Commissioner of Income Tax vs Amit Gupta

G.S. Singhvi J.—This is an appeal u/s 260A of the Income Tax, 1961 (for short, "the Act"), for framing of the following question of law and decision thereof by this court :

"Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in law in holding that the lower authorities were not justified in initiating proceedings u/s 147(a) of the Income Tax Act, 1961, for the assessment year 1987-88 because there was no specific material with the Assessing Officer for coming to the conclusion that any specific income for the assessment year in question had escaped assessment and, accordingly, the initiation of proceeding''s u/s 147(a) against the assessee by the Assessing Officer were invalid and the reassessment framed thereunder against the assessee by the Assessing Officer is void ab initio particularly when neither there were any reassessment proceedings initiated nor any such reassessment made nor there was any ground of appeal to this effect for the said assessment year ?"

We have heard learned counsel for the appellant and have carefully perused the record. The respondent-Amit Gupta is engaged in the business of sale and purchase of immovable property under the name and style of Gupta and Company. For the assessment year 1987-88, he filed a return declaring total loss of Rs. 90,910. Search and seizure operations were carried out at his residential as well as business premises u/s 132 of the Act and after considering the documents seized in the said operation, the Assessing Officer passed an order u/s 143(3) of the Act on the total income of Rs. 4,26,940. The Commissioner of Income Tax (Appeals). Jalandhar (for short, the "CIT (Appeals)"), partly allowed the appeal of the assessee and gave him relief to the tune of Rs. 3,12,574. The assessee as well as the Revenue challenged the orders of the Commissioner of Income Tax (Appeals) before the Income Tax Appellate Tribunal, Amritsar (for short, "the Tribunal"). By an order dated May 27, 1999, the Tribunal allowed the appeal filed by the assessee along with similar appeals filed by him against the orders of the Commissioner of Income Tax (Appeals) passed in relation to the assessment years 1973-74. 1974-75, 1977-78, 1979-80 and 1987-88. Simultaneously, the appeals filed by the Revenue were dismissed. The relevant extract of the Tribunal''s order reads as under:

"Similar issue, in the case of this very assessee came up for consideration before the Income Tax Appellate Tribunal. Amritsar Bench, for the assessment year 1975-76 in I. T. A. No. 172 (ASR/1989) which was decided on July 30, 1993, photocopy of which has been placed on record by the assessee at page 5 of the paper book. On this point, it was clearly held by the Bench that the Assessing Officer has no material to reopen the assessment for the assessment year 1975-76, as there was no specific information at all relevant to the assessment year under consideration and as such the reassessment proceedings were correctly held to be invalid by the Commissioner of Income Tax (Appeals). The Assessing Officer even for these assessment years, in question, has (not ?) been able to add anything more to the facts in the assessment order in the question.

In order to give a reasonable opportunity to the Revenue, the Bench asked the Department to produce evidence in the shape of the sale of plots directly or through power of attorney made by the appellant during the previous years, relevant to the assessment years under consideration. The Revenue was also directed to produce all the relevant seized material which will establish beyond doubt that they were having a prima facie material regarding sale of plots or any interest which would have resulted into profits to the appellant and which could have subsequently been translated into income but the Revenue has failed to produce the assessment records and the documents whatsoever.

Since the facts remaining the same, it is held that the lower authorities for the assessment year, in question, were not justified in initiating proceedings u/s 147(a) of the Income Tax Act, because there was no specific material with the Assessing Officer for coming to the conclusion that any specific income for the assessment years in question has escaped assessment and accordingly the initiation of proceedings u/s 147(a) against the assessee by the Assessing Officer are invalid and reassessments framed thereunder against the assessee by the Assessing Officer are void ab initio.

Now coming to the remaining effective ground, it is to be deduced from our first finding wherein we have held that the Assessing Officer has no material to reopen the assessment for the assessment year in question and there was no specific information at all relevant to the year under consideration and as such the reassessment proceedings were invalid and consequently, we further hold that there was no basis with the lower authorities for estimating the income of the assessee as income from purchase and sale of the evacuee properties and, hence, we can conclude that the lower authorities have no basis to make any addition in the income of the assessee as income earned by the assessee from purchase and sale of the evacuee properties. This very conclusion was also drawn by this Bench for the assessment year 1975-76 and we have no reason to differ with the conclusion drawn earlier on the basis of some material to which the Department has not been able to add anything more."

Shri Sawhney argued that the order dated July 30, 1993, passed by the Tribunal in relation to the assessment year 1975-76 could not have been made the basis for deciding the appeals filed in relation to the assessment year 1987-88 because the facts of the two assessment orders were substantially different. He argued that the Assessing Officer had relied on the documents seized during the search operation and, therefore, initiation of proceedings u/s 147(a) of the Act was legal and the Tribunal has gravely erred in quashing those proceedings. However, he could not controvert the stipulation contained in the order of the Tribunal that the Revenue had not produced documents relating to sale of plots or any interest earned by the appellant. He also could not explain as to why the assessment records and the documents allegedly seized during the search operation were not produced before the Tribunal to justify the initiation of proceedings u/s 147(a) of the Act. We, therefore, do not find any valid ground to interfere with the conclusion recorded by the Tribunal that there was no basis for initiation of proceedings u/s 147(a) of the Act.

We are further of the view that by placing reliance on the order passed in relation to the assessment year 1975-76, the Tribunal has not committed any illegality because the facts of the two cases were quite similar.

For the reasons mentioned above, we hold that no question of law arises in this case and the appeal is liable to be dismissed. Ordered accordingly.