The Commissioner of Income Tax and The Asst. Commissioner of Income Tax vs Jose Alexander

Aravind Kumar, J.—The revenue is in appeal assailing the order dt.21.2.2003 passed in ITA No. 1038/Bang 95 by the Income Tax Appellate Tribunal, Bangalore Bench.

The facts leading to the filing of this appeal are that the assessee has been assessed in an individual status for the assessment year 1987-88 on the basis of the return of income filed on 13.3.1989 declaring a total incomes of Rs. 18,800/-. Subsequently, a revised return of income was filed on 30.3.1991 admitting an income of Rs. 23,800/-. There was a search in the premises of the assessee on 30.2.1990 and during the course of the search, the assessee claimed, he had made certain investment and also he was doing Auto consultancy work. Assessment came to be completed u/s 144 by order dt.11.3.1994. The assessee being aggrieved by the said order filed an appeal before the CIT (Appeals), which came to be disposed of by a common order dt.27.9.l925 holding thereunder in respect of the income said to have been earned by the assessee to an extent of Rs. 7,000/-, the Assessing officer had not made any additions and accordingly, no relief was granted to the assessee by the CIT (Appeals).

The revenue in respect of the common order filed an appeal before the Tribunal, which came to be dismissed by order dt.21.2. 2003 and the order of the Appellate Authority were confirmed. It is this order which is now assailed in the present appeal.

At the time of admission of the appeal on 6.9.2004 the following substantial questions of law has been framed by this Court:

1) Whether the Tribunal has failed to record a finding on the controversy that the assessee had not produced any evidence to substantiate that he had been deriving income from ante consultancy services and had carried on this business and consequently recorded a perverse finding.

2) Whether the appellate authorities were correct in proceedings to grant relief in favour of the assessee without considering the material on record that the assessee had not substantiated his claim that he was running an auto consultancy and was deriving income from the same despite several notices having been issued to the assessee who had failed to cooperate with the department and consequently recorded a perverse finding.

We have heard, Sri. K.V. Aravind, the learned Counsel appearing for the revenue and Sri. A. Shanker, the learned Counsel appearing for the assessee-respondent.

It was contended by Sri K.V. Aravind that the finding of the appellate authority as confirmed by the Tribunal with regard to income earned by the assessed from Auto consultancy services, holding that Assessing officer accepted the same was in error in as much as it was done on protective basis and not on substantive basis and therefore the share of income should not be treated as an income of the Assessee and consequently it cannot be treated as investment in the asset and submits that the assessee not having produced any evidence to substantiate that he was earning income from Auto consultancy services, ought not to have given any finding on this issue and accordingly seeks that the questions of law framed herein above to be answered in favour of the revenue.

Per contra, Sri. A. Shanker, learned Counsel appearing for the respondent-assesseewould take us to the assessment order in question at paragraph-6 and submits that the return of income as filed by the assessee came to be accepted and there was no addition made by the Assessing Officer and thus the First Appellate Authority by considering the appeal of the assessee in para-8 of the order has rightly observed that the Assessing Officer himself had net made any addition. Hence there was no necessity to grant any relief on this ground and did not grant any relief and this older of the Appellate Authority is confirmed by the Tribunal and accordingly he submits that when there was no addition made by the Assessing Officer himself, the question of answering the questions of law in favour of the revenue does not arise.

Having considering the submissions made by the learned Counsel for the parties, we find that the submissions made by Sri. A. Shanker, requires to be accepted particularly on perusal of the order of the First Appellate Authority which reads as under:

The remaining ground is in respect of the assessing officer holding that the auto consultancy service of Rs. 70,000/- earned by the appellant was not available as source of investment in the hands of the appellant. However, perusal of the assessment order indicates that though the assessing officer has discussed about this issue, no addition has been made on the same. The assessing officer has accepted the income declared by the appellant. Once having accepted, it will necessarily be available as source for investment unless the same has been spent for some other purposes. In this case, the appellant used the said sum for investment. Consequently, the same shall be reckoned as available for making investment. No further relief is necessary as no addition has beer, made on this account. Hence, this ground is disposed of accordingly.

In view of the above finding and also in view of the finding of the Assessing Officer, that no addition having been made, in so far as the income said to have been earned out of Auto Consultancy service, we do not find that the Tribunal or Appellate Authorities were in error in passing the orders now questioned in this appeal.

10 Accordingly, we hold that the Tribunal was not in error in recording a finding with regard to the controversy regarding the income said to have been derived from Auto consultancy services, particularly in the facts and circumstances of the case as there was no addition made by the Assessing Officer himself and hence we answer questions formulated herein above, in the facts and circumstances of the case, in favour of the assesses and against the revenue.

Accordingly, the Appeal is dismissed.