DCIT, CIRCLE-2, Nagpur V. SHRI NANDKUMAR KHATTUMAL HARCHANDANI, Nagpur

ITA 243/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93430 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Unexplained cash credit; Principle of natural justice; Assessment record
• Section: 144

Judgement Text

1 ITA NO. 243/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO. 243/NAG/2013 ASSESSMENT YEAR : 2007 - 08. DY. COMMISSIONER OF INCOME - TAX, NANDKUMAR KHATTUMAL HARCHANDANI, CIRCLE - 2, NAGPUR. V/S. 469, NEW COLONY, NAGPUR. PAN AATPH2594R. (APPELLANT) RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI MANOJ MORYANI. DATE OF HEARING : 04 - 06 - 2015 DATE OF PRONOUNCEMENT : 10 TH JULY, 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 20 - 03 - 2013 AND PERTAINS TO ASSESSMENT YEAR 200 6 - 0 7 . THE GROUND RAISED BY THE REVENUE READ S AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE CIT(A) ERRED IN HOLDING THAT INVOKING OF SECTION 144 OF THE I.T. ACT WAS NOT IN ORDER AND HOLDING THE ASSESSMENT MADE U/S 144 BAD IN LAW. 2. IN THIS CASE THE ASSESSM ENT WAS FRAMED UNDER SECTION 144 OF THE I.T. ACT. AT THE OUTSET, THE ASSESSING O FFICER RECORDED THE FOLLOWING IN THE ASSESSMENT ORDER: 2 ITA NO. 243/NAG/2013 IN RESPONSE TO NOTICE U/S 143(2) OF THE I.T. ACT, 1961 & QUESTIONNAAIRE, SHRI MANOJ MORYANI, ADVOCATE & AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND EXPLAINED THE RETURN , FURNISHED VARIOUS DETAILS & INFORMATIONS AS REQUIRED, WHICH ARE PLACED ON RECORD. THEREAFTER THE ASSESSING OFFICER NOTED THAT SEVERAL NOTICES WERE ISSUED TO THE ASSESSEE AND THE ASSESSEE SOUGHT ADJOURNMENT FROM TIME TO TIME. FINALLY THE ASSESSI NG OFFICER CONCLUDED THAT SINCE THE ASSESSEE DID NOT COMPLY WITH THE ASSESSING OFFICERS LETTERS THERE WAS NO OTHER OPTION BUT TO PASS ASSESSMENT ORDER UNDER SECTION 144 OF THE I.T. ACT LOOKING TO THE NON COOPERATION OF THE ASSESSEE. THEREAFTER THE ASSESS ING OFFICER PROCEEDED TO MAKE THE FOLLOWING ASSESSMENT : INCOME AS PER RETURN. ` .14,36,003/ - ADD : (I) LONG TERM CAPITAL GAIN AS D ISCUSSED IN PARA - 04 ABOVE. `. 5,59,605/ - ( II) SALE OF SHOPS TREATED AS BUSINE SS INCOME A S DISCUSSED IN PARA - 05 ABOVE. `. 25,00,000/ - (III) UNEXPLAINED CASH CREDITS AS D ISCUSSED IN PARA - 6 ABOVE. `. 6,00,000/ - (IV) UNEXPLAINED CASH CREDITS AS D ISCUSSED IN PARA - 07 ABOVE. ` . 30,00,000/ - (V) INTEREST PAYMENT DISALLOWED S DISCUSSED IN PARA - 08 ABOVE. `. 9,63,974/ - --------------------- TOTAL TAXABLE INCOME -- ` . 90,59,582/ - ============ 3. AGAINST THE ABOVE ORDER, ASSESSEE APPEALED BEFORE THE LEARNED CIT(APPEALS). IT WAS INTER ALIA, CONTENDED THAT THE ASSESSEES COUNSEL APPEARED BEFORE THE 3 ITA NO. 243/NAG/2013 ASSESSING OFFICER FROM TIME TO TIME. IT WAS ALLEGED THAT THE ASSESSING OFFICER SUBSEQUENTLY CHANGED THE ORDER - SHEETS TO SUPPORT HIS POINT THAT THE ASSESSEES COUNSEL WAS NOT PRESENT. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD SUBMITTED A LARGE NUMBER OF DETAILS WHICH WERE NOT TAKEN INTO ACCOUNT BY THE ASSESSING OFFICER. CONSIDERING THE ASSESS EES SUBMISSIONS, LEARNED CIT(APPEALS) EXAMINED THE ASSESSMENT RECORDS AND OBSERVED AS UNDER : 5.6 DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSMENT RECORD WAS CALLED FOR AND ON PERUSAL OF THE RECORD IT IS SEEN THAT THE APPELLANT HAS COMPLIED WITH THE NOTICES AT LEAST FEW TIMES AND MAJORITY OF INFORMATION WAS PROVIDED AS THE SAME IS PLACED ON RECORD AS PER CHRONOLOGY EVEN THOUGH THERE IS NO SIGNATURE OF THE COUNSEL OF THE APPELLANT IN THE ORDER SHEET. THE DETAILS OF REPLIES AS PER THE RECORD ARE LISTED BELOW. 1. SUBMISSIONS DATED 18.12.2009. 2. AGREEMENT FOR SALE OF UNDIVIDED LAND SHARFE DATED 16.11.1995. 3. AGREEMENT OF BUILDING CONSTRUCT ION DATED 13.12.1995. 4. SUBMISSIONS DATED 18.12.2009. 5. CERTIFICATE OF INTEREST ( HDFC BANK) 6. CERTIFICATE OF INTEREST (HDFC BANK). 7. FINANCIAL STATEMENT OF THE APPELLANT. I. PROFIT & LOSS ACCOUNT. II. BALANCE SHEET III. CAPITAL ACCOUNT. IV. LOANS LIABILITY V. CURRENT LIABILITIES. VI. FIXED ASSETS 4 ITA NO. 243/NAG/2013 VII. INVESTM ENTS. VIII. CURRENT ASSETS. IX. DETAILED LIST OF UNSECURED LOAN. 7. BALANCE CONFIRMATIONS AS ON 31.03.2007 FROM I. T.V. NETWORK (INDIA) PVT. LTD. II. J K CONSTRUCTION & INFRASTRUCTURE (I) P. LTD. III. ANIL KUMAR HARCHANDANI. IV. KHATTUM AL HARCHANDANI HUF. V. NANDKUMAR HARCHANDANI HUF. VI. POONAM HARCHANDANI VII RITESH HARCHANDANI. VIII. VIJAY KUMAR HARCHANDANI IX. SAVITRIDEVI HARCHANDANI. X. USHA/JYOTI DIALANI. 9. AGREEMENT DATED 02.02.1995. 10. BANK A/C STATEMENT OF THE APPELLANT. I) BANK OF MAHARASHTRA DELHI A/C. NO. BOOK II) O.B.C. KINGSWAY A/C. NO. 9106 BOOK III) S.S.B.L. SADAR A/C. NO. 6928 BOOK IV) UTI BANK JVPD MUMBAI A/C. 34104 BOOK V) UTI BANK NAGPUR A/C NO.7528 BOOK VI) ORIENTAL BANK OF COMMERCE A/C NO.01342010034880 VII) UTI BANK STATEMENTS A/C. NO.048010100007528 5 ITA NO. 243/NAG/2013 VIII) UTI BANK STATEMENT MUMBAI (A/C NO.064010100034104) 11. SALE DEED COPY DATED 22.06.2007. 5.7 THE APPELLANT RELIED ON VARIOUS CA SE LAWS REGARDING PROPER RECORDING OF REASONS FOR PASSING EX - PARTE ORDER BY THE AO AND AS PER THE APPELLANT, THE AO HAS FAILED TO DO IN HIS CASE. THE CASES RELIED ARE AS FOLLOWS. 1) (1989) 176 ITR 169 (SC) R.B. SHREERAM DURGA PRASAD & FATEHCHAND NURS ING DAS V/S - SETTLEMENT COMMISSION & ANR. 2) (1972) 83 ITR 508 (KER. H.C.) PONKUNNAM TRADERS V/S - ADDITIONAL INCOME TAX OFICER & ANR. 3) (1991) ITR 101 (MADRAS H.C.) GOVERNMENT OF INDIA & ANR. V/S - MAXIM A. LOBO & ANR. 4) (1998) 61 TTJ 31 8 (ITAT BANGALORE) T.T. LIMITED V/S - DEPUTY COMMISSIONER OF INCOME TAX. 5) (1998) 61 TTJ 387 (ITAT JAIPUR) AFRUL HASSAIN IRAQUI V/S. INCOME TAX OFFICER. 6) (1993) 45 TTJ 114 (ITAT HYDERABAD) COLONISERS V/S. ASSISTANT COMMISSIONER OF INCOME TAX. 6. I HAVE CAREFULLY GONE THROUGH THE FACTS AND THE CASES RELIED ON BY THE APPELLANT. ON PERUSAL OF THE RECORD IT IS SEEN THAT THE FACTS STATED BY THE APPELLANT ARE CORRECT. THE APPELLANT STRONGLY ARGUED THAT THE CASE WAS HEARD BUT FOR SOME UNKNOWN REASON THE ASSESSMENT WAS COMPLETED EX - PARTE MAKING HUGE ADDITIONS DETRIMENTAL TO HIS INTEREST U/S 144 OF I.T. ACT, 1961. IN FACT MANY OF THE ISSUES ON WHICH THE ASSESSMENT WAS MADE, THE INFORMATION IS ALSO AVAILABLE IN THE EARLIER RECORDS AVAILABLE WITH THE DEPARTMENT. THE JUDICIAL DECISIONS RELIED ON BY THE COUNSEL ALSO SUPPORT THE CASE OF THE APPELLANT. THE CONDITIONS OF SECTION 144 ITSELF WERE NOT APPLICABLE TO FACTS AND CIRCUMSTANC ES OF THE CASE, SINCE IT WAS ADMITTED FACT THAT THE COUNSEL HAS SUBMITTED THE DOCUMENTS WHICH WERE DELIBERATELY NOT 6 ITA NO. 243/NAG/2013 ACCEPTED BY THE ASSESSING OFFICER AND THE ASSESSMENT WERE COMPLETED WITHOUT CONSIDERING THE EVIDENCES SUBMITTED BY THE APPELLANT. 7. AS IT IS CLEARLY EVIDENT THAT THE APPELLANT HAS RESPONDED TO SOME OF THE NOTICES DURING THE ASSESSMENT PROCEEDINGS AND THE INFORMATION PROVIDED BY THE APPELLANT HAD NOT BEEN CONSIDERED BY THE AO , AND HENCE I AM OF THE VIEW THAT THE INVOKING OF PROVISIONS OF SECTION 144 IS NOT IN ORDER. ACCORDINGLY, THE ASSESSMENT UNDER SECTION 144 OF THE I.T. ACT 1961 IS BAD IN LAW. THEREFORE THE ADDITIONS MADE IN THE IMPUGNED ASSESSMENT ARE HEREBY DELETED. 4. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED D.R. COULD NOT COGENTLY REBUT THE CLAIM OF THE ASSESSEE AND THE FINDING OF THE LEARNED CIT(APPEALS) THAT FOR SOME REASON THE ASSESSING OFFICER HAD SUBJECTED THE ASSESSEE TO HARSH TREATMENT. H OWEVER, LEARNED D.R. CLAIMED THAT NOW THE SETUP IS CHANGED. HENCE HE CLAIMED THAT INSTEAD OF QUASHING THE ASSESSMENT THE MATTER SHOULD BE REMITTED TO THE FILE OF THE ASSESSING OFFICER SO THAT THE ASSESSING OFFICER CAN RE - EXAMINE THE ISSUE AND REFRAME THE A SSESSMENT PROPERLY. 6. LEARNED COUNSEL OF THE ASSESSEE, ON THE OTHER HAND, REITERATED HIS SUBMISSIONS THAT THE ASSESSING OFFICER HAS PASSED AN ORDER UNDER SECTION 144 DESPITE THE FACT THAT THE ASSESSEES COUNSEL WAS PRESENT ON SEVERAL TIMES DURING THE ASSE SSMENT. HE CLAIMED THAT THE ASSESSEE HAD SUBMITTED A NUMBER OF DETAILS AND SUBMISSIONS WHICH HAVE NOT AT ALL BEEN TAKEN INTO ACCOUNT BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, LEARNED COUNSEL SUBMITTED THAT WHEN THE ASSESSING OFFICER HAS CLEARLY SHOWN HIS PREJUDICE AND THE LEARNED CIT(APPEALS) HAS GIVEN A FINDING IN THE AFFIRMATIVE, THERE IS NO REASON WHY THE ASSESSING OFFICER SHOULD BE GIVEN ANOTHER CHANCE TO MAKE A FRESH ASSESSMENT. IN THIS REGARD, LEARNED 7 ITA NO. 243/NAG/2013 COUNSEL REITERATED HIS RELIANCE ON THE CASE LAWS AS SUBMITTED BEFORE THE LEARNED CIT(APPEALS) ABOVE. 7. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASSESSING OFFICER IN THIS CASE HAS PASSED AN ORDER UNDER SECTION 144 OF THE I.T. ACT. THE ASSESSING OFFICER HAS RECORDED A FINDING THAT THE ASSESS EE HAS NOT COMPLIED WITH HIS LETTERS AND NO COMPLIANCE WAS MADE TO HIS NOTICES. HOWEVER, THE ASSESSING OFFICER HAS HIMSELF CONTRADICTED HIS OBSERVATIONS IN THE LATER PART OF HIS ORDER BY THE FOLLOWING PARAGRAPH 2 AT THE BEGINNING OF HIS ORDER : IN RESPO NSE TO NOTICE U/S 143(2) OF THE I.T. ACT, 1961 & QUESTIONNAAIRE, SHRI MANOJ MORYANI, ADVOCATE & AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND EXPLAINED THE RETURN, FURNISHED VARIOUS DETAILS & INFORMATION AS REQUIRED, WHICH ARE PLACED ON RECORD. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAD SUBMITTED BEFORE THE CIT(APPEALS) AS WELL AS BEFORE US THAT THE ASSESSEE HAS GIVEN A LOT OF WRITTEN SUBMISSIONS AND EXPLANATIONS WHICH WERE NOT ACCOUNTED FOR BY THE ASSESSING OFFIC ER. THE ASSESSEE HAS ALSO ALLEGED THAT THE ASSESSING OFFICER HAS REPLACED THE ORDER SHEET S IN SUPPORT OF HIS CLAIM THAT NO ONE WAS PRESENT IN RESPONSE TO NOTICES SENT. WE FIND THAT THE LEARNED CIT(APPEALS) HAS GIVEN A FINDING THAT HE HAS CALLED FOR THE ASS ESSMENT RECORD AND HAS FOUND THAT THE ASSESSEE HAS COMPLIED WITH THE NOTICES A FEW TIMES AND MAJORITY OF INFORMATION WAS PROVIDED AND THE SAME IS PLACED ON RECORD AS PER CHRONOLOGY EVEN THOUGH THERE IS NO SIGNATURE OF THE COUNSEL OF THE ASSESSEE IN THE A SSESSMENT ORDER. WHEN WE SEE THE ABOVE FINDING ALONG WITH THE ASSESSING OFFICERS OBSERVATION IN THE INITIAL PART OF HIS ASSESSMENT ORDER THAT MR. MANOJ MORYANI, ADVOCATE AND A.R. OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND EXPLAINED THE RETURN, FURNIS HED VARIOUS DETAILS AND INFORMATION AS REQUIRED , I N THESE CIRCUMSTANCES, ABSENCE OF ASSESSEES COUNSELS SIGNATURE ON 8 ITA NO. 243/NAG/2013 ORDER - SHEET SHOWS THAT THE ALLEGATION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS CHANGED THE ORDER - SHEETS CANNOT BE BRUSHED ASIDE. FURTHER MORE, LEARNED CIT(APP EALS) HAS GIVEN A FINDING THAT THE ASSESSEE HAS GIVEN A LARGE NUMBER OF DETAILS AND EXPLANATIONS WHICH WERE AVAILABLE IN THE ASSESSMENT RECORDS IN CHRONOLOGICAL ORDER. HOWEVER, THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN MAKING THE ASSESSMENT ON VARI OUS ISSUES HAS NOT AT ALL REFERRED TO THESE DETAILS WHICH ARE VERY RELEVANT BUT HAS OBSERVED THAT HE WAS MAKING THE ADDITIONS IN THE ABSENCE OF NECESSARY EXPLANATION AND DETAILS. IN THIS VIEW OF THE MATTER, IT IS ABUNDANTLY CLEAR THAT THERE HAS BEEN GROS S VIOLATION OF NATURAL JUSTICE ON THE PART OF THE ASSESSING OFFICER IN THIS CASE. AN ORDER UNDER SECTION 144 PASSED BY GROSS VIOLATION OF NATURAL JUSTICE CANNOT BE SUSTAINED. THIS VIEW IS DULY SUPPORTED BY THE FOLLOWING DECISIONS OF HONBLE APEX COURT AND HONBLE HIGH COURT : 1) (1989) 176 ITR 169 (SC) R.B. SHREERAM DURGA PRASAD & FATEHCHAND NURSING DAS V/S - SETTLEMENT COMMISSION & ANR. 2) (1972) 83 ITR 508 (KER. H.C.) PONKUNNAM TRADERS V/S - ADDITIONAL INCOME TAX OFICER & ANR. 3) (1991) 190 ITR 101 (MADRAS H.C.) GOVERNMENT OF INDIA & ANR. V/S. MAXIM A. LOBO & ANR. 8. WHEN IT IS QUITE APPARENT THAT THE ASSESSING OFFICER WAS NOT AT ALL JUSTIFIED IN PASSING AN ORDER UNDER SECTION 144 AND HONBLE APEX COURT AND HONBLE HIGH COURTS HAVE HELD THAT SUCH AN ORDER IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE CANNOT BE SUSTAINED, WE ARE OF THE OPINION THAT THE LEARNED D.RS PLEA THAT SINCE NOW THE SETUP HAS CHANGED AND THE PRESENT INCUMBENT ASSESSING OFFICER SHOULD BE GIVEN AN OPPORTUNITY TO REFR AME THE ASSESSMENT IS LIABLE TO BE REJECTED. ACCORDINGLY 9 ITA NO. 243/NAG/2013 WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS) AND REJECT THE GROUND RAISED BY THE REVENUE. 9 . IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JULY, 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 10 TH JULY, 2015. COP Y OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE