Mr. Ramratan Soni, Pune V. Addl. CIT,Range-2, Pune

ITA 623/PUN/2008

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9883 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH; VINITA MENON
• Keywords: Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Documents seized; Bonafide mistake

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.623/PN/2008 (ASSESSMENT YEAR 2004-05) RAMRATAN BADRINARAYAN SONI, FLAT NO.2, BEHIND SHREE GAJANAN KRIPA BUNGALOW, 63, MUKUNDNAGAR, PUNE 411 037. PAN NO. APOPS 6714E .. APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL RANGE-2, PUNE. .. RESPONDENT ASSESSEE BY : SRI SUNIL GANOO DEPARTMENT BY : SRI S.K. SINGH & SMT. VINITA MEN ON DATE OF HEARING : 19-10-2012 DATE OF PRONOUNCEMENT : 31-10-2012 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 13-02- 2008 OF THE CIT(A)-I, PUNE RELATING TO ASSESSMENT Y EAR 2004-05. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN ADVOCATE PRACTISING IN THE LOCAL CIVIL/CRIMINAL COURTS OF PUNE. A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT WAS CARRIED OUT FROM 29-07-2003 ONW ARDS AT THE RESIDENTIAL AND OFFICE PREMISES OF THE ASSESSEE. CERTAIN INCRIMINA TING DOCUMENTS WERE FOUND AND SEIZED. THE STATEMENT OF THE ASSESSEE WAS ALSO REC ORDED U/S.132(4) OF THE INCOME TAX ACT DURING THE COURSE OF SEARCH PROCEEDINGS FRO M 29-07-2003 TO 31-07-2003 WHEREIN ASSESSEE HAD DENIED TO HAVE BORROWED ANY AM OUNT AND PAYING OF INTEREST EXCEPT FROM UNITED WESTERN BANK FOR HIS HOUSING LOA N. THE ASSESSEE IN HIS REPLY TO QUERY NO.15 REGARDING CASH LOAN FROM MONEY LENDE RS HAD STATED THAT HE HAD NOT RECEIVED CASH LOAN FROM ANY MONEY LENDER. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT 4 BLANK UNDATED SIGNE D CHEQUES OF RS.1,00,000/- EACH DRAWN ON MAHESH SHAKARI BANK LTD. S.B. A/C NO. 5202 BELONGING TO THE 2 ASSESSEE AND 4 PROMISSORY NOTES IN MARATHI MENTION ING AMOUNT OF RS.1,00,000/- EACH WERE FOUND WHICH WERE CONFRONTED TO THE ASSESS EE DURING HIS STATEMENT U/S.132(4). IT WAS SUBMITTED BY THE ASSESSEE THAT HE DID APPROACH SHRI SHRIRAM H.SONI, HIS COUSIN BROTHER, FOR LOAN IN 2001 BUT HE DECLINED TO OBLIGE. THE AO ALSO CONFRONTED THE ASSESSEE TO EXPLAIN PAGE NO.21 OF BU NDLE NO.6 WHICH IS A RECORD SLIP OF THE CHEQUE BOOK CONSISTING OF DETAILS OF CH EQUE NOS, AMOUNT AND THE NAME OF THE DRAWEES NAME MENTIONING CHEQUES ISSUED IN F AVOUR OF SHRI S.H. SONI FOR RS.1,000/-. THESE ENTRIES ARE IN PENCIL WHEREAS ENT RIES ARE MENTIONED AT RS.1,00,000/- ON EACH CHEQUE. IN RESPONSE TO THE S AME THE ASSESSEE HAD EXPLAINED AS UNDER WHICH HAS BEEN REPRODUCED BY THE AO AT PAR A 1.4 OF THE ORDER : AS THE ISSUANCE OF CHEQUE IN THE NAME OF A PARTICU LAR PERSON WAS NOT KNOWN TO ME, (AND) THEREFORE THE NAME AND DATE IS BLANK. HOWEVE R, AS I WAS WILLING TO REPAY THE AMOUNT, IF PROVIDED BY COUSIN BROTHER IN INSTALMENT S OF RS.1,00,000/- EACH AND THEREFORE ACCORDINGLY THE CHEQUE AMOUNT WAS WRITTEN. (AS) THE NAME OF THE DRAWEE WAS NOT KNOWN TO ME. HOWEVER, FOR WHOM THE SAID CHEQUES WERE PRE PARED, AND TO KNOW ABOUT THE SAME, THE NAME OF MY COUSIN BROTHER IN SHORT SHS WAS WR ITTEN ON THE CHEQUE RECORD SLIP. THERE WAS NO BAD INTENTION TO FILL UP THE SAID RECO RD SLIP IN PENCIL. I DO NOT KNOW THE NAME (SO) IT WAS NOT WRITTEN IN THE CHEQUE RECORD S LIP. THE AMOUNT OF CHEQUE MENTIONED AS RS.1,000/- (ONE THOUSAND) IN THE CHEQUE RECORD S LIP IS A BONAFIDE MISTAKE COMMITTED BY ME, INADVERTENTLY, BUT THE SAME IS WITHOUT ANY B AD INTENTION OR MOTIVE. AS THE SAID CHEQUES WERE NOT ISSUED TO ANYBODY THEY ARE WITH ME AND THE SAID FACT IS SELF EXPLANATORY. 3. THE AO NOTED FROM THE REPLIES GIVEN BY THE ASSES SEE DURING THE COURSE OF SEARCH PROCEEDINGS THAT HE DENIED TO HAVE OBTAINED ANY CASH LOAN. HOWEVER, HE NOTED THAT SUBSEQUENTLY INCRIMINATING DOCUMENTS, LO OSE PAPERS ETC. CONTAINING ACCOUNTS OF CASH LOANS RUNNING INTO SEVERAL CRORES OF RUPEES WERE DISCOVERED AND SEIZED FROM SHRIRAM H. SOHNI VIDE PANCHANAMA DATE D 3-08-2003. THE AO THEREFORE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS GOT RECORD OF THE CHEQUES ISSUED TO SHRIRAM H.SONI AS SHS AND IN THE MULTIPLE OF RS.100, I.E. ALL THE CHEQUES ISSUED FOR RS.1,00,000/- HE HAS RECORDED RS.1,000/ -. HE NOTED THAT SIMILAR ENTRIES HAVE BEEN FOUND AT PAGE 27 OF BUNDLE NO.6. THE AO ALLOWED THE ASSESSEE FOR INSPECTION OF THE DOCUMENTS SEIZED FROM HIS POSSESS ION. THE ASSESSEE VEHEMENTLY ARGUED BEFORE THE AO THAT HE HAD NO CASH TRANSACTIO NS WITH SHS AS ALLEGED. 3 HOWEVER, THE AO WAS NOT CONVINCED WITH THE EXPLANAT ION GIVEN BY THE ASSESSEE. THE AO CONFRONTED THAT THE PRONOTES ATTACHED WITH T HE BLANK CHEQUES WERE APPARENTLY PREPARED BY SHRI S.W. RATNAKAR, ACCOUNTA NT OF SHRI SHRIRAM H. SONI, WHO IS ENGAGED IN MONEY LENDING BUSINESS IN THE COU RSE OF CASH LOAN TRANSACTIONS. A LARGE NUMBER OF SUCH BLANK AND UNDATED CHEQUES AN D PROMISSORY NOTES SIGNED BY THE BORROWERS HAVE BEEN FOUND AND SEIZED IN THE CAS E OF SHRIRAM H. SONI. THE AO THEREFORE OFFERED AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SHRI S.W.RATNAKAR AND SHRIRAM H. SONI WHICH WAS DECLINED BY THE ASSESSEE. THE AO ANALYSED THE VARIOUS ENTRIES FOUND IN THE SEIZED DOCUMENTS IN THE CASE O F THE ASSESSEE VIS-A-VIS SHRIRAM H. SONI AND CAME TO THE CONCLUSION THAT THE ASSESSE E, FOR THE IMPUGNED ASSESSMENT YEAR, HAS REPAID AN AMOUNT OF RS.3 LAKHS TO SHRIRAM H. SONI ON 09-05-2003 AND THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THE SAME. HE THEREFORE MADE ADDITION OF RS.3 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. 4. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT TH E ADDITION HAS BEEN MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS TAKEN CA SH LOAN FROM SHRIRAM H. SONI AND REPAID THE SAID AMOUNT WITH INTEREST OUT OF UND ISCLOSED INCOME. THIS ASSUMPTION WAS BASED ON THE ALLEGED FINDING OF THE AO THAT DURING THE COURSE OF SEARCH BLANK CHEQUES OF RS. 4 LAKHS (4 CHEQUES OF R S. 1 LAKH EACH) WERE FOUND WITH THE ASSESSEE WITH BLANK PROMISSORY NOTES DATED 29-0 5-2001 ETC. AND FOR CORRESPONDING TRANSACTIONS ON SIMILAR QUANTUM RECOR DED IN CODED FIGURES WERE FOUND IN THE SEARCH OF SHRIRAM H. SONI. IT WAS SUB MITTED THAT RIGHT FROM BEGINNING IN THE STATEMENT RECORDED U/S.132(4) THE ASSESSEE W AS DENYING THE ALLEGATION. HOWEVER, THE AO HAD NOT ACCEPTED THE STATEMENTS MAD E BY THE ASSESSEE. IT WAS SUBMITTED THAT NO CORRESPONDING DOCUMENTS OF WHATSO EVER NATURE WERE FOUND WITH THE ASSESSEE DURING THE COURSE OF SEARCH IN HIS HO USE OR AT HIS OFFICE FOR THE ADDITION MADE BY THE AO. IT WAS SUBMITTED THAT THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF PRESUMPTIONS AND SURMISES ON THE GROUND THAT THE ASSESSEE 4 HAD RETURNED RS. 3 LAKHS TO SHRIRAM H. SONI. IT WAS SUBMITTED THAT THE AO HIMSELF HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE CHEQ UES FOUND WITH THE ASSESSEE WERE TORNED ON THE SIGNATURE PORTION. IT WAS SUBMI TTED THAT THE ASSESSEE HAD TORNED THE SIGNATURE PART SINCE NO CASH WAS TRANSACTED NOR ANY REPAYMENT MADE DURING THE A.Y. 2004-05. 5. AS REGARDS THE ISSUE RELATING TO OPPORTUNITY OF CROSS EXAMINATION OF SHRI S.W. RATNAKAR AND MR. SHRIRAM H. SONI THE ASSESSEE SUBMITTED THAT THE AO HAD ONLY GAVE OPPORTUNITY TO EXAMINE THE SAID TWO PERSO NS AND NOT TO CROSS EXAMINE. SINCE THERE IS A DIFFERENCE BETWEEN EXAMINATION AND CROSS EXAMINATION, THEREFORE, THE ASSESSEE BEING AN ADVOCATE WAS AWARE OF THE DIF FERENCE BETWEEN EXAMINATION AND CROSS EXAMINATION AND THEREFORE, DID NOT AVAIL OF OPPORTUNITY TO EXAMINE THE PERSONS. IT WAS SUBMITTED THAT THE ASSESSEE WAS VE RY MUCH INTERESTED TO CROSS EXAMINE THE SAID TWO INDIVIDUALS BEFORE FURTHER CON CLUSIONS COULD BE DRAWN. IT WAS SUBMITTED THAT SINCE NO CORRESPONDING ENTRY OR CORROBORATIVE EVIDENCE WERE FOUND TOWARDS THE ALLEGED REPAYMENT OF THE CASH LOA N AND SINCE NO OPPORTUNITY FOR CROSS EXAMINATION WAS GIVEN, THEREFORE, THE ADDITIO N MADE BY THE AO SHOULD BE DELETED. 6. HOWEVER, THE LEARNED CIT(A) WAS NOT CONVINCED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AO BY HOLDING AS UNDER : 2.8 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED MATERIAL ON RECORD. AS REGARDS THE CLAIM OF THE APPELLANT T HAT APPELLANT HAS NOT BEEN GIVEN OPPORTUNITY TO CROSS EXAMINE, IT MAY BE MENTIONED T HAT THE APPELLANT HAD FILED A PHOTOCOPY OF THE ORDER SHEET ENTRY DATED 06-03-2007 . THIS ORDER SHEET ENTRY IS REPRODUCED AS UNDER : SHRI R.B. SONI IS OFFERED OPPORTUNITY TO EXAMINE SH RI S.W. RATNAKAR OR SHRI SHREERAM H. SONI, WHICH IS DECLINED. FROM THE ABOVE, IT IS CLEAR THAT THE APPELLANT HAS BEEN GIVEN AN OPPORTUNITY OF EXAMINING SHRI S.W. RATNAKAR AND SHRI SHRIRAM SONI. THE SUBM ISSION OF THE APPELLANT THAT NO CROSS EXAMINATION WAS OFFERED AMOUNTS TO PLAYING WITH WOR DS. INFACT FROM THE ORDERSHEET ENTRY IT IS CLEAR THAT THE APPELLANT WAS OFFERED THIS OPP ORTUNITY WHICH HAD NOT BEEN AVAILED. IN VIEW OF THIS THE APPELLANTS OBJECTION IN THIS REGA RD HAS NO BASIS IN FACT AND IS HELD TO HAVE NO MERIT. 5 2.9 IT IS TRITE LAW THAT PRESUMPTION AS CONTAINED U /S.132(4A) WHICH OF COURSE IS A REBUTTABLE PRESUMPTION IS AVAILABLE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. ON GIVEN FACTS, IT IS HELD THAT THE APPELLANT HAS FAIL ED TO REBUT THE PRESUMPTIONS AS CONTAINED U/S.132(4A) IN RESPECT OF CORRECTNESS OF SEIZED MAT ERIAL FOUND FROM THE PREMISES OF THE APPELLANT AND SHRI SHRIRAM SONI AND THE CO-RELATION BETWEEN THE TWO SEIZED MATERIALS AS IS CLEARLY BROUGHT OUT IN THE ASSESSMENT ORDER BY T HE ASSESSING OFFICER WHERE THERE IS DETAILED DISCUSSION IN RESPECT OF SEIZED MATERIAL F OUND FROM THE PREMISES OF THE APPELLANT AND SHRI SHRIRAM SONI, BY ADDUCING RELEVANT, RELIAB LE AND COGENT MATERIAL WHICH IS REQUIRED FOR REBUTTING THE PRESUMPTIONS U/S.132(4A) . IN VIEW OF THIS AND FOR THE REASONS GIVEN IN THE ASSESSMENT ORDER, IT IS HELD THAT THE CONCLUSION OF THE ASSESSING OFFICER FOR MAKING ADDITION OF 3,00,000/- AS GIVEN IN PARA 8.2 AND FOR REASONS GIVEN IN THE ASSESSMENT ORDER IS JUSTIFIED ON FACTS AND IN ACCOR DANCE WITH LAW AND DOES NOT REQUIRE INTERFERENCE. ACCORDINGLY, ADDITION MADE BY THE AS SESSING OFFICER VIDE PARA 8.2 OF THE ASSESSMENT ORDER AT RS.3,00,000/- IS HEREBY UPHELD. 6.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A)-I, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.3,00,000/- AS UNDISCLOSED INCOME AS MADE BY THE LEARNED AO WHILE PASSING THE ASSESSMENT ORDER U/S.153A(B) OF THE I.T. ACT, 1961. 2. THE LEARNED CIT(A)-I, PUNE ERRED IN HOLDING THAT , AN OPPORTUNITY OF CROSS EXAMINING SHRI S.W. RATNAKAR AND MR. SHRIRAM SONI W AS GIVEN TO THE ASSESSEE BY THE AO. THE ATTENDANCE SHEET/ORDER SHEET SPECIFICALLY DISCLOSES THAT AN OFFER TO EXAMINE THE AFORESAID TWO NAMED PERSONS WAS GIVEN TO THE APPELL ANT-ASSESSEE BY THE LEARNED AO AND NOT THE OPPORTUNITY OF CROSS EXAMINATION, BECAUSE O N NONE OF THE DATES, THE AFORESAID NAMED TWO PERSONS WERE PRESENT, WHEN THE HEARING BE FORE THE LEARNED AO TOOK PLACE. 3. THE ORDER OF THE LEARNED AO AND LEARNED CIT(A)-I , PUNE IS TOTALLY BASED ON ASSUMPTION AND PRESUMPTION AND THERE IS ABSOLUTELY NO EVIDENCE FOUND AGAINST THE APPELLANT. 4. THE LEARNED AO AND LEARNED CIT(A)-I, PUNE ERRED IN NOT CONSIDERING THE FINANCIAL POSITION OF THE APPELLANT WHICH IS REVEALED FROM TH E SEIZURE PANCHANAMA AND THE COPIES OF THE BALANCE SHEET FILED ON RECORD EVERY YEAR BY THE ASSESSEE-APPELLANT. 5. THE LEARNED AO HAS NOT GIVEN THE PROPER OPPORTUN ITY OF HEARING TO THE APPELLANT AND THE HURRIEDLY RESULTED IN MISCARRIAGE OF JUSTIC E AND VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 6. THE LEARNED AO AND LEARNED CIT(A)-I, PUNE FAILED TO TAKE INTO CONSIDERATION THE EXPLANATION GIVEN BY THE ASSESSEE AND ALSO IGNORED THE REPORTED RULING GIVEN BY THE APPELLANT IN CASE DECIDED BY ITAT, PUNE ITA NO.562/ PN/2000. 7. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND IN THE IN STANT CASE ADDITION OF RS. 3 LAKHS TOWARDS REPAYMENT OF LOAN HAS BEEN MADE ON TH E BASIS OF CERTAIN ENTRIES FOUND IN THE SEIZED DOCUMENTS FROM THE PREMISES OF SHRI SHRIRAM H. SONI. ALTHOUGH THE ASSESSEE DENIED TO HAVE MADE SUCH CASH REPAYMENT THE AO MADE THE ADDITION IN VIEW OF THE EVIDENCES FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AS WELL AS SHRI SHRIRAM H. SONI. IT IS THE CONTENTION OF THE 6 LEARNED COUNSEL FOR THE ASSESSEE THAT NO OPPORTUNIT Y FOR CROSS EXAMINATION WAS GIVEN AND ONLY OPPORTUNITY TO EXAMINE SHRI S.W. RAT NAKAR AND MR. SHRIRAM H. SONI WAS GRANTED. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE SINCE THERE IS WIDE DIFFERENCE BETWEEN EXAMINATION AND CROSS EXAMI NATION, THEREFORE, THE ASSESSEE BEING AN ADVOCATE DID NOT AVAIL OF THE OPP ORTUNITY TO EXAMINE THE WITNESSES. HOWEVER, HE WAS VERY MUCH INTERESTED TO CROSS EXAMINE THE PERSONS BEFORE FINALISATION OF THE ASSESSMENT. SINCE IN TH E INSTANT CASE WE FIND THE AO HAD GIVEN OPPORTUNITY TO EXAMINE THE WITNESSES AND NOT TO CROSS EXAMINE, THEREFORE, WE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO R ESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI S.W. RATNAKAR AND MR. SHRIRAM H. SONI AND DECIDE TH E ISSUE AFRESH AND IN ACCORDANCE WITH LAW. 8. AT THE TIME OF HEARING THE ASSESSEE HIMSELF WAS ALSO PRESENT AND MADE TWO FOLD REQUESTS, I.E. (A) THE HEARING OF THE CASE SHO ULD BE PREFERABLY KEPT AFTER 2PM SINCE HE IS A BUSY PRACTITIONER BEFORE THE CRIMINAL COURTS AND HIS CLIENTS SHOULD NOT SUFFER DUE TO HIS ABSENCE AND (B) IN CASE SHRI SHRI RAM H. SONI IS UNABLE TO COME TO OFFICE BECAUSE OF HIS OLD AGE AND ILL HEALTH THE AO MAY APPOINT LOCAL COMMISSION FOR RECORDING THE STATEMENT OF SHRIRAM H. SONI AS P ER LAW. WE ACCEPT THE ABOVE PLEA OF THE ASSESSEE AND DIRECT THE AO TO FIX THE H EARING OF THE APPEAL ACCORDING TO CONVENIENCE OF THE AO AS WELL AS THE ASSESSEE. THE AO MAY ALSO CONSIDER THE REQUEST OF THE ASSESSEE TO APPOINT LOCAL COMMISSION FOR RECORDING THE STATEMENT OF SHRIRAM H. SONI IN CASE HE IS UNABLE TO COME TO OFF ICE BECAUSE OF HIS OLD AGE AND ILL HEALTH. WE HOLD AND DIRECT ACCORDINGLY. THE GR OUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF OCTOBER 2012 SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: THE 31 ST OCTOBER 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4. THE D.R, B PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE