M/s. ISHITA DYE CHEM PVT. LTD., MUMBAI V. DCIT CEN. CIR. - 14, MUMBAI

ITA 3542/MUM/2003

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2546 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 1999-2000
• Appeal Filed On: 06-05-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL J SHAH
• Keywords: Principle of natural justice; Peak credit
• Section: 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI G S PANNU, AM & SHRI SANJAY GARG, JM ITA NO.3542/MUM/2003 / ASSESSMENT YEAR : 1998 - 99 ESHITA DYE CHEM PVT. LTD. 208, PARSHVA CHAMBERS, 19/21, ISSAJI STREET, VADGADI, MUMBAI 400 003 PAN AAACE1467C VS THE DY. CIT CENT. CIR. 14, MUMBAI ( /APPELLANT) ( /RESPONDENT) APPELLANT BY : SHRI VIPUL J SHAH RESPONDENT BY : SHRI ABANI KANTA NAYAK ! ' #$ / DATE OF HEARING :23.07.2015. %& ' #$ / DATE OF PRONOUNCEMENT : 30.10.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER OF THE CIT(A) -VI, MUMBAI, DATED 20.09.2002 PERTAI NING TO A.Y. 1998-99. 2. THE CONCISE GROUNDS OF APPEAL RAISED BY THE ASSE SSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] ERRED IN REJECTING THE REQUEST OF ADJOURNMENT, WITHOUT ASSIG NING ANY REASONS, ON THE VERY FIRST DATE OF HEARING AND DECI DING THE APPEAL EX-PARTE WHICH IS AN ABSOLUTE VIOLATION OF PRINCIPL E OF NATURAL JUSTICE. 2 ITA 3542/MUM/03 ESHITA DYE CHEM PVT. LTD 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT THE PEAK CREDIT OF THESE PARTIES WERE ALREADY CONSIDERED IN THE HANDS OF S M KHANDHAR ON SUBSTANTIVE BASIS 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E ASSESSING OFFICE IN REJECTING BOOKS OF ACCOUNT AND ESTIMATING HAWALA COMMISSION @5% WITHOUT APPRECIATING THE FACT THAT A CCOUNTS OF THE APPELLANT WERE DULY AUDITED. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE BELONGS TO KHANDHAR GROUP. IN THE PAST, THE ASSESSMENTS IN TH IS CASE HAVE BEEN COMPLETED BY TREATING THE ASSESSEE AS A HAWALA DEAL ER. THE GROUND OF THE CASE RELATES TO THE SEARCH ACTION U/S. 132 IN KHAND HAR GROUP OF CASES ON 18.12.91. DURING THE COURSE OF SEARCH ACTION, A LI ST OF 110 BANK ACCOUNTS (LIST A-3) WAS SEIZED. SHRI SURENDRA M KHANDHAR, T HE GROUP LEADER WAS CONFRONTED WITH THE LIST. IN REPLY TO QUESTION NO. 4 OF HIS STATEMENT U/S. 132(4) DT. 20.12.91, SHRI S M KHANDHAR STATED AS FO LLOWS: THAT LIST CONTAINS BANK ACCOUNTS OF KHANDHAR GROUP AND OTHER PARTNERSHIP AND PROPRIETARY CONCERNS. ALL PARTNERS AND PROPRIETORS ARE PHYSICALLY AVAILABLE, BUT THEIR CRE DIT WORTHINESS IS NOT LINKED WITH THE TRANSACTIONS IN THE CONCERNS UN DER REFERENCE AND, THEREFORE, I AM OFFERING PEAK AMOUNTS AS APP EARING IN THIS BANK STATEMENT FOR TAXATION. I, UNDERTAKE TO CLOSE DOWN ALL BANK ACCOUNTS AND CONCERNS AS REFERRED IN THE PAGES UNDE R REFERENCE, I.E. ANNEXURE A-3 EXCEPT KHANDHAR GROUP. IN THIS C ONNECTION, IF A PARTICULAR CONCERN DUE TO SOME REASON IS NOT CLOS ED, I MAY BE ALLOWED ONE MONTH MORE TIME, WITHIN WHICH I WILL PO SITIVELY CLOSE DOWN. 3 ITA 3542/MUM/03 ESHITA DYE CHEM PVT. LTD HOWEVER, SUBSEQUENTLY SHRI S M KHANDHAR WITHDREW HI S STATEMENT. HE DID NOT CLOSE DOWN ANY BANK ACCOUNT AND DID NOT OFFER T HE PEAK CREDIT OF ANY BANK ACCOUNT FOR TAXATION. IN THE ASSESSMENT PROCE EDINGS, HIS STATEMENT U/S. 132(4) DT. 20.12.91, WAS USED AS EVIDENCE IN H IS CASE, AS WELL AS IN THE CASE OF THE ASSOCIATE CONCERNS. MOST OF THE ASSOCI ATE CONCERNS OF KHANDHAR GROUP, INCLUDING THE PRESENT ASSESSEE, WERE ASSESSE D AS HAWALA DEALER. 3. IT IS THE GRIEVANCE OF THE ASSESSEE THAT THE CIT (A) HAD PASSED AN EXPARTE ORDER WITHOUT GIVING AN OPPORTUNITY OF BEIN G HEARD. BEFORE US, THE LEARNED COUNSEL HAS STATED THAT, ON IDENTICAL FACTS AND CIRCUMSTANCES, THE ISSUE IS SQUARELY COVERED BY SEVERAL DECISIONS OF T HE TRIBUNAL. THE TRIBUNAL ON IDENTICAL FACTS AND CIRCUMSTANCES IN ITA NO.877 AND 878/MUM/99 DT. 03.12.2003 WHILE RELYING UPON ANOTHER DECISION IN T HE CASE OF S M KHANDHAR REPORTED IN 76 ITD 121 HAS UPHELD THE PART CONCLUSI ON OF THE IT AUTHORITIES THAT THE BANK ACCOUNTS IN QUESTION BELONG TO SM KHA NDHAR BUT HAS FURTHER HELD THAT ONLY PEAK CREDIT IN THIS ACCOUNTS COULD B E ADDED. HOWEVER, IN CASE OF OTHER ASSESSEES, THE TRIBUNAL RELYING UPON THE DECISION OF ACIT VS. RAJ ENTERPRISE (ITA NO.3081/MUM/97, DT. 03.01.2003) HAS HELD THAT SINCE THE ADDITIONS HAVE ALREADY BEEN MADE IN THE CASE OF S M KHANDHAR THE SAME CANNOT BE MADE IN OTHER CASES AS IT WOULD BE A CASE OF DOUBLE ADDITION. 4 ITA 3542/MUM/03 ESHITA DYE CHEM PVT. LTD 4. IN SO FAR AS THE ISSUE RELATING TO ASSESSMENT OF THE HAWALA COMMISSION IS CONCERNED, THE SAME IS ALSO COVERED B Y THE DECISION OF THE TRIBUNAL IN ITA NO.9508/MUM/95 VIDE ORDER DATED 22. 11.2002, WHEREIN THE TRIBUNAL RELYING UPON THE OTHER CASE LAWS HAS TAKEN A CONSISTENT VIEW IN DIRECTING THE AO TO ADOPT THE NET ESTIMATION RATE O F HAWALA TURNOVER @3.6% ONLY AND RECOMPUTE THE INCOME ACCORDINGLY. WE BEING SATISFIED WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN IDENTICAL CASES , DIRECT THE AO TO DECIDE THE CASES ON SAME LINES AS THAT OF THE TRIBUNAL AS DISCUSSED ABOVE. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2015. SD/- SD/- (G S PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; '( DATED : 30 OCTOBER, 2015. SA 5 ITA 3542/MUM/03 ESHITA DYE CHEM PVT. LTD () ' #*+ ,+# /COPY OF THE ORDER FORWARDED TO : 1. /THE APPELLANT. 2. / THE RESPONDENT. 3. -# ( ) / THE CIT(A), MUMBAI. 4. -# / CIT 5. +./ # , , / DR, J BENCH, ITAT, MUMBAI () ! / BY ORDER, ! +# # //TRUE COPY// !0 (ASSTT. REGISTRAR) , / ITAT, MUMBAI