# Umang Agarwal v. The Commissioner of Income Tax Central Circle & Anr

- **Citation:** (2025) 3 ILRA 500
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-03-26
- **Case number:** Income Tax Appeal No. 86 of 2015
- **Bench:** Shekhar B. Saraf, Kshitij Shailendra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/umang-agarwal-v-the-commissioner-of-income-tax-central-circle-anr-53217
- **Pages:** 6

## Headnote

Tax Law - Income-tax Act, 1961 - Sections
143 & 263 - Against order of Tribunal -
Assessee
paid
advance
tax
of
Rs.5,71,000/-
on
14.03.2002,
search
operation conducted by Department on
04.09.2002, wherein account books and
other documents seized - 31.10.2002 was
due date for filing return for Financial
Year 2001-2002, (Assessment Year 20022003), however, seized materials and
books
received
from
Department
on
05.07.2004,
assessee
filed return
on
01.09.2004 after obtaining audit report,
block
assessment
order
passed
on
30.09.2004 - Regular assessment order
passed on 29.03.2006, challenged before
CIT on 16.08.2005 - Allowed holding that
provisions of Section 158 - BB(1)(c) would
apply in favour of assessee - Challenged
before
Tribunal,
order
modified
with
certain directions to Assessing Officer -
Held, Tribunal failed to examine entire
facts and circumstances of case but
treated finding of 'non-est' made by High
Court as final which was merely an obiter
and consequence thereof appears that
assessee taxed twice i.e. in regular
proceedings and block assessment for
relevant period - Impugned order set
aside, matter remanded. (Para 4, 10, 15)

Appeal allowed. (E-13)

## Text

500 INDIAN LAW REPORTS ALLAHABAD SERIES
22. In this regard, it would be apt
to refer to the judgment of the Apex Court
in the case of United India Insurance Co.
Ltd Vs. Gian Chand and Ors- (1997) 7
SCC 558 wherein it has been held as
under:-

"10...........it
has
been
clearly held by the Tribunal as well
as
by
the
High
Court
that
respondent No.1 who was permitted
to drive the vehicle by respondent
No.9, the insured, was admittedly
not having any driving licence. It
was not the case of respondent
No.9, the insured, that he did not
know that respondent No.1 whom
the vehicle was being handed over
was not having a valid licence. In
fact, once he did not step in the
witness box to prove his case, an
adverse inference had necessarily
to be drawn against him to the
effect that the vehicle had been
handed over by him for being
driven by an unlicensed driver,
respondent No.1.....
(emphasis by the Court)

23. From a perusal of the aforesaid
judgment it emerges that in case the
appellant was asserting that the vehicle was
being driven by Sri Siraju who was having
a valid driving license consequently, he
should have stepped in the witness box to
prove his case and not having done so an
adverse interference was necessarily to be
drawn against him to the effect that the
vehicle was being driven by an unlicensed
driver.

24. So far as the judgment of this
Court in the case of Jai Deo Singh (supra)
is concerned, suffice it to say that in the
said case before the learned tribunal, an
application was filed by the owner of the
vehicle per which the owner had indicated
the name of the driver as Sri Anuj Kumar
Bajpai who was possessing a valid driving
license but the learned tribunal did not
consider that aspect of the matter but
considered the name of driver indicated in
the charge sheet.

25. As already indicated above,
there was no evidence before the learned
tribunal to indicate that the driver of the
vehicle on the fateful day was Sri Siraju
who was a valid driving license more
particularly when the name of the driver of
the vehicle was suppressed by the owner of
the vehicle while filing the written
statement. Thus, the judgment of Jai Deo
Singh (supra) would have no applicability
in the instant case.

26. Keeping in view the aforesaid
discussion, no case for interference is
made out. Accordingly, the appeal is
dismissed.
----------
(2025) 3 ILRA 500
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.03.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE KSHITIJ SHAILENDRA, J.

Income Tax Appeal No. 86 of 2015

Umang Agarwal ...Appellant
Versus
The Commissioner of Income Tax Central
Circle & Anr. ...Respondents

Counsel for the Appellant:
Rakesh Ranjan Agarwal, Suyash Agarwal

Counsel for the Respondents:
C.S.C., Shubham Agarwal
3 All. Umang Agarwal Vs. The Commissioner of Income Tax Central Circle & Anr.
501
Tax Law - Income-tax Act, 1961 - Sections
143 & 263 - Against order of Tribunal -
Assessee
paid
advance
tax
of
Rs.5,71,000/-
on
14.03.2002,
search
operation conducted by Department on
04.09.2002, wherein account books and
other documents seized - 31.10.2002 was
due date for filing return for Financial
Year 2001-2002, (Assessment Year 20022003), however, seized materials and
books
received
from
Department
on
05.07.2004,
assessee
filed return
on
01.09.2004 after obtaining audit report,
block
assessment
order
passed
on
30.09.2004 - Regular assessment order
passed on 29.03.2006, challenged before
CIT on 16.08.2005 - Allowed holding that
provisions of Section 158 - BB(1)(c) would
apply in favour of assessee - Challenged
before
Tribunal,
order
modified
with
certain directions to Assessing Officer -
Held, Tribunal failed to examine entire
facts and circumstances of case but
treated finding of 'non-est' made by High
Court as final which was merely an obiter
and consequence thereof appears that
assessee taxed twice i.e. in regular
proceedings and block assessment for
relevant period - Impugned order set
aside, matter remanded. (Para 4, 10, 15)

Appeal allowed. (E-13)
(Delivered by Hon'ble Kshitij Shailendra, J.)

1. Heard Shri Manish Goyal, along
with Shri Rakesh Ranjan Agrawal, both
learned Senior Advocates, assisted by Shri
Suyash Agarwal and Shri Nitin Kumar
Kesarwani for the appellant and Shri
Ashish Agrawal, learned counsel for the
respondent-Income Tax Department.

2. The instant appeal under Section
260-A of the Income Tax Act, 1961 (in
short 'the Act') has been filed by the
assessee challenging the judgement and
order dated 25.08.2014 whereby the
Income Tax Appellate Tribunal, Allahabad
Bench, Allahabad has partly allowed ITA
No.464/Alld./2005 for block period w.e.f.
01.04.1996 to 04.09.2002 modifying the
order u/s 263 of the Act and with certain
directions to the Assessing Officer.

3. We may mention here that the
Tribunal has decided the appeal pursuant to
an order dated 16.05.2014 passed by this
Court whereby Income Tax Appeal No.422
of 2006 [The Commissioner of Income Tax
(Central), Kanpur vs. Shri Umang Agarwal]
was allowed and the matter was remanded
to the Tribunal for fresh consideration. The
assessee, being aggrieved by certain
observations made in the order of remand,
filed a Civil Misc. Review Application
No.203788 of 2014 seeking review of the
order dated 16.05.2014, however, during
the pendency of the review application and
in absence of any interim order passed
therein, the order of remand was given
effect to and, consequently, the Tribunal
proceeded to decide the appeal by the order
impugned in the instant appeal. We have
rejected the aforesaid review application
today itself by making certain observations
in the light whereof we would decide the
instant appeal on its own merits.

4. Brief facts giving rise to the
appeal are that the assessee had paid
advance
tax
of
Rs.5,71,000/-
on
14.03.2002,
a
search
operation
was
conducted
by
the
Department
on
04.09.2002 wherein account books and
other documents of the applicant were
seized. 31.10.2002 was the due date for
filing return for the Financial Year 20012002,
(Assessment
Year
2002-2003),
however, since the account books were
seized by the Department prior to the said
due date and the seized materials and books
were received from the Department on
05.07.2004, the assessee filed return under
Section 143 of the Act of 1961 on
502 INDIAN LAW REPORTS ALLAHABAD SERIES
01.09.2004 after obtaining audit report,
whereafter block assessment order was
passed on 30.09.2004; regular assessment
order was passed on 29.03.2006 which was
assailed before the CIT (Central) Kanpur
on 16.08.2005 by way of appeal. The
appeal was allowed in favour of the
assessee
on
26.06.2006 holding
that
provisions of Section 158-BB(1)(ca) would
apply in favour of the assessee.

5. The instant appeal was admitted
by order dated 19.01.2018 on the questions
of law framed in its memo which are
reproduced as under:-

"(i) Whether on the facts
and circumstances of the case the
ITAT was correct to hold that the
return for A.Y. 2002-03 filed on
01.09.2004 was non-est, ignoring
the delay in filing the return was
not attributable to the appellant
rather to the department as having
supplied photocopies of the seized
materials and books of accounts on
05.07.2004, seized on the date of
search dated 04.09.2002 under
Section 132 of the Act?

(ii) Whether the ITAT was
correct to allow the relief for A.Y.
2002-03 to the extent of the
advance tax paid amounting to
Rs.5,71,000/-, ignoring that the
return filed on 01.09.2004 was
regularized
by
the
Assessing
Officer under Section 143/148 of
the Act by order dated 29.03.2006
and charged the interest under
Section 234A (Rs.5,51,611/-), 234B
(Rs.10,25,118/-) and 234C (Rs.
73,418/-) totalling Rs. 16,50,147/-
as per computation form of A.O.
dated 29.03.2006?"
6. Shri Manish Goyal, learned
Senior Advocate submits that the Tribunal
has dismissed the appeal for the reason that
this Court, by order dated 16.05.2014, had
held ITR filed on 01.09.2004 as 'non-est'
although, in the facts of the case where the
seized account books and other materials
were released in favour of the assessee on
05.07.2004, prior whereto, there was no
occasion for the assessee to file return.
Submission is that if had the Tribunal
analyzed
all
the
material
facts
and
circumstances of the case, the result would
have been in favour of the assessee. He has
referred to 'paragraph 8.3' of the impugned
judgement and submits that since the
Tribunal could not go beyond the decision
of this Court, the assessee had no option
but to file a review application as well as
the instant appeal and both have to be seen
and decided in the light of totality of facts
and circumstances including the chain of
events that had taken place.

7. Per contra, Shri Ashish Agrawal,
learned counsel for the Department submits
that the Assessing Officer had made
assessment
for
block
period
w.e.f.
01.04.1996 to 04.09.2002 by his order
dated 30.09.2004, categorically recording
that seized materials were handed over by
Investigating Wing, Allahabad and on
09.09.2003, whereafter, by an order dated
05.12.2003, assessee was called upon to
inspect the seized material and obtain
photocopy thereof. The assessment order
further
records
that
inspection
and
photocopying work was carried out w.e.f.
31.12.2003 to 28.05.2004, print outs of
CPUs and floppies seized were carried out
in the presence of the assessee's authorized
representative and two witnesses, a notice
under Section 158-BC was issued to the
assessee on 08.06.2004 requiring him to
prepare a true and correct return of his total
3 All. Umang Agarwal Vs. The Commissioner of Income Tax Central Circle & Anr.
503
income in the prescribed form and to
deliver the same in the Department's Office
within twenty days; such notice was served
upon assessee on 09.06.2004; the assessee
requested for extension of time for filing
return, which extension was granted to him
upto 45th day i.e. 24.07.2004, however, no
return was filed by that date. Shri Agrawal
further submits that the assessee was not
co-operative in the proceedings and had
taken much time in inspection and
photocopying work, which continued for
about five months. By referring to the
computations made by the Assessing
officer in his order dated 30.09.2004, it is
urged that in the Assessment Year 20022003, total income of the assessee was
shown as Rs.1,08,03,703/-, his disclosed
income
being
Rs.53,27,810/-
and
undisclosed income Rs. 54,75,893/- and,
accordingly, the block assessment was done
in accordance with law. Referring to the
order dated 16.08.2005 passed under
Section 263 of the Act, it is urged that CIT
(Central) Kanpur found the return under
Section 139 as non-est and the assessment
order dated 30.09.2004 was set aside on a
limited issue of redetermination of the
undisclosed income for the Assessment
Year 2002-2003. Submission is that the said
order was set aside by this Court after
considering the entire facts of the case and,
since, this Court had remanded the matter
to the Appellate Tribunal, the Tribunal was
bound to act accordingly and if it has partly
allowed the appeal, no error has been
committed by it.

8. Having heard learned counsel
for the parties, we may mention that while
deciding the review application today itself,
as far as the observation of this Court in the
order dated 16.05.2014 regarding ITR
under Section 139 as 'non-est', we have
observed as under:-
"14.
Insofar
as
the
observation of this court that ITR
filed under Section 139 of the Act
had become 'non-est', we find that
the same was not the ratio or the
conclusion drawn by this Court,
otherwise there was no necessity to
remand the matter to the Appellate
Tribunal. The said observation
appearing at 'internal page No.5' of
the order sought to be reviewed can
either be treated as an argument
advanced
on
behalf
of
the
Department or, if not, it can be
treated as an 'obiter.' It was infact a
passing remark made by the Court
during the course of deciding the
appeal and, therefore, when the
matter
was
remanded
to
the
Appellate Tribunal, it cannot be
said that this Court had expressed
any final opinion regarding ITR
under Section 139 as "non-est".
15. In the facts of the case,
it has to be seen as to when the due
date for filing return i.e. 31.10.2002
had lapsed but, prior thereto,
account books and other material of
the
assessee
were
seized
on
01.09.2002 and when the block
assessment
was
being
done,
whether it was at all necessary for
the assessee to file a belated return
after the seized material was
released in favour of the assessee or
if at all it was filed, whether such
filing could be fatal to his case or
whether the assessee was precluded
from filing return though inspection
was facilitated to him. The inter-se
connection
between
regular
proceedings
vis-a-vis
block
assessment proceedings in the
peculiar facts of the case, is a
question that has relevance so as to
504 INDIAN LAW REPORTS ALLAHABAD SERIES
adjudge
the
issue
of
double
jeopardy allegedly faced by the
assessee, as argued on his behalf."

9. We have also held in the order
deciding review application that the instant
appeal shall be decided on its own merits
but keeping in view the effect of the
observation made by this Court as regards
ITR being 'non-est'.

10. In view of the above, we are of
the view that the Tribunal was not justified
in treating the observation as 'non-est' as a
finding against the assessee and, therefore,
when we peruse 'paragraph 8.3' of the
impugned judgement, we find force in the
submission of Shri Goyal that the Tribunal
has failed to examine the entire facts and
circumstances of the case but has treated
the finding of 'non-est' as final and the
consequence thereof appears to be that the
assessee has been taxed twice i.e. in regular
proceedings as well as those relating to
block assessment for the relevant period.
We may refer 'paragraph 8.3' of the
impugned judgement which reads as
under:-

"8.3. It is admitted fact that
when the search was conducted on
04.09.2002, the return for the
assessment year 2002-2003 was not
due on the date of the search and
due date of filing of the return u/s.
139(1) for the assessment year
2002-2003 was 31.10.2002 and the
said period had not expired on the
date of search. It is also undisputed
fact that the assessee applied for
copies of seized books of account
and
other
documents
to
the
Revenue Authorities after search
and
after
preparation
of
panchnamas etc., the copies of the
seized documents were applied to
the
assessee
on
05.07.2004.
Though the return of income
filed for the assessment year
2002-2003 on 01.09.2004 was
non-est u/s. 139 (1) as was also
held by Hon'ble High Court but
the fact remains that the delay in
filing such non-est return was not
solely attributable to the assessee.
Any how such reason may not be
relevant u/s. 139(1). Since it was
already held by Hon'ble High
Court that the return for the
assessment year 2002-2003 was
non-est, therefore, no further
finding would be required. It is
also
admitted
fact
that
the
assessee's
application
before
Settlement Commission has already
been rejected. Therefore, no such
application was pending and filing
of application before Settlement
Commission
would
have
no
bearing on the issue. The CPU for
F.Y. 2001-2002 as seized was later
on examined as per Panchnamas
and the assessee also filed return
for the assessment year 2002-03
later on and amount of dispute is
certain
at
Rs.53,27,810/-.
Therefore, it would have no bearing
on the issue u/s. 263 of the IT Act.
It is a fact that when the AO framed
block
assessment
order
on
30.09.2004, the return for the
assessment year 2002-2003 was
within the knowledge of the AO as
was filed on 01.09.2004."

11. The Tribunal in 'paragraph 8.3'
of the impugned judgement quoted above
has itself held that delay in filing 'non-est'
return was not solely attributable to the
assessee. The said observation has material
3 All. The Commissioner of Income Tax (Central) Kanpur Vs. Sri Umang Agarwal
505
bearing on the entire controversy
involved as the financial implications of the
result of proceedings of regular assessment
vis-a-vis block assessment have to be
examined in the entirety of the fact
situation.

12. Both the substantial questions
framed revolve around the finding of 'nonest' and its effect on the assessee and once
we are satisfied and have already held in
the order deciding review application, as
quoted above, that the said observation was
merely an obiter and not a finding/ ratio/
conclusion drawn by this Court, we deem it
appropriate to remand the matter to the
Appellate Tribunal for fresh consideration
on merits of the case.

13. Consequently, we answer both
the questions in the manner that the
Tribunal's finding treating the ITR under
Section 139(1) for the Assessment Year
2002-2003 filed on 01.09.2004 as 'non-est'
is erroneous and the effect of search
conducted on 04.09.2002 before the due
date i.e. 31.10.2002, release of material in
favour of the assessee on 05.07.2004, filing
of return thereafter on 01.09.2004 and its
financial consequences were liable to be
considered on their own merits and not
based upon the observation of 'non-est'
made by this Court in the order dated
16.05.2014.

14.
Consequently,
the
appeal
succeeds and is allowed.

15. The order impugned dated
25.08.2014 is hereby set aside and the
matter is remanded to the Income Tax
Appellate
Tribunal, Allahabad
Bench,
Allahabad for fresh consideration of entire
case of the assessee on its own merits in
accordance with law. The Tribunal shall
revive the proceedings of appeal and
dispose off the same after providing full
opportunity of hearing to the parties based
upon record within a period of four
months from the date a certified copy of
this order is filed before it.

16. Shekhar B. Saraf, J:- I agree.
----------
(2025) 3 ILRA 505
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.03.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE KSHITIJ SHAILENDRA, J.

Income Tax Appeal No. 422 of 2006

The
Commissioner
of
Income
Tax
(Central) Kanpur ...Appellant
Versus
Sri Umang Agarwal ...Respondent

Counsel for the Appellant:
S.C., C.S.C., R.K. Upadhyaya

Counsel for the Respondent:
R.R. Agarwal, Suyash Agarwal

Tax Law - Income Tax Act, 1961 -
Sections 139, 143, 158-BB(1)(ca), 15-BB,
158-BC & 263 - Civil Procedure Code,
1908 - Order 47 - Rules 1 - Sections 114
& 151- Review Petition - against High Court's
order - whereby court had allowed the income
Tax Appeal setting aside the order passed by the
Income Tax Appellate Tribunal and remanded
the matter to the Tribunal with certain
observation - seeking review - on the ground
that court failed to address key legal and factual
issues - and most notably, that delayed in filing
of the income tax return under Section 139 was
due to the seizure of account books by tax
authorities, and therefore, declaring the return
"non-est" was unjust - The Income Tax
Department opposed the review as unjustified,
claiming due process was followed and the
return was rightly treated as 'non-est' - Court