P.R.Patil, Jalgaon V. ITO, Wd. 1(1), Jalgaon, Jalgaon

ITA 660/PUN/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7443 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-06-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Unexplained expenditure; Document seized; Onus to prove; Documents seized
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! ' # , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVE DI, AM . / ITA NO.660 & 661/PUN/2012 ! & & / ASSESSMENT YEARS : 2001-02 & 2002-03 P.R.PATIL, 18, SAMARTH COLONY, M.J.COLLEGE RD, JALAGAON . APPELLANT PAN : AABHA7676P VS. ITO, WARD.1(1), JALGAON . RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE DEPARTMENT BY : SHRI ANIL KUMAR CHAWARE /DATE OF HEARING : 27-10-2016 /DATE OF PRONOUNCEMENT : 05-01-2017 ' / ORDER PER ANIL CHATURVEDI, AM: THE PRESENT APPEALS FILED BY THE ASSESSEE ARE AGAINST T HE ORDERS OF CIT(A) DATED 16.01.2012 FOR ASSESSMENT YEAR 200102 & 200203. ITA NO.660&661/PUN/2012 2 BEFORE US, AT THE OUTSET LD.AR SUBMITTED THAT THOUGH THE APPEALS OF THE ASSESSEE ARE FOR 2 DIFFERENT YEARS, BUT THE ISSUE S IN BOTH THE YEARS ARE INTER-CONNECTED & THEREFORE SHE HAS COMMON SUBMISS ION TO MAKE. SHE, THEREFORE, SUBMITTED THAT BOTH THE APPEALS BE HEARD TOGETHER. THE LD.DR DID NOT OBJECT TO THE AFORESAID SUBMISSIONS OF LD.AR. W E, THEREFORE, FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER: ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN T HE BUSINESS OF CIVIL CONSTRUCTION. ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 200102 ON 31.10.2001 DECLARING TOTAL IN COME OF RS.1,05,420/-. FOR ASSESSMENT YEAR 200203, ASSESSEE FILE D RETURN OF INCOME ON 22/09/2003 DECLARING TOTAL INCOME OF RS.60,860/ -. A SEARCH ACTION WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SHRI. R.N.AGRAWAL WHEREIN PAPERS CONNECTED WITH ASSESSEE WERE FOUND AND SEIZED. THEREAFTER NOTICE U/S 153C WAS ISSUED ON 11.06.2007 AND IN RESPONSE TO WHICH ASSESSEE FILED ITS RETURN OF INCOME ON 05.09.2007 FOR BOTH THE ASSESSMENT YEARS DECLARING THE SAME INCOME AS FILED ORIGI NALLY. THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER THE ASSE SSMENTS WERE FRAMED U/S 153C RWS 143(3) VIDE ORDER DATED 28.12.2007 A ND THE TOTAL INCOME FOR ASSESSMENT YEAR 200102 WAS DETERMINED AT R S.1,82,410/- AND FOR ASSESSMENT YEAR 200203, THE TOTAL INCOME WAS D ETERMINED AT RS.11,79,226/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CA RRIED THE MATTER BEFORE LD.CIT(A) WHO VIDE ORDER DATED 16.01.2012 (IN APPEAL ITA NO.660&661/PUN/2012 3 NO.NSK/CIT(A)-II/297/07-08 GRANTED PARTIAL RELIEF TO THE A SSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IN NOW IN APPE AL BEFORE US AND RAISED THE FOLLOWING GROUNDS IN AY 200102 (ITA NO.660/PUN/2012). 1) ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT SAID ALLEGE PAPERS FOUND AND SEIZED VIDE ANNEXURE A-2, AT THE PREMISES OF SEARCHED PERSON SHRI RAJENDRA AGARWAL O F CHALIGAON, IS BELONGING TO THE APPELLANT AND REJECTING THE GROUND OF VALIDITY OF I NITIATING THE PROVISION OF SECTION 153C OF THE ACT, EVEN THOUGH, SAID SEIZED PAPER IS NOT BELONGING TO THE APPELLANT AND THERE IS NO FINDING WITH SATISFACTION OF THE ASSESS ING OFFICER OF SEARCHED PERSON TO THE EFFECT THAT SAID TRANSACTION IS REQUIRED TO BE TAXE D IN THE HAND OF APPELLANT. 2) ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS. 36,161/- O UT OF EXPENSES DISALLOWED AT RS. 76,992/- 3) THE APPELLANT CRAVES THE PERMISSION TO ADD, AME ND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF THE APPEAL , IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 200203 IN ITA NO.661/PUN/2012 READS AS UNDER: 1. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT SAID ALLEGED PAPERS FOUND AND SEIZED VIDE ANNEXURE A-2, AT THE PREMISES OF SEARCHED PERSON SHRI. RAJENDRA N.AGRAWA L OF CHALISGAON, IS BELONGING TO THE APPELLANT AND REJECTING THE GROUND OF VALIDITY OF INITIATING THE PROVISION OF SECTION 153C OF THE IT ACT, EVEN THOUGH, SAID SEIZED PAPER IS NOT BELONGING TO THE APPELLANT AND THERE IS NO FINDING WITH SATISFACTION OF THE AS SESSING OFFICER OF SEARCHED PERSON TO THE EFFECT THAT SAID TRANSACTION IS REQUIRED TO BE TAXED IN THE HAND OF APPELLANT. 2. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PROTECTIVE ADDITION OF RS .3,08,047/-, OUT OF RS.10,70,000/-, EVEN THOUGH, THE ISSUE OF SUBSTANTATIVE ADDITION MADE ON IN THE HANDS OF SEARCHED PERSON SHRI. RAJENDRA N. AGRAWAL, VIDE CIT(A)-I, NA SHIKS ORDER NO. NSK/CIT(A)- I/540/2008-09 DT.18-10-2011 HAS BEEN DECIDED AND CO NSIDERED IN HIS HANDS, IN RESPECT OF THOSE ALLEGED SEIZED PAPERS, AND DIRECTE D TO TAX OF RS. 750,000/- OUT OF TOTAL ADDITION IN THAT CASE OF RS.168000/-. 3. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE OF THE CASE, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS. 24,183/- O UT OF EXPENSES DISALLOWED AT RS.48,366/-. 4. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEN D, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DEEMED NECE SSARY AT THE TIME OF HEARING OF THE APPEAL. ITA NO.660&661/PUN/2012 4 4. SINCE THE GROUNDS RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE INTER-CONNECTED, ALL THE GROUNDS ARE CONSIDERED TOGETHER. BEFORE US, LD.AR SUBMITTED THAT SINCE THE CONDITION PRECEDE NT FOR INITIATION OF PROCEEDINGS U/S153C OF THE ACT WERE NOT FULFILLED, THE ASSESSMENT FRAMED WAS VOID AND THEREFORE NEEDS TO BE ANNULLED. SHE FURTHER SUBMITTED THAT THE ALLEGED SEIZED PAPER ON THE B ASIS OF WHICH PROCEEDINGS U/S153C OF THE ACT WERE INITIATED AGAINST THE ASSESSEE BELONGED TO SHRI.R.N.AGRAWAL, A SEARCHED PERSON AND FURTH ER IT PERTAINED TO ASSESSMENT YEAR 2003 04 AND THEREFORE NO ADDITION OF ITS BASIS COULD BE MADE IN THE IMPUGNED YEARS. IT WAS FURTHE R SUBMITTED THAT THE ENTIRE TRANSACTION REFLECTED IN THE SEIZED PAPER WAS CONSIDERED IN THE HANDS OF SHRI.R.N.AGRAWAL AND IN THE HANDS OF ASSESSEE PROTECT IVE ADDITION WAS MADE. THE LD.AR FURTHER IN SUPPORT OF HER A FORESAID CONTENTIONS PLACED ON RECORD THE COPY OF THE FIRST APPELLA TE ORDER PASSED IN THE CASE OF RAJENDRA AGRAWAL. SHE, THEREFORE PRAYED THAT THE ADDITION BE DELETED. THE LD.DR ON THE OTHER HAND, SUPPORTED THE ORDER OF AO . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS & PERUSED THE MA TERIAL ON RECORD. IT IS ASSESSEES CONTENTION THAT THE ADDITIO N THAT HAS BEEN MADE IN THE HANDS OF ASSESSEE HAS ALREADY BEEN MADE IN SUBSTANTIVE BASIS IN THE HANDS OF MR.R.N.AGARWAL AT WHOSE PLACE SEARCH WAS CONDUCTED & THAT ADDITION HAS ALSO BEEN SUSTAINED IN APPEAL & THER EFORE NO ADDITION IN THE HANDS OF ASSESSEE IS CALLED FOR. THE LD.DR WAS THEREFORE DIRECTED TO FILE A REPORT TO KNOW THE FATE WITH RESPECT TO THE ITA NO.660&661/PUN/2012 5 ADDITIONS MADE ON SUBSTANTIVE BASIS. IN RESPONSE TO TH E AFORESAID DIRECTIONS, LD.DR PLACED ON RECORD THE COPY OF THE REPORT RECEIVED FROM ITO, WARD-I, BEARING NO.JAL/WD1(1)/ITAT/PRP/2016-17/18, D ATED 04.07.2016 WHEREIN INTER-ALIA IT IS STATED AS UNDER. OFFICE OF THE INCOME TAX OFFICER, WARD 1(1), JALGAON PH. NO.0257-2220752 NO. JAL/WD 1(1)/ITAT/PRP/2016-17/18 DATED 04/07/20 16 TO THE JOINT COMMISSIONER OF INCOME TAX, ITAT, PUNE (SUBMITTED THROUGH JT. CIT, R-1, JALGAON) SIR, SUB: ITA NO.660 & 661/PN/12 IN THE CASE OF M/S. P. R. PATIL (PAN:AAEFP3917F) FOR A. Y 2001-02, 2002-03-REG. KIND REFERENCE IS INVITED TO ITAT PUNES LETTER NO. PN/ADDL. CIT/ITAT/2016-17/166 DATED 16-06-2016, ON THE ABOVE SUBJECT. 02. IN THIS CONNECTION, REQUISITE ASSESSMENT YEAR WISE REPORT IS SUBMITTED AS UNDER: A.Y. 2001-02. IN THIS CASE, ASSESSMENT U/S 153C R.W.S 143(3) WAS COMPLETED ON 28/12/2007 DETERMINING THE TOTAL INCOME OF RS. 1,82 ,410/- INCLUSIVE OF ADDITION OF RS. 63,083/- ON ACCOUNT OF DISALLOWANCE OUT OF LABOUR EXPENSES, RS.9334/- ON ACCOUNT DISALLOWANCE OUT OF TELEPHONE EXPENSES AND RS. 4,575/- ON ACCOUNT OF DISALLOWANCE OUT OF TRANSPORTATION. BEING AGGRIEVED WITH THIS ORDER THE ASSESSEE HAS FILED APPEAL WITH THE CIT (A )-II, NASHIK VIDE ORDER DATED 16/01/2012 GRANTED THE RELIEF OF RS.40,821/- ON ACC OUNT OF DISALLOWANCE OF EXPENDITURE TOWARDS LABOUR, VEHICLE AND TRANSPORTAT ION. THE CIT(A)-II, NASHIK HAS ALSO MADE THE ENHANCEMENT OF RS. 1,00,185/- ON ACCOUNT OF UNACCOUNTED EXPENDITURE ON THE BASIS OF SEIZED MATERIAL (AS PER PARA. 6 OF THE CIT(A), NASHIK ORDER DATED 16/01/2012) AND REVISED THE INCO ME OF THE ASSESSEE AT RS.2,41,764/-. NOW, THE ASSESSEE IS IN APPEAL BEFO RE THE HON'BLE TRIBUNAL ON SAID ISSUE WHICH IS PENDING FOR DECISION. ITA NO.660&661/PUN/2012 6 A.Y 2002 - 03 THE ASSESSMENT U/S 153C R.W.S 143(3) WAS COMPLETED ON 28/12/2007 DETERMINING THE TOTAL INCOME OR RS. 11,79,226/- INC LUSIVE OF ADDITION OF RS.10,70,000/- ON ACCOUNT OF UNEXPLAINED EXPENDITUR E. BEING AGGRIEVED WITH THIS NASHIK VIDE ORDER DATED 16/01/2012 GRANTED THE RELIEF OF RS. 7,61,953/- LEAVING THE BALANCE ADDITION OF RS. 3,08,047/- ON T HIS ISSUE. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE HON'BLE TRIBUNAL ON SAID IS SUE WHICH IS PENDING FOR DECISION. BRIEF FACTS OF THE CASE ARE AS UNDER. THE FIRM P. R. PATIL ENTERED INTO AN AGREEMENT WIT H SHRI R. N. AGRAWAL FOR SOME CONSTRUCTION WORK IN BAHULA MEDIUM PROJECTS AT TAL. PACHORA, DIST. JALGAON. THE AGREEMENT WAS EXECUTED IN JANUARY, 2003 BETWEEN PRERANA CONSTRUCTIONS (PROP. SHRI R. N. AGRAWAL) AND M/S. P . R. PARIL (ENGG. & CONT.) THROUGH ITS PARTNER SMT. SANGITA PRAKASH PATIL. A SEARCH WAS CARRIED OUT AT THE PREMISES OF SHRI R. N. AGRAWAL ON 03/11/2004. DURING THE SEARCH SOME DOCUMENTS WERE SEIZED. THE SEIZED DOCUMENTS AMONGST OTHERS, CONTAINED SOME PAGES SHOW ING EXPENDITURE INCURRED BY P. R. PATIL ON BEHALF OF SHRI. R. N. AG RAWAL AND P. R. PATIL CLAIMED REIMBURSEMENT OF THE SAME FROM SHRI. R. N. AGRAWAL. SHRI R. N. AGRAWAL AGREED DURING THE SEARCH ITSELF THAT THE EX PENDITURE PERTAINS TO HIM AND ACCEPTED A SUM OF RS.6,10,000/- FOR TAXATION. DURING THE ASSESSMENT PROCEEDINGS FOR A.Y. 2002-03, THE TOTAL OF SUCH EXPENDITURE WAS RS.16,80,000/- AND THE SAME WAS ADD ED TO THE INCOME OF SHRI. R. N. AGRAWAL FOR AY 2002-03 VIDE ASSTT. ORDER DT . 27-12-2006. ON APPEAL BY SHRI. R. N. AGRAWAL, HON. CIT(A), NASHIK NOTICED TH AT THE AMOUNT PERTAINS TO SHRI. R. N. AGRAWAL AND HAS TO BE ADDED IN HIS HAND S. BUT, AFTER A DETAIL VERIFICATION, IT IS FOUND THAT CORRECT TOTAL OF THE EXPENDITURE WAS NOT MORE THAN RS.7,50,000/-. HENCE, THE ADDITION OF RS.16,80,000 /- IS REDUCED TO RS.7,50,000/-. THE CIT (A), NASHIK HAS ALSO OBSERV ED THAT THE INCOME ACCORDING TO THE DATES OF EXPENSE PERTAIN TO A.Y 20 03-04 AND NOT IN A.Y 2002- 03 AND DIRECTED THE A.O. TO ADD THE SAME IN AY 2003 04 INSTEAD OF 2002-03. (ORDER NSK/CIT(A)-I/540/2008-09, DTD.18/10/2011). THUS, SUBSTANTIVE ADDITION OF RS.7,50,000/- IS FINALLY MADE IN THE HA NDS OF SHRI R. N. AGRAWAL ON THIS ISSUE. 03. IN THE CASE OF P.R.PATIL, DURING THE ASSESSME NT PROCEEDINGS FOR A.Y 2002-03, IT IS NOTICED THAT, OUT OF TOTAL AMOUNT OF RS.16,80,000/- SHRI. R. N. AGRWAL HAD ACCEPTED RS.6,10,000/- DURING THE SEARCH ITSELF AS UNEXPLAINED EXPENDITURE. HENCE, THE ASSESSING OFFICER ASKED TO P. R. PATIL TO EXPLAIN THE BALANCE AMOUNT OF RS.10,70,000/-. IN REPLY, P. R. PATIL TO EXPLAIN THAT, THE ENTIRE AMOUNT PERTAINS TO SHRI. R. N. AGRAWAL AND C ANT BE ADDED TWICELY IN THE HANDS OF BOTH THE ASSESSEE. HOWEVER, THE A.O ADDED THE BALANCE AMOUNT OF RS.10,70,000/- IN THE HANDS OF THE P. R. PATIL FOR AY 2002-03 ON A PROTECTIVE BASIS ON THE GROUND THAT ONUS TO PROVE AND EXPLAIN THE BALANCE AMOUNT IS ON P. R. PATIL AS PER ORDER DT.28-12-2007, PARA 4(I) (D)( 7). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE CIT(A), NASHIK, P. R. PATIL CLAIMED THAT, THE ITA NO.660&661/PUN/2012 7 ADDITION MADE ON THE SAME ISSUE IN THE HANDS OF BOT H THE ASSESSEE CANNOT BE SUSTAINED. AS THE SUBSTANTIVE ADDITION IN THE CASE OF R. N. AGRAWAL IS FINALIZED AT RS.7,50,000/- BY THE FIRST APPELLATE AUTHORITY, THEREFORE, THE ADDITION MADE IN THE CASE OF ASSESSEE ON PROTECTIVE BASIS IS NOT TENABLE. HOWEVER, AN AMOUNT OF RS.3,08,047/- INSTEAD OF RS.10,70,000/- IS CONFI RMED IN THE HANDS OF THE P. R. PATIL BY HON.CIT-(A), NASHIK ORDER NO. NSK/CIT(A)-I I/296/07-08, DTD.16/11/2012. NOW, THE ASSESSEE IS IN APPEAL BEFO RE THE HON'BLE TRIBUNAL ON SAID ISSUE WHICH IS PENDING FOR DECISION. 04. IN VIEW OF THE ABOVE FACTS, THE DECISION MAY K INDLY BE TAKEN ON MERITS OF THE CASE. SUBMITTED. 6. CONSIDERING THE SUBMISSIONS MADE BY LD.AR AND CONSIDER ING THE REPORT OF AO AS REPRODUCED HEREIN ABOVE WHICH INTER-ALIA STATES THAT THE SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF SHRI R.N. AGRAWAL FOR AY 200304 AND THE SAME BEEN ATTAINED FINALITY. BEFORE US, RE VENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE ADDITION MADE IN THE HANDS OF SHRI R.N.AGARWAL HAS BEEN SET ASIDE B Y HIGHER AUTHORITIES. IN SUCH A SITUATION WE ARE OF THE VIEW THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. 7. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED IN BOTH THE YEARS. 8. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS THURSDAY, THE 5 TH DAY OF JANUARY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) /JUDICIAL MEMBER $ /ACCOUNTANT MEMBER PUNE ; DATED : 5 TH JANUARY, 2017. S S G G R R ITA NO.660&661/PUN/2012 8 ' ( )'*+ ,+' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. ! ''#$ , % #$ , & '() , / DR, ITAT, A BENCH, PUNE. 6. !+, -. / GUARD FILE. %/ / BY ORDER, / / TRUE COPY / / .'1 #) / SR. PRIVATE SECRETARY, % #$ , / ITAT, PUNE