SHRI KISHORE KUMAR DAGA, Nagpur V. THE CIT-CENTRAL, Nagpur

ITA 214/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1624 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 15-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Unexplained investment; Loose papers; Document seized; Principle of natural justice; Documents seized
• Section: 143(3); 153A; 131; 263; 132; 139

Judgement Text

1 ITA NOS. 214 TO 218/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. S.NO. I.T.A. NO. ASSTT. YEAR. 1. 214/NAG/2014 2004 - 05. 2. 215/ NAG/2014 2005 - 06 3. 216/NAG/2014 2006 - 07 4. 217/NAG/2014 2007 - 08 5. 218/NAG/2014 2008 - 09 SHRI KISHORE KUMAR DAGA, COMMISSIONER OF INCOME NAGPUR. VS. TAX - CENTRAL, NAGPUR. PAN ABIPD 6637P APPELLANT. RESPONDENT. APPELLANT BY : SHRI K.P. DEWANI. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 17 - 08 - 2015 DATE OF PRONOUNCEMENT : 30 TH OCT., 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THESE FIVE APPEALS HAVE BEEN FILED BY THE ASSESSEE, ALL EMANATING FROM A COMMON ORDER OF COMMISSIONER OF INCOME TAX (CENTRAL), NAGPUR PASSED U/S 263 OF I.T. ACT DATED 13 - 03 - 2014. THE APPELLANT HAS CHALLENGED THE VALIDITY OF THE IMPU GNED ORDER AS WELL AS THE QUANTUM OF ADDITION PROPOSED AS PER THE FOLLOWING IDENTICALLY WORDED GROUNDS : 1. THE ORDER PASSED BY LEARNED CIT (CENTRAL), NAGPUR UNDER SECTION 263 OF I.T. ACT, 1961 IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE LEARNED CIT ERRED IN HOLD ING THAT ORDER PASSED BY A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2 ITA NOS. 214 TO 218/NAG/2014 3. THE LEARNED CIT ERRED IN HOLDING INSPITE OF THERE BEING NO DATES ON THE LOOSE PAPERS WHICH WERE SEIZED ON 26/11/2009, THE SAME SHOULD HAVE BEEN CONSIDERED FOR MAKING ADD ITIONS IN ASSESSMENT YEAR 2004 - 5 TO 2008 - 09. 4. THE ADDITION MADE AT RS.5,10,000/ - , ( RS.1,50,000/ - , RS.5,00,000/ - , RS.17,40,000/ - AND RS.32,00,000/ - ) FOR ASSESSMENT YEARS 2004 - 05 TO 2008 - 09 RESPECTIVELY ) UNDER THE PROVISIONS OF SECTION 263 OF I.T. ACT, 1961 I S UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 2. THE OBSERVATIONS OF THE LEARNED CIT IN THE IMPUGNED ORDER PASSED U/S 263 WERE THAT A SEARCH ACTION WAS CONDUCTED ON 26 - 11 - 2009 IN THE DAGA GROUP OF CASES. THEREAFTER AN ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 153A OF I.T. ACT FOR THE YEARS NOW UNDER APPEAL. THE ALLEGATION OF THE LEARNED COMMISSIONER WAS THAT DURING THE COURSE OF SEARCH KU T TCHA CHITTHIS WERE FOUND BUT NOT ASSESSED IN THE YEAR IN QUESTION. KUTCHA CHITTHIS ALONG WITH SIGNED BLANK CHEQUES WERE FOUND AT THE TIME OF SEARCH WHICH WERE ALLEGED TO REPRESENT THE ADVANCES GIVEN BY THE ASSESSEE TO THOSE PERSONS WHO HAD GIVEN THE DULY SIGNED CHITTHIS. ACCORDING TO THE LEARNED COMMISSIONER, ALTHOUGH THE ASSESSEE AS WELL AS THE DEBTORS HAVE DENIED ANY SUCH TRANSACTION BUT IT WAS ADMITTED THAT THE SIGNED CHEQUES WERE LEFT WITH THE ASSESSEE TO GET SOME LOANS IN FUTURE. ACCORDING TO THE LEARNED COMMISSIONER IT WAS AN ADMITTED FACTUA L POSITION THAT NEITHER ON THE CHITTHI S NOR ON THE CHEQUES ANY DATE WAS MENTIONED. HOWEVER, THE AMOUNT WAS MENTIONED. IT WAS ALSO AN ADMITTED FACTUAL POSITION THAT THE AO HAD BROUGHT TO TAX AN AMOUNT OF RS.61 LAKHS ON ACCOUNT OF DETECTION OF KUTCHA CH ITTHIS AS UNDISCLOSED INCOME IN THE FORM OF ADVANCES MADE OUTSIDE THE BOOKS OF ACCOUNTS ; BUT IN THE ASSESSMENT YEAR 2010 - 11 I.E. THE YEAR IN WHICH SEARCH WAS CONDUCTED. ACCORDING TO LEARNED CIT, SINCE THERE WERE NO DATES MENTIONED ON THOSE DOCUMENTS I.E . KUTCHA CHITTHIS AND CHEQUES, THEREFORE, IT WAS WRONG PRESUME THAT THE UNDISCLOSED INCOME PERTAIN ED TO THE YEAR IN WHICH THE SEARCH WAS CONDUCTED I.E. ASSESSMENT YEAR 2010 - 11. THIS WAS ONE OF THE REASON TO HOLD THAT THE VIEW TAKEN BY THE AO WAS ERRONEOUS. 3 ITA NOS. 214 TO 218/NAG/2014 2.1 L EARNED COMMISSIONER HAS ALSO MENTIONED A FURTHER DEVELOPMENT PERTAINING TO ASSESSMENT YEAR 2010 - 11 AND FOUND THAT AN APPEAL WAS FILED BEFORE THE CIT(APPEALS). DURING APPELLATE PROCEEDINGS FOR ASSESSMENT YEAR 2010 - 11 A REMAND REPORT WAS CALLED FOR. DU RING THE REMAND PROCEEDINGS THE AO HAD CALLED FOR THE STATEMENT FROM THE BANK. ON THE BASIS OF THE CHEQUES THE PERIOD FOR WHICH THE CHEQUES HAVE BEEN ISSUED WERE ASCERTAINED. IN THE REMAND PROCEEDINGS IT WAS ARGUED BY AO THAT CERTAIN INCRIMINATING EVIDENC E S WERE FOUND AT THE TIME OF SEARCH ; H ENCE IT WAS CORRECTLY TAXED FOR THE ASSESSMENT YEAR 2010 - 11 I.E. THE YEAR IN WHICH THE SEARCH ACTION TOOK PLACE SPECIALLY IN THE ABSENCE OF DATES ON THE CHEQUES. HOWEVER, DURING FIRST APPELLATE PROCEEDINGS LEARNED CIT( APPEALS) HELD THAT AS THE ENQUIRY HAD REVEALED THAT THE TRANSACTIONS PERTAIN ED TO OTHER ASSESSMENT YEARS AND NOT TO THE ASSESSMENT YEAR IN WHICH THE ADDITION WAS MADE, SO RELIEF WAS GRANTED BY DELETING THE ADDITION. 2.2 THE MAIN REASON FOR INVOCATION OF P ROVISIONS OF SECTION 263 AS GIVEN BY THE LEARNED COMMISSIONER WAS THAT DURING REMAND PROCEEDINGS THE AO HAD OBTAINED THE DETAILS OF POSSIBLE DATES OF ISSUE OF CHEQUES. THE DATES WERE GATHERED AFTER COLLECTING THE INFORMATION AND IT WAS FOUND THAT THE DEBT ORS HAVE ISSUE D OTHER CHEQUES OF THAT VERY BANK ON DIFFERENT DATES AND THE CHEQUES IN QUESTION WERE ISSUED DURING THE INTERVENING PERIOD. LEARNED COMMISSIONER HAS MENTIONED THE CHEQUE NOS. W HICH WERE UNDATED ISSUED BY THE DEBTORS AND FOUND IN POSSESSION OF THE ASSESSEE AND COMPARED THE CHEQUE NOS. O F THE SAME BANK . THEREAFTER THEREAFTER PREPARED A COMPILATION OF THE DAT E S OF THE OTHER CHEQUES ALONG WI TH THEIR NOS. AND THE AMOUNTS. I N THAT C OMPILATION LEARNED CIT HAS MENTIONED THE UNDATED CHEQUES WHICH WERE IN QUESTION AT THE PLACES TALL Y ING WITH THE SR.NOS. OF OTHER CHEQUES. ON THE BASIS OF SR. NO. OF THE CHEQUES ISSUED, THE LEARNED COMMISSIONER HAS WORKED OUT THE YEARS FOR WHICH THE CHEQ UES WERE ALLEGED TO HAVE BEEN PERTAINED. ACCORDING TO THE LEARNED COMMISSIONER, THE AO HAD FAILED TO CONSIDER THE YEAR - WISE UNEXPLAINED 4 ITA NOS. 214 TO 218/NAG/2014 INVESTMENT WHICH ACCORDING TO THE LEARNED COMMISSIONER PERTAINED TO THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08. LEARNED COM MISSIONER THUS HAS ARRIVED AT A CONCLUSION THAT SINCE THE AO HAD FAILED TO CONSIDER THE IMPUGNED INVESTMENT IN THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08, THEREFORE, THE ASSESSMENT ORDERS PASSED FOR THESE YEARS WERE ERRONEOU7S IN SO FAR AS THEY ARE PREJUDICI AL TO THE INTEREST OF THE REVENUE. AS A RESULT, A SHOW CAUSE U/S 263 WAS ISSUED. 3. THE EXPLANATION OF THE ASSESSEE WAS THAT THE RELATED FACTS WERE IN THE KNOWLEDGE OF THE AO. THEREFORE, A CONSCIOUS DECISION WAS TAKEN TO ASSESS THE AMOUNT IN QUESTION IN ON E YEAR I.E. IN THE ASSESSMENT YEAR 2010 - 11. DURING THE SEARCH, BLANK CHEQUES AND BLANK CHHITHIS WERE FOUND. IN FACT THOSE WERE RELATED TO THE BUSINESS OF ONE SHRI SUKESH GANDHI. SHRI SUKESH GANDHI WAS EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN D HE HAS STATED THAT THOSE PAPERS/DOCUMENTS WERE NOT IN RESPECT OF ANY MATERIALISED TRANSACTION. ACCORDING TO HIS STATEMENT, THOSE DOCUMENTS WERE HANDED OVER TO THE ASSESSEE FOR ARRANGEMENT OF LOAN. HOWEVER, WHILE COMPLETING THE ASSESSMENT FOR ASSESSMENT YEAR 2010 - 11 IT WAS CONCLUDED BY THE AO THAT THOSE BLANK CHEQUES AND BLANK CHHITHIS WERE THE SUFFICIENT EVIDENCE TO HOLD THAT THE AMOUNT WAS ADVANCED BY THE ASSESSEE AND SINCE THOSE WERE UNDATED BUT FOUND IN THE COURSE OF SEARCH, THEREFORE, TO BE TAXED FO R ASSESSMENT YEAR 2010 - 11. IT HAS ALSO BEEN INFORMED BY THE LEARNED A.R. OF THE ASSESSEE DURING 263 PROCEEDINGS THAT AN APPEAL WAS PREFERRED BEFORE THE CIT(APPEALS) - I, NAG PUR FOR ASSESSMENT YEAR 2010 - 11 AND THE ADDITION WAS DELETED. 3.1 HOWEVER, LEARNED C IT WAS NOT CONVINCED AND IN HIS OPINION THE PAYMENTS WERE MADE BY THE ASSESSEE AS PER THE EVIDENCE IN THE FORM OF BLANK CHEQUES AND BLANK CHHITHIS. LEARNED COMMISSIONER HAS PREPARED A CHART OF THE LOANS/ADVANCES ALONG WITH THE NAMES OF THE PARTIES IN THE F OLLOWING MANNER : '. 5 ITA NOS. 214 TO 218/NAG/2014 . .S R. PAG E CHEQUE AMOUNT PAYMENT MADE TO CORROBORATIVE EV I DENCE F N O NO (IN RS LACS) 1 ' ' ', 18104 2 14 MJS STAR ORCHEM INTERNATLONAL PVT STAMPED RECEIPT OF RS 1 .