RAJKUMAR U. BHANSALI, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITA 2808/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62415 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUPINDER BRAR
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence; Validity of assessment; Accommodation entries; Reassessment proceedings
• Section: 147; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER. S.NO. I.T.A. NO. ASSTT. YEAR. 1. 2808/MUM/2011 2001-02 2. 2809/MUM/2011 2002-03 3. 2810/MUM/2011 2003-04 4. 2811/MUM/2011 2004-05 5. 2812/MUM/2011 2005-06 RAJKUMAR U. BHANSALI, DY. COMMISSIONER OF 80/82, SHEIKH MEMON, STREET, VS. INCOME-TAX, 1 ST FLOOR, R.NO.15, PATWA CHAWL, CENTRAL CIRCLE-47, MUMBAI 400 002. MUMBAI. PAN ADCPP7498Q APPELLANT. RESPONDENT. APPELLANT BY : SHRI VIJAY MEHTA. RESPONDENT BY : MS. RUPINDER BRAR. DATE OF HEARING : 26-04-2012 DATE OF PRONOUNCEMENT : 16-05-2012 O R D E R PER P.M. JAGTAP, A.M. : THESE FIVE APPEALS FILED BY THE ASSESSEE AGAINST A CONSOLIDATED ORDER OF LEARNED CIT(APPEALS)-38, MUMBAI DATED 18-01-2011 FO R ASSESSMENT YEARS 2001-02 TO 2005-06 INVOLVE COMMON ISSUES AND THE SAME, THER EFORE, HAVE BEEN HEARD 2 ITA NO. 2808 TO 2812/MUM/2011 TOGETHER AND ARE BEING DISPOSED OF BY THIS SINGLE C OMPOSITE ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF DEALING IN BULLION UNDER THE NAME AND S TYLE OF HIS PROPRIETARY CONCERN M/S VAISHNO ENTERPRISES. HE FILED HIS RETURNS OF IN COME FOR THE YEARS UNDER CONSIDERATION REGULARLY WHICH WERE ACCEPTED U/S 143 (1). A SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 04-03-2005 IN THE CASES OF M/S SHREE BULLION CORPORATION (PROP. SHRI BHARAT KHAVAS), M/S MAHADEO JEWELLERS ( PROP. SHRI PRABHAKAR PUROHIT), M/S MAHESH CORPORATION (PROP. SHRI RAGHUV EER PUROHIT) AND M/S MAHARAJA GEMS (PROP. SHRI BABUSINGH RATHOD). DURING THE COURSE OF SEARCH, STATEMENT OF SHRI BHARAT KHAVAS, PROP. OF M/S BULLI ON CORPORATION WAS RECORDED WHICH REVEALED THAT SHRI BHARAT KHAVAS WAS INDULGIN G IN PROVIDING ACCOMMODATION ENTRIES TO THE PARTIES LIKE M/S MAHES H CORPORATION AND M/S MAHADEO CORPORATION WHO IN TURN PROVIDED ACCOMMODAT ION BILLS TO ASSESSEE AND OTHER PARTIES ENGAGED IN THE SIMILAR BUSINESS. THE ANALYSIS OF RELEVANT ACCOMMODATION ENTRIES FURTHER REVEALED THAT CASH WI THDRAWALS WERE MADE FROM THE BANK ACCOUNT OF M/S SHREE BULLION CORPORATION AGAIN ST ACCOMMODATION BILLS. ACCORDING TO THE AO, THE ASSESSEE WAS A BENEFICIARY OF THE SAID CASH WITHDRAWALS AND THE CREDITORS APPEARING IN HIS ACCOUNTS ON ACCO UNT OF ACCOMMODATION BILLS WERE BOGUS LIABILITIES. HE, THEREFORE, ISSUED NOTIC ES U/S 148 REOPENING THE ASSESSMENTS FOR ALL THE FIVE YEARS UNDER CONSIDERAT ION. IN REPLY, THE ASSESSEE SUBMITTED THAT THE RETURNS ALREADY FILED BY HIM FOR THE YEARS UNDER CONSIDERATION MAY BE TREATED AS THE RETURNS FILED IN RESPONSE TO THE NOTICES U/S 148. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE, H OWEVER, DID NOT COMPLY WITH THE NOTICES ISSUED BY THE AO FIXING THE HEARING FRO M TIME TO TIME AND ALSO FAILED TO FURNISH THE DETAILS CALLED FOR BY THE AO. THE AO, T HEREFORE, PROCEEDED TO COMPLETE 3 ITA NO. 2808 TO 2812/MUM/2011 THE ASSESSMENTS FOR ALL THE FIVE YEARS UNDER CONSID ERATION U/S 144 READ WITH SECTION 147 TO THE BEST OF HIS JUDGMENT ON THE BASIS OF MAT ERIAL AVAILABLE ON RECORD. IN THE ASSESSMENTS SO COMPLETED, THE AO TREATED THE FOLLOW ING CREDITORS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS UNEXPLAINED AND ADDED THE AMOUNTS THEREOF TO THE TOTAL INCOME OF THE ASSESSEE U/S 68: SR.NO. NAME OF THE CREDITOR A.Y. ADDITIONS U/S 68 OF THE I.T. ACT. 01 M/S MAHADEV JEWELLERS 2001-02 14,32,000 02 M/S MAHADEV JEWELLERS 2002-03 40,00,930 03 M/S MAHESH CORPORATION 2003-04 1,72.21,811 04 M/S SHREE BULLION CORPORATION 2003-04 1,21,500 05 M/S MAHESH CORPORATION 2004-04 53,82,000 06 M/S SHREE BULLION CORPORATION 2004-05 2,44,47,084 07 M/S MAHARAJ GEMS 2005-06 1,98,41,478 08 M/S MAHADEV JEWELLERS 2005-06 11,67,000 3. AGAINST THE ORDERS PASSED BY THE AO U/S 144 READ WITH SECTION 147, THE APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE L EARNED CIT(APPEALS) FOR ALL THE FIVE YEARS UNDER CONSIDERATION. IN THE SAID APPEALS , THE ASSESSEE RAISED VARIOUS GROUNDS CHALLENGING THE VALIDITY OF ASSESSMENTS MAD E BY THE AO AS WELL AS DISPUTING THE ADDITIONS MADE IN THE SAID ASSESSMENT S U/S 68. FURTHER, DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE ALSO RAISED ADDITIONAL GROUNDS CHALLENGING THE ASSESSMEN TS MADE BY THE AO U/S 144 4 ITA NO. 2808 TO 2812/MUM/2011 READ WITH SECTION 147 ON SPECIFIC BASIS. THE LEARNE D CIT(APPEALS) DID NOT FIND MERIT IN ANY OF THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF ASSESSMENTS MADE BY THE AO AND DISPUTING THE ADDITI ONS MADE THEREIN U/S 68 AND DISMISSED THE APPEALS OF THE ASSESSEE UPHOLDING THE VALIDITY OF THE SAID ASSESSMENTS AS WELL AS CONFIRMING THE ADDITIONS MADE THEREIN BY THE AO U/S 68 BY A CONSOLIDATED ORDER PASSED ON 18-01-2011 WHICH IS IM PUGNED BY THE ASSESSEE IN THE PRESENT APPEALS FILED BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE VALIDIT Y OF ASSESSMENTS MADE BY THE AO U/S 144 READ WITH SECTION 147 FOR ALL THE FIVE YEAR S UNDER CONSIDERATION WAS CHALLENGED BY THE ASSESSEE BY WAY OF FOLLOWING GROU NDS RAISED IN THE APPEALS FILED BEFORE THE LEARNED CIT(APPEALS): GROUND NO. 5 ORIGINALLY RAISED. THE LD. ASSESSING OFFICER ERRED IN NOT PROVIDING C OPY OF THE REASONS RECORDED U/S 148(2) TO THE APPELLANT DESPITE REMIND ER. ADDITIONAL GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. ASSESSING OFFICER ERRED IN NOT APPRECIATING THAT TH E REQUISITE BELIEF OF ESCAPEMENT OF INCOME WITHOUT FURNISHING A COPY OF T HE STATEMENT RECORDED OF SHRI BHARAT KHAWAS (PROP. OF M/S SHREE BULLION CORPORATION) WAS NOT BASED ON MATERIAL OR FACTS WHI CH GIVE RISE TO SUCH BELIEF. THE LD. ASSESSING OFFICER FAILED TO AP PRECIATE WHETHER THE MATERIAL I.E. STATEMENT RECORDED OF SHRI BHARAT KHA WAS (PROP. OF M/S SHREE BULLION CORPORATION) CONSTITUTES ANY MATERIAL AT ALL, AND IF SO, WHETHER THAT MATERIAL HAS A DIRECT NEXUS OR LIVE LI NK WITH THE FORMATION OF SUCH RELIEF. THE LD. ASSESSING OFFICER FAILED TO SEND COPY OF THE STATEMENT RECORDED OF SHRI BHARAT KHAWAS ALONGWITH THE COPY OF REASONS RECORDED. COPY OF THE STATEMENT RECORDED OF SHRI BHARAT KHAWAS CAN ONLY INDICATE AS TO HOW THE LD. ASSESSIN G OFFICER WAS MADE TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. 5 ITA NO. 2808 TO 2812/MUM/2011 2. THE LD. ASSESSING OFFICER ERRED IN NOT APPRECIAT ING THAT THE CONFESSIONAL STATEMENT OF SHRI BHARAT KHAWAS IMPLIC ATING THE APPELLANT MUST BE SPECIFIC, RELIABLE AND RELEVANT. THE GENERAL STATEMENT OF PARTIES WHICH ARE VAGUE, DISTANT, REMO TE AND EXTRANEOUS CANNOT YIELD REASONABLE BELIEF AS CONTEMPLATED BY S ECTION 147. THE PRINCIPLE OF LAW IN THIS REGARD IS LAID DOWN I N THE CASE OF ASSESSING OFFICER V. LAKHMANI MEWAL DAS 103 ITR 437 (SC), THE SUPREME COURT OBSERVED AS FOLLOWS :- AS STATED EARLIER, THE REASONS FOR THE FORMATION O F THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BE ARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTUL ATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN T HE MATERIAL COMING TO THE NOTICE OF THE INCOME TAX OFFICER AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEM ENT OF THE INCOME OF THE ASSESSING OFFICER FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE CO URT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL AN D SUBSTITUTE ITS OWN OPINION FOR THAT OF THE INCOME-TAX OFFICER ON THE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPEN ING ASSESSMENT. AT THE SAME TIME WE HAVE TO BEAR IN MIN D THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER, VAGUE AND IN DEFINITE OR DISTANT, REMOTE AND FARFETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF T HE INCOME OF THE ASSESSEE FROM ASSESSMENT. 5. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSE SSEE, THE ABOVE GROUNDS RAISED BY THE ASSESSEE RELATING TO THE PRELIMINARY ISSUE OF VALIDITY OF ASSESSMENTS HAVE NOT BEEN ADJUDICATED UPON BY THE LEARNED CIT(A PPEALS) AND THIS POSITION CLEARLY APPARENT FROM THE IMPUGNED ORDER OF THE LEA RNED CIT(APPEALS) HAS NOT BEEN DISPUTED EVEN BY THE LEARNED DR. 6. IN THE APPEALS FILED BEFORE THE LEARNED CIT(APPE ALS), THE FOLLOWING GROUNDS WERE RAISED BY THE ASSESSEE AS GROUND NOS. 2, 3 AND 4 CHALLENGING THE ASSESSMENT 6 ITA NO. 2808 TO 2812/MUM/2011 ORDERS PASSED BY THE AO U/S 144 READ WITH SECTION 1 47 ON THE GROUND THAT THERE WAS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE : 2. THE ASSESSING OFFICER ERRED IN PASSING THE ASSES SMENT ORDER DATED 28 TH NOVEMBER, 2008 RECEIVED BY THE APPELLANT ON 14 TH DECEMBER, 2008 WITHOUT FOLLOWING THE MANDATORY RULES OF NATURAL JU STICE. THE SAID ORDER IS BASED UPON THE STATEMENT SAID TO HAVE BEEN MADE BY SHRI BHARAT KAVAS, PROP. OF M/S. SHREE BULLION CORPORATION, WITHOUT HA NDING OVER COPY OF THE SAID STATEMENT TO THE APPELLANT. IF THE STATEMENT R ECOR4DED OF SHRI BHARAT KAVAS IS TO BE MADE THE BASIS OF ADDITION IN THE SA ID ASSESSMENT ORDER, THEN THE COPY OF THE STATEMENT OUGHT TO HAVE BEEN SENT A LONGWITH THE NOTICE TO THE APPELLANT IN ORDER TO AFFORD HIM A REASONABLE O PPORTUNITY TO MEET THE ALLEGATIONS. THIS NOT HAVING BEEN DONE, THE IMPUGNE D ORDER WILL HAVE TO BE QUASHED AND SET ASIDE AND REMANDED TO THE LD. ASSES SING OFFICER FOR PASSING A PROPER ORDER AFTER COMPLYING THE RULES OF NATURAL JUSTICE. 3. THE LD. ASSESSING OFFICER ERRED IN PASSING THE A SSESSMENT ORDER WITHOUT AFFORDING PROPER OPPORTUNITY WHICH MEANT DE NIAL OF PRINCIPLES OF NATURAL JUSTICE. 4. THE LD. ASSESSING OFFICER ERRED IN NOT RECORDING THE PRESENCE OF THE AUTHORISED REPRESENTATIVE OF THE APPELLANT IN THE O RDER-SHEET PROCEEDINGS WHEN THE PERSONALLY ATTENDED BEFORE THE LD. ASSESSI NG OFFICER ON 26 TH NOVEMBER, 2008. THE LD. ASSESSING OFFICER FAILED TO APPRECIATE THAT ALTHOUGH THE APPELLANTS CHARTERED ACCOUNTANT WAS C ALLED ON 25 TH NOVEMBER, 2008 AS PER THE HEARING FIXED ON THAT DAT E, BUT ON ACCOUNT OF HIS SICKNESS HE ATTENDED ON 26 TH NOVEMBER, 2008 AND DISCUSSED THE MATTER AT LENGTH WITH HIM. FURTHER, THE LD. DCIT WAS ASKED AP PELLANTS CHARTERED ACCOUNTANT TO COME AND FILE ALL THE REQUISITE DETAI LS ON 28 TH NOVEMBER, 2008, APPELLANTS CHARTERED ACCOUNTANT COULD NOT DO SO ON ACCOUNT OF TERRORIST ACTIVITIES IN MUMBAI WHICH STARTED FROM 26 TH NOVEMBER, 2008 LATE NIGHT AND CONTINUED UPTO 29 TH NOVEMBER, 2008. THEREFORE, HE FILED ALL REQUISITE DETAILS ON MONDAY I.E. 1 ST DECEMBER, 2008 SINCE 29 TH AND 30 TH WERE SATURDAY AND SUNDAY. INCOME-TAX DEPARTMENT WAS NOT FUNCTIONING O N THESE DAYS. 7. A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED C IT(APPEALS) SHOWS THAT THE ABOVE GROUNDS HAVE BEEN ADJUDICATED UPON BY HIM VID E PARAGRAPH NO. 14 WHICH READS AS UNDER : 7 ITA NO. 2808 TO 2812/MUM/2011 THIS ISSUE IS CONSIDERED DURING THE APPEAL PROCEE DINGS. THE CONTENTIONS RAISED BY THE APPELLANT WITH REGARD TO THE LACK OF PROVIDING THE OPPORTUNITY TO EXPLAIN THE TRANSACTIONS AND OTHER R ELATED CONTENTIONS SUCH AS THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN DEALT W ITH BY ADMITTING THE WRITTEN SUBMISSIONS AND ADDITIONAL EVIDENCES. A FURTHER OPP ORTUNITY WAS GIVEN BY REMANDING THE CASE TO THE ASSESSING OFFICER. THE A. O. HAS, IN TURN, PROVIDED THE REQUIRED OPPORTUNITIES TO THE APPELLANT AND SUB MITTED THE REMAND REPORT. A COPY OF THE REMAND REPORT HAS ALSO BEEN MADE AVAI LABLE TO THE LD. AR OF THE APPELLANT AND FURTHER OBJECTIONS AND COMMENTS A RE FILED DURING THE APPEAL PROCEEDINGS. SINCE THE APPELLANT HAS BEEN PR OVIDED ADEQUATE OPPORTUNITIES OF HEARING ON ALL THE CONTENTIONS RAI SED WITH REGARD TO THE ADDITIONS MADE TO THE RETURNED INCOMES, THIS GROUND OF APPEAL IS TREATED AS DISMISSED. 8. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSE SSEE, THE ISSUES RAISED BY THE ASSESSEE IN GROUND NO. 2, 3 AND 4 ABOVE HAVE NOT BE EN DECIDED BY THE LEARNED CIT(APPEALS) SEPARATELY AND SPECIFICALLY AND THE SA ID GROUNDS HAVE BEEN DISMISSED IN A SUMMARY MANNER WITHOUT GIVING ANY SPECIFIC FIN DING/DECISION THEREON. FOR INSTANCE, THE CROSS EXAMINATION OF SHRI BHARAT KHAV AS WHOSE STATEMENT HAD BEEN USED AGAINST THE ASSESSEE WAS NOT GIVEN TO THE ASSE SSEE EITHER BY THE LEARNED CIT(APPEALS) OR EVEN BY THE AO DURING THE COURSE OF REMAND PROCEEDINGS. AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE AS SESSEE, SUCH OPPORTUNITY GIVEN BY THE INVESTIGATION WING COULD NOT BE SAID TO BE A N OPPORTUNITY EFFECTIVELY GIVEN TO THE ASSESSEE AND IT WAS NECESSARY IN THE INTERES T OF JUSTICE TO GIVE SUCH OPPORTUNITY TO THE ASSESSEE EITHER BY THE AO OR BY THE LEARNED CIT(APPEALS). 9. KEEPING IN VIEW THE POSITION AS DISCUSSED ABOVE WHICH IS VERY MUCH EVIDENT FROM THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) , WE ARE OF THE VIEW THAT THE PRELIMINARY ISSUES GOING TO THE ROOT OF THE MATTER HAVE NOT BEEN PROPERLY CONSIDERED AND DECIDED BY THE LEARNED CIT(APPEALS) AND HIS IMPUGNED ORDER PASSED WITHOUT CONSIDERING/DECIDING THE SAME ISSUES IS LIABLE TO BE SET ASIDE IN THE 8 ITA NO. 2808 TO 2812/MUM/2011 INTEREST OF JUSTICE. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) AND REMAND THE MATTER BACK TO HIM FOR DECIDING THE APPEALS OF THE ASSESSEE AFRESH BY PASSING A WELL CONSIDERED AND WE LL DISCUSSED ORDER ON EACH AND EVERY ISSUE AFTER GIVING THE ASSESSEE A PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 16 TH DAY OF MAY, 2012. SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 16 TH MAY, 2012 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, E-BENCH. (TRUE COPY) BY ORDE R ASSTT. REGI STRAR, ITAT, MUMBAI BEN CHES, MUMBA I, WAKODE