VIRENDRA KUMAR JAIN, NAVI MUMBAI V. ACIT 22)3), MUMBAI

ITA 5534/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3509 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: DR PRAYAG JHA
• Keywords: Gift; Opportunity of being heard; Principle of natural justice; Additional evidence; Reasonable cause; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' F ' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 5534 /MUM/201 2 (ASSESSMENT YEAR: 2009 - 10 ) SHRI VIRENDRA KUMAR JAIN VS. A C I T - 2 2 (3) C/O. VINEET CONSULTANT A - 03, GR. FLOOR, MANGAL TOWER, PLOT NO. 53, SEC. 17 VASHI, NAVI MUMBAI 400705 MUMBAI PAN - AAACM3025E APPELLANT RESPONDENT APPELLANT BY: SHRI PRATEEK JHA & DR. PRAYAG JHA RESPONDENT BY: SHRI NEIL PHILIP DATE OF HEARING: 24 .05 .2016 DATE OF PRONOUNCEMENT: 25 .0 5 .2016 O R D E R PER JASON P. BOAZ, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 33 , MUMBAI DATED 2 4 . 05 .201 2 , WHICH CONF I RMED THE ORDER OF ASSESSMENT FOR A.Y. 2009 - 10 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') VIDE ORDER DATED 19.12.2011. 2 . ORDER ON THE PETITION FOR CONDONATION OF DELAY IN FILING THIS APPEAL FOR A.Y. 2009 - 10 BEFORE THE TRIBUNAL. 2.1 THE ASSESSEE HAS FILED A PETITION FOR CONDONATION OF DELAY OF 11 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL, ENCLOSING AN AFFIDAVIT DATED 05.09.2012 SWORN TO BY THE ASSESSEE. IN THE PETITION AND ACCOMPANYING AFFIDAVIT, IT IS SUBMITTED THAT SINCE THE IM PUGNED ORDER OF THE LEARNED CIT(A) WAS RECEIVED BY THE ASSESSEE ON 24.06.2012 THE APPEAL WAS TO BE FILED WITHIN 60 DAYS THEREOF, BUT WAS FILED BELATEDLY BY 11 DAYS ON 03.09.2012. ACCORDING TO THE AVERMENTS IN THE AFFIDAVIT, THE ASSESSEE SUBMITS THAT HIS CO NSULTANT WAS REQUESTED TO PREPARE THE APPEAL TO BE IT A NO. 5534/MUM/2012 SHRI VIRENDRA KUMAR JAIN 2 FILED, BUT SINCE HE HIMSELF WAS OUT OF STATION ON BUSINESS TOUR, THE SAME COULD NOT BE SIGNED AND FILED IN TIME, WHICH LED TO A DELAY OF 11 DAYS IN FILING THE APPEAL. IT WAS PLEADED BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE DELAY WAS NOT INTENTIONAL AND WITH REASONABLE CAUSE AND IF THE MEAGRE DELAY OF 11 DAYS WAS NOT CONDONED THE ASSESSEE WOULD BE PUT TO GREAT HARDSHIP. IT WAS PRAYED THAT A LENIENT VIEW BE TAKEN IN THE MATTER, THE DELAY BE CONDONED AND THE APPEAL BE HEARD ON MERITS INSTEAD OF DISMISSING THE APPEAL ON MERE TECHNICALITIES. IN SUPPORT OF THIS PROPOSITION, THE LEARNED A.R. FOR THE ASSESSEE HAS, INTER ALIA, PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - I) COLLECTOR, LAND ACQUISI TION VS. MST KATIJI AND OTHERS (1987) 167 ITR 471 (SC) II) CIT VS. ISRO SATELLITE CENTRE IN ITA NO. 532/2008 (KAR. HC) 2.2 PER CONTRA, THE LEARNED D.R. OPPOSED THE ASSESSEES PRAYER FOR CONDONATION OF DELAY. 2.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PE RUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IN THE LANDMARK JUDGEMENT OF THE HON'BLE APEX COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST KATIJI (SUPRA), CITED BY THE ASSESSEE, WHEREIN THE HON'BLE COURT LAID DOWN THE PRINCIPLES FOR DEAL ING WITH MATTERS OF CONDONATION OF DELAY, THE HON'BLE COURT STATED THAT SUBSTANTIAL JUSTICE SHOULD PREVAIL OVER TECHNICALITIES. THE DOCTRINE MUST BE APPLIED IN A NATURAL, COMMON SENSE AND PRAGMATIC MANNER. IN VIEW OF THE FACTS OF THE MATTER AS EMERGE FROM THE ASSESSEES PETITION FOR CONDONATION OF DELAY AND ACCOMPANYING AFFIDAVIT, WE ARE OF THE VIEW THAT THIS IS A FIT CASE FOR CONDONATION OF THE DELAY OF 11 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL AND ACCORDINGLY CONDONE THE SAME. THE APPEAL IS ACCORDI NGLY ADMITTED FOR HEARING. 3 . THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 3.1 THE ASSESSEE, PROPRIETOR OF VINIT CONSULTANTS, FILED HIS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 30.09.2009 DECLARING INCOME OF ` 21,18,111/ - . THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER IT A NO. 5534/MUM/2012 SHRI VIRENDRA KUMAR JAIN 3 SECTION 143(3) OF THE ACT VIDE ORDER DATED 19.12.2011, WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT ` 41,14,110/ - , IN VIEW OF AN ADDITION OF ` 19,96,000/ - ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS TO THIS EXTENT IN HIS SAVINGS BANK ACCOUNT WITH DEVELOPMENT CREDIT BANK IN THE YEAR UNDER CONSIDERATION. 3.2 ON APPEAL, THE LEARNED CIT(A) DISMISSED THE ASSESSEES APPEAL FOR A.Y. 2009 - 10 VIDE THE IMPUGN ED ORDER DATED 24.05.2012. 4.1 AGGRIEVED BY THE ORDER OF THE CIT(A) - 33, MUMBAI, THE ASSESSEE HAS PREFERRED THIS APPEAL, RAISING CERTAIN GROUNDS. THE ASSESSEE SUBSEQUENTLY, VIDE LETTER DATED 15.04.2015, FILED CONCISE GROUNDS OF APPEAL WHICH ARE AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI, ERRED IN SUSTAINING THE ADDITION OF RS.19,96,000/ - ENTIRELY ON PRESUMPTIONS, CONJECTURES AND SURMISES AND WITHOUT APPRECIATING THE F ACT THAT THE AMOUNT WAS RECEIVED BY AN ASSESSEE AS GIFT FROM HIS MOTHER - IN - LAW AND THE TRANSACTION WAS SUPPORTED BY DECLARATION CUM AFFIDAVIT AND WAS EXEMPT FROM INCOME TAX. 4.2.1 THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO), ON THE BASIS OF INFORMATION RECEIVED THROUGH AIR THAT THE ASSESSEE HAD DEPOSITED CASH OF ` 19,96,000/ - IN HIS SAVINGS BANK ACCOUNT WITH DEV ELOPMENT CREDIT BANK IN THE YEAR UNDER CONSIDERATION, REQUIRED THE ASSESSEE TO FURNISH CERTAIN INFORMATION IN THIS REGARD. ACCORDING TO THE LEARNED A.R., IN RESPONSE THERETO, THE ASSESSEES MOTHER - IN - LAW, SMT. MANORAMA GANGWAL SUBMITTED VIDE AN AFFIDAVIT T HAT SHE HAD GIVEN GIFT OF ` 20,00,000/ - TO THE ASSESSEE OUT OF, INTER ALIA, THE FOLLOWING SOURCES, MONEY RECEIVED AT THE TIME OF HER HUSBANDS DEATH, OWN SAVINGS SINCE MARRIAGE, RENTAL INCOME FROM INDORE PROPERTY FOR 10 - 12 YEARS, MONEY RECEIVED ON VARIOUS O CCASIONS FROM RELATIVES, SALE PROCEEDS OF GOLD AND SILVER ORNAMENTS/UTENSILS, ETC. THE LEARNED A.R. CONTENDS THAT WHEN THE AFFIDAVIT IS FILED, IT IS TO BE PRESUMED TO BE TRUE UNTIL THE CONTRARY IS PROVED. BUT IN THIS CASE THE AO, WITHOUT PUTTING THE ASSESS EE ON NOTICE, DREW ADVERSE INFERENCES THAT THE AFFIDAVIT IS NOT RELIABLE AS SOURCES OF CASH, PROOF OF RENTAL INCOME, SALE OF GOLD IT A NO. 5534/MUM/2012 SHRI VIRENDRA KUMAR JAIN 4 ORNAMENTS, PAST SAVINGS, WERE NOT FURNISHED. IT IS CONTENDED THAT IF DEFECTS WERE OBSERVED BY THE AO OR VERIFICATIONS WERE TO BE CARRIED OUT, THE AO OUGHT TO HAVE PUT THE ASSESSEE ON NOTICE BY AFFORDING HIM OPPORTUNITY TO PLACE ON RECORD HIS REBUTTALS TO THE AO S OBSERVATIONS. FROM THE ORDER OF ASSESSMENT, IT IS VERY CLEAR THAT THE AO REJECTED THE ASSESSEES CONTENTIONS VIDE THE AFFIDAVIT OF HIS MOTHER - IN - LAW ON PRESUMPTIONS, SUSPICIONS AND SURMISES BEHIND THE ASSESSEES BACK IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, I.E. BY DENYING THE ASSESSEE OPPORTUNITY OF BEING HEARD IN THE MATTER BEFORE COMING TO A FINDING IN THE MATTER. 4.2.2 THE LEARNED A.R. FOR THE ASSESSEE SUBMITS THAT ON APPEAL SUBMISSIONS WERE ALSO MADE BEFORE THE LEARNED CIT(A), THAT APART FROM SALE OF JEWELLERY/ORNAMENTS, PART OF THE GIFT TO THE ASSESSEE, HER SON - IN - LAW, IS ALSO OUT OF HER SHARE IN THE SALE PROCEEDS OF AN IMMOVABLE PROPERTY SOLD VIDE AGREEMENT DATED 17.07.2007 FOR ` 45 LAKHS, A PORTION OF WHICH WAS ALSO GIVEN TO HER DAUGHTER, THE ASSESSEES WIFE; BOTH OUT OF NATURAL LOVE AND AFFECTION AND ALSO FOR THE REASON THAT SHE IS DEPENDENT AND LIVES WI TH THEM AFTER THE DEMISE OF HER HUSBAND. THE LEARNED A.R. SUBMITTED THAT THE LEARNED CIT(A) ALSO NOT ONLY BRUSHED ASIDE THE AFFIDAVIT FILED BY THE ASSESSEES MOTHER - IN - LAW AS UNRELIABLE AND DISBELIEVED THE AUTHENTICITY OF THE ASSESSEES CLAIM THAT THE SALE DEED FILED BY THE ASSESSEE, WAS AN EXPLANATION FOR BEING THE SOURCE OF A PART OF THE GIFT TO THE ASSESSEE FROM HIS MOTHER - IN - LAW. HERE TOO, THE LEARNED A.R. CONTENDS, THE LEARNED CIT(A) AFTER ADMITTING THAT FRESH EVIDENCE, IN THE FORM OF THE SAID SALE DEE D OUGHT TO HAVE HAD THE SAME EXAMIN ED AND VERI FI ED BY THE AO AND AFFORDED THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER BEFORE DRAWING AN ADVERSE INFERENCE. IT IS CONTENDED THAT IN THE AFORESAID CIRCUMSTANCES, IT IS EVIDENT THAT THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN BRUSHING ASIDE DOCUMENTS PUT FORTH BY THE ASSESSEE TO EXPLAIN SOURCE OF THE GIFT FROM HIS MOTHER - IN - LAW, WITHOUT PROPER VERIFICATION AND PUTTING THE ASSESSEE ON NOTICE WITH REFERENCE TO ANY REQU9IREMENTS/EXPLANATION S IN THIS REGARD, ESTABLISHES THAT THE FINDINGS OF THE LEARNED CIT(A) ARE BASED ON SUSPICIONS, SURMISES AND PRESUMPTIONS. IT IS PRAYED THAT IN THE AFORESAID CIRCUMSTANCES, THE IMPUGNED ORDER IS NOT SUSTAINABLE . IT A NO. 5534/MUM/2012 SHRI VIRENDRA KUMAR JAIN 5 4.3 PER CONTRA, THE LEARNED D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IN THE COURSE OF HEARING THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE IN THE FORM OF COP Y OF GIFT DEED EXECUTED BY SMT. MANORAMA GANGWAL (MOTHER - IN - LAW OF THE ASSESSEE) ON 10.10.2008. IT STATES, INTER ALIA, THAT SHE HAS GIVEN GIFT OF ` 20 LAKHS OUT OF NATURAL LOVE AND AFFECTION TO THE ASSESSEE OUT OF PROPERTY OF HER STREEDHAN, SAVINGS, FROM IN COME FROM RENT FROM THREE SHOPS AND RESIDENTIAL UNITS, SALE PROCEEDS OF PERSONAL GOLD ORNAMENTS, SILVER UTENSILS, ETC. IT IS STATED THAT THE SAME COULD NOT BE PLACED BEFORE THE LOWER AUTHORITIES BECAUSE SUFFICIENT OPPORTUNITY WAS NEVER ALLOWED BEFORE PASSI NG OF ORDERS. IT IS PLEADED THAT THE SAME ADDITIONAL EVIDENCE BE ADMITTED FOR CONSIDERATION SINCE IT GOES TO THE ROOT OF THE MATTER FOR THE PURPOSE OF ESTABLISHING THE GENUINENESS OF THE GIFT. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LEARNED A.R. FOR THE ASSESSEE AND THE LEARNED D.R. FOR REVENUE IN THE MATTER. TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT SUBSTANTIAL INTEREST OF JUSTICE WOULD BE SERVED IF THE ADDITIONAL EVIDENCE IN THE FORM OF COP Y OF GIFT DEED OF SMT. MANORAMA GANGWAL DATED 10.10.2008 BE ADMITTED AS IT GOES TO THE ROOT OF THE MATTER AND COULD HELP IN ESTABLISHING THE GENUINENESS OR OTHERWISE OF THE GIFT OF ` 20 LAKHS SAID TO HAVE BEEN GIVEN BY THIS LADY TO THE ASSESSEE. 4.4.2 WE HA VE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF ASSESSMENT, WE FIND THAT, AS SUBMITTED BY THE LEARNED A.R. FOR THE ASSESSEE, THE AO, ON RECEIPT OF AIR INFORMATION IN RESPECT OF CASH DEPOSITS OF ` 19,96,000/ - IN THE ASS ESSEES BANK ACCOUNT, ISSUED A QUESTIONNAIRE DATED 13.07.2011 TO THE ASSESSEE REQUIRING CERTAIN INFORMATION/DETAILS IN THIS REGARD. IT IS SEEN THAT WHEN THE ASSESSEE FILED AN AFFIDAVIT FROM HIS MOTHER - IN - LAW CONFIRMING THAT SHE HAD GIVEN HIM GIFTS AMOUNTIN G TO ` 20 LAKHS FROM VARIOUS SOURCES STATED THEREIN, THE AO JUST BRUSHED ASIDE THE AFFIDAVIT MAKING CERTAIN ADVERSE OBSERVATIONS SUCH AS THE AFFIDAVIT IS NOT RELIABLE, SOURCE OF CASH, PROOF OF RENTAL INCOME, SALE OF IT A NO. 5534/MUM/2012 SHRI VIRENDRA KUMAR JAIN 6 GOLD ORNAMENTS, PAST SAVINGS WERE NOT GIV EN ETC. AND REJECTED THE ASSESSEES CLAIM. IF THE AO HAD SUCH DOUBTS, AS EXPRESSED IN THE ORDER, THE ONUS WAS UPON HIM TO VERIFY THE SAME AND TO PUT THE ASSESSEE ON NOTICE ABOUT THE SAME AND AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY TO REBUT THE AOS PRESUM PTIONS. IN OUR VIEW, THE AOS FAILURE TO DO SO, IS A GRAVE VIOLATION OF THE ASSESSEES RIGHT TO NATURAL JUSTICE AND RENDERS HIS FINDING TO BE ONE BASED ONLY ON PRESUMPTIONS, SUSPICIONS AND SURMISES. IT SEEMS THAT THE LEARNED CIT(A), AFTER REPRODUCING SUBST ANTIAL PORTIONS OF THE ORDER OF ASSESSMENT, HAS MERELY PARROTED THE AOS FINDINGS. EVEN IN RESPECT OF THE SALE DEED DATED 17.07.2007 FILED TO EXPLAIN A PORTION OF THE SAID GIFT OF ` 20 LAKHS, THE LEARNED CIT(A) HAS MADE CERTAIN ADVERSE OBSERVATIONS WITHOUT REQUIRING ANY CLARIFICATIONS ON THESE OBSERVATIONS EITHER FROM THE AO OR THE ASSESSEE BEFORE ADJUDICATING THE MATTER. IN THIS VIEW OF THE MATTER, AND CONSIDERING THE ADDITIONAL EVIDENCE FILED BEFORE US BY THE ASSESSEE IN THE FORM OF COPY OF GIFT DEED DATED 10.10.2008 AND ADMITTED, WE ARE OF THE VIEW THAT IN THE INTEREST OF EQUITY AND JUSTICE, THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW ARE TO BE SET ASIDE AND THE MATTER OF CASH DEPOSITS OF ` 19,96,000/ - IN THE ASSESSEES BANK ACCOUNT IN DEVELOPMENT CREDIT B ANK AND WITHDRAWALS THEREFROM ALONGWITH THE EVIDENCES/ EXPLANATIONS IN THIS REGARD LIKE GIFT DEED DATED 10.10.2008, AFFIDAVIT OF SMT. MANORAMA GANGWAL, SALE DEED DATED 17.07.2007, ETC. BE RESTORED TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION AND ADJUDIC ATION THEREON AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 5 . IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2009 - 10 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY , 2016 . SD/ - SD/ - ( SANDEEP GOSAIN ) ( JASON P. BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH MAY , 2016 IT A NO. 5534/MUM/2012 SHRI VIRENDRA KUMAR JAIN 7 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) - 33 , MUMBAI 4 . THE CIT - 2 2 , MUMBAI 5 . THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.