Ultra Consultant (P) Ltd., New Delhi V. ITO, New Delhi

ITA 4475/DEL/2011

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4740 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-04-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Assessee Lawyers: Y K KAPOOR
• Keywords: Opportunity of being heard; Principle of natural justice; Non compliance; Non passing of speaking order; Documents seized; Reassessment proceedings
• Section: 131; 148

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH D , NEW DELHI BEFORE : SHRI S.K. YADAV , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 4475/DEL./2011 ASSESSMENT YEAR: 1999 - 2000 ULTRA CONSULTANT (P) LTD., A - 3, GREATER KAILASH, PART - I, NEW DELHI. PAN - AAACU 0040P (APPELLANT) VS. INCOME - TAX OFFICER, WARD 18(1), NEW DELHI. (RESPONDENT) ASSESSEE BY SH. Y.K. KAPOOR, ADVOCATE REVENUE BY SH. UMESH CHAND DUBEY, SR. DR ORDER PER L.P. SAHU, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - XXI, NEW DELHI DATED 02.08.2011 FOR THE ASSESSMENT YEAR 1999 - 2000. THE APPELLANT HAS RAISED AMENDED GROUNDS OF APPEAL WHICH READ AS UNDER : 1. THAT THE ORDER PASSED BY THE AUTHORITIES BELOW IS CONTRARY TO THE ORDER DATED 12.11.2008 OF THIS HON'BLE TRIBUNAL AS THE DIRECTION OF THE TRIBUNAL TO SUPPLY THE MATERIAL WHICH WAS THE BASIS OF ASSESSMENT THAT WAS USED AGAINST THE ASSESS EE, IS TILL DATE NOT BEEN COMPLIED WITH AND THE ASSESSMENT IS LIABLE TO BE QUASHED. 2. THE ORDERS OF THE AUTHORITIES BELOW SUFFER FROM NON COMPLIANCE OF PRINCIPLES OF NATURAL JUSTICE AS WELL AS NON APPLICATION OF MIND . DATE OF HEARING 11.04.2017 DATE OF PRONOUNCEMENT 13.06 .2017 ITA NO. 4475/DEL./2011 2 3. THAT THE ORDERS PASSED BY THE AUTHORITIES BELOW IS BAD IN LAW ON ACCOUNT OF NON CONSIDERATION OF THE EVIDENCE ADDUCED BY THE ASSESSEE IN SUPPORT OF ITS GROUNDS AND PURSUANT TO THE ORDER DATED 12.11.2008, PASSED BY THIS TRIBUNAL. 4. THAT THE ORDER PASSED BY THE LD. CIT(A) IS LIABLE TO BE SET ASIDE AS IT DOES NOT DISCLOSE THE REASONS FOR DISPOSING OF THE APPEAL AND IS THUS A NON SPEAKING ORDER. 5. THAT ORDERS PASSED BY THE AUTHORITIES BELOW IS NOT SUSTAINABLE IN LAW AS THE SAME INCOME WHICH WAS SUBJECTED TO TAX IN THE ASSESSMENT YEAR 19 98 - 99, IS AGAIN BROUGHT TO TAX IN THE RELEVANT ASSESSMENT YEAR UNDER APPEAL. 2. THE BRIEF FACTS OF THE CASE WAS THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A LOSS OF RS.38,430/ - WHICH WAS PROCESSED U/S. 143(1). SUBSEQUENTLY, AN INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, UNIT - I, NEW DELHI THAT THE APPELLANT HAD RECEIVED A SUM OF RS.5 LACS AND RS.4,34,334/ - FROM M/S. MY MONEY SECURITIES LTD. THROUGH CHEQUE NOS. 338954 AND 439401 DATED 09.09.1998 DRAWN ON CORPORATION BANK, KAROL BAGH, NE W DELHI OUT OF ACCOUNT NO. 3116. THEREFORE, THE AO REOPENED THE ASSESSMENT U/S. 147/148, REQUIRING THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF AFORESAID AMOUNTS RECEIVED BY HIM. THE APPELLANT EXPLAINED THAT THE ABOVE AMOUNTS WERE RECEIVED AGAINST SALE OF SHARES TO MY MONEY SECURITIES LTD. MADE IN A.Y. 1998 - 99. HOWEVER, FOR WANT OF SATISFACTORY EVIDENCES, THE ITA NO. 4475/DEL./2011 3 AO ADDED THE AMOUNT OF RS.9,41,334/ - TO THE TOTAL INCOME OF THE ASSESSEE AS ITS INCOME FROM UNEXPLAINED SOURCES VIDE ASSESSMENT ORDER DATED 27.12 .2006, WHICH STOOD CONFIRMED IN APPEAL BY THE LD. CIT(A). THE APPELLANT CHALLENGED THE ORDER OF LD. CIT(A ) IN APPEAL BEFORE THE TRIBUNAL BOTH ON VALIDITY OF REASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE AS WELL AS ON MERITS OF ADDITION STATING THE SAME TO BE UNSUSTAINABLE AS THE MATERIAL USED AGAINST THE ASSESSEE WAS NOT PROVIDED TO HIM FOR REBUTTAL AND THAT THE REQUEST OF ASSESSEE TO SUMMON THE DIRECTOR OF M/S. MY MONEY SECURITIES LTD., FOR CROSS EXAMINATION WAS TURNED DOWN WITHOUT ANY REASON. ON THIS, THE TRIBUNAL VIDE ORDER DATED 12.11.2008 RESTORED THE MATTER TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS : 7. WE HAVE GIVEN CAREFUL THOUGHT TO THE LAST ADDRESSED ARGUMENT OF THE ASSESSEE. WE FIND THAT THE ORDER PASSED BY THEAO IS VERY CRYPTIC AND THE ONLY RELEVANT OBSERVATION IS 'ADDITION OF RS.9,41,334 IS MADE' AS 'ACCOMMODATION ENTRY'. AGAINS T THE ASSESSMENT, THE ASSESSEE RAISED THE FOLLOWING GROUND OF APPEAL BEFORE THE LD. CIT(A): - 'THAT ISSUANCE OF NOTICE U/S 148 OF INCOME TAX ACT IN ABSENCE OF INABILITY TO PROVIDE COPY OF SEIZED PAPERS/DOCUMENTS STATEMENTS OBTAINED DURING SEARCH PROCEEDING S OF M/S MY MONEY SECURITIES LTD, RELATING TO APPELLANT COMPANY AND NON - PRODUCTION OF OPPORTUNITY TO VERIFY/CROSS EXAMINE, IS ILLEGAL/BASELESS.' ITA NO. 4475/DEL./2011 4 7.1 THEN THERE ARE LETTERS FILED BY THE ASSESSEE BEFORE THE AO ASKING FOR COPIES OF INFORMATION IN HIS POSSESSION AND BEING USED AGAINST THE ASSESSEE FOR MAKING ADDITION. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE INFORMATION USED AGAINST THE ASSESSEE WAS NEVER SUPPLIED TO THE ASSESSEE. WE ARE UNABLE TO REJECT ABOVE CLAIM OF THE ASSESSEE AS THERE IS NO DISCUSSION IN DIE ASSESSMENT ORDER OR IN THE ORDER OF CIT(A) ON THE ABOVE MATERIAL ISSUE. THERE IS NOTHING ON RECORD TO SHOW THAT REQUEST OF THE ASSESSEE TO PROVIDE INFORMATION BEING USED AGAINST IT OR REQUEST TO SUMMON THE DIRECTOR, M/S . MY MONEY S ECURITIES LTD. WAS CONSIDERED IN ACCORDANCE WITH LAW. IT IS, THUS, A CLEAR CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. I T IS TRITE LAW THAT ASSESSEE IS ENTITLED TO KNOW AND HAVE OPPORTUNITY TO REBUT THE MATERIAL WHICH IS USED AGAINST THE ASSESSEE. THEREFORE, IN OUR OPINION, THE ASSESSMENT MADE IN THIS CASE SUFFERS FROM A FUNDAMENTAL DEFECT. IT WAS OBLIGATORY ON THE PART OF THE ASSESSING OFFICER TO CONSIDER THE ABOVE - MENTIONED REQUEST OF THE ASSESSEE. T HIS NOT HAVING BEEN DONE, THE IMPUGNED ORDERS ARE NOT SUSTAINABLE. THESE ARE BEING SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO WITH THE DIRECTION THAT REQUEST OF THE ASSESSEE BE JUDICIALLY CONSIDERED IN ACCORDANCE WITH LAW AND THE ASSESSEE BE INFORMED OF THE MATERIAL WHICH IS BEING USED OR, WHICH IS INTENDED TO BE USED AGAINST THE ASSESSEE. ONLY AFTER THE ABOVE EXERCISE, A FRESH ORDER, IN ACCORDANCE WITH LAW BE PASSED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3. IN THE COURSE OF ASSESSMENT PROCEE DINGS TAKEN IN COMPLIANCE TO THE ABOVE DIRECTIONS OF THE TRIBUNAL, THE ASSESSEE REQUESTED THE AO VIDE LETTER DATED 09.12.2009 TO PROVIDE HIM COPIES OF STATEMENTS OF DIRECTORS OF M/S. MY MONEY SECURITIES LTD., DOCUMENTS SEIZED FROM M/S. MY MONEY SECURITIES LTD. HAVING RELEVANCE WITH THE ASSESSEE AND THE ASSESSMENT AND ITA NO. 4475/DEL./2011 5 APPEAL ORDERS OF THE SAID SHARE BROKER RELATED TO THE SEARCH PROCEEDINGS. THE AO PROVIDED THE ASSESSEE COPIES OF STATEMENTS OF SH. SANJAY SETH, THE DIRECTOR OF M/S. MY MONEY SECURITIES LTD. THE AO OBSERVED THAT SHRI SANJAY SETH, DIRECTOR OF M/S. MY MONEY SECURITIES IN REPLY TO QUESTION NO. 15 , STATED THAT THEY ARE CONCERNED WITH THEIR COMMISSION AND RECEIVED CHEQUE FROM THE CLIENTS FOR PURCHASE/DEBIT IN HIS ACCOUNT AND ISSUE CHEQUES FOR CRED IT/SALE OF SHARES. LAYING EMPHASIS ON THIS REPLY AND ALSO THE FACT THAT THE ASSESSEE FAILED TO SUBMIT ANY DETAILS OF PURCHASE AND SALE OF SHARES IN THE ORIGINAL ASSESSMENT PROCEEDINGS , THE AO CONCLUDED THAT THERE WAS NO ACTUAL BUSINESS TRANSACTION OF SHARE BETWEEN THE ASSESSEE AND M/S. MY MONEY SECURITIES LTD., BUT THE AMOUNT OF RS.9,41,334/ - RECEIVED BY APPELLANT WAS ACCOMMODATION ENTRY. HE, ACCORDINGLY, ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THIS ORDER IN APPEAL BEFORE TH E LD. CIT(A) WHO AGAIN CONFIRMED THE ORDER OF AO VIDE IMPUGNED ORDER. AGGRIEVED, THE ASSESSEE IS IN THIS APPEAL BEFORE THE TRIBUNAL. 4. ASSAILING THE IMPUGNED ORDER, THE LD. AR OF THE ASSESSEE THAT THE AO WHILE PASSING THE IMPUGNED ASSESSMENT ORDER HAS ITA NO. 4475/DEL./2011 6 F AILED TO COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL, ACCORDING TO WHICH THE AO WAS REQUIRED TO SUPPLY THE INFORMATION RECEIVED AND ALL THE MATERIAL SEIZED FROM THE PREMISES OF M/S. MY MONEY SECURITIES LTD. HAVING RELEVANCE TO THE IMPUGNED TRANSACTIONS AND TO ISSUE SUMMONS TO THE PURCHASER OF SHARES FOR CROSS - EXAMINATION AND TO VERIFY THE IMPUGNED TRANSACTIONS OF SHARES, BUT HE FAILED TO DO SO. THE AO ONLY PROVIDED THE COPIES OF STATEMENTS RECORDED BY THE REVENUE AUTHORITIES OF INVESTIGATION WING, BUT DID NO T BOTHER TO ISSUE SUMMONS TO THE SHARE PURCHASER FOR CROSS EXAMINATION WITH THE APPELLANT WITH RESPECT TO THE IMPUGNED TRANSACTIONS OF SHARES. IT WAS ALSO SUBMITTED THAT THE LD. CIT(A) HAS RECORDED CONTRARY FACTS THAT NO DETAILS REGARDING SHARE TRANSACTIONS WERE PLACED WHEREAS CONTRACT NOTES ETC. OF THE BROKER WERE FURNISHED BEFORE THE AUTHORITIES BELOW. HE, THEREFORE, SUBMITTED, THAT THERE BEING NO MATERIAL ON RECORD TO TREAT THE IMPUGNED SHARE TRANSACTIONS AS SHAM AND THERE BEIN G FAILURE ON THE PART OF AO TO COMPLY WITH THE DIRECTIONS OF THE TRIBUNAL, THE IMPUGNED ADDITION IS NOT SUSTAINABLE AT ALL. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 4475/DEL./2011 7 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE BEFORE US INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. A PERUSAL OF ORDER OF TRIBUNAL REVEALS THAT THE PLEA OF THE ASSESSEE BEFORE THE TRIBUNAL WAS THAT THE AO WHILE MAKING THE ADDITION IN REASSESSMENT PROCEEDIN GS, DID NOT CONSIDER THE REQUEST OF ASSESSEE TO PROVIDE HIM THE INFORMATION RECEIVED AGAINST THE ASSESSEE AND TO GIVE HIM AN OPPORTUNITY TO CROSS - EXAMINE THE SAID BROKER BY ISSUING SUMMONS TO HIM. THE TRIBUNAL DIRECTED THE AO TO CONSIDER THE REQUEST OF THE ASSESSEE WHILE PASSING FRESH ASSESSMENT ORDER. THERE WAS AN EXPRESS DIRECTION OF TRIBUNAL THAT THE ASSESSEE BE INFORMED OF THE MATERIAL WHICH IS BEING USED AGAINST HIM. HOWEVER, THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER NEITHER GAVE THE ASSE SSEE THE INFORMATION RECEIVED FROM INVESTIGATION WING NOR GAVE ANY REASON S THERE FOR , NOR ISSUED ANY SUMMON TO THE BROKER FOR CROSS EXAMINATION, AS PRAYED FOR. THE AO PROVIDED ONLY THE STATEMENTS OF DIRECTOR OF BROKER COMPANY , THAT TOO RECORDED BY INVESTIG ATION WING ON 03.03.2006 U/S. 131 AND 28.12.2006 U/S. 133A. THIS ACT OF THE AO DOES NOT AMOUNT TO COMPLETE COMPLIANCE OF TRIBUNAL S DIRECTION S AS NOTED ABOVE . A ITA NO. 4475/DEL./2011 8 PERUSAL OF ASSESSMENT ORDER FURTHER REVEALS THAT THE AO WHILE OBSERVING THAT THERE WAS NO ACTUAL SHARE TRANSACTION , HAS STATED THAT THE ASSESSEE FAILED TO SUBMIT THE DETAILS OF PURCHASE AND SALE OF SHARES AS REQUIRED BY THE AO IN THE ORIGINAL REASSESSMENT PROCEEDINGS. IN THIS CONTEXT, WE FIND THAT THE ASSESSEE MADE A REPLY BEFORE THE AO ON 22.1 2.2009 CATEGORICALLY STATING THAT THE ASSESSEE HAD PRODUCED BEFORE THE AO CASH BOOK , LEDGER AND OTHER RELEVANT RECORDS FOR THE ASSESSMENT YEAR 1998 - 99 AND 1999 - 2000 EXCEPT THE SALES/PURCHASE VOUCHERS/BROKERS NOTE. THE ASSESSEE HAS ALSO MENTIONED IN THE SAI D REPLY THAT HE IS SUBMITTING FOLLOWING DOCUMENTS WITH THIS REPLY ALONGWITH SALE / PURCHASE VOUCHERS/BROKER NOTES WITH CONSOLIDATED CHART OF SUCH SALE/PURCHASE TRANSACTIONS OF VARIOUS SCRIPS BEFORE THE AO IN THE FRESH ASSESSMENT PROCEEDINGS : (I). BALANCE SHEET (II). PROFIT AND LOSS ACCOUNT (III). COMPUTATION OF INCOME (IV). PHOTOCOPY OF RETURN OF INCOME (V). DETAILS OF SALE/PURCHASE TRANSACTIONS WHERE FROM THE PROFIT OF RS.9,41,334/ - BECAME RECEIVABLE BY ASSESSEE. ITA NO. 4475/DEL./2011 9 (VI). CONFIRMATION CERTIFICATE OF M/S. MY MONEY SECURITIES (P) LTD. WITH CONSOLIDATED CHART. HOWEVER, THE LD. ASSESSING OFFICER HAS NOT MADE ANY REFERENCE TO THESE DOCUMENTARY EVIDENCES IN THE ASSESSMENT ORDER NOR HAS TRIED TO EXAMINE THE SAME TO CHECK THE VERACITY OF THE IMPUGNED SHARE TRANSACTIONS. THE ASSESSEE HAD ALSO STATED THAT THE AUDITED BOOKS OF ACCOUNTS SHOWED THE TRANSACTIONS AND OUTSTANDING AMOUNTS RECEIVABLE FROM BROKER AND THE INCOME EARNED IN ASSESSMENT YEAR 1998 - 99 WAS DISCLOSED IN THE RETURN OF INCOME BASED ON AUDITED FI NANCIAL STATEMENTS, THE DETAILS OF WHICH WERE FURNISHED FOR EXAMINATION BEFORE THE AO , BUT THE AO HAS MADE NO REFERENCE OR COMMENTS ON THE SAME. IN FACT, THE VER IFICATION OF THE IMPUGNED TRANSACTIONS WAS NECESSARY TO BE EXAMINED BY THE AO FROM THE DETAILS/ DOCUMENTS FURNISHED BY THE ASSESSEE IN ITS SUPPORT, WHICH IS LACKING IN THE PRESENT CASE. THE LEARNED AR OF THE ASSESSEE HAS ALSO FURNISHED BEFORE US THE PAPER BOOK WHICH WAS FILED BEFORE THE LD. CIT(A) AND WE FIND THAT BROKERS NOTES PERTAINING TO THE IMPU GNED SHARE TRANSACTIONS ARE AVAILABLE IN THE SAID PAPER BOOK. HOWEVER, THE LD. CIT(A) TOO HAS SIDE TRACKED THE VERIFICATION OF THE SAME AND SIMPLY ENDORSED THE VIEW TAKEN BY THE AO WITHOUT MAKING PROPER EXAMINATION OF ITA NO. 4475/DEL./2011 10 RECORD. THE ASSESSEE HAS ALSO FILED A RECTIFICATION APPLICATION BEFORE THE LD. CIT(A) S T ATING THEREIN THAT THE ASSESSEE PRODUCED ALL RELEVANT RECORDS AS BROKER CONTRACT NOTES ETC. WHICH WERE FURNISHED AT PAGE NO. 1 TO 40 OF THE PAPER BOOK BEFORE THE LD. CIT(A). WE HAVE ALSO EXAMINED THE BROKER S NOTES FILED BEFORE US BY THE ASSESSEE, BUT THE SAME NEED PROPER EXAMINATION OR VERIFICATION AT THE STAGE OF AUTHORITIES BELOW. WE ALSO FIND THAT LAST TRANSACTION WAS UNDERTAKEN AS PER LEDGER ACCOUNT ON 17.03.1998. THE ASSESSEE HAS PRODUCED LEDGER ACCOUN T OF MY MONEY SECURITIES LTD. AT PAGE NO. 2 OF THE PAPER BOOK IN WHICH THE ASSESSEE HAS DEBITED TO MY MONEY SECURITIES LTD. ON DIFFERENT DATES AS PER SETTLEMENT PERIODS WHEREAS THE LAST SETTLEMENT /TRANSACTION DATE IS 17.03.1998. THE ASSESSEE HAS RECEIVED THE PAYMENTS ON 02.09.1998 OF RS.5 LACS AND RS.4,41,333 - 50 ON 22.09.1998, WHICH IS AFTER ABOUT SIX MONTHS FROM THE LAST TRANSACTION/SETTLEMENT DATE, AS NOTED ABOVE. IT IS ALSO FOUND THAT IN SOME BROKER S NOTES CERTAIN COLUMNS SUCH AS ORDER NO. TRADE NO. TR ADE TIME , ARE LYING BLANK. THE AUTHORITIES BELOW ARE REQUIRED TO EXAMINE THE EFFECT OF THESE COLUMNS AS ALSO THE SETTLEMENT PERIOD AS PER NATIONAL STOCK EXCHANGE RULES PREVAILING AT THE RELEVANT POINT OF TIME. WE, THEREFORE, FEEL IT ITA NO. 4475/DEL./2011 11 EXPEDIENT IN THE INTERE ST OF JUSTICE THAT THOROUGH EXAMINATION AND PROPER VERIFICATION OF THE IMPUGNED SHARE TRANSACTIONS IS NECESSARILY TO BE MADE INDEPENDENTLY WITH REFERENCE TO THE DOCUMENTARY EVIDENCES LAID BY ASSESSEE AND IN THE LIGHT OF ABOVE OBSERVATIONS IN ORDER TO CHECK THE GENUINENESS OF THE IMPUGNED TRANSACTIONS. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FIRST APPELLATE AUTHORITY TO DECIDE THE APPEAL AFRESH AFTER MAKING PROPER EXAMINATION IN THE LIGHT OF OBSERVATIONS MADE I N THE BODY OF THIS JUDGMENT. THE LD. CIT(A) IF FEELS NECESSARY, MAY TAKE REMAND REPORT FROM THE AO IN THIS REGARD. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD AFTER PROVIDING ALL THE MATERIAL BEING USED AGAINST THE AS SESSEE IN TERMS OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN ITS EARLIER DECISION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.06.2017 . SD/ - SD/ - ( S.K. YADAV ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13.06.2017 *AKS*