ACIT, New Delhi V. Shri Madhav Gangadhar Bhanoo, New Delhi

ITA 554/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65877 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP KUMAR SINGHDR
• Assessee Lawyers: ALKESH BABBARAR
• Keywords: Unexplained investment; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENC H BEFORE SHRI RAJPAL YADAV , JM & SHRI A.N. PAHUJA, AM ITA NO.554/DEL/2012 ASSESSMENT YEAR: 2006-07 A.C.I.T.,CIRCLE-48(1), ROOM NO.624, 6 TH FLOOR, MAYUR BHAWAN, CONNAUGHT PLACE, NEW DELHI V/S . SHRI MADHAV GANGADHAR BHANOO C/O VISHWANATH SINGH & ASSOCIATES, CA, FLAT NO.10, SHANKER MARKET, CONNAUGHT PLACE, NEW DELHI [PAN : AADPB 0093 M ] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ALKESH BABBAR,AR REVENUE BY SHRI AROOP KUMAR SINGH,DR DATE OF HEARING 29-10-2012 DATE OF PRONOUNCEMENT 23-11-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 02.02.2012 BY THE REVENUE AGA INST AN ORDER DATED 15.11.2011 OF THE LD. CIT(A)-XXX, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF ` ` 1,27,27,118/- AS RIGHTLY MADE BY THE AO ON ACCOUNT OF INVESTMENTS MADE WHICH REMAINED UN PROVED AND RIGHTLY HELD BY THE AO AS UNDISCLOSED INVESTMEN T MADE BY THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF ` `1,27,27,118/- ON THE BASIS OF ADDITIONAL EVIDENCE/ JUSTIFICATION FILED BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE SAME WERE NEITHER PRODUCED DURING THE ASSESSMENT PROCEED INGS NOR DURING THE REMAND REPORT PROCEEDINGS CONDUCTED BY T HE AO. ITA NO.554/DEL./2012 2 3. THE LD. CIT(A) HAS ERRED IN DELETING THE SAID WI THOUT APPRECIATING THE FACT THAT THE SOURCE OF INVESTMENT OF ` `1,27,27,118/- COULD NOT BE EXPLAINED BY THE ASSESS EE EITHER AT ASSESSMENT STAGE OR DURING THE REMAND REPORT PROCEE DINGS, THE FACT OF WHICH WERE DULY INCORPORATED IN THE REMAND REPORT, SUBMITTED BY THE AO. THE ASSESSEE CRAVES THE RIGHT TO ALTER, AMEND ADD OR SUBSTITUTE THE GROUNDS OF APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` `57,34,734/- FILED ON 26 TH JULY, 2006 BY THE ASSESSEE, AFTER BEING PROCESSED ON 13.2.2007 U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), WAS SELECTED FOR SCRUTIN Y WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT, ISSUED ON 18.07.2007. NONE RESP OND TO THIS NOTICE. EVEN SUBSEQUENT NOTICE DATED 17.7.2008 AND 29.08.2008 IS SUED U/S 143(2)/142(1) OF THE ACT WERE RETURNED UNSERVED BY THE POSTAL AUTHOR ITIES WITH THE REMARKS LEFT WITHOUT ADDRESS. CONSEQUENTLY, A NOTICE DATED 10. 12.2008 WAS SERVED THROUGH AFFIXTURE AT THE LAST KNOWN ADDRESS ON THE ASSESSEE . NONE RESPONDED TO THIS NOTICE ALSO. CONSEQUENTLY, THE ASSESSING OFFICER[A O IN SHORT] ADDED THE AMOUNT OF ` ` 1,27,27,118/- ON ACCOUNT OF UNEXPLAINED INVESTMENT S, AS REVEALED FROM AIR INFORMATION. 3. ON APPEAL, THE ASSESSEE SUBMITTED AN APPLICATIO N DATED 6 TH AUGUST, 2011 IN TERMS OF RULE 46A OF THE I.T. RULES, 1962, ENCLOSING A RECONCILIATION OF ALL THE TRANSACTIONS APPEARING IN THE AIR WITH THE BANK /INVESTMENT RECORDS OF THE ASSESSEE, ACCOMPANIED BY DOCUMENTS EVIDENCING THE S OURCE OF INVESTMENTS AS ALSO THE DOCUMENTS EVIDENCING THE INVESTMENTS MADE . INTER ALIA, IT WAS CONTENDED THAT THE ASSESSEE HAVING SHIFTED HIS RESI DENCE TO PUNE, INFORMED THE AO HIS NEW ADDRESS AT PUNE AND DESPITE THAT THE A O DID NOT SERVE ANY NOTICE AT THE NEW ADDRESS . ACCORDINGLY, THE LD. CIT(A) AFT ER HAVING A REMAND REPORT FROM THE AO, ADMITTED THE SAID ADDITIONAL EVIDENCE AND C ONCLUDED AS UNDER:- ITA NO.554/DEL./2012 3 FINDINGS AND DECISION FROM THE SUBMISSIONS MADE AND THE DOCUMENTS FILED, IT IS EVIDENT THAT THE APPELLANT HAS INTIMATED THE CHANGE IN HIS ADDRESS BY FILING THE PRESCRIBED APPLICATION PERTAINING TO CHANGE/COR RECTION IN PAN DATA. THE PRESCRIBED APPLICATION WAS FILED ON WITH THE LOCAL TIN FACILITATION CENTRE MANAGED BY NSDL ON 20.9.2007 VI DE ACKNOWLEDGEMENT RECEIPT NO. 050300300091090. IN THE APPLICATION THE ASSESSEE HAS PROVIDED HIS NE W ADDRESS OF FLAT NO. A-7, SHEFALI APARTMENTS, H. NO. 132-B, ICS COLONY, GANESHKHIND ROAD, BHOSALE NAGAR, PUNE 411007. IN THE ASSESSMENT ORDER UNDER APPEAL, IT CAN BE SEE N THAT THE OLD ADDRESS OF THE APPELLANT HAS BEEN MENTIONED IN THE ASSESSMENT ORDER WHICH IS DATED 24.12.2008. THIS IMPLIES THAT THE NEW ADDRESS WAS NOT TAKEN ON RECORD TILL THE TIME OF PASSING TH E ASSESSMENT ORDER WHEN THE APPELLATE HAD INTIMATED THE CHANGE I N THE ADDRESS ON 20.9.2007. THUS THE APPELLANT HAS DULY DISCHARGED HIS ONUS OF INTIMATING THE CHANGE IN HIS ADDRESS BY FILING THE PRESCRIBED APPL ICATION PERTAINING TO CHANGE/CORRECTION IN PAN DATA. ISSUING NOTICE AT THE OLD ADDRESS RESULTED IN DEPRIVING THE ASSESSEE FROM - NATURAL JUSTICE - OPPORTUNITY OF BEING HEARD AND -OPPORTUNITY OF PROVIDING THE NECESSARY INFORMATIO N AND EXPLANATIONS THUS THIS GROUND IS DECIDED IN FAVOUR OF THE APPELL ATE AND THE APPEAL IS ALLOWED. 3.1 AS REGARDS MERIT OF THE ADDITION, THE LD. CIT( A) DELETED THE ADDITION IN THE FOLLOWING TERMS: GROUND NO.4 SUBMISSION BY THE APPELLANT : THE APPELLANT IN HIS STATEMENT OF FACTS SUBMITTED T HAT THE ASSESSMENT HAS BEEN MADE BY THE AO WITHOUT AFFORDIN G NATURAL ITA NO.554/DEL./2012 4 JUSTICE BY OFFERING TO HIM AN OPPORTUNITY OF BEING HEARD FOR THE PURPOSE OF EXPLAINING HIS CASE, IN SPITE OF THE FAC T OF HIS HAVING NOTIFIED THE CHANGE OF ADDRESS TO WHICH OTHERWISE I T WAS POSSIBLE FOR THE AO TO SEND THE NOTICE/COMMUNICATIONS, ETC. BEFORE PROCEEDING EX-PARTE TO COMPLETE THE ASSESSMENT OF H IS INCOME FOR THE ASSESSMENT YEAR 2006-07 AS STATED ABOVE. THE AR HAS SUBMITTED A LIST SHOWING THE INVESTMENTS APPEARING IN THE AIR. THE AR IN HIS SUBMISSIONS HAS PROVIDED AN AFFIDAVIT DULY NOTARIZED IN PUNE FROM THE APPELLANT CONFIRMING THA T THE INVESTMENTS IN MUTUAL FUNDS APPEARING IN THE AIR IS SUED BY THE INCOME TAX DEPARTMENT IN THE ASSESSEE'S NAME, OTHER THAN THE INVESTMENTS IN WHICH HE WAS ONLY A JOINT HOLDER ALO NG WITH HIS WIFE LATE MRS. DEEPA BHANOO, WERE MADE OUT OF HIS OWN FU NDS SOURCED FROM EITHER OF THE FOLLOWING: I) FUNDS AVAILABLE IN THE BANK ACCOUNTS OUT OF REGU LAR INCOME ACCRUALS AND/OR II) FUNDS RECEIVED IN THE BANK ACCOUNTS ON ACCOUNT OF REDEMPTION OF INVESTMENTS AND/OR III) SWITCH IN FROM FUNDS RELEASED FROM SWITCH OUT OF EXISTING INVESTMENTS I.E. FROM ONE INVESTMENT TO ANOTHER INV ESTMENT. - NO CASH WAS DEPOSITED BY THE ASSESSEE IN ANY OF H IS BANK ACCOUNT DURING THE ASSESSMENT YEAR UNDER APPEAR CONSIDERATI ON. - PARTICULARS OF ALL THE THREE BANK ACCOUNTS MAINTA INED BY THE APPELLATE AND - CONFIRMATION THAT NO OTHER BANK ACCOUNT WAS MAINT AINED BY THE APPELLATE. THE AR ALSO SUBMITTED THE COPIES OF THE FOLLOWING T HREE BANK STATEMENTS MAINTAINED BY THE APPELLANT DURING THE F INANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07: I. SAVINGS BANK ALC NO. 521-1-001691-9 WITH STANDAR D CHARTERED BANK, GREATER KAILASH, NEW DELHI, II. SAVINGS BANK ALC NO. 5-001547-242 WITH CITIBANK , GURGAON; AND III. SAVINGS BANK ALC NO. 017701000031 WITH ICICI B ANK, QUTUB PLAZA, DLF PHASE-I, GURGAON. IT HAS ALSO BEEN STATED THAT NO CASH WAS DEPOSITED BY THE ASSESSEE IN ANY OF HIS BANK ACCOUNTS DURING THE PERIOD UNDER APPEAL. THE AR HAS ALSO PUT ON RECORD THE COPIES OF THE ACKNOWLEDGEMENTS OF THE INCOME TAX RETURNS AND THE TAX COMPUTATIONS FILED BY THE ASSESSEE FOR THE FOLLOWIN G ASSESSMENT ITA NO.554/DEL./2012 5 YEARS EVIDENCING THE INCOME EARNED BY THE ASSESSEE IN THESE YEARS. S.NO. A.Y. TAXABLE INCOME TAX EXEMPT INCOME TOTAL INCOME INCLUDING EXEMPT INCOME 1 2001-02 27,15,451 2,45,548 29,61,000 2 2002-03 32,94,346 4,82,390 37,76,736 3 2003-04 39,39,570 - 39,39,570 4 2004-05 46,76,629 2,45,007 49,21,636 5 2005-06 52,14,339 10,66,367 62,80,706 6 2006-07 57,34,734 19,72,936 77,07,670 7 2007-08 60,00,405 67,47,136 127,47,541 8 2008-09 34,80,788 65,63,212 100,44,000 9 2009-10 15,65,825 28,20,173 43,85,998 TOTAL 366,22,087 201,42,769 567,64,857 THE SCHEDULE OF INCOME EARNED DURING THE AFORESAID ASSESSMENT YEARS PROVIDES THE TAXABLE INCOME AND THE TAX EXEMPT INCOME. FROM THIS SCHEDULE AND FROM THE COPIES OF THE ACKNOWLEDGEMENTS OF THE INCOME TAX RE TURNS FILED, IT CAN BE SEEN THAT THE INVESTMENTS MADE OF `1,27,27,118/- WERE WI THIN THE FINANCIAL MEANS OF THE ASSESSEE. FINDINGS AND DECISION BASED ON THE DOCUMENTS PUT ON RECORD, IT IS CLEAR T HAT ALL THE INVESTMENTS LISTED IN THE AIR ARE FULLY SUBSTANTIAT ED AND VERIFIED. THESE INVESTMENTS HAVE BEEN MADE BY THE APPELLANT O UT OF HIS DULY DECLARED INCOME SOURCES THROUGH BANKING CHANNEL. THUS, THE ADDITION OF ` ` 1,27,27,118/- MADE IN THE ASSESSMENT ORDER DESERVES TO BE DELETED IN FULL. THE ADDITION OF ` `1,27,27,118/- MADE BY ASSESSING OFFICER IS DELETED. THUS, THIS GROUND IS DECIDED IN FAVOUR OF THE APPEL LANT AND AGAINST THE REVENUE. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). WHILE REFERRING TO PA GE 62 OF THE PAPER BOOK, THE LD. DR SUBMITTED THAT THE LD. CIT(A) ADMITTED ADDITIONA L EVIDENCE WITHOUT ALLOWING ANY OPPORTUNITY TO THE AO .THEREFORE, THE MATTER RE QUIRES TO BE RESTORED BACK TO THE FILE OF THE AO. ON THE OTHER HAND, THE LD. AR O N BEHALF OF THE ASSESSEE WHILE REFERRING TO THE SAID LETTER DATED 27 TH OCTOBER, 2011 ADDRESSED TO THE LD. CIT(A) PLACED ON PAGE 62 OF THE PB CONTENDED THAT AFTER SUBMITTING THEIR REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE IN TERMS OF TH E LETTER DATED 6 TH AUGUST, 2011, ITA NO.554/DEL./2012 6 THE LD. CIT(A) REQUISITIONED CERTAIN DOCUMENTS, WHI CH WERE SUBMITTED BY THE ASSESSEE. THEREFORE, THERE WAS NO VIOLATION OF RUL E 46A OF THE INCOME-TAX RULES, 1962. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE THROUGH HIS LETTE R DATED 6 TH AUGUST, 2011 REQUESTED FOR ADMISSION OF ADDITIONAL EVIDENCE IN T HE FORM OF DOCUMENTS EVIDENCING SOURCE OF INVESTMENT OF ` ` 1,27,27,118/- (PAGE 3 TO 54OF THE PAPER BOOK). SINCE THE DETAILS AND DOCUMENTS AS PER LETT ER DATED 27 TH OCTOBER, 2011 WERE REQUISITIONED BY THE LD. CIT(A) ALONE IN EXER CISE OF HIS POWERS IN TERMS OF RULE 46A(4) OF THE IT RULES,1962 AND THE ASSESSEE N EVER MADE ANY PRAYER FOR ADMISSION OF THESE DOCUMENTS BY WAY OF ADDITIONAL E VIDENCE, WE ARE OF THE OPINION THAT THERE IS NO VIOLATION OF RULE 46A OF T HE I.T. RULES, 1962. ON MERITS, THE LD. CIT(A) AFTER PERUSING THE DOCUMENTS SUBMITT ED BY THE ASSESSEE CONCLUDED THAT THE AFORESAID INVESTMENT OF ` ` 1,27,27,118/- WAS WITHIN THE FINANCIAL MEANS OF THE ASSESSEE AND ALL THE INVEST MENTS LISTED IN THE AIR WERE FULLY SUBSTANTIATED AND VERIFIED, THE INVESTMENTS H AVING BEEN MADE BY THE ASSESSEE OUT OF HIS DULY DECLARED INCOME THROUGH BA NKING CHANNEL. SINCE THE LD. DR DID NOT PLACE ANY MATERIAL BEFORE US, CONTROVERT ING THE AFORESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. THEREFORE , GROUND NOS. 1 TO 3 IN THE APPEAL ARE DISMISSED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND IN THE APPEAL, ACCORDINGLY, THIS GROUND IS D ISMISSED. 7. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. ITA NO.554/DEL./2012 7 8. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. A.C.I.T.,CIRCLE-48(1), ROOM NO.624, 6 TH FLOOR, MAYUR BHAWAN, CONNAUGHT PLACE, NEW DELHI 3. CIT CONCERNED. 4, CIT(A)-XXX,NEW DELHI 5. DR, ITAT, E BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT