RAMESH SONI, MUMBAI V. ACIT 7(1), MUMBAI

ITA 7224/MUM/2012

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2877 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 1991-1992
• Appeal Filed On: 05-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Keywords: Unexplained investment; Principle of natural justice; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI RAJESH KUMAR (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 7224/MUM/2012 ASSESSMENT Y EAR: 1991 - 92 & ITA NO. 7225/MUM/2012 ASSESSMENT Y EAR: 1992 - 93 SHRI RAMESH SONI, 1/13, MAHAVIR DHA M, SAI BABA NAGAR, BORIVALI (WEST), MUMBAI - 400050 PAN: AAKPS3473K VS. THE ITO 25 (2) (4), BANDRA KURLA COMPLEX, MUMBAI - 400050 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJEEV KHANDELWAL AR) REVENUE BY : SHRI MICHAEL JERAL D ( D R ) DATE OF HEARING: 04/08 /2020 DATE OF PRONOUNCEMENT: 29 / 10 /2020 O R D E R PER RAM LAL NEGI, JM T HE ASSSESSEE HAS FILED THESE APPEALS AGAINST THE COMMON ORDER DATED 02.03.2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 35 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR S 1991 - 92 AND 1992 - 93 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL S FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER S PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (F OR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS UNDER CONSIDERATION . A CCORDINGLY , THE AO PASSED THE ASSESSMENT ORDERS U/S 143(3) OF THE ACT, AFTER MAKING CERTAIN ADDITIONS . THE ASSE SSMENT ORDERS WERE SET ASIDE NUMBER OF TIMES BY THE LD. CIT(A) AND THE 2 ITA NO. 7224 & 7225 / MUM/2012 ASSESSMENT YEAR S : 1991 - 92 & 1992 - 93 TRIBUNAL. ULTIMATELY, THE AO FINALIZED THE ASSESSMENT ORDERS AFTER MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED INVESTMENT, UNDISCLOSED COMMISSION, PROFIT OUT OF FOREIGN REMITTANCES AND P ROFIT EARNED FROM OTHER TRANSACTIONS AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 7,72,00,190/ - FOR THE AY 1991 - 92 AND RS. 3,03,52,360/ - FOR THE AY 1992 - 93. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDERS BEFORE THE LD. CIT(A). THE LD. CIT(A) DISMI SSED BOTH THE APPEALS AND CONFIRMED THE ADDITIONS MADE BY THE AO HOLDING THAT THE ASSESSEE IS INVOLVED IN COMMISSION OF OFFENCES UNDER VARIOUS SECTIONS OF FOREIGN EXCHANGE REGULATION ACT (FERA) AND FOREIGN EXCHANGE MANAGEMENT ACT (FEMA) AND THE CHIEF ENFOR CEMENT OFFICER HAS FILED COMPLAINT AGAINST THE ACCUSED PERSONS INCLUDING THE ASSESSEE IN THE PRESENT CASE. 3. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER S BY RAISING COMMON GROUNDS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF AO IN TREAT ING THIRD PARTY BANK DEPOSIT /BANK RECEIPTS AS ITS UNDISCLOSED INCOME ; T HAT THE CIT(A) HAS WRONGLY UPHELD THE ADDITION MADE ON ACCOUNT OF COMMISSION INCOME ON FOREIGN REMITTANCES ; T HAT THE LD CIT(A) HAS WRONGLY UPHELD THE ADDITION OF PROFIT ON ACCOUNT OF F OREIGN REMITTANCE AND THAT THE LD CIT(A) ERRED IN UPHOLDING THE ACTION OF AO IN MAKING ADDITION ON ACCOUNT OF PROFIT ON NOTIONAL BASIS RELATED TO THIRD PARTY BUSINESS. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENFORCEMENT DIREC TORATE (ED) HAS FILED COMPLAINT IN THE COURT OF CHIEF METROPOLITAN MAGISTRATE (CMM) AGAINST ACCUSED PERSONS INCLUDING THE PRESENT ASSESSEE UNDER VARIOUS SECTIONS OF FERA AND FEMA. THE LD COUNSEL FURTHER CONTENDED AS PER THE SAID COMPLAINT, MR. RAMESH KUMA R VERMA WAS THE KINGPIN AND MAIN PERSON BEHIND THE TRANSACTIONS IN QUESTION AND THE ASSESSEE IN THE PRESENT CASE MR. RAMESH SONI WAS MERELY AN EMPLOYEE OF RAMESH KUMAR VERMA . THE LD . COUNSEL FURTHER SUBMITTED THAT THE MAIN ACCUSED MR. RAMESH KUMAR VERMA HA S ADMITTED THIS FACT IN HIS STATEMENT RECORDED DURING INVESTIGATION. THE LD. COUNSEL FURTHER CONTENDED THAT THE AO HAS MADE THE IMPUGNED ADDITIONS ON THE BASIS OF INVESTIGATION CONDUCTED BY THE ED. T HE LD. COUNSEL FURTHER SUBMITTED THAT UNDER THESE CIRCUMS TANCES, THE ADDITIONS MADE 3 ITA NO. 7224 & 7225 / MUM/2012 ASSESSMENT YEAR S : 1991 - 92 & 1992 - 93 BY THE AO CANNOT BE SUSTAINED , THEREFORE, THE IMPUGNED ORDER MAY BE SET ASIDE AND THE AO MAY BE DIRECTED TO PASS AFRESH AFTER THE DECISION OF THE CRIMINAL COMPLAINT AGAINST THE ACCUSED PERSONS INCLUDING THE PRESENT ASSESSEE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) DID NOT OPPOSE THE PRAYER OF THE LD. COUNSEL FOR DE - NOVO ASSESSMENTS AND SUBMITTED THAT THE DEPARTMENT HAS NO OBJECTION IN CASE THE PRESENT APPEALS ARE BACK TO THE AO FOR PASSING ASSESSMENT ORDERS AFRESH IN ACCORDANCE WITH THE DECISION OF THE LD. CMM IN THE COMPLAINT FILED BY THE ED AGAINST THE ACCUSED PERSONS INCLUDING THE ASSESSEE IN THESE APPEALS. 6. WE HAVE PERUSED THE MATERIAL ON RECORD. T HE LD. CIT (A) HAS NOT DECIDED THE APPEAL S OF THE ASSES SEE ON MERITS AND DISMISSED THE SAME ON THE BASIS OF INVESTIGATION MADE BY THE ED AND COMPLAINT FILED BEFORE THE LD. CMM. THE CONCLUDING PARAS OF THE ORDER OF THE LD. CIT (A) READ AS UNDER: - I HAVE CONSIDERED THE APPELLANTS SUBMISSIONS AT VARIOUS STAGE S, REMAND REPORT OF THE A.O. AS WELL AS THE ASSESSMENT ORDER FOR BOTH THE ASSESSMENT YEARS. MY PREDECESSOR HAD REMANDED THE MATTER TO THE FILE OF THE A.O. FOR CAUSING CERTAIN ENQUIRIES. THE LD. A.O. ALSO PERUSED THE MATTER AND GOT ON RECORD THE DETAILS FRO M ENFORCEMENT DIRECTORATE. THE PRINCIPLE OF NATURAL JUSTICE HAS BEEN ALSO FOLLOWED AND THE A.O. AS WELL AS THE APPELLANT BOTH HAVE BEEN GIVEN ADEQUATE OPPORTUNITY. THERE IS NO DISPUTE ON THE FACT THAT FINALLY CHARGESHEET HAS BEEN FILED AGAINST THE APPELLAN T BY THE DIRECTORATE OF ENFORCEMENT ALTHOUGH THE LD. A.R. HAS SUBMITTED THAT THIS WAS DONE AFTER MORE THAN PERIOD OF 17 YEARS. BUT THE ARGUMENT OF THE LD. A.R. IS NOT MATERIAL BECAUSE ULTIMATELY THE CHARGESHEET HAS BEEN FILED AGAINST THE APPELLANT. THE AP PELLANT HAS FAILED TO PROVE THAT HE HAS NOT VIOLATED FERA/FEMA RULES AND HAS ALSO FAILED TO REBUT THE CHARGES THAT HE WAS NOT INVOLVED IN THE MONEY TRANSACTION. IT IS NOT THE CASE THAT THE APPELLANT HAS NOT MADE BY TRANSACTION IN THE BANK ACCOUNT RATHER ON THE CONTRARY THE APPELLANT HAS BEEN INVOLVED IN MONEY TRANSACTION AND OPERATING THE BANK ACCOUNT. IT CANNOT BE SAID THAT THE APPELLANT HAS NOT BEEN INVOLVED IN THE 4 ITA NO. 7224 & 7225 / MUM/2012 ASSESSMENT YEAR S : 1991 - 92 & 1992 - 93 MONEY TRANSACTION. AS ON DATE THE CHARGESHEET EXISTS AND THE APPELLANT CANNOT BE GIVEN ANY BENEFIT. IN MONEY LAUNDERING AND HAS MADE UNEXPLAINED INVESTMENT, HAS UNDISCLOSED COMMISSION, HAS EARNED PROFIT OUT OF FOREIGN REMITTANCES, HAS ALSO EARNED PROFIT FROM M/S REAL GEMS AND M/S GEMS O INDIA. THE APPELLANT ON THE OTHER HAND HAS FAILED TO PROV E THE CONTRARY. UNDER THE CIRCUMSTANCES, I AM UNABLE TO MAKE ANY INTERFERENCE IN THE ADDITIONS MADE BY THE A.O. AT THIS STAGE. 7. A S POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE LD. CIT (A) HAS NOT DECIDED THE ISSUES RAISED BY THE ASSESSEE ON M ERITS . T HE AUTHORITIES BELOW HAVE MADE /SUSTAINED ADDITION S IN THESE CASES ON THE BASIS OF THE INVESTIGATION CONDUCTED BY THE ENFORCEMENT DIRECTORATE. AS ALLEGED BY T HE LD. COUNSEL , THE PRESENT ASSESSEE HAS ACTED IN THE CAPACITY OF AN EMPLOYEE OF THE MAIN A CCUSED MR. RAMESH KUMAR VERMA. WE ARE THEREFORE, OF THE CONSIDERED VIEW THAT THE ISSUES INVOLVED IN THE PRESET APPEALS REQUIRE FRESH DETERMINATION AFTER THE DECISION OF THE COURT IN THE COMPLAINT/CHARGE SHEET FILED AGAINST THE ACCUSED PERSONS INCLUDING THE PRESENT ASSESSEE . HENCE, KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT (A) AND SEND THESE CASES BACK TO THE AO FOR PASSING THE ASSESSMENT ORDER AFRESH AFTER THE DECISION OF THE COURT OF THE CMM IN THE SAID COMPLAINT. NEEDLESS TO SAY THAT IF THE ASSESSEE IS HELD TO BE ONLY CONDUIT AND EXONERATED THE ASSESSMENT BE FRAMED ACCORDINGLY. IN THE RESULT, APPEAL S FILED BY THE ASSESSEE FOR ASSESSMENT YEAR S 1991 - 92 AND 1992 - 93 ARE ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED ON 29 TH OCT. , 2020 UNDER RULE 34 (4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( RAJESH KUMAR ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 29 / 10 /2020 ALINDRA, PS 5 ITA NO. 7224 & 7225 / MUM/2012 ASSESSMENT YEAR S : 1991 - 92 & 1992 - 93 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI