Shri Dattaraj V. Salgaocar., Vasco V. The Deputy Commissioner of Income Tax Circle-2, Margao., Margao

ITA 348/PAN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1229 (ITAT-PANAJI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Peak credit
• Section: 143(3); 147; 131; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 348 & 349 /P A N/201 5 (ASST. YEAR : 20 06 - 07 ) SHRI DATTARAJ V. SALGAOCAR, SALGAOCAR HOUSE, VASCO - DA - GAMA, GOA PAN NO.ABYPS 1941 H (APPELLANT) VS. D CIT, CIRCLE - 1, MARGAO GOA. (RESPONDENT) ASSESSEE BY : SHRI PERCY PARDIWALA SR. ADV. WITH SHRI ASHWIN D. BHOBE , ADV. DEPARTMENT BY : SHRI RAMESH S. MUTAGAR - DR DATE OF HEARING : 15 / 0 9 /201 6 . DATE OF PRONOUNCEMENT : 15 / 0 9 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 348/PAN/2015 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANAJI - 1 IN APPEAL NO. 259/MRG/14 - 15 & 311/MRG/14 - 15 , DATED 14/07/2015 FOR THE ASSESSMENT YEAR 2006 - 07 AND ITA NO. 349/PAN/20158 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANAJI - 1 IN APPEAL NO. 259/MRG/14 - 15 & 311/MRG/14 - 15 DATED 14/07/2015 FOR THE ASSESSMENT YEAR 2006 - 07 AGAINST THE ORDER UNDER SECTI ON 154 APPEALED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 2 ITA NO. 348 & 349 /P A N/201 5 2. SHRI PERCY PARDIWALA, SR. ADVOCATE WITH SHRI ASHWIN D. BHOBE , ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAMESH S. MUTAGAR , DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE. 3 . IT WAS SUBMITTED BY THE SENIOR COUNSEL THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 31/10/2006 DECLARING AN INCOME OF 2,89,76,500/ - . THE SAID RETURN WAS PROCES SED AND THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT ON 29/10/2008. IT WAS THE SUBMISSION THAT SUBSEQUENTLY , IN A U GUST 2011 THERE WAS SOME PRESS REPORTS, BASED ON WHICH HE WAS INFORMED HIS NAME ALONG WITH HIS WIFE WERE APPEARING IN CERTAIN DATA WHICH WAS ST OLEN FROM HSBC BANK, GENEVA . ON THE BASIS OF THIS PRESS REPORT, THE ASSESSEE HAD WRITTEN A LETTER DATED 18/08/2011 WHICH WAS SHOWN AT PAGE NO. 6 OF THE PAPER BOOK TO THE DGIT (INV.) , BANGALORE . ON 18/08/2011 SUMMONS WERE ISSUED TO THE ASSESSEE TO APPEAR ALONG WITH HIS BOOKS OF ACCOUNT AND DETAILS OF BANK ACCOUNTS . ON 19/08/2011, STATEMENT UNDER SECTION 131 HAD BEEN RECORDED BY THE DGIT (INV.), BANGALORE , COPY OF STAT EMENT WAS SHOWN AT PAGE NOS. 8 & 9 OF THE PAPER BOOK. IN THE SAID STATEMENT, THE ASSESSEE SEEMS TO HAVE SPECIFICALLY DENIED THAT HE HAD ANY OVERSEAS BANK ACCOUNTS . IN RESPONSE TO A QUESTION PUT TO HIM THAT THE DIRECTORATE WAS IN POSSESSION OF INFORMATION REGARDING BANK ACCOUNTS HELD IN THE NAME OF THE ASSESSEE AND HIS WIFE AND CHILDREN IN HSBC BANK, GENEVA, IN WHICH A SUM OF USD $ 51,78,668 FOR THE PERIOD FROM JULY 2005 TO 2007 WAS DEPOSITED , T HE ASSESSEE HAD RESPONDED THAT TO THE BEST OF HIS KNOWLEDGE, HE DID NOT HOLD ANY ACCOUNTS ABROAD AND IN ORDER TO PROTECT HIS REPUTATION AS A HONEST BUSINESSMAN AND AN HONEST TAX PAYER AND TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE OF MIND , HE HAD OFFERED TO PAY TAX ALONG WITH INTEREST ON THE SAID AMOUNT OF USD $ 51,78,668 FOR THE ASSESSMENT YEAR 2006 - 07 . IT WAS THE SUBMISSION BY THE SENIOR 3 ITA NO. 348 & 349 /P A N/201 5 COUNSEL THAT THE SAID DOCUMENT OR DETAILS OF THE INFORMATION IN POSSESSION WITH THE DIRECTORATE WAS NOT AVAILABLE TO THE ASSESSEE. IT WAS THE SUBMISS ION THAT ON 18/11/2011, A NOTICE UNDER SECTION 148 HAD BEEN ISSUED AND THE ASSESSEE HAD FILED HIS RETURN OF INCOME IN RESPONSE TO THE NOTICE UNDER SECTION 148 ON 07/12/2011 DISCLOSING THE AMOUNT OF 23,01,91,793/ - AS INCOME FROM OTHER SOURCES . HE HAD ALS O SOUGHT FOR COPY OF REASONS RECORDED. ON 25/01/2012, THE REASONS RECORDED WERE PROVIDED TO THE ASSESSEE WHEREIN IT WAS MENTIONED THAT THE NOTICE UNDER SECTION 148 WAS ISSUED ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 131 ON 19/08/2011 AFTER TAKING PRIOR APPROVAL OF THE COMMISSIONER OF INCOME TAX . C OPY OF THE REASONS IS FOUND AT PAGE NO. 15 OF THE PAPER BOOK . IT WAS THE FURTHER SUBMISSION THAT IN RESPONSE TO THE RETURN FILED , NOTICE UNDER SECTION 143(2) HAD BEEN ISSUED. IN THE COURSE OF ASSESSMENT ALSO, THE ASSESSEE HAD REITERATED THAT HE HAD NO ACCOUNTS OVERSEAS AND DISCLOS URE WAS MADE ONLY TO BUY PEACE . THE REASSESSMENT CAME TO BE COMPLETED ON 14/03/2012 ACCEPTING THE RETURNED INCOME. THE MATTER WAS SETTLED THERE. SUBSEQUENTLY, ON 18/07/2014 , THE ASSESSING OFFICER ONCE AGAIN ISSUED ANOTHER NOTICE UNDER SECTION 148 ON 26/08/2014 AND T HE ASSESSEE HAS SOUGHT FOR THE REASONS RECORDED. ON 07/11/2014, THE ASSESSING OFFICER HAD PROVIDED THE REASONS WHEREIN IT WAS MENTIONED THAT THE INFORMATION WAS OBTAINED FROM THE DIT (INV.) , BANGALORE ALONG WITH COPY OF BANK ACCOUNT WAS RECEIVED, WHERE THEY SHOWED DEPOSITS MADE BETWEEN JANUARY 2006 TO MAR CH 2006 , AGGREGATING TO USD $ 1 , 39 , 39 , 783.33 . FURTHER, ON 03/06/2014 NOTICE UNDER SECTION 148 WAS ISSUED ON THE ASSESSEES WIFE SEEKING TO REOPEN HER ASSESSMENT FOR ASSESSMENT YEAR 2006 - 07. ON 27/06/2014 , THE ASSESSEES WIFE SOUGHT FOR COPIES OF THE REASONS RECORDED , AND ON 02/09/2014, THE REASONS WERE SUPPLIED TO THE ASSESSEES WIFE WHEREIN THE PEAK CREDIT DEPOSITS IN THE HSBC BANK, GENEVA WAS FOUND AT USD $ 51,78,668.83 IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006 - 07 . IT WAS THE SUBMISSION THAT THIS 4 ITA NO. 348 & 349 /P A N/201 5 AMOUNT IS IDENTICAL TO THE AMOUNT INFORMED TO THE ASSESSEE BY THE DIRECTORATE OF INCOME TAX (INV.) , UNIT - II (3) , BANGALORE WHEN RECORD ING THE STATEMENT OF THE ASSESSEE ON 19/08/2011. ON 12/01/2015, THE ASSESSING OFFICER INFORMED THE ASSESSEE THAT THE PROCEEDINGS INITIATED BY ISSUANCE OF THE NOTICE UNDER SECTION 148 , DATED 18/07/2014 WERE DROPPED AS THE CASE WAS REOPENED ON WRONG FACTS. THIS WAS SHOWN TO US AT PAGE NO. 25 OF THE PAPER BOO K. ON 31/03/2015 , REASSESSMENT WAS COMPLETED ON THE ASSESSEES WIFE WHEREIN THE AMOUNT OF 23,09,68,630/ - REPRESENTING THE VALUE OF USD $ 51,78,668.83 WAS ADDED IN HER HANDS . SUBSEQUENTLY , ON 23/09/2014, THE ASSESSING OFFICER ISSUED A SHOW - CAUSE NOTICE ON THE ASSESSEE ASKING HIM TO SHOW CAUSE AS TO WHY PROSECUTION PROCEEDINGS UNDER SECTION 277 AND 277A OUGHT NOT TO BE INITIATED AGAINST THE ASSESSEE , AS THE ASSESSEE HAS DI S CLOSED THE AMOUNT I N HIS RETURN OF INCOME , WHEREAS S A ME AMOUNT WAS DEPOSITED IN THE ACCOUNT OF ASSESSEES WIFE AND CONSEQUENTLY, THE ASSESSEE HAD GIVEN A FACTUAL FALSE STATEMENT AND VERIFICATION. ON RECEIPT OF THE SAID NOTICE, THE ASSESSEE FILED AN APPLICATION SEEKING RECTIFICATION OF THE ORD E R UNDER SECTION 143(3) READ WITH SEC. 147 DATED 14/03/201 2 ON THE FOOTING THAT THE SAID AMOUNT OF USD $ 51,78,668 DID NOT BELONG TO THE ASSESSEE HAVING REGA RD TO THE CONTENTS OF THE LETTER DATED 23/09/2014 ISSUED BY THE ASSESSING OFFICER. HOWEVER, ON 21/11/2014 , THE ASSESSING OFFICER WITHDREW THE SAID SHOW - CAUSE NOTICE FOR PROSECUTION AND THE SAME WAS SERVED ON THE ASSESSEE ON 29 / 11/2014. IT WAS THE SUBMISS ION THAT AS THE ASSESSEE NOTICED TH A T S A ME AMOUNT WAS BEING ATTEMPTED TO BE TAXED IN BOTH THE HANDS OF THE ASSESSEE AND HIS WIFE AND AS HE BECAME AWARE THAT EVEN BASIS OF REOPENING ITSELF WAS ERRONEOUS AND HIS OFFER TO ACCEPT THE STATEMENTS BY THE REVENUE AND PAID TAX THEREON FOR THE PURPOSE OF AVOIDING PROTRACTED LITIGATION WAS BEING PUT TO NAUGHT , H E PREFERRED AN APPEAL ON 24/11/2014 TO THE COMMISSIONER OF INCOME TAX (APPEALS) SPECIFYING THE SAID REASONS FOR DELAY IN FILING OF THE APPEAL. THE APPLICATION UNDER 5 ITA NO. 348 & 349 /P A N/201 5 SECTION 154 FILED BEFORE THE ASSESSING OFFICER WAS ALSO REJECTED VIDE AN ORDER DATED 27/11/2014, AGAINST WH I CH ALSO THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ON 26/12/2014 . IT WAS THE SUBMISSION THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) HAD DISMISSED THE ASSESSEES APPEAL WITHOUT CONSIDERING ANY OF THE SUBMISSIONS OF THE ASSESSEE THAT REOPENING ITSELF WAS INVALID AND THE BASIS FOR REOPENING WAS ALSO INVALID. CONSEQUENTLY, THE RETURN FILED IN RESPON SE TO NOTICE UNDER SECTION 148 WAS L I ABLE TO BE ANNULLED . IT WAS THE FURTHER SUBMISSION THAT THE STATEMENT RECORDED ON 19/08/2011 ITSELF WAS OBTAINED BY MISREPRESENTATION INSOFAR AS THERE WAS NO INFORMATION IN THE PO SSESSION OF THE DEPARTMENT THAT THERE WAS ANY BANK ACCOUNT BEING HELD IN THE NAME OF THE ASSESSEE AND HIS WIFE OR DAUGHTER WITH HSBC BANK, GENEVA. IT WAS THE SUBMISSION THAT THOUGH IT IS MENTIONED IN THIS STATEMENT RECORDED UNDER SECTION 131 , NONE OF THE CRITERIONS AND PRECONDITIONS FOR THE PURPOSE OF RECORDING THE STATEMENT UNDER SECTION 131 WERE AVAILABLE AS IS NOTICED FROM THE STATEMENT RECORDED. MORE SPECIFICALLY , AS TO WHO HAS RECORDED THE STATEMENT NAME AND SEAL NOTHING WAS AVAILABLE. IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD DISMISSED THE ASSESSEES APPEAL SIMPLY BY HOLDING THAT THE ASSESSEES INCOME WAS EQUAL TO THE RETURNED INCOME. CONSEQUENTLY, HE HAD NOT CONDONED THE DEL A Y IN FILING OF THE APPEAL. HE HAD ALSO NOT ADJUDICATED UPON THE ISSUE ON REOPENING. 4 . IN REPLY , DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS). ON THE SPECIFIC QUERY BY THE BENCH TO THE DEPARTMENTAL REPRESENTATIVE AS TO WHAT IS THE SAID INFORMATION WHICH IS IN THE POSSESSION OF THE REVENUE REGARDING BANK ACCOUNTS HELD BY THE ASSESSEE AND HIS WIFE AND CHILDREN IN HSBC BANK, GENEVA , WHICH IS A SPECIFIC QUERY PUT BY THE REVENUE IN QUESTION NO.6 IN THE STATEMENT 6 ITA NO. 348 & 349 /P A N/201 5 RECORDED AND AS TO WHETHER THE SAID INFORMATION HAS BEEN PROVIDED TO THE ASSESSEE FOR HIS REBUTTAL, THE DEPARTMENTAL REPRESENTATIVE SUBMITTED IN THE NEGATIVE. IT WAS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE THAT THE IS SUES IN THE APPEAL MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION. AT THIS POINT, THE SENIOR COUNSEL SUBMITTED THAT THE APPEALS OF THE ASSESSEES WIFE ARE ALSO PENDING BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO THE PENALTY PROCEEDINGS . IT WAS THE SUBMISSION THAT IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SITALDAS K. MOTWANI VS. DCIT & OTHERS REPORTED IN 323 ITR 223 (BOM.) WHEREIN IT IS HELD WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON - DELIBERATE DELAY , OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES . A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. THE APPROACH OF THE AUTHORITIES SHOULD BE JUSTICE ORIENTED SO AS TO ADVANCE THE CAUSE OF JUSTICE. IF REFUND IS LEGITIMATELY DUE TO THE APPLICANT, MERE DELAY SHOULD NOT DEFEAT THE CLAIM FOR REFUND. IT WAS THE SUBMISSION THAT THE DELAY IN FILING THE APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE CONDONED AND THE ISSUES IN THE APPEAL MAY BE RESTORED T O THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR RE - ADJUDICATION AFTER GRA N TING THE ASSESSEE ALL THE DOCUMENTS RELIED UPON FOR THE PURPOSE OF MAKING THE ASSESSMENT AND GRANTING ADEQUATE OPPORTUNITY TO THE ASSESSEE. TO THIS SUBMISSION, THE DEPART MENTAL REPRESENTATIVE DID NOT RAISE ANY SERIOUS OBJECTION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMITTEDLY, MANY OF THE DOCUMENTS REFERRED TO FOR THE P U R P O S E OF REOPENING AS ALSO FOR THE PURPOSE OF OBTAINING THE CONFESSION OF THE ASSESSEE DOES NOT S EEM TO HAVE BEEN PROVIDED TO THE ASSESSEE. THIS ITSELF IS A SER I OUS LACUNAE . 7 ITA NO. 348 & 349 /P A N/201 5 HOWEVER , AS THE INTEREST OF NATURAL JUSTICE SHOULD BE PROTECTED, WE ARE OF THE VIEW THAT THE ISSUES MUST BE RESTORED TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR RE - ADJUD I CATION AFTER CONDONING THE DELAY IN FILING OF THE APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND WE DO SO. THE COMMISSIONER OF INCOME TAX (APPEALS) SHALL NOT BE BOGGED DOWN JUST BY THE FACT THA T THE ASSESSED INCOME IS EQUAL TO THE RETURNED INCOME. THE COMMISSIONER OF INCOME TAX (APPEALS) SHALL PROVIDE THE ASSESSEE COPIES OF ALL THE DOCUMENTS USED AGAINST THE ASSESSEE IN THE COURSE OF THE ASSESSMENT AND AS ARE AVAILABLE WITH THE REVENUE WHICH IS PROPOSED TO BE USED AGAINST THE ASSESSEE AND SHALL GRANT THE ASSESSEE ADEQUATE OPPORTUNITY TO EXPLAIN ITS STAND. WE ARE ALIVE TO THE FACT THAT ONCE THE ASSESSEE MAKES A STATEMENT , THEN IT IS FOR THE ASSESSEE TO SUBSTANTIATE THAT THE SAID INCOME WHICH HAS BEEN OFFERED DOES NOT BELONG TO THE ASSESSEE. HOWEVER, WE NOTICE D FROM THE PRESENT CASE THAT SUCH A STATEMENT HAS BEEN OBTAINED FROM THE ASSESSEE VIOLATING ALL THE PRINCIPLES OF NATURAL JUSTICE AND BY DENYING THE ASSESSEE , COPIES OF ALL EVIDENCES WHICH ARE BEING USED AGAINST HIM. IT IS ALSO NOT KNOWN AS TO WHETHER THE SAID EVIDENCE WHICH IN FACT RELAT E TO THE ASSESSEE HIMSELF. THIS BEING SO, THE ISSUES IN THIS APPEAL ARE REST OR ED TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR RE - ADJU DI CATI ON AFTER GRANTING THE ASSESSEE AD E QU A TE OPPORTUNITY TO SUBSTANTIATE ITS CASE. IT WOULD ALSO BE ADVISABLE THAT AS THE IS S UES ARE INTERCONNECTED WITH THE APPEAL IN THE CASE OF THE ASSESSEES WIFE, BOTH ARE DISPOSED OF SIMULTANEOUSLY. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE . 6 . AT THE TIME OF HEARING IN ITA NO. 349/PAN/2015, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED TH A T AS THE ORDER IN THE CASE OF ITA 348/PAN/2015 HAS BEEN PRONOUNCED CONDONING THE DELAY AND RESTOR ING THE ISSUES TO THE FILE OF THE COMMISSIONER OF INCOME TAX 8 ITA NO. 348 & 349 /P A N/201 5 (APPEALS) FOR RE - ADJUDICATION, THE APPEAL OF THE ASSESSEE AGAINST THE ORDER PASSED UNDER SECTION 154 MAY BE DISMISSED AS WITHDRAWN. TO THIS, THE DEPARTMENTAL REPRESENTATIVE DID N OT RAISE ANY OBJECTION . CONSEQUENTLY , APPEAL OF THE ASSESSEE IN ITA 349/PAN/2015 STANDS DISMISSED AS WITHDRAWN. 7 . IN THE RESULT, APPEAL IN ITA NO.348/PAN/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND APPEAL IN ITA NO. 349/PAN/2015 IS DISMISSED AS WITHDRAWN. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON THURSDAY , THE 1 5 TH DAY OF SEPTEMBER , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 5 TH SEPTEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. SHRI DATTARAJ V. SALGAOCAR, SALGAOCAR HOUSE, VASCO - DA - GAMA, GOA . 2 . THE REVENUE. D CIT, CIRCLE - 1, MARGAO GOA. 3 . THE PR. CIT , PANAJI. 4 . THE CIT(A) , PANAJI - 1, GOA. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI