ACIT, New Delhi V. Mrs. Rita Chandiok, New Delhi

ITA 4222/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53481 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: R K RAMAN
• Keywords: Additional evidence
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NOS. 4221 & 4222/DEL/2010 ASSTT. YR: 2006-07 ACIT, CIR. 31(1), VS. MRS. RITA CHANDIOK, NEW DELHI. C-33, CONNAUGHT PLACE, NEW DELHI. PAN/GIR NO. AAAPC2224L (APPELLANT) ( RESPONDENT ) APPELLANT BY : MS. Y. KAKKAR SR. DR RESPONDENT BY : SHRI R.K. RAMAN CA O R D E R PER R.P. TOLANI, J.M : THESE ARE TWO REVENUES APPEALS ONE AGAINST THE D ELETION OF QUANTUM AND THE OTHER AGAINST DELETION OF PENALTY L EVIED U/S 271(1)(C) OF THE I.T. ACT, RELATING TO A.Y. 2006-07. BOTH THE APPEAL S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMON ORDER FOR THE SAK E OF CONVENIENCE. 2. RESPECTIVE GROUNDS ARE AS UNDER: ITA NO. 4221/DEL/10 : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) AMOUNTING TO RS. 11,16,100/-. ITA NO. 4222/DEL/10 : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE B Y WRONGLY INVOKING CLAUSE (C) AND CLAUSE (D) OF RULE 46A AS H IMSELF HAD MADE THE APPELLANT RESPONSIBLE FOR THE LAPSE AND EV EN CONFIRMED A PART OF THE PENALTY AND IT WAS NOT A CA SE WHERE THE ITA 4221 & 4222/DEL/10 RITA CHANDIOK 2 ASSESSING OFFICER HAD NOT GIVEN SUFFICIENT OPPORTU NITIES TO THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN ACCEPTING THE VALUATION OF THE SHARES AS SUBMITTED BY THE ASSESSEE AS IN ABSENCE OF COMPLIA NCE FROM ASSESSEE PROPER ENQUIRIES COULD NOT BE CONDUCTED TO VERIFY FACTS FOR UNPRECEDENTED INCREASE IN THE VALUATION OF A PV T. LTD. COMPANYS SHARE. 3. WITHOUT PREJUDICE TO THE ABOVE, IT IS PRAYED THA T THE CASE MAY BE SET ASIDE TO THE AO TO BE RE-EXAMINED AFRESH AFTER CONSIDERING THE FRESH EVIDENCE SUBMITTED BY THE AS SESSEE. ITA NO. 4222/DEL/10: 3. LEARNED DR VEHEMENTLY ARGUES THAT THE ASSESSEE F AILED TO GIVE ANY DETAILS BEFORE THE AO. MORE SO, IN THE YEAR IN QUES TION 4900 SHARES WORTH RS. 49,000 IN A PRIVATE LTD. COMPANY, WITHOUT INVOL VEMENT OF A BROKER, WERE SOLD AT AN AMOUNT OF RS. 98 LACS. AO WANTED TO INQU IRE INTO THE DETAILS OF THIS TRANSACTION WHICH WAS PRIMA FACIE SUSPICIOUS. THE ASSESSMENT ORDER WOULD REVEAL THAT ASSESSEE DID NOT COOPERATE AT ALL IN THIS DIRECTION AND AO WAS COMPELLED TO FRAME THE ASSESSMENT U/S 144, MAK ING THE IMPUGNED ADDITIONS. 3.1. BEFORE CIT(A) ASSESSEE FILED APPLICATION FOR A DMISSION OF ADDITIONAL EVIDENCE ON THE GROUND THAT NO NOTICE WAS RECEIVED BY THE ASSESSEE AS SHE WAS RESIDING WITH HER MOTHER. PENALTY U/S 271 (1)(B ) WAS ALSO IMPOSED ON THE ASSESSEE. IN APPEAL, AGAINST THE PENALTY, CIT(A ) HELD THAT ASSESSEE WAS IN DEFAULT, HOWEVER, PENALTY FOR 4 DEFAULTS WAS REDUCE D TO 2 DEFAULTS, AS UNDER: 5. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCU MSTANCES OF THE CASE, I FIND THAT THE APPELLANT HAD FILED TH E RETURN OF INCOME FROM THE ADDRESS AT C-33, CONNAUGHT PLACE, N EW DELHI. ITA 4221 & 4222/DEL/10 RITA CHANDIOK 3 UNDER THE SELF ASSESSMENT SCHEME OF TAXATION, ONUS IS ON THE ASSESSEE WITH REGARD TO ALL PARTICULARS RELATING TO COMPUTATION OF TAXATION AND OTHER RELEVANT DETAILS. ONCE, THE APPE LLANT AHS CHOSEN TO FILE THE RETURN ON A PARTICULAR ADDRESS, IT IS THE DUTY OF THE ASSESSEE TO SEE THAT THE CORRESPONDENCE WITH TH E INCOME TAX DEPARTMENT IS DULY RECEIVED AND COMPLIED WITH IN TH E MANNER OF RECEIPT. IF, THE APPELLANT HAD ANY PROBLEM IN RE CEIVING NOTICE ON A PARTICULAR ADDRESS, SHE COULD HAVE INFORMED TH E DEPARTMENT ABOUT ANY OTHER ADDRESS PREFERRED BY HER FOR THE PU RPOSE OF INCOME TAX PROCEEDINGS. IN THE INSTANT CASE, THE AP PELLANT HAD GIVEN THE ADDRESS OF THE SHOP OWNED BY HER MOTHER W HO WAS VERY OLD AND UNWELL AND HENCE, THE NOTICES SENT AT THE ADDRESS GIVEN, COULD NOT REACH THE APPELLANT. THE LD. COUNS EL HAS NOT AMPLY CLARIFIED WHETHER THE SAID NOTICE WERE ACTUAL LY RECEIVED BY ANY ATTENDANT OR ANY OTHER PERSON AT THE SHOP, S INCE, THE SHOP WAS OPEN ON ALL DAYS EVEN IF THE OWNER I.E. MOTHER OF THE APPELLANT WAS NOT PRESENT. THEREFORE, THE APPELLANT COULD NOT EXPLAIN THAT THE NOTICES WERE NOT DULY SERVED AT TH E RETURNED ADDRESS. 5.2. HAVING HELD THAT THE DEFAULT ON THE PART OF TH E APPELLANT WAS NOT DUE TO ANY DEFICIENCY IN FOLLOWING THE PROC EDURE ON THE PART OF THE INCOME TAX DEPARTMENT, I SHALL DECIDE T HE LEVY OF PENALTY IN RESPECT OF EACH DEFAULTS SEPARATELY. AFT ER CONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL, I AM FULLY IN A GREEMENT WITH HIM THAT HAVING OBSERVED NON-COMPLIANCE, IF TH E AO PREFERS NOT TO ISSUE THE NOTICE FOR LEVY OF PENALT Y U/S 271(1)(B) AND DECIDES TO ISSUE A FRESH NOTICE, IT IMPLIES THA T THE AO HAS DECIDED NOT TO LEVY THE PENALTY IN CASE OF THAT DEF AULT AND HENCE, HAD ACQUITTED THE APPELLANT FOR THE DEFAULT. FURTHE R, REGARDING THE DEFAULT ON 6-10-2008 IN RESPECT OF NOTICES U/S 143(2) AND SECTION 142(1), I AM OF THE VIE THAT PROCEEDINGS U/ S 142(1) AND U/S 143(2) ARE TWO SEPARATE PROCEEDINGS AND ONE DOE S NOT EMANATE FROM THE OTHER. THEREFORE, THE DEFAULT IN RESPECT OF TWO PROCEEDINGS ARE DISTINCT. HOWEVER, I DO NOT FIND AN Y SATISFACTORY EXPLANATION OF THE APPELLANT IN RESPECT OF THE DEFA ULT ON 25-11- 2008. SINCE, I HAVE SEPARATELY HELD THAT BY NOT ISSUING T HE NOTICE OF PENALTY AND BY ISSUE OF A FRESH NOTICE, T HE LD. AO HAS ITA 4221 & 4222/DEL/10 RITA CHANDIOK 4 DECIDED TO NOT LEVY OF THE PENALTY, I HOLD THAT THE PENALTY OF RS. 10,000/- ALONE WAS LEVIABLE IN RESPECT OF THE DEFAU LT ON 25-11- 2008. 3.2. LEARNED DR, ADVERTING TO CIT(A)S ORDER CONTEN DS THAT CONSEQUENT TO REMAND REPORT, AO OBJECTED TO ADMISSION OF ADDITION AL EVIDENCE, BESIDES, EXPLAINING THE SUSPICIOUS NATURE OF TRANSACTION AND ASSESSEES NON- COOPERATION BY FOLLOWING OBSERVATIONS: IN THIS CASE MAIN ISSUE IS LONG TERM CAPITAL GAIN OF RS. 97,45,520/- FROM SALE OF SHARE OF M/S PC PVT. LTD. THE ASSESSEE AHS PURCHASED 4900 SHARES OF M/S PC PVT. LTD. @ RS. 10.00 PER SHARE IN THE YEAR 2002 AND SAME WERE SOLD FOR A SUM OF RS. 98,00,000/- DURING THE ASSESSMENT YEAR, GIVING SALE PRICE OF RS. 2000 PER SHARE. KEEPING IN VIEW UNPRECEDENTED RISE IN PRICES, TO FIND OUT VALUE OF PER SHARE THE ASSESSEE WAS REQUIR ED TO SUBMIT AUDITED BALANCE SHEET OF THE COMPANY FOR A.Y. 2004- 05 & 2005-06. THE SAME WAS NOT DONE BY THE ASSESSEE. THE ASSESSEE HAS NOT FILED ANY EVIDENCE REGARDING FINANCIAL CAPA CITY OF PURCHASER AND AUDITED BALANCE SHEET ETC. AND EVEN H AVE NOT FILED BEFORE YOUR GOODSELF DURING APPELLATE PROCEEDINGS O FAR. THE PHOTOCOPIES OF CERTAIN DOCUMENTS DOES NOT GO TO PRO VE THE CASE OF THE ASSESSEE. FURTHER, NONE OF THE CONDITIONS AS REQUIRED UNDER R ULE 46A ARE SATISFIED IN THE CASE OF THE ASSESSEE AND ASSESSEE CANNOT BE ALLOWED TO FILE ADDITIONAL EVIDENCE AT THIS STAGE. (A) THE AO NEVER REFUSED FOR ADMISSIONS OF ANY EVIDENCE PRODUCED BY THE ASSESSEE. (B) AS IS EVIDENT FROM THE LETTER OF THE ASSESSEE, THE ASSESSEE WAS NOT PREVENTED BY ANY CAUSE FROM PRODUCING THE EVIDENCE, AS CALLED UPON BY THE AO. (C) IT IS ALSO APPARENT FROM THE LETTER FILED BY THE AS SESSEE THAT HE WAS NOT PREVENTED FROM ANY CAUSE FROM PRODUCING ANY EVIDENCE WHICH IS RELEVANT TO GROUNDS OF APPEAL. (D) THE ASSESSEE WAS AFFORDED SUFFICIENT OPPORTUNITIES TO PROVE HIS CASE AND EVEN THE ORDER WAS PASSED AFTER ISSUIN G FINAL SHOW CAUSE TO THE ASSESSEE. ITA 4221 & 4222/DEL/10 RITA CHANDIOK 5 3.3. AOS MAIN EMPHASIS WAS IN RESPECT OF ADMISSION OF ADDITIONAL EVIDENCE. LEARNED DR RELIES ON THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. MODERN CHARITABLE FOUNDATION (2011) 335 ITR 105, WHEREIN THE HONBLE COURT IN SIMILAR CIRCUMSTANCES SET ASIDE THE MATTER BACK TO THE FILE OF AO BY FOLLOWING OBSERVATIONS: AFTER HEARING THE COUNSEL FOR THE PARTIES, WE ARE OF THE OPINION THAT AT THIS STAGE ADMISSION OF THE ADDITIONAL EVID ENCE ADMITTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) CANNOT BE INTERFERED WITH. IT IS MORE SO WHEN THE ASSESSEE I S A CHARITABLE ORGANIZATION. WE MAY ALSO RECORD THE SUBMISSION OF THE LEARNED COUNSEL FOR THE RESPONDENT THAT IN SO FAR AS UNSECU RED LOANS ARE CONCERNED, THEY WERE PAID BACK IN SUBSEQUENT YEARS, WHICH THAT THESE WERE GENUINE LOANS TAKEN BY THE ASSESSEE . AT THE SAME TIME, WE FIND THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) AFTER ADMITTING THE EVIDENCE RELIED UPON THE SAME WITHOUT ANY VERIFICATION. NO DOUBT, THE REMAND REPO RT OF THE ASSESSING OFFICER WAS CALLED FOR AND IT WAS FOUND T HAT THE ASSESSING OFFICER DID NOT GO INTO THE VERACITY OF T HE SAME AND REPRODUCED SOME FACTS FROM THE ASSESSMENT ORDER IT WAS BECAUSE OF THE REASONS THAT THE ASSESSING OFFICER S TRONGLY FELT THAT THERE WAS LAPSE ON THE PART OF THE ASSESSEE IN NOT PRODUCING THE EVIDENCE BEFORE HIM WHEN IT HAD BEEN GIVEN A NU MBER OF OPPORTUNITIES AND THEREFORE, HE OBJECTED TO THE ADM ISSION OF THE SAID EVIDENCE AND DID NOT DO ANY FURTHER EXERCISE T O VERIFY THE SAME. AT THE SAME TIME, WE ALSO FIND THAT EVEN THE COMMISSIONER OF INCOME-TAX (APPEALS) DID NOT GO INT O THESE DOCUMENTS AND SIMPLY RELIED UPON THESE DOCUMENTS AN D GAVE BENEFIT TO THE ASSESSEE. THEREFORE, IN ORDER TO BAL ANCE THE EQUITIES, WE ARE OF THE OPINION THAT ON THE ONE HAN D, THE ASSESSEE BE PERMITTED TO RELY UPON THE ADDITIONAL E VIDENCE PRODUCED BEFORE THE COMMISSIONER OF INCOME-TAX (APP EALS) AND AT THE SAME TIME, THE ASSESSING OFFICER ALSO BE GIVEN AN OPPORTUNITY TO VERIFY THESE DOCUMENTS. ACCORDINGLY, WE REMIT THE CASE BACK TO THE ASSESSIN G OFFICER WHO SHALL GO INTO THE VERACITY OF THESE DOCUMENTS. THE ASSESSEE ITA 4221 & 4222/DEL/10 RITA CHANDIOK 6 SHALL ALSO BE ENTITLED TO SHOW THAT THE UNSECURED L OANS HAD BEEN REPAID. IF THE ASSESSEE IS ABLE TO EXPLAIN THE DONA TIONS AS WELL AS UNSECURED LOANS PROPERLY, THE ASSESSING OFFICER SHA LL ACCEPT THE SAME. 3.4. LEARNED DR ADVERTS TO THE FACT THAT CIT(A) WI THOUT REFERRING TO THE ACTUAL SUSPICIOUS FACTS, NON-PRODUCTION OF BALANCE- SHEET ETC. BY THE ASSESSEE, ADMITTED THE ADDITIONAL EVIDENCE AND BY NON-SPEAKIN G ORDER GAVE THE RELIEF BY FOLLOWING OBSERVATION: 5.4. ON CAREFUL CONSIDERATION OF THE ABOVE ADDITIO NAL EVIDENCE, I HOLD THAT THE AAO WAS NOT JUSTIFIED IN CHANGING T HE TREATMENT OF LTCG IN RESPECT OF SALE OF SHARES TO INCOME FRO M OTHER SOURCES IN THE ABSENCE OF ANY EVIDENCES BEFORE HIM . ACCORDINGLY, THE APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT. 3.5. LEARNED DR, THUS PLEADS THAT FOLLOWING HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF MODERN CHARITABLE FOUNDATIO N (SUPRA), THE ISSUE IN QUESTION MAY BE SET ASIDE, RESTORED BACK TO THE FIL E OF AO. 4. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, CONTENDS THAT THE ADDITIONAL EVIDENCE WAS PROPERLY ADMITTED BY CIT(A) AND WAS DULY FORWARDED TO THE AO FOR SUBMISSION OF REMAND REPORT . AO NOT ONLY OBJECTED TO THE ADDITIONAL EVIDENCE BUT HAS GIVEN HIS REPORT ON MERIT. THEREFORE, THERE IS NO INFIRMITY IN THE ORDER OF CIT(A). THE ASSESSE E SOLD IMPUGNED SHARES. PHOTO COPY OF TRANSFER DEED WAS PRODUCED BEFORE AO, THEREFORE, CIT(A) WAS JUSTIFIED IN GIVING THE REQUISITE RELIEF. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. P ERIMAL KANTI CHANDRA 291 ITR 77 FOR THE PROPOSITION THAT WHEN AO WAS GIV EN SUFFICIENT OPPORTUNITY AND TIME TO VERIFY THE ADDITIONAL EVIDE NCE AND NO OBJECTION WAS ITA 4221 & 4222/DEL/10 RITA CHANDIOK 7 FILED, CIT(A) WAS JUSTIFIED IN ADMITTING THE ADDITI ONAL EVIDENCE. THE ORDER OF CIT(A) IS RELIED UPON. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE REVENUES CASE I S CONCERNED, IT HAS TWO LIMBS ONE ADMISSION OF ADDITIONAL EVIDENCE AND TH E RELIEF ON MERITS. IN OUR VIEW WHEN THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S 144 I.E. EX PARTE ASSESSMENT, THE CIT(A), ON THE BASIS OF SUFFICIENCY OF REASONS, CAN ADMIT THE ADDITIONAL EVIDENCE. IN THIS CASE, THE ASSESSEE S PENALTY U/S 271(1)(B) HAS BEEN REDUCED, WHICH IMPLIES THAT THERE WAS SOME MER IT IN ASSESSEES NOT FILING THE REQUISITE INFORMATION BEFORE AO. IN VIEW THEREOF, THE ADMISSION OF ADDITIONAL EVIDENCE BY CIT(A) CANNOT BE QUESTIONED. HONBLE DELHI HIGH COURT IN THE CASE OF MODERN CHARITABLE FOUNDATION ( SUPRA) HAS ALSO SUGGESTED THE SIMILAR COURSE OF ACTION. CONSEQUENTL Y, WE UPHOLD THE ORDER OF CIT(A) ON THE ISSUE OF ADMISSION OF ADDITIONAL EVID ENCE. IN VIEW THEREOF, THE ASSESSEES RELIANCE ON THE CASE OF PERIMAL KANTI CH ANDRA (SUPRA) BECOMES INSIGNIFICANT. BESIDES, IN THAT CASE REVENUE HAD NO T FILED ANY OBJECTION WHEREAS IN THE INSTANT CASE, AO FILED HIS OBJECTION S. 5.1. HAVING ADMITTED THE ADDITIONAL EVIDENCE, WE AD VERT TO THE MERITS OF THE CASE. IN OUR VIEW, THE ISSUE IN QUESTION INVOLV E IN-DEPTH INVESTIGATION, WHICH COULD NOT BE CARRIED OUT DUE TO THE ASSESSEE S NON-COOPERATIVE ATTITUDE. CIT(A) WHILE CONSIDERING THE MERITS, SHOU LD HAVE CONSIDERED THE ENTIRE MATERIAL AND GONE FOR INDEPENDENT INQUIRY AL SO. AOS OBJECTIONS WERE CLEAR AND CIT(A) INSTEAD OF CONSIDERING THE CONSEQU ENTIAL COMPLICATIONS OF THE FACTUAL ASPECTS HAS GRANTED THE RELIEF MERELY O N THE OBSERVATION THAT THE ASSESSEE HAS PRODUCED TRANSFER DEED. IN OUR VIEW, C IT(A) OUGHT TO HAVE CONSIDERED AOS OBJECTIONS RAISED IN REMAND REPORT AND PROPER REASONING ITA 4221 & 4222/DEL/10 RITA CHANDIOK 8 SHOULD HAVE BEEN GIVEN BY PASSING A PROPER AND SPEA KING ORDER. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE FIND MERIT IN THE ARGUMENT OF LEARNED DR AND SET ASIDE THE ISSUE BACK TO THE FILE OF AO TO D ECIDE THE SAME AFRESH. ASSESSEE IS DIRECTED TO BE FULLY COOPERATIVE IN THE INVESTIGATION AND REQUISITE INFORMATION FOR PROPER DECISION ON THE ISSUE. IN TH E RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 4221/DEL/10 (PENALTY APPEAL) ; 6. SINCE WE HAVE SET ASIDE THE QUANTUM ADDITION BAC K TO THE FILE OF AO, CONSEQUENTLY, WE SET ASIDE THE ISSUE OF PENALTY U/S 271(1)(C) BACK TO THE FILE OF AO TO BE DECIDED AFRESH IN THE LIGHT OF THE QUAN TUM PROCEEDINGS. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE STAND ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 16-12-2011. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16-12-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 4221 & 4222/DEL/10 RITA CHANDIOK 9