Court upholds income assessment over criminal law, dismisses double taxation claims, rejects evidence challenge.

Dr. Gauri Shankar Prasad Versus Income-Tax Appellate Tribunal and others

Dr. Gauri Shankar Prasad Versus Income-Tax Appellate Tribunal and others - [2017] 393 ITR 635 Issues Involved:
1. Attachment of assets under the Criminal Law Amendment Ordinance and its impact on assessment under the Income-tax Act.
2. Double taxation of income and corresponding investments.
3. Basis of reassessment under section 147 of the Income-tax Act.
4. Confirmation of additions based on third-party statements without cross-examination.

Issue-wise Detailed Analysis:

1. Attachment of Assets under the Criminal Law Amendment Ordinance:
The appellant argued that since the assets, both movable and immovable, were attached under the Criminal Law Amendment Ordinance, 1944, and were to be restored to the State Government, no assessment could be made on these properties under the Income-tax Act. The court, however, found this argument to be misconceived. It clarified that the assessment under the Income-tax Act pertains to the income of a person for a particular assessment year, regardless of whether the income is derived from legal or illegal sources. The attachment under the Criminal Law Amendment Ordinance does not negate the liability to be taxed. The court emphasized that attachment does not equate to forfeiture, and even if forfeiture occurs, it does not affect the assessment of income under the Income-tax Act. The court concluded that the Criminal Law Amendment Ordinance does not prevent the assessment of income based on the attached assets.

2. Double Taxation of Income and Corresponding Investments:
The appellant contended that the assessment resulted in double taxation, as the same amount was taxed both as bank deposits and as investments in assets. The Tribunal rejected this argument, noting that no nexus was established between the bank deposits and the investments in movable and immovable properties. The court upheld this view, agreeing that the income was generated continuously, and the appellant failed to demonstrate a direct link between specific bank deposits and particular investments. Consequently, the court found no merit in the claim of double taxation and denied the request for telescoping.

3. Basis of Reassessment under Section 147 of the Income-tax Act:
The appellant did not press this issue, acknowledging that the reassessment was based on multiple grounds and pieces of evidence, not merely the valuation of assets by the Valuation Officer. Therefore, this question of law was not addressed in detail by the court.

4. Confirmation of Additions Based on Third-Party Statements without Cross-Examination:
The appellant argued that the Assessing Officer confirmed additions based on third-party statements without providing an opportunity for cross-examination. The court noted that the appellant had been given sufficient opportunity to respond but failed to do so. The Commissioner of Income-tax (Appeals) had observed that the appellant did not file returns or respond to notices, and the Assessing Officer relied on available materials, including public records and statements from various agencies. The court found that the appellant did not request copies of statements or indicate a desire to cross-examine witnesses during the assessment process. Thus, the court concluded that the statements were rightly considered as corroborative evidence, and the appellant's claim of being denied cross-examination was unfounded.

Conclusion:
The court dismissed the appeals, answering the first and fourth questions in the affirmative and the second question in the negative, all in favor of the Revenue and against the assessee. The assessments and penalties imposed by the Income-tax Department were upheld.