VIMAL KUMAR RATHI, MUMBAI V. DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 17 & 28, CENTRAL CIRCLE 17 & 28, MUMBAI

ITA 7457/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3805 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 11-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2011
• Court: TRIBUNAL
• Assessee Lawyers: G P MEHTA
• Keywords: Income from undisclosed sources; Principle of natural justice; Additional evidence
• Section: 132

Judgement Text

, , F , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.7457/MUM/2011 ASSESSMENT YEAR: 2007-08 VIMAL KUMAR RATHI, NIRMAL BUNGLOW, GULMOHAR CROSS RD. NO.5, JVPD SCHEME MUMBAI-400049 / VS. DCIT CEN. CIR - 17 & 28, RNO.401, 4 TH FLR. M.K. ROAD, MUMBAI-20 (REVENUE ) (RESPON DENT ) P.A. NO. AAB PR3676A ASSESSEE BY SHRI G.P. MEHTA (AR) REVENUE BY SHRI RAJESH OJHA (DR) / DATE OF HEARING: 20/07/2016 / DATE OF ORDER: 10/08/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF LD. ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-39, MUMBAI, {(IN SHORT CIT(A)}, DATE D 15.07.2011 PASSED AGAINST ASSESSMENT ORDER U/S 143( 3) OF THE ACT, DATED 31.12.08 FOR THE A.Y.2007-08 ON THE FOLL OWING GROUNDS: VIMAL K. RATHI 2 1.THE ORDERS PASSED BY THE LEARNED LOWER AUTHORITIE S ARE BAD IN LAW AND BAD IN FACTS. 2. THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN MAKING AN ADDITION OF RS.1,508,077/- ON ACCOUNT OF JEWELLERY FOUND AT THE TIME OF SEARCH TO THE RETURN ED INCOME IN CLEAR DISREGARD OF THE PROVISONS OF LAW R EAD WITH JUDICIAL PROPOSITIONS. 3. THE EARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN MAKING/UPHOLDING AN ADDITION OF RS.1,508,077/- ON ACCOUNT OF JEWELLERY FOUND AT THE TIME OF SEARCH, E VEN THOUGH NO MATERIAL OR EVIDENCE INCLUDING THE BREAK- UP OF VALUABLES FOUND IS AVAILABLE ON RECORD. THE IMPUGNE D ADDITION, THEREFORE, IS TAINTED WITH ARBITRARINESS. 4. THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT ADMI TTING THE EVIDENCES FILED IN SUPPORT OF APPELLANT'S CLAIM THAT JEWELLERY FOUND AT THE TIME OF SEARCH AND VALUED AT RS.1,508,077/- DID NOT BELONG TO THE APPELLANT, EVE N THOUGH SPECIFIC DIRECTIONS TO FILE SUCH EVIDENCES W ERE GIVEN DURING THE COURSE OF THE APPELLATE PROCEEDINGS. 5. THE IMPUGNED ADDITION OF RS.1,508,077/- HAS BEEN MADE WITHOUT ANY BASIS AND WITHOUT CONSIDERING THE EXPLANATION OF THE APPELLANT READ WITH INSTRUCTIONS OF CBDT. 6. HAVING REGARD TO THE FACTS OF THE CASE, PROVISIO NS OF LAW & JUDICIAL PROPOSITIONS, THE ENTIRE ADDITION OF RS.1,508,077/- IS WHOLLY UNCALLED FOR AND UNTENABLE IN LAW. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI G.P. MEHTA, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI RAJESH OJHA, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. THE BRIEF BACKGROUND IN THIS CASE IS THAT SEARCH A ND SEIZURE ACTION U/S 132 OF THE ACT WAS CONDUCTED ON THE PREM ISES OF THE ASSESSEE. DURING THE COURSE OF SEARCH SOME JEWE LLERY WAS FOUND AND A PART OF THE JEWELLERY WAS SEIZED. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSE E TO EXPLAIN THE JEWELLERY FOUND. IN ABSENCE OF PROPER E XPLANATION VIMAL K. RATHI 3 TO THE SATISFACTION OF THE AO, A SUM OF RS.20,41,83 9/- WAS ADDED AS INCOME FROM UNDISCLOSED SOURCES ON ACCOUNT OF UNEXPLAINED JEWELLERY. 3.1. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A) WHERE THE ASSESSEE MADE DETAILED SUBMISS IONS AND ALSO FILED ADDITIONAL EVIDENCES TO EXPLAIN THE JEWE LLERY. THE LD. CIT(A) SENT THESE EVIDENCES TO AO FOR EXAMINATION O F THESE EVIDENCES AND SENDING THEREAFTER HIS REMAND REPORT. 3.2. THE AO SENT REMAND REPORT DATED 2.06.2011 WHICH WA S CONSIDERED BY LD. CIT(A) BEFORE PASSING HIS ORDER. THE LD. CIT(A) DID NOT ADMIT THE ADDITIONAL EVIDENCES AND W ITHOUT CONSIDERING THESE EVIDENCES, HE CONFIRMED THE ADDIT ION PARTLY TO THE EXTENT OF RS.15,08,077/- OUT OF TOTAL AT RS. 20,41,839/- MADE BY THE AO. 3.3. BEING AGGRIEVED AGAIN, THE ASSESSEE FILED APPEAL B EFORE THE TRIBUNAL. DURING THE COURSE OF HEARING BEFORE US, I T WAS ARGUED BY THE LD. COUNSEL THAT THERE IS CONTRADICTI ON IN THE FACTS NOTED BY THE AO AND THE FACT AS HAVE BEEN REC ORDED BY THE LD. CIT(A). SINCE PROPER OPPORTUNITY WAS NOT GI VEN BY THE AO, THEREFORE EVIDENCES COULD NOT BE SUBMITTED BEFO RE THE AO. UNDER THESE CIRCUMSTANCES, ADDITIONAL EVIDENCES SHO ULD BE CONSIDERED BEFORE DECIDING THIS GROUND IN THE INTER EST OF JUSTICE AND THEREFORE, THE REQUEST WAS MADE TO SEND THIS ISSUE TO THE FILE OF THE AO FOR A FRESH DECISION AFTER CO NSIDERING EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE BEFORE THE LD. CIT(A). 3.4 . WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTH ORITIES AND AGREE WITH THE FACTUAL SUBMISSIONS MADE BY THE LD. VIMAL K. RATHI 4 COUNSEL BEFORE US. WE NOTICED A CONTRADICTION BETWE EN THE FINDINGS RECORDED BY BOTH THE AUTHORITIES IN THEIR ORDERS. IT IS POINTED OUT THAT AO IN HIS ORDER MENTIONED THAT TO TAL JEWELLERY WAS FOUND FOR RS.31,32,374/- AT THE TIME OF SEARCH, AND OUT OF IT JEWELLERY WORTH RS.20,41,839/- WAS SEIZED BY THE DDIT(INVESTIGATION). ON THE OTHER HAND, IT IS MENTI ONED BY THE LD. CIT(A) IN THE APPEAL ORDER THAT TOTAL JEWELLERY WORTH RS.48,00,330/- WAS FOUND DURING THE SEARCH. IT IS F URTHER MENTIONED BY THE LD. CIT(A) THAT THE SEARCH TEAM DI D NOT SEIZE ANY AMOUNT OF JEWELLERY. IT IS FURTHER MENTIONED BY THE LD. CIT(A) THAT DURING THE REMAND PROCEEDINGS, THE AO H IMSELF ACCEPTED JEWELLERY FOR AN AGGREGATE AMOUNT OF RS.32,91,553/.THUS, THERE IS A STARK CONTRADICTION WHEN THE FACTS RECORDED BY AO AND LD. CIT(A) ARE COMPARED. 3.4.1. FURTHER, ON THE ONE HAND, LD. CIT(A) STATED IN HIS ORDER THAT TOTAL JEWELLERY WAS FOUND FOR RS.31,32,374/-, AND ON THE OTHER HAND, LD. CIT(A) STATED IN THE SAID ORDER THA T DURING THE REMAND PROCEEDINGS JEWELLERY WORTH RS.32,91,553/- H AS BEEN ACCEPTED BY THE AO DURING THE REMAND PROCEEDINGS. T HUS, IF IT IS CORRECT, THEN NO ADDITION OUGHT TO HAVE BEEN MAD E IN THE HANDS OF ASSESSEE. THERE SEEMS TO SOME FALLACY WHIC H NEEDS TO BE RECONCILED. 3.4.2. FURTHER, THE ASSESSEE HAS BROUGHT ON RECORD SOME EVIDENCES TO EXPLAIN THE JEWELLERY, WHICH WERE NOT CONSIDERED BEFORE DECIDING THIS ISSUE AGAINST THE ASSESSEE. IN OUR CONSIDERED VIEW, WHEN THE SEARCH PROCEEDINGS ARE DO NE AND THE ASSESSMENT PERTAINING TO THE SEARCH ACTION IS C ARRIED OUT, A VOLUMINOUS EXERCISE IS DONE BY THE ASSESSEES FOR EXPLAINING VIMAL K. RATHI 5 AMPLE NUMBER OF ISSUES ARISING UNDER SUCH PROCEEDIN GS. UNDER THESE CIRCUMSTANCES, THERE MAY BE CERTAIN EVI DENCES WHICH MAY NOT HAVE BEEN PLACED AT THE EARLIEST OPPO RTUNITY GIVEN TO THE ASSESSEE DUE TO VARIOUS REASONS. BUT, DOORS OF JUSTICE SHOULD NOT BE CLOSED BY NOT CONSIDERING THE EVIDENCES WHICH MAY BE PLACED BY AN ASSESSEE, UNDER SUCH CIRCUMSTANCES AT THE STAGE OF FIRST APPEAL. IN OUR VIEW, AN ISSUE SHOULD NOT BE DECIDED AGAINST THE ASSESSEE WI THOUT EVEN EXAMINING THE EVIDENCES BROUGHT ON RECORD BY THE AS SESSEE. THEREFORE, KEEPING IN VIEW, THE CONTRADICTIONS RECO RDED IN ASSESSMENT ORDER AND ORDER PASSED BY THE LD. CIT(A) AND KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, WE SEND THIS ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO TAKE INTO HIS CONSIDERATION THE EVIDENCES AS MAY BE PLACED BY THE ASSESSEE BEFORE THE AO FOR WHICH FULL OPPORTUNITY S HALL BE GIVEN TO THE ASSESSEE AND AO SHALL DECIDE THE ISSUE AFTER CONSIDERING ON OBJECTIVE BASIS, THE DETAILS AND EVI DENCES AND OTHER MATERIAL ON RECORD. THE ASSESSEE IS FREE TO RAISE ALL LEGAL AND FACTUAL ISSUES WITH RESPECT TO THESE GROUNDS. T HESE GROUNDS ARE TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AS MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016. SD/- (AMIT SHUKLA ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; # DATED : 10/08/2016 VIMAL K. RATHI 6 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. % &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. * * ( % ) / THE CIT, MUMBAI. 4. * * / CIT(A)- , MUMBAI 5. -. / (01 , * % 012 , / DR, ITAT, MUMBAI 6. / 34 5 / GUARD FILE. / BY ORDER, ) -% ( //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI