IQBAL HUSSAIN MOHD HANIF KHAN, THANE V. ITO 21(3)(3), MUMBAI

ITA 3899/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3525 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 23-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYAN RAJU
• Keywords: Unexplained investment
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 3899/MUM/2013 : (A.Y : 20 06 - 07 ) SHRI IQBAL HUSAIN MOHD. HANIF KHAN R. NO. 302, ROSE GARDEN, B - WING, KADER PALACE ROAD, KAUSA, MUMBRA, DIST. THANE 400 612. PAN : AHMPK0005A (APPELLANT) VS. ITO - 21(3)(3), MUMBAI (RESPONDENT) APPELLANT BY : MS. AASIFA KHAN RESPONDENT BY : SHRI B. SATYANARAYAN RAJU (DR) DATE OF HEARING : 28/12/2015 DATE OF PRONOUNCEMENT : 29 /02/2016 O R D E R PER G.S. PANNU , A M : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 32, MUMBAI DATED 20.02.2013, PERTAINING TO THE ASSESSMENT YEAR 2006 - 07, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 12.12.2008 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN HIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING IMPUGNED GROUNDS OF APPEAL : 1. THE COMMISSIONER OF INCOME TAX (APPEALS) [HER EINAFTER REFERRED TO AS 'THE CIT(A)'] ERRED IN CONFIRMING THE ADDITION OF RS. 1 ,19,050/ - , BEING THE AMOUNT PAID (1 /2 1 TH SHARE) FOR PURCHASE OF THE NON - AGRICULTURAL LAND ALONG 2 SHRI IQBAL HUSAIN MOHD. HANIF KHAN ITA NO. 3899/MUM/2013 WITH 20 OTHER C O - OWNERS, TREATING THE SAME AS UNEXPLAINED INVESTMENT UNDER SECT ION 69 OF THE ACT. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION, MADE BY THE ASSESSING OFFICER ON A PROTECTIVE BASIS OF THE SHARES OF THE OTHER 20 C O - OWNERS FOR THE PURCHASE OF NON - AGRICULTURAL LAND, OF RS. 23,80,952/ - TO THE INCOME OF THE APPELLANT ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. 3. WHILE DOING SO, THE CIT(A) ERRED IN: (I) BASING HIS ACTION ONLY ON SURMISES, SUSPICION AND CONJECTURE; (II) TAKING INTO ACCOUNT IRRELEVANT AND EXTRANEOUS CONSIDERATIONS; AND (III) IGNORING RELEVANT MATERIAL AND CONSIDERATIONS AS SUBMITTED BY THE APPELLANT. 4. IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH ADDITION W AS CALLED FOR . 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APPELLANT - ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2006 - 07 DECLARING A TOTAL INCOME OF RS.4,60,030/ - WHICH , INTER - ALIA , INCLUDED AGRICULTURAL INCOME OF RS.3,30,310/ - . THE ASSESSEE IS , INTER - ALIA , DERIVING INCOME FROM BUSINESS THROUGH HIS PROPRIETARY CONCERN, M/S. M.K. TIMBER MART. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBTAINED INFORMATION FROM TH E SUB - REGISTRARS OFFICE, PANVEL WHICH SHOWED THAT THE ASSESSEE ALONGWITH 20 OTHER PEOPLE HAD PURCHASED A NON - AGRICULTURAL LAND FOR RS. 25 LACS. I N THE ABSENCE OF ANY EXPLANATION FURNISHED BY THE ASSESSEE , THE ASSESSING OFFICER INFERRED THAT THE ASSESSEE S SHARE WAS 1/21 TH , WHICH C A ME TO RS.1,19,048/ - , AND S INCE THERE WAS NO EXPLANATION WITH REGARD TO THE SOURCE OF THE INVESTMENT, THE SAID AMOUNT WAS TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. APART FROM THE AFORESAID SUBSTANTIVE ADDITION MADE I N THE HANDS OF THE ASSESSEE, THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE DID NOT GIVE ANY EVIDENCE OR DETAILS REGARDING THE INVESTMENT OF RS. 25 LACS STATED TO 3 SHRI IQBAL HUSAIN MOHD. HANIF KHAN ITA NO. 3899/MUM/2013 HAVE BEEN MADE ALONGWITH OTHER SHAREHOLDERS IN THE LAND, AND THEREFORE, THE BALANC E OF RS.23,80,952/ - (I.E. RS. 25,00,000/ - RS. 1,19,048/ - ) WAS ASSESSED IN THE HANDS OF THE ASSESSEE ON A PROTECTIVE BASIS. 4. THE AFORESAID TWO ADDITIONS WERE CARRIED IN APPEAL BEFORE THE CIT(A) WHO HAS SINCE CONFIRMED THE SAME. 5. IN THIS BACKGROUND, T HE LEARNED REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT EVEN IF ONE IS TO GO BY THE MATERIAL ON RECORD BEFORE THE ASSESSING OFFICER, IT WAS QUITE CLEAR THAT ASSESSEES SHARE IN THE IMPUGNED PROPERTY WAS 1/21, AND THEREFORE, THE INVESTMENT RE LATABLE TO THE OTHER SHAREHOLDERS COULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE AT ALL, LEAVE ALONE ON PROTECTIVE BASIS. THE LEARNED REPRESENTATIVE POINTED OUT THAT BEFORE THE CIT(A) , ASSESSEE PROVIDED THE DETAILS OF SUCH OTHER 20 PURCHASERS INCLUDIN G THE PAN NUMBER IN CASE OF 11 SUCH JOINT OWNERS. SECONDLY, IT HAS BEEN CANVASSED THAT SO FAR AS SOURCE OF INVESTMENT OF RS. 1,19,050/ - IS CONCERNED, THE ASSESSEE HAD POINTED OUT THAT A P AY O RDER OF RS.1,00,050/ - WAS OBTAINED FROM THE BANK AND THE BALANCE OF RS. 19,000/ - WAS CONTRIBUTED IN CASH. THE LEARNED REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS REJECTED THE EXPLANATION OF THE ASSESSEE WITHOUT ANY JUSTIFIABLE BASIS AND REFERRED TO THE SUBMISSIONS BEFORE THE CIT(A) IN ORDER TO SUPPORT THE PLEA OF THE ASSESSEE. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ACTION OF THE LOWER AUTHORITIES BY PLACING RELIANCE ON THE ORDERS OF THE RESPECTIVE AUTHORITIES. 4 SHRI IQBAL HUSAIN MOHD. HANIF KHAN ITA NO. 3899/MUM/2013 7. WE HAVE CAREFULLY CONSIDERED THE R IVAL SUBMISSIONS. INSOFAR AS THE SOURCE OF INVESTMENT OF RS. 1,19,050/ - , BEING THE ASSESSEES 1/21 TH SHARE IN THE PURCHASE OF NON - AGRICULTURAL LAND IS CONCERNED, THE EXPLANATION WAS FURNISHED BY THE ASSESSEE BEFORE THE CIT(A). THE ASSESSEE HAD EXPLAINED TH AT RS.1,00,050/ - WAS PAID BY A P AY O RDER OBTAINED FROM THE BANK AND THE BALANCE OF RS.19,000/ - WAS PAID BY CASH. THE CIT(A) HAS NOTED FROM THE BANK STATEMENT OF THE ASSESSEE THAT THERE IS A DEBIT OF RS.1,00,050/ - FOR OBTAINING OF THE PAY ORDER ON 4.10.2 005, BUT IN THE ABSENCE OF ANY FURTHER DETAILS HE DID NOT ACCEPT THE SAME AS RELATING TO THE INVESTMENT IN QUESTION. 8. IN OUR CONSIDERED OPINION, THE EXPLANATION OF THE ASSESSEE CAN AT BEST BE SAID TO BE UNVERIFIABLE, BUT CERTAINLY IT COULD NOT HAVE BEEN SAID TO BE FALSE. NOTABLY, THE DATE OF ENTRY FOR OBTAINING THE P AY O RDER IS QUITE PROXIMATE TO THE ULTIMATE DATE OF REG ISTRATION OF THE PURCHASE DEED OF THE IMPUGNED LAND AND IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT SUCH AN AMOUNT HAS BEEN UTILIZED ELSEWHERE, THE CLAIM OF THE ASSESSEE OUGHT TO HAVE BEEN ACCEPTED. WITH RESPECT TO THE BALANCE CASH CONTRIBUTION OF RS. 19, 000/ - , IT IS QUITE EVIDENT FROM THE LEVEL OF INCOME DECLARED BY THE ASSESSEE THAT AVAILABILITY OF SUCH AMOUNT WITH THE ASSESSEE IS QUITE PLAUSIBLE. THEREFORE, THE ADDITION OF RS.1,19,050/ - MADE BY THE LOWER AUTHORITIES ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF NON - AGRICULTURAL LAND IS NOT JUSTIFIED AND IS HEREBY DIRECTED TO BE DELETED. 9. NOW, COMING TO THE ADDITION MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS, AND WHICH HAS BEEN FURTHER AFFIRMED BY THE CIT(A). SUCH PROTECTIVE ADDITIO N HAS BEEN MADE BY THE ASSESSING OFFICER ON THE 5 SHRI IQBAL HUSAIN MOHD. HANIF KHAN ITA NO. 3899/MUM/2013 GROUND THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE OR DETAILS REGARDING INVESTMENT MADE BY THE OTHER 20 JOINT OWNERS IN THE PURCHASE OF THE IMPUGNED NON - AGRICULTURAL LAND. THE CIT(A) HAS ALSO AFFIRMED T HE ACTION OF THE ASSESSING OFFICER IN ASSESSING THE SUM OF RS.23,80,952/ - ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. 10. IN OUR CONSIDERED OPINION, THE APPROACH OF THE CIT(A) IS QUITE MISCONCEIVED. THE CIT(A), IN OUR VIEW, OUGHT TO HAVE DECIDED THE ISSUE ON MERITS HAVING REGARD TO THE MATERIAL AND EVIDENCE BEFORE HIM. ONCE THE FACT - POSITION BEFORE THE CIT(A) , VIZ. , THE PUR CHASE DEED IN RELATION TO THE NON - AGRICULTURAL LAND IN QUESTION WAS ON RECORD WHICH REFLECTED 20 OTHER JOINT OWNERS OF THE PROPERTY, THE ADDITION COULD NOT HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE UNLESS IT COULD BE ESTABLISHED THAT THE OTHER JOINT OWNE RS WERE BENAMIDARS OR THAT THERE WAS A CLEAR - CUT EVIDENCE TO SHOW THAT THE FUNDS WERE PROVIDED BY THE ASSESSEE. NONE OF THE AFORESAID TWO SITUATIONS HAVE BEEN ESTABLISHED BY THE LOWER AUTHORITIES, AND THEREFORE, IN OUR VIEW, THE CIT(A) WAS NOT JUSTIFIED I N ASSESSING THE SUM OF RS. 23,80,952/ - ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. THE SAID ACTION OF THE CIT(A) IS HEREBY SET - ASIDE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 9 T H FEBRUARY, 2016. SD/ - SD/ - ( RAM LAL NEGI ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 2 9 T H FEBRUARY, 2016 6 SHRI IQBAL HUSAIN MOHD. HANIF KHAN ITA NO. 3899/MUM/2013 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, I BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR *SSL* I.T.A.T, MUMBAI