TaxTMI 
TaxTMI 
2017 (4) TMI 777
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....ieved in one batch of matters; the Revenue claims to be aggrieved, in two appeals. The essential facts are narrated below, after which individual grounds urged in the various appeals and writ petitions would be dealt with. 2. The main assessee/appellant, Ashok Chawla (hereafter called by his name) had served in the Indian Army from which he retired in 1984 and went on to found M/s. Centaur Helicopter Services (P) Ltd (hereafter "Centaur") with him and his wife as its directors. Centaur was an authorized dealer of M/s. Schweizer Aircraft Corporation USA ("Schweizer" hereafter) for purchase and sale of its helicopters in India. Ashok Chawla was also consultant to M/s. Capitex Impex (P) Ltd. for manufacture of leather goods. The Revenue had claimed or rather suspected that Ashok Chawla used to earn income from defense deals and contracts, which he did not account for in his income tax returns and he instead claimed to be an army pensioner and salary income earner from Centaur. On 31st August, 1995, a search and seizure operation was carried out by the Revenue in his premises as well as those of his companies, concerns and individuals associated with him. This resulted in seizure of....
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....0 to an account with National Westminster Bank and for also instructing him to transfer US $ 10,000 to Anuj Chawla, son of Ashok Chawla. The document sought confirmation within an hour. (5) A request for bank guarantee (dated 4th October, 1994) made to Discount Bank, in relation to an account number (No. 53745 ZV) clearly stated on the face of the document, which requested for issuance of a guarantee for GBP GBP100,000 favouring Duncan Lawry Ltd, London securing all accounts and securities held with the bank. The relevant portion of the said letter reads as follows: "In this connection, I/we assume entire responsibility towards you for this co-operation as well as for all consequences of any kind or nature which may arise for you due to the issuance of this guarantee of your surety." (6) Documents showing that Rs. 1,15,72,668/- was paid for by Ashok Chawla, to purchase two Schweizer helicopters. This included a letter dated 31.08.1994 by Rocky G. Peter of Schweizer Corporation, USA addressed to the Director General, Civil Aviation, showing that they had been sold to Centaur. The letter stated that Schweizer had "recently sold two Schweizer 300C/Model 269 C helicopter....
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....ence found or disclosed showing linkage of the account with M/s. Capitex or any documents showing authorisation from M/s. Capitex to issue bank guarantees with respect to two Schweizer helicopters. The assessee had argued that M/s. Capitex had made the payments. The AO and the Tribunal relied upon the documents of Rocky. G. Peter of Schweizer and the Treasurer of Schweizer USA's letter dated 03.01.1995, which confirmed that helicopters were sold to the assessee. The assessee's letter asking for change of invoice favoring United Airways India Ltd. was also relied upon. The assessee's explanation was that he had an office in Moscow maintained by Allan Saltmer, Director of M/s. Capitex, and his business associate and that he was visiting Moscow at the behest of the principal, i.e. M/s. Capitex and Allan Saltmer for which he would be given money was rejected. The Tribunal said, "in case Mr. Saltmer had only occasionally given money for payment on his behalf, how a detailed and elaborate account of all expenses were found from the premises of the assessee. No logical explanation is coming forth. Moreover, no reliable and authenticated evidence has been produced showing that ....
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....x was only a front put up by Ashok Chawla to explain various transactions and could not be given any importance. It upheld the rejection of his explanation with respect to purchase of helicopters on behalf of M/s. Capitex. The ITAT therefore, upheld the findings that Ashok Chawla was bound to explain the source of payment - which he had not given satisfactorily. The discount allowed, i.e. $ 85,364 was held to be unsustainable and was therefore, deleted by following the reasoning that such amount merely reduced the value of the helicopter of which the assessee was the purchaser. Likewise, the claim of reimbursement of Rs. 1,37,79,186/- from Rakesh Gupta for which the Ashok Chawla gave an explanation was held to be unsatisfactory. This amount included a sum of Rs. 54.78 lakhs on account of payment to the helicopters and Rs. 29,51,186 on other counts. Reliance was placed upon payments made by M/s. Capitex - clear from a letter dated 08.03.1995 and MOU dated 05.07.1993 - both of which had been seized. These showed that M/s. Capitex had agreed to pay US $ 1,66,000 to Swidnik. The ITAT therefore held that addition was unjustified only on the basis of statement of Rajesh Gupta. However, t....
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....as follows: "21.7 We have perused the records and considered the rival contentions carefully. The explanation of the assessee regarding the cash of Rs. 4 lacs found from locker no.1403 is not convincing. It is not understandable as to why the assessee will withdraw money from bank account at different points of time and keep it in cash with his father to be deposited later in the locker. The money found in the locker was also found to be in the same denomination of Rs. 500/- and serially numbered. The explanation has, therefore, been rightly rejected by the AO and the addition made on this account is upheld. As regards the cash of Rs. 20,000/- found from locker no.6003, the amount being small, the explanation of the assessee in our view has to be accepted. The addition made on this account is accordingly deleted. 21.8 As for the liquor bottles, it is an undisputed fact that large quantity of liquor had been recovered during the course of search. The explanation of the assessee that the same were bought on the visits abroad or gifted by friends abroad and brought to India but his pilot son, is not supported by any evidence and has to be rejected. However, as we have held that ....
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....e Allahabad High Court in Shyam Jewellers & Anr. v. Chief Commissioner of Income Tax 1992 (196) ITR 243 which held that there should be sufficient objective material to believe that a person is in possession of money, bullion or jewellery to record satisfaction under Section 132 of the Act, justifying a warrant for search of the premises. Similarly, learned counsel relied upon ITO v. Seth Brothers 1969 (74) ITR 836 (SC) for a similar proposition. The Supreme Court had also observed that the provision cannot be construed as offering arbitrary authority upon the revenue officers. The Commissioner or the Director should have reason to believe consequent to information that statutory conditions for exercise of power to search exist. The reasons should be recorded and should precede the authorisation. If and only if the officer has reason to believe that there are books or accounts otherwise useful for or relevant to proceed under the Act would be justified in authorizing the search and seizure of such material. The court had then stressed that, "since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the tax payer, the power must be exercis....
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.... share capital of Rs. 1 crore. The initial share capital issued was only Rs. 7000/- in August 1992. The company was later on taken over by Rakesh Gupta; Ms. Sudesh Kapila, wife of KK Kapila, IRS; Sh. Vinod Jain and Sh. Yogesh who were appointed as Directors in various companies in 1993. The company showed its balance sheet with paid up capital of Rs. 50,07,000/- and share capital money of Rs. 31,00,62,500/-. The assets showed aircraft valued at Rs. 31,00,62,500/-. 16. It was argued that Rakesh Gupta approached Ashok Chawla with the balance sheet and induced him to join the Airlines and acquire 50% of its issued paid up share capital. He therefore, invested Rs. 22,50,000/- (Rs. 5 lakh shares @ Rs. 4.5 per share). Ashok Chawla and his wife later joined the Board of Directors in 1994. In 1995 he became aware that the aircraft worth Rs. 31 crores shown in the balance sheet never existed and was owned by a Russian company, being Mals Airways and that the share application of Rs. 31 crores shown in the balance sheets were bogus. Ashok Chawla, therefore, submits that he was cheated by being induced to invest Rs. 22.5 lakhs in Mals Airways. Yet another company, i.e. United India Airways....
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....which formed the basis of AO's decision. 19. Learned counsel submitted that such violation of principles of natural justice vitiates the order and relied upon L.R. Gupta v. UOI 1992 194 ITR 32. Learned senior counsel relied upon the letters dated 22.11.1995, 26.08.1996 and 17.09.1996. 20. In the course of hearing, the Revenue had produced copy of the documents and material as well as file notings which formed the basis for the warrant in a sealed cover, no doubt, a perusal of the impugned order of the Tribunal establishes that it declined to pronounce upon the validity of the search proceedings on account of its previous special bench ruling as well as the judgment of this Court in M.B. Lal v. CIT 279 ITR 298. No fault therefore, can be found with the impugned order. 21. At the same time, this Court has to nevertheless examine independently whether the search proceedings were indeed justified having regard to the entirety of the circumstances. Since elaborate submissions were made in this regard, in fact the petitioner had approached this Court earlier by filing W.P.(C)1518/1997, which was subsequently disposed of. The validity of the warrant and the search proceedings....
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....the arguments that the motivation for the complaint that led to the search were on account of some business falling out or differences between him and his earlier colleagues. As to why in fact the submissions of the assessee that search was at the behest of Ms. Kapila's husband since he was powerfully placed in the Income Tax department at that stage, did not appear to be well founded. In fact Mr. Ashok Chawla was well aware of Ms. Sudhir Kapila was the wife of senior Income Tax official despite which he did not involve himself in the business of two companies where he invested. More importantly, the allegation that Sh. K.K. Kapila brought pressure and used his official position in an unfair manner can no doubt be made; yet it has to be established by credible evidence. In this case, there is no evidence whatsoever - either direct or in the form of letters or material, giving Ms. Sudhir or her husband, or circumstantial evidence. Having regard to these factors, the Court holds that the plea that the search was on account of motivated allegations is without substance. 23. It was argued that Ravi Kumar, one of panchas at 2 Under Hill Road, Civil Lines, New Delhi, was shown as ....
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.... the matter of planting of the documents. 26. It was urged that due to harassment at the instance and motivation of Rakesh Gupta, Petitioner lodged complaint against him before IB, CBI and Police Dept. He also filed civil & criminal case against him i.e. Civil case for recovery of money introduced in 'Mals' & 'United' & criminal case for cheating him. Facing with these trials, Sh. Rakesh Gupta offered compromise through Court, according to which he offered demand draft of Rs. 1 lakh & two post dated cheque for Rs. 45 lakhs. During the period Rakesh Gupta also filed an affidavit to the effect that he handed over a slip of hand written papers about a Discount Bank with Account number and its address to the revenue officials. This slip was planted in the seized documents during search. It is not identified -either by witnesses or by the authorized officer or Chawla's representative. 27. It was also urged that no one was present at E-6, Anand Niketan, New Delhi, except one employee - Bhagirathi Sibbal, the receptionist. The search commenced on her arrival at 9 AM; however, the Panchnama stated that the search commenced at 8 AM. Kishan Lal and Hayat Singh, peons were the witnesses....
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....amounts by Rakesh Gupta. The credibility of the affidavits relied upon, by Ashok Chawla, in these circumstances is suspect, to put it mildly. 31. As far as the alleged illegalities in the timing of the search, or that it was improbable that searches took place at two places - argued with certain vehemence by learned senior counsel, this court is of the opinion that nothing much turns on these so called infirmities. For one, the factual nature of these allegations, i.e., as to timing, as to presence of certain pancha or recovery witnesses, renders it somewhat difficult to substantiate. From a broader angle, whether the search occurred at 08:00 AM or an hour later, is left for verification by affidavits signed by the witnesses much after the event. Their signatures on the panchnamas at the time of the search belie the affidavits. These arguments at best could establish some irregularities, for which the Revenue might have had a perfect or plausible explanation, if made in time. However, even if accepted at face value, such facts cannot undermine the search, the recoveries effected or in any case and the validity of the block assessments. The assessee/Ashok Chawla's submissions in ....
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....nder the section. The Assessing Officer is required to assess the income on the basis of facts as found. Such finding may be through any of the provisions referred to above. The only limitation on his drawing a conclusion from the facts as found is the requirement of allowing the assessee an opportunity of explaining the material. Even though it could be said that in a sense since the Assessing Officer was acting on behalf of the Revenue, in discharging the functions as an Assessing Officer, he was a party to the dispute, nevertheless there is no presumption of bias in such a situation. As said in H.C. Narayanappa v State of Mysore: "It is also true that the Government on whom the duty to decide the dispute rests, is substantially a party to the dispute but if the Government or the authority to whom the power is delegated acts judicially in approving or modifying the scheme, the approval or modification is not open to challenge on a presumption of bias. The Minister or the officer of the Government who is invested with the power to hear objections to the scheme is acting in his official capacity and unless there is reliable evidence to show that he is biased, his decision will n....
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....s subject to the doctrine of necessity and yields to it as pointed out by this court in J. Mohapatra & Co v State of Orissa ." 11. Learned counsel also drew our attention to the fact that the assessments on the basis of material recovered under Section 132 had to be completed within a period of limitation prescribed under Section 158 BE (1) (b). The last date for completion of the assessments in the present case was October 31, 2000. The prayer of the respondents for transfer of the case from the Assessing Officer on October 11, 2000, to a new Assessing Officer in the circumstances was unacceptable and the assessment by the said Harinder Kumar was unavoidable given the limited period left for completing the assessment proceedings. The High Court has observed that this plea had not been raised by the appellant. Perhaps the appellants are correct in submitting that the fact speaks for itself. However, it is not necessary for us to give any final view in the matter having held that the sections in the Act impose no limitation on the Assessing Officer on the authorised officer being the same person and that it could not be said that action taken pursuant to such statutory empowermen....
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.... ground to this effect (in W.P.(C) 1518/1997). Furthermore, even more significantly no such complaint was made before the ITAT nor such ground urged. Even in the appeal before this court, i.e ITA 495/2007, the appellant has not made out a grievance that such a plea was taken but not considered by the ITAT. These aspects apart, the court notices that the assessee was aware as to the nature of the documents seized. If he did want a copy or had been unjustifiably denied inspection, he had the means and resources to approach this court at the earliest opportunity- he clearly did not. All these rule out the possibility of denial of meaningful opportunity. This plea is consequently rejected. Fourth question: Whether the additions sustained by the ITAT are justified or are unreasonable or perverse. 36. The additions made by AO were sustained partly by the ITAT and partly set aside. The assessee, Ashok Chawla was granted some relief. In the present set of appeals and writ petitions, learned senior counsel for Ashok Chawla urged certain broad submissions, with respect to the additions made. This court proposes to deal with each one of them. 37. Learned senior counsel argued assaili....
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....ur aforesaid account or any other account to National Westminster Bank PLC, LondonUK took place at any time and similarly no transfer of US$ 10,000 to Mr. Anuj Chawla took place at any time: Yours sincerely,sd/-" It was also submitted that Capitex had clearly stated, in its letter to the Revenue, on 26th October 1995 (responding to the latter's letter dated 20th October 1995 that "the payment for two Schweizer 300 C helicopters questioned in your letter were made by Capitex Ltd. and negotiations were carried out by Centaur Helicopter Services Pvt. Ltd., on behalf of Capitex Ltd., Schweizer company was instructed to provide a certificate of payment received from Capitex Ltd., and they have confirmed issuing such certificate." It was urged, therefore, that the addition made based on the finding that Capitex was none other than Ashok Chawla's concern and that it used undisclosed foreign exchange for conducting business, was not warranted. 40. It was argued that similarly, the same letter issued important clarifications about the Sokol helicopters and other transactions such as the one relating to bank guarantee. Counsel relied on the following extracts of the said ....
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.... that two letters: the first dated 3rd January, 1995 from Schweizer and the other by the assessee, clinch the matter beyond any controversy. Counsel for the Revenue relied on the extracts of the said two letters. The first- dated 3rd January 1995, from Schweizer to Ashok Chawla, reads inter alia, as follows: "W sold you a Schweizer Aircraft Model 300C Helicopter on September 20, 1994, for $196,166.10 pursuant to your purchase order. There have been no written amendments to that purchase order, nor any oral understanding different from the purchase order. At your request.we are holding the Schweizer 300C Helicopter at your risk on our premises and title has passed to you. You have asked us to delay shipment of the 300C Helicopter so that it may be shipped during 1995. The product has been sold to you on our normal payment terms set forth in our invoice 9477928-AC dated September 2, 1994 and there have been no modifications of those terms. The above aircraft has been paid in full." The other letter, by the assessee, a copy of which was seized, dated 30th August, 1994, reads as follows: "Also please note that the balance of the money due to you for both Choppers will be se....
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....nt, no material or correspondence was found showing linkage of account with Capitex nor any document showing authorization from Capitex to issue bank guarantee, was found. In case, the account belonged to someone else, the assessee could have easily established the same by producing. bank documents or letters from the bank. But no such evidence has been produced. Further, a last 'will' dated 15.5.1995 signed by the assessee was also recovered during search in which the assessee d clearly mentioned that 'any fixed/movable assets abroad should automatically be passed on to my son Anuj Chawla, the list of which is known only to my son'. The explanation of the assessee that this was only draft 'will' and the intention was that in case any fixe&movible asset is acquired by the assessee abroad in future, the list will be known to his son is not convincing as the 'will' was duly signed and language used in the 'will' clearly shows that on the day of signing the 'will', the assessee was definitely having some fixed/movable asset abroad which was known only to his son. A copy of this wi1 has been reproduced latter in para 20.7. 1 . Considering the entirety of facts and circumstances such....
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.... consultant. Further, in case, the helicopters: had been bought on behalf of someone else, how the assessee could write that the invoice had to be changed lathe name of some other Indian company or that he was claiming that these helicopters were being bought on lease. The assessee thus was exercising complete control over the property." 44. This court is of the opinion that the ITAT's finding besides being factual and concurrent, are sound given the materials on record. The assessee had relied upon replies given to the Revenue on five points by Capitex, in its letter of 26th October 1995. The Revenue's letter addressed by the assessing officer (20.10.1995) sought details on firstly whether Centaur helicopters had purchased two helicopters on behalf of M/s. Capitex for which US$ 401595/- was paid and if so who paid it. Documents such as auditors' certified copy, certified copy of bank statements giving details of the payments; and details of total payments made along with the relevant dates of payment were sought. The letter further sought information with regard to leasing of Sokol helicopters and the contract which had confirmed that Capitex had transferred US$166,....
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....paid on a quarterly basis. The other material was a letter addressed to the Commissioner of Income tax by Mr. Allen Saltman, on 16th December 1996. It stated that Capitex was the subsidiary of one Inter Agra BV Holland a Dutch company and held 66.5% shares in Capitex. Allen Saltman held the balance shares. The letter stated that Ashok Chawla did not have any shareholding and clarified that no transfer to the tune of US $ 40,000 from Capitex from a Swiss account or any other account was made to National Westminster Bank PLC and that no transfer of US $10,000 was made to Ankur Chawla. 46. During the hearings, the counsel for Ashok Chawla had relied on an order dated 31.12.2013 of the Joint Director, Enforcement, (pursuant to notice issued to him and Centaur, dated 24.4.2002). The notice issued was under Sections 49 (3) (4) and (5) (a) of the Foreign Exchange Management Act, 1999. The order discharged the notice. The relevant parts of the order are extracted below: "3.1 The case was heard by the undersigned on 06.12.2013 when Sh. Pramod Shankar Tiwari, Advocate appeared on behalf of the notices. During the personal hearing, the Advocate submitted that written submissions whic....
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....A as Capitex, UK having purchased the two Helicopters from them for which Sh. Ashok Chawla of M/s Centaur Helicopter Services Pvt. Ltd., carried out all negotiations on behalf of M/s Capitex, UK and (iv) Letter dated 02.11.95 from Capitex, UK to M/s Schweizer Air Craft Corporation, USA requesting them to sell of the helicopters to some buyer as the same were not likely to be leased to an Indian company. 4. Findings and order 4.1 I have carefully gone through the case material available on record and also the defence reply filed along with documents mentioned above. I find that the said documents furnished by the noticees, prima facie show that Sh. Ashok Chawla of M/s Centaur Helicopter Services Pvt. Ltd., acted as representative for and on behalf of M/s Capitex, UK, who carried out negotiations relating to purchase of two Schweizer helicopters from M/s Schweizer Air Craft Corporation, USA by M/s Capitex Ltd., UK, who made the payment for the purchase of the choppers. These documents further show that after purchase, the said helicopters were to be leased out to M/s Centaur Helicopter Services Pvt. Ltd. for their operations in India, which eventually didn't materialize and ....
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.... out of search and seizure assessment under the Income Tax Act. 48. As discussed earlier the reasonableness of the findings by the ITAT is the main issue here. Both the AO and the tribunal had rejected the assessee's explanation that he was not the de facto owner or principal shareholder having control over Capitex. To dispel the suspicion that the assessee had entered into a contract for the purchase of two Schweizer helicopters and the Sokol helicopter and was also responsible for the account in the Discount Bank as well as the two remittances therefrom, and furthermore that he had sufficient amounts to secure for the issuance of a bank guarantee to the tune of US $ 100,000, relied upon certain other letters. 49. Now the jurisdiction of this court is to examine whether in the given facts of the case, substantial questions of law arise and if so endeavor to answer them. Unless the tribunal's inferences drawn on the basis of the given facts, are so unreasonable or that the Tribunal overlooks material circumstances and facts and renders a finding contrary to the documents, the jurisdiction under Section 260A, does not arise. This court would have to keep these broad co....
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....tex. As a consequence, this court holds that there is no infirmity in the Tribunal's findings on these aspects. 52. Ashok Chawla was examined under Section 131 of the Income tax Act, 1961 by the investigation wing on 11.10.1995, and asked to give details of all the immovable properties owned by him in India and abroad either himself or in the name of wife, son or otherwise financed or in other capacity, money invested by him for the purchase of land and/or construction or renovation etc. In response he denied having made any investment in any construction or property abroad. He, however, gave details of properties owned by him in India as follows: i) B9, Saket, New DeIhi. ii) 198, Sector 21 A, Faridabad iii) Agricultural land measuring about one acre in NOIDA UP iv) One SFS flat in Vasant Kunj, New Delhi v) D1/24, Vasant Vihar New Delhi vi) 40/98, Chitranjan Park, New Delhi. vii) 2 acres of land in Gopal Hari, near Gurgaon. A last Will dated 15.05.1995 was found from Ashok Chawla's premises in which he had willed his fixed/movable assets to different persons. The will is extracted below: "This is to state that I ASHOK KUMAR CHAWLA, S/O SHRI PRI....
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....alone will not be reasonable or sufficient to take stock of unaccounted commission etc. earned by the assessee and, therefore, further addition of Rs. 4,58,11,000/- is required o be made to make the assessment realistic having regard to the scale on which the activities were carried on by the assessee in the block period. The objection of the Id AR in regard to the additions: were that it was made purely on estimate. The id AR has also pointed out that the A.O. had not considered the valuation made by the registered valuer which supported the investment declared in the various block returns. These arguments are not found convincing. The investments in these properties were detected only during the course of search and these properties were not accounted for. in the block assessment, addition can be made on the basis of material found during search. In this case, material found during search, clearly showed unaccounted i investments in properties. Therefore, addition in relation to these properties in the block assessment is quite justified and for quantifying the addition, the value of actual investment has to be found out for which valuation of the unaccounted properties is nec....
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....that the findings with respect to valuation of properties and the additions made, should not be interfered with. He relied upon the observations of the tribunal that Sh. Ashok Chawla was actively involved in major defense deals and was party to detailed procurement plans, under the heading "modernizing army" a document found from his premises. This document contained an assurance by the appellant guaranteeing payment of US $120,000 in the event a particular contract did not materialize though the guarantee was given on the letterhead of a group company, such an assurance was clearly given in his personal capacity. This disclosed the scale at which he operated. Expenses relating to office maintenance at Moscow too were found. Moreover his ability to maintain a Swiss bank account and operate it also stood established. Although full details of such accounts could not be obtained on account of stringent secrecy laws in Switzerland, the assessee did not clarify this position nor clear the air. His statement made in the course of the proceedings admitted that he had invested substantial amounts to its acquisition of properties. This investment of unaccounted wealth was to the tune of ....
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....ere not acquired by him. Yet, on the basis that the assessee must have earned substantial income which was not declared, both the AO and the ITAT embarked upon the venture of revaluation of the properties that did not belong to him and concluded that the difference between the transaction value reflected in the documents and the higher value determined was the sum total of his undisclosed income. This clearly betrays a contradictory approach; worse, in some cases, additions were made and confirmed in the hands of the owner and the assessee, Ashok Chawla, was subjected to protective assessment; in cases of others, such as Asha Jain and Zal Akhtar, the additions were made to his returns. Furthermore, in respect of one property, i.e., the Anand Niketan premises, the documents showed that the assessee Ashok Chawla was only a power of attorney holder and had not paid the entire consideration. Yet, the AO concluded that he must have paid the entire consideration. 58. However, as far as the addition of Rs. 1.50 crores made in respect of the London property is concerned, stands on a different footing. The search and seizure had yielded documents pertaining to the London flat. The explan....
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.... considered all the records and the facts pertaining to the stages of the proceedings, as well as the offer to liquidate some of the tax liability and held that exercise of discretion under Section 220 (2A) was not made out. The assessee argues that during the pendency of the present appeals and writ petitions, one of its properties has been sold and repeated offers to settle tax liabilities were made and that this court should take all these into consideration. 64. This court has considered the submissions and materials on record. The materials and circumstances suggest that the assessee is in possession of adequate and substantial resources and could well have discharged his liabilities toward the Revenue. He chose not to do so; it is not as if in the event of his paying the tax liabilities and later succeeding, he would not have been restituted. Such restitution with interest is permissible; the law mandates it. In these circumstances, the discretion, exercised after considering all material facts, cannot be faulted as injudicious or arbitrary. For these reasons, the writ petition (W.P.(C) 7962/2009) fails and is dismissed. ITA No. 817/2007: Revenue's appeal against the IT....
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.... the concerned officials of the Revenue made the attachment of the properties. Further, by virtue of Section 293 of the Income Tax Act, the subject matter of income tax proceedings cannot be also the subject matter of civil proceedings. This issue was considered by the Supreme Court in Commissioner of Income Tax, Bhubaneswar and Anr. v. Parmeshwari Devi Sultania, (1998) 3 SCC 481. The Court was concerned with was partition of certain gold ornaments that had been the subject of search and seizure under Section 132. In deciding that the suit - in so far as it concerned the ownership of the gold ornaments - was barred, the Court noted at paragraph 9 as follows: "9. It (the High Court) failed to consider the effect of the decree if passed in the suit on the order under Section 132(5) of the Act or other proceedings under Section 132B of the Act. When Section 293 originally stood, it (sic) provided that "no suit shall be brought in any Civil Court to set aside or modify any assessment or order made under this Act". The word "assessment" was omitted and the words "proceeding taken" were inserted in its place. This made the section more comprehensive in nature. Direct effect of the dec....
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....ance from the Discount Bank account, was mistakenly to its account and that it should have been paid into the account of Centaur Helicopter. Since the assessee did not have an RBI and IE code, it transferred the order to M/s. Kerr Enterprises, a concern of Mr. Patrick Kerr, who was also its director. The exports were actually made during the next year. The Revenue, however, points out that the amount came from the account of Capitex and the explanation given by the assessee is unconvincing, as the said company had no concern with the transaction. 73. This court has considered the rival submissions. The ITAT's findings are as follows: "The export had been made to ATTL Uk and therefore, the payments were required to be made by ATTL. Merely because Mr. Allen Saltmer was Director of both ATTL and Capitex and was interested in becoming director of Centaur Impex, is no ground for Capitex to make payment on behalf of ATTL. Moreover, no further evidence in the form of a certificate from auditors in case of ATTL or any other reliable evidence has been produced to show that in the books of ATTL, the said amount had been shown as a loan from Capitex. The plea that some export against th....
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....were A-9, A-10, A-11 and A-12. Details for every year were discussed and a comparison made with respect to what was actually declared and what amounts had been received; the differential amount was brought to tax. This court is unpersuaded with the assessee's arguments on this aspect. The ITAT has considered all the materials and the UK Revenue service's communications, corroborating that the receipts were in facts GBP GBP233,991/- more than the sum declared for the given year (1993-94), i.e., GBP GBP6000/-. This was, according to the currency conversion at that time, Rs. 1,16,05,797/-. There is no infirmity amounting to a substantial error calling for interference by this court. ITA 988/2007 therefore, has to fail. ITA 478/2007: Anuj Chawla's appeal 78. Search under Section 132 of Income Tax Act 1961 was conducted on 31.08.1995 in case of the assessee the son of Shri Ashok Chawla as well as in cases of connected group companies and their employees. The Revenue discovered that the assessee was owner of certain immovable properties, lockers and bank accounts. A sum of Rs. 4 lacs was seized from the locker. The assessee, in his block return of income declared an undisclosed inc....
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.... The failure of the assessee to produce credible or sound evidence supporting his claim that the amount in question was his savings from earnings in the US for about 3 years. The probability of someone barely out of his teens, securing substantial earnings and to cap it, not possessing any bank account in the USA, is remote, to put it mildly. 81. The second head on which the AO had added amounts and brought them to tax, was the re-valuation of property. The assessee had declared the value of his properties; these were sent for fresh valuation by the AO. The relative particulars of the value declared in the block assessment and the revaluation together with the differential value, are reproduced in the following chart: S.No. Description of Property Cost of investment determined by AO Value as declared by assesse in return under Section 158BC Differential value 1. D-1/24, Vasant Vihar Rs. 42,90,000 Rs. 18,83,000 Rs.24,07,000 2. B-9, Saket Rs. 80,52,400 Rs.13,25,000 Rs. 67,27,400 82. The ITAT was of opinion that the protective assessment made in the hands of the assessee, because of the substantive assessment in the hands of Ashok Cha....
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....d value or some other value) was recovered or seized. In these circumstances, it is held that the assessment order, including these amounts on protective basis cannot be upheld. ITA 478/2007 is therefore, partly allowed to the above extent. ITA 822/2008: Appeal of Vijaya Rajagopal 84. This assessee is aggrieved by the ITAT's order dated 26th December 2006, which had rejected her plea. The AO had added Rs. 13 lakhs to her income during the block period, on the basis of a document found and seized during the search. The assessee, upon notice had filed a block return, declaring Rs. 21 lakhs as undisclosed income. The returns and documents field revealed that the acquisition cost of the flat was Rs. 9 lakhs. The AO was of opinion that the documents seized showed that Ashok Chawla acquired the flat through funding. He relied on two documents, A-9 and A-32 and rejected the assessee's plea that the flat was a gift- which was later altered to payment through an interest free loan from Ashok Chawla. 85. It is argued that the value finally attributed for the flat is fanciful and arbitrary. Learned counsel submitted that the valuer's report determined the property value at Rs. 18 lak....