Aliasgar Inayathusein Bohari, Dhule V. Income tax Officer, Dhule

ITA 660/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9070 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASHIS MAHENDRA BHALGAT
• Keywords: Unexplained investment; Loose papers; Opportunity of being heard; Application of stay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , . ! , ' , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM $ / ITA NO.660/PUN/2017 % & & / ASSESSMENT YEAR : 2013-14 SHRI ALIASGAR INAYATHUSEIN BOHARI KAPAD BAZAR, SHIRPUR, TAL. SHIRPUR, DHULE-425 405 PAN : ABAPB5558K ....... / APPELLANT '% / V/S. THE INCOME TAX OFFICER, WARD-3, DHULE. / RESPONDENT S.A. NO. 20/PUN/2018 ( ARISING OUT OF ITA NO. 660/PUN/2017 ) % & & / ASSESSMENT YEAR : 2013-14 SHRI ALIASGAR INAYATHUSEIN BOHARI PROP. OF M/S. SAIFEE MACHINERY, SHOP NO. 6, OPPOSITE PANCHAYAT, SAMITI CHOPADA, TALUKA- CHOPADA DIST- JALGAON-425 405 PAN : ABAPB5558K .. /APPLICANT '% / V/S. THE INCOME TAX OFFICER, WARD-3, DHULE. / RESPONDENT ASSESSEE BY : SHRI ASHIS MAHENDRA BHALGAT REVENUE BY : SHRI AJAY MODI, JCIT 2 ITA NO. 660/PUN/2017 S.A. NO.20/PUN/2018 A.Y. 2013-14 / DATE OF HEARING : 20.03.2018 / DATE OF PRONOUNCEMENT : 27.03.2018 ( / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEAL)-1, NASHIK DATED 13.02.2 017 FOR ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN APPEAL: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.70,00,000/- MADE BY THE A.O. WITHOUT APPRECIATIN G THE SAID ADDITION WAS NOT JUSTIFIED IN LAW. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ADD ITION OF RS.70,00,000/- WAS JUSTIFIED ON THE GROUND THAT IN THE COURSE OF SURVEY STATEMENT RECORDED U/S. 133A, THE ASSESSEE H AD DECLARED ADDITIONAL INCOME OF RS.70,00,000/- IN RESPECT OF S TOCK SHORTAGE, CASH FOUND, UNACCOUNTED INVESTMENTS AND CASH PAYMENTS U/ S.40A(3) AND HENCE, HE CANNOT GO BACK ON HIS DECLARATION ONCE TH E INCOME WAS DECLARED IN THE SURVEY STATEMENT. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THA T THE SAID ADDITION WAS MADE SOLELY ON THE BASIS OF THE DECLARATION MAD E IN THE STATEMENT U/S.133A AND THE DEPT. HAD NOT POINTED OUT ANY DISC REPANCY IN THE BOOKS OF ACCOUNTS FURNISHED BY THE ASSESSEE IN THE COURSE OF ASST. PROCEEDINGS TO JUSTIFY THE ADDITION OF RS.70,00,000 /- ON MERITS AND HENCE, THE ADDITION WAS NOT WARRANTED. 4. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T AT THE TIME OF SURVEY ACTION CONDUCTED ON 21.11.2012, THE BOOKS OF ACCOUNTS WERE INCOMPLETE, HOWEVER, AFTER THE END OF THE YEAR, THE BOOKS OF ACCOUNTS WERE PREPARED AND AS PER THE FINALIZED BOOKS, THE S TOCK AND CASH WAS RECONCILED AND THE A.O. HAD ACCEPTED THE SAID BOOKS WITHOUT POINTING OUT ANY DISCREPANCY IN THE SAME AND THEREFORE, THER E WAS NO REASON TO MAKE ANY ADDITION SOLELY ON THE BASIS OF THE DECLAR ATION MADE IN THE SURVEY STATEMENT. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSE SSEE SUBMITS THAT AT THE TIME OF SURVEY ACTION, THE INVENTORY OF STOC K VALUING RS.25,47,445/- WAS FOUND AS AGAINST THE STOCK OF RS .58,37,270/- AS PER THE INCOMPLETE BOOKS OF ACCOUNTS AND HENCE, IF AT ALL, ANY ADDITION IS TO BE MADE, THEN ONLY THE G.P. @ 4.66% ON THE ST OCK SHORTAGE SHOULD HAVE BEEN TAXED AND NO FURTHER ADDITION WAS JUSTIFI ED ON FACTS OF THE CASE. 3 ITA NO. 660/PUN/2017 S.A. NO.20/PUN/2018 A.Y. 2013-14 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF ALL TYPES OF PIPES , AGRICULTURAL IMPLEMENTS, MACHINERY ETC. THE ASSESSEE FILED RETURN OF INCOM E OF RS.26,46,907/-. IN THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE I.T ACT, THE ASSESSING OFFICER ASSESSED INCOME AT RS. 98,67,776/-. T HIS IS A CASE WHERE THERE WAS SURVEY ACTION U/S.133A OF THE ACT ON 21.11.2012. DURING THE PROCEEDINGS, STATEMENT WAS RECORDED U/S.134 OF THE ACT FROM ASSESSEE. THE SURVEY ACTION RESULTED IN DISCOVERY OF CERTAIN INCRIMINA TING DOCUMENTS AND LOOSE PAPERS, AND WHICH LED TO DISCLOSE THE INCOME OF R S.70,00,000/-. SUBSEQUENTLY, THE ASSESSEE RETRACTED THE SAME AND TH EREFORE, DID NOT DISCLOSE THE SAME IN THE RETURN OF INCOME. IT IS THE CASE OF ASSESSEE THAT NO SUCH DISCLOSURE IS REQUIRED AS CONTENTS OF THE SAID IMPOUN DED LOOSE PAPERS AND OTHER DOCUMENTS, BOOKS OF ACCOUNTS WERE INCORPORAT ED WHILE COMPLETING THE BOOKS OF ACCOUNTS AND ADOPTED THE BOOK PROFIT IN FILING RETURN OF INCOME. HOWEVER, AS PER THE DISCUSSION GIVEN IN P ARA-11 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER PROCEEDED TO MAK E ADDITION OF RS. 70,00,000/- IN THE ASSESSMENT MADE U/S. 143(3) OF THE ACT. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE C OULD NOT IMPROVE HIS CASE. EVENTUALLY, THE COMMISSIONER OF INCOME TA X (APPEAL) DISMISSED THE APPEAL OF ASSESSEE. THE CONTENTS OF PARA-3 AND 4 AND THEIR SUB-PARAGRAPHS ARE RELEVANT. 5. AGGRIEVED WITH THE SAID ORDER OF COMMISSIONER OF INCOM E TAX (APPEAL), THE ASSESSEE FILED PRESENT APPEAL BEFORE US WITH TH E GROUNDS EXTRACTED ABOVE. 4 ITA NO. 660/PUN/2017 S.A. NO.20/PUN/2018 A.Y. 2013-14 6. AT THE OUTSET, LD. COUNSEL BROUGHT OUR ATTENTION TO THE FACT THAT COMMISSIONER OF INCOME TAX (APPEAL) DISMISSED THE APPEAL OF ASSESSEE IN HIS EX-PARTE ORDER AFTER GIVING NOMINAL HEARINGS ON 22.11.20 16, 16.12.2016, 09.01.2017 AND 23.01.2017. AS PER DISCUSSION GIVEN IN PARA 3.5 OF IMPUGNED ORDER, THE APPEAL OF ASSESSEE WAS ADJUD ICATED EVENTUALLY WITHOUT ENSURING THE PRESENCE OF THE ASSESSEE OR HIS AU THORIZED REPRESENTATIVE. ON THIS ISSUE, THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT BY MAKING ADDITION OF RS.70,00,000/-, THE ASSESSMENT MADE CONSTITUTES CASE OF DOUBLE ADDITION TO THE EXTENT OF SAID RS. 70,00,000/-. THE ASSESSEE FILED WRITTEN SUBMISSION ON THIS ISSUE EXPLAININ G THE MANNER HOW IT BECOMES A CASE OF DOUBLE ADDITION. CONTENTS OF PARA S IN THE WRITTEN SUBMISSIONS ARE RELEVANT. IN THE SAID WRITTEN SUBMISSIONS, THE ASSESSEE EXPLAINED WITH THE SAID ADDITION OF RS.70,00,000/-, AN UNUSUAL GP OF THE ASSESSEE IS SUBJECTED TO TAXATION. THE LD. AR SUBMITTED FOR GRANT OF ONE OPPORTUNITY TO THE ASSESSEE BEFORE THE ASSESSING OFFICER TO EXPLAIN THE FACTS OF THE CASE. 7. ON THE OTHER HAND, THE LD. DR HEAVILY RELIED ON THE O RDER OF ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEAL). HE ALSO BROUGHT OUR ATTENTION TO THE INCRIMINATING MATERIALS IMPO UNDED BY REVENUE DURING SURVEY ACTION. 8. ON HEARING BOTH THE PARTIES, WE FIND IT IS EVIDENT THAT THE COMMISSIONER OF INCOME TAX (APPEAL) IS THE PRODUCT OF EX-PA RTE PROCEEDINGS. DURING FIRST APPELLATE PROCEEDINGS, THE CASE W AS DECIDED WITHOUT THE PRESENCE OF ASSESSEE OR HIS AUTHORIZED REPR ESENTATIVE. THEREFORE, IN PRINCIPLE, THE REQUEST FOR GRANT AN OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE, HAS MERIT. ACCORDINGLY, WE ARE OF THE OP INION THAT HEARING 5 ITA NO. 660/PUN/2017 S.A. NO.20/PUN/2018 A.Y. 2013-14 DATES MENTIONED IN THE IMPUGNED ORDER DOES NOT INDICATE THAT NOTICES WERE ACTUALLY SERVED UPON THE ASSESSEE AND ASSESSEE IS WELL AWARE ABOUT THE SAID DATES OF HEARING. NOTICES WERE SENT TO ASSESSEE T HROUGH SPEED POST. THERE IS NO CONCLUSIVE FINDING REGARDING SERVICE OF NOTICES T O ASSESSEE IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL). THE CONT ENTS OF PARA-2 OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) ARE SEL F EXPLANATORY IN THIS REGARD. THEREFORE, WE ARE OF THE OPINION THAT IT IS A FIT CASE FOR REMANDING ALL THE ISSUES RAISED IN THE APPEAL TO THE FILE OF C OMMISSIONER OF INCOME TAX (APPEAL). THIS TIME, COMMISSIONER OF INCOME TAX (APPEAL) SHOULD GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE BY NOT ONLY SENDING THE NOTICES THROUGH SPEED POST BUT ALSO E NSURING THE SERVICE OF NOTICES UPON ASSESSEE AS PER THE RULES ON SERVICES O F NOTICES. THE ASSESSEE IS DIRECTED TO COMPLY WITH THE NOTICES WITHOUT FAIL. ACCORDINGLY , GROUNDS RAISED BY ASSESSEE ARE ALLOWED FOR STATISTI CAL PURPOSES . S.A. NO. 20/PUN/2018 ( A.Y. 2013-14) 9. IN THE PRECEDING PARAGRAPHS OF THIS ORDER, WE HAVE D ISCUSSED THE ASSESSMENT MADE BY ASSESSING OFFICER AND ASSESSED INCOME OF RS.98,67,776/- AFTER MAKING ADDITION OF RS.70,00,000/-. THE AS SESSING OFFICER ISSUED THE DEMAND NOTICE U/S.156 OF THE ACT ASKING TO PAY DEMAND OF RS.30,18,266/-. THE ASSESSEE FILED STAY APPLICATION BEFORE U S REQUESTING TO STAY THE DEMAND. IN THIS REGARD, CONSIDERING THE ABO VE DISCREPANCIES WITH REGARD TO ISSUE OF PROPER NOTICE TO THE ASSESSEE, B OTH THE PARTIES SUBMITTED THAT STAY APPLICATION COULD BE HEARD ALONG WITH MAIN APPEAL I.E. ITA NO. 660/PUN/2017. 6 ITA NO. 660/PUN/2017 S.A. NO.20/PUN/2018 A.Y. 2013-14 10. AS PER DISCUSSION GIVEN IN THE AFOREMENTIONED PARAGR APHS, WE HAVE DECIDED TO REMIT ALL THE ISSUES RAISED IN THE APPEAL ON ME RITS TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEAL) FOR FRESH ADJUDICATION. IN VIEW OF OUR DECISION OF SETTING ASIDE THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEAL), THE ADJUDICATION OF STAY APPLICATION BECOMES AN ACADEMIC E XERCISE. THUS, STAY APPLICATION MOVED BY THE APPLICANT IS DISMISSED. 11. TO SUM UP, APPEAL OF THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES AND STAY APPLICATION MOVED BY THE APPLICANT IS DISMISSED. ORDER PRONOUNCED ON 27 TH DAY OF MARCH, 2018. SD/- SD/- ( / SUSHMA CHOWLA ) ( . ! / D. KARUNAKARA RAO ) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER / PUNE; '# / DATED : 27 TH MARCH, 2018. SB ()*+,-.-+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL)-1, NASHIK 4. THE CIT-1, NASHIK. 5. &'( )* , )* , +,- , / DR, ITAT, A BENCH, PUNE. 6. (./ 01 / GUARD FILE. // TRUE COPY // 2 / BY ORDER, 3 )- /PRIVATE SECRETARY )* , / ITAT, PUNE.