Agarwal Arvind Mithailal, V. CIT,(Appeals-I), Nagpur,

ITA 101/PUN/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3168 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1999-2000
• Appeal Filed On: 14-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: MRS DEEPA KHARE
• Keywords: Reopening of assessment; Unexplained investment; Loose papers; Document seized; Share purchase agreement; Tangible material; Documents seized
• Section: 143(3); 153A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER & SHRI G.S.PANNU ACCOUNTANT MEMBER ITA NO.101/PN/08 (A.Y. 1999-00) AGARWAL ARVIND MITHAILAL APPELLANT FLAT NO.3 & 4, NAYANTARA-B, BHABHA NAGAR, NASHIK PAN ADPPA4146F VS. CIT,(APPEALS I) NAGPUR RESPONDENT APPELLANT BY : MRS. DEEPA KHARE RESPONDENT BY : SHRI. ABHAY DAMLE ORDER PER G.S.PANNU, AM THIS APPEAL OF THE ASSESSEE PERTAINING TO ASSESSMEN T YEAR 1999- 00 IS DIRECTED AGAINST THE ORDER OF THE CIT (A) DA TED 15-11-2007, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY T HE ASSESSING OFFICER DATED 29/12/2006 U/S.147 R.W.S. 143(3) OF THE INCOM E-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING CONCISED G ROUNDS OF APPEAL :- 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE VALI DITY OF REOPENING OF ASSESSMENT U/S 147 WHEN THERE IS NO TANGIBLE MATERIAL TO SUGGEST ANY ESCAPEMENT OF INCOME IN THE HANDS OF THE APPELLANT. THE ASSESSMENT HAVING BEEN REOPENED PURELY ON PRESUMPTION OR SUSPICION MAY KINDLY BE QUASHED. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.6,90,000/- ON ACCOUNT OF INVESTMENT IN FLAT IN THE HANDS OF THE APPELLANT IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE FLAT WAS OWNED BY THE APPELLANT. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT GOING BY THE RECORD INCLUDING SEIZED MATERIAL, THE FLAT BELONGED OR WAS OWNED BY APPELLANTS BROTHER IN WHOSE HANDS THE INVESTMENT WAS DULY REFLECTED AND THEREFORE THE ADDITION OUGHT TO HAVE BEEN DELETED BY THE LEARNED CIT(A). ITA NO.101/PN/08 (A.Y. 1999-00) AGARWAL ARVIND MITHAILAL . 1998 2 3. AS A PERUSAL OF THE GROUNDS OF APPEAL REVEAL, TH E SOLITARY DISPUTE IN THIS APPEAL RELATES TO AN ADDITION OF RS .6,90,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN PURCHASE OF FLAT NO. 3 & 4 OF NAYANTARA-B, BHABHA N AGAR, NASHIK. 4. BRIEFLY PUT, THE RELEVANT FACTS ARE AS FOLLOWS. DURING THE COURSE OF SEARCH PROCEEDINGS ON 21/09/2005, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED, WHICH SHOWED NOTINGS REGARDING PAYMENTS MADE FOR PURCHASE OF THE AFORESAID FLAT. THE TOTAL PAYMENT AMOUNTED TO RS.12,13,352/- AS PER THE DATE-WISE DETAIL MENTION ED IN PARA 1 OF THE ASSESSMENT ORDER. SINCE THE SEIZED MATERIAL WAS F OUND FROM THE PREMISES OF THE ASSESSEE, THE ASSESSING OFFICER ISS UED NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) A ND REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000 TO TAX THE ESCAPED INCOME ON ACCOUNT OF PAYMENTS FOUND NOTED IN THE SE IZED MATERIAL. IN RESPONSE, ASSESSEE FILED A RETURN OF INCOME DECL ARING AN INCOME OF RS.81,340/- WHICH DID NOT INCLUDE THE INVESTMENT IN THE AFORESAID FLAT. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITT ED THAT HE WAS NOT CONNECTED WITH THE AFORESAID FLAT AND THAT THE SAME BELONGED TO HIS BROTHER SHRI N.M. AGARWAL. HOWEVER, AS PER THE ASSESSING OFFICER DOCUMENTS WERE SEIZED FROM ASSESSEES PREMISES AND THEREFORE THE INVESTMENT WAS TAXABLE IN HIS HANDS. AS PER THE D ETAILS FOUND IN THE SEIZED DOCUMENTS, A SUM OF RS.8,90,000/- WAS PAID O N DIFFERENT DATES DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 1 999-2000. THE ASSESSING OFFICER NOTED THAT A SUM OF RS.2,00,000/- PAID ON 12/2/09 WAS ACCOUNTED FOR BY SHRI NARENDRA AGARWAL IN HIS R ETURN OF INCOME AND THEREFORE THE BALANCE OF RS.6,90,000/- WAS ASSE SSED AS UNEXPLAINED INVESTMENT BY THE ASSESSEE DURING THE I MPUGNED ITA NO.101/PN/08 (A.Y. 1999-00) AGARWAL ARVIND MITHAILAL . 1998 3 ASSESSMENT YEAR. THE ADDITION HAS BEEN CONFIRMED BY THE CIT(A) FOR THE SAME REASONS AS ASSIGNED BY THE ASSESSING OFFIC ER. 5. BEFORE US, LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT THE PROPERTY WAS IN THE NAME OF THE ASSESSEES BROTHER SHRI N.M. AGARWAL AND IN SUPPORT, SHE HAS REFERRED TO PAGE 34 OF THE PAPER BOOK WHICH IS A COPY OF SHARE CERTIFICATE ISSUED BY THE NAYAN-TAR A COOPERATIVE HOUSING SOCIETY AND THE SAME WAS A PART OF THE SEI ZED MATERIAL. FURTHER, IT IS POINTED OUT THAT SHRI. N.M. AGARWAL IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT ON 21/9/05 CONFIRMED THE OWNERSHIP OF THE FLAT IN NAYAN-TARA SOCIETY, A COPY OF SUCH STAT EMENT HAS PLACED IN THE PAPERBOOK AT PAGES 15-26. IT IS ALSO POINTED OUT THAT THE ASSESSEE IN HIS STATEMENT RECORDED U/S.132(4) ON 26 /10/05 ALSO CONFIRMED THAT THE FLAT WAS IN THE NAME OF HIS BRO THER. FURTHER, THE ASSESSEE CONFIRMED THAT THE AMOUNT PAID WAS UNACCOU NTED, AND A SUM OF RS.1.50 LACS BE CONSIDERED IN THE HANDS OF MR. NARENDRA AGARWAL AS ADDITIONAL INCOME FOR ASSESSMENT YEAR 2000-01. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS ASSESSED THE PAYMENT S OF RS.1,50,000 AND RS.1,73,532/- (I.E. RS.3,23,532/-) AS INCOME IN THE HANDS OF THE ASSESSEES BROTHER, SHRI N.M. AGARWAL IN AN ASSESSM ENT MADE U/S. 153A OF THE ACT DATED 31/10/2007 FOR THE ASSESSMENT YEAR 2000-01. IT HAS BEEN FURTHER SUBMITTED THAT THE ASSESSEE WAS RESIDING IN THE PREMISES JOINTLY WITH HIS BROTHER AND FATHER AND TH EREFORE IT COULD NOT BE SAID THAT THE SEIZED MATERIAL WAS FOUND ONLY FRO M THE ASSESSEE AND IT PERTAINED TO ASSESSEE ONLY. IN VIEW OF THE AFO RESAID, IT WAS CONTENDED THAT THE IMPUGNED ADDITION WAS NOT MAINTA INABLE IN THE HANDS OF THE ASSESSEE. ITA NO.101/PN/08 (A.Y. 1999-00) AGARWAL ARVIND MITHAILAL . 1998 4 6. ON THE OTHER HAND, LEARNED D.R. HAS DEFENDED THE ADDITION MADE IN THE HANDS OF THE ASSESSEE. ACCORDING TO HIM, AL THOUGH THE ASSESSEE WAS LIVING JOINTLY WITH HIS FATHER AND BRO THER, BUT SINCE THE SEIZED DOCUMENT SHOWING PAYMENTS FOR THE FLAT HAVE BEEN FOUND FROM THE POSSESSION OF THE ASSESSEE, IT CANNOT BE RULED OUT THAT SUCH PAYMENTS HAVE BEEN MADE BY THE ASSESSEE, AND, THERE FORE, THE AMOUNT HAS BEEN RIGHTLY TAXED IN THE HANDS OF THE A SSESSEE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE ORDERS OF THE AUTHORITIES BELOW AS ALSO THE MATERIAL TO WHICH OUR ATTENTION HAS BEEN DRAWN DURING THE COURSE OF THE HEARING. THE MAIN DISPUTE IN THIS APPEAL IS WHETHER THE IMPUGNED AMOUNT IS ASSES SABLE IN THE HANDS OF THE ASSESSEE BASED ON THE DOCUMENTS SEIZED DURIN G THE COURSE OF SEARCH. AS PER THE REVENUE, THE SEIZED DOCUMENT W AS FOUND AND SEIZED FROM THE PREMISES OCCUPIED JOINTLY BY THE AS SESSEE WITH HIS FATHER AND BROTHER. THE SEIZED DOCUMENT SHOWED PA YMENTS ON DIFFERENT DATES FOR A PROPERTY IN A CO-OPERATIVE HO USING SOCIETY. IT IS NOT IN DISPUTE THAT THE SAID PROPERTY STANDS IN THE NAME OF ASSESSEES BROTHER, SHRI NARENDRA AGARWAL. IT IS ALSO NOT IN D ISPUTE THAT OUT OF TOTAL PAYMENTS FOUND RECORDED IN THE SEIZED DOCUMEN T, RS. 2,00,000/- WAS FOUND TO HAVE BEEN DECLARED BY SHRI NARENDRA AG ARWAL IN HIS RETURN OF INCOME, AS NOTED BY THE ASSESSING OFFICER . FURTHER, THE SAID SHRI NARENDRA AGARWAL DECLARED RS. 3,23,532/- OUT O F THE PAYMENT RECORDED IN THE SEIZED DOCUMENT AS HIS UNDISCLOSED INCOME IN THE RETURN FILED U/S 153A OF THE ACT FOR THE ASSESSMENT YEAR 2000-01 AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN AN ASSESSMENT FINALIZED U/S 153A OF THE ACT ON 31/10/2007. FROM T HE AFORESAID, IT IS ABUNDANTLY CLEAR THAT A PART OF THE PAYMENTS FOUND RECORDED IN THE SEIZED DOCUMENT HAVE BEEN SUBJECTED TO ASSESSMENT I N THE HANDS OF ITA NO.101/PN/08 (A.Y. 1999-00) AGARWAL ARVIND MITHAILAL . 1998 5 THE ASSESSEES BROTHER, EVEN AFTER THE SEARCH ACTIO N. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN ASSESSING THE IM PUGNED AMOUNT IN THE HANDS OF THE ASSESSEE MERELY BECAUSE THE SEIZED DOCUMENT WAS FOUND IN POSSESSION OF THE ASSESSEE, IS SELF-CONTRA DICTORY. MOREOVER, WE FIND THAT THE BROTHER OF THE ASSESSEE, SHRI NARE NDRA AGARWAL ON 26/10/05 HAD AFFIRMED THE ASSESSEES STATEMENT OF E VEN DATE THAT THE FLAT WAS IN THE NAME OF SHRI NARENDRA AGARWAL AND T HE ADDITIONAL INCOME ON ACCOUNT OF UNACCOUNTED INVESTMENT IN FLAT BE CONSIDERED IN THE CASE OF SHRI NARENDRA AGARWAL. UNDER THESE CIRC UMSTANCES, WE FIND AMPLE FORCE IN THE PLEA THAT THE IMPUGNED AMOUNT CA NNOT BE TAXED IN THE HANDS OF THE ASSESSEE, ESPECIALLY WHEN THERE IS NO CLINCHING EVIDENCE THAT THE ASSESSEE HAS MADE THE IMPUGNED PA YMENTS. THUS, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 6,90,000/- MADE ON ACCOU NT OF UNEXPLAINED INVESTMENT. 8. SINCE THE ASSESSEE HAS SUCCEEDED ON MERITS, THE GROUND REGARDING THE VALIDITY OF INITIATION OF PROCEEDINGS U/S 147 OF THE ACT IS RENDERED ACADEMIC AND HAS NOT BEEN ADJUDICATED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED ON 24 TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S.PANNU) JUDICIAL MEMBER AC COUNTANT MEMBER PUNE, DATED THE 24 TH NOVEMBER , 2010 ASHWINI ITA NO.101/PN/08 (A.Y. 1999-00) AGARWAL ARVIND MITHAILAL . 1998 6 TRUE COPY COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ASSTT.CIT, CIR.2, JALGAON 3. CIT(A)-II, PUNE 4. CIT- II, PUNE , 5. D.R. ITAT A BENCH 6. GUARD FILE BY ORDER ASSTT. REGISTRAR I.T.A.T PUNE