Samir N. Mehta, Kolhapur V. Commissioner of Income-tax - II, Kolhapur

ITA 70/PUN/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4380 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 14-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.70/PUN/2016 / ASSESSMENT YEAR : 2009-10 SAMIR N. MEHTA, ROW HOUSE NO.3, MATRU MANDIR, OPP. GHATAGE PATIL INDUSTRIES, UCHAGAON, KOLHAPUR-416005 PAN : AKKPM6834G VS. CIT-II, KOLHAPUR APPELLANT RESPONDENT ITA NO.71/PUN/2016 / ASSESSMENT YEAR : 2009-10 AKSHAY ANANTRAO SAWANT, PLOT NO.9, 2365, JUNA BUDHAWAR PETH, KOLHAPUR PAN : BJGPS7249D VS. CIT-II, KOLHAPUR APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY DIFFERENT ASSESSEES INVOLVE A COMMO N ISSUE. WE, ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OF F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSEE BY SHRI PRAMOD SHINGTE REVENUE BY SHRI SATISH K. GOYAL DATE OF HEARING 23-10-2020 DATE OF PRONOUNCEMENT 26-10-2020 ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 2 ITA NO.70/PUN/2016 SAMIR N. MEHTA : 2. THE APPEAL IS TIME BARRED BY 789 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT CITING REASONS FOR THE DELAY. WE ARE SATIS FIED WITH THE SAME. THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING ON MERITS. 3. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER PAS SED BY THE CIT U/S.263 OF THE INCOME-TAX ACT, 1961 (HEREINAF TER ALSO CALLED THE ACT) ON 17-09-2013 IN RELATION TO THE ASSESSMEN T YEAR 2009-10. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SALARIED EMPLOYEE, WHO, AT THE MATERIAL TIME, HAS BEEN WORK ING WITH WOCKHARDT LIMITED, A PHARMACEUTICAL COMPANY. RETURN WA S FILED DECLARING INCOME AT RS.1,71,039/-. THE CASE WAS SE LECTED FOR SCRUTINY ON THE BASIS OF `CASH DEPOSITS MADE IN THE BANK RE FLECTED IN THE SAVINGS BANK ACCOUNT. THE ASSESSING OFFICER (AO ) COMPLETED THE ASSESSMENT BY MEANS OF HIS ORDER DATED 29-1 2-2011 DETERMINING TOTAL INCOME AT RS.1,80,432/-, THEREBY MAKING A SMALL ADDITION OF RS.9,393/-. THE LD. CIT, INVOKING HIS POWER U /S.263 OF THE ACT, CAME TO HOLD THAT THE AO DID NOT MAKE PROPER ENQUIR Y IN ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 3 RESPECT OF CASH DEPOSITS MADE BY THE ASSESSEE IN HIS BANK ACCOUNT. AFTER CONSIDERING THE ARGUMENTS FROM THE SIDE OF THE ASSESS EE IN THE LIGHT OF THE ASSESSMENT ORDER, THE LD. CIT SET-ASIDE THE ASSESSMENT ORDER PASSED U/S.143(3) FOR A DE NOVO DETERMINATION OF TOTAL INCOME. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AGAINST THE ORDER PASSED BY THE LD. CIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH THE VIRTUAL COUR T AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. A COPY OF THE NOTICE ISSUED U/S.263 OF THE ACT IS AVAILABLE AT PAGE 23 OF THE PAPER BOOK RECORDING THE INITIAL VIEW OF THE LD. CIT THAT THE ASSESSE E MADE CASH DEPOSIT OF RS.23,60,000/- IN HIS SAVING BANK ACCOUNT MAINTAINED WITH ICICI BANK, WHICH WAS NOT PROPERLY EXAMINED BY THE AO. HE FURTHER NOTED THAT THE ASSESSEE CLAIMED BEFO RE THE AO THAT SUCH AMOUNT WAS DEPOSITED BY MR. DILIP TALEKAR, PARTNER OF SHRI LAXMISEN AGENCIES, KOLHAPUR FOR PURCHASING DEMAND D RAFTS IN FAVOUR OF WOCKHARDT LIMITED TOWARDS PURCHASES FROM TH E COMPANY. THIS IS HOW, HE HELD THAT THE AO DID NOT MAKE P ROPER VERIFICATION OF THIS ASPECT. 6. ON GOING THROUGH THE ASSESSMENT ORDER PASSED U/S.143(3) , WHICH HAS BEEN SET ASIDE BY THE LD. CIT U/S.263 OF THE ACT, IT IS ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 4 SEEN THAT THE AO CALLED UPON THE ASSESSEE TO FURNISH EVIDENC E OF THE CASH DEPOSITS OF RS.23,97,730/- IN HIS SAVINGS BANK A CCOUNT. PARA 4.4 OF THE ASSESSMENT ORDER TALKS OF CERTAIN ENQUIRIES MADE BY THE AO WITH THE ASSESSEES BANK AND ALSO WITH MR. DILIP TALEK AR. THE ASSESSEE CONTENDED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT MR. DILIP TALEKAR MISUSED HIS BA NK ACCOUNT BY DEPOSITING CASH AND THEREAFTER MAKING PURCHAS ES FROM WOKHARDT LIMITED THROUGH THE DEMAND DRAFTS FROM THIS ACCOU NT. THE AO ALSO INVOKED THE PROVISIONS OF SECTION 133(6) AND C ARRIED OUT INQUIRIES FROM WOKHARDT LIMITED AND ICICI BANK LTD. IT WAS CONFIRMED FROM THE BANK RECORDS THAT TRANSACTIONS FROM THE ASSESSEES BANK ACCOUNT WERE MADE FOR PURCHASING DEMA ND DRAFTS IN FAVOUR OF WOKHARDT LIMITED. THE AO ALSO RECORDED STATE MENT OF MR. DILIP TALEKAR, PARTNER OF SHRI LAXMISEN AGENCIES INDICA TING THAT THE AMOUNT WAS WITHDRAWN BY HIM FROM THE ASSESSEES B ANK ACCOUNT BY MEANS OF DEMAND DRAFTS ISSUED IN FAVOUR OF W OKHARDT LIMITED. THE CORRESPONDING CASH DEPOSITS WERE MADE BY MR. DILIP TALEKAR IN ASSESSEES BANK ACCOUNT FOR WHICH THE PURCHAS ES WERE MADE FROM WOKHARDT LIMITED. THIS ISSUE HAS BEEN APTLY DISC USSED IN PARAS 4.4 TO 4.6 OF THE ASSESSMENT ORDER. ON EXAMINA TION OF THE ENTIRE DETAILS, THE AO CONCLUDED THAT MR. DILIP TALEKAR AND ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 5 SHRAVAN KUMAR KOLE USED SAVINGS BANK ACCOUNT OF THE ASS ESSEE FOR THE BUSINESS OF THE FIRM, NAMELY, SHRI LAXMISEN AGENCIES WHEREIN MR. DILIP TALEKAR WAS A PARTNER. IT IS FURTHER NOTICED THAT TH E AO OF THE ASSESSEE PASSED ON THIS INFORMATION TO THE AO OF SHR I LAXMISEN AGENCIES. A COPY OF THE ASSESSMENT ORDER DATED 28-03- 2014 FOR THE YEAR UNDER CONSIDERATION IN THE CASE OF SHRI L AXMISEN AGENCIES HAS BEEN PLACED AT PAGE 1 ONWARDS OF THE PAPER BOOK. IN THIS ASSESSMENT ORDER, THERE IS REFERENCE OF THE PROCEEDIN GS TAKING PLACE IN THE HANDS OF THE ASSESSEE AND FURTHER THE AO OF THE ASSESSEE CONCLUDING THAT SHRI LAXMISEN AGENCIES MADE PURCHA SES BY WITHDRAWING AMOUNTS FROM THE BANK ACCOUNT OF THE ASSESS EE. IT TRANSPIRES FROM SUCH AN ORDER THAT SHRI LAXMISEN AGENCIES W AS DOING THIS PRACTICE USING OTHERS BANK ACCOUNTS AND THE OPERATION WAS NOT CONFINED TO THE ASSESSEE ONLY. NOT ONLY THAT, THE AO OF SHRI LAXMISEN AGENCIES MADE AN ADDITION OF RS.1,69,54,513 TOWARDS UNACCOUNTED PURCHASES. 7. ON A CAREFUL CIRCUMSPECTION OF THE ENTIRE FACTUAL SCENAR IO PREVAILING IN THE INSTANT CASE, IT IS MORE THAN CLEAR THAT ALBEIT THE CASH WAS DEPOSITED IN THE ASSESSEES BANK ACCOUNT BUT THE SOURCE OF SUCH CASH WAS MR. DILIP TALEKAR, PARTNER OF LAXMISEN AGEN CIES. HE USED THE ASSESSEES BANK ACCOUNT BY PURCHASING DEM AND DRAFTS ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 6 IN FAVOUR OF WOKHARDT LIMITED FOR MAKING PURCHASES, WHIC H BUSINESS THE FIRM WAS ADMITTEDLY DOING OUTSIDE THE BOOKS OF ACCOUNT. THE AO, NOT ONLY EXAMINED THIS FACT AFTER RECORDIN G THE STATEMENT OF MR. DILIP TALEKAR AS WELL AS THE ASSESSEE, BUT ALS O GOT SUCH TRANSACTIONS VERIFIED WITH WOKHARDT LIMITED AND THE BANK OF THE ASSESSEE. THIS AMPLY PROVES THAT THE AO MADE PROPER VERIFICATION OF THE ASSESSEES CLAIM AND REACHED RIGHT CONC LUSION THAT SUCH CASH DEPOSITS, IN FACT, REPRESENTED TRANSACTIONS C ARRIED OUT BY MR. DILIP TALEKAR FOR AND ON BEHALF OF SHRI LAXMISEN AG ENCIES. NOT ONLY THAT, THE AO OF THE ASSESSEE PASSED ON THIS INFORM ATION TO THE AO OF SHRI LAXMISEN AGENCIES, WHO, IN TURN, MADE ADDITION TOWARDS UNACCOUNTED PURCHASES. THE NARRATION OF ABOVE F ACTS CLEARLY DEMONSTRATES THAT NEITHER THE AO FAILED TO MAKE PROPE R INVESTIGATION NOR DID HE REACH ANY WRONG CONCLUSION IN HOLDIN G THAT THE AMOUNT OF CASH DEPOSITS BY THE ASSESSEE IN HIS BAN K ACCOUNT DID NOT PERTAIN TO HIM. WE, THEREFORE, SET-ASIDE TH E IMPUGNED ORDER DOUBTING THE CORRECTNESS OF THE ASSESSMEN T ORDER. ITA NO.71/PUN/2016 AKSHAY A. SAWANT : 8. THE APPEAL IS TIME BARRED BY 776 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING REASONS FOR THE DELAY. WE ARE SATIS FIED WITH ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 7 THE REASONS SO STATED. THE DELAY IN FILING THE APPEAL IS CON DONED AND THE APPEAL IS ADMITTED FOR HEARING ON MERITS. 9. THIS APPEAL ARISES OUT OF THE ORDER DATED 30-9-2013 P ASSED BY THE LD. CIT U/S.263 OF THE ACT IN RELATION TO THE ASSESSMENT Y EAR 2009-10. 10. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF SAMIR N. MEHTA. THIS ASSESSEE IS ALSO A SALARIED EMPLOYE E WHO WAS WORKING WITH WOCHARDT LIMITED. BANK ACCOUNT OF THIS ASSESSEE WAS ALSO USED BY MR. DILIP TALEKAR FOR MAKING PU RCHASES OUTSIDE THE BOOKS OF ACCOUNT FOR SHRI LAXMISEN AGENCIES. PROPER INVESTIGATION WAS CARRIED OUT BY THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS WHO DID NOT FIND ANYTHING AMI SS REQUIRING ADDITION ON THIS SCORE. THE LD. CIT, IN THE SAME M ANNER, AS IN THE CASE OF SAMIR N. MEHTA, SET-ASIDE THE ASSESSMEN T ORDER WITH A DIRECTION TO THE AO FOR MAKING DENOVO ADJUDICATION. IN VIEW OF THE REASON THAT THE FACTS AND CIRCUMSTANCES OF THIS A PPEAL ARE SIMILAR TO THOSE OF SAMIR N. MEHTA, FOLLOWING THE VIEW TAKE N HEREINABOVE, WE SET-ASIDE THE IMPUGNED ORDER. ITA NOS.70 & 71/PUN/2016 SAMIR N. MEHTA AND AKSHAY A. SAWANT 8 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 26 TH OCTOBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT-II, KOLHAPUR 4. , , / DR A, ITAT, PUNE 5. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 23-10-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26-10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *