KANJI BHACHU CHANDAT, MUMBAI V. ITO 19(1)(1), MUMBAI

ITA 1681/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1994 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA J MENON
• Assessee Lawyers: RAJKUMAR G TOLANI
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 68; 144

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 1681 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) KANJI BHACHU CHANDAT, 635, A-7, KALAMANDIR CHS, P.D. HINDUJA MARG, NEAR HANUMAN TEMPLE, KHAR (W), MUMBAI 400 052. / V. INCOME TAX OFFICER 19(1)(1), 319, 3 RD FLOOR, PIRAMAL CHAMBERS, JIJEEBHOY LANE, LALBAUG, MUMBAI 400 012. ./ PAN : AJOPC7478B ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI RAJKUMAR G. TOLANI REVENUE BY : MS. VINITA J. MENON / DATE OF HEARING : 17-12-2015 / DATE OF PRONOUNCEMENT : 23-12-2015 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 1 681/MUM/2014, IS DIRECTED AGAINST THE ORDER DATED 09-12-2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 30, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- ITA 1681/M/14 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) CONFIRMING THE ACTION OF THE ASSESSING OFFICER TAXING RS. 36,69,3 89/- AS UNEXPLAINED CASH CREDITS BEING THE CASH DEPOSITED TOW ARDS PROCEEDS OF SALES. HE FAILED TO APPRECIATE THE SAID AMOUNT WAS NO T INCOME AS UNDER THE INCOME TAX ACT, 1961. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) ERRED IN TAXING RS. 36,69,389/- AS UNEXPLAINED CASH CREDITS BEING THE CASH DEPOSITED TOWARDS PROCEEDS OF SALES AND THEREBY DENYING TO TAX THIS SALES AT NET PROFIT MARGIN. 3. THE LD. CIT (A) CONFIRMED THE ACTION OF THE AO ON THE BASIS OF ASSESSEE OR AR OF ASSEESSEE NEVER APPEARED BEFORE A O. BUT, THE LD. CIT (A) DIDN'T TRY TO FIND OUT THE FACT BEHIND THIS. AO IN I TS ORDER IN PARA NO. 3.1 WRITTEN THAT AR OF ASSESSEE HAS FILED LETTER THAT 'TH EY ARE NO MORE AR OF THE CLIENT'. FURTHER, SINCE THE ASSESSEE HAD CLO SED DOWN HIS BUSINESS AND WAS SHIFTING TO HIS VILLAGE, SO HE ALSO DIDN'T ATTENDED PERSONALLY ON THE BELIEF THAT AR WILL ATTEND AND HE AL SO DIDN'T AWARE OF THAT AR HAS WITHDRAW FROM THE CASE. FURTHER, AS ALL THE ORIGINAL SALES/PURCHASE BILLS AND OTHER DOCUMENTS ARE IN POSSE SSION OF AR AND HE DIDN'T SENT TO ASSESSE ON PROPER TIME WHICH RESULTS IN AO PASSED ORDER U/S. 144 OF ACT. THE LD. CIT(A) HAD NOT GIVEN ANY OPPORTUNITY OF BEING HEARD FOR THE REASON; WHY ASSESSEE DIDN'T APPE AR BEFORE AO. 4. THE LD. CIT(A) HAS STATED THE APPELLANT HAS NOT FURN ISHED ANY DOCUMENTARY EVIDENCE TO PROVE ARGUMENTS TAKEN IN APPEA L, WHEREAS LD. AR HAD SUBMITTED THE PROFIT & LOSS ACCOUNT, BALANCE S HEET, THREE BANK ACCOUNTS, CASH BOOK AND PURCHASE REGISTER ALONG WITH LETTER DATED 11TH OCTOBER 2013 AND AR HAD ALSO TAKEN ORIGINAL SALES & PURCHASE BILLS, BUT LD. CIT(A) HAD IGNORE THE SAME A ND THEN LD. CIT (A) HAD NOT ASKED FOR ANY FURTHER EVIDENCE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DERIVES TOTAL INCOME BY WAY OF INCOME FROM OTHER SOURCES. 4. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) OF INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT) DATED 24.08.2011 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE ON 29 TH AUGUST 2011. THEREAFTER, SEVERAL OPPORTUNITIES WERE GIVEN BY THE LEARNED ASS ESSING OFFICER(HEREINAFTER CALLED THE AO) TO THE ASSESSEE TO APPEAR BEFORE HIM FOR THE ASSESSMENT ITA 1681/M/14 3 PROCEEDINGS U/S 143(3) OF THE ACT READ WITH THE SEC TION 143(2) OF THE ACT BUT THE ASSESSEE FAILED TO AVAIL THE OPPORTUNITY GIVEN BY THE AO AND DID NOT PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE CO MPLETE DETAILS OF DATE-WISE OPPORTUNITIES GIVEN TO THE ASSESSEE BY THE A.O. HAS BEEN MENTIONED IN THE ASSESSMENT ORDER DATED 11.01.2013 PASSED U/S 144 OF THE ACT VIDE PAGE 1-4. THE A.O. GATHERED THE INFORMATION FROM ICICI BANK W HERE THE ASSESSEE HAD DEPOSITED RS. 36,69,389/- IN CASH IN HIS S.B. A/C N O. 102601501981 IN ICICI, KHAR (WEST) BRANCH ,MUMBAI DURING THE FINANC IAL YEAR 2009-10 WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF T HE INCOME TAX ACT, 1961 TREATING THE SAME AS UNEXPLAINED CASH CREDIT AS THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN THE SAVING BANK ACCOU NT OF THE ASSESSEE WITH THE SAID ICICI BANK . SIMILARLY, AS PER THE BANK ST ATEMENT OF THE ICICI BANK, AN AMOUNT OF RS. 57/- RECEIVED BY THE ASSESEE TOWAR DS INTEREST ON SAVING BANK ACCOUNT WAS ALSO ADDED BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOURCES SINCE THE SAME WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME FILED WITH THE REVENUE AND ACCORDINGLY BEST JUDGMENT ASSESSMENT WAS FRAMED U/S 144 OF THE ACT BY THE AO VIDE ASSESSMENT ORDER DATED 11-01-2013. 5. AGGRIEVED BY THE ABOVE ORDER DATED 11.01.2013 P ASSED BY THE AO U/S 144 OF THE ACT , THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT(A) AND SUBMITTED THAT HE IS A SMALL BUSINESSMAN DOING BUSI NESS OF RESALE OF CLOTH AND EARNING VERY SMALL MARGIN AND DOES NOT HAVE ANY BUSINESS NAME, BUSINESS PLACE OR ANY REGISTRATION DOCUMENTS LIKE V AT, SO THE BANK WAS NOT READY TO OPEN CURRENT ACCOUNT IN HIS NAME. THE ASS ESSEE SUBMITTED THAT THE SALE PROCEEDS RECEIVED IN CASH WERE DEPOSITED IN TH E ICICI BANK AND WITHDRAWALS MADE FROM THE SAID ACCOUNT FOR MAKING P URCHASES ETC. THE CIT(A), HOWEVER, REJECTED THE CONTENTIONS OF THE AS SESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVID ENCE TO PROVE THE ITA 1681/M/14 4 ARGUMENTS MADE IN THE APPELLATE PROCEEDINGS AND THE APPEAL OF THE ASSESSEE WAS DISMISSED BY THE CIT(A) VIDE ORDERS DATED 09.12 .2013. 6. AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE WAS NOT GIVEN PROPER AND ADEQUATE OPPORTUNITY IN AC CORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE AND HENCE THE ASSESSE E COULD NOT MAKE PROPER REPRESENTATION BEFORE THE AUTHORITIES BELOW. THE LD . COUNSEL SUBMITTED THAT COPY OF P&L ACCOUNT, BANK STATEMENT, CASH BOOK AND PURCHASE REGISTER ARE FILED VIDE PAPER BOOK PAGE 3 TO 35 WITH THE TRIBUNA L TO EVIDENCE AND SUBSTANTIATE THE CONTENTIONS OF THE ASSESSSEE THAT HE WAS ENGAGED IN THE BUSINESS OF TRADING DURING THE PREVIOUS YEAR. THE L D. COUNSEL SUBMITTED THAT PRINCIPLE OF NATURAL JUSTICE ARE NOT COMPLIED WITH BY THE AUTHORITIES BELOW AND THE CIT(A) HAS ALSO NOT CONSIDERED THE EVIDENCES SU BMITTED BY THE ASSESSEE BEFORE HIM TO SUBSTANTIATE HIS CONTENTIONS. THE LD. COUNSEL PRAYED THAT CONSIDERING THE TOTALITY OF THE SITUATION, THE MATT ER MAY BE SENT BACK TO THE FILE OF THE A.O. SO THAT THE ASSESSEE CAN EXPLAIN T HE GENUINENESS OF THE TRANSACTIONS WITH COGENT MATERIAL/EVIDENCES WHICH C AN BE VERIFIED AND AUTHENTICATED BY THE AUTHORITIES BELOW AND THE ASSE SSMENT CAN BE FRAMED ON MERITS AND MORE SO THE ASSESSMENT WAS ORIGINAL FRAM ED U/S 144 OF THE ACT AS BEST JUDGMENT ASSESSMENT WHEREBY THE MATTER WAS DEC IDED EX-PARTE BY THE AO. 8. THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM THE ASS ESSMENT ORDER THAT THE ITA 1681/M/14 5 ASSESSEE WAS GIVEN NUMBER OF OPPORTUNITIES TO APPEA R BEFORE THE A.O. BUT HE FAILED TO COMPLY WITH THE NOTICES. THE BEST JUDGME NT ASSESSMENT WAS FRAMED EX-PARTE U/S 144 OF THE ACT VIDE ORDERS DATED 11.01 .2013 WHEREBY THE ASSESSEE HAS NOT FILED ANY SUBMISSION BEFORE THE AO TO SUBSTANTIATE AND JUSTIFY THE RETURN OF INCOME FILED WITH THE REVENUE AND THE QUERIES RAISED BY THE AO. BEFORE THE CIT(A) IN THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED REPLIES TO SUPPORT HIS CONTENTIONS BUT TH E CIT (A) HAS NOT CONSIDERED THOSE CONTENTIONS ON MERITS NOR REMAND REPORT WAS CALLED FROM THE AO. THE ASSESSEE HAS SUBMITTED IN THE SOF FIL ED BEFORE THE TRIBUNAL THAT THE ASSESSEE WAS PREVENTED WITH THE SUFFICIENT CAUSE FOR NOT ATTENDING THE PROCEEDINGS BEFORE THE AO AS HE WAS NOT RESIDIN G AT THE ADDRESS OF THE ASSESSEE WITH THE REVENUE AND INSTEAD RELATIVES OF THE ASSESSEE ARE RESIDING THERE AND THE RELATIVES OF THE ASSESSEE HAVE NOT TA KEN THIS MATTER SERIOUSLY. THE ASSESSEE SUBMITTED THAT IN SOF FILED BEFORE THE TRIBUNAL THAT THE SERIOUSNESS OF THE MATTER WAS KNOWN ONLY WHEN ASSES SMENT ORDER U/S 144 OF THE ACT WAS RECEIVED ALONG WITH NOTICE OF DEMAND U/ S 156 OF THE ACT AND PENALTY NOTICE U/S 271(1)(C) OF THE ACT. IN OUR CON SIDERED VIEW, THE CONTENTIONS OF THE ASSESSEE ALONG WITH DOCUMENTS S UBMITTED AS EVIDENCE TO SUBSTANTIATE ITS RETURN OF INCOME AND THE OTHER EXP LANATION SOUGHT BY THE REVENUE NEEDS PROPER VERIFICATION , AUTHENTICATION AND ENQUIRY BY THE AUTHORITIES BELOW TO COMPUTE THE CORRECT INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE ACT. IN OUR CONSIDERED VIEW, TH E INTEREST OF JUSTICE WILL BE BEST SERVED IF WE RESTORE THIS MATTER BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO VERIFY AND AUTHENTICATE THE DOCUMENTS AND CONTENTIONS OF THE ASSESSEE AFTER MAKING NECESSARY ENQUIRY SO THAT THE CORRECT INCOME AS PER ACT CAN BE COMPUTED AND AFTER PROVIDING PROPER AND ADEQ UATE OPPORTUNITY OF BEING HEARD IN ACCORDANCE PRINCIPLES OF NATURAL JUS TICE AND IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO APPEAR B EFORE THE AO AND PRODUCE NECESSARY DOCUMENTS IN EVIDENCE AND SHALL CO-OPERAT E WITH THE AUTHORITIES BELOW AS AND WHEN REQUIRED. WE ORDER ACCORDINGLY. ITA 1681/M/14 6 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2015. # $% &' 23-12-2015 ( ) SD/- SD/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 26 -12-2015 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI