M/s Duo Associates , Bangalore V. Assistant Commissioner of Income Tax Circle-7(2)(1), Bangalore

ITA 2620/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7588 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Additional evidence; Borrowed satisfaction; Set aside
• Section: 143(3); 234B; 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BENGALURU BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.2620/BANG/2018 (ASSESSMENT YEAR: 2009-10) M/S.DUO ASSOCIATES, G-1, ROYAL HERITAGE APTS., NO.18, MAGRATH ROAD, BENGALURU-560 025. PAN:AACFD 4224 F VS. APPELLANT ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 7(2)(1), BENGALURU. RESPONDENT APPELLANT BY : SHRI S.V.RAVISHANKAR, ADVOCATE. RESPONDENT BY : SHRI PRADEEP KUMAR, CIT(DR). DATE OF HEARING: 28/03/2019 DATE OF PRONOUNCEMENT: 24/04/2019 O R D E R PER PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A)-7, BENGALURU, DATED 03/08/2018 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSED ON A TOTAL INCOME OF RS.8,38,11,710/- AS AGAINST THE RETURNED INCOME OF RS.1,38,11,710/- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.2620/BANG/2018 PAGE 2 OF 7 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.7,00,00,000/- AS UNEXPLAINED CASH CREDITS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ORDER OF THE LEARNED CIT(A) IS BAD IN LAW AS SUFFICIENT OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED TO THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) GROSSLY ERRED IN HOLDING THAT THE DOCUMENTS/EVIDENCES FURNISHED BEFORE HIM ARE ADDITIONAL EVIDENCES IN AS MUCH AS ALL THE DOCUMENTS/ EVIDENCES WERE ALREADY ON THE RECORDS OF THE DEPARTMENT AND THUS THE SAME DOES NOT CONSTITUTE ADDITIONAL EVIDENCES AS PER RULE 46A OF THE INCOME TAX RULES, 1962 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE ORDER OF THE ASSESSMENT IS BAD IN LAW AS THE MANDATARY CONDITIONS FOR ASSUMPTION OF JURISDICTION UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 (THE ACT) HAVE NOT BEEN COMPLIED WITH ON TILE GROUND THAT: A) THE RE-ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED WITHOUT SERVICE OF NOTICE UNDER SECTION 148 OF THE ACT WHICH IS A CONDITION PRECEDENT TO ASSUME JURISDICTION UNDER SECTION 147 OF THE ACT. B) WITHOUT PREJUDICE, THE ORDER OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S 147 OF THE ACT WITHOUT ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS INVALID AND LIABLE TO BE SET ASIDE. C) THE RE-ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED IN VIOLATION OF THE SETTLED PROCEDURE FOR REASSESSMENT AS LAID DOWN BY THE APEX COURT IN THE CASE OF GKN DRIVESHAFT'S INDIA LTD. VS. ITO, 259 ITR 19. D) THE DOCUMENT' TITLED 'REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148' PROVIDED BY THE ASSESSING OFFICER ARE NOT REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. E) WITHOUT PREJUDICE, ASSUMING BUT NOT ADMITTING THAT THE DOCUMENT TITLED 'REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148' ARE THE REASONS RECORDED UNDER SECTION 148, THESE CANNOT BE THE REASONS TO BELIEVE AND THE SAME ARE REASONS ITA NO.2620/BANG/2018 PAGE 3 OF 7 TO SUSPECT WHICH IS IMPERMISSIBLE IN THE EYES OF LAW. F) THE ASSESSING OFFICER HAS NOT INDEPENDENTLY APPLIED HIS MIND TO THE FACTS OF THE CASE AND THE ASSESSMENT WAS COMPLETED MERELY BASED ON SATISFACTION RECORDED BY THE PREDECESSOR OFFICER WHICH AMOUNTS TO BORROWED SATISFACTION WHICH IS IMPERMISSIBLE AND UNSUSTAINABLE IN THE EYES OF LAW AND THUS THE ORDER OF THE ASSESSMENT NEEDS TO BE QUASHED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. G) THE SANCTION AS REQUIRED UNDER SECTION 151 OF THE ACT HAS NOT BEEN OBTAINED FROM THE COMMISSIONER OF INCOME TAX BEFORE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT OR HAVING BEEN OBTAINED, THE COPY OF THE SAME HAS NOT BEEN PROVIDED TO THE APPELLANT ON THE FACTS OF THE CASE. 7. A. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE DATE OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AS THE DATE OF SERVICE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. B. THE LEARNED CIT(A) GROSSLY ERRED IN HOLDING THAT NO PREJUDICE HAS CAUSED TO THE APPELLANT BY NOT ISSUING THE NOTICE UNDER SECTION 143(2) OF THE ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. A. THE AUTHORITIES BELOW FAILED TO APPLY THEIR MIND AS THE ALLEGED TRANSACTION AS PER THE LEDGER EXTRACT RELIED UPON BY THE ASSESSING OFFICER IS NOT THE RECEIPT OF CASH BY THE APPELLANT AND IT IS THE PAYMENT MADE TO MR. DAYANAND PAI. THUS THE ADDITION BY HOLDING THAT THE APPELLANT HAS RECEIVED A SUM OF RS.7,00,00,000/- FROM MR. DAYANAND PAI IS UNWARRANTED AND HENCE THE SAME NEEDS TO BE DELETED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. B. THE ACTION OF THE ASSESSING OFFICER IS NOT JUSTIFIED IN LAW IN NOT AFFORDING AN OPPORTUNITY TO CROSS-EXAMINE MR. DAYANANDA PAI WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. FURTHER, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIONS WITHOUT PROVIDING AN OPPORTUNITY TO CROSS- EXAMINE IS NOT IN ACCORDANCE WITH LAW UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. C. THE ORDER OF ASSESSMENT IS FURTHER BAD IN LAW AS THE DOCUMENTS FOUND DURING SEARCH IN THE CASE OF MR. DAYANANDA PAI WERE USED AGAINST THE APPELLANT WITHOUT PROVIDING AN OPPORTUNITY TO REBUT THE CLAIMS/ STATEMENTS ITA NO.2620/BANG/2018 PAGE 4 OF 7 MADE AGAINST HIM UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. WITHOUT PREJUDICE, THE ORDER OF ASSESSMENT IS FURTHER BAD IN LAW AS THE ASSESSMENT OUGHT TO HAVE BEEN COMPLETED UNDER SECTION 153C OF THE ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. A. THE APPELLANT DENIES ITSELF LIABLE TO BE LEVIED TO INTEREST UNDER SECTIONS 234A, 234B AND 234C OF THE ACT AND FURTHER THE COMPUTATION OF INTEREST WAS NOT PROVIDED TO THE APPELLANT AS REGARD TO THE RATE, PERIOD AND METHOD OF CALCULATION OF INTEREST UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT EXPRESSLY URGES THAT THE PERIOD OF LEVY OF INTEREST IS NOT IN ACCORDANCE WITH SECTIONS 234A, 234BAND 234C OF THE ACT. B. WITHOUT PREJUDICE, THE INTEREST LEVIED UNDER SECTIONS234A, 234B AND 234C OF THE ACT REQUIRES TO BE WAIVED OFF UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE. 12. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN REAL ESTATE BUSINESS DEVELOPMENT AND FILED THE ELECTRONIC RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30/09/2009 WITH TOTAL INCOME OF RS.1,38,11,710/-. A SEARCH OPERATION U/S 132 OF THE ACT WAS CONDUCTED IN THE RESIDENCE OF ONE SMT. ADLENCE KAGOO (TRUSTED EMPLOYEE OF SHRI P.DAYANAND PAI) ON 12/04/2011. IN THE COURSE OF SEARCH OPERATIONS, THE INCOME-TAX DEPARTMENT FOUND CD PERRTAINING TO THE ITA NO.2620/BANG/2018 PAGE 5 OF 7 TRANSACTIONS OF THE ASSESSEE WITH RESPECT TO PAYMENTS AND RECEIPTS THROUGH SHRI DAYANAND PAI AND WHEREAS THE ASSESSING OFFICER (AO) HAS REFERRED TO THE TRANSACTIONS AT PAGE 2 OF THE ASSESSMENT ORDER AND CONSEQUENTLY THERE WAS SEARCH OPERATIONS ON THE ASSESSEE-FIRM ON 23/06/2011 AND THE STATEMENT WAS RECORDED. AO FOUND THAT THE ASSESSEE-FIRM HAS RECEIVED RS.7 CROES FROM SHRI DAYANAND PAI IN CONNECTION WITH DODDAJALA PROPERTY, BANGALORE. THE AO VERIFIED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 WHERE NO INCOME WAS OFFERED IN RESPECT OF TRANSACTION. THEREFORE, AO ISSUED NOTICE U/S 148 OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. FINALLY, BASED ON THE SUBMISSIONS AND THE MATERIAL ON RECORD, THE AO HELD THAT THE NOTICE US/ 148 IS IN ORDER AND MADE ADDITION OF RS.7 CRORES RECEIVED FROM SHRI DAYANAND PAI TO THE RETURNED INCOME AND ASSESSED THE TOTAL INCOME OF RS.8,38,11,710/- AND PASSED ORDER U/S 143(3) R.W.S. 147 OF THE ACT DATED 30/12/2016. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL WITH THE CIT(A) WHEREAS THE CIT(A) ISSUED NOTICE DATED 3/7/2018 POSTING THE CASE ON 10/7/2018 BUT ADJOURNMENT LETTER WAS FILED. AGAIN, THE CASE WAS POSTED FOR HEARING ON 20/07/2018 BUT NOBODY APPEARED ON THE DATE OF HEARING BUT FILED PAPER BOOK WITH MATERIAL PAPERS WHEREAS THE CIT(A) REJECTED THE ITA NO.2620/BANG/2018 PAGE 6 OF 7 EVIDENCE/MATERIAL FILED BY THE ASSESSEE AND DISMISSED THE ASSESSEES APPEAL. 5. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. THE LEARNED AR SUBMITTED THAT THE ASSESSEE WAS PREVENTED FROM SUBMITTING DETAILS BEFORE THE FIRST APPELLATE AUTHORITY FOR VARIOUS REASONS AND THEREFORE, PRAYED FOR AN OPPORTUNITY TO SUBSTANTIATE ITS CASE WITH DOCUMENTARY EVIDENCE. CONTRA, THE LEARNED DR OBJECTED TO THE SUBMISSIONS AND RELIED ON THE CIT(A) ORDER. 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. PRIMA FACIE, ON PERUSAL OF THE CIT(A) ORDER, WE FOUND THAT THE ASSESSEE HAS NOT APPEARED BEFORE THE APPELLATE AUTHORITY BUT FILED PAPER BOOK REFERRED AT PAGE 2 OF THE CIT(A) ORDER. THE CIT(A) HAVING CONSIDERED THE FACTS AND MATERIAL ON RECORD REJECTED THE ADDITIONAL EVIDENCE. WE FOUND THAT THE CIT(A) HAS DEALT ON THE ISSUE OF ADDITIONAL EVIDENCE AND DISMISSED WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE COULD NOT APPEAR FOR VARIOUS REASONS AS ENVISAGED BY THE LEARNED AR. WE ARE OF THE OPINION THAT THE REVENUE SHALL NOT BE AT LOSS IF AN OPPORTUNITY IS PROVIDED TO THE ASSESSEE. THEREFORE, TO MEET THE ENDS OF JUSTICE, WE PROVIDE AN OPPORTUNITY TO THE ASSESSEE ITA NO.2620/BANG/2018 PAGE 7 OF 7 TO REPRESENT ITS CASE BEFORE THE CIT(A) ALONG WITH EVIDENCE AND THE CIT(A) SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING. FURTHER THE ASSESSEE SHALL CO-OPERATE IN SUBMITTING THE INFORMATION AND DOCUMENTS FOR EARLY DISPOSAL OF THE APPEAL. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH APRIL, 2019. SD/- SD/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 24/04/2019 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE