RAJARAM STOCK BROKING CO. (MUMBAI), MUMBAI V. ITO WD 4(2)(1), MUMBAI

ITA 7284/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4290 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Peak credit; Set aside
• Section: 271(1)(c); 143(3); 143(1); 250; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 7284 /MUM/20 1 7 ( / ASSESSMENT YEAR: 2004 - 05 ) M/S. RAJARAM STOCK BROKING CO, MUMBAI PVT. LTD. 919, P .J. TOWER, DALAL STREET, FORT, MUMBAI - 400023 . / VS. ITO WARD 4(2)(1) AAYAKAR BHAVAN, M.K. MARG, MUMBAI . ./ ./ PAN/GIR NO. : AABCR1110Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 06 .0 2 .201 9 / DATE OF PRONOUNCEMENT : 13. 03 .2019 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE H AS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 25.03.2011 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 8 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2004 - 05 WHERE IN THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE C ONFIRMED . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1.1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN PASSING THE ORDER U/S 250 WITHOUT GIVING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE APPELLANTS. ASSESSEE BY : SHRI DIVYESH P. TOTORIA REV ENUE BY: SHRI D. G. PANSARI (SR. AR) ITA. NO.7284 /M/201 7 A.Y. 20 0 4 - 05 2 1.2) THE APPELLANTS SUBMIT THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AS WELL AS IN THE LAW THE ORDER IS ILLEGAL AND VOID IN AS MUCH AS THE APPELLANTS WAS NEVER BEEN SERVED UPON ANY NOTICE IN RESPECT OF THE HEARING. 2.1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER AND CONFIRMING THE PENALTY U/S 271(1)(C) AMOUNTING TO RS.6.45.7501 - . 2.2 THE APPELLANTS SUBMIT THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AS WELL AS IN THE LAW THE PENALTY OUGHT TO HAVE BEEN DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL). 2.3) THE APPELLANT FURTHER SUBMIT THAT THE ORDER U/S 271(1)(C) OUGHT TO BE CANCELLED AS THE ORDER OF ASSESSMENT MADE U/S 143(3) HAS BEEN SET ASIDE BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN TERMS OF THE ORDER DATED 5.2.2013. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUNDS AT THE TIME OF HEARING. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 01.11.2004 DECLARING TOTAL INCOME TO THE TUNE OF RS.3,30,925/ - FOR THE A.Y. 2004 - 05. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 18.03.2005. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT OF THE ASSESS EE WAS COMPLETED U/S 143(3 ) OF THE ACT ON 28.12.2006 RAISING THE ADDITION IN SUM OF RS.18,00,000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THEREAFTER, THE PENALTY WAS INITIATED AND AFTER THE REPLY OF THE ASSESSEE , THE PENALTY TO THE TUNE OF RS.6,45,750/ - WAS LEVIED. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ITA. NO.7284 /M/201 7 A.Y. 20 0 4 - 05 3 4 . WE HAVE HEARD THE ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET, THE LD. R EPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE QUANTUM ON THE BASIS OF WHICH THE PENALTY WAS LEVIED HAS BEEN ORDER TO BE SET ASIDE BY HONBLE ITAT IN ITA. NO. 4049/M/20109 DATED 05.02.2013, THEREFORE, IN THE SAID CIRCUMSTANCES, THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. THE COPY OF ORDER DATED 05.02.2013 IN ITA. NO.4049/M/2009 TITLED AS M/S. RAJARAM STOCK BROKING CO. VS. ITO WARD 4(2)(1) , MUMBAI IS ON RECORD AND THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 3 WHICH IS HEREBY REPRODU CED AS UNDER.: - 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED FROM THE STATEMENT OF SHRI KAILASH KABRA THAT HE ADMITTED TO HAVE ONLY ONE CONCERN, NAMELY, M/S.DEEPAK CORPORATION. IN RESPONSE TO QUE STION NO.6, HE STATED THAT HE WAS FUNDING THE ASSESSEE THROUGH HIS CONCERN DEEPAK CORPORATION. THE ASSESSING OFFICER VIDE HIS QUESTION NO.8 ASKED SHRI KAILASH KABRA THAT IF HE WAS HAVING ONLY ONE CONCERN, THEN HOW THE CONFIRMATIONS IN RESPECT OF M/S.RUCHIT A ENTERPRISE AND M/S.ANTIMA CORPORATION WERE SIGNED. SHRI KABRA REPLIED THAT THE STATEMENTS WERE SIGNED BY HIM,: BUT THESE CONCERNS ARE BELONGING TO M/S.RAJARAM STOCK BROKING CO. PVT. LTD. I HAVE OPENED THE BANK ACCOUNTS IN THE NAME OF M/S.RUCHITA ENTERPR ISE AND M/S.ANTIMA CORPORATION. IN RESPONSE TO QUESTION NO.9, HE SUBMITTED THAT HE OPENED THE ACCOUNTS IN RESPECT OF THESE TWO CONCERNS BUT THESE COMPANIES WERE RUN BY THE ASSESSEE FOR ITS OWN TRANSACTIONS. WHEN WE PERUSE THIS STATEMENT GIVEN BY SHRI KABR A, IT APPEARS THAT HE ADMITTED TO HAVE ONLY ONE CONCERN, NAMELY, DEEPAK CORPORATION AND THE OTHER TWO CONCERNS, NAMELY, RUCHITA ENTERPRISE AND ANTIMA CORPORATION WERE CLAIMED TO BE OPERATED BY HIM FOR AND ON BEHALF OF THE ASSESSEE ALONE. THE LEARNED AR CON TENDED THAT THE STATEMENT GIVEN BY SHRI KABRA IS INCORRECT INASMUCH AS THE BANK ACCOUNTS OF THESE TWO CONCERNS WOULD DEMONSTRATE THAT THERE WERE SEVERAL TRANSACTIONS CONDUCTED BY SHRI KABRA HIMSELF WITH OTHER PARTIES INCLUDING HIS CREDIT CARD PAYMENTS AND ITA. NO.7284 /M/201 7 A.Y. 20 0 4 - 05 4 NOT OF THE ASSESSEE ALONE. PAGE NO.40 OF THE PAPER BOOK IS A OF ACCOUNT OF DEEPAK CORPORATION IN THE BOOKS OF ASSESSEE BY WHICH VARIOUS TRANSACTIONS HAVE BEEN RECORDED STARTING FROM 22.04.2003 UP TO 31.03.2004. PAGE NO.41 OF THE PAPER BOOK IS A COPY OF ACC OUNT OF RUCHITA ENTERPRISES IN THE BOOKS OF ASSESSEE BY WHICH VARIOUS TRANSACTIONS HAVE BEEN RECORDED STARTING FROM 06.05.2003 UP TO 31.03.2004. PAGE 109 IS A COPY OF ACCOUNT OF ANITA CORPORATION IN THE BOOKS OF THE ASSESSEE. THE CORRECTNESS OF THESE THREE ACCOUNTS IN THE BOOKS OF ASSESSEE HAS NOT BEEN DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IT IS FURTHER WORTH NOTING THAT THE PEAK CREDIT FROM THESE THREE ACCOUNTS COMES AT `18 LAKH, WHICH IS THE AMOUNT ADDED BY THE A.O. U/S 68 OF THE ACT. THESE FACTS EX FACIE BRING TO LIGHT THAT THE ASSESSEES TRANSACTIONS WITH THESE THREE CONCERNS OF SHRI KABRA ARE LIMITED TO THOSE RECORDED ON SUCH PAGES. IT NEEDS TO BE ASCERTAINED AS TO WHETHER THE STATEMENT OF SHRI KABRA ABOUT THE ACCOUNTS OF RUCHITA ENTERPRI SES AND ANTIMA CORPORATION MAINTAINED BY HIM FOR AND ON BEHALF OF THE ASSESSEE IS CORRECT OR NOT. THE LEARNED AR HAS PLACED ON RECORD COPIES OF BANK STATEMENTS OF RESPECT OF RUCHITA ENTERPRISES AND ANTIMA CORPORATION. FROM THESE BANK STATEMENT OF ABN AMRO BANK HOLDING ACCOUNT OF ANTIMA CORPORATION AND THE CITY CO - OPERATIVE BANK LIMITED HOLDING THE ACCOUNT OF RUCHITA ENTERPRISES, IT CAN BE SEEN THAT THERE ARE SEVERAL TRANSACTIONS ENTERED INTO THESE BANK ACCOUNTS. IF THE CONTENTION OF SHRI KABRA IS ACCEPTED T HAT HE WAS MAINTAINING BANK ACCOUNT IN RESPECT OF THESE TWO CONCERNS FOR AND ON BEHALF OF THE ASSESSEE, THEN OBVIOUSLY ALL THE TRANSACTIONS IN THESE TWO BANK ACCOUNTS WOULD HAVE BEEN LIMITED ONLY TO THE ASSESSEE. IT CAN BE SEEN THAT THE TRANSACTIONS OF ASS ESSEE WITH RUCHITA ENTERPRISES AND ANTIMA CORPORATION ARE IN THE RANGE OF 10% OF THE TOTAL BANK TRANSACTIONS APPEARING IN THE BANK ACCOUNTS OF THESE TWO CONCERNS. PRIMA FACIE IT APPEARS THAT THE STATEMENT GIVEN BY SH. KABRA BEFORE THE AO IS NOT MATCHING WI TH THE MATERIAL ON RECORD. IN OUR CONSIDERED OPINION, THERE IS A NEED TO ALLOW AN OPPORTUNITY TO THE ASSESSEE FOR CROSS EXAMINING SH. KABRA, SO THAT THE CORRECTNESS OR OTHERWISE OF HIS STATEMENT COULD BE ASCERTAINED. EQUALLY, THERE ARE CERTAIN CIRCUMSTANCE S, WHICH ALSO PRIMA FACIE BELIE THE ASSESSEES CONTENTION ABOUT THE GENUINENESS OF THE CREDIT ENTRIES. AT THIS STAGE, WE DO NOT PROPOSE TO ELABORATELY DISCUSS THE FACTORS FOR AND AGAINST THE ASSESSEE. IN OUR CONSIDERED OPINION THE ENDS OF JUSTICE WOULD MEE T ADEQUATELY IF THE ASSESSEE IS ALLOWED AN OPPORTUNITY TO CROSS EXAMINE SH. KABRA. WE ORDER ACCORDINGLY. THE IMPUGNED ORDER IS THEREFORE, SET ASIDE AND THE MATTER IS SENT BACK TO THE AO FOR DOING THE NEEDFUL IN THIS REGARD AS PER OUR ABOVE DIRECTIONS AND T HEREAFTER DECIDING THE ISSUE AFRESH AS PER LAW. ITA. NO.7284 /M/201 7 A.Y. 20 0 4 - 05 5 5. SINCE THE QUANTUM HAS BEEN DELETED BY THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 4049/M/20109 DATED 05.02.2013, THEREFORE, IN THE SAID CIRCUMSTANCES, THE PENALTY HAS NO LEG TO STAND, AND THER EFORE , WE DELETED THE PENALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 13 . 03 .2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 13. 0 3 .2019 . V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPE LLANT 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