Demand for bribe and its acceptance by public servantCourt
Supreme Court
Brief
Facts : Gajendra Jagatsinh Jadeja, was residing in Plot No. 1 in Virbhadranagar Society. As in the City Survey Office record, the name of his grandfather stood recorded in respect of the premises in question, the complainant in order to obtain the property card and the sketch of the same, went to the office of the City Survey Office, to submit an application for the aforesaid purpose and he was asked by Mr. Jagani, Clerk in the said office. complainant gave the application to Mr. Jagani, who asked him to hand over the application to Narendra Champaklal Trivedi, , sitting in the opposite room who told him that it would take a week’s time to prepare the said copies. The complainant made a request to Shri Jagani to expedite the matter as he had to go to meet his father with the copies and Mr. Jagani replied that it would cost him Rs.50/- to get the copies immediately - he was asked by Jagani to meet Trivedi and Harjibhai Devjibhai Chauhan, who told him that the copies would be given to him on payment and he could receive the copies between 4.30 to 4.50 p.m. - He approached the office of the Anti Corruption Bureau which was situate on the ground floor of his premises and gave a complaint . The concerned inspector planed sting operation - the complainant took out the money from his left pocket of the shirt and handed over to Trivedi which was accepted by Trivedi by his right hand. He counted the money by both hands and put the same in the left side pocket of his shirt. As pre-decided, the signal was given to the raiding party which rushed to the place of the incident. Thereafter, the experiment of U.V. Lamp was carried out on the fingers of both the hands and palms of Trivedi and pocket also and thereon light blue fluorescent marks were found. - On being asked about the rest of the money, Trivedi had said that he had given it to Chauhan. Experiment of U.V. Lamp was made on the hands and pockets of Trivedi and Chauhan and light blue fluorescent marks of anthrecene powder was found. - The learned trial Judge, found the appellants guilty and convicted them - appellants preferred appeal before the High Court - High Court affirmed the judgment of acquittal. Issue : Whether there was demand of bribe and acceptance of the same. Observations : 1. It is the settled principle of law that mere recovery of the tainted money is not sufficient to record a conviction unless there is evidence that bribe had been demanded or money was paid voluntarily as a bribe. 2. There is a statutory presumption under Section 20 of the Act which can be dislodged by the accused by bringing on record some evidence, either direct or circumstantial, that money was accepted by other than the motive or reward as stipulated under Section 7 of the Act. 3. If acceptance of any valuable thing can help to draw the presumption that it was accepted as motive or reward for doing or forbearing to do an official act, the word ‘gratification’ must be treated in the context to mean any payment for giving satisfaction to the public servant who received it.” 4. The amount may be small but to curb and repress this kind of proclivity the legislature has prescribed the minimum sentence. It should be paramountly borne in mind that corruption at any level does not deserve either sympathy or leniency. Held : Appeal Dismissed
Citation
CRIMINAL APPEAL NO. 97 OF 2012 NARENDRA CHAMPAKLAL TRIVEDI …..Appellant Versus STATE OF GUJARAT ….Respondent WITH CRIMINAL APPEAL NO. 98 OF 2012 HARJIBHAI DEVJIBHAI CHAUHAN … Appellant Versus STATE OF GUJARAT ….Respondent
Judgement
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 97 OF 2012
NARENDRA CHAMPAKLAL TRIVEDI …..Appellant
Versus
STATE OF GUJARAT ….Respondent
WITH
CRIMINAL APPEAL NO. 98 OF 2012
HARJIBHAI DEVJIBHAI CHAUHAN … Appellant
Versus
STATE OF GUJARAT ….Respondent
J U D G M E N T
Dipak Misra, J.
1. The present appeals are directed against the judgment of conviction and order of sentence dated 14.10.2011 passed by the learned Single Judge of the High Court of Gujarat at Ahmedabad in Criminal Appeal No. 31 of 1999 whereby the appellate court has confirmed the judgment and order of conviction and sentence dated 1stof December, 1998 passed by the learned Additional Special Judge, Bhavnagar in Special Case No. 6 of 1994, wherein the learned Additional Special Judge had convicted the appellants for the offence punishable under Section 7 of the Prevention of Corruption Act, 1988 (for brevity `the Act’) and sentenced them to undergo rigorous imprisonment of six months with fine of Rs.5,000/- each, in default of payment of fine, to suffer simple imprisonment for a period of one month and further convicted them under Section 13(2) of the Act and sentenced them to undergo rigorous imprisonment for a period of one year with a fine of Rs.5,000/- each, in default, to suffer simple imprisonment for a period of one month with the stipulation that both the sentences would be concurrent.
2. The broad essential facts of the prosecution case are that the complainant, Gajendra Jagatsinh Jadeja, was residing in Plot No. 1 in Virbhadranagar Society. As in the City Survey Office record, the name of his grandfather stood recorded in respect of the premises in question, the complainant in order to obtain the property card and the sketch of the same, went to the office of the City Survey Office, Bhavnagar on 11th March, 1994, to submit an application for the aforesaid purpose and he was asked by Mr. Jagani, Clerk in the said office to come on 15th of March, 1994. On the said date, the complainant at about 1.30 p.m. went to the City Survey Office and gave the application to Mr. Jagani, who asked him to hand over the application to Narendra Champaklal Trivedi, the appellant in Criminal Appeal No. 97 of 2012, sitting in the opposite room who told him that it would take a week’s time to prepare the said copies. The complainant made a request to Shri Jagani to expedite the matter as he had to go to meet his father with the copies and Mr. Jagani replied that it would cost him Rs.50/- to get the copies immediately. As the complainant had no money at that time he was asked by Jagani to meet Trivedi and Harjibhai Devjibhai Chauhan, the appellant in Criminal Appeal No. 98/2012 who told him that the copies would be given to him on payment and he could receive the copies between 4.30 to 4.50 p.m. As the appellant had no intention to make the payment, he approached the office of the Anti Corruption Bureau which was situate on the ground floor of his premises and gave a complaint to the Police Inspector. The concerned inspector sought assistance of two panch witnesses who were made to understand the case and thereafter experiment of U.V. Lamp was carried out with the help of anthrecene powder. Thereafter, the complainant produced the currency notes and necessary instructions were given to the complainant as well as to the witnesses. A preliminary part of the panchnama was drawn and signatures of the panchas were taken and thereafter, the complainant, the panchas and the members of the raiding party proceeded to the City Survey Office.
3. As the narration of the prosecution case proceeds, Jagani asked the complainant to meet said Chauhan and pay the money. Being instructed, they went to the room of said Chauhan and he was directed to pay Rs. 7.10 paise as fees to said Trivedi and obtain the property card and sketch. Thereafter, said Chauhan demanded money from the complaint as decided and on being asked whom to hand over the amount, Chauhan said to give it to Trivedi and Trivedi was asked to accept the amount. Thereafter, the complainant took out the money from his left pocket of the shirt and handed over to Trivedi which was accepted by Trivedi by his right hand. He counted the money by both hands and put the same in the left side pocket of his shirt. As pre-decided, the signal was given to the raiding party which rushed to the place of the incident. Thereafter, the experiment of U.V. Lamp was carried out on the fingers of both the hands and palms of Trivedi and pocket also and thereon light blue fluorescent marks were found. Panch witness No. 1 took out the currency notes from Trivedi. There were two ten rupee notes and one five rupee note. On those currency notes, light blue fluorescent marks were found with the numbers mentioned on the first part of the panchnama. On being asked about the rest of the money, Trivedi had said that he had given it to Chauhan. Experiment of U.V. Lamp was made on the hands and pockets of Trivedi and Chauhan and light blue fluorescent marks of anthrecene powder was found. The currency notes were tallied with the numbers mentioned on the first part of the panchnama. From both the accused-appellants, currency notes were recovered, marks of anthrecene powder were found and the second part of the panchnama was prepared. The Investigating Officer carried out further investigation, recorded the panchnama and after obtaining requisite sanction, he laid the chargesheet before the Competent Court on 25th of August 1994.
4. The learned trial Judge framed charges in respect of the offences that have been mentioned hereinbefore. The appellants pleaded not guilty and sought to be tried.
5. In order to bring home the charges levelled against the appellants, the prosecution examined number of witnesses and produced documentary evidence in support of the case.
6. The accused-appellants in their statements under Section 313 of the Code of Criminal Procedure disputed the charges that they had demanded the amount towards illegal gratification but did not want to adduce any evidence in their defence.
7. The learned trial Judge, appreciating the oral as well as the documentary evidence and taking into consideration the submissions advanced by the parties, found the appellants guilty and convicted them as has been stated hereinabove.
8. The appellants preferred a singular appeal before the High Court. It was contended before the High Court that the learned trial Judge had failed to take into consideration the plea of the defence and the inadequacy of the material brought on record from which it would be graphically clear that the prosecution had miserably failed to prove its case that there was demand of bribe and acceptance thereof and hence, the ingredients of Sections 7 and 13 of the Act had not been established. It was argued that neither the FIR nor the testimony of the complainant remotely establish that there was a demand for bribe and once the said core fact was not proven, the charges levelled against them were bound to collapse like a pack of cards. It was urged that as the office of the Anti Corruption Bureau had been leased out by the complainant, he was able to rope the accused-appellants in a bogus trap and falsely implicate them. It was further contended that the complainant and Panch witness No. 1 had stated in the cross-examination that Trivedi had not made any demand of Rs.50/- from the complainant and the recovery of the trapped amount had also not been proven inasmuch as the panchas are not independent witnesses and their evidence did not merit any acceptance. It was proponed that the learned trial Judge had failed to consider the fact that Jagani who was the main culprit was not booked under law and, therefore, the prosecution had deliberately severed the link to rope in the appellants and hence, it was a malafide prosecution. It was also submitted that there were other witnesses in the room but the prosecution chose to examine only the interested witnesses and in essence, the judgment of conviction suffered from perversity of approach and deserved to be axed.
9. The learned counsel for the State urged before the High Court that the emphasis laid on Jagani not being arrayed as an accused was totally inconsequential as he had never made any demand from the complainant. He referred to various documents on record and the testimony of the witnesses that the charges levelled against the accused persons had been proven to the hilt and there was nothing on record which would remotely suggest that they had been falsely implicated. The relationship between the complainant and the ACB officer could not be taken into consideration to come to a conclusion that the complaint was false, malafide and the accused persons had been deliberately roped in. It was canvassed by him that the amount had been recovered from the pocket of Trivedi and the demand had been made by the accused Chauhan to handover the amount of illegal gratification to Trivedi. The offence was committed with the consent of both and the same had been established by the oral and documentary evidence. The learned counsel for the State gave immense emphasis on the version of the Panch witnesses, the scientific proof and the testimony of the trapping officer. The principle of presumption was pressed into service and the said contention was edificed by putting forth the stance that the cumulative effect of the evidence on record clearly satisfied the ingredients of Sections 7 and 13(2) read with Section 13(1)(d) of the Act to bring home the charges levelled against the accused persons.
10. The learned single Judge took note of the facts as regards the presence of the accused appellants in the room, the demand made by the appellant No. 2, Chauhan, in the presence of the Panch witness No. 1, the direction by Chauhan to hand it over to Trivedi which established the consent, the deposition of PW-2 about the involvement and complicity of the appellants in the crime, the absence of enmity between the complainant and the accused persons, the unreproachable aspect of the evidence of the witnesses who stood embedded in their stand, the acceptance and recovery that inspired total credence about the demand and acceptance, and the principle of presumption being attracted, all of which would go a long way to show that the prosecution had proven the case beyond reasonable doubt and further considered the inability of the accused-appellants to rebut the presumption as envisaged under Section 20 of the Act, the unacceptability and farfetchedness of the theory of existence of obligation between the informant and the investigating officer to implicate the accused-appellants in the crime, the failure of the appellants to explain how the amount in question was found from their possession and how anthrecene powder was found on their hands and eventually opined that the cumulative aspect of all the facts and circumstances clearly establish the charges framed against the appellants. Being of this view, the High Court affirmed the judgment of acquittal.
11. We have heard the learned counsel of both the parties at length and carefully perused the record.
12. At the outset, we may state that the recovery part has gone totally unchallenged. Though a feeble attempt was made before the High Court and also before us, yet a perusal of the evidence and the test carried out go a long way to show that the amount was recovered from the possession of the accused appellants. It is the settled principle of law that mere recovery of the tainted money is not sufficient to record a conviction unless there is evidence that bribe had been demanded or money was paid voluntarily as a bribe. Thus, the only issue that remains to be addressed is whether there was demand of bribe and acceptance of the same. Be it noted, in the absence of any evidence of demand and acceptance of the amount as illegal gratification, recovery would not alone be a ground to convict the accused. This has been so stated in T. Subramanian v. The State of Tamil Nadu.
13. The demand and acceptance of the amount as illegal gratification is the sine qua non for constituting an offence under the Act. It is also settled in law that there is a statutory presumption under Section 20 of the Act which can be dislodged by the accused by bringing on record some evidence, either direct or circumstantial, that money was accepted by other than the motive or reward as stipulated under Section 7 of the Act. It is obligatory on the part of the court to consider the explanation offered by the accused under Section 20 of the 1 AIR 2006 SC 836 Act and the consideration of the explanation has to be on the anvil of preponderance of probability. It is not to be proven beyond all reasonable doubt. It is necessary to state here that the prosecution is bound to establish that there was an illegal offer of bribe and acceptance thereof. The same has to be founded on facts. In this context, we may refer with profit to the decision in M. Narsinga Rao v. State of A.P. wherein a three-Judge Bench referred to Section 20 of the Act and stated that the only condition for drawing the legal presumption under Section 20 is that during trial it should be proved that the accused has accepted or agreed to accept any gratification. The section does not say that the said condition should be satisfied through direct evidence. Its only requirement is that it must be proved that the accused has accepted or agreed to accept the gratification. Thereafter, the Bench produced a passage from Madhukar Bhaskarrao Joshi v. State of Maharashtra with approval. It reads as follows: - “The premise to be established on the facts for drawing the presumption is that there was payment or acceptance of gratification. Once the said premise is established the inference to be drawn is that the said gratification was accepted ‘as motive or reward’ for doing or forbearing to do (2001) 1 SCC 691 (2000) 8 SCC 571 any official act. So the word ‘gratification’ need not be stretched to mean reward because reward is the outcome of the presumption which the court has to draw on the factual premise that there was payment of gratification. This will again be fortified by looking at the collocation of two expressions adjacent to each other like ‘gratification or any valuable thing’. If acceptance of any valuable thing can help to draw the presumption that it was accepted as motive or reward for doing or forbearing to do an official act, the word ‘gratification’ must be treated in the context to mean any payment for giving satisfaction to the public servant who received it.”
14. In Raj Rajendra Singh Seth v. State of Jharkhand & Anr the principle laid down in Madhukar Bhaskarrao Joshi (supra) was reiterated.
15. In State of Maharashtra v. Dnyaneshwar Laxman Rao Wankhede , it has been held that to arrive at the conclusion that there had been a demand of illegal gratification, it is the duty of the court to take into consideration the facts and circumstances brought on record in their entirety and for the said purpose, undisputedly, the presumptive evidence as laid down in Section 20 of the Act must also be taken into consideration.
16. In C.M. Girish Babu v. C.B.I., Cochin, High Court of Kerala , after referring to the decisions in M.Narsinga Rao AIR 2008 SC 3217 (2009) 15 SCC 200 AIR 2009 SC 2022 (supra) and Madhukar Bhaskarrao Joshi (supra), this Court has held thus: -
“19. It is well settled that the presumption to be drawn under Section 20 is not an inviolable one. The accused charged with the offence could rebut it either through the crossexamination of the witnesses cited against him or by adducing reliable evidence. If the accused fails to disprove the presumption the same would stick and then it can be held by the Court that the prosecution has proved that the accused received the amount towards gratification.”
17. In the case at hand, the money was recovered from the pockets of the accused-appellants. A presumption under Section 20 of the Act becomes obligatory. It is a presumption of law and casts an obligation on the court to apply it in every case brought under Section 7 of the Act. The said presumption is a rebuttable one. In the present case, the explanation offered by the accused-appellants has not been accepted and rightly so. There is no evidence on the base of which it can be said that the presumption has been rebutted.
18. The learned counsel for the appellant has submitted with immense force that admittedly there has been no demand or acceptance. To bolster the said aspect, he has drawn inspiration from the statement of the complainant in examination-in-chief. The said statement, in our considered opinion, is not to be read out of context. He has clarified as regards the demand and acceptance at various places in his examination and the cross-examination. The shadow witness has clearly stated that there was demand of bribe and giving of the same. Nothing has been brought on record to doubt the presence of the shadow witness. He had given the signal after which the trapping party arrived at the scene and did the needful. All the witnesses have supported the case of the prosecution. The currency notes were recovered from the possession of the appellants. In the lengthy crossexamination nothing has really been elicited to doubt their presence and veracity of the testimony. The appellants in their statement under Section 313 of the Code of Criminal Procedure have made an adroit effort to explain their stand but we have no hesitation in stating that they miserably failed to dislodge the presumption. PW-2 has categorically stated that the complainant took out Rs.50/- from his pocket and gave it to the accused appellant as directed. Thus analysed and understood, there remains no shadow of doubt that the accused-appellants had demanded the bribe and accepted the same to provide the survey report. Therefore, the conviction recorded by the learned trial Judge which has been affirmed by the learned single Judge of the High Court, does not warrant any interference.
19. The learned counsel for the appellants had, in the course of arguing the appeal, submitted that the appellants have suffered enough as they have lost their jobs and the amount is petty, the said aspects should be considered as mitigating factors for reduction of the sentence. Sympathy has also been sought to be drawn on the foundation that the occurrence had taken place almost 18 years back and the amount is paltry. On a perusal of Section 7(1) of the Act, it is perceptible that when an offence is proved under the said section, the public servant shall be punished with imprisonment which shall not be less than six months but which may extend to five years and shall also be liable to fine. Section 13(2) of the Act postulates that any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine. As is demonstrable from the impugned judgment, the learned trial court has imposed the minimum sentence and the High Court has affirmed the same.
20. The submission of the learned counsel for the appellants, if we correctly understand, in essence, is that power under Article 142 of the Constitution should be invoked. In this context, we may refer with profit to the decision of this Court in Vishweshwaraiah Iron and Steel Ltd. V. Abdul Gani and Ors. wherein it has been held that the constitutional powers under Article 142 of the Constitution cannot, in any way, be controlled by any statutory provision but at the same time, these powers are not meant to be exercised when their exercise may come directly in conflict with what has been expressly provided for in any statute dealing expressly with the subject. It was also made clear in the said decision that this Court cannot altogether ignore the substantive provisions of a statute.
21. In Keshabhai Malabhai Vankar v. State of Gujarat , it has been held as follows: - “6. It is next contended that this Court in exercise of power under Article 142 of the Constitution has plenary power to AIR 1998 SC 1895 1995 Supp (3) SCC 704 reduce the sentence. We are afraid that we cannot ignore the statutory object and reduce the minimum sentence prescribed under the Act. Undoubtedly under Article 142 the Supreme Court has the power untrammelled by any statutory limits but when penal offences have been prescribed for violation of statutory regulations for production, equitable supply and distribution of essential commodities at fair prices, it was done in the social interest which this Court would keep in mind while exercising power under Article 142 and respect the legislative policy to impose minimum sentence. Amendment to the Act was made to stamp out the statutory violations with impunity. Thus we find that it is not a fit case warranting interference. The appeal is accordingly dismissed.”
22. In Laxmidas Morarji (Dead) by LRS. v. Behrose Darab Madan, it has been ruled thus: - “Article 142 being in the nature of a residuary power based on equitable principles, the Courts have thought it advisable to leave the powers under the article undefined. The power under Article 142 of the Constitution is a constitutional power and hence, not restricted by statutory enactments. Though the Supreme Court would not pass any order under Article 142 of the Constitution which would amount to supplanting substantive law applicable or ignoring express statutory provisions dealing with the subject, at the same time these constitutional powers cannot in any way, be controlled by any statutory provisions. However, it is to be made clear that this power cannot be used to supplant the law applicable to the case. This means that acting under Article 142, the Supreme Court cannot pass an order or grant relief which is totally inconsistent or goes against the substantive or statutory enactments pertaining to the case.”
23. In view of the aforesaid pronouncement of law, where the minimum sentence is provided, we think it would not be at all appropriate to exercise jurisdiction under Article 142 of the (2009) 10 SCC 425 Constitution of India to reduce the sentence on the ground of the so-called mitigating factors as that would tantamount to supplanting statutory mandate and further it would amount to ignoring the substantive statutory provision that prescribes minimum sentence for a criminal act relating to demand and acceptance of bribe. The amount may be small but to curb and repress this kind of proclivity the legislature has prescribed the minimum sentence. It should be paramountly borne in mind that corruption at any level does not deserve either sympathy or leniency. In fact, reduction of the sentence would be adding a premium. The law does not so countenance and, rightly so, because corruption corrodes the spine of a nation and in the ultimate eventuality makes the economy sterile.
24. The appeals, being sans substratum, stand dismissed.
............................................J. [Dr. B. S. Chauhan]
............................................J. [Dipak Misra]
New Delhi; May 29, 2012
| |
| Tags :- demand bribe its acceptance public servant |
After giving proper opportunity additional cannot be admitted as per sec Rule 46A except in the presence of sufficient cause preventing him to give earlier |
| Posted on 01 June 2012 by Diganta Paul | ||||||||||||||||
Court
INCOME TAX APPELLATE TRIBUNAL
Brief
An application for admission of additional evidence under Rule 46A of the IT Rules, whereby the AR filed copy of Bank A/c, passport and professional license issued to the firm in Dubai where Shri Sunil Bhatia, the Director of the appellant company is a partner. As the addition of income of Rs. 1,97,61,900/- was made by the AO in the case u/s 68 of the IT Act by holding that the source of this investment in name of Shri Sunil Bhatia is unexplained therefore a remand report from AO was called for. In response thereto the AO has submitted his report which is reiteration of the earlier observation in the assessment order & that as Shri Bhatia had been given sufficient opportunity during the assessments proceedings therefore, the additional evidence may not be admitted U/R 46A. In counter reply to the remand report the appellant again submitted that as Sh. Sunil Bhatia is a nonresident based in Dubai therefore it took some time to get the above documents and that in meantime the AO had passed the assessment order on 10-11-09, without providing sufficient opportunity. That as the additional evidenced pertains to creditworthiness of Shri Sunil Bhatia therefore required to be admitted. On a consideration of reply of the appellant the objection of the AO on non-admission of additional evidence are not found acceptable as the additional evidence I form of Bank A/c, Passport and the professional license of the firm in Dubai in which Shri Sunil Bhatia is a partner are crucial to the issue in Ground nos. 1 & 2 of the present appeal. Hence these are admitted in order to impart substantive justice.
Citation
DCIT, Cir. 11(1), New Delhi. (Appellant) Vs. M/s E-4 Entertainment (P) Ltd., E-311, East of Kailash, New Delhi. PAN/GIR No. AABCE6843P (Respondent)
Judgement
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “B” New Delhi
BEFORE SHRI R.P. TOLANI AND SHRI A.N. PAHUJA
ITA No. 4491/Del/2010
Asstt. Yr: 2007-08
DCIT, Cir. 11(1),
New Delhi.
(Appellant)
Vs.
M/s E-4 Entertainment (P) Ltd.,
E-311, East of Kailash, New Delhi.
PAN/GIR No. AABCE6843P
(Respondent)
Appellant by: Shri V.K. Saksena CIT (DR)
Respondent by: Shri Ravi Gupta Adv. & Shri Prakash Yadav Adv.
O R D E R
PER R.P. TOLANI, J.M:
This is Revenue’s appeal against CIT(A)’s order dated 24-8-2010, relating to A.Y. 2007-08. Following grounds are raised:
“1. The order of Ld. CIT(A) is wrong, perverse, illegal and against the provisions of law, liable to be set aside.
2. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of Rs. 1.97,61,900/- u/s 68 of the Act on account of unexplained credits.
3. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of Rs. 8,92,396/- out of operation and other expenses incurred by the assessee.
4. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.”
2. Ground nos. 1 & 4 are general in nature and requires no adjudication.
3. Brief facts are: One of the directors of the assessee company Shri Sunil Bhatia contributed following share capital and share premium:
3.1. From the bank statement, it was revealed that Sunil Bhatia had subscribed an amount of Rs. 3,50,000/- through bank, whereas for the balance amount of Rs. 1,9761,000/- the assessee furnished only copies of foreign remittance vouchers. Besides, the assessee did not furnished any RBI approval for such foreign remittance. Though it was pleaded that Shri Sunil Bhatia had field return of income for A.Y. 2007-08 declaring income of Rs. 2,67,967/-, on computer check it was found that application for PAN was lying with ITO Ward 23(1), New Delhi. AO, therefore, could not cross check the creditworthiness of Shri Sunil Bhatia in respect of vouchers of foreign remittance. Besides, AO questioned the propriety of charging of huge premium in the very first year of incorporation of company. Assessee could not give satisfactory reply in this behalf. In these facts and circumstances, AO held it to be assessee’s own money, which was routed to its books of a/c in the garb of share premium. O Relied on following case laws:
- CIT Vs. Mussadilal Ram Bharose (1987) 165 ITR 14
- Sumati Dayal Vs. CIT 214 ITR 801
- Sreelekha Banerjee (1963) 49 ITR 112 (SC)
- A. Govindarajula Mudliar (1958) 34 ITR 807 (SC).
3.2. Since the assessee failed to explain impugned cash credits satisfactorily, it was added u/s 68 as unexplained cash credit.
3.3. Aggrieved, assessee preferred first appeal before the ld. CIT(Appeals). Assessee filed application for admission of additional evidence under Rule 46A of the I.T. Rules by making following submissions:
“1. It is requested to accord kind permission for production of additional evidence as the assessee was not provided proper opportunity of being heard. Besides the evidences go to the very root of the matter and have a direct and substantial bearing in determining the correct income and tax liability of the assessee for the year under consideration.
2. Kind permission may kindly be accorded to adduce additional evidences which are complied in the paper book Vol. II.
3. Since the Assessee was prevented by sufficient cause from production of above evidences before the Ld. AO.
4. It has been held in number of cases including in Keshaw Mills Co. Ltd. Vs. CIT (1965) 56 ITR 365 and now recognized as Rule 46A that the appellate authority has a right to admit additional evidence in the interest of justice.
5. The enclosed paper books are in duplicate with a request to kindly allow an opportunity to the ld. AO to rebut the same in terms of Rule 46A (3).
3.4. On this application the ld. CIT (Appeals) called for AO’s remand report. The AO in his remand report strongly object to the admission of additional evidenced by following observations:
“The additional ground of appeal can be admitted only in the situation provided under Rule 46A of the IT Rules which are as below:
i) Where the Assessing Officer has refused to admit evidence which ought to have been admitted.
ii) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer.
iii) Where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal.
iv)Where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
However, the case of the assessee does not fall in any of the conditions laid down in Rule 46A of the IT Rules as reproduced above. Hence, the additional grounds of appeal submitted by the assessee should not be admitted, since it is amply clear from perusal of the assessment proceedings before the AO.
However, factual report in respect of the submissions made before the ld. CIT(Appeals) is as under:
The company was incorporated on 01-07-2006, hence, the year under consideration is the first year of the assessee company. During the year under consideration, the assessee company was engaged in the business of conducting exhibition in New Delhi at DND Flyway compound.
During the course of assessment proceedings, the assessee filed copy of balance sheet, profit & loss account and the relevant schedules and annexure. From the balance sheet filed, it is seen that the assessee has raised share capital to the tune of Rs. 1,42,66,900/- and share premium of s. 58,95,000/-. Accordingly, the assessee was asked to furnish the details of the persons/entities contributing to share capital and share premium along with documentary evidence. The assessee company vide letter dated 22-10-2009 has furnished the details of the same. From the details furnished, it is seen that Sh. Sunil Bhatia, one of the directors of the assessee company has contributed to the share capital and share premium as per following details:
Sl. No. Particulars Amount
1. Towards share capital account 1,19,55,000
2. Towards share capital by way of allotment of shares on takeover of proprietor concern E-4 Entertainment 22,61,900
3. Towards share premium 58,95,000
2,01,11,900
The assessee has not furnished any RBI approval for the said foreign remittance. A further perusal of the I.T. details of Sh. Sunil Bhatia reveals that the assessee has filed its return for A.Y. 2007-08 declaring income of Rs. 2,67,967/-. On being inquired from the computer, it was gathered that the PAN is presently lying with ITO Ward 23(1), New Delhi. Hence, the creditworthiness of the subscriber is doubtful. Further, also the assessee has not furnished any basis of charging of such huge share premium in the very first year of the company. Hence, it is clear that the amount of Rs. 1,97,61,900/- is nothing but the assessee company’s own money which has been made routed to the books of account in the garb of share capital and share premium. The assessee, therefore, could prove the creditworthiness of the subscriber.
In view of the facts as narrated above and that the assessee was provided sufficient opportunity during the assessment proceedings wherein he could not substantiate the results shown, the remand report is submitted for kind consideration. The assessment was made after giving ample opportunity and should be sustained.”
3.5. Ld. CIT (Appeals), however, admitted the additional evidence by following observations:
“On 9-02-10 itself the appellant also filed an application for admission of additional evidence under Rule 46A of the IT Rules, whereby the AR filed copy of Bank A/c, passport and professional license issued to the firm in Dubai where Shri Sunil Bhatia, the Director of the appellant company is a partner. As the addition of income of Rs. 1,97,61,900/- was made by the AO in the case u/s 68 of the IT Act by holding that the source of this investment in name of Shri Sunil Bhatia is unexplained therefore a remand report from AO was called for. In response thereto the AO has submitted his report which is reiteration of the earlier observation in the assessment order & that as Shri Bhatia had been given sufficient opportunity during the assessments proceedings therefore, the additional evidence may not be admitted U/R 46A. In counter reply to the remand report the appellant again submitted that as Sh. Sunil Bhatia is a nonresident based in Dubai therefore it took some time to get the above documents and that in meantime the AO had passed the assessment order on 10-11-09, without providing sufficient opportunity. That as the additional evidenced pertains to creditworthiness of Shri Sunil Bhatia therefore required to be admitted.
On a consideration of reply of the appellant the objection of the AO on non-admission of additional evidence are not found acceptable as the additional evidence I form of Bank A/c, Passport and the professional license of the firm in Dubai in which Shri Sunil Bhatia is a partner are crucial to the issue in Ground nos. 1 & 2 of the present appeal. Hence these are admitted in order to impart substantive justice.
3.6. Thereafter, ld. CIT(Appeals) deleted the addition by following observations:
“I have considered the written submission of the appellant, gone through the case laws relied upon and also the additional evidence filed, the remand report & counter reply thereto. After considering the entire material, it is seen that the assessee submitted complete details of the share holders giving full name, addresses, details of payment made by cheuqe. It is seen from the assessment order that the AO has made an addition of income for Rs. 1,97,61,900/- on account of
unexplained cash credit in name of Shri Sunil Bhatia, the Director of the appellant company. The appellant has contended that out of the above amount an amount of Rs. 22,61,900/- is not a cash credit but relates to capital of Shri Sunil Bhatia as on 1st March 2007 on account of M/s E-4 Entertainment a proprietorship concern of Shri Sunil Bhatia being taken over as a running business by the appellant company, in terms of agreement between the two concerns on 01-03-07. Copy of the said agreement has been filed on record. It is mentioned in clause 4 of the agreement that the appellant company shall issue shares of Rs. 10% each to the proprietor of E-4 Entertainment, Shri Sunil Bhatia against his credit balance in his capital account as at 28th Feb. 2007. Copy of capital account of Shri Sunil Bhatia as on 28-02-07 in M/s E-4 Entertainment, reflecting an amount of Rs. 22,61,900/- has also been filed. It is for this reason that in the share application money ledger A/c of Shri Sunil Bhatia in the appellant company, a credit of Rs. 22,61,900/- has been made dated 01-03-2007 which has then also been credited in his share capital account. Thus from the above, it is observed that Rs. 22,61,900/- is not a cash credit in terms of S. 68, but relates to capital of Shri Sunil Bhatia in his now merged proprietary ship concern M/s E-4 Entertainment. As regards the balance amount of Rs. 1,75,00,000/- in name of Shri Sunil Bhatia the appellant has filed his confirmation letter as well as PAN No. and assessment details. In the additional evidence the appellant submitted that the above amount has been received from Shri Sunil Bhatia as foreign remittance and in support thereto the copy of current Bank A/c no. 90010200003863 in Bank of Baroda, Dubai Main Branch in case of E-4, Entertainment P.O. Box 48654, Dubai,United Arab Emirates was also filed for the relevant period. Copy of Passport of Shri Sunil Bhatia issued from Dubai on 09- 08-2005 (Date of expiry 08-08-05) has been submitted as also the professional license dated 07-09-02 issued by the Department of Economic Development Government of Dubai in name of E-4 Entertainment. Shri Sunil Bhatia is a 50% share holder in E-4 Entertainment as per license. The licensed activities are exhibition, organizing parties & private functions, entertainment service, conferences and seminar organizing. The appellant also provided copy of current account of Shri Sunil Bhatia in books of M/s E-4 Entertainment(Dubai), from which is observed that a total amount of 14,61,175/- (DHS) has been debited, which has consequently been remitted by Shri Sunil Bhatia as share capital to E-4 Entertainment P. Ltd., for Rs. 1,75,00,000/- in Bank A/c No. 0963020000779 in Bank of Baroda, East of Kailash, New Delhi.”
4. Ld. DR at the out set vehemently argues that:
(i) order of ld. CIT(Appeals) is illegal and perverse inasmuch as the objections raised by AO were purposely not complied by assessee to avoid investigation about huge premium charged by assessee which is a newly incorporated company.
(ii) Additional evidence has been admitted by ld. CIT(Appeals) only on the basis that the evidence is crucial to decide ground nos. 1 & 2, without appreciating that no ground was raised about sufficient opportunity before AO.
(iii) Rule 46A prescribes statutory conditions to be followed before admitting any additional evidence, which had not been complied.
(iv) Assessee has not whispered even a word as to how he was prevented by sufficient cause in producing the evidence before AO and ld. CIT(Appeals) glossed over this aspect which has rendered his order into perversity.
(v) There is no allegation in appeal memo that sufficient opportunity was not given to assessee before AO to adduce evidence. Without compliance with this or other mandatory requirements, ld. CIT(Appeals) cannot accept it and award relief. Reliance is placed on Hon’ble Delhi High court judgment dated 15-11-2011 in the case of CIT Vs. Manish Build Well Pvt. Ltd. (ITA no. 928/2011).
(vi) Further reliance is placed on Hon’ble Delhi High Court judgment in the case of Nova Promoters.
(vii) Ld. CIT(Appeals)’s order giving relief without considering the aspect of huge share premium which is tax free in the hands of assessee, is illegal.
4.1. The assessee did not raise any ground in first appeal about insufficiency of hearing, which is evident from grounds of appeal taken by it before ld. CIT(Appeals), which are as under:
“1. That the Ld. Assessing Officer has erred on facts and in law in making an addition of Rs. 1,97,61,900 by invoking the provisions of section 68 of the Income tax Act, 1961.
2. That the provisions of section 68 are not at all applicable in the case of the appellant.
3. That the Ld. Assessing Officer has erred on facts and in law in making a disallowance of Rs. 8,92,396 out of the operation and other expenses incurred by the appellant.
4. That the Ld. Assessing Officer has erred on facts and in law in not allowing the benefit of unabsorbed depreciation of Rs. 1,01,53,858/-.
5. That the impugned assessment order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence
]6. That the appellant craves leave to add/ alter any/ all grounds of appeal before or at the time of hearing of the appeal.”
4.2. A perusal of grounds of appeal will reveal that assessee had no where raised a ground that the assessment was completed in a hurry or that sufficient opportunity of hearing was not given by AO. Having not raised any ground of appeal before ld. CIT(Appeals) it was neither justified for the assessee to make a false statement that assessee was not given proper opportunity by AO and at the same time, ld. CIT(Appeals) was not justified in admitting the additional evidence without appreciating that there was no compliance to Rule 46A. The relevant evidence was not filed before AO to avoid first hand investigations for the reasons best known to the assessee.
4.3. So called additional evidence filed by the assessee are copies of foreign records and bank statements which are neither notarized nor verified by any diplomatic agency. Ld. CIT(Appeals) without giving adequate reasons for admission of additional evidence, fully relied on all these unadmissible copies of documents. Thus, the entire relief has been given on extraneous evidence which was neither before AO nor certified properly. It is, therefore, pleaded that ld. CIT (Appeals) miscarried himself in admitting the additional evidence and giving full relief by summarily relying on all these documents without verifying their genuineness and veracity.
4.4. Ld. CIT (Appeals) has failed to rebut AO’s findings and reasons as to why a freshly launched company commanded such heavy premium on its shares. In the circumstance, the burden placed on assessee to prove these transactions is heavy, which has not been discharged.
4.5. Apropos other ground about disallowance out of operation and other expenses incurred by the assessee, the necessary evidence was not filed before AO, which was disallowed by following observations:
“5.1. As it is clear from the assessee’s reply itself that the company started its operation in the month of November, 2006, but has worked only for three days in the month of March, 2006, hence, the expenses claimed under the head Operation & Other Expenses to the tune of Rs. 35,69,585/- are not allowed to the assessee in this year only. Hence, keeping in view the quantum of work done in three days for the year under consideration, 25% of the expenses have been disallowed and added to the total income of the assessee.”
4.6. Ld. CIT(DR) pleads that CIT(Appeals) has allowed the expenditure only on the plea that the veracity of expenses and another evidence/ material was not questioned on the record by the AO. In case of claim of expenditure, the burden was on the assessee to prove the same which cannot be allowed on assumptions. Besides, ld. CIT(Appeals) has not given any sound resoning about description or nature of exhibition site, therefore the relief has been given without ascribing reasons and by sweeping findings. It is pleaded that the order of ld. CIT(Appeals), which is illegal, may be reversed.
4.7. Reliance is placed by ld. DR on Hon’ble Delhi High Court judgment in the case of CIT Vs. Oasis Hospitality 333 ITR 119 also.
5. Learned counsel for the assessee, on the other hand, relied on the order of ld. CIT(Appeals) and contends that the additions have been rightly deleted. There is no prejudice caused to the department inasmuch as the additional evidence filed by the assessee was duly forwarded to AO who has not passed any objective adverse comments on merit. Ld. Counsel contends that Shri Sunil Bhatia is an assessee with the income-tax department; Shri Bhatia was a non-resident India (NRI), resident of Dubai. The assessee company is engaged in the business of conducting exhibitions at DND Flyway compound and other entertainment activities. The company was formed by taking over Mr. Bhatia’s proprietorship concern. The question of addition, if any, arises only in the case of Shri Sunil Bhatia and not the assessee company. Shri Sunil Bhatia being an identified individual, having PAN no. and known sources of investment, the assessee had discharged its burden cast on it in terms of sec. 68. Therefore, ld. CIT(Appeals) has deleted the addition on just and proper considerations. Reliance is placed on Hon’ble Supreme Court judgments in the cases of Lovely Exports 216 ITR 195; and Oasis Hospitality 333 ITR 119.
6. We have heard rival contentions and gone through the relevant material available on record.
6.1. Coming to the additional evidence, we have perused form no. 35 i.e. memo of appeal filed by the assessee before ld. CIT(Appeals). In the grounds raised, there is neither any ground nor whisper about not providing sufficient opportunity by AO while framing the assessment. It is further evidenced from the fact that the assessment proceedings commenced on 26- 9-2008 and assessment order has been passed on 10-11-2009 indicating that sufficient time was given to assessee for compliance. Therefore, there is no justification in the averment of assessee before ld. CIT(Appeals) that sufficient opportunity was not given by AO, therefore additional evidence should be admitted. We are constrained to observe that ld. CIT(Appeals) has admitted the additional evidence in a perfunctory manner without appreciating the role of rule 46A and its requirements and verifying assessee’s averments.
6.2. Ld. CIT(Appeals) has failed to give any satisfactory reasons for exercising his powers u/s 46A. Hon’ble Delhi High Court in the case of Manish Build Well Pvt. Ltd. (supra) has emphasized the mandatory characteristics of this rule and the scruples to be applied while entertaining such additional evidence. We may further add that the documents admitted by ld. CIT(Appeals) are foreign documents and are not verified properly. Besides, the AO’s objection about charging huge premium remains unanswered. In our view, ld. CIT(Appeals) ought not have admitted this additional evidence inasmuch as there was no ground raised by the assessee about extension of time or opportunity.
6.3. CIT(Appeals) except relying on such evidence has not recorded any cogent reasons for giving outright relief. In view thereof we are inclined to set aside the matter back to the file of ld. CIT(Appeals) to decide the same afresh after calling the assessment record for his perusal and decide the contention of the assessee on the basis of material available on record. In view thereof ground no. 2 of the revenue is allowed for statistical purposes.
6.4. Apropos ground no. 3 i.e. operational expenses, in our view the ld. CIT(Appeals) has not given proper reasons for deleting the addition. The interest of justice would be met if the ld. CIT(Appeals) decides the same on merits after perusing the original assessment record as directed above. In view thereof, this ground of appeal taken by the revenue is also allowed for statistical purposes.
7. In the result, revenue’s appeal is allowed for statistical purposes as indicated above.
Order pronounced in open court on 11-05-2012.
Sd/- Sd/-
(A.N. PAHUJA) (R.P. TOLANI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:11-05-2012.
MP
Copy to:
1. Assessee
2. AO
3. CIT
4. CIT (A)
5. DR
| ||||||||||||||||
| Tags :- giving proper opportunity additional cannot admitted per sec rule 46a except presence sufficient causepreventing give earlier | ||||||||||||||||
You need to be logged in to post comment | ||||||||||||||||
After providing all information asked by ITO production of Books of Accounts under sec 44AD is not compulsory
| Posted on 01 June 2012 by Diganta Paul | |
Court
INCOME TAX APPELLATE TRIBUNAL
Brief
The brief facts of this issue are that while doing the scrutiny assessment AO observed that “the assessee firm vas engaged in the business of developing and promoting. During the course of hearing, Sri Chakraborty, A/r of the firm, furnished various information as and when called for, however, he did not produce the books of accounts whenever called for. He was requested to produce books of accounts during the course of hearing on 14- 10-09, 1611-09, 25-11-2009 and 14-12-09. But everytime he took the plea of producing the same at the time of next hearing. Finally, during the course of hearing on 22-12-09, he filed a letter stating that the firm was covered by the provisions of section 44AD of the I.T.Act and maintenance of books was not mandatory. It was specifically asked whether the firm was maintaining books. In reply, he stated that requisition of hooks from an assessee covered u/s 44AD was not necessary. Then he was asked as to wherefrom he had filed all the information and what was the basis of the information filed by him, if books of accounts were not maintained. He stated that the information was kept for smooth running of the business but as the firm as covered u/s 44AD, production of books was not compulsory
Citation
I.T.O., Ward-28(1), Kolkata. (APPELLANT) Versus- M/s.Mark Construction, Kolkata (PAN: AAHFM 4469 J) (RESPONDENT) C.O. No.28/Kol/2011 A/o ITA No.602/Kol/2011 Assessment Year: 2007-08 M/s. Mark Construction, Kolkata. (PAN: AAHFM 4469 J) (APPELLANT) Versus I.T.O., Ward-28(1), Kolkata. (RESPONDENT)
Judgement
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “A”, KOLKATA
Before Shri Mahavir Singh, Judicial Member.
and
Shri C.D.Rao, Accountant Member
ITA No.602/Kol/2011
Assessment Year: 2007-08
I.T.O., Ward-28(1), Kolkata.
(APPELLANT)
Versus-
M/s.Mark Construction,
Kolkata
(PAN: AAHFM 4469 J)
(RESPONDENT)
C.O. No.28/Kol/2011
A/o ITA No.602/Kol/2011
Assessment Year: 2007-08
M/s. Mark Construction, Kolkata.
(PAN: AAHFM 4469 J)
(APPELLANT)
Versus
I.T.O., Ward-28(1),
Kolkata.
(RESPONDENT)
For the Department: Shri Amitabha Roy
For the Assessee: Shri S.Chakraborty
Date of Hearing: 03.05.2012.
Date of Pronouncement: 11.05.2012.
ORDER
Per Shri C.D.Rao, AM
The above two appeals one filed by the Revenue and the Cross Objection filed by the assessee are against order dated 04.08.2010 of the CIT(A)-XIV, Kolkata pertaining to A.Yr. 2007-08.
2. The only issue raised by the revenue is relating to deletion of addition of Rs.32,62,140/- made by AO u/s 40(a)(ia) of the IT Act.
3. The brief facts of this issue are that while doing the scrutiny assessment AO observed that “the assessee firm vas engaged in the business of developing and promoting. During the course of hearing, Sri Chakraborty, A/r of the firm, furnished various information as and when called for, however, he did not produce the books of accounts whenever called for. He was requested to produce books of accounts during the course of hearing on 14- 10-09, 1611-09, 25-11-2009 and 14-12-09. But everytime he took the plea of producing the same at the time of next hearing. Finally, during the course of hearing on 22-12-09, he filed a letter stating that the firm was covered by the provisions of section 44AD of the I.T.Act and maintenance of books was not mandatory. It was specifically asked whether the firm was maintaining books. In reply, he stated that requisition of hooks from an assessee covered u/s 44AD was not necessary. Then he was asked as to wherefrom he had filed all the information and what was the basis of the information filed by him, if books of accounts were not maintained. He stated that the information was kept for smooth running of the business but as the firm as covered u/s 44AD, production of books was not compulsory.”
3.1. After analyzing the material filed by assessee he came to the conclusion that “It is evident that originally the return was filed according to the books of accounts maintained, and later on when justifying certain actions became difficult, section 44AD was brought into the picture. It is not acceptable that the firm does not maintain any books of accounts when the A/r had famished lots of information at. the time of filing return as well as at the time of scrutiny proceedings. Ii. is only to avoid the liability of deducting lax at source that the aspect of section 44AD has been brought into picture. So, keeping in view the discussion above and the facts and circumstances of the case, the contention of the A/r is not tenable, hence rejected. Now, let us come to the findings in the case. The assessee firm had made certain payments to the following parties during the entire financial year against which tax was required to be deducted at source:
Name Amount Nature of Business
1. M/s,Aashirbad Developers Rs.24,50,000/- Labour Contract
2. M/s.OTIS Rs.1,16,000/- -do-
3. Sri Biprodas Banerjee Rs.1,00,000/- -do-
4. Shri Kabir Ali Rs.1,18,000/- -do-
5. Shri Abdul Kadir Rs.65,000/- -do-
6. Shri A.Bhuniya Rs.70,000/- -do-
7. M/s.C.Electric Rs.50,000/- -do-
8. Sri P.K.Sengupta Rs.1,00,000/- -do-
9. Sri Bapi Debnath Rs.93,140/- Professional fees
Total: Rs,32,62,140/-
The nature of transaction mentioned against the parties mentioned in SI. Nos. 1 to 8 is basically contractual in nature and TDS was required to be made u/s 194C and regarding payments made to Sri Bapi Debnath, who is an Advocate, TDS was required to be made u/s 194J. As the assessee firm had failed to deduct tax on the payments made as referred to above, provisions of section 40(a)(ia) are applied and the entire amount of Rs.32,62,140/- is being disallowed. “
3.2. On appeal the ld. CIT(A) has deleted the same by observing as under :-
“4. I have carefully considered all the facts and circumstances of this case. It is seen that the assessee is involved in the business of developing residential flats and also carrying out certain miscellaneous civil construction work. In the P & L A/c of the assessee for financial year 2006-07 on the receipt side following two entries are made. By, bill collection for job contract 19,71,112.00 By, stock/work-in-progress 65,45,500.00 Thus the assessee is engaged in the business of civil construction as mentioned in section 44AD. Now the important question is whether the gross receipt paid or payable to the assssee in the previous year on account of such business is Rs.40,00,000/- or less or not. It is seen that the work-in-progress of Rs. 65,45,500/- has been shown by the assessee for the residential flats which are being constructed by it but which were not complete by the end of the previous year under consideration. The assessee has claimed that the construction of these flats was completed in the next financial year and thereafter only the possession was handed over to the buyers. Thus it can be accepted that the partly constructed flats were work-in-progress for the assessee and the money received from the buyers for these flats was an advance and not a receipt for the previous year under consideration. This fact has not been disputed by the A.O. also in the assessment order. Thus the amount of Rs. 65,45,500/- cannot be considered gross receipt paid or payable to the assessee for the previous year under consideration. Therefore, the gross receipt of the assessee for the previous year will be Rs. 19,71,112/- which is related to job contract receipts and which is less than Rs. 40,00,000/. Since the assessee is engaged in the business of civil construction and its gross receipts for the previous year under consideration are less than Rs. 40,00,000/- therefore, its case is covered by provisions of Section 44AD. If we consider from the angle of section 44AD the assessee has declared net profit of Rs. 1,64,814/- consisting of interest on capital paid to partners amounting to Rs. 37,536/-, partners salary of Rs. 1,16,000/- and net profit of Rs. 11,278/-. This comes to 8 .4% of the gross receipt of Rs. 19,71,112/-. Since the assessee has shown net profit more than 8% of the gross receipt therefore, he has satisfied the special requirement laid down u/s 44AD and its income cannot be increased beyond this amount disclosed by it. The opening lines of section 44AD state as follows:
“Notwithstanding anything to the contrary contained in sections 28 to 43C, in the………………………………………………”
This means that while calculating 8% of the gross receipt of the assessee all the deductions to be allowed or disallowed as provided in section 28 to section 43C are considered to have been taken into consideration. If the assessee has shown more than this 8% in its return then that higher value is to be adopted. In the facts of the above case the 8% of gross receipts comes to Rs. 1,57,689/- and the profit declared by the assessee is Rs. 1,64,814/-. Therefore, the profit of Rs. 1,64,814/- declared by the assessee is to be adopted uls 44AD and there will not be any scope for making addition u/s 40(a)(ia). The argument of the A.O. that the assessee has got its account audited and has prepared proper P & L A/c and Balance Sheet therefore, its case will not be covered u/s 44AD is not acceptable. For the assessees covered by the provisions of Sec. 44AD the law does not require the assessee to maintain books of accounts u/s 44AA and audit its accounts u/s 44AB. However, if the assessee has done so it cannot be held against the assessee. Similarly, if the assessee has mentioned certain details about his financial transactions in the return of income on the basis o{ books of accounts maintained by it, it cannot be used as an evidence against the assessee.”
3.3. Aggrieved by this now the revenue is in appeal before us.
4. At the time of hearing the ld. DR appearing on behalf of the revenue relied on the orders of AO and submitted that since AO has derived information submitted by assessee himself though the provision of section 44AD of the Act is applicable in the present case. Assessee has violated the provision of section 194C of the Act to recover tax from nine parties as recorded by AO in the assessment order. Therefore addition made by AO u/s 40(a)(ia) of the IT Act is sustainable. The deletion made by ld. CIT(A) is not in accordance with law. Therefore he request to reverse the order of ld. CIT(A) and restore that of AO.
5. On the other hand, the ld. Counsel appearing on behalf of assessee has heavily relied on the order of ld. CIT(A)and further pointed out point-wise replies to the queries and observations made by AO which were incorporated by CIT(A) at pages 6,7 and 8 and finally concluded that since assessee is covered by the provision of section 44AD of the Act the law does not require to maintain books of accounts u/s 44AA of the Act and audit its accounts u/s 44AB of the Act. However, if the assessee has done so it cannot be held against the assessee. Similarly, if the assessee has mentioned certain details about his financial transactions in the return of income on the basis of the books of accounts which cannot be used as an evidence against the assessee. Therefore he requested to upheld the action of ld. CIT(A).
6. After hearing the rival submissions and on careful perusal of materials available on record, it is observed that the observations made by ld. CIT(A) in the impugned order which are incorporated in the preceding paragraphs, in our opinion, is in accordance with law. In the case of CIT vs Surendra Paul reported in 242 CTR 61 (P&H) the Hon’ble Punjab and Haryana High Court has held that once under the special provision of section 44AD of the IT Act exemption from maintenance of books of accounts have been provided and the presumptive tax at 8% of the gross receipts itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposits in the bank unless such entries had no nexus with the gross receipts. In the present case though from the details filed by assessee the ld. AO observed that no TDS has been recovered, in our opinion, since assessee has disclosed the profits more than 8% of the gross receipts and there is no dispute in receipt of the gross receipts the addition made by ld. CIT(A) u/s 40(a)(ia) of the IT Act is not sustainable. Therefore we confirm the action of ld. CIT(A) and dismiss the appeal of the revenue.
7. In respect of Cross Objection raised by assessee we are of the view that since the Cross Objection is in support of the order of ld. CIT(A) and we have confirmed the order of ld.CIT(A) the cross objection of assessee becomes infractuous and the same is hereby dismissed as being infractuous.
8. In the result the appeal of the revenue as well as the Cross Objection are dismissed.
Order pronounced in the court on 11.05.2012.
Sd/- Sd/-
Mahavir Singh, C.D.Rao,
Judicial Member Accountant Member
.
Date: 11.05.2012.
R.G. (.P.S.)
Copy of the order forwarded to:
1. M/s.Mark Construction, 20, Purna Ch Mitra Lane, Kolkata-700033.
2 The I.T.O., Ward-28(1), Kolkata.
3. The CIT,
4. The CIT (A)-XIV, Kolkata.
5. DR, Kolkata Benches, Kolkata
True Copy,
By order,
Deputy /Asst. Registrar, ITAT, Kolkata Benches
|
 | As per Rule 22 CPC the Respondend can resist the appeal for reduction of compensation without filling any cross objection |
| Posted on 01 June 2012 by Diganta Paul | |
Court
HIGH COURT OF DELHI
Brief
The first Respondent (the Claimant) by virtue of the provision of Order XLI Rule 22 CPC can resist the Appeal for reduction of compensation on other grounds without filing of any Cross Appeal or Cross Objections. The question of resisting the Appeal on quantum of compensation awarded by the Claims Tribunal without filing any Cross Appeal or Cross Objection was considered by three Judge Bench in Jayakodi & Ors. v. Branch Manager, NIC & Anr., Civil Appeal No.401/2008 (arising out of SLP (Civil) No.13746/2004 decided on 11.01.2008). The Supreme Court held that the Court can change the compensation under various heads so long as the compensation is not reduced in an Appeal filed by the Claimant
Citation
ICICI LOMBARD GENERAL INSURACE CO LTD..... Appellant Through Ms. Suman Bagga, Advocate Versus SWATANTRATA SHARMA & ORS..... Respondents Through Mr. S. Tomar, Advocate for the Respondent No.1.
Judgement
* IN THE HIGH COURT OF DELHI AT New Delhi
Date of decision: 10th May, 2012
+ MAC.APP. 427/2011
ICICI LOMBARD GENERAL INSURACE CO LTD..... Appellant
Through Ms. Suman Bagga, Advocate
Versus
SWATANTRATA SHARMA & ORS..... Respondents
Through Mr. S. Tomar, Advocate for the Respondent No.1.
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
J U D G M E N T
G. P. MITTAL, J. (ORAL)
1. The Appeal is for reduction of compensation of `14,19,000/- awarded by the Motor Accident Claims Tribunal (the Claims Tribunal) for the injuries suffered by Swatantrata Sharma, the First Respondent in a motor accident which occurred on 04.02.2009.
2. The only ground of challenge is that out of an amount of `11,50,000/- awarded towards medical treatment, special diet and conveyance, a sum of `4,35,000/- was reimbursed to the First Respondent under the mediclaim policy.
3. It is urged that the said benefit having accrued to the First Respondent on account of the injuries sustained in the accident, the same was liable to be deducted from the cost of treatment paid to the First Respondent.
4. On the other hand, it is urged by the learned counsel for the First Respondent that an amount of `4,35,000/- was paid by the Insurance Company on account of obtaining a mediclaim policy for which the First Respondent paid the premium. The Appellant being a tortfeasor cannot get any benefit from the policy obtained by the First Respondent.
5. It is urged that the compensation awarded towards permanent disability on assuming the income of `3,000/- (towards gratuitous services rendered by a housewife) on the basis ofLata Wadhwa & Ors. v.State of Bihar & Ors., (2001) 8 SCC 197 is on the lower side. It is urged that this accident occurred in the year 2009 whereas in Lata Wadhwa (supra) the accident occurred in the year 1989.
6. This Appeal is squarely covered by a judgment of this Court in MAC APP.191/2010 titledBajaj Allianze General Insurance Co. Ltd. v. Ganpat Rai Sehgal & Ors. decided on 03.01.2012 wherein this Court noticed United India Insurance Co. Ltd. v. Patricia Jean Mahajan (2002) 6 SCC 281; Gobald Motor Service Ltd. & Anr. v. R.M.K. Veluswami and Ors., AIR 1962 SC 1; Helen C. Rebello v. Maharashtra S.R.T.C., (1999) 1 SCC 90; Jitendra v. Rahul (2008) (5) MPHT 336; and Udam Singh Sethi v. Tamal Das and Ors. MAC. APP. No. 369/2006 decided on 26.10.2009; and held that the Claimant would not be entitled to the medical expenditure which has been reimbursed to him under the mediclaim policy.
7. Thus, a Claimant who has been reimbursed for the medical expenditure incurred by him (due to a motor accident) through his mediclaim policy, will not be again entitled to claim compensation for the same from the insurer of the offending vehicle, in a claim filed under the Motor Vehicles Act.
8. Applying the same principle to the instance case, the first Respondent cannot benefit twice i.e. she cannot recover the compensation from the tortfeasor for which she has already been compensated by her mediclaim policy. Therefore, the Claims Tribunal erred in not deducting a sum of `4,35,000/- which was admittedly paid to the first Respondent under the mediclaim policy. The said amount is liable to be deducted from the amount of ` 11,50,000/- paid towards the medical treatment.
9. The Claims Tribunal awarded a compensation of `1,44,000/- taking 45% disability in respect of right lower limb to be 50% disability in carrying out normal household work by the first Respondent. The same is not disputed by the Appellant during the course of arguments.
10. The value of domestic services rendered by a housewife was dealt with at great length by this Court in Royal Sundaram Alliance Insurance Co. Ltd. v. Master Manmeet Singh & Ors., MAC.APP. 590/2011, decided on 30th January, 2012. This Court noticed the following judgments of the Supreme Court:-
(i) General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors. (1994) 2 SCC 176,
(ii) National Insurance Company Limited v. Deepika & Ors., 2010 (4) ACJ 2221,
(iii) Amar Singh Thukral v. Sandeed Chhatwal, ILR (2004) 2 Del 1,
(iv) Lata Wadhwa & Ors. v. State of Bihar & Ors., (2001) 8 SCC 197,
(v) Gobald Motor Service Ltd. & Anr. v. R.M.K. Veluswami & Ors., AIR 1962 SC 1,
(vi) A. Rajam v. M. Manikya Reddy & Anr., MANU/AP/0303/1988,
(vii) Morris v. Rigby (1966) 110 Sol Jo 834 and
(viii) Regan v. Williamson 1977 ACJ 331 (QBD England),
and laid down the principle for determination of loss of dependency on account of gratuitous services rendered by a housewife. Para 34 of the judgment in Master Manmeet Singh (supra) is extracted hereunder:-
“34. To sum up, the loss of dependency on account of gratuitous services rendered by a housewife shall be:-
(i) Minimum salary of a Graduate where she is a Graduate.
(ii) Minimum salary of a Matriculate where she is a Matriculate.
(iii) Minimum salary of a non-Matriculate in other cases.
(iv) There will be an addition of 25% in the assumed income in (i), (ii) and (iii) where the age of the homemaker is upto 40 years; the increase will be restricted to 15% where her age is above 40 years but less than 50 years; there will not be any addition in the assumed salary where the age is more than 50 years.
(v) When the deceased home maker is above 55 years but less than 60 years; there will be deduction of 25%; and when the deceased home maker is above 60 years there will be deduction of 50% in the assumed income as the services rendered decrease substantially. Normally, the value of gratuitous services rendered will be NIL (unless there is evidence to the contrary) when the home maker is above 65 years.
(vi) If a housewife dies issueless, the contribution towards the gratuitous services is much less, as there are greater chances of the husband’s re-marriage. In such cases, the loss of dependency shall be 50% of the income as per the qualification stated in (i), (ii) and (iii) above and addition and deduction thereon as per (iv) and (v) above.
(vii) There shall not be any deduction towards the personal and living expenses.
(viii) As an attempt has been made to compensate the loss of dependency, only a notional sum which may be upto ` 25,000/- (on present scale of the money value) towards loss of love and affection and ` 10,000/- towards loss of consortium, if the husband is alive, may be awarded.
(ix) Since a homemaker is not working and thus not earning, no amount should be awarded towards loss of estate.”
11. There is no evidence as to the qualification of the first Respondent. Thus, the minimum wages of a non-Matriculate have to be considered for the grant of compensation which were `4129/- per month on the date of the accident. Moreover, she was aged 59 years and therefore, there shall be deduction of 25% as per clause (v) above.
12. Thus, in view of above, the compensation towards loss of earning capacity comes to `1,67,224/- (4129/- - 25% x 1/2 x 12 x 9) instead of `1,44,000/-
13. It is urged by the learned counsel for the Appellant that without any Cross Objections, the first Respondent cannot be granted any enhancement.
14. The first Respondent (the Claimant) by virtue of the provision of Order XLI Rule 22 CPC can resist the Appeal for reduction of compensation on other grounds without filing of any Cross Appeal or Cross Objections. The question of resisting the Appeal on quantum of compensation awarded by the Claims Tribunal without filing any Cross Appeal or Cross Objection was considered by three Judge Bench in Jayakodi & Ors. v. Branch Manager, NIC & Anr., Civil Appeal No.401/2008 (arising out of SLP (Civil) No.13746/2004 decided on 11.01.2008). The Supreme Court held that the Court can change the compensation under various heads so long as the compensation is not reduced in an Appeal filed by the Claimant. The relevant portion of the report is extracted hereunder:
“5……..When an appeal is filed by claimants claiming enhancement, the appellate court will calculate the just compensation, in accordance with law. If the amount so calculated is in excess of what is awarded, the difference is awarded as additional compensation. If the amount calculated is found to be less than or equal to the amount awarded by the court below, then the amount awarded by the court below is maintained. But there cannot be any objection for recalculation of compensation under various heads in accordance with law. So long as the total amount awarded is not less than what is awarded by the court below, there cannot be any objection if the amount is reduced under any particular head.”
15. Thus, without filing any cross objections, the first Respondent can resist the Appeal for reduction of compensation on the ground that may be available to him.
16. In view of the above discussion, there is overall reduction of `4,11,776/- in the compensation. (4,35,000/- + 1,44,000/- - 1,67,224/-).
17. The amount of `4,11,776/- along with interest as awarded by the Claims Tribunal and the interest accrued during the pendency of the Appeal shall be refunded to the Appellant Insurance Company. Rest of the amount shall be disbursed to the first Respondent in terms of the order passed by the Claims Tribunal.
18. The statutory amount of `25,000/- be refunded to the Appellant Insurance Company.
19. The Appeal is allowed in above terms.
(G.P. MITTAL)
JUDGE
|
No comments:
Post a Comment