MANJU MEADOWS P.LTD, MUMBAI V. ITO 1(2)(3), MUMBAI

ITA 8239/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83826 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU JIT BANGAR
• Assessee Lawyers: FAROOQ V IRANI
• Keywords: Unexplained investment; Principle of natural justice; Additional evidence
• Section: 69C; 68; 69; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER . / ITA NO. 8239 /MUM./ 2010 ( / ASSESSMENT YEAR : 200 3 0 4 ) M/S. MANJU MEADOWS PVT. LTD. 2 ND FLOOR, METRO HOUSE M.G. ROAD, MUMBAI 400 020 .. / APPELLANT V/S INCOME TAX OFFICER WARD 1(2)( 3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACM3161F / ASSESSEE BY : SHR I FAROOQ V. IRANI / REVENUE BY : SHRI SU JIT BANGAR / DATE OF HEARING 0 9 .09.2014 / DATE OF ORDE R 12.09.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 17 TH SEPTEMBER 2010 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) II , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 14 4 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 20 03 04 , ON THE FOLLOWING G ROUNDS: M/S. MANJU MEADOWS PVT. LTD. 2 GR . I . THE LEARNED CIT(APPEAL) ERRED I N CONFIRMING ASSESSMENT ORDER PASSED UNDER SECT I ON 144 . THE APPELLANT PRAYS, THAT THE ORDER UNDER SECTION 144 BE HELD TO BE BAD IN LAW . WITHOUT PREJUDICE TO THE ABOVE : GR . II . THE LEARNED CIT (APPEAL) - 2 ERRED IN HOLDING THAT THE ADDITIONAL EVIDENCE BEING PREFERRED NOW CANNOT BE ADMITTED. THE APPELLANT PRAYS, IT BE HELD THAT EVIDENCE ONCE ADMITTED BY ONE CIT (APPEAL) - I CANNOT BE REJECTED BY ANOTHER CIT (A ) - 2 . GR . III . THE LEARNED CIT (APPEAL) - 2 HAVING REJECTED EVIDENCE FILED , REFUSED TO HEAR THE APPEAL ON THE MERIT OF THE CASE. THE APPELLANT PRAYS THAT APPEAL NOT HEARD ON MERIT, BE HELD TO BE AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND BAD IN LAW. GR . IV. THE LEARNED CIT (APPEAL) - 2 ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO ADD PROFIT ON SALE OF ASSETS AT RS. 1,59,141/ - TO THE LOSS AS PER PROFIT & LOSS A/C . THE APPELLANT PRAYS, IT BE HELD , THAT THE PROFIT ON SALE OF ASSETS HAS TO BE ADDED TO THE LOSS, TO ARRIVE AT CORRECT BUSINESS LOSS. G R. V. THE LEARNED CIT (APPEAL) - 2 ERRED IN CONFIRMING ADDIT I ON OF RS . 3,04,230/ - UNDER SECTION 68 ON A C COUNT OF ACCRUED INTEREST ON SECURED BANK LOANS . THE APPELLANT PRAYS THAT THE ADDITION OF RS . 3,04 , 230/ - UNDER SECTION 68 BE DELETED . GR . VI . THE LE ARNED CIT (APPEAL) - 2 ERRED IN CONFIRMING ADDITION OF RS . 8,64,975/ - UNDER SECT I ON 69 ON A C COUNT OF UNACCOUNTED INVESTMENT IN NEW HORSES. THE APPELLANT PRAYS THAT THE ADDITION OF RS. 8,64,975/ - ON ACCOUNT OF UNACCOUNTED INVESTMENT IN NEW HORSES BE DELETED . GR . VII . 1 . THE LEARNED CIT (APPEAL) - 2 ERRED IN CONFIRMING DISALLOWANCE OF RS . 10 , 74,371/ - BEING 30% OF VARIOUS EXPENSES OF RS. 35 , 81,238/ - I NCURRED IN CARRYING ON NORMAL BUSINESS ACTIVITY OF BREEDING HORSES. THE APPEL L ANT PRAYS THAT DISALLOWANCE OF 3 0% AT RS. 10,74,371/ - BE DELETED. GR . VIII . THE LEARNED CIT (APPEAL) - 2 ERRED I N CONFIRMING DISAL L OWANCE OF RS . 43,04,290/ - ON ACCOUNT OF MORTALITY, PUT OUT OF STUD/RACING OR LOSS ON SALE OF HORSES. THE APPELLANT PRAYS THAT DISALLOWANCE OF RS. 43,04,290/ - ON ACCOUNT OF MORTALITY, PUT OUT OF STUD/RACING OR LOSS ON SALE OF HORSES BE DELETED. GR . IX . THE LEARNED CIT (APPEAL) - 2 ERRED IN CONFIRMING ADDITION OF RS . 60,000/ - UNDER SECTION 69C ON ACCOUNT OF PURCHASE OF M/S. MANJU MEADOWS PVT. LTD. 3 HORSE . THE APPELLANT PRAYS THAT THE ADDIT ION OF RS . 60,000/ - UNDER SECTION 69C ON ACCOUNT OF PURCHASE OF HORSE BE DELETED. GR. X. THE APPELLANT CRAVES LEAVE TO ADD, AMEND , ALTER VARY AND/OR WITHDRAW ANY OR ALL THE GROUNDS OF APPEAL 2. THE MAIN CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSE SSEE BEFORE US IS THAT THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ASSESSMENT ORDER PASSED UNDER SECTION 144, WITHOUT APPRECIATING THE ATTENDANT FACTS AND MATERIAL PLACED ON RECORD. BESIDES THIS, THE IMPUGNED ORDER HA S BEEN CHALLENGED AGAINST VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER WHICH HAS BEEN CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). 3. THE LEARNED COUNSEL, SHRI FAROOQ IRANI, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT IN THE CASE OF THE ASSESSEE, THE C OURT RECEIVER APPOINTED BY THE HON'BLE JURISDICTIONAL HIGH COURT WAY BACK ON 12 TH JULY 2004, HAS ISSUED A LETTER TO HANDOVER THE ENTIRE BOOKS OF ACCOUNT, BANK ACCOUNT, CHEQUE BOOKS AND OTHER VARIOUS DOCUMENTS PERTAINING TO THE ASSESSEE RIGHT FROM THE EARLI ER PERIOD TO THIS PERIOD. IN PURSUANCE THEREOF, THE ASSESSEE IN THE MONTH OF JULY AUGUST 2004, HANDED OVER ALL THE DOCUMENTS REQUIRED BY THE COURT RECEIVER. THE COPY OF THE LETTER ISSUED BY THE COURT RECEIVER AND THE COPY OF THE LETTER THROUGH WHICH THE AS SESSEE HAS HANDED OVER THE DOCUMENTS TO THE COURT RECEIVER HAS BEEN PLACED IN THE PAPER BOOK FROM PAGE 4 TO 7. IN THIS CASE, THE FIRST NOTICE UNDER SECTION 143(2), WAS ISSUED ON M/S. MANJU MEADOWS PVT. LTD. 4 NOVEMBER 2004 AND THE ASSESSMENT PROCEEDINGS HAD IN FACT COMMENCED AFTER 7 TH J ULY 2005. 4. LEARNED COUNSEL FURTHER POINTED OUT THAT B EFORE THE ASSESSING OFFICER, THE ASSESSEE DULY BROUGHT ON RECORD THAT ALL THE BOOKS OF ACCOUNT AND DOCUMENTS WERE NOT AVAILABLE WITH THE ASSESSEE AS THE SAME HAS BEEN TAKEN BY THE COURT RECEIVER. WHEN TH E SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE BY THE ASSESSING OFFICER, THE ASSESSEE HAD WRITTEN A LETTER TO THE COURT RECEIVER ON 5 TH OCTOBER 2005, TO PROVIDE BOOKS OF ACCOUNT, BALANCE SHEET AND PROFIT & LOSS ACCOUNT ALONG WITH THE ANNEXURE AND ALL THE F ILE CONTAINING VOUCHERS FOR THE EXPENDITURE AND THE BANK STATEMENT, ETC. THE COPY OF THE SAID LETTER WAS ALSO FILED BEFORE THE ASSESSING OFFICER WHICH HAS BEEN ACKNOWLEDGED BY THE ASSESSING OFFICER IN PARA 7 OF THE ASSESSMENT ORDER. DESPITE THIS, THE ASSES SING OFFICER WITHOUT WAITING FOR THE BOOKS OF ACCOUNT AND THE DETAILS PASSED THE ASSESSMENT UNDER SECTION 144, THEREBY MAKING HUGE ADDITIONS ON VARIOUS COUNTS. HE FURTHER SUBMITTED THAT BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE WAS ABLE TO RE COVER MOST OF THE BOOKS OF ACCOUNT AND DETAILS AND WAS FILED BEFORE HIM IN THE FORM OF ADDITIONAL EVIDENCE. THE THEN LEARNED COMMISSIONER (APPEALS) I , VIDE LETTER DATED 8 TH AUGUST 2006, HAD WRITTEN TO THE ASSESSING OFFICER TO EXAMINE THE PAPER BOOK AND OTH ER DETAILS AND TO SUBMIT HIS REMAND REPORT. THEREAFTER, THE APPEAL WAS TRANSFERRED TO LEARNED COMMISSIONER (APPEALS) II, WHO, WITHOUT M/S. MANJU MEADOWS PVT. LTD. 5 GOING THROUGH THE EARLIER LETTER OF THE LEARNED COMMISSIONER (APPEALS) FOR CALLING O F THE REMAND REPORT HAS REJECTED THE A DDITIONAL EVIDENCE FILED BY THE ASSESSEE AND CONFIRMED ALL THE ADDITIONS. THE LEARNED COUNSEL SUBMITTED THAT SUCH A HARSH VIEW TAKEN BY THE LEARNED COMMISSIONER (APPEALS) IN THE WAKE OF THESE FACTS AND CIRCUMSTANCES, CANNOT BE UPHELD AS IT IS VIOLATION OF NATURAL JUSTICE . ONCE THE EARLIER LEARNED COMMISSIONER (APPEALS) HAD CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AFTER EXAMINING THE BOOKS OF ACCOUNT AND OTHER DETAILS THEN THE INCUMBENT CIT(A) SHOULD HAVE WAITED FOR THE REMAND REPORT AND THEN DECIDED THE APPEAL ON MERITS. HE THUS SUBMITTED THAT THESE ADDITIONAL EVIDENCE SHOULD BE ADMITTED AND THE MATTER CAN BE DECIDED EITHER BY THE TRIBUNAL OR BY THE ASSESSING OFFICER. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT IT WAS THE RESPONSIBILITY OF THE ASSESSEE TO SUBSTANTIATE THE QUERIES RAISED BY THE ASSESSING OFFICER FROM THE BOOKS OF ACCOUNT AND SHOULD HAVE MADE AVAILABLE THE RECORDS, DOCUMENTS AT THE TIME OF ASSESSMENT STAGE. HOWEVER, IN CASE THE ADDITIONAL EVIDENCES ARE TO BE ADMITTED, THEN HE AGREED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND THE MATERIAL AVAILABLE ON RECORD . HERE IN THIS CASE, ALL THE BOOKS OF ACCOUNT, BALANCE SHEET, PROFIT & LOSS ACCOUNT ALONG WITH ENCLOSURES, BILLS AND VOUCHERS, M/S. MANJU MEADOWS PVT. LTD. 6 BANK STATEMENT, ETC., WERE TAKEN OVER BY THE COURT RECEIVER APPOINTED BY THE HON'BLE JURISDICTIONAL HIGH COURT. THE ASSESSEE HAD MADE DUE AND DILIGENT EFFORTS FOR OBTAINING THESE DOCUMENTS FOR THE PURPOSE OF ASSESSMENT. THE ASSESSING OFFICER WITHOUT WAITING FOR THE DOCUMENTS TO BE RELEASED, HAD PASSED THE ASSESSMENT ORDER UNDER SECTION 144, ON 26 TH OCTOBER 2005, EVEN WHEN THE TIME L IMIT WAS AVAILABLE UPTILL 31 ST MARCH 2006. AT THE FIRST APPELLATE STAGE, THE ASSESSEE WAS ABLE TO PROCURE THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND THE SAME WERE FILED BEFORE THE LEARNED COMMISSIONER (APPEALS) AS ADDITIONAL EVIDENCE. ALL THESE BOOKS OF ACCOUNT WERE FORWARDED BY THE LEARNED COMMISSIONER (APPEALS) TO THE ASSESSING OFFICER TO EXAMINE THE SAME AND TO SUBMIT THE REMAND REPORT. HOWEVER, WITHOUT OBTAINING THE REMAND REPORT, THE SUCCEEDING COMMISSIONER (APPEALS) HAS PUT THE ENTIRE BLAME ON THE ASSES SEE AND REJECTED THE ADDITIONAL EVIDENCE AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THIS ACTION OF THE LEARNED COMMISSIONER (APPEALS) IS UNWARRANTED ON THE FACT S AND CIRCUMSTANCES OF THE CASE, AS HE SHOULD HAVE IN THE INTEREST OF JUSTICE CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AND THEN DECIDED THE APPEAL ON MERITS . THUS, IN THIS BACKGROUND, WE FEEL THAT THE ADDITIONAL EVIDENCE FILED IN THE FORM OF THE PAPER BOOK BEFORE THE LEARNED COMMISSIONER (APPEALS) ALONG WITH THE OTHER DOCUMENTS SHOULD BE ADMITTED AND THE MATTER BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PASSING OF FRESH ASSESSMENT ORDER AFTER CONSIDERING THE BOOKS OF ACCOUNT AND OTHER M/S. MANJU MEADOWS PVT. LTD. 7 DOCUMENTS AFTER GIVING ASSESSEE A DUE AND EFFECTIVE OPPORTUNITY TO THE ASSESSEE A ND IN ACCORDANCE WITH LAW. 7. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 12 TH SEPTEMBER 2014 ORDER PRONOUNCED IN THE OP EN COURT O N 12 TH SEPTEMBER 2014 SD/ - . . R.S. SHARMA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 12 TH SEPTEMBER 2014 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI