JINESH H SHAH, MUMBAI V. ACIT 12(1), MUMBAI

ITA 3768/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8927 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 29-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 09-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Unexplained investment; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 3768/MUM/2011 ASSESSMENT YEAR : 2005-06 SHRI JINESH H. SHAH 11, NOBLE CHAMBERS, GHOGA STREET, FORT, MUMBAI-400 001 PAN NO : AAQPS 2764 M VS. ACIT 12(1), AAYKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY R. PARIKH DEPARTMENT BY : SHRI MOHIT JAIN DATE OF HEARING : 29.08.2012 DATE OF PRONOUNCEMENT : 05.09.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.03.2011 PASSED BY THE LD. CIT(A) 23, MUM BAI FOR THE A.Y. 2005- 06. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE AN INDIVIDUAL DERIVES INCOME AS A PARTNER IN TWO PARTN ERSHIP FIRMS, CAPITAL GAINS AND OTHER SOURCES. THE RETURN WAS FILED DECL ARING TOTAL INCOME AT RS.12,79,940/-. DURING THE COURSE OF ASSESSMENT PR OCEEDING IT WAS ITA NO. 3768/MUM/2011 2 INTERALIA OBSERVED BY THE A.O. THAT AS PER AIR INFO RMATION RECEIVED THE ASSESSEE HAD MADE INVESTMENTS IN HDFC MUTUAL FUNDS AND FRANKLIN TEMPLETON MF TOTALLING RS.86,29,696/- UNDER PAN AAQ PS 2764 M. IT WAS EXPLAINED BY THE ASSESSEE THAT THE INVESTMENTS FRAN KLIN TEMPLETON MF AMOUNTING TO RS.2,78,567/- BELONGS TO THE ASSESSEE. THE ASSESSEE PURCHASED MF ON 20.10.2003 FOR RS.2,75,000/- AND RE NEWED ON 15.04.2004 AT RS.2,78,579/-. HOWEVER, THE ASSESSEE ADMITTED THAT HE HAS NOT OFFERED THE SHORT TERM CAPITAL GAIN OF RS.3,567 /- ON THIS TRANSACTION. ACCORDINGLY, THE A.O. ADDED RS.3,567/- UNDER THE HE AD SHORT TERM CAPITAL GAIN. AS REGARDS THE OTHER INVESTMENT IN FRANKLIN TEMPLETON MF TOTALLING TO RS.58,75,983/-, IT WAS EXPLAINED THAT THE INVESTMENT WAS MADE BY HIM UNDER JINESH H SHAH AOP (PAN AAAAJ 1006 A), BUT THAT PAN NO OF INDIVIDUAL WAS QUOTED FOR THE REASON THAT MUTUAL FUNDS WERE NOT ACCEPTING THE DEPOSITS OF AOPS. THE ASSESSEE F ILED COPY OF RETURN OF INCOME ALONG WITH COMPUTATION OF INCOME AND BALANCE SHEET OF THE AOP WHEREIN THE BANK ACCOUNT NUMBER 210320482 WAS MENTI ONED IN THE BALANCE SHEET AS DEEMAT ACCOUNT, WHEREAS THE COPY OF ACCOUNT SUBMITTED BY THE ASSESSEE SHOWS IT AS CURRENT ACCOUNT. FUR THER THE CLOSING BALANCE DID NOT TALLY WITH THE BALANCE SHEET FIGURE. THE C ONTENTION THAT THE INVESTMENTS ARE RELATED TO THE AOP WAS NOT SUPPORTE D BY ANY EVIDENCE AND THE ASSESSING OFFICER THUS HELD THAT THE INVESTMENT S OF RS.58,75,983/- AS UNEXPLAINED. AS REGARDS INVESTMENT OF RS.14,75,146 /- MADE IN HDFC MF, IT WAS CLAIMED BY THE ASSESSEE THAT THESE INVESTMEN TS WERE MADE ON ITA NO. 3768/MUM/2011 3 SWITCHOVER BASIS, THAT THESE WERE MADE BY HIM UND ER JINESH H SHAH AOP (PAN AAAAJ 1006 A), IN SUPPORT OF WHICH HE SUBM ITTED COPY OF HDFC MF ACCOUNT STATEMENT. IT WAS FOUND THAT THERE WAS A REMARK MENTIONING YOUR BANK ACCOUNT NUMBER 210320482 OF AMERICAN EXP RESS BANK LTD. SINCE THESE INVESTMENTS WERE ALSO MADE FROM THE SAM E BANK ACCOUNT, FOR THE SAME REASONS AS IN THE CASE OF FRANKLIN TEMPLET ON MF, THE INVESTMENTS IN HDFC MF RS.14,75,146/- WAS ALSO HELD AS UNEXPLAINED INVESTMENTS. ACCORDINGLY, THE ADDITION OF RS.73,51 ,129/- WAS MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE IN HI S INDIVIDUAL CAPACITY IN ORDER TO SAFEGUARD THE INTEREST OF INCOME. 3. ON APPEAL, THE LD. CIT(A) VIDE PARA 2.3 OF THE O RDER HAS OBSERVED AND HELD AS UNDER :- 2.3 IT IS FOUND THAT THE ASSESSMENT IN THE HANDS O F THE APPELLANT IN HIS INDIVIDUAL CAPACITY HAS BEEN MADE ON PROTECTIVE BASIS, PRESUMABLY SUBSTANTIVE ASSESSMENT HAS BEEN MADE IN THE HANDS OF JINESH H SHAH AOP. TILL SUCH TIME AS THE SUBSTANTIVE ASSESSMENT REACHES FINALITY, IT WOULD B E PREMATURE TO ADJUDICATE ON THE PROTECTIVE ASSESSMENT MADE IN THE HANDS OF THE APPELLANT IN HIS INDIVIDUAL CAPACITY. IT HA S NOT BEEN SHOWN THAT THE SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE AOP HAS BEEN ACCEPTED AND REACHED FINALITY. IN THE SE CIRCUMSTANCES THE APPEAL IS PREMATURE AND THUS TREA TED AS INFRUCTUOUS. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED CIT(A) ERRED IN DISMISSING THE APPE AL FOR STATISTICAL PURPOSES. THE ASSESSING OFFICER ASSESS ED THE INCOME AT RS.86,34,635/- AS AGAINST THE RETURNED IN COME OF RS.12,79,940/- ON PROTECTIVE BASIS. ITA NO. 3768/MUM/2011 4 2. THE LEARNED CIT(A) OUGHT TO HAVE ACCEPTED THE RE TURNED INCOME OF RS.12,79,940/- ON THE BASIS OF SUBMISSION S MADE BEFORE HER. 3. THE LEARNED CIT(A) OUGHT TO HAVE ACCEPTED THAT T HE INVESTMENT BELONGS TO JINESH H. SHAH AOP ON THE BAS IS OF THE SUBMISSIONS MADE BEFORE HER AND BEFORE THE ASSESSIN G OFFICER. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFOR E THE A.O. AND LD. CIT(A) FURTHER SUBMITS THAT IN MUTUAL FUNDS THE INV ESTMENT OF RS.73,51,129/- HAS BEEN SHOWN IN THE HANDS OF THE J INESH H SHAH AOP AND DOES NOT BELONG TO JINESH H SHAH INDIVIDUAL AND IN THE ASSESSMENT OF THE AOP, THE A.O. HAS ACCEPTED THE SAME AND NO SUCH ADDITION HAS BEEN MADE. THEREFORE, THE PROTECTIVE ADDITION IN THE HA NDS OF THE ASSESSEE BE DELETED. HE FURTHER SUBMITS THAT BEFORE THE LD. CI T(A) THE ASSESSEE HAS FILED SUPPORTING EVIDENCES, HOWEVER, THE LD. CIT(A) WITHOUT CONSIDERING THE SAME HAS HELD THAT THE APPEAL IS PREMATURE AND HENC E INFRUCTOUS. HE, THEREFORE, SUBMITS THAT SINCE THE LD. CIT(A) HAS NO T CONSIDERED THE EVIDENCE FILED BY THE ASSESSEE, THEREFORE, THE ISSU E MAY BE SET ASIDE TO THE FILE OF THE LD. CIT(A) FOR DECIDING THE ISSUE ON ME RITS AFTER CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. DR WHILE RELYING ON T HE ORDERS OF THE A.O. AND THE LD. CIT(A) SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF THE LD. CIT(A). ITA NO. 3768/MUM/2011 5 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE LD. CIT(A) WITHOUT CONSIDERING THE ISSUE ON MERITS HAS HELD TH AT IT HAS NOT BEEN SHOWN THAT THE SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE A.O. WAS ACCEPTED AND REACHED THE FINALITY. SINCE IN THE HA NDS OF THE ASSESSEE, THE A.O. HAS MADE THE PROTECTIVE ADDITION AND THE LD. C IT(A) WITHOUT MAKING ANY INQUIRY THAT IN WHOSE HANDS THE SUBSTANTIVE ASS ESSMENT HAS BEEN MADE, CONFIRMED THE ADDITION ON THE GROUND THAT THE APPEAL IS PREMATURE, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) AND ACCORDINGLY WE SE T ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND RESTORE THE ISSUE TO HIS FILE TO DECIDE THE SAME AFRESH AFTER ADMITTING THE ADDITIONAL EVIDENCE SUBMITTED B Y THE ASSESSEE ACCORDING TO LAW AND AFTER PROVIDING REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05.09.2012. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 05.09.2012 ITA NO. 3768/MUM/2011 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 37, MUMBA I 4. COMMISSIONER OF INCOME TAX CENTRAL -1 MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ROSHANI