Parmanand Melumal Jhamatani, Pune V. Deputy Commissioner of Income-tax,

ITA 911/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9340 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-11-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Assessee Lawyers: RISHI LODHA
• Keywords: Loose papers; Principle of natural justice; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , ! ' , # $ BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 910 & 911/PUN/2015 #& ' (' / ASSESSMENT YEARS : 2006-07 & 2007-08 MR. PARMANAND MELUMAL JHAMTANI, PROP. M/S. JHAMTANI AGENCIES, SR NO. 17/2, OPP. PARK STREET, AUNDH KALEWADI ROAD, RAHATANI, PUNE-411 017 PAN : AAOPJ0821C ....... / APPELLANT & / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8 PUNE. / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE & SHRI RISHI LODHA REVENUE BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 16.11.2017 / DATE OF PRONOUNCEMENT : 09.02.2018 ) / ORDER PER VIKAS AWASTHY, JM THESE TWO APPEALS BY ASSESSEE FOR ASSESSMENT YEAR 200 6-07 AND 2007-08 ARE DIRECTED AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEAL)-2, NASHIK FOR THE RESPECTIVE ASSESSMENT YEARS. 2 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 IN ITA NO.910/PUN/2015, THE ASSESSEE HAS ASSAILED THE O RDER OF COMMISSIONER OF INCOME TAX (APPEAL)-2, NASHIK DATED 13.03.20 15 FOR ASSESSMENT YEAR 2006-07 AND IN ITA NO.911/PUN/2015, TH E ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-2 , NASHIK OF EVEN DATE FOR ASSESSMENT YEAR 2007-08. SINCE, ISSUES INVOLVED I N BOTH APPEALS ARE ARISING FROM SAME SET OF FACTS, THE APPEALS ARE TAKEN UP T OGETHER FOR ADJUDICATION AND ARE DISPOSED OF VIDE THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A PROPRIETOR OF M/S. JHAMTANI AGENCIES ENGAGED IN TRADING OF BUILDING MATERIAL AND PROPERTY. THE ASSESSEE IS ALSO A PARTNER IN M/S. SU PREME DEVELOPERS AND A DIRECTOR IN M/S. JHAMTANI CONSTRO AGENCIES PVT. LTD. A SUR VEY ACTION U/S.133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED OUT ON 22.01.2009. DURING THE COURSE OF SURVEY, IT TRANSPIRED T HAT THOUGH THE ASSESSEE IS HAVING TURNOVER OF MORE THAN RS. 40,00,000/-, BUT THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISION OF SECTION 44AB OF THE ACT IN GETTING ITS ACCOUNTS AUDITED. IT WAS FURTHER OBSERVED THAT ASSESS EE HAS NOT FILED RETURN OF INCOME FROM ASSESSMENT YEAR 2006-07 ONWARDS. IN SURVE Y PROCEEDINGS CERTAIN LOOSE PAPERS/POCKET DIARIES ETC. WERE FOUND AND SEIZED B Y THE DEPARTMENT. NOTICE U/S.148 OF THE ACT WERE ISSUED TO THE ASSESSEE FOR ASSESSMENT YEARS 2006-07 AND 2007-08. IN RESPONSE TO THE SAID NOTICE, AS SESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 12.02.2009 DECLARING TOTAL INCOME OF RS.1,80,79,300/- AND FOR ASSESSMENT YEAR 2007- 08 ON 31.03.2009 DECLARING TOTAL INCOME OF RS.7,71,320/-. ON THE BASIS OF MATER IALS/DOCUMENTS FOUND AND SEIZED DURING SURVEY, THE ASSESSING OFFICER VIDE A SSESSMENT ORDER DATED 31.12.2009 PASSED U/S.143(3) R.W.S. 147 OF THE ACT MA DE ADDITION OF RS.44,47,000/- FOR ASSESSMENT YEAR 2006-07. SIMILARLY FOR AS SESSMENT YEAR 2007-08, ON THE BASIS OF MATERIAL/DOCUMENTS SEIZED DURING SURVEY, THE 3 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 ASSESSING OFFICER MADE ADDITION OF RS.92,73,094/- VIDE ASSESS MENT ORDER DATED 31.12.2009. 3. AGGRIEVED BY THE ASSESSMENT ORDERS FOR THE RESPECT IVE ASSESSMENT YEARS, THE ASSESSEE FILED APPEALS BEFORE COMMISSIONER OF INCOME TA X (APPEAL). IN APPEAL FOR ASSESSMENT YEAR 2006-07, THE FIRST APPELLATE AUTHORITY CONFIRMED THE ADDITION TO THE TUNE OF RS.40,59,000/- AND FOR ASSESSMENT YEAR 2007-08, THE COMMISSIONER OF INCOME TAX (APPEAL) CONFIRMED THE ADDITION O F RS.86,17,997/-. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL) CO NFIRMING THE ADDITIONS IN BOTH THE IMPUGNED ASSESSMENT YEARS, NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. SHRI KISHOR PHADKE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITIONS ON THE BASIS OF LOOSE PAPERS, SMALL POCKET DIARIES AND DOCUMENTS IM POUNDED DURING COURSE OF SURVEY OPERATION U/S.133A OF THE ACT. WHILE MAKIN G ADDITIONS, THE ASSESSING OFFICER FAILED TO TAKE INTO CONSIDERATION THE SUBMIS SIONS OF ASSESSEE THAT FIGURES MENTIONED IN IMPOUNDED LOOSE PAPERS, SMALL POC KET DIARIES ETC. WERE MERELY PROPOSED TRANSACTIONS WHICH NEVER FRUCTIFIED. DURING PROCEEDINGS BEFORE FIRST APPELLATE AUTHORITY, THE ASSESSEES VIDE LETTER DATED 10.10.2011 FURNISHED DETAILS AND EXPLANATIONS IN RESPECT OF THE RECORD INGS MADE IN IMPOUNDED DOCUMENTS. IT WAS ALSO CONTENDED THAT THE ASSESSING O FFICER WITHOUT MAKING PROPER ENQUIRIES FROM THIRD PARTIES MADE ADDITIONS IN AN ARBITRARY AND UNJUSTIFIED MANNER. THE COMMISSIONER OF INCOME TAX (APPEAL) V IDE ORDER DATED 20.10.2011 DIRECTED THE ASSESSING OFFICER TO CONDUCT NECES SARY ENQUIRIES AND FURNISH REPORT BY 29.11.2011. THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEAL) SEEKING REPORT IS AT PAGE 221 OF THE PAPER BOOK. DURING REMAND PROCEEDINGS FOR ASSESSMENT YEAR 2006-07 AND 2007-08, THE ASSESSEE FURNISHED 4 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 INFORMATION AS SOUGHT BY ASSESSING OFFICER FROM TIME TO TIM E. THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE ON 28.02.2014 GRANTIN G FINAL OPPORTUNITY TO SUBMIT PARAWISE EXPLANATION ALONG WITH DOCUMENTARY EVIDENC ES ON OR BEFORE 06.03.2014. THE COPY OF SAID NOTICE IS AT PAGE 234 OF THE P APER BOOK. THE ASSESSING OFFICER ON THE SAME DATE I.E. 28.02.2014 CLOSED THE REMAND PROCEEDINGS AND FURNISHED REMAND REPORT IN THE CASE OF A SSESSEE FOR ASSESSMENT YEAR 2006-07 AND 2007-08 TO THE COMMISSION ER OF INCOME TAX (APPEAL). THE COPY OF REMAND REPORT IS AT PAGE 237 TO 239 OF THE PAPER BOOK. THE ASSESSEE FURNISHED EXPLANATION REGARDING ADDITIONS MAD E IN ASSESSMENT ORDERS FOR ASSESSMENT YEARS 2006-07 AND 2007-08 ON 0 6.03.2014 BEFORE THE ASSESSING OFFICER. THE FINAL SUBMISSIONS MADE BY ASSESSEE BEFO RE THE ASSESSING OFFICER ON 06.03.2014 ARE AT PAGE 242 TO 145 OF THE PAPER BOOK. IT WA S THEN THAT THE ASSESSEE LEARNT THAT REMAND REPORT HAS ALREADY BE EN FURNISHED BY THE ASSESSING OFFICER TO THE COMMISSIONER OF INCOME TAX (APPEAL) ON 28.02.2014 ITSELF. THE ASSESSING OFFICER ERRED IN SENDING THE REMAND REPORT TO THE COMMISSIONER OF INCOME TAX (APPEAL) ON THE DATE OF ISSUING N OTICE TO THE ASSESSEE FOR 06.03.2014. THE ASSESSING OFFICER FURNISHED REMA ND REPORT WITHOUT CONSIDERING THE FINAL SUBMISSIONS OF THE ASSESSEE. THIS FACT WAS BROUGHT TO THE NOTICE OF COMMISSIONER OF INCOME TAX (APPEAL) BY ASSESSEE V IDE COMMUNICATION DATED 12.05.2014. THE ASSESSEE SPECIFICALLY POINTED THAT TH E REMAND PROCEEDINGS WERE CONCLUDED BY THE ASSESSING OFFICER BEFORE THE DATE OF FINAL OPPORTUNITY OF HEARING GRANTED BY THE ASSESSING OFFICER T O THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEAL) ALSO FAILED TO CALL FOR FINAL REPORT FROM ASSESSING OFFICER OR TO CONSIDER FINAL SUBMISSION MADE BY AS SESSEE ON 06.03.2014. THE LD. AR FURTHER POINTED THAT THE ASSESSING OFFICER FAILED TO CONDUCT COMPLETE ENQUIRIES FROM THIRD PARTIES AS WAS DIREC TED BY COMMISSIONER OF INCOME TAX (APPEAL). 5 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 4.1. THE LD. AR FURTHER SUBMITTED THAT PRINCIPLES OF NATURA L JUSTICE HAVE BEEN VIOLATED BY AUTHORITIES BELOW IN NOT CONSIDERING FINAL SUBMISSIO NS OF ASSESSEE. AFTER HAVING ISSUED NOTICE OF HEARING FOR 06.03.2014 TO THE ASSESSEE, THE ASSESSING OFFICER CONCLUDED REMAND PROCEEDINGS ON 28.02.201 4 ITSELF AND SENT THE REPORT TO THE COMMISSIONER OF INCOME TAX(APPEAL), NASH IK ON THE SAME DATE, THUS DEPRIVING THE ASSESSEE FROM CONCLUDING HIS SUBMISSIONS. 4.2 THE LD. AR SUBMITTED THAT IF AN OPPORTUNITY IS GRANTED TO THE ASSESSEE, ASSESSEE WOULD BE ABLE TO SHOW THAT THE AMOUNT RECOR DED IN THE LOOSE PAPERS/SLIPS/POCKET DIARIES SEIZED DURING SURVEY WERE IN RESPECT OF PROPOSED TRANSACTIONS WHICH NEVER FRUCTIFIED. 5. ON THE OTHER HAND, DR. VIVEK AGGARWAL REPRESENTING T HE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) IN CONFIRMING THE ADDITIONS. THE LD. DR SUBMITTED THAT SUFFICIENT O PPORTUNITY WAS GRANTED TO THE ASSESSEE BY ASSESSING OFFICER DURING REMA ND PROCEEDING. NOTICES WERE SENT BY THE ASSESSING OFFICER TO THIRD PARTIES ON TH E ADDRESSES FURNISHED BY ASSESSEE. NOTICES SENT BY THE ASSESSING OFFICER WERE E ITHER NOT SERVED OR PARTIES DID NOT APPEAR BEFORE THE ASSESSING OFFICER. THEREFO RE, THE PLEA OF ASSESSEE THAT FINAL OPPORTUNITY OF HEARING WAS NOT GRANT ED TO THE ASSESSEE, IS WITHOUT ANY BASIS. LOOSE PAPERS/SLIP/POCKET DIARIES SEIZED DURING SURVEY CLEARLY INDICATE THAT ENTRIES RECORDED IN THE DOCUMENTS WERE IN RESPECT OF COMPLETED TRANSACTIONS AND NOT IN RESPECT OF PROPOSED T RANSACTIONS OR TRANSACTION WHICH ACCORDING TO THE ASSESSEE DID NOT FRUC TIFY. THE LD. DR PRAYED FOR CONFIRMING THE FINDINGS OF COMMISSIONER OF INCOME TAX (A PPEAL) IN BOTH THE IMPUGNED ASSESSMENT YEARS AND DISMISSING THE APPEALS OF ASSESSEE . 6 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT DURING IMPUGNED ASSESSMENT YEARS, THE ADDITIONS HAVE BEE N MADE ON THE BASIS OF IMPOUNDED LOOSE PAPERS/SLIPS/POCKET DIARIES AND OTHER D OCUMENTS FOUND AND SEIZED DURING SURVEY OPERATION CARRIED OUT AT THE P REMISES OF ASSESSEE ON 22.01.2009. DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS , COMMISSIONER OF INCOME TAX (APPEAL) VIDE ORDER DATED 20.10.2011 CALLED FOR R EPORT FROM THE ASSESSING OFFICER IN RESPECT OF VARIOUS TRANSACTIONS RECO RDED ON LOOSE PAPERS/DIARIES SEIZED DURING SURVEY FOR THE ASSESSMENT Y EARS 2006-07 AND 2007-08 AFTER NECESSARY ENQUIRIES. THE LD. AR OF THE ASSES SEE HAS DRAWN OUR ATTENTION TO THE NOTICE DATED 28.02.2014 ISSUED BY ASSES SING OFFICER TO THE ASSESSEE GRANTING FINAL OPPORTUNITY TO SUBMIT POINT WISE E XPLANATION ALONG WITH DOCUMENTARY EVIDENCES ON OR BEFORE 06.03.2014. THE COPY OF SAID NOTICE IS AT PAGE 234 OF THE PAPER BOOK. ON THE SAME DATE I.E. 28.02.20 14, THE ASSESSING OFFICER FINALIZED THE REMAND REPORT AND FURNISHED TO THE COM MISSIONER OF INCOME TAX (APPEAL) DISREGARDING THE FACT THAT HE HAS ISS UED NOTICE TO THE ASSESSEE GRANTING FINAL OPPORTUNITY TO SUBMIT DOCUMENTS A ND EXPLANATIONS ON OR BEFORE 06.03.2014. AFTER HAVING FURNISHED REMAND REPORT ON 28.02.2014, NO EFFORT WAS MADE BY THE ASSESSING OFFICER TO FILE FINAL/SUPPLEMEN TARY REMAND REPORT AFTER RECEIVING FINAL SUBMISSIONS OF THE ASSESSEE ON 06.03.2014. THE PRE- CLOSURE OF REMAND PROCEEDINGS AND FURNISHING OF REPORT B Y THE ASSESSING OFFICER ON 28.02.2014 WITHOUT CONSIDERING THE FINAL SUBMISSIONS OF THE ASSESSEE IS PATENT VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 7. A PERUSAL OF THE WRITTEN SUBMISSIONS MADE BY ASSESSE E BEFORE COMMISSIONER OF INCOME TAX (APPEAL) ON 12.05.2014 REVEAL TH AT ASSESSEE HAD TAKEN A SPECIFIC OBJECTION THAT THE REMAND REPORT WAS S ENT BEFORE CONSIDERING THE FINAL SUBMISSION OF ASSESSEE WHICH THE ASSESSEE HAD FILED ON 06.03.2014 IN 7 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 ACCORDANCE WITH THE NOTICE OF THE ASSESSING OFFICER. THE IMP UGNED ORDER SHOWS THAT THE COMMISSIONER OF INCOME TAX (APPEAL) HAS NEITHER D EALT WITH THE OBJECTION RAISED BY ASSESSEE NOR HAS CONSIDERED THE SU BMISSION OF ASSESSEE DATED 06.03.2014 FILED BEFORE THE ASSESSING OFFICER DURING REM AND PROCEEDINGS. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE MANNER IN WHICH THE PROCEEDINGS HAVE BEEN CONDUCTED BY AUTHORITIES BELOW, WE ARE OF CO NSIDERED VIEW THAT BOTH THE APPEALS NEED RE-VISIT TO THE FILE OF COMMISSIONER OF INC OME TAX (APPEAL). THE COMMISSIONER OF INCOME TAX (APPEAL) SHALL CONSIDER THE SUBMIS SION OF THE ASSESSEE DATED 06.03.2014 FILED BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS. THE COMMISSIONER OF INCOME TAX (APPEAL) IS AT LIB ERTY TO CONSIDER THE SUBMISSIONS OF ASSESSEE AND THE MATERIAL PLACED BEFORE HIM BEFORE PASSING THE FRESH ORDER OR THE COMMISSIONER OF INCOME TAX (APPEA L) MAY SEEK REPORT/COMMENTS FROM THE ASSESSING OFFICER BEFORE PASSING THE ORDER. NEEDLESS TO SAY THAT COMMISSIONER OF INCOME TAX (APPEAL) SHALL FOLLOW PRINCIPLES OF NATURAL JUSTICE BEFORE DECIDING THE ISSUES AFRESH, IN ACCORD ANCE WITH LAW. THUS, WITHOUT COMMENTING ON THE MERITS OF ADDITIONS IN BOTH THE APPEALS, WE ARE RESTORING THE APPEALS TO COMMISSIONER OF INCOME TAX (APPE AL). ACCORDINGLY, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 09 TH DAY OF FEBRUARY, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! ' /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 09 TH FEBRUARY, 2018 SB 8 ITA NOS.910 & 911/PUN/2015 A.YS. 2006-07 & 2007-08 ) * +#,-! .!(, / COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-2, NASHIK. 4. THE PR.CIT-5, PUNE. 5. %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 6. './ 01 / GUARD FILE. // % // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE.