VINOD K SHAH, MUMBAI V. ITO 16(3)(5), MUMBAI

ITA 4641/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0951 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS KAVITA KAUSHAL
• Keywords: Reopening of assessment; Unexplained investment; Principle of natural justice
• Section: 271(1)(c); 143(3); 13; 148; 54; 6

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 4641/MUM/2018 (ASSESSMENT YEAR 2004-05 ) VIN OD K. SHAH 30, WARDEN COURT, 79- 81, AUGUST KRANTI MARG, MUMBAI- 400361. PAN: AACPS7717E VS. ITO 16(3)(5) MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : NONE RESPONDENT BY : MRS. KAVITA KAUSHAL (DR) DATE OF HEARING : 02.12.2019 DATE OF PRONOUNCEMEN T : 06.12.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(A)-4, MUMBAI DATED 08.05.2018 FOR ASSESSMENT YEAR 2004-05 . THE LD. CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER IN LEVYING THE PENALTY UNDER SECTION 271(1)(C) DATED 18.02.2015. THE ASSES SEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) COMPLETELY FAILS TO CONSIDER THE SUBM ISSION MADE BY ASSESSEE AND FAILED TO CONSIDER THE QUANTUM ORDER P ASSED BY HON'BLE ITAT WHICH IS IN FAVOR OF THE ASSESSEE. 2. CIT (A) HAS CONFIRMED THE PENALTY ORDER WITHOUT LOOKING IN TO THE FACTS AND IGNORED THE SUBMISSION MADE BY THE ASSESSEE. ITA NO. 4641 MUM 2018-VINOD K. SHAH. 2 3. QUANTUM ORDER HAS BEEN PASSED IN FAVOUR OF THE A SSESSEE BY HON'BLE TRIBUNAL, HENCE PENALTY CANNOT BE LEVIED, HENCE PRI NCIPAL OF NATURAL JUSTICE IS VIOLATED. 4. AS REGARDS THE ALLOWABILITY OF TRANSFER FEES IS CONCERNED WHICH IS NOT ALLOWED IN QUANTUM ORDER BUT PENALTY U/S. 271 (1) ( C) IS NO ATTRACTED AS THE SAME HAVE BEEN DISCLOSED IN CAPITAL GAIN STATEMENT AND DISCLOSED IN RETURN OF INCOME WHICH DOES NOT AMOUNT TO CONCEALMENT OF THE FACTS OR FURNISHING THE INACCURATE PARTICULARS. 2. BRIEF FACTS OF THE CASE ARE THAT FOR ASSESSMENT YEA R 2004-05 ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S 147 ON 30. 12.2011 OF THE INCOME TAX ACT (THE ACT). WHILE MAKING ASSESSMENT, THE ASSESSING OFFICER TREATED THE LONG TERM CAPITAL GAIN (LTCG) A S UNEXPLAINED INVESTMENT. THE ASSESSING OFFICER FURTHER ADDED 5% OF THE UNEXPLAINED INVESTMENT AND EXEMPTION UNDER SECTION 54 F WAS DE NIED. FURTHER, 5% OF THE ABOVE AMOUNT WAS TREATED AS COMMISSION PAI D TO M/S GOLD STAR FINVEST PVT. LTD FOR PROVIDING ACCOMMODATION ENTRY AND ALSO ADDED RS. 3,00,000/- AS A TRANSFER FEE FOR THE WANT OF EVIDE NCE, THEREBY TOTAL ADDITION OF RS. 9,25,096/- WAS ADDED. 3. ON APPEAL BEFORE THE LD. CIT(A), THE TREATMENT OF L TCG AS UNDISCLOSED INCOME AND DIFFERENCE OF RS. 3,00,000/- WAS SUSTAIN ED. HOWEVER, THE ADDITION OF 5% COMMISSION WAS RESTRICTED TO .15% VI DE ORDER DATED 30.12.2013. ON RECEIPT OF ORDER FROM THE LD. CIT(A ), THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE UNDER SECTION 271( 1)(C) RWS 274. IN REPLY TO THE SHOW-CAUSE NOTICE, THE ASSESSEE FILED ITS REPLY AND SUBMITTED THAT THE ASSESSEE HAS FILED APPEAL BEFORE THE TRIBU NAL AND TILL THE DISPOSAL ITA NO. 4641 MUM 2018-VINOD K. SHAH. 3 OF APPEAL, THE PENALTY PROCEEDING BE KEPT IN ABEYAN CE. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADE D. THE ASSESSING OFFICER NOTED THAT AMOUNT INVOLVED/ADDED IS RS. 9,2 5,096/- AND 100% TAX SOUGHT TO BE EVADED IS RS. 2,51,942/-. ACCORDIN GLY, THE ASSESSING OFFICER LEVIED THE MINIMUM PENALTY OF RS. 2,51,942/ -. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFICER WAS CONFIRMED. FURTHER, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 4. NONE, APPEARED ON BEHALF OF ASSESSEE DESPITE THE SE RVICE OF NOTICE OF HEARING OF APPEAL, THEREFORE, WE LEFT NO OPTION EXC EPT TO HEAR THE SUBMISSION OF LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAIL ABLE ON RECORD. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUT HORITIES. HOWEVER, THE LD. DR OF HER ALL FAIRNESS SUBMITTED THAT IN TH E STATEMENT OF FACT FILED WITH THE GROUNDS OF APPEAL, THE ASSESSEE HAS CLAIME D THAT ADDITION ON THE BASIS OF WHICH THE PENALTY WAS LEVIED HAS BEEN DELE TED BY THE TRIBUNAL, HOWEVER, COPY OF ORDER OF TRIBUNAL IS NOT PLACED ON RECORD. THE LD. DR FURTHER SUBMITS THAT PENALTY PROCEEDING ARE SEPARAT E AND INDEPENDENT AND MAY BE DECIDED ON THE BASIS OF MERIT OF THE CAS E. 5. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT WHILE ITA NO. 4641 MUM 2018-VINOD K. SHAH. 4 PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) R .W.S. 147 DATED 30.12.2011, THE ASSESSING OFFICER MADE THE ADDITION BY TREATING THE LTCG AS UNEXPLAINED INVESTMENT, DISALLOWED 5% COMMI SSION ON SUCH UNEXPLAINED INVESTMENT. THE ASSESSING OFFICER ALSO ADDED RS. 3,00,000/- ON ACCOUNT OF DIFFERENCE OF INCOME FOR W ANT OF EVIDENCE. 6. WE HAVE NOTED THAT AGAINST THE QUANTUM ADDITION, TH E ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL VIDE ITA NO. 1736/MUM/20 14, WHICH WAS ADJUDICATED BY TRIBUNAL VIDE ORDER DATED 14.12.2016 . THE TRIBUNAL IN ITS ORDER IN ITA NO. 1736/MUM/2014, WHEREIN THE ADDITIO NS ON THE BASIS OF WHICH THE PENALTY WAS LEVIED, HAS BEEN DELETED. FOR COMPLETENESS OF THIS ORDER THE GROUNDS OF APPEALS RAISED BY THE ASSESSEE AND THE RELEVANT PART OF THE ORDER OF TRIBUNAL IN QUANTUM ASSESSMENT IN I TA NO. 1736/MUM/2016 IS EXTRACTED BELOW. ASSESSEE'S APPEAL FOR A.Y. 200405 (ITA NO. 1736/MUM /2014) 9. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: - '1. CIT (A) HAS ERRED IN LAW AND FACTS CONFIRMING O RDER OF A.O. IGNORING SUBMISSION MADE BY APPELLANT. APPELLANT WA S PREVENTED BY SUFFICIENT CAUSE FOR NOT ATTENDING ON APPOINTED DAT E. 2. CIT[A] HAS ERRED IN CONFIRMING ADDITION ON THE B ASIS APPELLANT OWN CASE CONFIRM IN A.Y. 2003-04 BY CIT[A] 27 WITHO UT APPRECIATING FACT THAT APPEALS OF GROUND ARE DIFFER ENT AND EACH YEAR ASSESSMENT IS INDEPENDENT ASST YEAR. 3. CIT[A] HAD WRONGLY MENTIONED THAT THE APPELLANT HAS ALSO RAISED SIMILAR CONTENTIONS / GROUNDS OF APPEAL. CONTENTION AND GROUNDS OF APPEAL BOTH ARE DIFFERENT IN BOTH APPEAL. 4. CIT[A] HAS NOT DISPOSED OFF ALL GROUNDS OF APPEA L NO OBSERVATION ON ACTION U/S 147 REASON RECORDED ARE NOT RELEVANT TO ESCAPEMENT OF INCOME WHICH ARE CHALLENGE BY APPELLANT. 5. CIT[A] HAS NOT MADE ANY OBSERVATION ON THE CAPIT AL GAIN ADDED TO INCOME. ITA NO. 4641 MUM 2018-VINOD K. SHAH. 5 6. REOPENING U/S 147 IS BAD IN LAW, NOTICE U/S 148 IS BAD IN LAW NO APPLICATION OF MIND BY A.O. NO INDEPENDENT ENQUIRY WERE MADE BY A.O. 7. CIT[A] HAS CONFIRM ORDER PASSED BY A.O. BY VIOLA TING PRINCIPLE OF NATURAL JUSTICE. 8. CIT[A] HAS IGNORE FACT THAT APPELLANT PURCHASE P HYSICAL SHARES WHICH WERE DULY TRANSFER IN HIS NAME THAN SEND FOR DEMATE. THE SOLD SHARES HAS BEEN DEBITED IN DEMATE ACCOUNT. SHRI VINOD K. SHAH 9. A.O. HAS MENTIONED THAT BOGUS INCOME IF IT IS BO GUS INCOME HOW IT CAN BE TAXES AS UNDISCLOSED INCOME 10. NOTICE UNDER SECTION 148 ISSUED AFTER 4 YEAR SO IN REASON RECORDED A.O. HAD COME TO CONCLUSION THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS IN THE RETURN. 11. A.O. HAS NOT PROVED NEXUS. 12. CIT[A] HAS ERRED IN RETAINING .15% COMMISSION O N TRANSACTION VALUE. 13. CIT [A] HAS ERRED IN DISALLOWING TRANSFER FEE O F RS 300000/- 14. APPELLANT CRAVES YOUR LEAVE TO ADD ALTER AND MO DIFY THESE GROUNDS OF APPEAL.' 10.1 THESE GROUNDS ARE GENERAL IN NATURE AND DO NOT CALL FOR ADJUDICATION THEREON. NOT BEING URGED BEFORE US, TH ESE GROUND ARE RENDERED INFRUCTUOUS AND ARE ACCORDINGLY DISMISSED. 11. GROUND NO. 13 - DISALLOWANCE OF TRANSFER FEE 11 .1 AT THE OUTSET OF THE HEARING, THE LEARNED A.R. OF THE ASSESSEE SU BMITTED THAT THIS GROUND IS NOT BEING PRESSED IN THIS APPEAL. THIS GR OUND IS THEREFORE RENDERED INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. 12. GROUNDS NO. 4, 6, & 10 - VALIDITY OF REOPENING OF ASSESSMENT 12.1 THE ISSUE RAISED IN THESE GROUNDS, ON THE VALIDITY OF R EOPENING THE ASSESSMENT FOR A.Y. 2004-05 ARE FACTUALLY/LEGALLY SIMILAR TO THOSE RAISED IN THE ASSESSEE'S OWN CASE FOR A.Y. 2003-04. WE HAVE ADDRESSED THE SA ME AT PARAS 5.1 TO 5.3.3 OF THIS ORDER IN ITA NO. 1264/MUM/2013 (SUPRA) AND DISMISSED THE ASSESSEE'S PLEAS. FOLLOWING THIS DECISION OF OURS AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY, THE SAME FINDING MUTATIS MUTANDIS APPL IES IN THE ASSESSEE'S CASE FOR A.Y. 2004-05 ALSO AND WE THEREFORE FINDING NO M ERITS IN THESE GROUNDS RAISED BY THE ASSESSEE AT S. NOS 4, 6 & 10 DISMISS THEM. 13.1 THE ISSUES RAISED IN THESE GROUNDS FOR A.Y. 20 04-05 ARE FACTUALLY SIMILAR ON IDENTICAL ISSUES, AS THOSE RAISED IN THE ASSESSE E'S OWN CASE FOR A.Y. 2003- 04. WE HAVE ADDRESSED THE SAME AT PARAS 6.1 TO 6.3. 2 OF THIS ORDER IN ITA NO. 1264/MUM/2013 (SUPRA) AND DECIDED THOSE ISSUES IN S HRI VINOD K. SHAH FAVOUR OF THE ASSESSEE TO THE EXTENT INDICATED THER EIN. FOLLOWING THIS DECISION OF OURS AND IN ORDER TO MAINTAIN JUDICIAL CONSISTEN CY, THE SAME FINDINGS MUTATIS MUTANDIS APPLIES IN THE ASSESSEE'S CASE FOR A.Y. 2004-05 ALSO. WE HOLD AND DIRECT ACCORDINGLY. ITA NO. 4641 MUM 2018-VINOD K. SHAH. 6 7. WE HAVE NOTED THAT THIS FACT THAT THE ADDITIONS ON THE BASIS OF WHICH THE PENALTY WAS LEVIED HAS BEEN DELETED BY TRIBUNAL, I S BROUGHT ON RECORD BY ASSESSEE BY WAY OF STATEMENT OF FACT, ANNEXED AL ONG WITH THE GROUNDS OF APPEAL. IT IS SETTLED LAW THAT ONCE THE ADDITION IN THE QUANTUM ASSESSMENT IS DELETED, THE PENALTY ORDER DOES NOT S URVIVE. THEREFORE, WE QUASH/ SET-ASIDE THE PENALTY ORDER DATED 18.02.2015 PASSED BY ASSESSING ORDER. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/12/2019. SD/- SD/- S. RIFAUR RAHMAN PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 06.12.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI