ITO, Wd. 2(3), Pune V. Shri Jaykumar U. Pokarna, Pune

ITA 627/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9891 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Keywords: Unexplained expenditure
• Section: 153A

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 549/PN/2011 (ASSTT.YEAR : 2004-05) SHRI JAYKUMAR UTTAMCHAND POKARNA, FLAT NO.306, SITA APARTMENT, GOOL POONAWAL CHOWK, S.NO.55/6, SALISBURY PARK, PUNE 411 037 PAN NO.ALGPP 0123Q .. APPELLANT VS. INCOME TAX OFFICER, WARD 2(3), PUNE PMT BUILDING, SWARGATE, PUNE. .. RESPONDENT ITA NO. 627/PN/2011 (ASSTT.YEAR : 2004-05) INCOME TAX OFFICER, WARD 2(3), PUNE PMT BUILDING, SWARGATE, PUNE. .. APPLICANT VS. SHRI JAYKUMAR UTTAMCHAND POKARNA, FLAT NO.306, SITA APARTMENT, GOOL POONAWAL CHOWK, S.NO.55/6, SALISBURY PARK, PUNE 411 037 PAN NO.ALGPP 0123Q .. RESPONDENT ASSESSEE BY : SRI SUNIL GANOO DEPARTMENT BY : SMT. VINITA MENON DATE OF HEARING : 05-10-2012 DATE OF PRONOUNCEMENT : 10 -10-2012 ORDER PER R.K. PANDA, AM : THESE ARE CROSS APPEALS, THE FIRST ONE FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AGAINST T HE ORDER DATED 24-02-2011 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2004-05 . 2. THE GROUNDS RAISED BY THE ASSESSEE AS WELL AS TH E REVENUE ARE AS UNDER : 2 GROUNDS BY ASSESSEE : 1. ON THE FACTS AND IN THE CIRCUMSTANCES PREVAILIN G OF THE CASE AND AS PER THE PROVISION OF LAW, AND SINCE IMPUGNED ASSESSMENT ORD ER PASSED IS IN VIOLATION OF SECTION 153D OF THE I.T. ACT, 1961 THE SAME IS BAD IN LAW A ND NULL AND VOID AB INITIO AND BEING WITHOUT JURISDICTION THE SAME MAY PLEASE BE VACATED . 2. ON THE FACTS AND IN THE CIRCUMSTANCES PREVAILING IN THE CASE AN AS PER THE PROVISION OF LAW, IT MAY PLEASE BE HELD THAT THE AS SESSMENT ORDER PASSED U/S.153C R.W.S. 153A OF THE I.T. ACT, BY THE ASSESSING OFFICER AND CONFIRMED AND HELD VALID BY THE CIT(A), INVOKING PROVISION OF SECTION 292B OF THE I.T. ACT, IS BAD IN LAW AND VOID AB INITIO AND BE DECLARED NULL AND VOID. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE NOTICE U/S.153C STATED TO BE SERVED ON THE APPELLANT IS NOT CORRECT, AS IT IS NO T RECEIVED BY THE APPELLANT OR HIS ANY FAMILY MEMBERS AS ALLEGED AS PER THE POSTAL ACKNOWL EDGEMENT ON RECORD. THUS, NOTICE U/S.153C IS NOT VALIDLY SERVED UPON THE APPELLANT. THIS NOTICE IS NOT LEGALLY VALID AND THUS ASSESSMENT FRAMED THERE UNDER BE HELD AS NULL AND VOID. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE PROCEEDING INITIATED U/S.153C IS NOT VALID AS NO SATISFACTION OF THE ASS ESSING OFFICER OF THE SEARCHED PERSON HAS BEEN RECORDED. THE CIT(A) ERRED IN HOLDING THA T THE ADDL. CIT CENTRAL R-2, PUNE HAS GIVEN PROPER INTIMATION U/S.153C, WHO WAS ASSES SING OFFICER OF THE SEARCHED PERSON MR. SONI, AS THE SAID INTIMATION CANNOT BE CONSIDER ED AS SATISFACTION AND NOT COMMUNICATED IN THE CAPACITY AS AN ASSESSING OFFICE R BY THE ADDL. CIT CENTRAL R-2, PUNE, DURING THE ASSESSMENT PROCEEDINGS OF MR. SONI , A SEARCHED PERSON. UNDER THE CIRCUMSTANCE, THE ASSESSMENT ORDER PASSED IS WITHOU T JURISDICTION AND THEREFORE BAD IN LAW VOID AB INITIO. 5. ON THE FACTS AND IN THE CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISION OF LAW, THE CIT(A) HAS ERRED IN CONFIRMIN G THE ADDITION OF RS.4,80,000/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF INTEREST A ND BROKERAGES. THEREFORE, IT IS REQUESTED THAT THE ADDITION MADE BY AO AND SUSTAINE D BY CIT(A) MAY PLEASE BE DELETED. GROUNDS BY REVENUE : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.69D OF T HE INCOME TAX ACT, 1961 BY ROUTINELY FOLLOWING THE DECISION OF THE HONBLE ITAT, PUNE BE NCH, IN THE CASE OF HIMALAYA DISTRIBUTORS 125 TTJ 705 (2009), INSTEAD OF CONFIRM ING SUCH ADDITION. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THE CIRCUMSTANCES OF THE CASE IN TOTALIT Y AND ALSO IN FAILING TO APPRECIATE THAT THE EVIDENCES SEIZED AT THE TIME OF THE SEARCH AND RELATING TO THE ASSESSEE HAD ALL THE ATTRIBUTES OF A HUNDI VIZ., 3 PARTIES TO THE TRAN SACTION, NAMELY, THE ASSESSEE BORROWER, THE INVESTOR AND SHRI SHRIRAM SONI, THE BROKER, AND , THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING ADDITION ON ACCOUNT OF BORROWAL BY APPLYING THE PROVISION OF SEC. 69D OF THE INCOME TAX ACT, 1961. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN DELETING THE ADDITION BY MAKING A VERY NARROW INTERPRETATION OF HUNDI WITHIN THE MEANING OF SEC.69D OF THE ACT AND WITHOUT APPRECIATING THAT IN VIEW OF THE RELEVANT PORTION OF THE NEGOTIABLE INSTRUMENT ACT, 1881 THE WORD HUNDI US ED IN SEC.69D REQUIRES TO BE VIEWED/INTERPRETED BROADLY, AND, SO DONE, THE SEIZE D DOCUMENTS RELATING TO THE PRESENT ASSESSEE READ WITH THE MODUS-OPERANDI ADOPTED BY TH E SHRIRAM SONI GROUP WOULD CLEARLY QUALIFY TO BE CONSIDERED AS HUNDI. 3 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN DELETING THE ADDITION MADE U/S.69D WHEN ON THE OTHER HAND, REFER RING TO THE ITAT ORDER IN THE CASE OF SHRI SHRIRAM SONI, HE HAS HELD THAT CASH LOANS HAD BEEN TAKEN BY THE ASSESSEE AND INTEREST ON THE SAME HAD ALSO BEEN PAID ON SUCH LOA NS. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITTED THAT GROUND OF APPEAL NO. 1 OF THE ASSESSEE IS A LEGAL GROUND. SI NCE IN THIS CASE PRIOR APPROVAL OF THE JT. CIT WAS NOT OBTAINED AS PER THE PROVISIONS OF SECTION 153D OF THE INCOME TAX ACT BEFORE PASSING OF THE ORDER, THEREFORE, THE ASSESSMENT ORDER IN QUESTION BEING BAD IN LAW DESERVES TO BE ANNULLED. FOR THIS PROPOSITION, HE REFERRED TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF AKIL GULAMALI SOMJI VS. ITO VIDE ITA NO.455 TO 458/PN/2010 ORDER DATED 30-0 3-2012 FOR A.YS. 2001-02 TO 2004-05 RESPECTIVELY. 4. THE LEARNED DR ON THE OTHER HAND FAIRLY CONCEDED THAT THE RECORDS DO NOT SHOW THAT THERE WAS PRIOR APPROVAL OF THE JT. CIT B EFORE PASSING OF THE ASSESSMENT ORDER. 5. AFTER HEARING BOTH THE SIDES WE FIND THIS BENCH OF THE TRIBUNAL IN THE CASE OF AKIL GULAMALI SOMJI (SUPRA) HAS DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE REGARDING THE VALIDITY OF THE ASSESSMENT ORDER WITH OUT OBTAINING PRIOR APPROVAL U/S.153D OF THE ACT. IT WAS HELD THAT REQUIREMENT U/S.153D FOR OBTAINING APPROVAL OF JCIT IS NOT PROCEDURAL BUT A MANDATORY REQUIREME NT AND THEREFORE ASSESSMENT ORDER FRAMED IN ABSENCE OF OBTAINING PRIOR APPROVAL OF JCIT IS INVALID AS NULL AND VOID. SINCE IN THE INSTANT CASE ADMITTEDLY NO APPR OVAL OF THE JT. CIT/ADDL. CIT HAS BEEN OBTAINED PRIOR TO COMPLETION OF THE ASSESSMENT , THEREFORE, IN VIEW OF THE DECISION OF THE TRIBUNAL CITED (SUPRA) THE ASSESSME NT ORDER PASSED IN VIOLATION OF SECTION 153D IS BAD IN LAW AND VOID AB-INITIO. SIN CE THE ASSESSEE SUCCEEDS ON THIS 4 LEGAL GROUND, THE OTHER GROUNDS RAISED BY THE ASSES SEE ARE NOT DECIDED BEING ACADEMIC IN NATURE. SINCE THE ASSESSMENT ORDER HAS BEEN HELD AS VOID AB-INITIO THE GROUNDS RAISED BY THE REVENUE BECOME INFRUCTUOUS AN D THEREFORE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF OCTOBER 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMBER PUNE, DATED THE 10 TH OCTOBER 2012 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4. D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER // TRUE COPY // SENIO R PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE