VINTI ABHISHEK LODHA, MUMBAI V. DCIT CEN CIR 7(3) ( ERSTWHILE CEN CIR 42), MUMBAI

ITA 3268/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0422 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 14-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Search and seizure; Salary income; Revised return
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA NO. 3268/MUM./2015 (ASSESSMENT YEAR: 200 8 - 0 9 ) VINTI ABHISHEK LODHA 412, 4 TH FLOOR, 17G, VARDHMAN CHAMBER, CAWASJI PATEL ROAD, HORNIMAN CIRCLE, FORT MUMBAI 400 001 PAN NO. ACYPL1772G . APPELLANT V/S DCIT CEN CIR 7(3) (ERSTWHILE CEN CIR 42) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 . RESPONDENT ASSESSEE BY : SHRI. JITENDRA JAIN REVENUE BY : SHRI. ALOK JOHRI DATE OF HEARING 19.06.2017 DATE OF ORDER - 11 .08 .2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LD. CIT - A DATED 26.03.201 5 AND PERTAINS TO ASSESSMENT YEAR 2008 - 0 9 . 2. THE GROUNDS OF APPEAL READ AS UNDER: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C1T(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ADDITIONS FOR THIS YEAR HAS TO BE RESTRICTED ON THE BASIS OF EVIDENCE FOUND IN THE BOOKS AND DOCUMENTS FOUND DURING THE SEARCH AS PER T HE DECISION OF THE ITAT ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 2 MUMBAI ,SPECIAL BENCH IN THE CASE OF 'ALL CARGO GLOBAL LOGISTICS LTD' [23 TAXMANN.COM 103 (MUM)SB], WHICH HAS NOW BEEN UPHELD BY THE BOMBAY HIGH COURT BY THEIR DECISION DELIVERED ON 21 ST APRIL 2015, IN APPEAL NO 1TX 1969 OF 2013. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C1T(A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT DIFFERENCE IN 26AS TO THE EXTENT OF RS 32,55,888, IGNORING THE APPELLANT CONTENTION THAT THERE WERE MISTAKES IN THE IDS RETURN FILED BY A DEDUCTEE COMPANY WHICH NEEDED TO BE RECTIFIED. 3. BRIEF FACTS OF THE CASE ARE AS UNDER: - 1 . A SEARCH AND SEIZURE ACTION U/S. 1 32(L) OF THE INCOME TAX ACT WAS CONDUCTED IN THE LODHA GROUP OF CASES BY THE INVESTIGATION WING ON 10/01/2011. THE ASSESSEE BEING AN ENTITY BELONGING TO THE LODHA GROUP WAS ALSO COVERED IN SEARCH AND SEIZURE ACTION U/S.132(1) ON THE SLATED DATE. SUBSEQUENT TO THE ACTION U/S.!32(L), NOTICES U/S.1 53A(L)(A) DATED 01 - 11 - 2011 WAS ISSUED AND SERVED ON THE ASSESSEE ON 08 - 11 - 2011 REQUIRING ASSESSEE TO FURNISH RETURNS OF INCOME FOR THE VARIOUS ASSESSMENT YEARS INCLUDING A.Y. UNDER CONSIDERATION. 2. IN COMPLIAN CE TO THE STATUTORY NOTICE U/S.1 53A(L)(A) OF THE INCOME TAX ACT, 1961, THE RETURN OF INCOME WAS FURNISHED ON 30 - 12 - 2011 DECLARING TOTAL INCOME OF RS.30,65,087/ - AFTER CLAIMING CHAPTER VIA DEDUCTION OF RS.1,15,000/ - . THE INCOME DECLARED IN THE RETURN OF INCOME IS MAINLY ATTRIBUTABLE TO THE INCOME UNDER THE HEAD 'SALARIES' FROM VARIOUS EMPLOYERS, INCOME FROM HOUSE PROPERTY AND INCOME FROM O THER SOURCES. THE ORIGINAL RETURN OF INCOME WAS FILED ON 09 - 12 - 2008 DECLARING TOTAL INCOME AT RS.28,94,977/ - ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 3 4. THEREAFTER REFERRING TO THE SALARY SHOWN IN THE FORM NUMBER 26 AS DOWNLOADED FROM THE INCOME TAX SYSTEM THE ASSESSING OFFICER HELD AS UNDER: - DIFFERENCE OF SALARY WITH REGARD TO 26 AS - THE 26 AS DOWNLOADED FROM THE SYSTEM REVEALS THAT ASSESSEE WAS PAID THE TOTAL SALARY OF RS.99,54,752/ - BY THE VARIOUS COMPANIES AS AGAINST THE SALARY INCOME SHOWN BY THE ASSESSEE IN HER RETURN OF INCOME FROM THESE COMPANIES OF RS.32,52,614/ - . THE COMPANY - WISE SALARY PAID AND THE SALARY APPEARED IN 26 A S IS AS BELOW: - FY2007 - 08 : GROSS INCOME PARTICULARS ASSESSEE RECORDS AIR DIFFERENCE CLDPL 554,600 4,130,488 (375,888) LBPL 300,000 1,548,750 (1,248,750) LDPL 600,000 1,708,750 (1,108,750) LEPL 100,000 80,000 20,000 U3C 105,000 105,000 . LLDPL 150,000 90,000 60,000 MCPL 600,000 360,000 240,000 VIVETC ENT 600,000 1,688,750 (1,088,750) INTERNATIONAL SECURITIES LTD 243,014 243,014 . TOTAL 3,252,614 9,954,752 (6,702,138) FROM THE ABOVE CHART IT CAN BE SEEN THAT THERE IS A SHORTAGE OF SALARY SHOWN RECEIVED FROM CLDPL , LDPBPL, LDPL AND VIVEK ENTERPRISE AS COMPARED TO THE SALARY REFLECTED IN THE 26 AS. THIS DIFFERENCE IS WORKS OUT TO RS.70,22,138/ - ((3,575,888) + (1,248,750) + 1,108,750) + 1,088,750). HENCE THERE IS A SHORTAGE OF SALARY OFFERED IN THE RETURN OF INCOME OF RS.70,22,138/ - . SINCE THERE WAS A SHORTAGE OF SALARY SHOWN BY THE ASSESSEE IN HER RETURN OF INCOME T HE ASSESSEE WAS ASKED ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 4 TO EXPLAIN THE DIFFERENCE AND ALSO TO EXPLAIN WHY THE SALARY INCOME NOT DECLARED IN THE RETURN OF INCOME SHOULD BE ADDED TO HER INCOME. IN RESPONSE TO THE ABOVE, THE ASSESSEE SUBMITTED THE STATEMENT OF COMPARISON AND EXPLAINED THE EXC ESS SALARY APPEARING IN 26AS DUE TO SOME DISCREPANCIES AND HE HAS FURTHER STATED THAT ASSESSEE IS IN PROCESS OF RECTIFYING THE SALARY TDS RETURN. HE EMPHASIZED THAT THE SALARY PAID BY THE DIFFERENT COMPANIES IS CORRECT BUT DUE TO ERROR ON THE PART OF PERSO N FILING THE TDS RETURN THE DISCREPANCIES HAS CREPT IN. SINCE THERE IS A DIFFERENCE OF SALARY NOT DECLARED IN THE RETURN OF INCOME AND ASSESSEE FAILED TO EXPLAIN THE DIFFERENCE SATISFACTORILY HENCE THE DIFFERENCE OF RS.70,22,138/ - IS ADDED TO THE INCOME OF THE ASSESSEE AND PENALTY PROCEEDING UNDER SECTION 27L(L)(C) IS INITIATED. THE MATTER IS SUBJECT TO RECTIFICATION IN CASE THE ASSESSEE FILED THE REVISED 26 AS FROM THE SYSTEM. 5. SUBJECT TO THE ABOVE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDE R : - INCOME AS PER RETURN RS. 30,65,087/ - ADD : INCOME AS DISCUSSED ABOVE (I) DIFFERENCE ON ACCOUNT OF SALARY RS. 70,22,138/ - GROSS TOTAL INCOME RS.1,00,87,225 TOTAL INCOME RS.1,00,87,230/ - ============ 5. AGAINST THE ABOVE ORDER ASSESSEE APPEAL ED BEFORE THE LEARNED CIT - A. LEARNED CIT - A ALSO OBTAINED REMAND REPORT FROM THE ASSESSING OFFICER. 6. AS REGARDS THE CHALLENGE OF JURISDICTION LEARNED CIT - A OBSERVED AS UNDER: - 5.2. THE FIRST AND SECON D GROUND OF APPEAL 1(I) AND (II) IS THE CHALLENGE TO THE ASSESSMENT PROCEEDINGS AND ORDER U/S 153A OF THE ACT. IT IS NOTED THAT THERE HAS BEEN A SEARCH ACTION U/S 132. AS HELD BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA (2012) (82 CCH 113) (DELHI HIGH COURT), IT IS MANDATORY ON THE PART OF THE A.O TO INITIATE PROCEEDINGS U/S.153A OF THE ACT, CONSEQUENT TO THE SEARCH & SEIZURE ACTION U/S.132(1) OF THE ACT. HAVING INITIATED THE PROCEEDINGS, A.O IS EMPOWERED TO EXAMINE ALL THE MATE RIALS, INCLUDING THE MATERIALS FOUND ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 5 DURING THE SEARCH & SEIZURE PROCEEDINGS AND FRAME THE ASSESSMENT ORDERS U/S. 143(3) R.W.S. 153A OF THE ACT. 7. AFTER REPRODUCING THE ORDER AS ABOVE LEARNED CIT - A HELD AS UNDER: - IN THE PRESENT CASE THERE IS NO PRIOR ORDER U/S 143(3). THUS THERE IS NO PRIOR ASSESSMENT IN THIS CASE. IN VIEW OF THE ABOVE, I DO NOT FIND ANY INFIRMITY IN THE OF THE AO IN ISSUING NOTICE UNDER SECTION 153A AND MAKING AN ASSESSMENT ACTION 143(3) R.W.S. 153A. 8. LEARNED CIT - A FURTHER HELD AS UNDER: - 5.3. THE APPELLANT HAS CLAIMED THAT NO INCRIMINATING MATERIAL WAS FOUND AND THEREFORE, DISALLOWANCES OF EXPENSES CANNOT BE MADE IN THE ORDER U/S. 143(3) R.W.S. 153A OF THE I .T.ACT. IN THE COURSE OF SEARCH, JEWELRY VALUED AT RS.29,10,170/ - WAS FOUND AT LOCKER NO. 2600 AT BANK OF INDIA, WALKESHWAR ROAD, MUMBAI STANDING IN THE NAME OF SMT. VINTI A. LODHA , THE APPELLANT. THE SAME WAS NOT SEIZED SINCE PAY ORDER WAS ISSUED IN LIEU OF THE JEWELRY. IN LIGHT OF THE ABOVE FACTS AND DISCUSSION ABOVE, THE GROUNDS 1 AND 2 ARE NOT TENABLE AND ARE DISMISSED. 9. AS REGARDS THE MERITS LEARNED CIT - A GIVE THE FOLLOWING DIRECTIONS: - 5.5. THE GROUND 1(IV) IS IN RESPECT OF ADDITION OF RS . 70,20,138 / - BEING THE DIFFERENCE BETWEEN SALARY INCOME RETURNED AND SALARY INCOME AS PER 26AS. IT WAS CLAIMED THAT THE DIFFERENCE WAS ON ACCOUNT OF INCORRECT TDS RETURN FILED AND THAT THE SAME WAS BEING RECTIFIED. THE AO WAS ASKED TO VERIFY THE CURRENT STATUS IN TH E 26AS STATEMENT AND REPORT. IN THE REPORT DATED 16 - 02 - 2015, THE DCIT CENTRAL CIRCLE 7(3) HAS REPORTED THAT ON VERIFICATION, THE GROSS SALARY INCOME AT RS 65,08,502/ - COPY OF TDS STATEMENT DOWNLOADED FROM TRACES HAS BEEN E NCLOSED. THE INCOME AS PER THIS STATEMENT IS STILL HIGHER THAN THAT SHOWN IN THE RE TURN FILED IN RESPONSE TO NOTICE U/S 153A. THE APPELLANT DID NOT OFFER ANY REJOIN DER TO THE REPORT OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE T HE INCOME BASED ON THE GROSS SALARY SHOWN IN THE 26AS STATEMENT VERIFIED AND SUBMITTED IN THE REMAND REPORT. THIS GROUND IS PARTLY ALLOWED. 10. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 11. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSMENT AND ADDITION IN THIS CASE IS BAD IN LAW IN AS MUCH AS THE ADDITION IS NOT AT ALL BASED UPON MATERIALS FOUND DURING ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 6 SEARCH. AS REGARDS THE MERITS OF THE CASE HE PLEADED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER, SO THAT THE ASSESSEE CAN BE IN A POSITION TO THE PROPERLY RECONCILE THE SALARY AS SHOWN IN THE RETURN OF INCOME AND THAT AS APPEARING IN THE FORM NUMBER 26 AS. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSUMPTION OF JURISDICTION IN THIS CASE IS PERFECTLY LEGAL. HE SUBMITTED THAT THERE WAS A SEARCH AND SEIZURE OPERATION IN THE CASE OF LODHA GROUP. HE SUBMITTED THAT VARIOUS INCRIMINATING MATERI AL WERE FOUND. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER REFERRED TO THE SUBMISSION OF THE ASSESSEE TO THE ASSESSING OFFICER DATED 24 TH OF AUGUST 2012 REFLECTED IN THE PAPER BOOK PAGE NUMBER 7 TO 9 FOR THE FOLLOWING SUBMISSION BY THE ASSESSEE: - 16. INCOME FROM RENT RECEIVED RS.1,70,110 IS DISCLOSED DURING THE PROCEEDINGS U/S.132(1). 17. NO MATERIAL WAS SEIZED FROM MY RESIDENCE. 18. DETAILS OF JEWELLERY, GOLD BARS, COINS ETC AND DISCLOSURES MADE ON THIS ACCOUNT WILL SUBMIT LATER. 12. REFERRING TO THE ABOVE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT INCRIMINATING MATERIAL WERE DULY FOUND DURING THE SEARCH. THE ASSESSEE AS ABOVE HAS HERSELF OFFERED AND DISCLOSED RENTAL INCOME NOT DISCLOSED EARLIER. FURTHERMORE HE SUBMITTED THAT JEWELLERY ETC WERE DULY FOUND AND IT WAS SO ADMITTED BY THE ASSESSEE HERSELF AS ABOVE. HE FURTHER SUBMITTED THAT ASSESSEE HERSELF FILED A REVISED RETURN IN WHICH ADDITIONAL INCOME WERE OFFERED WHICH WERE NOT REFLECTED IN THE RETURN FILED PRIOR TO SEARCH. HENCE LEARN ED ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 7 DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHEN THE ASSESSEE HAS SUBMITTED FRESH RETURN INCORPORATING ADDITIONAL INCOME IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO PROPERLY ASSESS THE SAME. HENCE HE PLEADED THAT IT WAS PERFECTLY NORMAL ASSESSMENT PRO CEDURE IN WHICH INCOME AND T DS REFLECTED IN FORM NUMBER 26 AS ARE COMPARED. HENCE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SINCE THE ASSESSEE HAS NOT BEEN ABLE TO PROPERLY RECONCILE THE INCOME REFLECTED IN THE SAID FORM 26AS AND THAT SHOWN IN THE RETURN THE ADDITION MADE IS JUSTIFIED. 13. UPON CAREFUL CONSIDERATION WE FIND THAT IT CANNOT BE SAID THAT THE ASSESSMENT IN THIS CASE IS BEREFT OF JURISDICTION. AS MENTIONED ABOVE ASSESSEE HAS HERSELF DISCLOSED ADDITIONAL INCOME WHICH WAS NOT DISCLOSED EARLIER. HENCE IT CANNOT BE SAID THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING SEARCH. FURTHER, THERE WAS FINDING OF JEWELLERY ETC AND SUBMISSION OF FRESH RETURN INCORPORATING ADDITIONAL INCOME. IN SUCH CIRCUMSTANCES HAVING FILED FRESH RETURN ASSES SEE CANNOT SHY AWAY FROM PROPER ASSESSMENT THEREOF. HENCE IN OUR CONSIDERED OPINION THE ASSESSMENT IN THIS CASE HAS PROPER JURISDICTION. THE COMPARISON OF THE RETURN OF INCOME FILED PURSUANT TO SEARCH WITH FROM NUMBER 26 AS IS ACCORDINGLY JUSTIFIED. HOWEVE R IN OUR CONSIDERED O PINION THE ASSESSEE DESERVES AN OPPORTUNITY TO GIVE PROPER RECONCILIATION IN THIS REGARD. THE LEARNED CIT - A HAS ALSO GIVEN SOME DIRECTION TO THE ASSESSING OFFICER TO COMPUTE INCOME BASED UPON SALARY SHOWN IN THE FORM NUMBER 26 AS. IN T HE INTEREST OF JUSTICE W E MODIFY THE ORDER OF LEARNED CIT - A AND DIRECT ITA NO.3268/MUM/2015 VINTI ABHISHEK LODHA 8 THE A SSESSING O FFICER TO GIVE THE ASSESSEE AN OPPORTUNITY TO GIVE THE RECONCILIATION OF THE INCOME SHOWN IN THE RETURN AND THAT APPEARING IN THE SAID FORM 26AS AS REQUESTED BEFORE US BY THE LEARNED COUNSEL OF THE ASSESSEE. 14. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE IS STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 .0 8 .2017 S D / - S D / - RAVISH SOOD SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 1 .0 8 .2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI