HUKUM CHAND JAIN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This income-tax appeal has been filed by the Assessee against the order dated September 30, 2008, passed by the Income-tax Appellate Tribunal (for short "ITAT"), Jaipur whereby his appeal challenging the order of the Commissioner of Income-tax (Appeals) dated September 27, 2007, was dismissed and the order of assessment passed by the Assessing Officer dated December 22, 2006 in respect of the assessment year 1999-2000 was upheld. The aforesaid order of assessment was framed on the basis of notice dated March 28, 2006 issued to the Appellant under Section 148 of the Income-tax Act, 1961 (for short "the Act") for reopening of the assessment.

(2.) Shri J. K. Ranka, learned Counsel for the Appellant has argued that a survey under Section 133A of the Act was conducted at the business premises of the Assessee by the income-tax authorities on January 16, 2002. On account of coercive effect and the pressure exerted by the income-tax officials, the Appellant made a statement before the income-tax authorities and surrendered a sum of Rs. 6,00,000 for the assessment year 2002-03. The Assessee submitted a return on October 17, 2002 declaring net taxable income of Rs. 1,33,600 along with the past history before the Income-tax Officer wherein it was clearly stated that he sold certain properties and the money received by way of sale of the properties along with agricultural income, LIC claim, etc. were invested by him in his residential house property. The original assessment order under Section 143(3) was passed on March 28, 2005 which included Rs. 6,00,000 as unexplained investment in construction of house property. This order was upheld by the Commissioner of Income-tax (Appeals). When the further appeal was filed before the Income-tax Appellate Tribunal, the Income-tax Appellate Tribunal allowed the appeal vide its judgment dated February 27, 2006 and deleted the addition of Rs. 6,00,000 observing that the Assessee may produce the evidence/material regarding investment in the property. Further, observations were made that the Assessing Officer is free to verify these investments in the year in which they are made and examine the investments as per law.

(3.) Shri J. K. Ranka, learned Counsel further argued that mere observation of the Income-tax Appellate Tribunal in this manner could not be construed as evidence of investment made by the Assessee in respect of earlier years. Learned Counsel submitted that the property in question even as per the report of the District Valuation Officer was constructed during the financial years 1997-98, 1998-99 and 1999-2000, which has also verified the fact that construction commenced in the year ending March 31, 1999. Municipal authorities have also given certificate of completion accordingly. Investment in the property was thus completed prior to the financial year ending on March 31, 2002. It is this argument which was accepted by the Income-tax Appellate Tribunal, therefore, the assessment could not have been reopened by recourse to Section 148. The Petitioner demanded reasons for reopening and subjected his objections on such reasons. Those observations were not properly understood. There is no additional or fresh material with the Assessing Officer to justify his finding regarding all these investments. Notice under Section 148 was even otherwise barred by limitation. The Assessing Officer by his order dated December 22, 2006 illegally made an addition of Rs. 4,07,800 holding that the investment in the residential house property was unexplained during the financial year 1998-99, whereas the evidence was to the effect that construction was started, continued and completed during above referred to three assessment years and not just one and therefore addition only to the extent of the investment made in the relevant assessment year could be made. It was argued that Section 148 could not be invoked on the self same material on which addition was set aside by the Income-tax Appellate Tribunal earlier.