Mr. Mahendra Kumar Soni, New Delhi V. ITO, New Delhi

ITA 1267/DEL/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8118 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: SAUBHAGYA AGARWAL
• Keywords: Bogus purchase; Search and seizure; Opportunity of being heard; Principle of natural justice; Accommodation entries; Sham transactions
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1267/DEL./2016 (ASSESSMENT YEAR : 2007-08) SHRI MAHENDRA KUMAR SONI, VS. ITO, WARD 23 (1), PROP. M/S. M. VAJUBHAI JEWELLERS, NEW DELHI. B 16, ARCHANA SHOPPING ARCADE MARKET, GREATER KAILASH I, NEW DELHI 110 048. (PAN : AATPS1324C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAUBHAGYA AGARWAL, ADVOCATE REVENUE BY : SHRI K.K. JAISWAL, DR DATE OF HEARING : 12.04.2016 DATE OF ORDER : 29.04.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, SHRI MAHENDRA KUMAR SONI (HEREINAFTER RE FERRED TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL , SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 21.01.2016 PASSED BY LD. CIT(A)- 10, NEW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON TH E GROUNDS INTER ALIA THAT:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ('CIT(A)') HAS ERRED ON FACTS AND IN LAW IN UPHOLDI NG THE ORDER OF THE ASSESSING OFFICER MAKING AN ADDITION O F ITA NO.1267/DEL./2016 2 RS.8,12,360/- U/S 143(3)/147 OF THE INCOME TAX ACT, 196 L ('ACT'). 1.1 THAT THE ASSESSMENT ORDER DATED 30.07.2014 ASSE SSING INCOME AT RS.10,26,200/- BY THE ITO WARD 23(1) ('AO ') IS ARBITRARY, UNJUST AND ILLEGAL ON FACTUAL AND LEGAL GROUNDS. 1.2 THAT THE CIT(A) FAILED TO APPRECIATE THAT THE A PPELLANT HAS ENTERED INTO A GENUINE TRANSACTION AND MADE PAY MENTS BY ACCOUNT PAYEE CHEQUE. 1.3 THAT THE CIT(A) FAILED TO APPRECIATE THAT THE A PPELLANT HAS ALSO OFFERED HIS INCOME FROM SALE OF THE ALLEGE DLY FAKE PURCHASES TO TAX AND TAX HAS BEEN DULY PAID. 1.4 THAT THE CIT(A) FAILED TO APPRECIATE THAT THE A PPELLANT HAS FURNISHED BILLS CONTAINING PAN, CST NUMBER AND TIN NUMBER FROM THE SELLER AND MADE THE PAYMENT BY ACCO UNT PAYEE CHEQUE THEREBY DISCHARGING HIS OBLIGATIONS UN DER THE ACT. 1.5 HAD NOT FURNISHED INACCURATE PARTICULARS OF IN COME BY CLAIMING THE EXPENSES AS ALLEGED BY THE AO IN THE I MPUGNED ORDER NOR HAD THE APPELLANT MADE ANY INCORRECT CLAI M THEREOF. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS UPHELD THE ASSESSMENT ORDER WITHOUT APPR ECIATING THE FACTS OF THE CASE 2.1. THAT THE CTT(A) HAS FAILED TO APPRECIATE THAT THIS IS NOT A CASE WHERE THE APPELLANT FAILED TO DISCHARGE HIS ONUS OF PROVING THE IDENTITY OF THE SELLER AND THE GENUINEN ESS OF THE TRANSACTION. 2.2. THAT THE PROFIT FROM SALE OF DIAMONDS HAS ALRE ADY BEEN OFFERED TO TAX AND TAX HAS ALREADY BEEN PAID. ANY A TTEMPT TO TAX THE WHOLE AMOUNT WILL RESULT IN DOUBLE TAXATION . 2.3. THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT MERE STATEMENT BY THE SELLER THAT THEY ARE INDULGING IN BOOK ENTRIES DOES NOT MAKE ALL TRANSACTION SHAM TRANSACTIONS ESP ECIALLY IN LIGHT OF THE FACT THAT THEIR STATEMENTS SHOW THAT P HYSICAL DELIVERY OF DIAMONDS AS HANDED OVER TO ACTUAL BUYER S. 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO AS THE ITA NO.1267/DEL./2016 3 TRANSACTION RELING TO THE APPELLANT HAS NOT SPECIFI CALLY BEEN ALLEGED TO BE BOGUS BUT THE ORDER HAS BEEN PASSED M ERELY ON THE PRESUMPTION THAT IT IS BOGUS, WHICH IS ILLEGAL AND IMPERMISSIBLE IN LAW. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO IN LIGHT OF THE FACT THAT THERE IS A MATCHING OF THE SALE AND P URCHASE MADE BY THE APPELLANT, WHICH HAS BEEN IGNORED BY THE AUT HORITIES BELOW. 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO AS IT IS BASED ON MERE SURMISES AND CONJECTURE. 6. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO AND HAS FAILED TO APPRECIATE THAT THE EVIDENCE SUBMITTED BY THE APPELLANT IS CONCLUSIVE PROOF TO SUBSTANTIATE THE C ASE OF THE APPELLANT AND THAT NO ADVERSE MATERIAL HAS BEEN BRO UGHT ON RECORD. 7. THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT NO N- GRANTING OF OPPORTUNITY TO CROSS EXAMINE THE PERSON ON WHO'S STATEMENT THE ADDITION OS MADE RENDERS THE ASSESSME NT AS VOID. ANY ASSESSMENT BASED ON A STATEMENT WITHOUT CONFRONTING THE ASSESSEE OR ALLOWING AN OPPORTUNITY TO CROSS EXAMINE IS VOID IN LAW 8. THE CIT(A) HAS FAILED TO ADJUDICATE ON THE ADDIT IONAL GROUND TAKEN BY THE APPELLANT ON NON-GRANTING OF OP PORTUNITY TO CROSS EXAMINE. 9. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO ADDING NOTIONAL COMMISSION TO THE INCOME OF THE APPELLANT. 10. THAT WITHOUT PREJUDICE TO GROUND NO.1, 2 & 3 AB OVE, THE PENALTY AS LEVIED IS EXCESSIVE. 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE : PRO CEEDINGS UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R THE ACT) WERE INITIATED AGAINST THE ASSESSEE ON THE BASIS OF INFORMATION ITA NO.1267/DEL./2016 4 RECEIVED FROM INVESTIGATION WING, NEW DELHI THAT FR OM THE SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF M/S. RAJENDRA GROUP, M/S. SANJAY CHAUDHARY GROUP AND M/S. DHARMIC HAND JAIN GROUP, M/S. M. VAJUBHAI JEWELLERS, PROPRIETORSHIP C ONCERN OF THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES TO THE TUNE OF RS.7,96,430/- ON ACCOUNT OF SALE MADE DURING THE FI NANCIAL YEAR 2006-07. CONSEQUENTLY, NOTICE U/S 148 WAS ISSUED A ND IN RESPONSE THERETO, ASSESSEE FILED ORIGINAL RETURN FILED ON 23 .10.2007 DECLARING INCOME AT RS.2,13,840/- TO BE TREATED AS REPLY TO T HE NOTICE. 3. THE ASSESSEE WAS CALLED UPON TO PROVIDE THE CONF IRMATIONS FROM THE PARTIES AND IN RESPONSE, SHRI VARUN MEHRA, CA PUT IN APPEARANCE, FILED COPY OF AGREEMENT OF TRANSACTION AND DETAILS OF MATERIAL RECEIVED ALONG WITH VOUCHERS IN SUPPORT OF THE PAYMENT O FRS.7,96,430/-. FINDING THE EXPLANATION FURNISHED BY THE ASSESSEE NOT SATISFACTORY, THE AO CAME TO THE CONCLUSION THA T THE ASSESSEE HAD MADE PURCHASES FROM HIS UNDISCLOSED MONEY AND F OR REGULARIZING HIS PURCHASES, HE APPROACHED THE RAJEN DRA GROUP FOR BOGUS BILLS AND CONSEQUENTLY, MADE AN ADDITION OF R S.10,26,200/- (RS.7,96,430/- ON ACCOUNT OF BOGUS PURCHASES + RS.1 5,390/- BEING COMMISSION PAID TO THE ENTRY OPERATOR TO THE TUNE O F 2% TO 2.5%). ITA NO.1267/DEL./2016 5 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEELING AGGRIEVED, THE A SSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. AT THE VERY OUTSET, THE LD. AR FOR THE ASSESSEE CONTENDED THAT THE CIT (A) HAS ERRED IN NOT DISPOSING OF THE ADDIT IONAL GROUNDS INTER ALIA :- THE APPELLANT HAS THE LEGAL RIGHT TO CROSS EXAMIN E THE THIRD PARTY ON WHOSE SUPPORT THE RESPONDENT HAS PROCEEDED TO MAKE REOPEN THE ASSESSMENT AND SOUGHT TO MAKE ADDITIONS. THE DENIAL OF THE LEGAL RIGHT IS A GAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE UNSUSTA INABLE UNDER LAW. WITHOUT SUCH OPPORTUNITY THE NEITHER ADDITIONS ARE UNILATERAL AND LIABLE FOR REJECTION A T THE OUTRIGHT. AND AS SUCH, ADEQUATE OPPORTUNITY OF BEING HEARD HA S NOT BEEN GIVEN TO THE ASSESSEE DURING THE APPELLATE PROCEEDI NGS BY THE LD. CIT (A). 7. FROM THE COPY OF APPLICATION DATED 17.03.2016, C OPY OF AFFIDAVIT AND COPY OF ADDITIONAL GROUNDS OF APPEAL, LYING AT PAGES 1 TO 5 OF THE PAPER BOOK AVAILABLE ON THE FILE, IT IS APPARENTLY PROVED THAT THE ADDITIONAL GROUNDS WERE FILED BY THE ASSES SEE DURING THE ITA NO.1267/DEL./2016 6 APPELLATE PROCEEDINGS WHEREUPON NO FINDINGS HAVE BE EN RETURNED BY THE CIT (A) NOR ANY SUCH GROUND HAS BEEN ENUMERA TED IN THE GROUNDS OF APPEAL REPRODUCED BY THE LD. CIT (A) IN PARA 3 OF THE IMPUGNED ORDER. 8. SO, WITHOUT ENTERING INTO THE MERITS OF THIS CAS E, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL GROUNDS, UN DISPUTEDLY FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS ON 20.01.2016, WERE REQUIRED TO BE DECIDED BY THE LD. CIT (A) BY P ROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQ UENTLY, THE PRESENT APPEAL IS HEREBY ALLOWED AND FILE IS ORDERE D TO BE RESTORED BACK TO THE LD. CIT (A) TO PASS FRESH ORDER AFTER C ONSIDERING THE ADDITIONAL GROUNDS BY GIVING AN ADEQUATE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 9. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE PR ESENT APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF APRIL, 2016. SD/- SD/- (N.K. SAINI) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF APRIL, 2016 TS ITA NO.1267/DEL./2016 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-X, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.