SHRI NISAR DIWAN, Raigad V. ITO, Raigad

ITA 705/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5892 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Document seized; Cost of acquisition; Reasonable cause; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER M.A. NO.172/PN/2013 ARISING OUT OF ITA NO.705/PN/2012 (ASST. YEAR: 2007-08) & ITA NO.705/PN/2012 (ASST. YEAR: 2007-08) SHRI NISAR ISMAIL DIWAN HOUSE NO. 76, PATEL MOHALLA PLOT NO. 26, PANVEL, DIST. RAIGAD PAN: AEVPD6736P APPLICANT VS. ITO, WARD 1, PANVEL RESPONDENT APPLICANT BY : SHRI MANISH SANGHAVI RESPONDENT BY : SHRI P.L. PATHADE DATE OF HEARING : 10-01-2014 DATE OF PRONOUNCEMENT : 20-01-2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS MISCELLANEOUS APPLICATION HAS BEEN MOVED BY T HE ASSESSEE ARISING OUT OF ORDER OF THE TRIBUNAL IN IT A NO. 705/PN/2012 DATED 11-06-2013. BOTH THE MISCELLANEOU S APPLICATION AND MAIN APPEAL ARE BEING DECIDED BY TH IS CONSOLIDATED ORDER. 2. THE TRIBUNAL HAS DISMISSED THE APPEAL BY WAY OF EX- PARTE ORDER DATED 11.06.2013 IN THE ABSENCE OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT AT THE RELEVANT POINT O F TIME, THE ASSESSEE WAS OUT OF INDIA, SO HE HAS NOT RECEIVED T HE NOTICE AND WAS FAILED TO ATTEND THE CASE FIXED ON 11.06.20 13, SO, SAME SHOULD BE RESTORED. WE FIND THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE IN NOT TO ATTEND TH E HEARING ON THE DATE FIXED FOR HEARING. SO, IN THE INTEREST OF JUSTICE, WE RESTORE THE EX-PARTE ORDER PASSED IN ITA NO.705/ PN/2012 DATED 11.06.2013 TO THE ORIGINAL FILE. AS A RESULT , THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED 3. HAVING RECALLED THE ITA NO.705/PN/2012 TO ITS O RIGINAL NUMBER, WE DECIDE THE ISSUE AT HAND ON MERIT. THE ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.60,00,000/- ON ACCOUNT OF ALLEGED CASH RECEIVED FROM ONE SHRI YOGESH THAKKAR FOR ACQUISITION OF SHARES OF PERSIAN AGRO HOT ENTERPRISES. 2. LOOKING TO THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE APPELLANT SUBMITS THAT LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ADDITION MADE BY THE A.O. IS INCORRECT AND INVALID AND OUGHT TO HAVE DELETED THE SAME. 3. THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AND VOID. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY AND / OR DELETE ANY OR ALL OF THE ABOVE SAID GROUND(S) OF APPEAL. 4. THE ASSESSING OFFICER HAS PASSED THE ORDER U/S.1 43(3) R.W.S. 147 OF I.T. ACT DATED 22.12.2010 AFTER MAKIN G ADDITION OF RS.80 LACS BY OBSERVING AS UNDER: '3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TRANSA CTION WITH SHRI YOGESH POPATLAL THAKKAR DURING THE FINANC IAL YEAR 2006-07. ASSESSEE STATED THAT HE WAS ONE OF TH E DIRECTORS OF PERSIAN AGRO-HOT ENTERPRISES PVT LTD., WHO ENTERED INTO RELEASE DEED AGREEMENT DT.01.12.2006 W ITH PERSIAN AGRO-RIOT ENTERPRISES PVT LTD, AND HAD RECE IVED RS.20,00,000/- ON A/C. OF RELINQUISHMENT OF RIGHT I N LEASED LAND. THEN, ASSESSEE WAS ASKED WHY THE CONSIDERATION AMOUNT WAS NOT REFLECTED IN RETURN OF INCOME FILED FOR A.Y. 2007-08. IN REPLY IT IS STATE D THAT IT REMAINED TO BE REFLECTED DUE TO PERSONAL REASON OF ASSESSEE. THE EXPLANATION OFFERED BY ASSESSEE IS NO T FOUND SATISFACTORY AS ASSESSEE HAS ACCEPTED THAT HI S SHARE OF CONSIDERATION IS RS.20,00,000/- AS PER REL EASE DEED AGREEMENT DT.01.12.2006 AND ALSO ADMITTED THAT THE COST OF ACQUISITION IN THIS CASE IS NIL AS HE W AS THE CONSENTING PARTY. THEREFORE, THE ENTIRE CONSIDERATI ON OF RS.20,00,000/- IS THE NET TAXABLE LONG TERM CAPITAL GAIN IN THE HANDS OF ASSESSEE FOR A.Y. 2007-08 WHICH IS NOT DISCLOSED IN HIS RETURN FILED. ON THESE FACTS THE N ET TAXABLE L.T.C.G. RS.20,00,000/- IS HEREBY BROUGHT T O TAX UNDER THE HEAD INCOME FROM CAPITAL GAIN AND ADD TO TOTAL INCOME OF ASSESSEE. THEREFORE, PENALTY U/S.27 1(L)(C) OF THE ACT IS INITIATED SEPARATELY, AS ASSESSEE HAS CONCEALED HIS PARTICULARS OF INCOME. 4. IN REGARDS TO INFORMATION RECEIVED FROM THE ACIT CENTRAL CIRDE-25, MUMBAI, DURING THE PROCEEDINGS ASSESSEE WAS ASKED TO GIVE THE DETAILS OF CASH RS. 60,00,000/- PAID BY SHRI YOGESH POPATLAL THAKKAR TO YOU. ASSESSEE REPLIED THAT HE WAS NOT THE PROPRIETO R OF M/S. PERSIAN AGROHOT ENTERPRISES DURING THE YEAR 20 06- 07 AND HE HAS NOT RECEIVED CASH OF RS.60,00,000/- FROM SHRI YOGESH POPATLAL THAKKAR. THE ACIT CENTRAL CIRCLE-25, MUMBAI WAS REQUESTED VIDE THIS OFFICE LETTER DT.02.12.2010 TO FORWARD CO PY OF PROOF OF PAYMENT OF RS.60,00,000/- TO ASSESSEE WHIC H CAN BE TAKEN AS AN EVIDENCE OF PAYMENT OF CASH RS.60,00,000/- BY SHRI YOGESH POPATLAL THAKKAR. REP LY DT.20.12.2010 RECEIVED IN THIS OFFICE ON 22.12.2010 FROM THE ACIT CENTRAL CIRCLE-25, MUMBAI ENCLOSING COPY O F CIT(A) ORDER VIDE APPEAL NO.CIT(A)-39/DC.CC.25/IT- 214/07-08 DT.01.04.2010, WHEREIN ADDITION OF CASH O F RS.60,00,000/- HAS BEEN CONFIRMED IN THE HANDS OF S HRI YOGESH POPATLAL THAKKAR ON A/C. OF PAYMENT OF UNACCOUNTED INCOME IN ACQUISITION OF COMPANY. FURTHER, IT IS INFORMED BY ACIT THAT IN THIS CASE T HERE HAVE BEEN TRANSFER OF SHARES FROM SHRI NISAR DIWAN TO SHRI YOGESH THAKKAR, SO THERE IS PAYMENT OF CASH BY SHRI YOGESH THAKKAR TO SHRI NISAR DIWAN, WHO WAS ERSTWHILE DIRECTOR IN M/S. PERSIAN AGRO-HOT ENTERPR ISES PVT. LTD. I THEREFORE, ADD RS.60,00,000/- TO THE TO TAL INCOME OF ASSESSEE, AS HE IS THE RECIPIENT OF CASH PAID BY SHRI YOGESH THAKKAR, WHO HAS ADMITTED THIS FACT IN HIS STATEMENT U/S. OF THE I.T. ACT DT. 132(4) AND A T THE SAME TIME ADDITION OF RS.60,00,000/- MADE BY ACIT H AS BEEN UPHELD BY THE CIT(A). THEREFORE PENALTY U/S/271(L)(C) OF THE ACT IS INITIATED SEPARATELY, A S ASSESSEE HAS CONCEALED HIS PARTICULARS OF INCOME.' 5. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITIES WHEREIN, THE VARIOUS CONTENTIONS WERE RAISED BY THE ASSESSEE AND THE CIT(A) HAVING CONSIDERED THE SAME HAS OBSER VED THAT THE ASSESSEE WAS ONE OF THE DIRECTORS OF M/S.PERSIA N AGRO- HOT ENTERPRISES PVT. LTD. SHARE OF WHICH HAVE BEEN ACQUIRED BY SHRI YOGESH P. THAKKAR. DURING THE COURSE OF SU RVEY AND SEIZURE OPERATION IN THE CASE OF SHRI YOGESH P. THA KKAR, CERTAIN INCRIMINATING MATERIAL IN THE FORM OF KUTCH A CASH BOOK AND OTHER PAPERS WERE FOUND. WHEN HE WAS CONF RONTED U/S.132(4) ON 05.06.2007, HE HAD ADMITTED INVESTMEN T OF RS.60 LACS IN CASH FOR ACQUIRING M/S.PERSIAN AGRO-H OT ENTERPRISES PVT. LTD. NO EVIDENCE WHATSOEVER WAS FU RNISHED BY SHRI YOGESH P. THAKKAR AT THE RELEVANT POINT OF TIME TO ESTABLISH THAT HIS STATEMENT RECORDED UNDER COERCIO N OR PRESSURE. THEREFORE, CIT(A) VIDE HIS ORDER DATED 0 1.04.2010 HELD THAT SEIZED DOCUMENTS CLEARLY INDICATED THE PA YMENT OF UNACCOUNTED INCOME IN ACQUISITION OF COMPANY BY SHR I YOGESH P. THAKKAR. THE CIT(A) FURTHER HAS OBSERVED THAT THE STATEMENT WAS RECORDED ON THE BASIS OF SEIZED MATER IAL FOUND AND HENCE DECLARATION WAS NOT AN ADHOC DECLARATION BUT WAS BASED ON DOCUMENTARY EVIDENCES WHICH WERE IN THE SP ECIAL KNOWLEDGE OF SHRI YOGESH P. THAKKAR. ACCORDINGLY, THE CIT(A) HAD CONFIRMED THE ADDITION OF RS.60 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ACQUISITION OF COMPANY I. E. M/S.PERSIAN AGRO-HOT ENTERPRISES PVT. LTD. UNDER T HE ABOVE CIRCUMSTANCES, THE CIT(A) ULTIMATELY OBSERVED THAT THE ASSESSEE HAS RECEIVED RS.60 LACS ON ACCOUNT OF SURR ENDER OF HIS INTEREST, CONTROL AND FOR FACILITATING THE SALE OF SHARES OF VARIOUS FAMILY MEMBERS IN FAVOUR OF SHRI. YOGESH P. THAKKAR. ACCORDINGLY, AN AMOUNT OF RS.60,00,000/- WHICH HAD BEEN RECEIVED WAS LIABLE TO BE TAXED AS INCOME OF THE AS SESSEE, ACCORDINGLY, THE ADDITION TO THAT EXTENT WAS CONFIR MED. 6. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENT ATIVE BEFORE US SUBMITTED THAT IN THE CASE OF SHRI YOGESH P. THAKKAR, THE TRIBUNAL, MUMBAI VIDE ITS CONSOLIDATED ORDER IN ITA NO.3372, 3373 AND 5745/MUM/2010 HAS TOUCHED THE SIMILAR ISSUE AND RESTORED THE MATTER TO THE ASSESS ING OFFICER BY OBSERVING AS UNDER: 12. FACTS OF THE CASE HAVE ALREADY BEEN DISCUSSED BY US WHILE DISPOSING THE APPEAL FOR ASSESSMENT YEAR 2007-08 (I.E. ITA NO.3372/MUM/2010), THE ADDITION OF RS. 45 LAKH ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CASH RECEIPT AT RS. 20 LAKH OUT OF TOTAL ADDITION O F RS. 45 LAKH, ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY AT RS.20 LAKH AND RS. 5 LAKH ON ACCOUNT O F UNACCOUNTED INCOME AS PER LOOSE PAPERS WERE MADE BY THE AO, WHICH WAS BASED ON THE BASIS OF STATEMENT RECORDED U/S 132(4) BY SHRI YOGESH THAKKAR, (T HE ASSESSEE). IN APPEAL, THE CIT (A) RESTR ICTED THE ADDITION ON ACCOUNT OF CASH RECEIPT OF RS. 20 LAKH AS 20 LAKH WAS DELETED. HOWEVER, ADDITION ON ACCOUNT OF JWELLERY AND LOOSE PAPER WERE SUSTAINED FOR SIMPLE REASON THAT THE ASSESSEE AGREED TO SHOW THE INCOME. 13. WE HAVE ALREADY DISCUSSED THE ISSUE IN DETAIL. THE ASSESSE'S MAIN ARGUMENT IS THAT THESE AMOUNTS ARE COVERED BY THE AMOUNT OF RS.3 CRORES SURRENDERED BY THE COMPANY. THIS ASPECT WAS ALSO NOT EXAMINED BY T HE ASSESSING OFFICER FOR THE SIMPLE REASON THAT AS PER STATEMENT OF SHRI THAKKAR THE ADDITION WAS MADE. WE HAVE ALREADY HELD THAT ONLY ON THE BASIS OF STATEME NT, ADDITION SHOULD NOT HAVE BEEN MADE AS THERE SHOULD BE SOME CORROBORATIVE EVIDENCE. AND IF THE ASSESSEE HA S ALREADY SURRENDERED A SUM OF RS. 3 CRORE, WHICH COV ERED THESE AMOUNT ALSO, THEN OF COURSE ADDITION SHOULD N OT HAVE BEEN MADE AS THE SAME WILL TANTAMOUNT TO DOUBL E ADDITION. FOR EXAMINATION OF THESE FACTS, WE RESTOR E THE ISSUES TO THE FILE OF THE ASSESSING OFFICER INVOLVE D IN THE APPEAL OF THE ASSESSEE AS WELL AS IN THE DEPARTMENT . WE HAVE ALREADY MADE OUR OBSERVATIONS WHILE DISPOSING THE APPEAL FOR THE ASSESSMENT YEAR 2007-08(I.E. ITA NO.3372/MUM/2010). THEREFORE, ON THE SAME REASONING DEPARTMENT'S APPEAL IS ALSO RESTORED TO THE FILE OF THE ASSESSING OFFICER. WE ORDER ACCORDINGLY, 14. IN THE RESULT THE APPEALS OF ASSESSEE AS WELL A S THE APPEAL OF DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THIS BACKGROUND, IT WAS SUBMITTED ON BEHALF O F ASSESSEE THAT THE MATTER BE RESTORED TO THE ASSESSI NG OFFICER WITH A DIRECTION TO DECIDE THE SAME IN THE LIGHT OF TRIBUNALS ORDER IN SHRI YOGESH THAKKAR IN ITA NOS.3372, 3373 AND 5745/MUM/2010. BEFORE US, THIS FACT HAS NOT BEEN D ISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. SO IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF CIT( A) AND RESTORE THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AT HAND AS PER FACT AND LAW AVAILA BLE AT THE RELEVANT POINT OF TIME INCLUDING THE OUTCOME IN THE CASE OF SHRI YOGESH THAKKAR (SUPRA) DISCUSSED ABOVE. 8. SINCE WE ARE RESTORING THE ISSUE FOR THE REASONS DISCUSSED ABOVE, WE ARE REFRAINING FROM COMMENTING ON THE MERIT OF THE ISSUE AT HAND. AS A RESULT, THE APPEA L OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE APPLICANT IS ALLOWED AND APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF JANUARY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YA DAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 20 TH JANUARY, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-I, THANE 4) THE CIT-I, THANE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY, ITAT PUNE BENCHES, PUNE.