ACIT - 28(1), MUMBAI V. SHRI DHARMESH GUL VASWANI, NAVI MUMBAI

ITA 2997/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3683 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MISHRA
• Keywords: Unexplained investment; Additional evidence; Non compliance
• Section: 142(1); 133(6); 250; 147; 69; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 2997/MUM/2019 (A.Y: 2010-11) ACIT 28(1) RMNO. 306, 3 RD FLOOR, TOWER NO. 6, VASHI RLY STN COMPLEX, MUMBAI 400703. VS. SHRI DHARMESH GUL VASWANI, PLOT NO. 29A, D-LANE, SECTOR 8, OPP CIDCO WATER TANK, VASHI, NAVI MUMBAI 400703. PAN/GIR NO. : ABQPV1664E APPELLANT .. RESPONDENT APPELLANT BY : SHRI RAJESH MISHRA. DR RESPONDENT BY : SHRI RAJESH . AR DATE OF HEARING 18 .0 5 .2021 DATE OF PRONOUNCEMENT 02 .0 6 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) -26 MUM BAI, PASSED U/S.143(3) R.W.S.147 AND 250 OF THE INCOME T AX ACT, 1961. THE REVENUE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL; 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETI NG THE ADDITION U/S 69 OF THE ACT MADE BY THE AO, BY ENTER TAINING THE ADDITIONAL EVIDENCE UNDER RULE 46A WHICH WAS NOT PR ODUCED ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 2 - BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS AND THEREBY AND CONTRAVENING THE PROVISIONS OF RULE 46A(1) OF THE IT RULES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT GI VING A REASONABLE OPPORTUNITY TO THE AO TO EXAMINE THE ADD ITIONAL EVIDENCE SUBMITTED BY ASSESSEE UNDER RULE 46A, WHIC H WAS NOT PRODUCED BEFORE THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, AND THEREBY CONTRAVENING THE PROVISION S OF RULE 46A(3) OF THE IT RULES. 3. THE APPELLANT PRAYS THAT THE ORDER OF LD.CIT(A) ON THE ABOVE GROUND BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A NON RESIDENT INDIAN (NRI) FROM THE YEAR 1994-99 AND HAS BROUGHT FCNR DEPOSITS IN US DOLLARS AND LEADING A RETIRED LIFE. THE REVENUE HAS RECEIVED INFORMATION FROM NMS CYCLE- 1 ITD APPLICATION OF INVESTIGATION WING, THAT IN THE F.Y 2009-10 THE ASSESSEE HAS INVESTED RS. 2,00,00,000/- IN MUTUAL FUNDS. THEREFORE, THE A.O A FTER RECORDING THE REASONS FOR REOPENING HAS ISSUED NOTI CE U/S 148 OF THE ACT. SUBSEQUENTLY, NOTICE U/S 142(1) OF THE ACT AND SHOW CAUSE NOTICE WAS ALSO ISSUED BUT THERE WAS NO COMPLIANCE. BUT WHEREAS EARLIER IN COMPLIANCE TO NO TICE ISSUED U/S 148 OF THE ACT, THE ASSESSEE HAS FILED T HE RETURN OF INCOME ALONG WITH LETTER DATED 12.04.201 7 AND ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 3 - THE A.O FOUND THAT THE ASSESSEE HAS FILED THE RETUR N OF INCOME FOR THE A.Y 2010-11 ON 12.04.17 WITH TOTAL I NCOME OF RS. 88,708/-.THE ASSESSEE HAS DERIVED THE TOTAL INCOME AFTER SET OFF OF CURRENT LOSS OF RS. 51,292/- AGAIN ST THE INCOME FROM OTHER SOURCES. IN SPITE OF ISSUING THE SHOW CAUSE NOTICE, NONE APPEARED ON BEHALF OF THE ASSESS EE OR ANY EXPLANATIONS ARE FILED IN RESPECT OF INVESTMEN T OF RS. 2 CRORES IN MUTUAL FUNDS. THE A.O ON PERUSAL OF THE FACTS, FOUND THAT RS. 1 CRORE WAS INVESTED IN THE UNITS OF FIDELITY MUTUAL FUND PURCHASED ON 30.03.2010 AND SIMILARLY R S. 1 CRORE WAS INVESTED IN UNITS OF HSBC MUTUAL FUND PURCHASED ON 13.07.2009. THE A.O FOUND THAT THERE I S NO INFORMATION IS RECEIVED FROM THE ASSESSEE. HENCE IS SUED NOTICE U/S 133(6) OF THE ACT ON 04.10.2017 TO FIDEL ITY MUTUAL FUND AND HSBC MUTUAL FUND RESPECTIVELY. IN RESPONSE TO THE NOTICE, HSBC MUTUAL FUND VIDE LETTE R DATED 30.10.2017 HAS SUBMITTED A COPY OF ACCOUNT STATEMENT OF THE ASSESSEE AND THE A.O ON PERUSAL, F OUND THAT THE ASSESSEE HAS PURCHASED UNITS OF MUTUAL FUN D OF RS. 1 CRORE. SIMILARLY IN FIDELITY MUTUAL FUND (NO W L&T MUTUAL FUND) STATEMENT THE A.O FOUND THAT THE ASSE SSEE HAS PURCHASED UNITS OF MUTUAL FUND OF RS. 1 CRORE ON 10.10.2010. SINCE IN SPITE OF PROVIDING OPPORTUNITY TO THE ASSESSEE AND SHOW CAUSE LETTER DATED 31.10.2017, TH E ASSESSEE COULD NOT EXPLAIN THE SOURCES OF MUTUAL FU NDS ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 4 - INVESTMENT OF RS.2 CRORES. THEREFORE IN THE ABSENCE OF THE INFORMATION, THE A.O. MADE ADDITION AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND ASSESSED THE TOTA L INCOME OF RS. 2,00,88,710/- AND PASSED ORDER U/S 14 4 R.W.S 147 OF THE ACT DATED 22.11.2017. 3 AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A), THE LD. CIT(A) CONSIDERED THE GROU NDS OF APPEAL, FINDINGS OF THE AO IN SCRUTINY ASSESSMENT A ND THE WRITTEN SUBMISSIONS OF THE ASSESSEE REFERRED AT PARA 5 OF THE CIT(A) ORDER. THE CIT(A) FOUND THAT IN RESPE CT OF INVESTMENT OF RS.1 CRORE IN HSBC MUTUAL FUND THE ASSESSEE WAS AN NRI FROM THE YEAR 1994-99 AND BROUG HT FCNR FROM USA IN US DOLLARS WHICH ARE EXEMPTED FROM TAX AND SOLD FCNR IN THE YEAR 2004 AND RECEIVED AN AMOUNT OF RS. 88,18,588/- AND HAS PURCHASED NON TAXABLE (TAX FREE) 6.5% BONDS OF RS. 78,58,000/- IN MARCH 2004. THE SAID BONDS WERE REDEEM IN MARCH 2009 AND RECEIVED REDEMPTION AMOUNT OF RS. 1,08,20,466/-.FUR THER THE CIT(A) OBSERVED THAT THE RS.1 CRORE INVESTMENT IN THE HSBC MUTUAL FUND ARE OUT OF THE REDEMPTION AMOUNT RECEIVED FROM NON TAXABLE 6.5% BONDS AND RELIED ON THE DOCUMENTARY EVIDENCES AND DIRECTED THE A.O TO DELET E THE ADDITION. SIMILARLY, IN RESPECT OF RS. 1 CRORE FID ELITY MUTUAL FUND UNITS THE ASSESSEE HAS REDEEMED THE MUT UAL FUNDS EARLIER PURCHASED BY AND THE PROCEEDS ARE U SED ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 5 - FOR INVESTMENT IN FIDELITY MUTUAL FUNDS. THEREFORE, THE CIT(A) OBSERVED THAT THE INVESTMENTS ARE OUT OF THE EARLIER SOURCES AND OLD INVESTMENTS AND HAS RELIED ON THE EVIDENCES FILED AND GRANTED THE RELIEF AND ALLOWED THE ASSESSE APPEAL. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE HAS FILED AN APPEAL WITH THE HONBLE TRIBUNAL, CHALLENGI NG THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE A.O AND ACCEPTING THE ADDITIONAL EVIDENCE UNDER RUL E 46A OF THE IT RULES AND THE A.O WAS NOT PROVIDED OPPORT UNITY TO VERIFY THE ADDITIONAL EVIDENCES. 4. AT THE TIME OF HEARING, THE LD. DR SUBMITTED THA T THERE IS GROSS VIOLATION OF RULE 46A OF THE IT RULES AND ON PERUSAL OF THE EXPLANATIONS MADE BY THE ASSESSEE AT PARA 5 OF THE CIT(A) ORDER. THE ASSESSEE HAS SUBMITTED T HE DETAILS IN THE APPELLATE PROCEEDINGS AND THE CIT(A) HAS OBSERVED THAT THESE INVESTMENTS ARE SUPPORTED BY DOCUMENTARY EVIDENCE AND GRANTED THE RELIEF. WHERE AS, THE BEFORE THE A.O. NO INFORMATION WAS FILED BY THE ASSESSEE OR ANY COMMENTS WERE CALLED FOR BY THE APP ELLATE AUTHORITY ON ADDITIONAL EVIDENCES FROM THE A.O. TH EREFORE PRAYED FOR ALLOWING THE REVENUE APPEAL. ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 6 - 5.CONTRA, THE LD. AR SUPPORTED THE ORDERS OF THE CI T(A) AND RELIED ON THE PAPER BOOK AND SUPPORTED HIS ARGUMENTS WITH THE SUBMISSIONS MADE BEFORE THE CIT( A) AND THE DOCUMENTARY EVIDENCE OF INVESTMENTS MADE W ITH HSBC MUTUAL AND FIDELITY MUTUAL FUND AND OTHER BAN K ACCOUNTS. THE ASSESSEE EARLIER WAS A NRI AND NOW IS LEADING A RETIRED LIFE AND THE SOURCES ARE EXPLAINE D AND PRAYED FOR DISMISSAL OF THE REVENUE APPEAL. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA-FACIE, THE LD.DR SUBMITT ED THAT THE A.O HAS BEEN DEPRIVED A REASONABLE OPPORTU NITY TO EXAMINE THE ADDITIONAL EVIDENCES SUBMITTED BY TH E ASSESSEE UNDER RULE 46A BEFORE THE APPELLATE AUTHOR ITIES. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE DETAILS FOR THE FIRST TIME BEFORE THE CIT(A) WHEREAS IN ASSESSMENT PROCEEDINGS DUE TO NON COOPERATION AND NON COMPLIANCE OF NOTICE THE A.O HA S TO DO THE BEST JUDGMENT ASSESSMENT U/S 144 OF THE ACT. WE FOUND THAT THE FACTS SUBMITTED BY THE LD. DR ARE EMANATING OUT OF THE ASSESSMENT ORDER BUT THE LD.A R MENTIONED THAT THE DETAILS WERE VERY CLEAR AND THE DOCUMENTS WERE VERIFIED. THE CIT(A) HAVING CONSIDER ED THE SUBMISSIONS AND EVIDENCE HAS GRANTED THE RELIEF . WE ON PERUSAL OF THE ASSESSMENT ORDER FOUND THAT THE ASSESSEE BEFORE THE A.O HAS FILED THE RETURN OF INC OME IN ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 7 - RESPONSE TO NOTICE U/S 148 OF THE ACT. WHEN THE NOT ICE U/S 142(1) OF THE ACT WAS ISSUED TWICE AND THE SHOW CAUSE NOTICE, THERE WAS NO COMPLIANCE. THE ASSESSEE HAS SUBMITTED THE DETAILS FOR THE FIRST TIME BEFORE THE CIT(A) REFERRED AT PARA 5 OF THE CIT(A) ORDER AND THE SAID INFORMATION WAS NOT SUBMITTED BEFORE THE A.O FOR VA RIOUS REASONS. WE ARE OF THE CONSIDERED OPINION THAT, THE ASSESSEE HAS TO COMPLY WITH RULES AND REGULATIONS. WHEN THE DOCUMENTS WERE SUBMITTED FOR THE FIRST TIME BEF ORE THE CIT(A)THE PROVISIONS OF RULE 46A SHALL EQUALLY APPLICABLE. ACCORDINGLY, WE FIND THAT THERE IS A VI OLATION OF RULE. 46A AS THE A.O WAS NOT PROVIDED AN OPPORT UNITY TO VERIFY AND EXAMINE THE EVIDENCES FILED BY THE AS SESSEE IN THE APPELLATE PROCEEDINGS. THE CIT(A) COULD HAVE CALLED FOR THE REMAND REPORT ON THE EVIDENCES FILED BY THE ASSESSEE AS REFERRED AT PARA 5 OF THE CIT(A) ORDER BUT ALLOWED THE ASSESSEE APPEAL. THEREFORE, FOR LIMITED PURPOSE WE FIND THAT THE DOCUMENTS WHICH THE LD.C IT(A) HAS RELIED ARE TO BE EXAMINED AND VERIFIED BY THE ASSESSING OFFICER. HENCE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND RESTORE THIS DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH ABOVE DIRECTIONS AND THE ASS ESSEE SHOULD BE PROVIDED WITH ADEQUATE OPPORTUNITY OF HEA RING AND SHALL COOPERATE IN SUBMITTING THE INFORMATION. ITA NO. 2997/MUM/2019 SHRI DHARMESH GUL VASWANI, MUMBAI - 8 - ACCORDINGLY, THE GROUNDS OF APPEAL OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02.06.2021 SD/- SD/- ( S RIFAUR RAHMAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 02.06.2021 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. !!' , $ % , / DR, ITAT, MUMBAI 6. () * + / GUARD FILE. / BY ORDER, ! //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA