The ITO, Ward-5, Mundra (Kutch) V. Shri Kotak Mayur Arvindbhai, Mundra (Kutch)

ITA 156/RJT/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2895 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL J RANPURA
• Keywords: Reopening of assessment; Business income; Loose papers
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA L RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 156/RJT/2016 (ASSESSMENT YEAR: 2007-08) INCOME-TAX OFFICER, WARD- 5, MUNDRA-KUTCH V/S SHRI KOTAK MAYUR ARVINDBHAI PROP: M/S. MAYUR TRADING CO., MAIN BAZAR, MUNDRA-KUTCH (APPELLANT) (RESPONDENT) PAN: AEMPK 1558F APPELLANT BY : SHRI PRAVEEN VERMA, SR. D .R. RESPONDENT BY : SHRI MEHUL J. RANPURA ( )/ ORDER DATE OF HEARING : 27 -02-201 9 DATE OF PRONOUNCEMENT : 10 -04-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-2, RAJKOT DATED 12.02.2016 PERTAINING TO A.Y . 2007-08 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 156/ RJT/2016 . A.Y. 2007-08 2 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS DELETED ADDITION MADE BY THE AO TO THE TUNE OF RS.1,09,51,000/- ON ACCOUNT OF UNDIS CLOSED INCOME. 2) THE ID CIT(A) HAS ERRED IN LAW AND ON FACTS THA T NOT CONSIDERING IMPOUNDED CASH BOOKS ENTRIES AS EVIDENCE FOR CASH RECEIVED BY ASSESSEE. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD CIT(A) MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE AB OVE EXTENT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A PPELLANT IS AN INDIVIDUAL DERIVING INCOME FROM BUSINESS AS PARTNER IN THE FIRM OF M/S. MAYUR TRADING COMPANY AT MUNDRA. DURING THE YEAR, HE ALSO DERIVED INCOME FROM SHORT TERM CAPITAL GAIN AND SMALL INCOME FROM INTEREST. RETURN OF INCO ME FOR THE YEAR UNDER APPEAL WAS FILED ON 31.03.2008 DECLARING TOTAL INCO ME AT RS. 1,04,780/-. 3. ON 29-10-2010 SURVEY UNDER SECTION 133A WAS CARRIED AT THE BUSINESS PREMISE OF ONE M/S KASHISH ENTERPRISE AT BHUJ. DURING THE S URVEY, IT WAS FOUND THAT M/S KASHISH ENTERPRISE HAD CARRIED PROJECT FOR CONS TRUCTION OF COMMERCIAL COMPLEX AT MUNDRA. IT WAS ALSO FOUND FROM THE IMPOU NDED MATERIAL THAT THEY HAVE PAID 'ON MONEY OF RS 1,09,51,000/- TO THE APP ELLANT AGAINST PURCHASE OF PLOT AT MUNDRA. BASED ON THIS MATERIAL, ITO, WARD 1 , BHUJ INITIATED PROCEEDINGS FOR REOPENING OF ASSESSMENT AND ISSUED NOTICE UNDER SECTION 148 TO THE APPELLANT. 4. ON RECEIPT OF THE NOTICE, APPELLANT VIDE APPLICATIO N DATED 23-08-2011 OBJECTED TO THE PROCEEDINGS FOR REOPENING OF THE COMPLETED A SSESSMENT ON THE GROUND THAT SALE CONSIDERATION RECEIVED BY THE APPELLANT W AS RS 2,25,000/- ONLY AND ITA NO. 156/ RJT/2016 . A.Y. 2007-08 3 NOT AS FOUND DURING THE SURVEY. AND IN SUPPORT OF I TS CONTENTION, APPELLANT FILED COPY OF THE REGISTERED SALE DEED WITH THE ITO . 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, APPELL ANT REQUESTED TO EXAMINE THE PERSON WHOSE STATEMENT WAS RECORDED BY THE DEPA RTMENT AS ALSO OTHER WITNESSES. APPELLANT ALSO CHALLENGED THE GENUINENES S AND CORRECTNESS OF THE SO CALLED CASH BOOK AND SUBMITTED THAT THE SAME WAS NO T MAINTAINED DURING THE DAY TO DAY COURSE OF BUSINESS. VARIOUS DEFECTS IN T HE SAID SO CALLED CASH BOOK WAS ALSO POINTED- IT WAS ALSO BROUGHT TO THE NOTICE THAT ITEMS OF EXPENDITURE INCURRED IN THE MONTH OF DECEMBER 2006 WERE RECORDE D AFTER THE ENTRIES OF JANUARY, 2007. IT WAS ALSO POINTED THAT VARIOUS CAS H EXPENDITURE INCURRED BY THEM FOR REGISTRATION OF DEED WERE ALSO NOT FOUND R ECORDED IN THE SO CALLED CASH BOOK. EVEN WHILE FURNISHING ORIGINAL RETURN OF INCO ME KSHISH ENTERPRISE HAVE NOT TAKEN INTO CONSIDERATION THE ENTRIES APPEARING IN THE IMPOUNDED MATERIAL. IT WAS ALSO SUBMITTED THAT AFTER THE SURVEY ACTION KAS HISH ENTERPRISE PRODUCED THIS SO CALLED CASH BOOK TO GET THE BENEFIT BY WAY OF ESCALATING THE PROJECT COST AND REDUCING THE INCOME. OBJECTIONS AND SUBMISSIONS OF THE APPELLANT WERE NOT CONSIDERED AND AO FRAMED THE ASSESSMENT UNDER S ECTION 143(3) R.W.S. 147 OF THE ACT DETERMINING THE TOTAL INCOME OF THE APPE LLANT AT RS. 1,10,55,780/- AS AGAINST RETURNED INCOME OF RS. 1,04,780/-. 6. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. 7. NOW BY WAY OF SECOND APPEAL, ASSESSEE/ APPELLANT HA S COME BEFORE US. ITA NO. 156/ RJT/2016 . A.Y. 2007-08 4 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, MAYUR ARAVINDBHAI KOTAK, MUNDRA IS AN INDIVIDUAL A ND FILED ITS RETURN ON 31.03.2008 DECLARING TOTAL INCOME AT RS. 1,04,780/- AND SAME WAS EARNED FROM SHORT TERM CAPITAL GAIN , BANK INTEREST AND PERSONA L BUSINESS INCOME AND REMUNERATION FROM PARTNERSHIP FIRM. 9. ON 29.10.2010 SURVEY WAS CARRIED AT THE BUSINESS PR EMISES OF M/S KASHISH ENTERPRISE FROM WHERE IT WAS FOUND FROM THE MATERIA L THAT KASHISH ENTERPRISE HAVE PAID ON MONEY OF RS. 1,09,51,000/- TO THE APP ELLANT AGAINST THE PURCHASE OF PLOT AT MUNDRA. 10. IN REPLY, ASSESSEE STATED THAT ASSESSEE RECEIVED 2, 25,000/- ONLY AND COPY OF REGISTERED SALE DEED ALSO PRODUCED AS EVIDENCE. 11. NOW QUESTION BEFORE US IS WHETHER ON THE BASIS OF S URVEY, IF SOME MATERIAL IS FOUND CONTAINING DETAILS PERTAINING TO PAYMENT MADE TO OTHER PERSONS ARE TREATED TO BE INCOME OF THE OTHER PERSONS OR THE IN COME OF THE PAYEE. IN THIS CASE, CERTAIN LOOSE PAPERS WERE FOUND WHEREIN IT IS ALLEGED THAT A PAYMENT OF RS. 1,09,51,000/- WAS MADE TO THE APPELLANT BUT APART FROM THAT NO CORROBORATIVE EVIDENCE WAS FOUND. 12. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, ASS ESSEE/APPELLANT ASKED THE ASSESSING OFFICER BY WAY OF LETTER DATED 11.11.2011 THAT HE SHOULD BE ALLOWED TO EXAMINE/CROSS EXAMINE THE PERSON WHOSE NAMES ARE FOUND FROM THE IMPOUNDED MATERIAL AND THOSE HAVE CLAIMED TO HAVE P LAYED ACTIVE ROLE IN THE ALLEGED TRANSFER OF MONEY TO THE ASSESSEE AND SAME LETTER IS PART OF PAPER BOOK AS PAGE NO. 270 BUT NO OPPORTUNITY WAS GIVEN TO THE APPELLANT. ITA NO. 156/ RJT/2016 . A.Y. 2007-08 5 13. IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED A JUDG MENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT VS. MAULIKKUMAR K. SHAH (2008) 307 ITR 137 WHEREIN IT IS HELD THAT LOOSE PAPER WITHOUT ANY SUP PORTING EVIDENCE DOES NOT HAVE ANY EVIDENTIARY VALUE AND SUCH PAPER WOULD BE MERELY PRESUMPTION BASED ON SURMISES. 14. LD. A.R. ALSO CITED A JUDGMENT OF HONBLE HIGH COUR T IN THE CASE OF CBI VS. V.C. SHUKLA & ORS. WHEREIN IT IS HELD THAT WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THE REVENUE WOULD NOT BE JUSTIFIED IN RESTING ITS CASE ON THE LOOSE PAPERS AND DOCUMENTS FOUND FROM THE RESIDENCE OF A THIRD PARTY EVEN IF S UCH DOCUMENTS CONTAIN NARRATIONS OF TRANSACTIONS WITH THE ASSESSEE-COMPANY. AT THIS STA GE, WE MAY ALSO REFER TO THE PROVISIONS OF SECTION 132(4A). THE PRESUMPTION UNDER THE PROVISIO NS OF SECTION 132(4A) WOULD IN ANY CASE NOT BE APPLICABLE TO A THIRD PARTY FROM WHOSE POSSESSION SUCH PAPERS AND DOCUMENTS HAVE NOT BEEN FOUND BY THE REVENUE. 15. AS OBSERVED ABOVE, NO CROSS-EXAMINATION OF THE PERS ON WHOSE STATEMENT WAS RECORDED DURING THE SURVEY PROCEEDINGS WAS ALLOWED BY THE A.O. AND PAPERS RECOVERED FROM THE THIRD PARTY AND IN THE ABSENCE O F ANY CORROBORATIVE EVIDENCE, ADDITION IN THE HANDS OF ASSESSEE CANNOT BE MADE. THUS, WE WOULD LIKE TO DISMISS THE APPEAL OF THE REVENUE. 16. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 04- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 10/04/2019