DCIT, Kanpur V. M/s. Gopi Appartment, Kanpur

ITA 738/LKW/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48337 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 13-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Document seized; Opportunity of being heard; Additional evidence; Documents seized; Set aside
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.738 (LKW.)/2010 A.Y. : 2005-06 THE DY.CIT, C.C. -2, VS. M/S. GOPI APARTMENT, KANPUR. 59/44, BIRHANA ROAD, KANPUR PAN AAGFG3611D (APPELLANT) (RESPONDENT) C.O.NO.2 (LKW.)/2011 (IN I.T.A.NO.738(LKW.)/2010) A.Y. : 2005-06 M/S. GOPI APARTMENT, VS. THE DY.CIT, C.C.-2, KANPUR. KANPUR. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI PRAVEEN KUMAR, CIT(D.R. ) ASSESSEE BY : SHRI AMIT SHUKLA, ADVOCATE O R D E R PER H.L.KARWA, VICE PRESIDENT THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-I, KANPUR DATED 5.10.2010 RELATING TO THE ASSESSMENT YEAR 2005-06. IN I.T.A.N O.738(LKW)/2010, THE REVENUE HAS TAKEN THE FOLLOWING TWO GROUNDS: 1. THE LD. CIT (A) HAS ERRED IN ADMITTING THE ADDITION AL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES WITHOUT DECI DING THE MATTER OF CASH CREDITS AFRESH IN ACCORDANCE WITH LA W AND WITHOUT AFFORDING REASONABLE OPPORTUNITY TO THE ASS ESSING 2 OFFICER. 2. THE LD. CIT (A) HAS ERRED IN TREATING THE CASH C REDITS OF RS.1,05,79,360/- FROM ITS PARTNER M/S. GOPESHWAR HO TELS LTD. AS EXPLAINED WITHOUT SPECIFYING THE DOCUMENTS AND E VIDENCE RELIED UPON BY HIM NOR WITHOUT GIVING ANY FINDING R EGARDING CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WITH REGARD TO SUCH CASH CREDITS. THE LD. CIT (A) ALSO D ID NOT SEEK THE AO'S COMMENTS ON THE SPECIFIC EVIDENCE OR DOCUM ENTS HE RELIED ON TO TREAT THE TRANSACTION AS EXPLAINED. 2. IN C.O.NO.2(LKW)/2011, THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS: 1. BECAUSE SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) IN THE 'BANARASI GROUP OF CASES' (TERMINOLOGY ADOPTED BY T HE ASSESSING OFFICER) DID NOT LEAD TO THE RECOVERY OF ANY INCRIM INATING MATERIAL AND INITIATION OF PROCEEDINGS UNDER SECTION 153C IN THE CASE OF THE 'APPELLANT' IS BAD IN LAW AND CONSEQUENTLY THE ASSE SSMENT ORDER DATED 31.12.2008 PASSED IN PURSUANCE THEREOF IS NULL AND VOID. 2. BECAUSE NO 'SATISFACTION NOTE' HAVING BEEN RECO RDED, PROCEEDINGS UNDER SECTION 153C ARE VITIATED ON ACCO UNT OF THIS REASON ALSO. 3. BECAUSE THERE BEING NO NOTICE ISSUED UNDER SECT ION 143(2) AND SERVED ON THE APPELLANT, AFTER THE ASSESSEE HAD FILED THE 'RETURN' IN COMPLIANCE WITH THE NOTICE UNDER SECTION 153C, IN T ERMS OF LETTER DATED 24.12.2008, THE ASSESSMENT ORDER DATED 31.12. 2008 AS A WHOLE AS ALSO THE VARIATION BETWEEN THE RETURNED INCOM E AND ASSESSED INCOME AS STOOD INCORPORATED THEREIN WAS LIABLE TO BE QUASHED, INTER ALIA, ON THIS GROUND ALSO. 4. BECAUSE IN ANY CASE, THE APPEAL FILED BY REVENU E, IS NOT MAINTAINABLE AND THE SAME DESERVES TO BE DISMISSED. 3. FIRSTLY, WE WILL TAKE UP THE REVENUES APPEAL 3 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM, WHICH CAME INTO EXISTENCE ON 7.9. 2004 RELEVANT TO THE ASSESSMENT YEAR 2005-06. IN THIS CASE, THE AO MADE THE ASSESSMENT UNDER SECTION 153C OF THE INCOME-TAX ACT,1961 (IN SHORT THE ACT) ON 31.12.2008. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 17.10.2006 IN BANARASI GROUP OF CASES ENCOMPASSI NG RESIDENTIAL AND BUSINESS PREMISES OF THE GROUP. CONSEQUENT UPON TH E SEARCH, THE JURISDICTION OVER THE ASSESSEE, WAS TRANSFERRED TO THE ACIT, CC-VI,KANPUR VIDE ORDER UNDER SECTION 127(2) ACT PASSED BY THE CIT-IX, NEW DELHI. WHILE FRAMING THE ASSESSMENT, THE AO HAS MADE THE A DDITION OF RS.1,05,79,360 AND DISALLOWED THE EXPENDITURE OF RS.20,852 AS PER THE ASSESSMENT ORDER IN THE FOLLOWING MANNER : THERE IS ADDITION IN CAPITAL OF RS.1,05,79,360 BY ONE PARTNER NAMELY GOPESHWAR HOTEL AND ESTATE LTD. DURING THE YEAR. TH E SAME IS ADDED TO THE INCOME OF THE ASSESSEE FOR WANT OF ANY EXPLA NATION SPECIALLY IN VIEW OF THE FACT THAT ASSESSEE WAS REQUIRED VIDE N OTICE DATED 12.12.08 TO FILE COPIES OF ACCOUNT OF PARTNERS EXPLAINING S OURCE OF CREDITS THEREIN. TOTAL INCOME IS COMPUTED AS UNDER : RETURNED INCOME RS.13,650 ADD: UNEXPLAINED CREDIT IN PARTNERS CAPITAL AC COUNT RS.10579360 RS.1,05,93,010. ON APPEAL, THE LD.CIT(A) DELETED THE ADDITION AND T HE REVENUE FILED APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD.CI T(A)-I, KANPUR DATED 26.2.2010, WHILE THE ASSESSEE HAS FILED THE CROSS OBJECTION. THE TRIBUNAL VIDE ITS ORDER DATED 7.7.2010 IN I.T.A.NO.325(LUC.) /2010 AND C.O. NO.20(LUC.)/2010, SET ASIDE THE ORDER OF THE LD.CIT (A) AND REMANDED THE MATTER TO THE FILE OF THE LD.CIT(A) WITH A DIRECTIO N TO DECIDE THE MATTER 4 AFRESH IN ACCORDANCE WITH LAW, AFTER AFFORDING REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS WELL AS THE AO. 5. IN COMPLIANCE TO THE ORDER OF THE TRIBUNAL DATE D 7.7.2010, THE LD.CIT(A) HAS PASSED A FRESH ORDER ON 5.10.2010 OB SERVING AS UNDER : 6. FURTHER SUBMITTED THAT THE AO HIMSELF PROVIDED THE COPIES OF SEIZED DOCUMENTS MENTIONED ABOVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HENCE THE SAID DOCUMENT DO NOT FORM CHA RACTER OF ADDITIONAL EVIDENCE AS DEFINED UNDER RULE 46A OF I. T.RULES. IN SUPPORT OF ABOVE, THE APPELLANT HAS FILED COPY OF PANCHNAMA DATED 18.10.2006 DRAWN IN THE NAME M/S G.R.S. JEWELLERS & OTHERS. 7. IN MY OPINION, THE DOCUMENTS FILED BY THE APPEL LANT ARE NOT ADDITIONAL EVIDENCE AS THE SAME WERE ALREADY AVAILA BLE WITH AO. SINCE THE ADDITION MADE BY AO TO THE EXTENT OF RS.L ,05,79,360/- AS PER ASSESSMENT ORDER DATED 31.12.2008 IS TREATED AS EXP LAINED AND HAVE BEEN DIRECTED TO BE DELETED AND NO OTHER ADDITION, REMAINS TO BE DECIDED IN THIS APPEAL. THEREFORE, GROUNDS NO.6 AND 7 OF APPEAL STANDS ALLOWED, AND REMAINING GROUNDS NO.1, 2, 3, AND 4 OF APPEAL ARE NOT NECESSARY TO ADJUDICATE. 6. NOW, THE REVENUE IS IN APPEAL AGAINST THE DELETI ON OF ADDITION OF RS.1,05,79,360, WHILE THE ASSESSEE HAS PREFERRED CR OSS OBJECTION AGAINST THE ORDER OF THE LD.CIT(A) IN NOT DECIDING THE CROSS O BJECTION OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE VERY OUTSET, SHRI PRAVEEN KUMAR, LD.CIT(DR) SUBMITTED THAT THE ORDER PASSED BY THE L D.CIT(A)IS CRYPTIC AND NON-SPEAKING. HE FURTHER SUBMITTED THAT THE LD.CIT( A) HAS NOT FULLY COMPLIED WITH THE DIRECTIONS OF THE TRIBUNAL GIVEN IN I.T.A.NO.325(LUC.)/2010 DATED 7.7.2010. HE ALSO REL IED ON THE DECISION OF 5 THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MANEK LAL D.SHAH VS. P.K.GUPTA AND OTHERS (2004) 267 ITR 340(BOM.) AND S UBMITTED THAT THE LD.CIT(A) HAS NOT GIVEN ITS OWN REASONS AS TO WHY HE DISAGREES WITH THE REASONS AND FINDINGS OF THE PRIMARY AUTHORITY. UNLE SS ADEQUATE REASONS ARE GIVEN, MERELY BECAUSE IT IS AN APPELLATE AUTHORITY , IT CANNOT BRUSH ASIDE THE REASONING OR FINDINGS RECORDED BY THE PRIMARY AUTHO RITY. ACCORDING TO THE LD. CIT(D.R.), THE ORDER SHOULD BE SELF-EXPLANATORY AND SHOULD NOT KEEP THE HIGHER COURT GUESSING FOR REASONS. IN THE CASE OF MANEKLAL D.SHAH (SUPRA),THE HON'BLE BOMBAY HIGH COURT HELD AT PAGE 344 OF THE REPORT AS UNDER : A RIGHT TO REASONS IS, THEREFORE, AN INDISPENSABLE PART OF A SOUND SYSTEM OF JUDICIAL REVIEW. A REASONED DECISION IS N OT ONLY FOR THE PURPOSE OF SHOWING THAT THE CITIZEN IS RECEIVING JU STICE, BUT ALSO A VALID DISCIPLINE FOR THE AUTHORITY ITSELF. THEREFO RE, STATING OF REASONS IS ONE OF THE ESSENTIALS OF JUSTICE. THE APPELLATE AUTHORITY IS ENJOINED AND IT IS INCUMBENT UPON IT TO APPRECIATE THE EVID ENCE CONSIDER THE REASONING OF THE PRIMARY AUTHORITY AND ASSIGN ITS OWN REASONS AS TO WHY IT DISAGREES WITH THE REASONS AND FINDINGS OF THE PRIMARY AUTHORITY. UNLESS ADEQUATE REASONS ARE GIVEN, MEREL Y BECAUSE IT IS AN APPELLATE AUTHORITY, IT CANNOT BRUSH ASIDE THE REAS ONING OR FINDINGS RECORDED BY THE PRIMARY AUTHORITY. THE ORDER SHOULD BE SELF- EXPLANATORY AND SHOULD NOT KEEP THE HIGHER COURT G UESSING FOR REASONS. THE REASONS PROVIDE A LIVE LINK BETWEEN T HE CONCLUSION AND THE EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGA INST ARBITRARINESS. IT GIVES AN OPPORTUNITY TO THE HIGHER COURT TO SEE WH ETHER OR NOT THE SUBORDINATE COURT OR AUTHORITY OR THE TRIBUNAL CONS IDERED THE RELEVANT MATERIAL. SINCE NO REASONS ARE FOUND IN TH E ORDER, WE ARE LEFT WITH NO OTHER ALTERNATIVE BUT TO QUASH AND SET ASI DE THE IMPUGNED ORDER TO THE EXTENT IT IS CHALLENGED AND TO REMIT THE PROCEEDINGS BACK TO THE COMMISSIONER OF INCOME-TAX, CENTRAL-II, MUM BAI, FOR HEARING AND CONSIDERATION AFRESH ON THE MERITS. IN VIEW OF THE ABOVE, SHRI PRAVEEN KUMAR, LD.CIT(D R) SUBMITTED THAT THE ORDER OF THE LD.CIT(A) MAY BE SET ASIDE AND RES TORE THE MATTER TO THE FILE 6 OF THE LD.CIT(A) WITH A DIRECTION TO DECIDE THE ISS UE AFRESH IN ACCORDANCE WITH LAW. HE ALSO SUBMITTED THAT THE LD.CIT(A) MAY BE DIRECTED TO PASS A SPEAKING ORDER. 7.1 ON THE OTHER HAND, SHRI AMIT SHUKLA, ADVOCATE, WHILE APPEARING FOR THE ASSESSEE, REITERATED THE SUBMISSIONS MADE BEFOR E THE LOWER AUTHORITIES. HE STRONGLY OBJECTED TO THE ABOVE SUBMISSIONS OF SH RI PRAVEEN KUMAR, LD.CIT(DR). 7.2 IN OUR CONSIDERED VIEW, THERE IS A SUBSTANTIAL FORCE IN THE ABOVE SUBMISSIONS OF SHRI PRAVEEN KUMAR, LD.CIT(DR). KEEP ING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF MANEKLAL D.SHAH (SUPRA), WE HOLD THAT THE LD.CIT(A) HAS NOT GIVEN ADEQUATE REASONS WHILE DECIDING THE ISSUE. THE ORDER PASSED BY THE L D. CIT(A) IS CRYPTIC AND NON-SPEAKING AND THEREFORE, NOT TENABLE. THE LD.CIT (A) HAS NOT GIVEN THE DESCRIPTION OF THE DOCUMENTS, WHICH WERE AVAILABLE WITH THE AO. HE HAS ALSO NOT MENTIONED THE DOCUMENTS, WHICH WERE FILED BEFORE HIM FOR THE FIRST TIME. IT IS ALSO NOT CLEAR FROM THE IMPUGNED ORDER THAT ON THE BASIS OF WHICH DOCUMENTS THE LD. CIT(A) HAS DELETED THE ADDITION. IN OUR VIEW, THE LD.CIT(A) HAS NOT FULLY COMPLIED WITH THE DIRECTION S OF THE TRIBUNAL DATED 7.7.2010 PASSED IN I.T.A.NO.325(LKW..)/2010 AND C.O .NO.20(LKW).2010. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE ARE OF THE VIEW THAT THE ORDER OF THE LD.CIT(A) DESERVES T O BE SET ASIDE AND REMAND THE MATTER TO THIS FILE FOR HEARING AND CONSIDERATI ON AFRESH ON MERITS. NEEDLESS TO SAY THAT THE LD.CIT(A) WILL PASS A SPEA KING ORDER. FOR STATISTICAL PURPOSES, THE APPEAL OF THE REVENUE STANDS ALLOWED. 7 C.O.NO.2(LKW)/2011 8. IT IS OBSERVED THAT THE C.O. FILED BY THE ASSES SEE ON 1.2.2011,WHICH WAS LATE BY THREE DAYS. IN THIS REGARD, SHRI AMIT S HUKLA, ADVOCATE, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEPART MENT HAD PREFERRED SECOND APPEAL BEFORE THE TRIBUNAL FOR THE ASSESSMEN T YEAR 2005-06 BEING I.T.A.NO.738(LKW)/2010. THE MEMO OF THE SAID APPEA L WAS RECEIVED AT THE END OF THE RESPONDENT/ASSESSEE ON 30.12.2010 AND T HE TIME LIMIT FOR FILING OF CROSS OBJECTION WAS ON OR BEFORE 29.1.2011. THE CROSS OBJECTION WAS DULY PREPARED AND SIGNED BY THE RESPONDENT/ASSESS EE ON 29.1.2011 AND THE SAME WAS ALSO DELIVERED IN THE OFFICE OF THE COUNSE L OF THE ASSESSEE. SINCE 29.1.2011 AND 30.1.2011 WERE SATURDAY AND SUNDAY, C ROSS OBJECTION WAS TO BE FILED ON 31.1.2011. HOWEVER, THE CROSS OBJEC TION HAS BEEN FILED ON 1.2.2011. SHRI AMIT SHUKLA, LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE REGISTRY OF THE TRIBUNAL VIDE ITS LETTER DATED 2.2 .2011 INTIMATED THE ASSESSEE THAT THE CROSS OBJECTION FILED ON 1.2.2011 IS BARRE D BY LIMITATION BY THREE DAYS. AFTER RECEIVING THE SAID LETTER, IT WAS ENQUI RED FROM THE OFFICE OF THE COUNSEL OF THE ASSESSEE AND IT WAS FOUND THAT DUE T O INADVERTENT MISTAKE OF HIS CLERK, THE SAID CROSS OBJECTION WAS FILED ON 1. 2.2011, INSTEAD OF 31.1.2011. IT IS CLAIMED THAT SUCH AN INADVERTENT M ISTAKE WAS DUE TO BONA FIDE OMISSION ON THE PART OF THE CLERK AND AS FAR A S THE ASSESSEE IS CONCERNED THERE WAS NO FAULT ON ITS PART FOR THE DELAY IN FIL ING THE CROSS OBJECTION. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE REPENT CASE, WE HOLD THAT THE EXPLANATION GIVEN BY THE ASSESSEE FOR THE DELAY IS SATISFACTORY. ACCORDINGLY, WE CONDONE THE DELAY OF THREE DAYS IN FILING THE CROSS OBJECTION. 8 9. SINCE WE HAVE RESTORED THE MAIN ISSUE TO THE FIL E OF THE LD.CIT(A) FOR FRESH ADJUDICATION AND, THEREFORE, WE THINK IT PROP ER TO RESTORE THE ISSUE RAISED IN THE CROSS OBJECTION ALSO TO THE FILE OF THE LD.CIT(A) WITH A DIRECTION TO DECIDE THE SAME. 10. IT IS MADE CLEAR THAT THE LD.CIT(A) SHOULD DECI DE THE APPEAL ON MERITS AND THE ISSUE RAISED IN THE CROSS OBJECTION IN ACCO RDANCE WITH LAW PREFERABLY WITHIN TWO MONTHS FROM THE RECEIPT OF T HE ORDER. 11. FOR STATISTICAL PURPOSES, THE APPEAL OF THE RE VENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 26.4.11 . SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT APRIL 26TH ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.