SODHANI FINANCIAL CONSULTANT PVT.LTD., Jaipur V. ITO, Jaipur

ITA 191/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2196 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA; POONAM RAI
• Assessee Lawyers: NARESH SHARMA
• Keywords: Accommodation entries
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR BEFORE: SMT, DIVA SINGH, JUDICIAL MEMBER ITA NO. 191/JP/2016 ASSESSMENT YEAR : 2009-10 ASSESSEE BY : SHRI NARESH SHARMA REVENUE BY : SHRI R.A.VERMA (ADDL. CIT) & SMT. POONAM RAI (JCIT) DATE OF HEARING : 20.03.20 17 DATE OF PRONOUNCEMENT : 07.04.2017 ORDER PER: DIVA SINGH, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 08/12/2015 OF ID. CIT(A)-I, JAIP UR PERTAINING TO 2009-10 ASSESSMENT YEAR ON VARIOUS GROUNDS. THE PARTIES WERE HEARD ONL Y IN RESPECT OF GROUND NO.4, WHICH READS AS UNDER:- '4 LEARNED INCOME TAX OFFICER HAS ERRED IN USING A LARGE CHUNK OF MATERIAL GATHERED BEHIND BACK OF THE ASSES SEE WITHOUT PROVIDING ITS COPY TO THE ASSESSEE AND WITHOUT ALLO WING IT AN OPPORTUNITY TO SUBMIT HIS EXPLANATION THEREON RENDE RING HIS ASSESSMENT ORDER TO A NULLITY.' 2. RELEVANT FACTS OF THE CASE ARE THAT, AS A RESULT OF SEARCH/SURVEY U/S 132/133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) COND UCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF SHRI SURENDER KUMAR JAIN AND H IS BROTHER SHRI VIRENDRA JAIN, THE ASSESSEE'S RETURN WAS PICKED UP FOR SCRUT INY. AFTER ISSUING OF NOTICE U/S 147 OF THE ACT. THE ASSESSEE WAS SHOW CAUSED WHY TH E ADDITION OF RS. 48.00 LACS SHOULD NOT BE MADE IN THE HANDS OF THE ASSESSE E AS ACCOMMODATION ENTRY. THE ASSESSEE HAVING FAILED TO CONVINCE THE ASSESSIN G OFFICER WHY SHARES SODHANI FINANCIAL CONSULTANT P.LOTD., S-4, 2 ND FLOOR, JAGDAMBA TOWER, AMARPALI CIRCLE, VAISHALI NAGAR, JAIPUR. VS. INCOME TAX OFFICER, WARD-3(5), JAIPUR. PAN/GIR NO.: AAMCS7653J APPELLANT RESPONDENT 2 WERE SOLD ON A PREMIUM IN THE MONTH OF FEBRUARY, 20 09 BY A COMPANY ONLY TWO MONTHS OLD CHALLENGED THE ADDITION BEFORE THE CIT(A ). THE CHALLENGE WAS POSED ON VARIOUS GROUNDS BEFORE THE CIT(A) INCLUDING THE GROUNDS THAT THE MATERIAL RELIED UPON TO MAKE THE ADDITION WAS NEVER CONFRONT ED TO THE ASSESSEE. THE SAID OBJECTIONS WERE DISMISSED BY THE CIT(A) HOLDIN G AS UNDER:- (V) THE ASSESSMENT PROCEEDINGS FURTHER CONTINUED ON 22.12.2014 AND 26.12.2014 BUT THE APPELLANT NEVER ASKED THE AO IN SPECIFIC TERMS THE MATERIAL IN THE POSSESSION OF THE AO INCLUDING THE STATEMENTS OF SHRI V. K. JAIN AND SHR I S. K. JAIN RECORDED BY THE INVESTIGATION WING AT DELHI. (VI) THE ABOVE FACTS CLEARLY REVEALED THAT THE APPE LLANT HAD WAIVED HIS RIGHT BEFORE THE AO ITSELF BY NOT OBJECTING TO THE INITIATION OF PROCEE DINGS U/S 147 OF THE ACT AND NOT SPECIFICALLY REQUIRING THE MATERIAL IN POSSESSION O F THE AO FOR TAKING ACTION AGAINST THE APPELLANT. THEREFORE, WITH THIS ACQUIESCENT ON THE PART OF THE APPELLANT, THE APPELLANT NOW CANNOT AGITATE THAT THE INFORMATION GATHERED BE HIND HIS BACK WAS NOT CONFRONTED TO IT AND NO OPPORTUNITY WAS GIVEN TO IT TO EXPLAIN ITS CASE. IT IS CRYSTAL CLEAR FROM THE REASONS RECEDED BY THE AO, AS REPRODUCED ABOVE, THA T DURING THE COURSE OF SEARCH ACTION IN SHRI S K JAIN AND SHRI V K JAIN AT DELHI, IT WAS ESTABLISHED THAT THEY WERE PROVIDING ACCOMMODATION ENTRIES THROUGH A NUMBER OF ENTITIES CONTROLLED BY THEM AND WERE ISSUING CHEQUES FOR SHARE CAPITAL IN LIEU OF C ASH. FURTHER, THE AO RECORDED THAT ON THE BASIS OF SEIZED MATERIAL, IT WAS FOUND THAT THE APPELLANT HAD RECEIVED ACCOMMODATION ENTRIES AMOUNTING TO RS. 48 LAC FROM THE CONCERNS CONTROLLED BY SHRI S KJAIN AND SHRI V K JAIN FOR WHICH HE BAD GIVEN THE DETAILS TO THE APPELLANT AS MENTIONED EARLIER. (VII) THE APPELLANT, THEREFORE, CANNOT BE ALLOWED T O RAISE THE CONTENTION THAT THE MATERIAL GATHERED AT ITS BACK WAS NOT CONFRONTED TO IT AND N O OPPORTUNITY WAS ACCORDED TO IT BY THE AO AS THE GIST OF THE MATERIAL HAS ALREADY BEEN COMMUNICATED TO IT IN THE FORM OF REASONS RECORDED FOR REOPENING THE CASE U/S 147 OF THE ACT AND THE APPELLANT HAD NEVERREQUIRED THE MATERIAL COLLECTED BY AO. IN FACT , THE APPELLANT NEVER RAISED ANY OBJECTION ABOUT THE INITIATION OF PROCEEDINGS U/S 1 47 OF THE ACT.' 3. THE ID AR SUBMITTED THAT SINCE THE MATERIAL UTIL IZED HAS BEEN COLLECTED AT ITS BACK, THE ADDITION MAY BE DELETED. THOUGH, T HE ID. SR.DR HEAVILY RELIED UPON THE IMPUGNED ORDER, HOWEVER, WAS UNABLE TO SUP PORT ITS CASE AS TO HOW AND WHY THE MATERIAL COLLECTED AT THE BACK OF THE A SSESSEE SHOULD NOT HAVE BEEN CONFRONTED. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON THE RECORD. I FIND THAT THE PRAYER OF THE ID AR THA T THE DEPARTMENT HAVING COLLECTED THE MATERIAL AT THE BACK OF THE ASSESSEE AND RELYING UPON THE SAME HAS COMMITTED SUCH AN ERROR, WHICH WARRANTS THAT TH E ADDITION BE DELETED, CANNOT BE ACCEPTED. THE PROCEDURAL VIOLATION IS CAP ABLE OF BEING ADDRESSED BY 3 ADDRESSING THE STAGE AT WHICH THE LAPSE HAS OCCURRE D. ACCORDINGLY, SETTING ASIDE THE AFORESAID FINDING OF THE CIT(A), I AM OF THE V IEW THAT SIMPLY BECAUSE THE ASSESSEE DID NOT ASK FOR THE MATERIAL IN POSSESSION OF THE ASSESSING OFFICER AND DID NOT OBJECT TO THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT, AT THE ASSESSMENT STAGE, CANNOT BE A REASON TO CONCLUDE THAT THE ASSE SSEE HAS WAIVED ITS RIGHTS FOR ALL TIMES TO COME. IT IS WELL SETTLED THAT THE JUR ISDICTIONAL ISSUE BEING A FOUNDATIONAL ISSUE HAS TO BE JUSTIFIED WHENEVER IT IS CHALLENGED BY THE AFFECTED PARTY. THE LAW DOES NOT CONTEMPLATE THAT THE FOUNDATIONAL FACT AND CHALLENGE THERETO CAN BE SAID TO BE WAIVED IN THE PECULIAR FACTS OF THE PRESENT C ASE. THE ASSESSEE IS WITHIN HIS RIGHTS TO CHALLENGE THE JURISDICTION BEFORE THE CIT (A). THE CHALLENGE HAVING BEEN POSED HAS TO BE ADDRESSED BY THE TAX AUTHORITIES. A CCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK T O THE FILE OF THE ID. CIT(A) WITH A DIRECTION TO CONFRONT THE ASSESSEE WITHIN THE MATER IAL RELIED UPON AND DECIDE THE JURISDICTIONAL ISSUE WHICH THE ASSESSEE HAS RAISED AND THEREAFTER TO PROCEED TO DECIDE THE ISSUE ON MERITS IF SO WARRANTED. THE SA ID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING IN THE PRESENCE O F THE PARTIES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT N 07 APRIL,2017. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED:- 7 TH APRIL, 2017, *RANJAN/POONAM (CHD) COPY OF THE ORDER FORWARDED TO; 1. APPELLANT- SODHANI FINANCIAL CONSULTANT PVT, LTD ., JAIPUR. 2. THE RESPONDENT- THE I.T.O., WARD-3(5), JAIPUR. 3. THE CIT 4. THE CIT (A) 5. DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 191/JP/2016) BY ORDER ; ASSTT. REGISTRAR