Sou. Jayashree Ulhas Bagul, Pune V. Assistant Commissioner of Income-tax,

ITA 466/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9360 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 10-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Loose papers; Principle of natural justice; Retraction
• Section: 69C; 143(3); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO. 466 /PUN/20 14 / ASSESSMENT YEAR : 2003 - 04 MRS. JAYASHREE ULHAS BAGUL 12, SHIVDARSHAN, PARVATI PUNE - 411 009 PAN : AAJBP8535B ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), PUNE. / RESPONDENT APPELLANT BY : SMT. DEEPA KHARE RESPONDENT B Y : SHRI YOGESH KAM AT / DATE OF HEARING : 30.05.2017 / DATE OF PRONOUNCEMENT : 07 . 06.2017 / ORDER PER SUSHMA CHOWLA , JM T HIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A PPEALS) - CENTRAL, PUNE DATED 22.11.2013 RELATING TO ASSESSMENT YEAR 200 3 - 04 AGAINST ORDER PASSED U/S 143(3) R.W.S 153A(A) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED CIT( APPEALS) CENTRAL HAS ERRED IN CONFIRMING THE ADDITION MADE BY ACIT CENTRAL CIRCLE 2(1) OF RS. 1,93,000/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN BEAUTY PARLOUR. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL HAS ERRED IN NOT CONSIDERING FACT T HAT LEARNED ASSESSING OFFICER HAS NOT PROVIDED THE APPELLANT STATEMENT OF MRS. GAUD ON WHOSE STATEMENT THE ENTIRE ADDITION IS MADE AND NOT PROVIDING THE APPELLANT AN OPPORTUNITY OF CROSS EXAMINING MRS. GAUD & THUS DENIED NATURAL JUSTICE TO THE APPELLANT. 2 ITA NO. 466/PUN/2014 3 ) THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) CENTRAL HAS ERRED IN ARRIVING AT THE CONCLUSION THAT THE EXPENDITURE INCURRED DID NOT RELATE TO FABRICATION BUSINESS OF THE APPELLANTS HUSBAND WITHOUT CALLING APPELLANTS HUSBAND ON OATH, WITHOUT EXAMINI NG HIS RECORDS & THEREBY DENYING NATURAL JUSTICE TO THE APPELLANT. 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL HAS ERRED IN NOT APPRECIATING THE RATIO OF THE DECISION IN THE CASE OF YADU HARI DALMIA VS. CIT DELHI HIGH COURT (1980) 17 CTR (D EL) 234, (1980) 126 ITR 48 ( DEL), (1980) 4 TAXMANN 525, EVEN THOUGH THE PRINCIPAL APPLIED IN THE ABOVE CASE SQUARELY APPLIES TO THE CASE OF APPELLANT. 5) THE APPELLANT CRAVES TO ADD, DELETE, ALTER AND MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. TH E ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF RS.1,93,000/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE , SEARCH AND SEIZURE ACTIONS U/S 132 OF THE ACT WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE. THE SAID SEARCH HAD STARTED ON 24.11.2004 AND WAS CONCLUDED ON 24.01.2005. DURING THE COURSE OF SEARCH, JEWELL E RY OF RS. 20,53,987/ - WAS FOUND AND CERTAIN DOCUMENTS AND LOOSE PAPERS WERE ALSO SEIZE D FROM RESIDENTIAL PREMISES OF THE ASSESSEE. THE STATEMENT OF THE ASSESSEE WAS RECORD ED PREMISES OF THE ASSESSEE. THE STATEMENT OF THE ASSESSEE WAS RECORD ED U/S . 131 OF THE ACT. IN ADDITION, CERTAIN OTHER PERSONS RELATING TO ASSESSEE WERE ALSO EXAMINED ON OATH DURING SEARCH ACTION. ONE SUCH PERSON WAS SMT. NAMRATA GUNVANT G AUD , WHOSE STATEMENT WAS RECORDED U/S . 131 OF THE ACT ON 07.01.2005. SHE CLAIMED THAT SHE WAS A PARTNER OF ASSESSEE LADY IN ONE BUSINESS NAMELY VIVA BEAUTY PARLOUR TO WHOM THE SHOP IN ASHOKA COMPLEX BELONGS, WHERE THE ASSESSEE LADY CLAIMED TO BE RUNNING HE R BEAUTY PARLOUR . THE ASSESSING OFFICER ISSUED NOTICE U/S 153A(A) OF THE ACT. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,61,460/ - . THE ASSESSEE WAS ASKED TO EXPLAIN NOTING ON DIFFERENT DOCUMENTS AND L OOSE PAPERS SEIZED DURING SEARCH. SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON VARIOUS ISSUES. ONE OF THE ISSUE INVOLVED WAS UNEXPLAINED INVESTMENT IN BEAUTY PARLOUR BUSINESS RUN BY ASSESSEE IN THE NAME AND STYLE OF VIVA BEAUTY PARLOUR . 3 ITA NO. 466/PUN/2014 THE PAGE NO. 4 OF ANNEXURE NO. 4 WAS HAND - WRITTEN DOCUMENT BEARING DATE 28.12.02. AS PER THE CONTENTS OF THE SAID DOCUMENT, THE DETAILS OF RENOVATION AND EXTRA WORK DONE IN THE BEAUTY PARLOUR WERE MENTIONED AMOUNTING TO RS.1.93 LACS. DURING POST - SEARCH INQUIRIES, IT WAS FOUND THAT ONE MRS. NAMRATA GAUD WAS MANAGING THE DAY TO DAY AFFAIRS OF THE VIVA BEAUTY PARLOUR . SHE WAS SUMMONED BY THE DDIT (INV) AND HER STATEMENT ON OATH WAS RECORDED. SHE CLAIMED THAT THE SAID BEAU TY PARLOUR WAS RUN IN PARTNERSHIP ON 50:50 SHARE. IN REPLY TO QUESTION ABOUT THE INVESTMENT IN THE SHOP, SHE STATED THAT SHE JOINED WITH ASSESSEE FEW DAYS BACK BEFORE SEARCH ACTION. SHE CLAIMED THAT SHE HAD BROUGHT ONLY SOME EQUIPMENT ALONG WITH HER AND REST OF THE INVESTMENT WAS MADE BY THE ASSESSEE. THE AS SESSING OFFICER WAS OF THE VIEW THAT STATEMENT GIVEN BY HER APPEARED TO BE TRUE. ON THE OTHER HAND, THE REPLY OF THE ASSESSEE WAS THAT MRS NAMRATA GAUD WAS RUNNING THE BEAUTY PARLOUR AND SHE HAD ONLY ARRANGED THE SHOP ON RENT. SHE POINTED OUT THAT THE TRAN SACTION OF RENT/ RENT DEPOSITS WERE WITH MRS. GAUD AND MR. KALU MEHTA, NOT BETWEEN THE ASSESSEE AND MRS. GAUD AND MR. MEHTA. SHE ALSO EXPLAINED THAT THE WORK OF RENOVATION AND FURNISHING OF THE PREMISES WAS DONE BY HER HUSBAND AND THEREFORE TRANSACTION BIL LS WERE FOUND FROM HER RESIDENCE DURING COURSE OF SEARCH. SHE VEHEMENTLY S TATED THAT SHE WAS NOT A PARTY TO ANY SUCH TRANSACTIONS. H OWEVER , SHE PRODUCED THE COPIES OF SHOP LICENSE IN THE NAME OF MRS. NAMRATA GAUD, PAN CARD XEROX AND PROFESSIONAL TAX ENROLLMENT CERTIFICATE OF MRS. GAUD. THE EXPLANATION OF THE ASSESSEE WAS REJECTED S INCE THE ASSESSEE IN HER STATEMENT RECORDED ON 24.11.04 HAD ADMITTED THAT SHE WAS HAVING ONE BEAUTY PARLOUR WITH ONE LADY NAMELY M RS. GAUD IN PARTNERSHIP. BUT IN HER WRITTEN SUBMISSION, THE ASSESSEE HAD DENIED ALL SUCH TRANSACTIONS WITH MRS. NAMRATA GAUD AND RETRACTION OF HER STATEMENT IN THIS REGARD WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE A PPLICATION FOR PAN ALLOTMENT WAS MAD E ON 04.07.2005. FURTHER, AP PLICATION UNDER 4 ITA NO. 466/PUN/2014 BOMBAY SHOP ACT WAS PROCESSED ON 29.12.2004. THE SEARCH WAS COMPLETED ON 24.01.05 AND MRS. GAUD STATEMENT WAS RECORDED ON 0 7 .01.05. THE ASSESSING OFFICER REJECTING THE PLEA OF THE ASSESSEE MADE ADDITION OF RS. 1, 93,000/ - IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69C OF THE ACT. THE CIT (APPEALS) UPHELD THE ADDITION IN THE HANDS OF THE ASSESSEE. 5 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 6 . THE LD. AR FOR THE ASSESSEE POI NTED OUT THAT NO ADDITION CAN BE MADE IN T HE HANDS OF THE ASSESSEE WHERE A COPY OF STATEMENT RECORDED ON 24.11.04 OF THE ASSESSEE U/S . 131 OF THE ACT HAS NOT BEEN SUPPLIED TO THE ASSESSEE. FURTHER, THE LD. AR FOR THE ASSESSEE POINTED OUT THAT EVEN COPY OF THE STATEMENT OF MRS. NAMRATA GAUD RECORDED ON 07.01.05 U/S 131 OF THE ACT HAS NOT BEEN PROVIDED TO THE ASSESSEE NOR CROSS EXAMINATION OF MRS. GAUD HAS BEEN ALLOWED TO THE ASSESSEE. 7 . THE LD. DR FOR THE REVENUE POINTED OUT THAT WHERE THE ASSESSEE HAD ADMI TTED ABOUT THE PARTNERSHIP OF THE BEAUTY PARLOUR AND WHERE DOCUMENTS WERE FOUND FROM POSSESSION OF THE ASSESSEE ALLEGING EXPENDITURE ON INTERIOR AND THEN WHERE THE ASSESSEE HAS FAILED TO EXPLAIN SOURCES OF INVESTMENT, THE SAID ADDITION MERITS TO BE UPHELD IN THE HANDS OF THE ASSESSEE. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE WHICH ARISES IN THE PRESENT APPEAL BEFORE US IS ADDITION OF RS. 1,93,000/ - . CONSEQUENT TO SEARCH ACTION ON THE PREMISES OF ASS ESSEE FROM 24.11.04 TO 24.01.05, CERTAIN LOOSE PAPERS AND DOCUMENTS WERE FOUND AND SEIZED. O NE SUCH DOCUMENT WA S WITH REGARD TO EXPENDITURE ON REPAIR AND RENOVATION OF THE SHOP. STATEMENT OF THE ASSESSEE WAS RECORDED DURING COURSE OF SEARCH U/S . 131 OF THE ACT ON 24.11.04 AND 24.01.05. DURING 5 ITA NO. 466/PUN/2014 COURSE OF SEARCH ACTION, STATEMENT OF MRS. NAMRATA GAUD WAS RECORDED U/S . 131 OF THE ACT ON 07.01.05. THE SAID LADY WAS CLAIMED TO BE RUNNING BUSINESS OF BEAUTY PARLOUR IN PARTNERSHIP WITH ASSESSEE. THE SAID LADY MRS. GAUD CLAIMED THAT SHE HAD NOT MADE ANY INVESTMENT IN RENO VATION WORK OF THE SHOP. ON THE OTHER HAND, PLEA OF THE ASSESSEE WAS THAT THE SAID BUSINESS WAS BEING CARRIED ON BY MRS. GAUD AND NOT BY THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER HAS REFERRED TO THE ST ATEMENT OF THE ASSESSEE RECORDED ON 24.11.04 WHEREIN SHE ADMITTED THAT SHE WAS CARRYING BUSINESS OF BEAUTY PA RLOUR IN PARTNERSHIP. T HE STATEMENT RECORDED BY INVESTIGATION WING OF THE ASSESSEE AND OF MRS. GAUD HAVE NOT BEEN MADE AVAILABLE TO THE ASSESSEE. T HE ASSESSEE CLAIMED THAT CROSS EXAMINATION OF THE WITNESS WHOSE TESTIMONY IS BEING USED AGAINST THE ASSESSEE, HAS ALSO NOT BEEN ALLOWED TO THE ASSESSEE. IN ALL FAIRNESS, WE DEEM IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIR ECTION TO HAND OVER THE COPY OF STATEMENT RECORDED U/S . 131 OF THE ACT TO THE ASSESSEE ON TWO DIFFERENT DATES AND ALSO STATEMENT OF MRS. NAMRATA GAUD ON 07.01.05. FURTHER THE ASSESSING OFFICER IS DIRECTED TO ALLOW CROSS EXAMINATION OF MRS. GAUD TO THE ASSESSEE . IN VIEW THEREOF , WITHOUT ADDRESSING THE MERIT OF ADDITION OF RS. 1,93,000/ - , WE REMIT THE ISSUE BACK TO THE FILE OF THE ASS ESSING OFFICER WHO SHALL DECIDE THE SAME AFTER HEARING THE ASSESSEE AND IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND S OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT , APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. ORDER PRO NOUNCED ON 7 T H DAY OF JUNE , 201 7 . S D / S D / - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 7 T H JUNE , 2017 . 6 ITA NO. 466/PUN/2014 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - CENTRAL, PUNE. 4. THE CIT, CENTRAL, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / T R U E C O P Y / / / BY ORDER, /ASSISTANT REGISTRAR , / ITAT, PUNE .