Mehmood Pasha vs Dy. Commissioner of Income Tax (Investigation)

B.V. Nagarathna, J.—The Assessee has preferred these appeals by challenging the order dated 8-4-2004 passed in ITA No. 76/Bang/2002 and order dt 6-10-2004 passed in MP No. 40/Bang/2004 arising out of the aforesaid appeal.

The facts leading to the filing of these appeals are that the Appellant-Assessee is an individual who is doing business in poultry. That on 29-1-1999 a search was conducted in the premises of his brother and consequent upon the search, a notice was issued u/s 158BD (sic--Section 158BC) of the Income Tax Act to his brother Sri Mehboob Dilbur Sait and another notice was issued to the Assessee on 18-2-2000 u/s 158BD of the Act. In response to the said notice, the Appellant-Assessee fifed his return of income declaring undisclosed income of Rs. 37,500 and by order dated 22-1-2001 the assessing officer processed the said return and made an addition of Rs. 2,75,000 being the investment made in the name of the Appellant-Assessee for the purchase of a property at Mysore Road at Bangalore. The contention of the Assessee that the said amount had been received by him from his brother who had declared the said amount as his undisclosed income was not accepted by the assessing officer.

Being aggrieved by the additions made, the Assessee preferred an appeal before the Commissioner (Appeals) which however was dismissed by order dated 21-1-2002, against which, a further appeal was preferred before the Tribunal. Before the Tribunal, the Assessee had produced the assessment order of his brother and contended that the source of investment for the purchase of the said property was the money which was given by his brother to him. The Tribunal, however did not accept the contention of the Appellant and dismissed the appeal by order dated 8-4-2004. Thereafter the Assessee preferred miscellaneous application before the Tribunal seeking rectification of the order, which application also was dismissed on 6-10-2004. The said orders are in challenge in these appeals by raising the following substantial questions of law:

In IT Appeal No. 860 of 2005

(i) Whether the Tribunal was right in law in confirming the addition of Rs. 2,75,000 as undisclosed income of the Appellant especially when the Appellants brother had already offered the same as his undisclosed income and the assessment had also been completed ?

(ii) Whether the assessment as confirmed by the Tribunal was right in law especially when the block period has not been mentioned in the notice issued u/s 158BD of the Act to the Appellant ?

(iii) Whether the Tribunal was right in law in upholding the assessment especially when the status has not been mentioned in the case of the Appellant ?

(iv) Whether the Tribunal was right in law in upholding the assessment especially when no PAN or GIR number has been specified in the notice ?

In IT Appeal No. 2544 of 2005

(a) Whether the Tribunal was right in law in not admitting the adjudicating upon the legal issues which had been raised for the first time before the Tribunal in the grounds of appeal raised though such issues had not been adjudicated before the Commissioner (Appeals) ?

(b) Whether the Tribunal was right in law in confirming the addition of Rs. 2,75,000 as undisclosed income of the Appellant especially when the Appellants brother had confirmed the investment made by him in the Appellants name and offered the same in his return filed which was also accepted in assessment ?

(c) Whether the assessment as confirmed by the Tribunal was right in law especially when the block period has not been mentioned in the notice issued u/s 158BD of the Act to the Appellant?

(d) Whether the Tribunal was right in law in upholding the assessment especially when the status has not been mentioned in the notice issued u/s 158BD in the case of the Appellant ?

We have heard the learned Counsel for the Appellant and the learned Counsel for the revenue.

It is submitted on behalf of the Appellant that when the materials were furnished by the Appellant to contend that the source of funds for the purchase of the property was that of the brother of the Assessee who had offered the said sum for taxation, the Tribunal ought to have accepted the said evidence and accordingly held that addition made to an extent of Rs. 2,75,000 was bad in law. He therefore submits that the order passed in the appeal as well as the order passed in the miscellaneous application have to be set aside in these appeals and relief should be given to the Assessee.

Per contra, supporting the said orders, the counsel for the revenue submits that there was no merit in these appeals. Therefore, they have to be dismissed.

Having heard the learned Counsel on both sides and on perusal of the material on record, it is not in dispute that the property which was purchased by the Appellant-Assessee at Mysore Road was with the financial assistance of his brother who had given a sum of Rs. 2,75,000 for the said investment. In fact, the said amount was also offered for tax by the Appellants brother and by showing the said amount in his return an order dated 22-1-2001 was also passed u/s 158BD of the Act. However, the Tribunal has not taken the said assessment order into consideration and has held that the investment was found to be made in the name of the Assessee and therefore the contention of the Assessee that for the purchase of the property the financial assistance was given by the Assessees brother could not be accepted and as the Assessee had not produced sufficient evidence in support of his contention. Accordingly, it held that the addition made was just and proper.

We find that the Tribunal has not taken into consideration the evidence produced by the Assessee in the form of the assessment order of the Assessees brother which is dated 21-1-2001. The order is made u/s 158BD of the Act, wherein a sum of Rs. 2,75,000 is shown as the undisclosed income of the Assessees brother and accordingly an addition would have been made in the said assessment order. The Tribunal ought to have taken this aspect into consideration and the fact that the said amount was offered for tax and accordingly ought to have deleted the additions made to the income of the Assessee. Since the Tribunal has not taken the material evidence which has been produced by the Assessee and also has not applied its mind to the fact as to whether the addition if so made in the case of the Assessee, it would amount to double taxation, we are of the view that the matter has to be remanded to the Tribunal to consider all the material evidence which has been produced by the Assessee with regard to the source of funds for the purchase of the property in question and then come to the conclusion as to whether the said amount of Rs. 2,75,000 was offered for tax by the Assessees brother and accordingly pass orders in the instant case.

For the aforesaid reasons, the matter is remanded to the Tribunal without answering the substantial questions of law with direction to take into consideration the material evidence produced by the Assessee and then conclude as to whether the said amount is really the undisclosed income of the Assessees brother or it is the undisclosed income of the Assessee.

The appeals are accordingly disposed of.