SAMIR P. SHAH THROUGH LEGAL HEIR RUSHANG SAMIR SHAH, MUMBAI V. I.TO.O. 19(1)(2), MUMBAI

ITA 2546/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4031 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-12-2013
• Assessment Year: 1990-1991
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Document seized; Opportunity of cross examination; Documents seized
• Section: 143(3); 68; 132; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .TA NOS.2546 & 2547/MUM/2011 ( / ASSESSMENT YEARS: 1990-91 & 1991-92 LATE SHRI SAMIR P. SHAH THROUGH LEGAL HEIR SHRI RUSHANG SAMIR SHAH, POONAMS, FLAT NO. 701, THE NEW INDIA C.H.S. LTD., N.S. ROAD NO. 11, JVPD SCHEME, VILE PAREL(W), MUMBAI-400 049 / VS. THE IT5O - 19(1)(2), MUMBAI ./ ./ PAN/GIR NO. AAGPS 9732H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI K. GOPAL / RESPONDENT BY: SHRI MANJUNATHA SWAMY / DATE OF HEARING :09.02.2016 ! / DATE OF PRONOUNCEMENT :20.04.2016 / O R D E R PER C.N. PRASAD, JM: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A)-30, MUMBAI DATED 04.01.2011 PERTA INING TO ASSESSMENT YEARS 1990-91 & 1991-92. AS COMMON ISSUE S ARE INVOLVED IN BOTH THESE APPEALS, THEY WERE HEARD TOG ETHER AND ITA NOS. 2546 & 2547/M/2011 2 DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE AND BREVITY. 2. THE FIRST ISSUE IN BOTH THESE APPEALS IS THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE TOWARDS UNEXPLAINED INVESTMENT, BY THE ASSESSING OFFICER. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE ACTION WAS CARRIED OUT UNDER THE PROVISIONS OF SEC. 132 OF THE ACT ON 9.11.1990 AT THE BUSINESS AND RESIDENTIAL PREMISES OF LATE SHRI N.P. VORA. DURING THE COURSE OF SEARCH ACTION, STATEMEN T OF LATE SHRI N.P. VORA WAS RECORDED U/S. 132(4) OF THE ACT WHEREIN H E HAD ADMITTED CARRYING ON OF VISHI BUSINESS. IN HIS STATEMENTS H E STATED THAT THE ASSESSEE WAS MEMBER IN FIVE VISHIES RUN BY RIVER GR OUP. AS PER THE SEIZED DOCUMENTS FROM THE PREMISES OF LATE SHRI N.P . VORA, THE ASSESSEE WAS SHOWN TO HAVE PAID AN AMOUNT OF RS. 10 ,30,400/- TOWARDS THE INSTALMENTS OF THE SAID VISHI SCHEMES. 3.1. THE SEARCH AND SEIZURE ACTION WAS CARRIED OUT AT THE RESIDENTIAL AS WELL AS BUSINESS PREMISES OF THE ASSESSEE. THE STATEMENT OF THE ASSESSEE WAS RECORDED U/S. 132(4) OF THE ACT WHEREI N HE HAS ADMITTED OF HAVING BUSINESS TRANSACTIONS WITH LATE SHRI N.P. VORA. HOWEVER, THE ASSESSEE VEHEMENTLY DENIED OF BEING ME MBER OF ANY VISHIES RUN BY LATE SHRI N.P. VORA. THE STATEMENT OF THE ASSESSEE WAS RECORDED ON 3.4.1991 WHEREIN HE HAD AGAIN DENIED OF BEING MEMBER OF ANY VISHIES RUN BY LATE SHRI N.P. VORA. THE ASS ESSEE FILED HIS RETURN OF INCOME FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1990-91 ON 5.4.1991 DECLARING TOTAL INCOME AT RS. 26,360/-. THE ASSESSEE FILED HIS RETURN OF INCOME ON 26.8.1992 F OR A.Y. 1991-92 DECLARING TOTAL INCOME OF RS. 19,32,683/-. THE ASS ESSMENT ORDERS ITA NOS. 2546 & 2547/M/2011 3 U/S. 143(3) WERE PASSED ON 29.3.1993 AND 28.2.1994 IN THE CASE OF THE ASSESSEE, MAKING ADDITION ON PROTECTIVE BASIS OF RS. 10,30,400/- AND RS.17,39,000/ FOR THE ASSESSMENT YEARS 1990-91 AND 1991-92 RESPECTIVELY TREATING THE SAME AS UNEXPLAINED INVES TMENT IN THE VISHI SCHEMES RELYING ON THE STATEMENT OF LATE SHRI N.P. VORA. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) VIDE HIS ORDER DT. 2.2.1994 DELETE D THE ADDITION MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS RELYIN G ON THE STATEMENT OF LATE SHRI N.P. VORA AND WITHOUT PROVIDING THE AS SESSEE AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. 5. AGGRIEVED BY THIS REVENUE IS IN APPEAL BEFORE TH E TRIBUNAL. THE TRIBUNAL IN ITA NOS. 2732 & 7059/BOM/1994 DISPO SED OF THE APPEAL FILED BY THE DEPARTMENT WITH A DIRECTION TO REDO THE ASSESSMENT AFRESH TAKING ALL THE FACTS INTO CONSIDE RATION AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE. THE ASSESS ING OFFICER GIVEN EFFECT TO THE ORDER PASSED BY THE TRIBUNAL. THE AS SESSING OFFICER AGAIN WHILE FINALIZING THE ASSESSMENT RELIED ON THE STATEMENT OF LATE SHRI N.P. VORA AND CONFIRMED THE ADDITION MADE IN T HE ORIGINAL ASSESSMENT ORDER. THE LD. CIT(A) PASSED THE IMPUGN ED ORDER AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN MA KING ADDITION ON ACCOUNT OF ALLEGED INVESTMENT IN VISHI SCHEMES. AG AINST THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITS THAT THESE TWO ASSESSMENTS, THE ADDITIONS WERE MADE PROT ECTIVELY IN THE HANDS OF THE ASSESSEE WHEREAS THE ADDITIONS WERE MA DE SUBSTANTIVELY IN THE HANDS OF LATE SHRI N.P. VORA BY PASSING ASSESSMENT ORDER U/S. 144 DATED 30.3.1993. THE LD. COUNSEL ITA NOS. 2546 & 2547/M/2011 4 SUBMITS THAT IN THE ASSESSMENT PASSED IN THE CASE O F SHRI N.P. VORA, IT HAS BEEN CATEGORICALLY OBSERVED BY THE ACIT, CENTRA L CIRCLE, BOMBAY THAT LATE SHRI N.P.VORA HAS NOT FURNISHED ANY DETAI LS OF VISHI ACCOUNTS INSPITE OF INFORMING HIM THAT UNLESS VISHI COLLECTI ONS ARE SATISFACTORILY EXPLAINED, THE SAME COULD BE CONSIDE RED AS INCOME OF LATE SHRI N.P. VORA U/S. 68 OF THE ACT. THE LD. CO UNSEL REFERRING TO PAGE 81 OF THE PAPER BOOK SUBMITS THAT THE ASSESSIN G OFFICER MADE ADDITION OF RS. 2.90 CRORES U/S. 68 OF THE ACT TREA TING THE VISHI COLLECTIONS AS UNEXPLAINED CASH CREDIT OF LATE SHRI N.P. VORA. THE LD. COUNSEL SUBMITS THAT ON 28.2.1995 LATE SHRI NP. VOR A FILED AN APPLICATION BEFORE THE SETTLEMENT COMMISSION TO GET HIS ASSESSMENTS SETTLED FOR ASSESSMENT YEARS 1990-91 & 1991-92. TH E LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE-234 OF THE PAPER BOO K WHICH IS THE ORDER OF THE SETTLEMENT COMMISSION, PARTICULARLY P AGE-236 OF THE PAPER BOOK, SUBMITS THAT LATE SHRI N.P. VORA HAD OF FERED INCOME FROM VISHI ACTIVITIES FOR SETTLEMENT. RELYING ON PARA- 4 OF THE SETTLEMENT COMMISSIONS ORDER, THE LD. COUNSEL SUBMITS THAT TH E ADDITION OF RS. 2.90 CRORES WAS MADE IN RESPECT OF VISHI ACTIVITIE S. 6.1. FURTHER REFERRING TO PAGE-5 OF THE SETTLEMENT COMMISSIONS ORDER, THE LD. COUNSEL SUBMITS THAT AN ADDITIONAL D ISCLOSURE OF RS. 81 LAKHS WAS MADE BY SHRI N.P. VORA FOR THE ASSESSMENT YEARS 1990-91 & 1991-92 IN RESPECT OF PROFITS FROM VISHI BUSINESS A ND ALSO THE SHORTFALL IN CASH. THE LD. COUNSEL SUBMITS THAT TH E DISCLOSURE WAS HOWEVER RAISED TO RS. 1.10 CRORES TO COVER ALL POSS IBLE DEFICIENCIES. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE- 15 OF THE SETTLEMENT COMMISSIONS ORDER ON PAGE 246 OF THE PA PER BOOK SUBMITS THAT THE SETTLEMENT COMMISSION HAS ACCEPTED THE CONTENTIONS OF LATE SHRI N.P. VORA AND ACCEPTED THE SAID DISCLOSURE ITA NOS. 2546 & 2547/M/2011 5 BY INCREASING FURTHER 10 LAKHS WHICH IS TOTALING TO RS. 1.20 CRORES IN RESPECT OF VISHI ACTIVITIES AND MARUTI BUMPER DRAW AND VARIOUS OTHER INVESTMENTS. THEREFORE, THE LD. COUNSEL FOR THE AS SESSEE SUBMITS THAT SINCE THE SETTLEMENT COMMISSION HAS ACCEPTED THE AD DITIONS MADE IN SUBSTANTIVE ASSESSMENTS IN THE HANDS OF LATE SHRI N .P. VORA, THE PROTECTIVE ASSESSMENTS MADE IN THE HANDS OF THE ASS ESSEE WILL NOT STAND. 7. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY S UPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE ORDER OF THE SETTLEMENT COMMISS ION. IN THIS CASE, CONSEQUENT TO SEARCH U/S. 132 OF THE ACT MADE ON 9. 11.1990 IN THE BUSINESS AND RESIDENTIAL PREMISES OF LATE SHRI N.P. VORA, ASSESSMENTS U/S. 143(3) WERE MADE ON 29.3.1993 AND 28.2.1994 IN THE HANDS OF THE ASSESSEE BY MAKING PROTECTIVE ADDITIONS OF RS. 10,30,400/- AND RS.17,39,000/- (RS. 13,49,000/- AND RS. 3,90,000/ -) FOR ASSESSMENT YEARS 1990-91 & 1991-92 RESPECTIVELY. THIS PROTECT IVE ADDITION FOR ASSESSMENT YEARS 1990-91 & 1991-92 IS ON ACCOUNT OF UNEXPLAINED INVESTMENT ON VISHI CONTRIBUTION AND MARUTI BUMPER DRAW BASED ON STATEMENT OF SHRI N.P. VORA. 9. WE HAVE PERUSED THE ORDER OF THE SETTLEMENT COMM ISSION DATED 16.3.2001 WHICH IS PLACED AT PAGE-234 OF THE PAPER BOOK. THE FINDING OF THE SETTLEMENT COMMISSION IN PARA-2 OF I TS ORDER IS THAT SHRI N.P. VORA ADMITTED UNDISCLOSED INCOME OF RS. 4 .5 CRORES WHICH INCLUDES RS. 50 LAKHS BEING INCOME OF VISHI ACTIVIT IES AND RS. 50 LAKHS BEING CONTRIBUTION OF OTHER MEMBERS OWNED BY HIM. THE SETTLEMENT COMMISSION IN PARA-5 OF ITS ORDER ALSO REPORTED AS UNDER: ITA NOS. 2546 & 2547/M/2011 6 5. IN THE APPLICATION THE APPLICANT MADE A DISCLOS URE OF ADDITIONAL INCOME TOTALING RS. 81,01,792/- AS UNDER : 1990 - 91 RS. 1991 - 92 RS. TOTAL RS. IN RESPECT OF PROFIT FROM VISHI BUSINESS 8,50,233/- 14,87,751/- 23,37,984/- SHORTFALL IN CASH 2,41,802/- 5,22,006/- 57,63,808/- TOTAL 10,92,035/- 70,09,757/- 81,01,792/- THE DISCLOSURE WORKED OUT ON ABOVE BASIS WAS HOWEVE R, RAISED TO RS. 1,10,00,000/- TO COVER POSSIBLE DEFIC IENCY AND WAS APPORTIONED AS UNDER: ASST. YEAR 1990-91 RS. 14,82,682/- ASST. YEAR 1991-92 RS. 95,17,318/- -------------------- TOTAL RS.1,10,00,000/- 10. THIS DISCLOSURE MADE BY LATE SHRI N.P. VORA FR OM VISHU BUSINESS HAS BEEN ACCEPTED BY THE SETTLEMENT COMMIS SION IN PARA-16 BY INCREASING THE DISCLOSURE TO RS. 1.20 CRORES AS UNDER: WE, HAVE CONSIDERED THE CASE FROM VARIOUS ANGLES WITH REFERENCE TO THE ADDITIONS MADE BY THE ASSESSING OF FICER AND THE SUBMISSIONS MADE BY BOTH THE REPRESENTATIVES. REGA RDING THE AGREEMENT FOR PURCHASE OF IMMOVEABLE PROPERTIES OF RUNNING BUSINESS THE CIT HAS NOT BEEN ABLE TO LEAD TO FURNI SH ANY EVIDENCE TO SHOW THAT THOSE AGREEMENTS WERE REALLY6 GIVEN EF FECT TO AND THE PROPERTIES WERE PURCHASED BY HIM IN THE ABSENCE OF ANYTHING TO CONTRADICT THE DENIAL BY THE APPLICANT AND CONSI DERING THE NATURE OF VISHI ACTIVITIES WHEREIN THE PROMOTER TAK ES UPON HIMSELF THE LIABILITY TO PAY THE INSTALMENTS OF THE DEFAULTING MEMBERS, WE ARE INCLINED TO ACCEPT THE SUBMISSIONS MADE BY THE ITA NOS. 2546 & 2547/M/2011 7 APPLICANT. WHATEVER PROPERTIES WERE APPROPRIATED HAVE BEEN TAKEN INTO THE BALANCE SHEET BY CREDITING THE ACCOU NT OF THE DEBTOR. WHEREVER PAYMENT WAS MADE THE SAME HAS BEE N TAKEN IN THE CASH FLOW STATEMENT. THE FINANCING ACTIVITI ES CLAIMED TO HAVE BEEN CARRIED OUT FROM FUNDS AVAILABLE WITH THE APPLICANT OUT OF VISHI ACTIVITIES HAVE ALSO BEEN TAKEN IN THE CASH FLOW STATEMENT. THERE IS ALSO SUBSTANCE IN THE ARGUMENT OF THE LEARNED REPRESENTATIVE FOR THE APPLICANT OUT OF VIS HI ACTIVITIES HAVE ALSO BEEN TAKEN IN THE CASH FLOW STATEMENT. T HERE IS ALSO SUBSTANCE IN THE ARGUMENT OF THE LEARNED REPRESENTA TIVE FOR THE APPLICANT THAT IF INCOME FROM INTEREST AND COMMISSI ON IN RESPECT OF MARUTI BUMPER DRAW IS TO BE INCLUDED, IT WILL NO T HAVE ANY IMPACT ON THE TOTAL UNDISCLOSED INCOME WHICH HAS BE EN WORKED OUT ON THE BASIS OF THE CASH FLOW STATEMENT. THE I NCOME WILL INCREASE THE AVAILABILITY AND REDUCE THE CASH SHORT AGE. REGARDING THE EMPLOYMENT OF OWN FUNDS IN THE GARB O F CONTRIBUTION BY MEMBERS, WE HAVE TAKEN NOTE OF THE FACT THAT IN VISHI BUSINESS SUCH CONTRIBUTIONS ARE GENERALLY LAR GELY UNACCOUNTED AND THE CONTRIBUTIONS ARE NOT PREPARED TO CONFIRM THE SAME. IN THIS CASE THE PROBLEM IS FURTHER ACUTE SINCE THE APPLICANT HAS EXPIRED AND THE SURVIVORS, NAMELY, HI S WIFE AND DAUGHTERS HAVE NO KNOWLEDGE ABOUT THE BUSINESS OF T HE APPLICANT. IN ANY CASE, THE APPLICANT HAS IN ADDITI ON TO THE CASH SHORTAGE AND PROFIT FROM VISHI HAS FURTHER OFFERED THE AMOUNT OF RS. 81,01,792/- FOR THE SOF RAISING IT TO 1,10,00 ,000/-. THIS IS TAKE CARE OF ANY POSSIBLE BENAMI CONTRIBUTION BY THE APPLICANT. DURING THE COURSE OF HEARING, THE LD. REPRESENTATIV E, IN ORDER TO PUT AN END TO ANY FURTHER CONTROVERSY AGREED TO A F URTHER ADDITION OF RS. 10,00,000/- RAISING THE DISCLOSURE TO RS. 1,20,00,000/-. IN THE TOTAL FACTS OF THE CASE, THE DISCLOSURE MADE APPEARS REASONABLE TO US AND ACCORDINGLY THE CASE I S SETTLED BY ADOPTING THE ADDITIONAL INCOME AT RS. 1,20,00,000/- . THIS WILL INCLUDE THE DISALLOWANCE MADE BY THE ASSESSING OFFI CER OUT OF EXPENSES CLAIMED. TAKING ACCOUNT OF ADDITIONS MADE BY THE ASSESSING OFFICER ADDITION OF RS. 10,00,000/- WILL GO TO THE ADDITIONAL INCOME OF THE ASSESSMENT YEAR 1990-91 BY RS. 7,75,948/- AND THAT OF 1991-92 BY RS. 2,24,052/-. 11. IT COULD BE SEEN FROM THE ABOVE SETTLEMENT COMM ISSIONS ORDER, THE INCOME DECLARED BY LATE SHRI N.P. VORA I N RESPECT OF VISHI BUSINESS AND CONTRIBUTION OF OTHER MEMBERS HAS BEEN ACCEPTED FOR ITA NOS. 2546 & 2547/M/2011 8 BOTH THE ASSESSMENT YEARS 1990-91 & 1991-92. SINCE SETTLEMENT COMMISSION HAS ACCEPTED THE SUBSTANTIVE ADDITIONS I N THE HANDS OF LATE SHRI N.P. VORA, THERE CANNOT BE ANY PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE DO NOT FIND ANY VALID REASON TO SUSTAIN THE PROTECTIVE ADDITIONS MA DE IN THE HANDS OF THE ASSESSEE. THUS, WE DELETE THE ADDITIONS MADE I N THE HANDS OF THE ASSESSEE FOR BOTH THESE ASSESSMENT YEARS. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH APRIL, 2016. SD/- SD/- (RAJESH KUMAR) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED : 20 TH APRIL, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI