JYOTI WIRE INDUSTRIES P. LTD, MUMBAI V. ASST CIT CEN CIR 16, MUMBAI

ITA 1273/MUM/1993

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70774 (ITAT-MUMBAI)
• Duration Of Justice: 20 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 1989-1990
• Appeal Filed On: 01-01-1993
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEKHAR L GAJBHIYE
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Search and seizure; Question of law
• Section: 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL D DD D BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . , . , ! ! ! ! '# '# '# '# BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI D. KARUNAKAR RAO D. KARUNAKAR RAO D. KARUNAKAR RAO D. KARUNAKAR RAO, AM , AM , AM , AM ./ I.T.A. NO. 1273/MUM/1993 I.T.A. NO. 1273/MUM/1993 I.T.A. NO. 1273/MUM/1993 I.T.A. NO. 1273/MUM/1993 ( $% $% $% $% & & & & / ASSESSMENT YEAR :1989-90) JYOTI WIRE INDUSTRIES PVT. LTD. 23A, SHAH INDIA ESTATE, VEERA SESAI ROAD, ANDHERI (W) MUMBAI-400058 % % % % / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 16, CCO BLDG., ANEXE, 6 TH FLOOR, M.K. ROAD, MUMBAI-400020 #' ! ./ ( ./ PAN/GIR NO. : ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , / APPELLANT BY : DR. K. SHIVARAM *+') *+') *+') *+') - -- - , , , , /RESPONDENT BY : MR. SHEKHAR L. GAJBHIYE % %% % - -- - .! .! .! .! / DATE OF HEARING : 5 TH AUGUST 2013 /0& /0& /0& /0& - -- -.! .! .! .! /DATE OF PRONOUNCEMENT: 14 TH AUGUST 2013 ' 1 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATE D 24.1.1992 OF COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSM ENT YEAR 1989-90 WAS DISPOSED OF BY THIS TRIBUNAL VIDE ORDER DATED 1 8.10.1993. 2. AGGRIEVED BY THE FINDING OF THIS TRIBUNAL IN RES PECT OF GROUND NO. 2 THE ASSESSEE FILED A REFERENCE APPLICATION IN RA NO . 2636/M/1993 WHICH WAS DISPOSED OF BY THIS TRIBUNAL BY PASSING THE ORD ER DATED 22.2.1995 WHEREBY A REFERENCE U/S 256(1) WAS MADE TO HONBLE HIGH COURT ON THE FOLLOWING QUESTION. ITA NO. 1273/M/1993 JYOTI WIRE INDUSTRIES PVT. LTD. 2 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN UPHOLDING A PART OF TH E ADDITION MADE TO THE ASSESSEES INCOME AMOUNTING TO ` 7,00,000/-? 3. WHILE ANSWERING THE QUESTION FRAMED AND REFERENC E MADE, THE HONBLE HIGH COURT VIDE DECISION DATED 25.9.2012 IN ITA REFERENCE NO. 38/1997 HAS GIVEN THE ANSWER IN FAVOUR OF THE ASSES SEE. ACCORDINGLY, THIS APPEAL HAS BEEN PLACED BEFORE THIS BENCH FOR PASSIN G GIVING EFFECT ORDER IN TERMS OF THE DECISION OF HONBLE HIGH COURT IN R EFERENCE. 4. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C AREFULLY PERUSED THE RELEVANT MATERIAL. THE ASSESSEE HAS RAISED VARI OUS GROUNDS IN THIS APPEAL HOWEVER THE REFERENCE WAS MADE ONLY WITH RES PECT TO THE FINDING OF GROUND NO. 2 RAISED BY THE ASSESSEE AS UNDER: 2.01 THE A.C. AND CIT(A) ERRED IN MAKING AND CONFI RMING RESPECTIVELY THE ADDITION OF RS.22,75,224/ IN RESP ECT OF UNDERSTATEMENT OF CONSIDERATION DEEMED TO HAVE BEEN RECEIVED BY THE APPELLANT COMPANY IN ASSESSMENT YEAR 198990 ON THE GROUND THAT THE APPELLANT COMPANY MADE DISCLOSURE O F INCOME VOLUNTARILY AND IN GOOD FAITH FOR HAVING RECEIVED ON MONEY IN RESPECT OF THE SALE OF CERTAIN INDUSTRIAL UNITS DUR ING THE ASSESSMENT YEAR 199091. 2.02 THE APPELLANT COMPANY MADE THE FOLLOWING SUBMI SSIONS BEFORE THE A.C. A) DURING THE COURSE OF ACTION UNDER SECTION 132 OF THE ACT, THE INVESTIGATING OFFICIALS INTERROGATED THE INDUSTRIAL UNITHOLDERS AND MADE DETAILED ENQUIRY ESPECIALLY IN REGARD TO T HE SO CALLED ON MONEY ALLEGED TO HAVE BEEN TAKEN BY THE APPELL ANT COMPANY AGAINST THE SALE OF ABOVE INDUSTRIAL UNITS. THE INDUSTRIAL UNITHOLDERS HAD CATEGORICALLY MENTIONED -DURING TH E COURSE OF SUCH ENQUIRY THAT THEY HAVE NOT PAID ON MONEY TO THE APPELLANT COMPANY IN CONNECTION I WITH THE SALE OF INDUSTRIAL UNITS TO THE APPELLANT COMPANY. B) THE INVESTIGATING OFFICIALS ALSO RECORDED THE AP PELLANT COMPANYS STATEMENT AND THE SAME ARE CORROBORATIVE IN THIS BEHALF. ITA NO. 1273/M/1993 JYOTI WIRE INDUSTRIES PVT. LTD. 3 C) THE APPELLANT COMPANY HAS BEEN GIVEN TO UNDERSTA ND THAT THE ASSISTANT COMMISSIONER OF INCOME TAX DID DEPUTE THE INSPECTOR TO VISIT VARIOUS INDUSTRIAL UNIT HOLDERS PARTICULAR LY WITH A VIEW TO ASCERTAIN AS TO WHETHER THEY HAVE PAID ALLEGED ON MONEY AT THE TIME OF SALE OF CATEGORICALLY DENIED HAVING PAI D ANY ON MONEY TO THE APPELLANT COMPANY. D) THE AGREEMENTS WITH THE UNITHOLDERS HAVE BEEN D ULY REGISTERED WITH THE REGISTRAR OF IMMOVABLE PROPERTI ES AND THE REGISTERING AUTHORITIES HAVE ALSO ACCEPTED THE VALU E STIPULATED IN THE RELEVANT AGREEMENTS. E) THE ASSISTANT COMMISSIONER OF INCOMETAX OUGHT T O ISSUE THE SUMMONS TO THE INDUSTRIAL UNITHOLDERS IN ORDER TO ENABLE HIM TO SATISFY ABOUT THE CORRECTNESS OF THE ABOVE STATE MENTS. AT THE TIME OF RECORDING SUCH STATEMENT FROM THE ABOVE UNI THOLDERS, THE APPELLANT COMPANY SHOULD ALSO BE AFFORDED AN OP PORTUNITY TO CROSS EXAMINE THE CONCERNED UNITHOLDERS TO ASCERTA IN THE CORRECTNESS OF THE FACTS. F) THE ONUS IS ON THE DEPARTMENT TO PROVE THE FACTS OTHERWISE THAN WHAT HAS BEEN STATED ABOVE. THE ASSISTANT COMM ISSIONER OF INCOMETAX DID NOT ADDUCE ANY EVIDENCE TO SUPPORT H IS STAND. 5. WHILE DECIDING THE GROUND NO. 2 THE TRIBUNAL HAS GIVEN ITS FINDING IN PARA 19 AS UNDER: 19. WE HAVE CONSIDERED THE MATTER CAREFULLY. AS RE GARDS THE FACTS, THERE IS NO DISPUTE THAT THE ASSESSEE DECLAR ED THE RECEIPT OF ON MONEY OF RS 348/- PR SQ. FT. IN THE ASSESSMEN T YEAR 1990- 91 I.E. THE ACTUAL SALE COMING TO AT RS.1111/- PER SQ. FT. AS AGAINST RS.763/- DECLARED BY THEM. THERE IS ALSO EQ UALLY NO DISPUTE THAT THIS DECLARATION OF THE RECEIPT OF THE ON MONEY BY THE ASSESSEE CAME ONLY AS A EQUAL TO THE SEARCH PRO CEEDINGS. SIMILARLY THERE IS NO QUARREL THAT NO INDEPENDENT M ATERIAL OR EVIDENCE EXISTED OR BROUGHT ON RECORD BY THE DEPART MENT TO PROVE THAT ON MONEY WAS RECEIVED BY THE ASSESSEE DURING THE CURRENT YEAR TOO. AS IS EVIDENT FROM THE IMPUGNED B EFORE US IN THE OPINION OF LEARNED COMMISSIONER SINCE THE HAD A LREADY CONFESSED HAVING RECEIVED ON MONEY DURING THE ACC OUNTING PERIOD RELEVANT TO THE ASSESSMENT YEAR 1990-91, IT AUTOMATICALLY FOLLOWS THAT HE HAD RECEIVED ON MONEY ON SALE OF GA LA DURING THE ACCOUNTING PERIOD RELEVANT TO ASSESSMENT YEAR 1989- 90 ALSO. WE ARE, AFRAID, WE CANNOT TOTALLY SUBSCRIBE TON ON THIS RULE OF AUTOMATION. A PERSON WHO MAY BE FOUND TO BE DISH ONEST ON THE 25 TH OF A PARTICULAR MONTH CANNOT NECESSARILY BE SAID T O BE EQUALLY DISHONEST SAY ON THE 20 TH OF THAT EVERY MONTH AND VICE ITA NO. 1273/M/1993 JYOTI WIRE INDUSTRIES PVT. LTD. 4 VERSA. THE DETAILS OF THE PERSONS TO WHOM THE INDUS TRIAL UNITS WERE SOLD BY THE ASSESSEE DURING THE YEAR UNDER CON SIDERATION WERE UNDENIABLY AVAILABLE AND THAT BEING SO A MINIM UM ENQUIRY WAS CALLED FOR TO REACH ANY CONCLUSION IN WHICH THE ASSESSING OFFICER HAD FAILED AS AN INVESTIGATOR IN COLLECTION AND COLLATING THE DETAILS, NOT EVEN COMPARABLE COST OF SALES OF S IMILAR CONSTRUCTION OF CONTEMPORARY PERIOD. HOWEVER, WE ALSO FIND SOME FORCE IN THE SUBMISSIONS MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE RECEIPT OF ON MONEY HAD NEATLY BECOME A SORT OF CONDITION PR ECEDENT FOR THE COMPLETION OF PROPERTY TRANSACTION IN THE URBAN AREAS, MORE PARTICULARLY MEGA AND METROPOLITAN CITIES. EVEN THA T BEING SO IT COULD AT BEST BURDEN THE ASSESSEE ONLY WITH AN ADHO C ADDITION RATHER THAN AN ADDITION ON THE SAME SCALE AS WAS CO NFESSED BY THEM DURING THE ASSESSMENT YEAR 1990-91. IF IT IS T HE QUESTION OF TAKING A JUDICIAL NOTICE, WE MAY NOT EXPRESS MUCH H ESITATION ON SAYING THAT IN CASE WHERE SEARCH ACTION IS TAKEN, T HE ASSESSEE FELL SCARED AND WITH A VIEW TO MAINTAIN HARMONIOUS CELATION WITH THE DEPARTMENT SOMETIMES REACT OVER-ENTHUSIASTICALL Y, WHETHER OR NOT THE DEPARTMENTAL OFFICERS MAKE ANY ATTEMPT O F OVERSMARTING THEM. IT IS IN THIS PECULIAR BACKGROUN D OF THE CASE AND TAKING INTO CONSIDERATION THAT NOT AN IOTA OF M ATERIAL EXISTED ON RECORD ABOUT THE RECEIPT OF ON MONEY BY THE AS SESSEE DURING THE CURRENT YEAR THAT WE MAKE AN ADHOC ADDITION WHI CH WE ESTIMATE AT RS.7 LAKHS. 6. AS IT IS CLEAR THAT THIS TRIBUNAL HAS PARTLY GRA NTED RELIEF TO THE ASSESSEE IN RESPECT OF GROUND NO. 2 WHILE CONFIRMIN G THE ADDITION OF ` 7 LAKHS OUT OF ` 22,75,224/- MADE BY THE AO AND CONFI RM BY THE CIT(A). THE HONBLE HIGH COURT WHILE DECIDING THE REFERENCE AS HELD IN PARA 6 TO 9 AS UNDER: 6. WE HAVE CONSIDERED THE SUBMISSIONS. THE RESPON DENT- REVENUE HAS ACCEPTED THE ORDER OF THE TRIBUNAL AND HAS NOT PREFERRED ANY APPLICATION SEEKING TO RAISE A QUESTI ON OF LAW TO THE EFFECT THAT THE ORDERS OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX(APPEALS) WERE CORRECT IN LAW AND THAT THE TRIBUNAL OUGHT NOT TO HAVE DISTURBED THEIR FINDINGS. THEREFORE, THE ONLY QUESTION FRAMED FOR OUT OPINION IS IN THE CONTEXT OF THE TRIBUNAL ADDING AN AD-HOC AMOUNT OF ` 7,00,000/-. IN THE CIRCUMSTANCES, THE RELIANCE UPON THE ORDERS OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X(APPEALS) BY THE RESPONDENT IS OF NO AVAIL. IN OTHER WORDS, W E ARE NOT CALLED ITA NO. 1273/M/1993 JYOTI WIRE INDUSTRIES PVT. LTD. 5 UPON TO CONSIDER THE CORRECTNESS OF THE ORDERS OF T HE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX(APPEALS) . 7. THE ISSUE RAISED BY THE RESPONDENTS COUNSEL VI Z. THAT THE FINDING OF FACT BY THE TRIBUNAL SHOULD NOT BE DISTU RBED, IS ALSO NOT SUSTAINABLE FOR THE REASONS THAT THE TRIBUNAL WAS C ONSCIOUS OF THE SAME WHILE SUBMITTING THE QUESTION OF LAW UNDER SECTION 256(1) OF THE ACT TO THE HIGH COURT FOR ITS OPINIO N. 8. ON MERITS, IT IS CLEAR THAT THE TRIBUNAL HAS REA CHED A FINDING OF FACT THAT THERE IS NO MATERIAL EVIDENCE ON RECORD FOR THE ASSESSMENT YEAR 1989-90 TO ESTABLISH THAT ANY ON MONEY WAS RECEIVED BY THE APPLICANT-ASSESSEE DURING THE Y EAR 1989-90. FURTHER, THE TRIBUNAL HAS, IN TERMS, REJECTED THE F INDING OF THE LOWER AUTHORITIES THAT MERELY BECAUSE THE APPLICANT -ASSESSEE HAD RECEIVED ON MONEY DURING THE ASSESSMENT YEAR 1990-91, IT FOLLOWS THAT THE APPLICANT-ASSESSEE HAD ALSO RECEIV ED ON MONEY FOR THE ASSESSMENT YEAR 1989-90. THE TRIBUNAL, AFTE R HAVING REACHED THE AFORESAID FINDING, WITHOUT GIVING ANY R EASONS WHATSOEVER, HAS ARBITRARILY CONCLUDED THAT AN AD-HO C ADDITION OF ` 7,00,000/- HAS TO BE MADE ON THE BASIS OF AN ESTI MATE. THE CONCLUSION IS BEREFT OF ANY REASONS WHATSOEVER. THE REFORE, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS CLEARLY WI THOUT SUPPORTING REASONS. A SINE QUA NON FOR A JUDICIAL ORDER BY THE TRIBUNAL IS A REASONED ORDER. A REASONED ORDER WOULD IMPLY EXAMIN ATION OF THE EVIDENCE PLACED BEFORE THE AUTHORITY AND SOME N EXUS BETWEEN THE EVIDENCE AND THE CONCLUSION REACHED. IN THIS CASE, THE TRIBUNAL HOLDS THAT THERE IS NO EVIDENCE AND IT SEEKS TO ADD ` 7,00,000/- ON AN AD-HOC BASIS TO THE INCOME DECLARE D BY THE APPLICANT-ASSESSEE. HOWEVER, SUSPICION BY ITSELF IS NOT ENOUGH TO REACH THE CONCLUSION THAT ON MONEY WAS RECEIVED B Y THE APPLICANT-ASSESSEE FOR THE ASSESSMENT YEAR 1989-90. THE TRIBUNAL HAS NOT APPROVED THE REASONING ADOPTED BY THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS). HAD THAT BEEN SO, IT MAY HAVE BEEN ANOTHER MATTER W ITH WHICH WE ARE NOT CONCERNED IN THIS REFERENCE. 9. IN VIEW OF THE ABOVE, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE ANSWER THE QUESTION FRAMED FOR OUR OPINION IN THE NEGATIVE I.E. IN FAVOUR OF THE APPLICANT-ASSESSEE A ND AGAINST THE RESPONDENT-REVENUE. 7. IN VIEW OF THE ABOVE FINDINGS OF THE HONBLE HIG H COURT ON THE QUESTION OF REFERENCE IN RESPECT OF GROUND NO. 2 TH E ADDITION OF ` 22,75,224/- ON ACCOUNT OF OWN MONEY BEING ATTRIBUTA BLE TO SALE OF SIX GALAS IS DELETED. ITA NO. 1273/M/1993 JYOTI WIRE INDUSTRIES PVT. LTD. 6 8. IN THE RESULT, GROUND NO. 2 OF THE APPEAL IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF AUGUST 2013 ' 1 - /0& ! 2 3'%4 14 TH 5#. 0 - 5 SD/- SD/- ( . ) ! '# (D. KARUNAKAR RAO) ACCOUNTANT MEMBER ( ) $ '# (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 14 TH AUGUST 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI