DEEPIKA A.MEHTA, MUMBAI V. DCIT CC 23, MUMBAI

ITA 6164/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3119 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-04-2015
• Assessment Year: 1992-1993
• Appeal Filed On: 08-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Unexplained investment; Rectification of order; Search and seizure; Opportunity of being heard; Principle of natural justice; Cost of acquisition
• Section: 234B; 132; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO 1889/MUM/2012 ASSESSMENT YEAR: 1992-93 & ITA NO 6164/MUM/2012 ASSESSMENT YEAR: 1992-93 SMT. DEEPIKA A. MEHTA . 32, MADHULI, DR. A.B.ROAD, WORLI, MUMBAI- 400018. PAN:- ABNPM8231D VS. THE DCIT, CENTRAL CIRCLE - 23 , 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. DHARMESH SHAH RESPONDENT BY : SHRI. DR. P. DANIEL. DATE OF HEARING: 17 /0 6 /2016 DATE OF PRONOUNCEMENT: 15/09/20 16 O R D E R PER RAM LAL NEGI, JM THE ASSESSEE HAS FILED ITA NO. 1889/M/2012 FOR THE ASST. YEAR 1992-93 AGAINST ORDER DATED 20/01/2012 PASSED BY THE LD. CI T(APPEALS)-40 MUMBAI WHEREBY THE LD. CIT(A) PARTLY ALLOWED THE ASSESSME NT ORDER PASSED BY THE DCIT, CENTRAL CIRCLE 23, MUMBAI PASSED U/S 144 R.W SECTION 254 OF THE INCOME TAX ACT,1961( IN SHORT THE ACT) AND ITA NO. 6164/ M/2012 FOR THE ASST. YEAR 1992-93 AGAINST ORDER 9.8.2012 PASSED BY THE CIT(A) -40, MUMBAI, U/S 154 OF THE ACT. SINCE BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE FOR THE SAME ASSESSMENT YEAR, THE SAME WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 ITA 1889/M/2012 FOR A.Y. 1992-93 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT/ ASSESSEE IS THE RELATIVE OF LATE SHRI. HARSHAD S. MEHTA INVOLVED IN THE SECURITIES S CAM. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE PR EMISES OF THE APPELLANT/ASSESSEE ON 27/09/1990. DURING THE COURSE OF SEARCH A LARGE NUMBER OF DOCUMENTS WERE SEIZED. A SECOND SEARCH AN D SEIZURE OPERATION WAS ALSO CARRIED OUT ON 28/02/1992. DURING THE COURSE O F SECOND SEARCH ALSO A LARGE NUMBER OF DOCUMENTS AND VALUABLES WERE SEIZED . SINCE THE APPELLANT/ ASSESSEE HAD NOT FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WITHIN A PRESCRIBED TIME, ASSESSMENT PROCEEDINGS WERE CARRIED OUT PURSUANT TO THE SEARCH ACTION. ULTIMATELY, ASSE SSMENT WAS COMPLETED U/S 144 OF THE ACT ON 28/02/1995 DETERMINING THE TOTAL INCOME AT RS. 27,63,93,984/-. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEF ORE THE LD. CIT(A). THE CIT(A) VIDE ORDER DATED 19/03/2003 GRANTED ONLY PAR TIAL RELIEF TO THE ASSESSEE. FEELING AGGRIEVED BY THE SAID ORDER, THE ASSESSEE F ILED SECOND APPEAL BEFORE THE ITAT. THE ITAT AFTER HEARING THE PARTIES CONSIDERED IT FIT TO SET ASIDE THE MATTER BACK TO THE FILE OF THE AO TO PASS ASSESSMENT ORDER AFRESH. IN COMPLIANCE OF ORDER DATED 31/8/2005 PASSED BY THE ITAT IN ITA NO. 7308/M/2003, THE ASSESSING OFFICER PASSED ASSESSMENT ORDER DATED 22. 12.2006, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 29,53,91,212/-. THE SAID ORDER WAS FURTHER CHALLENGED BY THE ASSESSEE AND THE ORDER UNDER CHAL LENGE HAS BEEN PASSED BY THE LD. CIT(A) IN THE SECOND ROUND OF APPEAL BY THE ASSESSEE. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFE CTIVE GROUNDS:- 3 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE ASSES SING OFFICER HAS NOT COMPLIED WITH THE PRINCIPLES OF NATURAL JUSTICE EITHER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF THE REMAND PROCEEDINGS. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT DETERMINING THE INCOME BASE D ON THE FINAL BOOKS OF ACCOUNT THEREBY CONFIRMING THE MANNER OF D ETERMINATION OF INCOME BY THE ASSESSING OFFICER. THE LEARNED COMMIS SIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE ACCEPTED BOOK RE SULTS SHOWN BY THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE CORRE CT QUANTITY OF PURCHASE AND SALE OF SHARES SHOULD BE ADOPTED WHILE DETERMINING THE INCOME OF THE ASSESSEE. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE WORKING OF UNEXPL AINED INVESTMENTS RELYING ON THE VARIOUS SOURCES OF INFOR MATION. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN GRANTING PARTIAL CREDIT IN RESP ECT OF THE PURCHASES MADE BY THE APPELLANT AND REJECTING THE BALANCE PAR T ON THE GROUND THAT THE EVIDENCES THEREOF WERE NOT FILED DURING TH E ORIGINAL ASSESSMENT PROCEEDINGS BUT ONLY DURING THE SET ASID E PROCEEDINGS. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE DETERMINATION OF UNACCOUNTED INVESTMENT AS PER ANNEXURE A-1 OF THE ASSESSMENT OR DER AMOUNTING TO RS. 24,85,56,416/-ON THE BASIS OF INFORMATION CO LLECTED FROM VARIOUS COMPANIES ALLEGEDLY SHOWING THE SHAREHOLDI NG OF THE APPELLANT WITHOUT APPRECIATING THAT THE COPIES OF T HE SAID LETTERS/INFORMATION WAS NEITHER PROVIDED TO THE APP ELLANT DURING ASSESSMENT PROCEEDINGS NOR DURING REMAND PROCEEDING S. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE VALUE OF THE UNE XPLAINED INVESTMENT BASED ON THE AVERAGE OF THE MARKET RATES AS ON 1.4.1992 4 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 WITHOUT APPRECIATING THAT THE VALUE OF INVESTMENT O UGHT TO HAVE BEEN DETERMINED AT THE COST OF ACQUISITION BASED ON THE DATES OF PURCHASE. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE INCOME FROM DIVI DEND AND INTEREST AT RS.67,41,033/-. 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS. 29,343/-0N ACCOUNT OF UNEXPLAINED RECEIPTS. 10. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS. 2,52,252/-ON ACCOUNT OF PROFIT FROM SUNRISE ENTERPRISE. 11. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF DEDUCTION ON ACCOUNT OF INTEREST EXPENDITURE CLAIMED BY THE APPE LLANT. 12. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING SET OFF OF ADDITIO N ON ACCOUNT OF SOURCE AGAINST THE APPLICATION OF SUCH SOURCE BASED ON TELESCOPING THEORY. 13. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE LEVY OF INTEREST U/S 234A AND 234B OF THE ACT. 14. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE PROVI SIONS OF S.220(2) OF THE ACT CANNOT BE INVOKED IN CASE OF A NOTIFIED ENT ITY. 4. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE GROUNDS RAISED IN THE PRESENT APPEAL ARE IDENTICAL TO THE GROUNDS RAISED IN THE CASE OF HITESH S. MEHTA, ITA NO 538/M/2012 FOR THE ASSESSMENT YEAR 1992-93 DECIDED ON 01.5.2013 BY THE MUMBAI TRIBUNAL. THEREF ORE, THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER PASSED BY THE ITAT MU MBAI IN CASE HITESH S. MEHTA (SUPRA). ON THE OTHER HAND THE LD. DEPARTMENT AL REPRESENTATIVE (DR) 5 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 RELYING ON THE FINDINGS OF THE AUTHORITY BELOW, SUB MITTED THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. LD. CIT(A) . 5. WE NOTICE THAT EXCEPT GROUND NO 8 AND 14 OF THE PRESENT APPEAL, ALL THE GROUNDS ARE IDENTICAL TO THE GROUNDS RAISED BY THE ASSESSEE IN THE CASE OF HITESH S. MEHTA (SUPRA). THE COORDINATE BENCH AFTER HEARING THE RIVAL SUBMISSIONS HAS SET ASIDE THE IMPUGNED ORDER AND RE STORED ALL THE ISSUES TO THE FILE OF THE AO TO PASS ASSESSMENT DE NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, OBSERVI NG AS UNDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE R THEM CAREFULLY. WE HAVE ALSO PERUSED THE COPIES OF THE O RDER OF THE TRIBUNAL IN CASE OF SMT. PRATIMA METHA AND THE ASSE SSMENT PASSED IN FIRST ROUND. 5. AFTER CONSIDERING ALL THE RELEVANT MATERIAL, WE FOUND THAT THE MATTER SHOULD GO BACK TO THE FILE OF ASSESSING OFFI CER TO PASS AFRESH ORDER. IT IS SEEN THAT FOR REJECTING THE BOOKS OF A CCOUNT, THE AO HAS NOT GIVEN ANY VALID REASONS AS NO SPECIFIC DEFECT H AS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT, THEREFORE IN OUR VIEW THE ASSESSING OFFICER SHOULD GO THROUGH THE BOOKS FOR DETERMINING THE INCOME ON THE BASIS OF BOOKS OF ACCOUNTS. THE ASSESSING OFFIC ER HAS TO BRING ON RECORD SPECIFIC EVIDENCE OR DEFECT TO PROVE FALSITY OF BOOKS OF ACCOUNT IS NO FALSITY HAS BEEN PROVED IN THE ASSESSMENT ORD ER PASSED BY THE AO. BESIDES THIS THE DEPARTMENT HAS TO PROVIDE ALL THE DETAILS AND MATERIAL ON WHICH BASIS THE ADDITION HAVE BEEN MADE EARLIER. IF SUCH MATERIAL IS DISPUTED BY THE ASSESSEE THEN IN OUR VI EW CORRECTNESS OF SUCH MATERIAL HAS TO BE EXAMINED AS PER PROVISION O F LAW. WE ARE NOT CONVINCED WITH THE ARGUMENT OF LD. DR THAT ASSE SSEE CAN COLLECT INFORMATION FROM PARTIES FROM WHERE ASSESSING OFFIC ER HAS OBTAINED THE COPIES ON WHICH BASIS THE ADDITION HAVE BEEN MA DE. THEREFORE THE ASSESSING OFFICER IS DIRECTED TO PROVIDE THE CO PIES OF ALL 6 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 INFORMATION ON WHICH BASIS, THE AO WANTED TO MADE A DDITIONS IN THE HANDS OF THE ASSESSEE. IF THE AO DOES NOT PROVIDE T HE MATERIAL THEN IN OUR VIEW ADDITION CANNOT BE MADE. IN VIEW OF ABO VE FACTS AND CIRCUMSTANCES, WE SET ASIDE ORDER OF THE AUTHORITIE S BELOW AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFI CER TO PASS ASSESSMENT DE NOVO AFTER AFFORDING REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE AND AS PER OBSERVATIONS OF HO URS MADE IN THE ORDER IS ABOVE. WE ORDER ACCORDINGLY. 6. SINCE THE COORDINATE BENCH OF THE TRIBUNAL HAS R ESTORED THE IDENTICAL ISSUES TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN THE CASE OF HARSH S. METHA (SUPRA), WE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH, RESTORE ALL THE GROUNDS EXCEPT GROUND NUMBER 8 AND 14 OF THE PRESENT APPEAL TO THE FILE OF AO TO PASS ASSESSMENT ORDER AFRESH A FTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDI NGLY, GROUND NOS. 1 TO7 AND 9 TO 13 OF THE APPEAL ARE ALLOWED FOR STATISTICAL P URPOSE. 7. AS REGARDS GROUND NO 8 WE FIND NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE INCOME FROM DIVIDEND AND INTEREST AT RS. 6 7410 33/. AS POINTED OUT BY THE LD. CIT(A) THE APPELLANT/ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER IN SET-ASIDE PROCEEDIN GS AND THE AO AFTER GOING THROUGH THE SAME IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE DETERMINED THE DIVIDEND AND INTEREST INCOME IN QUESTION. HOWEVER, NO EVIDENCE TO REBUT THE FINDINGS OF THE AO WAS PRODUCED EITHER BEFORE THE L D. CIT(A) OR BEFORE US. THEREFORE, WE HAVE NO REASON TO REVERSE THE FINDING OF THE CIT(A). HENCE WE UPHOLD THE FINDINGS OF LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 7 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 8. SO FAR AS GROUND NUMBER 14 IS CONCERNED SINCE AL L THE GROUNDS EXCEPT GROUND NO. 8 ARE BEING SET ASIDE TO THE FILE OF AO FOR FRESH ADJUDICATION, THE AO MAY EXAMINE THE SAME IN ACCORDANCE WITH LAW IN THE SET ASIDE PROCEEDINGS. ITA 6164/M/2012 FOR A.Y. 1992-93 THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 09.8.2012 PASSED BY THE CIT(A)-40 MUMBAI WHEREBY THE LD. CIT( A) REJECTING THE OBJECTION RAISED BY THE ASSESSEE, DIRECTED THE AO TO ENHANCE THE INCOME OF THE ASSESSEE BY RS. 42,49,266/- FOR THE REASON THAT M/S VYAS & V YAS, C.A., APPOINTED BY THE SPECIAL COURT TO AUDIT THE BOOKS OF ACCOUNT AS ON 08.6.92 IN THE CASE OF HARSHAD S. MEHTA AND OTHER NOTIFIED ENTITIES INCLUD ING THE PRESENT APPELLANT/ASSESSEE, HAS POINTED OUT THE DIFFERENCE BETWEEN THE BALANCE OF PARTIES IN BOOKS OF ACCOUNT OF LATE HARSHAD S. MEHT A AND THE BOOKS OF ACCOUNT OF THE RESPECTIVE NOTIFIED ENTITIES. 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER O N THE FOLLOWING EFFECTIVE GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN MAKING THE ADDITION OF RS. 42,4 9,266/- AND THEREBY ENHANCING THE ASSESSMENT VIDE THE IMPUGNED ORDER U/S 154 OF THE ACT WHICH IS UNSUSTAINABLE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN DETERMINING THE ALLEGED DIFFERE NCE BETWEEN THE TWO ACCOUNTS AT RS. 42,49,266/- AND TREATING THE SA ME AS INCOME OF THE APPELLANT. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE PRESENT CASE IS IDENTICAL TO THE ISSUE RAISED IN CA SE OF THE APPELLANTS MOTHER- IN-LAW, SMT. RASILA S. MEHTA IN ITA NO 3352/MUM/201 2 DATED 07.6.2013 FOR 8 ITA NO 1889, & 6164/MUM/2012 ASSESSMENT YEAR: 1992 -93 THE A. Y. 1992-93 AND THE MUMBAI TRIBUNAL HAS REMAN DED THE IDENTICAL ISSUE TO THE RECORD OF AO FOR CONSIDERATION AND ADJUDICAT ION. 4. IN VIEW OF THE FACT THAT THE COORDINATE BENCH HA S REMANDED BACK THE IDENTICAL ISSUE TO THE FILE OF THE AO FOR FRESH ADJ UDICATION, WE FOLLOW THE VIEW TAKEN BY THE COORDINATE BENCH IN THE CASE OF SMT. R ASILA S. MEHTA (SUPRA) AND SET ASIDE THE ISSUE URGED IN THE PRESENT APPEAL AGA INST RECTIFICATION ORDER PASSED BY THE LD. CIT(A) TO THE FILE OF AO FOR CONS IDERATION AND FRESH ADJUDICATION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT, THE FIRST APPEAL IS PARTLY ALLOWED A ND THE SECOND APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPT.,2016 SD/- SD/- (B.R.BASKARAN) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 15/09/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA