Madhukar Narayan Shahane, Pune V. Income-tax Officer, Ward – 3(1), Pune

ITA 2714/PUN/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9612 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 20-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Keywords: Unexplained investment; Search and seizure; Salary income; Document seized; Principle of natural justice; Opportunity of cross examination; Documents seized; Reassessment proceedings
• Section: 143(3); 148; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE . , BEFORE SHRI D. KARUNAKARA RAO , AM . / ITA NO. 2714 /P U N/201 7 / ASSESSMENT YEAR : 20 08 - 09 MADHUKAR NARAYAN SHAHANDE, 39, AMAR SOCIETY, GULMOHAR PATH, LAW COLLEGE ROAD, PUNE. PAN : ABEPS4459G . / APPELLANT VS. ITO, WARD - 3(1) , PUNE . . / RESPONDENT / AP PELLANT BY : SHRI SUHAS P. BORA. / RESPONDENT BY : SHRI RAJESH GAWLI / DATE OF HEARING : 30 . 10 .2018 / DATE OF PRONOUNCEMENT : 28 . 1 1 .201 8 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3 , PUNE DATED 18.10.2017 FOR THE ASSESSMENT YEAR 20 08 - 09 . 2. THE GROUNDS OF APPEAL READ AS UNDER : - 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 IS NOT VALID AND BAD IN LAW. 2. THAT LD. CIT(A) WHILE CONFIRMING THE ACTION OF THE A.O. ABOUT REASSESSMENT PROCEEDINGS HAS NOT APPRECIATED THE SUBMISSIONS MADE BY THE APPELLANT ON FOLLOWING GROUNDS : A. THAT THE APPELLANT HAD NEVER CHALLENGED THE ASSU MPTION OF JURISDICTION U/S 148 OF THE ACT BEFORE A.O. THUS NO SPEAKING ORDER WAS PASSED. B. THE APPELLANT FAILED TO SUBSTANTIATE ADDITION WHICH WAS MADE ON THE BASIS OF NOTINGS ON THE PAPERS SEIZED DURING SEARCH. C. THE APPELLANT HAD NEVER ASKED FOR THE CO PIES OF ANY DOCUMENTS FOR CROSS EXAMINATION. 3. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. AT RS.25,00,000/ - U/SEC. 69D ON ACCOUNT OF UNEXPLAINED INVESTMENT ITA NO. 2714 /PUN /201 7 - 2 - SIMPLY BY RELYING ON THE NOTINGS IN THE SEIZED DOCUMENTS FOUND DUR ING THE COURSE OF SEARCH WITH SAMIRA GROUP OF COMPANIES. THE ADDITION WAS MADE ON THE BASIS OF NOTE SHEET ENTRIES WHICH WAS WITHOUT ANY BASIS NOR IT WAS SUPPORTED BY ANY EVIDENCE, PURELY ON PRESUMPTION AND SURMISES, IN VIOLATION OF PRINCIPLES OF NATURAL J USTICE AND WITHOUT ANY BASE, AND WITHOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT. 4. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. AT RS.5,10,000/ - ON ACCOUNT OF INTEREST RECEIVED ON CASH LOAN OF RS.22 LAKHS GIVEN AS INC OME FROM OTHER SOURCES PURELY ON PRESUMPTIONS AND SURMISES IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND WITHOUT ANY BASE, AND WITHOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT. 5. THE LD. CIT(A) WHILE CONFIRMING THE ADDITIONS HAS ERRED IN NOT CONS IDERING CONTENTION OF THE APPELLANT THAT IF THE ADDITION IS MADE ON THE BASIS OF STATEMENT OF THIRD PARTY THEN PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION IS MUST AND IF THE SAME IS DENIED BY THE A.O. THE ADDITION BASED ON THE SAID STATEMENT IS NOT TENA BLE IN LAW AND ASKED TO REFER THE PROVISIONS OF SECTION 132(4A) OF THE ACT WHICH SAYS THAT THE CONTENTS OF BOOKS OF ACCOUNTS AND OTHER DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ARE PRESUMED TO BE TRUE AND THE APPELLANT SHOULD REBUT THE PRESUMPTION. 6. THE APPELLANT MAY KINDLY BE PERMITTED TO ADD TO OR ALTER ANY OF GROUNDS OF APPEAL, IF DEEMED NECESSARY. 3 . BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY, REMUNERATION, INTEREST AND SHARE OF PROFIT FROM PARTNERSHIP FIRM AND INCOME FROM OTHER SOURCES. THE ASSESSEE FILED HIS PARTNERSHIP FIRM AND INCOME FROM OTHER SOURCES. THE ASSESSEE FILED HIS RETURN OF INCOME ON 06.03.2009 DECLARING TOTAL INCOME OF RS.2,63,168/ - . A SEARCH AND SEIZURE OPERATION WAS CONDUCTED U/S 132 OF THE ACT AT SAMIRA GROUP OF COMPANI ES ON 21.03.201 3. DURING THE COURSE OF SEARCH ACTION, SOME INCRIMINATING DOCUMENTS WERE FOUND SHOWING THAT SAMIRA GROUP OF COMPANIES TOOK LOANS FROM VARIOUS PERSONS. IT WAS ALSO FOUND FROM THE SEIZED PAPERS THAT SAMIRA GROUP OF COMPANIES TOOK LOAN IN CAS H OF RS.25,00,000/ - FROM THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SAID LOAN. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXP LANATION OF THE ASSESSEE . THEREFORE, THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER FURTHER ADDED AN AMOUNT OF RS.5,10,000/ - AS UNDISCLOSED INCOME ON ACCOUNT OF INTEREST THERETO . ITA NO. 2714 /PUN /201 7 - 3 - 4 . AGGRIEVED WITH THE ORD ER OF ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). REFERRING TO PROVISIONS OF SECTION 132(4A) OF THE ACT, THE CIT(A) CONFIRMED THE ABOVE ADDITIONS. 5 . AGGRIEVED WITH THE ORDER OF CIT(A) CONFIRMING THE ADDITION S , THE ASSESSEE IS IN APPEAL BEFORE ME . 6 . BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS APPEAL BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN VIEW OF VARIOUS REASONS. THERE WAS A SEARCH AND SEIZURE ACTION IN THE CASE OF SAMIRA GROUP OF COMPANIES ON 21.03.2013. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS.25,00,000/ - ALONG WITH INTEREST ACCRUED OF RS.5,10,000/ - THEREON BY RELYING ON A DOCUMENT SEIZED FROM THE PREMISES OF THE SAID SAMIRA GROUP. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE DENIED GIVING LOAN OF RS.25,00,000/ - TO THE SAID SAMIRA GROUP IN CASH AND ALSO DENIED RECEIVING ANY INTEREST THEREON FROM THE SAID SAMIRA GROUP OF COMPANIES. T HE ASSESSING OFFICER REJECTED THE SAID DENIAL OF TRANSACTION BY THE ASSESSEE AND PROCEEDED TO MAKE THE RE - ASSESSMENT ON THE SAID AMOUNT. FURTHER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT , RELYING ON THE SAID PAPER , THE INTEREST INCOME OF RS.5,10,00 0/ - WAS REPEATEDLY ADDED IN THE ASSESSMENT YEAR 2009 - 10 AS WELL AS IN ASSESSMENT YEAR 2010 - 11 BY THE ASSESSING AUTHORITIES. FURTHER, THE LD. COUNSEL SUBMITTED THAT THE SAID ADDITION IN THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 WERE DELETED BY THE LD. CIT(A ) IN VIEW OF FAILURE OF THE ASSESSING OFFICER TO ADHERE TO THE SAID PRINCIPLES OF NATURAL JUSTICE IN THE MATTER RELATING TO GIVING COPY OF THE STATEMENT OF SMT. VIJAYA IYER, EXECUTIVE DIRECTOR OF SASMIRA HEBITATS (INDIA) LTD. AND ALSO GIVING AN OPPORTUNITY TO ITA NO. 2714 /PUN /201 7 - 4 - CROSS - EXAMINE THE SAID EXECUTIVE DIRECTOR ETC. CONVENING THE NON - SERIOUSNESS OF THE ASSESSEE IN THE MATTER RELATES TO THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS QUA THE COMPLIANCE TO THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF GKN DRIVESHAFT S (INDIA) LTD., 259 ITR 19, LD. COUNSEL FOR THE ASSESSEE MENTIONED THAT THE REQUIREMENT OF FURNISHING THE SAID SEIZED PAPER, STATEMENT OF SMT. VIJAYA IYER, PROVIDING AN OPPORTUNITY TO CROSS - EXAMINATION ETC. ARE BASIC REQUIREMENT BEFORE MAKING ADDITION. TH E LD. AR REQUESTED FOR A DIRECTION TO THE ASSESSING OFFICER FOR PROVIDING BASIC REQUIREMENT. 7 . ON THE OTHER HAND, LD. DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 8 . I HEARD BOTH SIDES ON THIS LIMITED ISSUE OF REMANDING BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER AND FIND UNDISPUTED FACT INCLUDES MAKING THE ADDITION OF RS.5,10,000/ - , THIS ACCRUED INTEREST INCOME ON THE LOAN OF RS.25,00,000/ - , IS COMMON FOR ALL THE ASSESSMENT YEARS I.E. A.Y. 2008 - 09, 200 9 - 10 AND 2010 - 11. THE SAID ADDITION WAS DELETED BY THE CIT(A) FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 AND THERE IS NO APPEAL FILED BY THE REVENUE IN THIS REGARD. IN MY VIEW, THE SAME COULD BE DUE TO THE LIMITATION OF TAX LIMIT S . FURTHER, THE FAILU RE S TO PROVIDE THE SEIZED PAPERS, THE STATEMENTS TAKEN ON OATH, NON - PROVIDING OF CROSS - EXAMINATION OF SMT. VIJAYA IYER ETC . TO THE ASSESSEE ARE UNDISPUTED. CONSIDERING THE SAME, I AM OF THE OPINION THAT THE REQUEST OF THE LD. AR FOR THE ASSESSEE IS FAIRLY AND UNREASONABLE. 9 . THEREFORE, ALL THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL STAND REMITTED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. THE ASSESSING ITA NO. 2714 /PUN /201 7 - 5 - OFFICER IS HEREBY DIRECTED TO FURNISH THE REQUISITE PAPERS, COPY OF STATEMENT, ETC, IF NEED BE SO AND THE BENEFIT OF CROSS - EXAMINATION IS REQUIRED TO BE PROVIDED TO THE ASSESSEE IN ACCORDANCE WITH THE SAID PRINCIPLES OF NATURAL JUSTICE. WITH THESE DIRECTIONS, ALL THE ISSUES RAISED IN THE GROUNDS OF APPEAL STAND ALLOWED FOR STATISTICAL PURP OSES. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 28 TH D AY OF NOVEMBER , 2018 . SD/ - ( D. KARUNAKARA RAO ) / ACCOUNTANT MEMBER / PUNE ; DATED : 28 TH NOVEMBER , 2018 . SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESP ONDENT; 3. THE CIT(A) - 3 , PUNE; 4. THE PR. C CIT, PUNE; 5. , , - / DR SMC , ITAT, PUNE; 6. / GUARD FILE . // TRUE COPY // / BY ORDER, //TR UE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE