INCOME TAX OFFICER 33(1)(1), MUMBAI V. SHRI ALAN M. DSOUZA, MUMBAI

ITA 2395/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7866 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOMNATH WAJLE
• Assessee Lawyers: H D SAVE
• Keywords: Unexplained investment; Opportunity of being heard; Additional evidence; Non compliance; Set aside; Capital Gains
• Section: 133(6); 201; 144; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI G. MANJUNATHA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 2395 /MUM/2018 ASSESSMENT Y EAR: 2012 - 13 THE INCOME TAX OFFICER 33(10(1), ROOM NO. 705, 7 TH FLOOR, BLDG. NO. C - 12, PRATYAKS HAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 VS. SHRI ALAN M. DSOUZA, 75E, GOVT. INDL. ESTATE, CHRKOP, KANDIVALI (WEST), MUMBAI - 400067 PAN: AFNPD0688P (APPELLANT) (RESPONDENT) REVENUE BY : SOMNATH WAJLE (DR) ASSESSEE BY : SHRI H.D. SAVE (AR) DATE OF HEARING: 17 /07 /201 9 DATE OF PRONOUNCEMENT: 26 / 0 7 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 29.01.2018 PA SSED BY THE COMMISSIONER OF INCOME TAX (APPEALS ) 45 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2012 - 13 , WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 144 OF THE INCOME TAX AC T, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF MOULDS AND DIES, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 4,85,220 / - . SINCE, THE CASE WAS SELECTED FOR SCRUTINY, THE A SSESSING O FFICER (AO) ISSUED NOTICE U/S 143 (2) AND 142 (1), HOWEVER , THE AO DID NOT RECEIVE ANY RESPONSE FROM THE ASSESSEE. NOTICE U/S 142 (1 ) WAS AGAIN ISSUED FOR AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGAIN NO RESPONSE WAS RECEIVED BY THE AO. ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE STATING THAT FAILURE TO 2 ITA N O. 2395 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 COMPLY WITH THE REQUIREMENTS WOULD ENTAIL EX - PARTE PROCEEDINGS . WHEN THE AO DID NOT RECEIVE ANY RESPONSE TO THE SAID NOTICE, THE A O PASSED ASSESSMENT ORDER U/S 144 OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 82,85,220/ - AFTER MAKING ADDITION OF RS. 28,00,000/ - U/S 69 OF THE ACT, ON ACCOUNT OF PURCHASE OF UNITS OF MUTUAL FUNDS AND ADDITION OF RS. 50,00,000/ - PAID TOWARDS CONSIDERATION FOR PURCHASE OF IMMOVABLE PROPERTY. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE DELETED BOTH THE ADDITIONS HOLDING THE SOURCES OF THE U NEXPLAINED ARE AVAILABLE IN THE ITR - 4 FILED ELECTRONICALLY BY THE ASSESSEE. AGAINST THE SAID FINDINGS OF THE LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4 . THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLO WING EFFECTIVE GROUNDS : - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS. 78,00,000/ - MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF INCOME TAX ACT, 1961 RELYING ON FRESH EVIDEN CE WITHOUT GIVING AN OPPORTUNITY UNDER RULE 46A TO THE AO BEFORE ADMITTING IT. 2. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN RELYI9NG ON THE BALANCE SHEET AS THERE WERE NO BOOKS OF ACCOUNT MAINTAINED BY T HE ASSESSEE AND GAVE RELIEF OF RS. 78,00,000/ - WITHOUT GIVING AN OPPORTUNITY TO THE AO IN THIS REGARD. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY DELETED THE ADDITION OF RS. 78,00,000/ - MADE ON ACCO UNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE ACT RELYING ON FRESH EVIDENCE WITHOUT GIVING AN OPPORTUNITY UNDER RULE 46A TO THE AO BEFORE ADMITTING IT. THE LD. DR FURTHER SUBMITTED THAT SINCE THE LD. CIT (A) HAS DECIDED THE APPEAL ON THE BASIS OF THE ADDITIO NAL EVIDENCE PRODUCED DURING THE APPELLATE 3 ITA N O. 2395 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 PROCEEDINGS WITHOUT GIVING OPPORTUNITY TO THE AO TO VERIFY THE GENUINENESS OF THE DOCUMENTS, THE ORDER PASSED BY THE LD. CIT (A) IS LIABLE TO BE SET ASIDE. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RE LYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER TO INTERFERE WITH. T HE LD. COUNSEL FURTHER POINTED OUT THAT SINCE THE AO HAD PASSED ASSESSMENT ORDER U/S 144 OF THE ACT, THE LD. CIT (A) DIRECTED THE AS SESSEE TO PRODUCE THE EVIDENCE UNDER SUB - RULE 4 OF THE RULE 46 A OF THE INCOME TAX RULES AND IN COMPLIANCE THEREOF , THE ASSESSEE FILED COMPLETE COPY OF ITR INCLUDING COMPUTATION OF INCOME, STATEMENT, BALANCE SHEET AND COPY OF BANK STATEMENT. SINCE, THERE WA S A SUFFICIENT CAUSE FOR NON COMPLIANCE OF NOTICE ISSUED BY THE AO , THE LD. CIT (A) HAS RIGHTLY ADMITTED THE DOCUMENTS UNDER CLAUSE B OF RULE 46A. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THESE DOCUMENTS DO NOT REQUIRE INVESTIGATION, THE LD. CIT (A) RI GHTLY VERIFIED THE SAME AND DECIDED THE APPEAL ON MERITS. THEREFORE, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE MATERIAL ON RECORD. THE LD. CIT (A) HAS DELETED THE ADDITION IN QUEST ION. THE LD. CIT (A) HAS DELETED THE ADDITIONS IN QUESTION HOLDING AS UNDER: - 6.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH PRINTOUT OF E - FILED ITR - 4, BALANCE SHEET AND COPY OF BANK ACCOUNT OF THE ASSES SEE HIGHLIGHTING THE RELEVANT ENTRIES IN ITR - 4 AND OTHER DOCUMENTS. VERIFICATION OF THE ITR - 4 SHOWS THAT THE ASSESSEE DECLARED FULL VALUE OF CONSIDERATION RECEIVED UNDER SCHEDULE CAPITAL GAIN AT RS. 71,25,000/ - AND NET CAPITAL GAINS OF RS. 45,78,620/ - . I N THE BALANCE SHEET OF THE ASSESSEE INVESTMENT IN MUTUAL FUNDS OF RS. 28,00,000/ - IS SEPARATELY SHOWN. THEREFORE, THERE IS ENOUGH EVIDENCE IN ITR - 4 FOR THE SOURCE OF INVESTMENT MADE BY THE ASSESSEE, WHICH IS REPORTED IN AIR. IN THE BEST JUDGMENT ASSESSMEN T, THE AO IS SUPPOSED TO EXAMINE ALL THE MATERIAL AVAILABLE WITH HIM AND TAKE A CONSIDERED JUDGMENT. THE AO COULD VERIFIED THE ITR - 4 FILED AND ALSO COULD HAVE WRITTEN TO THE BANK U/S 133(6) BASED ON THE BANK DETAILS 4 ITA N O. 2395 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 AVAILABLE IN THE AIR, TO CALL FOR STATEM ENT OF BANK ACCOUNT OF THE ASSESSEE AND EXAMINED IT BEFORE MAKING A BEST JUDGMENT ASSESSMENT. 6.4 HOWEVER, IT TRANSPIRES FROM THE RECORD THAT THE AO WITHOUT EXAMINING THE ITR - 4 AND WITHOUT CAUSING ANY ENQUIRIES, BASED ON THE AIR INFORMATION, SIMPLY ADDED T HE AMOUNTS APPEARING IN THE AIR. IT IS SEEN THAT, THE SOURCE FOR THE AMOUNTS OF INVESTMENTS IN MUTUAL FUND AND ALSO THE FLAT PURCHASED ARE AVAILABLE ON RECORD, THE ENTRIES ARE APPEARING IN THE BALANCE SHEET MAINTAINED BY THE ASSESSEE. THE BANK ACCOUNT REFL ECTS THE CHEQUES RECEIVED FOR SALE OF FLAT AND FACTORY AND ALSO DEBITS REFLECTS RS. 28,00,000/ - INVESTMENT IN MUTUAL FUND THROUGH JP MORGAN AND ALSO THE PAYMENTS MADE FOR PURCHASE OF FLAT FROM TIRUPATI DEVELOPERS BY THE APPELLANT. AFTER EXAMINATION OF THE ITR - 4, BALANCE SHEET AND THE BANK ACCOUNT STATEMENT OF THE APPELLANT, I AM OF THE CONSIDERED OPINION THAT THE INVESTMENTS IN MUTUAL FUNDS AND THE FLAT PURCHASED APPEARING IN AIR HAVE BEEN MADE FROM ACCOUNTED SOURCES AND THERE IS NO CASE FOR TREATING THE SA ME AS UNEXPLAINED INVESTMENT. THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITIONS MADE. THIS GROUND OF APPEAL IS ALLOWED. 8. WE NOTICE THAT THE LD. CIT (A) HAS DELETED THE ADDITIONS AFTER GOING THROUGH THE ENTRIES IN THE BALANCE SHEET, COPY OF BA NK ACCOUNT AND COPY OF E - FILED ITR - 4 . THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT (A) HAS DELETED THE ADDITION ON THE BASIS OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS WITHOUT VERIFYING THE DOCUMENTS OR OB TAINING REMAND REPORT FROM THE AO. AS POINTED OUT BY THE LD . DR SINCE THE AO HAD NOT CONDUCTED ANY VERIFICATION TO ASCERTAIN THE GENUINENESS OF THE SAID DOCUMENTS, THE LD. CIT ( A) OUGHT TO HAVE EITHER HIMSELF VERIFIED THE ADDITIONAL EVIDENCE OR SENT THE SA ME TO THE AO FOR VERIFICATION. HENCE, WE FIND MERIT IN THE CONTENTION OF THE LD. DR THAT THE LD. CIT (A) HAS DECIDED THE ISSUE IN QUESTION WITHOUT GIVING AN OPPORTUNITY UNDER RULE 46A BEFORE ADMITTING THE SAME. WE THEREFORE , SET ASIDE THIS ISSUE TO THE FIL E OF AO WITH THE DIRECTION TO DELETE THE ADDITION IN QUESTION AFTER VERIFYING THE GENUINENESS 5 ITA N O. 2395 / MUM/2018 ASSESSMENT YEAR: 2012 - 1 3 OF THE ADDITIONAL EVIDENCE ADMITTED BY THE LD. CIT (A) DURING THE APPELLATE PROCEEDINGS. WE FURTHER DIRECT THE AO TO AFFORD A REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2012 - 2013 IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH J ULY , 2019 . SD/ - SD/ - ( G. MANJUNATHA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 26 / 07 / 201 9 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI