RAJESH G. MEHTA, MUMBAI V. ASST CIT CEN CIR 36, MUMBAI

ITA 231/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8318 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 14-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIR NARENDRA SINGH JANG
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3); 153A; 69; 132; 11

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, D MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NOS.231 TO 235/MUM/2016 ASSESSMENT YEARS: 2008-09 TO 2012-13 SHRI RAJESH G. MEHTA, C-901, PANCHSEEL HEIGHTS, MAHAVIR NAGAR, KANDIVALI, MUMBAI-400067 / VS. ACIT CENTRAL CIRCLE-36, MUMBAI ( '#$ % /ASSESSEE) ( / REVENUE) PAN. NO . AAFPM9963R & ' % ( / DATE OF HEARING : 05/12/2017 ' % ( / DATE OF ORDER: 05/12/2017 '#$ % ! / ASSESSEE BY SHRI PRAKASH JHUNJHUNWALA & SHRI POOJAN MEHTA ! / REVENUE BY SHIR NARENDRA SINGH JANGPANGI CIT-DR ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THIS BUNCH OF FIVE APPEALS IS BY THE ASSESSEE AGAIN ST THE IMPUGNED ORDERS ALL DATED 24/09/2015 OF THE LD. FIR ST APPELLATE AUTHORITY, MUMBAI, ON THE GROUNDS AS STAT ED IN THE GROUNDS OF APPEAL. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE , SHRI PRAKASH JHUNJHUNWALA ALONG WITH POOJAN MEHTA FILED ADDITION EVIDENCE, WHICH COULD NOT BE FILED BEFORE THE FIRST APPELLATE AUTHORITY AS SUFFICIENT OPPORTUNITY WAS N OT PROVIDED. THE COPY OF THE ADDITIONAL EVIDENCES WAS ALSO GIVEN TO THE LD. CIT-DR, SHRI NAREDRA SINGH JANGPANGI. AS SESSEE HAS ALSO FILED AFFIDAVIT STATING THE COMPELLING REA SONS DUE TO WHICH THE EVIDENCES COULD NOT BE FURNISHED BEFORE T HE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT WAS EXPLAI NED THAT FOR ASSESSMENT YEAR 2007-08 , VIDE ORDER DATED 08/11/2016 ( ITA NO.270/MUM/2016) , IDENTICALLY THE ISSUE WAS REMANDED BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX ( APPEAL) FOR FRESH ADJUDICATION. THE ASSESSEE ALSO FILED PHO TOCOPY OF THE AFORESAID ORDER OF THE TRIBUNAL DATED 08/11/2016. THE LD. CIT-DR CONTENDED THAT IT WAS THE DUTY OF THE ASSESSEE TO ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 3 MAKE EFFECTIVE REPRESENTATION AND TO FILE THE NECES SARY EVIDENCE WITHIN THE STIPULATED PERIOD. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 08/1 1/2016 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL FILED BY THE ASSESSEE ON 14.1.2016 IS AGAINST THE ORDER OF THE CIT (A)-53, MUMBAI DATED 24.9.2015 FOR THE ASSESSMENT YEAR 2007-2008. 2. IN THIS APPEAL, ASSESSEE RAISED SEVEN GROUNDS IN TOTO AND APART FROM OTHER ISSUES, THEY INCLUDE CERTAIN LEGAL ISSUES VIZ CORRECTNESS OF THE ASSESSMENT ORDER MADE U/S 14 3(3) R.W.S 153A OF THE ACT AND THE DECISION OF THE AO ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. ASSESSEE FURTHER ARGUES IN THE GROUNDS THAT THIS IS THE CASE OF UNAB ATED ASSESSMENT AND THE AO DOES NOT HAVE FREE HAND IN MA KING ADDITIONS WHICH ARE SUPPORTED BY THE INCRIMINATING MATERIAL. FURTHER, ASSESSEE ALLEGES THAT THE ADJUDI CATION BY THE CIT (A) WAS MADE EXPARTE AND THEREFORE, THE CIT (A) VIOLATED THE PRINCIPLES OF NATURAL JUSTICE. THE OTH ER ISSUES RAISED IN THIS APPEAL RELATE TO THE MERITS OF THE A SSESSMENT ORDER AND THE ADDITIONS MADE THEREIN. 3. BEFORE US, THERE IS A LETTER FOR ADJOURNMENT DAT ED 7.11.2016, WHEREIN ASSESSEE SEEKS CERTAIN TIME TO C OMPILE THE DETAILS. IN THIS REGARD, IN RESPONSE TO THE QUE STIONS FROM THE BENCH REGARDING THE DETAILS LIKELY TO BE F ILED, THERE IS NO RESPONSE FROM THE ASSESSEE S SIDE. ACCORDINGLY, ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 4 THE REQUEST FOR ADJOURNMENT IS REJECTED AND WE PROC EED TO HEAR THE CASE ON THE GROUNDS RAISED BEFORE US. 4. BRINGING OUR ATTENTION TO THE GROUNDS NO.4 AND 6 , IT IS SUBMITTED THAT THE CIT (A) PASSED ORDER WITHOUT ATTENDANCE OF THE ASSESSEE OR ANY REPRESENTATION ON BEHALF OF THE ASSESSEE. THEREFORE, THERE IS A REQUEST FOR REMANDING THIS APPEAL TO THE FILE OF THE CIT (A) WITH A DIREC TION TO GRANT FURTHER OPPORTUNITY IN ADDITION TO THE DETAIL S PROVIDED IN PARA 3.2 OF THE IMPUGNED ORDER. IT IS A LSO BROUGHT TO OUR NOTICE THAT THE ISSUE RELATING TO MA KING OF ASSESSMENT IN THE ABSENCE OF ANY INCRIMINATING MATE RIAL U/S 153A OF THE ACT IS UNSUSTAINABLE IN LAW. 5. ON HEARING BOTH THE PARTIES, WE HAVE PERUSED THE ORDER OF THE AO DATED 26.3.2014 AND FIND THE ASSESSEE FIL ED THE RETURN OF INCOME ORIGINALLY ON 2.6.2008 DECLARING T HE TOTAL INCOME OF RS. 6.6 LAKHS (ROUNDED OFF). CONSEQUENT T O THE SEARCH ACTION CONDUCTED ON SHRI RAJESH G. MEHTA, TH E DIRECTOR OF M/.S KARMA INDUSTRIES LIMITED, IN RESPO NSE TO THE NOTICE U/S 153A OF THE ACT, ASSESSEE FILED THE RETURN OF INCOME DECLARING THE INCREASED TOTAL INCOME OF RS. 33,65,021/-. ON THE FACT OF IT, THE ASSESSMENT ORDE R DOES NOT INDICATE ANY INCRIMINATING MATERIAL / EVIDENCE IN ANY FORM FOR THIS INCREASED TOTAL INCOME. ASSESSEE DECL ARED AN AMOUNT OF RS. 28,12,544/- AS SHORT TERM CAPITAL GA INS AND CLAIMED BENEFIT OF THE PROVISIONS OF SECTION 11 1A OF THE ACT RELATING TO THE TAX ON SHORT TERM CAPITAL GAIN S SUO MOTO IN CERTAIN CASES. AO NEVER MENTIONED THAT THE ABOVE ADDITIONAL INCOME IS ATTRIBUTABLE TO ANY INCRIMINAT ING MATERIAL SEIZED U/S 132 OF THE ACT. ASSESSING OFFIC ER CONSIDERED THE CLAIM OF THE ASSESSEE AND FOUND, ASS ESSEE DOES NOT ESTABLISH THE APPLICABILITY OF THE SAID PR OVISIONS OF THE ACT AND THE CONDITIONS ARE SATISFACTORILY ME T BEFORE CLAIMING THE CONCESSIONAL TAX RATES. ACCORDINGLY, T HE SAID INCOME WAS TREATED AS NORMAL INCOME. AO ALSO DENIED THE CLAIM OF DEDUCTION UNDER CHAPTER VI-A AMOUNTING TO RS. 1,10,000/-. ON APPEAL, CIT (A) CONFIRMED THE SAME I N HIS ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 5 EXPARTE ADJUDICATION. THUS, IT IS EVIDENT FROM THE RECORD THAT THE AO DID NOT HAVE EVIDENCE / INCRIMINATING M ATERIAL TO SHOW THAT THE SAID INCOME OF RS. 28,12,544/- OR DEDUCTION OF RS. 1,10,000/- HAS A BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTI ON. HOWEVER, THIS IS THE CASE WHERE ADJUDICATION BY THE CIT (A) IS DONE IN THE ABSENCE OF THE ASSESSEE OR HIS REPRESENTATIVE. CONSIDERING THE FAIRNESS OF THE REQ UIREMENT OF THE ADJUDICATION OF ISSUES INVOLVED, WE ARE OF T HE OPINION, THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ARE REQUIRED TO BE REMANDED TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION AFTER GRANTING A REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. ASSESSEE IS ALSO DI RECTED TO MAKE ATTENDANCE WITHOUT FAIL THIS TIME IN THE SECON D ROUND OF PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY . WE ORDER ACCORDINGLY. THUS, GROUNDS RAISED BY THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 2.2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A DIRECTOR IN M/S KARMA INDUSTRIES LTD. AND WAS RECEI VING REMUNERATION AND ALSO INCOME FROM OTHER SOURCES. FO R ASSESSMENT YEAR 2008-09, THE ASSESSEE DECLARED INCO ME OF RS.74,91,670/- IN HIS RETURN FILED ON 20/04/2009. A SEARCH WAS CARRIED OUT U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) UPON THE ASSESSEE, THEREFORE, NOTICE U/S 153A OF THE ACT WAS ISSUED. THE LD. ASSESSING OFFIC ER WHILE FRAMING THE ASSESSMENT U/S 143(3) R.W.S 153A OF THE ACT MADE CERTAIN ADDITIONS/DISALLOWANCES BROADLY WITH R ESPECT TO ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 6 TREATING THE SHORT TERM CAPITAL GAINS OF RS.61,89,6 74/- AS BUSINESS INCOME AND CHARGE THE NORMAL RATE OF TAX. THE LD. ASSESSING OFFICER ALSO MADE DISALLOWANCE OF DEDUCTI ON U/S CHAPTER VIA OF THE ACT AMOUNTING TO RS.1,10,000/-. LIKEWISE, FOR ASSESSMENT YEAR 2009-10, THE AMOUNT O F RS.35,49,323/- WAS ASSESSED AT NORMAL TAX RATE AND ALSO MADE ADDITION OF RS.99,75,000/- ON ACCOUNT OF UNEXP LAINED INVESTMENT U/S 69 OF THE ACT. ALMOST SIMILAR ARE TH E FACTS EXCEPT THE FIGURES IN DIFFERENT ASSESSMENT YEARS AS IS EVIDENCED FROM THE FACTS AVAILABLE ON RECORD. HOWEV ER, BEFORE US, THE ASSESSEE FILED ADDITIONAL EVIDENCE WHICH CO ULD NOT BE FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) WITHIN THE SPECIFIED TIME. THE ASSESSEE HAS ALSO FI LED AN AFFIDAVIT STATING THAT THE ASSESSEE COULD NOT ATTEN D THE OFFICE OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) UNDE R THE BONA FIDE REASONS/COMPELLING CIRCUMSTANCES AS HAS B EEN NARRATED IN THE SAID AFFIDAVIT. CONSIDERING THE AFO RESAID ORDER OF THE TRIBUNAL AND THE REASONS EXPLAINED BEFORE US /STATED IN THE AFFIDAVIT, WE ARE OF THE VIEW THAT EVEN AS PER ARTICLE 265 OF THE CONSTITUTION OF INDIA, ONLY DUE TAXES HAS TO BE LEVIED/COLLECTED. EVEN OTHERWISE, NO PERSONS SHOUL D BE ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 7 CONDEMNED UNHEARD, THUS, CONSIDERING THE PRINCIPLE OF NATURAL JUSTICE AND THE MATERIAL FACTS AVAILABLE ON RECORD, IN ALL FAIRNESS, WE DEEM IT APPROPRIATE TO REMAND THES E FILES TO THE FILE OF THE FIRST APPELLATE AUTHORITY TO ADJUDI CATE THE SAME AFRESH ON MERIT. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE IN S UPPORT OF HIS CLAIM. THE ASSESSEE IS ALSO DIRECTED TO REMAIN CAREFUL AND TO FURNISH THE NECESSARY EVIDENCE BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THUS, THE APPE ALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES O NLY. FINALLY, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 05/12/2017. SD/- (MANOJ KUMAR AGGARWAL) SD/- (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER & MUMBAI; * DATED : 05/12 /2017 F{X~{T? P.S/. .. ITA NOS. 231 TO 235/MUM/2016 SHRI RAJESH G. MEHTA 8 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE RESPONDENT. 3. 1 1 2% ( , ) / THE CIT, MUMBAI. 4. 1 1 2% / CIT(A)- , MUMBAI, 5. 45 /%' , 1 ,( ' 6 , & / DR, ITAT, MUMBAI 6. # 7& / GUARD FILE. ! / BY ORDER, 04,% /% //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI