Vishal Prakash Malhotra, Pune V. Deputy Commisisoner of Income-tax,

ITA 1724/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7339 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-10-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: S N DOSHI
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Bogus loan
• Section: 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1723 TO 1726/PUN/2015 / ASSESSMENT YEARS : 2004-05 TO 2006-07 & 2008-09 SHRI VISHAL PRAKASH MALHOTRA, S.NO.103/08, UDAY NAGAR, NEW TELCO ROAD, PIMPRI, PUNE PAN : AHBPM5973A . /APPELLANT VS. DCIT, CENTRAL CIRCLE-2(3), PUNE . / RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SMT. NIRUPAMA KOTRU , CIT-DR / DATE OF HEARING : 12.10.2017 / DATE OF PRONOUNCEMENT: 13.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE FOUR APPEALS UNDER CONSIDERATION FILED BY THE ASSESSEE INVOLVING A.YRS. 2004-05 TO 2006-07 & 2008-09 AGAIN ST THE COMMON ORDER OF CIT(A)-13, PUNE DATED 06-11-2015. THESE ARE THE AS SESSMENTS MADE BY THE AO U/S.153A OF THE ACT IN CONNECTION WITH THE SEARCH AND SEIZURE ACTION ON 24-10-2007 ON THE ASSESSEE. ITA NOS. 1723 TO 1725/PUN/2015 (A.YRS. 2004-05 TO 2 006-07) : 2. BRIEF FACTS OF THE CASE INCLUDE THAT THE ASSESSE E IS AN INDIVIDUAL AND A SEARCH ACTION WAS CONDUCTED IN THE GROUP CASES OF V ISHAL MALHOTRA, HABIBULLAH CHAUDHARY, CHETAN MEHTA AND THEIR CONCERNS. SEARCH RESULTED IN SEIZURE OF VARIOUS DOCUMENTS AND ALSO CASH. BASED ON THE SEIZ URE OF LOOSE PAPER NO.80 OF ITA NOS.1723 TO 1726/PUN/2015 VISHAL PRAKASH MALHOTRA 2 BUNDLE NO.7, AN ENVELOPE OF MALHOTRA MACHINE TOOLS, THE AO INTERPRETED THE DETAILS AVAILABLE ON THE SAID ENVELOPE AND CAME TO THE CONCLUSION THAT AN AMOUNT OF RS.20 LAKHS IS REQUIRED TO BE MADE AS ADD ITION FOR A.Y. 2004-05 IN THE CASE OF THE ASSESSEE AS UNEXPLAINED LOAN GIVEN TO SHRI GANESH WAVHAL. AO ALSO MADE ADDITION OF RS.2,20,000/- TOWARDS INTERES T ACCRUED ON THE SAID LOAN FOR THE A.Y. 2004-05. REVENUE OFFICERS INVOKED THE PROVISIONS OF SECTION 131 OF THE ACT AND RECORDED STATEMENTS OF THE ASSESSEE AS WELL AS SHRI CHETAN MEHTA, SHRI RAJESH MALHOTRA (ASSESSEES BROTHER) BEFORE CO MING TO THE CONCLUSION THAT ASSESSEE HAS GIVEN UNACCOUNTED LOANS TO SHRI GANESH WAVHAL. FURTHER, THERE WAS DISCUSSION ABOUT THE FILING OF AN FIR BY SHRI C HETAN MEHTA AGAINST THE ASSESSEE. CIT(A) EXTRACTED THE CONTENTS OF SAID ST ATEMENTS AND THE FIR. THIS ADDITION WAS ALSO MADE IN THE A.Y. 2004-05 IS ENTIR ELY BASED ON THE SAID LOOSE PAPER NO.80. 3. SIMILARLY ADDITION OF RS.10 LAKHS TOWARDS UNEXPL AINED LOAN FOR THE A.Y. 2005-06 AND FURTHER ADDITION OF RS.2,40,000/- TOWAR DS INTEREST ACCRUED ON SUCH LOAN BASED ON ANOTHER LOOSE PAPER NO.10 OF BUNDLE N O.5. THESE DOCUMENTS ARE SEIZED FROM THE PREMISES OF SHRI CHETAN MEHTA. SIMILARLY, ANOTHER ADDITION OF RS.60 LAKHS WAS MADE TOWARDS UNEXPLAINED LOAN BA SED ON SAID LOOSE PAPER. 4. BRINGING OUR ATTENTION TO THE FIR FILED BY SHRI CHETAN MEHTA AGAINST THE ASSESSEE WHICH WAS EXTRACTED IN PARA 3.1.10 OF THE ORDER OF CIT(A) , LD. COUNSEL FOR THE ASSESSEE MENTIONED THAT THE CIT(A) HEAVILY RELIED ON THE STATEMENT OF SHRI CHETAN MEHTA AS WELL AS THE COPY OF FIR FILED AGAINST THE ASSESSEE. MENTIONING ABOUT THE OUTCOME OF THE SAID FIR, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENT OF 1 6 TH FIRST CLASS MAGISTRATE, PUNE IN CRIMINAL CASE NO.0402733/2007 DATED 09-09-2 016 PLACED AT PAGES 74 TO 90 OF THE PAPER BOOK AND SUBMITTED THAT THE SAID FIR STANDS QUASHED. ADMITTEDLY, THIS COPY OF JUDGMENT CONSTITUTES AN AD DITIONAL EVIDENCE AS THE ITA NOS.1723 TO 1726/PUN/2015 VISHAL PRAKASH MALHOTRA 3 SAME COULD NOT BE FILED BEFORE THE REVENUE AUTHORIT IES. THEREFORE, THE VERY BASIS OF PRESUMPTION OF THE AO ON THE SAID LOOSE PA PERS AND THE FIR REQUIRES TO UNDERGO CHANGE AND NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE ADDITIONS REQUIRE RECONSIDERATION BY THE LOWER OFFICERS IN VIEW OF THE SAID JUDGMENT CITED ABOVE. FURTHER, LD. COUNSEL ALSO SU BMITTED THAT THE AO DID NOT GRANT CROSS EXAMINATION OF SHRI CHETAN MEHTA TO THE ASSESSEE IN CONNECTION WITH THE INCRIMINATING STATEMENTS MADE BY SHRI CHET AN MEHTA. FURTHER, HE MENTIONED THAT THE ASSESSEE MERELY A FACILITATOR OF THE LOANS TO THE NEEDY PERSONS AND THEREFORE MAKING ENTIRE ADDITION IN THE HANDS OF THE ASSESSEE IS NOT FAIR AND THEREFORE, ASSUMING THE ASSESSEE AS A LOAN GIVER IS INCORRECT. 5. FURTHER, BRINGING OUR ATTENTION TO THE DATE OF J UDGMENT OF 16 TH FIRST CLASS MAGISTRATE, PUNE, I.E. 09-09-2016 AS WELL AS THE DA TE OF THE IMPUGNED ORDER OF CIT(A), I.E. 06-11-2015, LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE CIT(A)/AO DID NOT HAVE THE BENEFIT OF THIS JUDGMENT (SUPRA). LD. COUNSEL ALSO FILED WRITTEN SUBMISSIONS FOR EACH OF THE YEAR QUES TIONING THE AOS DECISION IN MAKING THE SAID ADDITIONS. 6. ON HEARING BOTH THE SIDES, WE FIND THAT THE BASI S FOR ADDITION IN THESE THREE A.YRS. 2004-05 TO 2006-07 ARE THE SEIZED LOOS E PAPERS ON ONE HAND AND THE STATEMENT GIVEN ON OATH BY ASSESSEE AND SHRI CH ETAN MEHTA ON THE OTHER. THE STATEMENTS GIVEN BY SHRI CHETAN MEHTA AND THE F IR FILED BY SHRI CHETAN MEHTA CONSTITUTES AN IMPORTANT PIECE OF INFORMATION FOR THE AO FOR MAKING ADDITIONS AS WELL AS FOR THE CIT(A) CONFIRMING THE SAME. CONSIDERING THE FACT THAT THE SAID FIR STANDS QUASHED BY THE JUDGMENT OF 16 TH FIRST CLASS MAGISTRATE, PUNE ON 09-09-2016, WE ARE OF THE VIEW THAT THERE IS NEED FOR RECONSIDERING THE DECISION OF THE CIT(A)/AO IN THE LIGHT OF THE C HANGED FACTS AND DEVELOPMENTS. WE FURTHER FIND, ON THE FACE OF THE COPY OF THE JUDGMENT OF 16 TH FIRST CLASS MAGISTRATE, PUNE, THE NAME OF SHRI VIKA S PRAKASH MALHOTRA IS ITA NOS.1723 TO 1726/PUN/2015 VISHAL PRAKASH MALHOTRA 4 MENTIONED AND NOT THAT OF SHRI VISHAL PRAKASH MALHO TRA, THE ASSESSEE. AO IS REQUIRED TO EXAMINE THE CORRECTNESS OF THIS NOMENCL ATURE AND TAKE A DECISION AS PER LAW. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO PROVIDE CROSS EXAMINATION OF SHRI CHETAN MEHTA, IF ANY, CONSIDERING THE SET PRINCIPLES OF NATURAL JUSTICE. THUS, ALL THE GROUNDS RAISED BY THE ASSESSEE FOR THE A.YRS. 2004-05 TO 2006-07 ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR A .YRS. 2004-05 TO 2006-07 ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1726/PUN/2015 (A.Y. 2008-09) : 8. THE SOLITARY GROUND RAISED BY THE ASSESSEE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.3,85,000/- O N THE GROUND THAT IT IS UNEXPLAINED CASH DISREGARDING THE FACTUAL EXPLANATI ON AND THE EVIDENCE PROVIDING THAT THE SAID CASH STANDS REFLECTED IN TH E BOOKS OF ACCOUNTS. 9. RELEVANT FACTS INCLUDES THAT, AS STATED ABOVE, T HERE WAS SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT ON 24-10-2007 ON THE ASSESSEE AND THE SAME RESULTED IN SEIZURE OF CASH AMOUNTING TO RS.3,85,00 0/- FROM THE BEDROOM OF THE ASSESSEES RESIDENCE AND ANOTHER CASH OF RS.1,06,00 0/- FROM HIS BROTHER SHRI RAJESH MALHOTRA. ASSESSEE SUBMITTED THAT THE SAID CASH IS RELATABLE TO THE CASH WITHDRAWAL FROM THE BANKS FROM TIME TO TIME. ASSES SEE ALSO FURNISHED A LETTER EXPLAINING THE ACCOUNTED NATURE OF CASH. HOWEVER, HE FAILED TO PRODUCE THE CASH BOOK IN SUPPORT OF THE CLAIM. ON EXAMINING TH E CASH POSITION, AO PROCEEDED TO MAKE ADDITION OF RS.3,85,000/-. CIT(A ) CONFIRMED THE SAME. CONTENTS OF PARA 5.1.3 ARE RELEVANT IN THIS REGARD. ASSESSEES FAILURE TO FURNISH CASH BOOK BEFORE THE AO AND HIS FAILURE TO FURNISH THE EVIDENCES IN SUPPORT OF WITHDRAWAL OF CASH FROM THE BANK ACCOUNTS ARE THE R EASONS FOR CONFIRMING THE ADDITION. ITA NOS.1723 TO 1726/PUN/2015 VISHAL PRAKASH MALHOTRA 5 10. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CASH BOOK, COPY OF WHICH IS PLACED AT PAGES 62 TO 67 OF THE PAPER BOOK, AND SUBMITTED THAT ON THE DATE OF SEARCH ACTION, THERE WAS SUFFICIENT CASH BALANCE TO ACCOUNT FOR THE SAID AMOUNT OF RS.3,85,000/- ADD ED BY THE AO. HE THEREFORE PRAYED FOR DELETING THE ADDITION. 11. PER CONTRA, THE LD. DR RELIED ON THE CASH SEIZU RE AND THE ORDERS OF THE AO/CIT(A). 12. WE HEARD BOTH THE SIDES ON THIS LIMITED ISSUE. WE ARE OF THE OPINION THAT THE DISCUSSION GIVEN BY THE CIT(A) IN THE SAID PARA 5.1.3 IS RELEVANT. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO PROCEED THE SAID PARA AND THE SAME READS AS UNDER : 5.1.3 I HAVE CONSIDERED THE FACTS AND ARGUMENTS O F THE APPELLANT. THE LEARNED AO ADDED RS.3,85,000/- OF CASH FOUND AT THE APPELLANTS PREMISES AS THE APPELLANT COULD NOT EXPLAIN AS TO THE CASH W AS ACCOUNTED. LATER ON, THE APPELLANT HAS PREPARED CASH BOOK AND HAS TRIED TO E XPLAIN THAT THE CASH FOUND WAS ACCOUNTED. I DO NOT AGREE WITH THE APPELLANTS EXPLANATION. THE APPELLANT DID NOT PRODUCE CASH BOOK BEFORE THE LEARNED AO NOT BEFORE ME. FIRSTLY, THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE AND SECOND LY, THE EVIDENCE SOUGHT TO BE FURNISHED BY THE APPELLANT IS NOT CONTEMPORANEOU S. CASH TRANSACTION UNLIKE CHEQUE TRANSACTIONS DO NOT LEAVE TRAIL AND HENCE, C ASH FOUND CAN BE EXPLAINED LATER ON. THEREFORE, IN ABSENCE OF THE CONTEMPORAN EOUS EVIDENCE, I REJECT THE APPELLANTS EXPLANATION. ACCORDINGLY, I CONFIRM TH E ADDITION MADE BY THE LEARNED AO OF RS.3,85,000/-. 13. HOWEVER, ASSESSEE COULD NOT DEMONSTRATE THAT TH E SAID CASH IS RELATABLE TO THE WITHDRAWAL OF CASH FROM THE BANK ACCOUNTS AS STATED BY HIM DURING THE PROCEEDINGS U/S.132. AS SUCH, THE REASONS FOR FAIL URE TO SUBMIT THE CASH BOOK BEFORE THE REVENUE AUTHORITIES COULD NOT BE SATISFA CTORILY EXPLAINED EVEN BEFORE US. THEREFORE, THE REASONING GIVEN BY THE CIT(A) O N THIS ISSUE IS FAIR AND REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE SOLITARY GROUND RAISED BY THE ASSESSEE IS DISMISSED. ITA NOS.1723 TO 1726/PUN/2015 VISHAL PRAKASH MALHOTRA 6 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 15. TO SUM UP, ITA NOS. 1723 TO 1725/PUN/2015 FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AND ITA NO.1726/PU N/2015 FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 13 TH OCTOBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-13, PUNE CIT-13, PUNE % , , B BENCH PUNE; / GUARD FILE.