Shri .Rajagopal Upadhyaya , Bellary V. Deputy Commissioner of Income Tax Central Circle-1(2), Bangalore

ITA 1275/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3461 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDINI DAS J
• Assessee Lawyers: K R PRADEEP
• Keywords: Unexplained investment; Document seized; Opportunity of being heard; Principle of natural justice; Documents seized
• Section: 143(3); 142(1); 131; 69; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, B ENGALURU BEFORE S HRI N.V.VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I TA NO. 1274 & 1275 / BANG/2 0 1 8 (ASSESSMENT YEAR S : 2007 - 08 AND 2011 - 12 ) SHRI RAJAGOPAL UPADHYAYA, SRI HARI' , 1 S T MAIN, 2 ND LINK ROAD, BASAVESHWARA NAGAR, BENGALURU - 583 104. PAN:AAJPU9639G VS. APPELLANT DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 1(2), BENGALURU. RESPONDENT APPELLANT BY : SHRI K.R.PRADEEP, CA. RESPONDENT BY : SM T. NANDINI DAS, JCIT(DR) DATE OF HEARING : 16/08/2018 DATE OF PRONOUNCEMENT : 24 /08/2018 O R D E R PER JASON P BOAZ , AM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 11, BENGALURU, DATED 15/03/2018 FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12. SINCE CERTAIN ISSUES ARE COMMON AND INTERCONNECTED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. BRIEFLY STATED, THE FACTS OF THE C ASE ARE AS UNDER: 2.1 ASSESSMENT YEAR 2007 - 08 A SEARCH U/S 132 OF THE OF THE INCOME - TAX ACT, 1961 [IN SHORT 'THE ACT'] WAS CONDUCTED ON 19/07/2010, INTER ALIA, IN THE BHARAT MINES AND MINERALS GROUP , OF WHICH THE ASSESSEE WAS A P AR T . IN TH E COURSE OF SEARCH CASH OF RS.10 LAKHS AND CERTAIN DOCUMENTS WERE FOUND/SEIZED FROM THE ASSESSEE S RESIDENCE. IN RESPONSE TO NOTICE U/S 153C OF THE ACT DATED 10/07/2012, THE ASSESSEE FILED A ITA NO . 1274 & 1275 /BANG/20 PAGE 2 OF 8 RETURN OF INCOME ON 08/02/2013 DECLARING INCOME OF RS.1,82,230/ - . THE ASSESSMENT WAS COMPLETED U/S 153C R.W.S 143(3) OF THE ACT VIDE ORDER DATED 19/03/2013 WHEREIN THE ASSESSEE S INCOME WAS DETERMINED AT 10,02,230/ - IN VIEW OF AN ADDITION OF RS.8,20,000/ - MADE BY THE ASSESSING OFFICER (AO) AS UNEXPLAINED INVESTMENT IN IMMOVABLE PROPERTY U/S 69 OF THE ACT , CITING THE SEIZED MATERIAL AND STATEMENT RECORDED AT THE TIME OF SEARCH. IN THE ORDER OF ASSESSMENT, THE AO RECORDS THAT THE ASSESSEE DID NOT COMPLY WITH EITHER NOTICE U/S 143(2) OF THE ACT OR SUMMONS ISSUED U/S 131 OF THE ACT REQUIRING HIM TO PRODUCE BOOKS OF ACCOUNT AND TO EXPLAIN THE CONTENTS OF THE SEIZED DOCUMENTS IN CONNECTION WITH INVESTMENT IN IMMOVABLE PROPERTY I.E. PURCHASE OF PLOT NO.102, BLOCK NO.19 & 21, CMC WARD NO.18A, CTS WARD NO.16, BASVESWARA NAGAR, BELLARY. ON APPEAL, THE CIT(A) - 11, BENGALURU, DISMISSED THE ASSESSEE S APPEAL EX - PARTE VIDE ORDER DATED 15/03.2018, AFTER NOTING THAT THE ASSESSEE FAILED TO EITHER APPEAR OR FILE EVIDENCES AND SUBMISSIONS BEFORE HIM; CONSTANTLY SEEKING ADJOURNMEN TS IN THE HEARINGS FIXED FOR THIS APPEAL. 2.2 ASSESSMENT YEAR 2011 - 12: FOR THIS ASSESSMENT YEAR, THE ASSESSEE FILED THE RETURN OF INCOME ON 27/02/2013 DE CLARING INCOME OF RS.3,86,590/ - , ONLY AFTER ISSUE OF NOTICE U/S 142(1) OF THE ACT ON 10/07/2 012 . JUST AS IN THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2007 - 08, IN THIS ASSESSMENT YEAR ALSO, THE AO RECORDS THAT ASSESSEE DID NOT COMPLY WITH NOTICES ISSUED U/S 143(2) OF THE ACT OR SUMMONS ISSUED U/S 131 OF THE ACT REQUIRING THE ASSESSEE TO EXPL AIN THE SEIZED DOCUMENTS. THE AO ACCORDINGLY COMPLETED THE ASSESSMENT U/S 153D R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 19/03/2013, WHEREIN THE ASSESSEE S INCOME WAS DETERMINED AT RS.13,86,590/ - IN VIEW OF AN ADDITION OF RS.10,00,000/ - U/S 69A IN RESPECT OF CASH SEIZED IN THE COURSE OF SEARCH. ON APPEAL, THE CIT(A) - 11, BENGALURU DISMISSED THE ASSESSEE S APPEAL FOR ASSESSMENT YEAR 2011 - 12 EX - PARTE VIDE ORDER DATED 15/03/2018 AFTER NOTING THAT THE ASSESSEE ITA NO . 1274 & 1275 /BANG/20 PAGE 3 OF 8 FAILED TO EITHER APPEAR OR FILE EVIDENCES BEFORE H IM IN SUPPORT OF THE GROUNDS RAISED AND CONTINUOUSLY SOUGHT ADJOURNMENTS OF HEARING. 3. AGGRIEVED BY THE SEPARATE ORDERS OF THE CIT(A) - 11, BENGALURU, DATED 15/03/2018 FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12, THE ASSESSEE HAS PREFERRED THESE APPEALS B EFORE THE TRIBUNAL. 3.1 ASSESSMENT YEAR 2007 - 08: THE GROUNDS RAISED BY THE ASSESSEE IN THIS ASSESSMENT YEAR ARE AS UNDER: - ITA NO . 1274 & 1275 /BANG/20 PAGE 4 OF 8 3. 2 ASSESSMENT YEAR 20 11 - 12 : THE GROUNDS RAISED BY THE ASSESSEE IN THIS ASSESSMENT YEAR ARE AS UNDER: - 4. GROUNDS SL.NO.3 & 4 (FOR BOTH ASSESSMENT YEARS 2007 - 08 AND 2011 - 12) 4.1.1 AT THE OUTSET, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT IN TERMS OF GROUNDS NO.3 & AND 4 FOR BOTH ASSESSMENT YEARS 2007 - 08 AND 2011 - 12, THE ORDERS OF ASSESSMENT AND O RDERS OF THE LD.CIT(A) OUGHT TO BE SET ASIDE FOR FAILURE ON THE PART OF THE AUTHORITIES BELOW TO PROVIDE THE ASSESSEE WITH ADEQUATE OPPORTUNITIES OF BEING HEARD AND TO PRESENT ITS CASE, FILE DETAILS AND SUBMISSIONS BEFORE PASSING THE IMPUGNED ORDERS. ACCO RDING TO THE LD. AR, THIS FACT WILL BE ITA NO . 1274 & 1275 /BANG/20 PAGE 5 OF 8 EVIDEN T FROM THE CHRONOLOGY OF EVENTS THAT HAD TAKEN PLACE IN THE COURSE OF BOTH ASSESSMENT AND APPELLATE PROCEEDINGS. 4.1.2 ACCORDING TO THE LD. AR FOR THE ASSESSEE, A PERUSAL OF THE ORDERS OF ASSESSMENT FOR B OTH ASSESSMENT YEAR S 2007 - 08 AND 2011 - 12 WOULD REVEAL THAT AFTER NOTICES WERE ISSUED ON 10/07/2012 CALLING UPON THE ASSESSEE TO FILE RETURNS OF INCOME FOR THESE ASSESSMENT YEARS, THE NOTICES U/S 143(2) OF THE ACT WAS ISSUED ONLY ON 27/02/2013 CALLING FOR D ETAILS TO BE FILED WITHIN A SHORT PERIOD ON 05/03/2013. SINCE THE SAME COULD NOT BE COMPLIED WITH, THE AO ISSUED SUMMONS U/S 131 OF THE ACT ON 07/03/2013 CALLING FOR ALL DETAILS, EVIDENCES AND EXPLANATIONS TO BE FILED BY 12/03/2013; FOR WHICH ONLY PARTIAL COMPLIANCE COULD BE MADE . T HEREUPON , T HE AO PROCEEDED TO DECIDE THE ISSUE IN A SUMMARY, EX - PARTE MANNER PLACING RELIANCE ON CERTAIN SEIZED DOCUMENTS. ACCORDING TO THE LD. AR, THE CHRONOLOGY OF EVENTS SHOWS THAT ASSESSMENT PROCEEDINGS FOR THESE ASSESSMEN T YEARS, 2007 - 08 AND 2011 - 12 WERE TAKEN UP BY ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 27/02/2013 AND COMPLETED IN HASTE AND IN A SUMMARY MANNER VIDE ORDERS OF ASSESSMENT DATED 19/03/2013; I.E. ALL PROCEEDINGS COMPLETED IN LESS THAN A PERIOD OF ONE MONTH. IT IS SUBMITTED THAT THESE FACTS ITSELF WOULD GO TO ESTABLISH THAT THE ASSESSEE WAS NOT AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD OR TO PRESENT HIS CASE WHICH IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 4.1.3 THE LD.AR SUBMI TS THAT EVEN ON APPEAL, A PERUSAL OF THE IMPUGNED ORDERS OF THE LD.CIT(A) DATED 15/03/2018 FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12 WOULD GO TO SHOW THAT THE LD. CIT(A) HAS UPHELD THE ORDERS OF THE AO IN A SUMMARY MANNER BY WAY OF NON - SPEAKING ORDER WITHOU T ADJUDICATING ON THE MERITS OF ANY ISSUE IN DISPUTE; MERELY STATING THAT THE ASSESSEE COULD NOT PROVIDE ANY SUBSTANTIVE EVIDENCES AND GROUNDS AGAINST THE AO S ORDERS. ACCORDING TO THE LD. AR, THE LD. CIT(A) S ORDERS WERE ALMOST ENTIRELY DEVOTED TO NARRAT E THAT MULTIPLE OPPORTUNITIES WERE AFFORDED TO THE ASSESSEE , IN SPITE OF THE FACT THAT THE ADJOURNMENTS BEING SOUGHT BY ITA NO . 1274 & 1275 /BANG/20 PAGE 6 OF 8 THE ASSESSEE WERE FOR VARIOUS GENUINE REASONS. THE LD. AR PLEADED THAT IN THE CIRCUMSTANCES NARRATED ABOVE, IT IS IMPERATIVE IN THE INT EREST OF SUBSTANTIAL JUSTICE THAT THE NON - SPEAKING ORDERS OF BOTH THE AUTHORITIES BELOW BE SET ASIDE BY THE TRIBUNAL AND THE AUTHORITIES BELOW BE DIRECTED TO MAKE THE ASSESSMENT DE NOVO, AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITIES OF BEING HEARD, W HICH THE ASSESSEE AGREES TO COMPLY WITH. 4.2 PER CONTRA, THE LD. DR FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ACCORDING TO THE LD. DR, THE ASSESSEE HAS BEEN AFFORDED OPPORTUNITIES OF BEING HEARD BY BOTH THE AUTHORITIES BELOW AN D THE PRESENT SITUATION IS A RESULT OF THE ASSESSEE S FAULT IN NOT FURNISHING THE REQUIRED DETAILS TO ESTABLISH/SUBSTANTIATE HIS CLAIM AND THEREFORE IT CANNOT BE SAID THAT THERE WAS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 4.3.1 WE HA VE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. FROM THE PERUSAL OF THE ORDERS OF ASSESSMENTS FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12, WE FIND THAT THE PERIOD FROM THE ISSUE OF NOTICES U/S 143(2) OF THE ACT ON 27/02/2013 TO 19/3/2013 THE ASSESSMENTS FOR BOTH THESE YEARS WERE COMPLETED POST HASTE IN A SUMMARY MANNER WITHIN A PERIOD OF LESS THAN ONE MONTH, AFTER A COUPLE OF HEARINGS, WHICH IN OUR VIEW, DENI ED THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER AND THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. ON APPEAL ALSO, WE FIND THAT THE LD.CIT(A) HAS UPHELD THE ORDERS OF ASSESSMENT FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12 ; BASICALLY EX - PARTE ON THE GROUNDS THAT ASSESSEE FAILED TO ESTABLISH A ND SUBSTANTIATE HIS CLAIM EVEN THOUGH OPPORTUNITIES OF HEARING WERE AFFORDED. WE NOTICE THAT THE LD.CIT(A) HAS NOT ADJUDICATED THE ISSUES RAISED ON MERITS BY WAY OF SPEAKING AND REASONED ORDERS BUT MERELY APPROVED THE AO S FINDINGS MECHANICALLY, ON THE G ROUND THAT THE ASSESSEE HAD NOT BEEN ABLE TO FURNISH EVIDENCE TO SUBSTANTIATE THE GROUNDS RAISED. ITA NO . 1274 & 1275 /BANG/20 PAGE 7 OF 8 4.3.2 IN THESE FACTUAL CIRCUMSTANCES, AS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE ULTIMATE OBJECT OF ASSESSMENT IS THAT THE TRUE AND CORRECT I NCOME OF THE ASSESSEE ALONE HAS TO BE BROUGHT TO TAX. IN THE CASE ON HAND, THE AUTHORITIES BELOW, BOTH HAVING FAILED TO AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD, THE ORDERS OF THE AUTHORITIES BELOW FOR BOTH ASSESSMENT YEARS 2007 - 08 AND 2011 - 12 ARE LIABLE TO BE SET ASIDE FOR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND WE DO SO. WE ACCORDINGLY RESTORE THE ISSUES RAISED BY THE ASSESSEE IN THE APPEALS FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12 TO THE FILE OF THE AO FOR DE - NOVO CONSIDERATI ON AND ADJUDICATION THEREON. NEEDLESS TO ADD, THE ASSESSEE MAY BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS AND SUBMISSIONS REQUIRED WITH REGARD TO HIS CLAIMS, WHICH SHALL BE CONSIDERED BEFORE DECIDING THE ISSUES AFRESH. CONSEQUE NTLY, GROUNDS NO.3 AND 4 OF THE ASSESSEE S APPEALS FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12 ARE ALLOWED. 5. GROUNDS 1, 2 AND 5 TO 12 - ASSESSMENT YEAR 2007 - 08 GROUNDS 1, 2 AND 5 TO 10 ASSESSMENT YEAR 2011 - 12 5.1 IN VIEW OF OUR DECISION RENDERED IN RESPECT OF GROUNDS 3 AND 4, BY SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON GROUNDS OF VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE GROUNDS 1,2 AND 5 TO 12 OF ASSESSMENT YEAR 200 - 08 AND GROUNDS 1, 2 AND 5 TO 10 OF ASSESS MENT YEAR 2011 - 12 RAISED ON MERITS ARE RENDERED ACADEMIC IN NATURE AND ARE NOT REQUIRED TO BE ADJUDICATED AT THIS JUNCTURE. 6. IN THE RESULT, THE ASSESSEE S APPEALS FOR ASSESSMENT YEAR 2007 - 08 AND 2011 - 12 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2018 S D/ - SD/ - ( N.V.VASUDEVAN ) ( JASON P BO AZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 24 / 0 8 /201 8 SRINIVASULU, SPS ITA NO . 1274 & 1275 /BANG/20 PAGE 8 OF 8 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE