ITO 20(1)(4), MUMBAI V. FARIDA KAUSER MERCHANT, MUMBAI

ITA 5476/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6998 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 08-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Keywords: Transactions in derivatives; Additional evidence
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI N. K. PRADHAN, AM ./ I.T.A. NO. 5476/MUM/2016 ( / ASSESSMENT YEAR: 2010 - 11 ) INCOME TAX OF FICER - 20(1) - 4, R. NO. 112, PIRAMAL CHAMBERS, 1 ST FLOOR, PAREL, MUMBAI - 400 012 / VS. SMT. FARIDA KAUSER MERCHANT 7, MUSTAFA MANZIL, 2 ND PEERKHAN STREET, NAGPADA, MUMBAI - 400 008 ./ ./ PAN/GIR NO. ANLPM 0965 A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SAURABH DESHPANDE / RESPONDENT BY : SHRI RAJESH S. SHAH / DATE OF HEARING : 09.05.2018 / DATE OF PRONOUNCEMENT : 13.06 .2018 / O R D E R PER SA KTIJIT DEY , J . M.: THIS IS AN A PPEAL BY THE DEPARTMENT AGAINST ORDER DATED 07.06.2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 32, MUMBAI FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE ONLY EFFECTIVE GROUND RAI SED BY THE DEPARTMENT READ S AS UNDER: 2 ITA NO. 5476/MUM/2016 SMT. FARIDA KAUSER MERCHANT 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCES AND NOT GIVING SPECIFIC OPPORTUNITY TO THE ASSESSING OFFICER AS REQUIRED UNDER RULE 46A OF THE INCOME TAX RULES. 3. BRIEFLY THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL . F OR THE ASSESSMENT YEAR UNDER DISPUTE T HE ASSESSEE DID NOT FILED ANY RETURN OF INCOME UNDER SECTION SECTION 139(1) OF THE ACT. ON THE BASIS OF INFORMATION AVAILABLE ON AIR DAT A BASE, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAS DEALT IN TRANSACTIONS OF MULTI COMMODITY EXCHANGE AMOUNTING TO RS.23,17,29,400/ - . HE ALSO FOUND THAT THE ASSESSEE HAS DEALT IN CREDIT CARD BILLS AMOUNTING TO RS.4,41,570/ - . ON THE BASIS OF TH E AFORE - SAID INFORMATION, THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S. 147 OF THE ACT BY ISSUING A NOTICE TO THE ASSESSEE U/S. 148 OF THE ACT ON 27.11.2013. DURING THE ASSESSMENT PROCEEDING , THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH T HE DETAILS RELATING TO CREDIT C ARD AND MULTI COMMODITY EXCHANGE TRANSACTIONS. AS OBSERVED BY THE ASSESSING OFFICER , SINCE , THE ASSESSEE DID NOT FURNISH THE NECESSARY DETAILS, HE PROCEEDED TO COMPLETE THE ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON REC ORD AND ACCORDINGLY ESTIMATE D INCOME @ 2.5% OF RS.23,17,29,400/ - REPRESENTING MULTI COMMODITY EXCHANGE TRANSACTION. AS REGARDS THE CREDIT CARD TRANSACTION OF RS.4,48,570/ - , THE ASSESSING OFFICER ADDED THE WHOLE AMOUNT ALLEGING THAT THE ASSESSEE DID NOT PRO VIDE THE SOURCE OF THE CREDIT CARD BILLS PAID. ACCORDINGLY, THE ASSESSING OFFICER MADE TOTAL ADDITIONS OF RS.62,34,805/ - . 3 ITA NO. 5476/MUM/2016 SMT. FARIDA KAUSER MERCHANT 4. BEING AGGRIEVED OF THE ADDITIONS MADE BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. COMMISSIONER OF IN COME TAX (APPEALS). 5. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE FACTS AND MATERIALS PLACED BEFORE HIM FOUND THAT AS PER THE STATEMENT OF PURCHASE AND SALE OF MULTI COMMODITY EXCHANGE TRANSACTION UNDERTAKEN BY THE ASSESSEE AND CERTIFIED BY THE BROKER , THE S HARE KHAN LTD. , THE ASSESSEE HAS EARNED PROFIT OF RS.2,96,238/ - . HE OBSERVED THAT THE ASSESSING OFFICER HAS NOT MENTIONED ANY REASON FOR ADOPTING THE PROFIT RATE OF 2.5% OF THE TOTAL TURNOVER. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME AT RS.2,96,238/ - ON ACCOUNT OF INCOME DERIVED FROM MULTI COMMODITY EXCHANGE TRANSACTION. AS REGARDS THE CREDIT CARD RELATED TRANSACTION, HE FOUND THAT AS PER THE CREDIT CARD BIL LS, THERE IS AN AMOUNT OF RS.1,90,000/ - WHICH IS A WRONG DEBIT IN THE CREDIT CARD AND HAS SUBS EQUENTLY BEEN REVERSED. ON VERIFYING THE STATEMENT OF CREDIT CARD BILLS LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE A DDITION ON ACCOUNT OF CREDIT CARD BILLS TO RS.2,51,570/ - . 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THE COURSE OF HEARING OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS PRODUCED CERTAIN DOCUMENTARY EVIDENCES WHICH WERE NEV ER PRODUCED BEFORE THE ASSESSING OFFICER. HE SUBMITTED , WITHOUT GIVING AN Y OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THOSE EVIDENCES, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GRANTED RELIEF TO THE 4 ITA NO. 5476/MUM/2016 SMT. FARIDA KAUSER MERCHANT ASSESSEE ON THE BASIS OF THOSE EVIDENCES. THEREFOR E, THERE IS V IOLATION OF RULE 46A OF THE I. T. RULES. 7. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE POWER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BEING CO - TERMINUS WITH THAT OF THE ASSESSING OFFICER, HE IS EMPOWERED TO CALL FOR AND EXAM INE THE EVIDENCES OR MAKE SUCH FURTHER ENQUIRY FOR ENABLING HIM TO DISPOSE OF THE APPEAL. HE SUBMITTED , RULE 46A(4) ALSO EMPOWERS THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TO CONDUCT ENQUIRY OR CALL FOR EVIDENCE FOR DISPOSAL OF THE APPEAL. HE SUBMITTED , IN THE PRESENT CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS SIMPLY EXERCISE D HIS POWER UNDER THE STATUTE TO VERIFY THE AUTHENT ICITY OF ASSESSEES CLAIM. HE SUBMITTED , FROM THE EVIDENCES BROUGHT ON RECORD, THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAVING FOUND THAT AS PER THE CONFIRMATION OF THE BROKER THE ASSESSEE HAS A PROFIT OF RS.2,96,238/ - FROM MULTI COMMODITY EXCHANGE TRANSACTION HAS D IRECTED THE ASSESSING OFFICER TO RESTRICT THE INCOME OF THE ASSESSEE TO THAT AMOUNT. HE SUBMITTED , EVEN IN RESPECT OF CREDIT CARD BILLS, ON VERIFICATION OF MATERIALS ON RECORD, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FOUND THAT AN AMOUNT OF RS.1,90,000/ - WAS NOT ACTUALLY PAID BY THE ASSESSEE AS THE SAID TRANSACTION WAS SUBSEQUENTLY REVERSED. HE SUBMITTED , SINCE THE AFORE - SAID FINDING OF FACT ARE AFTER PROPER ENQUIRY AND EXAMINATION OF FACTS ON RECORD, THERE IS NO VALUATION OF RULE 46A AND NOTHING MORE COULD HAVE BEEN ACHIEVED OR HAPPENED IF THE MATTER WAS REMANDED TO THE ASSESSING OFFICER. HE, THEREFORE 5 ITA NO. 5476/MUM/2016 SMT. FARIDA KAUSER MERCHANT SU BMITTED , THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) CALLS FOR NO IN TER FERENCE. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. F ROM THE GROUNDS RAISED BEFORE US IT IS ABSOLUTELY CLEAR THAT THE DEPARTMENT IS CHALLEN GING THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PURELY FROM A TECHNICAL ANGLE AND NOT ON MERITS. AS COULD BE SEEN FROM THE MATERIAL ON RECORD, BEFORE THE ASSESSING OFFICER THE ASSESSEE , FOR WHATEVER MAY BE THE REASON , THE ASSESSEE WAS UNA BLE TO PRODUCE THE DETAILS CALLED FOR . A S A RESULT , THE ASSESSING OFFICER ESTIMATED INCOME IN RESPECT OF MULTI COMMODITY TRANSACTION EXCHANGE TRANSACTION @ 2.5% OF THE TOTAL TURNOVER. HOWEVER, HE HAS NOT PROVIDED THE BASIS FOR ADOPTING THE RATE OF 2.5%. S IMILARLY , IN THE ABSENCE OF ANY DETAILS, THE ASSESSING OFFICER ADDED THE ENTIRE CREDIT CARD BILL OF RS.4,41,570/ - . HOWEVER, IN THE APPELLATE PROCEEDING, THE FIRST APPELLATE AUTHORITY HAS CALLED UPON THE ASSESSEE TO PRODUCE THE NECESSARY DETAILS AND AFTER V ERIFYING THE DETAILS PRODUCED BY THE ASSESSEE HAS FOUND THAT AS PER THE STATEMENT OF PURCHASE AND SALES OF MULTI COMMODITY EXCHANGE TRANS ACTIONS CERTIFIED BY THE BROKER SHARE KHAN LTD. , THE ASSESSEE HAS EARNED A PROFIT OF RS.2,96,238/ - . THEREFORE, HE ASKED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO THAT AMOUNT. SIMILARLY, IN RESPECT OF CREDIT CARD TRANSACTION, HE HAS FOUND THAT AS PER THE CREDIT CARDS BILLS AN AMOUNT OF RS.1,90,000/ - , THOUGH , WAS DEBITED TO THE CARD ON 24.04.2009 , IT WAS REVERSED ON 05.05.2009. THUS , TAKI NG NOTE OF SUCH FACTUAL POSITION 6 ITA NO. 5476/MUM/2016 SMT. FARIDA KAUSER MERCHANT HE HAS DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO AN AMOUNT OF RS.2,51,570/ - . F ROM THE AFORE - SAID FACTS IT BECOMES CLEAR THAT THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS AFTER VERIFYING THE MATERIAL BROUGHT ON RECORD. T HEREFORE, THE COMMISSIONER (APPEALS) ON THE BASIS OF FACTS AND MATERIAL S BROUGHT ON RECORD HAVING COME TO HIS CONCLUSION THE SAME CANNOT BE CALLED INTO QUESTION SIMPLY BECAUSE IN DEPARTMENTS V IEW, THE EVIDENCES BROUGHT ON RECORD SHOULD HAVE BEEN SENT FOR EXAMINATION BY THE ASSESSING OFFICER. EVEN , ASSUMING THAT THE EVIDENCES PRODUCED ARE IN THE NATURE OF ADDITIONAL EVIDENCE , BUT , CERTAINLY THEY ARE NOT OF SO COMPLEX IN NATURE TO REQUIRE A DETAI LED ENQUIRY WHICH COULD ONLY HAVE BEEN MADE BY THE ASSESSING OFFICER , T HEREBY , REQUIRING A REMAND TO HIM. THE DEPARTMENT HAS NOT BEEN ABLE TO CONVINCE US AS TO HOW A DIFFERENT CONCLUSION COULD HAVE BEEN RE A CHED IF THE EVIDENCES WERE EXAMINED BY THE ASSESSI NG OFFICER ON REMAND. THUS, IT IS CLEAR THAT NOTHING MUCH WOULD HAVE TURNED IF THE EVIDENCES W OULD HAVE BEEN SENT FOR EXAMINATION OF THE ASSESSING OFFICER . IT IS PERTINENT TO OBSERVE, SECTION 250(4) OF THE ACT EMPOWERS THE COMMISSIONER (APPEALS) TO MAKE FU RTHER ENQUIRY AS DEEMED FIT BY HIM TO DISPOSE OF THE APPEAL. S INCE , LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER MAKING SUCH ENQUIRY AND PROPERLY EXAMINING THE EVIDENCES ON RECORD HAS GIVEN A FACTUAL FINDING , WHICH THE DEPARTMENT EXCEPT RAISING A TECHNI CAL OBJECTION HAS NOT PROVED TO BE INCORRECT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE GROUND RAISED IS DISMISSED. 7 ITA NO. 5476/MUM/2016 SMT. FARIDA KAUSER MERCHANT 9. IN THE RESULT, THE DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.06.2018 SD/ - SD/ - ( N. K. PRADHAN ) (S A KTIJIT DEY ) / A CCOUNTANT MEMBER / JUDICIA L MEMBER MUMBAI ; DATED : 13.06.2018 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI