Smt. Dhanwant Kaur, Ludhiana V. ITO, Ludhiana

ITA 1027/CHANDI/2004

• Counselvise Citation: 102721514 RSA 2004
• Duration Of Justice: 11 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-10-2015
• Assessment Year: 1995-1996
• Appeal Filed On: 04-10-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Income from undisclosed sources; Wrong claim
• Section: 234B; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 1027/CHD/2004 ASSESSMENT YEAR: 1995-96 SMT. DHANWANT KAUR, VS. THE ITO, WARD IV(1), W/O SH. BHUPINDER SINGH, LUDHIANA LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHOK GOYAL RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 16.10.2015 DATE OF PRONOUNCEMENT : 19.11.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF LD. CIT(A), LUDHIANA DATED 6.7.2004 RELATING TO ASSESSM ENT YEAR 1995-96. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LD. CIT(A)-II LUDHIANA HAS ERRED IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN INVOKING SECTION 148 OF THE INCOME TAX ACT, WHICH IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A)-II, LUDHIANA HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDIT ION OF RS. 1,05,000 VIDE PARA ONE OF THE ASSESSMENT ORDER . OR DER AND ALSO 2 IN MAKING ADDITION OF RS. 13,100/- VIDE PARA TWO OF THE ASSESSMENT ORDER, AS INCOME FROM UNDISCLOSED SOURCE S. 3. THAT ADDITION OF RS. 1,05,000/- AND RS. 13,100/- AS PARA NO.2 ABOVE IS UNLAWFUL, UNSUSTAINABLE AND UNWARRANTED AN D IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THAT INTEREST U/S 234A AND U/S 234B HAS BEEN WRONGL Y CHARGED. 5. THAT PENALTY PROCEEDINGS U/S 271(1)(C) HAS BEEN WRO NGLY INITIATED. 3. FIRSTLY, WE WILL TAKE UP GROUND NO. 2 & 3 OF THE APPEAL. THE BRIEF FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM SALE OF SHARE S AND EARNED LONG TERM CAPITAL GAIN. IN THIS CASE, RE-ASSESSMENT PROCEEDINGS WERE INITIATED U/S 147 OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). ON THE BASIS OF INFORMATION RECEIVED FROM SHRI ASHOK MITTAL, DY. DIRECTOR OF INCOME TAX (INV.) 107 -A, SUSHANT LOK, GURGAON DATED 26.3.2002 BY WHICH HE HAS COMMUNICATED INFORM ATION REGARDING BOGUS CLAIM OF LONG TERM CAPITAL GAIN SHOWN AS EARNED ON ACCOUN T OF SALE / PURCHASE OF SHARES TAKEN THROUGH BANK ACCOUNT NO. 8627 IN PUNJAB NATIO NAL BANK, KAROL BAGH, NEW DELHI OPERATED BY SHRI SHANKAR HARI MAHESHWARI PROP . M/S MAHESHWARI SONS IN ASSESSMENT YEAR 1995-96 IN WHOSE CASE QUERIES MADE BY THE DEPARTMENT REVEALED THAT TRANSACTIONS FROM HIS ACCOUNT WERE NOT GENUIN E AS ENTRIES HAVE BEEN TAKEN BY BENEFICIARY BY PAYING IN CASH AN AMOUNT EQUIVALENT TO DRAFT / CHEQUE, PLUS CERTAIN PREMIUM ON THAT. THE ASSESSEE WAS ASKED REGARDING PURCHASE OF CHQUES / DRAFT NO. 205/94/390086 OF M/S MAHESHWARI SONS CREDITED IN PU NJAB NATIONAL BANK, GILL ROAD, LUDHIANA FOR RS. 1 LAKH THROUGH WHOM THE TRAN SACTIONS OF SHARES WERE MADE BY THE ASSESSEE AS SHRI HARI SHANKAR MAHESHWARI IN HIS STATEMENT DATED 8.12.1999 RECORDED BY THE DCIT CIRCLE-1, ALIGARH DENIED TO HA VE ANY TRANSACTIONS OF THESE SHARES WITH THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE AMOUNT OF RS. 1 LAKH SHOULD NOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSMENT YEAR UNDER CONSIDERATION. IN RESPONSE TO THE SAID QUERY, 3 THE ASSESSEE SUBMITTED A REPLY ON 26.12.2002 WHEREI N SHE HAS STATED THAT SHE HAD PURCHASED SHARES OF M/S PRADISH EXPORTS LTD (2500 S HARES, DISTINCTIVE NOS. 1505501 TO 1508000) THROUGH A SHARE BROKER M/S MAHE SHWARI SONS, DELHI AND FURTHER STATED THAT SHE HAD RECEIVED SALE PROCEEDS OF SHARES THROUGH DEMAND DRAFT. HOWEVER, THE STOCK BROKER DENIED THE TRANSACTIONS. ACCORDINGLY A REGISTERED LETTER WAS ISSUED TO SH. HARI SHANKER MAHESHWARI AT DELHI AND ALIGARH ADDRESSES REQUIRING HIM TO CONFIRM WHETHER SMT. DHANWANT KAUR (ASSESSEE) HAD ANY TRANSACTION REGARDING PURCHASE AND SALES OF SHARES, BUT NO RESPONSE WAS RECEIVED. A LETTER ISSUED AT HIS ALIGARH OFFICE WAS RECEIVED BACK WITH POSTAL AUTHORITY REMARKS A FIRM BAND HO GAI. THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE IS ONE OF THE BENEFIFIRY WHO HAD OBTAINED CHEQUE / DRA FT OF RS. 1 LAKH FROM THE SAID FIRM WHICH TOO CAN SAFELY BE SAID TO BE BOGUS TRANS ACTION. ACCORDINGLY, ASSESSING OFFICER HELD THAT THE AMOUNT OF RS. 1 LAKH + RS. 50 00/- AS PREMIUM PAID ON THAT TO BE TAKEN AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION STATING THAT THE ASSESSEE HAS FAILED TO PROVE THAT SHARES WERE PURCHASED OUT OF ISTRI DHAN. HE FURTHER NOTED THAT THE LETTER SENT FOR VERIFICATION BY THE ASSESS ING OFFICER TO THE BROKER WERE RETURNED BACK UNSERVED. ACCORDINGLY, THE CIT(A) HEL D THAT THE ASSESSEE HAD PURCHASED DEMAND DRAFT OF RS. 1 LAKH OUT OF UNEXPLA INED CASH. HE ALSO CONFIRMED THE ADDITION OF RS. 5000/- STATING THE NO SHARE BRO KER WILL PURCHASE / SELL SHARE WITHOUT ANY COMMISSION OR PREMIUM. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE VERY OUTSET, SHRI ASHOK GOYAL, LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE DECISION OF I TAT CHANDIGARH BENCH B IN THE CASE OF ITO WARD-II, LUDHIANA SHRI SURINDER SINGH I N ITA NO. 624/CHD/2000 4 RELATING TO ASSESSMENT YEAR 1995-96 WHEREIN ON SIMI LAR FACTS THE TRIBUNAL VIDE ITS ORDER DATED 7.10.2004 UPHELD THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS. 3,11,700/- MADE BY THE ASSESSING OFFICER ON THE BAS IS OF INFORMATION RECEIVED FROM ADI (INV.) GURGAON BEING BOGUS CLAIM OF LONG TERM C APITAL GAIN. IN THE CASE OF SHRI SURINDER SINGH, THE ASSESSEE IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 1995-96 DISCLOSED CAPITAL GAIN EARNED FROM SALE OF SHARES TRANSECTED BY BROKER M/S MAHESHWARI & SONS. INVESTMENT IN SHARES WAS MADE BY THE ASSESSEE IN THAT CASE ON 28.4.1993 AND WHILE FRAMING ASSESSMENT OF THAT YEAR, THE ASSESSING OFFICER HAS NOT DOUBTED THE INVESTMENT IN SHARES. THE ASSESSEE SOLD THE DISPUTED SHARES ON 26.9.1994 AND THE PAYMENT WAS RECEIVED BY THE ASSES SEE BY WAY OF DEMAND DRAFT AND SALE OF SHARES WAS ALSO MADE THROUGH BROKER. TH E ADI, GURGAON CONFRONTED SHRI SHANKER HARI MAHESHWARI AND DURING INVESTIGATI ON THE SAID PARTY DENIED TO HAVE ANY TRANSACTION WITH M/S PARSIDH EXPORTS LTD. FROM WHERE THE ASSESSEE WAS IN RECEIPT OF SALE PROCEEDS OF SHARES. SHRI SHANKER HA RI MAHESHWARI DENIED TO HAVE BANK ACCOUNT NO. 8267 MAINTAINED WITH PNB, KAROL BA GH, NEW DELHI FROM WHERE THE ASSESSEE HAD RECEIVED DEMAND DRAFT ON ACCOUNT OF SALE PROCEEDS OF SHARES. ON THE BASIS OF THE STATEMENT OF SHRI SHANKER HARI MAH ESHWARI, THE ADI (INV) PASSED ON THE INFORMATION TO THE ASSESSING OFFICER OF THE ASSESSEE AT LUDHIANA. THE ASSESSING OFFICER WHEN CONFRONTED THESE FACTS TO TH E ASSESSEE THE ASSESSEE REQUESTED THE ASSESSING OFFICER THAT SHRI SHANKEAR HARI MAHESHWARI BEING A DEPARTMENTAL WITNESS, THE ONUS WAS ON THE ASSESSING OFFICER TO PRODUCE THE WITNESS FOR CROSS-EXAMINATION. IN THE CASE OF SHRI SURINDER SINGH THE ASSESSING OFFICER GAVE A FINDING THAT THE ASSESSEE HAS IN FACT PAID C ASH AMOUNTING TO RS. 3,11,702/- TO M/S MAHESHWARI & SONS OUT OF HIS INCOME AND REC EIVED A DRAFT. IN THAT CASE THE ASSESSING OFFICER ALSO HELD THAT SINCE SHRI SHANKER HARI MAHESHWARI HAVE DENIED HAVING ANY BANK ACCOUNT WITH PUNJAB NATIONAL BANK, KAROL BAGH, NEW DELHI AND THE TRANSACTION IS BOGUS. THE ASSESSING OFFICER ACC ORDINGLY DENIED THE LONG TERM CAPITAL GAIN TO THE ASSESSEE. ON APPEAL, THE CIT(A) HELD THAT THE BASIS OF ADDITION IS ON PRESUMPTION ONLY AND THE ASSESSEE MIGHT HAVE PAID TO M/S MAHESHWARI & 5 SONS AND GOT THE DRAFT MADE AND THIS PRESUMPTION IS WITHOUT ANY EVIDENCE. FINALLY, THE CIT(A) HELD THAT THE ADDITION WAS MADE MERELY ON THE BASIS OF STATEMENT OF SHRI SHANKER HARI MAHESWARI, WHO WAS DEPARTMENTAL WITNESS AND THE ASSESSEE OUGHT TO HAVE BEEN AFFORDED TO HAVE AN OPPORTUNITY TO CROSS EXAMINE HIM. THE CIT(A) DELETED THE ADDITION. 6. WHEN THE MATTER CAME UP BEFORE THE TRIBUNAL, THE TRIBUNAL UPHELD THE ORDER OF CIT(A), OBSERVING AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSI DERED THEIR RIVAL SUBMISSIONS. WE HAVE ALSO EXAMINED THE FACTS, EVIDENCE AND MATERIAL ON RECORD. THE FACTS ARE NO T DISPUTED BY EITHER OF THE SIDES. THE ONLY ISSUE TO TE DECIDE D IS WHETHER THE DEPARTMENT SHOULD HAVE PROVIDED OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE SHRI SHANKER HARI MAHESHW ARI. A DEPARTMENTAL WITNESS. IN THIS CASE, THE ASSESSEE FROM THE VERY BEGINNING HAS BEEN REQUESTING THE A O FOR CROSS-EXAMINATION OF THE DEPARTMENTAL WI TNESS SHRI SHANKER HARI MAHESHWARI WHO HAS DENIED HAVING BA NK ACCOUNT NO.8627 WITH PUNJAB NATIONAL BANK, KAROL BAGH, NEW DELHI. THE ASSESSEE REQUESTED FOR CROSS-EXAMIN ATION VIDE LETTER DATED 24.2.2003, WHICH IS PLAC ED AN RECORD WITH SPECIFIC REQUEST THAT HE IS PREPARED TO DEPOSI T DIET MONEY INCLUDING TRAVELLING CHARGES. THE STATEMENT OF SHRI SHANKER HARI MAHESHWARI WAS RECORDED BY THE ADI, GURGAON ON 8.12.99 WHO HAS DENIED TO HAVE AN Y SUCH BANK ACCOUNT AND STATED THAT SOMEBODY OPE RATED THE ACCOUNT IN HIS NAME BY FORGING HIS SIGNATU RES. THE ASSESSEE WAS NOT PROVIDED ANY OPPORTUNITY FOR CR OSS- EXAMINATION OF THE DEPARTMENTAL WITNESS AND THE STA TEMENT OF WITNESS WAS RECORDED AT THE BACK OF THE ASSESSEE. THIS ADDITION WAS BASED ON THE SOLE STATEMENT OF SHRI SHANKER HARI MAHESHWARI AND HE WAS NOT ALLOWED CROSS-EXAMI NATION BY THE ASSESSEE. 6 6. THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURS E OF HEARING HAS RELIED ON THE DECISION 25.7.2004 OF ITA T. DELHI BENCH IN THE CASE OF SHRI SATISH GUPTA & ANOTHER. N EW DELHI VS ITO WARD 27{4), NEW DELHI (UNREPORTED) IN L .T.A.NOS. 57 & 100/DEL/04 FOR THE ASSESSMENT YEAR 95-96, WH EREIN IT HAS BEEN HELD AS UNDER:- '16...............THE ASSESSEE FURTHER REQUESTED SPECIFICALLY TO THE ASSESSING OFFICER TO ALLOW HIM TO CROSS-EXAMINE ANAND PRAKASH. DESPITE THESE TWO REQUESTS, ANAND PRAKASH WAS NOT ALLOWED TO BE CROSS - EXAMINED BY THE ASSESSEE, A POSITION WHICH IS NOT DISPUTED BEFORE ME BY THE DEPARTMENT. THE ENTIRE ADDITION IS BASED ON THE STATEMENT OF ANAND PRAKASH . AS RIGHTLY POINTED OUT, ON BEHALF OF THE ASSESSEE, IF THIS STATEMENT IS IGNORED, THERE IS HARDLY ANY ANOTHER D IRECT EVIDENCE TO JUSTIFY THE ADDITION. THEREFORE, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO AFFORD AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE ANAND PRAKASH. HE DID NOT DO SO. THE EFFECT OF THE ASSESS ING OFFICER'S FAILURE TO DO SO IS THAT THE ENTIRE ADDIT ION IS BAD. IN THE CASE OF KISHAN CNAND CHEIARAM VS. CIT. 125 ITR 713, THE SUPREME COURT HELD THAT IF ANY EVIDENC E ITSELF USED AGAINST THE ASSESSEE IS NOT SHOWN TO HI M AND AN OPPORTUNITY TO CONTROVERT THE SAME IS NOT GIVEN TO THE ASSESSEE THAT EVIDENCE SHALL NOT BE ADMISSIBLE IN SUPPORT OF THE ADDITION. IT WAS SPECIFICALLY HELD I N THAT CASE THAT THE INCOME TAX AUTHORITIES ARE BOUND TO ACCEDE TO THE REQUEST AND IF THEY DO NOT DO SO, THE ADDITION CANNOT BE SUSTAINED IN THE ABSENCE OF ANY OTHER EVIDENCE IN SUPPORT OF THE SAME. THIS POSITION APPL IES SQUARELY TO THE PRESENT CASE. THE ADDITION SUFFERS FROM BASIC INFIRMITY IN THE SENSE THAT IT HAS BEEN MADE WITHOUT ACCEPTING THE ASSESSEE'S REQUEST MADE AT LE AST TWICE BEFORE THE ASSESSING OFFICER, TO CROSS-EXAMIN E ANAND PRAKASH. I, THEREFORE, DELETE THE ADDITION.' 7 IN THE PRESENT CASE, THE FACTS ARE ALMOST IDENTICAL TO THE FACTS DECIDED BY THE ITAT, DELHI BENCH IN THE AFOREMENTIO NED CASE. HERE ALSO THE ASSESSEE HAS BEEN DENIED OPPORTUNITY OF CROSS- EXAMINING THE DEPARTMENTAL WITNESS. FURTHER, THE IT AT M THE AFORESAID CASE HAS PLACED RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELAREM VS. CIT, 125 ITR 713, WHEREIN THEIR LORDSHIPS HAVE HELD THAT IF ANY EVIDENCE ITSELF USED AGAINST THE ASSESSEE IS NOT SH OWN TO HIM AND AN OPPORTUNITY TO CONTROVERT THE SAME IS NOT GIVEN TO THE ASSESSEE THAT EVIDENCE SHALL NOT BE ADMISSIBLE IN S UPPORT OF THE ADDITION. IT WAS SPECIFICALLY HELD IN THAT CASE TH AT THE INCOME TAX AUTHORITIES ARE BOUND TO ACCEDE TO THE REQUEST AND IF THEY DO NOT DO SO. THE ADDITION CANNOT BE SUSTAINED IN THE ABSENCE OF ANY OTHER EVIDENCE IN SUPPORT OF THE SAME. THIS POSITIO N APPLIES SQUARELY TO THE PRESENT CASE. BY RESPECTFULLY FOLLO WING THE DECISION OF THE ITAT, DELHI BENCH, SUPRA, WE UPHOLD THE ORDER OF THE CIT{A) AND DISMISS THE DEPARTMENTAL APPEAL. 7. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THA T OF SHRI SURINDER SINGH OF LUDHIANA (SUPRA). IN THE INSTANT CASE, THE ASSESSE E PURCHASED 1000 SHARES ON 2.6.1993 AND THE SAME WERE SOLD ON 26.6.94, FOR RS. 1,03,900/- WHICH RESULTED IN TO LONG TERM CAPITAL GAINS. THE ASSESSEE VIDE HER LETTER DATED 27.12.2002 MADE A REQUEST TO THE ASSESSING OFFICER TO CONFRONT ALL TH E DOCUMENTS ESPECIALLY STATEMENT OF SHRI SHANKER HARI MAHESHWARI RECORDED BY THE CON CERNED DY. DIRECTOR (INV.) TO HER. IT IS EVIDENT FROM THE ORDER OF ASSESSING OFF ICER THAT NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE AS PRAYED BY HER. IN OUR VI EW THE DECISION OF THE TRIBUNAL RECORDED IN THE CASE OF SURINDER SINGH (SUPRA), IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. RESPECTFULLY, FOLLOWING THE OR DER OF THE TRIBUNAL DATED 7.10.2014 PASSED IN THE CASE OF SHRI SURINDER SINGH IN ITA NO. 624/CHD/2000, RELATING TO ASSESSMENT YEAR 1995-096, WE ALLOW THIS GROUND OF APPEAL. 8 8. GROUND NO.4 OF THE APPEAL RELATES TO CHARGING OF INTEREST U/S 234A AND 234B OF THE ACT. IT IS CLAIMED THAT THIS GROUND OF APPEA L IS OF CONSEQUENTIAL NATURE. WE HOLD ACCORDINGLY. SINCE, WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS AND, THEREFORE, WE DO NOT THINK IT NECESSARY TO DECIDE G ROUND NO.1 OF THE APPEAL REGARDING VALIDITY OF REOPENING OF THE ASSESSMENT A S THE DISCUSSION ON THIS ISSUE WOULD BE ONLY OF ACADEMIC INTEREST. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.11.2015 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED: 19 TH NOV., 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR