9. Purshottam
Khatri vs. Commissioner of Income Tax, Bhopal (2019)
419 ITR 475 (SC)
Appeal
to the High Court – Substantial question of law – The only entry on facts for
the High Court exercising its appellate jurisdiction u/s 260A of the Income-tax
Act, 1961 is in a case where the Tribunal’s judgment and findings therein are
perverse – The High Court otherwise cannot interfere with the Tribunal’s
judgment on facts
The assessee left
India in 1968 and was employed in Muscat and Dubai till the previous year
relevant to the assessment year 1992-93 and thereafter returned to India.
A
search was carried out u/s 132 of the Act in the premises of the assessee at
Bhopal for a period of 13 days from 18th to 30th October,
1996. Thereafter, an assessment was made u/s 158BC r/w/s 143(3) of the Act by
the A.O. on 29th October, 1997 determining the total undisclosed
income for the block period 1st April, 1986 to 18th
October, 1996 at Rs. 2,10,48,043. One of the additions was of Rs. 1,03,50,020
in respect of an alleged unexplained part of the deposits in the NRE accounts.
The assessee filed an
appeal before the Income Tax Appellate Tribunal, Indore Bench (the Tribunal).
By an order dated 7th July, 2000, the Tribunal deleted some of the
additions (including the aforesaid addition of Rs. 1,03,50,020) made by the
A.O. to the undisclosed income of the assessee and allowed the appeal in part.
The
Revenue filed an appeal before the High Court which, by a judgment dated 25th
January, 2006, set aside the order of the Tribunal in which the Tribunal, after
looking at the exchange vouchers and other evidence produced by the assessee,
had held that the entire sum of $7,55,534 was explained, as a result of which
the sum of $3,14,534, equivalent to Rs. 1,03,49,720, could not be held to be
unexplained deposits.
Aggrieved, the
assessee filed an appeal before the Supreme Court.
The Supreme Court
noted that the impugned judgment had added as unexplained income a sum of Rs.
1.03 crores, basically on the ground that the assessee had been unable to
present declaration forms that had been filled by him at the time of his visits
to India from abroad. According to the Supreme Court, keeping in mind the fact
that these declaration forms were asked for long after such expenditure had
been incurred, it could not possibly be said that the Tribunal’s judgment and
findings therein were perverse, which was the only entry on facts for the High
Court exercising its appellate jurisdiction u/s 260A of the Income-tax Act,
1961.
The Supreme Court
held that the High Court ought not to have interfered with the Tribunal’s
judgment as no substantial question of law arose therefrom.
Accordingly, the
Supreme Court allowed the appeal and set aside the judgment of the High Court
and reinstated that of the appellate Tribunal.
10. H.S.
Ramchandra RA.O. vs. Commissioner of Income Tax and Ors. (2019)
419 ITR 480 (SC)
Capital
or revenue receipt – Amount received by the assessee for relinquishing
secretaryship could not be treated as a capital receipt – It might have been a
different matter had it been a case of life-time appointment
On 14th
July, 2000 a search was conducted in the residential premises of the assessee.
During the course of the search proceedings the assessee had admitted that he
had received from Dr. K. R. Paramahamsa, Chairman of Paramahamsa Foundation
& Trust, Bangalore, a sum of Rs. 42 lakhs for relinquishing his life
membership and secretaryship in Jayanagar Education Society. The assessee,
pursuant to the said search, filed return for the block period 1st
April, 1990 to 14th July, 2000 on 24th April, 2001
declaring undisclosed income as nil. In the said block return in the statement
enclosed to part III of the return pertaining to ‘total income and loss for the
A.Y. 1997-98’, the assessee had mentioned that he had treated Rs. 35,00,000
received from Dr. K.R. Paramahamsa for relinquishing two posts held by him in
Jayanagar Education Society as a capital receipt. The A.O., after calling upon
the assessee to justify the said claim and after considering the reply thereof,
held the amount of Rs. 37,54,266 as exigible to tax under the Act by treating
the same as income under the head ‘Income from other sources’ and raised the
demand accordingly by treating the said income as undisclosed income.
Aggrieved by this,
the assessee filed an appeal before the CIT(A) contending that the receipt of
Rs. 37,54,266 was for relinquishing life membership and secretaryship of the Jayanagar
Education Society by enclosing the copy of the proceedings of the executive
committee meetings held on 15th September, 1996 and 2nd
October, 1996 regarding change in management and his resignation to the
abovesaid two posts, and thus claimed the said amount received as capital
receipt and so not exigible to tax. The appellate authority, after considering
the contentions raised by the assessee, rejected the same and held that it is
to be treated as revenue receipt.
The assessee filed a
further appeal before the Tribunal which, after considering the contentions
raised by the assessee and the case law relied thereunder, came to the
conclusion that the amount of Rs. 37,54,266 was capital in nature and
accordingly allowed the appeal and reversed the findings of the first appellate
authority who had confirmed the finding of the A.O..
The Revenue had then
filed an appeal before the High Court which held that the amount received by
the assessee could not be treated as a capital receipt since to forego life
membership or secretaryship, there was no capital asset which had been
transferred by the assessee in favour of Dr. Paramahamsa. Further, the assessee
was not earning any income or making profit out of the said posts and, by
virtue of relinquishing the same, the assessee did not lose monetarily and as
such the amount received from Dr. Paramahamsa by the assessee could not be
termed or construed as capital receipt.
The assessee filed an
appeal before the Supreme Court. The Supreme Court observed that the issue
involved in the appeal was essentially questioning the finding of fact recorded
by the authorities below whether the amount received by the appellant in the
sum of Rs. 37,54,266 was a capital receipt or a revenue receipt in the hands of
the appellant.
The Supreme Court
noted that the authorities below had found that going by the admission of the
appellant, the amount received could not be treated as capital receipt but only
as revenue receipt. For that, the authorities had relied on the statement given
by the appellant. The substance of the admission was that the appellant was
holding the post of secretary of the institution [Paramahamsa Foundation (R)
Trust] until 1996 but he left the institution after new members were elected to
the managing committee. That being the case, according to the Supreme Court,
the question of the appellant invoking the principle of capital asset did not
arise. It may have been a different matter if it was a case of life-time
appointment of the appellant as secretary of the institution concerned. No such
evidence was produced by the appellant before the A.O. or before it (the
Supreme Court).
Taking an overall
view of the matter, the Supreme Court upheld the conclusion reached by the High
Court that the amount received in the hands of the appellant could not be
treated as capital receipt. Thus, the order of the A.O. was affirmed and the
appeal was dismissed.
11. Senior Bhosale Estate (HUF) vs.
Assistant Commissioner of Income Tax (2019)
419 ITR 732 (SC)
Appeal to the High Court – Limitation – Condonation of
delay of 1,754 days – Appellant(s) had asserted that they had no knowledge
about passing of order dated 29th December, 2003 until they were
confronted with the auction notices in June, 2008 issued by the competent
authority – Unless that fact is refuted, the question of disbelieving the stand
taken by the appellant(s) on affidavit does not arise
The High Court had
dismissed the application of the appellant(s), a Hindu Undivided Family which
was under control of the Court of Wards, for condonation of delay of 1,754 days
in filing the appeal u/s 260A of the Act for the reason that the appellant(s) had
not monitored the actions of the Court of Wards, Nagpur who was managing the
properties of the appellant.
On an appeal before
it, the Supreme Court observed that the appellant(s) had asserted that they had
no knowledge about the passing of the order dated 29th December,
2003 until they were confronted with the auction notices in June, 2008 issued
by the competent authority.
The
Supreme Court noted that soon thereafter, the appellant(s) filed appeal(s)
accompanied by the subject application(s) on 19th July, 2008.
Notably, the respondent(s) did not expressly refute the stand taken by the
appellant(s) that they had no knowledge about the passing of the order dated 29th
December, 2003 until June, 2008. According to the Supreme Court, unless that
fact is refuted, the question of disbelieving the stand taken by the
appellant(s) on affidavit does not arise and for which reason the High Court
should have shown indulgence to the appellant(s) by condoning the delay in
filing the concerned appeal(s). This aspect had been glossed over by the High
Court.
The
Supreme Court, therefore, allowed the appeals setting aside the impugned order
of the High Court and relegated the parties before the High Court by allowing
the civil application(s) filed by the appellant(s) for condonation of delay in
filing the appeal(s) concerned. As a result, the appeal(s) concerned stood
restored to the file of the High Court to be proceeded with in accordance with
the law. 
