Padham J. Challani, CHENNAI V. DCIT, CHENNAI

ITA 725/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6322 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-04-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 23-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS RU GEORGE
• Assessee Lawyers: K RAVI
• Keywords: Principle of natural justice
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , ! . , ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER , AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.719 TO 725/MDS/2017 /ASSESSMENT YEARS: 2007-08 TO 2013-14 SHRI PADHAM J. CHALLANI, NO.23/1, HABIBULLAH ROAD, T.NAGAR, CHENNAI-600 017. VS. THE DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE III(4), CHENNAI-600 034. [PAN: AEKPC 1816 N ] ( & /APPELLANT) ( '(& /RESPONDENT) & ) / APPELLANT BY : MR.K.RAVI, ADV. '( & ) /RESPONDENT BY : MRS.RUBY GEORGE, CIT ) /DATE OF HEARING : 16.08.2017 ) /DATE OF PRONOUNCEMENT : 16.08.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NOS.719 TO 725/MDS/2017 ARE APPEALS FILED BY T HE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-19, CHENNAI, IN ITA NO.106, 105, 104, 103, 102, 101 & 100/15-16 DATED 15.03.2017 FOR THE AYS 2007-08 TO 2013-14 . ITA NOS.719 TO 725/MDS/2017 :- 2 -: 2. MRS.RUBY GEORGE, CIT REPRESENTED ON BEHALF OF TH E REVENUE AND MR.K.RAVI, ADV. REPRESENTED ON BEHALF OF THE ASSESS EE. 3. IT WAS SUBMITTED BY THE LD.AR THAT THERE WAS A S EARCH ON THE PREMISES OF THE ASSESSEE ON 19.04.2012. IT WAS A S UBMISSION THAT AS A RESULT OF SEARCH, NOTICE U/S.153A CAME TO BE ISSUED AND THE ASSESSMENTS CAME TO BE COMPLETED U/S.153A R.W.S.143(3) ON 17.03 .2014 WHEREIN ADDITIONS HAD BEEN MADE. IT WAS A SUBMISSION THAT AGAINST THE ASSESSMENT, APPEALS HAD BEEN FILED BY THE ASSESSEE BEFORE THE LD.CIT(A). IT WAS A SUBMISSION THAT BEFORE THE LD.CIT(A), IT W AS ARGUED THAT NO INCRIMINATING MATERIAL HAVING BEEN FOUND IN THE COU RSE OF THE SEARCH AND CONSEQUENTLY, THE ASSESSMENTS U/S.153A R.W.S.143(3 ) WAS LIABLE TO BE CANCELLED. IT WAS A FURTHER SUBMISSION THAT THE LD .CIT(A) DID NOT QUASH THE ASSESSMENT BUT HAD PROCEEDED TO ENHANCE THE ASS ESSMENT BY MAKING THE DISALLOWANCE BY APPLYING THE PROVISIONS OF SEC. 14A R/W RULE 8D OF THE ACT. IT WAS A SUBMISSION THAT AT THE OUTSET, THE A SSESSMENTS WERE LIABLE TO BE ANNULLED IN SO FAR AS NO INCRIMINATING MATERI AL HAD BEEN FOUND IN THE COURSE OF THE SEARCH OR USED FOR THE PURPOSE OF THE ASSESSMENT PROCEEDINGS. IT WAS ALSO A SUBMISSION THAT STATEME NTS RECORDED HAVE ALSO NOT BEEN GIVEN TO THE ASSESSEE. IT WAS A FURTHER S UBMISSION THAT IN RESPECT OF THE DISALLOWANCE MADE BY INVOKING THE PR OVISIONS OF SEC.14A R/W RULE 8D, ONE OF THE PRIMARY REQUIREMENTS WAS TH E SATISFACTION WAS TO BE RECORDED BY THE AO. IT WAS A SUBMISSION THAT TH E SATISFACTION RECORDED BY THE LD.CIT(A) CANNOT BE CONSIDERED AS SATISFACTI ON ARRIVED AT BY THE ITA NOS.719 TO 725/MDS/2017 :- 3 -: AO. IT WAS A SUBMISSION THAT PROVISIONS OF SEC.14A SPECIFICALLY REQUIRED THE SATISFACTION TO BE ARRIVED AT BY THE AO. IT WA S A SUBMISSION THAT IF THE ASSESSEES CLAIM OF ANNULMENT OF THE ASSESSMENT ON ACCOUNT OF NON- AVAILABILITY OF INCRIMINATING MATERIAL WAS ACCEPTED , THEN AUTOMATICALLY THE ISSUE OF DISALLOWANCE U/S.14A WOULD NO MORE SURVIVE . IT WAS A SUBMISSION THAT ALTERNATIVELY, THE ADDITION MADE BY THE LD.CIT (A) BY INVOKING THE PROVISIONS OF SEC.14A R/W RULE 8D WAS LIABLE TO BE DELETED. THE LD.AR PLACED RELIANCE UPON THE DECISION OF THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF OM SHAKTHI AGENCIES (MADRAS) (P) LTD . V. DCIT REPORTED IN 66 TAXMANN.COM 287 AND ALSO THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPOR ATION LTD. VS. CIT REPORTED IN [2015] 58 TAXMANN.COM 78 (BOM) AND ALSO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF LATA JA IN V. PR. CIT [2016] 384 ITR 543 (DEL). 4. IN REPLY, THE LD.DR DREW OUR ATTENTION TO THE AS SESSMENT ORDER IN PAGE NO.2 PARA NO.5 TO SUBMIT THAT THERE WAS NO CO- OPERATION ON THE PART OF THE ASSESSEE AT THE TIME OF THE ASSESSMENT AND C ONSEQUENTLY, THE AO HIMSELF WAS HANDICAPPED. IT WAS A SUBMISSION THAT THE ASSESSMENT WAS LIABLE TO BE UPHELD. IT WAS A FURTHER SUBMISSION T HAT THE DISALLOWANCE MADE BY THE LD.CIT(A) BY INVOKING THE PROVISIONS OF SEC.14A R/W RULE 8D WAS LIABLE TO BE UPHELD. SHE VEHEMENTLY SUPPORTED THE ORDER OF THE LD.CIT(A). ITA NOS.719 TO 725/MDS/2017 :- 4 -: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMITT EDLY, THE ASSESSMENT ORDER DOES NOT TALK OF ANY INCRIMINATING MATERIAL. BUT, IN THE PENULTIMATE PARAGRAPHS OF PAGE-2 OF THE ASSESSMENT ORDER, THE AO TALKS OF THE MAIN SOURCE OF THE INCOME OF THE ASSESSEE BE ING MYSTERIOUS OTHER SOURCE WHICH HAS NOT BEEN EXPLAINED WITH EVIDENCE. A PERUSAL OF THE ORDER OF THE LD.CIT(A) IN PAGE NOS.12, PARA NO.4 TA LKS OF STATEMENT ON OATH RECORDED AS WELL AS THE BUSINESS PRACTICES DIS COVERED DURING THE COURSE OF THE SEARCH WHICH HAVE BEEN THE BASIS ON W HICH ADVERSE INFERENCES HAVE BEEN DRAWN AS REGARDS THE INCOMES D ECLARED FOR TAXATION. WE ARE OF THE VIEW THAT THE NON-COOPERATION BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT HAS HAMPERED THE ASSESSMENT COMPL ETELY. THIS BEING SO, IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSM ENT IS SET-ASIDE AND RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFRESH AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE HIS C ASE. ALL ISSUES ARE LEFT OPEN BEFORE THE AO. THE AO HAS TO RE-DO THE ASSESS MENT AFTER BRINGING ON RECORD THE INCRIMINATING MATERIALS, IF ANY, FOUN D IN THE COURSE OF THE SEARCH. THE AO IS ALSO DIRECTED TO GRANT THE ASSES SEE, THE COPIES OF THE STATEMENTS RECORDED IN THE COURSE OF THE SEARCH. W E ARE NOT GIVING ANY FINDING ON THE ISSUE OF THE ADDITIONS MADE BY THE L D.CIT(A) BY INVOKING THE PROVISIONS OF SEC.14A R/W RULE 8D AS WE HAVE SE T-ASIDE THE ASSESSMENTS AND CONSEQUENTLY, THE ORDER OF THE LD.C IT(A) ALSO STANDS SET- ASIDE AND THE ISSUES ARE BEFORE THE AO FOR RE-ADJUD ICATION AFTER BRINGING ON RECORD THE INCRIMINATING MATERIALS, IF ANY, FOUN D IN THE COURSE OF THE SEARCH. ITA NOS.719 TO 725/MDS/2017 :- 5 -: 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH AUGUST, 2017, AT CHENNAI. SD/- SD/- ( . ) ( A. MOHAN ALANKAMONY ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 1 /DATED: 16 TH AUGUST, 2017. TLN ) '23 43 /COPY TO: 1. & /APPELLANT 4. 5 /CIT 2. '(& /RESPONDENT 5. 3 ' /DR 3. 5 ( ) /CIT(A) 6. /GF