M/s Pukhraj Hasmukhlal , Bangalore V. Income Tax Officer Ward-5(2)(2), Bangalore

ITA 1927/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5689 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 28-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJASEKHAR BENGALURU
• Assessee Lawyers: PRASHANTH G S
• Keywords: Opportunity of being heard; Principle of natural justice; Borrowed satisfaction
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO. 1927/BANG/2017 ASSESSMENT YEAR : 2014 - 15 MR. PUKHRAJ HASMUKHLAL, NO.28, 29 & 30, JUMMA MASJID ROAD, BENGALURU 560 002. PAN: AAIPH 2169P VS. THE INCOME TAX OFFICER, WARD 5(2)(2), BENGALURU. APP ELLANT RESPONDENT APP ELLANT BY : SHRI PRASHANTH G. S., CA RESPONDENT BY : SHRI M. RAJASEKHAR, ADDL.CIT(DR)(ITAT), BENGALURU DATE OF HEARING : 28.11.2017 DATE OF P RONOUNCEMENT : 09 .01.2018 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR A S THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTA NCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES HIMSELF LIABLE TO BE ASSESS ED ON A TOTAL INCOME OF RS.49,37,270/- AS AGAINST RS.15,08, 818/- RETURNED BY THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.34,28,455/- AS UNEXPLAINED INCOME UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE. ITA NO.1927/BANG/2017 PAGE 2 OF 5 4. THE AUTHORITIES BELOW FAILED TO APPRECIATE THE F ACT THAT ALL THE TRANSACTIONS HAD TAKEN PLACE THROUGH PROPER BAN KING CHANNELS AND NO CASH WAS PAID TO THE BROKERS/PARTIES FROM WH OM THE SHARES WERE PURCHASED. 5. THE AUTHORITIES BELOW ERRED IN TREATING THE SHAR E PURCHASE TRANSACTIONS AS SHAM WITHOUT PROPER EXAMINATION UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. WITHOUT PREJUDICE, THE ADDITION MADE AS UNEXPLAI NED CASH CREDITS UNDER SECTION 68 OF THE INCOME TAX ACT (THE ACT) IS WRONG AND REQUIRES TO BE MADE AS NIL ON THE FACTS OF THE CASE. 7. THE AUTHORITIES BELOW ERRED IN NOT PROVIDING AN OPPORTUNITY TO CROSS EXAMINE THE THIRD PARTY WHOSE STATEMENTS WERE USED AGAINST THE APPELLANT ON THE FACTS OF THE CASE. THUS, THE ORDER PASSED IS OPPOSED TO PRINCIPLES OF NATURAL JU STICE AND REQUIRES TO BE DELETED ON THE FACTS OF THE CASE. 8. THE AUTHORITIES BELOW MERELY ON SUSPICION AND SU RMISE TREATED THE TRANSACTIONS MADE BY THE APPELLANT AS A CCOMMODATIVE AND BOGUS IN NATURE AND THUS THE ADDITION MADE OF R S. 34,28,455/- NEEDS TO BE DELETED FOR THE SUBSTANTIAL CAUSE OF AD VANCEMENT OF JUSTICE. 9. THE ACTION OF THE LEARNED ASSESSING OFFICER IN S TATING THAT THE TRANSACTIONS ENTERED INTO BY THE APPELLANT ARE ACCOMMODATIVE IN NATURE IS WITHOUT ANY CORROBORATIVE EVIDENCE WHI CH IS UNACCEPTABLE IN THE EYES OF LAW. THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITIONS BASED ON SUCH STATEMENT IS NOT WARRANTED AND IS LIABLE TO BE DELETED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. THE ACTION OF THE ASSESSING OFFICER IN SEEKING REASONS FROM THE APPELLANT FOR THE UNUSUAL RISE AND FALL OF SHAR E PRICES IS UNJUST, UNFAIR AND UNACCEPTABLE FOR THE REASON THAT THE APP ELLANT WOULD NOT HAVE ANY POWER TO DETERMINE THE MOVEMENT OF SHA RE PRICES AND THUS, THE ADDITION MADE IS ONLY ON SUSPICION AN D SURMISES AND NEEDS TO BE DELETED UNDER THE FACTS OF THE CASE. 11. THE ACTION OF THE ASSESSING OFFICER IN MAKING A DDITIONS BASED ON THE INVESTIGATION REPORT OF KOLKATA INVEST IGATION DIRECTORATE, WHICH WAS NOT PUT FORTH TO THE APPELLA NT FOR REBUTTAL ITA NO.1927/BANG/2017 PAGE 3 OF 5 IS UNACCEPTABLE ON THE FACTS OF THE CASE. FURTHER, THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITIONS BASED ON SUCH REPORT IS NOT WARRANTED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 12. THE ASSESSING OFFICER HAS NOT INDEPENDENTLY APP LIED HIS MIND TO THE FACTS OF THE CASE AND HAS MERELY RELIED UPON THE GENERAL REPORT MADE BY THE KOLKATA INVESTIGATION DI RECTORATE WHICH AMOUNTS TO BORROWED SATISFACTION, WHICH IS IM PERMISSIBLE IN THE EYES OF THE LAW AND THEREFORE NEEDS TO BE DE LETED IN THE INTEREST OF EQUITY AND JUSTICE. 13. THE ACTION OF THE ASSESSING OFFICER IN TREATING ALL THE TRANSACTIONS MADE WITH SUNRISE ASIAN LIMITED AS SHA M MERELY BECAUSE THE COMPANY WAS INVESTIGATED BY KOLKATA INV ESTIGATION DIRECTORATE IS UNTENABLE AND UNSUSTAINABLE IN THE E YES OF LAW. 14. THE APPELLANT DENIES HIMSELF LIABLE TO BE LEVIE D TO INTEREST UNDER SECTIONS 234A. 234BAND 234C OF THE ACT AND FU RTHER THE COMPUTATION OF INTEREST WAS NOT PROVIDED TO THE APP ELLANT AS REGARD TO THE RATE, PERIOD AND METHOD OF CALCULATIO N OF INTEREST UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT EXPRESSLY URGES THAT THE PERIOD OF LEVY OF INTEREST IS NOT IN ACCORDANCE WITH SECTIONS 234A, 234BAND 234C OF THE ACT. 15. WITHOUT PREJUDICE, THE INTEREST LEVIED UNDER SE CTIONS234A, 234B AND 234C OF THE ACT REQUIRES TO BE WAIVED OFF UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 16. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELET E OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 17. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPEL LANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTIC E AND EQUITY. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED MY ATTENTION THAT THE IMPUGNED ISSUES ARE S QUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI ARVIND KUMAR MOOLCHAND IN ITA NO.509/BANG/2017 IN WHICH THE TRIBUNAL HAS RESTORED THE ISSUE TO TH E FILE OF THE AO HAVING OBSERVED THAT THE ADDITIONS WERE MADE ON THE BASIS OF STATEMENT OF MR. MUKESH CHOKSI WITHOUT CONFRONTING THE SAID STATEMENT TO ITA NO.1927/BANG/2017 PAGE 4 OF 5 THE ASSESSEE. THE TRIBUNAL ACCORDINGLY RESTORED TH E MATTER TO THE AO WITH A DIRECTION TO CONFRONT THE STATEMENT OF MR. MUKESH CHOKSI TO THE ASSESSEE AND THEREAFTER ALLOW HIM TO CROSS-EXAMINE MR. MUKES H CHOKSI AND THE ISSUE MAY BE ADJUDICATED AFRESH, AFTER AFFORDING OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. THE LD. DR DID NOT DISPUTE THESE FACTS. 4. I HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF THE ORDER OF THE TRIBUNAL ON THE IMPUGNED ISSUE AND I FIND THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE AFORESAID CASE WHEREIN THE TRIBUNAL RESTORED THE MA TTER TO THE AO WITH CERTAIN DIRECTIONS. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL :- 5. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER A UTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, I FIND THAT DURI NG THE COURSE OF SEARCH CONDUCTED UPON THE MUKESH CHOKSI GROUP, STAT EMENT OF MUKESH CHOKSI WAS RECORDED AND IN HIS STATEMENT HE HAS ADMITTED THAT HE WAS PROVIDING ACCOMMODATION ENTRIE S TO THOSE WHO WERE INTERESTED TO EARN CAPITAL GAIN. ON A CAR EFUL PERUSAL OF THE ASSESSMENT ORDER, I FIND THAT THERE IS NO FINDI NG WITH REGARD TO THE SUPPLY OF STATEMENT OF MUKESH CHOKSI TO THE ASS ESSEE. MOREOVER, NOTHING IS AVAILABLE ON RECORD, WHEREFROM IT COULD BE INFERRED THAT ASSESSEE WAS EVER ALLOWED TO CROSS-EX AMINE MR. MUKESH CHOKSI. IT IS SETTLED POSITION OF LAW THAT STATEMENT OR THE EVIDENCE WHICH IS BEING RELIED UPON BY THE AO FOR M AKING THE ADDITION IN THE HANDS OF ASSESSEE, THE SAME SHOULD BE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE SHOULD BE ALLOWED TO CROSS- EXAMINE THE WITNESS IN THIS REGARD. 6. FROM A CAREFUL PERUSAL OF THE ORDERS OF LOWER AU THORITIES, IT IS QUITE EVIDENT THAT STATEMENT OF MR. MUKESH CHOKS I WAS RELIED ON FOR MAKING THE ADDITION, BUT ASSESSEE WAS NEVER ALLOWED TO CROSS-EXAMINE HIM. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION IN THE HANDS OF ASSESSEE, WITHOUT ALLOWING THE ASSESSEE TO CROSS-EX AMINE MR. MUKESH CHOKSI, WHOSE STATEMENT WAS RELIED UPON FOR MAKING THE ABOVE ADDITIONS. I ACCORDINGLY SET ASIDE THE ORDER OF ITA NO.1927/BANG/2017 PAGE 5 OF 5 CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF AO WITH A DIRECTION TO FIRST CONFRONT THE STATEMENT OF MR. MU KESH CHOKSI TO THE ASSESSEE AND ALLOW HIM TO CROSS-EXAMINE MR. MUK ESH CHOKSI TO DIG OUT THE TRUTH IN THIS REGARD. ACCORDINGLY, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. SINCE THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW I N SIMILAR SET OF FACTS, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THIS A PPEAL. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND RESTORE THE MATTER TO THE AO WITH A DIRECTION TO READJUDICATE THE ISSUE AFRESH I N TERMS OF DIRECTIONS ISSUED BY THE TRIBUNAL IN THE AFORESAID CASE. NEED LESS TO MENTION HERE THAT PROPER OPPORTUNITY OF BEING HEARD SHOULD BE AF FORDED TO THE ASSESSEE. 6. IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF JANUARY, 2018. SD/- ( SUNIL KUMAR YADA V ) JUDICIAL MEMBER BANGALORE, DATED, THE 09 TH JANUARY, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.