The ACIT, Central Circle-2, Baroda V. Shri Rajnikant B.Desai, Nadiad

ITA 1567/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89712 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-06-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: P M MEHTA
• Keywords: Income from undisclosed sources; Tangible material; Reassessment proceedings
• Section: 143(3); 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO.1567/AHD/2011 ALONG WITH C.O. NO.163/AHD/2011 ASST. YEAR 2002-03 ASSTT. CIT, CEN.CIR-2, BARODA. VS. SHRI RAJNIKANT B. DESAI, 17 NAIROBI COLONY, COLLEGE ROAD, NADIAD. PAN ABVPD 0086F APPELLANT RESPONDENT APPELLANT BY : SMT. SONIA KUMAR, SR.DR RESPONDENT BY : SHRI P. M. MEHTA, AR DATE OF HEARING : 04/06/2015 DATE OF PRONOUNCEMENT : 24/06/2015 O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 8 TH MARCH, 2011 FOR AY 2002-03 AND THE CROSS OBJECTION HAS BEEN FILED BY THE ASSESSEE. ITA NO.1567/AHD/2011 & CO. 163/AHD/2011 ASST. YEAR 2002-03 2 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER :- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN QUASHIN G THE NOTICE ISSUED U/S 148 OF THE IT ACT AND CONSEQUENTL Y IN ANNULLING THE ASSESSMENT ORDER DATED 18.11.2009 PAS SED UNDER SECTION 143(3) R.W.S. 147 OF THE I.T. ACT. 2. THE LD. CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT IN WHICH ADDITION OF RS.59,32,051/- WAS MADE ON ACCOUNT OF UNEXPLAINED CAPITAL AS PER DIGITAL DA TE DERIVED FROM THE LAP-TOP. 3. THE LD. CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT IN WHICH ADDITION OF RS.52,16,180/- WAS MADE ON ACCOUNT OF UNEXPLAINED CASH RECEIPTS AND PAYMENT S AS DIGITAL DATA DERIVED FROM THE LAP-TOP. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILE D HIS RETURN OF INCOME U/S 139 ON 31.03.2003 DECLARING TOTAL INCOME OF RS.42,375/-. A SEARCH U/S 132 WAS CARRIED OUT IN TH IS CASE AND THE GROUP CASES OF SHRI RAMESHBHAI BABUBHAI SHAH OF NAD IAD ON 03/04/2008. MANY INCRIMINATING DOCUMENTS/MATERIALS WERE SEIZED DURING THE COURSE OF SEARCH, INTER ALIA, LENOVO MAK E LAPTON. IN THE SAID LAPTON, DATA OF 65 COMPANIES (AS PER SOFTWARE S LANGUAGE), I.E. ENTITIES(FILES), BOOKS OF ACCOUNT FOR DIFFERENT PE RIOD WAS FOUND. AMONG THESE 65 ENTITIES, THE ASSESSEE WAS THE ONE O F WHOM BOOKS OF ACCOUNT IN THE NAME OF (COMPANY AS PER TALLY SOF TWARE) 2PARSHWA CORPORATION WAS MAINTAINED. DURING THE COU RSE OF ITA NO.1567/AHD/2011 & CO. 163/AHD/2011 ASST. YEAR 2002-03 3 SEARCH AS WELL AS POST SEARCH ENQUIRIES, THE KEY PE RSON OF THE GROUP SHRI RAMESHBHAI B. SHAH CATEGORICALLY STATED THAT T HESE ACCOUNTS WERE BEING MAINTAINED FOR VARIOUS BUSINESS TRANSACT IONS/ACCOUNTS WHICH WERE EITHER TOTALLY OUT OF BOOKS OR PARTLY OU T OF BOOKS. THEREFORE, THESE FILES CONTAINED DATA OF UNACCOUNTE D BUSINESS TRANSACTIONS/INFORMATION OF UNACCOUNTED INCOME. SHR I RAMESHBHAI B. SHAH FAILED TO SUBMIT BIFURCATION OF ACCOUNTED A ND UNACCOUNTED INCOME/BUSINESS DURING THE COURSE OF SEARCH AS WELL AS POST SEARCH INVESTIGATION. THUS THE DEPARTMENT CAME IN POSSESSI ON OF THE INFORMATION ABOUT THE FILES CONTAINING THE DATE OF UNACCOUNTED BUSINESS TRANSACTIONS/INFORMATION OF UNACCOUNTED IN COME. ACCORDINGLY, THE ASSESSING OFFICER ISSUED NOTICE UN DER SECTION 148 ON 31.3.2009 AND SUBSEQUENTLY QUESTIONNAIRES WERE I SSUED CALLING FOR DETAILS/INFORMATION. THEY WERE SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICES, THE ASSESSEE MADE ITS SUBM ISSIONS ALONG WITH OBJECTIONS BEFORE THE ASSESSING OFFICER. THE A SSESSING OFFICER CONSIDERED THE SUBMISSIONS/OBJECTIONS BUT R EJECTED THE SAME AND MADE ADDITION IN QUESTION. THE ADDITION WA S MADE ON THE GROUND THAT THE ASSESSEE COULD NOT EXPLAIN THE SOUR CE OF CASH RECEIPTS OF RS.8,59,350/- AND CASH PAYMENTS OF RS.5 9,65,178/-. THE ADDITION OF RS.8,59,350/- WAS MADE ON ACCOUNT OF UN EXPLAINED CASH RECEIPTS. THE ADDITION OF RS.59,65,178/- WAS M ADE AS THE CASH ITA NO.1567/AHD/2011 & CO. 163/AHD/2011 ASST. YEAR 2002-03 4 PAYMENTS INCLUDING THE NEGATIVE CASH BALANCE WERE M ORE THAN THE CASH RECEIPTS. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE FIRS T APPELLATE AUTHORITY, WHO AFTER CONSIDERING MATERIAL AVAILABLE ON RECORD AND THE SUBMISSIONS OF ASSESSEE, AND FOLLOWING THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC) ANNULLED THE ASSESSMENT ORDER. THE REV ENUE BEING AGGRIEVED WITH THE ORDER OF LD. FIRST APPELLATE AUT HORITY HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. DR SUPPORTED THE ORDER OF AO WHEREAS THE LD. AR RELIED ON THE ORDER OF FIRST APPELLATE AUTHORITY AND SUBMITTED A BUNCH OF TRIBUN AL DECISIONS ON THE ISSUE. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOIN G THROUGH THE MATERIAL AVAILABLE ON RECORD CAREFULLY, WE FIND THAT THE AO HAS MADE THE REASSESSMENT WITHOUT DISPOSING OF THE OBJE CTIONS OF THE ASSESSEE. AN IDENTICAL ISSUE CAME UP BEFORE THE TRI BUNAL AND THE TRIBUNAL, IN A RECENT DECISION IN THE CASE OF ACIT, CEN.CIR.-2, BARODA VS. M/S SAGAR DEVELOPERS VIDE ORDER DATED 10 /04/2015 IN ITA NO.1538/AHD/2011 FOR AY 2002-03 THE TRIBUNAL HA S DECIDED THE ISSUE BY OBSERVING AS UNDER :- ITA NO.1567/AHD/2011 & CO. 163/AHD/2011 ASST. YEAR 2002-03 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN TH E INSTANT CASE, THE RESPONDENT ASSESSEE IN TERMS OF RULE -27 OF THE INCOME-TAX APPELLATE TR IBUNAL RULES, 1963 SUPPORTED THE ORDER OF CIT(A) ON THE GROUND THAT THE IMPUGNED ASS ESSMENT ORDER WAS BAD IN LAW AS THE REASSESSMENT WAS MADE WITHOUT DISPOSING OFF THE OBJ ECTIONS RAISED BY THE ASSESSEE AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS BY A SEPARATE ORDER. WE FIND THAT, IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSE E FILED HIS OBJECTIONS AGAINST THE ISSUANCE OF NOTICE U/S 148 OF THE ACT VIDE HIS LETTER DATED 11.11.2009 WHICH WAS RECEIVED BY THE OFFICE OF THE ASSESSING OFFICER ON 16.11.2009. THER EAFTER, THE AO PASSED THE IMPUGNED RE-ASSESSMENT ORDER ON 20.11.2009 DISPOSING OFF THE OBJECTIONS TO REASSESSMENT PROCEEDINGS OF THE ASSESSEE IN THE ORDER ITSELF. TH US THESE FACTS SHOW THAT THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE ISSUANCE OF NOTI CE U/S 148 OF THE ACT WERE NOT DISPOSED OFF BY THE AO BY PASSING A SPEAKING ORDER THEREON A ND ALLOWING REASONABLE TIME TO THE ASSESSEE AFTER COMMUNICATING THE FATE OF THE OBJECT IONS BEFORE PROCESSING WITH THE REASSESSMENT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA P. LTD. VS. DCIT (SUPRA) HAS HELD AS UNDER :- FROM THE AFORESAID DISCUSSION, WE ARE OF THE CONS IDERED OPINION THAT THE WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF I NDIA IS MAINTAINABLE WHERE NO ORDER HAS BEEN PASSED BY THE AO DECIDING THE OBJECT ION FILED BY THE ASSESSEE UNDER SECTION 148 OF THE ACT AND ASSESSMENT ORDER H AS BEEN PASSED OR THE ORDER DECIDING AN OBJECTION UNDER SECTION 148 OF THE ACT HAS NOT BEEN COMMUNICATED TO THE ASSESSEE AND ASSESSMENT ORDER HAS DECIDED ALONG WITH THE ASSESSMENT ORDER. IF THE OBJECTION UNDER SECTION 148 HAS BEEN REJECTED W ITHOUT THERE BEING ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO TO FORM AN OPINION T HAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND IN THE ABSENCE OF REASON S HAVING DIRECT LINK WITH THE FORMATION OF THE BELIEF, THE WRIT COURT UNDER ARTIC LE 226 CAN QUASH THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE WRIT PETIT ION FILED BY THE PETITIONER IS MAINTAINABLE. THE AO IS MANDATED TO DECIDE THE OBJE CTION TO THE NOTICE UNDER SECTION 148 AND SUPPLY OR COMMUNICATE IT TO THE ASS ESSEE. THE ASSESSEE GETS AN OPPORTUNITY TO CHALLENGE THE ORDER IN A WRIT PETITI ON. THEREAFTER, THE AO MAY PASS THE REASSESSMENT ORDER. WE HOLD THAT IT WAS NOT OPE N TO THE AO TO DECIDE THE OBJECTION TO NOTICE UNDER SECTION 148 BY A COMPOSIT E ASSESSMENT ORDER. THE AO WAS REQUIRED TO, FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED UNDER SECTION 148 AND SERVE A COPY OF THE ORDER ON THE ASSESSEE. AND AFTER GIVING SOME REASONABLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DONE BY THE AO THERE FORE, THE ORDER ON THE ITA NO.1567/AHD/2011 & CO. 163/AHD/2011 ASST. YEAR 2002-03 6 OBJECTION TO THE NOTICE UNDER SECTION 148 AND THE A SSESSMENT ORDER PASSED UNDER THE ACT DESERVES TO BE QUASHED. 8. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER OF REASSESSMENT PASSED BY THE AO WITHOUT DISPOSING OFF THE OBJECTIO NS RAISED BY THE ASSESSEE AGAINST THE ISSUANCE OF NOTICE U/S 148 BY A SEPARATE ORDER IS L IABLE TO BE QUASHED. WE ORDER ACCORDINGLY. THUS, THIS GROUND OF APPEAL OF THE REV ENUE IS DISMISSED. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR SO, RESPECTFULLY FOLLO WING THE ABOVE ORDER OF THE TRIBUNAL AND IN VIEW OF THE DECISION O F THE HONBLE GUJARAT HIGH COURT IN THE CASE GENERAL MOTORS INDIA P. LTD. VS. DCIT 354 ITR 0244 (GUJ), AND IN VIEW OF THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGH TLY ANNULLED THE ASSESSMENT ORDER. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). THEREFORE, THE GROUNDS RAISED BY THE REVENUE IN THI S APPEAL, HAVE BECOME IN FRUCTUOUS AND HENCE DISMISSED. THE APPEAL FILED BY THE REVENUE IS DISMISSED. SINCE WE ARE DECIDING THE MAT TER ON PRELIMINARY ISSUE WE ARE REFRAINING TO COMMENT ON M ERIT OF THE ISSUE AT HAND. HOWEVER, REVENUE IS AT LIBERTY TO RA ISE THE ISSUE ON MERIT AS AND WHEN REQUIRED TO DO SO. 6. THE C.O. WAS NOT PRESSED. HENCE THE SAME IS DISM ISSED AS NOT PRESSED. ITA NO.1567/AHD/2011 & CO. 163/AHD/2011 ASST. YEAR 2002-03 7 7. IN THE RESULT, THE APPEAL OF REVENUE AND THE CRO SS OBJECTION OF ASSESSEE BOTH ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILE NDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED : 24/6/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.REGISTRAR,ITAT, AHMEDABAD 1. DATE OF DICTATION: 04/06/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15/06/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 24/6/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: