Shri.Ashish Mehata(HUF), Bangalore V. Income Tax Officer, Bangalore

ITA 557/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7666 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUBHASH K R
• Assessee Lawyers: H N KHINCHA
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Accommodation entries
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 55 7 /BANG/201 7 ASSESSMENT YEAR : 20 1 0 - 1 1 SHRI ASHISH MEHTA (HUF), # 1, POONAM, 3 RD CROSS, MOUNT JOY EXTENSION, HANUMANTHNAGAR, BANGALORE 560 019. PAN: AAIHA 6591C VS. THE INCOME TAX OFFICER, WARD 5(2)(4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : DR. SUBHASH K.R., JCIT (DR) DATE OF HEARING : 1 6 .0 8 .2017 DATE OF PRONOUNCEMENT : 31 . 08 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A)-5, BANGALORE DATED 25.01.2017 FOR ASSES SMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRE D TO BE QUASHED. 2.1 IN ANY CASE, THE CONDITIONS PRECEDENT FOR THE I SSUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT, THE RE- OPENING OF ASSESSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED/CONFIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. ITA NO. 557/BANG/2017 PAGE 2 OF 7 2.2 IN ANY CASE, THE IMPUGNED ORDER PASSED WITHOUT COMPLYING THE LEGAL FORMALITIES REQUIRED U/S 147 OF THE ACT, BECOME BAD IN LAW AND IS REQUIRED TO BE QUASHED. 3.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORDER, MAKE THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER ON THE ABOVE GROUNDS, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLICABLE. 3.3. IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS PASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE JURISDICTIONAL HI GH COURT ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS.9,30,340/- BEING LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS UNEXPLAINED CASH CREDIT AND TAXING THE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE ACTION OF AUTHORITIES BELO W HAS NO SUPPORT IN LAW; IS CONTRARY TO FACTS AND EVIDENCE AVAILABLE. SUCH A TREATMENT DESERVES TO BE REJECTED TOTALLY. 5.1 IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: A) TAXING/ CONFIRMING THE LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS INCOME UNDER THE HEAD OTHER SOURCES. B) NOT CONSIDERING THE FACT THAT THE APPELLANT HAD EARNED LONG TERM CAPITAL GAIN ON SALE OF SHARES AND SAME WAS EXEMPT U/S. 10(38) OF THE I.T. ACT. ITA NO. 557/BANG/2017 PAGE 3 OF 7 C) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN SHARES ARE FRAUDULENT. D) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HA S OBTAINED ACCOMMODATION ENTRIES AND APPELLANT'S OWN MONEY COME BACK IN THE GUISE OF CAPITAL GAINS. THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND WITHOUT BASIS BOTH ON FACTS AND LAW IS TO BE DISREGARDED. 5.2 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCLUSIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WITHOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILITIES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY QUASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW A ND DESERVE TO BE REJECTED IN TOTO. 6. THE APPELLANT HAD ACTUALLY SOLD SHARES THROUGH DEMAT ACCOUNT AND HAD EARNED CAPITAL GAIN THEREON AND SAME NEEDS TO BE ACCEPTED AS SUCH. 7. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO B E DELETED. 8. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE INCOME FROM LONG TERM CAPITAL GAIN AS CLAIMED EXEMPT U/S. 10(38) OF THE I.T. ACT. 1961 BE ACCEPTED, THE ADDIT ION OF LONG TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS INCOME FROM OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ADD ITION IN THE PRESENT CASE IS MADE BY THE AO ON THE BASIS OF STATEMENT OF SHRI MU KESH CHOWKSI OF MAHASAGAR GROUP OF CASES. HE SUBMITTED THE COPY OF TWO TRIBUNAL ORDERS RENDERED IN THE CASE OF SHRI AMIT MEHTA (HUF) VS. I TO IN ITA NO. 559/BANG/2017 DATED 16.06.2017, COPY ON PAGES 395 T O 399 OF PAPER BOOK AND IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. IT O IN ITA NO. ITA NO. 557/BANG/2017 PAGE 4 OF 7 2168/BANG/2016 DATED 17.03.2017, COPY ON PAGES 400 404 OF PAPER BOOK. HE POINTED OUT THAT IN THESE TWO CASES ALSO, THE AD DITION WAS MADE ON THE BASIS OF SAME STATEMENT OF SHRI MUKESH CHOKSI AND T HE TRIBUNAL RESTORED BACK THE MATTER TO THE FILE OF AO FOR FRESH DECISIO N AFTER CONFRONTING THE STATEMENT OF SHRI MUKESH CHOKSI TO THE ASSESSEE AND AFTER ALLOWING CROSS EXAMINATION OF SHRI MUKESH CHOKSI IN ORDER TO DIG O UT THE TRUTH IN THIS REGARD. HE SUBMITTED THAT IN THE PRESENT CASE ALSO , THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO FOR FRESH DECISION. 4. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF THE A UTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THA T IT IS AN ADMITTED POSITION OF FACT THAT IN THE PRESENT CASE ALSO, THE ADDITION WAS MADE BY THE AO ON THE BASIS OF STATEMENT OF SHRI MUKESH CHOKSI OF MAHASAG AR GROUP OF CASES. NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LD. DR OF REVENUE IN THE PRESENT CASE AND IN THE ABOVE TWO CASES ON WHICH TH E RELIANCE IS PLACED BY THE LD. AR OF THE ASSESSEE. THE RELEVANT PART OF T RIBUNAL ORDER IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. ITO (SUPRA) IS PARA N O. 5 AND 6 AND THESE PARAS FROM THIS TRIBUNAL ORDER ARE REPRODUCED HEREI N BELOW FOR THE SAKE OF READY REFERENCE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRS T OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HON'BLE KARN ATAKA HIGH COURT RENDERED IN THE CASE OF M/S CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER:- ITA NO. 557/BANG/2017 PAGE 5 OF 7 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS ADVERTED TO ABOVE, AND AS THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE-CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE PETITIONER AND BY FURNISHING THE DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. 6. PROM THE ABOVE PARA FROM THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RE STORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENT OF SHRI MUKESH CHOKSI. AS PER THE FACTS NOTED BY THE HIGH COURT IN THE EARLIER PARAS OF JUDGMENT AND AS PER THE FACTS OF THE PRESENT CASE, I FIND THAT THE FACTS ARE SIMILAR AND LD DR OF THE REVENUE ALSO COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND HENCE, BY RES PECTFULLY FOLLOWING THIS JUDGMENT OF KARNATAKA HIGH COURT, I SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MATTER TO TH E FILE OF THE AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS W ERE GIVEN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPRODUCED ABOVE. IN VIEW OF T HIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STA GE REGARDING THE MERIT OF THE ADDITION. 6. I ALSO REPRODUCE PARA NOS. 2 AND 3 FROM THE TRIBUNA L ORDER RENDERED IN THE CASE OF SHRI AMIT MEHTA (HUF) VS. ITO (SUPRA). THE SE PARAS ARE AS UNDER. 2. DURING THE COURSE OF HEARING, THE ID. COUNSEL FO R THE ASSESSEE HAS INVITED MY ATTENTION THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN TH E ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2008-09 IN WHICH THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE C IT(A) AND RESTORED THE MATTER TO THE ASSESSING OFFICER TO REA DJUDICATE THE ISSUE AFRESH AFTER CONFRONTING THE STATEMENT OF MR. MUKESH CHOKSI TO THE ASSESSEE AND ALSO TO ALLOW HIM TO CROSS-EXAMINE MR. MUKESH CHOKSI IN ORDER TO DIG OUT THE TRUTH IN THIS REGARD. COPY OF THE ORDER OF THE TRIB UNAL IS PLACED ON RECORD. 3. HAVING EXAMINED CAREFULLY THE ORDER OF THE CIT(A ) AND THE ORDER OF THE TRIBUNAL, WE FIND THAT IMPUGNED ISSUE WAS ALREADY EXAMINED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2008-09 AND THE TRIBUNAL HAS RESTORED THE MATTER TO THE AO ITA NO. 557/BANG/2017 PAGE 6 OF 7 FOR READJUDICATING THE ISSUE AFRESH AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FOLLOWI NG THE EARLIER ORDER OF THE TRIBUNAL, WE SET ASIDE THE ORD ER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO CONFRONT THE STATEMENT OF MR. MUKESH C HOKSI TO ASSESSEE AND ALSO ALLOW HIM TO CROSS-EXAMINE MR. MU KESH CHOKSI IF THE ASSESSEE SEEKS CROSS-EXAMINATION AND THEREAFTER ADJUDICATE THE ISSUE AFRESH IN ACCORDANC E WITH LAW. 7. SINCE NO DIFFERENCE IN FACTS COULD BE POINTED OUT B Y THE LD. DR OF REVENUE IN THE PRESENT CASE AND THESE TWO CASES, BY FOLLOWING THESE TWO TRIBUNAL ORDERS, I SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MAT TER BACK TO THE FILE OF AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE TRIBUNAL IN THESE TWO CASES AND ALSO BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S CHANDRA DEVI KOTHARI IN WRIT PETITION NO. 39370 /2014 DATED 02.02.2015 WHICH WAS FOLLOWED BY THE TRIBUNAL IN THE CASE OF S HRI MUKESH KUMAR SOLANKI VS. ITO (SUPRA). IN VIEW OF THIS DECISION, NO ADJUDICATION REGARDING THE MERIT IS CALLED FOR AT THIS STAGE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2017. SD/- (A.K. GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2017. / MS/ ITA NO. 557/BANG/2017 PAGE 7 OF 7 COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.