S Rakeshkumar , Kolar V. Income TAx Officer Ward-1 , Kolar

ITA 2194/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4703 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 15-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Principle of natural justice; Accommodation entries
• Section: 234B; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO S . 2 193 TO 2195 /BANG/2017 ASSESSMENT YEAR S : 2007 - 08 TO 2009 - 10 SHRI S. RAKESH KUMAR, PROP: M/S. MAYUR JEWELLERS, MOIDU TOWER, B.M. ROAD, ROBERTSONPET, KGF 563 122. PAN: AFMPK4035J VS. THE INCOME TAX OFFICER, WARD 1, KOLAR. APPELLANT RESPONDENT APPELLANT BY : SMT. SUMAN LUNKAR, CA RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 11 .05.2018 DATE OF PRONOUNCEMENT : 01.06. 2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE W HICH ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF LD. CIT(A)-4, BANGALORE AL L DATED 27.07.2017 FOR ASSESSMENT YEARS 2007-08 TO 2009-10. ALL THESE APP EALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2007- 08 IN ITA NO. 2193/BANG/2017 ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASHED. 2.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE AB SENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOU GHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORD ER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED . ITA NOS.2193 TO 2195/BANG/2017 PAGE 2 OF 6 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLA NT AND THE LAW APPLICABLE. 2.3 IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS P ASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARE LI ABLE TO BE QUASHED. 3. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS. 15,67,658/- BEING LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AND TAXING THE SAME UNDER THE HEAD 'INCOME FROM OTHER S OURCES' AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE SAME. THE ACTION OF AUTHORITIES BELO W HAS NO SUPPORT IN LAW; IS CONTRARY TO FACTS AND EVIDENCE AVAILABLE AND THEREFORE DESERVES TO BE REJECTED. 4.1 IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: A) TAXING/ CONFIRMING A SUM OF RS. 15,67,658/- BEIN G GAIN ON SALE OF SHARES AS INCOME UNDER THE HEAD OTHER SOURCES. B) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN S HARES ARE FRAUDULENT C) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HA S OBTAINED ACCOMMODATION ENTRIES AND APPELLANT'S OWN MONEY WOU LD COME BACK IN THE GUISE OF CAPITAL GAINS. THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND WITHOUT BASIS BOTH ON FACTS AND LAW I S TO BE DISREGARDED. 4.2 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCL USIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WI THOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILIT IES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY Q UASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO B E REJECTED IN TOTO. 5. THE APPELLANT HAD ACTUALLY EARNED LONG TERM CAPI TAL GAIN ON SALE OF SHARES WHICH WERE CLAIMED EXEMPT U/S 10(38) OF T HE ACT. THE TRANSACTION BEING GENUINE IN NATURE OUGHT TO HAVE B EEN ACCEPTED AS SUCH. 6. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST U/S 234B AND 234C OF THE ACT. THE INTEREST HAVING BEEN LEVIED ERRONEO USLY IS TO BE DELETED. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADD UCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ASSESSMENT OF LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2008- 09 IN ITA NO. 2194/BANG/2017 ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE ITA NOS.2193 TO 2195/BANG/2017 PAGE 3 OF 6 MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMP UGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASH ED. 2.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE AB SENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOU GHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORD ER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND C IRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLIC ABLE. 2.3 IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS P ASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARE LIABLE TO BE QUAS HED. 3. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS. 6,79,473/- AS INCOME OF THE APPELLANT AND TAXING TH E SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' HOLDING THAT THE A PPELLANT HAD DEALT IN SHARES MENTIONED IN THE ASSESSMENT ORDER WHICH W ERE ACCOMMODATIVE IN NATURE AND THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE APP ELLANT HAVING NEVER DEALT IN SHARES AS MENTIONED IN THE ASSESSMENT ORDE R, THE ACTION OF AUTHORITIES IN TAXING THE ALLEGED SUM IS WITHOUT BA SIS, BASED ON SURMISES AND CONJECTURES, CONTRARY TO FACTS AND EVI DENCE AVAILABLE AND THEREFORE DESERVES TO BE REJECTED. 3.2 IN ANY CASE, THE CIT(A) HAS ERRED IN REJECTING THE SUBMISSION OF THE APPELLANT THAT HE HAD NOT DEALT IN THE SHARES AS ME NTIONED IN THE ASSESSMENT ORDER ON THE GROUND THAT THE APPELLANT H AD NOT SOUGHT ANY REDRESSAL UNDER CRPC AND THE CONTENTION IS ONLY AN AFTERTHOUGHT. THE CONCLUSION DRAWN BY THE CIT(A) BEING ERRONEOUS IS T O BE REJECTED. 3.3 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCL USIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WI THOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILIT IES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY Q UASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO B E REJECTED IN TOTO. 4. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST U/S 234B AND 234C OF THE ACT. THE INTEREST HAVING BEEN LEVIED ERRONEO USLY IS TO BE DELETED. 5. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADD UCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ASSESSMENT OF ALLEGED AMOUNT UNDER THE HEAD INC OME FROM OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 4. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2009- 10 IN ITA NO. 2195/BANG/2017 ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN ITA NOS.2193 TO 2195/BANG/2017 PAGE 4 OF 6 THE MANNER PASSED BY HIM AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASHED. 2.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE AB SENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOU GHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORD ER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED . 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLA NT AND THE LAW APPLICABLE. 2.3 IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS P ASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARE LI ABLE TO BE QUASHED. 3. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS. 46,41,576/- AS INCOME OF THE APPELLANT AND TAXING T HE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' HOLDING THAT THE A PPELLANT HAD DEALT IN SHARES MENTIONED IN THE ASSESSMENT ORDER WHICH W ERE ACCOMMODATIVE IN NATURE AND THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE APPELLANT HAVING NEVER DEALT IN SHARES AS MENTIONED IN THE ASSESSMEN T ORDER, THE ACTION OF AUTHORITIES IN TAXING THE ALLEGED SUM IS WITHOUT BASIS, BASED ON SURMISES AND CONJECTURES, CONTRARY TO FACTS AND EVI DENCE AVAILABLE AND THEREFORE DESERVES TO BE REJECTED. 3.2 IN ANY CASE, THE CIT(A) HAS ERRED IN REJECTING THE SUBMISSION OF THE APPELLANT THAT HE HAD NOT DEALT IN THE SHARES A S MENTIONED IN THE ASSESSMENT ORDER ON THE GROUND THAT THE APPELLANT H AD NOT SOUGHT ANY REDRESSAL UNDER CRPC AND THE CONTENTION IS ONLY AN AFTERTHOUGHT. THE CONCLUSION DRAWN BY THE CIT(A) BEING ERRONEOUS IS T O BE REJECTED. 3.3 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCL USIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WI THOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILIT IES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY Q UASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO B E REJECTED IN TOTO. 4. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST U/S 234B AND 234C OF THE ACT. THE INTEREST HAVING BEEN LEVIED ERRONEO USLY IS TO BE DELETED. 5. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADD UCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ASSESSMENT OF ALLEGED AMOUNT UNDER THE HEAD INC OME FROM OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 5. BOTH SIDES WERE HEARD AND IT WAS NOTED THAT IN T HIS CASE, THE ISSUE WAS DECIDED AGAINST THE ASSESSEE ON THE BASIS OF THE STATEMENT OF SHRI MUKESH CHOKSI, KEY ITA NOS.2193 TO 2195/BANG/2017 PAGE 5 OF 6 PERSON OF M/S. MAHASAGAR GROUP OF CASES AS PER WHIC H IT WAS STATED BY HIM THAT HE IS PROVIDING ACCOMMODATION ENTRIES AND IT I S NOTED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS ONE OF THE BE NEFICIARIES OF SUCH ACCOMMODATION ENTRIES. THE BENCH OBSERVED THAT THIS TRIBUNAL IS TAKING A CONSISTENT VIEW OF RESTORING THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY HON'BLE K ARNATAKA HIGH COURT IN A JUDGMENT RENDERED IN THE CASE OF CHANDRA DEVI KOTHA RI IN WRIT PETITION NO. 39370/2014 DATED 02.02.2015. FOR TAKING THIS VIEW, THE TRIBUNAL IS FOLLOWING THE TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. ITO IN ITA NO. 2168/BANG/2016 DATED 17.03.2017, IN WHICH T HE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISIO N WITH THE SAME DIRECTIONS AS WERE GIVEN BY HON'BLE KARNATAKA HIGH COURT IN A JUD GMENT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT PETITION NO. 3 9370/2014 DATED 02.02.2015. LEARNED AR OF THE ASSESSEE SUBMITTED TH AT IN THE PRESENT CASE ALSO, THE ISSUE MAY BE DECIDED ON SIMILAR LINE. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I REPR ODUCE PARAS 5 AND 6 OF THIS TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. ITO (SUPRA). THE SAME READS UNDER. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRS T OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HON'BLE KARN ATAKA HIGH COURT RENDERED IN THE CASE OF M/S CHANDRA DEVI KOTH ARI (SUPRA) AND THIS IS AS UNDER:- 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS A DVERTED TO ABOVE, AND AS THE PETITIONER HAS BEEN DENIED AN OPP ORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE-CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEA RING TO THE PETITIONER AND BY FURNISHING THE DETAILS/COPY OF TH E STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BE EN PASSED.' 6. FROM THE ABOVE PARA FROM THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RESTORED BAC K TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE S TATEMENT OF SHRI MUKESH CHOKSI. AS PER THE FACTS NOTED BY THE HIGH C OURT IN THE EARLIER ITA NOS.2193 TO 2195/BANG/2017 PAGE 6 OF 6 PARAS OF JUDGMENT AND AS PER THE FACTS OF THE PRESE NT CASE, I FIND THAT THE FACTS ARE SIMILAR AND LD DR OF THE REVENUE ALSO COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF KARNATAKA HIGH COURT, I SET ASIDE THE O RDER OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR FR ESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE HON'BLE KARNAT AKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPROD UCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FO R AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. 7. RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER AND I N TURN FOLLOWING THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CHANDRA DEVI KOTHARI (SUPRA), I DECIDE THIS ISSUE IN THE PRESENT CASE AL SO ON SIMILAR LINE AND RESTORE THIS MATTER BACK TO THE FILE OF AO FOR FRESH DECISI ON WITH THE SAME DIRECTIONS AS WERE GIVEN BY HON'BLE KARNATAKA HIGH COURT IN THE C ASE OF CHANDRA DEVI KOTHARI (SUPRA) AS PER PARA 8 OF THE JUDGMENT WHICH IS REPRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FO R REGARDING MERIT OF THE ADDITION AT THIS STAGE. 8. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 01 ST JUNE, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.