HEM CHAND GOVIL Vs. INCOME TAX SETTLEMENT COMMISSION

JUDGEMENT

(1.) UNDER challenge in this writ petition is the order dt. 30th Sept., 1996 passed by the Settlement Commission whereby application of the petitioner filed under Section 245C of the IT Act, 1961 (in short 'the Act') was rejected and not allowed to be proceeded with.

(2.) FACTUAL matrix of the case is that the business and residential premises of the petitioner were searched by the respondents in accordance with the provisions of Section 132(1) of the Act on 21st March, 1990. During the course of search proceedings, certain incriminating documents were found at these premises. An order was later passed under Section 132(5) of the Act on 13th July, 1990. Notice under Section 148 was issued to the petitioner on 30th April, 1991 in respect of the asst. yr. 1989 -90 because the petitioner by that time had not filed the return under Section 139(1) of the Act. Pursuant to the said notice, the petitioner filed his return of income for the asst. yr. 1989 -90 on 15th May, 1991 declaring total income -tax of Rs. 18,289. The petitioner then filed return of income under Section 139(1) of the Act for the asst. yr. 1990 -91 on 31st March, 1992. The assessing authority first took up the assessment for the year 1990 -91 and by order dt. 10th Feb., 1993 determined the total income of the petitioner as Rs. 28,15,375 in respect of that assessment year. Feeling aggrieved thereby, the petitioner filed an appeal before the CIT(A). The CIT(A) however by his order dt. 15th Oct., 1993 held that the two additions made by the AO were not relevant in respect of the asst. yr. 1990 -91. He however further held that these additions could be relevant for the asst. yr. 1989 -90. Aggrieved by the order of the CIT(A) dt. 15th Oct., 1993, the petitioner as well as Revenue both filed further appeals before Tribunal. In the meanwhile, assessment proceedings in respect of asst. yr. 1989 -90 were taken up by the AO who made two additions of Rs. 11,21,000 and Rs. 12,64,564 respectively in the income of the petitioner vide his order dt. 30th March, 1994. The petitioner thereupon filed an appeal before the CTT(A) against the said order dt. 30th March, 1994, passed in respect of asst. yr. 1989 -90, on the ground of invalidity of the notice under Section 148 and the same was set aside by CIT(A) by order dt. 31st March, 1995. The assessment proceedings for the asst. yr. 1989 -90 was said to be pending before the AO when the writ petition was filed but in the meantime the petitioner filed an application under Section 245G of the Act on 14th Nov., 1995 in regard to the asst. yr. 1989 -90 for being settled before the Settlement Commission. The Settlement Commission after hearing both assessee as well as Revenue by order dt. 30th Sept., 1996 held that in view of the complexity of the investigation involved, the application for settlement about the asst. yr. 1989 -90 does not deserve to be proceeded with because disputed matters have already reached to Income -tax Appellate Tribunal (for short 'the Tribunal') which is the final appellate authority on questions of facts and its findings will finally decide the issues regarding disputed additions and also the issue of assess ability. Further, the Settlement Commission was not persuaded to proceed with the application of the petitioner on the premise that since the petitioner has already chosen the normal appeal procedure for both the assessment years one of which was covering part of the dispute in the application before them and the other having been appealed against before the CIT(A) in respect of asst. yr. 1989 -90, this was not a fit case to proceed in the matter.

(3.) SHRI G.S. Bapna, the learned Counsel for the petitioner argued that the sole basis on which the Settlement Commission refused to proceed with the matter was the complexity of the investigation and pendency of the appeal before the Tribunal. He argued that two additions made in respect of the petitioner's income for the asst. yr. 1989 -90 was based on conclusions arrived at by the CIT(A) while deciding the appeal of the petitioner against the assessment order of the asst. yr. 1990 -91. Appeal of the petitioner against the said order was allowed at least in respect of those findings by the Tribunal vide its order dt. 4th June, 2001 in ITA Nos. 1757/Jp/1993 and 1796/Jp/1993. Shri Bapna has placed copy of the judgment on record before this Court. In para 8 of which the Tribunal while dealing with two additions in the income of the petitioner based on the observation made by the CIT(A) in his order dt. 15th Oct., 1993 observed as under: 8. We have carefully considered the rival submissions of the parties, perused the material available on record and the case laws relied upon by the learned Authorised Representative. We find that the addition of Rs. 11,21,000 was made by the AO as undisclosed investment made by the assessee in respect of purchase of front portion of the property, known as 24, Surya Bhawan, Ajmer Road, Jaipur. This addition was made by the AO on the basis of seized paper page No. 10 of Exhibit B -l, contending to be payments mentioned along with dates. According to the assessee, the property was purchased for a sum of Rs. 9 lakhs, the payment of which was made by the assessee on 20th June, 1988 Rs. 25,000, 24th June, 1988 Rs. 2,00,000, 1st Sept., 1988 Rs. 65,000 and Rs. 1,00,000 aggregating to Rs. 3,90,000 and the balance amount of Rs. 5,10,000 was paid on 7th Jan., 1991. According to the Revenue, all the payments of Rs. 15,11,000 were made from 20th June, 1988 to 10th March, 1989 and after deducting the payments as shown by the assessee Rs. 3,90,000 upto 1st Sept., 1988, the addition of Rs. 11,21,000 was made in the year under appeal. Since all the dates fall in the financial year 1988 -89, relevant to asst. yr. 1989 -90, therefore, no addition can be made as undisclosed investment in the front portion of the property in the assessment year under appeal, i.e., asst. yr. 1990 -91 and to this extent, the findings of the CIT(A) are confirmed. However, the CIT(A) has given a finding that the said amount was liable to be considered in asst. yr. 1989 -90. Such a finding by the CIT(A) is unjust and uncalled for in view of the fact that the issue for asst. yr. 1989 -90 was not before him for adjudication. Accordingly, such a finding given by him is hereby directed to be reversed. Under such circumstances, any decision rendered by the CTT(A) on merits to the fact that it was investment by the assessee in asst. yr. 1989 -90, is also directed to be reversed. Since the addition cannot be sustained legally in the asst. yr. 1990 -91 in appeal before us, we do not consider it necessary to decide the issue on merits of the case. However, the AO shall be at liberty to take any action as he may consider appropriate under any of the enabling provisions of the Act. Accordingly, ground Mos. 1, 2 and 3 raised by the assessee in his appeal and Revenue's ground on the addition of Rs. 11,21,000 in ground No. 1 stand disposed of.