Shri Vijay Prakash Mittal, Meerut V. CIT, Meerut

ITA 3369/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86633 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 27-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Keywords: Unexplained cash credit; Gift; Business income; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO. 3369/DEL/2013 ASSESSMENT YEAR 2008-09 VIJAY PRAKASH MITTAL VS. CIT 59, CHIPPI TANK MEERUT MEERUT (PAN ABCPM6523F) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI ANOOP SHARMA, ADVOCATE RESPONDENT BY : SHRI RAMESH CHANDRA, CIT DR ORDER PER GEORGE GEORGE K, JUDICIAL MEMBER THIS APPEAL AT THE INSTANCE OF ASSESSEE I S DIRECTED AGAINST CITS ORDER U/S 263 OF THE ACT DATED 25.3.2013. THE RELEVANT ASSESSMENT YE AR IS 2008-09. GROUNDS RAISED READS AS UNDER :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX, MEERU T, HAS ERRED IN INVOKING JURISDICTION UNDER SECTION 263 OF THE INCO ME TAX ACT, 1961. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX, MEERUT , HAS ERRED IN INVOKING JURISDICTION UNDER SECTION 263 OF THE INCO ME TAX ACT, 1961 WHEN IT WAS DISCERNIBLE FROM RECORD THAT ASSESSING OFFICER HAD APPLIED HIS MINDS TO THE ISSUES IN QUESTIONS, COMMISSIONER COULD NOT INV OKE SECTION 263 MERELY BECAUSE HE HAD DIFFERENT OPINION. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX, MEERUT , HAS ERRED IN MAKING ARBITRARY ADDITIONS BASED ON CONJECTURES AND SURMIS ES. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX, MEERUT , HAS ERRED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 12.11.2013 TO THE FILE OF ASSESSING OFFICER TO VERIFY DIFFERENT CLAIMS. ITA NO.3369/DEL /2013 2 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX, MEERUT , HAS FURTHER ERRED IN NOT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE WHI LE DECIDING THE APPEAL. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX, MEERUT , HAS FURTHER ERRED IN DECIDING THE 263 PROCEEDINGS IN UNDUE HASTE WITHOUT GIVING THE ASSESEE AN ADEQUATE OPPORTUNITY TO CONTEST THE SAME. 2. THE ASSESSEE AN INDIVIDUAL, FILED HIS RETUR N OF INCOME ON 26.3.2009 DECLARING RS. 9,14,344/-. THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 12.11.2010 ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY CIT ISS UED NOTICE U/S 263 OF THE ACT (DATED 12.3.2013). ACCORDING TO CIT, ASSESSMENT WAS COMPLETED WITHOUT PROPER ENQUIRY. THE CIT IN NOTICE U/S 263 POINTED OUT THE FOLLOWING INFIRMITIES IN THE ASSESSMENT ORDER :- A) THIS CASE WAS SELECTED IN SCRUTINY THROUGH CA SS AND REASON WAS THAT ASSESSEE HAS PURCHASED MUTUAL FUND OF RS. 2,34,76,644/- BUT AO HAS NOT ENQUIRED ANY ASPECT IN THIS REGARD NO R HAS MADE THE VERIFICATION OF AIR INFORMATION OF RS. 2,34,76,644/-. B) ANOTHER POINT FOR EXAMINATION BY THE AO WAS REG ARDING THE GENUINENESS OF STCGS SHOWN AND THEIR CLAIM VIS--VIS BUSINESS INCOME BUT CASE RECORDS ARE SILENT ON THIS ISSUE. C) UNSECURED LOAN OF RS. 37,14,212/- HAVE NOT BEEN ENQUIRED INTO BY THE AO WHO HAS SIMPLY ACCEPTED THE SAME. D) AS PER BALANCE SHEET LOAN AND ADVANCES GIVEN TO OTHERS BUT INTEREST WAS NOT CHARGED ON THE SAME AMOUNT AND ON THE OTHER SID E ASSESSEE HAD PAID INTEREST ON UNSECURED LOANS. THEREFORE, INTEREST SHALL BE DISALLOWED ON PROPORTIONATE BASIS. E) AS PER BALANCE SHEET, AN ADDITION OF RS . 3,38,660/- WAS MADE IN FIXED ASSETS BUT AO HAS NOT VERIFIED THE SOURCE OF A DDITION. F) DURING THE YEAR, ASSESSEE HAS MADE A GI FT TO RUCHIKA DASS, GHAZIABAD, BUT COPY OF GIFT DEED AND SOURCE OF INVESTM ENT HAS NOT BEEN OBTAINED BY THE AO. G) INCOME OTHER THAN CAPITAL GAINS AMOUNTI NG TO RS. 17,70,684/- HAS BEEN ALLOWED BY THE AO WITHOUT MAKING A SINGLE ENQUIR Y. H) THE ASSESSEE HAS SHOWN CAPITAL GAINS OF R S. 9,14,343/- AND AO HAS ACCEPTED THE SAME WITHOUT ASKING FOR ANY DETAIL OR MAK ING ANY ENQUIRY. I) P & L A/C OF THE ASSESSEE SHOWS THE FOL LOWING INCOME: ITA NO.3369/DEL /2013 3 1. BY CAPITAL GAIN RS. 3 ,33,413/- 2. BY CAPITAL GAIN (SHORT TERM) RS. 9,14,3 43/- 3. BY DIVIDEND RS. 1 0,80,607/- 4. BY INTEREST ON PPF RS. 1, 90,603/- 5. BY INTEREST A/C RS. 2,51,656/- 6. BY INTEREST ON RBI EXEMPT RS. 2,13,0 99/- 7. BY INTEREST UTI ARS BONDS RS. 9,9 53/- 8. BY RENT RS. 24,766/- _____________________________________________ TOTAL RS. 30,18,443/- AGAINST THE SAME, THE ASESSEE HAS SHOWN A NET PROFI T OF RS. 28,34,029/- THUS CLAIMING EXPENSES OF RS. 1,84,414/-. NONE OF THESE EXPENSES IS RELATED TO OR ALLOWABLE AGAINST ANY OF THE INCOME SHOWN AS ABOVE. J) THE ASSESSEE HAS RETURNED THE INCOME AT MERELY RS. 9,14,344/- EVEN AS AGAINST THE N.P. OF RS. 28,34,029/-, OTHER INCOME ARE CLAIMED AS EXEMPTED AS FOLLOWS : 1 PROFIT FROM FIRM H L WAREHOUSING CORPORAT ION RS. (-) 2,02,929/- 2 CAPITAL GAIN (STT) AS PER ANNEXURE U/S 10 (38) RS. 3,33,410/- 3 RBI RELLIEF BONDS RS. 2,13,099/- 4 PPF INTEREST AND ARS BONDS RS. 2,00, 557/- 5. DIVIDEND FROM SHARES RS. 10,80 ,608/- ______________________________ TOTAL RS. 16,24,745 /- _______________________________ 3. ASSESSEE FILED OBJECTIONS / WRITTEN SUBMISS IONS DATED 18.3.2013 TO THE NOTICE ISSUED U/S 263 OF THE ACT. THE CIT HOWEVER, REJECTE D THE OBJECTIONS RAISED BY THE ASSESSEE AND PASSED AN ORDER U/S 263 DATED 25.3.201 3. THE CIT IN SO FAR AS THE INFIRMITIES POINTED OUT AT SERIAL NUMBER (A)(B)(D) TO (I) AND (J) REFERRED TO ABOVE, REMANDED THE ISSUES TO AO FOR FRESH EXAMINATION. TH E RELEVANT FINDING OF THE CIT READS AS FOLLOWS :- THE AO DID NOT MAKE ANY VERIFICATION ON AIR INFORM ATION ON MUTUAL FUND OF RS. 23476644/- PURCHASED BY THE ASSESSEE. THE GENUINENE SS OF STCG AND DEEMED CAPITAL GAIN WAS ALSO NOT EXAMINED. THE ADDITIONS M ADE TO FIXED ASSETS SHOWN AT RS. 338660/- ALSO REMAINED UNEXAMINED AND UNINQUIRE D SO WAS THE CASE WITH THE ITA NO.3369/DEL /2013 4 GIFT STATED TO BE MADE TO M/S. RUCHIKA DAS, THE INC OME OTHER THAN CAPITAL GAINS AMOUNTING TO RS. 1770684/- HAS BEEN ALLOWED BY THE AO WITHOUT MAKING A SINGLE QUERY CAPITAL GAIN SHOWN AT RS. 914343/- HAVE BEEN ACCEPTED WITHOUT MAKING A SINGLE INQUIRY. THE LD. COUNSEL FOR THE ASSESSEE HA S GIVEN SOME DETAILS AND EXPLANATION DURING THE COURSE OF 263 PROCEEDINGS. H OWEVER, IT IS WELL ESTABLISHED THAT FURNISHING SOME INFORMATION DURING 263 PROCEED INGS DOES NOT ABSOLVE THE AO FROM HIS DUTY TO CALL FOR SUCH DETAILS AND EXAMINAT ION THEM. THE AO IS NOW DIRECTED TO EXAMINE EACH AND EVERY ASPECT OF ABOVE AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY. 4. AS REGARDS THE UNSECURED LOANS OF RS. 37,14, 212/- (POINT MENTIONED BY CIT IN SERIAL NO. (C). THE CIT DIRECTED THE AO TO ADD THE SAME. T HE RELEVANT FINDING OF THE CIT AT PAGE 8 OF THE IMPUGNED ORDER READS AS UNDER :- AS REGARDS THE UNSECURED LOANS OF RS. 37 14212/-, THE AO HAS ACCEPTED THE SAME WITHOUT ANY INQUIRY OR VERIFICATION. DURING THE CO URSE OF 263 PROCEEDINGS, A COPY OF CONFIRMATION IS STATED TO HAVE BEEN FILED, HOWEV ER, IT IS REITERATED THAT FURNISHING THE SAME INFORMATION DURING 263 PROCEEDI NGS, IT DOES NOT ABSOLVE THE AO OF HIS DUTY TO MAKE PROPER INQUIRY AND CALL FOR SUCH INFORMATION TO EXAMINE THEM BEFORE ACCEPTING THE SAME. AS REGARDS CREDITS ARE CONCERNED, IDENTITY, CREDITWORTHINESS AND GENUINENESS THAT HAS TO BE PRO VED REMAINED TOTALLY UNEXPLAINED SINCE THE ASSESSEE FAILED TO CONFIRM TH E SAME WHEREAS HEAVY ONUS LIES ON THE ASSESSEE SOLELY TO EXPLAIN ALL KINDS OF CREDITS APPEARING IN ITS BOOKS FAILING WHICH THE SAME ARE LIABLE TO BE ADDED UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED CASH CREDITS. 5. SIMILARLY EXPENSES OF RS. 1,84,414/- WAS DIRE CTED BY THE CIT TO BE DISALLOWED [POINT AT SERIAL NO. (1)]. THE RELEVANT FINDING OF THE CIT READS AS UNDER :- THE ASSESEE IN ITS P & L A/C HAS SHOWN INCOME UNDE R SEVERAL HEADS WHICH IS REPRODUCED AT PARA 2 (I) OF NOTICE UNDER SECTION 26 3 AND IS NOT BEING REPEATED HERE FOR THE SAKE OF BREVITY. ALL THESE INCOME FALL S UNDER THE HAD OTHER THAN BUSINESS INCOME YET THE ASSESSEE HAS CLAIMED EXPENS ES TO THE TUNE OF RS. 184,414/- NONE OF WHICH RELATED TO OR WERE ALLOWABL E AGAINST ANY SUCH INCOME SINCE THIS CLAIM IS WRONG, THE SUM OF RS. 184,414/- IS ADDED TO THE INCOME OF THE ASSESSEE ALONG WITH INITIATION OF PENALTY UNDER SEC TION 271(1)(C) OF THE INCOME TAX ACT . 6. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEF ORE US. THE AUTHORIZED REPRESENTATIVE FOR THE ASSESEE SUBMITTED THAT THE NOTICE U/S 263 O F THE ACT DATED 12.3.2013 WAS ITA NO.3369/DEL /2013 5 RECEIVED BY THE ASSESEE ONLY ON 13.3.2013 AND THE O RDER U/S 263 WAS PASSED ON 25.3.2013. IT WAS SUBMITTED THAT CIT HAS ERRED IN N OT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, SINCE PROCEEDINGS U/S 263 WAS PASSED IN UN DUE HASTE WITHOUT GIVING THE ASSESSES AN ADEQUATE OPPORTUNITY TO CONTEST THE SAM E. THE ASSESESE HAS ALSO FILED A PAPER BOOK OF 156 PAGES COMPRISING OF THE WRITTEN S UBMISSIONS FILED BEFORE THE CIT, CONFIRMATION OF UNSECURED LOANS ETC. 7. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE CIT. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. ON PERUSAL OF ASSESSMENT ORDER DATED 12.11.2010, WE NOTICED THAT THE SAME IS PASSED WITHOUT ANY PROPER ENQUIRY. THE AO ACCEPTED THE RETURNED INCOME OF THE ASSESSEE BY HOLDING AS UNDER :- CONSIDERING ALL THE FACTS, DETAILED SUBMITTED BY T HE ASSESSEE AND AFTER EXAMINATION OF ACCOUNT BOOKS/DOCUMENTS AND AFTER DISCUSSION OF THE VARIOUS ISSUE, THE ASSESSMENT IS COMPLETED ON RETURNED INCOME. THERE IS NOTHING ON RECORD EVEN REMOTELY TO SUGGEST THAT THE ISSUES ON WHICH THE CIT HAD POINTED OUT THE INFIRMITIES WAS PROPERLY EXAMIN ED BY THE AO. THEREFORE, WE HOLD THAT THE CIT IS JUSTIFIED IN INVOKING HIS REVISIONA RY JURISDICTION U/S 263 OF THE ACT. 9. THE CIT AFTER POINTING OUT THE INFIRMITIES, D IRECTED THE AO TO MAKE ADDITION OF RS. 37,14,212/- (UNSECURED LOANS) AND RS. 1,84,414/- (D ISALLOWANCE OF EXPENSES). THE ASSESSEE HAD GIVEN CONFIRMATION FOR THE UNSECURED L OANS AND COPIES OF THE BANK ACCOUNTS OF THE CREDITORS ARE PLACED ON RECORD. SIM ILARLY ASSESSEE HAD GIVEN EXPLANATION FOR DISALLOWANCE OF EXPENSES (RS. 1,84,414/-) WHICH SEEMS NOT TO HAVE BEEN TAKEN NOTE OFF BY THE CIT, WHILE PASSING ORDER U/S 263 OF THE ACT. MOREOVER, THE ORDER U/S 263 WAS PASSED WITHIN A PERIOD OF 12 DAYS FROM THE DATE OF ISSUANCE OF NOTICE U/S 263. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE MODIFY TH E ORDER OF THE CIT AND DIRECT THE AO TO ITA NO.3369/DEL /2013 6 EXAMINE AFRESH THE ISSUES REGARDING UNSECURED LOANS OF RS. 37,14,214/- AND DISALLOWANCE OF EXPENDITURE AMOUNTING TO RS. 1,84,4 14/-. THE AO SHALL EXAMINE THESE TWO ISSUES AFRESH DE HORS THE DIRECTIONS GIVEN BY T HE CIT, AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS O RDERED ACCORDINGLY. IN THE RESULT THE APPEAL OF THE ASSESEE IS P ARTLY ALLOWED AS INDICATED ABOVE. THE DECISION WAS PRONOUNCED IN THE OPEN COUR T ON 30 TH JANUARY, 2015. SD/- SD/- (S.V. MEHROTRA) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JANUARY, 2015 VEENA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DEPUTY REGISTRAR, ITAT, NEW DELHI