MAHESH S. JAIN, MUMBAI V. ITO WD 24(2)(4), MUMBAI

ITA 3557/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9048 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M HEMALATHA
• Keywords: Unexplained cash credit; Search and seizure; Opportunity of being heard; Principle of natural justice; Reassessment proceedings
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 3557/MUM/2017 (ASSESSMENT YEAR 2008-09) SHRI MAHESH S. JAIN, 401, OSIA FRIENDSHIP, J.P.ROAD, ANDHERI (W), MUMBAI 400 058 PAN: AAAPT 4862F ...... APPELLANT VS. THE I.T.O, WARD 24(2)(4), AAYKAR BHAVAN,M.K.ROAD, MUMBAI - 400 020 ...... RESPONDENT APPELLANT BY : MS. DINKLE HARIA RESPONDENT BY : MS. M. HEMALATHA DATE OF HEARING : 26/07/2017 DATE OF PRONOUNCEMENT : 13/10/2017 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAI NING TO ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST AN ORD ER PASSED BY CIT(A)- 39 MUMBAI DATED 10/02/2017, WHICH IN TURN ARISES OU T OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143( 3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 27/ 03/2015. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- 2 ITA NO. 3557/MUM/2017 (ASSESSMENT YEAR 2008-09) 1- REASSESSMENT 1.1 THE LD. COMMISSIONER OF INCOME - TAX (APPE ALS) - 39, MUMBAI ['LD. CIT (A)'], ERRED IN CONFIRMING THE ACTION OF THE A.O. IN INITIATING REASSESSMENT PROCEEDINGS AND FRAMING THE ASSESSMENT OF THE APPELLANT BY INVOKING THE PROVISIONS OF SECTION 147 R.W.S. 148 OF THE INCOME TAX ACT, 1961 ['THE ACT']. 1.2 WHILE DOING SO, THE LD. CIT (A) FAILED TO APPRECIATE THAT: (I) THE CASE OF THE APPELLANT DID NOT FALL W ITHIN THE PARAMETERS LAID DOWN BY SECTION 147 R.W.S. 148 OF THE ACT; (II) THE NECESSARY PRECONDITIONS FOR INITIAT ING AND COMPLETION THEREOF WERE NOT SATISFIED. 1.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTA NCES OF THE CASE, AND IN LAW, THE REASSESSMENT FRAMED IS BAD, I LLEGAL AND VOID. WITHOUT PREJUDICE TO THE ABOVE I- 2. NATURAL JUSTICE 2.1 THE LD. CIT (A) ERRED IN CONFIRMING THE AC TION OF THE A.O, IN NOT GRANTING PROPER, SUFFICIENT AND ADEQUATE OPPORTUNIT Y OF BEING HEARD TO THE APPELLANT WHILE FRAMING THE ASSESSMENT. 2.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ASSESSMENT SO FRAMED BE HELD AS BAD AND ILLEGAL, AS THE SAME IS FRAMED IN BREACH OF THE PRI NCIPLES OF NATURAL JUSTICE AND WITHOUT APPLICATION OF MIND TO THE FACT S BROUGHT ON RECORD BY THE APPELLANT. WITHOUT FURTHER PREJUDICE TO THE ABOVE 3.1 THE LD. CIT (A) ERRED IN CONFIRMING THE AD DITION OF RS. 12,72,828/-, BEING LONG TERM CAPITAL GAIN OF RS.126 1,895/- AND SHORT TERM CAPITAL GAIN OF RS.10,933/-AS CLAIMED BY THE A PPELLANT U/S. 68 ON THE GROUND OF ALLEGED RECEIPT FROM ACCOMMODATION EN TRY. 3.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH ADDITION WAS CALLED FOR. 3.3 WITHOUT PREJUDICE TO THE ABOVE, ASSUMING - BUT NOT ADMITTING - THAT SOME ADDITION WAS CALLED FOR, IT IS SUBMITTED THAT THE COMPUTATION OF THE ADDITION MADE BY THE A.O. IS ARBITRARY, EXCE SSIVE AND NOT IN ACCORDANCE WITH THE LAW. WITHOUT FURTHER PREJUDICE TO THE ABOVE 3 ITA NO. 3557/MUM/2017 (ASSESSMENT YEAR 2008-09) 4.1 THE LD. CIT (A) ERRED IN CONFIRMING THE AC TION OF THE A.O. IN MAKING ADDITION OF RS. 21,777/- TO THE INCOME OF TH E APPELLANT ON ACCOUNT OF ALLEGED ESTIMATED COMMISSION PAID FOR AL LEGED ACCOMMODATION ENTRY. 4.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH ADDITION WAS CALLED FOR. WITHOUT FURTHER PREJUDICE TO THE ABOVE 5.1 THE LD. CIT (A) ERRED IN CONFIRMING THE AC TION OF THE A.O. IN HOLDING THAT PURCHASES OF SHARES DURING THE YEAR, A MOUNTING TO RS. 4,08,515.50 WERE ONLY ACCOMMODATION ENTRY. 5.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR. LIBERTY 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUND AT THE TIME OF HEARING. 3. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUND S OF APPEAL, BUT ESSENTIALLY THE DISPUTE RELATES TO AN ADDITION OF R S.12,72,828/- BEING CAPITAL GAINS EARNED BEING TREATED AS ACCOMMODATION ENTRY ASSESSABLE AS UNEXPLAINED CREDITS UNDER SECTION 68 OF THE ACT. APART THEREFROM, THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF TH E PROCEEDINGS INITIATED BY INVOKING THE PROVISIONS OF SECTION 147 /148 OF THE ACT IN ORDER TO MAKE THE IMPUGNED REASSESSMENT. 4. NOTABLY, THE APPELLANT IS AN INDIVIDUAL WHOSE AS SESSMENT FOR THE YEAR UNDER CONSIDERATION WAS REOPENED BY ISSUANCE O F NOTICE UNDER SECTION 147/148 OF THE ACT DATED 27/03/2014. THE RELEVANT DISCUSSION IN THE ASSESSMENT ORDER REVEALS THAT THE REASSESSME NT WAS INITIATED ON THE BASIS OF THE INFORMATION FOUND IN THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED OUT ON 25/11/2009 IN THE CASE OF M/S . MAHASAGAR SECURITIES PVT. LTD. GROUP CASES. BE THAT AS IT MA Y, IN THE ENSUING 4 ITA NO. 3557/MUM/2017 (ASSESSMENT YEAR 2008-09) ASSESSMENT, THE TOTAL INCOME WAS ASSESSED AT RS.17, 84,730/- AS AGAINST THE ORIGINALLY RETURNED INCOME OF RS.2,54,440/- BY TREATING THE PROFIT ON SALE AND PURCHASE OF SHARES AS BEING IN THE NATU RE OF ACCOMMODATION ENTRY PROCURED FROM M/S. MAHASAGAR S ECURITIES PVT. LTD. GROUP OF CONCERNS. THE ADDITIONS MADE BY THE ASSESSING OFFICER HAVE ALSO BEEN SUSTAINED BY THE CIT(A), AGAINST WHI CH ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE F OR THE ASSESSEE HAS RAISED A PRELIMINARY GROUND, WHICH IS BASED ON THE PROPOSITION LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. TREND ELECTRONICS, 379 ITR 456 (BOM). IT IS SOUGHT TO BE POINTED OUT THAT THE REASONS RECORDED BY THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT WERE NOT FURNISHED TO THE ASSESSEE A ND THAT SUCH FAILURE TO FURNISH THE REASONS RECORDED RENDERS THE REASSES SMENT AS INVALID. IN THIS CONTEXT, THE LD. REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT VIDE COMMUNICATION DATED 23/06/2014, WHICH WAS ACKN OWLEDGED IN THE OFFICE OF THE ASSESSING OFFICER ON 25/06/2014, ASSE SSEE HAS SOUGHT COPIES OF REASONS RECORDED TO ISSUE THE NOTICE UNDE R SECTION 148 OF THE ACT. IT WAS CONTENDED THAT THERE HAS BEEN NO COMPL IANCE TO THE AFORESAID REQUEST BY THE ASSESSEE AND, THEREFORE, I N THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF TREND ELECTRONICS (SUPRA), THE REASSESSMENT IS INVALID. 6. IT WAS ASSERTED BY THE LD. REPRESENTATIVE FOR T HE ASSESSEE THAT THOUGH THE PLEA OF THE ASSESSEE IS EMERGING FROM TH E PAPER BOOK FILED, SO HOWEVER, THERE IS NO DETERMINATION OF THE SAID I SSUE IN THE ORDER OF THE CIT(A). THE LD. REPRESENTATIVE FOR THE ASSESSE E SUBMITTED THAT THE 5 ITA NO. 3557/MUM/2017 (ASSESSMENT YEAR 2008-09) ASSESSEE WOULD BE SATISFIED IF THE MATTER IS RESTOR ED BACK TO THE FILE OF CIT(A) FOR DETERMINATION OF THE SAID ISSUE IN ACCOR DANCE WITH LAW. 7. THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE PLEA OF THE ASSESSEE BY POINTING OUT THAT SUCH AN ARGUMENT WAS NOT RAISED BY THE ASSESSEE ON AN EARLIER OCCASION. 8. IN MY CONSIDERED OPINION, THE PROPOSITION OF LAW WHICH IS SUPPORTED BY THE JUDGMENT OF JURISDICTIONAL HIGH CO URT DESERVES TO BE DECIDED AT THE THRESHOLD, ESPECIALLY CONSIDERING TH E FACTS THAT THE SAME GOES TO THE ROOT OF THE JURISDICTION. THEREFORE, I N THE INTEREST OF JUSTICE AND FAIR PLAY, THE MATTER IS RESTORED BACK TO THE F ILE OF CIT(A), WHO SHALL AT THE THRESHOLD DECIDE THE PRELIMINARY PLEA OF THE ASSESSEE, WHICH IS BASED ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF TREND ELECTRONICS (SUPRA). THEREFORE, THE ORDER OF THE CIT(A) IS SET- ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE O F CIT(A) FOR DENOVO ADJUDICATION. NEEDLESS TO SAY THAT THE CIT(A) SHAL L ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSIN G AN ORDER AFRESH. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13/10/2017. SD/- (G.S. PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 13/10/2017 VM , SR. PS 6 ITA NO. 3557/MUM/2017 (ASSESSMENT YEAR 2008-09) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI