Ashok Kumar B.Mehta, Coimbatore V. ITO, NCW 2(3), Coimbatore

ITA 3154/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6565 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 20-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN CIT ITA NO
• Keywords: Unexplained cash credit; Search and seizure; Principle of natural justice; Additional evidence; Difference of opinion; Accommodation entries; Change of opinion
• Section: 147; 131; 68; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NO.3154/CHNY/2018. #$% &$ / ASSESSMENT YEAR : 2007-2008. SHRI. ASHOK KUMAR B. MEHTA, NO.178, MEHTA B. MEHTA, D.B. ROAD, R.S. PURAM, COIMBATORE 641 002. VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(3) COIMBATORE [PAN ABKPM 9259N] !' ./I.T.A. NO.295/CHNY/2019. #$% &$ / ASSESSMENT YEAR : 2007-2008. SHRI. ASHISH KUMAR A. MEHTA, NO.178, D.B. ROAD, R.S. PURAM, COIMBATORE 641 002. [PAN AEAPA 2239M] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(3) COIMBATORE !' ./I.T.A. NO.296/CHNY/2019. #$% &$ / ASSESSMENT YEAR : 2007-2008. SMT. VEENA KUMARI A. MEHTA, NO.178, D.B. ROAD, R.S. PURAM, COIMBATORE 641 002. [PAN AARPM 7531P] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(3) COIMBATORE ( / APPELLANT) ( /RESPONDENT) !' '( ) * / APPELLANT BY : NONE +,'( ) * /RESPONDENT BY : SHRI. A. SUNDARARAJAN, ADDL. CIT. ITA NO.3154 /2018-296-97-19 :- 2 -: # - ) . /DATE OF HEARING : 17-10-2019 /0&% ) . /DATE OF PRONOUNCEMENT : 21-10-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THESE ARE APPEALS FILED BY DIFFERENT ASSESSEES DIR ECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INC OME TAX (APPEALS)- 2, COIMBATORE (CIT(A) FOR SHORT) DATED 14.09.201 8 FOR THE ASSESSMENT YEAR (AY) 2007-2008. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS R ELEVANT TO THE APPEAL IN ITA NO.3154/CHNY/2018 FOR ASSESSMENT YEAR 2007-08 ARE STATED HEREIN. 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) IS CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE ORDER OF ASSESSING OFFICER IN BRINGING TO TAX A SUM OF RS. 617463/- UNDER SECTION 68 OF THE ACT. 3. THE APPELLANT SUBMITS THAT HE HAD FURNISHED ALL THE MATERIALS AND PARTICULARS FULLY AND TRULY AND HENCE REOPENING OF THE ASSESSMENT BEYOND THE PERIOD OF 4 YEARS WAS UNSUSTAINABLE 3.1. THE APPELLANT HAD DISCLOSED THE NAMES, ADDRESS ES, PAN, ETC. OF ALL THE PERSONS FROM WHOM LOANS EXCEEDING RS. 20,00 0/- WERE OBTAINED DURING THE YEAR, IN THE TAX AUDIT REPORT W HICH WAS ITA NO.3154 /2018-296-97-19 :- 3 -: FURNISHED TO THE ASSESSING OFFICER WHO DID NOT MAKE ANY ADDITION IN THE ORIGINAL ASSESSMENT. THEREFORE, THE NOTICE ISSU ED U/S 148 OF THE ACT SUBSEQUENTLY ON THE BASIS OF INFORMATION RECEIV ED FROM THE INVESTIGATION WING OF THE DEPARTMENT MUMBAI WAS ON ACCOUNT OF CHANGE OF OPINION AND AS SUCH THE REOPENING U/S 147 OF THE ACT WAS NOT VALID. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER WAS DUTY BOUND TO PROVID E AN OPPORTUNITY TO CROSS-EXAMINE SHRI GOUTHAM JAM AS HIS STATEMENT WAS RECORDED BEHIND THE BACK OF YOUR APPELLANT, THAT TOO DURING THE SEARCH AND SEIZURE ACTION AT HIS PLACE AND NOT DURING ANY ASSE SSMENT PROCEEDINGS OF YOUR APPELLANT. 4.1 THE COMMISSIONER OF INCOMETAX (APPEALS) OUGHT T O HAVE DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER UNDER S ECTION 68 SINCE THE ASSESSING OFFICER FAILED TO ISSUE SUMMONS AND E XAMINE THE LENDERS UNDER SECTION 131 OF THE ACT. THIS TANTAMOU NTS TO VIOLATION OF ESSENTIAL RULES OF NATURAL JUSTICE 4.2 THE COMMISSIONER OF INCOMETAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD CLEARLY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE BY NOT AFFORDING ANY OPPORTUNITY TO THE APPELLANT TO CROSS- EXAMINE SHRI GOUTHAM JAM 4.3 THE APPELLANT RELIES ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES 281 CTR 241 WHEREIN IT HAS HELD THAT NOT ALLOWING ASSESSEE TO C ROSS-EXAMINE WITNESSES BY ADJUDICATING AUTHORITY THOUGH STATEMEN TS OF THOSE WITNESSES WERE MADE AS BASIS OF IMPUGNED ORDER, AMO UNTED IN SERIOUS FLAW WHICH MADE IMPUGNED ORDER NULLITY AS I T AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 4.4. THE APPELLANT RELIES ON THE DECISION OF THE MU MBAI TRIBUNAL IN M/S.RUSHABH ENTERPRISES VS. ASST. CIT ITA NO.1580/M UM/2017 WHEREIN THETRIBUNAL HELD APPLYING THE PROPOSITION OF LAW LAID DOWN BY HONBL E BOMBAY HIGH COURT AND HONBLE SUPREME COURT TO THE FACTS OF THE INSTANT CASE, I DO NOT FIND ANY MERIT FOR THE ADDIT ION MADE BY AO WITHOUT ALLOWING ASSESSEE AN OPPORTUNITY TO CROS S EXAMINE THE PERSON ON WHOSE STATEMENT ADDITION WAS MADE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT T O HAVE FOUND THAT THE ASSESSING OFFICER HAD TREATED THE LOAN REC EIVED FROM SHRI GOUTHAM JAM AS UNEXPLAINED CREDIT WITHOUT ANY BASIS AND PURELY ON SUSPICION, SURMISES AND CONJECTURES ITA NO.3154 /2018-296-97-19 :- 4 -: 5.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE FOUND THAT THE AMOUNT OF RS.5,98,000/- RECEIVED AS LOAN F ROM MS. MIHIR DIAMONDS IN SEPTEMBER 2005 WAS IMMEDIATELY INVESTED BY WAY OF SUBSCRIPTION IN THE SHARES OF M/S.HIRAN ORGO CHEMIC ALS LTD., A PUBLIC LIMITED COMPANY LISTED ON THE BOMBAY STOCK EXCHANGE LTD., BY ISSUE OF CHEQUE OF STANDARD CHARTERED BANK LTD.; AN D THE ASSESSEE WAS ALLOTTED 20000 SHARES ON APPLICATION BY CREDIT IN HIS DEPOSITORY ACCOUNT 5.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD DISCHARGED INITI AL ONUS BY GIVING PARTICULARS OF TRANSACTIONS, ALL TRANSACTIONS TOOK PLACE THROUGH REGULAR BANKING CHANNELS, HAD PROVED THE GENUINENES S OF THE TRANSACTIONS AND ALSO THE FACT THAT THE APPELLANT H AD REPAID THE LOAN 5.3. THE COMMISSIONER OF INCOMETAX (APPEALS) OUGHT TO HAVE FOUND THAT THE LOAN RECEIVED FROM SHRI GOUTHAM JAM & OTHE RS WERE BY BANK TRANSFER THROUGH RTGS REFLECTED IN THE BANK AC COUNT OF THE ASSESSEE AND INTEREST HAD BEEN PAID TO THE LENDERS ON THE LOAN. 5.4 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE FOUND THAT THE ASSESSING OFFICER HAD TOTALLY IGNORED THE RELEVANT DETAILS, DOCUMENTS/CONFIRMATIONS, AND NECESSARY EXPLANATIONS GIVEN, IN MAKING THE ADDITION UNDER SECTION 68 THOUGH HE HAD NOTED THAT THE LOAN HAD BEEN REPAID BY WAY OF TRANSFER OF THE SHAR ES 5.5 THE COMMISSIONER OF INCOMETAX (APPEALS) OUGHT T O HAVE FOUND THAT THE PURCHASE OF SHARES OF M/S HIRAN ORGO CHEM LTD WAS REFLECTED IN THE DEMAT ACCOUNT OF THE ASSESSEE AND THE SHARES WERE NOT PENNY STOCK 5.6 THE COMMISSIONER OF INCOMETAX (APPEALS) OUGHT T O HAVE FOUND THAT THE ASSESSEE HAD REPAID THE LOANS BY WAY OF TR ANSFER OF SHARES TO SHRI GOUTHAM JAM AND THIS WAS REFLECTED IN THE D EMAT ACCOUNT OF THE ASSESSEE AND ALSO REFLECTED IN THE LEDGER ACCOU NT OF GOUTHAM JAM, PROP : M/S.MIHIR DIAMONDS. 5.7 THE APPELLANT RELIES ON THE DECISION OF THE MUM BAI TRIBUNAL IN DILSA DISTRIBUTORS COMBINE VS ITO I.T.A. NO. 7007/ MUM/2011, WHEREIN IT HAS BEEN HELD THAT IF THE CLAIM OF THE ASSESSEE THAT LOANS HAVE ALREADY BEEN REPAID IS FOUND CORRECT THEN THE ADDITION U/S 68 IS NOT SUSTAINABLE AND LIABLE TO BE DELETED. 6. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GR OUNDS AT THE TIME OF HEARING. ITA NO.3154 /2018-296-97-19 :- 5 -: 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL. THE RETURN OF INCOM E FOR THE ASST. YEAR 2007-2008 WAS FILED ON 29.01.2008 DISCLOSIN G TOTAL INCOME OF L2,11,970.-. THE SAID RETURN OF INCOME WAS PROCES SED U/S.143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). SU BSEQUENTLY BASED ON THE INFORMATION RECEIVED FROM DGIT (INVESTIGATION) MUMBAI THAT ASSESSEE IS ONE OF THE BENEFICIARIES OF ACCOMMODATI ON ENTRIES PROVIDED BY ONE SHRI. GAUTAM JAIN & OTHERS (SURAT DIAMOND CONCERNS), THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE U/S.148 OF THE ACT ON 28.03.2014. SUBSEQUENTLY, THE ASSESSMEN T WAS COMPLETED BY THE INCOME TAX OFFICER, NON CORPORATE WARD 2(3) CHENNAI VIDE ORDER DATED 16.03.2015 PASSED U/S.143 (3) R.W.S. 147 OF THE ACT AFTER MAKING ADDITION OF L6,17,463/- BEING UNSECURED MONEY RECEIVED FROM M/S. MIHIR DIAMONDS TREATING IT AS AC COMMODATION ENTRIES REJECTING THE CONTENTION OF THE ASSESSEE THAT IT IS GENUINE TRANSACTION. 6. BEING AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT(A). EVEN THOUGH, THE ASSESSEE DID NOT ENTER APPEARANCE BEFORE LD. CIT(A), THE LD. CIT(A) ADJUDICATED THE ISSUE R AISED BY THE ASSESSEE AND DISMISSED THE APPEAL ON MERITS. ITA NO.3154 /2018-296-97-19 :- 6 -: 7. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. EVEN BEFORE US, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE DUE SER VICE OF NOTICE. 8. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORIT IES. 9. WE HEARD THE LD. SR. DEPARTMENTAL REPRESENTATIVE AN D PERUSED THE MATERIAL ON RECORD. THE FINDINGS OF T HE LD. CIT(A) IS AS UNDER:- 1 THE ASSESSING OFFICER HAS GIVEN THE OPPORTUNIT Y TO THE APPELLANT TO DEFEND THE CASE. 2. BUT FOR THE SEARCH AT THE PREMISES OF SHRI. GAU TAM CHAND JAIN, THIS INFORMATION ABOUT ACCOMMODATION ENTRIES WOULD NOT HAVE COME TO LIGHT. 3. THE STATEMENT GIVEN BY MR.JAIN U/S.132(4) IS A VALID EVIDENCE. 4. THE VERY PURPOSE OF PROVIDING ACCOMMODATION ENTR IES IS TO CREATE AN IMPRESSION OF GENUINENESS IN A TRANSACTION WHILE ACTUALLY IS IMPERMISSIBLE IN LAW. 5. WHEN THIS WAS THE SITUATION, AND WHEN APPELLANT WAS SOUNDED, IT WAS THE DUTY OF APPELLANT TO PROVIDE WITH FURTHER E VIDENCE TO PROVE THAT THE TRANSACTION WAS GENUINE. SINCE THE APPELLANT HAS NOT SUCCEEDED IN PROVING A TAINTED TRANSACTION WITH ADDITIONAL EVIDENCE, AM CONSTRAINE D TO ACCEPT THE CONCLUSION OF THE ASSESSING OFFICER AS IN ORDER. TH EREFORE I CONFIRM THE ADDITION OF 6,17,463/- MADE BY THE ASSESSING OFFICER. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ERS OF THE LOWER AUTHORITIES. THEREFORE, THE APPEAL FILED BY THE AS SESSEE IN ITA 3154/CHNY/2018 FOR ASSESSMENT YEAR 2007-2008 STANDS DISMISSED. ITA NO.3154 /2018-296-97-19 :- 7 -: ITA NOS.295 & 296/CHNY/2019, FOR ASSESSMENT YEARS 2 007- 08 OF SHRI. ASHISH KUMAR A. MEHTA AND SMT. VEENA KUMARI A MEHTA. 10. SINCE, THE FACTS IN THE PRESENT APPEALS ARE IDENTI CAL TO THE FACTS IN ITA NO.3154/CHNY/2018, FOR ASSESSMENT YEAR 2007-2008, FOR THE REASONS MENTIONED THEREIN, WE DISMISS THE APP EALS ON THE ABOVE LINES INDICATED IN APPEAL ITA NO.3154/CHNY/20 19 SUPRA. HENCE, THE ABOVE CAPTIONED APPEALS FILED BY THE ASSESSEE STAND DISMISSED. 11. TO SUMMARIZE THE RESULTS, THE APPEALS FILED BY THE ASSESSEES IN ITA NOS. 3154/CHNY/2018 AND 295 & 296/CHNY/2019 FOR ASSESSMENT YEAR 2007-2008 STAND DISMISSED. ORDER PRONOUNCED ON 21ST DAY OF OCTOBER, 2019, AT CHENNAI. 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