HIGH COURT OF ALLAHABAD
Commissioner of Income-tax-II, Agra
Versus
Nirankar Nath Mittal
IT APPEAL NOS. 47 OF 2003 & 50 OF 2012†
NOVEMBER 8, 2012
ORDER
1. The income tax appeal no.47 of 2003 under section 260A of the Income Tax Act, 1961 (the Act) arises out of the judgment and order dated 18.9.2002 passed by the Income Tax Appellate Tribunal in ITA No. 6001/Del/96, relating to block period from 25.8.1984 to 26.10.1995.
2. The connected Income Tax Appeal No.50 of 2012, under section 260A of the Act arises out of the judgment and order dated 10.6.2002 passed by the Income Tax Appellate Tribunal, ITA No.6107/Del/96 relating to block period 1.4.1985 to 14.11.1995.
3. The ITA No.47 of 2003 was admitted on 20.7.2007 on the following questions of law:-
“1. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is legally correct in holding that two separate assessments should have been made in this case, one for the block period the date of search u/s 132 concluded on 20.10.1995 and another for the block period ending on the date of requisition under section 132A of the amount of 30 lacs from the custody of Police Authorities i.e. on 16.07.1996?
2. Whether the Hon’ble Tribunal is legally correct in holding that the addition made u/s 69 of IT Act, 1961 for Rs. 30 lacs out of Rs.1.03 crore looted from the assessee and Sh. Dabi Sarin as per information of the S.H.O. Thana Rakabganj, Agra was illegal and bad in law as the same was beyond the scope of the block assessment made in the case?
3. Whether the Hon’ble Tribunal is legally correct in law and on facts in deleting the addition made u/s 69A of the IT Act, 1961 being undisclosed income admitted by the Assessee during the course of the statement recorded u/s 132 (4) of the IT Act, 1961?
4. Whether the Hon’ble Tribunal is legally correct in observing that the notice u/s 158BC of the IT Act was bad in law?”
4. The ITA No. 50 of 2012 was admitted on 16.7.2007 on the following questions of law:-
“(1) Whether on the fact and in the circumstances of the case, the Tribunal is legally correct in observing that Notice U/s 158 BC of I.T. Act, 1961 was bad in law and that warrant of authorisation U/s 132-A of I.T. Act, 1961 remained unexecuted?
(2) Whether in the circumstances of the case, the Tribunal is legally correct in holding that two separate assessments should have been made in the instant case for the block period up to date of search U/s 132 (1) concluded on 14.1.1995 and the order for the block period ending on requisition of the amount of Rs. 72.60 lakhs from the custody of police authorities i.e. on 16.10.1996?
(3) Whether the Tribunal is legally correct in holding that the addition of Rs. 73 lakhs u/s 69-A of I.T. Act, 1961 out of Rs.1.03 crores looted from the assessee and Shri N.N. Mittal as per information of the S.O. Thana Rakahganj, Agra was illegal and bad in law as the same fall beyond the scope of block assessment?
(4) Whether on the facts and in the circumstances of the case, the Tribunal is legally justified in deleting the addition of Rs. 42.60 lakhs and Rs.30.40 lakhs as undisclosed income U/s 69-A of I.T. Act, 1961?
(5) Whether in the circumstances of the case, the Tribunal is legally correct in deleting the addition of Rs. 5,00,000/-made U/s 69-A being unexplained investment of speculation business by estimate to earn profit of Rs. One Crore as against Rs. 5,000/- admitted by the assessee?
(6) Whether the Tribunal is legally correct in directing the A.O. to allow deductions claimed under Chapter IV and VIA of I.T. Act, 1961 which were allowed in regular assessments for the respective assessment years, while computing the undisclosed income U/s 158 BB (i) for the block period 1.4.1985 to 14.1.1995?
(7) Whether the Tribunal is legally correct in directing the A.O. to delete the addition of Rs.1,00,500/- made U/s 145 read with Section 55 (2) of the I.T. Act 1961 on account of goodwill received by the assessee on retirement from the firm M/s Sarin Chemical Laboratory Agra from the period Assessment Year 1993-94 which was added as undisclosed income for the assessment year 1993-94?”
5. We have heard Shri Shambhu Chopra, learned counsel for the income tax department. Shri Rahul Agarwal appears for the respondent assessee in ITA No.47 of 2003. Shri Shakeel Ahmad appears for the respondent assessee in ITA No.50 of 2012.
6. Brief facts common to both the appeals as narrated in the order of the Income Tax Appellate Tribunal in para 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6 in the case of Shri Nirankar Nath Mittal-the assessee, are quoted as below:-
“2.1 The assessee along with Shri Dabi Sarin was travelling in a Car No. UP-14-C-0040 on 08.10.1995 and while driving on Agra Tundla road the car driver Shri Mata Prasad stopped it near Central Public School and then two unknown persons forced the assessee and Shri Sarin to hand over whatever money they were carrying in the said car. As per F.I.R. 415/95 under section 394 of IPC dated on 08.10.1995 recorded at Thana Itmad-ud-daula in Book No. 30534, It was claimed by the assesee that a sum of Rs. 2.00 Lakh was looted from them. On 31.10.1995 both assessee and Shri Dabi Sarin addressed communications to S.O. Itmad-daula, wherein, it was pointed out that on 08.10.1995 actually the amount looted was about Rs.1.00 Crore, out of which Rs.30.00 Lakh was claimed to be owned by the assessee and Rs.70.00 Lakhs was claimed by Dabi Sarin to be his property. On the basis of the F.I.R. lodged by Shri Mittal and information supplied to S.H.O. Itmad-daula, police authorities took action and recovered the amount aggregating to Rs.72.60 Lakh from the alleged looters including Ashok Tyagi, Devendra Tyagi and Mukesh Tyagi. However, in the meantime the Income-tax Department took search and seizure operation at the premises of the assessee on 26.10.1995 and thereafter on the following day i.e. 27.10.1995 warrant of authorisation under section 132A was also issued in favor of the police authorities to hand over the recovered amount of looting to the I.T. Department Meanwhile the Department also moved a petition in the Court of IIIrd Additional District and Session Judge, Agra requesting to direct the police authorities to hand over the recovered amount to I.T. Department Vide order dated 08.07.1996 the Additional District and Session Judge, Agra in Criminal Misc Application No.54/95 under section 394/411 IPC directed to hand over the amount of Rs. 72.00 Lakhs to the I.T. Department subject to an undertaking that the responsibility of safety and security of the amount and that the said amount shall not be disposed of without permission of the Court or that of any other Court superior than the said Court as the case may be and if directed by the said Court or any other competent Court the amount shall be produced as and when so required. Subsequently, a further clarification was also issued by the Hon’ble Court on 07.01.1997 that the order dated 08.07.1996 is clear, yet for the convenience of the I.T. Dept. it was clarified that it has already been incorporated in the order dated 08.07.1996 that the amount of Rs. 72.00 Lakhs handed over to the I.T. Department is an undisclosed income. In such situation, the I.T. Department is competent under the provision of Income Tax Act to realize, collect and adjust as the case may be, the requisite income tax from the said amount and also at liberty to take up entire proceedings contemplated under the I.T. Act subject to the condition already imposed in the order dated 08.07.1996 under which the I.T. Department shall be duty bound to produce in the Court the amount or any part or balance thereof as and when so ordered by the said Court or any superior Court keeping the condition contemplated in the order dated 08.07.1996.
2.2 From the perusal of the judgment of IIIrd Additional District and Session Judge, Agra in Criminal Misc. Application No. 64/95 dated 08.07.1996, it is further observed that the alleged looters of the cash on 08.10.1995 had also claimed that the amount seized by the police on various dates belong to them.
2.3 Further, in view of the direction issued by the Court of IIIrd Additional District and Session Judge, Agra dated 08.07.1996 the cash was actually handed over by the police authorities to the Income Tax Department on 16.07.1996. Meanwhile on 18.04.1996 notice under section 158 BC was issued by the A.O. to the assessee.
2.4 It is pertinent to note that the assessee first lodge an FIR at Thana Itmad-daula that a sum of Rs. 2.00 Lakh was looted from him and his Companies Shri Dabi Sarin on 08.10.1995 while travelling in a car but later on vide letter dated 31.10.1995 addressed to SHO Itmad-daula communicated that on 08.10.1995 actual amount looted was about Rs.1.00 crore out of which Rs.30.00 Lakh claimed to be owned by the assessee and balance amount of Rs.70 Lakh owned by Shri Dabi Sarin. This claim of Rs. 30.00 Lakh owned by the assessee was repeatedly made in entire proceedings initiated under the I.T. Act 1961 i.e. either in his statement recorded u/s 132(4) or u/s. 131 or in his various communication made to different authorities or in return of income filed in compliance to notice issued u/s. 158 BC of the Act.
2.5 It is also worthful to mention that looted amount of Rs. 72,6,000 in the aggregate was recovered by the police authorities from the possession of different persons. The assessee has filed two paper books during course of hearing before us wherein at page 52 of the paper book there is details of such recovered amount which is as under:-
