M/s. N.H SECURITIES LTD., MUMBAI V. ACIT CENT CIR. - 40, MUMBAI

ITA 1386/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54909 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 27-07-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 25-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Assessee Lawyers: RAJIV KHANDELWALA
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI. P.M. JAGTAP (A.M.) AND SHRI VIJAY PAL RAO (J.M.) ITA NO.1386/MUM/2008 ASSESSMENT YEAR : 1999-2000 N.H. SECURITIES LTD. BHUPEN CHAMBERS, GRD. FLR.9, DALAL STREET, FORT, MUMBAI 400 023. PAN : AAACS7140Q VS. A.C.I.T. CENT CIR 40 MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.1390/MUM/2008 ASSESSMENT YEAR : 1999-2000 A.C.I.T. CENT CIR 40 MUMBAI. VS. N.H. SECURITIES LTD. BHUPEN CHAMBERS, GRD. FLR.9, DALAL STREET, FORT, MUMBAI 400 023. PAN : AAACS7140Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJIV KHANDELWALA RESPONDENT BY : DR. P. DANIEL DATE OF HEARING : 27.07.2011 DATE OF PRONOUNCEMENT : 12.08.2011 O R D E R PER P.M. JAGTAP THESE TWO APPEALS, ONE FILED BY THE ASSESSE BEING I TA NO.1086/MUM/08 AND OTHER FILED BY THE REVENUE BEING ITA NO.1390/MUM/08, ARE CROSS APPEALS WHICH ARE DIRECTE D AGAINST THE ORDER OF THE LEARNED CIT(A) CENTRAL CIRCLE VII, MUMBAI DAT ED 10.12.2007 WHEREBY HE PARTLY SUSTAINED THE PENALTY IMPOSED BY THE AO U /S.271(1)(C) OF THE I.T. ACT. ITA NO.1386/MUM/2008 ITA NO.1390/MUM/2008 2 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF SHARE AND STOCK BROKING AS WELL AS INVE STMENT AND TRADING IN SHARES AND SECURITIES. THE RETURN OF INCOME FOR T HE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 10.04.2000 DECLARI NG TOTAL INCOME OF RS.1,37,38,650/-. IN THE ASSESSMENT COMPLETED U/S. 143(3) VIDE ORDER DATED 31.10.2002, TOTAL INCOME OF THE ASSESSEE WAS DETERM INED BY THE AO AT RS.419,69,67,050/- AFTER MAKING THE FOLLOWING ADDIT IONS: 1 UNEXPLAINED INVESTMENT U/S.69 RS. 3975729214/- 2 UNDISCLOSED PROFIT RS 56258741/- 3 UNEXPLAINED CASH CREDIT U/S.68 RS 148414624/- 4 DIVIDEND U/S.10(33) RS 2766827/- 5 UNEXPLAINED INVESTMENT U/S.69 RS 56000/- 3. AGAINST THE ORDER PASSED BY THE AO U/S.143(3) MA KING THE ABOVE ADDITIONS TO ITS TOTAL INCOME, APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD CIT(A). THE SAID APPEAL WAS DISPOSED OF BY THE LD CIT(A) VIDE AN APPELLATE ORDER DATED 29.03.2004 WHEREIN HE DELETED THE ADDIT ION OF UNEXPLAINED INVESTMENT TO THE EXTENT OF RS.2639336286/- AND SUS TAINED THE BALANCE ADDITION OF RS.1336392928/-. THE LD CIT(A) RESTOR ED THE ISSUES RELATING TO ADDITIONS MADE ON ACCOUNT OF DIVIDEND AMOUNTING TO RS.2766827/- AND DIFFERENCE IN TURNOVER AMOUNTING TO RS.56,000/- TRE ATED AS UNEXPLAINED INVESTMENT TO THE FILE OF THE AO FOR DECIDING THE S AME AFRESH AS PER THE DIRECTION GIVEN IN HIS APPELLATE ORDER. IN THE OR DER PASSED WHILE GIVING EFFECT TO THE ORDER OF THE LD CIT(A), THE AO DELETED THE S AID TWO ADDITIONS. THE ADDITIONS ON ACCOUNT OF ADDITIONAL CASH CREDIT AMOU NTING TO RS.14,84,17,624/- WAS CONFIRMED BY THE LD CIT(A). AS A RESULT OF ORDER OF THE LD CIT(A) PASSED IN THE QUANTUM PROCEEDINGS, ON LY TWO ADDITIONS IN RESPECT OF UNEXPLAINED INVESTMENT AMOUNTING TO RS.1 336392928/- AND UNEXPLAINED CASH CREDIT AMOUNTING TO RS.14,84,17,62 4/- MADE TO THE TOTAL INCOME OF THE ASSESSEE THUS WERE CONFIRMED. THERE AFTER NOTICE ITA NO.1386/MUM/2008 ITA NO.1390/MUM/2008 3 U/S.271(1)(C) R.W.S. 274 WAS ISSUED BY THE AO REQUI RING THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID ADDITIONS CONFIRMED BY T HE LD CIT(A) SHOULD NOT BE TREATED AS ITS CONCEALED INCOME FOR THE PURPOSE OF IMPOSING PENALTY U/S.271(1)(C). THE EXPLANATION OFFERED BY THE ASSE SSEE IN RESPONSE TO THE SAID NOTICE WAS NOT FOUND ACCEPTABLE TO THE AO AND HE PROCEEDED TO IMPOSE PENALTY OF RS.53,93,52,000/- U/S.271(1)(C) BEING 10 0% OF THE TAX SOUGHT TO BE EVADED ON THE ADDITION MADE TO THE TOTAL INCOME HOLDING THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOM E TO THAT EXTENT. 4. THE PENALTY IMPOSED BY THE AO U/S.271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD CIT(A) WH O UPHELD THE ACTION OF THE AO IN IMPOSING THE PENALTY U/S.271(1)(C) IN PRINCIP LE. HE, HOWEVER, DIRECTED THE AO TO RECOMPUTE THE QUANTUM OF PENALTY PAYABLE BY THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE RELIEF ALLOWED BY THE TRIBUNAL TO THE ASSESSEE IN QUANTUM PROCEEDING. AGGRIEVED BY T HE ORDER OF THE LD CIT(A), THE ASSESSEE AND REVENUE BOTH ARE IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE IMPUGNED PENALTY HAS BEEN IMPOSED BY THE AO IN RESPECT OF ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT A MOUNTING TO RS.133.63 CRORES AND UNEXPLAINED CASH CREDIT AMOUNTING TO RS. 14,84,17,624/-. IN THIS REGARD, IT IS OBSERVED THAT THE TRIBUNAL VIDE ITS ORDER DATED 03.10.2007 PASSED IN ITA NO.3717/MUM/2004 WHILE DISPOSING OF T HE APPEAL OF THE ASSESSEE FILED IN THE QUANTUM PROCEEDING HAS ALREAD Y RESTORED THE ISSUE RELATING TO ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME AFRESH AFTER CONSIDERING OF THE EVIDENCE THAT MAY BE FILED BY THE ASSESSEE BEFORE H IM. EVEN THE OTHER ISSUE RELATING TO THE ADDITION MADE ON ACCOUNT OF UNEXPLA INED CASH CREDIT HAS BEEN RESTORED BY TRIBUNAL PARTLY TO THE FILE OF THE LD CIT(A) VIDE PARA 20 AND 22 WHICH READS AS UNDER: 20 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND TH E LD CIT(A) ITA NO.1386/MUM/2008 ITA NO.1390/MUM/2008 4 AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO MADE THE ADDITION OF RS.148417624/- ON ACCOU NT OF LOANS TAKEN FROM THE FOLLOWING PARTIES. NAME OF THE PARTY PEAK ADVANCE RECEIVED 20 TH CENTURY FINANCE CORPORATION LTD. RS.6,00,00,000 RAJ MITTAL RS.50,24,658 SUSHIL C CHOKSI RS.6,00,000 MITTAL INSPAT LTD RS.50,60,411 PONDY METALS AND ROLLING MILLS LTD. RS.50,73,644 SHARDA CASTINGS LTD. RS.35,00,000 ADINATH TEXTILES RS.35,00,000 DSQ HOLDINGS LTD. RS.5,00,00,000 FORTUNE FINANCIAL SERVCES (I) LTD. RS.1,40,98,500 TOTAL RS.14,84,17,624 21. WE FIND THAT OUT OF THE ABOVE 9 CREDITORS THE A SSESSEE HAS FILED CONFIRMATION LETTERS BEFORE THE LD CIT(A) IN CASE OF 20 TH CENTURY FINANCE CORPORATION LTD., MITTAL ISPAT LTD. , PONDY METALS AND ROLLING MILLS LTD., SHARDA CASTINS LTD. AND DSQ HOLDINGS LTD. AS CLAIMED BY THE LD COUNSEL FOR THE ASSESSEE AND FOR WHICH AN AFFIDAVIT HAS ALSO BEEN FILED BEFO RE US. HOWEVER, NO CONFIRMATION FROM THE REMAINING PARTIES FOR WHICH NO CONFIRMATIONS HAVE BEEN FILED, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD CIT(A) IS UPHELD, SINCE THE ONUS WHICH LIES ON THE ASESSEE HAS NOT BEEN DISCHARGED AND THE RE IS NO APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. THEREFORE, IN THE ABSENCE OF EVIDENCE, THE ADDITION TO THE EXTENT RELATING TO THOSE PARTIES ARE UPHELD. 22. HOWEVER, AS REGARDS, THE PARTIES FOR WHICH THE CONFIRMATIONS WERE FILED BEFORE THE LD CIT(A) WHO D ID NOT CONSIDER THE CONFIRMATIONS FILED BEFORE HIM NOR PAS SED ANY ORDER BY EITHER ACCEPTING THE SAME OR REJECTING IT, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO GO BACK TO HIS FILE FOR FRESH ADJUDICATION. HE IS DIRECTED TO VERIFY HIS RECORDS AND IF THE CONFIRMATIONS WERE FILED BEFORE HIM HE SHOUL D PASS A SPEAKING ORDER AND IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE HOLD AND DIRECT ACCORDINGLY, GROUNDS OF APPEAL NO.3 BY THE APPELLANT IS ACCORDINGLY PARTLY ALLOWED FOR STATIST ICAL PURPOSE. 6. IT IS THUS CLEAR THAT THE ISSUES RELATING TO BOT H THE ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF WHIC H IMPUGNED PENALTY WAS LEVIED BY THE AO HAVE NOT BECOME FINAL IN THE QUANT UM PROCEEDINGS AND THE ITA NO.1386/MUM/2008 ITA NO.1390/MUM/2008 5 SAME ARE PENDING EITHER BEFORE THE AO OR BEFORE THE LD CIT(A) FOR ADJUDICATION. KEEPING IN VIEW THIS POSITION, WE D EEM IT JUST AND PROPER TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND R ESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE MAT TER RELATING TO IMPOSITION OF PENALTY U/S.271(1)(C) AFRESH AFTER TAKING INTO CONS IDERATION THE FINAL OUTCOME OF CORRESPONDING ADDITIONS IN THE QUANTUM PROCEEDIN GS AS WELL AS THE FINDINGS RECORDED THEREIN. 7. IN THE RESULT, APPEAL OF THE ASSESSEE AS WELL TH AT OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 12 TH DAY OF AUGUST, 2011. SD/- (VIJAY PAL RAO) (JUDICIAL MEMBER) SD/- (P.M. JAGTAP) (ACCOUNTANT MEMBER) MUMBAI, DATED 12.08.2011 JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUMBA I. 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI. 5. DEPARTMENTAL REPRESENTATIVE, BENCH , MUMBA I TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI