SHREE NARAYANI APPARELS P. LTD, MUMBAI V. ITO WD 8(3)(1), MUMBAI

ITA 6351/MUM/2013

• Counselvise Citation: 635119914 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 29-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Search and seizure; Opportunity of being heard; Additional evidence; Reasonable cause; Deemed dividend
• Section: 143(3); 80HHC; 153A; 68; 69

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ I.T.A. NO.6351 TO 6353 /MUM/2013 ( / ASSESSMENT YEAR 2008-09 ./ I.T.A. NO.6354 /MUM/2013 ( / ASSESSMENT YEAR 2006-07 ./ I.T.A. NO.6355 /MUM/2013 ( / ASSESSMENT YEAR 2007-08 ./ I.T.A. NO.6356 /MUM/2013 ( / ASSESSMENT YEAR 2003-04 ./ I.T.A. NO.6357 /MUM/2013 ( / ASSESSMENT YEAR 2004-05 ./ I.T.A. NO.6358 /MUM/2013 ( / ASSESSMENT YEAR 2005-06 M/S SHREE NARAYANI APPARELS PVT. LTD., C/O SHRI PRAKASH JHUNJHUNWALA, CHARTERED ACCOUNTANT, 5, JOLLY BHAWAN NO. 2, GROUND FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI 400 020. / VS. INCOME TAX OFFICER - WARD 8(3)(1), MUMBAI. ./ PAN : AAGCS0056B ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI PRAKASH JHUNJHUNWALA R E SPONDENT BY : SHRI NEIL PHILIP / DATE OF HEARING : 18-03-2015 / DATE OF PRONOUNCEMENT : 18-03-2015 [ ITA 6351 TO 6358/M/13 2 !' / O R D E R PER BENCH : THESE ARE THE APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE ORDERS PASSED BY THE LD. CIT(A) -18, MUMBAI DATED F OR THE ASSESSMENT YEARS 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 & 2008- 09 IN THE MATTER OF LEVY OF PENALTY U/S 271B, 271A, 271AAA, & 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. AT THE OUTSET, THE LD. A.R. PLACED ON RECORD OR DER OF THE TRIBUNAL DATED 29 TH JANUARY, 2014 IN ITA NO. 7630 TO 7633/MUM/2010 FOR ASSESSMENT YEARS 2008-09, 2006-07, 2005-06, 2004-05 AND 2003-04 RESP ECTIVELY WHEREIN ALL THE ADDITIONS IN RESPECT OF WHICH PENALTY HAS BEEN LEVIED U/S 271(1)(C) HAVE BEEN SET ASIDE TO THE FILE OF THE A.O. FOR PROPER E XAMINATION/VERIFICATION AND FOR DECIDING THE SAME AS PER LAW. 3. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL DATED 29-1-2014 IN ASSESSEES OWN CASE FOR ASSESSMENT YEA RS 2003-04 TO 2008-09 WHEREIN ADDITIONS WITH RESPECT TO WHICH PENALTY HAS BEEN IMPOSED U/S 271(1)(C) HAS BEEN SET ASIDE TO THE FILE OF THE A.O . WITH A DIRECTION TO THE A.O. FOR PROPER EXAMINATION/VERIFICATION AND DECIDE THE SAME AS PER LAW. THE GROUNDS RAISED BY THE ASSESSEE AND THE CONCLUSION D RAWN BY THE TRIBUNAL IN ITS ORDER DATED 29-1-2014 ARE AS UNDER:- 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THESE APPEALS: ASSESSMENT YEAR 2003-04 1. ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW O N THE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN DISALLOWING THE EN TIRE ADMINISTRATIVE, SELLING & OTHER EXPENSES OF RS. 72,19,632/-. ON FACTS AND CIR CUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHO LDING ADDITION OF 1/3 RD OF THESE EXPENSES AMOUNTING TO ` 48,13,088/-. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE ADDITION BE DELETED . ITA 6351 TO 6358/M/13 3 2. ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN DISALLOWING MANUFA CTURING EXPENSES OF RS. 2,26,91,694/-. ON FACTS AND CIRCUMSTANCES OF THE CA SE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHOLDING ADDITION OF 2 /3 RD OF THESE EXPENSES AMOUNTING OF RS. 1,28,99,027/-. ON FACTS AND CIRCUM STANCES OF THE CASE AND LAW ON THE SUBJECT THE ADDITION BE DELETED. ASSESSMENT YEAR 2004-05 1. ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW O N THE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN DISALLOWING THE EN TIRE ADMINISTRATIVE, SELLING & OTHER EXPENSES OF RS. 1,08,45,404/-. ON FACTS AND C IRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHO LDING ADDITION OF 1/3 RD OF THESE EXPENSES AMOUNTING TO ` 72,30,270/-. ON FACTS AND C IRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE ADDITION BE DELETED. 2. ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN DISALLOWING MANUFA CTURING EXPENSES OF RS. 2,46,56,327/-. ON FACTS AND CIRCUMSTANCES OF THE CA SE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHOLDING ADDITION OF 2/3 RD OF THESE EXPENSES AMOUNTING OF RS. 1,30,68,820/-. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE ADDITION BE DELETED. ASSESSMENT YEAR 2005-06 ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW ON T HE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN DISALLOWING THE EN TIRE ADMINISTRATIVE, SELLING & OTHER EXPENSES OF RS. 90,63,368/-. ON FACTS AND CIR CUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHOLDIN G ADDITION OF 1/3 RD OF THESE EXPENSES AMOUNTING TO RS. 60,42,246/-. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE ADDITION BE DELETED. ASSESSMENT YEAR 2006-07 ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW ON T HE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN DISALLOWING THE EN TIRE ADMINISTRATIVE, SELLING & OTHER EXPENSES OF RS. 12,92,164/-. ON FACTS AND CIR CUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHOLDIN G ADDITION OF 2/3 RD OF THESE EXPENSES AMOUNTING TO RS. 8,61,443/-. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE ADDITION BE DELETED. ASSESSMENT YEAR 2008-09 ON FACT AND CIRCUMSTANCES OF THE CASE AND LAW ON T HE SUBJECT. THE LEARNED ASSESSING OFFICER (A.O) ERRED IN MAKING ADDITION OF RS. 5,08,50,000/- BEING THE VALUE OF CLOSING STOCK DESTROYED IN FLOODS NOT ADJU STED IN THE BOOKS OF ACCOUNT PENDING SETTLEMENT OF INSURANCE CLAIM. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE SUBJECT THE LEARNED CIT(A) ERRED IN UPHO LDING ADDITION OF ` 4,66,12,500/- OUT OF THE ABOVE ADDITION. ON FACTS A ND CIRCUMSTANCES OF THE CASE AND LAW THE ADDITION BE DELETED. 3. THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS IN THESE APPEALS: ASSESSMENT YEAR 2003-04 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. A.O ERRED IN MAKING THE DISALLOWANCE OF ROUTINE EXPENSES ON IGNORING TH E FACT THAT NO INCREMENTING MATERIAL WAS FOUND DURING SEARCH AND ROUTINE DISALL OWANCES CANNOT BE MADE IN SEARCH ASSESSMENT. ITA 6351 TO 6358/M/13 4 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, A PRAYER IS MADE TO ALLOW THE ENHANCED DEDUCTION US/ 80HHC IN RESPECT OF THE REVISED PROFITS OF THE BUSINESS DETERMINED AFTER DISALLOWANCE OF THE MANUF ACTURING, OFFICE AND SELLING EXPENSES. ASSESSMENT YEAR 2004-05 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. A.O ERRED IN MAKING THE DISALLOWANCE OF ROUTINE EXPENSES ON IGNORING TH E FACT THAT NO INCREMENTING MATERIAL WAS FOUND DURING SEARCH AND ROUTINE DISALL OWANCES CANNOT BE MADE IN SEARCH ASSESSMENT. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, A PRAYER IS MADE TO ALLOW THE ENHANCED DEDUCTION US/ 80HHC IN RESPECT OF THE REVISED PROFITS OF THE BUSINESS DETERMINED AFTER DISALLOWANCE OF THE MANUF ACTURING, OFFICE AND SELLING EXPENSES. ASSESSMENT YEAR 2005-06 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. A.O ERRED IN MAKING THE DISALLOWANCE OF ROUTINE EXPENSES ON IGNORING TH E FACT THAT NO INCREMENTING MATERIAL WAS FOUND DURING SEARCH AND ROUTINE DISALL OWANCES CANNOT BE MADE IN SEARCH ASSESSMENT. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, LD. CIT(A) ERRED IN CONFIRMING THE ADDITION U/S 69A OF ALLEGED UNEXPLAINED CASH RE CEIVED OF RS. 16,00,000/- ASSESSMENT YEAR 2006-07 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. A.O ERRED IN MAKING THE DISALLOWANCE OF ROUTINE EXPENSES ON IGNORING TH E FACT THAT NO INCREMENTING MATERIAL WAS FOUND DURING SEARCH AND ROUTINE DISALL OWANCES CANNOT BE MADE IN SEARCH ASSESSMENT. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, LD. CIT(A) ERRED IN CONFIRMING THE ADDITION U/S 69A OF ALLEGED UNEXPLAINED CASH RE CEIVED OF RS. 7,22,500/- ASSESSMENT YEAR 2008-09 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. A.O ERRED IN MAKING THE DISALLOWANCE OF ROUTINE EXPENSES ON IGNORING THE FA CT THAT NO INCREMENTING MATERIAL WAS FOUND DURING SEARCH AND ROUTINE DISALLOWANCES C ANNOT BE MADE IN SEARCH ASSESSMENT. 4. WE HAVE HEARD THE LD. A.R AS WELL AS LD. D.R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET THE LD. A.R OF THE ASSESSE E HAS SUBMITTED THAT AN IDENTICAL ISSUES WERE CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASS ESSEES SISTER CONCERN CASE SHRI SHARADA INDUSTRIES PVT. LTD. AS WELL AS IN CASE OF SANGEETA SANJAY JHUNJHUNWALA, DIRECTOR OF THE ASSESSEE. HE HAS FURTHER POINTED OUT THAT THE DIREC TORS IN THE ASSESSEE AS WELL AS THE SISTER CONCERN ARE COMMON AND THE ASSESSMENT HAS BEEN FRAM ED U/S 153A CONSEQUENT TO THE SAME SEARCH AND SEIZURE ACTION. THUS, THE LD. A.R HAS SU BMITTED THAT THE MATTER REQUIRES TO BE RECONSIDER, EXAMINATION AND VERIFICATION AT THE LEVE L OF THE ASSESSING OFFICER SO FAR AS THE ASSESSMENT YEAR 2002-03 TO 2006-07 ARE CONCERNED. T HE LD. A.R HAS FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2008-09 THE A.O HAS MADE TH E ADDITION ON ACCOUNT OF UNACCOUNTED SALES AND GP ADDITION ON THE SAME. HE HAS POINTED O UT THAT THE UNACCOUNTED SALE HAS BEEN TREATED BY THE A.O THEREFORE, THE OPENING STOCK AND CLOSING STOCK HAS BEEN SHOWN AT THE SAME AMOUNT AND THE A.O WAS OF THE VIEW THAT THE AS SESSEE HAS SOLD THE OPENING STOCK AND ITA 6351 TO 6358/M/13 5 THEN ESTIMATED GP AT 10% OF THE SAID UNACCOUNTED SA LE TREATED BY THE A.O. HE HAS CONTENDED THAT SINCE THERE WAS NO BUSINESS DURING T HE YEAR AND THERE WAS NO PURCHASE THEREFORE, THE OPENING STOCK REMAINS UNCHANGED AND THE EQUAL AMOUNT WAS SHOWN AS CLOSING STOCK. THE ASSESSING OFFICER HAS NOT CONSIDERED THI S FACT WHILE MAKING THE ADDITION OF UNACCOUNTED SALE AND GP ON THE SAME. 5. ON THE OTHER HAND, THE LD. D.R HAS NOT DISPUTED THE FACT THAT IN THE IDENTICAL CIRCUMSTANCES IN THE CASE OF SISTER CONCERN OF THE ASSESSEE THE MATTER HAS BEEN REMANDED TO THE RECORD OF THE ASSESSING OFFICER FOR RECONSID ERATION, EXAMINATION AND VERIFICATION AND THEN DECIDING AS PER LAW. HOWEVER, HE HAS RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THE ASSESSING OFFICER MADE CERTAIN DISALLOWANCE AND ADDITIONS IN ALL THESE YEARS SOME OF WHICH WERE UPHELD PARTLY AND SO ME ARE FULLY BY THE CIT(A). THE DETAILS OF ADDITION/DISALLOWANCE MADE BY THE A.O AND SUSTAI NED BY THE CIT(A) ARE AS UNDER: PARTICULARS A.Y: 2003 - 04 A.Y: 2004 - 05 A.Y: 2005 - 06 A.Y: 2006 - 07 A.Y: 2008 - 09 DISALLOWANCE OF OFFICE, ADMINISTRATIVE, AND SELLING EXPENSES A.O - 72,19,632 CIT(A)-48,13,088 A.O - 1,08,45,404 CIT(A)-72,30,270 A.O - 90,63,368 CIT(A)-60,42,246 A.O - 12,92,164 CIT(A)-8,61,443 DISALLOWANCE OF MANUFACTURING EXPENSES A.O - 2,26,91,694 CIT(A)-1,28,99,027 A.O - 2,46,5 6,327 CIT(A)-1,30,68,820 ADDITION U/S 69A OF UNEXPLAINED CASH CREDIT A.O - 16,00,000 CIT(A)-16,00,000 A.O - 7,22,500 CIT(A)-7,22,500 ADDITION OF UNACCOUNTED SALES A.O - 4,23,75,000 CIT(A)-4,23,75,000 ADDITION OF 10% OF GP ON UNACCOUNTED SALES A. O - 42,37,500 CIT(A)-42,37,500 7. SO FAR AS THE DISALLOWANCE RELATING TO THE ASSES SMENT YEARS 2003-04 TO 2006-07 AN IDENTICAL MATTER HAS BEEN CONSIDERED AND DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DIRECTOR OF THE ASSESSEE NAMELY SANG EETA SANJAY JHUNJHUNWALA VS ACIT VIDE ORDER DATED 20.2.2013 IN ITA NO. 7929 TO 7934/M/201 0 IN PARA 5 TO 9 AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER FOR THESE SIX YEARS WHILE THE ASSESSMENT FRAMED U/S 143(3) R.W.S 153A ARE AS UNDE R: ASSESSMENT YEAR 2002-03: ADDITION U/S 69 OF SHARE INVESTMENTS: A) M/S LEG APPAREL INDIA LTD 494,000 B) M/S SHRI NARAYANI APPARELS P LTD 101,000 595.000 ASSESSMENT YEAR 2003-04: GIFT RECEIVED FROM RAVI A KAMAL U/S 68 1, 1,426,183 ASSESSMENT YEAR 2005-06: UNSECURED LOANS FROM NIRMAL & CO 1,025,000 ITA 6351 TO 6358/M/13 6 DEEMED DIVIDEND U/S 2(22)(E) OF ALLEGED ADVANCE FROM M/S SHRI NARAYANI APPAREL P LTD 46 3,100 1,488,100 ASSESSMENT YEAR 2006-07: UNSECURED LOANS U/S 68 A) DHAVAL JHAVERI 400,000 B) SUREKHA JHAVERI 3,500,000 C) NEERU JHAVERI 700,000 4,600,000 ASSESSMENT YEAR 2007-08: UNSECURED LOANS U/S 68 A) DHAVAL JHAVERI 1,500,000 D) ASHOK DIDWANIA 1,100,000 C) OM PRAKASH AGARWAL 1,500,000 D) CAPS & CONFECTIONARIES LTD 1,000,000 5,100,000 ASSESSMENT YEAR 2008-09: UNSECURED LOANS U/S 68 A) DHAVAL JHAVERI 7,000,000 B) OM PRAKASH AGARWAL 7,000,000 ADDITION U/S 69 UNEXPLAINED JEWELLERY 623,506 14,623,506 SUMMARY A) SHARE INVESTMENT U/S 69 RS. 595,000 B) GIFT RECEIVED U/S 68 RS. 1,426,183 C) DEEMED DIVIDEND U/S 2(220(E) RS. 463,100 D) UNSECURED LOANS U/S 68 RS. 24,725,000 E) UNEXPLAINED JEWELLERY U/S 69 RS. 623.506 TOTAL ADDITIONS SUSTAINED IN 1 ST APPEAL RS. 27,832,789 5.1 THE MAJOR ADDITION IS WITH RESPECT TO THE UNSE CURED LOAN U/S 68 OF THE I T ACT AMOUNTING TO RS. 2,47,25,000/- OUT OF THE TOTAL AD DITION OF RS. 2,78,32,789/- FOR ALL THESE ASSESSMENT YEARS. IT APPEARS THAT SOME OF TH E CASH CREDITORS ARE COMMON BOTH IN THE CASE OF THE ASSESSEE AS WELL AS IN THE CASE OF THE HUSBAND OF THE ASSESSEE MR SANJAY JHUNJUHNWALA. THE ADDITION U/S 68 HAS BEEN MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE COULD NOT PROVE THE CREDIT WORTHINESS OF THE CREDITORS; THOUGH THE OTHER REQUIREMENTS LIKE IDENTITY AND GENUINENES S OF THE TRANSACTIONS HAVE NOT BEEN SERIOUSLY DISCUSSED BY THE ASSESSING OFFICER. ITA 6351 TO 6358/M/13 7 5.2 IT IS PERTINENT TO NOTE THAT THE STATEMENT OF THE CREDITOR MR DHAVAL JHAVERI , WHO IS COMMON IN THE CASE OF THE ASSESSEE AND IN T HE CASE OF THE ASSESSEES HUSBAND WAS RECORDED BY THE SAME ASSESSING OFFICER IN THE A SSESSMENT PROCEEDINGS OF THE HUSBAND OF THE ASSESSEE SHRI SANJAY JHUNJHUNWALA; B UT HAS NOT BEEN CONSIDERED WHILE DECIDING THE ISSUE IN THE CASE OF THE ASSESSEE. THU S, PRIMA FACIE, THE RELEVANT EVIDENCE WHICH WAS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS OF THE ASSESSEES HUSBAND BY SUMMONING THE CREDITOR IS LEF T OUT FROM CONSIDERATION IN THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE. 6. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, THIS ISSUES REQUIRED TO BE PROPERLY EXAMINED AND VERIFIED BY THE ASSESSING OFF ICER. 6.1 THERE IS ONE MORE REASON FOR CONSIDERATION OF T HE ISSUE BECAUSE THE ASSESSEE STATED TO HAD BEEN FACING CRIMINAL PROCEEDINGS IN THE VARI OUS COURTS OF LAW AND SOME OF THE FAMILY MEMBERS OF THE ASSESSEE WERE ARRESTED BY THE POLICE AND EVEN ARREST WARRANT WERE ISSUED AGAINST THE ASSESSEE, HER HUSBAND AND O THER FAMILY MEMBERS, WHICH CLEARLY SHOWS THAT THE ASSESSEE WAS FACING ABNORMAL CIRCUMS TANCES AND THEREFORE, WAS NOT ABLE TO PROPERLY DEFEND HER CASE DURING THE ASSESSMENT P ROCEEDINGS. 7 . FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09, TH E ASSESSEE HAS FILED ADDITIONAL EVIDENCE AND PLEADED THAT DUE TO THE CRIMINAL PROCE EDINGS PENDING AGAINST THE ASSESSEE AS WELL AS OTHER FAMILY MEMBERS OF THE ASSESSEE, TH E ASSESSEE COULD NOT OBTAIN THE RELEVANT DOCUMENTS TO JUSTIFY THE CREDITWORTHINESS OF THE LOAN TRANSACTIONS. 7.1 AS WE HAVE DISCUSSED IN THE FORGOING PARAGRAPHS THAT THE ASSESSEE WAS FACING THE APPREHENSION OF THE ARREST AS ARREST WARRANTS WERE ISSUED AGAINST THE ASSESSEE, HER HUSBAND AND OTHER FAMILY MEMBERS AND THEREFORE, THE ASSESSEE WAS FACING ABNORMAL CIRCUMSTANCES, IN OUR VIEW, THE ASSESSEE HAS MADE O UT A BONAFIDE CASE AND REASONABLE CAUSE FOR NOT PRODUCING THE DOCUMENTARY EVIDENCE TO ESTABLISH THE CREDITWORTHINESS OF THE LOAN TRANSACTIONS. ACCORDINGLY, IN THE INTERE ST OF JUSTICE, WE ALLOW THE REQUEST OF THE ASSESSEE FOR FILING THE ADDITIONAL EVIDENCE AND THE SAME IS TAKEN ON RECORD. 7.2 SINCE THE EVIDENCE FILED BY THE ASSESSEE IS REQ UIRED TO BE EXAMINED AND VERIFIED AT THE LEVEL OF THE ASSESSING OFFICER; THEREFORE, THE ISSUE OF ADDITION U/S 68 IS REQUIRED TO BE RECONSIDERED AFTER EXAMINING ALL THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. 8 .THE REMAINING ISSUES ARE REGARDING ADDITION U/S 69 IN RESPECT OF SHARE INVESTMENT FOR THE ASSESSMENT YEAR 2003-03; ADDITION U/S/ 68 IN RESPECT OF GIFT RECEIVED FOR THE ASSESSMENT YEAR 2003-04; ADDITION U/S 69 ON ACCOUN T OF UNEXPLAINED INVESTMENT IN DIAMOND JEWELLERY FOR THE ASSESSMENT YEAR 2008-09. . SINCE THE MAJOR ISSUE IS REQUIRED TO BE RECONSIDERED AS THE ASSESSEE WAS FACING SOME DIFFICULTIES DUE TO THE CRIMINAL PROCEEDINGS AND WARRANT ISSUED AGAINST THE ASSESSEE , HER HUSBAND AND OTHER FAMILY MEMBERS OF THE ASSESSEE; THEREFORE, IN THE INTEREST OF JUSTICE, ALL THESE ISSUES, WHICH ARE ALSO REQUIRED TO BE RECONSIDERED AT THE LEVEL O F THE ASSESSING OFFICER FOR GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PROVE HER CLAIM . 9 . IN VIEW OF THE ABOVE DISCUSSION AND FACTS AND C IRCUMSTANCES OF THE CASE, WE SET AIDE ALL THE ISSUES INVOLVED IN THESE SIX APPEALS TO TH E RECORD OF THE ASSESSING OFFICER FOR RECONSIDERATION, EXAMINATION, VERIFICATION AND THEN DECIDE THE SAME AFTER CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE INCLU DING THE EVIDENCE (STATEMENT ITA 6351 TO 6358/M/13 8 RECORDED BY THE ASSESSING OFFICER DURING THE ASSES SMENT PROCEEDINGS OF THE HUSBAND OF THE ASSESSEE) AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PROVE HER CASE. 8. WE FURTHER NOTE THAT IN CASE OF THE SISTER CONCE RN OF THE ASSESSEE NAMELY SHRI SHARADA INDUSTRIES PVT. LTD. THE TRIBUNAL HAS REMIT TED THE MATTER TO THE RECORD OF THE A.O BY FOLLOWING THE ORDER IN CASE OF SANGEETA SANJAY JHUN JHUNWALA IN PARA 4 AND 5 AS UNDER: 4. WE HAVE HEARD BOTH THE PARTIES AND FIND THAT TH E AO RESORTED TO DISALLOW THE ENTIRE CLAIM OF EXPENSES DEBITED TO THE PROFIT & LOSS ACCO UNT. ON APPEAL TO THE CIT (A), 2/3 RD OF THE DISALLOWANCE WAS FOUND CONFIRMED. IT IS ALS O A FACT THAT THE ASSESSEE WAS FACING CRIMINAL PROCEEDINGS AND THE FEAR OF ARREST IS ON T HE ASSESSEES DIRECTORS. WE HAVE ALSO PERUSED PARA 6.1 AND 7.1 OF THE ORDER OF THE TRIBUN AL IN THE CASE OF SANGEETA S. JHUNJHUNWALA (SUPRA) AND THE SAID PARAS ARE REPRODU CED AS FOLLOWS: 6.1 THERE IS ONE MORE REASON FOR CONSIDERATION OF THE ISSUE BECAUSE THE ASSESSEE STATED TO HAD BEEN FACING CRIMINAL PROCEED INGS IN THE VARIOUS COURTS OF LAW AND SOME OF THE FAMILY MEMBERS OF THE ASSESSEE WERE ARRESTED BY THE POLICE AND EVEN ARREST WARRANT WERE ISSUED AGAINST THE ASS ESSEE, HER HUSBAND AND OTHER FAMILY MEMBERS, WHICH CLEARLY SHOWS THAT THE ASSESSEE WAS FACING ABNORMAL CIRCUMSTANCES AND, THEREFORE, WAS NOT ABLE TO PROPERLY DEFEND HER CASE DURING THE ASSESSMENT PROCEEDINGS. 7.1. AS WE HAVE DISCUSSED IN THE FORGOING PARAGRAPH S THAT THE ASSESSEE WAS FACING THE APPREHENSION OF THE ARREST AS ARREST WAR RANTS WERE ISSUED AGAINST THE ASSESSEE, HER HUSBAND AND OTHER FAMILY MEMBERS AND THEREFORE, THE ASSESSEE WAS FACING ABNORMAL CIRCUMSTANCES, IN OUR VIEW, THE ASSESSEE HAS MADE OUT A BONAFIDE CASE AND REASONABLE CAUSE FOR NOT PRODUCIN G THE DOCUMENTARY EVIDENCE TO ESTABLISH THE CREDITWORTHINESS OF THE LOAN TRANS ACTIONS. ACCORDINGLY, THE IN THE INTEREST OF JUSTICE, WE ALLOW THE REQUEST OF TH E ASSESSEE FOR FILING THE ADDITIONAL EVIDENCES AND THE SAME IS TAKEN ON RECOR D. 5. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAS A REASONABLE CAUSE FOR NON- REPRESENTATION OR IMPROPER REPRESENTATION OF THE CA SE BEFORE THE AO AND THE CIT(A) PROPERLY WHICH LEAD TO THE IMPUGNED ADDITIONS. QUA LITY OF JUSTICE ASSUMES GREAT IMPORTANCE IN MATTERS OF ADMINISTRATION OF JUSTICE OF COURSE, WITH DUE REGARD TO THE PROCEDURES INVOLVED. IN THIS CASE, WITH THE WARRANT OF ARREST IS ISSUES AGAINST THE DIRECTORS OF THE COMPANY, IT IS UNDERSTANDABLE, THE SE CIVIL AND ECONOMIC LITIGATIONS ASSUMES LESSER IMPORTANCE TO THE ASSESSEE. THAT CAU SED MESS IN THE ASSESSMENT PROCEEDINGS AND AO PROCEEDED TO DISALLOW ALL THE CL AIMS OF EXPENDITURE DEBITED TO THE P AND L ACCOUNT MERCILESSLY. FURTHER, THIS IS A CAS E OF FILING OF ADDITIONAL EVIDENCES WHICH HAVE TO BE ADMITTED IN VIEW OF THE NEXUS TO T HE ADDITIONS IN QUESTION AND ALSO IN THE INTEREST OF RENDERING OF THE JUSTICE, WE ADMIT THE SAME AND REMAND THEM TO THE FILES OF THE AO FOR EXAMINING THE ISSUES AFRESH AFT ER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUN DS RAISED BY THE ASSESSEE IN ALL THE FIVE APPEALS ARE SET ASIDE. 9. FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL WE REMIT ALL THE GROUNDS RAISED INCLUDING THE ADDITIONAL GROUNDS FOR THE ASSESSMENT YEARS 200 3-04 TO 2007-08 TO THE RECORD OF THE A.O ITA 6351 TO 6358/M/13 9 TO EXAMINE AND ADJUDICATION OF THE SAME AFRESH. AS R EGARD, THE ASSESSMENT YEAR 2008-09 THE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF UNACCOUNTE D SALE BY TREATING THE OPENING STOCK AS SALES OF THE ASSESSEE AND THEREFORE, THE A.O MADE G P ADDITION. SINCE THE A.O HAS NOT EXAMINED THE ISSUE PROPERLY FOR WANT OF NECESSARY DE TAILS AND REPRESENTATION BECAUSE THE DIRECTORS OF THE ASSESSEE WERE FACING SOME HARDSHIP AND DIFFICULTIES AS NOTED IN THE CASE OF DIRECTORS AND SISTER CONCERN OF THE ASSESSEE AND RE PRODUCED ABOVE. THIS ISSUE FOR THE ASSESSMENT YEAR 2008-09 ALONGWITH THE ADDITIONAL IS SUE IS ALSO SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR PROPER EXAMINATION, VERIFICATI ON AND THEN DECIDING THE SAME AS PER LAW. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. A DETAILED CHART WAS FILED BY THE LD. A.R. INDI CATING THE DISALLOWANCES MADE BY THE A.O. WITH REGARD TO WHICH PENALTY WAS L EVIED ALONG WITH THE COPY OF THE ORDER OF THE TRIBUNAL WHICH WAS ALSO HANDED OVER TO THE LD. D.R. WHO FAIRLY CONCEDED THAT ALL THESE ISSUES HAVE BEEN RES TORED BACK TO THE FILE OF THE A.O. FOR FRESH EXAMINATION. 5. KEEPING IN VIEW THE FACT THAT QUANTUM ADDITIONS HAVE BEEN SET ASIDE, THE CONSEQUENTIAL PENALTY CANNOT SURVIVE AND THE SA ME IS ALSO SET ASIDE TO THE FILE OF A.O. HOWEVER, THE A.O. WILL BE AT LIBERTY T O INITIATE PENALTY PROCEEDINGS AFRESH AFTER DECIDING THE QUANTUM ADDITIONS AS PER THE DIRECTION OF THE TRIBUNAL IN ITS ORDER DATED 29-1-2014. 6. IN THE A.Y. 2008-09, THE A.O. ALSO LEVIED PENALT Y U/S 271AAA AND 271B OF THE ACT. SINCE THE QUANTUM ADDITIONS OF THESE YE ARS HAVE BEEN SET ASIDE, IN THE INTEREST OF JUSTICE AND TO GIVE ONE MORE OPPORT UNITY TO THE ASSESSEE AND A.O. BOTH, WE RESTORE THESE APPEALS ALSO TO THE FIL E OF A.O. FOR DECIDING AFRESH KEEPING IN VIEW THE FRESH ORDER PASSED IN QUANTUM A DDITIONS VIS--VIS TOTALITY AND CIRCUMSTANCES OF THE CASE. NEEDLESS TO SAY ASSE SSEE SHOULD BE GIVEN DUE OPPORTUNITY OF BEING HEARD BEFORE DECIDING THE PENA LTY SO LEVIED. 7. IN THE A.Y. 2007-08, PENALTY WAS LEVIED FOR DISA LLOWANCE OF ADMINISTRATIVE, SELLING AND OTHER EXPENSES AMOUNTIN G TO RS. 2,52,657/- WHICH WAS SUSTAINED BY THE LD. CIT(A) TO RS. 1,68,4 38/-. PENALTY OF RS. 56,696/- WAS LEVIED BY THE A.O. U/S 271(1)(C) OF TH E ACT. SINCE THE QUANTUM ITA 6351 TO 6358/M/13 10 ADDITION WAS VERY LOW, THE ASSESSEE HAS NOT FILED A PPEAL AGAINST THE QUANTUM ADDITIONS. HOWEVER IN RELATION TO IDENTICAL DISALLO WANCES MADE IN OTHER ASSESSMENT YEARS AS DISCUSSED ABOVE, THE MATTER HAS BEEN RESTORED BY THE ITAT TO THE FILE OF A.O. FOR DECISION AFRESH. I N THE INTEREST OF JUSTICE, WE RESTORE THIS PENALTY APPEALS TO THE FILE OF THE A.O . FOR DECIDING AFRESH INSOFAR AS IN OTHER ASSESSMENT YEARS ORDERS OF LOWER AUTHOR ITIES HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE A.O. 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED IN PART FOR STATISTICAL PURPOSE IN TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2015. !' # $% &! ' 18-03-2015 ( ) SD/- SD/- (SANJAY GARG) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER $ 5 MUMBAI ; &! DATED 18-03- 2015 .6../ RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 7 () / THE CIT(A) CONCERNED,, MUMBAI 4. 7 / CIT -CONCERNED, MUMBAI 5. :;( 66<= , <= , $ 5 / DR, ITAT, MUMBAI E BENCH 6. (?@ A / GUARD FILE. ' / BY ORDER, : 6 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 5 / ITAT, MUMBAI