BABULAL G. JAIN, MUMBAI V. ITO 17(3)(1), MUMBAI

ITA 836/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0959 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SRAVANAN
• Keywords: Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 836/MUM/2016 ASSESSMENT YEAR: 2006-07 M/S. BABULAL G. JAIN VS. ITO 17(3)(1) ROOM NO. 201PRIYADARSHINI BLDG. MUMBAI KAMATHIPURA LANE NO. 13, S.P. RD. NAGAPADA MUMBAI 400 008 PAN NO. AAIPJ8776M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. JAIN, AR REVENUE BY: SHRI J. SRAVANAN, DR DATE OF HEARING : 02/0 2/2017 DATE OF PRONOUNCEMENT: 19/04/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2006-07. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 32, MUMBAI AND ARISES OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: I. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 32 HAS ERRED IN LAW IN CONFIRMING THE ADDITION MADE BY THE ASSESSIN G OFFICER OF RS. 30,00,000/- AS A UNDISCLOSED INCOME OF THE ASSESSEE WHICH MOST UNJUSTIFIED AND ARBITRARY. ITA NO. 836/MUM/2016 2 II. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 32 HAS ERRED IN LAW IN APPLYING SECTION 44AF WHICH IS NOT APPLICABL E TO THE CASE OF THE ASSESSEE. III. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) 32 IS BAD IN LAW AND UNJUSTIFIED. 3. BRIEFLY STATED, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2006-07 ON 25.06.2006 SHOWING TOTAL INCOME OF RS.76,850/-. THE ASSESSING OFFICER (AO) HAD RECEIVED INFORMATION FRO M THE DIRECTORATE OF ENFORCEMENT VIDE LETTER DATED 06.04.2010 THAT ON 13.10.2005 AT VALIYAPATTANAM RAILWAY STATION AN AMOUNT OF RS. 30 LACS WAS ROBBED FROM ONE SHRI M.T. UMER DURING HIS JOURNEY FROM MUM BAI TO CALICUT AND THE SAID AMOUNT WAS STATED TO BE ENTRUSTED TO H IM BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO ASKED THE ASSESSEE TO SUBMIT THE SOURCE OF RS. 30 LACS. I N RESPONSE TO IT, THE ASSESSEE SUBMITTED THE DETAILS OF 40 VISA ASPIRANTS FROM WHOM THE ALLEGED CASH WAS RECEIVED BY THE ASSESSEE. THEN THE AO ISSUED NOTICE U/S 133(6) TO THE 40 VISA ASPIRANTS AND THE POSITIO N IS NARRATED IN THE ASSESSMENT ORDER WHICH IS PRODUCED AS UNDER:- SL NO NAME REMARKS 1 THERAVIL GIRISH REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 2 REJIS BABU VADAKKETHODI REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 3 DEVIDASAN VELU KOLOTHUMTODI REPLY AWAITED 4 MORDU KOLKAT REPLY AWAITED DELIVERED ON 05.11.13 5 SARAFUDDEEN DAPPIL MOHIMMED REPLY AWAITED 6 BHILASH CHIRAKKAL BALAKRISHNAN RETURNED UNDELIVERED 7 RAJAN THENESSERY REPLY AWAITED 8 SHAJIMON THATTADI PARAMBIL REPLY AWAITED 9 MUHAMMED ASHRAF ARIMBRA REPLY AWAITED 10 PALLATHODI MOHAMMED IQBAL RETURNED UNDELIVERED ITA NO. 836/MUM/2016 3 1 MUJEEB CHEKU HASSAN REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 12 MUHAMMED KUTTY ADATTHTHODI REPLY AWAITED 13 ABBAS THACHAMKUNNAN REPLY AWAITED 14 MANOJ KRISHNAN ALLAKKATT REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 15 ABOBAKKAR SIDHIQU ALAKKAL REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 16 MUHAMED MUSHAFA AKKA PARAMBIL RETURNED UNDELIVERED 17 ABDUL JALEEL MANIKKANTHODI REPLY AWAI TED 18 UBAIDULLA VALIYATHODI REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 19 MUNEER KUNNATH REPLY AWAITED 20 MOHD ABDULJALAL VALIYATHODI REPLY AWAITED 21 MUTHANGAPPAR AMBIL SASIDARAN NOTICE UNDELIVERED 22 ORATHODY MUHAMMED SAJEER REPLY AWAITED 23 RIYAS BABU KODUVAND REPLY AWAITED 24 HANEEFA RAWTHAR SAAHULHAMEED REPLY AWAITED 25 PULIYAKKATTIL SIDHEEQUE REPLY AWAITED DELIVERED ON 18.11.13 26 MELEVEETIL SAMEERALI REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 27 SIHABUDDEN VILAKKATHODI REPLY AWAITE D 28 MAHESH POTHUVAKKUTH REPLY AWAITED 29 MADATHODI UMAR REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 30 MUNDAKKAL CHANGARU REPLIED VIDE LETTER DATED 27.11.2013 THAT HE HAS PAID RS. 75,000/- IN CASH FOR AIR TICKET & VISA TO BABULAL JAIN 31 KUTTERI ABDUL NASIF REPLY AWAITED DELIVERED ON 19.11.13 32 THONDIYIL JAYAFAR SADK REPLIED VIDE LETTER DTD 21.11.13 THAT HE HAD PAID RS. 75,000/- TO MR. HAMSA BY CASH AND WAS NOT AWARE TO WHOM THE AMOUNT WAS ENTRUSTED FOR PURCHASING AIR TICKET 33 ANVER MEKKADANKUZHI REPLY AWAITED 34 SHOWKATH ALI THOTTAKKARA REPLY AWAITED 35 THETTAYIL JOSEPH NOTICE UNDELIVERED 36 PONNAK AMPAT VINODAN REPLY AWAITED 37 MUHAMMED JALEEL REPLY AWAITED DELIVERED ON 17.11.13 38 KARIVILK AKKAPRATH REPLY AWAITED 39 KUNNATH DILEEP REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 40 AYOOB AMBALAAPARAMBAN RETURNED UNDELIVERED ITA NO. 836/MUM/2016 4 THE AO, ON EXAMINATION OF THE ABOVE OBSERVED THAT O NLY ONE PERSON AT SR. NO. 30 THAT IS MR. MUNDAKKAL CHANGARU VIDE L ETTER DATED 27.11.2013 CONFIRMED THE PAYMENT OF RS.75,000/- TO THE ASSESSEE. MR. THONDIYIL JAYAFAR SADK VIDE LETTER DATED 21.11. 2013 HAS REPLIED THAT HE HAS PAID RS.75,000/- TO ONE PERSON, NAMED M R. HAMSA BY CASH AND HE WAS NOT AWARE TO WHOM THE AMOUNT WAS ENTRUST ED FOR PURCHASING AIR TICKET. IN RESPONSE TO A QUERY RAISE D BY THE AO, THE ASSESSEE FILED A REPLY DATED 14.02.2014 WHICH IS AT PAGE 4 OF THE ASSESSMENT ORDER. THE AO WAS NOT CONVINCED WITH THE SAME AS THE ASSESSEE FAILED TO DISCHARGE THE BURDEN OF PROVING THE GENUINENESS OF TRANSACTION WITH THE PARTIES. THEREFORE, HE MADE AN ADDITION OF RS.29,25,000/- TO THE INCOME SHOWN BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) OBSERVED THAT (I) 8 OUT OF THE 40 PERSONS DENIED HAVING ANY RELATION WITH THE APPELLA NT, WHILE IN 7 CASES, THE NOTICES COULD NOT BE DELIVERED. IN REST OF THE CASES, THERE WAS NO RESPONSE EXCEPT FOR ONE PERSON WHO CONFIRMED THAT HE HAD PAID RS.75,000/- TO THE APPELLANT FOR CARRYING ON W ORK FOR OBTAINING VISA AND AIR TICKET, (II) THE ASSESSEE HAS FILED RE TURN OF INCOME U/S 44AF WHO IS APPLICABLE TO ASSESSEE ENGAGED IN RETAI L TRADE OF ANY GOODS OR MERCHANDISE, (III) ADMITTEDLY, THE ASSESSE E HAS MADE A CLAIM TO THE CASH CLAIMED TO HAVE BEEN STOLEN FROM THE PO SSESSION OF ONE M.T. UMER, VIDE CR MC NO. 609 OF 2011. THEREIN THE ASSESSEE HAS CLAIMED OWNERSHIP OF CASH. IN THAT PETITION, THE AS SESSEE HAS REQUESTED THE COURT TO QUASH THE CRIMINAL PROCEEDIN GS AGAINST THE ACCUSED IN THE THEFT CASE. THE HON'BLE HIGH COURT R EFUSED TO ACCEPT THE PETITION AND DISMISSED THE SAME. ITA NO. 836/MUM/2016 5 THE LD. CIT(A) NOTED THAT DURING THE APPELLATE PRO CEEDINGS BEFORE HIM, NOTHING MORE IN THE MATTER WAS PRODUCED OR ARGUED. AS REGARDS THE ALTERNATE PLEA OF THE ASSESSEE THAT THE CASH HAVING BEEN LOST IN THEFT, HAS TO BE ALLOWED AS DEDUCTION, THE LD. CIT(A) FOUND THAT THE CASE LAWS CITED BY THE ASSESSEE APPLY TO CASES WHERE CASH HAVING BEEN LOST IN THEFT, HAS TO BE ALLOWED AS DEDUCTION. ALL THE CASE LAWS CITED BY THE ASSESSEE APPLY TO CASES WHERE EITHER C ASH ITSELF IS THE STOCK IN TRADE OR CASH TRANSACTIONS FORM INTEGRAL P ART OF THE BUSINESS OF THE ASSESSEE. THE ASSESSEE IS IN THE RETAIL TRAD E OF GOODS AND MERCHANDISE. THEREFORE, THE LD. CIT(A) CONFIRMED TH E ADDITION OF RS.29,25,000/- MADE BY THE AO. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE FILE D A COPY OF THE DOCUMENTS FILED BY THE ASSESSEE ON 16.06.2015 BEFOR E THE LD. CIT(A). 6. PER CONTRA , THE LD. DR RELIED ON THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE HONBLE SUPREME COURT IN STATE OF KERALA VS. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627, RECOGNISED THE IMPORTANCE OF ORAL EVIDENCE BY HOLDING THAT THE OPP ORTUNITY TO PROVE THE CORRECTNESS OR COMPLETENESS OF THE RETURN NECES SARILY CARRY WITH IT THE RIGHT TO EXAMINE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS-EXAMINE WITNESSES. IN ITO VS. M. PIRAI CHOODI [2012] 20 TAXMANN.COM 733 (SC), THE HON'BLE SUPREME COURT HELD:- IN THIS CASE, THE HIGH COURT HAS SET ASIDE THE ORD ER OF ASSESSMENT ON THE GROUND THAT NO OPPORTUNITY TO CROSS-EXAMINE WAS GRANTED, AS SOUGHT BY THE ASSESSEE. WE ARE OF THE VIEW THAT THE HIGH COURT SHOULD NOT HAVE SET ASIDE THE ENTIRE ASSESSMENT ORDER. AT THE HIGHEST, THE ITA NO. 836/MUM/2016 6 HIGH COURT SHOULD HAVE DIRECTED THE ASSESSING OFFIC ER TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE CO NCERNED WITNESS. 7.1 IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT( A) IS SET ASIDE AND THE AO IS DIRECTED TO PASS AN ASSESSMENT ORDER AFRE SH AS PER THE PROVISIONS OF THE ACT, AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO CROSS-EXAMINE A REASONABLE NUMBER OF T HE CONCERNED PARTIES. THE ASSESSEE IS DIRECTED TO FILE BEFORE TH E AO THE RELEVANT DETAILS. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.04.2017 SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI; DATED: 19.04.2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 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