income Tax Appellate Tribunal, both have recorded a concurrent finding of fact based on cogent material available before them, that surrendered amount was an income of the assessee from business and not from other sources. Learned counsel for Revenue is unable to point out any perversity in the said finding recorded by Appellate Authority as well as Appellate Tribunal. There is no dispute between the parties on the issue that in case, the surrendered amount is treated as an income from business, then assessee is entitled to get set off of the amount of Rs.54,10,054/- .
12. In view of the above, the questions of law framed in the present case, particularly when no perversity has been pointed out in the finding of Commissioner of Income Tax as well as Income-tax Appellate Tribunal to the extent that the surrendered amount was an income of the assessee from business and not from other sources as held by Assessing Officer, cannot be said to be the questions of law. Therefore, both the questions are liable to be answered in favour of the assessee.
13. In view of above discussions, we do not find any merit in this appeal and the same is liable to be dismissed and is hereby dismissed with no order as to costs.
SKJRegards
Prarthana Jalan
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