Shri Sujal R. Shroff, Ahmedabad V. The Income Tax Officer, Ward-11(2), Ahmedabad

ITA 542/AHD/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5305 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Assessee Lawyers: S N DIVATIA
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

SMC-ITA NO. 542/ AHD/ 2014 SUJAL R SHROFF VS. ITO AY : 2010-11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 542/AHD/2014 ASSESSMENT YEAR : 2010-11 SUJAL R. SHROFF ............APPELLANT 6, MERCHANT PARK, B/H. JAIN MERCHANT SOCIETY, PALDI, AHMEDABAD - 380007 [PAN : AIFPS 9224 D] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 11 (2), AHMEDABAD APPEARANCES BY: SN DIVATIA & MEHUL TALERA, FOR THE APPELLANT ALBINUS TIRKEY, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 24.09.2018 DATE OF PRONOUNCING THE ORDER : 28.09.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT H AS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 7 TH JANUARY 2014, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, F OR THE ASSESSMENT YEAR 2010- 11. 2. ALTHOUGH APPELLANT HAS RAISED SEVERAL GRIEVANCES IN THE GROUNDS OF APPEAL, ONLY TWO GRIEVANCES WERE PRESSED DURING THE HEARING FIRST, AGAINST DISALLOWANCE OF INTEREST EXPENSES OF RS.4,98,900, AND SECOND, AGAINST ADDITION OF INTEREST INCOME OF RS.3,10,450. 3. SO FAR AS THE GRIEVANCE AGAINST ALLEGED DISALLOW ANCE OF RS.4,98,900 IS CONCERNED, AS RIGHTLY NOTED BY THE CIT(A), THE ASSE SSING OFFICER HAS NOT ACTUALLY MADE ANY ADDITION IN THE COMPUTATION OF INCOME, EVE N THOUGH, IN THE BODY OF THE ASSESSMENT ORDER HE HAS DISCUSSED THE JUSTIFICATION OF DISALLOWANCE. AS THERE IS NO DISALLOWANCE, GRIEVANCE OF THE ASSESSEE IS WHOLL Y ACADEMIC AND INFRUCTUOUS AT THIS STAGE. I, THEREFORE, DECLINE TO ENTERTAIN THI S GRIEVANCE. 4. AS REGARDS THE ADDITION OF RS.3,10,450 IN RESPEC T OF COMMISSION EARNED FROM TULIP TELECOM LTD, THERE IS NO DISPUTE THAT HI S PROPRIETARY CONCERN BY THE NAME OF M/S. EMERGE RECEIVED THIS AMOUNT. HE, HOWE VER, PLEADED THAT THIS AMOUNT WAS FRAUDULENTLY SHOWN TO HAVE BEEN EARNED I N THE NAME OF HIS PROPRIETORSHIP CONCERN BUT IT ACTUALLY BELONGED TO HIS MANAGER ONE HIMANSHU SINGHANI. THE FACTS CLAIMED BY HIM ARE AS FOLLOWS: - SMC-ITA NO. 542/ AHD/ 2014 SUJAL R SHROFF VS. ITO AY : 2010-11 PAGE 2 OF 4 IN THE MATTER OF COMMISSION INCOME FROM TULIP TELE COM LTD., THE ASSESSEE HAD STATED THAT A COMMISSION INCOME OF RS.3,10,450/ - STANDS CREDITED TO HIS ACCOUNT AS PROVIDED IN ITS DETAILS AND THE SAME IS RECEIVED FROM TULIP TELECOMS LTD. HE HAS A PROPRIETARY CONCERN BY THE NAME OF EMERGE. HE HAD APPOINTED MR. HIMANSHU SANGHANI AS MANAGER. MR . HIMANSHU SANGHANI ACTED FRAUDULENTLY AND OPENED A BANK A/C W ITH CATHOLIC SYRIAN BANK IN THE NAME OF EMERGE, PROPRIETOR HIMANSHU SAN GHAVI. COMMISSION RECEIVED FROM TULIP TELECOM LTD. WAS DEPOSITED IN T HIS ACCOUNT AND HE USED TO WITHDRAW THIS MONEY. HOWEVER HE PROVIDED AS SESSEE'S PAN NO. THE ACT OF RECEIPT AND WITHDRAWAL OF COMMISSION WAS OUTSIDE ASSESSEE'S KNOWLEDGE. WHILE TULIP TELECOM LTD. DEDUCTED TDS AN D CREDITED THE SAME IN ASSESSEE'S ACCOUNT. THE MANAGER HAD EARNED THE I NCOME ON HIS OWN ACCOUNT AND IN ORDER TO EVADE THE TAX LIABILITY MIS REPRESENTED BEFORE TULIP TELECOM LTD. ALL THIS WAS WITHOUT ASSESSEE'S KNOWLE DGE. THIS FACT WAS DISCOVERED IN THE AUDIT OF A.Y. 2011-12. LEGAL NOTI CE SERVED TO HIMANSHU SANGHANI IS ATTACHED HEREWITH AS PER ANNEXME-2. 5. AS THE STAND SO TAKEN BY THE ASSESSEE WAS NOT AC CEPTED BY THE ASSESSING OFFICER AND, ACCORDINGLY, INCOME OF RS.3,10,450 BRO UGHT TO TAX IN HIS HANDS, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). IN A VERY WELL REASONED ORDER, LEARNED CIT(A) ALSO CONFIRMED THE DISALLOWAN CE AND OBSERVED AS FOLLOWS:- 8.1 THE GROUND OF APPEAL NO. 4.E) IS REGARDING ADD ITION OF RS.3,10,450/- ON ACCOUNT OF COMMISSION INCOME. THE AO HAS DISCUSSED THIS ISSUE IN PARA-9 OF THE ASSESSMENT ORDER. FROM THE AIR DATA, THE A O NOTED THAT APPELLANT HAD RECEIVED COMMISSION INCOME OF RS. 3,10,450/- FR OM ONE TULIP TELECOM LTD(TTL) AND WHICH WAS NOT DISCLOSED IN RETURN OF I NCOME. THE AO WAS INFORMED BY THE APPELLANT THAT SOME FRAUD HAS BEEN COMMITTED BY ONE OF HER EMPLOYEE SHRI HIMASHU SANGHANI AND THAT THE INC OME DOES NOT PERTAINS TO ITS BUSINESS. HOLDING THAT DISPUTES BET WEEN EMPLOYEE AND APPELLANT ARE PERSONAL DISPUTES AND CANNOT COME IN WAY OF TAXATION OF APPELLANTS INCOME, THE A O MADE THE IMPUGNED ADDITI ON. 8.2 IT IS THE CASE OF THE APPELLANT THAT LD AO HAS NOT APPRECIATED THE FACTS CORRECTLY. IT HAS BEEN SUBMITTED THAT ONE OF APPELL ANTS EMPLOYEE SHRI HIMASHU SANGHANI HAD OPENED AN ACCOUNT IN CATHOLIC SYRIAN BANK USING PANO OF APPELLANT IN THE NAME OF A PROPRIETARY CONC ERN E-MERGE. THE SAID EMPLOYEE USED TO OBTAIN BUSINESS FROM TTL WITHOUT T HE KNOWLEDGE OF APPELLANT AND WAS OPERATING THE BANK ACCOUNT WITH C ATHOLIC SYRIAN BANK. THIS ASPECT WAS NOTED DURING AUDIT FOR A Y 2011-12 AND LEGAL NOTICE WAS SERVED UPON SHRI SANGHANI. THUS, IT HAS BEEN ARGUED THAT SINCE SHRI SANGHANI HAS CHEATED THE APPELLANT BY MISUSING PANO ., THE APPELLANT CANNOT BE HELD LIABLE FOR THE SAID INCOME OF RS. 3, 10.450/-. IN SUPPORT OF ITS CONTENTION, THE APPELLANT HAS, INTER ALIA, FILED A COPY OF INCOMPLETE SHOW CAUSE NOTICE DATED 25-5-2012 ISSUED TO SHRI SANGHAN I BY SOME DILIP M SHAH, ADVOCATE AS WELL AS A LETTER DATED 5-10-2011 OF SHRI SANGHANI ADDRESSED TO APPELLANT CONVEYING THAT HE OPENED BAN K ACCOUNT IN CATHOLIC SYRIAN BANK AND REGRETTING FOR HIS MISTAKE. SMC-ITA NO. 542/ AHD/ 2014 SUJAL R SHROFF VS. ITO AY : 2010-11 PAGE 3 OF 4 8.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE IN THE LIGHT OF SUBMISSIONS MADE BY THE APPELLANT, THE ARGUMENTS TA KEN BY THE ASSESSING OFFICER & MATERIAL AVAILABLE ON RECORDS. THE ARGUME NTS OF THE APPELLANT DO NOT APPEAR TO BE CONVINCING IN THE LIGHT OF PECULIA R FACTS OF THE CASE. TO BEGIN WITH WHEN THE APPELLANT HAS SUBMITTED THAT SH RI SANGHANI HAS MISREPRESENTED, CHEATED AND IMPERSONATED TO HER THE N THE NATURAL COURSE WAS TO FILE A POLICE COMPLAIN. THERE IS NO EVIDENCE ON RECORD THAT ANY SUCH COMPLAINT WAS FILED AND IF YES, THE STATUS THEREOF. THERE ARE ALSO NO REASONS ADDUCED FOR NON FILING OF ANY SUCH POLICE COMPLAINT . THEN AGAIN, THE COPY OF THE BANK ACCOUNT OF THE CATHOLIC SYRIAN BANK INDICA TES THAT THE ACCOUNT WAS OPENED IN AUGUST, 2009. NOW IT IS HIGHLY IMPROB ABLE THAT THE EMPLOYEE OF THE APPELLANT WAS INDULGING IN THE ALLEGED MAL P RACTICE OF IMPERSONATION BUT THE APPELLANT WAS ABLE TO GET THE KNOWLEDGE OF THE SAME ONLY IN OCTOBER, 2011 WHEN THE AUDIT FOR 2011-12 WAS BEING UNDERTAKEN. PERUSAL OF THE ACCOUNTS SHOWS THAT FROM 11-8-2009 TILL 31-3 -2010 SUBSTANTIAL TRANSACTIONS WERE MADE FROM THE SAID ACCOUNT. THUS, THE POSITION OUGHT TO HAVE BEEN KNOWN TO THE APPELLANT WHILE AUDIT FOR A Y 2010-11 WAS BEING UNDERTAKEN. AGAIN, IT IS SEEN THAT THE LEGAL NOTICE ISSUED BY THE ADVOCATE IS MORE IN THE NATURE OF A COVER-UP OPERATION UNDERTAK EN SO AS TO OFFSET THE INQUIRIES UNDERTAKEN BY THE AO U/S. 143(2) FOR AY 2 010-11. AS PER FACTS ON RECORDS, MR SANGHANI HAS GIVEN A TWO LINE APOLOGY L ETTER ON 5-10-2011 WHEREAS THE LEGAL NOTICE OF THE LAWYER IS DATED 25- 5-2012. INCIDENTALLY, THE COPY OF THE LEGAL NOTICE PROVIDED BY THE APPELLANT ON PAGE-50 TO 51 OF HIS SUBMISSIONS IS INCOMPLETE AS IT DOES NOT CONTAINS A NY SIGNATURE OF THE LAWYER ETC. WITHOUT PREJUDICE TO ABOVE, IT IS SEEN THAT THROUGH PARA-5 OF THE SAID NOTICE, THE LAWYER HAD ASKED SHRI SANGHANI TO REIMBURSE AND COMPENSATE THE APPELLANT FOR ALL THE LOSSES INCURRE D ON THIS ACCOUNT TO WHICH SHRI SANGHANI HAD EARLIER AGREED IN THE PRESE NCE OF APPELLANT AND ITS CHARTERED ACCOUNTANT. NOW THE QUESTION ARISES IF MR SANGHANI HAS RETURNED BACK ALL THE MONIES TO THE APPELLANT EARNED FROM TH E SAID ACTIVITY, THEN WHY SHOULD NOT THE APPELLANT PAY TAXES ON THE SAME, AS THE SAID INCOME THEN BECOMES INCOME OF THE APPELLANT. THE FACTS OF THE C ASE WHEN VIEWED IN THEIR TOTALITY INDICATE TOWARDS A COOKED UP STORY I N WHICH THE HYPOTHESIS OF MR SANGHANI'S MISDEMEANOR WAS RAISED SO AS TO CONTR OVERT THE QUERIES OF AOS RAISED DURING THE SCRUTINY ASSESSMENT PROCEEDIN GS. THUS, IN THE ABSENCE OF ANY COGENT AND CORROBORATIVE EVIDENCES A VAILABLE ON RECORDS, THE ADDITION MADE BY THE ID AO IS CONFIRMED AND THE GROUND OF APPEAL IS THEREFORE DISMISSED. 6. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 7. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 8. LEARNED COUNSELS BASIC PLEA IS THAT THE EMPLOYE E COMMITTED A FRAUD BUT HE DOES NOT SUBMIT ANY REASONABLE EVIDENCE TO SUPPORT THIS CONTENTION. THE ASSESSEE HAS NOT EVEN FILED AN FIR, OR TAKEN ANY SE RIOUS LEGAL ACTION AGAINST THE SAID EMPLOYEE. AS A MATTER OF FACT, THE LEGAL NOTI CE, A COPY OF WHICH IS PLACED BEFORE ME AT PAGE NO.39-40, IS NOT EVEN SIGNED BY T HE ADVOCATE AND ONLY AN SMC-ITA NO. 542/ AHD/ 2014 SUJAL R SHROFF VS. ITO AY : 2010-11 PAGE 4 OF 4 INCOMPLETE COPY OF LEGAL NOTICE IS FILED. THIS APP ROACH OF THE ASSESSEE HARDLY INSPIRES ANY CONFIDENCE. AS LEARNED CIT(A) RIGHTLY OBSERVES, THIS STORY APPEARS TO BE COOKED UP AND THERE IS, IN ANY CASE, NO MATERIAL TO SUBSTANTIATE THE SAME. 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS, AS ALSO B EARING IN MIND ENTIRETY OF THE CASE, I APPROVE THE STAND OF THE AUTHORITIES BELOW AND DECLINE TO INTERFERE IN THE MATTER. THE ADDITION OF RS.3,10,450 IS THUS CONFIR MED. 10. NO OTHER ISSUE WAS PRESSED BEFORE ME. 11. IN THE RESULT, THE APPEAL IS DISMISSED. PRONO UNCED IN THE OPEN COURT TODAY ON THE 28 TH DAY OF SEPTEMBER, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 28 TH DAY OF SEPTEMBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ....AS PER 5 PAGES MANUSCRIP TS OF HONBLE AM-.28.09.2018........... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 28.09.2018.... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 28.09.2018.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: .. 28.09.2018 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : .. 28.09.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......