Shri Kirit Mohanbhai Patel, Surat V. The Income Tax Officer, Ward 7(3), Surat

ITA 1507/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9800 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-11-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Revision of order; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 69; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 1507/AHD/2013 / ASSESSMENT YEAR : 2001-02 KIRIT MOHANBHAI PATEL, 5/C & D, AALOKIK APARTMENT, SUMUL DAIRY ROAD, SURAT-395004 PAN : ACVPP 4721 G VS INCOME TAX OFFICER, WARD 7 (3), SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA, AR REVENUE BY : SHRI K. MADHUSUDAN, SR DR / DATE OF HEARING : 10/11/2016 / DATE OF PRONOUNCEMENT: 07/12/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-V, SUR AT DATED 15.03.2013 FOR ASSESSMENT YEAR 2001-02. 2. FOLLOWING GROUNDS ARE RAISED:- (I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION OF RS.4,82,953/- ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME TAX ACT , 1961; (II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION OF RS.73,182/- ON A CCOUNT OF TREATING AGRICULTURAL INCOME AS INCOME FROM UNDISCLOSED SOUR CES. 3. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET CONTE NDS THAT ASSESSEE AND MANY OTHER ENTITIES WERE FLOATED BY AND CONNECTED T O M/S. M.D. PATEL GROUP WHICH WAS SEARCHED. THE SAID M D PATEL GROUP OWNED UP THE ITA NO. 1507/AHD/2013 KIRIT MOHANBHAI PATEL VS. ITO AY : 2001-02 2 TRANSACTION OF THE CONNECTED ENTITIES. SIMILAR ISSU ES REACHED ITAT IN VARIOUS CASES INCLUDING SMT. ALKABEN AMRUTRAM GURU AND SMT KANCHANLAL NATWARLAL RANA. AHMEDABAD ITAT IN ITA NO. 885/AHD/2 013 AND 1506/AHD/2013 VIDE A COMMON ORDER DATED 01.08.2016 OBSERVED THAT THESE ASSESSEES ARE CONNECTED TO M/S. M.D. PATEL GROUP. I N THIS BACKDROP THE AFORESAID APPEALS ARE SET ASIDE BY ITAT TO THE FILE OF ASSESSING OFFICER BY FOLLOWING OBSERVATIONS:- 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. A STATEMENT AT BAR IS MADE BY SHRI HEMANT JADIA, ADVOCATE OF GUJAR AT HIGH COURT AND SOME OF THE ORDERS OF THE BOMBAY HIGH COURT ARE ON THE RECORD IN RESPECT OF PURPORTED LITIGATION BETWEEN M/S. M.D. PATEL GROUP AND UNION OF INDIA. THE FACTS ABOUT SETTLEMENT COMMISSION OWNING UP OF THE INCOME BY THE KINGPIN M/S. M.D. PATEL GROUP ETC. ARE NOT ON THE R ECORD. IN VIEW THEREOF THESE APPEALS ARE SET ASIDE AND RESTORED BACK TO TH E FILE OF THE ASSESSING OFFICER TO CALL THE ASSESSEES TO DEMONSTRATE THAT T HE SUBJECT MATTER RAISED IN THESE APPEALS IS COVERED BY THE ALLEGED SETTLEMENT PETITION OF M/S. M.D. PATEL GROUP AND THE RESULT THEREOF. IT IS MADE CLEAR THA T THE ASSESSING OFFICER WILL VERIFY NECESSARY RECORDS AND THE ASSESSEES WILL FUL LY CO-OPERATE IN THIS MATTER. IN CASE OF NON-COOPERATION BY THE ASSESSEES, THE LD . ASSESSING OFFICER WILL BE AT LIBERTY TO TAKE APPROPRIATE VIEW IN ACCORDANCE W ITH LAW. ACCORDINGLY, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 3.1 ASSESSEE HAS RAISED FOLLOWING ADDITIONAL GROUND S OF APPEAL VIDE APPLICATION DATED 11.08.2016:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN NOT DELETING THE ADDITION OF RS.90,000/- MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF ALLEGED UNEXPLAINED GIFTS RECEIVED BY THE ASSESSEE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT DELETING THE ADDITION OF RS.2,02,07,402/- MADE BY THE ASSESSING OFFICER ON SUBSTANTIVE BASIS ON ACCOUNT OF ALLEGED UNEXPLAINED CAPITAL/INT EREST INCOME/DONATION ETC. 3.2 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE FILED RETURN OF INCOME ON 21.01.2002 AT INCOME OF RS.1,30,000/- (+ AGRICULTURAL INCOME OF RS.73,182/-), WHICH WAS PROCESSED U/S 143(1) OF THE ACT. CONSEQUENT TO SEARCH ON M/S. M.D. PATEL GROUP, IT WAS REOPENED AN D REASSESSED VIDE ITA NO. 1507/AHD/2013 KIRIT MOHANBHAI PATEL VS. ITO AY : 2001-02 3 ORDER DATED 26.12.2008 U/S 143(3) R.WS. 147 OF THE ACT AT RS.2,04,27,402/-. AGAIN, THE REASSESSED INCOME WAS REVISED U/S 263 OF THE ACT BY ORDER DATED 24.03.2011, WHEREIN THE LD. CIT(A) DIRECTED THE AO TO MAKE THE FRESH ASSESSMENT. 3.3 THE CONSEQUENT ASSESSMENT ORDER PASSED U/S 143( 3) R.W. S. 263 DATED 14.09.2011 I.E. THE IMPUGNED ORDER, THE ASSESSEES INCOME WAS RE DETERMINED AT A HIGHER AMOUNT OF RS.2,09,83,540/-. THE ISSUES RAISED BY WAY OF ADDITIONAL GROUNDS IN APPLICATION DATED 11.08.2016 ARISE OUT OF THE IMPUGNED ORDER OF LD. AO PASSED U/S 143(3) R.W. S. 263. 4. HOWEVER, INADVERTENTLY THESE GROUNDS REMAINED TO BE RAISED BY THE ASSESSEE IN MEMO OF APPEAL BEFORE LD. CIT(A). LD. COUNSEL FOR THE ASSESSEE FOR ADMISSION OF ADDITIONAL GROUNDS CONTENDS THAT:- (I) ALL THE APPEALS OF THE ASSESSESSMENTS CONNECTED WIT H M/S. M.D. PATEL GROUP, THEIR ASSESSMENTS ARE BEING SET ASIDE IN VIEW OF THE SETTLEMENT PETITION FILED BY M/S. M.D. PATEL GROUP BY WHICH GROUP HAS OWNED UP ALL THE TRANSACTIONS OF THE CONN ECTED ASSESSEES, HOWEVER THE SAME WAS REJECTED AND CHALLE NGED BEFORE HONBLE BOMBAY HIGH COURT. THE M D PATEL ASSESSMEN TS ARE IN PIPE LINE ON THE ISSUE OF OWNING UP ON INCOME OF CO NNECTED ENTITIES. THIS BEING SO, THE ADDITIONS RAISED BY WA Y OF ADDITIONAL GROUNDS AS A LOGICAL CONSEQUENCE WILL BE DELETED AF TER VERIFICATION. THE ITAT ORDER IN THE CASE OF SMT. ALKABEN AMRUTRAM GURU AND KANCHANLAL NATWARLAL RANA (SUPRA) ALSO REFERS TO TH E SETTLEMENT PETITION OF M/S. M.D. PATEL GROUP WHICH IS IDENTICA L TO ASSESSEES CASE. SINCE THE ASSESSMENT ITSELF IS BEING SET ASI DE, ALL THE MATERIAL BEING ON RECORD, NO NEW FACTS WILL BE REQUIRED OR B ROUGHT ON RECORD BEFORE THE LOWER AUTHORITIES QUA THE ADDITIO NAL GROUNDS WHICH ARE ALREADY SUBJECT MATTER OF IMPUGNED ASSESS MENT.. ITA NO. 1507/AHD/2013 KIRIT MOHANBHAI PATEL VS. ITO AY : 2001-02 4 (II) THE ADDITIONS IN QUESTION ARE SUBJECT MATTER OF ASS ESSMENT AND BY INADVERTENCE REMAINED TO BE TAKEN IN MEMO OF APPEAL DUE TO MULTIPLICITY OF PROCEEDINGS, MISUNDERSTANDING ABOUT THE GROUNDS TAKEN IN MULTIPLE PROCEEDINGS; THE ASSESSEES INADV ERTENCE BEING BONA FIDE THE ADDITIONAL GROUNDS MAY BE ADMITTED FO R SETTING ASIDE ALONG WITH OTHER ISSUES. (III) THE ADDITIONS IN QUESTION RAISED GO TO THE ROOT OF THE ASSESSMENT AND THERE NON-ADJUDICATION WILL RESULT IN DOUBLE TA XATION, MISCARRIAGE OF FAIR AND PROPER ASSESSMENT AND WILL CAUSE IRREPARABLE INJURY TO THE ASSESSEE. (IV) THE ADDITIONAL GROUNDS ARE PLEADED TO BE ADMITTED I N VIEW OF THE FOLLOWING JUDGMENTS:- A) NATIONAL THERMAL POWER CORPORATION VS. CIT [229 ITR 383 (SC)] B) JUTE CORPORATION OF INDIA LTD VS. CIT [187 ITR 688 (SC)] C) AHMEDABAD ELECTRICITY CO LTD V. CIT [199 351 (BOM) (FB)] 5. THE DEPARTMENTAL REPRESENTATIVE IS HEARD ON THE ADMISSIBILITY OF THE ADDITIONAL GROUNDS AND CONTENDS THAT THE ASSESSEE W AS NOT DILIGENT IN RAISING THESE GROUNDS BEFORE THE LD. CIT(A); THEREF ORE, THE SAME SHOULD NOT BE ADMITTED. HOWEVER, IT IS NOT DISPUTED THAT THE SAME ADDITIONS ARE SUBJECT MATTER OF EARLIER REASSESSMENT AS WELL AS THE 263 O RDER AND CONSEQUENT ASSESSMENT WHICH IS IMPUGNED IN THIS APPEAL. LD. DR CONTENDS THAT THE GROUNDS MAY REQUIRE VERIFICATION OF FURTHER MATERIA L AND FACTS. 6. LD. COUNSEL FOR THE ASSESSEE, IN REJOINDER, CONT ENDS THAT THERE IS NO ISSUE OF VERIFICATION OF NEW EVIDENCE INASMUCH AS T HE SETTLEMENT PETITION & THE OWNING UP OF ENTIRE INCOME IS ALREADY ON THE RE CORD OF LOWER AUTHORITIES. BESIDES, IN NUMBER OF APPEALS INVOLVING SIMILAR ISS UES ARE BEING SUCCESSIVELY SET ASIDE BACK TO THE FILE OF THE AO. EXCLUDING THE ASSESSEE ITA NO. 1507/AHD/2013 KIRIT MOHANBHAI PATEL VS. ITO AY : 2001-02 5 FROM SIMILAR TREATMENT AMOUNTS TO VIOLATION OF PRIN CIPLE OF NATURAL JUSTICE, DOUBLE TAXATION AND NOT CONDUCIVE FOR A FAIR AND PR OPER ASSESSMENT WHICH IS ORDAINED BY LAW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND MERITS IN THE CONTENTIONS OF THE LD. COUNSEL FOR TH E ASSESSEE. IN OUR CONSIDERED VIEW, ALL THESE ISSUES INVOLVE SETTLEMEN T PETITION AND INCOME OWNED UP BY M/S. M.D. PATEL GROUP IN RESPECT OF ALL THE CONSTITUENTS. IT IS NOT DISPUTED THAT THE ASSESSEE IS CONNECTED TO M D PATEL GROUP AND THE FACT THAT THE ADDITIONS IN QUESTION ARE SUBJECT MATTER O F REASSESSED INCOME AS WELL AS IMPUGNED REFRAMING OF ASSESSMENT U/S 143(3) R.W.S. 263 OF THE ACT. THE DOUBT OF LD. DR THAT THE ADDITIONAL GROUNDS WIL L REQUIRE VERIFICATION OF FRESH EVIDENCE AND FACTS SEEMS TO BE OUT OF PLACE I NASMUCH AS THE RELEVANT RECORD OF THE SETTLEMENT PETITION AND OTHER RELEVAN T EVIDENCE IS ON THE RECORD OF THE AO IN MULTIPLE PROCEEDINGS. IN ANY C ASE, HOST OF ASSESSMENTS ARE BEING SET ASIDE AND RESTORED BACK TO THE FILE O F AO IN VIEW THE SETTLEMENT PETITION AND OWNING UP OF INCOME BY M/S. M.D. PATEL GROUP. CONSEQUENTLY THE APPLICATION FOR ADMISSION OF ADDIT IONAL GROUNDS DESERVES MERIT. 7.1 IN CONSIDERATION OF ENTIRETY OF FACTS AND CIRCU MSTANCES, CONTENTIONS AND JUDICIAL PRECEDENTS RELYING ON THE JUDGMENTS OF NATIONAL THERMAL POWER CORPORATION & JUTE CORPORATION OF INDIA LTD ( SUPRA), THE ADDITIONAL GROUNDS AS RAISED BY THE ASSESSEE ARE ADMITTED. 7.2 FOLLOWING THE ITAT JUDGMENT IN THE CASE OF SMT. ALKABEN AMRUTRAM GURU AND KANCHANLAL NATWARLAL RANA (SUPRA) TO WHICH THE UNDERSIGNED IS A PARTY, THE ASSESSMENTS ARE SET ASIDE WHICH WILL INC LUDE THE ADMITTED ADDITIONAL GROUNDS AS ABOVE. THE LD. AO WILL DECID E THE ISSUES AFRESH IN ITA NO. 1507/AHD/2013 KIRIT MOHANBHAI PATEL VS. ITO AY : 2001-02 6 ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE ADEQU ATE OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 7 TH DECEMBER, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 07/12/2016 *BIJU T., SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD