Nanchand Bhogilal Shah, Pune V. Deputy Commissioner of Income-tax,

ITA 1523/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9367 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-01-2018
• Assessment Year: 1998-1999
• Appeal Filed On: 23-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO S.1523 TO 1528 /P U N/201 5 / ASSESSMENT YEAR S : 1998 - 99 TO 200 0 - 01 & 2002 - 03 TO 2004 - 05 SHRI NANCHAND BHOGILAL SHAH, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN : ADXPS3814J ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE / RESPONDENT ASSESSEE BY : S HRI RAJIV THAKKAR REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 25 - 01 - 2018 / DATE OF PRONOUNCEMENT : 29 - 01 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH ESE SIX APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 13, PUNE DATED 23 - 09 - 2015 COMMON FOR THE ASSESSMENT YEAR S 1998 - 99 TO 200 0 - 01 AND 2002 - 03 TO 2004 - 05 CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2 ITA NO S.1523 TO 1528/PUN/2015, A.YS. 1998 - 99 TO 2000 - 01 & 2002 - 03 TO 2004 - 05 2. THE FACTS GERMANE TO THE PRESENT APPEALS ARE : A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF ASSESSEE ON 29 - 03 - 2003. DURING COURSE OF SEARCH RS. 40,00,000/ - CASH WAS SEIZED FROM RESIDENCE OF ASSESSEE. A SIMULTANEOUS SEARCH WAS ALSO CARRIED OUT IN THE CASE OF SONI GROUP COMPRISING OF SH RIRAM HIRALAL SONI AND JUGALKISHOR H. SONI WHO ARE ENGAGED IN THE BUSINESS OF FINANCE, BROKING AND MONEY LENDING. ON THE BASIS OF DOCUMENTS FOUND AND SEIZED FROM THE PREMISES OF SHRIRAM H. SONI, THE DEPARTMENT CAME TO THE CONCLUSION THAT THE ASSESSEE IS EN GAGED IN LENDING OF UNACCOUNTED CASH TO SONI GROUP. THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS 1998 - 99 TO 200 0 - 01 , 2002 - 03 AND 2003 - 04, FRAMED ASSESSMENT U/S. 153A R.W.S. 143(3) OF THE ACT. IN ASSESSMENT YEAR 2004 - 05, ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INTER ALIA MADE ADDITION S ON ACCOUNT OF UNACCOUNTED INTEREST INCOME IN ALL IMPUGNED ASSESSMENT YEARS. IN ASSESSMENT YEARS 2000 - 01 AND 2002 - 03, THE ASSESSING OFFICER APART FROM ABOVE, MADE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MONEY LENDING BUSINESS. THE GIST OF ADDITIONS MADE IN THE IMPUGNED ASSESSMENT YEARS IS AS UNDER: ASSESSMENT YEAR UNEXPLAINED INVESTMENT IN MONEY LENDING BUSINESS U/S. 29B OF THE ACT UNACCOUNTED INTEREST INCOME DISALLOWANCE (PROPERTY TAX) DISALLOWANCE OF E XPENSES 1998 - 99 - 5,13,000 3,660 - 1999 - 00 - 5,13,000 3,660 - 2000 - 01 7,00,000 6,39,000 - 3,723 2002 - 03 5,00,000 17,91,000 - - 2003 - 04 - 17,91,000 - - 2004 - 05 - 17,91,000 - - 3 ITA NO S.1523 TO 1528/PUN/2015, A.YS. 1998 - 99 TO 2000 - 01 & 2002 - 03 TO 2004 - 05 2.1 THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT IN RESPECT OF ADDITIONS MADE. THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) VIDE SEPARATE ORDER S OF EVEN DATE I.E. 21 - 03 - 2013 QUA ADDITIONS MADE IN RESPECTIVE ASSESSMENT YEARS . THE DETAILS OF PENALTY LEVIED ARE AS UNDER : ASSESSMENT YEAR PENALTY LEVIED 1998 - 99 RS.1,28,900/ - 1999 - 00 RS.1,28,900/ - 2000 - 01 RS.4,13,270/ - 2002 - 03 RS.6,74,526/ - 2003 - 04 RS.5,36,865/ - 2004 - 05 RS.5,62,430/ - 2.2 AGGRIEVED BY THE ORDER LEVYING PENALTY, THE ASSESSEE FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) FOR RESPECTIVE ASSESSMENT YEARS. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER COMMON FOR ALL THE SIX ASSESSMENT YEARS UNDER APPEAL CONFIRMED LEVY OF PENALTY AND DISMISSED THE APPEALS OF ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AGAINST CONFIRMING OF PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 3. SHRI RAJIV THAKKAR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN QUANTUM APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 1998 - 99 TO 2004 - 05 IN ITA NOS. 1008 TO 1012, 1334 & 1335/PUN/2011 VIDE ORDER DATED 08 - 12 - 2017 HAS DELETED THE ENTIRE ADDITION. THE LD. AR FURNISHED A COPY OF ORDER O F TRIBUNAL DATED 08 - 12 - 2017 IN APPEALS ARISING FROM ASSESSMENT PROCEEDINGS. THE LD. AR SUBMITTED THAT SINCE THE QUANTUM ADDITION S HAVE BEEN DELETED NO PENALTY IS TO BE LEVIED ON THE ASSESSEE. 4 ITA NO S.1523 TO 1528/PUN/2015, A.YS. 1998 - 99 TO 2000 - 01 & 2002 - 03 TO 2004 - 05 4. ON THE OTHER HAND SHRI AJAY MODI REPRESENTING THE DEPART MENT SUBMITTED THAT A PERUSAL OF ORDER OF TRIBUNAL DATED 08 - 12 - 2017 WOULD SHOW THAT THE TRIBUNAL HAS NOT EXONERATED THE ASSESSEE COMPLETELY. THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO FIND OUT IF ANY CASH TRANSACTIONS ARE RECORDED IN THE NAME OF A SSESSEE I.E. SHRI NANCHAND B. SHAH AND SHRI NANCHAND BHOGILAL SHAH AND TO MAKE ADDITION IF HIS NAME EXISTS. THE ASSESSING OFFICER HAS YET TO CARRY OUT THIS EXERCISE , T HEREFORE, THE ORDER LEVYING PENALTY MAY BE RESTORED TO THE ASSESSING OFFICER. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE HAVE ALSO PERUSED THE ORDER OF CO - ORDINATE BENCH IN ASSESSEES APPEAL ARISING FROM ASSESSMENT PROCEEDINGS IN ITA NOS. 1008 TO 1012, 13 34 & 1335/PUN/2011 (SUPRA). A PERUSAL OF ORDER OF CO - ORDINATE BENCH REVEAL THAT THE TRIBUNAL IN PRINCIPLE HAS ALLOWED THE APPEALS OF ASSESSEE AND HAVE DELETED ADDITION. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL READS AS UNDER : 16. IN VIEW OF THE FACTS OF THE CASE AND VARIOUS DECISIONS DISCUSSED ABOVE, WE ARE OF CONSIDERED VIEW THAT NO ADDITION CAN BE MADE IN THE HANDS OF ASSESSEE IN ABSENCE OF ANY CORROBORATIVE EVIDENCE TO LINK SOME SUSPICIOUS ENTRIES FOUND IN THE BOOKS OF THIRD PARTY. AS HAS BEE N POINTED EARLIER THAT MERE RECORDING OF NAMES CLOSELY RESEMBLING TO THE NAME OF ASSESSEE IN THE BOOKS OF SONI GROUP DOES NOT GIVE RISE TO PRESUMPTION THAT THE SAID NAMES ARE PSEUDONYM/CODED NAMES OF ASSESSEE UNLESS LIVE CONNECTION IS DRAWN BY WAY OF SU PPORTING EVIDENCE. HERE, WE WOULD LIKE TO MENTION THAT BEFORE ABSOLVING THE ASSESSEE COMPLETELY FROM THE ADDITIONS MADE ON BASIS OF ALLEGED CASH TRANSACTIONS, WE DIRECT THE ASSESSING OFFICER TO RE - EXAMINE THE SEIZED MATERIAL. IF THE ASSESSING OFFICER FINDS THAT ANY TRANSACTION IN CASH IS RECORDED IN THE NAME OF ASSESSEE I.E. NANCHAND B SHAH OR NANCHAND BHOGILAL SHAH, THE ASSESSING OFFICER MAY MAKE ADDITION OF THE SAME, IN ACCORDANCE WITH LAW. BEFORE MAKING ANY ADDITION, IF CIRCUMSTANCES SO ARISE, THE ASSESS ING OFFICER SHALL GRANT OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. HENCE, THE IMPUGNED ORDER IS SET ASIDE AND APPEALS OF ASSESSEE ARE ALLOWED IN PRINCIPLE, SUBJECT TO THE AFORESAID DIRECTIONS. 5 ITA NO S.1523 TO 1528/PUN/2015, A.YS. 1998 - 99 TO 2000 - 01 & 2002 - 03 TO 2004 - 05 6. WE FIND THAT THE TRIBUNAL HAS REMIT TED THE ISSUE BACK TO ASSESSING OFFICER TO RE - EXAMINE THE SEIZED MATERIAL AND TO FIND IF ANY CASH TRANSACTIONS IS RECORDED IN THE NAME OF ASSESSEE I.E. SHRI NANCHAND B. SHAH AND SHRI NANCHAND BHOGILAL SHAH AND TO MAKE ADDITION OF THE SAME, IN ACCORDANCE WITH LAW. HOWEVER, IN PRINCIPLE THE TRIBUNAL HAS SET ASIDE THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). ONCE, THE SUBSTRATUM FOR LEVYING PENALTY HAS ERODED , THE PENALTY PROCEEDINGS WOULD NOT SURVIVE. THEREFORE, NO USEFUL PURPOSE WOULD BE SERVED BY RESTORING PENALTY PROCEEDINGS TO THE ASSESSING OFFICER. 7. BEFORE PARTING WITH THE ORDER WE WOULD LIKE TO MAKE IT CLEAR THAT IN CASE WHILE RE - EXAMINING THE SEIZED MATERIAL , THE ASSESSING OFFICER COME S ACROSS CASH TRANSACTIONS RECORDED IN THE NAME OF ASSESSEE IN LINE WITH THE DIRECTIONS OF TRIBUNAL AND PROPOSES TO MAKE ADDITIONS , THE ASSESSING OFFICER WILL BE AT LIBERTY TO INITIATE PENALTY PROCEEDINGS, IN ACCORDANCE WITH LAW. 8. IN THE RESULT, IMPUGNED ORDER IS SET ASIDE AND THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 29 TH DAY OF JANUARY, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 29 TH JANUARY, 2018 RK 6 ITA NO S.1523 TO 1528/PUN/2015, A.YS. 1998 - 99 TO 2000 - 01 & 2002 - 03 TO 2004 - 05 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 13, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE