Sh. Mohit Gawri, Chandigarh V. DCIT, Mohali

ITA 439/CHANDI/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51609 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JYOTI KUMARI
• Keywords: Unexplained cash credit; Unexplained expenditure; Business income; Additional evidence; Reasonable cause; Set aside
• Section: 69C; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER ITA NO. 439/CHD/2010 ASSESSMENT YEAR: 2006-07 SHRI MOHIT GAWRI, VS THE DCIT, CHANDIGARH CIRCLE 6(1), MOHALI PAN NO. AANPG0190Q ITA NO. 936/CHD/2010 ASSESSMENT YEAR: 2006-07 THE DCIT, VS SHRI FATEH JANG SINGH BAJWA, CIRCLE 6(1), CHANDIGARH MOHALI PAN NO. AERPB0933J & ITA NO. 937/CHD/2010 ASSESSMENT YEAR: 2006-07 SHRI FATEH JANG SINGH BAJWA, VS THE DCIT, CHANDIGARH CIRCLE 6(1), MOHALI PAN NO. AERPB0933J (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI KUMARI RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 28.11.2011 2 ORDER PER H.L.KARWA, VP THESE THREE APPEALS WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE APPEAL IN ITA NO. 439/CHD/2010 IS DIRECTED AGAINST THE ORDER OF CIT(A) CHANDIGARH DATED 11.3.2010 RELATING TO AS SESSMENT YEAR 2006- 07. THE APPEALS IN ITA NOS. 936/CHD/2010 AND 937/C HD/2010 BY THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A) CHANDIGARH DATED 31.3.2010 RELATING TO ASSESSMENT Y EAR 2006-07. 3. IN THE CASE OF SHRI MOHIT GAWRI, THE ASSESSING O FFICER FRAMED THE ASSESSMENT U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON 20.10.2009 BY MAKING CERTAIN ADDITIONS / DISALLOWAN CES. IN THE CASE OF FATEH JANG SINGH BAJWA, ITA NO. 937/CHD/2010 AND IT A NO. 936/CHD/2010, THE ASSESSING OFFICER FRAMED THE ASSE SSMENT U/S 144 OF THE ACT ON 30.10.2009 AFTER MAKING CERTAIN ADDITION S/DISALLOWANCES. 4. BOTH THE ASSESSEES FILED SEPARATE APPEALS AGAINS T THE ASSESSMENT ORDER BEFORE THE CIT(A) AND CHALLENGED THE VALIDITY OF ORDERS PASSED U/S 144 OF THE ACT. THE ASSESSEES HAVE ALSO CHALLENGED THE ADDITIONS / DISALLOWANCES MADE BY THE ASSESSING OFFICER IN THEI R RESPECTIVE ASSESSMENT YEARS. IN BOTH THE CASE, THE CIT(A) HEL D THAT THE ASSESSING 3 OFFICER HAS MADE BEST JUDGMENT ASSESSMENTS U/S 144 OF THE ACT IN ACCORDANCE WITH LAW AND DISMISSED THE GROUNDS RAISE D BY THE ASSESSEE ACCORDINGLY. IN THE CASE OF MOHIT GAWARI, THE CIT( A) CONFIRMED THE ADDITIONS / DISALLOWANCES MADE BY THE ASSESSING OFF ICER. HOWEVER, IN THE CSAE OF FATEH JANG SHIGH BAJWA, THE CIT(A) DELE TED THE ADDITION OF RS. 2,85,55,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITS IN ASSESSEES BANK ACCOUNT. HO WEVER, THE CIT(A) CONFIRMED THE OTHER ADDITIONS / DISALLOWANCES IN TH E CASE OF FATEH JANG SINGH BAJWA. 5. IN ITA NO. 439/CHD/2010, THE ASSESSEE RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH E ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 144 OF THE INCOME TAX ACT, 1961 IS IN ORDER AND IS IN L INE WITH THE LAW AND ACCORDING TO THE FACTS OF THE CASE . 2. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH E APPELLANT WAS ENGAGED INTO A BUSINESS OF REAL ESTAT E DEVELOPMENT AND NET CONSIDERATION OF RS. 5 CRORES RECEIVED BY HIM AGAINST AGREEMENT TO SELL OF LAND / CANCELLATION AGREEMENT WAS HIS TRADING RECEIPTS. 3. THAT THE LD. CIT(A) HAS ALSO ERRED IN NOT AGREEI NG WITH THE APPELLANTS SUBMISSIONS THAT HE HAD SOLD / ENTERED INTO AN AGREEMENT TO SELL HIS LAND / CANCELLATION AGREEMENT IN HIS INDIVIDUAL CAPACITY A S INVESTOR AND NOT AS A DEALER AND THE AMOUNT RECEIVE D BY HIM WAS CAPITAL ADVANCE / RECEIPTS AND NOT BUSINESS RECEIPT AND THE AMOUNT RECEIVED WAS NOT TAXABLE AS THERE WAS NO TRANSFER OF ASSETS. 4. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH E APPELLANT HAD FAILED TO EXPLAIN THE SOURCE OF EXPENDITURE IN THE PURCHASE OF LAND AND THAT THE ASSESSING OFFICER WAS RIGHT IN ADDING THE 4 UNEXPLAINED EXPENDITURE OF RS. 50 LACS AS HIS INCOM E U/S 69C OF THE INCOME TAX ACT, 1961. 6. IN ITA NO. 937/CHD/2010, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT EX. PARTE ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 144 IS TOTALLY IN LINE WITH T HE LAW COMPLETELY IGNORING THE FACT THAT ASSESSMENT U/ S 144 WAS MADE ABSOLUTELY IN UNDUE HASTE WITHOUT AFFORDING PROPER OPPORTUNITY TO THE APPELLANT. 2. THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE EX. PARTE ASSESSMENT U/S 144 WITH TOTAL DISREGARD TO TH E FACT THAT APPELLANTS WRIT PETITION CHALLENGING THE VERY JURISDICTION OF THE ASSESSING OFFICER WAS PENDING BEFORE THE HON'BLE HIGH COURT AND THE ASSESSING OFFICER HAD NO AUTHORITY OR JURISDICTION TO PASS IMPUGNED EX. PARTE ORDER. 3. THE LD. CIT(A) HAS ERRED IN LAW IN HOLDING THAT THE PROCEEDINGS U/S 148 WERE INITIATED IN ACCORDANCE WITH THE PROVISIONS OF LAW BY THE ASSESSING OFFICER 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 8,89,45,834/- PURELY ON SURMISES, CONJECTURES AND ASSUMPTIONS. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 1,10,54,167/- PURELY ON SURMISES, CONJECTURES AND ASSUMPTIONS. 6. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING THE ADDITIONS OF RS. 8,89,45,834/- AND RS. 1,10,56,167/ - WHICH WAS MADE BY THE ASSESSING OFFICER RELYING UPON THE MATERIAL COLLECTED AT THE BACK OF THE APPELLANT WITHOUT CONFRONTING AND GIVING OPPORTUNIT Y TO THE APPELLANT TO REBUT THE SAME BY WRONGLY HOLDI NG THAT SHE HAS ALREADY ADJUDICATED UPON THIS GROUND. 7. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E ADDITION OF RS. 8,67,500/- MADE BY THE ASSESSING OFFICER BY TREATING THE SAME AS NON-AGRICULTURE INCOME WHICH WAS DECLARED BY THE APPELLANT AS AGRICULTURAL INCOME. 5 7. IN ITA NO. 936/CHD/2010, THE DEPARTMENT HAS TAKE N THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF T HE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 2,85,55,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CREDITS IN ASSESSEES BANK ACCOUNT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. THE PRIMARY OBJECTI ONS RAISED BY THE ASSESSEES ARE AGAINST THE EX. PARTE ORDER PASSED BY THE ASSESSING OFFICER U/S 144 OF THE ACT WHICH WAS PASSED WITHOUT PROVIDI NG COPIES OF VARIOUS DOCUMENTS IMPOUNDED OR COLLECTED DURING INVESTIGATI ON. WE FIND THAT A SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE ITAT CHANDIGARH B BENCH OF THE TRIBUNAL IN THE CASE OF SHRI PREET IND ER SINGH, MOHALI V DCIT, CIRCLE 6(1), CHANDIGARH AND SHRI PARVEEN KAUS HAL, MOHALI VS ITO, WARD 6(3), MOHALI IN ITA NOS. 440/CHD/2010 AND 441/CHD/2010 RELATING TO ASSESSMENT YEAR 2006-07. BOTH THE ASSE SSEES BELONG TO SAME GROUP OF ASSESSEES. THE TRIBUNAL VIDE ITS ORDER DA TED 19.10.2010, SET ASIDE THE ORDER OF CIT(A) AND REMANDED THE MATTER T O CIT(A) TO DECIDE THE ISSUE ON MERITS. THE RELEVANT OBSERVATION OF T HE TRIBUNAL MADE IN THE CASE OF SHRI PREET INDER SINGH, MOHALI (SUPRA) AND SHRI PARVEEN KAUSHAL (SUPRA) ARE AS UNDER :- 6 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSMENT IN THE PRESENT CASE WAS COMPLETED EX-PARTE U/S 144 OF THE INCOME TAX ACT. THE BASIS FOR REOPENING THE ASSESSMENT WERE CERTAIN ENQUIRIES MADE IN THE CASE OF M/S MGF LTD AND ITS SUBSIDIARY COMPANIES, IN RELATION TO TH E INVESTMENT MADE BY THE ASSESSEE AND OTHER PERSONS, CARRYING OUT THEIR OPERATION IN MOHALI (PUNJAB). CERTAIN INFORMATION WAS RECEIVED BY THE DEPARTMENT AND THEREAFTER RELATED ENQUIRIES WERE MADE AS PER WHICH CERTAIN TRANSACTIONS BETWEEN M/S MGF LTD AND ITS SUBSIDIARY COMPANIES WITH THE ASSESSEE AND OTHER CONCERNS WERE NOT REPORTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE REQUISITION ED FOR COPIES OF THE DOCUMENTS AND THE STATEMENT RECORDED WHICH WERE NOT SUPPLIED TILL THE END OF TH E ASSESSMENT PROCEEDINGS. THE SAID INFORMATION WAS ALSO SUPPLIED IN PART. THEREAFTER, THE ASSESSMENT WAS COMPLETED EX-PARTE U/S 144 OF THE ACT. THE PLEA OF THE ASSESSEE THAT IT WAS NOT AFFORDED A REASONABLE OPPORTUNITY BY THE ASSESSING OFFICER BEFORE COMPLETING THE ASSESSMENT PROCEEDINGS. BEFORE THE CIT(A), THE EVIDENCE BY WAY OF ADDITIONAL EVIDENCE WAS FURNISHED BY THE ASSESSEE IN ORDER TO SUPPORTS ITS CLAIM. THE SAID ADDITIONAL EVIDENCE FURNISHED BY T HE ASSESSEE WAS REJECTED BY THE CIT(A). 7. UNDER THE PROVISIONS OF RULE 46A OF THE I.T. RULES, THE ASSESSEE IS ENTITLED TO PRODUCE ALL SUCH ADDITIONAL EVIDENCES, WHICH WAS NOT PRODUCED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CIRCUMSTANCES ENSHRINED IN SUB CLAUSE (A) TO (D) UNDER RULE 46A (1) OF THE I.T. RULES. THE ADDITION AL EVIDENCE CAN BE FURNISHED BEFORE THE CIT(A) WHERE (A) THE ASSESSING OFFICER HAD REFUSED TO ADMIT THE EVIDENCE, OR (B) WHERE THE ASSESSEE WAS PREVENTED B Y A SUFFICIENT CASE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR C) WHERE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING ANY EVIDENCE BEFORE THE ASSESSING OFFICER, WHICH WAS RELEVANT TO ANY GROUND OF APPEAL; OR D) WHERE THE ASSESSING OFFICE R HAS MADE THE ORDER WITHOUT GIVING A SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE REPRESENTING TO ANY GROUND OF APPEAL. UNDER RULE 46A(2) OF THE I.T. RULES, IT IS PROVIDED THAT NO EVIDENCE SHALL BE ADMITTED UNDER SUB RULE (1) UNLES S THE CIT(A) RECORDS IN WRITING THE REASONS FOR ITS 7 ADMISSION AND UNDER SUB RULE (3), THE CIT(A) SHALL NOT TAKE INTO RECORD ANY EVIDENCE ADDUCED UNDER SUB RULE (1) UNLESS THE ASSESSING OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE THE SAI D EVIDENCE OR DOCUMENT OR CROSS EXAMINE THE WITNESS PRODUCED BY THE ASSESSEE OR PRODUCE ANY EVIDENCE/DOCUMENT/WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. UNDE R SUB RULE (4), IT IS PROVIDED THAT THE CIT(A) IS NOT EMPOWERED TO DIRECT THE ASSESSEE FOR PRODUCTION OF ANY DOCUMENT OR OF ANY WITNESS TO ENABLE HIM TO DISPOSE OF THE APPEAL. 8. THE PROCEDURE FOR THE ADMISSION OF ADDITIONAL EVIDENCE IS PRESCRIBED IN THE ACT AND THE ASSESSEE IN CASE WANTS TO RELY ON ANY EVIDENCE WHICH WAS NOT FURNISHED BEFORE THE ASSESSING OFFICER, AND IS BEIN G FURNISHED BEFORE THE CIT(A) FOR ADJUDICATION OF THE ISSUE RAISED, AN APPLICATION FOR THE SAME IS TO BE MOVED FOR ITS ADMISSION AND UNDER RULE 46A OF INCOME-TAX RULES, THE CIT(A) AFTER CONFRONTING THE SAME TO THE ASSESSING OFFICER HAS TO DECIDE WHETHER THE SAME MERITS TO BE ADMITTED AND THEREAFTER DECID E THE ISSUE ON ITS MERITS. 9. IN VIEW THE ABOVE SAID, WE ARE OF THE VIEW THAT THE ASSESSEE HAS ESTABLISHED ITS CASE OF REASONABLE CAUSE OF NON FURNISHING THE INFORMATION / EVIDENCE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE ADDITIONAL EVIDENCE RELIED UPON B Y THE ASSESSEE MERITS TO BE TAKEN ON RECORD AND THE ISSUES BE ADDRESSED IN RELATION TO THE AFORESAID ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. FURTHER, IN THE INTEREST OF JUSTICE, AFTER ADMITTIN G ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE, WE REMIT THE ISSUE BACK TO THE FILE OF CIT(A) TO DECID E THE ISSUE ON MERITS, AFTER CONFRONTING THE ASSESSIN G OFFICER WITH ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE. ACCORDINGLY, GROUND NO.5 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN VIEW OF OUR REMITTING THE ISSUE BACK TO THE FILE OF CIT(A), WE ARE NOT ADDRESSING THE ISSUES RAISED BY THE ASSESSEE ON MERITS OF THE ADDITION. THUS THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8 11. THE FACTS IN ITA NO. 441/CHD/2010 ARE IDENTICAL TO THE FACTS IN ITA NO. 440/CHD/2010 AND HENCE OUR DECISION IN ITA NO. 440/CHD/2010 SHALL APPLY MUTATIS-MUTANDIS. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) IN NON ADMISSION OF ADDITIONAL EVIDENCE IS ALLOWED. THE CIT(A) IS DIRECTED TO DECIDE THE ISSUE ON MERITS AFTER CONFRONTING THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER. THE GROUND NO.5 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. AT THE TIME OF HEARING OF APPEAL, SHRI SUDHIR SE HGAL, LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ORDERS OF CIT(A) M AY BE SET ASIDE AND REMAND THE MATTER TO THE FILE OF CIT(A) WITH A DIRE CTION TO DECIDE ALL THE ISSUES AFRESH IN ACCORDANCE WITH LAW FOLLOWING THE ORDER OF THE TRIBUNAL DATED 19.10.2011 PASSED IN THE CASE OF SHRI PREET P AL SINGH MOHALI (SUPRA) AND SHRI PARVEEN KAUSHAL, MOHALI IN ITA NO. 440CHD/2010 AND 441/CHD/2010 (SUPRA) RELATING TO ASSESSMENT YEARS 2 006-07. 10. WE FIND MERIT IN THE ABOVE SUBMISSIONS OF SHRI SUDHIR SEHGAL, LD. COUNSEL FOR THE ASSESSEE. THE FACTS ARE SIMILAR AN D, THEREFORE, WE SET ASIDE THE ORDER OF CIT(A) DATED 11.3.2010 PASSED IN THE CASE OF MOHIT GAWRI (ITA NO.439/CHD/2010) AND ORDER DATED 31.3.20 10 PASSED IN THE CASE OF SHRI FATEH JANG SINGH BAJWA (IN ITA NOS.936 & 937/CHD/2010) AND REMAND THE MATTER TO CIT(A) WITH A DIRECTION TO DECIDE THE APPEALS OF THE ABOVE ASSESSEES AFRESH IN ACCORDANCE WITH LA W FOLLOWING THE 9 DIRECTIONS AND GUIDELINES GIVEN BY ITAT CHANDIGARH BENCH B IN THE CASE OF SHRI PREET INDER SINGH MOHALI (SUPRA) AND SHRI PARVEEN KAUSHAL, MOHALI (SUPRA). 11. IN VIEW OF THE ABOVE, WE DO NOT THINK IT NECESS ARY TO GIVE COMMENTS ON THE MERITS OF THE CASE. 12. FOR STATISTICAL PURPOSES, ALL THE APPEALS ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER, 2011. SD/- SD/- (D.K.SRIVASTAVA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 28 TH NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR