GIRISH MULJI FURIA, MUMBAI V. ITO 25(2)(4), MUMBAI

ITA 4073/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8573 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 29-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: VIPUL SHAH
• Keywords: Unexplained cash credit; Business income; Audit objection; Additional evidence; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 68; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI R P TOLANI, JUDICIAL MEMBER ITA NO.4073/MUM/2015 ASSESSMENT YEAR : 2007-08 GIRISH MULJI FURIA 302 PARAKAWEST- 1 RAHEJA ESTATE, KULUPWADI, BORIVALI (EAST), MUMBAI- 400 066 PAN AAAPF1088M VS. ITO 25(2)(4), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIPUL SHAH RESPONDENT BY : MS. BEENA SANTOSH DATE OF HEARING : 30.01.2017 DATE OF PRONOUNCEMEN T : 03.02.2017 O R D E R PER R P TOLANI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL CHALLENGING THAT THE LE ARNED CIT(A) ERRED IN : I) UPHOLDING INITIATION OF RE-ASSESSMENT PROCEEDINGS II) TREATING THE LOAN AMOUNT OF RS.3,68,500/- AS UNEXPL AINED CASH CREDIT U/S. 68 III) CONFIRMING DISALLOWANCE OF RS.10 LACS OUT OF AGRICU LTURAL INCOME AND TREATING THE SAME AS UNEXPLAINED CASH CREDIT. IV) TREATING DEPOSITS IN BANK ACCOUNT NO. 4603 AMOUNTIN G TO RS.13,83,930/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T.ACT. V) TREATING DEPOSITS IN BANK ACCOUNT NO.978 AMOUNTING TO RS.1,65,000/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T.ACT. 2. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTING T O GROUND NO.1 ABOUT VALIDITY OF REASSESSMENT PROCEEDINGS, IT IS CONTENDED THAT T HE ORIGINAL ASSESSMENT WAS ITA NO.4073/MUM/2015 GIRISH MULJI FURIA 2 MADE U/S. 143(3) VIDE ORDER DATED 13.11.2009. ALL THE ISSUES PERTAINING TO ASSESSMENT WERE DULY DISCUSSED AND ASSESSEES RETUR N WAS ACCORDINGLY ACCEPTED. ASSESSMENTS WERE REOPENED ON THE FOLLOWING REASONS: THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS ON T HE BASIS OF AIR INFORMATION VIZ. DEPOSIT OF CASH IN SB ACCOUNT WITH SARASWAT CO-OP BANK LTD. RS.24,19,000/- (A/C NO.4603 AND DEPOSIT CASH I N SB ACCOUNT WITH SAME BANK RS.23,07,850/- (A/C NO.4601). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE TOOK THE STAND THAT HE WAS ONLY A JOINT HOLDER OF SB ACCOUNT NO.4601 AND THE 1 ST HOLDER WAS MS.SHASHIKALA SHETTY, HOWEVER, NO CONFIRMATION WAS FILED BY THE A SSESSEE FROM MS. SHASHIKALA CONFIRMING THAT SHE WAS RESPONSIBLE FOR THE CASH DEPOSITS IN THAT ACCOUNT. PAN SEARCH IN CBN REVEALS THAT SHASH IKALA IS NOT ASSESSED TO TAX AND SHE DOES NOT APPEAR TO BE A FAMILY MEMBE R OF THE ASSESSEE. IN RESPECT OF A/C NO.4603, THE HAS EXPLAINED THE SO URCE OF CASH DEPOSIT AS AGRICULTURAL INCOME OF RS.17,85,670/- AND CASH L OANS FROM 34 INDIVIDUALS, EACH LOAN BELOW RS.20,000/- TOTALLING IN ALL TO RS.6,56,000/-. IN RESPECT OF ALL THE 34 PERSONS NO EVIDENCE OF I.D . PROOF, RESIDENCE PROOF WAS SUBMITTED AS ALL ARE NOT ASSESSED TO TAX. IN R ESPECT OF AGRICULTURAL INCOME THE ASSESSEE HAS NOT SUBMITTED ANY BILLS AND VOUCHERS OF SEEDS, FERTILIZERS, PESTICIDES, ELECTRICITY BILLS, WAGES B ILLS ETC. EXCEPT 7/12 EXTRACT AND COPIES OF BILLS FOR SALE. 2. IN NOTHER SB ACCOUNT NO.4603 AND CA ACCOUNT NO.9 78 THERE ARE CREDIT ENTRIES OF RS.37,15,092/- AND 27,94,000/- RE SPECTIVELY INCLUDING CASH AND CHEQUES, AS THE ASSESSEE RETURN OF INCOME REFLECTS THAT THERE EXISTS NO BUSINESS INCOME AND FOR THE SAME NO EXPLA NATION OFFERED BY THE ASSESSEE. THEREFORE, I HAVE REASON TO BELIEVE THAT SUCH ASSES SMENT WAS REASON OF THE OMISSION OR FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THAT YEAR IN CONSEQUENCE OF INFORMATION IN THE POSSESSIO N OF THE AO AND INCOME TO THE EXTENT OF RS.1,18,91,942/- HAS ESCAPE D ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T.ACT, AS THE INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED U/S. 143(3) AND ACCORDI NGLY THE CASE OF THE ASSESSEE IS REQUIRED TO BE REOPENED U/S. 148 OF THE ACT, SO AS TO REASSESS THE ASSESSEES CORRECT INCOME FOR A.Y. 2007-08. IN THE REASONS, THE AO HIMSELF HAS REFERRED TO THE PROCEEDINGS OF THE ORIGINAL ASSESSMENT AND ALLEGES THAT THE ASSESSEE DID NOT FI LE EXPLANATIONS. IF THAT WAS THE CASE, THE ADDITION WOULD HAVE BEEN MADE IN THE ORIG INAL ASSESSMENT. THE RECORDING OF REASON TRANSPIRES THAT THE AO DEVELOPED SECOND T HOUGHT ABOUT THE SAME DETAILS, ITA NO.4073/MUM/2015 GIRISH MULJI FURIA 3 WHICH WERE FILED DURING THE COURSE OF ORIGINAL ASSE SSMENT. THE ASSESSEES OBJECTIONS HAVE BEEN BRUSHED ASIDE BY THE LEARNED C IT(A). THE LEARNED CIT(A) UPHELD THE VALIDITY BY OBSERVING AS UNDER: 4. GROUND NO.1 TO 4 ARE BEING DEALT WITH IN A CONS OLIDATED MANNER SINCE ALL THE FOUR GROUNDS ARE RELATED TO THE ISSUE OF INITIATION OF PROCEEDINGS U/S. 147 OF THE I.T.ACT. THE APPELLANT HAS SUBMITTED THAT IN THE ORIGINAL ASSESSMENT ALL INFORMATION WAS PROVIDE D BY HIM AND THAT THE A.O. HAS REOPENED THE CASE ONLY ON THE BASIS OF OBS ERVATIONS OF THE AUDIT TEAM. THE APPELLANT HAS REFERRED TO THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF EASTERN NEWS PAPER SOC IETY VS. CIT WHEREIN IT HAS BEEN HELD THAT AN AUDIT OPINION IN R EGARD TO THE APPLICATION OR INTERPRETATION OF LAW CANNOT BE TREATED BY THE A .O. AS INFORMATION FOR REOPENING OF THE ASSESSMENT U/S. 147 OF THE I.T.ACT . IT IS SUBMITTED THAT THE A.O. WAS ALREADY AWARE OF ALL THE FACTS AND THE REFORE THIS IS A CASE OF MERELY CHANGE OF OPINION. THE APPELLANT HAS REFERR ED TO THE DECISIONS IN THE CASE OF SITA WORLD TRAVELS (I) LTD. VS. CIT 274 ITR 186 (DEL) AND CIT VS. KELVINATOR OF INDIA LTD. 256 ITR 1 (DEL). 5. DECISION: I HAVE GONE THROUGH THE FACTS OF THE CASE AND FIND THAT THE A.O. HAS INITIATED THE PROCEEDINGS U/S. 148 ON THE BASIS OF INFORMATION AVAILABLE THROUGH AIR REGARDING THE DEPOSITS IN THE ACCOUNTS HELD BY THE ASSESSEE. THE A.O. HAS IN FACT DISPOSED OFF BY A SPEAKING ORDER THE OBJECTIONS RAISED BY THE ASSESSEE TO THE REOPENING. THE REFERENCE WAS MADE BY THE A.O. TO THE DECISION IN THE CASE OF EAS TERN NEWSPAPER SOCIETY REFERRED SUPRA CANNOT BE HELD TO APPLY IN T HE PRESENT CASE SINCE THE REOPENING HAS BEEN DONE ON FACTS AND NOT LAW. TO THIS EXTENT IT CANNOT BE SAID THAT IT IS A CASE OF CHANGE OF OPINI ON BECAUSE THE AMOUNTS HAVE REMAIN UNEXPLAINED AND THEREFORE THE A .O. IS RIGHT IN INITIATING PROCEEDINGS U/S. 148 AND INQUIRE INTO TH E CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IN LIGHT OF THESE OBSERVATI ONS THE ACTION OF THE A.O. IS UPHELD. THE GROUND NO.1 TO 4 ARE DISMISSED . 3. THE LEARNED COUNSEL CONTENDS THAT LEARNED CIT(A) LOOKING AT ALL THESE FACTS SHOULD HAVE CALLED FOR ASSESSMENT RECORD FROM THE A O AND SHOULD HAVE VERIFIED WHETHER THE REASONS WERE RECORDED AND PROCEEDINGS U /S. 147 WERE INITIATED ON THE BASIS OF CREDIT OBJECTION AND WHETHER THE REASONS A MOUNT TO CHANGE OF OPINION IN TERMS OF DECISION IN THE CASE OF KELVINATOR OF INDI A LTD., WHICH IS UPHELD BY THE HONBLE SUPREME COURT (256 ITR 1). WITHOUT VERIFYI NG THE RECORD IT IS NOT POSSIBLE ITA NO.4073/MUM/2015 GIRISH MULJI FURIA 4 TO HOLD WHETHER IT IS A CASE OF CHANGE OF OPINION O R NOT. THE LEARNED CIT(A) HAS JUST SUMMARILY CONCLUDED THAT THERE IS NO CHANGE OF OPINION. THE LEARNED DR, ON THE OTHER HAND, CONTENDS THAT I) THERE IS NO REFERENCE TO REASONS BEING BASED ON ANY AUDIT OBJECTIONS II) THE ASSESSEES CONTENTION THAT IT WAS ORALLY REQUES TED TO THE LEARNED CIT(A) TO CALL FOR ASSESSMENT RECORD IS MERELY A SELF SERV ING STATEMENT. III) THE ASSESSMENT ORDER IS VERY CRYPTIC AND DOES NOT E VEN REFER TO THE AGRICULTURAL INCOME. THEREFORE, IT BECOMES A FIT C ASE OF NON-DISCLOSURE OF APPROPRIATE PARTICULARS. IV) THE ASSESSMENT ORDER DOES NOT GIVE ANY CLUE THAT AN Y DETAILS WERE FILED BY THE ASSESSEE. THEREFORE, THE PROCEEDINGS U/S. 147 HAS BEEN PROPER LY INITIATED. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. WITH REGARD TO GROUND NO.1, ABOUT VALIDITY OF PROCEEDINGS U/S. 148, IT IS APPARENT THAT ORIGINAL ASSESSMENT WAS FRAMED U/S. 1 43(3). THE REASONS REFERRED TO SOME PROCEEDINGS RELATED TO THE ORIGINAL ASSESSMENT AND ALLEGED THAT SOME DETAILS WERE NOT FILED BY THE ASSESSEE AT THAT TIME. HOWEV ER, AT THE SAME TIME IT IS SEEN THAT NO ADDITION WAS MADE BY THE LEARNED AO. THERE IS MERIT IN THE CONTENTION OF THE LEARNED DR THAT THE ORIGINAL ASSESSMENT ORDER I S VERY SHORT AND DOES NOT REFER TO AGRICULTURAL INCOME OF THE ASSESSEE, WHICH INDIC ATES NON-DISCLOSURE 5. BE THAT AS IT MAY, LEARNED CIT(A) IN THE INTERES T OF JUSTICE SHOULD HAVE CALLED FOR ASSESSMENT RECORD AND VERIFIED THE PROCEEDING S HEET AND CORRESPONDENCE BETWEEN THE AO AND THE ASSESSEE AND CONSIDERED THE OBJECTIONS RAISED ON THE ITA NO.4073/MUM/2015 GIRISH MULJI FURIA 5 VALIDITY OF SECTION 147. IT APPEARS THAT THIS ISSU E HAS BEEN DECIDED BY THE LEARNED CIT(A) WITHOUT VERIFYING THESE ASPECTS, WHICH ARE R ELEVANT TO DECIDE GROUND NO.1 IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES, INTEREST O F JUSTICE WILL BE SERVED IF APPEAL IS SET ASIDE AND RESTORED TO THE FILE OF THE CIT(A) TO DECIDE THE SAME AFRESH AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING H EARD ON THIS ASPECT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED AN APPLI CATION FOR ADMISSION FOR ADDITIONAL EVIDENCE. AFTER HEARING BOTH THE PARTIES, I AM OF THE VIEW THAT THIS ADDITIONAL EVIDENCE CANNOT BE ADMITTED AT THE LEVEL AS THE ASS ESSEE COULD NOT EXPLAIN HOW HE WAS PREVENTED BY SUFFICIENT CAUSE IN NOT PRODUCING THESE DOCUMENTS BEFORE THE LEARNED CIT(A) AND FILING AN APPROPRIATE APPLICATIO N. THEREFORE, THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IS REJECTED. HOWE VER, THE ASSESSEE MAY BE AT LIBERTY TO TAKE APPROPRIATE LEGAL REMEDY BEFORE THE LEARNED CIT(A) IN THIS BEHALF. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 RD FEBRUARY, 2017. SD/- (R P TOLANI) J UDICIAL MEMBER MUMBAI, DATED : 3 RD FEBRUARY, 2017. SA ITA NO.4073/MUM/2015 GIRISH MULJI FURIA 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI