VARDHAMAN J PATEL, MUMBAI V. ACIT 17(3), MUMBAI

ITA 5113/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0957 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NOS. 5111 TO 5114/MUM/2014 (ASSESSMENT YEARS: 2001-02 TO 2004-05) SHRI VARDHARAM J. PATEL VS. A C I T , CIRCLE - 17 (3) SHOP NO. 1, BLDG. NO. 52 KAMATHIPURA MUMBAI 400008 MUMBAI PAN - ABCPP4605P APPELLANT RESPONDENT APPELLANT BY: SHRI BHUPENDRA SHAH RESPONDENT BY: SHRI M.V. RAJGURU DATE OF HEARING: 28.04.2017 DATE OF PRONOUNCEMENT: 03.05.2017 O R D E R PER JASON P. BOAZ, A.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-16, MUMBAI DATED 28.03.2014 FOR ASSESSMENT Y EARS 2001-02 TO 2004-05 CONFIRMING THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THESE APPEALS WERE EARLIER DISMISSED EXPARTE BY WAY OF ORDERS OF EVEN NUMBER DATED 10.05.2016, FOR REASON OF NON PRO SECUTION BY THE ASSESSEE ON ACCOUNT OF NOT BEING PRESENT OR REPRESE NTED ON VARIOUS DATES ON WHICH THESE APPEALS WERE FIXED IN RESPONSE TO NOTICES ISSUED. SUBSEQUENTLY, THE MISCELLANEOUS APPLICATIONS IN MA NOS. 403 TO 406/ MUM/2016 WERE FILED BY THE ASSESSEE SEEKING RECALL OF THE EXPARTE ORDER DATED 10.05.2016, FOR VARIOUS REASONS MENTIONED THE REIN, INTER ALIA, (I) THAT HE WAS AWAY AT RAJASTHAN AND NOT AT THE GIVEN ADDRESS AT MUMBAI AND THEREFORE THE NOTICES ISSUED FOR HEARINGS COULD NOT BE RECEIVED BY HIM OR BE SERVED ON HIM AND (II) THAT THE COORDINAT E BENCH OF THIS TRIBUNAL IN THE ASSESSEES APPEALS ON QUANTUM ISSUE S VIDE ORDER IN ITA ITA NOS. 5111-5114/MUM/2014 SHRI VARDHARAM J. PATEL 2 NOS. 8077 TO 8080/MUM/2010 DATED 24.04.2015 FOR THE SE ASSESSMENT YEARS, I.E. 2001-02 TO 2004-05 HAD SET ASIDE THE IS SUES ON WHICH THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS BASED IN THE IMPUGNED ORDERS AND RESTORED THE SAME TO THE FILE O F THE ASSESSING OFFICER (AO) FOR FRESH EXAMINATION AND ADJUDICATION . IN THIS FACTUAL MATRIX OF THE CASE, THE BENCH IN THE INTEREST OF EQ UITY AND JUSTICE HAD RECALLED ITS ORDERS OF EVEN NUMBER DATED 10.05.2016 AND TOOK UP THESE FOUR APPEALS FOR HEARING AFRESH. 3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IN THESE APPEALS BEFORE US, FOR ASSESSMENT YEARS 2001-02 TO 2004-05, THE ASSESSEE H AS RAISED SIMILAR GROUNDS CHALLENGING THE ACTION OF THE LEARNED CIT(A ) IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AT THE OUTSET OF THE HEARING, THE LEARNED A.R. OF THE ASSESSEE SUBMITTED THAT THE AFORESAID PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT B Y THE AO AND UPHELD BY THE LEARNED CIT(A) FOR THESE ASSESSMENT YEARS AR E UNSUSTAINABLE, SINCE THE BASIS FOR ITS IMPOSITION; I.E. THE QUANTU M ADDITIONS MADE BY THE AUTHORITIES BELOW, HAVE BEEN SET ASIDE AND REST ORED TO THE FILE OF THE AO FOR FRESH EXAMINATION AND ADJUDICATION BY THE DE CISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 8077 TO 8080/MUM/2010 VIDE ORDER DATED 24.04.2015 ( COPY OF WHICH HAS BEEN PLACED ON RECORD). 3.2 WE HAVE CAREFULLY PERUSED THE AFORESAID ORDER O F THE COORDINATE BENCH (SUPRA) AND FIND THAT THE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2001-02 TO 2004-05 ON QUANTUM ADDITIONS, THAT FORM THE BASIS FOR LEVY OF PENALTY, HAVE BEEN SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR RE- EXAMINATION AND FRESH ADJUDICATION, HOLDING AS UNDE R AT PARAS 7 TO 11 THEREOF : - 7. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAR EFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMEN TARY EVIDENCES REFERRED TO DURING THE COURSE OF THE APPELLATE PROC EEDINGS BEFORE US. CLAIM OF AGRICULTURAL INCOME THERE IS NO DISPUTE THAT THE ASSESSEE WAS HAVING SUBSTANTIAL HOLDING OF AGRICULTURAL LAND . THE OWNERSHIP OF ITA NOS. 5111-5114/MUM/2014 SHRI VARDHARAM J. PATEL 3 AGRICULTURAL LAND HAS NOT BEEN DENIED BY THE REVENU E AUTHORITIES. CONSIDERING THE HOLDING OF THE AGRICULTURAL LAND BY THE ASSESSEE, IN OUR CONSIDERED OPINION, THE AGRICULTURAL INCOME SHOWN B Y THE ASSESSEE IN THESE FOUR YEARS UNDER APPEAL APPEAR TO BE VERY REA SONABLE. WE FURTHER FIND THAT THE AO HAS REFERRED THE MATTER TO THE DIS TRICT COLLECTOR TO KNOW THE AGRICULTURAL INCOME IN THE CASE OF ONE SHRI ARM SINGH WHOSE VILLAGE IS IN THE IMMEDIATE VICINITY WITH THAT OF THE ASSESSEE . WE FIND THE DISTRICT COLLECTOR HAS GIVEN A REPORT OF AGRICULTURAL INCOME IN THE CASE OF ARMSINGH AS PER THE RECORDS OF THE REVENUE AUTHORIT IES FOR LAST 10 YEARS AS PER THE REVENUE RECORDS. WE ALSO FIND THAT SUCH REPORT HAS BEEN CALLED BY THE SAME AO WHO HAS ASSESSED ASSESSEES I NCOME. WE FAIL TO UNDERSTAND WHY THE SAME PROCEDURE WAS NOT ADOPTED B Y THE AO IN THE CASE OF THE ASSESSEE. CONSIDERING THE UNDENIABLE F ACT THAT THE ASSESSEE WAS HAVING SUBSTANTIAL AGRICULTURAL HOLDING, IN OUR CONSIDERED OPINION, THE AO SHOULD HAVE VERIFIED THE AGRICULTURAL INCOME FROM THE REVENUE RECORDS OF THE DISTRICT COLLECTOR AS HE HAS DONE IN THE CASE OF OTHER PERSONS LIVING IN OR AROUND THE SAME AREA. THEREFOR E, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY THE AGRICULTURAL INCOME AS PE R THE REVENUE RECORDS OF THE DISTRICT COLLECTOR BY CALLING INFORMATION OR SENDING I.T. INSPECTOR AS THE CASE MAY BE AND AFTER GIVING A REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE, DECIDE THE ISSUE AFRESH. GRI EVANCE RELATING TO THE ADMISSIBILITY OF AGRICULTURAL INCOME IS ALLOWED FOR STATISTICAL PURPOSE. 8. THE ONLY GROUND REMAINS IS THAT FOR A.Y. 2002-0 3 WHICH IS IN RESPECT OF THE ADDITION OF RS. 6 LAKHS. 9. AT THE VERY OUTSET, IT HAS TO BE UNDERSTOOD CLEA RLY THAT THE ENTRY WHICH WAS FOUND CREDITED IN THE BOOKS OF ACCOUNT IS OF RS. 5 LAKHS AND NOT 6 LAKHS AS TAKEN BY THE AO. 9.1. PAGE-12 OF THE PAPER BOOK 1A IS THE COPY OF T HE ORDER U/S. 131(3) WHICH GIVES DETAILS OF BOOKS IMPOUNDED DURING THE C OURSE OF ASSESSMENT PROCEEDINGS OF A.Y. 2002-03. THE IMPOUN DED BOOKS CONTAIN CASH BOOK AND LEDGER ACCOUNTS FOR THE PERIO D 1.4.2001 TO 31.3.2002. PAGE-165 OF THE PAPER BOOK 1B IS THE CA SH BOOK ENTRY AS ON 20.11.2001 WHICH SHOWS CREDIT OF RS. 5 LAKHS ON ACCOUNT OF SALE OF AGRICULTURAL LAND. PAGE-167 OF THE SAME PAPER BOOK CONTAINS CASH BOOK ENTRIES OF 5.12.2001, THE SAID ENTRIES SHOW CR EDIT OF RS. 1,50,000/- FROM THE BOOKS OF MONEY LENDING BUSINESS . PAGE-168 SHOWS CASH BOOK ENTRIES OF 6.12.2001 WHICH SHOW CRE DIT OF RS. 9 LAKHS ON ACCOUNT OF CUSTOMS DEPARTMENT. AT PAGE-8 OF THE PAPER BOOK 1A, WE FIND AFFIDAVIT OF SHRI GAJAJI NANJI CHO UDHARY WHEREIN HE HAS CATEGORICALLY STATED THAT HE HAS AGREED TO PURC HASE AGRICULTURAL LAND FROM THE ASSESSEE FOR A CONSIDERATION OF RS. 6 LAKHS FOR WHICH HE HAS PAID RS. 5 LAKHS IN FRONT OF TWO WITNESSES AND FOR SOME REASON HE HAS CANCELLED THE SAID DEAL. WE FIND THAT THIS AFF IDAVIT WAS FILED BEFORE THE LD. CIT(A). A REMAND REPORT WAS CALLED BY THE LD. CIT(A). THERE IS A REFERENCE BY THE AO IN HIS REMAND PROCEE DINGS IN RESPECT OF THIS AFFIDAVIT. THE REMAND REPORT IS AT PAGES 292 TO 295 OF THE PAPER BOOK-1C. THE REASONS GIVEN FOR REJECTING THE CLAIM OF THE ASSESSEE IN ITA NOS. 5111-5114/MUM/2014 SHRI VARDHARAM J. PATEL 4 THE REMAND PROCEEDINGS IS THAT THE ASSESSEE COULD N OT VERIFY THE CONTENTS OF THE AFFIDAVIT AS THE ASSESSEE FAILED TO PRODUCE THE WITNESSES AND THE PERSON MAKING THE AFFIDAVITS. AT PAGE-214 OF THE PAPER BOOK-1B, WE FIND AN AFFIDAVIT OF SHRI LAXMAN ARAM J. CHOUDHARY WHO STATED THAT HE WAS A WITNESS TO THE L AND DEAL BETWEEN THE ASSESSEE AND SHRI GAJAJI CHOUDHARY. IN THIS AFFIDAVIT, WE FURTHER FIND THAT THE WITNESS HAS CLEARLY STATED THAT HE HAS APPEARED BEFORE THE ACIT 17(3) ON 5.10.2009. 10. WE DO NOT FIND ANYTHING WHICH COULD SUGGEST THE ADMISSIBILITY OR OTHERWISE OF THIS AFFIDAVIT OF THE WITNESS SINCE TH E AO HAS REJECTED THE CLAIM OF THE ASSESSEE IN THE REMAND PROCEEDINGS HOL DING THAT THE WITNESS WAS NOT PRODUCED BEFORE HIM. THIS AFFIDAVIT OF THE WITNESS IS IN CONTRADICTION TO THE CLAIM OF THE AO. HOWEVER, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO PRODUCE THE WITNESSES AND A LSO THE PURCHASER OF THE IMPUGNED LAND BEFORE THE AO FOR VERIFICATION . THE AO IS DIRECTED TO VERIFY AND DECIDE THE ISSUE AFRESH AFTE R GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND RELATING TO THE ADDITION OF RS. 6 LAKHS ON ACCOUNT OF CREDIT ENTRIE S FOUND IN THE BOOKS OF ACCOUNT IS ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSE. 3.3 IN VIEW OF THE DECISION OF THE COORDINATE BENCH SETTING ASIDE THE ISSUES IN THE QUANTUM APPEALS FOR ASSESSMENT YEARS 2001-02 TO 2004- 05 FOR FRESH EXAMINATION AND DE NOVO ADJUDICATION ( SUPRA), THE QUANTUM ISSUES ON THE BASIS OF WHICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR THESE YEARS WAS LEVIED DO NOT NOW SURVIVE FOR C ONSIDERATION AND, THEREFORE, THE SAID ORDERS LEVYING PENALTY UNDER SE CTION 271(1)(C) OF THE ACT BEING UNSUSTAINABLE, WE CANCEL THE SAME. CONSEQ UENTLY, WE ALLOW THE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2001-02 TO 2004-05 SEEKING THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1) (C) OF THE ACT. 3. IN THE RESULT, THE ASSESSEES APPEALS FOR ASSESSMEN T YEARS 2001-02 TO 2004-05 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY, 2017. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 3 RD MAY, 2017 ITA NOS. 5111-5114/MUM/2014 SHRI VARDHARAM J. PATEL 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -16, MUMBAI 4. THE CIT - 17, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.