The ITO, Ward-12(4), Ahmedabad V. Shri Jitendra Ramanlal Shah, Ahmedabad

ITA 1427/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0474 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-11-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GARG
• Keywords: Unexplained investment; Opportunity of being heard; Corroborative evidences
• Section: 143(3); 143(1); 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI H. L. KARWA, JM AND N. S. SAINI, AM) ITA NO.1427/AHD/2009 A. Y.: 2005-06 THE INCOME TAX OFFICER, WARD-12(4), ROOM NO.108, 1 ST FLOOR, NARAYAN CHAMBER, NR. NEHRU BRIDGE, ASHRAM ROAD, AHMEDABAD VS SHRI JITENDRA RAMANLAL SHAH, D-23, SAROVAR APARTMENT, UTTAMNAGAR, MANINAGAR, AHMEDABAD PA NO. AEJPS 3785 D (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI SANDEEP GARG, DR O R D E R PER H. L. KARWA: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XX, AHMEDABAD DATED 13-02-2009 RELATING TO ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOWI NG GROUNDS: 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED LAW AND ON FACTS IN DELETING THE ADDITION OF RS.62,00,430/- MA DE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S. 69 OF THE I. T. ACT BY THE AO, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. 1.2. IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT, DESPITE SUFFICIENT OPPORTUNITY HAVING BEEN ALLOWED BY THE AO, THE ASSE SSEE FAILED TO FURNISH THE EVIDENCES CALLED FOR IN RESPE CT OF THE SAID INVESTMENT APPEARING IN THE BALANCE-SHEET OF THE AS SESSEE. 1.3 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS E RRED IN NOT APPRECIATING THAT IN RESPECT OF UNSECURED LOANS OF RS.51,35,000/- SHOWN IN THE BALANCE-SHEET OF THE AS SESSEE, THE ASSESSEE COULD NOT EVEN PRODUCED THE CONFIRMATI ONS AND PAN OF SEVERAL PARTIES DURING THE REMAND PROCEEDING S ALSO ITA NO.1427/AHD/2009 SHRI JITENDRA RAMANLAL SHAH 2 AND THEREFORE THE IDENTITY, CREDITWORTHINESS AND TH E GENUINENESS OF THESE CREDITORS COULD NOT BE ESTABLI SHED BY THE ASSESSEE. 3. IN THIS CASE, THE AO PASSED THE ASSESSMENT ORDER U/S 144 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 7-12-2007 AND MADE ADDITION OF RS. 62,00,430/- CONC LUDING AS UNDER: ENTIRE ASSETS AS APPEARING IN THE BALANCE SHEET AS ON 31-3- 2005 TO THE TUNE OF RS.62,00,430 IS TREATED AS UNEX PLAINED INVESTMENT U/S 69 OF THE INCOME TAX ACT AND ADDED T O THE TOTAL INCOME OF RS.2,21,600/- OF THE ASSESSEE DETER MINED AS PER INTIMATION U/S 143(1) DTD. 8-2-2007. 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE EX-PARTE ASSESSMENT ORDER PASSED BY THE AO WAS NOT CORRECT AND JUSTIFIED. THE ASSESSEE FURTHER SUBMITT ED BEFORE THE CIT(A) THAT HE WAS DOING WORK/BUSINESS OF DEVELOPING AND C ONSTRUCTION WORK ON BEHALF OF SAROVAR ASSOCIATION, MANINAGAR (SAROVAR A PARTMENTS) DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE FURTHER SUBMITTED THAT HE HAS MAINTAINED BOOKS OF ACCOUNT AS PER MERCANTILE S YSTEM OF ACCOUNTING. IT WAS ALSO SUBMITTED BY THE ASSESSEE B EFORE THE CIT(A) THAT AS ALLEGED BY THE AO, THESE WERE NOT LOANS BUT THES E AMOUNTS WERE RECEIVED FROM THE MEMBERS OF THE SCHEME. THE ASSESS EE HAS SUBMITTED THE BREAK UP OF ADDITIONS OF INVESTMENTS AS UNDER: SR. NO. PARTICULARS AMOUNT 1 FIXED ASSETS, AS PER BALANCE SHEET 1832812 LESS:- DEPN. 118978 1713834 2 CURRENT ASSETS, LOANS AND ADVANCES, CASH & BANK BALANCES 37396 LOANS & ADVANCES 4434200 4471596 3 PREPAID SALARY 15000 TOTAL 6200430 ITA NO.1427/AHD/2009 SHRI JITENDRA RAMANLAL SHAH 3 THE ASSESSEE FURTHER SUBMITTED BEFORE THE CIT(A) TH AT THE ITO-WARD-12, AHMEDABAD HAS SUBMITTED HIS REMAND REPORT DATED 27- 1-2009, WHICH IS SELF EXPLANATORY AND FROM WHICH IT WOULD BE CLEAR T HAT THE EX-PARTE ASSESSMENT WAS ORIGINALLY MADE AND THE ADDITION WAS ALSO NOT JUSTIFIED WHICH DESERVES TO BE DELETED. 5. THE CIT(A) DELETED THE ENTIRE ADDITION OBSERVING AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE APPELLANT AND HAVE ALSO CAREFULLY G ONE THROUGH THE ASSESSMENT ORDER. IN THIS CASE, DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE MATTER WAS ADJOURNED TO 10-12-07 B UT THE ASSESSMENT ORDER WAS PASSED EX-PARTE THIS DATE I.E 07-12-07.THE FINDINGS OF THE AO AND THE CONTENTIONS PUT FORTH BY THE LEARNED COUNSEL ON THE BASIS OF WHICH, TO CLARIFY THE REAL FACTS, A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER VI DE THIS OFFICE LETTER DATED 21.11.2008. THE PRESENT AO HAS GIVEN HIS VIEW S/COMMENTS POINT BY POINT IN HIS REMAND REPORT DATED 27-01-09 AS UNDER:- (1) INVESTMENTS IN FIXED ASSETS OF RS.17,13,834/-. THE ASSESSEE HAS PRODUCED PARTICULARS OF DEPRECIATI ON ALLOWANCES AS PER THE INCOME TAX ACT, 1961 AND HE HAS VERIFIED THE SAME AND STATED THAT NO NEW ADDITIONS HAS BEEN MADE DURING T HE YEAR UNDER CONSIDERATION. HE HAS FOUND THAT INVESTMENT MADE IN FIXED ASSETS IS CORRECT AND ACCEPTABLE. (2) AS REGARDS CASH & BANK BALANCES OF RS.37,396/- THE AO HAS VERIFIED THE CASH & BANK BALANCES FROM T HE CASH BOOK & BANK BOOKS PRODUCED BEFORE HIM AND FOUND NO DISCR EPANCY. (3) AS REGARDS LOANS & ADVANCES OF RS.44,34,200/- THE I. T. O. HAS VERIFIED FROM THE COPIES OF ACCOUN TS OF THE PARTIES TO WHOM ADVANCES WERE MADE AGAINST WORK DONE BY THEM A ND HAS FOUND THE SAME TO BE CORRECT. (4) AS REGARDS ADVANCE PAYMENT OF SALARY OF RS.1500 0/- THE I.T.O. HAS VERIFIED THE COPY OF ADVANCE PAYMENT OF SALARY TO STAFF AND HAS FOUND CORRECT. ITA NO.1427/AHD/2009 SHRI JITENDRA RAMANLAL SHAH 4 (5) AS REGARDS UNSECURED LOANS OF RS.5,13,500/- THE AO STATES THAT THERE ARE NOT UNSECURED LOANS BU T THESE AMOUNTS ARE RECEIVED FROM MEMBERS OF THE SCHEME, THE DETAIL S OF THE MEMBERS ARE FILED. DURING THE YEAR, THE ASSESSEE HA S RECEIVED THE DEPOSITS OF RS.11,22,500/-. THE COPIES OF ACCOUNTS OF THE DEPOSITORS ARE ALSO FILED. (6) ADDITIONS OF RS.323736/- IN CAPITAL A/C. THE INCOME TAX OFFICER, WARD -12(4), AHMEDABAD HAS VERIFIED THE ADDITIONS MADE OF RS. 3,23,736/- IN THE CAPITAL ACC OUNT OF THE APPELLANT AND THE SOURCE IS DUE TO THE FLAT CANCELL ATION ALLOTTED TO SHRI ARVINDBHAI KHENGAR. THE COPY OF LEDGER ACCOUNT IS FILED. THUS, FROM THE REMAND REPORT OF THE AO, IT TRANSPIR ES THAT THE EX- PARTE ASSESSMENT WAS MADE WITHOUT GRANTING PROPER O PPORTUNITY TO THE APPELLANT TO EXPLAIN HIS CASE AND THE ADDITION WAS MADE ONLY BECAUSE THE APPELLANT HAS NOT ATTENDED ON THE DATE OF LAST HEARING. IT DOES NOT SEEM PROPER THAT ON THE ONE HAND THE AO IS GIVING LAST AND FINAL OPPORTUNITY OF BEING HEARD FOR 10-12-2007 AND ON THE OTHER HAND, HE IS FINALIZING THE ASSESSMENT EX-PARTE ON 0 7-2007 I.E. THREE DAYS BEFORE THE LAST AND FINAL DATE OF HEARING GRAN TED TO THE APPELLANT. THIS ITSELF MEANS THAT THE AO HAS FINALI ZED THE ASSESSMENT WITHOUT APPLYING PROPER APPLICATION OF M IND. THE AO HAS MADE THE ADDITION OF RS.62,00,430/- OF ALL THE INVESTMENTS APPEARING IN THE BALANCE SHEET WITHOUT GIVING ANY C OGENT REASONING IN HIS ASSESSMENT ORDER. ONLY BECAUSE THE APPELLANT HAS NOT ATTENDED THE ASSESSMENT PROCEEDINGS, HE HAS MADE SU CH A HUGE ADDITION WITHOUT GIVING ANY SPECIFIC FINDINGS IN TH E ASSESSMENT ORDER. SINCE THE APPELLANT HAS CLARIFIED AND EXPLAI NED THE POSITION WITH SUPPORTING EVIDENCES AND SINCE THE AO HAS AFTE R VERIFICATION, DURING REMAND REPORT PROCEEDINGS, ACCEPTED THE EXPL ANATION OF THE APPELLANT, THE ADDITION MADE BY THE AO OF RS.62,00, 430/- IS NOT AT ALL JUSTIFIED AND NEEDS TO BE DELETED. THE ADDITION SO MADE IS HEREBY DELETED. 6. WE HAVE HEARD THE LEARNED DR. NOBODY APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF NOTICE BY REGISTERE D POST A/D. THE ASSESSEE HAS ALSO NOT FILED ANY APPLICATION FOR ADJ OURNMENT OF HEARING. IN THE CIRCUMSTANCES, WE ARE CONSTRAINED TO DISPOSE OF THE APPEAL OF THE REVENUE ON MERITS. IN THE INSTANT CASE, THE AO HAS PASSED EX-PARTE ASSESSMENT ORDER WITHOUT GRANTING PROPER OPPORTUNIT Y OF BEING HEARD TO ITA NO.1427/AHD/2009 SHRI JITENDRA RAMANLAL SHAH 5 THE ASSESSEE. IT SEEMS THAT THE AO MADE THE ADDITIO N BECAUSE THE ASSESSEE HAS NOT ATTENDED ON THE DATE OF LAST HEARI NG. IT IS APPARENT FROM THE RECORD THAT THE AO HAS PASSED THE ASSESSMENT OR DER 3 DAYS BEFORE THE LAST AND FINAL DATE OF HEARING GRANTED TO THE A SSESSEE. THIS CONDUCT OF THE AO SHOWS THAT HE HAS PASSED THE ASSESSMENT ORDE R WITHOUT PROPER APPLICATION OF MIND. IN OUR VIEW, THE AO HAS MADE T HE IMPUGNED ADDITION OF ALL THE INVESTMENTS APPEARING IN THE BA LANCE SHEET WITHOUT GIVING ANY COGENT REASON. WE FULLY AGREE WITH THE O BSERVATIONS OF THE CIT(A) THAT THE AO HAS MADE THE ADDITION ONLY BECAU SE THE ASSESSEE HAS NOT ATTENDED THE ASSESSMENT PROCEEDINGS. HOWEVER, T HE ASSESSEE HAS CLARIFIED AND EXPLAINED THE POSITION WITH SUPPORTIN G EVIDENCE DURING THE COURSE OF REMAND PROCEEDINGS AND THE AO HAS ACCEPTE D THE EXPLANATION OF THE ASSESSEE DURING THE REMAND PROCEEDINGS AND T HE AO WAS SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND, THE REFORE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ENTIRE ADDITION ON THE BA SIS OF THE REMAND REPORT OF THE AO DATED 27-1-2009. IN OUR VIEW, THE REVENUE WAS NOT JUSTIFIED IN FILING THE APPEAL BEFORE THE TRIBUNAL AGAINST THE O RDER OF THE CIT(A) WHEN IN THE REMAND PROCEEDINGS THE AO WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND SUGGESTED THAT NO ADDITION SHOULD BE MADE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 04 -11-2009 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (H. L. KARWA) JUDICIAL MEMBER DATE : 04-11-2009 LAKSHMIKANT/- ITA NO.1427/AHD/2009 SHRI JITENDRA RAMANLAL SHAH 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD