Shri Vinod Nahar, Bangalore V. The Income Tax Officer, Ward - 15(4), Bangalore

ITA 1136/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8477 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries; Set aside; Capital Gains
• Section: 143(3); 234B; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1136/BANG/2019 : ASST.YEAR 2007-2008 SHRI VINOD NAHAR NO.121, OPP:MARATHA HOSTEL BULL TEMPLE ROAD CROSS BANGALORE 560 019. PAN : AAJPN3407F. VS. THE INCOME TAX OFFICER WARD 5(3)(4) BANGALORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI.SUMAN LUNKAR RESPONDENT BY : SRI.GANESH R.GHALE, STANDING COUNCIL FOR DR DATE OF HEARING : 20.01.2020 DATE OF PRONOUNCEMENT : 20.01.2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), DATED 27.03.2019. THE RELEVANT ASSESSMENT YEAR IS 2007-2008. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND E-FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007- 2008 ON 31.03.2008 DECLARING AN INCOME OF RS.6,89,020. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 147 AFTER VERIFICATION OF THE DETAILS AS WELL AS DOCUMENTS FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE A.O. OBSERVED THAT THE IMPUGNED TRANSACTIONS WERE ENTERED THROUGH TAINTED ENTITIES /COMPANIES AND THAT THE RELEVANT TRANSACTIONS WERE BASED ON BOGUS ACCOMMODATION ENTRIES AND BILLS, RESULTING IN BENEFIT TO THE EXTENT OF RS.5,42,437. ACCORDINGLY, THE A.O. BROUGHT THE SAME TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA NO.1136/BANG/2019 SHRI VINOD NAHAR. 2 3. AGGRIEVED BY THE ORDER OF ASSESSMENT, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ORDER OF THE A.O. AGAINST THE SAME, THE ASSESSEE IS IN APPEAL BEFORE US, RAISING FOLLOWING GROUNDS:- I. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5 HAS ERRED IN CONFIRMING THE SAME. THE ORDERS PASSED ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED. 2.1 IN ANY CASE, THE CONDITIONS PRECEDENT FOR THE ISSUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT, THE RE-OPENING OF ASSESSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED /CONFIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. 2.2 IN ANY CASE THE ASSESSING OFFICER HAVING NOT COMPLIED WITH LEGAL PROVISIONS 1 PROCEDURE FOR REOPENING 1 REASSESSMENT, THE CONSEQUENTIAL ORDER BECOMES BAD IN LAW AND LIABLE TO BE QUASHED. 3.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORDER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLICABLE. 4. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS. 5,42,437/- BEING SALE CONSIDERATION OF SHARES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND TAXING THE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE ACTION OF AUTHORITIES BELOW HAS NO SUPPORT IN LAW; IS CONTRARY TO FACTS AND EVIDENCE AVAILABLE AND THEREFORE DESERVES TO BE REJECTED. 5. IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: ITA NO.1136/BANG/2019 SHRI VINOD NAHAR. 3 A) TAXING CONFIRMING THE SALE PROCEEDS AS UNEXPLAINED CASH CREDIT UNDER THE HEAD OTHER SOURCES. B) NOT APPRECIATING THE FACT THAT THE APPELLANT HAD EARNED LONG TERM CAPITAL GAIN AND ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE ACT. C) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN SHARES ARE FRAUDULENT D) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HAS OBTAINED ACCOMMODATION ENTRIES AND APPELLANT'S OWN MONEY COME BACK IN THE GUISE OF CAPITAL GAINS. THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND WITHOUT BASIS BOTH ON FACTS AND LAW IS TO BE DISREGARDED. 6. IN ANY CASE THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 68 OF THE ACT ARE APPLICABLE TO THE FACTS OF THE CASE. THERE BEING NO UNEXPLAINED CASH CREDIT, THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE AT ALL. THE ADDITION AS MADE BEING WHOLLY ERRONEOUS BOTH ON FACTS AND LAW APPLICABLE IS TO BE DELETED. 7. THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST U/S. 234A, 234B AND 234C. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 8. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE INCOME FROM LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS RETURNED BY THE APPELLANT BE ACCEPTED, THE ADDITION OF SALE PROCEEDS MADE AS UNEXPLAINED CASH CREDIT UNDER THE HEAD INCOME FROM OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 4. AFTER HEARING BOTH THE SIDES AND PERUSING THE MATERIAL ON RECORD, I FIND THAT SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF SHRI. KIRTI K.BHANSALI V. ITO FOR ASSESSMENT YEAR 2008-2009 IN ITA NO.105/BANG/2019. VIDE ORDER DATED 24.05.2019, THE TRIBUNAL HELD AS UNDER:- ITA NO.1136/BANG/2019 SHRI VINOD NAHAR. 4 4.3.1 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRST OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF M/S. CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER: 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS ADVERTED TO ABOVE AND AS THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE- CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE PETITIONER AND BY FURNISHING THE DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. 4.3.2 FROM THE ABOVE PARA FROM THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENT OF SHRI MUKESH CHOKSI AND OTHER RELATED DETAILS. AS PER THE FACTS NOTED BY THE HIGH COURT IN THE EARLIER PARAS OF JUDGMENT (SUPRA) AND AS PER THE FACTS OF THE CASE ON HAND, THERE APPEARS TO BE NO DIFFERENCE IN FACTS AND THEREFORE BY RESPECTFULLY FOLLOWING THIS JUDGMENT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA), I SET ASIDE THE IMPUGNED ORDERS OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2008-09 AND RESTORE THE MATTERS TO THE FILE OF THE AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE ISSUED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERITS OF THE ADDITION. 5. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, I INCLINED TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH WITH SIMILAR DIRECTIONS AS HELD BY THE TRIBUNAL IN THE CASE OF SHRI.KIRTI K.BHANSALI (SUPRA). 5.1 IN VIEW OF THE ABOVE, I AM NOT INCLINED TO COMMENT UPON ANY OTHER GROUNDS OF APPEAL ON MERITS OF THE ISSUE AT THIS STAGE. ITA NO.1136/BANG/2019 SHRI VINOD NAHAR. 5 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY, 2020 . SD/- ( CHANDRA POOJARI ) ACCOUNTANT MEMBER BANGALORE ; DATED : 20 TH JANUARY, 2020. DEVADAS G* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A)-5, BENGALURU. 4. THE PR.CIT-5, BENGALURU. 5. THE DR, ITAT, BENGALURU. 6. GUARD FILE. ASST.REGISTRAR/ITAT, BANGALORE