LALIT D. SONI, MUMBAI V. PR CIT 29, MUMBAI

ITA 785/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2404 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Reopening of assessment; Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAMIT KOCHAR , AM ITA NO . 6431/MUM/2013 (A.Y: 2002 - 03 ) LONGULF TRADING (INDIA) PVT. LTD., TIMES SQUARE, A WING, 5 TH FLOOR, UNIT 1B, MAROL, ANDHERI KURLA ROAD, ANDHE RI (EAST), MUMBAI - 59 PAN: AAACL 075D VS. THE DY . COMMISSIONER OF INCOME TAX, CIRCLE 2(2), MUMBAI APPELLANT .. RESPONDENT APPELLANT BY .. SHRI SANJAY PARIKH, AR RESPONDENT BY .. SHRI A. RAMACHANDRAN , DR DATE OF HEARING .. 20 - 10 - 2016 DATE OF PRO NOUNCEMENT .. 20 - 10 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OU T OF THE ORDER OF THE CIT - (A) - 4 1 , MUMBAI IN APPEAL NO. CIT (A) - 17 / IT - 2 1 / 20 11 - 12 DATE D 23 - 08 - 2013 . ASSESSMENT WAS FRAMED BY THE D C I T , CIRCLE - 2(2) , MUMBA I FOR THE ASSESSMENT YEAR 2002 - 03 VIDE HIS ORDER DATED 28 - 03 - 2005 U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . P ENALTY U/S 271 (1) (C ) OF THE ACT WAS LEVIED BY THE D CIT - 8(2) , MUMBAI VIDE HIS ORDER DATED 25 - 03 - 2011. 2. THE ONLY ISSUE I N THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE CIT (A) CONFIRMING LEVY OF PENALTY U/S 271 (1) OF THE ACT. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE QUANTUM APPEAL ON WHICH PENALTY WAS LEVIED WAS CHALLENGED BY TH E ASSESSEE BEFORE THE TRIBUNAL IN ITA NO.2528/MUM/2010 AND THE TRIBUNAL VIDE ORDER DATED 02 - 03 - 2016 HAS ALLOWED THE APPEAL BY DELETING THE DISPUTED ADDITION ON WHICH PENALTY WAS LEVIED. IN VIEW OF THIS, HE REQUESTED THAT PENALTY LEVIED ON THE ASSESSEE BE D ELETED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. ON PERUSAL OF RECORDS , WE FIND THAT THE QUANTUM ADDITION HAS BEEN MADE BY THE AO ON ACCOUNT OF FREIGHT PAID (INLAND WATERWAYS IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , MUMBAI ITA NO. 785 /MUM/20 1 6 2 BEFORE SRI MAHAVIR SINGH, J M AND SRI RAMIT KOCHAR , AM ITA NO . 785/MUM/2016 (A.Y: 2008 - 09 ) LALIT D. SONI , 5, SOTTA BHAVAN, L. T. ROAD, MULUND (EAST), MUMBAI - 81 PAN:AAFPS 7764L VS. THE PRINCIPAL COMM ISSIONER OF INCOME TAX - 29, C - 10, 3 RD FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 APPELLANT .. RESPONDENT APPELLANT BY .. SHRI BHADRESH DOSHI, AR RESPONDENT BY .. SHRI R. P. MEENA, CIT DR DATE OF HEARING .. 1 9 - 10 - 20 16 DATE OF PRONOUNCEMENT .. 19 - 10 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OU T OF THE ORDER OF THE PRINCIPAL CIT - 29, MUMBAI IN APPEAL NO. PR. CIT - 29 / 263 / 29 (2)(2)/15 - 16 DATE D 21 - 12 - 2015 . ASSESSMENT WAS FRAMED BY TH E I T O, WARD - 2 3 ( 2 ) (4 ) , MUMBAI FOR THE ASSESSMENT YEAR 200 8 - 09 VIDE HIS ORDER DATED 18 - 02 - 2014 U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE AGAINST THE ORDER OF TH E PRINCIPAL CIT - 29, MUMBAI REVISING THE ASSESSMENT U/S 263 OF THE ACT I.E. ASSESSMENT FRAMED U/S 143(3) READ WITH SECTION 147 DATED 18 - 02 - 2014. THE PRINCIPAL CIT DIRECTED THE AO TO VERIFY THE CLAIM IN RESPECT TO ASSESSEES TRANSACTION WITH M/S. ALLIANCE IN TERMEDIARIES AND NETWORK PVT. LTD. AMOUNTING TO RS.28,34,081/ - , PURCHASE AND SALE OF SHARES WORTH RS.13,00,665/ - AND TRANSACTION OF RS.6,31,228/ - OF MRS. HANSA LALIT SONI I.E. WIFE OF THE ASSESSEE. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSE E TOOK US THROUG H THE REASONS RECORDED BY THE A O WHILE REOPENING THE ASSESSMENT U/S 148 OF THE ACT AND THE RELEVANT PORTION OF THE SAID REASONS READS AS UNDER: - DURING THE COURSE OF VERIFICATION OF RECORDS, IT WAS FOUND THAT DURING THE YEAR UNDER CONSIDER ATION, THE ASSESSEE WAS ENGAGED IN THE ACTIVITIES OF BOGUS SHARE TRANSACTIONS INCLUDING SPECULATION PROFIT/LOSS, BOGUS SHORT/LONG TERM CAPITAL GAINS, COMMODITIES PROFIT/LOSS TRANSACTIONS ETC. ITA NO. 785 /MUM/20 1 6 3 ALSO THERE WAS INCOME FROM VARIOUS SOURCES. DURING THE YEAR THER E WAS SALE OF SHARES WORTH RS.28,34,081/ - THROUGH M/S. MAHA SAGAR GROUP OF COMPANIES. EARNING FROM ALL TRANSACTIONS INCLUDING BOGUS TRANSACTIONS LIKE SHORT/LONG TERM CAPITAL GAINS, SPECULATION PROFIT/LOSS, COMMODITIES TRANSACTION PROFIT/LOSS OTHER SOURCES ETC. WHICH WAS IN EXCESS OF RS. 1 LAKH NOT OFFERED FOR TAXATION. IN THIS CASE ASSESSMENT U/S 143 (1) WAS COMPLETED. THEREFORE I HAVE REASON TO BELIEVE THAT EARNING FROM ABOVE ACTIVITIES HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I. T. ACT. A NOTICE U/S 148 IS THEREFORE REQUIRED TO BE ISSUED TO THE ASSESSEE. THE LEARNED COUNSEL ALSO TOOK US THROUGH THE REPLY FILED VIDE LETTER DATED 07 - 01 - 2014 AND THE RELEVANT PORTION OF THE SAME READS AS UNDER: - WE ARE HERE WITH SUBMITTING COPY OF I NCOME TAX RETURN FOR ASST. YEAR: 2008 - 09 ALONG WITH COMPUTATION OF TOTAL INCOME, CAPITAL ACCOUNT, BALANCE SHEET FOR YEAR ENDED ON 31.03.2008, COPY OF TDS CERTIFICATE FROM INTEREST AND BROKERAGE FOR YEAR ENDED ON 31.03.2008. WE ARE HEREWITH SUBMITTING THE COPY OF BANK PASSBOOK FOR YEAR ENDED ON 31.03.2008 WE HAVE TO STATE THAT WE HAD NOT ESCAPED ANY INCOME IN ASS YEAR 2008 - 09. THIS IS TO INFORM YOU THAT WE WANT COPY OF EVIDENCE AND STATEMENT RECORDED FOR REOPENING OF ASSESSMENT PROCEEDINGS U/S 148 OF INCO ME TAX ACT 1961. AS MANSIONS IN REASONS FOR REOPENING GIVEN BY HONOUR PERTAINING TO THE PURCHASES AND SALES CARRIED OUT THROUGH M/S. MAHASAGAR GROUP AS CLAIMED BY YOU. FURTHER WE HAVE TO STATE THAT WE DO NOT HAVE ANY PURCHASE AND SALE OF SHARE WITH SAID GR OUP. THEREFORE, IN THE INTEREST OF NATURAL JUSTICE YOU PLEASE PROVIDE US THE COMPLETE DETAILS OF THE DESCRIPTION OF THE SHARES PURCHASED AND SOLD, NUMBER OF SHARES, DATE OF PURCHASE AND SALE AND OTHER RELEVANT INFORMATION. IN VIEW OF THE ABOVE, THE LE ARNED COUNSEL FOR THE ASSESSEE STATED THAT DURING THE REASSESSMENT PROCEEDINGS THE TRANSACTIONS OF R S.28,34,081/ - WAS TOTALLY DENIED AND THE ASSESSEE WAS NOT AWARE ABOUT ANY TRANSACTIONS FOR THE AMOUNT OF RS.13,00,665/ - . HE ALSO TOOK US THROUGH THE ASSESSE ES ACCOUNTS AND STATED THAT THE ONLY TRANSACTION IN THE ASSESSEES BANK ACCOUNT MAINTAINED WITH BANK OF BARODA, MULUND (EAST) BRANCH, MUMBAI, A COPY OF WHICH IS ENCLOSED IN PAGES 8 TO 14 OF THE ASSESSEES PAPER BOOK AND HE TOOK US THROUGH PAGE 10 OF THE A SSESSEES PAPER BOOK WHEREIN TRANSACTION OF RS.6,31,238/ - IS SHOWN IN THE NAME OF THE ASSESSEES WIFE. TO PROVE HIS POINT, THE LEARNED COUNSEL FOR THE ITA NO. 785 /MUM/20 1 6 4 ASSESSEE STATED THAT THIS BANK ACCOUNT I S IN JOINT NAME I.E. THE ASSESSEE IS SECOND HOLDER AND THE ASSESS EES WIFE MRS. HANSA LALIT SONI IS THE FIRST ACCOUNT HOLDER. FURTHER, TO PROVE HIS POINT, THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE ASSESSMENT FRAMED IN THE CASE OF THE ASSESSEES WIFE I.E. MRS. HANSA LALIT SONI FRAMED U/S 143(3) READ WITH S ECTION147 OF THE ACT DATED 05 - 03 - 2014 WHEREIN THIS TRANSACTION OF RS.6,32,290/ - IS CONSIDERED AND ADDED IN THE HANDS OF THE ASSESSEES WIFE U/S 68 OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THEY HAVE ACCEPTED THIS TRANSACTION IN THE HANDS OF THE ASSESSEES WIFE AND FURTHER ACCEPTED THE SAME AS HER TRANSACTIONS . WHEN THIS FACTS WERE CONFRONTED TO THE LEARNED CIT DR, HE ONLY URGED THAT THIS FACTS NEED VERIFICATION. 4. AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE FACTS OF THE CAS E, WE NOTICED THAT THE FIRST TWO TRANSACTIONS I.E. TRANSACTION WITH M/S. ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. AMOUNTING TO RS.28,34,081/ - DOES NOT AT ALL EXIST. FURTHER, THERE IS NO TRANSACTION AS ALLEGED BY THE PRINCIPAL CIT AMOUNTING TO RS.13,0 0,665/ - . THE ONLY TRANSACTION REMAINS FOR EXAMINATION IS AMOUNTING TO RS.6,31,238/ - BEING SALE OF SHARES HAS ALREADY BEEN ADDED IN THE HANDS OF MRS. HANSA LALIT SONI AND SHE HAS ACCEPTED THE SAME TRANSACTION BELONG TO BE IN HER NAME. THE LEARNED COUNSEL FO R THE ASSESSEE CANDIDLY ACCEPTED THAT THE SAME IS UNDER CHALLENGE BEFORE THE CIT (A) BUT OWNERSHIP IS NOT IN DISPUTE. IN THE GIVEN FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THA T THE ASSESSMENT FRAMED BY THE A O U/S 143(3) READ WITH SECTION 147 OF THE ACT DATED 18 - 02 - 2014 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, WE QUASH THE REVISION ORDER PASSED BY THE PRINCIPAL CIT U/S 263 OF THE ACT. RESULTANTLY, ASSESSEES APPEAL STANDS ALLOWED. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 - 10 - 2016 . SD/ - (RAMIT KOCHAR ) ACCONTANT MEMBER MUMBAI, DATED: 19 - 10 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER ITA NO. 785 /MUM/20 1 6 5 BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI SR. NO. PARTICULARS DATE INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 19 / 1 0/16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 20 /10/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT D ISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//