SHRI PRAVIN RATILAL SHARE DALAL, Ahmedabad V. THE DCIT, CC-2(2), Ahmedabad

ITA 1200/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6602 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S A BOHRA
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 11.5.2011 DRAFTED ON: 12. 5.2011 ITA NO.1200/AHD/2009 ASSESSMENT YEAR : 2006-07 SHRI PRAVIN RATILAL SHARE DALAL RATNAKAR 27-B, BRAHMIN MITRA MANDAL SOCIETY ELLISBRIDGE, AHMEDABAD VS. THE DY.CIT CENTRAL CIRCLE-2(2) AHMEDABAD PAN/GIR NO. : ARSPS 8711 K ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI DEEPAK SONI RESPONDENT BY: SHRI S.A. BOHRA, SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -III, AHMEDABAD DATED 12/02/2009 PASSED FOR ASSESSMENT YEAR 2006-9 7. 2. FIRST FEW GROUNDS ARE GENERAL IN NATURE THEREFOR E DO NOT REQUIRE ANY LEGAL ADJUDICATION. HOWEVER, GROUND NO S.3 & 4 ARE THE SUBSTANTIVE GROUNDS WHICH ARE ARGUED BEFORE US, HEN CE REPRODUCED BELOW: ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 2 - 3.0. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING ADDITION OF RS.1,45,000/- ALLEGING INCOME DERIVED BY THE APPELLANT. THE APPELLANT SUBMITS THAT THE INCOME OF RS.1,45,000/- WAS DERIVED BY SMT. SULOCHANABEN P.SHAREDALAL OUT OF RETAIL BUSINESS CARRIED ON BY HER. THE APPELLANT SUBMITS THAT RETAIL BUSINESS WAS CARRIED ON BY THE LADY AND THE INCOME OF RS.1,45,000/- WAS CONSIDERED IN COMPUTATION OF THE TOAL INCOME OF THE LADY. THE AP PELLANT SUBMITS THAT HE HAD NOT CARRIED ON ANY RETAIL BUSIN ESS AND HE HAD DERIVED NO INCOME AND THEREFORE ADDITION OF RS. 1,45,000/- IS CONTRARY TO THE FACTS. THE ADDITION OF RS.14500 0/- BE DELETED. 4.0 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING ADDITION OF RS.95,000/- ALLEGING INCOME D ERIVED BY THE APPELLANT. THE APPELLANT SUBMITS THAT THE INCOME OF RS.95,000/- WAS DERIVED BY SHRI PRAVIN RATILAL SHAR EDALAL (HUF) OUT OF RETAIL BUSINESS CARRIED BY IT. THE AP PELLANT SUBMITS THAT RETAIL BUSINESS WAS CARRIED ON BY THE HUF AND THE INCOME OF RS.95,000/- WAS CONSIDERED IN COMPUTA TION OF THE TOTAL INCOME OF THE HUF. THE APPELLANT SUBMITS THAT HE HAD NOT CARRIED ON ANY RETAIL BUSINESS AND HE HAD D ERIVED NO INCOME AND THEREFORE ADDITION OF RS.95,000/- IS CON TRARY TO THE FACTS. THE ADDITIONS OF RS.95,000/- BE DELETED. ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 3 - 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT DATED 27/12/2007 WERE THAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY WAS COVERED UND ER SEARCH ACTION U/S.132 OF THE ACT ON 22/09/2005. A RETURN OF INCOME WAS FILED ON 31/12/2006 AND AN INCOME OF RS.12,66,800/- WAS D ECLARED. THE ASSESSEE IS IN THE BUSINESS OF SHARE TRADING AND SH ARE BROKERAGE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT WIFE OF THE ASSESSEE SMT.SULOCHNABEN HAS ALSO FILED HERE INCOME TAX RETURN U/S.44AF OF THE ACT AND A BUSINESS PROFI T OF RS.1,45,000/- WAS DISCLOSED. HER STATEMENT WAS RECORDED ON 06/10/2005 AND SHE HAS STATED TO BE A HOUSE-WIFE. THE AO HAS ALSO NOTED THAT A STATEMENT OF SHRI ATUL WAS ALSO RECORD ED ON 22/09/2005, SON OF THE ASSESSEE, AND IN HIS STATEMENT HE HAS NO T MENTIONED THE RETAIL BUSINESS OF READY-MADE GARMENTS CLAIMED TO H AVE BEEN CARRIED OUT BY SMT.SULOCHNABEN. ON THE BASIS OF THOSE STA TEMENTS, THE AO HAS REMARKED AS UNDER: ASSESSEES ABOVE REPLY HAS BEEN CONSIDERED CAREFUL LY AND IT IS NOT FOUND TENABLE FOR THE REASON THAT THE ASSESS EE WAS GIVEN OPPORTUNITY OF HEARING ON 24/12/2007. HOWEVER, INS TEAD OF AVAILING OPPORTUNITY OF HEARING ASSESSEE HAS CHOSEN TO FILE WRITTEN SUBMISSION IN DAK. THE ASSESSEE HAD APPLIE D FOR COPIES OF SEIZED MATERIAL AND STATEMENTS AND WHATEV ER DOCUMENTS REQUIRED BY ASSESSEE WERE PROVIDED TO ASS ESSEE. EVEN THOUGH SMT. SULOCHNABEN AND SHRI PRAVIN RATILA L SHAREDALAL (HUF) HAVE SHOWN INCOME FROM RETAIL BUSI NESS, THEY HAVE NOT PROVED THE FACTUM OF THE TURNOVER. T HE ASSESSEES DEMAND THAT IN ABSENCE OF ANY BUSINESS T HE INCOME BE DELETED FROM THE COMPUTATION OF INCOME OF SMT. ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 4 - SULOCHNABEN AND SHRI P.R.SHAREDALAL (HUF) IS NOT TE NABLE IN LAW SINCE THEY HAVE SHOWN THIS INCOME IN THEIR RESP ECTIVE RETURNS WHICH HAVE BEEN ASSESSED ON PROTECTIVE BASI S AND IT CAN BE DELETED ONLY IF IT IS ADMITTED BY THE ASSESS EE THAT IT IS REALLY HIS INCOME. 2.2. WITH THOSE REMARKS IT WAS CONCLUDED BY THE AO THAT THE ASSESSEE HAS UNDISCLOSED SOURCE OF INCOME WHICH WAS SHOWN IN THE NAME OF HIS WIFE HENCE ACCORDINGLY TAXED ON SUBSTANTIVE BASIS IN HIS HANDS. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LD.CIT(A) HAS AFFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE BUSINESS OF THE ASSESSEES WIFE WAS NOT MENTION ED AT THE TIME OF RECORDING OF STATEMENT. HE HAS ALSO MENTIONED THAT THE RETURN WAS FILED AFTER THE SEARCH ACTION. IN HIS OPINION, IT WAS THE OBLIGATION OF THE WIFE TO ESTABLISH THE PROVISI ONS OF SECTION 44AF OF THE ACT AS APPLICABLE ON THE BUSINESS RUN BY HER . IN THE RESULT, THE ADDITION WAS AFFIRMED. 4. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO CAR EFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED BEFORE US. FROM THE SIDE OF THE ASSESSEE, LD.AR MR.DEEPAK SONI APPEARED AND DRAWN OUR ATTENTION ON THE ACKNOWLEDGEMENT OF THE INCOME TAX RETURN FILED IN T HE CASE OF SMT.SULOCHNABEN, WIFE OF THE ASSESSEE. HE HAS ALSO EMPHASIZED THAT ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 5 - THE REVENUE AUTHORITIES HAVE RELIED UPON THE STATEMENTS BUT THOSE STATEMENTS WERE NOT PROVIDED TO THE ASSESSEE . LD.AR HAS VEHEMENTLY CONTESTED THAT SINCE THOSE STATEMENTS HA VE NOT BEEN CONFRONTED TO THE ASSESSEE, THEREFORE THE REVENUE D EPARTMENT HAS WRONGLY PLACED RELIANCE ON THOSE STATEMENTS. WE FI ND FORCE IN THE ARGUMENTS OF LD.AR BECAUSE THE HONBLE DELHI HIGH C OURT HAS HELD IN THE CASE OF INDOCON FINANCE & INVESTMENT LTD RE PORTED AT 1 DTR 25 THAT UNLESS AND UNTIL THE ASSESSEE IS NOT ALLOW ED TO CROSS-EXAMINE THE SAID PERSON WHO HAS DEPOSED BEFORE THE REVENUE AUTHORITIES, SUCH A STATEMENT CANNOT BE USED AS AN EVIDENCE AGAI NST THE ASSESSEE. THERE IS ONE MORE ASPECT OF THIS ISSUE THAT BEFORE ARRIVING AT THE CONCLUSION THAT THE WIFE OF THE ASSESSEE WAS MERELY A NAME LENDER OR BENAMI OF THE ASSESSEE IT WAS NECESSARY ON THE PA RT OF THE DEPARTMENT TO ESTABLISH THAT THE FUNDS OF THE ASSES SEE HAVE BEEN DIVERTED TO RUN THE SAID BUSINESS OF READY-MADE GAR MENTS CLAIMED TO HAVE BEEN MANAGED BY THE WIFE OF THE ASSESSEE. THO UGH ON ONE HAND, THE REVENUE HAS ALLEGED THAT THERE WAS NO CON CLUSIVE EVIDENCE FOUND AT THE TIME OF SEARCH THAT THE SAID BUSINESS WAS RUN BY THE WIFE OF THE ASSESSEE, BUT LIKEWISE, EVEN NO SUCH EVIDENC E WAS FOUND THAT THE ASSESSEE HAD DIVERTED HIS FUNDS OR THERE WAS UN EXPLAINED INVESTMENT BY THE ASSESSEE IN THE NAME OF HIS WIFE. FACTS HAVE REVEALED THAT A RETURN U/S.44AF OF THE ACT WAS FILED BY SMT.SULOCHNABEN AND THE ASSESSMENT WAS MADE ON PROT ECTIVE BASIS IN HER HAND VIDE AN ORDER DATED 27.12.2007 PA SSED ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 6 - U/S.143(3) OF I.T. ACT. WHILE TAKING SUCH DECISION THE A.O. HAD GIVEN THE ONLY RESON,QUOTE IN HER STATEMENT DATED 6.10.2005, SHE HAS STATED THAT SHE IS SIMPLY A HOUSE-WIFE. FURTHER , SHRI ATUL SHAREDELAL IN HIS STATEMENT DATED 22.9.2005 HAS CAT EGORICALLY GIVEN THE DETAILS OF FAMILY BUSINESS WHICH DOES NOT INCLU DE THE RETAIL BUSINESS OF HOSIERY/READYMADE GAMENTS CLAIMED TO BE CARRIED OUT AND PROFIT SHOWN UNDER SEC. 44AF OF THE ACT. UNQUO TE. IT APPEARS THAT THE REVENUE HAS ADOPTED A ONE SIDED APPROACH B Y NOT CONFRONTING WITH THOSE STATEMENTS WHICH WERE USED A GAINST THE ASSESSEE. IT IS A SETTLED LAW THAT A STATEMENT WITH OUT ANY SUPPORTING EVIDENCE IS NOTHING BUT A BALD OR STALE STATEMENT , THEREFORE , MERELY ON THAT BASIS AN ADVERSE INFERENCE SHOULD NOT BE DR AWN. THUS, THE TOTALITY OF THE CIRCUMSTANCES DEMANDS TO REVERSE TH E FINDINGS OF THE AUTHORITIES BELOW SINCE THERE WAS NO EVIDENCE FOUND THAT THE BUSINESS OF THE WIFE WAS A BENAMI BUSINESS OF THE ASSESSEE. MERELY BECAUSE A RETURN U/S.44AF WAS FILED OF ASSES SEES WIFE AND APART FROM THAT NO CLINCHING EVIDENCE WAS IN POSSES SION OF THE REVENUE AND THAT WAS THE ONLY GENESIS OF THE IMPUGN ED ADDITION, WE HEREBY HOLD THAT THE ACTION OF THE AO WAS MERELY ON PRESUMPTION, HENCE TO BE REVERSED. THIS GROUND OF THE ASSESSEE IS THEREFORE ALLOWED. 5. APROPOS ANOTHER GROUND, IT WAS FOUND BY THE ASSE SSING OFFICER THAT A RETURN WAS FILED BY THE HUF OF RETAIL BUSINESS ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 7 - U/S.44AD/44AF OF THE ACT DISCLOSING AN INCOME OF RS .95,000/- . A STATEMENT OF ONE SHRI ATUL WAS RECORDED AND SINCE IN THAT STATEMENT HE HAS NOT MENTIONED THE RETAIL BUSINESS OF THE HUF, THEREFORE AO WAS OF THE VIEW THAT THE PROFIT DISCLO SED IN THE NAME OF HUF WAS UNDISCLOSED INCOME OF THE ASSESSEE. IN IDE NTICAL MANNER, THE ACTION OF THE AO WAS AFFIRMED BY THE LD.CIT(A). 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTICED THAT IN RESPECT OF THE IMPUGNED ADDITION A PROTECTIVE ASSESSMENT WAS MADE IN THE HANDS OF THE HUF VIDE AN ORDER DATED 27.12 2007 U/S 143(3) OF THE ACT. FURTHER, THE STA TEMENT OF SHRI ATUL WAS NOT CONFRONTED TO THE ASSESSEE. IT HAS AL SO BEEN NOTED THAT THERE WAS NO EVIDENCE FOUND AT THE TIME OF SEARCH T O DEMONSTRATE THAT THE FUNDS OF THE ASSESSEE WERE DIVERTED FOR TH E SAID BUSINESS OF HUF. SINCE ON IDENTICAL FACTS WE HAVE ALREADY TAK EN A VIEW (SUPRA) THEREFORE ON THE SAME LINES, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND GRANT RELIEF ACCORDINGLY. TH IS GROUND IS ALLOWED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 13 TH MAY, 2011. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 13/ 05 /2011 ITA NO.1200/AHD /2009 SHRI PRAVIN RATILAL SHARE DALAL VS. DY.CIT ASST.YEAR 2006-07 - 8 - T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-III, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..11.5.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.5.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S13.5.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.5.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER