INCOME TAX OFFICER-5(3)(3), MUMBAI V. VISHNU R. TALESARA, MUMBAI

ITA 4653/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3763 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 29-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV K GUBGOTRA
• Keywords: Question of law
• Section: 68; 148; 143(3); 143(1)

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN , J M & HONBLE SH. G. MANJUNATHA , A M ./ I.T.A. NO . 4653 /MUM/201 7 ( / ASSESSMENT YEAR: 2007 - 08 ) ITO 5(3)(3) , ROOM NO. 565, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 / VS. VISHNU R. TALESARA, 1401 - 1402A, SAMBHAVNATH TOWER, SUDHA PARK GARODIA NAGAR, GHATKOPAR(E), MUMBAI - 400 007 ./ ./ PAN NO. A ABPT1135E ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJEEV K. GUBGOTRA , DR / RESPONDENTBY : NONE / DATE OF HEARING : 26.12 .201 8 / DATE OF PRONOUNCEMENT : 12.02.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 21, MUMBAI DATED 27.03 .17 F OR AY 20 07 - 08. 2 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA 2. AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PARTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3 . THE ONLY GRIEVANCE RAISED BY THE REVENUE IS CHALLENGING THE ORDER OF LD. CIT (A) I N ALLOWING THE APPEAL OF THE ASSESSE BY HOLDING THAT THE ASSESSEE HAS DISCHARGE HIS ONUS CAST ON HIM IN PROVIDING IDENTITY AND CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AS REQUIRED U/S 68 OF THE ACT, DESPITE THE FACTS THE ASSESSEE HAS TAKEN AN ACCOMMODATION ENTRY OF RS. 1,00,00,000/ - WHICH WAS ALSO CONFIRMED BY THE INVESTIGATION WING. 4 . WE HAVE HEARD LD. DR AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND FROM THE RECORDS THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 29.10.07 DECLARING THE TOTAL INCOME AT RS. 3 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA 24,61,027/ - AN D THE SAME WAS PROCESSED U/S 143(1) OF THE I.T. ACT. SUBSEQUENTLY, THE CASE WAS REOPENED AND ORDER U/S 143(3) R.W.S. 147 OF THE ACT WAS PASSED ON 27 .03.15 DETERMINING THE TOTAL INCOME AT RS. 1,24,61,027 AND THEREBY MAKING ADDIT IONS /DISALLOWANCES. 5. WE ALSO FIND THAT LD. CIT(A) HAD DELETED THE ADDITIONS BY HOLDING THAT THE AO HAD WRONGLY HELD THAT THE ASSESSEE HAD NOT DISCHARGED ITS ONUS CAST UPON HIM IN PROVIDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDIT ORS. WHEREAS, AS PER THE RECORDS, THE ASSESSEE HAD FILED SEVERAL DETAILS WHICH WERE REQUIRED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PERSONS AND THE GENUINENESS OF THE TRANSACTIONS IN FORM OF PAN CARD, IT RETURN COPY, BANK STATEMENT, CONFIRMATION , AUDITED ACCOUNTS, ETC. OF THE LENDER. IT WAS ALSO HELD BY LD. CIT(A) THAT THE AO HAD ONLY RELIED UPON THE STATEMENTS GIVEN BY THIRD PARTY I.E. KEY PERSONS OF PRAVEEN JAIN GROUP WITHOUT PROVIDING THE ASSESSEE A CHANCE TO CROSS EXAMINATION TO THEM WHO HAD GIVEN SUCH ADVERSE STATEMENT. IT WAS FURTHER HELD THAT THE ADDITION WAS MADE WITHOUT PROVIDING THE ASSESSED THE CORROBORATIVE EVIDENCE 4 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA IN THE POSSESSION OF THE AO TO PROVE THAT THE ASSESSEE HAD PAID CASH, AGAINST THE CASH RECEIPT OF CHEQUE. LD. CIT(A) WH ILE RELYING UPON THE DECISION OF HONIBLE DELHI TRIBUNAL IN THE CASE OF ITO VRS. SHYAM SUNDER JAJODIA (2008) 26 SOT 541 (DELHI) HAD HELD THAT THE LOAN TAKEN FROM THE LENDER WAS ALREADY REPAID CONFIRMS THE EARLIER ACCEPTANCE OF LOAN. 6. FROM THE ORDER OF A SSESSMENT, WE NOWHERE FOUND THAT AO HAD VERIFIED THE FACT OF REPAYMENT OF LOAN OF RS. 1 CRORE FROM 15.05.09 TO 06.03.10 AND ALSO PAYMENT OF INTEREST FROM 27.04.06 TO 25.03.10 AS ALLEGED BY THE ASSESSEE BEFORE LD. CIT(A). THEREFORE 7. LD. CIT(A) HAD DELETE D THE ADDITIONS ONLY BY FINDING SHORTCOMING AND FAULTS IN THE ORDER OF ASSESSMENT. WHEREAS IT IS TRUE THAT THE POWERS OF LD. CIT(A) ARE CO - TERMINUS WITH THAT OF THE AO AND THE LD. CIT(A) COULD HIMSELF CARRIED OUT FURTHER INVESTIGATION WHICH OUGHT TO HAVE B EEN CARRIED OUT BY THE AO. THE LD. CIT(A) HAD NOT CONTROVERTED THE FACTUAL FINDINGS RECORDED BY AO BY ELABORATING THE DOCUMENTARY EVIDENCE. THE 5 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA FINDINGS OF LD. CIT(A) ARE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCES. 8. BE THAT AS IT MAY, IT IS THE PRIMARY DUTY WHICH IS BESTOWED UPON LD. CIT(A) TO BRING ON RECORD THE COMPLETE AND ALL RELEVANT FACTS OF THE CASE WHILE DECIDING THE APPEAL. IT WOULD BE RELEVANT HERE TO QUOTE FROM HONBLE DELHI HIGH COURT IN THE CASE OF CIT VRS. JANSAMPARK ADVERTISING AND MARKETI NG PVT. LTD. DATED 11.03.15, WHEREIN IT WAS HELD AS UNDER: - 35. ASSESSMENT PROCEEDINGS UNDER THE INCOME TAX ACT ARE NOT A GAME OF HIDE AND SEEK. THE INQUIRY IN THE WAKE OF A NOTICE UNDER SECTION 148 IS NOT AN EMPTY FORMALITY. IT MUST BE EFFECTIVE AND WITH A SENSE OF PURPOSE. THERE IS AN ELABORATE PROCEDURE SET OUT WHICH REQUIRES SCRUPULOUS ADHERENCE AND FOLLOWED UP ON. IN THE HIERARCHY OF T HE AUTHORITIES, THE AO IS PLACED AT THE BOTTOM RUNG. THE TWO LAYERS OF APPEALS, BEFORE THE MATTER ENGAGES THE APPELLATE JURISDICTION OF THIS COURT, ARE AUTHORITIES VESTED WITH THE JURISDICTION, POWER AND OBLIGATION TO REACH APPROPRIATE FINDINGS ON FACTS. N OTICEABLY, IT IS ONLY THE APPEAL TO THE HIGH COURT, UNDER SECTION 260 - A , WHICH IS RESTRICTED TO CONSIDERATION OF 'SUBSTANTIAL QUESTION OF LAW', IF ANY ARISING. AS WOULD BE SEEN FROM THE DISCUSSION THAT FOL LOWS, THE OBLIGATION TO MAKE PROPER INQUIRY AND 6 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA REACH FINDING ON FACTS DOES NOT END WITH THE AO. THIS OBLIGATION MOVES UPWARDS TO CIT (APPEALS), AND ALSO ITAT, SHOULD IT COME TO THEIR NOTICE THAT THERE HAS BEEN DEFAULT IN SUCH RESPECT ON THE PART OF THE AO . IN SUCH EVENT, IT IS THEY WHO ARE DUTY BOUND TO EITHER THEMSELVES PROPERLY INQUIRE OR CAUSE SUCH INQUIRY TO BE COMPLETED. IF THIS WERE NOT TO BE DONE, THE POWER UNDER SECTION 148 WOULD BE RENDERED PRONE TO ABUSE. 38. THE PROVISION OF APPEAL, BEFORE THE CIT (APPEALS) AND THEN BEFORE THE ITAT, IS MADE MORE AS A CHECK ON THE ABUSE OF POWER AND AUTHORITY BY THE AO. WHILST IT IS TRUE THAT IT IS THE OBLIGATION OF THE AO TO CONDUCT PROPER SCRUTINY OF THE MATERIAL, GIVEN THE FACT THAT THE TWO APPELLATE AUTHORITIES ABOVE ARE ALSO FORUMS FOR FACT - FINDING, IN THE EVENT OF AO FAILING TO DISCHARGE HIS FUNCTIONS PROPERLY, THE OBLIGATION TO CONDUCT PROPER INQUIRY ON FACTS WOULD NATURALLY SHIFT TO THE DOOR OF THE SAID APPELLATE AUTHOR ITY. FOR SUCH PURPOSES, WE ONLY NEED TO POINT OUT ONE STEP IN THE PROCEDURE IN APPEAL AS PRESCRIBED IN SECTION 250 OF THE INCOME TAX ACT WHEREIN, BESIDES IT BEING OBLIGATORY FOR THE RIGHT OF HEARING TO BE AFFORDED NOT ONLY TO THE ASSESSEE BUT ALSO THE AO, THE FIRST APPELLATE AUTHORITY IS GIVEN THE LIBERTY TO MAKE, OR CAUSE TO BE MADE, 7 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA 'FURTHER INQUIRY', IN TERMS OF SUB - SECTION (4) WHICH READS AS UNDER: - THE COMMISSIONER (APPEALS) MAY, BEFORE DISPOSING OF A NY APPEAL, MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT, OR MAY DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY AND REPORT THE RESULT OF THE SAME TO THE COMMISSIONER (APPEALS). 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT (APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPE LLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACE OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL A UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. 9. APART FROM ABOVE, WE FIND THAT HONBLE APEX COURT IN THE CASE OF KAPURCHAND SHRIMAL VRS. CIT 1981 131(ITR) PAGE 451 HAS HELD THAT T HE DUTY OF THE TRIBUNAL DOES NOT END WITH 8 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA MAKING A DECLARATION THAT THE ASSESSMENTS ARE ILLEGAL AND IT IS DUTY BOUND TO ISSUE FURTHER DIRECTIONS. THE APPELLATE AUTHORITY HAS THE JURISDICTION AS WELL AS THE DUTY TO CORRECT ALL ERRORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE, IF NECESSARY, APPROPRIATE DIRECTIO NS TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATTER AFRESH UNLESS FORBIDDEN FROM DOING SO BY THE STATUTE AND THE STATUTE DOES NOT SAY THAT SUCH A DIRECTION CANNOT BE ISSUED BY THE APPELL ATE AUTHORITY IN A CASE OF THIS NATURE. 10. THEREFORE, KEEPING IN VIEW THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO CARRY OUT FURTHER NECESSARY INVESTIGATIONS /VERIFICATION AND TO MEET OUT THE SHORTCOMINGS POINTED OUT BY LD. CIT(A) AND THEREAFTER PASS AFRESH ORDER. IT IS NEEDLESS HERE TO MENTION THAT BEFORE PASSING AFRESH ORDER OF ASSESSMENT, THE AO SHALL PROVIDE SU FFICIENT OPPORTUNITY OF HEARING TO THE ASSESS E E. 9 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA 11. BEFORE PARTING, WE MAY MAKE IT CLEAR THAT OUR DECISION TO RESTORE THE MATTER BACK TO THE FILE OF AO SHALL IN NO WAY BE CONSTRUED AS HAVING ANY REFLECTION OR EXPRESSION ON THE MERITS OF THE DISPUTE, WHI CH SHALL BE ADJUDICATED BY THE AO INDEPENDENTLY IN ACCORDANCE WITH LAW. WITH THESE DIRECTIONS, THIS GROUND OF APPEAL RAISED BY THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 1 2 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEB , 2019. SD/ - SD/ - ( G. MANJUNATHA ) (SANDEEP GOSAIN) / A COUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 .02 .201 9 SR.PS . DHANANJAY 10 I.T.A. NO. 4653 /MUM/201 7 VISHNU R. TALESARA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI