HARSH ESTATES P.LTD, MUMBAI V. DCIT CC 31, MUMBAI

ITA 3596/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92454 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 16-02-2015
• Assessment Year: 1991-1992
• Appeal Filed On: 07-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL SP L DEPTT
• Keywords: Unexplained cash credit; Additional evidence; Condonation of delay
• Section: 234B; 2

Judgement Text

, H INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 3596 /MUM/20 13 , / ASSESSMENT YEAR - 19 91 - 92 M/S. HARSH ESTATES PVT. LTD. 32, MADHULI, 3RD FLOOR, DR. ANNIE BESANT ROAD WORLI, MUMBAI - 400 018. PAN: AAACH 3480 L VS DCIT CC - 31, ROOM NO. 409 AAYKAR BHAVAN,M K MARG , MUMBAI - 20 . ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI DHARMESH SHAH / REVENUE BY : DR. P. DANIEL (SP L. COUNSEL FOR DEPTT.) / DATE OF HEARING : 05 - 0 5 - 2015 / DATE OF PRONOUNCEMENT : 05 - 0 5 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 11.1.2013 OF THE CIT(A) - 40 ,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/ S. 250 OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN MAKING DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENSES AMOUNTING TO RS.7,309/ - . 4. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS.3,90,000/ - ON ACCOUNT OF DECLARATION MADE U/S. 132(4) OF THE ACT. 5. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF R S. 3,44,500/ - ON ACCOUNT OF UNEXPLAINED CREDIT. 6. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND IN FACTS IN CHARGING INTEREST U/S. 234A, 234 B AND 234C OF THE ACT. 7. THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, ALTER, AMEND AND/ OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 2. THERE IS A DELAY OF 20 DAYS ON PART OF THE ASSESSEE IN FILING T HE APPEAL. IN THIS REGARD THE ASSESSEE HAS FILED AN APPLICATION SEEKING CONDONATION OF DELAY ON THE GROUND THAT THE DELAY WAS BECAUSE OF RE LEASING THE APPEAL FEE BY THE CUSTODIAN, THAT IT HAS WRITTEN LETTERS/REMINDERS TO THE CUSTODIAN FOR THE RELEASE OF THE APPEAL FEE FOR FILING THE PRESENT APPEALS, THAT ON RECEIPT OF THE COUNTER FOIL OF THE CHALLAN, APPEALS WERE FILED, THAT IN SIMILAR CIRCUM STANCES THE T RIBUNAL HAD CONDONED THE DELAY. THE APPLICATION IS ACCOMPANIED BY AN AFFIDAVIT OF THE ONE OF THE DIRECTORS OF THE COMPANY. DURING THE COURSE OF HEARING BEFORE US THE LD. AUTHORISED REPRESENTATIVE ( AR ) OF THE COMPANY REITERATED THE FACTS MENTIO NED IN THE APPLICATION AND THE AFFIDAVIT. AFTER PERUSING THE ORDER OF THE TRIBUNAL IN THE CASE OF ORI ON TRAVELS PVT. LTD. ( ITA / 4023 - 40 24/ MUM/ 2011 FOR 3596/13 HARSH (91 - 92) 2 AY . S . 2004 - 05 AND 20 05 - 06 DT. 16.4.14; M/S.GROWMORE EXPORTS PVT. LTD. ( ITA 4015/MUM/1 1 DT. 20.11.2013 ) IN THE SIMILAR CIRCUMSTANCES THE TRIBUNAL HAD CONDONED T HE DELAY IN FILING THE APPEALS. ACCORDINGLY , DELAY OF 20 DAYS IS HEREBY CONDONED. 3. DURING THE COURSE OF HEARING BEFORE US THE LD. AUTHORISED REPRESENTATIVE ( AR ) DID NOT PRESS GROUND OF APPEAL NOS. 1TO 3 HENCE, SAME STAND DISMISSED AS NOT PRESSED. 4. GROUND NO.4 IS ABOUT ADDITION OF RS. 3.90 LACS ON ACCOUNT OF DECLARATION MADE U/S. 132(4) OF THE ACT. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT AFTER SEARCH A T VARIOUS PREMISES OF THE GROUP, H A RSHAD MEHTA,VIDE HIS LETTER DT.2.6.92, HAD OFFERED AN ADDITIONAL INCOME OF RS. 100 CR. U/S. 132(4) OF THE ACT AS ADDITIONAL INCOME ON BEHALF OF HIS FAMILY MEMBERS AND THE GROUP CONCERNS. THE AO FURTHER OBSERVED THAT THE DISCLOSURE WAS MADE IN EXCESS OF WHAT H AS BEEN DISCLOSED BY THE GROUP ENTITIES IN THEIR RETURNS OF INCOME, THAT NO BIFURCATION OF UNDISCLOSED INCOME HAD BEEN FILED. IN THE ORIGINAL ASSESSMENT PROPORTIONATE ADDITION OF RS.3.90 LACS HAD BEEN MADE ON THE BASIS OF ADVANCE TAX PAID BY THE ASSESSEE. THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY SIMILAR ADDITION SHOULD NOT BE MADE AS INCOME NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT BECAUSE HARSHAD MEHTA HAD REFERRED /OFFERED ADDITIONAL INCOME TO THE INCOME OVER AND ABOVE THE INCOME RELATED TO TH E ADVANCES TAX PAID. THE ASSESSEE CONTENDED THAT DECLARATION WAS ON ESTIMATE BASIS, TH AT THE BOOKS WERE NOT COMPLETE. THE AO, HOWEVER, WAS NOT CONVINCED BY THE ARGUMENT OF THE ASSESSEE IN VIEW OF THE FACT THAT A LARGE NUMBER OF BENAMI TRANSACTIONS WERE ESTA BLISHED IN THE COURSE OF SUBSEQUENT INVESTIGATION AND THAT THE ASSESSEE GROUP HAD SUBSTANTIAL INCOME FROM SHARE TRADING AND MONEY MARKET THAT WAS NOT RECORDED I N THE REGULAR BOOKS OF ACCOUNT.ACCORDINGLY, HE MADE ADDITION OF RS.3,90,000/ - 5 . AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM IT WAS ARGUED THAT THE PRESUMPTION U/S. 132(4)(A) COULD NOT BE INVOKED FOR THE PURPOSE OF ASSESSMENT PROCEEDINGS , THAT THE DECLARATION HAD BEEN MADE ON THE FACT THAT NO BOOKS WERE MAINTAINED, THAT NO ADDITION COULD BE MADE ON ACCOUNT OF ANY DECLARATION OF ANY INCOME WITHOUT CORROBORATIVE EVIDENCE FOUND DURING THE SEARCH. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA HEL D THAT AS PER PROVISIONS OF SEC TION 292C PRESUMPTION OF 132(4A) WAS AVAILABLE FOR ASSESSMENT PROCEEDINGS, THAT THE OBJECTION OF THE ASSESSEE HAD NO FORCE. CONFIRMING THE ORDER OF THE AO HE UPHELD THE ADDITION. 6 . BEFORE US,AUTHORISED REPRESENTATIVE (AR) SUBM ITTED THAT SIMILAR ADDITION WAS MADE IN ONE OF THE GROUP CASES, THAT THE TRIBUNA L , HAD DELETED THE ADDITION THAT WAS PART OF DECLARATION MADE U/S. 132(4) OF THE ACT. DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA AND STATED THAT INCOME SHOULD NOT BE BELOW THE DECLARED INCOME. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF LATE HARSHAD S. MEHTA (LEGAL HEIR JYOTI S. MEHTA) 5518/MUM/2007 AY - 1988 - 89 AND ORS DT. 2.1.2008 SIMILAR ISSUE WAS DISCUSSED AS UNDER : - 5.30 THE LAST GROUND NO.24 RELATES TO THE ASSESSEE'S GRIEVANCE AGAINST THE ADDITION OF RS.25,OO,OOO MADE BY THE ASSESSING OFFICER ON THE BASIS OF DECLARATION U/S.L32(4)OF THE ACT. 5.31 IT IS, SUBMITTED BY THE LEARNED CHARTERED ACCOUNTANT TH AT THE DECLARATION WAS GIVEN BY THE ASSESSEE ON 27.09.1990 WITHOUT HAVING THE BENEFIT OF THE RECORDS AND THAT TOO DURING THE COURSE OF SEARCH PROCEEDINGS CONDUCTED ON 27.09.1990. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL WAS FILED ON 30.1 1.1990, BY WHICH TIME, THE ASSESSEE HAD RECONCILED THE FIGURES AND TAKEN CARE OF ALL THE ITEMS. IT IS THE CASE OF THE LEARNED CHARTERED ACCOUNTANT THAT THE ASSESSING OFFICER 3596/13 HARSH (91 - 92) 3 HAS MADE ADDITIONS IN RESPECT OF ALL THE SPECIFIC ITEMS INCLUDING ON THE BAS IS OF THE FINDINGS OF THE SEARCH PARTY, THERE IS NO SCOPE FOR MAKING ANY ADHOC ADDITION AND THAT TOO, WITHOUT ANY EVIDENCES. 5.32 WE HAVE GONE THROUGH THE DECLARATION GIVEN BY THE ASSESSEE, AVAILABLE IN PAGE 88 OF THE PAPER BOOK FILED BY TH E ASSESSEE BEFORE US. IN THE SAID DECLARATION, THE ASSESSEE HAS PROPOSED TO PAY TAXES ON ADDITIONAL INCOME OF RS.25,OO,OOO. IT IS SEEN FROM THE DECLARATION THAT THE ASSESSEE WAS GIVING AN ESTIMATE OF HIS TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION RA THER THAN ADDING INDEPENDENT AND ADDITIONAL AMOUNT OF RS.25,OO,OOO, IN ADDITION TO INCOME ACCOUNTABLE IN THE ASSESSEE'S HANDS. THE ASSESSMENT IN THIS CASE HAS BEEN COMPLETED BY THE ASSESSING OFFICER BY MAKING VARIOUS ADDITIONS TO THE INCOME RETURNED BY THE ASSESSEE. ONCE THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME IN SUCH A MANNER INVOLVING A SERIES OF ADDITIONS, THERE IS NO JUSTIFICATION IN MAKING FURTHER ADDITION OF RS.25,OO,OOO ON THE BASIS OF THE DECLARATION MADE BY THE ASSESSEE. IF THE ASSE SSING OFFICER WAS TO ACCEPT THE DECLARATION MADE BY THE ASSESSEE, THEN HE SHOULD NOT HAVE MADE OTHER ADDITIONS OUTSIDE BOOKS OF ACCOUNT. THEREFORE, THERE IS FORCE IN THE ARGUMENT OF THE ASSESSEE ON THIS POINT. THE ASSESSING OFFICER MAY DETERMINE THE TOTAL INCOME EITHER ON THE BASIS OF ESTIMATION OR ON THE BASIS OF THE DECLARATION OF THE ASSESSEE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ADDITION OF RS.25,OO,OOO NEEDS TO BE DELETED. WE ORDER ACCORDINGLY. RESPECTFULLY FOLLOWI NG THE ABOVE ORDER WE DIRECT THE AO TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE EITHER ON THE BASIS OF ESTIMATION OR ON THE BASIS OF DECLARATION MADE BY THE ASSESSEE. FOLLOWING THE ORDER OF LATE HARSHAD S. MEHTA - LEGAL HEIR JYOTI S. MEHTA(SUPRA), WE DELETE THE ADDITION AMO UN TING TO RS. 3.90 LACS MADE BY AO AND CONFIRMED BY FAA. GR. 4 IS DECIDED IN F AVOUR O F THE ASSESSEE. 7 . NEXT GROUND OF APPEAL IS ABOUT CONFIRMATION OF ADDITION OF RS.3,44,500/ - ON ACCOUNT OF UNEXPLAINED CREDIT. DURING THE ASSESSMENT PROC E EDIN G, THE AO NOTED THAT AS PER THE REVIEW REPORT OF THE SPECIAL AUDITORS IN THE CASE OF HARSHAD MEHTA THE ASSESEES ACCOUNT AS APPEARING IN THE BOOKS OF HARSHAD MEHTA WAS SHOWING DEBIT BALANCE OF RS. 8.65 LACS, THAT IN THE ASSESSEES AUDITED BOOKS HARSHAD META WAS SHOWED AS CREDITOR FOR RS.3.9 LACS ONLY. HE DIRECTED THE ASSESSEE TO RECONCILE THE FIGURES AND FOUND THAT IN HARSHAD S. MEHTAS BOOKS THE BROKERS DIFFERENCE CONTROL ACCOUNT WAS SH OW ING A CREDIT OF RS.3,44,500 / - IN THE NAME OF THE ASSESSEE. AS PER THE AO ASSESSEE DID NOT EXPLAIN THE DIFFERENCE. AS A RESULT, HE ADDED SAID INCOME TO THE TO T AL INCOME OF THE ASSESSEE. 8 . AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). IT WAS SUBMITTED BEFORE HIM THAT THE ASSESSEE HAD FI LED NECESSARY DETAILS BEFORE AO THAT HE DID NOT CONSIDER THE SAME, THAT THE DIFFERENCE RELATED TO TRANSACTIONS OF PURCHASE AND SALE OF US64 . THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCE BEFORE HIM. AFTER CONSIDERING THE SUBMISSION OF TH E ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT T HERE WAS NO EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE HAD F ILED EXPLANATION BEFORE THE AO, THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE COULD NOT BE ACCEPTED, THAT THE ASSESSEE HAD NOT PROVED THAT IT WAS PREVENTED BY A REASONABLE CAU S E FOR NOT FILING THE EVIDENCE BEFORE THE AO DURING THE ASSESSMENT PROCEED - INGS. HE HELD THAT THE DIFFERENCE OF RS.3.44 LACS WAS NOT RECONCILED BY THE ASSESSEE . FINALLY , HE UPHELD THE ORDER OF THE A O . 9 . DURING T HE COU RSE OF HEARING BEFORE US, THE AR STATED THAT ASSESSEE HAD FILED DETAILS CALLED FOR B Y AO DURING THE ASSESSMENT PROCEEDINGS, THAT VIDE ITS LETTER DT.30.11.2006 IT HAD FILED A RECONCI - LIATION STATEMENT , THAT THE AO HAD DISCUSSED ABOUT THE SAID LETTER. HE REFE RRED TO THE P&L ACCOUNT 3596/13 HARSH (91 - 92) 4 FILED BY THE ASSESSEE WHEREIN THE SAID AMOUNT OF RS. 3.44 LACS WAS APPEARING. THE DR SUPPORTED THE ORDER OF THE FAA. 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD MENTIONED THAT T HE ASSESSEE HAD MENTIONED ABOUT EXPLANATION REGARDING RS. 3.44 LACS ON 30 . 11. 2006 . ONCE HE HAD RECEIVED THE LETTER IT WAS HIS DUTY TO CONSIDER ALL ANNEX TURES OF THE LETTERS. THE ASSESSEE, BEFORE THE FAA SPECIFICALLY MENTIONED THE RELEVANT DOCUMENTS WERE NO T CONSIDER E D. N THESE CIRCUMSTA NCES WE ARE OF THE OPINION THAT,IN THE INTEREST OF JUSTICE, MATTER SHOULD BE RESTORED BACK TO FAA FOR FRESH ADJUDICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY TO THE ASSESSEE AND TO CONSIDER ALL THE DOCUMENTS TO BE FURNISHED BY THE ASSESSEE WITH REGARD TO THE DISPUTED AMOUNT OF RS. 3.44 LACS. GROUND OF APPEAL NO. 5 IS ALLOWED IN FAVOUR OF AS SESSEE, IN PART. 1 1 . LAST GROUND OF APPEAL IS AB O UT LEVY OF INTERES T U/S. 234A , 234B AND 234C OF THE ACT. D URING THE COURSE OF HEA RING BEFORE US, THE AR FAIRLY CONCEDED THAT THE ISSUE WAS DECIDED AGAINST THE ASSESSEE VIDE TRIBUNAL ORDER DT.8.10.14 (ITA 1035/MUM/13 AND ORS.) WE FIND THAT THE TRIBUNAL IN ITS ORDER DT.8.10.2014 (SUPRA) HAD DECIDED THE ISSUE AS UNDER : - SO FAR AS, CHARG ING OF INTEREST U/ S 234A, 234B AND 234C IS CONCERNED THE ID. COUNSEL FOR THE ASSESSEE CONTENDED THAT IT MAY BE SENT TO THE FILE OF THE ID. ASSESSING OFFICER. HOWEVER, THE ID. SPECIAL COUNSEL CONTENDED THAT THE LEVY OF INTEREST IS MANDATORY THEREFORE IT SHOULD BE DECIDED AGAINST THE ASSESSEE. HOWEVER THE ID. COUNSEL FOR THE ASSESSEE CONTENDED THAT IT MAY BE SENT TO THE ASSESSING OFFICER FOR ACTUAL CALCULATION PURPOSES ONLY. AGREED, LEVY OF INTEREST IS MANDATORY AND SOMETIMES CONSEQUENTIAL DEPENDING UPON THE FACTS OF EACH CASE. WE NOTE THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN THE AFORESAID CASES THEREFORE FOLLOWING THE REASONING CONTAINED THEREIN, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE INTEREST LIABILITY AFTER REDUCING THE AMOU NT OF TAX DEDUCTABLE AT SOURCE AND DECIDE AS PER THE PROVISIONS OF LAW. WE DIRECT ACCORDINGLY, THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. R ESPECTFULLY FOLLOWING THE ABOVE, WE DECIDE GR OUND NO.6 AGAINS T THE ASSESSEE AND DIRECT THE AO RE - COM P UTE THE INTE RE ST LIABILITY AFTER REDUCING TAX LIABILITY AT SOURCE AND DECIDE THE ISSUE AS PER PROVISIONS OF LAW. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH , MAY, 2015. 5 , 2015 SD/ - SD/ - ( /I . P . BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 05 .0 5 .2015 . ./ JV . SR.PS / COPY OF THE ORDER FORWARDED TO : 3596/13 HARSH (91 - 92) 5 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.