SAMARTHMAL P. MALI, MUMBAI V. ASST CIT (OSD I) CEN RG 7, MUMBAI

ITA 318/MUM/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3746 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Assessee Lawyers: VINAYAK PANDYA
• Keywords: Gift; Search and seizure
• Section: 143(3); 153A; 69; 15

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO S . 786 & 787 / MUM/ 20 1 3 ( ASSES SMENT YEAR S : 200 1 - 20 02 & 2002 - 03 ) BHAGARAM P. MALI, PROP. OF SUNDHAMA CLOTHING CO., 15, ASHISH INDUSTRIAL ESTATE, GOKHALE ROAD (S), DADAR (WEST), MUMBAI - 400 025. VS. ACIT ( OSD1) , CEN RG.7, MUMBAI PAN/GIR NO. : A F Z PM 5856 F ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 318 /MUM/20 13 ( ASSESSMENT YEAR :2001 - 2002 ) SAMRATHMAL P. MALI, PROP OF SHRI SUNDHA MAA CREATION, 23, ASHISH INDUSTRIAL ESTATE , GOKHALE ROAD (S), DADAR (WEST), MU MBAI - 400 025. VS. ACIT (OSD1), CEN RG.7, MUMBAI PAN/GIR NO. : A AHPM 6079 Q ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI GIRISH DAVE & SHRI VINAYAK PANDYA /REVENUE BY : SHRI PRITAM SINGH & SMT. JOTHILAKSHMI NAYAK DATE OF HEARING : 2 ND APRIL , 201 3 DATE OF PRONOUNCEMENT : 8 TH MAY , 2013 O R D E R TH ESE THREE APPEALS PREFERRE D BY THE TWO DIFFERENT ASSESSEES AGAINST THE ORDER OF LEANED CIT(A) - 40 , MUMBAI RELA TING TO THE ASSESSMENT YEAR S 2001 - 02 & 2002 - 03 . ITA NO S . 786,787&318 /20 1 3 2 2 . SINCE COMMON ISSUES ARE INVOLVED IN ALL THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE, ALL THESE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . WE WILL TAKE FIRST APPEALS IN CASE OF ASSESSEE BHAGARAM P. MALI, FILED FOR ASSESSMENT YEARS 2001 - 02 & 2002 - 03, RESPECTIVELY (I.E.ITA NOS.786 & 787/MUM/2013) . THE ASSESSEE HAS FILED MODIFIED/AMENDED GROUNDS W HICH ARE ALMOST SIMILAR TO THE GROUNDS TAKEN ORIGINALLY, THEREFORE, THE GROUNDS ARE TAKEN ON RECORD FOR BOTH OF THE YEARS I.E. 2001 - 02 & 2002 - 03, RESPECTIVELY. 4 . LEARNED COUNSEL OF THE ASSESSEE IN ITS APPEALS RAISED OBJECTION IN REGARD TO CONFIRMING THE ADDITION OF RS. 1,00,002/ - MADE UNDER SECTION 69 OF THE ACT FOR THESE TWO YEARS RESPECTIVELY. THE ASSESSEE HAS ALSO OBJECTED THAT THE ADDITIONS MADE BY THE AO, WHICH IS CONFIRMED BY THE CIT(A) UNDER SECTION 153A OF THE ACT, IS ILLEGAL AS IT IS NEITHER BASED ON ANY INCRIMINATING MATERIAL NOR BASED ON ANY BOOKS OF ACCOUNTS AND OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH, WHICH WAS NOT PRODUCED DURING THE COURSE OF ORIGINAL ASSESSMENT, THEREFORE, THE ASSESSMENT IS BAD IN LAW. 5 . FACTS OF THESE CASE ARE TH AT NOTICES UNDER SECTION 153 A OF THE ACT WERE ISSUED FOR THESE TWO ASSESSMENT YEARS. RETURN WERE FILED. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 153A, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED RS. 1,00,000/ - AS GIFT FROM ONE SMT. REKHA PAREKH DU RING THE ASSESSMENT YEAR 2001 - 02. SIMILARLY, GIFT ITA NO S . 786,787&318 /20 1 3 3 OF RS.50,001/ - EACH WERE RECEIVED FROM TWO PERSONS I.E. SHRI VIJAY KHAPARE AND APARNA PAI FOR ASSESSMENT YEAR 2002 - 03. THE ASSESSEE WAS REQUIRED TO PRODUCE THESE PERSONS, HOWEVER, THEY COULD NOT BE PRODUCED AS THEY WERE NOT AVAILABLE ON THAT POINT OF TIME. BANK STATEMENTS, CONFIRMATION OF GIFT DEEDS, ACKNOWLEDGEMENT OF INCOME TAX RETURN ALONG WITH BALANCE SHEET OF THE DONORS WERE FILED BEFORE THE AO. AFTER EXAMINING THE BANK STATEMENTS, THE AO NOTICED THAT THERE WAS NO BANK BALANCE IN THE RESPECTIVE ACCOUNT OF DONORS. THE AO FURTHER NOTED THAT FEW DAYS BACK, AMOUNT OF RS. 1.00,000/ - IN ACCOUNT OF MS.REKHA PAREKH WAS CREDITED AND THEREAFTER THE SAME WAS GIVEN TO THE ASSESSEE AS GIFT. SIMILARLY, AN AMOUNT OF RS . 50,000/ - IN THE ACCOUNT OF SHRI VIJAY KHAPARE AND RS. 50,000/ - IN THE ACCOUNT OF APARNA PAI WAS CREDITED AND AFTER FEW DAYS, THE CHEQUE WAS ISSUED IN THE NAME OF ASSESSEE SHOWING GIFTS. THE AO ALSO NOTED THAT SINCE NONE OF THE DONORS WERE PRODUCED AS ASKE D FROM THE ASSESSEE AND THEIR CREDITWORTHY REMAINED UNPROVED, THEREFORE, HE ADMITTED THE GENUINENESS OF THE CREDITWORTHINESS OF THE DONORS. ACCORDINGLY, HE TREATED THE AMOUNT OF GIFT RECEIVED BY THE ASSESSEE AS HIS OWN MONEY AND ADDED THE SAME UNDER SECTIO N 69A OF THE ACT. 6 . BEING AGGRIEVED WITH THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEALS BEFORE THE LEARNED CIT(A). DETAILED SUBMISSIONS WERE FILED BEFORE HIM. HOWEVER, LEARNED CIT(A) WAS ALSO NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE. IN HIS VIEW ALSO, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE LOAN AND CREDITWORTHINESS OF THE AMOUNT ITA NO S . 786,787&318 /20 1 3 4 RECEIVED UNDER THE GARB OF GIFT. LEARNED CIT(A) ALSO PLACED RELIANCE IN THE CASE OF SUBHASH CHANDRA SEKRI VS. DCIT, REPORTED IN 290 ITR 300 (P&H) AND IN THE CASE OF ACIT VS. RAJIV TANDON, REPORTED IN 294 ITR 219 (DELHI) AND CONFIRMED THE ORDER OF THE AO FOR BOTH OF THE YEARS. 7 . THE CONTENTION RAISED BEFORE THE LOWER AUTHORITIES WERE REITERATED BY THE LEARNED AR BEFORE THE TRIBUNAL. RELIANCE WAS PLACED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. DCIT , REPORTED IN [2012] 23 TAXMANN.COM 103 (MUM) (SB ) . COPY OF THE DECISION WAS ALSO FILED. IT WAS EXPLAINED THAT IN THESE CASES ORIGINAL ASSESSMENT WER E ALREADY COMPLETED. THE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03 WAS COMPLETED UNDER SECTION 143(3) AND FOR ASSESSMENT YEAR 2001 - 02, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143 (1) . DURING THE ORIGINAL ASSESSMENT COMPLETED UNDER SECTION 143(3) , THE DETAIL S IN RESPECT TO GIFT RECEIVED WERE FILED. COPY OF THE LETTER HANDED OVER TO THE AO ON 10 - 1 - 2005, IS PLACED AT PAGE 22 . ATTENTION OF THE BENCH WAS ALSO INVITED ON THE LETTER DATED 24 - 3 - 2005, RELATING TO SCRUTINY ASSESSMENT PROCEEDING FOR ASSESSMENT YEAR 20 02 - 03, COPY OF WHICH IS PLACED AT PAGE 23 OF THE PAPER BOOK. IT WAS SUBMITTED THAT WHILE COMPLETING THE ASSESSMENT ORIGINALLY, THE AO ASKED TO FILL THE BANK STATEMENTS, CONFIRMATION OF GIFT DEEDS, ACKNOWLEDGEMENT OF INCOME TAX RETURN ALONG WITH BALANCE SHE ET OF THE DONORS, COPIES OF WHICH WERE FILED BEFORE THE AO AND THEREAFTER SCRUTINY UNDER SECTION 143(3) FOR ASSESSMENT YEAR 2002 - 03 ITA NO S . 786,787&318 /20 1 3 5 WAS COMPLETED AND NO ADDITION WAS MADE ON ACCOUNT OF GIFT RECEIVED BY THE AO . IT WAS FURTHER SUBMITTED THAT NO INCRIMINATING DOCUMENTS EXCEPT GIFT DEEDS WERE FOUND DURING THE COURSE OF SEARCH, NEITHER THERE WAS ANY BOOKS OF ACCOUNTS FOUND WHICH WERE NOT PRODUCED BEFORE ORIGINAL ASSESSMENT PROCEEDING. THEREFORE, ADDITION MADE UNDER SECTION 153A IS NOT JUSTIFIED AND LIABLE TO BE DELETED. 8 . ATTENTION OF THE BENCH WAS DRAWN ON RELEVANT PORTION OF THE ORDER OF THE SPECIAL BENCH IN CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) . IT WAS FURTHER SUBMITTED THAT IN CASE OF ORIGINAL ASSESSMENT CERTAIN OTHER ADDITIONS WERE MADE WHICH WA S AGITATED BEFORE THE CIT(A) AND THEN BEFORE THE TRIBUNAL. ATTENTION OF THE BENCH WAS ALSO DRAWN ON THE COPY OF THE ORDER OF THE TRIBUNAL, WHICH IS PLACED IN THE PAPER BOOK . ACCORDINGLY IT WAS SUBMITTED THAT THE ASSESSMENT PROCEEDING COMPLETED ORIGINALLY A RE FINAL AND NO OTHER MATERIAL WERE FOUND ON WHICH BASIS ANY ADDITION CAN BE MADE WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A. 9 . REGARDING FOR ASSESSMENT YEAR 2001 - 02, IT WAS SUBMITTED THAT THOUGH ASSESSMENT WAS COMPLETED UNDER SECTION 143(1 ) , H OWEVER, ALL THE DETAILS REGARDING GIFT WERE ATTACHED ALONG WITH THE RETURN. IN THE BALANCE SHEET, THE AMOUNT OF GIFT WAS SHOWN AS GIFT RECEIPT. THEREFORE, NO ADDITION CAN BE MADE WHILE COMPLETING ASSESSMENT UNDER SECTION 153A. ITA NO S . 786,787&318 /20 1 3 6 10 . ON THE OTHER HAND, LEAR NED DR, FIRSTLY PLACED RELIANCE ON THE ORDER OF THE CIT(A) . FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF MR. GOPAL LAL BHADRUKA VS. DCIT, REPORTED IN 2012 - TIOL - 357 - HC - AP - IT . COPY OF THE WAS ALSO FILED BY THE LEARNED DR. IT WAS SUBM ITTED THAT IN THIS ORDER, THE H O N BLE HIGH COURT HAS HELD THAT THE PROVISION OF SECTION 153A/153C ARE VERY CLEAR AND, THEREFORE, THE AO CAN TAKE INTO CONSIDERATION THE MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZURE OPERATION FOR MAKING AN ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT THIS DECISION IS SQUARELY APPLICABLE ON THE FACTS OF THE PRESET CASE AS DURING THE COURSE OF SEARCH, THE GIFT DEEDS WERE FOUND AND THEY WERE EX AMINED BY THE AO. THE ASSESSEE WAS REQUIRED TO PRODUCE THE DONORS, HOWEVER, HE FAILED TO PRODUCE THE DONORS. ATTENTION OF THE BENCH WAS ALSO DRAWN ON COPY OF BANK STATEMENT PLACED IN THE COMPILATION FILED ON BEHALF OF THE ASSESSEE. IN BANK STATEMENT , IT IS C LEARLY SHO W N THAT THE AMOUNT OF GIFT WHICH WAS TAKEN BY THE ASSESSEE THROUGH CHEQUE WAS CREDITED IN RESPECT OF DONORS FEW DAYS EARLIER ONLY, OTHERWISE THERE WAS NO BANK BALANCE IN THE RESPECTIVE ACCOUNT OF THE DONORS. 1 1 . I HAVE HEARD RIVAL SUBMISSION S AND CONSIDERED THEM CAREFULLY . AFTER EXAMINING THE SUBMISSIONS AND THE CASE LAWS, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN ITS APPEAL FOR BOTH OF THE YEARS. I NOTED THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03 WAS ITA NO S . 786,787&318 /20 1 3 7 COMPLETED UNDER SECTION 143( 3) A ND FOR ASSESSMENT YEAR 2001 - 0 2 , THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1). DURING THE ASSESSMENT PROCEEDING FOR ASSESSMENT YEAR 2002 - 03, ASSESSEE FILED DETAILS OF GIFT RECEIVED IN THE SHAPE OF GIFT DEEDS, BANK STATEMENTS, CONFIRMATIONS AND ACK NOWLEDGEMENT OF INCOME TAX RETURN FILED BY THE DONOR. THEREAFTER THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED AND NO ADDITION ON ACCOUNT OF GIFT REC EIVED BY THE ASSESSEE WAS MADE. IT CLEARLY SHOWS THAT THE AO WAS SATISFIED IN RESPECT TO GIFT RECEIVED BY THE ASSESSEE. SIMILARLY, FOR ASSESSMENT YEAR 2001 - 02, THE ASSESSEE HAS ENCLOSED ALL THE DETAILS OF THE GIFT ALONG WITH RETURN AND THE SAME WAS PROCESSED UNDER SECTION 143(1) AND THEREAFTER NO PROCEEDING WAS INITIATED EITHER BY ISSUING NOTICE UNDER SECTI ON 143(2) OR 148 WITHIN THE STIPULATED PERIOD OF TIME. NOW, DURING THE ASSESS MENT PROCEEDING UNDER SECTION 15 3 A , THE ASSESSEE WAS REQUIRED TO PRODUCE THE DONOR ONCE AGAIN, IN MY CONSIDERED VIEW, IS NOT JUSTIFIED OR TENABLE IN THE EYES OF LAW. THIS VERY ISS UE HAS BEEN DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) . THE SPECIAL BENCH OF THE TRIBUNAL HAS ANSWERED THE QUESTION IN THE FOLLOWING MANNER : - ( A ) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORI GINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; ( B ) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153 A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCO ME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. ITA NO S . 786,787&318 /20 1 3 8 1 2 . FROM THE FINDING OF THE SPECIAL BENCH, IT BECOMES CLEAR THAT IN CASE OF ASSESSMENT ALREADY COMPLETED, NO ADDITION CAN BE MADE FURTHER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A, IF THERE IS NO INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISION, MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN T HE COURSE OF SEARCH. 1 3 . IN THE PRESENT CASE, NEITHER ANY INCRIMINATING MATERIAL WAS FOUND NOR ANY OTHER MATERIAL OR DOCUMENT ALONG WITH BOOKS OF ACCOUNTS WERE FOUND, WHICH WERE NOT PRODUCED BEFORE THE AO WHILE COMPLETING THE ASSESSMENT ORIGINALLY. FOR AS SESSMENT YEAR 2001 - 02, NO INCRIMINATING MATERIAL WAS FOUND OR ANY OTHER DOCUMENTS WERE FOUND, WHICH SUGGESTS THAT THE ASSESSEE HAS CONCEALED PARTICULAR OF INCOME. THEREFORE, IN VIEW OF THE OBSERVATION MADE BY THE SPECIAL BENCH, NO ADDITION CAN BE MADE WHI LE COMPLETING THE ASSESSMENT UNDER SECTION 153A, IF THERE NO FRESH MATERIAL OR DOCUMENTS WAS FOUND DURING THE COURSE OF SEARCH. I HAVE ALSO CONSIDERED THE DECISION RELIED UPON BY THE LEARNED DR AND FOUND THAT THERE IS NO DISPUTE THAT THE AO CAN TAKE INTO C ONSIDERATION THE MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZURE OPERATION FOR MAKING ANY ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. IN THE PRESENT CASE, THERE NO OTHER MATERIAL WAS FOUND BY THE AO, WHICH WAS NOT AVAILABLE A T THE TIME OF ORIGINAL ASSESSMENT. THEREFORE, TH E RATIO RATHER HELPED THE CASE OF THE ASSESSEE. IN VIEW OF THESE FACTS AND CIRCUMSTANCE AND IN VIEW OF ITA NO S . 786,787&318 /20 1 3 9 THE DECISION OF THE SPECIAL BENCH, I HOLD THAT THE ADDITION MADE UNDER SECTION 69A OF THE ACT FOR BOTH OF THE YEARS, WHICH ARE CONFIRMED BY THE LEARNED CIT(A), ARE NOT JUSTIFIED. ACCORDINGLY, I DELETE THE ADDITIONS FOR BOTH OF THE YEARS. 1 4 . NEXT GROUND IS IN RESPECT TO CHARGING OF INTEREST UNDER SECTION 234A & B, WHICH IS CONSEQUENTIAL IN NATURE. 1 5 . NOW, WE WILL TAKE UP THE APPEAL IN CASE OF OTHER ASSESSEE I.E. SAMRATHMAL P. MALI FILED FOR THE ASSESSMENT YEAR 2001 - 02 (I.E ITA NO. 318/MUM/2013) . 1 6 . SIMILAR GROUND HAS BEEN RAISED IN THIS APPEAL ALSO. THE ASSESSEE IS OBJECTING IN CONFIRMING THE INCOME OF R S. 1,00,002/ - UNDER SECTION 69A WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A. 1 7 . IDENTICAL FACTS ARE INVOLVED IN THE CASE OF THIS ASSESSEE ALSO. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND ALL THE DETAILS IN RESPECT OF GIFT RECEIVED BY THI S ASSESSEE WAS FILED. NO ADDITION WAS MADE BY THE AO WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3).THEREAFTER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A, THE IMPUGNED ADDITIONS WERE MADE AS TREATING THE GIFT AS NON - GENUINE. LEARNED CIT(A) HAS CONFIRMED THE ORDER OF THE AO. 1 8 . AS STATED ABOVE, FACTS ARE SIMILAR AS I HAVE DISCUSSED THE ISSUE IN DETAIL WHILE DISPOSING THE APPEAL IN THE CASE OF BHAGARAM P. MALI, FILED FOR ASSESSMENT YEARS 2001 - 02 & 2002 - 03, RESPECTIVELY (I.E.ITA ITA NO S . 786,787&318 /20 1 3 10 NOS.786 & 787/M UM/2013) , WHEREIN I HAVE DELETED THE ADDITIONS. THEREFORE, ON THE SAME REASONING, IN THIS CASE ALSO, THE ADDITION MADE UNDER SECTION 69A OF RS. 1,00,002/ - IS HEREBY DELETED. 1 9 . IN THE RESULT, APPEAL S OF THE TWO ASSESSEE S ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF M AY .2013 201 3 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 0 8/05/ 2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPOND ENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. P //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI