SAKSHI ROHIT KATYAL, MUMBAI V. DCIT CEN CIR 17 & 28, MUMBAI

ITA 3873/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3635 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAVIN SURVE
• Keywords: Gift; Business income; Principle of natural justice
• Section: 143(3); 153A; 68

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 3873 /MUM/2015 ( / ASSESSMENT YEAR : 2007-08) MRS. SAKSHI ROHIT KATYAL, C/O JAYESH SANGHRAJKA & CO., CHARTERED ACCOUNTANTS, UNIT NO. 405, HIND RAJASTHAN CENTRE, D.S. PHALKE ROAD, DADAR(E), MUMBAI 400 014. / V. DCIT CENTRAL CIRCLE 17 & 28 ROOM NO. 402, AAYKAR BHAWAN, M.K. ROAD, MUMBAI. ./ PAN : AJQPK1294F ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI PRAVIN SURVE & SHRI MARGAV SHUKLA REVENUE BY : SHRI SUNIL KUMAR AGARWAL- DR / DATE OF HEARING : 22-2-2016 / DATE OF PRONOUNCEMENT : 13-05-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 3873/MUM/2015, IS DIRECTED AGAINST THE ORDER DATED 11-03-2015 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 51, MUMBAI (HEREINAFTER CA LLED THE CIT(A) ), FOR THE ASSESSMENT YEAR 2007-08, THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 28.3.2013 PASSED BY THE LEARNED ASSESSING OFFICER U/S 153A R.W.S. 143(3) OF THE INCOME TAX AC T,1961(HEREINAFTER CALLED THE ACT). ITA 3873/MUM/2015 2 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMO O F APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAF TER CALLED THE TRIBUNAL) READS AS UNDER:- 1. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRO NOUNCEMENTS; HON. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE LD . ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INCOME IN REGARDS TO THE GIF TS FROM RELATIVE; SUCH ADDITION IS BAD IN LAW AND LIABLE TO BE DELETED . 2. WITHOUT PREJUDICE TO ABOVE, ON THE GIVEN FACTS, CIRCU MSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT (A) ERRED IN C ONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER ON ACCOUNT OF UNEX PLAINED INCOME IN REGARDS TO THE GIFTS FROM RELATIVE; SUCH ADDITION IS B AD IN LAW AND LIABLE TO BE REDUCED. 3. ON THE GIVEN FACTS, CIRCUMSTANCES AND LEGAL PROPOSI TIONS; HON. CIT (A) ERRED IN PASSING THE ORDER IN ABSENCE OF REA SONABLE OPPORTUNITY OF MAKING THE SUBMISSIONS TO THE ASSESSEE IN PRINCIPLE S OF NATURAL JUSTICE AND SUCH UNDER IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND LIABLE TO BE QUASHED. 3. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDIT IONAL GROUNDS OF APPEAL:- ON THE GIVEN FACTS, CIRCUMSTANCES AND LEGAL PRONOUNC EMENTS, LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN FRAMING THE ORDER WITHOUT APPRECIATING THAT THIS ASSESSMENT BEING NOT PENDI NG WAS NOT ABATED UNDER PROVISIONS OF SECTION 153A AND SUCH FRAM ING OF THE ORDER BY THE LD. ASSESSING OFFICER IS BAD IN LAW AND ERRON EOUS IN FACTS AND HENCE LIABLE TO BE ANNULLED.' 2. WITHOUT PREJUDICE TO ABOVE, ON THE GIVEN FACTS, CIR CUMSTANCES AND LEGAL PRONOUNCEMENTS, LD. COMMISSIONER OF INCOME TAX APPEALS ERRED IN CONFIRMING THE ADDITION DESPITE THE FACT THAT NO INC RIMINATING MATERIAL WAS FOUND DURING COURSE OF SEARCH AND REGU LAR ASSESSMENT WAS ALREADY COMPLETED IN CASE OF ASSESSEE FOR THE SA ID ASSESSMENT YEAR AND HENCE SUCH ADDITION MADE IN COURSE OF BLOCK ASSE SSMENT PROCEEDINGS IS LIABLE TO BE DELETED.' 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION WAS CARRIED OUT U/S 132(1) OF THE ACT IN THE CASE OF PR ATIBHA INDUSTRIES GROUP ON 10.3.2011 AT THE OFFICE PREMISES AS WELL AS RESIDEN TIAL PREMISES OF THE PERSONS/ENTITIES ASSOCIATED WITH THE GROUP. THE AS SESSEE IS WIFE OF MR. ROHIT ITA 3873/MUM/2015 3 KATYAL, ONE OF THE DIRECTORS OF M/S PRATIBHA INDUST RIES GROUP. THE ASSESSEE WAS ALSO COVERED UNDER THE SEARCH OPERATIONS U/S. 1 32(1) OF THE ACT CARRIED ON BY THE REVENUE ON 10.03.2011. THE ASSESSEES CAS E, CONSEQUENT UPON THE SEARCH, IS COVERED UNDER THE PROVISIONS OF SECTION 153A OF THE ACT. NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 23.2. 2012 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME U/S. 153A OF THE ACT, AND IN RESPONSE THE ASSESSEE FILED THE RETURN ON 26.3.2012 , DECLARING TOTAL INCOME AT RS. 3,91,954/-. THE ASSESSEE HAS FILED HER ORIGINAL RE TURN OF INCOME DECLARING TOTAL INCOME OF RS. 3,27,509/- WHICH WAS ASSESSED U /S 143(3) OF THE ACT ON 6.5.2009 BY THE REVENUE, ASSESSING THE INCOME AT RS . 3,91,950/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD DECLARED THE BUSINESS INCOME AND INCOME FROM OTHER SOURCES . THE AO ON GO ING THROUGH THE CAPITAL ACCOUNT FILED FOR THE RELEVANT ASSESSMENT YEAR OBSE RVED THAT THE ASSESSEE HAS SHOWN GIFT RECEIVED FROM LUDHIANA OF RS. 5,73,690 /-. THE ASSESSEE WAS ASKED TO PRODUCE THE CONFIRMATION FROM THE DONOR AL ONG WITH PROOF OF IDENTITY, CREDITWORTHINESS AND COPY OF RETURN OF INCOME OF TH E DONOR AND THE RELATIONSHIP WITH THE ASSESSEE. BUT THE ASSESSEE F AILED TO DO SO AND AS SUCH ADDITION WERE MADE BY THE AO U/S 68 OF THE ACT AND ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE WAS MADE BY THE AO TO THE TU NE OF RS.5,73,690/- VIDE ASSESSMENT ORDERS DATED 28-03-2013 PASSED U/S 153A READ WITH SECTION 143(3) OF THE ACT. 4.AGGRIEVED BY THE ASSESSMENT ORDERS DATED 28-03-20 13 PASSED U/S 153A READ WITH SECTION 143(3) OF THE ACT BY THE A.O., TH E ASSESSEE FILED FIRST APPEAL WITH THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT N O INCRIMINATING MATERIAL WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH ACTION U/S 132(1) OF THE ACT WITH RESPECT TO THE GIFT OF RS. 5,73,690 /- RECEIVED FROM LUDHIANA . ITA 3873/MUM/2015 4 THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME WA S FILED FOR THE ASSESSMENT YEAR 2007-08 WHICH WAS PROCESSED U/S 143 (3) OF THE ACT ON 6.5.2009 ASSESSING INCOME AT RS. 3,91,954/- AND HEN CE THE ASSESSMENT STOOD CONCLUDED AND THIS ASSESSMENT FOR THE ASSESSMENT YE AR 2007-08 IS AN UNABATED ASSESSMENT AS DEFINED U/S 153A OF THE ACT, HENCE, THE REVENUE CANNOT MAKE ANY ADDITION UNLESS SOME INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH QUA THIS ADDITION. NO INCRIMI NATING MATERIAL HAVE BEEN FOUND OR SEIZED DURING THE COURSE OF SEARCH CONDUC TED BY THE REVENUE ON 10.3.2011 WITH RESPECT TO THE GIFT RECEIVED BY THE ASSESSEE, HENCE, THE ADDITION TO THE INCOME MADE BY THE AO VIDE ASSESSME NT ORDERS DATED 28-03- 2013 PASSED U/S 153A READ WITH SECTION 143(3) OF TH E ACT WAS BAD IN LAW. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT V. MURLI AGRO PRODUCTS LTD., 49 TAXMANN .COM 172 AND SUBMITTED THAT THIS IS AN UNABATED ASSESSMENT AND ADDITIONS C AN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND OR SEIZED DUR ING THE COURSE OF SEARCH QUA THE SAID ADDITIONS SO MADE BY THE REVENUE . THE CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE RELYING UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANA RA HOUSING DEVELOPMENT CO. V. DCIT, 49 TAXMANN.COM 98 AND THE CIT(A) CONFI RMED THE ADDITION MADE BY THE A.O. VIDE APPELLATE ORDERS DATED 11.03.2015 , AS THE ASSESSEE WAS REQUIRED TO FURNISH CONFIRMATION FROM THE DONOR ALO NG WITH PROOF OF IDENTITY , CREDITWORTHINESS AND COPY OF RETURN OF INCOME OF TH E DONOR , THE RELEVANT MATERIAL HAS NOT BEEN SUBMITTED BY THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE CLAIM MADE BY THE ASSESSEE AND TO ESTABLISH THE NATURE AND SOURCE OF THE GIFT AS HELD BY THE CIT(A). 6.AGGRIEVED BY THE ORDERS DATED 11.03.2015 OF THE CIT(A), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. ITA 3873/MUM/2015 5 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITIONAL GROUND WAS RAISED ON 18.12.2015 WHICH NEEDS TO BE ADMITTED AS IT IS A LEGAL GROUND AND GOES TO THE ROOT OF THE MATTER. THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THERE WERE A SEARCH OPERATION CONDUCTED U/S 13 2(1) OF THE ACT ON 10.3.2011 IN THE CASE OF PRATIBHA INDUSTRIES GROUP AND THE ASSESSEE WAS ALSO COVERED UNDER THE SEARCH OPERATIONS. ORIGINAL RETU RN OF INCOME WAS FILED FOR THE IMPUGNED ASSESSMENT YEAR 2007-08 DECLARING INCO ME AT RS. 3,27,509/- WHICH WAS PROCESSED U/S 143(3) OF THE ACT ON 6.5.20 09 COMPUTING INCOME AT RS. 3,91,950/- . THE ASSESSMENT U/S 143(3) OF THE A CT VIDE ORDERS DATED 06- 05-2009 IS THE CONCLUDED ASSESSMENT HAVING ATTAINED FINALITY AND AS PER SECTION 153A OF THE ACT, IT IS AN UNABATED ASSESSM ENT. HE ARGUED THAT THE REVENUE CANNOT MAKE ADDITION UNLESS THERE IS AN INC RIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH QUA ADD ITIONS MADE BY THE REVENUE AND IN THIS CASE NO INCRIMINATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH OPERATIONS AGAINST THE ASSESSEE QUA THE SAID GIFT RECEIVED FROM LUDHIANA. THE REVENUE HAS MADE ADDIT ION BY REFERRING TO THE CAPITAL ACCOUNT OF THE ASSESSEE FILED FOR THE ASSES SMENT YEAR WHEREBY THE GIFT RECEIVED FROM LUDHIANA OF RS. 5,73,690/- WAS DULY DECLARED AND DISCLOSED TO THE REVENUE. THE LD. COUNSEL RELIED UPON THE DECIS ION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MURLI AGRO PRODUCTS LTD. (SUPRA), DECISION OF ITAT, HYDERABAD IN THE CASE OF DCIT V. AMR INDI LIMITED I N ITA NO 1828- 1831/HYD./2012 DATED 23-10-2013 AND DECISION OF MUM BAI TRIBUNAL, SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. V. DCIT, (2012)23 TAXMANN.COM(103)(MUM.(SB) 8. THE LD. D.R., ON THE OTHER HAND RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON BY THE RIVAL PARTIES. THE ITA 3873/MUM/2015 6 ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE LEGAL GROUNDS WHICH GOES TO THE ROOT OF THE MATTER AND IS ADMITTED IN THE SUBSTANTI AL INTEREST OF JUSTICE AND IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF CIT V. NTPC LIMITED (1998) 229 ITR 383(SC) . WE HAVE OBSERVED THAT THE ASSESSEE WAS SEARCHED BY THE REVENUE U/S 132(1) OF THE ACT ON 10-03-2011. THE ASSESSEE HAD FILED RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 WHICH WAS PROCESSED U/S. 14 3(3) OF THE ACT BY THE REVENUE , WHEREBY THE ASSESSMENT ORDER U/S 143(3) O F THE ACT DATED 6.5.2009 WAS FRAMED BY THE REVENUE. THE SEARCH U/S 132(1) O F THE ACT HAD BEEN CONDUCTED ON 10-3-2011 AND ON THE DATE OF SEARCH, T HE ASSESSMENT U/S 143(3) OF THE ACT STOOD CONCLUDED FOR THE ASSESSMEN T YEAR 2007-08 VIDE ORDERS DATED 06-05-2009 AND ATTAINED FINALITY AND I T IS AN UNABATED ASSESSMENT AS PER SECTION 153A OF THE ACT. NO INCR IMINATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH OPERATI ONS U/S 132(1) OF THE ACT QUA THE ADDITIONS OF GIFT OF RS. 5,73,690/- RECEIVE D BY THE ASSESSEE FROM LUDHIANA. THE ADDITIONS HAVE BEEN MADE MERELY ON T HE BASIS OF CAPITAL ACCOUNT FILED ALONG WITH THE RETURN OF INCOME WITH THE REVENUE WHILE FRAMING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WHICH CULMINATED INTO THE ASSESSMENT ORDER DATED 6.5.2009 U/S 143(3) OF THE A CT, WHEREBY THIS GIFT FROM LUDHIANA OF RS.5,73,690/- WAS DULY DECLARED A ND DISCLOSED. THE CONCLUDED ASSESSMENT FOR THE ASSESSMENT YEAR 2007-0 8 WAS UNABATED ASSESSMENT AS PER SECTION 153A OF THE ACT AND THE A DDITION CAN ONLY BE MADE IN THE CASE OF CONCLUDED AND FINALIZED ASSESSMENT A S PER THE PROVISIONS OF SECTION 153A OF THE ACT ONLY WHEN INCRIMINATING MAT ERIAL HAS BEEN FOUND OR SEIZED DURING THE SEARCH OPERATIONS QUA THE ADDITIO NS MADE OF GIFT FROM LUDHIANA OF RS.5,73,690/-. IN THIS CASE, NO SUCH INCRIMINATING MATERIAL HAS BEEN FOUND OR SEIZED DURING THE COURSE OF SEARCH O PERATIONS U/S 132(1) OF THE ACT QUA THE ADDITIONS OF RS.5,73,690/- MADE FOR GIF TS RECEIVED FROM LUDHIANA, AND IN OUR CONSIDERED VIEW THE ADDITION OF RS. 5,7 3,690/- MADE BY THE A.O. ITA 3873/MUM/2015 7 AND CONFIRMED BY THE CIT(A) IS NOT SUSTAINABLE IN L AW AND IS ORDERED TO BE DELETED. OUR VIEW IS CONSISTENT WITH THE VIEW OF THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. CONTINENTAL WAREHOUSING CORPORATION(NHEVA SHEVA) LIMITED, (2015) 58 TAXMANN.COM 78(BOMBAY) AN D ALSO BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. K ABUL CHAWLA, (2015) 61 TAXMANN.COM 412(DELHI) . THUS, IN OUR CONSIDERED VI EW, THIS ADDITION OF RS.5,73,690/-MADE BY THE AO AND AS CONFIRMED BY THE CIT(A) IS NOT SUSTAINABLE AND IS ORDERED TO BE DELETED AS PER OUR REASONING AND DISCUSSIONS AS SET OUT ABOVE. WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA N0. 3873/MUM/2015, FOR THE ASSESSMENT YEAR 2007-08 IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MAY , 2016. # $% &' 13-05-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 13-05-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 3873/MUM/2015 8 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI