Sri. Prakash, V. DCIT,

ITA 1640/BANG/2013

• Counselvise Citation: 164021114 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained investment; Search and seizure; Principle of natural justice; Assessment record
• Section: 142(1); 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 1640 /B ANG/2013 (ASSESSMENT YEAR: 200 7 - 08 ) SHRI PRAKASH, # 224, 23 RD MAIN, 5 TH CROSS, SARAK KI TANK LAYOUT, JP NAGAR 5 TH PHASE, BANGALORE - 560078. APPELLANT PAN: AAGPP0430P VS. DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, MYSORE. RESPONDENT A PPELLANT BY: SHRI S.VENKATESAN, CA. RESPONDENT B Y: SHRI P.DH IVAHAR, JC IT(DR) DATE OF HEARING : 0 4 /0 3 /2015 DATE OF PRONOUNCEMENT: 11 /03/2015 O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - V I , BANGALORE, DATED 26 / 09 /2013 CONFIRMING THE VALIDITY OF THE PROCEEDINGS U/S 147 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] AND ALSO AGAINST THE ADDITION CONFIRMED BY THE CIT(A) FOR THE ASSESSMENT YEAR 200 7 - 08 . ITA NO. 1640/BANG/2013 SHRI PRAKASH PAGE 2 OF 6 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 3/2/2009 DECLARING INCOME OF RS.36,99,910/ - FROM BUSINESS. THERE WAS A SEARCH AND SEIZURE ACTION IN THE CASE OF ONE SHRI S.K.SRINIVAS A AND OTHERS ON 31/1/2008 AND SURVEY U/S 133A WAS ALSO CONDUCTED ON THE BUSI NESS PREMISES OF THE ASSESSEE , SHRI PRAKASH , IN BANGALORE ON 31/1/2008. FROM THE DETAILS FOUND DURING THE COURSE OF SURVEY AS WELL AS THE RETURN FILED BY THE ASSESSEE, T HE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE , IN HIS RETURN OF INCOME, HAD FAIL ED TO DECLARE HIS CORRECT SHARE OF PROFIT FROM SALE OF LAND AT KOORGALLI. HENCE, HE SOUGHT TO REOPEN THE ASSESSMENT BY ISSUANCE OF NOTICE U/S 148 ON 4/3/2011. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE FILED COPY OF THE RETURN OF INCOME FILED ON 3/2 /2009 DECLARING AN INCOME OF RS.36,99,910/ - FROM BUSINESS. N OTICE S U/S 143(2) AND U/S 142(1) W ERE ISSUED CALLING FOR VARIOUS DETAILS. THE ASSESSEE COMPLIED WITH THE NOTICE S AND SUBMITTED TH AT HE WAS ONLY A CO ORDINATOR FOR THE SALE OF LAND AND WAS NOT THE OWNER OF THE LAND AND THEREFORE WAS NOT IN RECEIPT OF THE SALE CONSIDERATION. HOWEVER, AO CAME TO THE CONCLUSION THAT THE ASSESSEE WAS NOT JUST A COORDINATOR FOR SALE OF LAND TO SHRI S.K.SRINIVAS A AND COMPANY , BUT WAS THE OWNER AS IT WAS THE ASSESSEE WHO HAD PURCHASED AND S OLD THE LAND. THE AO RELIED UPON THE STATEMENT OF SHRI S.K.SRINIVASA FOR COMING TO THIS CONCLUSION. WHEN THE ASSESSEE WAS CONFRONTED WITH THE STATEMENT OF SHRI SRINIVASA, THE ASSESSEE REQUESTED FOR AN ITA NO. 1640/BANG/2013 SHRI PRAKASH PAGE 3 OF 6 OPPORTUNITY TO CROSS - EXAMIN E SHRI S.K. SRINIVASA AND ACCORDINGLY THE ASSESSEE WAS INFORMED OF AN OPPORTUNITY TO CROSS - EXAMINE HIM ON 19/12/2011. HOWEVER, SHRI S.K.SRINIVAS A DID NOT APPEAR BUT REQUESTED FOR ADJOURNMENT AND THEREFORE THE ASSESSEE WAS NOT GIVEN FURTHER OPPORTUNITY OF CROSS - E XAMINATION. THEREAFTER, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT BY BRINGING TO TAX PROFIT FROM SALE OF LAND AT KOORGALLI. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE ASSESSEE HAD ORALLY REQUESTED FOR THE RE ASONS FOR REOPENING OF ASSESSMENT , A ND THAT THE AO HAD AGREED TO GIVE/FURNISH DETAILS FOR REOPENING AFTER COMPLETION OF CROSS - EXAMINATION OF SHRI SRINIVASA. IT WAS FURTHER PLEADED THAT SINCE SHRI SRINIVAS A DID NOT APPEAR ON THE DATE OF CROSS - EXAMINATION, THE AS SESSEE COULD NOT CROSS - EXAMINE HIM AND EVEN THEREAFTER, THE ASSESSEE WAS NEVER FURNISHED WITH THE REASONS FOR REOPENING. THE CHARTERED ACCOUNTANT OF THE ASSESSEE , SHRI SURENDRA HEGDE , FILED AN AFFIDAVIT TO THIS EFFECT BEFORE THE CIT(A). THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO ON THE SAID AFFIDAVIT . T HE AO , IN THE REMAND REPORT , STATED THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAD REQUESTED FOR REASONS FOR REOPENING OF THE ASSESS MENT AND THAT IN SPITE OF OPPORTUNITY GIVEN TO THE ASS ESSEE, HE FAILED TO AVAIL OPPORTUNITY OF CROSS - EXAMINING SHRI SRINIVASA. ON THE BASIS OF THE SAID REMAND REPORT, THE CIT(A) CAME TO THE CONCLUSION THAT THE AFFIDAVIT OF THE CA IS ONLY A SELF - SERVING DOCUMENT AND CANNOT BE ITA NO. 1640/BANG/2013 SHRI PRAKASH PAGE 4 OF 6 ACCEPTED. HE ACCORDINGLY UPHELD THE VALIDITY OF THE REOPENING OF THE ASSESSMENT AND PROCEEDED TO CONSIDER THE ADDITIONS MADE BY THE AO ON BOTH THE PROFIT ON SALE OF LAND AS WELL AS UNEXPLAINED INVESTMENT AT KOORGALLI. ACCORDINGLY, THE ADDITIONS WERE CONFIRMED BY THE CIT(A). THE ASSESSE E IS IN SECOND APPEAL BEFORE US. 4. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE HAS FILED AN AFFIDAVIT OF THE ASSESSEE BEFORE US BRINGING TO THE NOTICE OF THIS TRIBUNAL THAT THE ASSESSEE HAD MADE ORAL REQUEST FOR REASONS FOR REOPENING AND ALSO A REQUEST FOR CROSS - EXAMINATION OF SHRI S.K.SRINIVASA AND THE AO HAD INFORMED THE ASSESSEE THAT HE WOULD ALLOW THE CROSS - EXAMINATION OF SHRI SRINIVASA FIRST AND THEREAFTER PROVIDE THE REASONS FOR REOPENING BUT BEFORE COMPLETING THE ASSESSMENT. IT IS STATED THAT THE ASSESSEE AND HIS CA WERE PRESENT ON THE DATE WHEN SHRI S.K.SRINIVASA WAS SUMMONED FOR CROSS - EXAMINATION BUT SINCE SHRI S.K.SRINIVASA DID NOT APPEAR AT ALL , HIS CROSS - EXAMINATION COULD NOT TAKE PLACE AND THEREFORE THE OBSERVATION MADE IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT AVAILED THE OPPORTUNITY OF CROSS - EXAMINATION GIVEN BY THE AO IS NOT TRUE AND CO R RECT . IT IS ALSO STATED THAT THE CIT(A) HAS NOT CONSIDERED THE AFFIDAVIT OF SHRI SRINIVASA FILED BY THE ASSESSEE BUT HAS CONFIR MED THE ADDITION ONLY ON THE BASIS OF STATEMENT OF SHRI S.K.SRINIVASA WHICH IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. ITA NO. 1640/BANG/2013 SHRI PRAKASH PAGE 5 OF 6 THE COPY OF THE AFFIDAVIT WAS SERVED ON THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE EARLIER DATE OF HEARING AND THE LEARN ED DEPARTMENTAL REPRESENTATIVE WAS INSTRUCTED TO PRODUCE THE ASSESSMENT RECORDS FOR THE RELEVANT ASSESSMENT YEAR. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAD PRODUCED THE ASSESSMENT RECORDS AND ON PERUSAL OF THE SAME, WE NOTICED THAT THE AO HAD ISSUED SUM MONS TO SHRI S.K.SRINIVASA TO APPEAR FOR CROSS - EXAMINATION ON 19/12/2011 BUT SHRI S.K.SRINIVASA DID NOT APPEAR AND THEREAFTER THERE WAS NO ACTION TAKEN BY THE AO FOR CAUSING THE ATTENDANCE OF SHRI S.K.SRINIVASA. WE FIND THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS - EXAMINE SHRI S.K.SRINIVASA AND IN THE ABSENCE OF THE SAME, RELIANCE ON THE SAID STATEMENT FOR MAKING ADDITION IS UNSUSTAINABLE. THE CIT(A) HAS ALSO NOT CONSIDERED THE AVERMENTS OF THE ASSESSEE S AUTHORIZED REPRESENTATIVE IN THE AFFIDA VIT , THAT SHRI S.K.SRINIVASA HAD NOT APPEARED FOR CROSS - EXAMINATION EVEN AFTER SEEKING ADJOURNMENT FOR THE HEARING ON 19/12/2011 BUT PROCEEDED TO CONFIRM THE ASSESSMENT ORDER. THEREFORE, IN OUR OPINION, THIS IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IN VIEW OF THE SAME, WE SET ASIDE ORDER OF THE AO U/S 147 AND REMAND THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO THE AO TO FURNISH REASONS FOR REOPENING TO THE ASSESSEE AND IF THE ASSESSEE FILES OBJECTIONS THERETO, TO DISPOSE OF THE OBJECTIONS BEFO RE PROCEEDING WITH THE ADJUSTMENT. THE ASSESSEE SHALL ALSO BE GIVEN AN OPPORTUNITY TO ITA NO. 1640/BANG/2013 SHRI PRAKASH PAGE 6 OF 6 CROSS - EXAMINE SHRI S.K.SRINIVASA IF THE STATEMENT OF SHRI S.K.SRINIVASA IS TO BE RELIED UPON BY THE AO FOR MAKING ADDITION. 5. IN THE RESULT, THE ASSESSEE S APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH , 2015. S D/ - S D/ - (ABRAHAM P GEORGE) (SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. C IT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE