Vipan Kapildev Zulka, Surat V. The ITO, Ward-5(2), Surat

ITA 906/AHD/2012

• Counselvise Citation: 90620514 RSA 2012
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-10-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 24-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B K S PANDYA
• Assessee Lawyers: R N VEPARI
• Keywords: Income from undisclosed sources; Accommodation entries; Capital receipt
• Section: 143(3); 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER I.T.A. NO.904/AHD/2012 A.Y. 1998-99 KANCHAN DUGGAL, 1 ST FLOOR, RIVER PALACE-II, NEAR NAVDI OVARA, NANPURA, SURAT-395001 PAN-ABKPD0537G APPELLANT VS. THE INCOME TAX OFFICER WARD-5(2), SURAT RESPONDENT I.T.A. NO.905/AHD/2012 A.Y. 1999-2000 JAWAHARLAL RAMNATH DUGGAL 1 ST FLOOR, RIVER PALACE-II, NEAR NAVDI OVARA, NANPURA, SURAT-395001 PAN-ABPPD0134J APPELLANT VS. THE INCOME TAX OFFICER WARD-5(2), SURAT RESPONDENT I.T.A. NO.906/AHD/2012 A.Y. 1998-99 VIPAN KAPILDEV JULKA 1 ST FLOOR, RIVER PALACE-II, NEAR NAVDI OVARA, NANPURA, SURAT-395001 PAN-ABIPJ5524B APPELLANT VS. THE INCOME TAX OFFICER WARD-5(2), SURAT RESPONDENT DEPARTMENT BY : SHRI B.K.S. PANDYA, CIT- D.R. ASSESSEE BY : SHRI R.N. VEPARI, A.R. DATE OF HEARING : 22.10.2012 DATE OF PRONOUNCEMENT : 30.11.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER I.T.A. NO.904, 905 & 906/AHD/2012 A.Y. 1998-99, 1999-2000 & 1998-99 2 THESE APPEALS HAVE BEEN FILED BY THE ASSESSEES AGAI NST THE ORDER PASSED BY LD. CIT-II, SURAT U/S 263 OF THE ACT DATE D 29.03.2012. SINCE THE FACTS IN ALL THESE APPEALS ARE IDENTICAL, THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER BY TAKING THE FACTS OF I.T.A. NO .904/AHD/2012 IN THE CASE OF KANCHAN DUGGAL VS. CIT. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE DERIVE S INCOME FROM PARTNERSHIP FIRM M/S D.C. WOOLLEN MILLS. ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 31.12.1998 DECLARING TOTAL INCO ME AT RS.1,56,818/-. THE INFORMATION WAS RECEIVED FROM T HE ITO, WARD- V(4), AMRITSAR REGARDING THE INVESTIGATIONS CONDUCT ED BY THE INVESTIGATING WING OF AMRITSAR AND ASSESSEES INVOL VEMENT IN ACCOMMODATION ENTRY SCAM. DURING THE YEAR UNDER APP EAL ASSESSEE HAS CLAIMED TO HAVE SOLD JEWELLERY WORTH RS.9,40,18 4/- TO M/S BISHAN CHAND MUKESH KUMAR. THE SALE CONSIDERATION OF RS.9,40,184/- WAS RECEIVED FROM BANK ACCOUNT NO.770 2 VIDE CHEQUE NO.348074 DATED 11.3.1998 FOR RS.1,40,184/- AND CHEQUE NO.349683 ON 31.3.1998 FOR RS.8,00,000/- IN FAVOUR OF THE ASSESSEE, THE SOURCE OF WHICH WAS CASH DEPOSITED IN THE ACCOUNT IMMEDIATELY PRECEDING THE ISSUE OF SAID CHEQUE. ON THE BASIS OF THIS INFORMATION ASSESSMENT OF ASSESSEE WAS REOPENE D U/S 148 OF THE ACT. AS PER THE INVESTIGATION CONDUCTED BY THE INVESTIGATING WING OF AMRITSAR IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED CHEQUE IN LIEU OF CASH GIVEN TO THE LOCAL AGENT I.E . MADAN MOHAN OF M/S BISHAN CHAND MUKESH KUMAR. THE ASSESSEE JUST AR RANGED THE SALE BILLS TO GIVE THE SHADES OF GENUINENESS TO THE TRANSACTION I.T.A. NO.904, 905 & 906/AHD/2012 A.Y. 1998-99, 1999-2000 & 1998-99 3 WITHOUT SELLING ANY JEWELLERY AND CONVERTED HER INC OME FROM UNDISCLOSED SOURCE OF RS.9,40,184/- TO CAPITAL RECE IPTS ON ACCOUNT OF SALE OF JEWELLERY. DURING THE ASSESSMENT PROCEE DINGS SHRI MADAN MOHAN WAS SUMMONED BY THE INCOME TAX AUTHORIT IES AND IN HIS STATEMENT ON OATH HE ADMITTED THE MODUS OPERAND I WHERE HE MADE IT CLEAR THAT THE BANK ACCOUNT WAS USED FOR GI VING ACCOMMODATION ENTRIES. SHRI MADAN MOHAN IN HIS STA TEMENT ALSO STATED THE HE HAD FAMILY RELATION WITH SHRI BISHANC HAND AND SHRI MANOJ AGARWAL WHO HAD ASKED HIM TO INTRODUCE HIS AC COUNT AND OPERATE THE SAID ACCOUNT IN RETURN FOR A CERTAIN PE RCENTAGE OF COMMISSION. HE ADMITTED THAT CERTAIN BANK CHEQUES WERE GIVEN TO HIM WITH THE INSTRUCTION THAT CERTAIN LOCAL PERSON WOULD APPROACH HIM AND HE WAS TO GIVE HIM A CHEQUE OF PRE-DETERMIN ED AMOUNT AND HE FILLED CASH PAY IN SLIPS AND CASH WOULD BE D EPOSITED IN THE BANK ACCOUNT. HE WAS TO RECEIVE COMMISSION AT THE RATE OF 0.1% BUT THE SAME WAS NOT PAID TO HIM. HE FURTHER STATE D THAT THE PARTIES APPROACHED HIM WERE LOCAL BUT HE COULD NOT REMEMBER THEIR NAMES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. WAS OF THE VIEW THAT IT WAS PROVED BEYOND DOUBT THAT TH E ASSESSEE HAS CONVERTED HER UNACCOUNTED INCOME TO CAPITAL RECEIPT S ON ACCOUNT OF JEWELLERY SALE. THE ASSESSEE COULD NOT PROVE OTHERW ISE. THE ASSESSEE ONLY GAVE CASH TO THE ALLEGED BUYERS OF TH E JEWELLERY I.E. M/S BISHANCHAND MUKESHKUMAR AND GOT BACK EQUIVALENT AMOUNT OF CHEQUE. IN VIEW OF THESE FACTS THE A.O. PASSED THE ORDER U/S 143(3) R.W.S. 147 ON 31.3.2005 BY MAKING ADDITION O F I.T.A. NO.904, 905 & 906/AHD/2012 A.Y. 1998-99, 1999-2000 & 1998-99 4 RS.9,40,184/- ON ACCOUNT OF UNACCOUNTED INCOME RECE IVED IN THE FORM OF CHEQUE AS CLAIMED TO BE RECEIVED BY THE ASS ESSEE ON ACCOUNT OF SALE OF JEWELLERY. 3. AGGRIEVED BY THIS ORDER OF THE A.O. ASSESSEE FIL ED APPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE A.O. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSEE FILED APPEAL BEFORE THE ITAT. HONBLE ITAT SET ASIDE THE MATTER TO THE FILE OF THE A.O. BY OBSERVING AS UNDE R- WE FIND FROM THE ORDER OF THE LOWER AUTHORITIES TH AT THE PARTLY IS IN EXISTENCE I.E M/S BISHAN CHAND MUKESH KUMAR AS HELD BY THE SPECIAL BENCH OF DELHI TRIBUNAL IN THE CASE OF MANOJ AGGARW AL (SUPRA) BUT THE FACT THAT THE AO HAS NOT EXAMINED THE SALES BIL LS AND OTHER RELEVANT DOCUMENTS TO PROVE THE GENUINENESS OF SALE . ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ISSUE NEEDS RE-EXAMINA TION AT THE LEVEL OF THE AO AFRESH AND WILL DECIDE IN ACCORDANCE WITH THE PRINCIPLE AND GUIDELINES AS LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF MANOJ AGARWAL. 4. THE A.O. ON 31.12.2009 PASSED A CONSEQUENTIAL OR DER U/S 143(3) READ WITH SECTION 254 OF THE ACT ACCEPTING THE RETURN IN COME SHOWN BY THE ASSESSEE BY OBSERVING AS UNDER:- ON THE BASIS OF THESE DIRECTIONS, THE DETAILS WERE CALLED FOR FROM THE ASSESSEE. IN RESPONSE TO THAT SHRI DHAVAL MEHTA AN D SHRI R.N. VEPARI, C.A. AND AUTHORIZED REPRESENTATIVE OF THE A SSESSEE REMAINED PRESENT AND FURNISHED THE ORIGINAL BILLS OF SALE OF ORNAMENTS ETC. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS R ELIED UPON THIS DIRECTION OF THE HONBLE ITAT IN THE CASE OF MANOJ AGRAWAL VS. DCIT CENTRAL CIRCLE-3, NEW DELHI (2008) 113 ITD 337 (DEL ) (SB) AND PRODUCED THIS ORIGINAL BILLS FOR VERIFICATION. AS PER THE FINDINGS OF THE HONBLE ITAT THE PARTY, NAMELY BISHANCHAND MUKESHKU MAR IS IN EXISTENCE SO THE BILLS FOR SALES WERE VERIFIED. TH E FACTS OF THE CASE ARE SIMILAR TO THAT OF SHRI MANOJ AGRAWAL (SUPRA) W HERE IN SPECIAL BENCH OF ITAT HAS DECIDED THAT THE SALES WERE GENUI NE. IN VIEW OF THE ABOVE, AND THE FACT THAT THE SALE BILLS HAVE BE EN PRODUCED IN ORIGINAL FOR VERIFICATION. THE CONTENTION OF THE A SSESSEE ACCEPTABLE. I.T.A. NO.904, 905 & 906/AHD/2012 A.Y. 1998-99, 1999-2000 & 1998-99 5 5. SUBSEQUENT TO THIS A PROPOSAL WITH THE RECOMMEND ATION FOR TAKING ACTION U/S 263 OF THE ACT WAS RECEIVED BY LD. CIT O N 15.03.2012 FROM THE CONCERNED A.O. LD. CIT ISSUED NOTICE U/S 263 OF TH E ACT AS TO WHY ASSESSMENT ORDER DATED 31.12.2009 BE NOT SET ASIDE BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. AFTER TAKI NG INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE TO THESE SHOW CAUSE NOT ICE LD. CIT SET ASIDE THE ORDER DATED 31.12.2009 PASSED U/S 143(3) READ WITH SECTION 254 BY OBSERVING AS UNDER:- IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE A.O. HAS ERRED IN MAKING A PROPER ASSESSMENT IN THIS CASE DUE TO FAIL URE ON HIS PART TO CONDUCT NECESSARY ENQUIRIES AND INVESTIGATIONS MAKI NG THE ASSESSMENT ORDER PREJUDICIAL TO THE INTEREST OF REV ENUE. HENCE, I IN EXERCISE OF MY POWER U/S 263 OF THE I.T. ACT, 1961 SET ASIDE THE ASSESSMENT ORDER DONE U/S 143(3) R.W.S. 254 ON 31.1 2.2009 FOR A.Y. 1998-99 AND DIRECT THE AO TO PASS A FRESH ASSESSMEN T ORDER AFTER CONDUCTING THE NECESSARY ENQUIRIES AS MENTIONED IN PARA 12 OF THIS ORDER. AGAINST THIS ORDER OF LD. CIT, THIS APPEAL HAS BEEN FILED BEFORE US. 6. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE, PLACING RELIANCE ON VARIOUS CASE LAWS, CONTENDED THAT LD. CIT HAS WRONG LY ASSUMED THE JURISDICTION U/S 263 OF THE ACT. THE MAIN THRUST O F HIS ARGUMENT WAS THAT JURISDICTION U/S 263 CANNOT BE INVOKED FOR MAKING S HORT ENQUIRY OR TO GO INTO THE PROCESS OF ASSESSMENT AGAIN AND AGAIN MERELY ON THE BASIS THAT MORE ENQUIRY OUGHT TO HAVE BEEN CONDUCTED. LD. COUNSEL O F THE ASSESSEE ALSO SUBMITTED THAT LD. CIT WAS NOT JUSTIFIED IN DIRECTI NG THE A.O. TO CONDUCT THE ENQUIRY AS MENTIONED IN PARA-12 OF HIS ORDER. IN T HIS REGARD HIS SUBMISSION WAS THAT IF THIS DIRECTION IS FOLLOWED BY THE A.O. THE SCOPE OF ENQUIRY WOULD GO BEYOND WHAT THE TRIBUNAL DIRECTED. CONCLUDING HIS ARGUMENT LD. COUNSEL OF I.T.A. NO.904, 905 & 906/AHD/2012 A.Y. 1998-99, 1999-2000 & 1998-99 6 THE ASSESSEE SUBMITTED THAT PROCEEDING U/S 263 HAVE NOT BEEN CORRECTLY INITIATED AND THE A.O. HAS PASSED ORDER AFTER EXAMI NING THE EVIDENCE PRODUCED BEFORE HIM AND WHAT WAS AVAILABLE WITH HIM ON RECORD AND THEREFORE IT CANNOT BE SAID THAT THE ORDER PASSED BY THE A.O. ON 31.12.2009 WAS ERRONEOUS AND/OR PREJUDICIAL TO THE INTEREST OF REV ENUE. LD. D.R. ON THE OTHER HAND VEHEMENTLY SUPPORTED THE ORDER PASSED BY LD. C IT. HE FURTHER SUBMITTED THAT IT IS NOT A CASE OF LACK OF ENQUIRY OR INQUIRY TO BE MADE IN A PARTICULAR WAY BUT A CASE WHERE NO INQUIRY AS SUCH HAS BEEN MADE. THEREFORE, LD. CIT WAS JUSTIFIED IN HOLDING THAT TH ERE WAS FAILURE ON THE PART OF THE A.O. TO CONDUCT NECESSARY INQUIRIES AND INVESTI GATIONS THEREBY MAKING THE ASSESSMENT ORDER PREJUDICIAL TO THE INTEREST OF REV ENUE AND THE ORDER PASSED BY HIM MAY KINDLY BE UPHELD. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND FORCE IN THE CONTENTION OF LD. D.R. THAT THE A.O., WHILE PAS SING ORDER IN CONSEQUENCE TO THE DIRECTION OF HONBLE ITAT, WHICH WE HAVE ALREAD Y REPRODUCED IN PARA-3 OF THIS ORDER, HAS NOT MADE ANY INQUIRY IN RESPECT OF SALE BILLS OF JEWELLERY ISSUED BY M/S BISHANCHAND MUKESH KUMAR TO PROVE THE GENUIN ENESS OF SALE OF JEWELLERY BY THE ASSESSEE. ONLY FOR THIS PURPOSE T HE MATTER WAS RESTORED BACK TO THE FILE OF THE A.O. AT THE TIME OF HEARIN G WHEN LD. COUNSEL OF THE ASSESSEE WAS SPECIFICALLY ASKED WHETHER THE A.O. IS SUED ANY QUESTIONNAIRE TO ASSESSEE OR TO ANY OTHER PERSON OR ANY ENQUIRY IN A NY FORM WAS CONDUCTED ABOUT THE SALE BILLS OF THE JEWELLERY, LD. COUNSEL FAILED TO POINT OUT ANY SUCH QUESTIONNAIRE OR ENQUIRY BEING MADE BY THE A.O. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT IT IS A CASE IN WHICH NO EN QUIRY AS SUCH WAS CONDUCED BY THE A.O. WHILE PASSING ORDER U/S 143(3) READ WIT H SECTION 254 OF THE ACT I.T.A. NO.904, 905 & 906/AHD/2012 A.Y. 1998-99, 1999-2000 & 1998-99 7 AND THIS MAKES THE ORDER PASSED BY HIM ERRONEOUS AS WELL PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE, LD. CIT HAS RIGHTLY INVOKED THE PROVISION OF SECTION 263 OF THE ACT IN THIS CASE. WE ARE, HOWEVER, INCLINED TO AGREE WITH THE CONTENTION OF LD. COUNSEL OF THE ASS ESSEE THAT IF DIRECTIONS OF LD. CIT CONTAINED IN PARA-12 OF HIS ORDER ARE FOLLOWED BY THE A.O. IT WILL INCREASE THE SCOPE OF INQUIRY BEYOND THE DIRECTIONS OF THE T HEN TRIBUNAL. THEREFORE, THE A.O. IS DIRECTED TO IGNORE THE DIRECTIONS OF LD . CIT AND CONFINE HIMSELF TO THE DIRECTION OF HONBLE ITAT. 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. 9. IN THE RESULT, ALL THE THREE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30.11.2012 SD/- SD/- (T.R. MEENA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD