M/s. Rajmal Lakhichand, V. Deputy Commissioner of Income-tax,

ITA 669/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9562 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Unexplained investment; Document seized; Documents seized
• Section: 143(3); 148

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO.669/PUN/2015 ' ' / ASSESSMENT YEAR : 2005-06 M/S. RAJMAL LAKHICHAND, 169, BALAJI PETH, JALGAON 425 001 . / APPELLANT PAN: AACFR8609L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, JALGAON . RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI ANIL CHAWARE DATE OF HEARING : 17.04.2017 / DATE OF PRONOUNCEMENT: 20.04.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-2, NASHIK, DATED 05.03.2015 RELATING TO ASSESSMENT YEA R 2005-06 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S.147 OF THE INCOME -TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- THE GROUNDS OF APPEAL STATED BELOW ARE WITHOUT PRE JUDICE TO EACH OTHER. 1. ALLEGED DEPOSIT OF RS.5,00,000/- AND INTEREST OF RS.2,750/- THEREON. ITA NO.669/PUN/2015 M/S. RAJMAL LAKHICHAND 2 1.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS. 5,02,750/- ON THE GROUND OF ALLEGED UNACCOUNTED INVESTMENT BY WAY OF DEPOSIT OF RS. 5,00,000 WITH CHHORIYA GROUP AND ALLEGED INTEREST R ECEIPT OF RS. 2,750/- THEREON. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS. 5,02,750/- BE DELETED. 1.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HERE WAS NO MATERIAL ON RECORD, EXCEPT THE ENTRY FOUND IN THE ROUGH BOOK MA INTAINED BY THE CHHORIYA GROUP IN THE HANDWRITING OF PERSON CONNECTED THEREW ITH AND AS SUCH NO ADDITION COULD BE JUSTIFIED. 1.3 THE LEARNED CIT(A) ERRED IN MAKING AN ADDITION IN THE HANDS OF THE APPELLANT WHILE AS THE APPELLANT WAS GIVEN TO UNDER STAND SUCH SUM WAS TAXED AS INCOME IN THE HANDS OF THE CHHORIYA GROUP ON AN AGREED BASIS. 1.4 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT THERE COULD BE ANOTHER PERSON/S WITH SIMILAR NAME AND THEREFORE IN THE ABSENCE OF ANY OTHER EVIDENCE THE APPELLANT COULD NOT BE MADE LIABLE FOR THE ALLEGED UNRECORDED INVESTMENT. 1.5 THE ADDITION OF RS. 5,02,750 BEING THE RESULT OF GUESS WORK AND SURMISES COULD NOT BE SUSTAINED EITHER OF FACTS OR IN LAW. 2. GENERAL : 2.1 THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY ONE OR MORE OF THE GROUNDS OF APPEALS AS MAY BE REQUIRED I N THE NATURE AND CIRCUMSTANCES OF THE CASE. 2.2. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTH ER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEMAND. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE ADDITION OF RS.5, 02,750/-. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSMENT WAS REOPENED UNDER SECTION 148 OF THE ACT BY THE ASSESSING OFFIC ER, AFTER RECORDING REASONS FOR REOPENING THE ASSESSMENT. THE ASSESSEE INTURN REPLIED THAT THE RETURN OF INCOME ALREADY FILED MAY BE CONSIDERED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE ASKED FOR THE REASONS RECORDED FOR REOPENING THE ASSESSMENT WHICH WERE SUPPLIED TO THE ASSESSEE AND THE OBJECTIONS RAISED BY THE ASSESSEE WAS ADDRESSED BY THE ASSESSING OFFICER VIDE LETTER DATED 14-02-2013 AND THE COPY OF THE EVIDENC E BEING RELIED ON BY THE ASSESSING OFFICER, WAS PROVIDED TO THE ASSESSEE. T HE ASSESSING OFFICER HAD PROPOSED AN ADDITION OF RS.5 LAKHS IN THE HANDS OF ASSESSEE ON THE BASIS OF EXTRACT FROM ROUGH CASH BOOK SEIZED FROM THE POSSES SION OF CHHORIYA GROUP ITA NO.669/PUN/2015 M/S. RAJMAL LAKHICHAND 3 DURING THE COURSE OF SEARCH ON 22-08-2008. THE ASSE SSEE EXPLAINED THAT THE ENTRY CREDITING THE SUM OF RS.5 LAKHS SHOWN TO HAVE RECEIVED FROM ONE SHRI RAJMAL LAKHICHAND-TH MOHAN. THE ASSESSEE STRESSE D THAT THE SAID TRANSACTION DID NOT RELATE TO THE ASSESSEE AND HE A LSO POINTED OUT THAT NO PERSON BY NAME MOHAN WAS KNOWN TO THE FIRM. THE ASSESSING OFFICER REJECTING THE PLEA OF THE ASSESSEE MADE AN ADDITION OF RS.5 LAKHS ON ACCOUNT OF SOURCE OF INVESTMENT NOT BEING REFLECTED IN THE BOO KS OF ACCOUNT. FURTHER ADDITION WAS MADE OF RS.2,750/- WHICH WAS THE ENTRY ENTERED IN THE ROUGH CASH BOOK RELATING TO INTEREST DUE FROM 06-07-2004 TO 09 -07-2004. 4. IN APPEAL THE CIT(A) UPHELD THE ADDITION HOLDING THAT THE IDENTITY OF THE ASSESSEE STANDS ESTABLISHED WHERE SEVERAL ADVANCES WERE GIVEN BY VARIOUS PROMINENT PERSONS/CONCERNS TO THE CHHORIYA GROUP OF JALGAON. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C IT(A). 6. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE PERUSAL OF THE SEIZED DOCUMENTS PLACED AT PAGES 16 AND 17 OF THE PAPER BOOK WOULD REFLECT THAT AT PAGE 16 THE PREFIX IS SHRI TO RAJMAL LAKHICHAND AND AT PAGE 17 THE SUFFIX IS JI TO RAJMAL LAKHICHAND. T HE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE P RESENT CASE BEFORE THE TRIBUNAL IS THAT OF A PARTNERSHIP FIRM AND THE PREF IX OF SHRI OR SUFFIX JI ARE NOT TO BE ATTACHED TO THE FIRM, HENCE THE ENTRIES DO NO T RELATE TO THE ASSESSEE. FURTHER NO CORROBORATIVE EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH ESTABLISHING THE CONNECTION BETWEEN THE ASSESSEE AN D THE CHHORIYA GROUP OF ASSESSEE. HE FURTHER STRESSED THAT IN THE ABSENCE OF ANY BUSINESS TRANSACTION WITH THEM THERE WAS NO MERIT IN HOLDING THAT THE SA ID ENTRIES RELATED TO THE ASSESSEE. HE FURTHER POINTED OUT THAT THE PUNE BEN CH OF THE TRIBUNAL IN THE CASE OF SHRI RATANLAL C. BAFNA VS JCIT VIDE ITA NO. 91/PN/2010 & 204/PN/2012 AND CONNECTED APPEAL VIDE ORDER DATED 3 1-03-2015 HAD HELD THE ITA NO.669/PUN/2015 M/S. RAJMAL LAKHICHAND 4 SIMILAR TRANSACTIONS TO BE RELATABLE TO THE ASSESSE E BECAUSE OF DIFFERENT FACTORS, I.E. BUSINESS TRANSACTION BETWEEN SHRI RATANLAL C. BAFNA AND CHHORIYA GROUP OF AN AOP. FURTHER EVIDENCE WAS FOUND OF TRANSACTIO N OF SALE AND PURCHASE OF PROPERTY BETWEEN THE TWO AND ALSO THE TRANSACTION O F JEWELLERY PURCHASE TALLIED. HE STRESSED THAT IN THE ABSENCE OF ANY SUCH EVIDENC E FOUND IN THE CASE OF ASSESSEE, THERE IS NO MERIT IN HOLDING THAT THE SAI D DOCUMENTS RELATE TO THE ASSESSEE. IN THIS REGARD HE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF TULSIRAM JODHA RAJ PALLOD VS ITO IN ITA NOS. 1789,1790 & 1791/PN/2013 ORDER DATED 30-04-201 5. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF CIT(A) AND THE ASSESSING OFFICER. 8. ON THE PERUSAL OF RECORD THE ISSUE WHICH ARISES FOR ADJUDICATION IS IN RELATION TO THE ADDITION OF RS. 5 LAKHS BEING MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF ENTRIES IN THE SEIZED DOCUMENTS FOUND DU RING THE COURSE OF SEARCH ON CHHORIYA GROUP. THE ASSESSING OFFICER HAD REOPE NED THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT ON THE BASIS OF TH E ALLEGED ENTRIES IN THE SEIZED DOCUMENT RECOVERED FROM CHHORIYA GROUP. THE CASE OF THE REVENUE WAS THAT SAID SUM OF RS.5 LAKHS MENTIONED AGAINST T HE ENTRY SHRI RAJMAL LAKHICHAND RELATED TO THE ASSESSEE AND SINCE SOURC E OF SAID INVESTMENT WAS NOT KNOWN, THE SAID AMOUNT WAS ADDED IN THE HANDS O F ASSESSEE. FURTHER ADDITION WAS MADE TO THE EXTENT OF RS.2,750/- ON AC COUNT OF INTEREST. WHEN THE AMOUNT WAS REFUNDED, I.E. RS.5,02,750/- THE NAME OF THE PERSON TO WHOM IT WAS REFUNDED WAS MENTIONED AS RAJMAL LAKHICHANDJI. T HE CASE OF THE ASSESSEE BEFORE THE TRIBUNAL IS THAT IT IS A PARTNERSHIP FIR M AND THE PREFIX SHRI AND SUFFIX JI CANNOT BE USED AGAINST THE ASSESSEE. FURTHER NO CORROBORATIVE EVIDENCE HAS BEEN FOUND TO ESTABLISH ANY CONNECTION BETWEEN THE ASSESSEE AND THE CHHORIYA GROUP CONCERN. IN THE ABSENCE OF THE SAME , THE ASSESSEE CLAIMS THAT ITA NO.669/PUN/2015 M/S. RAJMAL LAKHICHAND 5 NO ADDITION COULD BE MADE IN ITS HANDS ON THE BASIS OF SUCH SEIZED DOCUMENT. THERE IS MERIT IN THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE FOUND DURING THE COURSE OF S EARCH FROM THE CHHORIYA GROUP OF CASES IN ORDER TO ESTABLISH ANY BUSINESS L INK OR OTHERWISE, MERELY BECAUSE SIMILAR SOUNDING NAME IS FOUND IN THE SEIZE D DOCUMENT, DOES NOT MERIT ADDITION IN THE HANDS OF ASSESSEE. IN THE AB SENCE OF SAME, NO ADDITION ON ACCOUNT OF SUCH ENTRIES IN THE SEIZED DOCUMENT I S WARRANTED IN THE HANDS OF ASSESSEE. SIMILAR PROPOSITION HAS BEEN LAID DOWN B Y THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF TULSIRAM JODHARAJ PALLOD V S ITO IN ITA NOS. 1789,1790 & 1791/PN/2013 ORDER DATED 30-04-2015 AND PRADEEP A MRUTLAL VS. TAX RECOVERY OFFICER REPORTED IN (2014) 14 ITD 0549 (PU NE). THE ISSUE DECIDED BY THE PUNE BENCH OF THE TRIBUNAL IN RATANLAL C. BAFNA (SUPRA) WAS ON THE BASIS OF OTHER CIRCUMSTANTIAL EVIDENCES FOUND, I.E. DOCUM ENT FOUND EVIDENCING SALE/PURCHASE OF PROPERTY IN WHICH BOTH THE PARTIES WERE INVOLVED AND ALSO BOTH RATANLAL C. BAFNA AND THE PRINCIPAL PERSON OF CHHOR IYA GROUP HAD FORMED AN AOP AND HENCE IN SUCH CIRCUMSTANCES IT WAS HELD THA T THE ENTRIES IN THE SEIZED DOCUMENT RELATED TO SHRI RATANLAL C. BAFNA, MERITIN G ADDITION ON THE BASIS OF SUCH ENTRIES. IN THE TOTALITY OF THE FACTS AND CIRC UMSTANCES, THE ADDITION MADE OF RS.5,02,750/- IS THUS DELETED. THE GROUNDS OF APPE AL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED ORDER PRONOUNCED ON THIS 20 TH DAY OF APRIL, 2017 SD/- (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 20 TH APRIL, 2017 SATISH ITA NO.669/PUN/2015 M/S. RAJMAL LAKHICHAND 6 $ %'( )( / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ' () THE CIT(A)-2, NASHIK; ' THE CIT- 2, NASHIK % ((), ), , - / DR SMC, ITAT, PUNE; 0 / GUARD FILE. BY ORDER, % ( // TRUE COPY // / ASSISTANT REGISTRAR, ) , / ITAT, PUNE