Namdev Krishna Patil, Kolhapur V. Income-tax Officer,

ITA 315/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9067 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence; Retraction; Reassessment proceedings
• Section: 147; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.315/PUN/2015 / ASSESSMENT YEAR : 2006-07 NAMDEV KRISHNA PATIL, 23, UJAWAL HOUSING SOCIETY, UJALAIWADI, KOLHAPUR 416 004 PAN : ABQPP6311E . /APPELLANT VS. INCOME-TAX OFFICER, WARD-2(2), KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI S.N. PURANIK / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 14.03.2018 / DATE OF PRONOUNCEMENT: 27.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1 & 2, KOLHAPUR, DATED 14-01-2015 FOR THE ASSESSMENT YEAR 2006-07. 2. ASSESSEE RAISED 8 GROUNDS IN THE APPEAL MEMO ORIGINALL Y. SUBSEQUENTLY, ASSESSEE FILED THE CONCISE GROUNDS AND THE SAME ARE EXTRACTED AS UNDER : 1. LOWER AUTHORITIES HAVE ERRED IN ADDING RS.1,02, 25,000/- TO RETURNED INCOME OF RS.99,265/-. APPELLANT PRAYS TO DELETE T HE ADDITIONS. 2. APPELLANT PRAYS FOR FAIR AND EQUITABLE RELIEF. 3. APPELLANT PRAYS FOR CANCELLATION OF INTEREST LE VIED UNDER SECTION 234B. 2 3. APART FROM VARIOUS SETS OF PAPER BOOKS, ASSESSEE ALSO FURNISHED SUPPLEMENTARY DOCUMENTS BY WAY OF AN AFFIDAVIT. FURTHER, L D. COUNSEL FOR THE ASSESSEE ALSO FILED COPIES OF DOCUMENTS FROM THE RECO RDS OF THE AO ON 25-06-2016 AND PRAYED FOR ADMISSION OF THE SAME. FURTH ER, ASSESSEE FILED PAPER BOOK ON 04-01-2018 CONTAINING ADDITIONAL EVIDENCES ALONG WITH PRAYER FOR ADMISSION OF THE SAME. 4. WITH THE ABOVE BACKGROUND FACTS, BEFORE US, LD. COUNSE L FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACTS OF THE CAS E AND MENTIONED THAT THE ASSESSEE IS A SALARIED EMPLOYEE OF M/S. ATHANI FARMERS SUGAR FACTORY LTD., LOCATED IN BELGAUM. THERE WAS SURVEY ACTION U/S.133A OF THE ACT ON 18-01-2012 ON THE SAID COMPANY. THE SURVEY ACTION RESU LTED IN THE DISCOVERY OF A BLUE DIARY FOR THE YEAR 2005 IN THE POSSES SION OF THE ASSESSEE. ASSESSEE IS A MANAGER IN THE MATERIAL DEPARTM ENT OF THE COMPANY. ON PERUSAL, THE DIARY IS FOUND TO CONTAIN CERTAI N INCRIMINATING INFORMATION RELATING TO KICK BACKS FOR THE F.Y. 2005-06 TO 2 008-09. THE SAID INFORMATION WAS SUPPLIED TO THE AO OF THE ASSESSEE. T HE AO OF THE ASSESSEE RECEIVED ABOUT THE SAID INFORMATION FROM THE BELG AUM AND THE TOTAL KICK BACKS WERE COMPUTED TO WORK OUT TO A SUM O F RS.1,02,25,000/- FOR THE F.Y. 2005-06 RELEVANT TO A.Y. 2006-07. BASING ON T HE SAID INFORMATION, THE AO, KOLHAPUR INITIATED THE PROCEEDINGS U/S. 147 OF THE ACT AFTER DUE RECORDING OF THE REASONS AS WELL AS AFTER OBTAIN ING THE APPROVAL OF THE ADDL.CIT, KOLHAPUR. DURING THE SURVEY ACTION, THE STAT EMENT WAS RECORDED ON OATH FROM THE ASSESSEE. IN THE SAID STATE MENT, ASSESSEE NOT ONLY CONFIRMED THE CONTENTS OF SAID DIARY BUT ALSO OFFERED THE SAID SUM OF RS.1,02,25,000/- AS ADDITIONAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. HE ALSO CONFIRMED IN ANSWER TO QUESTION NO.9 THAT HE VOLUNTARILY DECLARED THE SAID SUM. SUBSEQUENTLY, ASSESSE E FILED AN AFFIDAVIT 3 DATED 30-01-2012 RETRACTING THE ABOVE SAID ADDITIONAL INC OME/STATEMENT IN TOTO ON THE GROUND THAT THE SAID ADMISSION WAS GIVEN D UE TO PRESSURE FROM THE MANAGEMENT. AO EXTRACTED THE CONTENTS OF SAID AFFIDA VIT IN PARA NO.4.2 OF THE ASSESSMENT ORDER. REJECTING THE CONTENTS OF THE AFFIDAVIT, AO MADE OUT A CASE THAT THE DIARY, WITH THE NAME OF THE ASSESSE E EMBOSSED ON IT, BELONGS TO THE ASSESSEE AND THE CONTENTS RELATING TO T HE KICK BACKS ARE IN THE KNOWLEDGE OF THE ASSESSEE. ASSESSEE IS A HIGHLY QUA LIFIED COMMERCE GRADUATE AND THEREFORE, THE STATEMENT GIVEN BY HIM IS IN THE KNOWLEDGE OF THE ASSESSEE. FOR THE FOLLOWING REASONS, THE AO ASSESSED THE SUM OF RS.1,02,25,000/- AS INCOME OF THE ASSESSEE. THE RELEVANT LIN ES FROM THE CONTENTS OF PARA 5.3 OF THE ASSESSMENT ORDER ARE EXTRACTED HERE A S UNDER : 5.3 . . . . . . . . . . . . .IN VIEW OF THESE FACT S, AFFIDAVIT ETC. AND THE STORY OF PRESSURE FROM MANAGEMENT IS SHEER AN AFTERTHOUGHT T O AVOID TO PAY LEGITIMATE TAXES DUE. CONSIDERING THESE FACTS, IT IS UNFAIR O N THE PART OF THE ASSESSEE THAT KICK BACK MONEY DIRECTLY WENT TO MANAGEMENT OF FACTORY, BECAUSE, THE CHAIRMAN-RESPONSIBLE PERSON IN MANAGEMENT IN HIS RE CORDED STATEMENT STATED THAT HE IS UNAWARE OF TRANSACTION MENTIONED IN THE DIARY BY SHRI NAMDEO PATIL-PRESENT ASSESSEE AND ALSO NOT AWARE UN DER WHAT CIRCUMSTANCES HE MAINTAINED AND KEPT THAT DIARY. I N VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED HEREINBEFORE, A SUM OF RS.1,02,25,000/- ON ACCOUNT OF KICK BACK MONEY RECEIVED BY THE ASSES SEE IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES, SIMULTANEOUSLY, PENAL PROCEEDINGS U/S.271(1)(C) OF THE ACT, FOR CONCEALMENT OF INCOME OF RS.1,02,25,000/-, AS WELL AS, FURNISHING PARTICULARS OF SUCH INCOME ARE INITIATED, SEPARATELY. 5. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE R EITERATED THE ARGUMENTS MADE OUT BEFORE THE AO IN THE REASSESSMENT PROCEEDINGS. AT THE END OF THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) NOT ONLY REJECTED THE RETRACTION OF THE ASSESSEE AS THE SAME IS NOT SUPPORTE D BY ANY EVIDENCES BUT ALSO CONFIRMED THE ADDITION MADE BY THE AO. 6. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFO RE US WITH THE CONCISE GROUNDS EXTRACTED ABOVE. 4 7. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACT THAT THE AO DID NOT SHARE THE COPIES OF THE ST ATEMENTS AS WELL AS THE CONTENTS OF THE DIARY WITH THE ASSESSEE BEFORE THE ADDITION IS MADE BY THE AO. FURTHER, HE SUBMITTED THAT DESPITE THE DEMAND FOR CROSS EXAMINATION, ASSESSEE WAS DENIED OF THE SAME BY THE AUTH ORITIES. BRINGING OUR ATTENTION TO THE ADDITIONAL EVIDENCES PLACED AT PAGE 123 ONWARDS OF THE PAPER BOOK, LD. COUNSEL SUBMITTED THAT THE ASSESSEE INVO KED THE PROVISIONS OF RIGHT TO INFORMATION ACT, 2005 AND OBTAINED V ARIOUS PAPERS AND DOCUMENTS WHICH ARE LISTED IN PARA NO.2 OF THE SAID P AGE 123. THE LIST CONSISTS OF STATEMENT OF CHAIRMAN AND EMPLOYEES RECORDED ON 27-04-2012, ASSESSMENT ORDER OF M/S. ATHANI SUGARS LTD. FOR A.Y. 2006 -07, STATEMENT OF THE ASSESSEE RECORDED ON 24-03-2014, AFFIDAVIT OF BHARAT NARAYAN PATIL, DATED 27-04-2012, STATEMENT OF THE ASSESSEE RECORDED ON 26-04-2012 ETC. LD. COUNSEL FURTHER SUBMITTED THAT ALL THE ABOVE SAID DOC UMENTS WERE OBTAINED AFTER PASSING OF THE ASSESSMENT/RE-ASSESSMENT/ FIRST APPELLATE ORDERS IN THE MONTH OF SEPTEMBER, 2016 AND THESE DOCUM ENTS GO TO THE ROOT OF THE MATTER. THEREFORE, LD. DR FOR THE REVENUE SUB MITTED THAT THESE DOCUMENTS MAY BE ADMITTED AND REMANDED TO THE FILE OF AO FOR FRESH EXAMINATION OF THE ENTIRE ISSUES CONSIDERING THE SET PRINCI PLES OF NATURAL JUSTICE. FURTHER, HE ALSO BROUGHT OUR ATTENTION TO THE COPY OF FIR DATED 12- 05-2012 AND COPY OF THE CHARGE-SHEET DATED 16-04-201 6 FILED BY THE COMPANY AGAINST THE ASSESSEE. LD. COUNSEL SUBMITTED THA T THE COMPANY HAS NAMED 13 SUPPLIERS AND ALLEGED THAT ASSESSEE POCKE TED EXTRA DISCOUNT FROM THE SUPPLIERS. MAKING VARIOUS SUBMISSIONS IN THE WRITTE N NOTE SEQUENCE OF EVENTS AND FACTS AND DEVIATING FROM THE D EMAND FOR CANCELLATION OF REASSESSMENT ORDER, LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ADDITIONAL EVIDENCES MAY BE ADMITTED AND REMAND ALL THE ISSUES TO 5 THE FILE OF AO FOR FRESH EXAMINATION AND GRANT OF CROSS-EXAM INATION, IF ANY, AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. 8. ON THE OTHER HAND, LD. DR FOR THE REVENUE, ON THE PR ELIMINARY ISSUE OF ADMISSION OF ADDITIONAL EVIDENCES AND GRANTING OF CROSS-EXAMINATION WITH THE MANAGEMENT/EMPLOYEES OF THE COMPANY RELIED ON THE O RDERS OF THE AO AND THE CIT(A) AND THE INCRIMINATING MATERIAL DISCOVERED BY THE SURVEY TEAM. 9. ON THE PRELIMINARY ISSUE OF ADMITTING THE ADDITIONAL EVIDEN CES, WE HEARD BOTH THE PARTIES AND PERUSED THE ADDITIONAL EVIDE NCES PLACED BEFORE US. IT IS AN ADMITTED FACT THAT ASSESSEE GAVE A STATEM ENT ON OATH DURING THE SURVEY ACTION GIVING DISCLOSURE OF RS.1,02,25,000/- FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER, IT IS ALSO AN ADMITTED FACT THAT THERE ARE VARIOUS OTHER STATEMENTS RECORDED BY THE SURVEY TEAM INVOLVING THE MANAGEMENT AND THE EMPLOYEES OF THE COMPANY. THE DETA ILS PERTAINING TO THE FIR AND THE CHARGE-SHEET WERE ALSO PLACED BEFORE U S. FURTHER, IT IS UNDISPUTED FACT THAT THE BENEFIT OF CROSS-EXAMINATION WAS NOT GRANTED TO THE ASSESSEE WHILE MAKING THE ADDITION OF RS.1,02,25,000/- FOR THE YEAR UNDER CONSIDERATION. AS SUCH, THE INFORMATION GATHERED BY THE ASSESSEE UNDER THE PROVISIONS OF RIGHT TO INFORMATION ACT, 2005 ARE ANTERIOR TO THE PASSING OF THE ORDERS BY THE AO AND THE CIT(A). WE ALSO FIND, ADMISSION OF THESE ADDITIONAL EVIDENCES WILL BE HELPFUL FOR ADMINISTRATION OF JUSTICE. THEREFORE, WE ARE OF THE OPINION THAT THE SAID ADDITIONAL E VIDENCES SHOULD BE ADMITTED. FURTHER, CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE, WE FIND THE SAID DOCUMENTS SHOULD BE REFERRED TO THE FILE O F AO FOR USE OF THE SAME AFTER GRANTING REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. IT IS THE REQUIREMENT OF JURISPRUDENCE THAT WHEREVER REQUIRED THE 6 BENEFIT OF CROSS-EXAMINATION HAS TO BE GRANTED TO THE AS SESSEE. WITH THESE DIRECTIONS AND OBSERVATIONS, WE ARE OF THE VIEW THAT THES E ADDITIONAL EVIDENCES ARE ADMITTED AND REMANDED. 10. COMING TO THE ISSUES RAISED ON MERITS, WE ARE OF THE VIEW THAT THE ISSUES RAISED IN THE GROUNDS SHOULD ALSO BE REMANDED TO THE FILE OF AO FOR FRESH EVIDENCES AND PASS A SPEAKING ORDER ON EACH OF T HE ARGUMENTS RAISED BY THE ASSESSEE BEFORE US. ACCORDINGLY, THE PRAYER REG ARDING ADMISSION OF ADDITIONAL EVIDENCES IS ALLOWED AND THE CONCISE GROUNDS RAIS ED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 27 TH MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1 & 2, KOLHAPUR 4. / THE CIT-1 & 2, KOLHAPUR 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE