Mrs. Rajni Madan, Bhopal V. The ITO 3(2), Bhopal

ITA 199/IND/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5722 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED JCIT LD DR
• Assessee Lawyers: S S DESHPANDE CA LD
• Keywords: Unexplained investment; Salary income; Opportunity of being heard
• Section: 69C

Judgement Text

SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 1 OF 8 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE . . , . . , ' BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER V. SMT. RAJANI MADAN 261- SECTOR- II, SHAKTI NAGAR, BHOPAL INCOME TAX OFFICER 3(2) BHOPAL # / APPELLANT $%# / RESPONDENT . . ./ PAN: ABDPM 0912 H # & / APPELLANT BY SHRI S.S. DESHPANDE, CA, THE LD. A.R. $%# & / RESPONDENT BY SHRI MOHD. JAVED, JCIT, THE LD. DR & / DATE OF HEARING 15.03.2017 + & / DATE OF PRONOUNCEMENT 20.03.2017 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, BH OPAL [IN SHORT THE CIT (A)] DATED 20-12-2013 PERTAINING TO ASSES SMENT YEAR 2009- 10, WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 1 9-12-2010 PASSED BY THE ITO 3(2) BHOPAL (IN SHORT THE AO) U NDER SECTION 143 (3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). T HE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT (A) HAS ERRED IN MAINTAINING THE ADDITI ON OF RS. 40,00,000/- PAID ON ACCOUNT OF PURCHASE OF HOUSE. . . ./ I.T.A. NO. 199/IND/2014 / ASSESSMENT YEAR: 2009-10 SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 2 OF 8 1.1. IT WAS PROVED BEFORE THE LOWER AUTHORITIES ABOUT TH E SOURCE OF THE SAID MONEY, WHICH IS PAID THROUGH THE BANK CHEQUES AND MENTIONED IN THE REGISTERED TRANSFER DO CUMENT. 1.2. THE ADDITION OF RS. 40,00,000/- MAY PLEASE BE DELET ED. 2. THE LD. CIT (A) HAS ERRED IN MAINTAINING THE ADDITI ON OF RS. 39,82,000/- BEING PAID TO SON SHRI ASHOK MADAN. 2.1 IT WAS PROVED BEFORE THE LOWER AUTHORITIES THAT THE SOURCE OF MONEY RAISED THROUGH BANK LOANS AND AS SUCH, THE SO URCE WAS TOTALLY EXPLAINED. 2.2 THE ADDITION OF RS.39,82,000/- MAY PLEASE BE DELETE D . 2. GROUND NO. 1 AND GROUND NO. 2 RELATES TO ADDITION O F RS. 40 LAKHS BEING AMOUNT PAID FOR PURCHASE OF HOUSE AND R S. 39.82 LAKH AS UNEXPLAINED UNSECURED LOANS TAKEN BY THE AS SESSEE. THESE ARE BEING CONSIDERED TOGETHER. 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS INDIVIDUAL DER IVES INCOME FROM SALARY FROM UJALA ELECTRICAL LTD. AND INTEREST INCO ME. THE ASSESSEE FILED RETURN OF INCOME ON 30-07-2009 DECLARING TOTA L INCOME OF RS. 3,52,048/-. THE AIR INFORMATION REFLECTED THAT THE ASSESSEE HAD PURCHASED A IMMOVABLE PROPERTY DURING THE YEAR. THE REFORE, THE ASSESSEE WAS ASKED TO SUBMIT COPY OF REGISTRY AND R ELEVANT DOCUMENT. ON VERIFICATION, THESE DOCUMENTS , THE A O NOTICED THAT THE ASSESSEE HAS PURCHASED PLOT NO. 258, SECTOR-II, SHAKTI NAGAR, BHOPAL, IS SITUATED NEXT TO THE PROPERTY OF THE ASS ESSEE`S SON WHICH SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 3 OF 8 ARE THE RESIDENTIAL UNIT OF WHOLE OF THE MADAN FAMI LY, AND THE ASSESSEE HAS PURCHASED THE SAME FROM M/S. OXFORD CA BLES AND METALS PVT.(IN SHORT OCMPL) THE SHRI NEERAJ THAKUR , THE SO-CALLED DIRECTOR OF OCMPL, SIGNS THE REGISTERED DEED ON 16. 03.2009. THE AO ISSUED SUMMONS TO SHRI NEERAJ THAKUR TO ATTEND HIS OFFICE ON 26.12.2011 WITH COMPLETE DETAILS OF SALE AND PURCHA SE OF IMMOVABLE PROPERTY, BUT FAILED TO ATTEND NOR FURNISHED ANY RE ASONS FOR NON- ATTENDANCE. THEREFORE, INSPECTOR WAS DEPUTED TO SEA RCH SHRI NEERAJ THAKUR. ON 28-12-2011, THE INSPECTOR HAS SUBMITTED A REPORT THAT SHRI NEERAJ THAKUR IS MERELY AN EMPLOYEE TO THE FIR M M/S. UJALA ELECTRICALS OF SHRI V. K. MADAN AND HE IS RESIDING AT SHANTI NIKETAN, GOVINDPURA, BHOPAL. ON ENQUIRY, SHRI NEERAJ THAKUR DOES NOT RECALL HIS CONNECTION WITH M/S. OCMPL AND POSSESSION OF SA ID PROPERTY PLOT NO. 258, SECTOR II, SHAKTI NAGAR, BHOPAL. A S PER CENTRAL EXCISE DEPARTMENT SURVEY CARRIED OUT IN YEAR 2008, ALSO SUBMITTED A REPORT THAT THERE WAS NO BUSINESS BEING CARRIED OUT AT THE PREMISES OF M/S. OCMPL AND THE SAID COMPANY HAS NOT TAKEN EV EN ELECTRICITY CONNECTION. THIS COMPANY WAS LOCATED IN THE SAME C OMPLEX WHERE M/S. VKM ELECTRICAL LTD. OF SHRI V.K. MADAN IS REPO RTED TO HAVE BEEN RUNNING. THE AO OBSERVED THAT AS PER CENTRAL EXCISE DEPARTMENT REPORT M/S. OXFORD CABLES AND METALS PVT. LTD. IS A TOTALLY BOGUS COMPANY ESTABLISHED BY V. K. MADAN IN ORDER TO PASS ENTRIES. IN VIEW OF THESE FACTS, THE AO HELD THAT THE PLOT NO. 258 , IS A BENAMI PROPERTY OF SHRI V. K, MADAN AND SMT. RAJANI MADAN REGISTERED IN THE NAME OF M/S. OCMPL IN WHOM SHRI NEERAJ THAKUR H AS BEEN SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 4 OF 8 MADE AS A DIRECTOR OF THE SAID COMPANY. THE AO ALSO FOUND THAT THE ASSESSEE HAS TOOK LOAN OF RS. 40 LAKH TO PURCHASE T HIS PROPERTY FROM HDFC BANK. THIS AMOUNT HAS BEEN CREDITED TO ICICI B ANK ACCOUNT OF M/S. OCMPL FROM WHERE, THIS AMOUNT TRANSFERRED T O M/S. VKM ELECTRICALS AND M/S. UJALA ELECTRICALS LTD.. FROM W HERE THE SAID AMOUNT WAS, CREDITED BACK TO THE ACCOUNT OF SMT. RA JANI MADAN AND SAME HAS BEEN GIVEN TO SHRI ASHISH MADAN AS UNSECUR ED LOAN. IN TURN, SHRI ASHISH MADAN HAS CREDITED BACK THE SAME AMOUNT IN THE ACCOUNT OF M/S. OCMPL. THUS, THIS TRANSACTION CLEAR LY ESTABLISHED NEXUS OF FAKE COMPANIES. THE AO HAS ALLOWED VARIOUS OPPORTUNITY TO PROVE GENUINENESS OF TRANSFER OF THE PROPERTY BUT F AILED TO SUBSTANTIATE BY DOCUMENTARY EVIDENCE. HENCE, THE AO TREATED THE INVESTMENT OF RS. 40 LAKH AS UNEXPLAINED INVESTMENT UNDER SECTION 69C OF THE ACT. THE AO FURTHER MADE AN ADDITION OF RS. 39, 82,000/- ON ACCOUNT OF UNSECURED LOAN GIVEN TO SHRI ASHISH M ADAN. THE SOURCE OF ASSESSEE`S INCOME IS ONLY SALARY OF RS. 3 ,52,052/- FROM UJALA ELECTRICALS. THEREFORE, THE AO CONCLUDED THAT DEPOSIT MADE IN HER ACCOUNT WERE FROM UNEXPLAINED SOURCES AS THE CR EDITWORTHINESS AND GENUINENESS WAS NOT ESTABLISHED. 4. BEING, AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFOR E THE LD. CIT (A). DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E SAME SUBMISSIONS WERE REITERATED WHICH HAVE BEEN REPRODU CED BY THE LD. CIT (A) IN HIS ORDER. THE LD. CIT (A) OBSERVED THAT M/S. OCMPL HAS THREE SHAREHOLDER NAMELY SHRI ANIL SHETH, RAMESH YE LI AND SHRI NEERAJ THAKUR. SHRI ASHISH MADAN, SON OF THE ASSESS EE, IS ALSO SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 5 OF 8 MANAGING DIRECTOR WHEREAS SHRI NEERAJ THAKUR IS DIR ECTOR OF THE SAID OCMPL. IN THE SEARCH CARRIED OUT ON 05.12.2008 BY C ENTRAL EXCISE, IT WAS FOUND THAT THE ASSESSEE WITHOUT ELECTRICITY CONNECTION CARRYING OUT SOME MANUFACTURING ACTIVITY OF ALUMINUM WIRES, HOWEVER, SAID COMPANY WAS FAILED TO RECORD THE ACCOUNTING RECEIPT S OF INPUT AND FURNISHED GOODS. FURTHER, SHRI V. K. MADAN WAS OPER ATING THE BANK ACCOUNT. THUS, IT SHOWS THAT DUBIOUS CIRCUITOUS FUN D FLOW MOSTLY IN CASH. THE LD. CIT (A) ALSO NOTICED THAT THE SAID OC MPL HAD DISCLOSED UNSECURED LOANS OF RS. 1.35 CRORES AND SHARE APPLIC ATION MONEY IN THE NAME OF 200 INDIVIDUALS. THE LD. CIT (A) HAD H ELD THAT THE SO- CALLED DIRECTOR OF M/S. OCMPL ARE DUMMY DIRECTOR AN D ARE EMPLOYEES OF THE ASSESSEE GROUP COMPANIES/ FIRMS. T HIS WAS APPARENT FROM THE STATEMENT RECORDED BY CENTRAL EXC ISE AUTHORITIES OF THESE PERSONS. CONSIDERING, THESE FACTS, THE ADD ITION OF RS. 40 LAKH AND RS. 39.82 LAKHS WERE CAME TO BE CONFIRMED. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. BEFORE US, THE LD. A.R. SUBMITTED THAT V ARIOUS CHEQUES AS MENTIONED IN REGISTERED DOCUMENT BY SHRI ASHISH MAD AN, WHICH WAS RETURNED BACK TO HIM BY CHEQUE OF HDFC ON 31.03.200 9, MADE THE PAYMENT OF RS. 40 LAKH. THE ASSESSEE HAS RAISED A L OAN FROM ICICI BANK. THUS, ALL TRANSACTIONS ARE ROUTED THROUGH BAN KING CHANNELS. THE ASSESSEE ALSO RECEIVED SUBSTANTIAL AMOUNT FROM HER SON SHRI MANISH MADAN WHO IS SETTLED IN AUSTRALIA WHICH WAS ALSO THROUGH CHEQUES. THE AO MADE ADDITION OF RS. 40 LAKHS UNDE R SECTION 69C AND RS. 39.82 LAKHS AS UNSECURED LOAN FROM UNEXPLAI NED SOURCES. SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 6 OF 8 HOWEVER, THE AO MADE REMARKS THAT SHRI NEERAJ THAKU R IS MERELY AN EMPLOYEE OF THE FIRM OF SHRI V. K MADAN AND NO BUSI NESS ACTIVITY FOUND DURING EXCISE SURVEY. ALL THESE REMARKS WERE IRRELEVANT FOR FRAMING ASSESSMENT OF THE ASSESSEE. WITH REGARD TO ADDITION OF RS.39.82 LAKH, THE AO DID NOT BOTHER TO LOOK IN TO THE DETAILS FILED BY THE ASSESSEE AND SUBMISSIONS MADE BEFORE HIM. HE GA VE UNDUE IMPORTANCE FOR THE EXTRANEOUS EVENT ABOUT SURVEY OF THE CENTRAL EXCISE, WHICH HAS NOTHING TO DO WITH THE CASE OF TH E ASSESSEE. THEREFORE, IT WAS CONTENDED THAT THERE IS DIRECT EV IDENCE OF PAYMENTS MADE BY CHEQUES THROUGH BANKING CHANNEL AND LOAN TA KEN AS REPAYMENT MADE BY THE ASSESSEE. HENCE, NO ADDITION IS CALLED FOR. 6. PER CONTRA, THE LD. D.R. SUBMITTED THAT REGISTERED SALE DEEDS HAS BEEN SIGNED BY SHRI NEERAJ THAKUR , SO CALLED D IRECTOR WHO HAS AVOIDED HIS PRESENCE BEFORE THE AO WHEREAS THE INSP ECTOR OF DEPARTMENT HAS FIND OUT THAT HE IS MERELY AN EMPLOY EE OF SHRI VK MADAN AND DOES NOT HAVE ANY CONNECTION WITH M/S. O CMPL. FURTHER, THE AO HAD FOUND THAT THE AMOUNT OF LOAN T AKEN AND REPAID HAS BEEN CIRCUITOUSLY ROUTED THROUGH BANK ACCOUNT O F VARIOUS FAMILY MEMBERS, WHEREAS THE ASSESSEE IS MERELY A SALARIED EMPLOYEE DRAWING SALARY OF RS. 3.5 LAKH PER ANNUM ONLY. FURT HER, THE ASSESSEE HAS FAILED TO PRODUCE NECESSARY EVIDENCE A ND AVAIL THE OPPORTUNITY OF BEING HEARD ALLOWED TO HER. NOR SHE HAD FILED ANY EVIDENCE IN HER SUPPORT TO DISPROVE THE FINDINGS RE CORDED BY CENTRAL EXCISE AUTHORITIES DURING SURVEY. THEREFORE, IT WAS CONTENDED THAT TRANSACTION IS NOT GENUINE; HENCE, THE LOWER AUTHOR ITIES WERE JUSTIFIED SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 7 OF 8 IN MAKING THE ADDITION OF RS. 40 LAKH AND RS. 39.82 LAKHS IN THE CASE OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE SOLE SIGNATORY OF REGISTERED DOCUMENT SHRI NEERAJ THAKUR HAS FAILED TO APPEAR BEFORE THE AO TO VERIFY THE GENUINENESS OF T RANSFER OF PLOT NO. 258 OF SHAKTI NAGAR. WHEREAS, AS PER REPORT SUBMITT ED BY THE INSPECTOR OF DEPARTMENT, HE IS MERELY AN EMPLOYEE O F SHRI V. K MADAN. SHRI NEERAJ THAKUR HAS ALSO DENIED HAVING AN Y CONNECTION WITH M/S. OCMPL. FURTHER, WE FIND THAT THE TRANSACT ION OF LOANS HAVE TRAVELLED THROUGH BANKING CHANNEL BY TAKING VA RIOUS CIRCUITOUS ROUTES, WHICH HAS NOT BEEN PROPERLY EXAMINED TO EST ABLISH THE GENUINENESS OF TRANSACTION. FURTHER, SURVEY PROCEED INGS UNDERTAKEN BY THE CENTRAL EXCISE HAVE REVEALED THAT NO BUSINES S ACTIVITY WERE CARRIED OUT BY THE M/S. OCMPL. IT IS ALSO NOTICED FROM THE STATEMENT DTD. 30.04.2009 OF SHRI ANIL SETHI THAT H E DOES NOT HAVE ANY CONNECTION WITH M/S. OCMPL, M/S. VKM AND IS NOT HOLDING ANY DIRECTORIAL POSITION. FURTHER SHRI RAMESH YELI AND SHRI NEERAJ THAKUR WERE FOUND TO BE WORKING AS ACCOUNTANT ONLY. WE ALSO NOTICED THAT THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE AO HAS FAILED TO LOOK IN TO THE EVIDENCE PRODUCED BEFORE H IM AND SUBMISSIONS MADE BY THE ASSESSEE. IN VIEW OF THES E FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T THE ENTIRE ISSUE OF ADDITION OF RS. 40 LAKH AS WELL AS RS. 39.82 LAK HS IS REQUIRED TO BE REVISITED BY THE AO. THEREFORE, IN EXERCISE OF P OWER CONFERRED SMT. RAJANI MADAN VS. ITO 3(2) BHOPAL / I.T.A. NO.1 99/IND/2014/A.Y.:09-10 PAGE 8 OF 8 UNDER RULE 28 OF TRIBUNAL RULES, WE RESTORE THIS AP PEAL TO THE FILE OF LD. AO FOR ALLOWING PROPER OPPORTUNITY OF BEING HEA RD IN ACCORDANCE WITH LAW. NEVERTHELESS, TO MENTION THAT THE ASSESSE E WILL PRODUCE SHRI NEERAJ THAKUR, SHRI ANIL SETHI AND SHRI RAMESH YELI BEFORE THE AO FOR EXAMINATION. THE ASSESSEE WOULD ALSO PRODUCE THE COPIES OF ALL BANK ACCOUNTS, WHICH ARE RELEVANT TO EXPLAIN TH E CIRCUITOUS TRANSACTION ROUTED THROUGH VARIOUS BANKS AND CONCER NS AND AS REQUIRED BY THE AO. THE AO WILL EXAMINE THE GENUINE NESS AND LEGAL EXISTENCE OF M/S. OCMPL AND THE LOAN TRANSACTION UN DERTAKEN BY THE ASSESSEE. NEVERTHELESS, TO MENTION THAT THE ASS ESSEE WILL COOPERATE IN THE ASSESSMENT PROCEEDINGS AND FILE NE CESSARY EVIDENCES ON WHICH HE WANTS TO RELY UPON. ACCORDING LY, WE RESTORE BOTH THE ISSUES FOR FRESH ADJUDICATION TO BE MADE D E-NOVO ASSESSMENT THE FILE OF THE ASSESSING OFFICER WITH T HE DIRECTION THAT THE ASSESSEE BE AFFORDED PROPER OPPORTUNITY TO PRES ENT HER CASE AS WELL AS THE ASSESSEE IS TO EXTEND ALL POSSIBLE COOP ERATION IN THE DISPOSAL OF THE CASE. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.03.2 017. SD/- SD/- ( . . ) /(C.M. GARG) ( . . ) /(O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DATED: 20 TH MARCH, 2017/OP