S.Dasarathraj Dhariwall, Mysore V. The Income Tax Officer Ward-7(2)(1), Bangalore

ITA 1978/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7894 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARUPPUSWAMY S R BENGAL URU
• Assessee Lawyers: S VIMALCHAND
• Keywords: Principle of natural justice; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT ITA NO. 1978/BANG/2018 ASSESSMENT YEAR : 2008 - 09 SHRI S. DASARATHRAJ DHARIWALL, S/O. LATE P. SURAJMULL DHARIWALL, NO.98/1, MAIN ROAD, NAZARABAD, MYSORE 570 010. PAN: ABTPD 0578L VS. THE INCOME TAX OFFICER, NEW WARD 7(2)(1), OLD WARD 9(1), BENGALURU. APP ELLANT RESPONDENT APP ELLANT BY : SHRI S. VIMALCHAND, CA RESPONDENT BY : SHRI KARUPPUSWAMY, S.R., ADDL.CIT(DR)(ITAT), BE NGALURU. DATE OF HEARING : 18. 1 2 .2018 DATE OF PRONOUNCEMENT : 02 . 0 1 . 201 9 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORD ER DATED 06.04.2018 OF CIT(APPEALS)-7, BENGALURU RELATING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE IN THE RETURN OF INCOME FOR THE AY 2008-09 DECLARED LONG TERM CAPITAL GAIN (LTCG) OF RS.10,36,573 ON SALE OF SHARES OF M/S. ZEN SHAVING LTD. THE CLA IM FOR EXEMPTION OF LTCG WAS EXAMINED U/S. 10(38) OF THE INCOME-TAX ACT , 1961 [THE ACT]. THE AO TREATED THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD LTCG AS INCOME FROM OTHER SOURCES AND BROUGHT IT TO TAX FOR THE REASON THAT THE TRANSACTION OF PURCHASE & SALE OF SHARES W AS THROUGH MR. MUKESH ITA NO.1978/BANG/2018 PAGE 2 OF 4 CHOKSI AND HIS GROUP CONCERNS, WHICH ON INVESTIGATI ON BY THE DEPARTMENT WAS FOUND TO BE FICTITIOUS AND WAS A MODUS OPERANDI ADOPTED FOR THE PURPOSE OF CREATING FICTITIOUS PROFITS AND PROVIDIN G ACCOMMODATION ENTRIES. 3. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CON FIRMED THE ACTION OF THE AO, HENCE THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, IT WAS BROUGHT TO OUR NO TICE THAT THE LD. COUNSEL FOR THE ASSESSEE THAT HE HAD MADE A SPECIFI C REQUEST BEFORE THE AO AS WELL AS BEFORE THE CIT(APPEALS) IN THE FORM O F GROUNDS OF APPEAL BEFORE THE CIT(APPEALS) THAT THE ORDERS OF REVENUE AUTHORITIES ARE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND BAD IN LAW AND ARE LIABLE TO BE QUASHED. THE GRIEVANCE OF THE ASSESSEE WAS THAT ST ATEMENT OF MR. MUKESH CHOKSI AND OTHER INCRIMINATING MATERIAL ON W HICH RELIANCE WAS PLACED BY THE REVENUE AUTHORITIES IN MAKING THE IMP UGNED ADDITIONS WERE NOT CONFRONTED TO THE ASSESSEE. THE LD. COUNSEL FO R THE ASSESSEE FILED BEFORE US A COPY OF THE DECISIONS OF THE HONBLE HI GH COURT OF KARNATAKA IN THE CASE OF SMT. JAYASHREE DEVI KOTHARI V. ITO IN W.P. NO.39379/2014(T- IT) JUDGMENT DATED 25.02.2015 WHEREIN ON IDENTICAL FACTS, THE HONBLE JURISDICTIONAL HIGH COURT SET ASIDE THE ORDERS OF A SSESSMENT AND REMANDED FOR FRESH CONSIDERATION BY THE AO, THE ADDITION THA T WAS MADE TO THE ASSESSMENT AFTER PROVIDING THE ASSESSEE OPPORTUNITY OF HEARING BY PROVIDING COPIES OF STATEMENT AND RELATED DETAILS.. SIMILAR ORDERS WERE PASSED BY THE BANGALORE BENCH OF ITAT IN THE CASE O F SHRI DHARMICHAND CHAJJED V. ITO IN ITA NO.875/BANG/2016, ORDER DATED 30.06.2016 FILED BEFORE US. 5. THE LD. DR, HOWEVER, RELIED ON THE ORDER OF THE CIT(APPEALS) AND SUBMITTED THAT WHEN THE DEMAND FOR FURNISHING THE S TATEMENT WAS NOT MADE BEFORE THE AO, THERE IS NO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND IN THIS REGARD RELIED ON THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF ITA NO.1978/BANG/2018 PAGE 3 OF 4 K.L. TRIPATHI V. SBI & ORS., AIR 273 1984 SCR (1) 184 1984 SCC . I AM OF THE VIEW THAT IN THE PRESENT CASE, THE ASSESSEE HAS MADE A DEMAND FOR THE STATEMENT AND OTHER DOCUMENTS BEFORE THE AO/CIT(APP EALS) AND THEREFORE THE AFORESAID DECISION WILL NOT BE OF ANY ASSISTANC E TO THE PLEA OF THE REVENUE. 6. I AM OF THE VIEW THAT IN THE GIVEN FACTS AND CIR CUMSTANCES, THE ENDS OF JUSTICE WILL BE SERVED BY SETTING ASIDE THE ORDE R OF CIT(APPEALS) AND REMANDING THE ISSUE FOR FRESH CONSIDERATION BY THE AO OF THE PROPOSED ADDITION, AFTER CONFRONTING THE STATEMENT OF MR. MU KESH CHOKSI TO THE ASSESSEE AND ALSO PROVIDING OTHER MATERIALS PLACED ON WHICH THE REVENUE AUTHORITIES CAME TO THE CONCLUSION THAT THE LONG TE RM CAPITAL GAIN DECLARED BY THE ASSESSEE IS FICTITIOUS. ACCORDINGLY, THE AP PEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 02 ND DAY OF JANUARY, 2019. SD/- ( N.V. VASUDE V AN ) VICE PRESIDENT BANGALORE, DATED, THE 02 ND JANUARY, 2019. / D ESAI S MURTHY / ITA NO.1978/BANG/2018 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.