Shri Mahendra Kumar S.Jain, CHENNAI V. ACIT, CHENNAI

ITA 1458/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86246 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RU GEORGE
• Assessee Lawyers: B RAMANA KUMAR
• Keywords: Search and seizure; Opportunity of being heard

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , ! , ' #$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 1458/MDS/2014 ' % &% / ASSESSMENT YEAR : 2004-05 SHRI MAHENDRA KUMAR S. JAIN, 18, KESAVA IYER STREET, SOWCARPET, CHENNAI - 600 001. PAN : AAFPJ 9250 N V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE IV(1), CHENNAI - 600 034. (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI B. RAMANA KUMAR, ADVOCATE *+!( , - / RESPONDENT BY : MS. RUBY GEORGE, CIT-DR . , / / DATE OF HEARING : 20.01.2015 01& , / / DATE OF PRONOUNCEMENT : 21.01.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 31.03.2014, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) (CENTRAL)-I, CHENNAI AND IT RELATES T O ASSESSMENT YEAR 2004-05. THE ASSESSEE IS AGGRIEVED BY THE DEC ISION OF LD. CIT(APPEALS) ON CONFIRMING THE ADDITION OF ` 50 LAKHS RELATING TO UNEXPLAINED ADVANCES GIVEN THROUGH PRO-NOTES. 2 I.T.A. NO. 1458/MDS/2014 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE I N BRIEF. THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATION IN THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE O N 27.03.2007. DURING THE COURSE OF SEARCH, TWO PRO-NOTES, BOTH DA TED 19.9.2003, SIGNED BY A PERSON NAMED MOHANLAL JAIN, WERE FOUND. THE AGGREGATE AMOUNT MENTIONED IN BOTH THE PRO-NOTES WA S ` 50 LAKHS. SINCE THE ASSESSEE FAILED TO EXPLAIN THE SOURCES FO R GIVING LOAN THROUGH PRO-NOTES, THE ASSESSING OFFICER ASSESSED T HE AMOUNT OF ` 50 LAKHS AS INCOME OF THE ASSESSEE TREATING THE SAM E AS UNDISCLOSED ADVANCES. THE LD. CIT(APPEALS) ALSO CO NFIRMED THE SAID ADDITION. AGGRIEVED, THE ASSESSEE HAS FILED A PPEAL BEFORE US. 3. LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(APPEALS) HAS NOT PROPERLY CONSIDERED THE EX PLANATION OF THE ASSESSEE WITH REGARD TO THE TWO PRO-NOTES FOUND DUR ING THE COURSE OF SEARCH. THE ASSESSEE HAD ALSO FURNISHED CONFIRM ATION LETTER OBTAINED FROM SHRI MOHANLAL JAIN, WHEREIN HE HAS CL EARLY STATED THAT HE DID NOT GIVE ANY MONEY AGAINST THE PRO-NOTES SIN CE THE DEAL GOT CANCELLED. LD.COUNSEL SUBMITTED THAT THE LD. CIT(A PPEALS), WITHOUT CONSIDERING THE EXPLANATIONS OF THE ASSESSEE AS WEL L AS THE CONFIRMATION LETTER GIVEN BY SHRI MOHANLAL JAIN, HA S PROCEEDED TO CONFIRM THE ADDITION ON THE GROUND THAT THE ASSESSE E HAS FAILED TO 3 I.T.A. NO. 1458/MDS/2014 FURNISH FINANCIAL STATEMENTS PERTAINING TO SHRI MOH ANLAL JAIN. LD.COUNSEL SUBMITTED THAT THE ASSESSEE WAS NOT IN A POSITION TO GET FINANCIAL STATEMENTS FROM SHRI MOHANLAL JAIN AS THE SAID PARTY WAS NOT UNDER HIS CONTROL. ACCORDINGLY, THE LD.COUNSEL SUBMITTED THAT THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMIN G THE IMPUGNED ADDITION. 4. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION BEFORE THE AS SESSING OFFICER. EVEN THOUGH HE FILED A CONFIRMATION LETTER ALLEGED TO HAVE BEEN OBTAINED FROM SHRI MOHANLAL JAIN, YET, HE FAILED TO FURNISH OTHER DOCUMENTS TO SUBSTANTIATE HIS CLAIM. ACCORDINGLY, THE LD. D.R. SUBMITTED THAT THE LD. CIT(APPEALS) WAS JUSTIFIED I N CONFIRMING THE ADDITION OF ` 50 LAKHS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. ADMITTEDLY, THE DEPARTMENT HAS UNEARTH ED TWO PRO- NOTES HAVING AN AGGREGATE VALUE OF ` 50 LAKHS, EXECUTED BY A PERSON NAMED SHRI MOHANLAL JAIN. IT IS ALSO AN UND ISPUTED FACT THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION WITH REGARD TO THESE PRO-NOTES DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. HOWEVER, DURING THE APPELLATE PROCEEDINGS BEFORE LD . CIT(APPEALS), THE ASSESSEE HAS COME UP WITH AN EXPL ANATION THAT 4 I.T.A. NO. 1458/MDS/2014 THE FINANCIAL DEAL DID NOT GET THROUGH, I.E. THE AS SESSEE DID NOT ADVANCE ANY MONEY AGAINST THE PRO-NOTES FOUND DURIN G THE COURSE OF SEARCH. IN SUPPORT OF THIS EXPLANATION, THE ASS ESSEE HAS ALSO FILED A CONFIRMATION LETTER OBTAINED FROM SHRI MOHA NLAL JAIN. HOWEVER, WE NOTICE THAT THE LD. CIT(APPEALS) DID NO T CONSIDER THE EXPLANATION OF THE ASSESSEE AS WELL AS THE CONFIRMA TION LETTER FILED BY THE ASSESSEE AND INSTEAD PROCEEDED TO CONFIRM TH E ADDITION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH FINANCIAL STATEMENTS RELATING TO SHRI MOHANLAL JAIN. THE APP ROACH ADOPTED BY THE LD. CIT(APPEALS), IN OUR VIEW, DOES NOT APPE AR TO BE CORRECT. IN OUR VIEW, THE LD. CIT(APPEALS) SHOULD HAVE EXAMI NED THE EXPLANATION OF THE ASSESSEE AND SHOULD HAVE CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER WITH REGARD TO TH E EXPLANATION AS WELL AS THE CONFIRMATION LETTER BEFORE DECIDING THE ISSUE. IN OUR VIEW, WHEN AN ASSESSEE OFFERS A FRESH EXPLANATION, IT IS NECESSARY ON THE PART OF TAX AUTHORITIES TO EXAMINE THE VERAC ITY OF THE EXPLANATION BEFORE REJECTING THE SAME. SINCE THE L D. CIT(APPEALS) HAS FAILED TO EXAMINE OR CAUSE TO BE EXAMINED THE E XPLANATION AS WELL AS THE DOCUMENTS FURNISHED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES A FRESH EXAMINATION A T HIS END. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT( APPEALS) AND REMIT IT TO HIS FILE WITH THE DIRECTION TO RECONSID ER THE ISSUE AFRESH 5 I.T.A. NO. 1458/MDS/2014 AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LA W AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 21 ST DAY OF JANUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKAS AWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 21 ST JANUARY, 2015. KRI. B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A) (CENTRAL)-I, CHENNAI 4. . E/ /CIT, CENTRAL-I, CHENNAI 5. FG *'/' /DR 6. GH% I /GF.