Sumermal Yatendra Sanani (HUF), Bangalore V. The income Tax Officer Ward-2(2)(5), Bangalore

ITA 1318/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5579 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Reopening of assessment; Accommodation entries
• Section: 143(3); 234B; 147; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.1318/BANG/2017 (ASST. YEAR 2009-10) SUMERMAL YATENDAR SANANI (HUF), #106, 1 ST FLOOR, RAJALAKLSHMI COMPLEX, MAMULPET, BENGALURU. . APPELLANT PAN : AAFHZ2004H VS. THE INCOME-TAX OFFICER, WARD 2(2)(5), BENGALURU. . RESPONDENT APPELLANT BY : SMT. SUMAN LUNKAR, C.A RESPONDENT BY : SMT. PADMAMEENAKSHI, JCIT DATE OF HEARING : 30-1-2018 DATE OF PRONOUNCEMENT : 02--2018 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-2, BANGALORE DATED 23/3/2017, UPHOLDING THE ORDER OF THE ASSESSMENT FOR ASST. YEAR 2009-10, PASSED U/S 147 R .W.S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDE R DATED 31/12/2013. ITA NO.1318/B/17 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- 2.1 THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN O F INCOME FOR ASST. YEAR 2009-10 ON 27/3/2010 DECLARING INCOME OF RS.4, 31,700/- FROM INCOME FROM OTHER SOURCES. THE RETURN WAS PROCESSE D U/S 143(1) OF THE ACT. SUBSEQUENTLY, ON RECEIPT OF INFORMATION F ROM DIT(I&CI), NEW DELHI THAT A SEARCH, U/S 132 OF THE ACT WAS CON DUCTED IN THE MAHASAGAR GROUP CASES ON 25/11/2009, PROCEEDINGS U/ S 147 OF THE ACT WERE INITIATED IN THE CASE ON HAND, ON THE GROUND T HAT DURING THE AFORESAID SEARCH, SHRI MUKESH CHOKSHI IN A STATEME NT ON OATH U/S 131 OF THE ACT HAD ADMITTED THAT, HE AND HIS GROUP CONC ERNS WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND INVOLVED IN G IVING ACCOMMODATION ENTRIES IN ORDER TO ENABLE ITS CLIENTS TO DECLARE SPECULATIVE PROFITS/LOSSES AS THEY REQUIRED AND THAT ONE OF THO SE WAS THIS ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S 147 R.W.S 143(3) O F THE ACT VIDE ORDER DATED 31/12/2013 WHEREIN INCOME OF THE ASSESS EE WAS DETERMINED AT RS.14,20,750/-. AGGRIEVED BY THE ORD ER OF ASSESSMENT DATED 31/12/2013 FOR ASST. YEAR 2009-10, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A)-2, BANGALORE WHO DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 23/3/2017. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-2, BANGALO RE DATED 23/3/2017 FOR ASST. YEAR 2009-10, THE ASSESSEE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS:- 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ITA NO.1318/B/17 3 INSTEAD OF QUASHING THE ORDER, ERRED IN CONFIRMING THE SAME. 2. THE IMPUGNED ORDER PASSED BY LEARNED ASSESSING OFFICER BEING IN TOTAL VIOLATION OF PRINCIPLES OF N ATURAL JUSTICE MAKES THE ORDER BEING BAD IN LAW AND LIABLE TO BE QUASHED. 3. IN ANY CASE, IN THE ABSENCE OF THE CONDITIONS PRECEDENT REQUIRED FOR REOPENING MAKES THE REOPENIN G BAD IN LAW AND ALSO MAKES THE CONSEQUENTIAL ORDERS BAD IN LAW AND LIABLE TO BE QUASHED. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) INSTEAD OF QUASHING THE ORDER HAS ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT. 4.1 IN ANY CASE AND WITHOUT PREJUDICE THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THE TRANSACTIONS IN SHARES AS NOT GENUINE AND IN HOLDING THAT THE APPEL LANT HAD NOT EARNED CAPITAL GAINS ON SALE OF SHARES. FUR THER THE LOWER AUTHORITIES HAVE ERRED IN TAXING THE INCO ME U/S. 68 OF THE ACT 4.2 THE FACTS AND CIRCUMSTANCES OF THE CASE HAVE NO T BEEN APPRECIATED PROPERLY BY LOWER AUTHORITIES. ON PROPER APPRECIATION OF FACTS, IT WILL BE CLEAR THAT HE APPELLANT HAD GENUINELY DEALT IN SHARES AND HAD EAR NED CAPITAL GAINS AND THE SAME HAS TO BE ACCEPTED AS SU CH ITA NO.1318/B/17 4 AND THE ADDITION AS MADE AND SUSTAINED U/S. 68 OF T HE ACT IS TO BE DELETED. 4.3. IN ANY CASE THE ADDITION MADE IS EXCESSIVE. TH E LEARNED ASSESSING OFFICER HAD ERRED IN MAKING AN ADDITION OF RS. 11,73,618/- WHEN THE ACTUAL CREDIT IN BANK ACCOUNT WAS ONLY RS.2,04,5 67.81. 4.4. THE LEARNED ASSESSING OFFICER HAD ALSO ERRED I N LEVYING INTEREST U/S. 234B OF THE ACT. THE APPELLAN T DENIES LIABILITY TO PAY INTEREST. THE INTEREST HAVI NG BEEN LEVIED ERRONEOUSLY IS TO BE DELETED 5. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ADDITION A S MADE BE DELETED AND INTEREST LEVIED BE DELETED. 3.2 IT IS SUBMITTED BY THE LD AR FOR THE ASSESSEE T HAT ON SIMILAR ISSUES AND FACTS; AS IN THIS APPEAL OF THE ASSESSEE S; CO-ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES OF MUKESH K UMAR SOLANKI IN ITA NO.2168/BANG/2016 DATED 17/3/2017, ANITHA NAHAR IN ITA NO.2170/BANG/2016 DATED 4/4/2017 AND ASHOK KUMAR (H UF) IN ITA NO.956/BANG/2017 DATED 31/5/2017 HAVE HELD THAT THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER (AO ) FOR FRESH EXAMINATION AND ADJUDICATION WITH THE SAME DIRECTIO NS AS WERE RENDERED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT PETITION NO.39370/2014 DATED 2 /2/2015. IT WAS ITA NO.1318/B/17 5 FURTHER SUBMITTED THAT ON SIMILAR ISSUES AND SIMILA R FACTS, ANOTHER SMC BENCH OF THE TRIBUNAL IN THE CASE OF SMT. NARAN GI DEVI IN ITA NO.487/BANG/2017 DATED 19/5/2017 HAS SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE A O WITH A DIRECTION TO FIRST CONFRONT THE ASSESSEE WITH THE STATEMENT O F SHRI MUKESH CHOKSI AND AFFORD THE ASSESSEE OPPORTUNITY TO EXAMI NE SHRI MUKESH CHOKSI IN ORDER TO FIND OUT THE TRUTH IN THE MATTE R. IT WAS PRAYED, THAT IN THE CASE ON HAND ALSO, THE ISSUE IN DISPUTE MAY BE DECIDED ON SIMILAR LINES AS THE CITED CASES. 3.3 PER CONTRA, THE LD DR FOR THE REVENUE VEHEMENTL Y SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED (SUPRA). FROM AN APPRECIATION OF THE FACTS ON RECORD, WE FIND THAT IN THE CASE ON HAND ALSO, THE ADDITION WAS MADE ON THE BASIS OF THE SWORN STATEMENT RECORDED FROM S HRI MUKESH CHOKSI, DIRECTOR OF MAHASAGAR GROUP AND OTHER GROUP COMPANIES. IN THE CASE OF SMT. ANITHA NAHAR IN ITA NO.2170/BANG/2 016 DATED 4/4/2017, TO WHICH ONE OF US IS PARTY AND ASHOK KUM AR (HUF) IN ITA NO.956/BANG/2017 DATED 31/5/2017 TO WHICH BOTH OF U S ARE PARTY, IT WAS NOTED THAT AS PER THE JUDGMENT OF THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) T HE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH EX AMINATION AND ADJUDICATION THEREON, AFTER PROVIDING THE ASSESSEE A COPY OF THE SWORN STATEMENT OF SHRI MAHESH CHOKASI RELIED ON BY THE A O AND PROVIDING ITA NO.1318/B/17 6 THE ASSESSEE ADEQUATE OPPORTUNITY OF CROSS EXAMINAT ION OF SHRI MUKESH CHOKSI AND OF BEING HEARD IN THE MATTER. TH E CO-ORDINATE BENCH IN THE CASE OF ANITHA NAHAR (SUPRA) IN ITS OR DER AT PARA 4 TO 7 HAS HELD AS UNDER:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN THE PRESENT CASE ALSO, THE ADDITION WAS MAD E ON THE BASIS OF SWORN STATEMENT RECORDED FROM ONE MR. MUKESH M CHOKSI, DIRECTOR OF MAHASAGAR SECURITIES AND OTHER COMPANIES. IN THE CASE OF SHRI MUKESH KUMAR SOLANKI (SUPRA) ALSO, IT WAS NOTED BY SMC BEN CH OF THIS TRIBUNAL THAT AS PER THE JUDGMENT OF THE HO NBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDR A DEVI KOTHARI (SUPRA), THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING A COPY OF THE STATEMENT OF SHRI MUKESH M CHOKSI. FOR THE SAKE OF READY REFERENCE, WE RE-PROD UCE PARA-5 & 6 OF THIS TRIBUNAL ORDER RENDERED IN THE C ASE OF SHRI MUKESH KUMAR SOLANKI. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRST OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF M/S CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER:- ITA NO.1318/B/17 7 6. FROM THE ABOVE PARA FROM THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENT OF SHRI MUKESH CHOKSI. AS PER THE FACTS NOTED BY THE HIGH COURT IN THE EARLIER PARAS OF JUDGMENT AND AS PER THE FACTS OF THE PRESENT CASE, I FIND THAT THE FACTS ARE SIMILAR AND LD DR OF THE REVENUE ALSO COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF KARNATAKA HIGH COURT, I SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE AS PER PARA ITA NO.1318/B/17 8 NO.8 OF THE JUDGMENT REPRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. 5. IN THE PRESENT CASE ALSO, THE DISPUTE IN QUESTIO N IS THAT WHETHER THE REASSESSMENT ORDER IS VALID OR NOT AND THIS ASPECT OF THE MATTER WAS DECIDED BY THE LO WER AUTHORITIES WITHOUT SUPPLYING THE COPY OF THE STATE MENT OF SHRI MUKESH M CHOKSI TO THE ASSESSEE. 6. THE LD. DR OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT CASE AND IN THE CASE OF SHRI MUKESH KUMAR SOLANKI (SUPRA) AND ALSO IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA). HENCE , WE DECIDE THE ISSUE REGARDING VALIDITY OF THE RE- ASSESSMENT IN THE SAME LINE BY RESPECTFULLY FOLLOWI NG THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT BECAUSE LD. DR OF THE REVENUE COULD NOT POINT OUT A NY DIFFERENCE IN FACTS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH SAME DIRECTIONS A S WERE GIVEN BY THE HONBLE KARNATAKA HIGH COURT IN THAT CASE AS PER PARA-8 OF THE JUDGMENT RE-PRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. ITA NO.1318/B/17 9 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 3.4.2 FOLLOWING THE AFORESAID DECISION OF THE CO-OR DINATE BENCH IN THE CASE OF ANITHA NAHAR (SUPRA) AND ASHOK KUMAR (HUF) (SUPRA) WE FIND THAT WITH CASE ON HAND ALSO THE DISPUTE IN QUE STION IS WHETHER THE RE-ASSESSMENT ORDER IS VALID OR NOT AND THAT THIS A SPECT OF THE MATTER WAS DECIDED BY THE AUTHORITIES BELOW WITHOUT SUPPLY ING THE ASSESSEE WITH A COPY OF THE SWORN STATEMENT OF SHRI MUKESH C HOKSI RELIED ON BY THE AUTHORITIES BELOW FOR MAKING THE ORDER OF AS SESSMENT FOR ASST. YEAR 2009-10. THE LD. DR FOR REVENUE COULD NOT POI NT OUT ANY DIFFERENCES IN FACTS OF THE CASE ON HAND AND IN THE OTHER CITED CASES OF SHRI MUKESH KUMAR SOLANKI (SUPRA), ANITHA NAHAR (S UPRA), ASHOK KUMAR (HUF) (SUPRA) AND CHANDRA DEVI KOTHARI (SUPRA ). IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE, WE SET ASIDE THE ORDER OF THE LD CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF T HE AO FOR FRESH EXAMINATION AND ADJUDICATION WITH THE SAME DIRECTIO NS AS WERE GIVEN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) AT PARA 8 THEREOF (REPRODUCED SUPRA ). 4. IN THE RESULT, THE ASSESSEES APPEAL FOR ASST. YEAR 2009-10 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND FEBRUARY, 2018 . SD/- SD/- (LALIET KUMAR) (JA SON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : 2/2/2018 VMS ITA NO.1318/B/17 10 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVA TE SECRETARY, ITAT, BANGALORE.