HARRESH MEHTA, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITA 6850/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101194 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 27-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BANSALDR
• Keywords: Unexplained cash credit; Search and seizure; Difference of opinion; Bogus loan; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6850/MUM/2013 ASSESSMENT YEAR: 2006-07 SHRI HARRESH MEHTA, 2601, SHIC TAPI, 26 TH FLOOR, H.G. MARG, GAMDEVI, MUMBAI-400007 / VS. DCIT-CC-47, AAYAKAR BHAWAN, M.K.ROAD, MUMBAI-400020 ( !'# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AALPM3811G !'# $ / ASSESSEE BY SHRI VIJAY MEHTA % / REVENUE BY SHRI KUSUM BANSAL-DR %& ' $ ( / DATE OF HEARING : 14/09/2015 ' $ ( / DATE OF ORDER: 28/09/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 30/09/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND PRESSED BY THE ASSESSEE IS GROUND N O.3, WHICH PERTAINS TO CONFIRMING THE PENALTY OF RS.11,8 6,896/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). SHRI HARRESH MEHTA ITA NO.6850/MUM/2013 2 2. DURING HEARING OF THIS APPEAL, THE CRUX OF ARGU MENT ADVANCED BY SHRI VIJAY MEHTA, LD. COUNSEL FOR THE A SSESSEE, IS THAT THE PENALTY WAS LEVIED ON TWO ISSUES, FOR WHIC H OUR ATTENTION WAS INVITED TO PAGE 2 PARA 7 OF THE ASSES SMENT ORDER ALONGWITH PARA 9 OF THE PENALTY ORDER BY CONT ENDING THAT THE MONEY BELONGED TO PARTNERSHIP FIRM, BY FUR THER INVITING OUR ATTENTION TO PAGES, 1, 11, 60 OF THE P APER BOOK BY CONTENDING THAT CAPITALIZATION WAS ALLOWED BY THE S ETTLEMENT COMMISSION. RELIANCE WAS PLACED UPON THE DECISION I N ITA NO.4552/MUM/2012 AND ITA NO.6025/MUM/2012 (PAGES 90 AND 92 OF THE PAPER BOOK). IT WAS CONTENDED THAT TH E ASSESSEE DID NOT FILE APPEAL UNDER THE EFFECT OF THESE TWO O RDERS. OUR ATTENTION WAS INVITED TO PAGE 62 OF THE PAPER BOOK BY CONTENDING THAT THE DIRECTION OF THE SETTLEMENT COM MISSION IS BINDING ON THE ASSESSING OFFICER. WITH RESPECT TO SECOND ADDITION, IT WAS CONTENDED THAT ADDITION WAS OF RS.28,60,000/- BY THE ASSESSING OFFICER BY INVITING OUR ATTENTION TO PARA 4 OF THE ORDER OF THE LD. COMMISS IONER OF INCOME TAX (APPEALS), PARA 8 OF THE PENALTY ORDER, BY EXPLAINING THAT THE ADDITION WAS BASED ON PRESUMPTI ON AS NO INVESTIGATION WAS MADE BY THE ASSESSING OFFICER AND THE ADDITION WAS MERELY ON INTERPRETATION OF FACTS. ON THE OTHER HAND, THOUGH THE LD. DR, MS. KUSUM BANSAL, DEFENDED THE IMPOSITION OF PENALTY BUT ON A QUESTIONING FROM THE BENCH FAIRLY AGREED THAT FIRST ADDITION IS A DOUBLE ADDIT ION AS THE ORDER OF THE SETTLEMENT COMMISSION WAS NOT AVAILABL E BEFORE THE ASSESSING OFFICER AND ON THE ISSUE OF SECOND AD DITION, RELIANCE WAS PLACED UPON THE CONCLUSION DRAWN BY TH E LD. SHRI HARRESH MEHTA ITA NO.6850/MUM/2013 3 COMMISSIONER OF INCOME TAX (APPEALS) BY INVITING OU R ATTENTION TO PARA 7.1 OF THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE DECLARED TOTAL INCOME OF RS.4 2,48,960/- IN HIS RETURN. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF M/S ROHAN GROUP, INC LUDING DIRECTORS OF DIFFERENT ASSOCIATED AND SISTER COMPAN IES AND ALSO ON THE ASSESSEE. NOTICE U/S 153A WAS SERVED UP ON THE ASSESSEE TO WHICH THE ASSESSEE DECLARED INCOME OF RS.67,72,958/- ON 29/03/2007, THUS, THE ASSESSEE DE CLARED ADDITIONAL INCOME OF RS.25,24,000/- U/S 132(4) OF T HE ACT. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS), THE PENALTY WAS AFFIRMED ON THE GROU ND THAT THE INCOME WAS NOT DISCLOSED IN THE RETURN, THEREFO RE, THE CONCEALMENT WAS ESTABLISHED. THE ASSESSEE IS IN FUR THER APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER/PENALTY ORDER, LEADING TO IMPOSITION OF PENAL TY, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AV AILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE CO UNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT MA JOR ADDITIONS, TO THE TOTAL INCOME, WERE ON ACCOUNT OF (A) UNEXPLAINED CASH CREDIT, DETECTED OUT OF THE INCRIM INATING DOCUMENTS SEIZED DURING THE COURSE OF SEARCH, TO TH E TUNE OF SHRI HARRESH MEHTA ITA NO.6850/MUM/2013 4 RS.28,60,000/-, (B) BOGUS LOANS TO THE TUNE OF RS.3 4 LAKH FROM ONE PARTY M/S JAI MATA DI, AND (C) BOGUS IMD G IFTS OF RS.5,91,74,176/-. THE ADDITIONS WERE CHALLENGED BE FORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE ORDER DATED 02/07/2010, CONFIRMED CERTAIN ADDITIONS WHICH ARE SUMMARIZED AS UNDER:- (I) IN THE CASE OF UNEXPLAINED CASH CREDIT, THE ADDITIO N OF RS.28,60,000/- WAS CONFIRMED ONLY TO THE EXTENT OF RS.2,92,800/-. (II) THE ADDITION OF RS.34 LAKH ON ACCOUNT OF BOGUS LOANS WAS CONFIRMED, (III) THE BALANCE ADDITION WERE DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 2.4. THE ASSESSING OFFICER INITIATED PENALTY PROC EEDINGS. NOW, WE SHALL DEAL WITH THE ADDITIONS ON THE BASIS OF WHICH PENALTY WAS IMPOSED. SO FAR AS, THE FIRST ADDITION IS CONCERNED, THE MONEY BELONGED TO PARTNERSHIP FIRM M/S SILVER A RCH BUILDERS AND PROMOTERS (ITEM AT SERIAL NO.5 AT PAGE 1 OF THE PAPER BOOK CONTAINING ORDER OF THE SETTLEMENT COMMI SSION). BEFORE THE SETTLEMENT COMMISSION, APPLICANTS MADE P RAYER FOR CAPITALIZATION OF THEIR INCOME FOLLOWING APPLICATIO N METHOD, WHICH WAS ALLOWED BY THE LD. SETTLEMENT COMMISSION. WE FURTHER NOTE THAT THE TRIBUNAL IN THE CASE OF ACIT VS HARESH N MEHTA (THE ASSESSEE), THE APPEAL FILED BY THE REVEN UE, (ITA NO.4552/MUM/2012 ORDER DATED 27/11/2013) CLEARLY HE LD THAT ASSESSEE HAS EXPLAINED THE SOURCE OF OBTAINING THE ALLEGED BOGUS LOAN, BEING THE AMOUNT RECEIVED FROM THE FIRM , WHICH HAS BEEN OFFERED BY THE FIRM TO TAX AND SUBJECT TO THE SHRI HARRESH MEHTA ITA NO.6850/MUM/2013 5 PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION (PAGES 86 TO 91 RELEVANT PAGE 91). THUS, IT WAS HELD THAT DOUBLE A DDITION CANNOT BE MADE OF THE AMOUNT WHICH IS ALREADY SUBJE CTED TO TAX IN THE HANDS OF THE FIRM, THUS, THE APPEAL OF T HE REVENUE WAS DISMISSED. THEREFORE, FROM THIS ANGLE ALSO, NO PENALTY IS IMPOSABLE. IDENTICALLY VIDE ORDER DATED 07/02/2014 , IN THE CASE OF ACIT VS HARESH N MEHTA (THE ASSESSEE) ITA NO.6025/MUM/2012 (PAGES 92 TO 95 OF THE PAPER BOOK) , THE APPEAL OF THE REVENUE WAS DISMISSED. THUS, UNDER TH E EFFECT OF THESE ORDERS OF THE TRIBUNAL, THE ASSESSEE DID N OT FILE ANY APPEAL. THE DIRECTION OF THE SETTLEMENT COMMISSION IS BINDING UPON THE ASSESSING OFFICER. HOWEVER, THIS ORDER WAS NOT AVAILABLE WITH THE ASSESSING OFFICER WHILE LEVYING THE PENALTY, THEREFORE, ON THE FIRST ADDITION, PENALTY CANNOT SU RVIVE. 2.5. SO FAR AS, THE SECOND ADDITION IS CONCERNED, WE NOTE THAT THE ORIGINAL ADDITIONAL WAS MADE TO THE TUNE O F RS.28,60,000/- BY THE ASSESSING OFFICER. AS ALREAD Y MENTION IN THE PRESIDING PARAS OF THIS ORDER, SEARCH AND SE IZURE ACTION U/S 132(1) OF THE ACT WAS CARRIED OUT UPON M/S ROHA N GROUP INCLUDING THE DIRECTORS OF ITS ASSOCIATED AND SISTE R COMPANIES OF THE GROUP. ASSESSMENT U/S 143(3) WAS COMPLETED O N 29/12/2008 MAKING THE ADDITIONS ON ACCOUNT OF UNEXP LAINED CASH CREDIT OF RS.28,60,000/- ALONG WITH OTHERS. T HE ASSESSEE CHALLENGED THE PENALTY BY CLAIMING THAT NECESSARY DOCUMENTS/PARTICULARS WERE FILED BY THE ASSESSEE TO SUBSTANTIATE THE CLAIM THAT THE LOANS WERE OFFERED FOR TAXATION IN THE CASE OF M/S SILVER ARCH BUILDERS AND PROMOTE RS AND SHRI HARRESH MEHTA ITA NO.6850/MUM/2013 6 ALSO IN THE CASE OF ASSESSEE AS IT WAS APPLICATION OF FUNDS. THE STAND OF THE ASSESSEE IS THAT PENALTY CANNOT BE LEV IED, WHERE THERE IS A DIFFERENCE OF OPINION BETWEEN THE ASSESS EE AND THE ASSESSING OFFICER. IT IS NOTED THAT ADDITION WAS MA DE MERELY ON THE BASIS OF PRESUMPTION AND NO INDEPENDENT INVE STIGATION WAS MADE BY THE ASSESSING OFFICER. THERE IS NO POSI TIVE MATERIAL ON RECORD IMPOSING PENALTY AND ADDITION IS BASED UPON INTERPRETATION OF FACTS. THEREFORE, AT LEAST, IT IS NOT A FIT CASE FOR LEVYING PENALTY, BECAUSE, THE ASSESSEE DIS CLOSED THE MATERIAL FACTS/DETAILS AND EVEN THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) AFFIRMED THE ADDITION ONLY TO THE EXTENT OF RS.9,92,800/- OUT OF THE ADDITION OF 28,60,000/- . THAT TOO IS BASED UPON APPRECIATION OF FACTS. IT MAY OR MAY NOT BE A GOOD CASE FOR SUSTAINING PART ADDITION BUT NOT SUST AINING THE PENALTY, BECAUSE, FOR PENALTY EITHER THERE SHOULD B E CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME. EVEN OTHERWISE, IF A CLAIM IS MADE WHICH IS NOT SUSTAINABLE IN LAW, PENALTY IS NOT AUTOMATIC, A S WAS HELD BY HONBLE APEX COURT IN CIT VS RELIANCE PETRO PROD UCTS PVT. LTD. 322 ITR 158 (SC), THUS, THE PENALTY CANNOT SUR VIVE. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 14/09/2015. SD/ - (RAJESH KUMAR) S D/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER SHRI HARRESH MEHTA ITA NO.6850/MUM/2013 7 & MUMBAI; * DATED : 28/09/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 3$ ( ,- ) / THE CIT, MUMBAI. 4. 2 2 3$ / CIT(A)- , MUMBAI 5. 5%6 0$ ! , 2 ,-( ,! 7 , & / DR, ITAT, MUMBAI 6. 8' 9& / GUARD FILE. / BY ORDER, 15-$ 0$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI