Dhirendra Jadhavji Shah, Raigad V. Income-tax Officer,

ITA 1281/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1559 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JITEN DHIRENDR SHAH
• Keywords: Unexplained investment; Search and seizure; Document seized; Principle of natural justice; Documents seized; Reassessment proceedings
• Section: 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 1281 /PN/20 1 4 / ASSESSMENT YEAR : 20 0 8 - 0 9 JITEN DHIRENDRA SHAH L/H OF LATE DHIRENDRA JADHAVJI SHAH A - 803, RIDDHI SIDDHI RESIDENCY, PLOT NO.53, SECTOR - 03, NEW PANVEL, PLOT NO.53, SECTOR - 03, NEW PANVEL, DIST. RAIGAD - 410206 . / APPELLANT PAN: AHDPS471 1L VS. THE INCOME TAX OFFICER, WARD 2, PANVEL . / RESPONDENT / APPELLANT BY : SHRI JITEN DHIRENDR SHAH / RESPONDENT BY : SHRI A BHIJIT HALDER / RESPONDENT BY : SHRI A BHIJIT HALDER / DATE OF HEARING : 12 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 14 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF C I T (A) - I , THANE , DATED 04 . 0 2 .20 1 4 RELATING TO ASSESSMENT YEAR 200 8 - 0 9 AGAINST ORDER PASSED UNDER S ECTION 143 (3) R.W.S. 147 OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1 . THE HON. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.55,00,000/ - MADE IN THE HANDS OF THE APPELLANT AS UNEXPLAINED I NVESTMENT IN PURCHASE OF SHOP AT LITTLE WORLD MALL, KHARGHAR, NAVI MUMBAI, SOLELY ON THE BASIS OF INFORMATION PROVIDED WORLD MALL, KHARGHAR, NAVI MUMBAI, SOLELY ON THE BASIS OF INFORMATION PROVIDED BY ONE SHRI K.M. PATEL OF SIDDHI GROUP, INSPITE OF THE FACT THAT SUCH INFORMATION WAS NOT CORROBORATED BY ANY OTHER SUBSTANTIAL EVIDENCE AND THEREFORE THE ADDITION WAS NOT JUSTIFIED. ITA NO . 1281 /PN/20 1 4 JITEN DHIRENDRA SHAH 2 2 . THE HON. CIT(A) ERRED IN NOT APPRECIATING THE CONTENTIONS OF YOUR APPELLANT THAT NO ADDITION COULD BE MADE MERELY ON THE BASIS OF INFORMATION PROVIDED BY A THIRD PARTY UNLESS AND UNTIL SUCH THIRD PARTY IS ALLO WED TO BE CROSS - EXAMINED BY THE APPELLANT, ESPECIALLY WHEN THE APPELLANT IS DENYING THE CONCERNED PAYMENT AND HAS SPECIFICALLY REQUESTED FOR SUCH CROSS EXAMINATION BEFORE THE LD AO AS WELL AS HON. CIT(A). 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAIN ST THE ADDITION OF RS.55 LAKHS AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,62,210/ - ON 14.11.2008, WHICH WAS PROCESSED UNDER SECTION 143(1 ) OF THE ACT. INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM INVESTIGATION WING, THANE THAT THE ASSESSEE HAS BOOKED A SHOP AT LITTLE WORLD MALL KHARGHAR FOR RS.85,30,000/ - , WHEREAS THE CONSIDERATION PAID IN CHEQUE WAS ONLY RS.30,30,000/ - AND THE B ALANCE WAS PAID IN CASH. AFTER RECORDING REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. THE ASSESSEE IN RESPONSE, FILED A REPLY TO TREAT THE RETURN OF INCOME ORIGINALLY FILED IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. DURING THE COURSE OF SEARCH ON SIDDHI GROUP, CERTAIN DOCUMENTS WERE FOUND AND SEIZED, ONE DOCUMENT BEARING PAGE 19 OF BUNDLE NO.11 DEPICTED ENTRIES IN RESPECT OF BOOKING OF SHOP NO.117 BY THE ASSESSEE. THE SAID DOCUMENT IS ATTACHED AS ANNEXURE - A TO THE ASSESSMENT ORDER. THE STATEMENT OF SHRI K.M. PATEL OF SIDDHI GROUP WAS RECORDED ON OATH UNDER SECTION 131 OF THE ACT ON 02.04.2009 BY THE ADIT(INV) - I, THANE. THE SAID DOCUMENT WAS CONFRONTED TO SHRI K.M. PATEL AND HE CONFIRMED THAT THE SAME WAS SEIZED FROM THE RESIDENCE OF SHRI MAYUR PATEL DURING THE COURSE OF SEARCH ACTION. HE FURTHER ADMITTED THAT THE STATEMENT DEPICTED THE SALE DETAILS OF SHOP IN LITTLE WORLD MALL INCLUDING CHEQUE AND CASH RECEIPTS. THE ASSESSING OFFICER DECODED THE FIGURES ON SAID DOCUMENT AS PER THE STATEMENT OF SHRI K.M. PATEL AND OBSERVED THAT COLUMN IN NO.1 WAS THE NUMBER OF SHOP I.E. 117, SECOND COLUMN WAS COLUMN FOR NAME WHEREIN DHIRUBHAI I.E. NAME OF THE ASSESSEE WAS WRITTEN A ND THESE TWO MATCHED WITH THE ASSESSEE. FURTHER, CH AREA WAS THE ITA NO . 1281 /PN/20 1 4 JITEN DHIRENDRA SHAH 3 CHARGEABLE AREA AND WAS SHOWN AS 998, WHICH WAS 200% OF THE CARPET AREA OF THE S HOP CONSIDERING THE OPEN AREA IN AND AROUND THE SHOP . FURTHER, TT DEALS MEANS TOTAL DEAL VALUE WHICH WAS 8530 (000) I.E. RS.85,3 0 ,000/ - INCLUDES CASH AND CHEQUE COMPONENTS AGAINST SALE OF SHOP NO.117. AA TOTAL MEANS AGREEMENT TOTAL, WHICH IN THIS CASE WAS 3030 (000), WHICH MATCHES WITH THE DOCUMENT OF THE ASSESSEE. BALANCE RECEIVABLE AGAINST AGREEMENT VALUE WAS ZERO. BB TOTAL MEANS CASH TOTAL 5500(000) AND BB RECEIVED 5500(000) MEANS TOTAL CASH RECEIVED AND ACCORDINGLY, BALANCE CASH RECEIVABLE WAS SHOWN AS ZERO. THE ASSESSING OFFICER FURTHER NOTED THAT WHERE THE SHOP NUMBER, NAME AND AMOUNT RECORDED IN VARIOUS COLUMNS OF THE SEIZED DOCUMENT PERTAINS TO THE ASSESSEE AND WHERE THE ASSESSEE HAD ONLY SHOWN THE AGREEMENT VALUE OF THE SAID SHOP AT RS.30,30,000/ - , THE BALANCE PAYMENT OF RS.55 LAKHS WAS UNRECORDED AND UNEXPLAINED CASH PAID BY THE ASSESSEE AGAINST THE P URCHASE OF SHOP. SHOW CAUSE NOTICE IN THIS REGARD WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH, HE DENIED THE PAYMENT OF CASH COMPONENT AND HE STRESSED THAT ONLY THE AGREEMENT VALUE OF RS.30,30,000/ - PLUS DEVELOPMENT CHARGES WAS PAID. ONLY THE AGREEMENT VALUE OF RS.30,30,000/ - PLUS DEVELOPMENT CHARGES WAS PAID. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE RELEVANT PORTION OF THE STATEMENT OF SHRI K.M. PATEL PERTAINING TO THE CASE OF ASSESSEE AND THE COPY OF SEIZED DOCUMENT WERE SHOWN TO THE ASSESSEE AND CONFRONTED. THE SUBMISSION OF THE ASSESSEE IN THIS REGARD WAS THAT SHR I K.M. PATEL SHOULD BE ALLOWED TO CROSS - EXAMINE, BUT THE SAME WAS NOT ALLOWED BY THE ASSESSING OFFICER AS SHRI K.M. PATEL WAS ALREADY EXAMINED BY THE DEPARTMENT AND HIS STATEMENT ON OATH WAS ALREADY RECORDED BY THE DEPARTMENT. THUS, ADDITION OF RS.55 LAKH S WAS MADE IN THE HANDS OF ASSESSEE AS UNEXPLAINED INVESTMENT IN PURCHASE OF SHOP. 5. BEFORE THE CIT(A), THE ASSESSEE REITERATED THAT THE COPIES OF SEIZED DOCUMENTS AND STATEMENT OF SHRI K.M. PATEL WERE NOT CONFRONTED TO HIM, THOUGH THE SAME WERE USED AGA INST HIM FOR MAKING THE ADDITION. FURTHER, THE ASSESSEE POINTED OUT THAT HE HAD REQUESTED VIDE LETTER DATED 19.12.2011 FOR ISSUING S UMMONS TO SHRI K.M. PATEL, SO THAT HE CAN BE CROSS - EXAMINED, BUT THE SAME WAS NOT ALLOWED TO HIM ITA NO . 1281 /PN/20 1 4 JITEN DHIRENDRA SHAH 4 BY THE ASSESSING OFFICER. THE SAID SUBMISSIONS OF THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER, WHO IN TURN, FURNISHED HIS REMAND REPORT AND REITERATED THAT THE STATEMENT AND THE RELEVANT SEIZED DOCUMENTS WERE DULY SHOWN TO THE ASSESSEE ON 19.12.2011 DURING THE COURSE OF A SSESSMENT PROCEEDINGS. HE FURTHER STATED THAT SHRI K.M. PATEL WAS EXAMINED ON OATH AND HIS STATEMENT WAS RECORDED. THE ASSESSEE IN REJOINDER TO THE REMAND REPORT AGA IN REITERATED HIS SUBMISSIONS AND COPY OF STATEMENT OF SHRI K.M. PATEL RECORDED ON 02.04. 2009 WAS SUPPLIED TO HIM, BUT COPIES OF SEIZED DOCUMENTS WERE NOT FURNISHED TO HIM. HE FURTHER ASKED FOR CROSS - EXAMINATION OF SHRI K.M. PATEL. ANOTHER REMAND REPORT WAS ASKED FROM THE ASSESSING OFFICER, WHO IN TURN, GAVE STATEMENT OF SHRI K.M. PATEL AND THE SEIZED DOCUMENTS TO THE ASSESSEE. THE ASSESSEE AGAIN ASKED FOR CROSS - EXAMINATION OF SHRI K.M. PATEL. HOWEVER, THE CIT(A) DECIDED THE ISSUE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AS THE CONTENTION OF THE ASSESSEE HAD BEEN MADE MERELY ON THE BASIS OF STATEMENT OF SHRI K.M. PATEL WAS WITHOUT ANY MERIT, BECAUSE THE DOCUMENTARY EVIDENCE RECORDING THE DETAILS OF TRANSACTION WERE FOUND AND THE DOCUMENTARY EVIDENCE RECORDING THE DETAILS OF TRANSACTION WERE FOUND AND SEIZED, WHICH IN TURN, WERE CONFRONTED TO THE ASSESSEE. THERE WERE VARIOUS CASES OF ON - MONEY AND SINC E THE SIDDHI GROUP HAD ACCEPTED AND DISCLOSED ON - MONEY OF RS.12.05 CRORES, THE ADDITION OF RS.55 LAKHS IN THE HANDS OF ASSESSEE WAS UPHELD. ANOTHER ISSUE RAISED BY THE ASSESSEE BEFORE THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS WAS THAT THE REAS ONS FOR REOPENING THE ASSESSMENT WERE SUPPLIED TO HIM ONLY ON 14.12.2011 I.E. AFTER 17 MONTHS OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THE CIT(A) NOTED THAT THE ASSESSEE HAD MADE A WRITTEN REQUEST ON 07.12.2011 FOR SUPPLY OF REASONS RECORDED FOR R EOPENING THE ASSESSMENT WHICH WERE SUPPLIED TO HIM WITHIN A WEEK I.E. ON 14.12.2011. HE FURTHER OBSERVED THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 20.07.2010 AND THOUGH THE ASSESSEE FILED A WRITTEN LETTER ON 21.08.2010, BUT NO REASONS WER E ASKED FOR BY THE ASSESSEE AND HE COOPERATED IN THE REASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. THEREFORE, THE CONTENTION OF ASSESSEE REGARDING NON - SUPPLY OF ITA NO . 1281 /PN/20 1 4 JITEN DHIRENDRA SHAH 5 REASONS / SUPPLY OF REASONS AT LATE STAGE WAS HELD TO BE WITHOUT MERIT AND HENCE, WAS REJECTED. 6. THE ASSESSEE IS IN APPEAL WITH REGARD TO ADDITION OF RS.55 LAKHS MADE IN HIS HANDS AS UNEXPLAINED INVESTMENT IN PURCHASE OF SHOP AT LITTLE WORLD MALL, KHARGHAR. THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW IN RELYING ON THE INFORMATION PROVIDED BY ONE SHRI K.M. PATEL OF SIDDHI GROUP AND THE ADDITION BEING MADE ON THE BASIS OF SUCH THIRD PARTY INFORMATION AND HE ALLEGES THAT WHERE SUCH THIRD PARTY WAS NOT ALLOWED TO BE CROSS - EXAMINED BY THE ASSESSEE, ESPECIALLY WHERE THE ASSES SEE IS DENYING THE SAID PAYMENTS AND HAD ESPECIALLY REQUESTED FOR CROSS - EXAMINATION BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A), THEN IN THE ABSENCE OF SAME, NO ADDITION IS WARRANTED. 7. ON PERUSAL OF RECORD AND AFTER GOING THROUGH THE ORDERS OF AUTHOR ITIES BELOW, THE FACTUAL ASPECTS OF THE CASE REFLECT THAT REOPENING UNDER SECTION 147/148 OF THE ACT WAS CARRIED OUT BY THE ASSESSING OFFICER PURSUANT TO CERTAIN INFORMATION BEING RECEIVED FROM THE INVESTIGATION WING. SEARCH AND SEIZURE ACTION WAS TAKEN I N THE CASE OF SIDDHI GROUP, WHEREIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED AND THE ENTRIES IN THE SAID DOCUMENTS REFLECTS THE SALE OF UNITS IN LITTLE WORLD MALL AT KHARGHAR . THE ASSESSEE HAD PURCHASED SHOP NO.117 AT LITTLE WORLD MALL. THE ASSESSEE HAD DECLARED INVESTMENT IN THE SAID SHOP AT RS.30,30,000/ - , WHEREAS THE SAID DOCUMENTS, IN ADDITION TO THE CHEQUE AMOUNT DEPICTED THE CASH PAYMENT OF RS.55 LAKHS. THE SEIZED DOCUMENTS WERE DECODED BY INVESTIGATION WING AND THE SAME PRINCIPLE WAS APPLIED BY THE ASSESSING OFFICER IN WORKING OUT THE CASH CONSIDERATION AT RS.55 LAKHS. ADMITTEDLY, THE SAID DOCUMENTS WERE SEIZED AND ANNEXED AS ANNEXURE - A TO THE ASSESSMENT ORDER. FURTHER, THE STATEMENT OF SHRI K.M. PATEL OF SIDDHI GROUP WAS RECORDED UNDER SECT ION 131 OF THE ACT ON 02.04.2009 BY THE ADIT(INV) - I, THANE, WHO HAD CONFRONTED HIM WITH THE SAID SEIZED DOCUMENTS. HE ADMITTED THAT THE SAID DOCUMENTS SEIZED BELONGS TO THE GROUP AND HAD SHOWN ITA NO . 1281 /PN/20 1 4 JITEN DHIRENDRA SHAH 6 SALE DETAILS OF SHOPS IN THE MALL INCLUDING BOTH CHEQUE AND CA SH RECEIPTS. ADMITTEDLY, THE CASH RECEIPTS WERE NOT REFLECTED IN THE BOOKS OF ACCOUNT. THE SAID GROUP HAD MADE A DECLARATION OF UNDISCLOSED INCOME OF RS.12.05 CRORES. THE CASE OF THE REVENUE BEFORE US IS THAT WHERE SUCH INFORMATION IS AVAILABLE, THEN IT MERITS THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE HANDS OF ASSESSEE TOTALING RS.55 LAKHS . UNDOUBTEDLY, WHERE CERTAIN INFORMATION IS RECEIVED BY THE ASSESSING OFFICER, THEN THE SAME CAN BE APPLIED FOR MAKING THE ASSESSMENT IN THE HANDS OF AF FECTED PARTY. HOWEVER, THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT BEFORE MAKING ANY ADDITION IN THE HANDS OF ASSESSEE, THE SEIZED DOCUMENTS AS REFERRED IN THE PRESENT CASE SHOULD BE NOT ONLY CONFRONTED TO THE ASSESSEE BUT THE COPY OF THE SAME SHOULD BE GIVEN TO THE ASSESSEE BY WAY OF SHOW CAUSE NOTICE DURING THE ASSESSMENT PROCEEDINGS ITSELF. THE COPY OF THE SAID DOCUMENT IS ANNEXED AS ANNEXURE - A TO THE ASSESSMENT ORDER. HOWEVER, IT IS NOT CLEAR WHETHER THE DOCUMENT IS SAME AS REFERRED TO FOR MAKING T HE ADDITION I.E. PAGE 19 OF BUNGLE NO.11 AS THERE IS NO MARK ON THE SAID ANNEXURE - A. FURTHER, IN ORDER TO COMPUTE THE ADDITION IN THE HANDS OF ON THE SAID ANNEXURE - A. FURTHER, IN ORDER TO COMPUTE THE ADDITION IN THE HANDS OF ASSESSEE I.E. DECODED DOCUMENTS FOUND FROM THE SEARCH AT SIDDHI GROUP, RELIANCE HAS BEEN PLACED ON THE STATEMENT RECORDED OF SHRI K.M. PATEL OF SIDDHI GROUP UNDER SECTION 131 OF THE ACT AFTER SEARCH PROCEEDINGS. PART OF THE STATEMENT SO RECORDED IS REPRODUCED BY THE ASSESSING OFFICER AT PAGE 2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ADMITS THAT RELEVANT POR TION OF THE STATEMENT OF SHRI K.M. PATEL PERTAINING TO THE ASSESSEE AND THE COPY OF SAID SEIZED DOCUMENTS WERE DULY SHOWN TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE TIME AND AGAIN SOUGHT CROSS - EXAMINATION OF SHRI K.M. PATEL BOTH DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO DURING THE COURSE OF APPELLATE PROCEE DINGS. HOWEVER, BOTH THE OFFICERS BELOW DID NOT ALLOW THE SAID CROSS - EXAMINATION. ON THE OTHER HAND, THE STATEMENT OF THIRD PARTY AND THE DOCUMENTS SEIZED FROM THE THIRD PARTY WERE USED AGAINST THE ASSESSEE FOR MAKING THE AFORESAID ADDITION IN THE HANDS OF ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT. IN THE TOTALITY OF THE ABOVE SAID ITA NO . 1281 /PN/20 1 4 JITEN DHIRENDRA SHAH 7 FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT RECORDED OF THIRD PERSON WITHOUT ALLOWING CROSS - EXAMINATION TO THE ASSESSEE. FROM THE PERUSAL OF APPEAL MEMO , IT IS FURTHER CLEAR THAT THE SAID PERSON HAS DEMISED AND HIS SON IS THE LEGAL HEIR. IN SUCH CIRCUMSTANCES, WHERE NO CROS S - EXAMINATION HAS BEEN ALLOWED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN HE WAS ALIVE, WE DELETE THE ADDITION MADE IN THE HANDS OF ASSESSEE AS THE ASSESSEE HAS DEMISED, IT IS NOT POSSIBLE FOR HIS SON TO CROSS - EXAMINE THE THIRD PARTY AS HE MAY NOT BE AWARE OF COMPLETE FACTS. ACCORDINGLY, WE DELETE THE ADDITION OF RS.55 LAKHS MADE IN THE HANDS OF DECEASED ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THIS 14 TH D AY JULY , 201 6 . SD/ - SD/ - SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 14 TH JULY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE AP PELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - I , THANE ; 4. / THE C I T - II , THANE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE