Pranab Kumar Banik, Kolkata V. ACIT, Centre Circle-II, Kolkata, Kolkata

ITA 373/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1888 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 12-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2014
• Court: TRIBUNAL
• Department Lawyers: BANI BRATA DUTTAADL
• Assessee Lawyers: S JHAJHARIA
• Keywords: Search and seizure
• Section: 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.373/KOL/2014 ( / ASSESSMENT YEAR :2007-2008) PRANAB KUMAR BANIK, C/O- SALARPURIA JAJODIA & CO 7, CHITTARANJAN AVENUE, KOLKATA-700072 VS. ACIT, CENTRAL CIRCLE-II, AAYKAR BHAVAN, PURVA, 110,SHANTIPALLY, KOLKATA KOLKATA-700107 ./ ./PAN/GIR NO. : ADQPB 4401 K ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI S.JHAJHARIA, FCA /REVENUE BY : SHRI BANI BRATA DUTTA,ADL.CIT-(DR) / DATE OF HEARING : 12/04/2017 /DATE OF PRONOUNCEMENT 26/04/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO THE ASSESSMENT YEAR 2007-2008, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-III, KOLKA TA, IN APPEAL NO.258/CC-II/CIT(A)C-III/2008-09/KOLKATA, DATED 31. 12.2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 147/144 OF THE INCOME TAX ACT 1961, (HEREIN AFTER REFERRED TO AS THE ACT), DATED 31.12.2008. 2. BRIEF FACTS QUA THE ASSESSEE ARE THAT IN THE CA SE OF ASSESSEE A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE R ESIDENTIAL PREMISES OF SHRI PRANAB KUMAR BANIK AT 25, DUMDUM PARK, KOLK ATA-700055 AND THE OFFICE OF THE AJANTA GROUP OF COMPANIES AND ITS DIRECTORS. THE ASSESSEE IS A DIRECTOR OF M/S AJANTA FOOTCARE (INDI A) PVT. LTD., ONE OF THE MAIN COMPANIES OF THE AJANTA GROUP AND A PARTNER IN THE ASSOCIATION OF ITA NO.373/KOL/2014 PRANAB KUMAR BANIK 2 PERSONS IN THE NAME AND STYLE OF M/S MA DURGA TRADE RS HAVING ITS BUSINESS AT 161, N.S.ROAD, KOLKATA-7. DURING THE CO URSE OF SEARCH AND SEIZURE OPERATION, CASH, JEWELLERY, VARIOUS BANK AC COUNTS, MUTUAL FUNDS, AND CREDIT DEBIT CARDS ETC. WERE FOUND FROM THE PRE MISES OF THE ASSESSEE. THE AO COMPLETED THE ADDITION BY MAKING THE ADDITIO N ON ACCOUNT OF UNEXPLAINED CASH RS.27,710, ON ACCOUNT OF UNDISCLOS ED JEWELLERY RS.18,24,425, ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE BONDS RS.50,000/- AND ON ACCOUNT OF UNEXPLAINED EXPENDITU RE THROUGH CREDIT CARDS RS.1,93,688. 3. AGGRIEVED FROM THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO HAS PARTIALLY DELETED THE AD DITION MADE BY THE AO. THE AO MADE ADDITION IN RESPECT OF UNDISCLOSED JEWE LLERY IN THE HANDS OF PRANAB KUMAR BANIK AND PRITHU BANIK @3,87,061/- AND RS.81,153/-, AGGREGATING RS.4,68,214/-. THE LD. CIT(A) AFTER TAK ING INTO ACCOUNT THE CBDT INSTRUCTION NO.1916 DATED 11.5.1994 PROVIDED S OME RELIEF TO THE ASSESSEE. OUT OF TOTAL ADDITION OF RS.4,68,214/- MA DE BY THE AO, THE LD. CIT(A) CONSIDERED RS.2 LAKHS TO BE UNEXPLAINED AND THE BALANCE RS.2,68,000/- HAS BEEN DELETED. THE LD. CIT(A) OBSE RVED THAT IN RESPECT OF JEWELLERY HELD BY EMPLOYEE, SHRI RANJIT BANIK, I T WAS HELD THAT OUT OF TOTAL JEWELLERY OF RS.6,06,666/-, THE AMOUNT OF RS .3,00,000/- IS TO BE CONSIDERED UNEXPLAINED AND THE BALANCE RS.3,06,000/ - IS TO BE TREATED AS EXPLAINED AND BELONGING TO THE EMPLOYEE OF MR. RANJ IT BANIK. THIS WAY THE CIT(A) PROVIDED SOME RELIEF TO THE ASSESSEE. ITA NO.373/KOL/2014 PRANAB KUMAR BANIK 3 4. NOT BEING SATISFIED WITH THE ORDER OF THE LD. CI T(A) THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GRO UNDS OF APPEAL :- 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN HOLD ING THE IMPUGNED EXPARTE ASSESSMENT ORDER U/S 144/ 147 OF T HE I. T. ACT, DT. 31.12.2008 FOR THE A. Y 2007-08 PASSED BY THE A SSESSING OFFICER AS VALID WITHOUT CONSIDERING THE FACTS THAT - (I) THE RETURN DULY FILED ON 29.03.2008 IN RESPONSE TO NOTICE U/S 142(1 ) WAS UNLAWFULLY DECLARED AS INVALID U/S 139(9) ON CASUAL & VAGUE OB SERVATIONS WITHOUT SPECIFYING ANY PARTICULAR DEFECT IN THE RET URN AND (III) SUFFICIENT OPPORTUNITY OF HEARING WAS NOT PROVIDED TO THE ASSESSEE BEFORE DECLARING THE RETURN AS NOT LEGALLY VALID. 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN HOLD ING THE AFORESAID ORDER U/S 144 /147 DT. 31.12.2008 AS VALID WITHOUT CONSIDERING THE FACTS THAT - (I) DURING THE EXISTENCE OF AN ASSESSM ENT PROCEEDING ALREADY INITIATED U/S 142(1) OF THE ACT ON 21.01.20 08, A SECOND PROCEEDING U/S 147 WAS ILLEGALLY INITIATED BY ISSUE OF A NOTICE U/S 148 DT. 26.06.2008 FOR THE SAME A.Y 2007-08 WITHOUT PRIOR CANCELLATION OF THE FIRST PROCEEDING AND (II) THE S AID NOTICE U/S 148 WAS ISSUED UNLAWFULLY, WITHOUT EVER COMMUNICATING B EFORE COMPLETION OF THE EXPARTE ASSESSMENT, THE REASONS R ECORDED FOR INITIATION OF THE SAID PROCEEDING U/S 147 VIOLATING THE JUDGEMENT OF THE HON'BLE APEX COURT ON THIS ISSUE. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN HOLD ING THE AFORESAID ORDER U/S 144/147 DT. 31.12.2008 AS VALID WITHOUT C ONSIDERING THE FACTS THAT NO STATUTORY NOTICE OF HEARING U/S 143(2 ) WAS ISSUED AND SERVED ON THE ASSESSEE AFTER THE ISSUANCE OF THE NO TICE U/S 142(1) OR U/S 148 OF THE ACT AND BEFORE COMPLETION OF THE ASSESSMENT. THE ORDER U/S 144/147 DT. 31.12.2008 BEING ILLEGAL AND VOID AB INITIO IS LIABLE TO BE QUASHED / CANCELLED. 4. WITHOUT PREJUDICE TO THE GR. NOS. 1 TO 3 ABOVE, THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS.4,68,214/- (RS. 3,87,061/- + RS.81,153/-), MA DE IN ASSESSMENT AS UNDISCLOSED INVESTMENT VIS-A-VIS THE INCOME OF THE APPELLANT ON A/C OF THE ALLEGED UNDISCLOSED JEWELLE RIES BELONGING TO THE APPELLANT'S TWO MINOR SONS NAMELY S/SRI PRITHU BANIK & PURNAVA BANIK, TO THE EXTENT OF RS.2,00,000I- ONLY ON PURE ESTIMATE WITHOUT ALLOWING FULL RELIEF ON THAT A/C ON THE BASIS OF TH E BINDING INSTRUCTION NO.1916 DT.L1.05.1994 OF THE CBDT EXPLAINED BEFORE HIM DESPITE HIS ACCEPTANCE OF THE NORMAL SOCIAL CUSTOMS THAT IN A FAMILY THE MINOR CHILDREN ALSO POSSESS JEWELLERIES RECEIVED FR OM VARIOUS RELATIVES AND FRIENDS ON THE OCCASION OF THEIR BIRT H AND OTHER SOCIAL CEREMONIES. ITA NO.373/KOL/2014 PRANAB KUMAR BANIK 4 5. WITHOUT PREJUDICE TO THE GR. NOS. 1 TO 3 ABOVE, THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS.6,06,666/- MADE IN ASSESSMENT AS UNDISCLOSED INVESTMENT VIS-A-VIS THE INCOME OF THE APPELLANT ON A/C OF THE ALLEGED UNDISCLOSED JEWELLERIES OWNED AND HELD BY SRI RANJI T BASAK, AN EMPLOYEE IN THE APPELLANT'S BUSINESS CONCERN, TO TH E EXTENT OF RS.3,00,000/- ONLY ON PURE ESTIMATE WITHOUT ALLOWIN G FULL RELIEF ON THAT A/C ON THE BASIS OF BINDING INSTRUCTION NO.191 6 DT.11.05.1994 OF THE CBDT EXPLAINED BEFORE HIM. 6. WITHOUT PREJUDICE TO THE GR. NOS. 1 TO 3 ABOVE, THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS.50,000/-, MADE IN ASSESSMENT AS UNDISCLOSED I NVESTMENT IN THE UNITS OF MUTUAL FUNDS / BONDS MERELY ON ASSUMPT IONS AND PRESUMPTIONS WITHOUT ANY BASIS AND APPLICATION OF M IND, TO THE EXTENT OF RS.20,000/- ONLY ON PURE ESTIMATE WITHOUT ALLOWING FULL RELIEF ON THAT A/C. 7. WITHOUT PREJUDICE TO THE GR. NOS. 1 TO 3 ABOVE, THE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE ARBITRARY ADDITION OF RS.1,93,688/-, MADE IN ASSESSMENT AS UNDISCLOSED INVESTMENT ON A/C OF UNDISCLOSED EXPENSES MADE THROUGH CREDIT/ DEBIT CARDS MERELY ON ASSUMPTIONS AND PRESUMPTIONS WITHOUT ANY BASIS AND APPLICATION OF MIND, TO THE EXTENT OF RS.1,38,745/- ON PURE ESTIMATE WITHOUT ALLOWING FULL RELIEF ON THAT ALC. 8. FOR THAT YOUR PETITIONER CRAVES LEAVES THE RIGHT TO PUT ADDITIONAL GROUNDS AND/OR TO ALTER/AMEND/MODIFY THE PRESENT GR OUNDS BEFORE OR AT THE TIME OF HEARING OF THE APPEAL PETITIONS. IN THIS APPEAL, THE ASSESSEE HAS RAISED EIGHT GROUN DS OF APPEAL, BUT AT THE TIME OF HEARING THE MAIN GRIEVANCE OF THE ASSES SEE HAS BEEN CONFINED TO GROUND NO.4 AND GROUND NO.5 AND OTHER GROUNDS WE RE NOT PRESSED. 5. GROUND NO.4 RELATES TO ADDITION OF RS.(3,87,061/ - + 81,151/-) = RS.4,68,214/- OUT OF THAT LD. CIT(A) PROVIDED THE R ELIEF OF RS.2,68,000/- AND ADDITION SUSTAINED WAS AT RS.2,00,000/. THE ASS ESSEE IS IN APPEAL BEFORE US FOR RS.2,00,000/-, WHICH WAS CONSI DERED BY THE LD. CIT(A) AS UNEXPLAINED JEWELLERY. ITA NO.373/KOL/2014 PRANAB KUMAR BANIK 5 5.1. LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE U S THAT BOTH, THE AO AS WELL AS THE CIT(A) HAD TREATED THE JEWELLARY OF BOTH THE SONS ( PURNAVA BANIK AND PRITHU BANIK) AS IF, IT WAS ACQUIRED BY T HE ASSESSEE OUT OF HIS UNDISCLOSED INCOME, AS BOTH THE CHILDREN WERE MINOR S ON THE DAY OF SEARCH AND NEVER HAD ANY SOURCE OF INCOME TO ACQUIR E SUCH JEWELLERIES FROM THEIR OWN FUNDS. THE LD AR SUBMITTED THAT THE JEWELLERY IN QUESTION WERE ACQUIRED BY THE TWO MINOR CHILDREN PURNAVA BAN IK AND PRITHU BANIK THROUGH INHERITANCE AND ON THEIR BIRTHDAY AND VARIO US SOCIAL FUNCTIONS FROM RELATIVES AND FRIENDS AND COULD UNDER NO CIRCUMSTAN CES BE TREATED AS TO BE ACQUIRED FROM UNDISCLOSED INCOME OF THE ASSESSEE . THE ASSESSEE RELIED ON CBDT INSTRUCTION NO. 1916 DATED 11-05-199 4, REQUIRING NON SEIZURE OF JEWELLERY TO THE EXTENT OF 500 GMS FOR M ARRIED LADY, 250 GMS FOR UNMARRIED LADY AND 100 GMS FOR MALE. IN THE CONTEXT OF THE SAID CBDT CIRCULAR THE LD AR FOR THE ASSESSEE STATED THAT PUR NAVA BANIK THE QUANTITY OF GOLD IS 97.50 GMS WHICH IS BELOW 100 GMS THEREFO RE, IT SHOULD BE TREATED AS EXPLAINED. LIKEWISE, ANOTHER SON IS HAVI NG TOTAL GOLD AT 95.90 WHICH IS BELOW 100 GMS, THEREFORE IT IS COVERED BY CBDT CIRCULAR. 5.2. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMARILY RELIED ON THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 5.3.HAVING HEARD THE SUBMISSIONS OF LD AR FOR THE A SSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORDS, WE ARE OF THE VI EW THAT THIS ISSUE UNDER CONSIDERATION IS FULLY COVERED BY THE CBDT INSTRUCT ION NO. 1916 DATED 11- 05-1994, REQUIRING NON SEIZURE OF JEWELLERY TO THE EXTENT OF 500 GMS FOR ITA NO.373/KOL/2014 PRANAB KUMAR BANIK 6 MARRIED LADY, 250 GMS FOR UNMARRIED LADY AND 100 GM S FOR MALE. AS WE HAVE NOTICED THAT IN CASE OF BOTH THE SONS OF THE A SSESSEE, THE WEIGHT OF GOLD IS BELOW 100 GMS THEREFORE IT IS FULLY COVERD BY THE SAID CBDT CIRCULAR. BASED ON THE ABOVE FACTS WE ARE OF THE VI EW THAT ADDITION CONFIRMED BY LD CIT(A) AT RS.2,00,000/- NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION. 5.4 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ON GROUND NO. 4, IS ALLOWED. 6. GROUND NO.5 RELATES TO ADDITION MADE BY THE AO A T RS.6,06,666/- OUT OF WHICH RS.3,06,666/- HAS BEEN D ELETED BY THE CIT(A) AND THE ASSESSEE IS IN APPEAL BEFORE US FOR RS.3,00,000/-. 6.1 THE LD AR FOR THE ASSESSEE SUBMITTED THAT IN CA SE OF MR.RANJIT BASAK, THE TOTAL WEIGHT OF GOLD IS AT RS.101.40 GMS, WHICH IS VERY NEAR TO 100 GMS THEREFORE, THE SAME SHOULD ALSO BE COVERED BY T HE CBDT INSTRUCTIONS. HENCE, IN THIS CASE ALSO THE ASSESSEE RELIED ON CBDT INSTRUCTION NO. 1916 DATED 11-05-1994, REQUIRING NO N SEIZURE OF JEWELLERY TO THE EXTENT OF 500 GMS FOR MARRIED LADY, 250 GMS FOR UNMARRIED LADY AND 100 GMS FOR MALE. 6.1 ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS P RIMARILY RELIED ON THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 6.3 HAVING HEARD THE SUBMISSIONS OF LD AR FOR THE A SSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORDS, WE ARE OF THE VI EW THAT THIS ISSUE UNDER CONSIDERATION IS COVERED BY THE CBDT INSTRUCTION NO . 1916 DATED 11-05- ITA NO.373/KOL/2014 PRANAB KUMAR BANIK 7 1994, REQUIRING NON SEIZURE OF JEWELLERY TO THE EXT ENT OF 500 GMS FOR MARRIED LADY, 250 GMS FOR UNMARRIED LADY AND 100 GM S FOR MALE. HOWEVER, WE NOTICED AN INSIGNIFICANT DIFFERENCE IN WEIGHT (QUANTITY) AT 1.40 GMS, BEING THE DIFFERENCE BETWEEN GOLD POSSESS ED AT 101.40.GMS BY MR. RANJIT BASAK AND AS PER CBDT INSTRUCTION AT 100 GMS. IN OUR VIEW IT IS NOT A MATERIAL DIFFERENCE THEREFORE WE TREAT IT THAT ASSESSEE HAS EXPLAINED THE GOLD QUANTITY SATISFACTORILY AS PER C BDT INSTRUCTIONS (SUPRA). BASED ON THE FACTUAL POSITION DISCUSSED ABOVE, THE ADDITION MADE BY THE LD CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELE TE THE ADDITION. 6.4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E ON GROUND NO. 5, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26/04 /2017. SD/ - (N.V. VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 26/04/2017 & ()* /PRAKASH MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) & ' , / ITAT, KOLKATA 1. / THE APPELLANT- PRANAB KUMAR BANIK 2. / THE RESPONDENT.-ACIT-CC-11, KOLKATA 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 56 7 8 , 8 , / DR, ITAT, KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//