ITO, New Delhi V. Sh. Naveen Kapoor, New Delhi

ITA 4416/DEL/2009

• Counselvise Citation: 441620114 RSA 2009
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 31-07-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 19-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Keywords: Search and seizure; Loose papers; Principle of natural justice; Non compliance; Documents seized
• Section: 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4416/DEL/2009 ASSESSMENT YEAR : 2002-03 ITO, SHRI NAVEEN KAPOOR, WARD-29 (1), 1948-KUCHA CHALLAN, NEW DELHI. V. DELHI. C.O. NO.141/DEL/2010 IN I.T.A. NO.4416/DEL/2009 ASSESSMENT YEAR : 2002-03 SHRI NAVEEN KAPOOR, ITO, 1948-KUCHA CHALLAN, WARD-29 (1), DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AADPK AADPK AADPK AADPK- -- -4134 4134 4134 4134- -- -E EE E APPELLANT BY : SMT. ANUSHA KHURANA, SR. DR. RESPONDENT BY : SHRI ANIL SHARMA, ADVOCATE. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 12 TH OCTOBER, 2009 FOR ASSESSMENT YEAR 2002-03 AND THE ASSESSEE HAS FILED CROSS OBJECTIONS TO THIS APPEAL WHICH IS L ISTED AS CROSS OBJECTION NO. 141/DEL/2010. BOTH WERE HEARD TOG ETHER AND FOR THE SAKE OF CONVENIENCE, THESE ARE DISPOSED OFF THROUGH A SINGLE CONSOLIDATED ORDER. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- ITA NO4416 & CO. 141/DEL/2009 & 2010 2 1. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` .22,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH LOANS ADVANCED THROU GH HUNDI. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT( A) HAS ERRED IN IGNORING THE FACT THAT THE CASH LOAN ENTRIE S ARE NOT OPEN TO ACCOUNTING VERIFICATION AS THESE WERE UNACCOUNTED TRANSACTIONS AND COUNTER ENTRIES FOR THESE CASH LOANS COU LD NOT HAVE BEEN REFLECTED IN REGULAR BOOKS OF ACCOUNTS. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT T O AMEND, MODIFY ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL A T ANY TIME BEFORE OR DURING OF THIS APPEAL. THE GROUNDS TAKEN BY ASSESSEE IN HIS CROSS OBJECTIONS ARE AS UNDER:- 1. BECAUSE THE DEPARTMENTAL APPEAL IS BAD IN LAW AS WELL AS ON FACTS AND IS LIABLE TO BE DISMISSED. 2. BECAUSE THE LD CIT(A) ERRED IN NOT QUASHING ACTION U/ S 147 AND IN NOT ANNULLING THE IMPUGNED ASSESSMENT ORDER. 3. THE RESPONDENT OBJECTS TO THE FACT THAT THE CASH LOANS/ ADVANCES OF ` .22 LAKHS WAS MADE THROUGH HUNDIS. THE FIRST GROUND OF APPEAL OF APPELLANT IS BAD IN LAW AS WELL AS ON FACTS. 4. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND MODIFY ALTER ADD OR FORGO ANY GROUND(S) OF CROSS OBJE CTION AT ANY TIME BEFORE OR DURING THE HEARING OF THIS CROSS OBJEC TION. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SE IZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CON DUCTED ON 15.12.2004 ON SHRI BRIJ MOHAN GUPTA, GALI HINGA BEG , TILAK BAZAR, ITA NO4416 & CO. 141/DEL/2009 & 2010 3 DELHI. DURING COURSE OF SEARCH AND SEIZURE OPERATION V ARIOUS INCRIMINATING DOCUMENTS/DIARY/LOOSE PAPERS WERE SEIZED. THE ENTRIES IN THE DIARY WERE WRITTEN BY SHRI RAM AVTAR SINGHAL ACCOUNTANT OF THE GROUP. IN THE STATEMENT RECORDED ON OATH HE EXPLAIN ED THE COMPLETE MODUS OPERANDI OF THE GROUP WHICH WAS CONDUCTING HUND I BUSINESS/UNACCOUNTED LOANS CASH TRANSACTIONS. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, SHRI BRIJ MOHAN GUPTA, THE MAIN PERSON OF THE GROUP ADMITTED HAVING HIS INVOLVEMENT IN UNACCO UNTED HUNDI TRANSACTIONS/CASH LOANS TRANSACTIONS ON BEHALF OF VARIOUS PARTIES AND ONE OF THE PERSONS WITH WHOM TRANSACTIONS WERE UNDERTAK EN WAS THE ASSESSEE I.E. SHRI NAVEEN KAPOOR. THE DCIT, CENTRAL CIR CLE, NEW DELHI SENT INFORMATION/DOCUMENTS TO THE JURISDICTIONAL ASSESSING OFFICER AND JURISDICTI0ONAL ASSESSING OFFICER ISSUED STATUTORY NOTICES U /S 148 OF THE ACT ON 19.3.2008. THE ASSESSEE IN HIS REPLY DENIED ANY T RANSACTIONS HAVING BEEN ENTERED WITH THE GROUP AND STATED THAT R ETURN ORIGINALLY FILED BY HIM MAY BE TREATED AS COMPLIANCE OF NOTICE U/S 148 OF THE ACT. THEN VARIOUS NOTICES WERE ISSUED BUT ASSESSEE DID NOT RESPON D. A FURTHER NOTICE U/.S 271(1)(B) WAS ALSO ISSUED FOR IMPOSIT ION OF PENALTY FOR NON COMPLIANCE ON VARIOUS DATES TO WHICH ASSESSEE RE PLIED THAT HE HAD ALREADY OBJECTED TO THE NOTICE WHICH WAS BAD IN LAW AND VOID AB INITO. VARIOUS QUERIES WERE RAISED TO THE ASSESSEE TO WHIC H ASSESSEE REPLIED THAT HE HAD NOT ENTERED INTO ANY TRANSACTIO N WITH SHRI BRIJ MOHAN GUPTA. IN VIEW OF THE ABOVE, THE ASSESSING OFFICE R PROCEEDED TO MAKE AN ADDITION OF ` .22,00,000/- U/S 69A OF THE INCOME TAX ACT, 1961 THE ADDITION WAS MADE ON THE BASIS OF DOCUMENTS SEIZED FROM THE PREMISES OF SHRI BRIJ MOHAN GUPTA. 3. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND OBJECTED TO REOPENING OF CASE U/S 148 AND ALSO OBJECTED TO ON THE MERITS OF THE CASE. THE LD CIT(A) AGREED WITH THE CONTENTIONS OF ITA NO4416 & CO. 141/DEL/2009 & 2010 4 ASSESSEE AND ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVA NT PARAGRAPH OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED. THE ASSE SSING OFFICER MERELY REFERRED TO A PIECE OF INFORMATION I N THE POSSESSION OF THE DEPARTMENT THAT THE APPELLANT HAD MAD E A TRANSACTION OF ` .22 LAKHS IN APRIL, 2011. THIS INFORMATION THOUGH ADEQUATE TO ISSUE NOTICE U/S 148 WAS NOT SUFFICIENT TO M AKE THE ADDITION TO THE TOTAL INCOME. THE APPELLANT HAD CAT EGORICALLY DENIED ANY KNOW LEDGE OF SHRI BRIJ MOHAN GUPTA OR H AVING ANY FINANCIAL OR BUSINESS TRANSACTION WITH HIM. A SPECIFIC REQUEST WAS ALSO MADE TO PROVIDE COMPLETE STATEMENTS OF SHRI BRIJ MOHAN GUPTA, SHRI RAJIV GUPTA (SON OF SHRI BRIJ MOHAN GUPT A) AND SHRI RAM AVTAR SINGHAL (THE ACCOUNTANT OF SHRI BRIJ MOHA N GUPTA) SO THAT THE OPPORTUNBITY OF CROSS EXAMINATION COULD BE A VAILED. HOWEVER, THE ASSESSING OFFICER NEITHER PROVIDED THE COP IES OF THE STATEMENTS ON OR AFFORDED THE REQUISITE OPPORTUNITY TO CROSS EXAMINE THE AFOREMENTIONED PERSONS WHOSE STATEMENTS WE RE BEING RELIED UPON BY HIM. FROM THE FACTS ENUMERATED ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER COMPLETELY FAILED TO E STABLISH ANY CASE AGAINST THE APPELLANT. FURTHER ENQUIRY INVESTIGAT ION WAS REQUIRED TO BE CARRIED OUT ON THE INFORMATION PASSED BY THE DCIT, CENTRAL CIRCLE 19, NEW DELHI BUT NO WORTHWHILE OR C OGENT WORK WAS DONE TOWARDS THIS END. NO CORROBORATIVE EVIDENCE TO THAT FOUND DURING SEARCH ON SHRI BRIJ MOHAN GUPTA WAS GATH ERED IN RELATION TO THE APPELLANT. DESPITE SPECIFIC REQUEST OF THE APPELLANT, COPIES OF THE AVERMENTS/STATEMENTS ON THE BA SIS OF WHICH ADDITIONS WERE MADE, WERE NOT PROVIDED NOR THE OPPORTUNITY TO CROSS EXAMINE THOSE PERSONS WAS GIVEN TO THE APPELLANT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER MERELY ITA NO4416 & CO. 141/DEL/2009 & 2010 5 SUMMARIZED THE SALIENT FEATURES OF THE ASSESSMENT PROCEEDI NGS RELATING TO SHRI BRIJ MOHAN GUPTA AND THEREAFTER SUM MARILY REJECTED THE REPLY OF THE APPELLANT AS NO ACCEPTABL E. SINCE THE APPELLANT HAD DENIED ENTERING INTO ANY TRANSACTION W ITH SHRI BRIJ MOHAN GUPTA (THE PERSON SEARCHED), THE INFORMATION IN THE SEARCH MATERIAL ABOUT THE APPELLANT ENTERING INTO LO AN TRANSACTIONS REMAINED UNSUBSTANTIATED. IN THE ABSENCE OF ANY FURTHER INVESTIGATION BY THE ASSESSING OFFICER, THERE WA S NO OTHER MATERIAL THAT COULD CONFIRM SUCH LOAN TRANSACTIONS. TH E ASSESSING OFFICER MERELY OFFERED TO THE STATEMENTS OF SHR I BRIJ MOHAN GUPTA AND OTHERS, WHEREBY THEIR INVOLVEMENT IN CASH LOAN TRANSACTIONS WAS ADMITTED BUT THERE IS NOTHING ON RECOR D TO SUGGEST THAT THOSE STATEMENTS WERE PROVIDED TO THE APPEL LANT. THEREFORE, THERE IS MERIT IN THE CONTENTION OF THE A PPELLANT THAT THE ADDITION WAS MADE WITHOUT ADHERING TO THE PRINCI PLES OF NATURAL JUSTICE. 4. DISSATISFIED WITH THE ABOVE ORDER, THE REVENUE HAS F ILED APPEAL BEFORE THIS TRIBUNAL. 5. AT THE OUTSET, THE LD AR FILED A COPY OF TRIBUNAL ORDER IN THE CASE OF M/S KABUL TRADING CO. ON WHICH SIMILAR PROCEEDING S WERE INITIATED UNDER THE SAME CIRCUMSTANCES OF ALLEGED TRANSACTION WIT H THE SAME PERSON I.E. SHRI BRIJ MOHAN GUPTA. THE LD AR FURTHER SUBMITTED THAT HON'BLE TRIBUNAL IN I.T.A. NO.4415/DEL/2009 DATED 3 1.3.2010 HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. THE LD AR FURTHER SUBMITTED THAT ALLEGED DOCUMENTS RELATING TO M/S KABUL TRADING CO. AND THE ASSESSEE WERE SEIZED DURING SAME SEARCH. THEREFORE , HE ARGUED THAT MATTER BEING A COVERED MATTER, MAY BE D ECIDED IN FAVOUR OF THE ASSESSEE AS DECIDED IN THE CASE OF M/S KABUL TRADIN G CO. MOREOVER THE LD AR ARGUED THAT REOPENING U/S 147 WAS NOT JUSTIFIED AS ITA NO4416 & CO. 141/DEL/2009 & 2010 6 NO NEW MATERIAL HAD COME TO THE NOTICE OF ASSESSING OFF ICER AND ASSESSING OFFICER HAD NOT APPLIED HIS MIND AND ISSUED NOT ICES ONLY ON RECEIPT OF INFORMATION FROM DCIT. 6. THE LD DR, HOWEVER, RELIED UPON THE ORDER OF ASSESSI NG OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE NOTE FROM THE ORDER OF TRIBUNAL THAT CIRCUMSTANCES AND FACTS OF THE CASE ARE SIMILAR TOFACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE HON 'BLE TRIBUNAL IN THAT ORDER HAS DECIDED THE MATTER IN FAVOUR OF THE A SSESSEE. THE RELEVANT PARAGRAPH OF HON'BLE TRIBUNAL IS REPRODUCED BELOW:- WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GO NE THROUGH THE RECORD CAREFULLY. ON PERUSAL OF THE SATISFACTION N OTE WE ARE OF OPINION THAT DEPARTMENT WAS POSSESSING INFORMATION EXHIB ITING THE INVOLVEMENT OF MANY CONCERNS IN HUNDI BUSINESS. SHR I BRIJ MOHAN GUPTA IS A MEDIATOR WHO CHARGED COMMISSION @ 10 PAISE PER ` . 100/-. THUS IT INDICATES THAT THERE WAS SUFFICIENT MA TERIAL WITH THE ASSESSING OFFICER WHICH COULD ENABLE HIM TO FO RM A PRIMA FACIE OPINION THAT INCOME TO THE EXTENT OF ` .28 LAKHS HAS ESCAPED ASSESSMENT. AS FAR AS THE OTHER IRREGULARITY POINT ED OUT BY THE LD COUNSEL FOR THE ASSESSEE ARE CONCERNED WE HAVE GONE THROUGH THE ORDER OF THE LD CIT(A) AS WELL AS OF THE ASSESSING OFFICER ON MERIT ALSO., WE DO NOT FIND ANY MERIT IN THE APPEAL OF REVENUE. THEREFORE, WE DO NOT DEEM IT NECESSARY TO SET ASIDE THE ORDERS OF THE REVENUE AUTHORITY IN ORDER TO REMOVE T HE IRREGULARITY, CREPT IN THE NAME OF ASSESSEE, IN THE NOT ICE. IN OUR OPINION, THAT WOULD BE A FUTILE EXERCISE. THEREFORE, WE DO NOT FIND ANY MERIT IN THE CROSS OBJECTION RAISED BY THE ASSESSEE IT IS ITA NO4416 & CO. 141/DEL/2009 & 2010 7 REJECTED. AS FAR AS THE APPEAL OF REVENUE IS CONCERNED , WE HAVE GONE THROUGH THE RECORD WITH THE ASSISTANCE OF LD REPRESENTATIVE. THE ASSESSING OFFICER HAS TREATED THE INFORMATION SENT TO HIM BY THE INVESTIGATING WING AS A GOSPEL TRUTH. HE HAS NOT CONDUCTED ANY FURTHER INQUIRY. HE DID NOT CONFRONT THE ASSESSEE WITH THE SEIZED MATERIAL WITH THE STATEMENT OF SHRI BRIJ MOHAN GUPTA/SHRI RAJIV GUPTA OR WITH THE STATEMENT OF THEIR ACCOUNTANT SHRI RAM AVTAR SINGHAL . HE SIMPLY MADE AN ADDITION ON THE BASIS OF THAT FROM THE DIARY OR PAPERS SEIZED FROM THE PREMISES OF SHRI BRIJ MOHAN GUPTA. NAM E OF THE ASSESSEE IN CODED WORDS IS REFLECTED AND THEREFORE ASSESSEE HAD AN UNEXPLAINED TRANSACTION TO THE EXTENT OF ` .28 LAKHS. IN OUR OPINION WE COULD APPRECIATE THE ACTION OF ASSESSING OFF ICER IF HE HAD CALLED FOR THE SEIZED MATERIAL FIND OUT HOW IT I S RELATED TO THE ASSESSEE THEN HE WOULD GAVE AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS POSITION WITH REGARD TO THOSE ENTRIES. THE ASSESSING OFFICER COULD HAVE CALLED FOR SHRI BRIJ MOHAN GUPTA , SHRI RAJIV GUPTA AND SHRI RAMAVTAR SINGHAL TO SUPPORT HIS CASE. HAD THEY SUPPORTED THE VERSION OF ASSESSING OFFICER, THAT THEY HAD RECEIVED OR GIVEN CASH LOAN TO THE ASSESSEE THEN THE CO LOUR OF ACCUSATION AGAINST ASSESSEE COULD BE DIFFERENT. THE PAPER S WERE NOT SEIZED FROM THE ASSESSEE. THEY RELATES TO THE BUSINESS O F THIRD PERSON HOW ASSESSEE CAN BE HELD LIABLE IN SUCH CIRCUMSTANCES UNLESS IT IS ESTABLISHED ON RECORD THAT TRAN SACTIONS WERE RELATING TO THE ASSESSEE. THERE IS NOT AN IOTA OF E VIDENCE ON RECORD. BUT NO SUCH STEP WAS TAKEN BY THE ASSESSING OFF ICER. LD CIT(A) HAS CONSIDERED ALL THESE ASPECTS BEFORE DELETING THE ADDITION. AT THE TIME OF HEARING LD DR MADE A FAINT ATTEMPT TO PERSUADE US FOR SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR REINVESTIGATION. WE ARE OF THE OPINION, THAT WHI LE SITTING IN THE ITA NO4416 & CO. 141/DEL/2009 & 2010 8 SECOND APPELLATE AUTHORITY IT IS NOT DESIRABLE AT OUR END TO GIVE A SECOND INNING TO THE ASSESSING OFFICER FOR BUILDING THE CASE OR TO FULFILL THE LACUNA HE HAS LEFT. IT WAS HIS DUTY AT THE TIME OF ASSESSMENT PROCEEDINGS TO COLLECT ALL SORT OF EVIDENCE W HICH CAN EXHIBIT THE INCOME CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE. TAKING INTO CONSIDERATION THE WELL REASONED ORD ER OF LD CIT(A), WE DO NOT FIND ANY MERIT IN THIS APPEAL OF T HE REVENUE. IT IS DISMISSED. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMI LAR TO FACTS AND CIRCUMSTANCES OF M/S KABUL TRADING CO. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TRIBUNAL ORDER, WE ALSO ARE OF T HE OPINION THT ASSESSING OFFICER NECESSARILY HAD NEW INFORMATION FOR REO PENING OF THE CASE, THEREFORE, REOPENING WAS JUSTIFIED. ON THE OTHE R HAND, ASSESSING OFFICER HAD NOT CONFRONTED ANY SEIZED MATERIAL TO TH E ASSESSEE AND MOREOVER THEY WERE FOUND FROM THE PREMISES OF ANOTHER PERSON AND FURTHER THE ASSESSING OFFICER WAS NOT ABLE TO ESTABLISH TH AT ENTRIES FOUND IN THE DOCUMENTS SEIZED RELATED TO ASSESSEE. 8. IN VIEW OF THE ABOVE, APPEAL FILED BY THE REVENU E AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST DAY O F SEPTEMBER, 2012. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 21.9.2012. HMS ITA NO4416 & CO. 141/DEL/2009 & 2010 9 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 2.8.2012 DATE OF DICTATION 13.9.2012 DATE OF TYPING 13.9.2012 DATE OF ORDER SIGNED BY 21.9.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 21.9.2012 & SENT TO THE BENCH CONCERNED.