ACIT,Cir.1(1), Nashik, V. Shri Trilokchand T. Kalani, Nashik

ITA 538/PUN/2004

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3161 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 08-04-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Unexplained cash credit; Unexplained expenditure; Principle of natural justice
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 538/PN/04 (ASSTT. YEAR 1999-00) ACIT, CIRCLE-1, NASHIK .... APPELLANT VS. SHRI TRILOKCHAND T. KALANI, (INDIVIDUAL) BEHIND MUNICIPAL CORPORATION SCHOOL, JAI BHAVANI ROAD, NASHIK ROAD, NASHIK PAN NO. AJDPK9428N . RESPONDENT ITA NO. 539/PN/04 (ASSTT. YEAR 1999-00) ACIT, CIRCLE-1, NASHIK .... APPELLANT VS. SHRI TRILOKCHAND T. KALANI, (HUF) BEHIND MUNICIPAL CORPORATION SCHOOL, JAI BHAVANI ROAD, NASHIK ROAD, NASHIK PAN NO. AAEHK0699F . RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY : SHRI NIKHIL PATHAK ORDER PER D. KARUNAKARA RAO AM THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-I NASHIK, IDENTICALLY DATED 29-01-2004 FOR A.Y 1999-00 . EFFECTIVE GROUND IN BOTH THE APPEALS IE SHRI TRILOKCHAND T. KALANI (INDLL) AND (HU F) ARE COMMON IN BOTH THE APPEALS AND THE GROUNDS RELATED TO THE ORDER PASSED U/S . 143(3) R.W.S. 147 ARE AS FOLLOWS:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1583680/- M ADE U/S. 68 OF THE I.T. ACT FOR UNEXPLAINED CASH CREDIT AND RS. 47510/- MADE U/S. 69C OF THE I.T. ACT FOR UNEXPLAINED EXPENDITURE. ITA NO.538 & 539/PN/04 A.Y 1999-00 PAGE 2 OF 3 2. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL FOR THE ASSESSEE FILED THE ORDER OF THE PUNE TRIBUNAL IN THE CASE OF SHRI BALBHIM DAT TATRAY SHINDE AND OTHERS FOR THE A.Y 1998-99 DATED 31/08/2007 VIDE ITA NO. 1362 & 13 64/PN/2005 AND REFERRED TO PARA 5 AND 6 WHEREIN, IT WAS HELD AS UNDER:- 5. AT THE TIME OF HEARING BEFORE US, NONE APPEARED FOR THE RESPONDENT ASSESSEE. WE HAVE HEARD THE LEARNED DR AND DULY CON SIDERED THE FACTUAL MATRIX OF THE CASES AS ALSO THE APPLICABLE LEGAL PO SITION. 6. ON PERUSAL OF THE ORDER OF THE CIT(A), IT IS EVI DENT THAT CIT(A) HAS MADE CATEGORICAL FINDINGS BEFORE THE DELETION OF TH E ADDITIONS MADE BY THE AO ON ACCOUNT OF ALLEGED FACTITIOUS SALE PROCEEDS O F DIAMOND JEWELLERY AND ON ACCOUNT OF COMMISSION ON BILLS, VIZ., I) THE ADD ITION ON ACCOUNT OF PROCEEDS FROM SALE OF JEWELLERY TO M/S. GALAXY EXPORTS CANN OT BE SUSTAINED MERELY ON THE BASIS OF INVESTIGATION DONE IN THE CASE OF THE BUYER PARTY DURING THE COURSE OF SEARCH PROCEEDINGS IN ITS CASE AS THE SAM E HAS NO DIRECT RELEVANT TO THE APPELLATE PROCEEDINGS IN THE APPELLANTS CASE, II) ON THE CONTRARY, THE CONFIRMATIONS OF THE BUYER PARTY FILED BY THE APPEL LANT DURING THE APPELLATE PROCEEDINGS AS DIRECTLY RELEVANT IN THIS CASE AND T HE AO HAS DONE NOTHING TO DISPROVE THE SAME, AND II) THERE HAS BEEN A COMPLET E DENIAL OF THE PRINCIPLES OF NATURAL JUSTICE IN THIS CASE IN AS MUCH AS THE E VIDENCE FILED BY THE APPELLANT HAS NOT BEEN CONTROVERTED BY THE AO AND C OMPLETE RELIANCE IS PLACED BY THE AO ON THE OUTCOME OF INVESTIGATION IN THE CASE OF A THIRD PARTY. IN ANY EVENT, THE HONBLE ITAT MUMBAI BENCH B (TH IRD MEMBER) IN THE CASE OF UTTAMCHAND P. JAIN VS. ITO [2006] 103 ITD 1 HAS FOLLOWED THE RATIO LAID IN THE CASE OF MOHANLAL R. DAGA VS. ITO (SUPRA ), ON WHICH THE RELIANCE PLACED BY THE ASSESSEE, WHILE DECIDING THE CASE IN FAVOUR OF THE ASSESSEE. ON SIMILAR IDENTICAL FACTS AND CIRCUMSTANCES OF THE CA SE. THE ISSUE IS THUS SQUARELY COVERED BY THE AFORESAID THIRD MEMBER DECI SION. WE RESPECTFULLY FOLLOW THE SAME IN VIEW OF THE DISCUSS IONS ABOVE, WE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDI TIONS MADE ON ACCOUNT OF PROCEEDS FROM SALE OF JEWELER AND COMMIS SION ON BILLS, IN THESE TWO APPEALS. THUS, THE GROUND NOS. 1 & 2 IN BOTH THE APPEALS RAI SED BY THE REVENUE ARE HEREBY DISMISSED. 3. RESPECTFULLY FOLLOWING THE ABOVE VIEW TAKEN BY T HE TRIBUNAL IN THE CASE OF SHRI BALBHIM DATTATRAY SHINDE AND OTHERS (SUPRA), WE UP HOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND UNEXPLAINED EXPENDITURE. FURTHER, THE ABOVE REFERRED EXTRA CT WAS DECIDED IN THE FACTUAL CONTEXT SALE OF JEWELER TO M/S. GALAXY EXPORT S. WHERE AS THE PRESENT CASE INVOLVES SALE OF JEWELER TO DHANANJAY DIAMONDS. IT I S INFORMED THAT BOTH THE GALAXY EXPORTS AND DHANANJAY DIAMONDS BELONG TO K.K. JOHRI A ND SHRI HARI OM SHARMA WHERE THE TRIBUNAL CONFIRMED THE GENUINENESS OF THESE CONCERNS. REVENUES APPEALS ON IDENTICAL FACTS, HAVE BEEN DISMISSED IN PAST IN LARGE NUMBER OF CASES RELYING ON BOMBAY HIGH COURT DECISION IN THE CASE OF INDER V. NANLEANI ITA NO. 128 OF 2009 DATED 24-02-2009, WHOSE EXTRACT IS AT PAGES 171 TO 172 OF BCAJ FOR THE ITA NO.538 & 539/PN/04 A.Y 1999-00 PAGE 3 OF 3 PROPOSITION RECEIPTS OF SALE PROCEEDS OF DIAMONDS AND THE RECEIPTS OF THE SAID CONSIDERATION BY CHEQUE INVOLVING DECLARED ASSETS UND ER VDIS PROVISION DOES NOT AMOUNT TO UNDISCLOSED INCOME. WE ALSO FID THE RATIO DECIDENDI IN THE CASE OF UTTAMCHAND P. JAIN 103 ITD 1 IS ALSO RELEVANT FOR IDE NTICAL PROPOSITION. HOWEVER, THE GENUINENESS OF THE TRANSACTION OF THE SALE OF THE DE CLARED ASSETS IN VDIS SHOULD NOT BE DOUBTED CONSEQUENTLY THE CREDIT TRANSACTIONS APPEA RED IN THE BOOKS OF ASSESSEE SHOULD ALSO BE GENUINE AND NOT MERELY A PAPER TRANSACT IONS AS HELD BY THE REVENUE. CONSEQUENTLY, APPEALS OF THE REVENUE IN CASE OF TRIL OKCHAND T. KALANI BOTH IN INDIVIDUAL AND HUF STATUS IS HELD COVERED IN FAVOUR O F THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE HEREBY DISMISSED. 4. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 16 TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 16 H NOVEMBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. DEPARTMENT 2. ASSESSEE 3. CIT(A)-I, NASHIK 4. CIT-I, NASHIK 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE