Ramesh M.Mehta (Deceased) Represented by Sri Shashank S.Mehta, CHENNAI V. ACIT, CHENNAI

ITA 1566/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68704 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 18-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Documents seized
• Section: 153A; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1566(MDS)/2013 ASSESSMENT YEAR : 2004-05 RAMESH M MEHTA(DECEASED REP.BY SRI SHASHANK S MEHTA, C/O S.VENKATRAM & CO., CAS, 218-TTK ROAD, CHENNAI-600 018. PAN AACPM7084J. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, BUSINESS CIRCLE XV, CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.SITHARAMAN, C. A. RESPONDENT BY : SHRI SHAJI P JACOB, IRS, A DDL.CIT DATE OF HEARING : 24 TH SEPTEMBER, 2013 DATE OF PRONOUNCEMENT : 24 TH SEPTEMBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2004-05. THE APPEAL IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-XI I AT CHENNAI, DATED 21-8-2012 AND ARISES OUT OF THE ASSE SSMENT - - ITA 1566 OF 2013 2 COMPLETED UNDER SECTION 143(3), READ WITH SECTION 1 53C OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RETURNED AN INCOME OF ` 80,570/- FOR THE ASSESSMENT YEAR UNDER APPEAL. THE SAID RET URN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. 3. THERE WAS A SEARCH ACTION UNDER SECTION 132 OF THE ACT IN THE CASE OF BHARAT SHAH GROUP OF CONCERNS AT MUMBAI. IN THE COURSE OF SEARCH OPERATION, DETAILS AND MATERIA LS WERE SEIZED RELATING TO THE VARIOUS TRANSACTIONS ENTERED INTO BY BHARAT SHAH GROUP OF CONCERNS. ONE OF THE TRANSACTIONS REF LECTED IN THE SEIZED MATERIALS WAS THE SALE OF TWO FLATS TO THE A SSESSEE AND HIS WIFE, MADE BY M/S.LAYER EXPORT PVT. LTD. THE S AID COMPANY M/S.LAYER EXPORT PVT. LTD. BELONGS TO BHARAT SHAH G ROUP OF CONCERNS. AS PER THE SEIZED RECORDS, THE ASSESSEE AND HIS WIFE HAD PURCHASED ONE FLAT EACH AT MUMBAI. A PAYMENT O F ` 2,03,50,200/- WAS PAID PER FLAT, BY CHEQUE/DEMAND DRAFT. IN ADDITION TO THAT, A CASH PAYMENT OF ` 1,93,57,051/- EACH WAS PAID BY THE ASSESSEE AND HIS WIFE FOR THEIR FLATS. 4. AS THE ASSESSEES PURCHASE OF FLAT WAS ALSO REFLECTED IN THE MATERIALS SEIZED AT THE TIME OF SE ARCH CONDUCTED - - ITA 1566 OF 2013 3 AT BHARAT SHAH GROUP OF CONCERNS AT MUMBAI, THE ASS ESSING AUTHORITY AT MUMBAI, WHILE COMPLETING THE SEARCH AS SESSMENT IN THE CASE OF M/S.LAYER EXPORT PVT. LTD. (THE SELLER OF THE FLATS), FOUND THAT THE ASSESSEE AND HIS WIFE ARE ANSWERABLE TO THE ON- MONEY PAID BY THEM AT ` 1,93,57,051/- PER FLAT. AS THIS INFORMATION IMPLICATES THE ASSESSEE AND HIS WIFE AN D THEY ARE LIABLE FOR AN ASSESSMENT UNDER SECTION 153C, THE AS SESSING AUTHORITY AT MUMBAI TRANSMITTED THE RELEVANT DETAIL S AND PARTICULARS TO THE ASSESSING AUTHORITY IN THIS CASE TO INITIATE ACTION AS PER LAW. 5. IN THE LIGHT OF THE ABOVE INFORMATION RECEIVED FROM MUMBAI INCOME-TAX, THE ASSESSING OFFICER ISSUED NOT ICE TO THE ASSESSEE UNDER SECTION 153C, READ WITH SECTION 153A , STATING THAT THE SEARCH MADE AT MUMBAI AT BHARAT SHAH GROUP OF CONCERNS HAS BROUGHT OUT DETAILS OF ON-MONEY PAYMEN TS MADE BY THE ASSESSEE AT THE TIME OF PURCHASE OF FLATS AN D, THEREFORE, THE NECESSARY DETAILS MAY BE FURNISHED BEFORE HIM. 6. AFTER ISSUING THE NOTICE AND AFTER CERTAIN CORRESPONDENCES, THE ASSESSING OFFICER CONCLUDED TH E ASSESSMENT UNDER SECTION 143(3), READ WITH SECTION 153C, - - ITA 1566 OF 2013 4 ADDING THE ON-MONEY PAYMENT OF ` 1,93,57,051/- IN THE HANDS OF THE ASSESSEE. THUS THE TOTAL INCOME HAS BEEN ASSES SED AT ` 1,94,37,630/-. 7. THIS ASSESSMENT WAS TAKEN IN FIRST APPEAL BEFOR E THE COMMISSIONER OF INCOME-TAX(APPEALS). THE CONTE NTIONS RAISED BY THE ASSESSEE BEFORE THE COMMISSIONER OF I NCOME- TAX(APPEALS) WERE THAT THERE WERE NO MATERIALS AVAI LABLE WITH THE ASSESSING OFFICER TO INITIATE ASSESSMENT PROCEEDING S UNDER SECTION 153C AND SO ALSO THE ASSESSING OFFICER HAS NOT SUPPLIED TO THE ASSESSEE THE INFORMATION AND MATERIALS ACQUI RED IN THE COURSE OF THE SEARCH CONDUCTED AT MUMBAI AND, THERE FORE, THE ASSESSMENT MADE IN THE CASE OF THE ASSESSEE WAS INV ALID. THE COMMISSIONER OF INCOME-TAX(APPEALS) EXAMINED THE CA SE IN DETAIL AND HELD THAT SUFFICIENT MATERIALS ARE AVAIL ABLE IN THE HANDS OF THE ASSESSING OFFICER TO INITIATE THE PROCEEDING S UNDER SECTION 153C. REGARDING THE ARGUMENT OF THE ASSESSEE THAT COPIES OF THE SEIZED MATERIALS WERE NOT FURNISHED BY THE ASSE SSING OFFICER TO THE ASSESSEE, THE COMMISSIONER OF INCOME-TAX(APP EALS) DIRECTED THE ASSESSING OFFICER TO FURNISH THE COPIE S OF THE SEIZED MATERIALS TO THE ASSESSEE AND GRANT HIM AN OPPORTUN ITY OF BEING - - ITA 1566 OF 2013 5 HEARD AND THEREAFTER SUBMIT A REMAND REPORT. ACCOR DING TO THE COMMISSIONER OF INCOME-TAX(APPEALS) THE COPIES OF T HE SEIZED MATERIALS WERE FURNISHED TO THE ASSESSEE BY THE ASS ESSING OFFICER AND ON THE BASIS OF THE HEARING TAKEN PLACE THEREAFTER, A REMAND REPORT WAS FURNISHED BY THE ASSESSING OFFICE R BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS). AFTER CONSIDE RING THE FACTS AND CIRCUMSTANCES OF THE CASE INCLUDING THE R EMAND REPORT SUBMITTED BY THE ASSESSING OFFICER, THE COMMISSIONE R OF INCOME-TAX(APPEALS) CAME TO A CONCLUSION THAT THE A SSESSEE HAD PURCHASED A FLAT NO.14 FROM M/S.LAYER EXPORT PV T. LTD. FOR A TOTAL CONSIDERATION OF ` 3,97,07,251/-. HE FOUND THAT FURTHER THE ASSESSEE HAD RECORDED ONLY A CONSIDERATION OF ` 2,03,50,200/- AND THE BALANCE OF ` 1,93,57,051/- WAS PAID IN CASH AS ON- MONEY. AS THE PAYMENT OF ON-MONEY WAS PROVED BEYON D DOUBT, THE COMMISSIONER OF INCOME-TAX(APPEALS) CONFIRMED T HE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSED THE APP EAL FILED BY THE ASSESSEE. 8. IT IS AGAINST THE ABOVE THAT THE ASSESSEE HAS C OME IN SECOND APPEAL BEFORE THE TRIBUNAL. - - ITA 1566 OF 2013 6 9. THE GROUNDS RAISED IN THE PRESENT APPEAL ARE EXTRACTED BELOW: 1. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED BOTH IN LAW AND IN FACTS OF THE CASE IN SUSTAINING THE VALIDITY OF THE ASSESSMENT U/S.153C OF THE ACT AND THE ADDITION OF ` 1,93,57,057/- 2. HE ERRED IN OVERLOOKING THAT THE ASSESSING OFFICER LACKED JURISDICTION TO PROCEED U/S.153C OF THE ACT. 3. HE OVERLOOKED THAT THE APPELLANT WAS NEVER MADE AWARE AS TO HOW THE STATEMENT OF THE A.O. WAS SATISFIED TO APPLY SECTION 153C. 4. HE OVERLOOKED THAT THE ASSESSING OFFICER HAD NOT CONSIDERED, AT ALL, THE ABSENCE OF ANY EVIDENCE IN THE APPELLANTS PREMISES AND THE APPELLANT WAS NOT MADE KNOWN, HOW AND WHY NOTICE U/S.153 WAS ISSUED. 5. HE OVERLOOKED THAT THE APPELLANT WAS NEVER MADE AWARE OF THE DOCUMENTS SEIZED OR THE PERSONS QUESTIONED. - - ITA 1566 OF 2013 7 6. IN ANY CASE, PRINCIPLES OF NATURAL JUSTICE HAD BEEN VIOLATED, IN SO FAR AS MATERIALS GATHERED BEHIND THE BACK OF THE APPELLANT HAD BEEN USED WITHOUT FURNISHING THE SAME TO THE APPELLANT AND WITHOUT GIVING ANY OPPORTUNITY TO THE APPELLANT. 7. WITHOUT PREJUDICE TOT H ABOVE, THE APPELLANT ADMITS THAT HE HAD NOT PAID ANY ON MONEY AND THE ONUS OF PROVING THAT THE APPELLANT HAD PAID SUCH MONEY, LIES ON THE AO. 8. THE APPELLANT ALSO DISPUTES THE VERACITY OF THE FOLLOWING STATEMENT CONTAINED IN PAGE 5 OF THE CIT(A) ORDER : ACCORDINGLY, THE ASSESSING OFFICER FURNISHED COPIES OF THE SEIZED MATERIAL TO THE ASSESSE AND SUBMITTED THE REMAND REPORT. I HAVE PERUSED THE ABOVE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE ASSESSMENT ORDER AND THE REMAND REPORT 9. THE APPELLANT DENIES HAVING BEEN SUPPLIED WITH THE SEIZED MATERIALS OR THE REMAND REPORT REFERRED TO. 10. WE HEARD SHRI G.SITHARAMAN, THE LEARNED CHARTE RED ACCOUNTANT APPEARING FOR THE ASSESSEE AND SHRI SHAJ I P JACOB, - - ITA 1566 OF 2013 8 THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FO R THE REVENUE. 11. THE FIRST SET OF GROUNDS RAISED BY THE ASSESSE E FROM GROUND NOS.1 TO 4 RELATES TO THE ARGUMENT OF THE AS SESSEE THAT THE ASSESSING OFFICER LACKED JURISDICTION TO PROCEE D UNDER SECTION 153C OF THE INCOME-TAX ACT, 1961. IT IS TH E CASE OF THE ASSESSEE THAT NO EVIDENCE WAS COLLECTED FROM THE PR EMISES OF THE ASSESSEE AND NO DOCUMENTS WERE SEIZED FROM HIS PERSON AND AS SUCH THERE WAS NO RELEVANCE IN MAKING AN ASS ESSMENT UNDER SECTION 153C OF THE ACT IN THE NAME OF THE AS SESSEE. 12. THIS ARGUMENT AND THE RELATED GROUNDS ARE NOT AT ALL ACCEPTABLE. THE FACTUM OF PURCHASE OF FLAT BY THE ASSESSEE IS PROVED. THERE IS NO DISPUTE REGARDING THAT. THE F LAT WAS PURCHASED FROM M/S.LAYER EXPORT PVT. LTD. THAT COM PANY BELONGED TO BHARAT SHAH GROUP OF CONCERNS AT MUMBAI . THERE WAS A SEARCH OPERATION UNDER SECTION 132 OF THE ACT IN THE CASE OF BHARAT SHAH GROUP OF CONCERNS. MATERIALS WERE S EIZED IN THE COURSE OF THE SEARCH. THE SEIZED MATERIALS ALSO RE FLECTED, AMONG OTHER THINGS, THE DETAILS OF TRANSACTION RELA TING TO THE PURCHASE OF THE FLATS BY THE ASSESSEE AND HIS WIFE FROM - - ITA 1566 OF 2013 9 M/S.LAYER EXPORT PVT. LTD. IN THE SEIZED MATERIALS IT WAS MADE CLEAR THAT IN ADDITION TO THE ACCOUNTED PAYMENT OF PURCHASE CONSIDERATION BY WAY OF CHEQUE, THE ASSESSEE HAS FU RTHER PAID AN AMOUNT OF ` 1,93,57,051/- IN CASH, WHICH WAS IN THE NATURE OF ON-MONEY PAYMENT. 13. LAW AUTHORIZES AN ASSESSING OFFICER TO IMPLICA TE ANOTHER PERSON, EVEN THOUGH HE WAS NOT SEARCHED, PR OVIDED THE SEARCH HAS UNEARTHED DETAILS REGARDING THE TRANSACT ION IN WHICH THE OTHER PERSON IS ALSO A PARTY. IN THE PRESENT C ASE, EVEN THOUGH SECTION 153A DIRECTLY APPLIES TO BHARAT SHAH GROUP OF CONCERNS INCLUDING M/S.LAYER EXPORT PVT. LTD., IN T HE LIGHT OF THE MATERIALS COLLECTED IN THE COURSE OF SEARCH, WHICH ALSO RELATED TO THE TRANSACTION ENTERED INTO BY THE ASSESSEE WITH M /S.LAYER EXPORT PVT. LTD., THE MUMBAI INCOME-TAX AUTHORITY I S VERY MUCH JUSTIFIED IN TRANSMITTING THE DETAILS TO THE ASSESS ING AUTHORITY OF THE ASSESSEE. THE ASSESSING OFFICER IN THE PRESENT CASE IS EQUALLY JUSTIFIED IN RELYING ON THOSE MATERIALS TRA NSMITTED BY THE MUMBAI INCOME-TAX AUTHORITIES TO INITIATE PROCEEDIN GS TO COMPLETE THE ASSESSMENT UNDER SECTION 153C AGAINST THE ASSESSEE. THEREFORE, THERE IS NO LACK OF JURISDICT ION AS FAR AS THE - - ITA 1566 OF 2013 10 IMPUGNED ASSESSMENT IS CONCERNED. THE IMPUGNED ASS ESSMENT COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 14 3(3), READ WITH SECTION 153C OF THE ACT, IS WITHIN JURISDICTIO N AND SUSTAINABLE IN LAW. 14. THE SECOND SET OF GROUNDS FROM GROUND NOS.5 TO 9 RELATES TO THE ARGUMENT OF THE ASSESSEE THAT THE IM PUGNED ASSESSMENT HAS BEEN COMPLETED AFTER VIOLATING THE B ASIC PRINCIPLE OF NATURAL JUSTICE. THE CASE OF THE ASSE SSEE IS THAT INSPITE OF FERVENT REQUESTS MADE BY THE ASSESSEE, T HE COPIES OF THE SEIZED MATERIALS WERE NOT FURNISHED TO THE ASSE SSEE AND AS SUCH THE ASSESSEE WAS IN DARK TO UNDERSTAND AS TO W HAT WAS THE BASIS OF THE ASSESSMENT MADE ON THE ASSESSEE UNDER SECTION 153C OF THE ACT. 15. WE CONSIDERED THIS ISSUE ALSO VERY SERIOUSLY. THE SAME GROUND WAS RAISED BEFORE THE COMMISSIONER OF I NCOME- TAX(APPEALS) AS WELL. THE COMMISSIONER OF INCOME- TAX(APPEALS), THEREFORE, DIRECTED THE ASSESSING OFF ICER TO FURNISH THE ASSESSEE WITH COPIES OF THE SEIZED MATERIALS US ED AGAINST HIM IN COMPLETING THE IMPUGNED ASSESSMENT. IN PAGE 5 OF HIS ORDER, THE COMMISSIONER OF INCOME-TAX(APPEALS) IN S ECOND - - ITA 1566 OF 2013 11 PARAGRAPH HAS MADE IT VERY CLEAR THAT: ACCORDINGLY THE ASSESSING OFFICER FURNISHED COPIES OF THE SEIZED MA TERIALS TO THE ASSESSEE AND SUBMITTED THE REMAND REPORT. 16. THE ABOVE DISCUSSION MADE BY THE COMMISSIONER OF INCOME-TAX(APPEALS) CLEARLY SHOWS THAT THE ASSES SING OFFICER, AS DIRECTED BY THE COMMISSIONER OF INCOME-TAX(APPEA LS), HAS FURNISHED COPIES OF THE SEIZED MATERIALS TO THE ASS ESSEE AND THE ASSESSEE WAS AGAIN GIVEN AN OPPORTUNITY OF BEING HE ARD AND ON THAT BASIS THE ASSESSING OFFICER HAS FURNISHED A RE MAND REPORT BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS) AND THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS PASSED THE ORDER AFTER CONSIDERING THE ABOVE REMAND REPORT. WHEN TH IS IS THE CASE, WE ARE NOT IN A POSITION TO ACCEPT THE CONTEN TION OF THE ASSESSEE THAT THE ASSESSEE WAS NOT FURNISHED WITH C OPIES OF THE SEIZED MATERIALS. 17. THE ASSESSEE HAS RAISED A SPECIFIC GROUND BEFO RE US, AS GROUND NO.8, THAT THE ASSESSEE DISPUTES THE STATEMENT MADE BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IN PAGE 5 OF HIS ORDER THAT COPIES OF THE SEIZED MATERIALS WERE FURNISHED TO THE ASSESSEE. AT THIS STAGE IT IS NOT POSSIBLE FOR US TO VERIFY THIS - - ITA 1566 OF 2013 12 QUESTION OF FACT. IF THE ASSESSEE HAD ANY OBJECTIO N TO THE OBSERVATION MADE BY THE COMMISSIONER OF INCOME-TAX( APPEALS) IN HIS ORDER THAT THE ASSESSING OFFICER HAS FURNISH ED COPIES OF THE SEIZED MATERIALS TO THE ASSESSEE, THE ASSESSEE OUGHT TO HAVE BROUGHT HIS OBJECTION THEN AND THERE BEFORE TH E COMMISSIONER OF INCOME-TAX(APPEALS) AND HE SHOULD S EE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) IS DELETING THE SAID OBSERVATION FROM HIS ORDER. IF, IN FACT, THE COMMI SSIONER OF INCOME-TAX(APPEALS) HAS MADE AN UNTRUE STATEMENT IN HIS ORDER, AS STATED IN PAGE 5 OF HIS ORDER REGARDING THE SUPP LY OF COPIES OF THE SEIZED MATERIALS, THE SAID UNTRUE STATEMENT AMO UNTED TO A MISTAKE APPARENT FROM RECORD, WHICH IS RECTIFIABLE UNDER SECTION 154 OF THE INCOME-TAX ACT, 1961. BUT, INSPITE OF S UCH A CRUCIAL ARGUMENT RAISED BY THE ASSESSEE REPEATEDLY BEFORE T HE COMMISSIONER OF INCOME-TAX(APPEALS) AND ALSO BEFORE THE TRIBUNAL, THE ASSESSEE HAS NOT MOVED THE COMMISSION ER OF INCOME-TAX(APPEALS) TO CORRECT THE WRONG AND UNTRUE STATEMENT, IF ANY, MADE BY THE COMMISSIONER OF INCOME-TAX(APPE ALS). 18. NOW, AT THIS STAGE IT IS NOT POSSIBLE FOR US T O DISBELIEVE THE STATEMENT OF FINDING MADE BY THE COM MISSIONER OF - - ITA 1566 OF 2013 13 INCOME-TAX(APPEALS) IN HIS ORDER. HE HAS CLEARLY S TATED THAT THE ASSESSING OFFICER HAS FURNISHED COPIES OF THE SEIZE D MATERIALS TO THE ASSESSEE AND THEREAFTER THE ASSESSING OFFICER H AS FURNISHED A REMAND REPORT BEFORE HIM. 19. IN VIEW OF THE ABOVE, WE CANNOT ACCEPT THE GRO UND RAISED BY THE ASSESSEE REGARDING NON FURNISHING OF THE COPIES OF THE SEIZED MATERIALS BY THE ASSESSING OFFICER. 20. IN THE COURSE OF HEARING OF THIS APPEAL, THE O NLY POINT PROPOSED BY THE LEARNED CHARTERED ACCOUNTANT IS REGARDING THE ALLEGED VIOLATION OF PRINCIPLES OF NATURAL JUST ICE ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT FURNISHED COPIES OF THE SEIZED MATERIALS TO THE ASSESSEE. WE HAVE ALREADY SEEN TH AT THE SAID GROUND IS NOT SUSTAINABLE IN THE FACTS OF THE CASE. NO ARGUMENT REGARDING THE MERITS OF THE ISSUE HAS BEEN RAISED B EFORE US AT THE TIME OF HEARING. 21. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAD IN FACT MADE AN ON-MONEY PAYM ENT OF ` 1,93,57,051/- WHILE PURCHASING THE FLAT AT MUMBAI FROM M/S.LAYER EXPORT PVT. LTD. THEREFORE, THE ASSESSIN G OFFICER HAS RIGHTLY ADDED THIS AMOUNT IN THE HANDS OF THE ASSES SEE AS - - ITA 1566 OF 2013 14 INCOME LIABLE FOR TAXATION. THEREFORE, WE UPHOLD T HE ORDERS OF THE LOWER AUTHORITIES. 22. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 24 TH DAY OF SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 24 TH SEPTEMBER, 2013. V,A.P. 1. THE APPELLANT. 2. THE RESPONDENT. 3. CIT 4. CIT(A) 5. DR 6. GF