Meghana Kailash Gidwani, Sangli V. Assistant Commissioner of Income tax, Sangli

ITA 321/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9242 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Business income; Income from undisclosed sources; Reason to believe; Reassessment proceedings
• Section: 147; 68; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.321/PUN/2017 / ASSESSMENT YEAR : 2009-10 MEGHANA KAILASH GIDWANI, C.S. NO.35, LAXMI BUNGLOW, REVENUE COLONY, SOUTH SHIVAJI NAGAR, SANGLI-416416. PAN : AEFPG7956Q . /APPELLANT VS. ACIT, CIRCLE-1, SANGLI. . / RESPONDENT / APPELLANT BY : SHRI SUNIL GANOO / RESPONDENT BY : SHRI N. ASHOK BABU / DATE OF HEARING : 06.09.2019 / DATE OF PRONOUNCEMENT: 19.09.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, KOLHAPUR DATED 28.11.2016 FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. LEARNED CIT (A) HAS ERRED IN FACT & IN LAW IN MAKING CONFIRMING ADDITION & TREATING TRADING BUSINESS INCOME OF THE APPELLANT OF RS 1088406/- AS INCOME FROM UNDISCLOSED SOURCES WITHOUT ANY CONTRARY EVIDENCE. 2. LEARNED CIT (A) HAS ERRED IN FACT & IN LAW IN CONFIRMING PREJUDICED ADDITION U/S 68 IN RESPECT OF LOANS GIVEN TO AMIT GIDWANI OF RS 100000/- & SUNIL GIDWANI OF RS 60000/- & KAILASH GIDWANI OF RS 945000/- TOTALLING TO RS 1105000/- A) IRRESPECTIVE OF THE FACT THAT AMOUNT GIVEN TO ABOVE REFERRED PERSONS IS OUT OF TAX PAID INCOME OF THE APPELLANT I.E. OUT OF SUCH INCOME WHICH IS OFFERED TO TAX & TAX IS ALSO PAID. ITA NO.321/PUN/2017 - 2 - B) IRRESPECTIVE OF THE FACT THAT LEARNED A.O. HIMSELF HAS ACCEPTED ABOVE FACT, HOWEVER A.O. HAS TREATED THIS AS INCOME FROM OTHER SOURCES. C) IRRESPECTIVE OF THE FACT THAT PROVISIONS OF SECTION 68 ARE NOT AT ALL APPLICABLE TO THE CASE. 2. THE APPELLANT CRAVES TO LEAVE, ADD / AMEND OR ALTER ANY OTHER GROUNDS OF APPEAL. 3. ASSESSEE RAISED AN ADDITIONAL GROUND BEFORE US. THE SAID ADDITIONAL GROUND IS EXTRACTED HEREUNDER :- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ISSUANCE OF NOTICE U/S 148 OF THE I.T. ACT 1961, THE REASSESSMENT PROCEEDINGS INITIATED BY THE LEARNED ASSESSING OFFICER ARE BAD IN LAW, VOID AB INITIO AND WITHOUT JURISDICTION AND HENCE THE IMPUGNED REASSESSMENT FRAMED BY THE LEARNED ASSESSING OFFICER BE ANNULLED. 4. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE SAID REGULAR GROUNDS AND THE ADDITIONAL GROUNDS AND SUBMITTED THAT, IF THE ADDITIONAL GROUND IS ADMITTED AND ADJUDICATED IN FAVOUR OF THE ASSESSEE, THERE IS NO REQUIREMENT FOR ADJUDICATING THE OTHER REGULAR GROUNDS. THEREFORE, LD. COUNSEL FOR THE ASSESSEE PROCEEDED TO ARGUE THE LEGAL ISSUE RAISED IN THE ADDITIONAL GROUND. 5. IN CONNECTION WITH THE ABOVE ADDITIONAL GROUND RELATING TO THE VALIDITY OF THE REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE REASONS RECORDED BY THE ASSESSING OFFICER DATED NIL (PAGE 8 OF THE PAPER BOOK) AND READ OUT THE FOLLOWING :- .. ACCORDING TO INFORMATION GATHERED FROM INFORMED SOURCES, LOCAL ENQUIRIES AND MEDIA REPORTS, IT HAS COME TO BE KNOWN THAT SHRI KANHAIYALAL GIDWANI, OWNS THREE FLATS, ONE IN HIS NAME AND TWO IN THE NAMES OF HIS SONS KAILASH AND AMIT IN THE ADARSHA HOUSING SOCIETY. AGAIN, ONE FLAT IS LEARNED TO BE BOOKED IN THE NAME OF SHRI GAJANAN S. KOLI, WHERE APPARENTLY IT IS BELIEVED THAT SHRI SUNIL K. GIDWANI, SON OF KANHIYALAL GIDWANI, HAS LENT ITA NO.321/PUN/2017 - 3 - FINANCE TO PURCHASE THE SAME. ALL PAYMENTS FOR THE SAME WERE APPARENTLY MADE THROUGH GIDWANI FAMILYS VARIOUS BANK ACCOUNTS IN WHICH APPARENTLY CASH AMOUNTS WERE DEPOSITED AND THE SAME WERE TRANSFERRED INTO THE ACCOUNTS OF GIDWANIS WIFE, SON AND DAUGHTER-IN-LAW IN HDFC BANK AT WORLI. THEREAFTER, THE SAID AMOUNTS WERE APPARENTLY TRANSFERRED INTO THE ACCOUNT OF M/S JAY MAHARASHTRA CPL, HDFC BANK, WORLI, IN WHICH GIDWANIS SONS ARE DIRECTORS FOR MAKING PAYMENTS TOWARDS COST OF THE FLATS. 2. ON VERIFICATION IT IS SEEN THAT THE ASSESSEE OF THE GIDWANI FAMILY, SOU. MEGHANA KAILASH GIDWANI HAD GIVEN INTEREST FREE LOANS TO THE BELOW ENLISTED THREE PERSONS AS UNDER: 1. TO SHRI KANHIYALAL V. GIDWANI OF RS.9 LAKHS ON 08.03.2007. 2. TO SHRI KAILASH K. GIDWANI OF RS.12 LAKHS ON 29.06.2010 & 3. TO SHRI AMIT K. GIDWANI OF RS.ONE LAKHS ON 26.11.2008 GENUINENESS OF ALL THESE INTEREST FREE LOANS IS NOT PROVED. THEREFORE, IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX FOR A.Y. 2009-10 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. 6. REFERRING TO PARA 2 OF THE ABOVE REASONS OF THE ASSESSING OFFICER, LD. COUNSEL SUBMITTED THAT THE ASSESSEE BELONGS TO GIDWANI FAMILY AND GAVE LOANS TO THREE CREDITORS NAMELY (I) SHRI KANHIYALAL V. GIDWANI; (II) SHRI KAILASH K. GIDWANI; AND, (III) SHRI AMIT K. GIDWANI. REFERRING TO THE LOANS GIVEN TO FIRST TWO CREDITORS, LD. COUNSEL SUBMITTED THAT THE PAYMENT OF RS.9,00,000/- TO SHRI KANHIYALAL V. GIDWANI ON 08.03.2007 AND THE PAYMENT OF RS.12,00,000/- SHRI KAILASH K. GIDWANI ON 29.06.2010 FALLS IN THE ASSESSMENT YEARS 2007-08 AND 2011-12 RESPECTIVELY. THEREFORE, THERE IS NO CONCEALMENT OF INCOME INVOLVING THE SAID CREDITORS FOR THE YEAR UNDER CONSIDERATION (A.Y. 2009-10). IN THIS REGARD, LD. COUNSEL DEMONSTRATED THE DATES OF PAYMENTS AND THEIR CORRECTNESS AND RELIED ON THE DOCUMENTS FILED IN THE PAPER BOOK. 7. ON HEARING BOTH THE SIDES ON THIS ISSUE, I AM OF THE OPINION THAT THIS AMOUNTS PAID TO SHRI KAILASH K. GIDWANI AND SHRI KANHIYALAL V. GIDWANI ITA NO.321/PUN/2017 - 4 - CANNOT BE ADDED AS CONCEALMENT OF INCOME FOR THE YEAR UNDER CONSIDERATION WHETHER THEY ARE GENUINE OR OTHERWISE. ASSESSMENT YEARS 2007-08 AND 2011-12 ARE RELEVANT FOR THE SAME. ACCORDINGLY, THIS PART OF THE REASONS HAS TO BE HELD UNSUSTAINABLE IN LAW. TO THAT EXTENT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED . 8. REFERRING TO THE PAYMENT OF RS.1,00,000/- PAID TO SHRI AMIT K. GIDWANI (THIRD CREDITOR) ON 26.11.2008, LD. COUNSEL MENTIONED THAT THE SAME PERTAINED TO THE YEAR UNDER CONSIDERATION. HOWEVER, LD. COUNSEL SUBMITTED THAT THE SAID AMOUNT IS NOT AN UNACCOUNTED TRANSACTION. TO JUSTIFY THE ABOVE SUBMISSION, LD. COUNSEL BROUGHT OUR ATTENTION TO PAGE 44 AND 45 OF THE PAPER BOOK AND SUBMITTED THAT WHEN THE AMOUNTS ARE ACCOUNTED, THE CONCEALMENT OF INCOME DOES NOT ARISE. ACCORDING TO HIM, IT IS NOT THE CASE OF THE REVENUE THAT THESE RELEVANT LOANS ARE IN THE CASE OF SHRI AMIT K. GIDWANI IS AN UNACCOUNTED TRANSACTION. 9. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 10. ON HEARING BOTH THE SIDES AND CONSIDERING THE FACT, I AM OF THE OPINION THAT THERE IS NO CASE FOR CONFIRMING THE REASON TO BELIEVE IN THE MIND OF THE ASSESSING OFFICER ABOUT THE CONCEALMENT OF INCOME INVOLVING SHRI AMIT K. GIDWANI. THUS, THE REASON RECORDED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. THEREFORE, THE JURISDICTION ASSUMED BY THE ITA NO.321/PUN/2017 - 5 - ASSESSING OFFICER IS NOT LEGALLY SUSTAINABLE. ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 11. CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON THE ADDITIONAL GROUND, WE ARE OF THE OPINION THAT, AS ADMITTED BY THE LD. AR, THE ADJUDICATION OF OTHER REGULAR GROUNDS BECOME AN ACADEMIC EXERCISE ONLY. THEREFORE, THE OTHER REGULAR GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AS ACADEMIC. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF SEPTEMBER, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 19 TH SEPTEMBER, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, KOLHAPUR; 4. THE PR. CIT-1, KOLHAPUR; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE