DCIT.,CENTRAL CIR.-12, MUMBAI V. DURIAN INDUSTRIES LTD., MUMBAI

ITA 4577/MUM/2011

• Counselvise Citation: 457719914 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Assessee Lawyers: YOGESH A THAR
• Keywords: Unexplained expenditure; Loose papers; Document seized; Documents seized
• Section: 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4577/MUM/2011 ASSESSMENT YEAR: 2008-09 DY. CIT, CENTRAL CIRCLE-12 MUMBAI VS. M/S. DURIAN INDUSTRIES LTD. 401, THE CHAMBERS, HANUMAN ROAD, WESTERN EXPRESS HIGHWAY, VILE- PARLE(E), MUMBAI- 400 057 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAACD 1698 N ASSESSEE BY : SHRI YOGESH A. THAR REVENUE BY : SHRI S.D. SRIVASTAVA DATE OF HEARING : 22.05.2014 DATE OF PRONOUNCEMENT : 16.07.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-37, MUMBAI DATED 28.03.2011 FOR THE ASSES SMENT YEAR 2008-09. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING THE EFFECTIVE GROUNDS WHICH READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING ADDITION ON THE BASIS OF LOOSE SH EETS SEIZED FROM THE PREMISES OF SHRI ASHOK KUMAR DOKANIA WITHOUT APPREC IATING THE CONTENTS OF THE SEIZED DOCUMENTS AND HIS WRITTEN STATEMENT TO T HE EFFECT THAT THE FIGURES WRITTEN ON THE LOOSE PAPERS WERE CASH PAYMENTS MADE TO STAFF IN THE F.Y. 2007-08. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE NEVER R AISED OBJECTION OF ASSESSIBILITY OF THE SAID CASH PAYMENT TO THE STAFF IN F.Y. 2007-08 WHEN IT REPLIED TO THE SHOW CAUSE NOTICE. ITA NO. 4577/MUM/2011 M/S. DURIAN INDUSTRIES LTD. ASSESSMENT YEAR: 2008-09 2 3. BRIEFLY STATED, THE ASSESSEE IS A CLOSELY HELD L IMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING/IMPORT OF FUR NITURE, PLYWOOD AND LAMINATES. THE ASSESSEE COMPANY WAS MANAGED BY SHRI SAJJAN DOK ANIA IN THE CAPACITY OF MANAGING DIRECTOR AND S/SHRI R.S. KANORIA, TRIDIB S EN & SHARSH KHAITAN IN THE CAPACITY OF DIRECTORS. SEARCH & SEIZURE PROCEEDINGS U/S 132 OF THE ACT WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE FROM 10.04.2008 TILL 02.05.2008. SIMULTANEOUSLY, THE RESIDENTIAL PREMISES OF ONE SHRI ASHOK KUMAR DO KANIA, WHO WAS NEITHER DIRECTOR NOR AN EMPLOYEE NOR A SHAREHOLDER BUT A COUSIN BROT HER OF SHRI SAJJAN DOKANIA WAS ALSO SEARCHED U/S 132 OF THE ACT. DURING THE COURSE OF THE SAID SEARCH & SEIZURE OPERATIONS AT THE RESIDENCE OF THE SAID SHRI ASHOK KUMAR DOKANIA, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED AS PER ANNEXURE-A, PAG E NOS. 1 TO 42. DURING THE COURSE OF SEARCH & SEIZURE OPERATIONS, STATEMENT ON OATH U/S 132 (4) OF THE ACT WAS RECORDED FROM THE SAID ASHOK KUMAR DOKANIA, AND HE HAD EXPLAINED THE CONTENTS OF THE SEIZED LOOSE PAPERS IN THE SAID STATEMENT DATED 10.04.2008, WHICH WAS RECONFIRMED BY HIM U/S 132(4) OF THE ACT, AGAIN ON 02.05.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO RELIED ON THE LOOSE PAPERS SEIZED FROM THE RESIDENCE OF SHRI ASHOK KUMAR DOKANIA, AND ALSO ON THE STATEMENT OF THE SAID SHRI ASHOK KUMAR DOKANIA, RECORDED ON OATH U/S 132(4) OF THE ACT ON 10.04.2008 AND 02.05.2008. THE AO HAD OBSERVED THAT THE SAID SHRI ASHOK KUMAR DOKANIA, CATEGORICALLY ACCEPTED THAT PAGE NOS. 39 TO 42 PERT AINS TO THE ASSESSEE COMPANY M/S. DURIAN INDUSTRIES LTD. AND THAT HE DID NOT HAV E ANY RESPONSIBILITY FOR THE SAID LOOSE SHEETS FOUND FROM HIS RESIDENCE. ACCORDINGLY, THE AO, AMONG OTHER THINGS, MADE AN ADDITION OF RS.38,25,000/-, ALLEGEDLY INCUR RED BY THE ASSESSEE ON ACCOUNT OF CASH PAYMENTS MADE TO STAFF IN THE F.Y. 2007-08, AS UNEXPLAINED EXPENDITURE U/S 69 OF THE INCOME-TAX ACT. ON APPEAL, THE LD.CIT(A) DELETED THE SAID ADDITION ON THE REASON THAT THE SAID SEIZED DOCUMENTS IS DUMB DOCUM ENT SINCE THE SAME BELONGED TO F.Y. 2008-09. AGGRIEVED BY THE IMPUGNED ORDER, T HE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, THE IMPUGNED ADDITION HAS BEEN MADE ON THE BASIS THE LO OSE SHEET BEARING PAGE NO. 41 ITA NO. 4577/MUM/2011 M/S. DURIAN INDUSTRIES LTD. ASSESSMENT YEAR: 2008-09 3 OF ANNEXURE-A, FOUND DURING THE SEARCH OPERATION FR OM THE ONE SHRI ASHOK KUMAR DOKANIA AND IT IS NOT DISPUTED THAT THE RELEVANT LO OSE SHEETS, BEARING PAGE NO. 41 OF ANNEXURE-A IS FOUND AND SEIZED FROM THE RESIDENCE O F SHRI ASHOK KUMAR DOKANIA. THE PERUSAL OF THE LOOSE SHEET BEARING PAGE NO. 41 INDICATES THAT THE SAME DOES NOT HAVE ANY DATE OR ANY FINANCIAL YEAR. FURTHER, IT DO ES NOT BEAR ANY PERSONS SIGNATURE ALSO. EVEN, THE NAMES WRITTEN THEREIN ARE NOT COMPL ETE AND CLEAR. HOWEVER, THE AO HAS BROUGHT ON RECORD THAT THE AFORESAID LOOSE SHEE T WAS EXPLAINED BY THE SAID SHRI ASHOK KUMAR DOKANIA HIMSELF IN HIS STATEMENT RECORD ED ON OATH U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH & SEIZURE PROCEEDIN GS AT HIS RESIDENTIAL PREMISES. FURTHER, THE AO HAS RELIED ON THE SAID STATEMENT RE CORDED U/S 132(4), DATED 10.04.2008 FOR MAKING THE IMPUGNED ADDITION. IN THI S CONNECTION, IT IS RELEVANT TO STATE THAT THE PERUSAL OF THE SAID STATEMENT SUGGES TS THAT SHRI ASHOK KUMAR DOKANIA HAS DECIPHERED THE RELEVANT PAGE NO. 41 WHILE ANSWE RING QUESTION NO. 27 OF THE SAID STATEMENT U/S 132(4) OF THE ACT DATED 10.04.2008, W HICH IS REPRODUCED AS UNDER:- PAGE NO. 41: THIS ALSO CONFIRMS THE PAYMENT OF PACK AGE MADE IN CASH FOR 08- 09 FY AS PER THE INSTRUCTION OF MR. SAJJAN DOKANIA AND NOTED OWN IN THE DIR. 1 RSK-R.S. KANODIA 2.30 LAKHS 2 SKT-S.K. TRIVEDI 2.25 LAKHS 3 MITRA 2.25 LAKHS 4 SIR GANGULY 1.25 LAKHS 5 NIRANJAN ---- 6 AASHISH .30 IN THIS CONNECTION, THE LD.CIT(A) HAS OBSERVED THAT THERE ARE SEVERAL MISTAKES IN THE IMPUGNED ASSESSMENT ORDER OF THE AO. FIRSTLY, WHERE AS, THE DUMB DOCUMENT HAS BEEN EXPLAINED BY SHRI ASHOK KUMAR DOKANIA BELONGIN G TO FINANCIAL YEAR 2008-09 AND THE AO PRESUMED THE SAID PAGE NO. 41 BELONGS TO F.Y. 2007-08. HE HAS NOT GIVEN ANY REASON NOR ANY MATERIAL EVIDENCE TO COME TO SUCH CONCLUSION IN CONTRAST TO THE STATEMENT U/S 132(4) OF THE ACT, WHICH IS SO HEAVILY RELIED UPON BY THE LEARNED AO. SECONDLY, WHEREAS THE SAID SHRI ASHOK K UMAR DOKANIA HAS DECIPHERED THE PAYMENT GIVEN TO RSK RS.2.30 LAKHS, THE AO H AS MADE ADDITION OF RS.2.50 LAKHS. THIRDLY, WHEREAS, SHRI ASHOK KUMAR DOKANIA H AS EXPLAINED PAYMENT MADE TO ASHISH-.30, THE AO HAS PRESUMED THE PAYMENT MADE TO ONE MR. ASHOK RS. 30,00,000. IT IS PRIMA FACIE EVIDENT THAT THE AO H AS FAILED TO GIVE ANY REASON FOR DEVIATING FROM THE FACTS EXPLAINED BY SHRI ASHOK KU MAR DOKANIA IN HIS STATEMENT ITA NO. 4577/MUM/2011 M/S. DURIAN INDUSTRIES LTD. ASSESSMENT YEAR: 2008-09 4 RECORDED U/S 132(4) OF THE ACT ON 10.04.2008. THERE FORE, THE LD.CIT(A) IS OF THE VIEW THAT THE AO CANNOT BLOW HOT & COLD AT THE SAME TIME WHEREBY HE CANNOT RELY PARTLY ON THE STATEMENT GIVEN BY SHRI ASHOK KUMAR D OKANIA. EITHER THE SAID STATEMENT IS FULLY ACCEPTABLE TO THE AO OR NOT ACCE PTABLE TO HIM. HE CANNOT BE PERMITTED TO SUBSTITUTE FIGURES OF PAYMENT AND THE DATES OF PAYMENT WITHOUT GIVING ANY COGENT REASONS. MOREOVER, IT IS OBSERVED THAT T HE ASSESSEE HAS NOT BEEN GIVEN SUFFICIENT OPPORTUNITY TO CROSS-EXAMINE SHRI ASHOK KUMAR DOKANIA DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ALSO, NO SHOW CAUSE NOTI CE HAS BEEN ISSUED TO THE ASSESSEE BY THE AO BEFORE MAKING SUCH HUGE ADDITION S, THAT TOO RELYING ON THIRD PARTY EVIDENCES WHICH HAVE BEEN DUBBED AS DUMB DO CUMENT. PROVISIONS OF SECTION 292C OF THE ACT ARE NOT AVAILABLE IN THIS CASE BECA USE THE IMPUGNED LOOSE SHEET IS NEITHER FOUND NOR SEIZED FROM THE PREMISES OF THE A SSESSEE. IN VIEW OF THE FACT THAT THE LD.CIT(A) HAS CORRECTLY TAKEN COGNIZANCE OF ALL THE RELEVANT FACTS AND MATERIALS FOR DELETING THE IMPUGNED ADDITION OF RS.38,25,000/ - MADE BY THE AO ON THE BASIS OF LOOSE SHEET NO. 41 FOUND AND SEIZED FROM THIRD P ARTYS PREMISES, THE DECISION OF THE LD.CIT(A) DESERVES TO BE SUSTAINED AND UPHELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JULY, 2014. [ SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.07.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.