NISHI KHANNA, MUMBAI V. ITO 21(1)(3), MUMBAI

ITA 5077/MUM/2014

• Counselvise Citation: 507719914 RSA 2014
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2014
• Court: TRIBUNAL
• Department Lawyers: G N MAKAWANA
• Assessee Lawyers: APURV GANDHI
• Keywords: Principle of natural justice; Tangible material
• Section: 147; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER ITA NO . 5077 / MUM./ 2014 ( ASSESSMENT YEAR : 20 07 08 ) SMT. NISHI KHANNA 501/502, ASHOK HOUSE GANDHIGRAM ROAD JUHU, MUMBAI 400 049 PAN AAOPK2603B .. APP ELLANT V/S INCOME TAX OFFICER WARD 21(1)(3), MUMBAI .... RESPONDENT ASSESSEE BY : SHRI APURV GANDHI REVENUE BY : SHRI G.N. MAKAWANA DATE OF HEARING 1 6 .0 7 .2015 DATE OF ORDER 31.08.2015 O R D E R PER BENCH TH E PRESENT APPEA L PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 18 TH JULY 2014, PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 32 , MUMBAI, FOR THE ASSESSMENT YEAR 20 07 08 . THE G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS : ' 1. ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) HAS WRONGLY UPHELD THE ACTION OF THE LD. AO BY INVOKING THE PROVISION OF SECTION 147 R.W.S. 148 OF THE ACT IN THE APPELLANTS CASE. THERE WAS NO TANGIBLE MATERIAL IN THE HANDS OF THE A.O. WHICH MAY JUSTIFY FORMING OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE FRAMING OF ASSESSMENT ORDER U/S 143 R/.W SECTION 147 OF THE ACT IS SMT. NISHI KHANNA 2 THEREFORE ILLEGAL. THE APPELLANT PRAYS THAT THE ASSESSMENT ORDER MAY KINDLY BE QUASHED. 2. WITHOUT PRE JUDICE TO THE ABOVE CONTENTION RAISED IN GROUND NO.1 ABOVE, THE APPELLANT SUBMITS THAT THE HON'BLE CIT(A) FAILED TO CONSIDER THE FACTS OF THE CASE EXPLAINED TO HIM AND PROCEEDED TO CONFIRM THE ERRONEOUS ADDITION MADE BY THE LD. AO OF RS.1,88,473 IN THE HAN DS OF THE APPELLANT ON ACCOUNT OF JEWELLERY WHICH DID NOT BELONG TO HERSELF. THE APPELLANT PRAYS THAT THE SAID ADDITION BEING AGAINST PRINCIPLE OF NATURAL JUSTICE MAY KINDLY BE ORDERED TO BE DELETED. 2. THE SOLITARY DISPUTE IN THIS APPEAL RELATES TO ADDITI ON OF RS. 1,88,473/ - MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED JEWELLERY. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 132(1) OF THE ACT WAS CARRIED OUT ON 22 ND FEBRUARY 2007 AT RESIDENTIAL AND BUSINESS PREMISES OF KHANNA GROUP OF CO MPAN IES AND ITS DIRECTORS/PARTNERS, AND THE APPELLANT IS WIFE OF MR DINESH KHANNA , THE MAIN DIRECTOR/PARTNER OF THE GROUP. D URING THE ORIGINAL ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, COMPLETED ON 24 TH DECEMBER 2008 , THE RETURNED INCOME WAS ACCEPTED IN THE CASE OF ASSESSEE . THEREAFTER, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 23 RD MARCH 2012. THE ASSESSEE CALLED FOR THE REASONS FOR RE OPENING , WHICH WAS DISCLOSED TO THE ASSESSEE WHICH PRIMARILY STATES THAT THE ADDITIONAL INCOME OF RS 2,81,372 / - ON ACCOUNT UNEXPLAINED JEWELLERY WAS NOT TAXED IN THE HANDS OF THE ASSESSEE IN THE ORDER UNDER SECTION 143(3) DATED 24 TH DECEMBER 2008. THE ASSESSEE OBJECTED TO THE ISSUANCE OF NOTICE UNDER SECTION 148 OF SMT. NISHI KHANNA 3 THE ACT AND CLAIMED THAT JEWELLERY OF RS. 2,81,372 / - HAS ALREADY BEEN DECLARED IN THE HANDS OF THE ASSESSEE ALONG WITH FAMILY MEMBERS. THE ASSESSEE ALSO SUBMITTED WEALTH TAX RETURNS IN SOME CASES. THE A SSESSING O FFICER NOTED THAT OUT OF THE AMOUNT OF RS. 2,81,372/ - , JEWELLERY TO THE EXTENT OF RS. 1,88,473/ - STATED TO BE BELONGING TO THE FOLLOWING TWO FAMILY MEMBERS COULD NOT BE EXPLAINED: - SR. NO. NAME OF THE FAMILY MEMBER VALUE OF JEWELLERY 1. SHRI BHARAT KHANNA RS. 42,973 (RS, 26,320 + RS. 16,653) 2. SHRI DINESH K HANNA (IND.) RS. 1,37,500 RS. 1,88,473 ACCORDINGLY, HE TREATED THE AFORESAID JEWELLERY AS BELONGING TO THE ASSESSEE AND BROUGHT TO TAX AN AMOUNT OF RS. 1,88,473/ - AS JEWELLERY FOR WHICH THE SOURCE REMAINED UNEXPLAINED. 3. IN APPEAL BEFORE THE CIT(A) , ASSESSEE CHALLENGED THE INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT AS WELL AS ALSO THE ADDITION ON MERITS. THE CIT(A) DISAGREED WITH THE ASSESSEE ON BOTH THE COUNTS. NOT BEING SATISFIED WITH THE ORDER OF CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. BEFORE ME, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS VEHEMENTLY ASSAILED THE INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT AND HAS ALSO CONTENDED THAT THE ADDITION OF RS. 1,88,473/ - ON SMT. NISHI KHANNA 4 ACCOUNT OF UNEXPLAINED JEWELLERY IS UNSUSTAINAB LE IN THE HANDS OF THE ASSESSEE. 5. THE LD. DR ON THE OTHER HAND, HAS DEFENDED THE ORDERS OF AUTHORITIES BELOW. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. NOTABLY, IN THE PRESENT CASE, ASSESSEE WAS REQUIRED TO EXPLAIN THE AMOUNT OF RS. 2,8 1,372/ - WHICH WAS STATED TO BE THE VALUE OF JEWELLERY ADMITTED BY THE HUSBAND OF THE ASSESSEE SHRI DINESH KHANNA AS BELONGING TO THE ASSESSEE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE EXPLAINED THAT THE AFORESAID JEWELLERY WAS ALREADY DECLARED IN THE HANDS OF OTHER FAMILY MEMBERS, ASSESSEE FILED THE RE SPECTIVE WEALTH TAX RETURNS ALSO. IN CASES, WHERE THE EXPLANATION OF THE ASSESSEE WAS SUPPORTED BY THE WEALTH TAX RETURNS OF THE FAMILY MEMBERS, THE ASSESSING OFFICER ACCEPTED THE SAME BUT IN RELAT ION TO THE AMOUNT OF RS. 1,88,473/ - , THE WEALTH TAX RETURN OF THE RESPEC TIVE FAMILY MEMBERS , NAMELY , SHRI BHARAT KHANNA AND SHRI DINESH KHANNA W ERE NOT FILED. HENCE , THE SAID AMOUNT OF RS. 1,88,473/ - WAS ASSESSED IN THE HANDS OF THE ASSESSEE . IN MY CONSIDE RED OPINION, THE FURTHER EXPLANATION OF THE ASSESSEE HAS BEEN UNJUSTLY BRUSHED ASIDE BY THE LOWER AUTHORITIES. THE ASSESSEE HAD EXPLAINED THAT THE AFORESAID TWO INDIVIDUALS WERE NOT LIABLE TO FILE WEALTH TAX RETURNS AND, THEREFORE, THE SMT. NISHI KHANNA 5 SAME COULD NOT BE S UBSTANTIATED WITH THE RESPECTIVE WEALTH TAX RETURNS. THE CASE OF THE ASSESSEE WAS THAT THE SAID INDIVIDUALS WERE EXISTING ASESSEES AND THE AFORESAID AMOUNT OF JEWELLERY WAS QUITE EXPLAINED IN THE RESPECTIVE HANDS. IN MY CONSIDERED OPINION, THERE IS NO EVI DENCE TO NEGATE THE ASSERTIONS OF THE ASSESSEE AND IT IS A CASE WHERE, THE EXPLANATION RENDERED BY THE ASSESSEE HAS MERELY BEEN DISBELIEVED. I, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE A SSESSING O FFICER TO DELETE THE ADDITION OF RS. 1,88,473 / - . HENCE ON THIS ASPECT, ASSESSEE SUCCEEDS. 7. SINCE ASSESSEE HAS SUCCEEDED ON MERITS, THE OTHER ASPECT RELATING TO VALIDITY OF INITIATION OF PROCEEDINGS U/S 147/148 IS RENDERED ACADEMIC AND IS NOT ADJUDICATED FOR THE PRESENT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE . ORDER PRONOUNCED IN THE OPEN COURT O N 31.08.2015. SD/ - SD/ - G.S. PANNU ACCOUNTANT MEMBER MUMBAI, DATED : 31.08.2015 SMT. NISHI KHANNA 6 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONC ERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI