The ITO, Ward-6(3), Ahmedabad V. Shri Nailesh T.Shah, Ahmedabad

ITA 2221/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68096 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2013
• Assessment Year: 1994-1995
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Opportunity of being heard; Peak credit

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NOS.2221 & 2222/AHD/2010 ( & '& & '& & '& & '& / / / / ASSESSMENT YEARS : 1994-95 & 1995-96) ITO WARD-6(3) AHMEDABAD / VS. SHRI NAILESH T.SHAH 5, KANISHKA, PRITAMNAGAR 2 ND DHAL, PALDI ELLISBRIDGE AHMEDABAD-380 006 ( !./)* !./ PAN/GIR NO. : ADOPS 9199 S ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI OP BATHEJA SR.D.R. ,-(+ / . / RESPONDENT BY : SHRI S.N.SOPARKAR, A.R. ' 0 / $1 / / / / DATE OF HEARING : 26/11/2013 23' / $1 / DATE OF PRONOUNCEMENT : 31/12/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGA INST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHME DABAD (CIT(A) FOR SHORT) DATED 26/04/2010 PERTAINING T O ASSESSMENT YEARS (AYS) 1994-95 & 1995-96. SINCE THESE APPEALS PERTA IN TO THE SAME ASSESSEE AND COMMON ISSUES INVOLVED, THESE WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE REVENUE HAS RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL:- ITA NOS.2221&2222/AHD/ 2010 ITO VS. SHRI NAILESH T.SHAH ASST.YEARS 1994-95 & 1995-96 - 2 - 1. THE LD.COMMISSIONER OF INCOME TAX(A)-XI, AHMEDA BAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF R S.96,71,306/- AND RS.2,67,705/- FOR ASSTT.YEARS 1994-95 & 1995-96 RES PECTIVELY FOR NON- PRODUCTION OF PROOF OF GENUINENESS OF DEPOSITS IN T HE BANK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.COMMISSIONER OF INCOME TAX (A)-XI AHMEDABAD OUGH T TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A)-XI, AHMEDABAD MAY BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 2. FIRST, WE TAKE UP THE ITA NO.2221/AHD/2010 FOR A Y 1994-95. 2.1. THIS IS THE SECOND INNING AND IN THE EARLIER I NNING, THE ASSESSMENT ORDER FOR THE AYS 1994-95 & 1995-96 WERE PASSED U/S.143(3 ) OF THE I.T. ACT DATED 31/03/1997 DETERMINING INCOME AT RS.99,95,360/- AND RS.3,99,430/- RESPECTIVELY AS AGAINST THE RETURNED INCOME OF RS.2 ,87,630/- AND RS.1,31,720/-. ON APPEAL, A CONSOLIDATED ORDER WAS PASSED BY THE L D.CIT(A) AND THE MATTER TRAVELLED UPTO THE HONBLE TRIBUNAL AND THE HONBLE ITAT C BENCH AHMEDABAD IN ITA NOS.2006 & 2007/AHD/2000 VIDE CONS OLIDATED ORDER DATED 04/12/2001 RESTORED THE MATTER TO CIT(A) WITH FOLLO WING OBSERVATIONS/DIRECTIONS:- '9. TO A SPECIFIC QUERY FROM THE BENCH ABOUT THE VE RIFICATION OF THE DEPOSITS/WITHDRAWALS THROUGH ACCOUNT PAYEE CHEQUES, SUCH ENTRIES SUPPORTED BY COGENT DOCUMENTARY EVIDENCE, THE ID. D.R. SUBMITTED THAT NO SUCH DETAILED ENQUIRY HAS BEEN CONDUCTED BY THE A.O. BUT CAN BE DONE IF THE MATTER IS SENT BACK TO THE REVENUE AUTH ORITIES. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORDS AND GONE THROUGH THE DECISIONS REFERRED BY BOTH THE PARTIES. ONE OF THE CONTENTIONS OF THE ID. D.R. IS THAT THE A.O HAS NOT FULLY CONSIDERED AND APPRECIATED THE SUBMISSION OF ASSESSEE WHICH WERE MADE BY HIM THROUGH LETTER DATED 5.3.97. IT HAS BE EN FOUND BY US THAT NEITHER THE ASSESSES HAS DISCLOSED THE COMPLETE FAC TS OF THE CASE NOR THE DEPARTMENT HAS DONE SINCERE EFFORTS TO COLLECT THE FACTS OF THE CASE ITA NOS.2221&2222/AHD/ 2010 ITO VS. SHRI NAILESH T.SHAH ASST.YEARS 1994-95 & 1995-96 - 3 - WHEREAS THE MOST OF THE TRANSACTIONS IN DISPUTE WE RE THROUGH BANKING CHANNEL. BY THIS TYPE OF COLLECTING THE REVENUE C OULD LAY ITS HAND ON NUMBER OF UNACCOUNTED ENTRIES AND ENTRIES RELATED T O CONCEALMENT OF INCOME ON THE OTHER HAND, THE ASSESSEE MIGHT GET RE LIEF THE DISPUTED TRANSACTIONS WERE HAVING COGENT AND PATENT SUPPORTING DOCUMENTARY EVIDENCE. WHEN DEPOSITS OR W ITHDRAWAL FROM BANK THROUGH ACCOUNT PAYEE CHEQUE DEMAND DRAFT WERE THERE, ONE CAN FIND THE OWNER OF THAT TRANSACTION FROM THE RECORDS OF THE BANK. SIMILARLY IN THE CASE OF TRANSACTION WITH COMPANIES ARE TRACEABLE AS ALL COMPANIES WITH WHOM DISPUTED TRANSACTIONS MADE WERE REGISTERED WITH THE RESPECTIVE REGISTRAR OF COMPANIES AND SUCH COMP ANIES WERE MAINTAINING COMPLETE RECORDS RELATED TO SHARE CAPIT AL ISSUE, SUBSCRIBER, PAID AND REFUNDED. THE DISPUTED TRANSACTIONS WHERE DEPOSITS IN ASSESSEE'S BANK ACCOUNT THROUGH ACCOUNT PAYEE CHEQU ES AND DRAFTS, SUCH TRANSACTIONS CAN BE LOCATED FROM THE RECORD OF THE CONCERNED BRANCH OF THE BANK THAT FROM WHOM THE MONEY WERE RE CEIVED. SIMILARLY IN CASE OF AMOUNT SENT TO COMPANIES FOR ALLOTMENT O F SHARES THE CONCERNED PERSON CAN BE TRACED FROM THE RECORDS OF COMPANIES AND BANKS IN WHOSE NAME THE SHARES WERE ALLOTTED. FURTH ERMORE, IN CASE OF REFUND TO PARTIES IT CAN VERIFY EASILY AND TRACE OU T THE PARTY FROM THE RECORDS OF THE BANK/RECORD OF CONCERNED COMPANY THA T TO WHOM THE REFUNDS WERE ISSUED. IN THIS MANNER ALL ENTRIES CAN BE TRACED OUT AND TRANSACTIONS OF THOSE ENTRIES CAN BE VERIFIED WHETH ER SAME HAVE BEEN DISCLOSED BY THE RESPECTIVE PARTIES IN THEIR BOOKS OF ACCOUNT AND THE RETURN OF INCOME SUBMITTED BY THEM OR NOT, AND IF S AME HAVE NOT BEEN DISCLOSED, APPROPRIATE ACTION CAN BE TAKEN AGAINST THEM IN ACCORDANCE WITH THE PROVISIONS OF I.T. ACT BY EXERCISING POWER PROVIDED UNDER THE LT. ACT INCLUDING PROVISIONS OF SEC. 150 OF THE ACT . IT IS PERTINENT TO MENTION HERE THAT ON A SPECIFIC QUERY FROM THE BENC H ABOUT THE VERIFICATION OF DEPOSITS/ WITHDRAWAL IN ALLEGED BAN K ACCOUNT WHICH WERE MOSTLY THROUGH ACCOUNT PAYEE CHEQUES AND DEMAND DRA FTS ETC., THE LD. D.R. SUBMITTED THAT THE SAME CAN BE VERIFIED IF THE MATTER IS SENT BACK TO THE REVENUE AUTHORITIES. . 11. AFTER ABOVE DISCUSSION AND TINDER THE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT IT IS UNFAIR TO BOTH THE PARTIES TO EXPRESS ANY OPINION ON INCOMPLETE FACTS. IN THESE C IRCUMSTANCES AND IN VIEW OF HON'BLE SUPREME COURT EXPRESSED IN CASE OF CIT VS. KANPUR COAL SYNDICATE (1964) 53 ITR 225 (SC) THE MATTER IS SENT BACK TO THE FILE OF THE CIT(A). HE MAY SEND THE ISSUE TO THE A. O TO COLLECT THE REQUIRED AND RELEVANT FACTS OF EACH ENTRIES OF THE CASE AND C1T(A) IS TO DECIDE THE ISSUE AFRESH ON THE BASIS OF MATERIAL CO LLECTED IN ACCORDANCE ITA NOS.2221&2222/AHD/ 2010 ITO VS. SHRI NAILESH T.SHAH ASST.YEARS 1994-95 & 1995-96 - 4 - WITH LAW AND IN ACCORDANCE WITH THE ABOVE OBSERVATI ON MADE BY US AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. IT IS ALSO PERTINENT TO ADD HERE THAT THE ASSESSEE SHO ULD ALSO EXTEND HIS CO- OPERATION TO THE A.O (REVENUE AUTHORITIES) IN COLLE CTING NECESSARY FACTS OF THE CASE AND ENTRIES OF THE BANK TRANSACTIONS AND INCASE FAILURE ON HIS PART THE R.A. ARE FREE TO TAKE APPROPRIATE INFERENC ES AGAINST HIM BY A SPEAKING ORDER '. 3. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO, WHER EAS LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DIRECTION WAS I SSUED IN THE YEAR 2001 BUT NO ACTION WAS TAKEN BY THE REVENUE AUTHORITIES. HE SUBMITTED THAT IT IS EVIDENT THAT THE LD.CIT(A) PASSED ORDER ON 26/04 /2010. HE SUBMITTED THAT THE REMAND REPORT WAS CALLED FOR BY THE LD.CIT (A) IN THE YEAR 2008. THE AO IN HIS REMAND REPORT HAS SUBMITTED THAT IN T HE ABSENCE OF BANK RECORD, IT IS NOT POSSIBLE TO COMPLY WITH THE DIREC TIONS OF THE HONBLE ITAT REGARDING VERIFICATION OF RECORDS OF THE ASSES SEE. HE SUBMITTED THAT THE REVENUE AUTHORITIES OUGHT TO HAVE VERIFIED THE RECORDS. THE LD.SR.DR COULD NOT CONTROVERT ABOUT THE DIRECTIONS OF THE TRIBUNAL ISSUED IN THE YEAR 2001. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE HONBLE TRIBUNAL IN ITA NOS.2006 & 2007/AHD/2000 FOR AYS 1994-95 & 1995-96 HAD GIVEN THE FOLLOWING DIRECTIONS VIDE ORDER DATED 04/12/2001:- 11. AFTER ABOVE DISCUSSION AND TINDER THE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT IT IS UNFAIR TO BOTH THE PARTIES TO EXPRESS ANY OPINION ON INCOMPLETE FACTS. IN THESE C IRCUMSTANCES AND IN VIEW OF HON'BLE SUPREME COURT EXPRESSED IN CASE OF CIT VS. KANPUR COAL SYNDICATE (1964) 53 ITR 225 (SC) THE MATTER IS SENT BACK TO THE FILE OF THE CIT(A). HE MAY SEND THE ISSUE TO THE A. O TO COLLECT THE ITA NOS.2221&2222/AHD/ 2010 ITO VS. SHRI NAILESH T.SHAH ASST.YEARS 1994-95 & 1995-96 - 5 - REQUIRED AND RELEVANT FACTS OF EACH ENTRIES OF THE CASE AND C1T(A) IS TO DECIDE THE ISSUE AFRESH ON THE BASIS OF MATERIAL CO LLECTED IN ACCORDANCE WITH LAW AND IN ACCORDANCE WITH THE ABOVE OBSERVATI ON MADE BY US AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. IT IS ALSO PERTINENT TO ADD HERE THAT THE ASSESSEE SHO ULD ALSO EXTEND HIS CO- OPERATION TO THE A.O (REVENUE AUTHORITIES) IN COLLE CTING NECESSARY FACTS OF THE CASE AND ENTRIES OF THE BANK TRANSACTIONS AND INCASE FAILURE ON HIS PART THE R.A. ARE FREE TO TAKE APPROPRIATE INFERENC ES AGAINST HIM BY A SPEAKING ORDER '. 4.1. THE LD.CIT(A) HAS RECORDED A FINDING THAT VIDE A LETTER DATED 29/05/08, THE AO WAS ASKED TO SUBMIT THE REPORT KEE PING IN VIEW THE TRIBUNALS ORDER. IT IS ALSO RECORDED THAT SINCE T HERE WAS NO RESPONSE, VIDE LETTER DATED 15/09/09, THE AO WAS ASKED TO SUB MIT THE REPORT IN RESPONSE TO WHICH AO SUBMITTED THE REPORT DATED 23/ 9/09. IT IS ALSO RECORDED THAT VIDE LETTER DATED 22/10/99, AOS ATTE NTION WAS DRAWN IN PARTICULAR TO PARA NOS.9,10 & 11 OF THE TRIBUNALS ORDER AND HE WAS ASKED TO SUBMIT A FURTHER REPORT BY 15/12/09 (AS EA RLIER REPORT WAS SUBMITTED WITHOUT CARRYING OUT THE INQUIRIES IN ACC ORDANCE WITH TRIBUNALS ORDER). THE AO VIDE HIS LETTER DATED 1 5/12/09 REQUESTED FOR FURTHER TIME OF 20 DAYS. HOWEVER, FINALLY VIDE HIS LETTER DATED 07/01/2010, THE AO SUBMITTED THE REPORT WHICH IS RE PRODUCED BELOW:- IN THIS REGARD IT IS TO BE STATED THAT AS REQUESTE D THAT YOUR HONOR AS GRANTED TO SUBMIT FURTHER REMAND REPORT IN THE ABOV E CASE UP TO 11/01/2010. SUBSEQUENTLY TIME WAS GRANTED TO THE B ANK MANAGER OF THE RELIEF MERCANTILE CO.OP. BANK LTD. TO SUBMIT REQUIR ED INFORMATION BEFORE 08/01/2010. THE LIQUIDATOR SHRI H.M.RATHOD OF THE RELIEF MERCAN TILE CO.OP.BANK LTD. HAS SUBMITTED REPLY ON 05/01/2010 STATING THAT ENTIRE RECORD OF THE BANK UPTO 2000 HAS BEEN DESTROYED HOWEVER SINCERE E FFORTS HAS BEEN CARRIED OUT TO TRACE OUT THE REQUIRED RECORDS FROM EXISTING RECORDS OF THE BANK BUT THERE IS NOTHING IS OBTAINED WHICH IS RELATED WITH BANK ITA NOS.2221&2222/AHD/ 2010 ITO VS. SHRI NAILESH T.SHAH ASST.YEARS 1994-95 & 1995-96 - 6 - ACCOUNTS OF SHRI NAILESH T.SHAH AS DESIRED BY THE I NCOME TAX DEPARTMENT AS THE LETTER OF ITO WARD 6(3) DATED 09 /11/2009 AND REMINDER LETTER DATED 07/12/2009. COPY OF THE LETT ER DATED 05/01/2010 RECEIVED FROM THE LIQUIDATOR OF THE RELIEF MERCANTI LE CO-OP.BANK LTD. IS SENT HEREWITH FOR YOUR READY REFERENCE. IN ABSENCES OF BANK RECORD IT IS NOT POSSIBLE TO CO MPLY THE GUIDE LINES OF LD.ITAT REGARDING VERIFICATION OF RECORDS OF BANK O F THE SHRI NAILESH T SHAH. SUBMITTED FOR YOUR KIND PERUSAL AND NECESSAR Y FURTHER DIRECTIONS PLEASE. 4.2. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT IN THE INSTANT CASE, NO SURVEY OR SEI ZURE TOOK PLACE. NO INCRIMINATING DOCUMENTS WERE FOUND WITH THE ASSESSE E. THE ENTIRE ISSUE ORIGINATED FROM THE STATEMENT RECORDED BY THE ADIT, THE DETAILS OF WHICH HAVE BEEN REPRODUCED. IT IS RECORDED THAT THE ASS ESSMENT ORDERS DATED 31/3/97 FOR ASSESSMENT YEARS 1994-95 & 1995-96, THE AO PROCEEDED ON THE BASIS THAT THE BANK ACCOUNTS WITH RELIEF MERCAN TILE CO-OPERATIVE BANK LTD., BELONGED TO THE ASSESSEE; THAT THE ASSES SEE FAILED TO EXPLAIN THE SOURCE OF DEPOSITS; AND THEREFORE THE DEPOSITS IN THE BANK ACCOUNTS WERE ASSESSABLE IN THE HANDS OF THE ASSESSEE. THUS , BY TAKING THE PEAK CREDIT OF 90 DAYS, THE AO WENT ON TO MAKE THE ADDIT ION OF RS.96,71,306/- AND RS.2,67,705/- AS INCOME ESTIMATED ON PEAK METH OD BASIS FROM SHARE TRADING BUSINESS FOR ASSESSMENT YEARS 1994-95 AND 1995-96 RESPECTIVELY. THE UNDISPUTED FACT REMAINS THAT THE REVENUE WAS GIVEN AN OPPORTUNITY BY THE HONBLE TRIBUNAL VIDE ORDER D ATED 04/12/2001 IN ITA NOS.2006 & 2007(SUPRA). THE REVENUE CHOSE NOT TO AVAIL THE OPPORTUNITY AND THIS IS A CLASSICAL EXAMPLE OF LETH ARGY ON THE PART OF THE OFFICIAL CONCERNED, SINCE DESPITE HAVING GIVEN OPPO RTUNITY NO VERIFICATION COULD BE MADE. THEREFORE, WE DO NOT FIND ANY REASO N TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), MOREOVER, NO MATERIAL H AS BEEN PLACED ON ITA NOS.2221&2222/AHD/ 2010 ITO VS. SHRI NAILESH T.SHAH ASST.YEARS 1994-95 & 1995-96 - 7 - RECORD BY THE REVENUE IN COMPLIANCE OF THE SPECIFIC DIRECTIONS ISSUED BY THE TRIBUNAL. THEREFORE, GROUND RAISED BY THE REVEN UE IS HEREBY REJECTED. 5. IN THE RESULT, REVENUES APPEAL FOR AY 1994-95 I S DISMISSED. 6. NOW, WE TAKE UP THE ITA NO.2222/AHD/2010 FOR AY 1995-96. 6.1. SINCE THE FACTS AND CIRCUMSTANCES ARE SIMILAR TO TH E FACTS AND CIRCUMSTANCES IN REVENUES APPEAL IN ASSESSEES OWN CASE BEARING ITA NO.2221/AHD/2010 FOR AY 1994-95(SUPRA), FOLLOWING THE SAME REASONING, WE HEREBY DISMISS THIS APPEAL OF THE REVENUE. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/ 12 /2013 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-XI, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD