RAJKUMARI AGRAWAL, MUMBAI V. ITO WD 14(1)(4), MUMBAI

ITA 5495/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6284 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KAMAT
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record; Sham transactions

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, D, MUMBAI BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) RAJKUMARI AGARWAL 4,2 ND FL, 1/13, SHREE BASKAR BHAVAN SITARAM PODAR MARG, MUMBAI-400002 APPELLANT PAN: AADPA3405G VS INCOME TAX OFFICER WARD 14(1)(4), EARNEST HOUSE, 2 ND FL, NARIMAN POINT, MUMBAI-400010 RESPONDENT APPELLANT BY : SHRI VIPUL JOSHI RESPONDENT BY : SHRI AMOL KAMAT O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.07.2009 OF THE LEARNED CIT(A)-XIV, M UMBAI FOR THE ASSESSMENT YEAR 2006-07. 2. CONCISE GROUNDS RAISED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER : 1.1 THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.63,08,353/- TO THE INCOME OF THE APPELLANT UNDER THE HEAD INCOME FROM OTHER SOURCES ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) 2 1.2 WHILE DOING SO, THE LD. CIT(A), AS WELL AS THE AO ERRED IN PASSING THE RESPECTIVE ORDERS IN GROSS BREACH OF THE PRINCIPLES OF NATURAL JUSTICE IN AS M UCH AS : I) NO PROPER, EFFECTIVE AND SUFFICIENT OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE APPELLANT; II) THE MATERIALS, ON WHICH THE RELIANCE WAS PLACED FOR FRAMING THE ASSESSMENT, AND CONFIRMING T HE DAME, WERE NOT SUPPLIED TO THE APPELLANT; AND III) THE APPELLANT WAS NOT GIVEN ONLY OPPORTUNITY T O CROSS EXAMINE THE CONCERNED PERSONS WHO STATEMENT /MATERIAL WERE RELIED UPON; 1.3 WHILE DO SO, THE LD. CIT(A) FAILED TO APPRECIAT E THAT; I) THE ADDITIONS WERE BASED ON SUSPICION, SURMISES AND CONJECTURE; II) THE ADDITIONS WERE MADE TAKING INTO ACCOUNT IRRELEVANT, EXTRANEOUS AND IMPERMISSIBLE CONSIDERATIONS AND III) THE ADDITIONS WERE MADE BY IGNORING RELEVANT MATERIALS AND CONSIDERATIONS 3. FIRST WE WILL TAKE THE LEGAL ISSUE OF VIOLATION OF PRINCIPLE OF NATURAL JUSTICE: 4. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEA RNED DR AND CONSIDERED THE RELEVANT RECORD. THE GRIEVAN CES OF THE ASSESSEE ARE THAT THE ASSESSEE WAS NOT GIVEN SUFFIC IENT OPPORTUNITY OF BEING HEARD AND FURTHER THE ASSESSEE WAS NOT GIVEN THE OPPORTUNITY FOR CROSS-EXAMINATION OF SHRI SHAILESH RANKA WHOSE STATEMENT WAS RECORDED BY THE AO AND RE LIED ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) 3 UPON THE SAME WHILE MAKING THE ADDITION. ON CAREF UL PERUSAL OF THE ASSESSMENT RECORD, WE NOTE THAT THE AO CONF RONTED WITH THE STATEMENT OF SHRI SHAILESH RANKA TO THE AR OF THE ASSESSEE AND ALLOWED HIM TO PERUSE THE SAME FOR HIS OPINION. THE AO ALSO CONVEYED THE AR OF THE ASSESSEE ABOUT NO PAYMENT WAS RECEIVED BY THE BROKER M/S RSBL FROM T HE OTHER PARTIES FROM WHOM THE PURCHASES WERE MADE. THE REL EVANT PORTION OF THE ASSESSMENT RECORD IS REPRODUCED AS U NDER : 4.DURING. THE ASSESSEE/AR WAS CONFRONTED WITH THE STATEMENT OF SAID SHRI SHAILESH RANKA BY ALLOWING HIM TO PERUSE THE SAME FOR HIS INFORMATION IT WAS ALSO CONVEYED TO THE AR THAT THE BROKER M/S RSBL HAD STATED THAT NO PAYMENT HAD BEEN RECEIVED BY HIM (I. E. THE BROKER) FROM THE CORRESPONDING PERSONS WHO HAD SUFFERED THE LOSS. HE AS ALSO APPRISED THAT NO CHARGES AS TO THE USE OF THE TERMINAL FOR THE TRANSACTION OF PROFIT AND MCX HAVE BEEN DEBITED IN THE P AND L ACCOUNT. IN THE LIGHT OF STATEMENT OF THE OTHER PERSON SW3HO HAD SUFFERED THE PURPORTED LOSS CLAIMING THAT HE AS UNAWARE OF THE TRANSACTION, THE FACT THAT THE BROKER M/S RSBL HAD NOT RECEIVED ANY PAYMENT FROM THE OTHER CORRESPONDING CLIENT WHO HAD SUFFERED LOSS AND THE FACT THAT NO SEPARATE TERMINA L WAS USED FOR SUCH TRANSACTIONS, THE ASSESSEE/ AR WAS ASKED TO SHOW CAUSE WHY THE SAID TRANSITIONS OF RECEIVING PROFIT SHOULD NOT BE TREATED AS SHAM TRANSACTIONS AND MONEY SO RECEIVED BE TREATED AS INCOME OF THE ASSESSEE FROM OTHER SOURCES 5. THE ASSESSEE HAS DULY FILED ITS REPLY VIDE LETTE R DATED 23.12.2008 IN RESPONSE TO THE STATEMENT RECORDED B Y THE AO AS WELL AS THE QUERIES RAISED BY THE AO. THUS, IT I S CLEAR FROM THE ASSESSMENT ORDER THAT DESPITE THE OPPORTUNITIE S GIVEN BY THE AO TO THE ASESEEE, THE ASSESSEE DID NOT CHOOSE TO CROSS- ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) 4 EXAMINE THE PERSON CONCERNED. MOREOVER, THE AO C ONVEYED ALL THE RELEVANT FACTS, EMERGED DURING THE INQUIRY TO THE AR OF THE ASSESSEE AND THE ASSESSEE SUBMITTED ITS REPLY WITHOUT RAISING ANY OBJECTION OR DEMAND FOR NOT GIVING ANY OPPORTUNITY TO CROSS-EXAMINE OR SUPPLYING ANY MATERIAL. THER EFORE, WE DO NOT FIND ANY SUBSTANCE OR MERITS IN THE GROUNDS RAISED BY THE ASSESSEE THAT THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY OF BEING HEARD AND ALSO FOR CROSS-EXAM INATION OF THE WITNESSES AS WELL AS THE RELEVANT MATERIAL. TH EREFORE, THE SAME IS ACCORDINGLY REJECTED. 6. THE SECOND ISSUE IS REGARDING, ADDITION OF RS.63,08,353/- ON ACCOUNT OF INCOME FROM SPECULATIV E TRANSACTION ADMITTED BY THE ASSESSEE TREATED AS IN COME FROM OTHER SOURCES 7. DURING THE YEAR, THE ASSESSEE ADMITTED THE PROFI T FROM SPECULATION BUSINESS OF RS.62,96,364/- AND THE SA ME WAS SET OFF AGAINST THE BROUGHT FORWARD SPECULATION LO SSES OF EARLIER YEARS. THE AO DURING THE SCRUTINY ASSESS MENT YEAR DOUBTED THE GENUINENESS OF THE TRANSACTIONS AND ASK ED THE ASSESSEE TO FILE THE RELEVANT RECORD. THE ASSESSE E HAS FILED THE BROKER NOTES AND BILLS IN RESPECT OF SAID SPECU LATION TRANSACTIONS AND FILED THE BANK STATEMENT ETC. TH E AO NOTED THAT THE COUNTER PART WHO HAS NOT SHOWN THE LOSSES IN THE TRANSACTIONS IN WHICH THE ASSESSEE HAS RECEIVED PRO FIT. ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) 5 ACCORDINGLY, THE AO SUMMONED SHRI SHAILESH RANKA, THE COUNTER PART AND RECORDED HIS STATEMENT U/S 131. I N THE SAID STATEMENT SHRI SHAILESH RANKA HAS STATED THAT HE W AS WORKING WITH M/S ROYAL CHAINS AND HE WAS LEARNING THE TRADE. HE FURTHER STATED THAT HE DID TAKE OR GET S ALARY FROM M/S ROYAL CHAINS AND WAS PAID RS.10,000/- BY HIS UNCLE SHRI PRITHIVIRAJ KOTHARI OF M/S RSBL TO HELP HIM. HE WORKED WITH M/S ROYAL CHAINS UP TO FEBRUARY 2000 AND THERE AFTER STARTED HIS OWN WORK BEING SMALL BROKERAGE IN GOLD ORNAMENTS. HE STATED THAT HE WAS NOT AWARE OF THE VARIOUS TRAN SACTIONS CARRIED OUT. ACCORDINGLY, THE AO HELD THAT SPECULA TION TRANSACTIONS CLAIMED BY THE ASSESSEE ARE NOT GENUI NE BUT SHAME AND THEREFORE CLAIM OF THE SETTING OFF OF BRO UGHT FORWARD LOSSES WAS DISALLOWED AND TREATED THE PROFIT FROM THE SPECULATIVE TRANSACTION AS INCOME FROM OTHER SOU RCES. 8. ON APPEAL, THE CIT(A) HAS CONFIRMED THE ADDITIO N MADE BY THE AO. 9. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEAR NED DR AND CONSIDERED THE RELEVANT RECORD. IT IS UNDISPUTE D FACT THAT THE ASESEEE FILED VARIOUS DOCUMENTS BEFORE THE AO I N SUPPORT OF HER CLAIM VIZ. CONTRACT NOTES, TRADE CONFIRMATIO N, SERVICE TAX ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) 6 PAID, CONTRACT CUM-BILL CONFIRMATION FROM MCX AND CONFIRMATION FORM RSBL. THE LOWER AUTHORITIES HAVE NOT DISCUSSED THE VERACITY OF THE RECORD FILED BY THE A SSESSEE AND DISALLOWED THE CLAIM SOLELY ON THE BASIS OF THE ST ATEMENT RECORDED BY THE AO OF SHRI SHAILESH RANKA. WE F URTHER NOTE THAT THE CIT(A) HAS DECIDED THE ISSUE ON SIMILAR LI NES AS BY THE AO AND NOTHING HAS BEEN DISCUSSED ABOUT THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM. IN THE INTEREST OF JUSTICE, WE ACCEPT THE REQUEST/PRAYER OF THE ASESEE E FOR GIVING HIM ONE MORE OPPORTUNITY OF EXAMINATION OF WITNESSE S AND REBUTTAL OF THE MATERIAL RELIED UPON BY THE AO. THEREFORE, WE ARE OF THE VIEW THAT THE RECORD FILED BY THE ASSESS EE IS REQUIRED TO BE EXAMINED AND VERIFIED IN DETAILED. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE RECORD OF THE AO FOR RE- CONSIDERATION AND ADJUDICATION OF ISSUE AFTER CONS IDERING THE EVIDENCE FILED BY THE ASSESSEE AND AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE WITNESS AS WE LL AS REBUT THE MATERIAL RELIED UPON BY THE AO. ACCORDINGLY, THE AO IS DIRECTED TO DECIDE THE ISSUE AFTER CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE AND AFTER GIVING THE OPPORTUN ITY TO THE ASSESSEE FOR CROSS-EXAMINATION OF WITNESSES AS WELL AS REBUTTAL OF THE MATERIAL. ITA NO. 5495/MUM/2009 (ASSESSMENT YEAR: 2006-07) 7 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24.11.2020 SD SD (R.S.SYAL) (VIJ AY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 24 TH NOV 2010 SRL:221110 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI