The ITO, Ward-7(4), Ahmedabad V. Shri Tarun D.Karia, Ahmedabad

ITA 3259/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72811 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 09-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N DIVATIA
• Keywords: Revision of order; Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Bogus loan
• Section: 143(3); 153A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 3259/AHD/2010 & CO.10/AHD/2011 (ASSESSMENT YEAR: 2004-05) ITO, WARD 7 (4), AHMEDABAD V/S SHRI TARUN D. KARIA, M- 196/2347, PRATIKSHA APARTMENT, SOLA ROAD, NARANPURA, AHMEDABAD (APPELLANT) (RESPONDENT) SHRI TARUN D. KARIA, M- 196/2347, PRATIKSHA APARTMENT, SOLA ROAD, NARANPURA, AHMEDABAD V/S ITO, WARD 7 (4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AMGPK 1458A APPELLANT BY : SHRI O.P. BATHEJA SR. D.R. RESPONDENT BY : SHRI S. N. DIVATIA ( )/ ORDER DATE OF HEARING : 26-12-20 13 DATE OF PRONOUNCEMENT : 03 -01--2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-III, AHMEDABAD DATED 23.09.2010 FOR A.Y. 2004-05 AND ASS ESSEE HAS ALSO FILED A C.O. ITA NO 3259/A/2010 & CO.NO. 10/A/2011 . A.Y. 2004- 05 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. IN THIS CASE, THE ASSESSMENT FOR A.Y. 04-05 WAS FIN ALIZED UNDER SECTION 143 (3) VIDE ORDER DATED 31.03.2006 AND THE TOTAL I NCOME WAS DETERMINED AT RS. 37,52,010/-. LATER ON GOING THROUGH THE REC ORDS AND THE ORDER PASSED BY THE A.O. CIT NOTED THAT ON THE BASIS OF I NFORMATION THAT GAMBLING AND BETTING ACTIVITIES WERE CARRIED OUT AT THE PREMISES THERE WAS A POLICE SEARCH IN THE PREMISES OF M/S KALGI. SHR I TARUN D. KARIA, THE ASSESSEE WHO ALONG WITH SOME OTHER PERSONS WERE ARR ESTED FROM THE PREMISES. DURING THE SEARCH FROM THE LOCKERS IN THE PREMISES, POLICE RECOVERED CASH TO THE TUNE OF RS. 73,20,740/-, GOLD ORNAMENTS WORTH RS. 9,00,000/-, KISAN VIKAS PATRA OF RS. 70,000/-, TWO SMALL DIARIES AND DOCUMENTS CONTAINING FINANCIAL TRANSACTIONS. THE AS SESSEE ADMITTED BEFORE ADIT (INV) THAT HE WAS ENGAGED IN COLLECTION OF MONEY FROM PERSONS INDULGING IN BETTING AND GAMBLING. THEREAFT ER PROCEEDINGS UNDER SECTION 132A WERE INITIATED AGAINST THE ASSESSEE AN D OTHER PERSONS AND IN CASE OF ASSESSEE, ASSESSMENT WAS FRAMED VIDE ORDER DATED 31.03.2006 U/S 153A OF THE ACT AND THE TOTAL INCOME WAS DETERMINED AT RS. 37,52,010/-. ON GOING THROUGH THE ASSESSMENT ORDER CIT NOTED TH AT THE CASH, GOLD ORNAMENTS AND JEWELLERY THAT WERE SEIZED DURING THE SEARCH AND WHICH WAS OWNED BY THE ASSESSEE WAS NOT BROUGHT TO TAX AS UNEXPLAINED BY THE A.O. HE FURTHER NOTED THAT THE SEIZED MATERIAL INDI CATED THAT ASSESSEE HAD MADE ADVANCE OF RS. 5 LAKHS TO SHRI NARENDRA SHAH, PROPRIETOR OF N.K. JEWELLERS, OUT OF HIS UNACCOUNTED INCOME WHICH ALSO REMAINED TO BE BROUGHT TO TAX BY THE A.O. BEFORE CIT, IT WAS SUBMI TTED THAT THE CASH AND JEWELLERY FOUND AT THE TIME OF SEARCH BELONGED TO SHRI MAHENDRA PATEL ITA NO 3259/A/2010 & CO.NO. 10/A/2011 . A.Y. 2004- 05 3 AND NOT TO THE ASSESSEE. THIS SUBMISSION WAS NOT AC CEPTED BY CIT. CIT WAS THEREFORE OF THE VIEW THAT THE ASSESSMENT ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. HE ACCORDINGLY SET ASIDE THE ORDER OF A.O. U/S 263 OF THE ACT BY ORDER DATED 28.03.2008 AND DIRECTED THE A.O. TO EXAMINE THE FAC TS AFRESH AND TO PASS AFRESH ASSESSMENT ORDER. PURSUANT TO THE DIRECTION OF CIT, A.O. PASSED ORDER UNDER SECTION 143(3) READ WITH SECTION 263 ON 23.12.2008 AND AFTER MAKING ADDITION ON ACCOUNT OF UNACCOUNTED JEWELLERY , UNACCOUNTED CASH AND UNACCOUNTED ADVANCE, DETERMINED THE TOTAL INCOM E AT RS. 1,54,79,870/-. AGGRIEVED BY THE ORDER OF A.O. ASSES SEE PREFERRED THE APPEAL BEFORE CIT(A). CIT(A) VIDE ORDER DATED 23.09 .2010 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AF ORESAID ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 11,79,831/- MADE ON ACCOUNT OF UNACCOUNTED JEWE LLERY. 2. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.73,10,080/- MADE ON ACCOUNT OF UNACCOUNTED CASH SEIZED. 3. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,00,000/- MADE ON ACCOUNT OF UNACCOUNTED ADVANC E TO SHRI N.K. SHAH PROPRIETOR OF N.K. JEWELLERS. 4. THE ASSESSEE HAS ALSO IN ITS C.O. HAS RAISED THE FO LLOWING GROUND:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN UPHOLDING THAT THE INVESTMENTS BY WAY OF CASH, JEWELLERY AND PROMISSORY NOTES BELONGED TO THE ASSE SSEE AND REPRESENT INCOME FROM ILLEGAL ACTIVITIES OF GAMBLING AND BETTING. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THAT RS. 5 L ACS REPRESENTED UNACCOUNTED LOANS GIVEN BY THE ASSESSEE TO N.K. JEWELLERS. 5. BEFORE US, AT THE OUTSET, THE LD. A.R. SUBMITTED TH AT AGAINST THE ORDER OF TRIBUNAL PASSED ON 26.02.2008 IN THE CASE OF SHRI M AHENDRA A PATEL, SHRI MAHENDRA PATEL HAD FILED APPEAL BEFORE HONBLE GUJA RAT HIGH COURT. GUJARAT HIGH COURT VIDE ORDER DATED 19.10.2010 (TAX APPEAL NO. ITA NO 3259/A/2010 & CO.NO. 10/A/2011 . A.Y. 2004- 05 4 1798/AHD/2010) HAD RESTORED THE MATTER TO TRIBUNAL FOR DECIDING THE APPEAL OF SHRI MAHENDRA PATEL AND THE ASSESSEE. PUR SUANT TO THE DIRECTIONS OF HONBLE GUJARAT HIGH COURT THE HON. T RIBUNAL IN THE CASE OF ASSESSEE IN ITA NO. 2310/AHD/2010 AND IN ITA NO. 45 75/AHD/2007 (ORDER DATED 14.12.2012) IN THE CASE OF MAHENDRABHA I AMBALAL PATEL HAS RESTORED THE MATTER TO THE FILE OF CIT(A) FOR A FRE SH DECISION. SINCE THE MATTER IS ALREADY BEFORE CIT(A) HE SUBMITTED THAT T HE PRESENT APPEAL ALSO BE RESTORED BEFORE CIT(A). HE PLACED ON RECORD, THE COPY OF THE AFORESAID ORDER OF TRIBUNAL. THE LD. D.R. DID NOT OBJECT TO T HE SUBMISSION MADE BY THE A.R. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CO-ORDINATE BENCH OF TRIBUNAL BY C ONSOLIDATED ORDER IN ITA NO. 4575/AHD/2007 FOR A.Y. 2004-05 IN THE CASE OF MAHENDRABHAI AMBALAL PATEL AND IN CASE OF THE ASSESSEE IN ITA NO . 2310/AHD/2010 FOR A.Y. 2004-05 HAS NOTED AS UNDER:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SHRI M.A. PATEL (SUPRA). AS PER THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT. WE HAVE TO DECIDE BOTH THESE APPEALS TOGETHER. HENCE, DELAY IN THE CASE OF TARUN D. KARIA IS CONDONED AND HIS APPEAL IS ADM ITTED. BEFORE US, ONE OF THE GROUNDS RAISED BY THE ASSESSEE IN THE CASE OF SHRI M.A. PATEL IS THIS THA T LD. CIT(A) HAS ERRED IN LAW AND/ OR FACTS IN HOL DING THAT THE ASSESSMENT WOULD NOT BE VITIATED BY LACK O F OPPORTUNITY AND NATURAL JUSTICE. THE ASSESSEE HAD SUBMITTED THAT DUE TO HIS ILLNESS AND HOSPITALIZATI ON, HE WAS NOT IN A POSITION TO FURNISH ADEQUATE DETAILS AND EVIDENCE. THIS SUBMISSION WAS MADE BEFO RE LD. CIT(A) ALSO AND SIMILAR GROUND WAS RAISED BEFORE LD. CIT(A) AS PER GROUND NO. 1,2,AND ON THIS ASPECT, THE LD. CIT(A) HAS REJECTED THIS GROUND OF THE ASSESSEE BUT WE FIND THAT WHILE REJECTING THIS GROUND AND DECIDING THIS ISSUE, HE HAS NOT CONSIDER ED THIS ASPECT THAT BECAUSE OF ILLNESS AND HOSPITALIZA TION THE ASSESSEE WAS NOT IN A POSITION TO FURNISH ADEQUATE DETAILS AND EVIDENCE. CONSIDERING ALL THE SE FACTS, WE FEEL THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES AND HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE HIS FILE FOR FRE SH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. SINCE, WE HAVE RESTORED BACK THE MATTER TO THE FILE OF LD. CIT(A) FOR FRESH DECISION, NO DECISION IS CALLED FOR ON MERIT AT THI S STAGE. 5. IN THE RESULT, THIS APPEAL OF THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSES. 6. NOW, WE TAKE UP THE 2 ND APPEAL I.E. THE APPEAL IN THE CASE OF SHRI TARUN D . DARIA IN ITA NO. 2310/AHD/2010. WE FIND THAT THE ISSUES INVOLVED IN BOTH THESE APPEALS ARE INTERCONNECTED AND SINCE WE HAVE RESTORED BACK THE MATTER TO FILE OF LD. CI T(A) FOR A FRESH DECISION IN THE CASE OF SHRI M.A. ITA NO 3259/A/2010 & CO.NO. 10/A/2011 . A.Y. 2004- 05 5 PATEL, THE ENTIRE ISSUE IN THIS CASE OF THIS ASSESS EE IS ALSO RESTORED BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECISION ON ALL ISSUES SIMULTANEOUSLY. 7. SINCE THE ISSUE HAS BEEN REMITTED BY THE CO-ORDINAT E BENCH OF THE TRIBUNAL BEFORE CIT(A), WE ARE OF THE VIEW THAT THE PRESENT APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE ALSO NEEDS TO BE REMITTED BEFORE CIT(A) SO THAT THE ENTIRE ISSUE CAN BE CONSIDERED I N ENTIRTY. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF CIT(A) FOR FRESH D ECISION ON THE ISSUE RAISED IN THE PRESENT APPEAL. NEEDLESS TO STATE THA T CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES BEFORE DECIDING THE ISSUE. ASSESSEE IS ALSO FREE TO FURNISH NECESSARY E VIDENCE IN SUPPORT OF ITS CONTENTION BEFORE CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND C.O. O F THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 03 - 01 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD