JAGDISH UTTAM PARAB, THANE V. ITO 1(4), THANE

ITA 5497/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0786 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV HARIT
• Keywords: Unexplained investment; Period of limitation; Condonation of delay
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH J, MU MBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5497/MUM/2015 (ASSESSMENT YEAR-2006-07) JAGDISH UTTAM PARAB 404, VEDANT PARK, B-WING, KHAREGAON, KALWA (W), THANE -400605. PAN: AMBPP7561L VS. ITO-1(4), VARDHAN BUILDING, MIDC, WAGLE INDUSTRIAL ESTATE, THANE. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHADRESH DOSHI (AR) REVENUE BY : SHRI RAJEEV HARIT (CIT-DR) DATE OF HEARING : 08.01.2018 DATE OF PRONOUNCEMENT : 19.01.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER LD. CIT(A)-II, THANE DATED 06.08.2013 FOR ASSESSMENT YEAR (AY) 2006-07. THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW A S WELL AS ON FACTS IN CONFIRMING THE ADDITIONS OF RS. 8,06,89,870/- MADE BY THE ASSESSING OFFICER ON A PROTECTIVE BASIS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT BANK ACCOUNTS AND DEMAT ACCOUNTS HELD IN THE NAME OF APPELLANT HA VE BEEN OWNED UP BY MR. JALAJ BATRA AND THE APPELLANT, BEING HIS EMPLOYEE, WAS MERE A NAME LENDER AND MAN OF NO MEANS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT INCOME OF RS. 8,06,89,870/- ADDED IN THE HANDS OF APPELLANT HAS A LREADY BEEN ASSESSED IN THE HANDS OF MR. JALAJ BATRA AS DULY CONFIRMED BY HIS A SSESSING OFFICER AND ALSO AS DULY REFLECTED IN THE ASSESSMENT ORDER PASSED IN HI S CASE. I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW A S WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 6,61,68,798/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INCOME ON ACCOUNT OF PURCHASE OF SHARES DURING THE PERIOD FROM 7.6.2005 TO 13.6.2005. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW A S WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 45,78,088/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF PROFITS EARNED FROM TRADING IN SHARES. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW A S WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 96,42,982/- MADE BY T HE ASSESSING OFFICER AS UNEXPLAINED INVESTMENT ON ACCOUNT OF SHORTFALL FOUN D WHEREBY THE SHARES SOLD WERE IN EXCESS OF SHARES PURCHASED. 2. THE PERUSAL OF RECORDS REVEALS THAT THE PRESENT APP EAL IS FILED AFTER 789 DAYS OF PRESCRIBED PERIOD OF LIMITATION. FOR CONDONATION OF DELAY THE ASSESSEE HAS FILED HIS AFFIDAVIT DATED 02.11.2017 DULY SWORN BEF ORE CONSULAR IN HIGH COMMISSION OF INDIA IN ZAMBIA. THE AFFIDAVIT IS FIL ED ON 09.11.2017 BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED ONLY PHOTO COP Y OF THE AFFIDAVIT BEFORE THE TRIBUNAL. THE CONTENTS OF AFFIDAVIT DISCLOSED T HAT THE ORDER OF LD. CIT(A) PASSED ON 06.08.2013 CAME TO ASSESSEES KNOWLEDGE O N 8 TH SEPTEMBER 2013. IN SEPTEMBER 2013, THE ASSESSEE SUFFERED INJURY IN HIS LEG AND WAS ADVISED REST. THE ASSESSEE REMAINED AT HIS NATIVE PLACE IN SINDHUDURG . AFTER COMING TO KNOW THE DISMISSAL OF APPEAL, THE ASSESSEE HAS G ONE IN DEPRESSION AS HE HAD NOTHING TO DO WITH THE ADDITION OF INCOME ADDED IN THE INCOME OF ASSESSEE. THE AFFIDAVIT FURTHER DISCLOSED THAT DURING THE REL EVANT PERIOD, THE ASSESSEE WAS EMPLOYED WITH ONE SHRI MAHESH MISTRY WHO WAS CL OSELY ASSOCIATED WITH JALAJ BATRA. JALAJ BATRA WAS ENGAGED IN THE ACTIVIT Y OF STOCK MARKET. JALAJ BATRA OPENED DEMAT AND BANK ACCOUNT IN HIS NAME. TH E ASSESSEE WAS PAID A SALARY OF RS. 3,000/-PM. ONLY. A SEARCH ACTION WAS CARRIED ON 25.10.2005 AT I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 3 THE OFFICE AND RESIDENCE PREMISES OF JALAJ BATRA. T HE SEARCH WAS ALSO CARRIED AT THE RESIDENCE, WHERE THE ASSESSEE WAS STAYING. T HE ASSESSEE WAS NOT AWARE ABOUT THE CONSEQUENCE AND HAS NO TECHNICAL KNOWLEDG E AND HE WAS ASSURED BY JALAJ BATRA THAT NOTHING IS GOING TO BE HAPPENED IN ASSESSEES CASE. IT IS FURTHER CONTENDED IN THE AFFIDAVIT THAT DUE TO DEPR ESSION AND INJURY, THE FAMILY OF ASSESSEE ADVISED NOT TO TRAVEL TO MUMBAI AND TO TAKE REST. THUS, THE ASSESSEE HAS NOT COME BACK TO MUMBAI THEREAFTER. HO WEVER, HE KEPT ON CALLING JALAJ BATRA TO SETTLE THE MATTER WITH THE D EPARTMENT. THEREAFTER, THE ASSESSEE GOT A PERMANENT JOB IN ZAMBIA. ACCORDINGLY , HE LEFT FOR ZAMBIA IN JUNE 2014. THE ASSESSEE RETURNED IN INDIA FOR A SHO RT PERIOD ON FIRST WEEK OF SEPTEMBER 2015 AND RECEIVED A SUMMONS FROM THE DEPA RTMENT ABOUT THE DEMAND RAISED AGAINST HIM. 3. THE LD. AR OF THE ASSESSEE MADE HIS SUBMISSION ON S IMILAR LINE AS CONTENDED IN THE AFFIDAVIT AND SUBMITS THAT THERE IS SUFFICIE NT CAUSE FOR CONDONATION OF DELAY. THE LD AR FOR ASSESSEE PRAYED FOR CONDONATIO N OF DELAY AND TO ALLOW HIM TO MAKE SUBMISSIONS ON THE MERIT OF THE CASE. ON THE OTHER SIDE THE LD. DR FOR THE REVENUE STRONGLY OBJECTED FOR CONDONING THE DELAY IN FILING THE APPEAL. IT WAS ARGUED THAT THE ASSESSEE HAS NOT PRO PERLY EXPLAINED THE DELAY. AS PER THE CONTENTS OF THE AFFIDAVIT THE ORDER OF LD. CIT(A) WAS SERVED UPON HIM IN SEPTEMBER 2013 ITSELF. IT WAS ARGUED THAT TH E ASSESSEE IS FREQUENTLY VISITING ZAMBIA WHICH IS EVIDENT FROM THE ENDORSEME NT ON HIS PASSPORT. THE MEDICAL PAPERS FURNISHED BY ASSESSEE NOWHERE DISCLO SED THAT HE WAS STABLE OR I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 4 ADVISED COMPLETE REST. IN REJOINDER ARGUMENT, THE L D. AR OF THE ASSESSEE PRAYED THAT THE ASSESSEE WAS NOT HAVING COMPLETE RE CORD OF ASSESSMENT ORDER, SEIZED MATERIAL AND THE STATEMENT RECORDED BY THE I NVESTIGATING TEAM. THE ASSESSEE MADE AN APPLICATION TO THE DEPARTMENT IN 1 ST WEEK OF SEPTEMBER 2017 WHEN RE-VISITED INDIA AND AFTER THAT AFFIDAVI T WAS SWORN BEFORE THE CONSULAR OF HIGH COMMISSION OF INDIA IN ZAMBAI. 4. WE HAVE CONSIDERED THE SUBMISSION OF LD REPRESENTAT IVES OF BOTH THE PARTIES AND PERUSED THE AFFIDAVIT, MEDICAL REPORTS OF THE A SSESSEE AND THE COPY OF PASSPORT FILED BY ASSESSEE. WE HAVE NOTED THAT THE PRESENT APPEAL WAS FILED ON 03.12.2015. THE DEFECT MEMO WAS ISSUED TO THE ASSES SEE IMMEDIATELY, AFTER SCRUTINY OF APPEAL PAPER, INFORMING THE ASSESSEE AB OUT THE DELAY OF 789 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS NOT REMOVED THE DEFECT IMMEDIATELY. THE ASSESSEE HAS FILED AFFIDAVIT FOR EXPLAINING THE DELAY IN ONLY ON 09.11.2017 I.E. AFTER TWO YEAR OF FILING THE APPEAL. THE ASSE SSEE HAS FILED ONLY PHOTO COPY OF THE AFFIDAVIT, SWORN BEFORE THE CONSULAR, HIGH C OMMISSION OF INDIA IN ZAMBAI. WE HAVE NOTED THAT THE ASSESSEE IS CASUAL A ND NEGLIGENT IN REMOVING THE DEFECT AFTER NOTIFYING THE DELAY IN FILING OF T HE APPEAL. THE ASSESSEE HAS TAKEN A CASUAL APPROACH AND FILED THE AFFIDAVIT ALM OST AFTER TWO YEARS OF FILING OF APPEAL. 5. WE MAY MENTION HERE THAT THE SUPREME COURT IN THE C ASE OF COLLECTOR, LAND ACQUISITION VS MST. KATIJI [1987] 167 ITR 471/ 35 T AXMAN 17 , HELD THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO NS ARE PITTED AGAINST EACH I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 5 OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE A VESTED RIGHT IN INJUSTI CE BEING DONE BECAUSE OF A NO DELIBERATE DELAY. HENCE, KEEPING IN VIEW THE PRI NCIPLE LAID DOWN BY HONBLE APEX COURT, WE DEEM IT APPROPRIATE TO CONDO NE THE DELAY. AS WE HAVE OBSERVED THAT THE ASSESSEE IS CASUAL IN PURSUI NG THE APPEAL BEFORE TRIBUNAL. THUS, THE DELAY IN FILING THE PRESENT APP EAL IS CONDONED SUBJECT TO COST OF RS. 10,000/-.THE COST OF RS. 10,000/- BE DE POSITED WITH THE REVENUE WITHIN FOUR WEEKS OF THE RECEIPT OF THIS ORDER. HEN CE, THE DELAY IN FILING OF THE APPEAL IS CONDONED. 6. NOW, WE SHALL DISCUSS THE MERIT OF APPEAL. BRIEF F ACTS OF THE CASE AS CULLED OUT FROM THE RECORD ARE THAT A SEARCH ACTION UNDER SECTION 132 IN JALAJ BATRA GROUP WAS CARRIED OUT BY REVENUE ON 25.10.2005. THE ASSESSEES RESIDENCE WAS ALSO SEARCH ON 25.10.2005 AS THE BANK ACCOUNT, DEMAT ACCOUNT, TRADE ACCOUNT OF ASSESSEE WERE FOUND AT THE PREMISES OF J ALAJ BATRA. CONSEQUENT UPON THE SEARCH A NOTICE UNDER SECTION 153A DATED 1 1.09.2006 WAS ISSUED FOR ASSESSEE FOR FURNISHING RETURN OF INCOME FOR AY 200 0-01 TO 2005-06. THE ASSESSEE MADE NO RESPONSE TO THE NOTICE UNDER SECTI ON 153A, DESPITE REPEATED REMINDERS BY THE REVENUE. HOWEVER, THE ASSESSEE VID E HIS LETTER/APPLICATION DATED 07.12.2007 CONTENDED THAT HE WAS ONLY A NAME LENDER, ALL TRANSACTION PERTAINS TO JALAJ BATRA AND THE ASSESSEE HAS NO INC OME IN THE TRANSACTIONS MADE IN HIS ACCOUNTS. SINCE, NO DOCUMENTARY EVIDEN CE WAS FURNISHED BY ASSESSEE NOR, THEREAFTER, ASSESSEE ATTENDED THE PRO CEEDING, THE AO I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 6 PROCEEDED TO COMPLETE THE ASSESSMENT. THE AO PASSED THE ASSESSMENT ORDER UNDER SECTION 153A R.W.S. 144 DATED 28.12.2007. THE AO ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS. 8,06,89,870/- BY MAKING A DDITION ON ACCOUNT OF UNEXPLAINED INCOME OF PURCHASE OF SHARE FOR RS. 6,6 4,68,798/-, PROFIT FROM SHARE TRADING OF RS. 45,78,088/- AND UNEXPLAINED IN VESTMENT IN PURCHASE OF SHARE OF RS. 96,42,982/-. THE ADDITION WAS MADE IN THE HAND OF ASSESSEE ON PROTECTIVE BASIS. ON APPEAL BEFORE THE LD. CIT(A) NO RELIEF WAS GRANTED. THE LD. CIT(A) PASSED THE EX-PARTE ORDER. THUS, FURTHER APPEAL CAME UP BEFORE US. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT ASSESSEE WAS EMPLOYED WITH JALAJ BATRA DURING THE RELEVANT PERIO D FOR ABOUT 15 MONTH AS A OFFICE BOY AND WAS GETTING A SALARY OF RS. 3,000/- ONLY. THE ASSESSEE WAS NOT ASSESSED TO TAX AS HE WAS NOT HAVING SUFFICIENT INC OME. JALAJ BATRA OPENED BANK ACCOUNT IN THE NAME OF ASSESSEE AND OTHER STAF F EMPLOYED WITH HIM AND MADE HUGE TRANSACTION IN STOCK MARKET. A SEARCH WAS CARRIED OUT ON 25.10.2005 WHEREIN THE BANK ACCOUNT, DEMAT, TRADE A CCOUNT OF ASSESSEE WERE FOUND AT THE PREMISES OF JALAJ BATRA, THUS, THE ASS ESSEE WAS ALSO COVERED BY THE SEARCH BY EXECUTING WARRANT OF AUTHORIZATION. D URING THE SEARCH AS WELL AS AFTER SEARCH PROCEEDING, JALAJ BATRA OWNED UP THAT ALL BANK ACCOUNTS, DEMAT ACCOUNT AND TRADE ACCOUNT IN THE NAME OF VARIOUS ST AFF. JALAJ BATRA FILED HIS RETURN OF INCOME AND OFFERED THE ENTIRE INCOMES WHI CH WERE REFLECTED IN THE I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 7 ACCOUNTS OF ASSESSEE TO TAX. THE REVENUE ASSESSED A LL THE INCOME IN THE HANDS OF JALAJ BATRA OF SUBSTANTIVE BASIS. THE ASSESSMENT OF ASSESSEE WAS COMPLETED UNDER SECTION 144 R.W.S. 153A. THE AO MADE THE ASSE SSMENT AT THE HAND OF ASSESSEE ON PROTECTIVE BASIS. IT WAS FURTHER ARG UED THAT THE ADDITION AT THE HAND OF JALAJ BATRA WAS UPHELD BY THE FIRST APPELLA TE AUTHORITY AND CONFIRMED BY TRIBUNAL IN ITA NO. 1931/MUM/2009 VIDE ORDER DA TED 03.06.2011. THE ORDER OF TRIBUNAL HAS BEEN UPHELD BY JURISDICTIONAL HIGH COURT. IT WAS FINALLY ARGUED THAT WHEN SUBSTANTIVE ADDITION IN THE HAND O F JALAJ BATRA HAVE BEEN UPHELD UP TO THE HIGH COURT, THE PROTECTIVE ADDITIO N MADE AGAINST THE ASSESSEE IS LIABLE TO BE DELETED. IN SUPPORT OF HI S SUBMISSION, THE LD. AR OF THE ASSESSEE FILED A COPY OF PANCHNAMA DATED 25.10. 2005 ALONG WITH STATEMENT OF ASSESSEE (PAGE 22 TO 35). THE LD. AR O F THE ASSESSEE ALSO FILED THE COPY OF ASSESSMENT ORDER DATED 31.12.2007 IN CA SE OF JALAJ BATRA AND THE COPY OF ORDER OF TRIBUNAL DATED 03.06.2011. THE LD AR SUBMITS THAT THE LD CIT(A) PASSED THE ORDER WITHOUT HEARING THE ASSESSE E. THE ASSESSEE HAS FILED CERTAIN DOCUMENT WHICH WAS NOT CONSIDERED BY LD CIT (A). ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. ON SPECIFIC QUARRY OF THE BENCH THE LD CIT-DR CONFIRME D THAT THE SUBSTANTIVE ADDITION MADE IN THE HAND OF JALAJ BATRA HAS BEEN C ONFIRMED BY THE TRIBUNAL AND UPHELD BY HONBLE HIGH COURT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT IN THE ASSESSMENT ORDER, I TA NO. 5497/M/2015- JAGDISH UTTAM PARAB 8 THE ADDITION AGAINST THE ASSESSEE WAS MADE ON PROT ECTIVE BASIS,. THE ADDITION ON SUBSTANTIAL BASIS WAS MADE IN THE HAND OF JALAJ BATRA. WE HAVE NOTED THAT THE SUBSTANTIVE ADDITION MADE IN THE HAND OF JALAJ BATRA HAVE BEEN CONFIRMED BY THE TRIBUNAL. WE HAVE NOTED THAT THE ORDER OF TR IBUNAL HAS BEEN STATED TO BE UPHELD BY THE HONBLE HIGH COURT. CONSIDERING TH E FACT THAT SUBSTANTIVE ADDITION HAS BEEN UPHELD IN THE HAND OF JALAJ BATRA . IN OUR CONSIDERED VIEW THE INCOME FROM THE SAME TRANSACTION CANNOT BE ADDE D IN TWO HANDS. THUS, WE RESTORE THE CASE TO THE FILE OF ASSESSING OFFICE R WITH THE DIRECTION AO TO VERIFY THE FACT AND PASS THE FRESH ORDER IN ACCORDA NCE WITH LAW. 9. WITH THESE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF JANUARY 2018. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 19/01/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/