The ACIT, Circle-5, Baroda V. Shri Ashokkumar B.Patel, Baroda

ITA 1804/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0262 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-10-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: K R DIXIT
• Keywords: Income from undisclosed sources; Additional evidence; Corroborative evidences; Set aside; Capital Gains
• Section: 142(1); 250; 143(2); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING:26/10/2009 DRAFTED ON:26/10/20 09 ITA NO.1804/AHD/2009 ASSESSMENT YEAR:2006-2007 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-5, 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA- 390 007. VS. SHRI. ASHOKKUMAR B. PATEL, A/2-7, MANGLYA PARK SOCIETY, HARNI WARASHIA RING ROAD, BARODA. PAN NO. : ALVPP 0090 R (APPELLANT) .. (RESPONDENT) APPELLANT BY : C.K. MISHRA, SR. DR RESPONDENT BY: K.R. DIXIT, A.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-V, BARODA, DATED 24-03-2009 TAKING THE FOLLOWING GROUNDS: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE ADDITIONS AMOUNTING TO RS . 68,37,054/- MADE AS PER ORDER UNDER SECTION 144 OF THE I T ACT, 1961. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN ADMITTING FRESH EVIDENCES, THAT TOO WI THOUT ITA NO.1804 /A/2009 SHRI. ASHOKMUMAR B. PATEL ASST.YEAR -2006-07 - 2 - GIVING THE LEARNED ASSESSING OFFICER AN OPPORTUNITY TO CROSS-VERIFY THEM, THEREBY VIOLATING THE PROVISIONS OF RULE 46A OF THE I T RULES, 1962. 3) IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) BE SET-ASIDE AN D THAT OF THE LEARNED ASSESSING OFFICER BE RESTORED. 2. THE FACTS OF THE CASE ARE THAT THE LEARNED ASSES SING OFFICER ISSUED NOTICE UNDER SECTION 143(2) OF THE ACT DATED 11-06-2007 WHICH WAS DULY SERVED UPON THE ASSESSEE. THEREAFTE R, A DETAILED QUESTIONER TOGETHER WITH NOTICE UNDER SECTION 142(1 ) OF THE INCOME TAX ACT DATED 20-02-2008, WHICH WAS ALSO SERVED ON THE ASSESSEE. THE ASSESSEE DID NOT COMPLY WITH THE AFORESAID NOTI CES. AGAIN SHOW CAUSE NOTICE DATED 21-11-2008 WAS ISSUED TO SHOW CA USE WHY ASSESSMENT SHOULD NOT BE COMPLETED UNDER SECTION 14 4 OF THE ACT. THE ASSESSEE DID NOT COMPLY WITH THE SAID NOTICE AL SO. THEREFORE, THE LEARNED ASSESSING OFFICER COMPLETED THE ASSESSM ENT UNDER SECTION 144 OF THE ACT ON THE BASIS OF DETAILS AND MATERIALS AVAILABLE ON RECORD TO THE BEST OF HIS JUDGMENT WHICH RESULTE D IN ADDITION OF RS. 7,00,000/- UNDER SECTION 68 OF THE ACT ON ACCOU NT OF UNSECURED LOAN TAKEN DURING THE YEAR AND ADDITION OF RS. 5,85 ,127/- ON ACCOUNT OF INTRODUCTION OF FRESH CAPITAL, ADDITION OF RS. 1 7,24,123/- LONG TERM CAPITAL GAINS CLAIMED TO BE EXEMPTED BY THE ASSESSE E AND DISALLOWANCE OF PROPORTIONATE EXPENSES AT THE RATE 12% AMOUNTING TO RS. 1,47,650/- ON ACCOUNT OF INVESTMENT IN SHARE S OF RS. 12,30,420/- DIVIDEND FROM WHICH WAS EXEMPT FROM TAX . FURTHER, EXPENDITURE OF INTEREST OF RS. 35,204/- WAS ALSO DI SALLOWED. THE ITA NO.1804 /A/2009 SHRI. ASHOKMUMAR B. PATEL ASST.YEAR -2006-07 - 3 - ASSESSEE HAD ALSO CLAIMED INDIRECT EXPENSES OF RS. 4,55,286/-. THE LEARNED ASSESSING OFFICER CONSIDERED 15% OF THIS AM OUNT AS UNVERIFIABLE AND THEREFORE DISALLOWED RS. 68,292/- OUT OF THE EXPENSES CLAIMED BY THE ASSESSEE. FURTHER, FROM TH E AIR DETAILS, IT WAS KNOWN THAT DURING THE FINANCIAL YEAR 2005-2006, ASSESSEE HAS MADE INVESTMENTS OF RS.32,13,000/- WITH SUZLON ENER GY LTD. AND RS. 5,79,600/- WITH BANK OF BARODA. THE LEARNED ASSESS ING OFFICER CONSIDERED THE SAME AS OUT OF UNACCOUNTED INCOME AN D ADDED RS. 37,92,600/- TO THE INCOME OF THE ASSESSEE. IN THIS WAY THE ASSESSMENT OF THE ASSESSEE WAS MADE AT AN INCOME OF RS. 73,71,270/- IN PLACE OF THE RETURNED INCOME OF RS. 4,65,928/-. 3. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) DELETED THE ADDITIONS OF RS. 68,37,054/- MADE BY TH E LEARNED ASSESSING OFFICER BY ADMITTING ADDITIONAL EVIDENCES SUCH AS DETAILS IN RESPECT OF THE TRANSACTIONS OF RS7,00,000/- AND RS5 ,85,127/- FOR WHICH ADDITIONS WERE MADE UNDER SECTION 68 OF THE A CT BY THE LEARNED ASSESSING OFFICER, DELETED THE ADDITION OF RS. 17,24,173/- MADE BY THE LEARNED ASSESSING OFFICER AS INCOME OF THE BUSINESS OF BY CONSIDERING THE TRANSACTIONS IN SHARES AS BUSIN ESS TRANSACTIONS OF THE ASSESSEE BY ACCEPTING THE BANK PASSBOOK SHOWING ADDRESS OF THE ASSESSEE OF OSAKA, ZAMBIA AND TREATING THE ASSESSEE AS A NOT ORDINARILY RESIDENT IN INDIA AND CONSIDERING THE IN COME FROM SHARE TRANSACTIONS AS LONG TERM CAPITAL GAIN OF THE ASSES SEE EXEMPT FROM TAX. FURTHER, DELETING THE ADDITION OF RS. 1,47,65 0/- AND RS. 35,204/- ITA NO.1804 /A/2009 SHRI. ASHOKMUMAR B. PATEL ASST.YEAR -2006-07 - 4 - ON ACCOUNT OF EXPENDITURE AND INTEREST BY ACCEPTING THE EVIDENCES IN THE FORM OF AUDIT REPORT. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFOR E US WHEREIN ONE OF THE GROUNDS TAKEN IS THAT THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN ADMITTING FRESH EVIDENCE WITHOUT GIVING THE LEARNED ASSESSING OFFICER AN OPP ORTUNITY TO VERIFY THEM AND THEREBY VIOLATING THE PROVISIONS OF RULE 4 6A OF THE I.T. RULES, 1962. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS VIO LATED RULE 46A OF THE INCOME TAX RULES, 1962 WHILE ADMITTING A DDITIONAL EVIDENCES AND DELETING THE ADDITIONS MADE BY THE L EARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER. 6. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE VERY FAIRLY CONSIDERED THAT THE ASSESSEE COULD NOT MAKE COMPLIANCE TO THE NOTICES OF HEARING ISSUED BY THE LEARNED ASSESS ING OFFICER AND THEREFORE THE DETAILS AND EVIDENCES REQUIRED BY HIM IN FRAMING THE ASSESSMENT COULD NOT BE FILED BEFORE HIM. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE FA ILED TO COMPLY WITH THE NOTICES OF HEARING SISSUED UNDER SECTION 143(2) AND 142(1) OF THE ITA NO.1804 /A/2009 SHRI. ASHOKMUMAR B. PATEL ASST.YEAR -2006-07 - 5 - INCOME TAX ACT, 1961. THUS, THE DETAILS AND DOCUMEN TS REQUIRED BY THE LEARNED ASSESSING OFFICER FOR COMPLETING ASSESS MENT WERE NOT FURNISHED BEFORE HIM. THIS LED TO THE FRAMING OF A SSESSMENT TO THE BEST OF HIS JUDGMENT BY THE LEARNED ASSESSING OFFIC ER WHICH RESULTED IN A HIGH PITCHED ASSESSMENT OF TOTAL INCOME OF THE ASSESSEE. THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS DELETED THE ADDITION TO THE EXTENT OF RS. 68,37,054/- BY ADMITT ING ADDITIONAL EVIDENCES AS DETAILED ABOVE IN THIS ORDER WITHOUT A LLOWING ANY OPPORTUNITY TO THE LEARNED ASSESSING OFFICER TO EXA MINE THOSE EVIDENCES OR CALLING FOR THE COMMENTS OF THE LEARNE D ASSESSING OFFICER ON THE EVIDENCES ACCEPTED FOR THE FIRST TIM E BY HIM. 8. AS PER RULE 46A OF THE IT RULES, THE APPELLANT IS N OT ENTITLED TO PRODUCE ANY EVIDENCE, ORAL OR DOCUMENTARY OTHER THA N PRODUCED BEFORE THE AO. THE FOLLOWING EXCEPTIONS HAVE BEEN P ROVIDED IN THE SAID RULES: O THE AO HAS REFUSED TO ADMIT WHICH OUGHT TO HAVE BEE N ADMITTED. O THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FRO M PRODUCING EVIDENCE, WHICH HE WAS CALLED UPON TO PRO DUCE BY THE AO. O THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FRO M PRODUCING THE EVIDENCE BEFORE THE AO, WHICH IS RELE VANT TO THE GROUNDS IN APPEAL. O THE AO HAS MADE ORDER WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE REL EVANT TO ANY GROUND IN APPEAL. ITA NO.1804 /A/2009 SHRI. ASHOKMUMAR B. PATEL ASST.YEAR -2006-07 - 6 - 9. FURTHER, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PRABHAVATI S. SHAH 231 ITR 1 HAD OCCASION TO CONSID ER WHETHER THE RULE 46A IS INTENDED TO PUT FETTERS ON THE RIGHT OF THE APPELLANT TO PRODUCE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)ANY, ADDITIONAL OR SUPPORTING EVIDENCE. AFTER CONSIDERING SECTION 250 OF THE INCOME TAX ACT AND R ULE 46A OF THE INCOME TAX RULES, 1962 THE HON'BLE HIGH COURT HELD THAT BEFORE ADMITTING THE ADDITIONAL EVIDENCE, THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) HAS TO GIVE OPPORTUNITY TO THE LEARNED ASSESSING OFFICER TO CONSIDER OR CROSS EXAMINE OR R EBUT THE ADDITIONAL SUPPORTING EVIDENCES FURNISHED BY THE AS SESSEE. IF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FAILS T O EXERCISE HIS DISCRETION JUDICIALLY, AND CIRCUMSTANCES SO DEMAND, HIS ACTION WOULD BE OPEN FOR CORRECTION BY A HIGHER AUTHORITY. THE PURPOSE OF RULE 46A OF THE RULES IS TO ENSURE THAT EVIDENCE IS PRIM ARILY LED BEFORE THE INCOME TAX OFFICER. ADMITTEDLY THE EXCEPTIONS PROVIDED IN RULE 46A TO FILE ADDITIONAL EVIDENCE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DID NOT EXISTS IN THE CASE OF T HE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) WHILE ADMITTING ADDITIONAL EVIDENCES H AS NOT ALLOWED ANY OPPORTUNITY TO THE LEARNED ASSESSING OFFICER TO EXAMINE THE SAME AND THIS HAS BEEN VERY FAIRLY CONCEDED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. THUS, I N OUR CONSIDERED VIEW, IN THE INTEREST OF JUSTICE AND ALSO THAT THER E IS NO MISCARRIAGE OF JUSTICE, WE SET ASIDE THE ORDER OF THE LEARNED C OMMISSIONER OF ITA NO.1804 /A/2009 SHRI. ASHOKMUMAR B. PATEL ASST.YEAR -2006-07 - 7 - INCOME TAX(APPEALS) AND REMAND THE MATTER BACK TO T HE FILE OF THE LEARNED ASSESSING OFFICER TO REFRAME THE ASSESSMENT AFTER CONSIDERING THE ALL EVIDENCES TO BE FILED BY THE AS SESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL EVIDENCES AS MAY BE REQUIRED BY THE LEARNED ASSESSING OFFICER FOR FRAMING THE ASSES SMENT. NEEDLESS TO MENTION THAT THE LEARNED ASSESSING OFFICER SHALL ALLOW PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE REFRA MING THE ASSESSMENT. HENCE, THE APPEAL OF THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 26/10/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED: 26/10/2009 ANKIT COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD