Silver Stars, Mumbai V. D.C.I.T. Circle 16(3), Mumbai

ITA 317/MUM/2006

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3168 (ITAT-MUMBAI)
• Duration Of Justice: 10 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-11-2015
• Assessment Year: 1988-1989
• Appeal Filed On: 13-01-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRA
• Assessee Lawyers: BHARAT J MEHTA PARTNER
• Keywords: Opportunity of being heard
• Section: 142(1); 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI BEFORE SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM ITA NO.315, 316, 317, 318 & 319/MUM/2006 (A.Y.:1988-89) SILVER STARS,C/O.B. J. MEHTA, 21-A, ATLAS APARTMENTS, J. MEHTA ROAD, MUMBAI- 6 VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-16 (3), MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 PAN: AAEFA 7543-E APPELLANT .. RESPONDENT APPELLANT BY SHRI BHARAT J. MEHTA (PARTNER) RESPONDENT BY SHRI A. RAMACHANDRA, DR DATE OF HEARING 13-06-2016 DATE OF PRONOUNCEMENT 15 -06-2016 O R D E R PER BENCH : THESE FIVE APPEALS BY THE SAME ASSESSEE ARE ARISING OUT OF ORDERS PASSED BY DIFFERENT CIT(A)S, MUMBAI ON DIFFERENT DATES, ALL F OR THE ASSESSMENT YEAR 1988-89 UNDER VARIOUS SECTIONS. 2. FIRST, WE WILL DEAL WITH THE ASSESSEES APPEAL I N ITA NO.317/MUM/2006. THIS APPEAL IS ARISING OUT OF THE ORDER OF THE CIT (A) - X, MUMBAI PASSED IN APPEAL NO.CIT (A)-X/WD.20/IT/16/2001-01 DATED 31-01-2001. ASSESSM ENT WAS FRAMED BY THE ACIT, CIRCLE- 20(1), MUMBAI FOR ASSESSMENT YEAR 1988-89 V IDE HIS ORDER DATED 08-03-2000 PASSED U/S 144 OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT). 3. AT THE OUTSET, IT IS NOTICED THAT THIS APPEAL IS DELAYED AS THE ASSESSEE FILED THE APPEAL ON 31-01-2006 AS AGAINST RECEIPT OF THE IMPU GNED ORDER ON 09-12-2005. THEREBY, DELAY OCCURRED FOR FOUR DAYS. BUT, NOW BEFORE US, T HE REVENUE CONTENDED THAT THE IMPUGNED ORDER PASSED BY THE CIT(A) IS DATED 31-01- 2001 AND THIS WAS DISPATCHED ON 26-02-2001 (IT IS INFERRED FROM THE STAMP PUT ON TH E ORDER BY THE OFFICE OF CIT). THE ITA NO.315, 316, 317, 318 & 319/MUM/2006 2 REVENUE CONTENDED THAT THERE IS HUGE DELAY OF 4/5 Y EARS BUT COULD NOT SUPPORT HIS ARGUMENT BY ANY EVIDENCE. THE ASSESSEE HAS FILED AN AFFIDAVIT STATING THE FACTUAL ASPECTS AS UNDER:- 1. THE BUSINESS OF THE APPELLANT WAS MORE OR LESS DISCONTINUED SINCE 27.08.1987, I.E. THE DATE ON WHICH THE SEARCH ACTIO N U/S 132 OF THE ACT WAS CARRIED OUT AT THE APPELLANTS PREMISES WHEN ALL TH E RECORDS WERE SEIZED BY I. T. DEPARTMENT AS WELL AS D. R. I. AND FERA DEPARTMENTS . 2. SINCE THEN, I BEING THE PARTNER OF THE FIRM AND RESPONSIBLE FOR THE INCOME TAX AND OTHER RELATED MATTERS OF THE FIRM, WAS SUFF ERING FROM 100% BLOCKAGE OF ARTERY (TRIPLE VESSEL DISEASE) AND ACCORDINGLY, I U NDERWENT OFF PUMP CORONARY ARTERY BYPASS SURGERY TWO TIMES AT ASIAN HEART INSTITUTE, MUMBAI. EVEN THEREAFTER, I AM ADVISED COMPLETE BED REST AT HOME. THE XEROX COPIES OF THE DOCTORS CERTIFICATE AND OTHER MEDICAL REPORTS ARE ENCLOSED FOR YOUR READY REFERENCE. 3. OUR OFFICE AT 14, MAJESTIC SHOPPING CENTRE, MUMB AI WAS UNDER THE ATTACHMENT SINCE 1989. DUE TO THIS, SINCE 1989 NO N OTICES/PAPERS/ORDERS WERE RECEIVED BY US. THEREAFTER, CERTAIN PAPERS MAY HAVE BEEN RECEIVED AT MY RESIDENCE, BUT DUE TO CRITICAL HEART PROBLEMS, THOS E PAPERS WERE NEITHER PRESERVED NOR ATTENDED TO. 4. ACCORDINGLY, ON HEARING FROM THE INCOME TAX DEPA RTMENT ABOUT THE ARREARS OF TAXES OUTSTANDING AGAINST US, WE VIDE OU R LETTER DATED 21.11.2005 REQUESTED THE OFFICER INCHARGE TO GIVE US COPIES OF ALL ORDERS I.E. ORDERS OF THE ASSESSING OFFICERS AND THE ORDERS OF THE C. I. T. ( A) AGAINST THE SAID ORDER OF THE ASSESSING OFFICER. PURSUANT TO THIS, COPIES OF ORDE RS WERE RECEIVED ON 9.12.2005 BY US. 5. HOWEVER, THE COPIES OF GROUNDS OF APPEAL AND THE STATEMENTS OF FACTS ARE NOT RECEIVED FROM THE INCOME TAX DEPARTMENT. 6. IN VIEW OF THE ABOVEMENTIONED FACTS, WE REQUEST YOU TO KINDLY CONSIDER THE LIMIT OF 60 DAYS FOR FILING OF APPEAL FROM 9.12 .2005, I.E. THE DAY ON WHICH THE COPIES OF ORDERS ARE RECEIVED FROM THE TAX AUTHORIT IES ON HUMANITARIAN GROUNDS AND TREAT THIS APPEAL AS FILED IN TIME & CONDONE TH E DELAY AND THE APPEALS FILED BY THE APPELLANT BE ADMITTED FOR THE DECISION OF TH E HONBLE I.T.A.T. TO GIVE JUSTICE TO THE APPELLANT. 4. THE ASSESSEE PARTNER, IN PERSON APPEARED BEFORE US AND ARGUED THAT THE ASSESSEE HAS RECEIVED THE IMPUGNED ORDER ONLY ON 09-12-2005 AND THAT ALSO ON LOT OF PERSUASIONS AND AFTER RECEIVING DEMAND NOTICES AS WELL AS PENAL TY NOTICES UNDER VARIOUS SECTIONS. ACCORDING TO THE PARTNER OF THE ASSESSEE FIRM SHRI BHARAT J. MEHTA, SERVICE OF THE APPELLATE ORDER IS ONLY 09-12-2005 AND NO CONTRARY EVIDENCE IS AVAILABLE ON RECORD THAT THE APPELLATE ORDER WAS EARLIER SERVED ON THE ASSES SEE. ITA NO.315, 316, 317, 318 & 319/MUM/2006 3 5. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND G ONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO HEARD THE L EARNED SR. DR, WHO COULD NOT CONTROVERT THE FACTUAL ASPECTS NARRATED BY THE PART NER OF THE ASSESSEE FIRM, SHRI BHARAT J. MEHTA IN HIS AFFIDAVIT. EVEN, THE LEARNED SR. DR CO ULD NOT BRING ON RECORD ANY CONTRARY EVIDENCE THAT THE APPELLATE ORDER WAS SERVED ON THE ASSESSEE PRIOR TO 09-12-2005. IN SUCH A SITUATION, WE DEEM IT FIT TO CONDONE THE DELAY OF ONLY 4/5 DAYS AND ADMIT THE APPEAL. ACCORDINGLY THE APPEAL IS ADMITTED. 6. AT THE OUTSET, THE PARTNER OF THE ASSESSEE FIRST OF ALL DREW OUR ATTENTION TO FRAMING OF ASSESSMENT U/S 144 OF THE ACT. FOR THIS, THE ASS ESSEE HAS RAISED THE FOLLOWING FOUR GROUNDS:- 1. THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS -X (THE C.I.T. (A) ERRED IN CONFIRMING THE ORDER U/S 144 OF THE A CT. 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD T HAT THE ORDER MADE U/S 144 OF THE ACT WAS MADE WITHOUT GIVING ADEQUATE OPP ORTUNITY TO THE APPELLANT AND HENCE NEEDS TO BE SET ASIDE. 3. HE FURTHER ERRED IN NOT APPRECIATING THAT THE RE QUIRED DETAILS COULD NOT BE FURNISHED DUE TO NON AVAILABILITY OF THE SAME AN D THE BAD HEALTH OF ONE OF THE PARTNER OF THE APPELLANT WHO WAS LOOKING AFT ER THE MATTER. 4. THE APPELLANT PRAYS THAT THE ORDER U/S 144 BE SE T ASIDE AS AB INITIO OR OTHERWISE VOID AND ILLEGAL TO BE MADE DE-NOVO . 7. THE ASSESSEE PARTNER FIRST OF ALL TOOK US THROUG H THE ASSESSMENT ORDER AND STATED THAT THE AO PROCEEDED TO MAKE ORDER U/S 144 OF THE ACT, BUT TO ANSWER THIS THE ASSESSEE PARTNER STATED THAT A SEARCH ACTION WAS CARRIED OUT ON THE ASSESSEE U/S 132 OF THE ACT ON 26-08-1987 IN THE PREMISES OF M/S. EVEREST GEMS. DU RING THE COURSE OF SEARCH AT THE PREMISES OF M/S. EVEREST GEMS A CONSIGNMENT OF 9004 .59 CARATS OF ROUGH DIAMOND WAS FOUND ALONG WITH THE JHANGAD OF M/S. SILVER STARS I .E. THE ASSESSEE. M/S. EVEREST GEMS CLAIMED THAT THIS ROUGH DIAMOND HAD COME TO THEIR O FFICE FROM M/S. SILVER STARS ON APPROVAL BASIS. THE ENTIRE BOOKS OF ACCOUNT, BILLS & VOUCHERS AND OTHER DETAILS WERE SEIZED BY THE INCOME TAX DEPARTMENT. NOTHING WAS PR OVIDED TO THE ASSESSEE TO EXPLAIN ITA NO.315, 316, 317, 318 & 319/MUM/2006 4 HIS CASE. IT WAS EXPLAINED BY THE ASSESSEE PARTNER THAT THE ASSESSEE FIRM COULD NOT FILED RETURN OF INCOME FOR ASSESSMENT YEAR 1988-89 SINCE THE BOOKS OF ACCOUNT ARE ALREADY SEIZED BY THE DEPARTMENT AS WELL AS DRI AND FERA. R EGARDING DRI AND FERA, THE ASSESSEE FILED PANCHANAMA. THIS FACT IS ADMITTED BY THE AO IN HIS ASSESSMENT ORDER IN PARA 6 WHICH READS AS UNDER:- 6. IN RESPONSE TO THE NOTICE U/S. 142(1) SHRI BHAR AT J. MEHTA, PARTNER OF THE ASSESSEE FIRM ATTENDED AND STATED THAT THE DETA ILS NECESSARY FOR THE ASSESSMENT OF THE ASSTT. YEAR 88-89 CANNOT BE FILED SINGE THE BOOKS OF ACCOUNT ARE ALREADY SEIZED BY THE I. T. DEPARTMENT AS WELL AS D.R.I. AN D FERA. REGARDING DRI/FERA THE ASSESSEE HAS FILED PANCHANAMA BUT HAS NOT ENCLO SED THE ANNEXURES REFERRED THERETO. THE ASSESSEE COULD HAVE TAKEN EXTRACTS/INS PECTION OF THE BOOKS OF ACCOUNT/DOCUMENTS FROM WHEREVER IT IS LYING AND COU LD HAVE FURNISHED NECESSARY DETAILS ALONGWITH RETURN OF INCOME BUT THE ASSESSEE HAS OPTED FOR NOT DOING SO AND AS SUCH THE ASSESSEE HAS NOT CO-OPERATED IN THE ASSESSMENT PROCEEDINGS. THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT PERT AINING TO ITS SURAT BRANCH. EVEN THESE BOOKS WERE ALSO NOT PRODUCED FOR VERIFIC ATION. THE ASSESSEE WAS GIVEN INSPECTION OF THE BOOKS OF ACCOUNTS AND DOCUMENTS W ITH THIS DEPARTMENT ON TWO OCCASIONS. 8. WHEN THESE WERE CONFRONTED TO THE LEARNED SR. DR , HE FAIRLY AGREED THAT NOW THE REVENUE IS READY TO PROVIDE THESE DOCUMENTS TO THE ASSESSEE PROVIDED HE IS READY TO CO- OPERATE WITH THE DEPARTMENT. ON THIS ASSURANCE, THE ASSESSEE AGREED FOR CO-OPERATION WITH THE DEPARTMENT AND ALSO AGREED FOR TAKING COPI ES OF ALL THE DOCUMENTS AND FOR FILING OF RETURN OF INCOME AND ALSO FOR CO-OPERATION IN TH E ASSESSMENT PROCEEDINGS AS AND WHEN CALLED. 9. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES O F THE CASE, WE ARE OF THE VIEW THAT NOTHING HAS BEEN EXAMINED EITHER BY THE AO OR BY CI T (A) AND THE DOCUMENTS WERE NOT PROVIDED TO THE ASSESSEE BEFORE FRAMING ASSESSMENT U/S 144 OF THE ACT. IN OUR CONSIDERED OPINION, THE ASSESSEE SHOULD BE GIVEN FAIR CHANGE T O REPRESENT HIS CASE. IN TERMS OF THE ABOVE, WE REMIT THE ISSUES BACK TO THE FILE OF THE AO, CANCELLING THIS ASSESSMENT AND SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW. NEEDLESS TO SAY THE AO WILL RE-FRAME THE ASSESSMENT DE-NOVO BASED ON THE SEIZED MATERIAL S AFTER ALLOWING PHOTO COPIES OF THE SAME TO THE ASSESSEE AND ALSO AFTER ALLOWING REASON ABLE OPPORTUNITY OF BEING HEARD AND ITA NO.315, 316, 317, 318 & 319/MUM/2006 5 TO REBUT THE SAME. IN TERMS OF THE ABOVE, THE APPEA L OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN RESPECT TO ASSESSEES APPEAL IN ITA315/MUM/2 006 FOR ASSESSMENT YEAR 1988- 89 RELATING TO LEVY OF PENALTY U/S 271 (1) (C) OF T HE ACT, ITA NO.316/MUM/2006 FOR ASSESSMENT YEAR 1988-89 IN RESPECT OF PENALTY U/S 2 71 (1) (A) OF THE ACT, ITA NO.318/MUM/2006 FOR ASSESSMENT YEAR 1988-89 FOR PEN ALTY U/S 271 (1) (B) OF THE ACT AND ITA NO.319/MUM/2006 FOR ASSESSMENT YEAR 1988-89 FOR PENALTY U/S 271D OF THE ACT, WE ARE OF THE VIEW THAT ONCE THE QUANTUM ASSES SMENT IS SET ASIDE TO THE FILE OF THE AO AND REMANDED THE MATTER BACK FOR FRESH ADJUDICAT ION, THESE PENALTIES WILL NOT SURVIVE AND HENCE DELETED. HOWEVER, THE AO IS FREE TO INITI ATE PENALTY PROCEEDINGS AS PER LAW UNDER ANY OF THE ABOVE PROVISIONS, IN CASE, DURING THE SET ASIDE ASSESSMENT PROCEEDINGS, HE COMES TO A CONCLUSION THAT PENALTY UNDER PARTICU LAR PROVISION IS LEVIABLE. THESE PENALTIES ARE DELETED AND THE APPEALS OF THE ASSESS EE ARE ALLOWED. 11. IN THE RESULT, THE APPEAL IN ITA NO. 317/MUM/20 06 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND OTHER APPEALS IN ITA N O. 315, 316, 318 & 319/MUM/2006 OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/06/2016 . SD/- SD/- (RAMIT KOCHAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 15 /6/2016 LAKSHMIKANTA DEKA/SR.PS ITA NO.315, 316, 317, 318 & 319/MUM/2006 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI DATE INITIAL DICTATION PAD ATTACHED WITH THE DRAFT ORDER YES 1. DRAFT DICTATED ON 13-06-16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14-06-16 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//