ASHWIN C. VISARIYA, MUMBAI V. ITO HQ, CIB, PUNE

ITA 571/MUM/2009

• Counselvise Citation: 57119914 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: SHIVARAM
• Keywords: Unexplained investment; Reasonable cause
• Section: 144; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A , MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH(A.M ) ITA NO.571/MUM/2009 (ASSESSMENT YEAR: 2005-06) SHRI ASHWIN C. VISARIYA, 11, VINAY, GOGRASWADI, PATHRKALI ROAD,, DOMBIVLI (E). V/S INCOME TAX OFFICER (HQ) (CIB), PUNE. APPELLANT RESPONDENT DATE OF HEARING : 3-11-2011 DATE OF PRONOUNCEMENT : 16-11-2011 APPELLANT BY : SHRI SHIVA RAM RESPONDENT BY : SHRI P.K.B. M ENON O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13.10.2008 PASSED BY THE LD . CIT(A) FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A S PER THE INFORMATION RECEIVED FROM THE TRANSACTION REPORTED IN ANNUAL INFORMATION REPORT (AIR) FURNISHED U/S 285BA OF THE INCOME TAX ACT, 1961 (THE ACT) THE AO NOTED THAT THE ASSES SEE HAS MADE DEPOSITS OF RS. 35,08,200/- IN CASH IN HIS SA VINGS BANK ACCOUNT DURING THE FY 2004-05 RELEVANT TO AY 2005-06. ITA NO.571/M/2009 AY 2005-06 2 STATUTORY NOTICES U/S 142(1) WERE ISSUED BY THE AO AND THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DE POSITS, DETAILS OF BANK ACCOUNTS ALONG WITH PASS BOOKS AND STATEMENT OF ASSETS/LIABILITIES AS ON 31.3.2005. I N THE ABSENCE OF ANY COMPLIANCE BY THE ASSESSEE, THE AO T REATED THE CASH DEPOSIT OF RS. 35,08,200/- AS UNEXPLAINED INVESTMENT AND BROUGHT THE SAME TO TAX AS ASSESSEE S INCOME, VIDE ORDER DATED 26.12.2007 PASSED U/S 144 OF THE ACT. ON APPEAL BEFORE THE LD. CIT (A), THE ASSESSE E FILED HIS RETURN SUBMISSIONS INTER ALIA STATING THAT THE ASSE SSEE IS A CLOTH MERCHANT AND THE DEPOSITS IN THE BANK ACCOUNT ARE OUT OF THE CASH SALES OF CLOTH MATERIAL MADE BY THE AS SESSEE. IN SUPPORT, THE ASSESSEE ALSO FILED COPY OF THE RETURN FOR AY 2005-06 WITH THE COMPUTATION OF INCOME, P&L ACC OUNT, CAPITAL ACCOUNT AND BALANCE SHEET. THE LD. CIT (A) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS HELD THAT TH E APPELLANT HAS FAILED TO CORRELATE DAY TO DAY CASH S ALES AND CASH DEPOSITS MADE IN HIS SAVINGS BANK ACCOUNT AND HENCE HE CONFIRMED THE ADDITION MADE BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUND, VALIDITY OF THE ASSESSMENT ORDER PASSED BY THE AO, SUSTENANCE OF ADDITION OF RS. 35,08,200/- BY THE L D. CIT (A) AND LEVY OF PENAL INTEREST. BESIDE THIS, THE ASSESSEE HAS ITA NO.571/M/2009 AY 2005-06 3 ALSO FILED ADDITIONAL GROUND CONTENDING THAT THE LD . CIT (A) ERRED IN NOT DECIDING THE ISSUE THAT NO PROPER OPPO RTUNITY OF BEING HEARD WAS PROVIDED TO THE ASSESSEE. WHEN THE APPELLANT WAS PREVENTED BY REASONABLE CAUSES,THEREF ORE, THE EX PARTE ORDER PASSED BY THE AO BE QUASHED. IN SUPP ORT OF THE ADDITIONAL GROUND, THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT DATED 1.11.2011, INTER ALIA, STATED THAT ON OATH TH E REASONS FOR ADMISSION ADDITION GROUNDS OF APPEAL. 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE IS ASSESSED TO TAX AT KALYAN SINCE 1995. THE RETURN WAS ALSO FILED AT KAL YAN. HOWEVER, NOTICE U/S. 142(1) WAS ISSUED FROM ITO, PU NE, WHO HAS NO JURISDICTION ON THE ASSESSEE. HE FURTHER SUB MITS THAT THE ASSESSEE HAD PURCHASED CLOTH MATERIALS OF RS.19,73,000/- IN ASSESSMENT YEAR 2004-05. THE AO H AS ACCEPTED THE SAME. THE ASSESSEE HAS FILED DETAILS W ITH NAME AND ADDRESS OF THE PARTIES FROM WHOM THE GOODS WAS PURCHASED. THE GOODS WAS SOLD IN THE IMPUGNED ASSES SMENT YEAR 2005-06 AND THE CASH RECEIPTS WERE DEPOSITED I N THE BANK ACCOUNT. FURTHER, THE ASSESSEE WAS HAVING CASH BALANCE OF RS.8,97,184/- IN THE EARLIER YEAR. THE A SSESSEE HAS ALSO FILED FUND FLOW STATEMENT BEFORE THE LD. C IT(A). THE AO AND LD. CIT(A) HAVE NOT DOUBTED THE PURCHASES, THEREFORE, SALES CANNOT BE DOUBTED. HE FURTHER SUBM ITS THAT ITA NO.571/M/2009 AY 2005-06 4 LD. CIT (A) HAS NOT DECIDED THE ASSESSEES GROUND T HAT THE AO HAS PASSED THE ORDER WITHOUT GIVING PROPER OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE, THEREFORE, IN THE INTE REST OF JUSTICE AND KEEPING IN VIEW THAT THE AO HAS PASSED THE EX PARTE ORDER, THE MATTER MAY BE SET ASIDE TO THE FIL E OF THE AO. 5. ON THE OTHER HAND, THE LD. D.R., WHILE RELYING O N THE ORDERS OF THE AO AND LD. CIT(A), SUBMITS THAT HE HA S NO OBJECTION IF THE MATTER IS SET ASIDE TO THE FILE OF THE AO. 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECO RD, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS MADE NO COMPLIANCE BEFORE THE AO. WE FURTHER FIND THAT BEF ORE THE LD. CIT (A), THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING COMPUTATION OF INCOME, COPY OF P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET. THE LD. CIT (A) WITHOUT CALLING FOR THE REMAND REPORT FROM THE AO, IN TERMS OF RULE 46A OF THE INCOME TAX RULES, 1962, CONSIDERED THE SAID NEW EV IDENCE AND CONFIRMED THE ADDITION MADE BY THE AO. THUS, T HE LD. CIT (A) HAS VIOLATED THE PROVISIONS OF RULE 46A. T HIS BEING SO AND IN THE ABSENCE OF ANY DIRECTION BY THE LD. C IT (A) TO PRODUCE THE RELEVANT DOCUMENTS AND ALSO KEEPING IN VIEW THAT THE AO HAS PASSED EX PARTE ORDER, WE, IN THE I NTEREST OF JUSTICE, CONSIDER IT FAIR AND REASONABLE THAT THE M ATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SE T ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND SEND B ACK THE ITA NO.571/M/2009 AY 2005-06 5 MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFR ESH AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS INCLUDING THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE ARE, THERE FORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16TH NOVEMBER 2011. SD/- SD/- (RAJENDRA SINGH) (D.K .AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16TH NOV., 2011 OKK: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.571/M/2009 AY 2005-06 6 ITA NO.571/M/2009 AY 2005-06 7 DATE INITIALS 1. DRAFT DICTATED ON 3-11-2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 4-11-2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER