Shri Rajendrasinh Ganpatsinh Talsadiya, Surat V. The Income Tax Officer, Ward-5(4), Surat

ITA 3057/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1718 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH RATHOD
• Assessee Lawyers: RASESH SHAH
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 142(1); 147; 148; 144

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.3057/AHD/2014 / ASSTT. YEAR: 2007-2008 RAJENDRA TALSADIYA AT & PO : PALI VILLAGE TALUKA KAMREJ SURAT 394 180 PAN : AHUPT 6778 M VS. ITO, WARD-5(4) SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH REVENUE BY : SHRI KAILASH RATHOD, SR.DR ! / DATE OF HEARING : 24/04/2017 '#$ ! / DATE OF PRONOUNCEMENT: 02 /05/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-I, SURAT DATED 21.8.2014 PASSED FOR THE A SSTT.YEAR 2007-08. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCES. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ITA NO.3057/AHD/2014 2 ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING AN ADDITION OF RS. 20,00,000/- AS UNDISCLOSED INVESTME NT MADE IN PANCHVATI APARTMENT. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING AN ADDITION OF RS. 4,50,000/- AS UNACCOUNTED AGRICULTURE INCOME. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING AN ADDITION OF RS. 6,00,000/- AS UNACCOUNTED RENT INCOME. 5. WITHOUT PREJUDICE TO ABOVE, THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT GIVING TELESCOPING E FFECT OF ALLEGED UNACCOUNTED AGRICULTURE INCOME AND ALLEGED UNACCOUN TED RENT INCOME AGAINST UNDISCLOSED INVESTMENTS. 6. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITIO NS MADE BY ASSESSING OFFICER AND CONFIRMED BY LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) MAY PLEASE BE DELETED. 7. IT IS ALSO PRAYED THAT THE HIGHER OF UNACCOUN TED INVESTMENT SUSTAINED AND UNACCOUNTED INCOME SUSTAINED MAY PLEA SE BE TAXED. 8. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 3. APART FROM THE ABOVE, THE ASSESSEE MOVED AN APPL ICATION DATED 22.4.2007 AND SOUGHT PERMISSION TO RAISE ADDITIONAL GROUND OF APPEAL. IT IS PLEADED IN THE APPLICATION THAT THE ASSESSEE ON ACCOUNT OF INADVERTENT MISTAKE FAILED TO RAISE GROUND OF APPEA L CHALLENGING REOPENING OF THE ASSESSMENT. IN THIS WAY, THE ASSE SSEE HAS RAISED ADDITIONAL GROUND ALSO, WHEREBY HE HAS CHALLENGED R EOPENING OF THE ASSESSMENT. 4. WITH THE ASSISTANCE OF THE LD.REPRSENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD THAT THE AO HAS ALLEGED THAT HE HAS RECEIVED A REPORT FROM I NVESTIGATION WING EXHIBITING FACT THAT A STATEMENT OF THE ASSESSEE WA S RECORDED ON OATH ON 2.1.2009 BY THE ADDITION DIRECTOR OF INCOME-TAX (INVESTIGATION), ITA NO.3057/AHD/2014 3 SURAT. IN THIS STATEMENT ASSESSEE HAS STATED THAT HE HAS PURCHASED TWO FLATS IN THE F.Y.2006-07 RELEVANT TO THE ASSTT. YEAR 2007-08 AND RAISED CONSTRUCTION WORTH RS.20 LAKHS. HE HAS CONS TRUCTED 49 ROOMS THEREON. ARMED WITH THIS INFORMATION, THE LD.AO HA S RECORDED REASON AND ISSUED NOTICE UNDER SECTION 148 ON 30.3.2012. HE REOPENED THE ASSESSMENT. ACCORDING TO THE AO, THE ASSESSEE DID NOT FILE RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 AND DID NO T APPEAR BEFORE HIM. THE AO, THEREAFTER, ISSUED NOTICE UNDER SECTI ON 142(1) ON 31.8.2012 AND SHOW CAUSE NOTICE ON 5.3.2013. ACCOR DING TO HIM, THE ASSESSEE DID NOT REPLY THESE NOTICES, HENCE, HE PA SSED EX PARTE ASSESSMENT ORDER ACCORDING TO HIS BEST JUDGMENT UND ER SECTION 144 READ WITH SECTION 147 OF THE INCOME TAX ACT. THE L D.AO HAS MADE THREE ADDITIONS VIZ. (A) INVESTMENT IN PUNCHAVATI APARTME NT OF RS.20 LAKHS, (B) ADDITION OF RS.4.50 LAKHS WHICH WAS ADDED BY DI SBELIEVING CLAIM OF AGRICULTURE INCOME, AND (C) ESTIMATED RENTAL INCOME OF RS.6.00 LAKHS FROM ALLEGED 49 ROOMS CONSTRUCTED BY THE ASSESSEE I N PUNCHAVATI APARTMENTS. 5. DISSATISFIED WITH THIS EX PARTE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). HE FILED AN APPLICATION UNDER RULE 46A OF THE INCOME TAX RULES, 1962. HE HAS SUBMITTED THAT INCOME OF RS.4.50 LAKHS WAS EARNED O UT OF SALE OF SUGAR- CANE AND OTHER AGRICULTURE PRODUCE4. SIMILARLY, HE HAS NOT COMPLETED CONSTRUCTION IN THIS ACCOUNTING YEAR, AND THEREFORE , THERE CANNOT BE ANY RENTAL INCOME WHICH IS TO BE ESTIMATED. IN SUPPORT OF HIS CONTENTIONS, HE SOUGHT TO SUBMIT CERTIFICATE OF TALATI . SIMILARLY, HE CONTENDED THAT INVESTMENT OF ALLEGED RS.20.00 LAKHS IN CONSTRUCTIO N OF THE PROPERTY WAS OUT OF AGRICULTURE INCOME EARNED IN EARLIER YEA RS. THE LD.CIT(A) HAS REJECTED CONTENTIONS OF THE ASSESSEE ON THE GRO UND THAT THE ASSESSEE DOES NOT FULFILL CONDITIONS AVAILABLE IN C LAUSE (A) TO (D) OF SUB- RULE 1 OF RULE 46A OF THE INCOME TAX RULES, 1962, A ND THEREFORE, SUCH EVIDENCE CANNOT BE TAKEN ON RECORD. ITA NO.3057/AHD/2014 4 6. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET CONTENDED THAT THE LD.CIT(A) HAS MADE REFERENCE TO THE ARGUMENTS O F THE ASSESSEE PLEADED IN THE APPLICATION FOR PERMISSION TO ADDUCE ADDITIONAL EVIDENCE OR TAKEN IN THE WRITTEN SUBMISSIONS, BUT DID NOT RE AD THAT EVIDENCE WHILE ADJUDICATING THE ISSUES. HE PRAYED THAT PROP ER OPPORTUNITY OF HEARING WAS NOT GRANTED TO THE ASSESSEE, AND THEREF ORE, BOTH THE ORDERS ARE NOT SUSTAINABLE. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES BELOW. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE ASSESSMENT ORDE R WOULD INDICATE THAT NOWHERE THE AO HAS RECORDED A FINDING THAT NOTICES ISSUED UPON THE ASSESSEE WERE SERVED. A MENTION WITH REGARD TO THE FACT OF ISSUANCE OF NOTICE IS BEING THERE IN THE ASSESSMENT ORDER, BUT NOWHERE A CONCLUSIVE FINDING EXHIBITING SERVICE OF NOTICE HAS BEEN RECOR DED. SIMILARLY, THE LD.AO HAS NOT REPRODUCED THE REASONS FOR REOPENING OF THE ASSESSMENT. 8. FOR THE SAKE OF ARGUMENT, EVEN IF WE ASSUME THAT THE ASSESSEE WAS SOMEWHAT NEGLIGENT IN CONDUCTING INCOME TAX PRO CEEDINGS, THEN ALSO, IF HIS EXPLANATION SUBMITTED TO THE CIT(A) IS BEING CONSIDERED, THEN IT WOULD REVEAL THAT PUNISHMENT IN THE SHAPE O F TAX LIABILITY IS DISPROPORTIONATE TO HIS NEGLIGENCE. THE LD.CIT(A) OUGHT TO HAVE ADMITTED EVIDENCE AND CALL FOR REPORT FROM THE AO, AND THEREAFTER ISSUES SHOULD HAVE BEEN DECIDED ON MERIT, INSTEAD OF CONFI RMING AN EX PARTE PROCEEDINGS OF THE AO. IT IS PERTINENT TO OBSERVE THAT THE QUASI JUDICIAL AUTHORITIES ARE BEING RESPECTED NOT ON ACCOUNT OF T HEIR POWER TO LEGALISE THE INJUSTICE ON TECHNICAL GROUND BUT BECAUSE, THEY ARE CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. THE LD .CIT(A) OUGHT TO HAVE CONSIDERED EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE RESOLVING CONTROVERSY. CONSIDERING THESE FACTS, WE DEEM IT A PPROPRIATE THAT ENDS OF JUSTICE WOULD MEET IF WE SET ASIDE BOTH THE ORDE RS OF THE REVENUE AUTHORITIES AND RESTORE ALL THESE ISSUES TO THE FIL E OF THE LD.AO FOR FRESH ITA NO.3057/AHD/2014 5 ADJUDICATION. THE ASSESSEE WILL BE AT LIBERTY TO S UBMIT ANY EXPLANATION/ EVIDENCE IN SUPPORT OF HIS STAND FOR EXPLAINING THE ABOVE THREE ISSUES CONSIDERED BY THE AO. THE ASSESSEE WILL ALSO BE EN TITLED TO RAISE OBJECTION AGAINST REOPENING OF THE ASSESSMENT, IF A NY AVAILABLE TO HIM AS PER LAW. 9. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR I NJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER