MEGHRAJ HIRACHAND SHANKLESHA, MUMBAI V. DCIT CEN CIR-1, THANE

ITA 2844/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7317 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ALSO REMUNERATION
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Valuation report
• Section: 69C; 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, I BENCH, MUMBAI. I BENCH, MUMBAI. I BENCH, MUMBAI. I BENCH, MUMBAI. BEFORE S/SHRI S.V.MEHROTRA, AM & V. DURGA RAO,JM BEFORE S/SHRI S.V.MEHROTRA, AM & V. DURGA RAO,JM BEFORE S/SHRI S.V.MEHROTRA, AM & V. DURGA RAO,JM BEFORE S/SHRI S.V.MEHROTRA, AM & V. DURGA RAO,JM I.T.A. NO. 2844 I.T.A. NO. 2844 I.T.A. NO. 2844 I.T.A. NO. 2844/MUM/2009 /MUM/2009 /MUM/2009 /MUM/2009 ASSESSMENT YEAR: 2006 ASSESSMENT YEAR: 2006 ASSESSMENT YEAR: 2006 ASSESSMENT YEAR: 2006- -- -07 0707 07 MEGHRAJ HIRACHAND SHANKLESHA, V. THE DCIT, CENT CIR-1, 201, 2 FLOOR, MUTHA HOUSE, OPP. THANE. WELLCOME HOTEL, SHIVAJI CHOWK, KALYAN(W). MUMBAI. PA NO.ADRPS 0217 P PER S.V.MEHROTRA, AM PER S.V.MEHROTRA, AM PER S.V.MEHROTRA, AM PER S.V.MEHROTRA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 27.2.2009 OF LD CIT (A)-THANE UPHOLDING THE ADDITIO N OF RS.4,82,240/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTHA HOUSE FOR THE ASSESSMENT YEAR 2006-07. 2 BRIEFLY STATED, THE FACTS IN THIS CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED ON IN THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE ASSESSEE ON 7.12.2006. D URING THE COURSE OF SEARCH AND SEIZURE ACTION, A NUMBER OF INCRIMINATING DOCUMEN TS WERE 2 FOUND AND SEIZED. IN RESPONSE TO NOTICE U/S 153A(A) OF THE ACT, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOM E AT RS. 1,05,500/- ON 2.6.2008. THE ASSESSEE IS A PARTNER IN M/S MUTHA PARASRAM DHANAJI & CO. THE ASSESSEE HAD DISCLOSED HIS SHARE INCOM E FROM THE FIRM AND ALSO THE REMUNERATION AND INTEREST RECEIVED FROM THE FIRM UNDER THE HEAD INCOME FROM BUSINESS. 3. DURING THE COURSE OF SEARCH & SEIZURE ACTION, IT WAS FOU ND THAT THE ASSESSEE ALONG WITH HIS THREE BROTHERS HAD CONSTRUCTED A H OUSE KNOWN AS MUTHA HOUSE AT A TOTAL COST OF RS. 65,14,500/- AS VALUE D BY THE DISTRICT VALUATION OFFICER IN HIS REPORT. THE INDIVIDU AL SHARE OF THE ASSESSEE AND HIS BROTHERS WAS WORKED OUT AT RS.16,28,625/ -. AS AGAINST THIS, THE ASSESSEE HAD SHOWN INVESTMENT OF RS.9,21,385 /- TOWARDS CONSTRUCTION AND RS.2,18,000/- TOWARDS LAND COST AND RS.75, 000/- (AS ON 31.3.2006) AND RS.2,25,000/- ON INTERIORS. THE AO OB SERVED THAT THE ASSESSEE HAD SUPPRESSED HIS INVESTMENT IN MUTHA HOUSE BY RS.4,82,240/- BEING THE DIFFERENCE I.E. (RS.16,28,625 RS.9,21,385 + RS.2,25,000/-) THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE BETWEEN T HE COST OF CONSTRUCTION AS PER THE VALATION REPORT AND INVESTMENT AS PER BALANCE SHEET. SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF RS.4,82,240/-, THE AO TREATED THE SAME AS UNEXPLAINED INVESTMENT OF TH E ASSESSEE U/S 69C OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE AO. A GGRIEVED, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THAT OF ONE OF THE ASSESSEES BROTHER SHRI RAMESH HIRACHAND SHANKLESAHA, WHOSE APPEAL HAS BE EN HEARD BY THE TRIBUNAL VIDE ITA NO. ITA NO. 3891/MUM/0 ITA NO. 3891/MUM/0 ITA NO. 3891/MUM/0 ITA NO. 3891/MUM/09 99 9 (ASST YEAR 3 2006-07) ON 2.3.2010 IN THE ITAT D BENCH. THEREF ORE, HE SUBMITTED THAT THE DECISION IN THAT WILL APPLY MUTATIS-MUTANDIS IN T HE PRESENT CASE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. WE FIND THAT IN THE CASE OF RAMESH HIRACHAND SHANK LESAHA, THE BROTHER OF THE ASSESSEE(SUPRA), THE TRIBUNAL VIDE ORD ER DATED 10.3.2010, WHICH IS PLACED ON RECORD, HAS REMANDED THE MATTER BACK TO TH E FILE OF THE AO FOR FRESH CONSIDERATION OBSERVING AS UNDER:- AFTER CONSIDERING THE SUBMISSIONS AND OTHER RELEVANT M ATERIAL ON RECORD, WE NOTED THAT THIS MATTER NEEDS RE-VERIFICATION. IN FACT, AFTER COMPLETING THE ASSESSMENT PROCEEDINGS, THE ASSESSE E HAS WRITTEN A LETTER DATED 26.12.2008 TO THE AO BY WHICH IT HAS BEEN STATED THAT THE ASSESSEE HAS NOTICED THE NOTING MADE BY T HE AO ON THE NOTE-SHEET ON 12.12.2008 THAT THE ASSESSEE HAS NO OBJECTION IN PROPOSED ADDITION ON THE ACCOUNT OF THE MUTHA HOUSE AMOUN TING TO APPROXIMATELY RS. 7 LACS. THERE APPEARS TO BE SOME MISUNDERSTANDING AS REGARDS TO THE SAID NOTING AND I HER EBY OBJECT TO THE SAID NOTING OF THE REASON THAT THE ABOVE FIGURE HAS BEEN ARRIVED BY YOUR HONOUR TAKING INTO THE CONSIDERATION T HE TOTAL COST ON THE BASIS OF THE VALUATION REPORT . THIS LETTER WAS GIVEN TO THE AO BEFORE PASSING THE ASSESSMENT; HOWEVER, THE SAME HAS NOT BEEN CONSIDERED BY THE AO. WE NOTED THAT EITHER THE AO OR THE LD CIT(A) HAS BROUGHT ON RECORD AS WHAT SEIZED MATERIAL FOUND RELATIN G TO THE INVESTMENT IN THE MUTHA HOUSE. THEREFORE, IN OUR CO NSIDERED VIEW, THIS MATTER NEEDS RE-VERIFICATION AT THE END OF THE AO AND ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES B ELOW AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO PASS A FR ESH ORDER AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE AND AFTER TAKING INTO CONSIDERATION THE LETTER DATED 26.1 2.2008 FILED BY THE ASSESSEE, COPY OF WHICH IS PLACED ON RECORD. WE OR DER ACCORDINGLY. SINCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWING THE D ECISION OF THE TRIBUNAL IN THE CASE OF SHRI RAMESH HIRACHAND SHANKLESAHA(SUP RA), WE 4 REMIT THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION IN LINE WITH THE DECISION TAKEN IN RAMESH HIRACHAND SHANKLESAHA (SUPR A). 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ON 18 MARCH, 2010 SD/- (V. DURGA RAO) (JUDICIAL MEMBER) SD/- (S.V. MEHROTRA) (ACCOUNTANTMEMBER) MUMBAI, DATED 18 MARCH , 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-, MUMBAI 4. COMMISSIONER OF INCOME TAX, CITY-, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH I, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI 5 `IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI MUMBAI BENCH D MUMBAI MUMBAI BENCH D MUMBAI MUMBAI BENCH D MUMBAI BEFORE SHRI R K GUPTA, JM & SHRI B RAMAKOTAIAH , AM BEFORE SHRI R K GUPTA, JM & SHRI B RAMAKOTAIAH , AM BEFORE SHRI R K GUPTA, JM & SHRI B RAMAKOTAIAH , AM BEFORE SHRI R K GUPTA, JM & SHRI B RAMAKOTAIAH , AM 6 IT ITIT ITA NO. 3891/MUM/09 A NO. 3891/MUM/09 A NO. 3891/MUM/09 A NO. 3891/MUM/09 (ASST YEAR 2006-07 ) SHRI RAMESH HIRACHAND SHANKLESAHA 401 MUTHA HOUSE OPP WELLCOME HOTEL SHIVAJI CHOW KALYAN (WEST) THE DY COMMR OF INCOME TAX CEN CIR 1, THANE (APPELLANT) VS (RESPONDENT) PAN ADRPS0273R PAN ADRPS0273R PAN ADRPS0273R PAN ADRPS0273R ASSESSEE BY: SHRI HARISH MOTIWALA/ MAHENDRA CHHAJED REVENUE BY: SHRI T T JACOB ORDER ORDER ORDER ORDER PER R K GUPTA: PER R K GUPTA: PER R K GUPTA: PER R K GUPTA: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF T HE CIT(A) RELATING TO ASSESSMENT YEAR 2006-07. 2 THE ASSESSEE IS OBJECTING IN CONFIRMING THE ADDITION OF RS. 7,45,010/- ON ACCOUNT OF ESTIMATED SHARE OF CONSTRUCTION OF MUTHA HOUSE. 3 BRIEFLY STATED, THE FACTS IN THIS CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED ON IN THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE ASSESSEE ON 7.12.2006. D URING THE COURSE OF SEARCH AND SEIZURE ACTION, A NUMBER OF INCRIMINATING DOCUMEN TS WERE FOUND AND SEIZED. IN RESPONSE TO NOTICE U/S 153A OF THE ACT, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 1,07,790/- ON 20.6.2008. THE ASSESSEE IS A PARTNER IN M/S MUTHA PARAS RAM DHANAJI & CO. THE ASSESSEE HAD DISCLOSED HIS SHARE INCOME FROM TH E FIRM AND ALSO THE REMUNERATION AND INTEREST RECEIVED FROM THE FIRM UNDER THE HEAD INCOME FROM BUSINESS. 3.1 DURING THE COURSE OF SEARCH & SEIZURE ACTION, IT WAS FO UND THAT THE ASSESSEE ALONG WITH HIS THREE BROTHERS HAD CONSTRUCTED A H OUSE KNOWN AS MUTHA HOUSE AT A TOTAL COST OF RS. 65,14,500/- AS VALUED BY THE DISTRICT VALUATION OFFICER IN HIS REPORT. THE INDIVIDU AL SHARE OF THE ASSESSEE AND HIS BROTHERS WAS WORKED OUT AT RS.16,28,625 /-. AS AGAINST THIS, THE ASSESSEE HAD SHOWN INVESTMENT OF RS.8,33,615 /- TOWARDS CONSTRUCTION AND RS.2,18,000/- TOWARDS LAND COST. THE AO O BSERVED THAT 7 THE ASSESSEE HAD SUPPRESSED HIS INVESTMENT IN MUTHA HO USE BY RS.7,45,010/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE S OURCE OF INVESTMENT OF RS.7,45,010/- IN THE MUTHA HOUSE. AS PER THE ORDER OF THE AO, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF INVEST MENT BEING THE DIFFERENCE IN THE ASSESSEES SHARE OF INVESTMENT IN TH E MUTHA HOUSE AS VALUED BY THE DVO AND THE ASSESSEES INVESTMENT DISCLOS ED IN HIS BALANCE SHEET. THE AO TREATED THE SAME AS UNEXPLAINED INVESTMEN T OF THE ASSESSEE U/S 69C OF THE ACT AND ADDED THE SAME TO THE TO TAL INCOME OF THE ASSESSEE. THE CIT(A) ALSO CONFIRMED THE ACTION OF THE A O. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 4 AFTER CONSIDERING THE SUBMISSIONS AND OTHER RELEVANT MATERIAL ON RECORD, WE NOTED THAT THIS MATTER NEEDS RE-VERIFICATION. IN FACT, AFTER COMPLETING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS WRITTEN A LETTER DATED 26.12.2008 TO THE AO BY WHICH IT HAS BEEN STATED T HAT THE ASSESSEE HAS NOTICED THE NOTING MADE BY THE AO ON THE NOTE-SHEE T ON 12.12.2008 THAT THE ASSESSEE HAS NO OBJECTION IN PROPOSED ADDITION ON THE ACCOUNT OF THE MUTHA HOUSE AMOUNTING TO APPROXIMATELY RS. 7 LACS. T HERE APPEARS TO BE SOME MISUNDERSTANDING AS REGARDS TO THE SAID NOTING AND I HEREBY OBJECT TO THE SAID NOTING OF THE REASON THAT THE ABOVE F IGURE HAS BEEN ARRIVED BY YOUR HONOUR TAKING INTO THE CONSIDERATION T HE TOTAL COST ON THE BASIS OF THE VALUATION REPORT . THIS LETTER WAS GIVEN TO THE AO BEFORE PASSING THE ASSESSMENT; HOWEVER, THE SAME HAS NOT BEEN C ONSIDERED BY THE AO. WE NOTED THAT EITHER THE AO OR THE LD CIT(A) HAS BROUGHT ON RECORD AS WHAT SEIZED MATERIAL FOUND RELATING TO THE INVES TMENT IN THE MUTHA HOUSE. THEREFORE, IN OUR CONSIDERED VIEW, THIS MATTER NEEDS RE- VERIFICATION AT THE END OF THE AO AND ACCORDINGLY, WE SET AS IDE THE ORDERS OF THE AUTHORITIES BELOW AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO PASS A FRESH ORDER AFTER ALLOWING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE AND AFTER TAKING INTO CONSIDERATION THE L ETTER DATED 26.12.2008 FILED BY THE ASSESSEE, COPY OF WHICH IS PLACED ON RECORD. WE ORDER ACCORDINGLY. 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 10.3.2010 SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - ( B RAMAKOTAIAH ) ( B RAMAKOTAIAH ) ( B RAMAKOTAIAH ) ( B RAMAKOTAIAH ) ( R K GUPTA R K GUPTA R K GUPTA R K GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER 8 PLACE: MUMBAI : DATED: 10 , MARCH 2010 RAJ* 9