ASHOK P. SHAH, MUMBAI V. ITO 14(2)(1), MUMBAI

ITA 4101/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0784 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 15-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: NAMRATA KASALE
• Keywords: Unexplained investment; Opportunity of being heard; Principle of natural justice
• Section: 69

Judgement Text

P A G E | 1 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, M UMBAI BEFORE SHRI B.R.BASKARAN, AM AND SHRI RAVISH SOOD, JM ITA NO. 4101 /MUM/2016 ( / ASSESSMENT YEAR:2009 - 10 ) SHRI ASHOK P. SHAH 701, LA MARIE JAI BHAWANI MATA ROAD OFF CEASE RD, AMBOLI, ANDHERI (W), MUMBAI - 400 097 / VS. I.T.O. - 18(1)(2) 2 ND FLOOR HALL 2 ND FLOOR HALL ROOM NO. 601, EARNEST HOUSE, MUMBAI - 400021 ./ ./ PAN NO. AKMPS5481P ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : MS. NAMRATA KASALE , A.R / RESPONDENT BY : MS. POOJA SWAROOP , D.R / DATE OF HEARING : 16 .01 .201 8 / DATE OF PRONOUNCEMENT : 19 .01.2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL IS FILED BY THE ASSESSEE AND DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 29, MUMBAI, DATED 22.03.2016, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 20.03.2014. THE P A G E | 2 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE F OLLOWING GROUNDS OF APPEAL: - 1. NATUR AL JUSTICE : 1.1 THE INCOME TAX OFFICER 14 (2) (1), MUMBAI ( THE A.0. ), ERRED IN NOT GRANTING PROPER, SUFFICIENT AND OPPORTUNITY OF BEING HEARD TO THE APPELLANT WHILE FRAMING THE ASSESSMENT. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ASSESSMENT SO FRAMED BE HELD AS BAD AND ILLEGAL , AS THE SAME IS FRAMED IN BREACH OF THE PRINCIPLES OF NATURAL JUSTICE. 2. WITHOUT PREJUDICE TO THE ABOVE: 2.1 THE A.O. ERRED IN MAKING ADDITIONAL OF RS. 27,45,000/ - TO THE INCOME OF THE APPELLANT AS ALLEGED UNEXPLAINED INVESTMENT U/S. 69 OF THE INCOME TAX ACT, 1961 ['THE ACT']. 2.2 WHILE DOING SO , THE A.O. 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. 2.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH ADDITION WAS CALLED FOR. 2.4 ASSUMING - BUT NOT - THAT ANY ADDITION WAS CALLED FOR, IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, IN LAW, THE COMPUTATION OF THE ADDITION IS NOT IN ACCORDANCE WITH THE LAW. 3.1 THE A.O. ERRED IN NOT GRANTING REBATE U/S. 88 OF THE ACT AS CLAIMED BY THE APPELLANT. 3.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE APPELLANT IS TO BE GRANTED REBATE U/S. 88 AS CLAIMED FOR. 5. THE APPELLANT CRAVES LEAVE TO ADD ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUND AT THE TIME OF HEARING . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR A . Y 2009 - 10 ON 01.10.2009, DECLARING TOTAL INCOME AT RS. NIL . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. THE A.O BEING OF THE VIEW THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THE CASH DEPOSIT P A G E | 3 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO OF RS.27,45,000/ - IN HIS BANK ACCOUNT WITH JANSEWA SAHKARI BANK BORIVALI LTD, BRANCH: DAHISAR (EAST), THEREFORE, TREATING THE SAME AS AN UNEXPLAINED INVESTMENT UND ER SEC. 69 OF THE ACT, ASSESSED THE INCOME OF THE ASSESSEE VIDE HIS ORDER PASSED UNDER SEC. 143(3), DATED. 28.12.2011. THE A.O WHILE FRAMING THE ASSESSMENT ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE. 3. THAT AFTER THE CULMINATION OF THE ASSESSMENT A SHOW CAUSE NOTICE UNDER SEC. 274 R.W.S. 271(1)(C) WAS ISSUED TO THE ASSESSEE ON 28.12.2011. THE ASSESSEE IN HIS REPLY SUBMITTED BEFORE THE A.O THAT AS THE ADDITION OF RS.27,45,000/ - MADE UNDER SEC. 69 ON ACCOUNT OF ALLE GED UNEXPLAINED INVESTMENT WAS MERELY BACKED BY SURMISES, SUSPICIO N S AND CONJECTURES , WITHOUT CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE , THEREFORE, NO PENALTY WAS CALLED FOR IN THE HANDS OF THE ASSESSEE . T HE A.O AFTER DELIBERATING ON THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME. THE A.O OBSERVED THAT AS THE UNSUBSTANTIATED EXPLANATION OF THE ASSESSEE THAT THE CASH DEPOSIT OF RS.27,45,000/ - IN HIS BANK ACCOUNT REPRESENTED THE SALE PROCEEDS OF FLATS WHICH WERE SOLD TO M/S TALENT IN FOWAYS LTD AND M/S BUNIYAAD CHEMICAL LTD. DID NOT INSPIRE ANY CONFIDENCE , THEREFORE, THE SAME COULD NOT BE ACCEPTED . THE A.O IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS, HOLDING A CONVICTION THAT THE AMOUNT OF RS.27,45,000/ - DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE REPRESENTED HIS CONCEALED INCOME, THEREFORE , IMPOSED A PENALTY OF RS.8,25,391/ - IN THE HANDS OF THE ASSESSEE UNDER SEC. 271(1)(C) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIB ERATING ON THE SUBMISSIONS OF THE ASSESSEE WAS NOT PERSUADED TO ACCEPT THE SAME. THE CIT(A) OBSERVED THAT IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY PR E CEDING YEAR, P A G E | 4 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO VIZ. A . Y 2008 - 09, THE PENALTY IMPOSED BY THE A.O UNDER SEC.271(1)(C) ON THE SAME SET OF FACTS WAS UPHELD BY HIS PREDECES SOR , AS UNDER: THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. (233 CTR 465 ( 191 TAXMAN 179) ON CONCEALMENT PENALTY U/S. 271(1) (C) PROVIDES NECESSARY GU IDANCE AS DECISION IS RENDERED AFTER CONSIDERATION OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. FOR READY REFERENCE, RELEVANT EXTRACT OF THE D ECISION IS REPRODUCED AS UNDER : - IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT, IN LAW, WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDES B EING INCORRECT, IN LAW IS MA/A FIDE THE EXPLANATION 1 TO SECTION 271(1) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE (PARA 19) THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME - TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSE3SEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW, BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH CLAIM IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL BE LIABLE TO PENALTY UNDER SECTION 271(1)(C). IF ONE TAKES A VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION O PENALTY, EVEN IF HE WAS NOT ACTING BON A FIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LICENSE TO THE UNSCRUPULOUS ASSESSEE TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCR UTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF ASSESSMENT UNDER SECTION 143(1) AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PER SONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM, WOULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE (PARA 20) . ACCORDINGLY, I CONFIRM THE PENALTY LEVIED OF RS.25,69 , 984/ - BEING MINIMUM @100% PENALTY TAX SOUGHT TO BE EVADED. HENCE, THE GROUND OF APPEAL IS DISMISSED. THE CIT(A) IN THE BACKDROP OF THE AFORESAID FACTS FOLLOW ED THE ORDER OF HIS PREDECESSOR AND UPHELD THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C). 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED P A G E | 5 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) UPHOLDING THE QUANTUM ADDITION FOR THE YEAR UNDER CONSIDERATION, VIZ. A . Y 2009 - 10 HAD BEEN RESTORED BY A COORDINATE BENCH OF THE TRIBUNAL TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION (COPY PLACED ON RECORD) . IT WAS SUBMITTED BY THE LD. A.R THAT AS THE QUANTUM APPEAL OF THE ASSESSEE WAS PENDING ADJUDICATION BEFORE THE CIT(A), THEREFORE, IN A LL FAIRNESS THE PRESENT APPEAL MAY ALSO BE RESTORED TO THE FILE OF THE CIT(A) . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) DID NOT OBJECT TO THE AFORESAID CONTENTION OF THE ASSESSEE. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE QUANTUM APPEAL OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, VIZ. A . Y 2009 - 10 HAD BEEN RESTORED BY THE COORDINATE BENCH OF THE TRIBUNA L , VIZ. ITAT A BENCH, MUMBAI, TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION, VIDE ITS ORDER PASSED IN ITA NO. 5843/MUM/2012, DATED 29.07.2016, BY OB SERVING AS UNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND RELIED UPON BY THE ASSESSEE. WE FIND FROM THE DECISION OF CO - ORDINATE BENCH VIDE ORDER DATED 19.1.1996 PASSED IN ITA NO.6828/MUM/2011 (AY - 2008 - 09), HAS RESTORED THE ISSUE TO THE FILE OF ID. CIT(A) TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW UNDER IDENTICAL FACTS. IN THIS CASE ALSO, FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH, WE RESTORE THE MATTER BACK TO THE FILE OF THE A.O FOR RE - ADJUDICATION DENOVO AFTER GIVING REASONABLE OPPORTUNITY OF THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO CO - OPERATE WITH THE ID. CIT(A) FOR SPEEDY DISPOSAL OF THE CASE. WE ARE OF THE CONSIDERED VIEW THAT AS THE QUANTUM APPEAL IS PENDING ADJUDICATION AS ON DATE BEFORE THE CIT(A), THEREFORE, IN ALL FAIRNESS WE RESTO RE THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION AFTER THE DISPOSAL OF THE AFORESAID QUANTUM APPEAL OF THE ASSESSEE . P A G E | 6 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO 7. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 .01.2018 SD/ - SD/ - (B.R. BASKARAN ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 19 .01.2018 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 7 ITA NO.4101/MUM/2016 AY: 2009 - 10 SHRI ASHOK P. SHAH VS. ITO