UDAY SALVI, MUMBAI V. ITO 18(1)(3), MUMBAI

ITA 1300/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2652 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VENUGOPAL C NAIR
• Keywords: Opportunity of cross examination
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ./ I.T.A. NO. 1300/MUM/2011 ( / ASSESSMENT YEAR: 2006-07) SHRI UDAY A SALVI 4/162 AMBEDKAR NAGAR CHS BHAGOJI WAGMARE ROAD, WORLI, MUMBAI-400 018. / VS. ITO 18(1)(3), 1 ST FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012. ./ ./PAN/GIR NO. AAEPS 0346T ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI VENUGOPAL C. NAIR / RESPONDENT BY : SHRI V.K. BORA / DATE OF HEARING : 28/09/2016 !'# / DATE OF PRONOUNCEMENT : 07/10/2016 $% / O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 29, DATED 30 .09. 2010 ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 2 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO I) INAPPROPRIATENESS OF GRANTING ONLY PART RELIEF BY CONFIRMING ADDITION OF RS. 522101/- OF THE ADDITION OF RS. 2355101 /- ON AN AD HOC & ARBITRARY BASIS THE LEARNED CIT (A) ERRED IN FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW IN GRANTING ONLY PART RELIEF BY CONFIRMING ADDITION OF RS.52210 1/- OF THE RS. 2355101/- ADDITIONS THAT THE AO MADE BY FRAMING THE ASSESSMENT ORDER BY ADOP TING ADHOC AND ARBITRARY NO. OF CABLE CONNECTIONS AND AN ARBITRARY RATE OF SUBSCRIP TION WITHOUT BRINGING TO RECORD ANY MATERIAL TO SUBSTANTIATE THESE. II) INAPPROPRIATENESS OF CONFIRMING ADDITION OF RS 11324/- ON ACCOUNT OF DONATION THE LEARNED AO HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING ADDITIONS THAT THE AO MADE ON ACCOUNT OF DONATION WITHOUT GIVING ANY REASON FOR MAKING SUCH ADDITION REASONS GIVEN BY LEARNED AO FOR RE-OPENING THE ASSE SSMENT BY ISSUE OF NOTICE U/S 148 AND FRAMING THE ORDER BY MAKING THE ADHOC AND ARBIT RARY ADDITIONS ARE WRONG, INSUFFICIENT AND CONTRARY TO FACTS AND EVIDENCE ON RECORD AND IN LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31/10/2006 DECLARING TO TAL INCOME OF RS.5,86,575/-. ASSESSEE IS RUNNING A PROPRIETARY CONCERN IN THE NA ME AND STYLE OF SHREERAM VIDEO CHANNEL OF PROVIDING CABLE CONNECTIONS. IN T HE COURSE OF INVESTIGATION MADE BY THE INVESTIGATION WING UNIT-I, MUMBAI, IT W AS NOTICED THAT THE ASSESSEE WAS CHARGING RS.250/- FROM THE SUBSCRIBERS, WHEREAS THE ASSESSEE HAS SHOWN RS.210/- PER CONNECTION PER MONTH AND THEREBY SUPPR ESSED RS.40/- PER CABLE CONNECTION PER MONTH. APART FROM THIS IT WAS ALSO F OUND THAT THE ASSESSEE HAD ALSO SUPPRESSED INFORMATION WITH REGARD TO THE NUMBER OF CONNECTIONS AND THEREFORE AFTER PROVIDING OPPORTUNITY OF HEARING AND SEEKING DETAILS FROM THE ASSESSEE, ORDER OF ASSESSMENT WAS PASSED BY AO THEREBY MAKING ADDIT IONS. 3 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREF ERRED APPEAL BEFORE CIT(A) HOWEVER THE CIT(A) AFTER HEARING BOTH THE PARTIES H AD PARTLY ALLOWED THE APPEAL OF THE ASSESSEE, THEREBY RESTRICTING THE ADDITIONS TO RS.5,22,101/- ON ACCOUNT OF SUPPRESSION OF CABLE RECEIPTS, AND RS.11,324/- ON A CCOUNT OF DONATIONS. 4. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE PREFE RRED PRESENT APPEAL BEFORE US ON THE GROUND MENTIONED HERE IN ABOVE. GROUND NO.1 5. THIS GROUND RELATES TO CONFIRMATION OF ADDITION BY CIT(A) OF RS.5,22,101/- ON ACCOUNT OF SUPPRESSION OF CABLE RECEIPTS. IN THI S CONNECTION LD. AR APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT THE ASSESSMENT FO R AY 2000-01 WAS REOPENED ON SIMILAR GROUNDS ON 14.03.2007 AND THE ASSESSMENT WA S COMPLETED U/S 143(3) R.W.S. 147 DETERMINING THE TOTAL INCOME AT RS.44,56,870/- ON THE SAME GROUND. HOWEVER THE SAID ORDER OF REOPENING WAS CHALLENGED BEFORE C IT(A) AND THE CIT(A) HAS QUASHED THE REOPENING OF THE ASSESSMENT BY THE AO A ND CONSEQUENTLY THE ORDER OF CIT(A) FOR THAT YEAR WAS ALSO UPHELD BY HONBLE ITA T F BENCH VIDE ITS ORDER IN ITA NO.3125/MUM/2008. LD. AR FURTHER SUBMITTED THAT THE AO HAD MADE ADDITIONS WITHOUT VERIFYING THE FACTS AND WITHOUT B EING CERTAIN OF PRECISE NUMBER OF CONNECTIONS. IT WAS FURTHER SUBMITTED THAT ALTHO UGH THE CIT(A) HAS RESTRICTED THE ADDITIONS OF RS.5,22,101/- OUT OF TOTAL ADDITION OF RS.23,55,101/- BUT THE CIT(A) OUGHT TO HAVE DELETED THE SAID ADDITION OF RS.5,22, 101/- AS WELL. LD. AR FURTHER 4 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO SUBMITTED THAT THERE IS A INHERENT MISTAKE IN THE O RDERS PASSED BY CIT(A) IN PAGE NO.3 AS THE CIT(A) HAS WRONGLY MENTIONED FYS IN TH E TABLE PROVIDED AT PAGE NO.3. IT WAS FURTHER SUBMITTED THAT THE ADDITIONS WAS MAD E BY REVENUE AUTHORITIES APPARENTLY ON THE INFORMATION RECEIVED FROM THE INV ESTIGATION WING WITHOUT PROVIDING OPPORTUNITY OF CROSS EXAMINATION TO THE A SSESSEE. LD. AR ALSO DREW OUR ATTENTION TO THE PAPER BOOK MORE PARTICULARLY AT PA GE NO.8 ONWARDS WHEREIN THE RATES PER CONNECTION ARE MENTIONED. LD. AR FURTHER RELIED UPON THE ORDERS OF CO- ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2001-0 2, 2002-03, 2003-04, 2004-05 AND 2005-06. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 8. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES ON THIS GROUND AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS O F THE CASE IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY CIT(A) WHILE DEALING WITH THE SAID ISSUE: 3.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ARGUMENTS OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE AUTHOR ISED REPRESENTATIVE OF THE APPELLANT. THERE WAS AN INFORMATION FROM THE IN VESTIGATION WING STATING THAT APPELLANT HAS BEEN PROVIDING CONNECTIONS IN MO RE THAN 100 BUILDINGS IN WORLI AND HAS BEEN CHARGING RS.250/- PER MONTH PER CABLE CONNECTION. THE WING BY ITS LETTER DATED 8.2.2007 ALSO REPORTED THA T THE RATES DISCLOSED PER CONNECTION BY THE APPELLANT IS ONLY BETWEEN RS.180/ - TO RS.210/- DURING FINANCIAL YEARS 2000-01 TO 2005-06. HENCE AS CAN BE SEEN THE INVESTIGATION WING APPARENTLY INFORMED THAT THERE IS UNDERSTATEME NT OF RATES PER MONTH 5 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO PER CONNECTION BY THE APPELLANT. THE INVESTIGATION WING ALSO FOUND OUT EXACT EXCESS CONNECTION FOR FINANCIAL YEAR 2005-06. THE INVESTIGATION WING HAS QUANTIFIED THAT FOR THE FY.2005-06 THE APPELLANT HAS DISCLOSED ONLY 1356 CONNECTIONS. THE APPELLANT HAS ALSO DISCLOSED RS.210/- PER MONTH FOR THIS YEAR. THE RELEVANT PORT ION OF THE LETTER SENT BY THE INVESTIGATION WING TO THE AO AS UNDER: 'IT WAS SEEN THAT THE ASSESSEE HAS DISCLOSED THE FO LLOWING DETAILS IN RESPECT OF NUMBER OF CONNECTIONS AND THE RATE PER CONNECTIO N: S.N. FINANCIAL YEAR NUMBER OF CONNECTION RATE PER CONNECTION PER MONTH TOTAL AMOUNT (RS.) 01 2000-01 682 180 14,29,403 02 2001-02 730 180 15,76,100 03 2002-03 916 190 20,87,773 04 2003-04 1108 200 26,58,023 05 2004-05 1186 200 28,47,399 06 2005-06 1357 210 34,20,540 FOR THE F. Y.2005-06 THE ASSESSEE HAS SHOWN TOTAL N UMBER OF CONNECTION ARE AT 1357 AND THE RATE PER CONNECTION IS RS.210/- PER MONTH. HOWEVER, THE DETAILS AS WELL AS FIELD ENQUIRES REVEALS THAT THERE ARE 2084 CONNECTION AND THE RATE PER CONNECTION IS CHARGES AT RS.250/-. THUS, THE ASSESSEE HAS SUPPRESSED 727 (2084 - 1357) CABLE CONNECTIONS AND ALSO SHOWN THE LESSER RATE OF RS.40/- (250-210). PRIMA FACIE IT SEEMS THA T DURING THE F. Y.2005-06 RELEVANT TO A. Y.2006-07, THE ASSESSEE HAS CONCEALE D INCOME TO THE EXTENT OF RS.2,36,030/- [RS.1,81,750/- (727 X 250) + RS.54728 0 (1357 X 40)]. THE ASSESSING OFFICER IS REQUESTED TO BRING TO TAX THE UNDISCLOSED INCOME DETECTED DURING THE F. Y. 2005-06. AS REGARDS CONCE ALMENT OF INCOME FOR THE F. Y.2000-01 TO 2004-05, THE ASSESSING OFFICER IS REQUESTED TO VERIFY THE SAME AS PER THE DETAILS FILED BY THE ASSESSEE AND T AKE APPROPRIATE ACTION AS DEEMED FIT. THE REOPENING PROCEEDINGS U/S.147 OF TH E ACT FOR THE A. Y.2000- 01 GETS BARED BY LIMITATION BY 31-03-2007. THE ASSE SSING OFFICER IS ALSO REQUESTED TO VERIFY THIS ISSUE FROM A. Y. 2000-01 O N WARDS. FROM THE ABOVE INQUIRY IT CAN BE SEEN THAT APPELLAN T HAD GIVEN ATLEAST 2084 CABLE CONNECTIONS DURING THE FINANCIAL YEAR AND THE RE WAS A SUPPRESSION OF 727 CONNECTIONS. APART FROM THE CABLE CHARGES RELAT ING TO 727 CONNECTIONS THERE WAS ALSO SUPPRESSION OF CABLE RATES TO THE EX TENT OF RS.40/- PER MONTH 6 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO WITH RELATION TO 1357 DISCLOSED CONNECTIONS. HENCE THE TOTAL CONNECTIONS HAVE TO BE TAKEN AT 2084 AS MULTIPLIED BY RS.250/- PER MONTH PER CONNECTION. THIS MAKES THE TOTAL RECEIPT AT RS.62,5 2,000/- FOR THE YEAR. THE APPELLANT HAS DISCLOSED RS.57,86,899/- AS TOTAL CAB LE RECEIPTS FOR THE YEAR. THEREFORE ONLY THE DIFFERENTIAL AMOUNT OF RS.4,65,1 01/- CAN BE ADDED. THE AO HAS TAKEN NUMBER OF CONNECTIONS ESTIMATED AT 271 4 ON THE BASIS OF AY.2005-06. THE AO HAS NOT STATED HOW HE HAS ARRIVE D AT THIS FIGURE. EVEN THIS ISSUE HAS NOT BEEN CLARIFIED IN THE REMAND REP ORT. THEREFORE THE ONLY BASIS OF NUMBER OF CONNECTIONS IS THE SURVEY REPORT OF THE WIN WHICH STATES THE CONNECTIONS AT 2084. THEREFORE THE NUMBER OF CO NNECTIONS HAS TO BE TAKEN AT 2084. ACCORDINGLY AN ADDITION OF RS.4,65, 101/- AS SUPPRESSION OF CABLE RECEIPTS IS CONFIRMED ON THIS COUNT. IN ADDITION TO THE ABOVE AO HAS GIVEN LIST OF 19 PE RSONS WHOSE NAMES DO NOT APPEAR IN THE SUBSCRIBER LIST OF THE APPELLANT. THE CABLE CHARGES IN RESPECT OF THESE PERSONS (19 X 250 X 12 ) RS.57,000 1- HAS TO BE ALSO ADDED TO THE ABOVE AMOUNT OF RS.4,65,101/-. HENCE TOTAL A DDITION OF RS.5,22,101/- (RS.4,65,101 + 57,000) IS CONFIRMED UNDER THE HEAD SUPPRESSION OF CABLE RECEIPTS. BALANCE ADDITION MADE BY THE AO IS NOT SU PPORTED BY THE FACTS. BALANCE ADDITION OF RS.18,33,000/- (RS.23,55,101 -5 ,22,101) IS DELETED. 9. FROM THE PERUSAL OF THE AFORE MENTIONED ORDERS W E FOUND THAT ALTHOUGH THERE IS A MISTAKE UNDER THE NOMENCLATURE OF FINANCIAL YE AR INSTEAD OF ASSESSMENT YEAR BUT THE REASONS GIVEN BY CIT(A) ARE NOT INCORRECT A S THE CIT(A) HAS TAKEN INTO CONSIDERATION ALL THE FACTS WHILE DECIDING THE SAID ISSUE AND MOREOVER THE CIT(A) WHILE DEALING WITH THE ISSUE HAD ALREADY TAKEN INTO CONSIDERATION THE SURVEY REPORT OF INVESTIGATING WING AND ALSO CONSIDERED THE FIELD ENQUIRIES CARRIED OUT BY THE DEPARTMENT. IT IS IMPORTANT TO MENTION HERE THAT SU RVEY IN THE PRESENT CASE WAS CONDUCTED BY THE GOVERNMENT DEPARTMENT FOR THE PURP OSE OF ENTERTAINMENT TAX WHICH INCLUDE CABLE OPERATORS. SINCE THIS SURVEY WA S CONDUCTED BY ENTERTAINMENT DEPARTMENT OF MAHARASHTRA GOVERNMENT AND THE FIELD ENQUIRIES WERE ALSO 7 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO CONDUCTED WHICH REVEAL THAT THERE ARE 2084 CONNECTI ONS AND RATE PER CONNECTION IS BEING CHARGED BY THE ASSESSEE AT RS.250/- THE SAID SURVEY WAS CONDUCTED BY THE GOVERNMENT OFFICIALS DURING THE DISCHARGE OF THEIR OFFICIAL DUTIES AND THEREFORE PRESUMPTION OF CORRECTNESS IS ATTACH WITH THE SAID REPORT AND MOREOVER THE ASSESSEE HAS NOT PLACED ON RECORD ANY EVIDENCE TO CONTRAVENE THOSE FINDINGS .THE ASSESSEE HAS ONLY POINTED OUT THE MINOR DISCREPANCIES AND HA S ALSO RELIED UPON THE EARLIER ORDERS OF HONBLE ITAT. HOWEVER, ON THE PERUSAL OF ORDERS OF ITAT WE FOUND THAT THE HONBLE ITAT IN ITA NO. 1295, 1296, 1297, 1298 & 1299/MUM/2011 FOR ASSESSMENT YEARS: 2001-02, 2002-03, 2003-004, 2004- 05 & 2005-06 HAD QUASHED THE REOPENING OF THE ASSESSMENT AND NO ORDERS WERE PASSED ON THE MERITS OF THE CASE/ ADDTIONS. WE HAVE ALSO NOTICED THAT THE CIT(A ) WHILE CONSIDERING THE CASE OF THE ASSESSEE HAS ALSO RIGHTLY CONCLUDED THAT THE AO HAS TAKEN NUMBER OF CONNECTIONS ESTIMATED AT 2714 ON THE BASIS OF FY 20 05-06 BUT THE AO HAS NOT STATED ANY BASIS FOR ARRIVING AT SUCH FIGURE OF 271 4. HOWEVER WHILE MAKING THE SURVEY REPORT AS BASIS TO REACH TO THE CONCLUSION F OR ASCERTAINING NUMBER OF CONNECTIONS, CIT(A) HAS RIGHTLY HELD THAT THE NUMBE R OF CONNECTIONS AT 2084 THEREFORE NECESSARY CALCULATIONS WERE MADE ON 2084 CONNECTIONS. APART FROM THAT, THE LD. CIT(A) HAS ALSO CONSIDERED THAT THE AO HAD MADE LIST OF 19 PERSONS WHOSE NAMES WERE NOT APPEARING IN THE SUBSCRIBER LIST OF THE ASSESSEE AND THEREFORE CABLE CHARGES IN RESPECT OF THESE 19 WERE ALSO CALCULATED AT THE RATE OF RS.250/- AND 8 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO NECESSARY ADDITIONS WERE ALSO MADE. LD. CIT(A) AFTE R CALCULATING ALL THE FIGURES HAD RIGHTLY RESTRICTED THE ADDITIONS AT RS.5,22,101 /- INSTEAD OF RS.23,55,101/-. NO NEW EVIDENCE HAS BEEN BROUGHT ON RECORD BEFORE US B Y THE LEARNED AR IN ORDER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE LE ARNED CIT (A) ON THE BASIS OF THE REMAND REPORT. MOREOVER, THERE IS NO REASON FOR US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LEARNED CIT (A). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS RECORDED BY THE LEARNED CIT (A) ARE JUDICI OUS AND ARE WELL REASONED. ACCORDINGLY, WE UPHOLD THE SAME. GROUND NO.2 THIS GROUND RELATES TO CONFIRMATION OF ADDITION OF RS. 11,324/- IN THIS RESPECT WE FIND THAT EXCEPT FOR RAISING THIS GROUND THE ASSESS EE HAS NOT FURNISHED ANY MATERIAL EVIDENCE BEFORE THE AUTHORITIES BELOW OR BEFORE US TO PROVE THAT THIS EXPENDITURE INCURRED ON ACCOUNT OF DONATION WAS MADE FOR BUSINE SS PURPOSES AND WAS ALLOWABLE AS DEDUCTION. IN THIS VIEW OF THE MATTER, WE UPHOLD THE DISALLOWANCE OF DEDUCTION CLAIMED ON ACCOUNT OF DONATION. HENCE, THIS GROUND OF APPEAL IS DISMISSED. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. 9 ITA NO. 1300/MUM/2011(A.Y. 2006-07) UDAY A SALVI VS. ITO ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2016. SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :07.10.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI