DCIT, Bangalore V. Sri. H.S. Chandramouli, Bangalore

ITA 1551/BANG/2012

• Counselvise Citation: 155121114 RSA 2012
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 27-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRASHEKAR DIT
• Assessee Lawyers: K Y NINGOJI RAO
• Keywords: Reasonable cause; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1551/BANG/2012 ASSESSMENT YEAR : 2004-05 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5(1), BANGALORE. VS. SHRI H.S. CHANDRAMOULI, NO.9/1, I FLOOR, CRESCENT ROAD, OPPOSITE JUDICIAL ACADEMY, BANGALORE 560 001. PAN : AASPC 6915C APPELLANT RESPONDENT APPELLANT BY : SHRI P. CHANDRASHEKAR, ADDL. DIT RESPONDENT BY : SHRI K.Y.NINGOJI RAO, C.A. DATE OF HEARING : 28.08.2013 DATE OF PRONOUNCEMENT : 30.08.2013 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER D ATED 10.07.2012 OF THE CIT(APPEALS)-II, BANGALORE RELATING TO ASSESSME NT YEAR 2004-05. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS:- ITA NO.1551/BANG/2012 PAGE 2 OF 8 1) THE LD. CIT(A) HAS ERRED BOTH IN FACT AND IN L AW BY DELETING THE ADDITION MADE OF RS 22,75,000/- WITHOU T APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT EXPLAIN AND HO W THAT THE SAID AMOUNT DOES NOT BELONG TO HIM. 2) THE LD. CIT(A) HAS FURTHER ERRED IN HOLDING THA T THERE WAS NO CORROBORATIVE EVIDENCE WITHOUT TAKING INTO ACCOU NT THE STATEMENT RECORDED U/S 132(4) AND THE SEIZED DOCUME NT CLEARLY MENTIONING THE PAYMENT OF RS 22,75,000 TO THE ASSES SEE WHICH WAS USED BY THE AO IN TERMS OF SEC. 132(4A)(II). 3) THE LD.CIT(A) HAS ALSO ERRED IN NOT FOLLOWING T HE DECISIONS HAVING DIRECT IMPLICATION TO THE ASSESSEE S CASE FOR THE INTENTION OF SEC. 132(4A)(II). I) THIRU JOHN V. RETURNING OFFICER AIR 1977 SC 1724 - AN ADMISSION, IF CLEARLY AND UNEQUIVOCALLY MADE IS THE BEST EVIDENCE, PARTY MAKING IT AND THOUGH NO T CONCLUSIVE, SHIFTS THE ONUS ON TO THE MAKER ON THE PRINCIPAL THAT WHAT A PARTY HAVE HIMSELF ADMITTED TO BE TRUE . II) DURGA PRASAD MORE - 82 ITR 540 (SC) III) 222 ITR 333(KER) IV) HOTEL KIRAN VS ACIT REPORTED IN 82 ITD 453(PUN E) 3. THERE IS A DELAY OF ABOUT 57 DAYS IN FILING THE APPEAL. THE DELAY IN FILING THE APPEAL HAS BEEN EXPLAINED BY THE DCIT, C IRCLE 5(1) BANGALORE AS OWING TO THE APPEAL HAVING BEEN WRONGLY FILED ON 26 .9.2012 (WHICH IS WITHIN TIME) BEFORE THE OFFICE OF THE CIT (DR) INSTEAD OF FILING THE SAME WITH THE ASST.REGISTRAR, ITAT, BANGALORE. THE MISTAKE WAS N OTICED LATER AND THE APPEAL WAS FILED BEFORE THE ASST.REGISTRAR, ITAT, B ANGALORE ON 27.11.2012. 4. WE HAVE CONSIDERED THE REASONS FOR THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL AND ARE OF THE VIEW THAT THE DE LAY IN FILING THE APPEAL ITA NO.1551/BANG/2012 PAGE 3 OF 8 HAS OCCASIONED DUE TO REASONABLE CAUSE. THE DELAY IN FILING THE APPEAL IS ACCORDINGLY CONDONED. 5. AS FAR AS THE MERITS OF THE APPEAL BY THE REVENU E ARE CONCERNED, THE FACTS ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL. HE IS AN ADVOCATE B Y PROFESSION. THERE WAS A SEARCH ACTION U/S. 132(2) IN THE CASE O F ONE SOHANRAJ MEHTA CONDUCTED BY INCOME TAX INVESTIGATION WING OF BANGA LORE ON 09.10.2009. SOHANRAJ MEHTA WAS A C&F AGENT OF M/S. RASIKLAL MAN IKCHAND DHARIWAL GROUP. IN THE COURSE OF SEARCH, A DOCUMENT MARKED AS ANNEXURE A/M/8 WAS FOUND. IN THE SAID DOCUMENT, AN ENTRY WAS FOUN D SHOWING A SUM OF RS.22,75,000 AGAINST THE NAME OF THE ASSESSEE. ACC ORDING TO THE REVENUE, THE AFORESAID EVIDENCE SHOWED THAT THE ASSESSEE HAD RECEIVED A SUM OF RS.22.75 LAKHS FROM SOHANRAJ MEHTA ON 22.10.2003. 6. THE AO INITIATED REASSESSMENT PROCEEDINGS AGAINS T THE ASSESSEE FOR AY 04-05 BASED ON HIS OPINION THAT THE ASSESSEE HAD RECEIVED A SUM OF RS.22,75,000 FROM MR.SOHANRAJ MEHTA. THE ASSESSEE FILED RETURN OF INCOME ON 10.5.2011 IN RESPONSE TO THE NOTICE ISSU ED U/S.148 OF THE ACT FOR REASSESSMENT OF INCOME. 7. ON 05.08.2011, THE ASSESSEE WAS EXAMINED BY THE DCIT, CENTRAL CIRCLE 2(2) U/S. 131 OF THE ACT. THE ASSESSEE DENI ED HAVING RECEIVED THE SUM OF RS.22,75,000/- FROM SOHANRAJ MEHTA. THE ASS ESSEE SUBMITTED THAT ITA NO.1551/BANG/2012 PAGE 4 OF 8 HE HAD RENDERED SERVICES TO DHARIWAL INDUSTRIES LTD . AND WAS PAID A SUM OF RS.50,000 AND RS.1,75,000 AFTER DUE DEDUCTION OF TA X AT SOURCE, WHICH HAS BEEN OFFERED TO TAX AS INCOME BY THE ASSESSEE. 8. ON 01.08.2011, THE AO ISSUED NOTICE U/S. 143(2) OF THE ACT WHICH WAS FOLLOWED BY ANOTHER NOTICED DATED 21.10.2011. IN THE AFORESAID NOTICES, THE AO DID NOT ASK FOR ANY DETAILS ABOUT T HE SEIZED DOCUMENT OR THE ASSESSEE HAVING RECEIVED A SUM OF RS.22.75 LAKH S AS REFLECTED IN THE SEIZED DOCUMENT. THE ASSESSEE ALSO FILED AN AFFIDA VIT BEFORE THE AO CONFIRMING THE FACT THAT HE HAS NOT RECEIVED A SUM OF RS.22.75 LAKHS EITHER FROM DHARIWAL INDUSTRIES LTD. OR ITS GROUP COMPANY OR AS A C&F AGENT OF SOHANRAJ MEHTA. IT WAS THE STAND OF THE ASSESSEE T HAT DESPITE DEMANDS TO FURNISH COPY OF THE SEIZED MATERIAL BASED ON WHICH ADVERSE INFERENCE IS BEING DRAWN BY THE REVENUE, THE SAME WAS NOT FURNIS HED TO THE ASSESSEE. IT IS ALSO THE STAND OF THE ASSESSEE THAT HE WAS NO T INFORMED AS TO WHETHER ANY STATEMENT HAD BEEN GIVEN IN THE SEARCH OF MR.SO HANRAJ MEHTA NOR ANY COPY OF STATEMENTS, IF ANY, GIVEN TO HIM. 9. THE AO WHILE FRAMING THE ASSESSMENT REFERRED TO THE SEIZED DOCUMENT AND WAS OF THE VIEW THAT THE SEIZED DOCUME NT EVIDENCED RECEIPT OF RS.22.75 LAKHS BY THE ASSESSEE FROM SOHANRAJ MEH TA. HE WAS OF THE VIEW THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT THE AFORESAID MONEY WAS NOT RECEIVED FROM SOHA NRAJ MEHTA. THE AO PRIMARILY RELIED ON THE PRESUMPTION U/S. 132(4A)(II ) OF THE ACT WHICH LAYS ITA NO.1551/BANG/2012 PAGE 5 OF 8 DOWN THAT ANY DOCUMENT FOUND IN THE POSSESSION OR C ONTROL OF ANY PERSON IN THE COURSE OF SEARCH CAN BE PRESUMED TO BE TRUE AND THE CONTENTS OF SUCH DOCUMENT CAN ALSO BE PRESUMED TO BE TRUE. 10. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) DEL ETED THE ADDITION MADE BY THE AO OBSERVING AS FOLLOWS:- 4.2 AT PAGE 3 OF THE STATEMENT OF FACTS ACCOMPANY ING THE APPEAL MEMO VIDE SERIAL NO.F(IV), THE APPELLANT HAS MADE THE FOLLOWING SUBMISSIONS: (IV) THE IMPUGNED ADDITION OF RS.22,75,000/- HAS BEEN MADE BY THE RESPONDENT JUST ON THE BASIS OF THE ENTRY FO UND IN THE AFORESAID PAGE 34 AND 4L OF THE SEIZED MATERIAL MARKED AS A/M/8, WITHOUT SATISFYING HIMSELF AS TO THE NATU RE OF THE RECEIPT, WHETHER THE SAME CONSTITUTES AN INCOME CHARGEABLE IN THE HANDS OF THE APPELLANT, WHETHER T HE SAME WAS REALLY PAID BY MR. SOHANRAJ TO THE APPELLA NT AND WITHOUT PRODUCING THE EVIDENCE OF SUCH STATEMENT OF MR.SOHANRAJ MEHTA AND WITHOUT AFFORDING ANY OPPORTU NITY TO THE APPELLANT EITHER TO CROSS-EXAMINE SUCH EVIDE NCE OR TO REBUT THE SAME; 4.3 I HAVE CAREFULLY CONSIDERED THE APPELLANTS SU BMISSIONS AND THE ASSESSMENT ORDER. I FIND THAT THE ORDER IS BRIEF AND DOES NOT INDICATE ANY EVIDENCE GATHERED BY THE AO ABOUT THE PAYMENT OF A SUM OF RS.22,75,000/- BY DHARIWAL GROUP TO THE APPELLANT ON 22/10/2003. APART FROM THE SEIZED MATERIAL IN THE C ASE OF DHARIWAL GROUP SUGGESTING PAYMENT OF RS.22,75,000/- TO ONE CHANDRAMOULI, ADVOCATE, NO OTHER EVIDENCE HAS BEE N BROUGHT ON RECORD EITHER IN THE ASSESSMENT ORDER OR IN THE REMAND REPORT DATED 4/6/2012 TO BRING THIS AMOUNT TO TAX IN THE H ANDS OF THE APPELLANT. NO OTHER CORROBORATIVE EVIDENCE EITHER I N THE FORM OF ANY BANK DEPOSIT OR AN UNDISCLOSED CONSULTATION OR UNACCOUNTED COURT CASE OR ANY OTHER TRANSACTION FOR WHICH THIS FEE COULD HAVE BEEN RECEIVED BY THE APPELLANT OR COULD HAVE BEEN A TTRIBUTABLE TO HAS BEEN BROUGHT ON RECORD. THE STATEMENT RECORDED FROM THE CONCERNED PERSON OF DHARIWAL GROUP HAVE ALSO NOT BE EN BROUGHT ON RECORD OR SHOWN TO HAVE BEEN CONFRONTED TO THE A PPELLANT. THE ITA NO.1551/BANG/2012 PAGE 6 OF 8 APPELLANT HAS POINTED OUT THAT THE PROVISIONS OF SE CTION 132(4A)(II) OF THE ACT ARE NOT ATTRACTED IN RESPECT OF REGULAR ASSESSMENT. THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF METRANI P.R., V. CIT 287 ITR 209 HAS ALSO B EEN CITED IN THIS REGARD. I AM CONVINCED THAT THE AO HAS NOT BRO UGHT ANY EVIDENCE ON RECORD TO SUBSTANTIATE THE ALLEGED PAYM ENT OF RS.22,75,000/- TO THE APPELLANT AS INCOME IN HIS HA NDS. MERELY ON THE STRENGTH OF A SEIZED DOCUMENT IN THE CASE OF AN OTHER ASSESSEE SUGGESTING A PAYMENT TO THE APPELLANT, THIS ADDITIO N CANNOT BE SUSTAINED. THE ADDITION OF RS.22,75,000/- MADE TO T HE INCOME OF THE APPELLANT BY THE AO IS, THEREFORE, DELETED. 11. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR, WH O RELIED ON THE ORDER OF THE AO. WITH REFERENCE TO GROUND NO.2, A QUERY WAS RAISED AS TO THE STATEMENT RECORDED U/S. 132(4) OF THE ACT REFER RED TO IN THE SAID GROUND. IT WAS POINTED OUT THAT THE AO DID NOT BASE HIS CON CLUSIONS ON ANY STATEMENT U/S. 132(4) OF THE ACT. IN FACT THERE IS NOT EVEN A REFERENCE TO ANY STATEMENT RECORDED U/S.132(4) OF THE ACT IN THE ORDER OF ASSESSMENT. IT WAS ALSO POINTED OUT THAT NO SUCH STATEMENT, IF ANY , HAS EVER BEEN CONFRONTED TO THE ASSESSEE BEFORE MAKING THE IMPUGN ED ADDITION. IT WAS ALSO QUERIED AS TO WHETHER THE PRESUMPTION U/S. 132 (4A)(II) WHICH NOW STANDS INCORPORATED AS SECTION 292C OF THE ACT CAN BE INVOKED IN THE CASE OF A PERSON WHO IS NOT SEARCHED. THE LD. DR, HOWEV ER, RELIED ON THE ORDER OF THE AO. ITA NO.1551/BANG/2012 PAGE 7 OF 8 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DR. IT IS SEEN THAT THE DOCUMENT IN QUESTION WAS SEIZED FROM THE P OSSESSION OF ONE MR. SOHANRAJ MEHTA. THE SEIZED DOCUMENT MAKES A REFERE NCE TO THE NAME OF THE ASSESSEE AND A FIGURE OF RS.22.75 LAKHS APPEARS AGAINST HIS NAME. AS TO WHETHER THIS DOCUMENT EVIDENCES PAYMENT OF RS.22 .75 LAKHS TO THE ASSESSEE IS A MOOT QUESTION. THERE IS NO BASIS SE T OUT IN THE ORDER OF THE AO FOR COMING TO THE CONCLUSION THAT THE SEIZED DOC UMENT EVIDENCES RECEIPT OF MONEY BY THE ASSESSEE FROM SOHANRAJ MEHT A. THE PRESUMPTION U/S. 292C OF THE ACT IS ONLY WITH REFERENCE TO THE PERSON SEARCHED AND IT CANNOT BE EXTENDED TO THE ASSESSEE. THERE IS NO CO RROBORATIVE EVIDENCE OR STATEMENT OF SOHANRAJ MEHTA RELIED UPON BY THE A O, TO THE EFFECT THAT A SUM OF RS.22.75 LAKHS WAS PAID TO THE ASSESSEE. TH E ASSESSEE HAS CATEGORICALLY DENIED HAVING RECEIVED ANY PAYMENT FR OM SOHANRAJ MEHTA. EVEN IN THE PROCEEDINGS BEFORE THE AO, WHEN THE ASS ESSEE WAS EXAMINED, HE HAD TAKEN THE SAME STAND. THE DETAILS CALLED FO R IN THE SCRUTINY ASSESSMENT DID NOT CALL FOR ANY SPECIFIC DETAILS ON THE SEIZED DOCUMENT OR RECEIPT OF CASH BASED ON THE SEIZED DOCUMENT. 14. IN THE LIGHT OF THESE CIRCUMSTANCES, THE CIT(AP PEALS) WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE RECEIVED THE SUM OF RS.22.7 5 LAKHS FROM SOHANRAJ MEHTA. THE ADDITION MADE BY THE AO WAS THEREFORE R IGHTLY DELETED BY THE CIT(A). WE DO NOT FIND ANY GROUND TO INTERFERE WIT H THE ORDER OF THE CIT(APPEALS). ITA NO.1551/BANG/2012 PAGE 8 OF 8 15. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2013. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 30 TH AUGUST, 2013. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.