SHRI SANJAY AGARWAL, Jaipur V. DCIT, BHARATPUR

ITA 681/JPR/2012

• Counselvise Citation: 68123114 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 1990-1991
• Appeal Filed On: 20-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Validity of assessment; Documents seized; Reassessment proceedings
• Section: 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 681/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 1990-91 SHRI SANJAY AGARWAL S/O- SH. BANKEY BIHARI LAL AGARWAL NADIYA MOHALLA, BHARATPUR. CUKE VS. THE DCIT, CIRCLE- BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ABDPA 4393 G VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 13/02/2015 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS A SMALL APPEAL FILED BY THE ASSESSEE AGAINS T THE ORDER DATED 17/05/2012 BY THE LEARNED CIT(A), ALWAR FOR A. Y. 1990-91. RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE LEGALITY OF ASSESSMENT ORDER PASSED U/S 148/143(3). ITA 681/JP/2012_ SANJAY AGARWAL VS. DCIT 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS H AS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF THE ASSESSMENT ORDER EVEN WHEN ACCEPTING THAT ASSESSMENT HAS BEEN MADE WITHOUT AFFORDING ANY OPPORTUNITY TO T HE ASSESSEE TO PROVE HIS CASE BY GIVING HIM THE COPY O F THE DOCUMENTS SEIZED AS PER ANNEXURE-A-1. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS. 1,03,075/- (RS. 89,145+RS. 9500 + RS. 4,430) IN RES PECT OF ENTRIES IN THE RED DIARY KA6. HE HAS FURTHER ERRED IN CONFIRMING THE SAID ADDITION:- (I) ON THE GROUND THAT THE REGULAR BOOKS OF ACCOUN TS WHICH WERE SEIZED IN SEARCH, IN WHICH THESE ENTRIES ARE RECORDED IS NOT AVAILABLE WITH THE A.O. AND THEREFORE THE CONTENTION OF THE ASSESSEE CANNOT BE SUBJECTED TO EXAMINATION/VERIFICATION. (II) BY NOT ACCEPTING THE REALIZATION OF ADVANCES O F RS. 89,145/- FOR WHICH CONFIRMATIONS WERE SUBMITTED. (III) BY NOT ALLOWING THE CREDIT OF OPENING CAPITAL OF SH. SANJAY AGARWAL TO THE EXTENT OF RS. 500/- AND THE LOAN RECEIVED FROM SH. LAXMAN SINGH AT RS. 9,000/-. (IV) NOT GIVING THE CREDIT OF RS. 4,430/- WHICH WAS OTHERWISE VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNTS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF R S. 25,000/- ON ACCOUNT OF INTEREST AND BROKERAGE BUSIN ESS WITHOUT ANY BASIS. HE HAS FURTHER ERRED IN MAKING TH E ADDITION IGNORING THAT INTEREST INCOME EARNED BY TH E ITA 681/JP/2012_ SANJAY AGARWAL VS. DCIT 3 ASSESSEE IS DULY RECORDED IN THE BOOKS OF ACCOUNTS. HE HAS FURTHER ERRED IN MAKING THIS ADDITION WITHOUT ALLOWIN G THE SET OFF OF THE ADDITION CONFIRMED BY HIM IN GROUND NO. 3 ABOVE. 2. BRIEF FACTS ARE A SEARCH WAS CONDUCTED AT THE RES IDENTIAL AND BUSINESS PREMISES OF THE FATHER OF THE ASSESSEE SHR I BANKE BIHARI AGARWAL ON 14.09.1989 AND 20.09.1989, ASSESSEE LIVED WITH HIS FATHER. ALONG WITH FATHER, THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE WERE ALSO SEIZED VIDE ANNEXURE A-1. AFTER SEARCH THE ASS ESSEE'S FATHER AND THE ASSESSEE REQUESTED TIME AND AGAIN TO PROVIDE TH E PHOTOCOPY OF THE SEIZED RECORDS, WHICH WERE NOT PROVIDED INCLUDING ASS ESSEES BOOKS I.E. ANNEXURE A-1. IN ORDER TO OBTAIN THE PHOTOCOPY OF B OOKS OF ACCOUNTS AS PER ANNEXURE A-1, FATHER FILED A WRIT PETITION AND S TAY PETITIONS BEFORE HONBLE HIGH COURT. HE ALSO FILED TWO STAY APPLICATI ONS BEFORE THE HONBLE RAJASTHAN HIGH COURT, WHICH WAS PLEASED TO DI RECT THE DEPARTMENT TO PROVIDE THE SAME. DESPITE THESE DIRE CTIONS THE ORDER REMAINS TO BE COMPLIED WITH TILL DATE. 2.1 ALL THE ADDITIONS WERE MADE IN THE HANDS OF THE FATHER DESPITE ASSESSEES STATEMENT THAT ANNEXURE A-1 BELONGED TO SON. FATHERS APPEAL TRAVELLED UPTO ITAT JAIPUR WHICH BY ORDER DTD. 29-10-1999 DELETED THE ADDITIONS WITH A DIRECTION THAT THE QUES TION OF ADDITIONS QUA ITA 681/JP/2012_ SANJAY AGARWAL VS. DCIT 4 ANNEXURE A-1 CAN BE CONSIDERED IN THE HANDS OF THE ASSESSEE BY FOLLOWING OBSERVATIONS AT INTERNAL PAGE 12 & 12, PA RA 14 OF THE ORDER: IN VIEW OF THIS FACTS AND CIRCUMSTANCES, WE ARE OF TH E VIEW THAT FIRST STATEMENT GIVEN BY SHRI SANJAY AGARWAL SHOULD HAVE B EEN IGNORED AND THE STATEMENT GIVEN ON A LATER STAGE SHOULD HAV E BEEN ACCEPTED AND ADDITION IN THE HANDS OF SHRI SANJAY AGARWAL SHO ULD HAVE BEEN MADE INSTEAD OF MAKING ADDITION IN HANDS OF ASSESSE E. WITH THESE OBSERVATIONS, WE ARE OF THE VIEW THAT ADDITION MADE IN THE HANDS OF ASSESSEE IS NOT SUSTAINABLE. ACCORDINGLY, WE DELETE THE ENTIRE ADDITION IN THE HANDS OF THE ASSESSEE. THE GROUND O F THE ASSESSEE IS ALLOWED AND GROUND OF THE DEPARTMENT IS DISMISSED. 2.2 ON THIS BASIS OF THESE OBSERVATIONS, NOTICES U/ S 148 WERE ISSUED ON THE ASSESSEE, WHICH WERE COMPLIED WITH BY DECLARAT ION THAT ORIGINAL RETURNS FILED MAY BE CONSIDERED AS FILED IN RESPONS E THERETO. IT WAS INSSITED THAT ANNEXURE A-1 HAS NOT BEEN PROVIDED TO THE ASSESSEE, ALL THESE TRANSACTIONS WERE RECORDED ON THE REGULAR BOO KS OF ACCOUNTS. AO HOWEVER WITHOUT SUPPLYING THE ANNEXURE A-1 AS DIRECTE D BY HONBLE HIGH COURT AND ITAT FRAMED THE ASSESSMENT MAKING ALL THESE ADDITIONS. 3. AGGRIEVED ASSESSEE PREFERRED 1 ST APPEAL CHALLENGING THE VALIDITY OF REASSESSMENT AND ON MERITS. LD. CIT(A), HOWEVER, UPHE LD THE REASSESSMENT AND AWARDED SUBSTANTIAL RELIEF ON MERIT S. QUA THE NON SUPPLY OF ANNEXURE A-1, LEARNED CIT(A) OBSERVED THAT , ASSESSEE ITA 681/JP/2012_ SANJAY AGARWAL VS. DCIT 5 CONTENTION THAT THESE AMOUNTS ARE ENTERED IN REGULA R BOOKS SEIZED AS PER ANNEXURE A-1 CANNOT BE ACCEPTED AS IT IS NOT SU BJECT TO EXAMINATION OR VERIFICATION AT ANY STAGE SINCE THE SAME DO NOT APPEAR TO BE AVAILABLE BEFORE AO . HE THEREFORE ALLOWED SUBSTANTIAL RELIEF HOWEVER ON ESTIMATE SUSTAINED THE ADDITION TO RS.1,03,075/- . 4. NOW THE ASSESSEE IS BEFORE US CHALLENGING VALIDIT Y OF 147/148 PROCEEDINGS AND ON MERITS. LD. COUNSEL FOR THE ASSE SSEE CONTENDS THAT LD. AO CANNOT INITIATE REASSESSMENT PROCEEDINGS ON BORROWED OBSERVATION. ITAY DID NOT DIRECT THAT ASSESSMENTS S HOULD BE REOPENED. ASSESSEES CASE WAS NOT BEFORE ITAT, THEREFORE, ITS D IRECTION IN THE ABSENCE OF ASSESSEE BEING A PARTY TO THOSE PROCEEDI NGS, DOES NOT CONSTITUTE A DIRECTION. BESIDES IT WAS WELL KNOWN TO A O THAT SEIZED BOOKS OF ACCOUNTS IN THE FORM OF ANNEXURE A-1 WAS NO T AVAILABLE, IN THIS EVENTUALITY PROPER SATISFACTION OR BELIEF CANNOT BE ARRIVED AT TO HOLD THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, REOPENING IS BAD IN LAW AND DESERVES TO BE QUASHED. 4.1 APROPOS MERITS ITS VEHEMENTLY ARGUED THAT ON SE VERAL OCCASIONS, JAIPUR ITAT BENCH ADJOURNED THE HEARING DIRECTING TH E DEPARTMENT TO PRODUCE THE ANNEXURE A-1; WHICH HAS NOT BEEN PRODUCE D SO FOR AND DEPARTMENT HAS EXPRESSED THE INABILITY TO PRODUCE T HE SAME. SINCE THE ITA 681/JP/2012_ SANJAY AGARWAL VS. DCIT 6 ALLEGED ANNEXURE A-1 IS NOWHERE TO BE SEEN NO ADDIT ION ON ESTIMATE IN REASSESSMENT PROCEEDINGS CAN BE MADE. LD. AO AND LD . CIT(A) BOTH HAS ACCEPTED THE FACT ABOUT MISSING ANNEXURE A-1 DESPIT E THAT ADDITIONS HAVE BEEN PARTLY SUSTAINED. THERE CAN BE NO JUSTIFIC ATION FOR ANY ADDITION BASED ON MATERIAL WHICH IS NEITHER PROVIDED TO ASSESSEE NOR BEFORE ITAT. THEREFORE ON MERITS ALSO THE PART RETENT ION OF SMALL ADDITIONS BY LD. CIT(A) DESERVES TO BE DELETED. 5. LD. DR RELIED ON THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. APROPOS THE VALIDITY OF 147/14 8 PROCEEDINGS WE ARE INCLINED TO UPHOLD THE SAME AS THERE WERE PERTINENT OBSERVATION OF THE ITAT. AT THE TIME OF RECORDING REASONS AND ISSUANCE OF NOTICE ONLY PRIMARY SATISFACTION IS REQUIRED. SUFFICIENCY OF RE ASONS CANNOT BE EXAMINED AT THAT STAGE AS HELD BY HONBLE SUPREME C OURT IN THE CASE OF PHOOLCHAND BAJRANGLAL 203 ITR 456. THEREFORE, THIS G ROUND OF THE ASSESSEE IS DISMISSED. 6.1 APROPOS THE MERITS WE FIND SUBSTANCE IN THE CONT ENTION OF ASSESSEES COUNSEL. THE FACT THAT THE ALLEGED ANNEXU RE A-1 DID NOT SEE THE LIGHT OF THE DAY IS ADMITTED BY THE DEPARTMENTA L AUTHORITIES. THE REASONS FOR ESTIMATED PART RETENTION OF ADDITION IS DONE BY PUTTING A ITA 681/JP/2012_ SANJAY AGARWAL VS. DCIT 7 BURDEN IN THE ASSESSEE. IN OUR VIEW NO ADDITION QUA AN ITEM EMERGING FROM THE INCRIMINATING MATERIAL CAN BE MADE UNLESS THE ASSESSEE IS GIVEN AN OPPORTUNITY, CONFORMING TO PRINCIPLES OF N ATURAL JUSTICE, TO RECONCILE AND REBUT THE SAME. CONSEQUENTLY WE DELETE THE ALL THE ADDITIONS RETAINED BY LD. CIT(A). ASSESSEE GROUNDS O N MERIT SUCCEED. 7. IN THE RESULT, THE ASSESSEE APPEAL IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/02/2015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 13 TH FEBRUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SANJAY AGARWAL, BHARATPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE- BHARATPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 681/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR