The ITO, Ward-2, Bharuch V. Shri Ilyas Yusuf Paperwala, Bharuch

ITA 2877/AHD/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6952 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 03-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Principle of natural justice; Additional evidence; Retraction
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ./ ITA NO . 2877 / AHD/ 201 0 [ [ / ASSESSMENT YEAR : 20 0 7 - 08 THE INCOME TAX OFFICER, WARD - 2, BHARUCH VS SHRI ILYAS YUSUF PAPERWALA, PROP. OF M/S. MOON STAR CABLE NETWORK, 1 ST FLOOR, G. PATEL PLAZA, BANK ROAD, PALEJ, DIST. BHARUCH PAN : AECPP 3721 P / (APPELLANT) / (RESPONDENT) REVENUE BY : SMT. SONIA KUMAR, SR. DR. ASSESSEE(S) BY : NONE / DATE OF HEARING : 0 4 / 12 /2014 / DATE OF PRONOUNCEMENT: 12 /1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - V I , BARODA DATED 19 . 07 .201 0 FOR THE ASSESSMENT YEAR 20 07 - 0 8 . 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE FOLLOWING ADDITIONS MADE ON ACCOUNT OF DISCLOSURE MADE BY THE ASSESSEE DURING SURVEY U/S 133A OF THE ACT: - I) ADDITION OF RS.16,43,000/ - ON ACCOUNT OF INCOME FROM CABLE CONNECTION AND ADVERTISEMENT. ITA NO. 2877/AHD/2010 SHRI ILYAS YUSUF PAPERWALA FOR AY 2007 - 08 2 II) ADDITION OF RS.1,50,000/ - ON ACCOUNT OF NEW CONNECTION CHARGES. III) ADDITION OF RS.3,50,000/ - ON ACCOUNT OF COMMISSION AND OTHER INCOME. 3. NOTICE OF HEARING WAS SENT TO THE RESPONDENT - ASSESSEE BY REGISTERED POST WITH ACKNOWLEDGEMENT DUE WHICH WAS SERVED ON THE ASSESSEE AS IS EVIDENT FROM THE ACKNOWLEDGEMENT SLIP PLACED ON RECORD ; BUT NONE APPEARED WHEN THE CASE WAS CALLED FOR HEARING. THE BENCH, THEREFORE, PROCEEDED TO HEAR THE APPEAL EX - PARTE QUA THE RESPONDENT - ASSESSEE. 4. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDITION OF RS.16,43,000/ - ON ACCOUNT OF INCOME FROM CABLE CONNECTION AND ADVERTISEMENT WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S. 133A ON 28.02.2007. THE ASSESSEE RETRACTED THE DISCLOSURE BY FILING AN AFFIDAVIT DATED 10.04.2007. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE WAS UNABLE TO JUSTIFY HOW THE DISCLOSURE MADE DURING THE SURVEY PROCEEDINGS FOR ASSESSING YEAR 2006 - 0 7 AND 2007 - 08 WAS NOT HONORED, EXCEPT MAKING THE BALD STATEMENT TO THE EFFECT THAT THE STATEMENT WAS MADE UNDER STRESS AND WITHOUT PROPER APPRECIATION OF T HE FACT OF THE CASE. 5. THE DEPARTMENTAL REPRESENTATIVE FILED COPY OF THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF DATED 14.06.2013 PASSED IN ITA NO.2030/AHD/2010 IN AY 2006 - 07 AND SUBMITTED THAT THIS ISSUE HAS BEEN RESTORED BACK BY THE TRIBUNAL TO T HE FILE OF THE CIT(A) FOR ADJUDICATION AFRESH. FOLLOWING THE SAME, IN THIS ITA NO. 2877/AHD/2010 SHRI ILYAS YUSUF PAPERWALA FOR AY 2007 - 08 3 YEAR ALSO THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE SAME DIRECTIONS. 6. WE FIND THAT THE TRIBUNAL IN AY 2006 - 07 HELD AS UNDER: - 2. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(A) HAS HELD THAT THE ASSESSEE HAD DISCLOSED AN INCOME FROM CABLE AND ADVERTISEMENT AT RS. 18,78,800/ - . THAT INCOME WAS THE GROSS INCOME AND OBVIOUSLY A NET INCOME WAS REQUIRED TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. THE LEARNED CIT(A) HAS THEREFORE TAKEN A VIEW THAT THE EXPENDITURE OF RS.17,06,320/ - WAS TO BE ADJUSTED AGAINST THE SAID INCOME DECLARED. RESULTANTLY, ONLY THE BALANCE AMOUNT OF RS.1,78,480/ - WAS SUSTAINED IN THE FOLLOWING MANNER: ' 4.3 I HAVE CONSIDERED THE SUBMISSION OF THE ID. AR AND FACTS OF THE CASE AND REMAND REPORT OF THE ASSESSING OFFICER. IT MAY BE NOTED HERE THAT THE APPELLANT HAS DISCLOSED AN AMOUNT OF RS.18,78,800/ - , INCOME FROM CABLE OPERATIONS DURING THE YEAR UNDER CONSI DERATION. AT THE TIME OF DISCLOSURE, IT APPEARS THAT THE APPELLANT HAS DECLARED GROSS RECEIPTS AS INCOME FROM CABLE OPERATIONS, WITHOUT REDUCING THE EXPENSES/ROYALTY PAID TO THOSE PERSONS FROM WHOM HE HAS RECEIVED THE CABLE INPUT PROGRAMS, IN ALL AMOUNTING TO RS. 17,06,320/ - . OBVIOUSLY, INCOME IS NET OF EXPENSES AFTER REDUCING INCIDENTAL EXPENSES, WHICH THE AO HAS REFUSED TO CONSIDER DURING REMAND PROCEEDINGS, WHICH STAND CANNOT BE UPHELD. THE EVIDENCES PRODUCED FOR PAYMENT OF ROYALTY/EXPENSES ARE ADMISSIBL E, AS NO FINDING WAS GIVEN BY THE AO REGARDING ITS AUTHENTICITY. PRIMA - FACIE, AS THE EXPENSES/ROYALTY PAYMENTS WERE SUPPORTED BY BILLS, VOUCHERS, PAYMENT SCHEDULES AND ALL PAYMENTS BEING THROUGH DRAFTS, THERE IS NO REASON WHY THE SAME CANNOT BE ADMITTED AS ADDITIONAL EVIDENCE, AS THE PAYMENTS WERE RELATED TO THE YEAR UNDER CONSIDERATION, AND ACCORDINGLY, THE CONCLUSION OF THE AO NOT TO ADMIT SUCH EVIDENCES IS REJECTED. THUS, THE INCOME TO BE SUSTAINED UNDER THIS HEAD COMES TO RS. 1,78,480/ - (I.E., RS.18,78, 800/ - MINUS RS.17,06,320/ - ) AND THIS ADDITION IS PARTLY SUSTAINED.' 2.1 NOW BEFORE US FROM THE SIDE OF THE REVENUE A PAPER BOOK HAS BEEN FILED CONTAINING A COPY OF THE SUBMISSION OF THE ASSESSEE RECORDED UNDER SECTION 133A(3) OF THE IT ACT DATED 28.2.2007 . A COPY OF THE RETRACTION HAS ALSO BEEN FURNISHED. THE PAPER BOOK CONTAINS OTHER INCRIMINATING MATERIAL. BECAUSE CERTAIN EVIDENCES ITA NO. 2877/AHD/2010 SHRI ILYAS YUSUF PAPERWALA FOR AY 2007 - 08 4 WERE FILED FOR THE FIRST TIME BEFORE LEARNED CIT(A), THEREFORE, A REMAND REPORT WAS CALLED FOR. HOWEVER AS PER THE REMAND RE PORT SUBMITTED BY THE ITO, WARD - 2, BAHRUCH DATED 30TH OCTOBER, 2009, IT WAS OBJECTED THAT THE ASSESSEE HAD NOT GIVEN ANY COGENT REASON TO ESTABLISH THAT THE FURNISHING OF NEW EVIDENCE WAS COVERED UNDER THE EXCEPTION AS PRESCRIBED IN RULE 46A OF THE IT RULE S. IN THE SAID REMAND REPORT, THEREFORE, IT WAS STATED THAT THE ASSESSEE HAS EARNED A SUM OF RS.21.03 LACS, WHICH WAS OFFERED FOR TAXATION. THE RETRACTION THROUGH AN AFFIDAVIT WAS AN AFTERTHOUGHT. IN SHORT, THE ITO IN HIS REMAND REPORT HAS PRAYED THAT THE ADDITIONAL EVIDENCES SHOULD NOT BE ADMITTED BY LEARNED CIT(A). EVEN BEFORE US, THE VEHEMENT CONTENTION OF THE LEARNED DR IS THAT FIRST APPELLATE AUTHORITY HAS FAULTED IN ADMITTING NEW EVIDENCES WHICH WERE OBJECTED BY THE AO. 2.2 AFTER CONSIDERING THE TOTAL ITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND APPRECIATION OF THE EVIDENCES PLACED ON RECORD IN THE FORM OF PAPER BOOK BY THE REVENUE DEPARTMENT, WE ARE OF THE CONSIDERED OPINION THAT THERE WAS NO REASON OF THE ASSESSEE TO FURNISH CERTAIN EVIDENCES BE FORE LEARNED CIT(A) WHICH COULD NOT BE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE HAVE EXAMINED THE CONTENTS OF RULE 46A OF THE IT ACT WHICH PRESCRIBES THAT NO EVIDENCE SHALL BE ADMITTED BY CIT(A) UNLESS THE AO HAS BEEN ALLOWED REASONABLE OP PORTUNITY TO EXAMINE THOSE EVIDENCES. FURTHER SUB RULE 2 PRESCRIBES THAT NO EVIDENCE SHALL BE ADMITTED UNLESS THE CIT(A) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. IN OUR CONSIDERED OPINION, IF THE LEARNED CIT(A) HAD GRANTED OPPORTUNITY TO THE AO IN TERMS OF RULE 46A(3) TO THE AO THEN THE CONDITION OF ACCEPTANCE OF FRESH EVIDENCE WAS COMPLIED WITH BY LEARNED CIT(A). IN SUCH A SITUATION, IT WAS EXPECTED FROM THE AO TO EXAMINE THOSE EVIDENCES AND IF REQUIRED COULD HAVE CALLED THE ASSESSEE FOR THE VERIF ICATION OR INVESTIGATION, INSTEAD OF PUTTING THOSE EVIDENCES ASIDE AT THE THRESHOLD ITSELF. THUS, THE CIRCUMSTANCES HEREBY DEMAND THAT THE MATTER SHOULD GO BACK TO THE STAGE OF LEARNED CIT(A) WITH THE DIRECTION THAT THE AO MUST BE GRANTED AN OPPORTUNITY TO EXAMINE THOSE EVIDENCES AFRESH. SIDE BY SIDE WE HEREBY DIRECT THAT HE SHALL NOT RAISE ANY TECHNICAL OBJECTION ABOUT THE FURNISHING OF THOSE EVIDENCES AT THE FIRST APPELLATE STAGE, INSTEAD THE AO SHALL GIVE HIS CLEAR FINDING AFTER EXAMINING OR INVESTIGATIN G OF THOSE EVIDENCES IN TERMS OF PROVISIONS OF RULE 46A OF IT ACT. WE HEREBY ALSO DIRECT THE ASSESSEE TO FULLY CORROBORATE WITH THE PROCEEDINGS BY PROPERLY ATTENDING THE HEARING/PROCEEDINGS FIXED BY THE AO/CIT(A). WITH THESE DIRECTIONS, IN THE INTEREST OF NATURAL JUSTICE, THIS GROUND OF THE REVENUE MAY BE TREATED AS ALLOWED ONLY FOR STATISTICAL PURPOSE. ITA NO. 2877/AHD/2010 SHRI ILYAS YUSUF PAPERWALA FOR AY 2007 - 08 5 7. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION OF THE ISSUE AFRESH I N LINE WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN AY 2006 - 07 AS QUOTED ABOVE, AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . REGARDING THE ADDITION OF RS.1,50,000/ - ON ACCOUNT OF NEW CONNECTION CHARGES, THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ISSUE WAS COVERED BY THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF PASSED IN A SSESSMENT Y EAR 2006 - 07, WHERE THE ORDER OF THE CIT(A) DELETING THE ADDITION WAS CONFIRMED BY THE TRIBUNAL ; T HEREFORE, FOLLOWING THE SAME, THE ISSUE IS TO BE DECIDED AGAINST THE REVENUE. WE FIND THAT THE TRIBUNAL IN AY 200 6 - 07, WHILE DECIDING THE ADDITION ON ACCOUNT OF NEW CONNECTION CHARGES , HAS HELD AS UNDER: - 3. A PROPOS TO GROUND NO.2, THE AO HAD ESTIMATED A SUM OF RS.1,00,000/ - ALLEGED TO HAVE BEEN EARNED ON NEW CONNECTION CHARGES. IN THIS REGARD, THE PLEA BEFORE LEARNED CIT(A) WAS THAT THE ASSESSEE'S BUSINESS IS AT A SMALL PLACE IN RURAL AREA, THEREFORE, THERE WAS NO SCOPE OF EARNING OF SUCH HIGH INCOME. LEARNED CIT(A) HAS OPINED THAT THE NET INCOME IN RESPECT OF CONNECTIONS SUBSCRIBED BY THE CUSTOMER HAS ALREADY BEEN ASSESSED, THEREFORE, THERE WAS NO NECESSITY TO AGAIN ASSESS AN ESTIMATED INCOME OF RS.1,00,000/ - . RATHER IN THE OPINION OF LEARNED CIT(A) THIS ADDITION WAS NOTHING BUT A DOUBLE ADDITION IN THE HANDS OF THE ASSESSEE. IN THE RESULT, HE IS DIRECTED TO DELETE THE SAME. AFTER CONSIDERING THE PAPER BOOK FILED BY THE REVENU E DEPARTMENT AND THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SURVEY IN RESPECT OF THE IMPUGNED ADDITION OF RS.1,00,000/ - , THE AO WAS NOT JUSTIF IED IN ESTIMATING THE SAID INCOME FROM RECHARGE ETC. RESULTANTLY, WE HEREBY AFFIRM THE FACTUAL FINDING OF LEARNED CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. ITA NO. 2877/AHD/2010 SHRI ILYAS YUSUF PAPERWALA FOR AY 2007 - 08 6 9 . WE, THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 - 07, CONFIRM THE ORDER OF CIT(A) ON THIS COUNT AND ACCORDINGLY DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 10 . WITH REGARD TO THE ADDITION OF RS.3,50,000/ - ON ACCOUNT OF COMMISSION AND OTHER INCOME , THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO DISCUSSION ABOUT THE SAME IN THE ASSESSMENT ORDER, BUT THE AMOUNT HAS BEEN ADDED IN THE COMPUTATION OF INCOME OF THE ASSESSEE. SHE SUBMITTED THAT THE CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT SINCE HE HAS SUSTAINED THE AD DITION OF RS.16,43,000/ - BEING INCOME FROM CABLE OPERATION, THEREFORE, THE SUSTAINING THE ADDITION OF RS. 3 ,50,000/ - ON ACCOUNT OF COMMISSION AND OTHER INCOME WOULD AMOUNT TO DOUBLE ADDITION UNDER SIMILAR CIRCUMSTANCES WHICH IS AGAINST THE PRINCIPLE OF NATU RAL JUSTICE. SHE ARGUED THAT AS THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON TH E BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED U/S 133A OF THE ACT, THEREFORE, THE ADDITION OF RS.3 ,50,000/ - ON ACCOUNT OF COMMISSION AND OTHER INCOME SHOULD BE SUSTAIN ED AND THE ORDER OF THE CIT(A) SHOULD BE REVERSED. 11 . AFTER CONSIDERING THE SUBMISSIONS OF THE DEPARTMENTAL REPRESENTATIVE, WE FIND THAT IN THE ASSESSMENT ORDER, AS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE, THERE IS NO DI SCUSSION ON THE ADDITION OF RS.3 ,50,000/ - MADE ON ACCOUNT OF COMMISSION AND OTHER INCOME . IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER WHILE MAKING AN ADDITION HAS TO GIVE REASONS FOR THE SAME AND WITHOUT GIVING JUSTIFIABLE REASONS CANNOT INTERFERE WITH THE RETURNED INCOME OF TH E ASSESSEE. FURTHER, IT IS OBSERVED THAT EXCEPT FOR THE STATEMENT OF THE ASSESSEE U/S 133A THE ASSESSING OFFICER HAS BROUGHT NO CORROBORATING MATERIAL ON RECORD FOR MAKING THIS ADDITION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT ITA NO. 2877/AHD/2010 SHRI ILYAS YUSUF PAPERWALA FOR AY 2007 - 08 7 THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , THE 1 2 T H OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 2 /1 2 /2014 BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - VI, BARODA 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD