DCIT CEN CIR 8(1), MUMBAI V. SURESH GAGGAR, MUMBAI

ITA 1332/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0343 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 05-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Unexplained investment; Opportunity of being heard; Additional evidence
• Section: 143(3); 142(1); 153A; 133(6); 68; 69; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 1332 /MUM/20 1 5 ASSESSMENT YEAR: 2011 - 12 THE DCIT CC 8(1), ROOM NO. 656, 6 TH FLOOR, AAYKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. SHRI SURESH GAGGAR, 302, GAURAV APARTMENTS, GOKULDHAM, GOREGAON (EAST), MUMBAI - 400063 PAN: ABLPG3809K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI MANJUNATHA SWAMY (DR) ASSESSEE BY : SHRI VIJAY MEHTA (AR) DATE OF HEARING: 06/11 /201 7 DATE OF PRONOUNCEMENT: 05 / 02 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 24/12/2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 47 , MUMBAI , FOR THE A S S ESSMENT YEAR 2011 - 12 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. THE FACTS WHICH NEED NECESSARY MENTION FOR THE PURPOSES OF ADJUDICATING THE ISSUES RAISED BY THE APPELLANT/REVENUE ARE THAT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON 06.10.2012 IN THE CASE OF M/S ARSS INFRASTRUCTURE PROJECTS LIMITED AND GROUP CONCERNS. ACCORDINGLY, THE CASE OF THE ASSESSEE W AS COVERED UNDER THE PROVISIONS OF SECTION 153A OF THE ACT. SUBSEQUENTLY, NOTICE UNDER SECTION 142(1) READ WITH SECTION 153B(1) OF THE ACT WAS ISSUED AND IN RESPONSE TO THE SAID NOTICES THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 97 ,81,772/ - . THE ASSESSMENT WAS COMPLETED UNDER SECTION 2 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.1,70,33,755/ - BY MAKING ADDITION OF RS.32,00,000/ - ON ACCOUNT OF UNEXPLAINED LOAN UNDER SECTION 68 OF THE ACT AND RS.39,51,983/ - AS UNEXPLAINED INVEST MENT IN JEWELLERY UNDER SECTION 69 OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD. CIT(A). AFTER HEARING THE ASSESSEE, THE LD. CIT(A) SUSTAINED THE ADDITION OF RS. 2 ,00,000/ - OUT OF RS.30,00,000/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED LOAN UNDER SECTION 68 OF THE ACT AND DELETED THE REMAINING AMOUNT. THE LD. CIT(A) FURTHER DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY UNDER SECTION 69 OF THE ACT. THE REVENUE IS IN APPE AL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER PASSED BY THE LD. CIT(A). 4 . T HE REVENUE HAS PREFERRED THE PRESENT APPEA BY RAISING THE FOLLOWING EFFECTIVE GROUND S : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A), ERRED IN DE LETING THE ADDITION MADE U/S 68 OF THE ACT ON ACCOUNT OF LOANS CLAIMED TO HAVE BEEN ACCEPTED FROM KAUSHIK DEVA OF RS. 30,00,000/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS COST ON HIM U/S 68 OF THE ACT TO ESTABLISH ALL TH REE INGREDIENTS I.E. GENUINENESS OF TRANSACTION, IDENTITY OF THE PARTY AND CREDITWORTHINESS OF THE PARTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A), ERRED IN DELETING THE ADDITION OF RS. 38,16,983/ - MADE U/S 69 OF THE A CT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST ON HIM U/S 69 OF THE ACT TO ESTABLISH THE NATURE AND SOURCE OF THE INVESTMENT MADE. 3. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT (A), ERRED IN ADMITTING ADDITIONAL EVIDENCES IN VIOLATION OF PROVISION OF RULE 46A BY NOT PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE AO. 3 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A ), ERRED IN ADMITTING ADDITIONAL EVIDENCES ALTHOUGH THE ASSESSEE FAILED TO PRODUCE THE SAME BEFORE THE AO INSPITE OF OPPORTUNITY GRANTED. 5. VIDE FIRST GROUND OF APPEAL THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING RS. 30,00,000/ - O UT OF RS. 32,00,000/ - MADE BY THE AO ON ACCOUNT OF LOAN CLAIMED TO HAVE BEEN OBTAINED FROM KAUSHIK DEVA. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED BEFORE US THAT THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITION MADE UNDER SECTION 68 OF THE ACT WITH OUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO FURNISH THE COMPLETE DETAILS OF THE PARTIES FROM WHOM THE ALLEGED LOANS WERE TAKEN. THE LD. DR FURTHER CONTENDED THAT SINCE THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS OF ESTABLISHING GENUINENESS OF TRANSACTION, IDENTITY OF THE PARTY AND CREDITWORTHINESS OF THE PARTY CONCERNED, AO HAS RIGHTLY MADE THE ADDITION IN QUESTION. THEREFORE , THE FINDINGS OF THE LD. CIT(A) ARE NOT BASED ON THE EVIDENCE ON RECORD AND AS PER THE PROVISIONS OF LAW. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE FINDINGS OF THE LD. CIT(A) SUBMITTED THAT THE FINDINGS OF THE LD. CIT(A) ARE BASED ON THE EVID ENCE ON RECORD. THE ASSESSEE HAS SUBMITTED THE LOAN CONFIRMATION AND ALSO FURNISHED THE PRIMARY DETAIL S IN RESPONSE TO THE NOTICE DATED 16.08.2012 ISSUED BY THE AO. THEREAFTER THE AO CALLED FOR THE DETAILS IN RESPECT OF OUTSTANDING LOANS AS ON THE YEAR AND TWO VERIFY THE GENUINENESS OF THE TRANSACTION. IN RESPONSE THEREOF THE LOAN CONFIRMATIONS ALONG WITH THE REQUISITE DOCUMENTS INCLUDING BANK STATEMENTS WERE SUBMITTED. ALL THE TRANSACTIONS DULY RECORDED IN THE BOOKS OF ACCOUNTS WERE ALSO SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. IN VIEW OF THE AFORESAID FACTS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE IS NO MERIT IN THE APPEAL OF THE REVENUE, THEREFORE, THE SAME IS LIABLE TO BE DISMISSED. 4 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 7. IN THE LIGHT OF THE RIVAL SUBMISSIONS OF THE PARTIES , WE HAVE PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW. THE L D.CIT(A) HAS DELETED THE ADDITION IN QUESTION HOLDING AS UNDER: LOAN CONFIRMATION & BANK STATEMENT OF THE LENDER WAS FURNISHED TO THE AO DURING THE ASSESSMENT PROCEEDINGS TO PROVE THE GENUINENESS, IDENTITY AND CREDITWORTHINESS. THE APPELLANT HAD ALSO SPE CIFICALLY REQUESTED THE AO TO OBTAIN THE OTHER REQUIRED DOCUMENTS BY INVOKING THE PROVISIONS U/S 133(6) OF THE ACT FROM THE LENDER. DURING THE APPELLATE PROCEEDINGS ALSO THE APPELLANT FURNISHED LOAN CONFIRMATION AND COPY OF BANK STATEMENT OF THE LENDER. FR OM THE BANK STATEMENT IT IS EVIDENT THAT THE LENDER HAD ENOUGH RESOURCES AND ITS DISPOSAL BEFORE GRANTING OF LOAN TO THE APPELLANT. FURTHER, IT IS NOT A CASE OF ISSUE OF CHEQUE AGAINST CASH DEPOSIT. IT IS ALSO A FACT THAT THE BORROWER IS AT THE RECEIVING E ND OF LOAN TRANSACTION. HE MAY NOT BE PRIVY TO CERTAIN PERSONAL AND CONFIDENTIAL DATA OF THE LENDER. THE LENDER MAY NOT PROVIDE DETAILS LIKE HIS PERSONAL RETURN OF INCOME OR BALANCE SHEET TO THE BORROWER. IT IS THEREFORE, INCUMBENT ON THE PART OF THE AO TO EXERCISE HIS POWERS UNDER THE A CT AND GET THE DESIRED INFORMATION, ONCE THE BORROWER HAD PROVIDED HIM WITH THE BASIC DETAILS AND REQUESTED HIM TO GET IT FROM THE LENDER THE AO HAD NOT EXERCISED THIS POWER UNDER THE A CT TO GET THE INFORMATION BEFORE MAKING THE ADDITION. THUS LOOKING AT THE DOCUMENTS SUBMITTED, THE GENUINENESS, IDENTITY AND CREDITWORTHINESS OF THE LOAN UNDER SECTION 68 STANDS PROVED AND THUS, ADDITION IS UNWARRANTED AND DIRECTED TO BE DELETED. IN VIEW OF THE ABOVE FINDINGS, THE ADDITION OF RS.30,00,000/ - CANNOT BE SUSTAINED. THUS, THE ADDITION OF RS.30,00,000/ - IS DIRECTED TO BE DELETED AND RS.2,00,000/ - IS SUSTAINED . 8. WE NOTICE THAT THE ASSESSEE HAS FURNISHED THE DETAILS CALLED FOR BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FR OM THE COPY OF LETTER DATED19.03.2013, ADDRESSED TO THE ACIT CENTRAL CIRCLE AYAKAR BHAVAN MUMBAI AVAILABLE AT PAGE 1&2 OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE, IT CAN BE INFERRED THAT THE ASSESSEE HAS SUBMITTED THE DETAILS /INFORMATION SOUGHT BY THE 5 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 AO . SINCE THE ASSESSEE HAS SUBMITTED THE CONFIRMATION BY THE CREDITOR, BANK STATEMENTS AND OTHER RELATED DOCUMENTS, THE ASSESSEE HAS PRIMA FACIE DISCHARGED THE ONUS OF ESTABLISHING IDENTITY OF THE PARTY, CREDITWORTHINESS OF THE PARTY AND THE GENUINENESS OF T RANSITION. ON THE OTHER HAND THE AO HAS NOT POINTED OUT ANY EVIDENCE TO DISPROVE THE EVIDENCE ADDUCED BY THE AO. AS POINTED OUT BY THE LD. CIT(A) IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS ISSUED CHAQUES AGAINST CASH DEPOSIT IN QUESTION. IN OUR CONSIDERED OPINION, THE FINDINGS OF THE LD. CIT(A) IS BASED ON THE EVIDENCE ON RECORD AND IN ACCORDANCE WITH THE SETTLED PRINCIPLES OF LAW. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) TO INTERFERE WITH THE SAME. WE ACCORDINGL Y, UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 9. GROUND NO 2 PERTAINS TO ADDITION OF RS.39,51,983/ - MADE AS UNEXPLAINED INVESTMENT IN JEWELLERY UNDER SECTION 69 OF THE ACT. THE LD. DR RELYING ON THE FINDINGS OF THE AO SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY DELETED THE ADDITION WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS TO ESTABLISH THE NATURE AND SOURCE OF INVESTMENT IN QUESTION. THE LD. DR FURTHER SUBMITTED AS PER THE IN VENTORY PREPARED , PURE GOLD AND JEWELLERY WORTH RS. 1,45,60,300/ - WERE FOUND IN LOCKER NO 123, APNA SAHAKARI BANK LTD., GAURAV EXTENTION, GOKULDHAM, GOREGAON (EAST) MUMBAI. THE ASSESSEE ADMITTED THAT INVESTMENT OF RS.1,24,56,983/ - IN GOLD WAS MADE FROM UNDI SCLOSED SOURCE OF INCOME. ACCORDINGLY, THE AO HAS RIGHTLY MADE ADDITION OF RS. 39,51,983/ - ( 1,45,60,300 1,24,56,983/ - ) TO THE INCOME OF THE ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT THE LD. CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF ADDITIONAL EVI DENCE IN THE FORM OF DOCUMENTS PRODUCED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS . SINCE, THE ADDITIONAL DOCUMENTS AFORESAID HAVE BEEN ADMITTED IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES,1962, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 6 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 10. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FINDINGS OF THE LD. CIT(A) ARE BASED ON THE EVIDENCE ADDUCED DURING ASSESSMENT PROCEEDINGS . NO SUBSTANTIVE EVIDENCE WAS ADMITTED BY THE LD. CIT(A) AS AN ADDITIONAL EVIDENCE DURING THE APPEL LATE PROCEEDINGS. ONLY A FEW DOCUMENTS WERE PRODUCED BEFORE THE LD. CIT(A). THE LD. COUNSEL RELYING ON THE DECISION OF THE HONBLE G AU HATI HIGH COURT IN THE CASE OF CIT VS. PODDAR SWADESH UDYOG P. LTD. 295 ITR 252 (GAUHATI) AND THE DECISION OF THE MUMBAI T RIBUNAL RENDERED IN ITO VS. BOMBAY OCTRIO CO, ITA NO 6949/MUM/2010 SUBMITTED THAT SINCE THE CIT(A) HAS COTERMINOUS POWER S WITH THAT OF THE AO, THE LD. CIT(A) CAN CONSIDER THE MATERIAL WHICH IS NECESSARY FOR DECIDING THE ISSUE IN QUESTION. 11. WE HAVE PERU SED THE MATERIAL ON RECORD INCLUDING THE FINDINGS OF THE AUTHORITIES BELOW AND THE CASES RELIED UPON BY THE LD. COUNSEL IN THE LIGHT OF THE RIVAL SUBMISSIONS OF THE PARTIES . WE NOTICE THAT THE LD. CIT(A) HAS DELETED THE ADDITION AFTER EXAMINING THE FOLLOWI NG DOCUMENTS SUBMITTED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS: - 1. A DETAILED JEWELLERY CHART DEPICTING ITEMS OF JEWELLERY FOUND ON THE DATE OF SEARCH AS PER THE V/R DT.06.10.2010 OF LAXMILAL S KOTHARI. 2. JEWELLERY RECON CILIATION STATEMENT TO SUBSTAN TIATE THIS CHART. 3. SUMMARY CHART, THE YEAR ACQUISITION MADE BY THE APPELLANTS WIFE TOGETHER WITH INVOICES THEREOF. 4. BALANCE SHEET OF APPLICANT & HIS WIFE FOR ALL THE YEARS UNDER CONSIDERATION (I.E, A.Y.2005 - 06 TO 2011 - 12) HIGHLIGHTING THE ACQUISITION OF JEW ELLERY MADE. 5. EXTRACTS OF BALANCE SHEET OF APPELLANT AND GARNET INTERNATIONAL LTD. DEPICTING THE ACQUISITION OF SILVER UTENSILS WEIGHING 27KG & 16.995 KG RESPECTIVELY 7 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 6. DEBIT NOTE FOR ACQUISITION OF SILVER (27KGS) IN APPELLANTS CASE. 7. CERTIFICATE FROM APNA SA HAKARI BANK FOR THE LAST DATE WHEN THE APPELLANT HAD OPERATED THE LOCKER I.E.14/07/2010, BEFORE THE DATE OF SEARCH, AND 8. GOLD RATE CHART PREVAILING IS ON 14/07/2010. 12. ADMITTEDLY, THE ASSESSEE HAS NOT FILED THE DOCUMENTS AT S.NO 2 OF THE PAPER BOOK FILED BEFORE THE TRIBUNAL , WHICH CONSISTS OF 22 PAGES, BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. OUT OF 22 PAGES 9 PAG ES ARE THE WRITTEN SUBMISSIONS MADE TO THE LD. CIT(A) AND REMAINING PAGES ARE ANNEXURE THEREOF. NO DOUBT, THE CIT(A) HAS POWER TO ADMIT AD DITIONAL EVIDENCE SUBJECT TO THE CONDITIONS ENVISAGED UNDER RULE 46A OF THE INCOME TAX RULES . H OWEVER, WE NOTICE THAT THE LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCE WITHOUT RECORDING REASONS FOR ITS ADMISSION UNDER RULE 46A(2). WE FURTHER NOTICE THAT THE LD. CIT(A) HAS TAKEN INTO ACCOUNT THE DOCUMENTS WITHOUT GIVING A REASONABLE OPPORTUNITY TO EXAMINE THE SAME AS CONTEMPLATED UNDER SUB RULE 3 OF RULE 46A. KEEPING IN VIEW THE NATURE OF THE DOCUMENTS ADMITTED AS ADDITIONAL EVIDENCE, THE SAME ARE REQUIRED TO BE VERIFIED EITHER BY THE LD. CIT(A) HIMSELF OR THROUGH AO. WE ALSO NOTICE THAT THE LD. CIT(A) HAS NEITHER VERIFIED HIMSELF THE DOCUMENTS SUBMITTED BY THE ASSESSEE NOR HAS SOUGHT REMAND REPORT FROM THE AO. SINCE, T HE DOCUMENTS RELIED UPON BY THE LD. C IT(A) ARE VITAL FOR ADJUDICATING THE ISSUE RAISED BY THE REVENUE AND SINCE THESE DOCUMENTS WERE NOT SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, WE ARE OF THE CONSIDERED OPINION , THAT THE SAME ARE REQUIRED TO BE VERIFIED BY THE AO. IN OUR CON SIDERED VIEW, T HE CASES RELIED UPON THE LD. COUNSEL ON THE POINT OF ADMISSION OF ADDITIONAL EVIDENCE ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. 13. KEEPING IN VIEW THE IRREGULARITIES DISCUSSED IN THE FOREGOING PARA, W E SET ASIDE THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE AND SEND THE MATTER BACK TO 8 ITA NO. 1332 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 THE AO TO DECIDE THIS ISSUE AFRESH AFTER TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCE SUBMITTED BEFORE THE LD. CIT(A). THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR THE STATISTICAL PUR POSES. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A SSESSMENT YEAR 2011 - 2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY , 201 8 . SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 05 / 02 / 20 18 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELL ANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI