EVERSMILE CONSTRUCTION CO. P. LTD, MUMBAI V. DCIT CEN CIR 5, MUMBAI

ITA 6951/MUM/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3590 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 13-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHINTAN GHELANI
• Keywords: Gift; Opportunity of cross examination; Documents seized
• Section: 153A; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , ! '#, $ , % BEFORE SHRI B.R.BASKARAN, AM AND SHRI AMARJIT SINGH , JM / I.T.A. NO.6951/MUM/2011 ( $ & '& / ASSESSMENT YEAR: 2003-04) EVERSMILE CONSTRUCTION CO. PVT. LTD DB HOUSE, YASHODHAM, GEN. A.K.VAIDYA MARG, GOREGAON (EAST) MUMBAI - 400063 / VS. THE DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 5 AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACE0875E ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 05.04.2016 !' /DATE OF PRONOUNCEMENT: 05.07.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 12.07.2011 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEAL) 36, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2003-04. ASSESSEE BY: MS. ARATI VISSANJI AND SHRI CHINTAN GHELANI DEPARTMENT BY: SHRI SHANDRAJIT SINGH ITA NO.6951/MUM/11 A.Y.2003-04 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT- (A) ORDER PASSED U/S.143(3) READ WITH SECTION 147 OF TH E INCOME TAX ACT, 1961 PURSUANT TO THE NOTICE DATED 2 2 ND DECEMBER, 2008 ISSUED U/S.148 OF THE ACT IS IMPROPE R IN LAW. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATE (B) THERE WAS NO DIVERSION OF SALE CONSIDERATION OF S.1 70 LACS BY THE APPELLANT AS ALLEGED TO HAVE BEEN HELD BY THE AO IN THE SAID ORDER AND ACCORDINGLY NO ADJUSTM ENT IS REQUIRED TO BE MADE TO THE LOSS DETERMINED AS PE R ORDER PASSED U/S.143 READ WITH SECTION 153A OF THE ACT DATED 31 ST DECEMBER, 2008. 2. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED A ND SUCH OTHER AND FURTHER RELIEFS AS MAY BE JUSTIFIED BY TH E FACTS AND CIRCUMSTANCES OF THE CASE AND AS MAY MEET THE ENDS OF JUSTICE, SHOULD BE GRANTED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 21.07.2004 DECLARING BUSINESS LOSS TO THE TUNE OF RS.7,97,31,311/- AND LONG TERM CAPITAL LOSS TO THE TUNE OF RS.76,14,137/-. A SEARCH ACTION U/S.132 OF THE INC OME TAX ACT, 1961 ( IN SHORT THE ACT) WAS CARRIED OUT ON THE ASSESS EE AND ITS DIRECTOR SHRI VINOD GOENKA ON 22.03.2007. THE ASSESSMENT U/ S.143(3) R.W.S 153A OF THE ACT WAS COMPLETED ON 31.12.2008, DETERM INING THE LOSS ITA NO.6951/MUM/11 A.Y.2003-04 3 TO THE TUNE OF RS.5,92,92,430/-. THE ASSESSEE PAID TAX U/S.115JB OF THE ACT ON THE BOOK PROFIT COMPUTED AT RS.14,09,060 /-. 4. THEREAFTER, THE ASSESSMENT WAS REOPENED ON THE F OLLOWING INFORMATION:- INFORMATION HAS BEEN RECEIVED BY THIS OFFICE THAT SHRI ASHOK H. PAMANI HAD PURCHASED FOUR UNITS AT ASCOT CENTRE AT SAHAR, MUMBAI A PROJECT DEVELOPED BY M/S. VEENA ESTATES PV T. LTD. WHICH AMALGAMATED WITH M/S.EVERSMILE CONSTRUCTION C O. PVT. LTD. THESE DOCUMENTS REVEAL THAT SHRI ASHOK PAMANI HAD MADE PAYMENT OF RS.1,73,27,500/- TO M/S. VEENA ESTATES P VT. LTD. AND AN AMOUNT OF RS.1,70,00,000/- WAS GIFTED TO SMT . SHANITA JAIN (1 CRORE) AND SMT. SUNITA BALI (70 LAKHS) WHIC H IN FACT REPRESENTED CONSIDERATION FOR PURCHASE OF UNITS AT ASCOT CENTRE. DUE TO DIVERSION OF THE SALE CONSIDERATION IN THE F ORM OF GIFTS THE RECEIPTS OF THE PROJECT HAVE BEEN SHOWN LESS BY THE ASSESSEE COMPANY TO THE EXTENT OF RS.1,70,00,000/-. BY VIRT UE OF ASSESSEES FAILURE TO DISCLOSE ALL TRUE AND MATERIA L FACTS RELATING TO THE SALE OF UNITS 105 TO 108 TO SHRI ASHOK PAMAN I THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT TO THE EXT ENT OF RS.1,70,00,000/- IN TERMS OF PROVISIONS OF SEC. 147 . 5. ACCORDINGLY, NOTICE U/S.148 DATED 22.12.2009 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME, ASSESSEE FURNISHED ITA NO.6951/MUM/11 A.Y.2003-04 4 RETURN OF INCOME FOR THE YEAR IN QUESTION ON 15.01. 2010 DECLARING TOTAL LOSS TO THE TUNE OF RS.7,80,41260/-. NOTICE U/S.14 3(2) OF THE ACT DATED 10.08.2010 WAS ISSUED AND SERVED UPON THE ASS ESSEE. THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF M/S. K. SERA SERA PRODUCTION LTD. OF WHICH SHRI ASH OK H. PAMANI WAS THE CHAIRMAN, INCLUDING COPY OF AFFIDAVIT DATED 03.09.2010 WERE PROVIDED TO THE ASSESSEE. THEREAFTER, THE ASSESSME NT WAS COMPLETED BY DISALLOWANCE OF THE LOSS TO THE TUNE OF RS.1,70, 00,000/-, BASICALLY ON RELIANCE ON THE AFFIDAVIT EXECUTED BY SHRI ASHOK HARIKISHAN PAMANI. SINCE THE ASSESSEE WAS NOT SATISFIED WITH THE ASSESSMENT, THEREFORE AN APPEAL WAS FILED BEFORE CIT(A) BUT THE CIT(A) HAS CONFIRMED THE ORDER OF ASSESSING OFFICER. FEELING AGGRIEVED THE PRESENT APPEAL HAS BEEN FILED BEFORE US. ISSUE NO.1 &2:- 6. ISSUE NO.1 & 2 ARE INTER CONNECTED THEREFORE AR E BEING TAKEN UP TOGETHER FOR ADJUDICATION. AT THE VERY OUTSET THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ADDITION TO THE TUNE OF RS.1,70,00,000/- WAS MADE BY THE ASSESSING OFFIC ER ON THE BASIS OF THE AFFIDAVIT EXECUTED BY SHRI ASHOK H. PAMANI BUT NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO HIM THEREFORE THE AD DITION TO THE TUNE OF RS.1,70,00,000/- IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. IN SUPPORT OF THESE CONTENTIONS THE LEA RNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE ON THE LAW SETTLED IN [2011] 334 ITR ITA NO.6951/MUM/11 A.Y.2003-04 5 262 (SC) IN CASE INCOME TAX OFFICER VS. M. PIRAI CH OODI. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE DEPART MENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUEST ION. THE ORDER IN QUESTION PERUSED. APPARENTLY THE AFFIDAVIT EXECUT ED BY SHRI ASHOK H. PAMANI WAS THE BASE OF THE ADDITION TO THE TUNE OF RS.1,70,00,000/. THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINED SHRI ASHOK H. PAMANI EVEN AFTER THE ASSESSEE PRAYED FOR CROSS EXAMINATION. NO DOUBT THE ORDER SPEAKS THAT THE DO CUMENTS HAVE BEEN GIVEN TO THE ASSESSEE FOR PERUSAL, BUT IT IS NOT ON RECORD THAT AN OPPORTUNITY OF CROSS EXAMINATION OF SHRI ASHOK H. P AMANI WAS GIVEN TO THE ASSESSEE. 7. AT THE TIME OF ARGUMENT BEFORE THE TRIBUNAL THE ASSESSEE ONLY RAISED THE DEMAND TO CROSS EXAMINE SHRI ASHOK H. PA MANI. IN VIEW OF THE LAW SETTLED IN INCOME TAX OFFICER VS. M. PIR AI CHOODI (SUPRA) AND IN VIEW OF THIS FACT THAT THE ASSESSING OFFICER HAS PASSED THE ORDER IN QUESTION WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINE SHRI ASHOK H. PAMANI. THEREFORE, THE ORDER PASSED BY TH E CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. ACCORDINGLY, WE SET ASIDE THE ORDER P ASSED BY THE CIT(A) IN QUESTION AND RESTORE THE FILE BEFORE THE ASSESSING OFFICER TO PROVIDE AN OPPORTUNITY TO CROSS EXAMINE SHRI ASHOK H. PAMANI AND PASS THE FRESH ORDER IN ACCORDANCE WITH LAW. ITA NO.6951/MUM/11 A.Y.2003-04 6 8. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY , 2016. SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 5 TH JULY, 2016 MP MP MP MP ) * +$!', -,'! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ) / BY ORDER, - & //TRUE COPY// ./# /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI