HEMENT RAJ SANKHLA, Jaipur V. DCIT, Jaipur

ITA 482/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1868 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT DR DHK
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 153A; 132; 69

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 482/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2009-10 SHRI HEMANT RAJ SANKHLA A-3, MOTI LAL ATAL ROAD, JAIPUR CUKE VS. THE DCIT CENTRAL CIRCLE 1, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADUPS 2328A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI RAJEEV SOGANI, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI VARINDER MEHTA, CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/09/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 1 /12/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-4, JAIPUR DATED 29-03-2016 FOR THE ASSESSMEN T YEAR 2009-10 RAISING FOLLOWING GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE SEARCH PROCEEDINGS CONDUCTED U/S 132 IS PATENTLY ILLEGAL A ND CONSEQUENTLY THE ASSESSMENT MADE U/S 153A IS ILLEGAL, WITHOUT ANY BA SIS AND BEYOND SCOPE. RELIEF MAY PLEASE BE GRANTED BY HOLDING THE SEARCH PROCEEDINGS ILLEGAL AND CONSEQUENTLY QUASHING THE ASSESSMENT PR OCEEDING U/S 153A BEING VOID AND AB INITO. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 40,50,000/- U/S 69 OF THE I.T. ACT, 1961. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, ITA NO. 482/JP/2016 SHRI HEMANT RAJ SANKHLA VS DCIT, CENTRAL C IRCLE-1, JAIPUR 2 UNJUSTIFIED, ARBITRARY AND AGAINST THE CASE OF THE ASSESSEE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 40,50,000/- 2.1 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1.HENCE, THE SAME IS DISMISS ED BEING NOT PRESSED. 3.1 APROPOS GROUND NO. 2 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 3.2.2 I HAVE DULY CONSIDERED THE ASSESSEES SUBMI SSION AND ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER. I HAVE TAKEN A N OTE OF FACTUAL MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. ASSESSEE HAS SHOWN ADVANCE CASH RECEIPTS AMOUNTING TO RS. 40.50 LACS ON ACCOUNT OF ADVANCE A GAINST SALE OF PLOT NO. 74, 75, 76, 77, 78, 81, 82, & 83 AT NARAYAN VIHAR-Z, JAIPUR. T HE CASH PAYMENTS PURPORTED TO HAVE BEEN MADE TO THE ASSESSEE BY M/S. RANSONS PROP ERTIES PVT. LTD. , MUMBAI DURING THE YEAR CONSIDERATION. AO TREATED IT AS BOGUS TRAN SACTIONS AND GAVE HIS DETAIL REASONING IN PARA 14 TO 28 PG 8 TO 12 OF THE ASSESS MENT ORDER. THE RELEVANT FINDINGS OF THE AO ARE SUMMARIZED AS UNDER: A) THE TRANSACTIONS WERE MADE IN CASH. THE REASON FOR MAKING SUCH A HUGE TRANSACTIONS WAS NOT VERY CONVINCING. B) A SURVEY OPERATION WAS CONDUCTED ON 28.07.2009 TO V ERIFY THE GENUINENESS OF THE CONCERNS AT THE GIVEN ADDRESS AND IN THE SURVEY OPERATION, M/S. RANSONS PROPERTIES PVT. LTD., MUMBAI WAS FOUND TO BE NON -E XISTENT ON THE SAID ADDRESS. C) ACB, GOVT. OF RAJASTHAN, JAIPUR HAS ALSO CONDUCTED SIMILAR ENQUIRIES AGAINST THOSE CONCERNS AND FOUND THEM NON-EXISTENT WHICH FU RTHER PROVES THE FINDING OF THE AO. D) ASSESSEE SAID TO HAVE ENTERED TO THE AGREEMENT WITH THE NEW DIRECTOR SH FATEH LAL SHAH, WHO WAS NOT A DIRECTOR ON 02.01.2009 I.E. , THE DATE OF SAID AGREEMENT OF SALE /ON THE DATE OF TRANSACTION. MEAN ING THEREBY ON THE DATE, HE WAS NOT IN A CAPACITY TO ENTER INTO SUCH AN AGREEM ENT OF SALE. E) ON THE DATE OF AGREEMENT SH GAUTAM R. PATEL WAS DIR ECTOR OF M/S. RANSONS PROPERTIES PVT. LTD. WHO HAS CONFIRMED THAT NO SUCH TRANSACTIONS WERE PERFORMED BY THE ASSESSEE. ITA NO. 482/JP/2016 SHRI HEMANT RAJ SANKHLA VS DCIT, CENTRAL C IRCLE-1, JAIPUR 3 F) ON THE DATE OF AGREEMENT M/S. RANSONS PROPERTIES PV T. LTD. WAS NOT HAVING SUFFICIENT CASH BALANCE SO AS TO ADVANCE RS. 40.50 LACS TO THE ASSESSEE. G) ON PERUSAL OF AGREEMENT DT 02.01.2009, AO HAS NOTIC ED THAT WHILE NOTIFYING THE DOCUMENT, THE NOTARY HAS SIMPLY PUT A STAMP AT TESTED AND NOTARY, JAIPUR(RAJASTHAN) AND NO REGISTERED NO. O F THE NOTARY IS APPEARING ON THE AGREEMENT WHICH RAISES SERIOUS DOU BT ABOUT GENUINENESS AND AUTHENTICITY OF THIS LEGAL DOCUMENT. ASSESSEE DURING THE APPELLATE PROCEEDING HAS NOT C ONTROVERTED AOS AFOREMENTIONED FINDINGS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, ADDITION MADE BY THE AO OF RS. 40. 50 LACS ON ACCOUNT OF UNEXPLAINED CASH IS HEREBY SUSTAINED. ASSESSEES AP PEAL IN GR NO. 2 FAILS. 3.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSE SSEE PRAYED FOR DELETION OF ADDITION SUSTAINED BY THE LD. CIT(A) AM OUNTING TO RS. 40.50 LACS U/S 69 OF THE ACT FOR WHICH THE LD.AR OF THE A SSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION. 3. SUBMISSIONS 3.1 OUR SUBMISSIONS BEFORE LD. CIT(A), REPRODUCED BY HI M AT PAGES 12 TO 21 OF HIS ORDER, MAY PLEASE BE CONSIDERED IN CORRECT PERSPECTIVE. 3.2 THE FINDINGS OF LD. CIT(A) ARE CONTRARY TO LAW AND FACTS AS SUBMITTED BELOW:- (A) THE TRANSACTIONS WERE MADE IN CASH. THE REASON FOR MAKING SUCH A HUGE TRANSACTIONS WAS NOT VERY CONVINCING. THERE IS NO PROHIBITION UNDER THE LAW TO RECEIVE CA SH AS ADVANCE TOWARDS AGREEMENT TO SELL. THE SAID CASH WAS DULY RECORDED IN THE CASH B OOK OF THE APPELLANT. THE TRANSACTION WAS DULY SUPPORTED BY VALID AGREEMENT BETWEEN THE P ARTIES WHICH WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH. MERELY, BECAUSE THE TR ANSACTION WAS IN CASH, THE SAME CANNOT BE DOUBTED. (B) A SURVEY OPERATION WAS CONDUCTED ON 28.07.2009 TO VERIFY THE GENUINENESS OF THE CONCERNS AT THE GIVEN ADDRESS AND IN THE SURVEY OPE RATION, M/S RANSON PROPERTIES PVT. LTD., MUMBAI WERE FOUND TO BE NON - EXISTENT O N THE GIVEN ADDRESS. THE BUYER COMPANY WAS INCORPORATED UNDER THE PROVIS IONS OF THE COMPANIES ACT, 1956. THIS FACT IS NOT DOUBTED. NO EVIDENCE WAS BROUGHT O N RECORD BY THE DEPARTMENT IN ITA NO. 482/JP/2016 SHRI HEMANT RAJ SANKHLA VS DCIT, CENTRAL C IRCLE-1, JAIPUR 4 SUPPORT OF ITS ALLEGATION THAT THE COMPANY WAS NOT EXISTENT ON THE GIVEN ADDRESS. WITHOUT PREJUDICE TO THIS, IT IS SUBMITTED THAT THE COMPANIES ACT, 1956 ALLOWS COMPANY TO CHANGE THEIR REGISTERED OFFICE. HOWEVER, ON ANY GIVEN POINT OF TIME, EXACT ADDRESS OF ANY COMPANY CAN BE ASCERTAINED FROM THE OFFICE OF R EGISTRAR OF COMPANIES. NO SUCH EFFORTS HAVE BEEN MADE EXCEPT MAKING UNSUBSTANTIATE D ALLEGATIONS. (C) ACB, GOVT. OF RAJASTHAN, JAIPUR HAS ALSO CONDUCTED SIMILAR ENQUIRIES AGAINST THOSE CONCERNS AND FOUND THEM NON-EXISTENT WHICH FURTHER PROVES THE FINDING OF AO. LOWER AUTHORITIES HAVE REFERRED AND RELIED ON THE E NQUIRIES CONDUCTED BY ACB, GOVT. OF RAJASTHAN. HOWEVER, NO SUCH REPORT OF ACB WAS MADE AVAILABLE TO THE ASSESSEE AT ANY STAGE SO AS TO GIVE HIM AN OPPORTUNITY TO REBUT THE SAME. (D) ASSESSEE SAID TO HAVE ENTERED TO THE AGREEMENT WIT H THE NEW DIRECTOR SH. FATEH LAL SHAH, WHO WAS NOT A DIRECTOR OF M/S RANSON PROPERTI ES PVT. LTD.., MUMBAI ON 02.01.2009 I.E., THE DATE OF SAID AGREEMENT OF SALE /ON THE DATE OF TRANSACTION. MEANING THEREBY ON THE DATE, HE WAS NOT IN A CAPACI TY TO ENTER INTO SUCH AN AGREEMENT OF SALE. THE AGREEMENT ENTERED INTO BY THE SAID PERSON IS AL LEGED BY THE LOWER AUTHORITIES TO BE NOT DIRECTOR ON THE DATE OF ENTERING INTO THE AGREE MENT. HOWEVER, COMPANY HAS NOT REFUTED THE AGREEMENT. NO EVIDENCE HAS BEEN BROUGHT ON RECORD IN SUPPORT OF THE ALLEGATION THAT THE SAID PERSON WAS NOT DIRECTOR OF THE COMPANY ON THE DATE OF AGREEMENT. HOWEVER, THE SAID PERSON WAS DIRECTOR OF THE COMPANY, HAS NOT BEEN DISPUTED OR DOUBTED BY THE LOWER AUTHORITIES. (E) ON THE DATE OF AGREEMENT SH. GAUTAM R. PATEL WAS D IRECTOR OF M/S RANSON PROPERTIES PVT. LTD.., WHO HAS CONFIRMED THAT NO SU CH TRANSACTIONS WERE PERFORMED BY THE ASSESSEE. THE ALLEGATION OF DENIAL IS NOT SUBSTANTIATED BY TH E DEPARTMENT BY BRINGING APPROPRIATE MATERIAL ON RECORD. NEITHER COPIES OF STATEMENTS RE CORDED WERE PROVIDED NOR OPPORTUNITY FOR CROSS EXAMINATION WAS GIVEN. (F) ON THE DATE OF AGREEMENT M/S RANSON PROPERTIES PVT . LTD.., MUMBAI WAS NOT HAVING SUFFICIENT CASH SO AS TO ADVANCE RS.40.50 LAKH TO T HE ASSESSEE. THE ALLEGATION AGAIN IS UNSUBSTANTIATED. ONCE THE A GREEMENT IS SIGNED & CASH HAVING GIVEN IS CONFIRMED, NON-AVAILABILITY OF CASH (UNSUB STANTIATED ALLEGATION) HAS NO RELEVANCE FOR THE ASSESSMENT OF THE APPELLANT. (G) ON PERUSAL OF AGREEMENT DT 02.01.2009, AO HAS NOTI CED WHILE NOTIFYING THE DOCUMENT, THE NOTARY HAS SIMPLY PUT A STAMP ATTEST ED AND NOTARY,JAIPUR (RAJASTHAN) AND NO REGISTERED NO. OF THE NOTARY IS APPEARING ON THE AGREEMENT WHICH RAISES SERIOUS DOUBT ABOUT GENUINENESS AND AU THENTICITY OF THIS LEGAL DOCUMENT. THIS AGREEMENT IS NOTARIZED WHICH FACT IS NOT DISPU TED. SO-CALLED LAPSE ON THE PART OF FUNCTIONING OF NOTARY, IF ANY, HAS NO RELEVANCE FOR THE APPELLANT. MOREOVER, THERE IS NO DISPUTE THAT AGREEMENT IS SIGNED BY BOTH THE PARTIE S AND BOTH ARE OWNING AND ADMITTING THE SAME. ANY FRIVOLOUS MATTER CANNOT NEGATE THE VA LIDITY OF THE AGREEMENT. ITA NO. 482/JP/2016 SHRI HEMANT RAJ SANKHLA VS DCIT, CENTRAL C IRCLE-1, JAIPUR 5 3.3 IT IS ALSO SUBMITTED THAT NO INCRIMINATING DOCUMENT S, SUGGESTING THIS TRANSACTION TO BE BOGUS, WAS FOUND DURING THE SEARCH OPERATION. HAD IT BEEN A MANAGED TRANSACTION, SOME TRACES OF THE SAME WOULD HAVE BEEN FOUND. BUT NOTHING WAS FOUND S UGGESTING THAT A CONTRARY TRANSACTION HAD TAKEN PLACE THAN WHAT WAS RECORDED IN THE BOOKS . 3.4 THE CONTENTS OF THE AGREEMENT ARE PRESUMED TO BE TR UE IN VIEW OF THE PROVISIONS OF SECTION 132(4A). IT IS BINDING ON THE DEPARTMENT. 3.5 RELIANCE IS PLACED ON THE DECISION OF THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS SHUBH MINES PVT LTD (D.B. INCOME TAX APPEAL NO. 96/15), WHERE EVEN ADDITION IS HELD TO BE UNJUSTIFIED UNLESS IT IS PROVED THAT MON EY BELONGED TO THE ASSESSEE. RELEVANT PORTION OF THE DECISION IS EXTRACTED BELOW: IN THE CONSIDERED OPINION OF THIS COURT, IN ABSENC E OF ANY COGENT EVIDENCE ON RECORD ESTABLISHING THAT THE MONEY SHOWN TO HAVE RE CEIVED AS SHARE APPLICATION MONEY, WAS AS A MATTER OF FACT, UNACCOUNTED MONEY B ELONGING TO THE ASSESSEE COMPANY, THE FINDING ARRIVED AT BY THE AO, WHICH IS BASED ON SUSPICION, HAS RIGHTLY BEEN HELD NOT SUSTAINABLE IN THE EYES OF LAW. IN VIEW OF ABOVE SUBMISSIONS, ADDITION OF RS. 40,50 ,000 MADE BY LD. AO AND CONFIRMED BY CIT(A), MAY PLEASE BE DELETED. 3.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER O F THE LD. CIT(A). 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE AO MADE T HE ADDITION OF RS. 40.50 LACS U/S 69 OF THE ACT TREATING THE AMOUNT AS UNEXP LAINED CASH AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE WITH T HE OBSERVATION THAT THE ASSESSEE COULD NOT PROVE THE SOURCE OF ADVANCE RECE IVED. IN FIRST APPEAL, THE LD. CIT(A) HAS SUSTAINED THE ADDITION MADE BY T HE AO. IT IS NOTED FROM THE AVAILABLE RECORDS THAT DURING THE SEARCH O PERATION INCRIMINATING DOCUMENTS SHOWING CASH RECEIPTS AMOUNTING TO RS. 40 .50 LACS ON ACCOUNT OF ADVANCE AGAINST SALE OF PLOT NO. 74,75,76,77,78, 81,82 AND 83, AT ITA NO. 482/JP/2016 SHRI HEMANT RAJ SANKHLA VS DCIT, CENTRAL C IRCLE-1, JAIPUR 6 NARYANA VIHAR-Z, JAIPUR WERE FOUND. THE ABOVE CASH PAYMENT HAD BEEN MADE BY M/S. RANSON PROPERTIES PVT. LTD, 402, PRANA YAN NAGAR, CO-OP. HOUSING SOCIETY, VAZIR NAK, BORIVALLI (W), MUMBAI D URING THE YEAR UNDER CONSIDERATION. IN ORDER TO VERIFY THE GENUINE NESS OF THE CONCERN, A SURVEY OPERATION WAS CONDUCTED ON 28-07-2009 AT THE ADDRESSES OF THE ABOVE MENTIONED CONCERN ALONGWITH THREE OTHER CONCE RNS FROM WHOM OTHER FAMILY MEMBERS WERE SAID TO HAVE RECEIVED CAS H PAYMENT AGAINST SALE OF CERTAIN PROPERTIES. THE REVENUES CLAIM IS THAT DURING THE COURSE OF SURVEY THIS CONCERN WAS FOUND TO BE NON-EXISTEN T. HOWEVER, THE ASSESSEE CLAIMS THAT THE CONCERN WAS HAVING PAN AND THE NEW ADDRESS COULD HAVE BEEN ASCERTAINED FROM REGISTRAR OF COMPA NIES. IT IS ALSO NOTED THAT THE ACB,GOVT. OF RAJASTHAN, JAIPUR HAS CONDUCT ED THE SIMILAR ENQUIRIES AGAINST THE CONCERN AT MUMBAI AND FOUND THE CONCERN WAS NOT EXISTING ON THE GIVEN REGISTERED OFFICE ADDRESS. TH E LD.AR OF THE ASSESSEE SUBMITTED THAT LOWER AUTHORITIES HAVE REFERRED AND RELIED ON THE ENQUIRIES CONDUCTED BY THE ACB, GOVT. OF RAJASTHAN, HOWEVER, NO SUCH REPORT OF ACB WAS MADE AVAILABLE TO THE ASSESSEE AT ANY STAGE . ASSESSEE WAS NOT PROVIDED OPPORTUNITY TO CONTROVERT THE REPORT IF AN Y. THERE IS VIOLATION OF NATURAL JUSTICE. LAW DOES NOT ALLOW SUCH ACT. TAK ING INTO CONSIDERATION ITA NO. 482/JP/2016 SHRI HEMANT RAJ SANKHLA VS DCIT, CENTRAL C IRCLE-1, JAIPUR 7 ALL THE ABOVE FACTS, CIRCUMSTANCES OF THE CASE AND ALSO INTO CONSIDERATION THE WRITTEN SUBMISSIONS OF THE ASSESSEE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE TO RESTORE THE ISSUE TO THE FILE OF THE AO TO DECIDE IT AFRESH BY PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS ALSO PERTINENT TO MENTION HERE THAT THE ASSESSEE BE PRO VIDED THE REPORT OF ACB ON THIS ISSUE TO CONTEST ITS CASE APPROPRIATEL Y. THUS THE GROUND NO. 2 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOS ES. 3.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1-12-201 7. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 1/12/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HEMANT RAJ SANKHLA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE-1 , JAIP UR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 482/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR