M/s. Sanjay Swaroop, Muzaffarnagar V. ACIT, Muzaffarnagar

ITA 3437/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3167 (ITAT-DELHI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Third party statement; Block assessment; Documents seized
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.3437/DEL/2017 ASSESSMENT YEAR : 2012-13 SH. SANJAY SWAROOP, 196, CIVIL LINES, MUZAFFARNAGAR (PAN: ABVPS6292A) VS. ACIT, CIRCLE - 2, MUZAFFARNAGAR ( APPELLANT ) ( RESPONDENT ) ASSESSEE B Y : SHRI SANDEEP GUPTA, ADV. DEPARTMENT BY : SHRI VK JIWANI, SR. DR ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A)-MUZAFFARNAGAR ON 24.3.2017 IN RE LATION TO THE ASSESSMENT YEAR 2012-13 AND RAISED THE FOLLOWING GROU NDS:- 1. THAT THE ORDER PASSED U/S 147/144 OF THE ACT DATED 31.03.2015 PASSED BY THE LD. AO IS BAD ON FACTS AND IN LAW. 2. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE NOTICE U/S 147/148 DATED 29.01.2015 IS ILLEGAL AS THE SAME WAS ISSUED WITHOUT JURISDICTION 2 SINCE THE IMPUGNED ASSESSMENT YEAR WAS COVERED IN BLOCK OF 6 ASSESSMENT YEARS MENTIONED IN SECTION 153C(1) OF THE ACT. 2.1 THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE NOTICE U/S 147/148 DATED 29.01.2015 IS ILLEGAL SINCE THE SEIZED DOCUMENTS WERE HANDED OVER TO ASSESSING OFFICER OF ASSESSEE VIDE LETTER DATED 31.03.2014 RELEVANT TO ASSESSMENT YEAR 2014-15 AND THEREFORE, ASSESSING OFFICER COULD REOPEN ASSESSMENT FOR SIX PRECEDING ASSESSMENT YEARS I.E. A.Y. 2008-09 TO A.Y. 2013-14. THEREFORE, ASSESSMENT FOR IMPUGNED ASSESSMENT IS NULL AND VOID SINCE THE SAME HAS BEEN DONE U/S 147 INSTEAD OF SECTION 153C. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ASSESSING OFFICER HAS ERRED IN ISSUING THE NOTICE U/S 148 OF THE ACT WITHOUT THERE BEING VALID MATERIAL AND GROUND JUSTIFYING THE REASONS RECORDED FOR REOPENING OF ASSESSMENT. 3 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ASSESSING OFFICER HAS ERRED IN DISPOSING OFF THE OBJECTIONS RAISED BY THE ASSESSEE. 2. THE FACTS IN BRIEF ARE THAT IN THIS CASE ARE THAT RE TURN OF INCOME IN THIS CASE WAS FILED ON 30.3.2013 DECLARING TOTAL INC OME OF RS. 13,16,590/-. IN THIS CASE INFORMATION ALONG WITH DOC UMENTS WAS RECEIVED FROM THE ACIT-CENTRAL CIRCLE, KANPUR THAT SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON M/S RAMA/ SHAKUMBARI GROUP O F CASES ON 22.9.2011. DURING THE COURSE OF SEARCH AND SEIZURE OPERA TION CERTAIN DOCUMENTS WERE SEIZED IN WHICH THE NAME OF SH. SANJA Y SWAROOP R/O 196, CIVIL LINES, MUZAFFARNAGAR HAVING PAN: ABVPS6292A WAS FOUND, THERE WAS ENTRY OF RECEIPT AND PAYMENT OF CASH MADE B Y SH. SANJAY SWARUP. ON THE BASIS OF SUCH INFORMATION / DOCUMENTS RECEIVED, PROCEEDING WAS INITIATED U/S. 147 OF THE I.T. ACT IN CONNECTION WITH THE BLOCK ASSESSMENT AND NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 29.1.2015. IN COMPLIANCE OF THE SAME THE ASSESSEE V IDE LETTER DATD 09.1.2015 STATED THAT THE RETURN FILED BY HIM ON 30.3 .2015 MAY BE TREATED AS RETURN FILED IN COMPLIANCE OF NOTICE U/S. 148 OF THE ACT. FURTHER NOTICE U/S. 143(2)/142(1) WAS ISSUED TO THE AS SESSEE ASKING HIM TO FURNISH THE DESIRED INFORMATION/DETAILS & SUPP ORTING EVIDENCES 4 AND EXPLAIN THE INVESTMENT RS.25,00,000/-, AS ADMIT TED BY SHRI DEEPAK MITTAL, IN HIS STATEMENT RECORDED ON 24.02.201 2, THAT A SUM OF RS.25,00,000/- BEEN PAID BACK TO ONE SHRI NITIN JI BY THE ASSESSEE. THIS TRANSACTION HAS BEEN MENTIONED AGAINST THE PURC HASE OF LAND AT SAHARANPUR, MEASURING 19.50 BIGHA @ RS.2.70 LAC PER BIG HA. TE AMOUNT OF RS.25,00,000/- HAS BEEN MENTIONED AS 'EX PENSES DONE BY SANJAY'. THUS THE ASSESSEE VIDE NOTICE DATED 04-03- 2015 WAS REQUIRED TO EXPLAIN THE SOURCE OF SUCH EXPENSES INCURR ED AT RS.25,00,000/- WITH SUPPORTING DETAILS AND EVIDENCE S. IN COMPLIANCE THE ASSESSEE FILED COPY OF FORM NO.26AS ONLY AND NO OTHER DETAILS AND EVIDENCES ESTABLISHING THE SOURCE OF EXPENSES INCURRE D AT RS.25,00,000/- WAS FURNISHED. LATER ON SHRI R.K. MAHES HWARI CA(POA) ATTENDED AND FILED HIS POWER OF ATTORNEY BUT NO DETAILS/ EVIDENCES HAVE BEEN FURNISHED IN COMPLIANCE TO THE NOTICE DATED 4.3.2015 AND FURTHER NOTICE DATED 27.3.2015. THESE NOTICES HAVE REMAINED UNCOMLIED WITH. THEREFORE, AO LEFT WITH NO O THER ALTERNATIVE BUT TO COMPLETE THE ASSESSMENT ON THE BASIS OF MATE RIAL / EVIDENCE AVAILABLE ON RECORD. THE AO CONCLUDED THAT IN THE A BSENCE OF EVIDENCE OR ANY EVIDENCE OF THE SOURCE OF EXPENSES INCURRED A T RS. 25,00,000/- HAS REMAINED UNEXPLAINED IN THE HANDS O F THE ASSESSEE, HENCE, THE AO ADDED THE SAME IN THE HANDS OF THE AS SESSEE BY 5 COMPLETING THE ASSESSMENT AT RS. 41,33,030/- U/S. 14 7/144 OF THE INCOME TAX ACT, 1961 VIDE ORDER DATED 31.3.2015. 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER DATED 31.3.2015, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE HI S IMPUGNED ORDER DATED 24.3.2017 HAS AFFIRMED THE ACTION OF THE AO AN D DISMISSED THE APPEAL OF THE ASSESSEE. 4. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSE SSEE STATED THAT AO HAS MADE THE ADDITION OF RS. 25 LACS MERELY ON T HE BASIS OF STATEMENT OF THIRD PARTY AND SOME NOTINGS FOUND FROM THE LAPTOP OF THIRD PARTY. HE FURTHER STATED THAT THE STATEMENT OF TH E THIRD PARTY WAS NOT PROVIDED TO THE ASSESSEE AS A RESULT, NO PROP ER OPPORTUNITY WAS PROVIDED TO THE ASSESSEE. THEREFORE, IN SUCH CIRC UMSTANCES, THE DISALLOWANCE ON THE BASIS OF THE STATEMENT OF THE T HIRD PARTY IS UNSUSTAINABLE IN LAW. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE SAME MAY BE AF FIRMED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD S. I FIND CONSIDERABLE COGENCY IN THE ASSESSEES COUNSEL CONTE NTION THAT AO HAS MADE THE ADDITION OF RS. 25 LACS MERELY ON THE BASIS OF STATEMENT OF 6 THIRD PARTY AND SOME NOTINGS FOUND FROM THE LAPTOP OF THIRD PARTY. I FURTHER FIND THAT THE STATEMENT OF THE THIRD PARTY WA S NOT PROVIDED TO THE ASSESSEE TO REBUT HIS CONTENTION AND UNABLE THE ASSESSEE TO MAKE HIS CASE PROPERLY. HOWEVER, DURING THE ASSESSMENT PROCEE DINGS THE ASSESSEE HAS FURNISHED COMPLETE DETAILS. THEREFORE, I N SUCH CIRCUMSTANCES, THE DISALLOWANCE ON THE BASIS OF THE STATEMENT OF THE THIRD PARTY AND NOT PROVIDING HIS STATEMENT TO THE ASS ESSEE IS UNSUSTAINABLE IN LAW. HENCE, EVEN OTHERWISE, I FIND THAT HONBLE SUPREME COURT OF INDIA IN ITS DECISION IN THE CASE O F ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE REPOR TED IN (2015) 94 CCH 0187 (SC) HAS HELD THAT NOT ALLOWING THE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE AMOU NTS TO SERIOUS FLOW WHICH MAKE IMPUGNED ORDER NULLITY AND VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE HONBLE SUPREME COURT OF INDIA VI DE PARA NO. 6 TO 8 HAS ADJUDICATED THE ISSUE AS UNDER:- 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS - EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY T HOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BAS IS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE O RDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRIN CIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS AD VERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE 7 COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE' AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTE D TO CROSS-EXARRME, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SU CH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS TH E TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED TH AT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-F ACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO H AVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANT ED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSE S AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS- EXAMINATION . THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON T HE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE TH E PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. 8 WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS - EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATIN G AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJ ECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS A S MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN E ARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CI VIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH T HE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REA SONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. 8. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, TH ERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE A FORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE NOTICE. WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. NO COSTS. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, I AM OF THE CONSIDERED OPINION THAT THE ADDITION MADE ON THE BA SIS OF THE THIRD PARTY STATEMENT IN THE PRESENT CASE IS NOT SUSTAINAB LE IN THE EYES OF 9 LAW, HENCE, I DELETE THE ADDITION OF RS. 25,00,000 /- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) AND ACCORDINGLY ALLO W THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. THE ORDER PRONOUNCED ON 01-03.2018. SD/- [ H.S. SIDHU ] JUDICIAL MEMBER DATED, 01-03-2018 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.