PANKAJ JAIN, Jaipur V. ITO, Jaipur

ITA 188/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2129 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 142(1); 148; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 188/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 SHRI PANKAJ JAIN, 4-161, JAWAHAR NAGAR, JAIPUR. CUKE VS. INCOME - TAX OFFICER, WARD-6(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABKPJ 6853 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (ADV.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/01/2018 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), AJMER DATED 16.01.2017 PERTAINING TO THE ASSESSMENT YEAR 2007-08 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1 (A). ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT (A) HAS LEGALLY AND FACTUALLY ERRED IN DISMISSING THE GROUND OF THE APPEAL REGARDING VALIDITY OF THE EX-P ARTE ASSESSMENT ORDER PASSED U/S 147/144 OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PROSPEC TIVE. (B) AS PER CERTIFIED COPY OF THE ORDER SHEET PROCE EDINGS (SUBMITTED IN THE APPEAL PROCEEDINGS), IT IS SEEN T HAT SUCH PROCEEDINGS WERE NOT RECORDED IN 'REGULAR COURSE' AND THE SAME WERE PREPARED IN 'ONE SITTING' . OVER-LOOKING SUCH 2 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. ABNORMAL FEATURE OF THE ORDER-SHEET PROCEEDINGS AND ALSO IGNORING THE CONTENTS OF THE `AFFIDAVIT' FILED BY THE APPELLANT TO THIS EFFECT, LEARNED CIT (A) HAD ERRONEOUSLY RELIED UPON HEAVILY ON THE REMAND REPORT AND HAD TURNED DOWN THIS GROUN D OF APPEAL 'SUMMARILY 'WITHOUT ASSIGNING ANY COGENT REASON. THUS DISMISSA L OF THIS GROUND IS NOT LEGALLY AND FACTUALLY MAINTAI NABLE AND DESERVES TO BE QUASHED SUMMARILY. 2. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEA L, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED C IT (A) HAS LEGALLY AND FACTUALLY ERRED IN VIOLATING THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE IN REJECTING THE ADDITIONAL EVI DENCES AS SUBMITTED IN THE APPEAL PROCEEDINGS UNDER RULE 46A OF INCOME TAX RULES, 1962. THE LD. CIT (A) HAD FORWARD ED SUCH ADDITIONAL EVIDENCES TO THE LD. AO FOR EXAMINATION AND VERIFICATION AND HAD OBTAINED REMAND REPORT VIDE LETTER NO. 2992 DATED 4.1.2017. HOWEVER, THE LD. CIT (A) HAD RUBBISHED THE SAID REMAND REPORT WITHOUT DISCUSSING THE SAME IN THE AP PEAL ORDER DESPITE OF THE FACT THAT COUNTER COMMENTS ON SUCH R EMAND REPORT WERE ALSO OBTAINED FROM THE APPELLANT. OBVIOUSLY SU CH ACT ON THE LD. CIT (A) IS CONTRARY TO THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE AND DESERVES TO BE QUASHED SUMMARILY: 3. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT (A) HAD FACTUALLY AND LEGALLY ERRED IN MAKING AND CONFIRMIN G THE ADDITION OF RS. 34,92,950/- AS MADE U/S.69A ON ACCOUNT OF THE ALLEGED CASH DEPOSITS IN SAVINGS BANK ACCOUNT WITH AXIS BAN K WITHOUT APPRECIATING THE FACT OF THE PROFESSIONAL ACTIVITIE S OF THE APPELLANT, THE NATURE OF THE CASH DEPOSITS AND ITS 'FINAL DESTINATION', ETC. AS COMMUNICATED BY THE A.O. IN HIS REMAND REPORT. THUS THE ADDITION SO CONFIRMED WITHOUT APPR ECIATING THE 3 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. FACTS AND FINAL DESTINATION OF THE DEPOSITS UNDER C ONSIDERATION IS FACTUALLY AND LEGALLY INCORRECT AND DESERVES TO BE DELETED SUMMARILY. 4. THE APPELLANT CRAVES TO ADD, AMEND OR WITHDRAW OF THE GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING O F APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL AND WAS WORKING AS RTO AGENT, MANAGING AND OBTAINING ROAD PERMITS AND LICENSES ETC. FROM T HE RTO OFFICE ON BEHALF HIS CLIENTS. THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO NOTED THAT THE AS SESSEE HAS MADE CASH DEPOSITED OF RS. 34,92,950/- IN THE SAVING BANK ACC OUNT WITH AXIS BANK LTD. ACCORDINGLY, THE AO ISSUED A NOTICE U/S 148 ON 23.3 .2014. THE ASSESSEE MADE NO COMPLIANCE OF THE NOTICE ISSUED U/S 148 OF THE ACT. THEREAFTER, THE AO ISSUED A NOTICE U/S 142(1)OF THE ACT. HOWEVER, THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE AS NEITHER ANYBODY ATTE NDED PROCEEDINGS BEFORE THE AO NOR ANY WRITTEN SUBMISSIONS WERE FILED. CONS EQUENTLY, THE AO ISSUED A NOTICE U/S 144 FOR MAKING THE ASSESSMENT EX PARTE. SINCE NONE HAS APPEARED ON BEHALF OF THE ASSESSEE NOR ANY EVIDENCE OR DETAI LS WERE FILED, THEREFORE, THE AO FRAMED THE ASSESSMENT U/S 144 AND ADDED THE ENTIRE AMOUNT OF CASH DEPOSIT IN THE BANK OF RS. 34,92,950/- TO THE INCOM E AS WELL AS ADDITION OF RS. 5,00,000/- WERE MADE ON ESTIMATED BASIS AS INCOME F ROM THE BUSINESS ACTIVITIES OF THE ASSESSEE. 4 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. 2.1 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AND ALSO FILED AN APPLICATION FOR AD MISSION OF ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULES, 1962. THE LD. CIT(A) CALLED FOR A REMAND REPORT ON THE ADDITIONAL EVIDEN CES SOUGHT TO BE FILED BY THE ASSESSEE. HOWEVER, FINALLY THE LD. CIT(A) HAS DECLINED TO ADMIT THE ADDITIONAL EVIDENCES AND SUSTAINED THE ADDITION MAD E BY THE AO ON ACCOUNT OF DEPOSITS MADE IN THE BANK ACCOUNT BUT THE INCOME ESTIMATED BY THE AO FROM REGULAR ACTIVITY WAS DELETED BY THE LD. CIT(A) . AGGRIEVED BY THE ORDER OF THE LD. CIT(A) FOR NOT ADMITTING THE ADDITIONAL EVIDENCES AS WELL AS CONFIRMING THE ADDITION ON ACCOUNT OF BANK DEPOSIT, THE ASSESSEE HAS FILED THE PRESENT APPEAL. 3. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT SERVED WITH ANY OF THE NOTICES ISSUED BY THE AO EITHER THE NOTICE ISSUED U/S 148 OR ISSUED U/S 142(1) OR 144 OF THE IT ACT. HE HAS REFERRED TO THE COPY OF THE ORDER SHEET OF THE ASSESSING OFFICER AND SUB MITTED THAT IT IS APPARENT FROM THE ORDER SHEET THAT ALL THE ENTRIES WERE MADE ON SAME DATE WITH SAME PEN & INK. FURTHER NOTHING HAS BEEN MENTIONED IN TH E PROCEEDINGS, AS HOW THE NOTICES WERE SENT OR SERVED UPON BY THE ASSESSE E. THE LD. CIT(A) AFTER CALLING THE REMAND REPORT FROM THE AO ON THE ADDIT IONAL EVIDENCE FILED BY THE ASSESSEE HAS DECLINED TO ADMIT THE SAME WHEREAS THE ASSESSING OFFICER HAVE DULY EXAMINED THE EVIDENCE FILED BY THE ASSESSEE AN D ACCEPTED THE FACT THAT THE ENTIRE DEPOSITS MADE IN THE BANK ACCOUNT WAS US ED FOR ISSUANCE OF 5 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. DEMAND DRAFT IN FAVOUR OF THE REGIONAL TRANSPORT AU THORITIES ON BEHALF OF THE CLIENTS. THUS, THE DEPOSIT MADE IN THE BANK ACCOUN T BELONGS TO THE CLIENTS OF THE ASSESSEE ON WHICH ONLY COMMISSION INCOME OF THE ASSESSEE CAN BE CONSIDERED AND NOT THE ENTIRE DEPOSITS AS INCOME OF THE ASSESSEE. HE HAS REFERRED TO THE AFFIDAVIT FILED BY THE ASSESSEE BEF ORE THE LD. CIT(A) FOR EXPLAINING THE REASONS FOR NON-APPEARANCE BEFORE TH E ASSESSING OFFICER AS WELL AS THE REMAND REPORT OF THE ASSESSING OFFICER WHEREIN THE AO AFTER EXAMINATION OF RECORD HAS ACCEPTED THAT THE CASH DE POSITED IN BANK WAS ONLY FOR OBTAINING THE DDS FROM THE BANK ACCOUNT OF THE ASSESSEE AND SENT TO THE TRANSPORT AUTHORITIES. THE AO HAS DULY VERIFIED TH E RECORD AND HAS ACCEPTED THAT THE DEPOSIT IN THE BANK ACCOUNT WERE USED ONLY FOR THE DD ISSUED IN FAVOUR OF THE TRANSPORT AUTHORITIES. THUS, LD. AR HAS CONTENDED THAT THE LD. CIT(A) DESPITE THE REMAND REPORT ON THE FACTS HAS C ONFIRMED THE ADDITION ON THIS ACCOUNT WHICH IS CONTRARY TO THE RECORD. HENC E, THE LD. AR HAS PLEADED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE MAY B E ADMITTED AND THE ADDITION MADE ON ACCOUNT OF CASH DEPOSITING IN THE BANK ACCOUNT MAY BE DELETED. 4. ON THE OTHER HAND, LD. D/R HAS REFERRED TO THE O RDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE AO HAS ISSUED NOTICE S TO THE ASSESSEE AND DESPITE THE SERVICE OF THE NOTICES THROUGH THE INCO ME TAX INSPECTOR THE ASSESSEE DID NOT APPEAR BEFORE THE AO OR FILE THE R ELEVANT RECORD. FURTHER, THE LD. CIT(A) HAS CONSIDERED THE EXPLANATION OF TH E ASSESSEE AND FOUND THAT 6 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. THE ASSESSEE HAS FILED A FALSE AFFIDAVIT REGARDING THE SERVICES OF THE NOTICES ISSUED BY THE AO WHEREAS THE AO HAS GIVEN IN ITS RE MAND REPORTS ALL THE DETAILS OF THE NOTICES ISSUED AND SERVED UPON THE A SSESSEE THROUGH THE INSPECTOR OF ITO. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSMENT WAS FRAMED U/S 144 OF TH E ACT WHEN THERE WAS NO-APPEARANCE ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE AO HAS STATED IN THE ASSESSMENT ORDER THAT DESPITE VARIOUS NOTICES AS WELL AS SHOW CAUSE NOTICES ISSUED U/S 144 OF THE ACT, THE A SSESSEE DID NOT COMPLY WITH ANY OF THE NOTICES AND ACCORDINGLY THE AO WAS LEFT WITH NO OPTION BUT TO MAKE THE ASSESSMENT EX PARTE U/S 144 OF THE ACT. T HE ASSESSING OFFICER HAS ASSESSED THE ENTIRE AMOUNT FOUND DEPOSITED IN THE B ANK ACCOUNT OF THE ASSESSEE TO THE TUNE OF RS. 34,92,950/- AS INCOME O F THE ASSESSEE. ON APPEAL THE ASSESSEE FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULES, 1962. THE ASSESSE E HAS ALSO FILED AN AFFIDAVIT IN SUPPORT OF HIS APPLICATION AND EXPLAIN ED THE REASONS FOR NON- APPEARANCE BEFORE THE ASSESSING OFFICER THAT THE AL LEGED NOTICES ISSUED BY THE AO WERE NOT SERVED UPON THE ASSESSEE. THE LD. CIT( A) CALLED A REMAND REPORT FROM THE AO ON THE ADDITIONAL EVIDENCE SOUGH T TO BE PRODUCED BY THE ASSESSEE UNDER RULE 46A OF THE IT RULES. AFTER REC EIVING THE REMAND REPORT, THE LD. CIT(A) DECLINED TO ADMIT THE ADDITION AND A CCORDINGLY REJECTED THE APPLICATION OF THE ASSESSEE. THEREAFTER, THE LD. C IT(A) CONFIRMED THE ADDITION 7 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. MADE BY THE AO ON ACCOUNT OF DEPOSITS IN THE SAVING BANK ACCOUNT OF THE ASSESSEE TO THE TUNE OF RS. 34,92,950/-. WE FIND T HAT THE ASSESSEE PROPOSED TO FILE THE ADDITIONAL EVIDENCE COMPRISING OF THE B ANK RECORD, DD SLIPS AS WELL AS AUTHORIZATION AND DETAILS OF THE VEHICLES ON BEH ALF OF WHICH THE ASSESSEE GOT THE DEMAND DRAFT ISSUED BY THE BANK IN FAVOUR O F THE TRANSPORT AUTHORITIES. IT IS PERTINENT TO NOTE THAT THE MAJO RITY OF THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE ARE THE DOCUMENT S OF THE TRANSPORT AUTHORITIES AS WELL AS BANK ACCOUNTS DETAILS OF TH E ASSESSEE. THE ASSESSEE ALSO FILED HIS IDENTITY CARD IN SUPPORT OF HIS CLAI M THAT THE ASSESSEE IS WORKING AS A RTO AGENT. THEREFORE, ALL THESE EVIDENCES WER E THE DOCUMENTS OF THE INDEPENDENT GOVERNMENT AUTHORITY AND BEYOND THE CON TROL OF THE ASSESSEE TO MANIPULATE ANY OF THE RECORD TO BE PRODUCED AS ADDI TIONAL EVIDENCE. FURTHER, WE NOTE THAT THE ASSESSING OFFICER IN HIS REMAND RE PORT DATED 4.1.2017 HAS SPECIFICALLY STATED AS UNDER:- GROUND NO. 2. REGARDING CASH DEPOSIT IN HIS BANK AC COUNT IN THIS CASE ASSESSMENT ORDER WAS PASSED EX-PARTE U /S 144 ON 16.01.2015. THE ASSESSEE IN HIS APPLICATION BEFORE YOUR GOOD SELF HAS MENTIONED THAT THE DEMAND DRAFT OBTAINED BY THE APP ELLANT FROM THE BANK IN HIS PERSONAL NAME FOR ONWARD TRANSMISSION T O THE TRANSPORT AUTHORITIES THROUGH SPLIT DEMAND DRAFTS. THE ASSES SEE HAS PROVIDED AN OPPORTUNITY OF BEING HEARD VIDE THIS OFFICE LETTER NO. 2972 DATED 27.12.2016. IN RESPONSE TO THIS LETTER, THE A/R OF THE ASSESSEE IS ATTENDED AND PRODUCE SUMMARY SHEETS OF FEW INSTANCE S OF THE DDS OBTAINED FROM THE BANK IN PERSONAL NAME OF THE ASSE SSEE AND WERE 8 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. FINALLY SENT TO THE TRANSPORT AUTHORITIES. THE DET AILS HAVE BEEN VERIFIED FROM RECORDS ON TEST CHECK BASIS. THE ASSESSEE HAS DEPOSITED CASH IN VARIOUS DATES FOR MAKING SPLITS DEMANDS DRAFT FOR S ENT TO TRANSPORT AUTHORITIES. 5.1 THUS, IT IS CLEAR THAT THE ASSESSING OFFICER AF TER EXAMINATION OF RELEVANT RECORD FOUND THAT THE DEMAND DRAFTS WERE OBTAINED F ROM THE BANK ACCOUNT OF THE ASSESSEE AND WERE SENT TO THE TRANSPORT AUTHORI TIES. THE DETAILS WERE DULY VERIFIED BY THE AO ON TEST CHECK BASIS. DESPIT E THIS REPORT OF THE ASSESSING OFFICER, THE LD. CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO ON ACCOUNT OF DEPOSITS IN THE BANK. THUS, IT IS MA NIFEST FROM THE IMPUGNED ORDER OF THE LD. CIT(A) THAT THE ADDITION SUSTAINED ON ACCOUNT OF BANK DEPOSIT IS WITHOUT CONSIDERING THE REPORT OF THE ASSESSING OFFICER ON THIS ISSUE. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE ASSESSEE HAS EXPLAINED THE REASONS FOR NON-APPEARANCE AND THE AO HAS NOT PRODUCED ANY EVIDENCE OF SERVICE OF THE NOTICES ON THE ASSESSEE, THOUGH HE CLAIMED TO HAVE SERVED THE NOTICE THROUGH THE WIFE OF THE ASSESSEE. HOWEVER, WITHOUT GOING INTO THE CONTROVERSY OF SERVICES OF THE NOTICES WHE N IN THE REMAND PROCEEDINGS, ASSESSEE HAS PRODUCED THE EVIDENCES WH ICH IS AN INDEPENDENT RECORD OF THE AUTHORITIES AND BANK ACCOUNT OF THE A SSESSEE BEYOND THE SCOPE OF ANY MANIPULATION THEN THE LD. CIT(A) OUGHT TO HA VE DECIDED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN THE INTEREST OF JUSTICE 9 ITA NO. 188/JP/2017. SHRI PANKAJ JAIN, JAIPUR. WE ADMIT THE ADDITIONAL EVIDENCES SOUGHT TO BE FILE D BY THE ASSESSEE BEFORE THE LD. CIT(A) AND REMIT THE MATTER TO THE RECORD O F THE AO FOR DECIDING THIS ISSUE OF ADDITION MADE ON ACCOUNT OF DEPOSIT IN BAN K AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCES, REMAND REPORT AND AFTER GIVIN G AN OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 31/01/2018. POOJA/- VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PANKAJ JAIN, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-6(1), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE [ITA NO. 188/JP/2017] VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR