Sanghar Ceramics, Pune V. Assistant Commissioner of Income-tax, Central Circle -2(1), Pune

ITA 912/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6754 (ITAT-PUNE)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Loose papers; Principle of natural justice
• Section: 143(3); 133A

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.912/PUN/2015 / ASSESSMENT YEAR : 2009-10 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 ASTT.COMMISSIONER OF INCOME TAX, CIRCLE 8, AKURDI, PUNE. . / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE. REVENUE BY : SHRI PRASHANT GADEKAR. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 2, NASHIK DT.13.03.2015 FO R THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE TRADING IN STEEL AND PIPES. ASSESSEE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 20 09-10 ON 31.10.2009 DECLARING TOTAL INCOME OF RS.72,23,270/-. THE CAS E WAS / DATE OF HEARING : 05.12.2018 / DATE OF PRONOUNCEMENT: 21.01.2019 2 ITA NO.912/PUN/2015 SELECTED FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FRAM ED U/S 143(3) OF THE ACT VIDE ORDER DT.30.12.2011 AND THE TOTA L INCOME WAS DETERMINED AT RS.1,78,70,300/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.13.03.2015 (IN APPEAL NO.NSK/CIT(A)-2/739/13-14) DISMISS ED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CI T(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND O N FACTS IN AFFIRMING ADDITION MADE BY LEARNED ACIT, CIRCLE 8, AKURDI, PUNE (HEREINAFTER REFERRED T O AS AO) AMOUNTING TO RS. 1,10,90,935/- ON THE BASIS OF IMPOUNDED LOOSE PAPERS , SMALL POCKET DIARIES AND DOCUMENTS FOUND DURING THE SURVEY OPERATIONS U/S 13 3A OF THE ITA , 1961. 2. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITIONS MADE BY AO WITHOUT CONSIDERING APPELLANT'S SUBMISSIONS MADE FROM TIME TO TIME. THE LEARNED CIT (A)-2, NASHIK OUGHT TO HAVE APPRECIATED THAT NUMBER OF IMPOUNDED LOOSE PAGES / PAPERS, SMALL POCKET DIARIES; WERE MERELY REPRESENT ING ESTIMATES OF SOME PROPOSED DEALS WHICH NEVER FRUCTIFIED. 3. THE LEARNED CIT(A)-2, NASIK ERRED IN LAW AND ON FACTS IN NOT AWAITING FOR THE OUTCOME OF FACTUAL FINDINGS, DIREC TED TO BE CARRIED OUT BY THE LEARNED AO VIDE A SECOND AND SEPARATE RE MAND REPORT VIDE ORDER DATED 12/05/2014 FOR A.Y.2006-07 AND FOR 2007- 08. THE LEARNED CIT(A)-2, NASIK OUGHT TO HAVE AWAITED FOR T HE SECOND REMAND REPORT BEFORE CONCLUDING THE APPELLATE PROCE EDINGS AS THE SAME WERE HAVING CASCADING IMPACT ON THE PRESENT AP PEAL. 4. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 25,74,840/- FOR ALLEGED EXPENSES AND ADVANCES TO VA RIOUS PARTIES, WITHOUT APPRECIATING THAT THE SAID NOTING ON IMPOUN DED PAPERS WAS MERE ESTIMATE AND TRANSACTIONS DID NOT MATERIALIZE. 5. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 1,50,450/ - FOR ALLEGED UNACCOUNTED SALES, WITHOUT APPRECIATING THAT THE NOTING ON IMPOUNDED PAPERS WAS MERE RATE QUOTED TO M/S SSD TRADERS AND ACTUAL TRANSACTION D I D NOT TAKE PLACE. 6. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 57,145/- FOR PAYMENT MADE TO TEJ WATCHMAN, WITHOUT APPRECIATING THAT SAID EXPENSE WERE MADE OUT OF WITHDRAWALS AND APPELLANT HAD SUFFICIENT RESOURCES TO INCUR THE EXPENSES. 7. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 33,00,000/- FOR ALLEGED ADVANCES TO VARIOUS PERSONS , WITHOUT 3 ITA NO.912/PUN/2015 APPRECIATING THAT THE SAID NOTING ON IMPOUNDED PAPE RS WAS MERE ESTIMA T E AND TRANSACTIONS DID NOT MATERIALIZE. 8. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 20,000/- FOR EXPENSES IN RESPECT OF LAND AT SURVEY NO.6 KNOWN AS HAPPY THOUGHTS, WITHOUT APPRECIATING THAT SAID EX PENSE WERE MADE OUT OF WITHDRAWALS AND APPELLANT HAD SUFFICIEN T RESOURCES TO INCUR THE EXPENSES. 9. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 12,00,000/- FOR CAPITAL CONTRIBUTION IN M/S SUPREME DEVELOPERS. THE LEARNED CIT(A)-2, FURTHER ERRED IN ENHANCING THE INCOME BY RS . 5,00,000/- ON ACCOUNT OF CAPITAL CONTRIBUTIONS WITH OUT APPRECIATING THE NO ALLEGED EXTRA FUNDS WAS INFUSED. 10. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 13,25,000/- FOR PAYMENT MADE TO APPELLANT'S SON MR. ANUP JHAMTHANI, WITHOUT APPRECIATING THAT THE SAME WAS R ECORDED IN THE BOOKS OF APPELLANT . 11. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 73,500/- FOR ALLEGED SITE EXPENSES ON LAND SITUATED AT S.NO 319, PIMPRI WAGHARE, WITHOUT APPRECIATING THE FACT THAT THE NOTING ON IMPOUNDED PAPER WAS MERE ESTIMATE AND NO PARTICULAR YEAR WAS MENTIONED. 12. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 15 , 40,000/- FOR ALLEGED CAPITAL INTRODUCTION IN M/S SU PREME DEVELOPERS IN WHICH APPELLANT IS PARTNER. THE LEARN ED CIT(A)-2, NASHIK AND LEARNED AO OUGHT TO HAVE APPRECIATED THE FACT THAT THE NOTING ON IMPOUNDED PAPER WAS MERE EST I MATE AND NO PARTICULAR YEAR WAS MENTIONED. 13. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 6,50,000/- FOR A L LEGED TRANSACTIONS WITH VAR I OUS PERSONS, WITHOUT APPRECIATING THE FACT THAT THE NOTING ON IMPOUNDED PAPER WAS MERE ESTIMATE AND NO ACTUAL TRANSACTION TOOK PLACE . 14. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 30,000/- FOR PERSONAL EXPENSES INCURRED, WITHOUT AP PRECIATING THAT SAID EXPENSE WERE MADE OUT OF WITHDRAWALS AND APPEL LANT HAD SUFFICIENT RESOURCES TO INCUR THE EXPENSES . 15. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 90,000/- FOR ALLEGED PAYMENT FOR PURCHASE OF SHOP A T SONKAR COMPLEX, PIMPRIGAON; WITHOUT APPRECIATING THE FACT THAT THE NOTING ON IMPOUNDED PAPER WAS MERE ESTIMATE AND THE SAID T RANSACTION DID NOT MATERIALIZE . 16. THE LEARNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE LEARNED AO AMOUNTING TO RS. 80,000/- FOR ALLEGED ADVANCE MADE, WITHOUT APPRECIA TING THE FACT 4 ITA NO.912/PUN/2015 THAT THE NOTING ON IMPOUNDED PAPER WAS MERE ESTIMAT E AN D THE SAID TRANSACTION DID NOT MATERIALIZE. 17. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEA RNED CIT(A)-2, NASHIK ERRED IN LAW AND ON FACTS IS NOT CONSIDERING THE EFFECT OF TELESCOPING OF AVAILABLE AND ALLEGED RESOURCES AS A GAINST ALLEGED APPLICATIONS. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHE R. 4. IN THIS CASE, SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT ON 22.01.2009 AT THE BUSINESS PREMISES OF THE ASSESSEE. CONSEQUENT TO SURVEY ACTION, ASSESSEE HAD ADMITTED UNDISCLOSED INCO ME OF RS.50 LAKHS ON ACCOUNT OF UNEXPLAINED TRANSACTIONS, RS.10,00,000/ - ON ACCOUNT OF EXCESS STOCK AND RS.1,87,500/- ON ACCOUNT OF UNACCOUNTED SALE OF CAR. THUS, ASSESSEE ADMITTED UNACCOUNTED INCOME AGGREGATING TO RS.61,87,500/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, AO NOTICED THAT DURING THE COURSE OF SURVEY, CERTAIN LOOSE P APER BUNDLES, POCKET DIARIES WERE IMPOUNDED WHICH CONTAIN UNACCOUNTED TRANSACTIONS OF BUSINESS AS WELL AS LAND DEALINGS. BASED ON THE NOTINGS FOUND IN THE LOOSE PAPERS BUNDLES, AO WORKED OUT THE ADDITIONS AGGREGATING TO RS.1,06,47,025/- (THE DETAILS OF ADDIT IONS ARE LISTED IN PAGE 13 OF THE ASSESSMENT ORDER) AND MADE ITS A DDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE ORDER DT.13.03.2015 DISMISSED THE APPEAL O F THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT IDENTICA L ISSUE AROSE IN ASSESSEES OWN CASE IN A.YS. 2006-07 AND 200 7-08, WHEREIN 5 ITA NO.912/PUN/2015 THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE ISS UE IN ITA NOS.910 AND 911/PUN/2015 ORDER DT.09.02.2018, REMITTED TH E MATTER BACK TO THE FILE OF LD.CIT(A). HE THEREFORE SUBMITTED THAT T HE ISSUE BEING IDENTICAL TO THAT OF EARLIER YEARS, THE MATTER MAY B E REMITTED BACK TO THE FILE OF LD.CIT(A) AND FURTHER ASSURED THAT ASS ESSEE WILL CO- OPERATE BY FILING THE REQUISITE DETAILS. LD.D.R. ON THE OTHER HAND, DID NOT SERIOUSLY OBJECT TO ASSESSEES PLEA OF REMITTING THE ISSUE BACK TO THE FILE OF LD.CIT(A) BUT HOWEVER SUPPORTED THE ORDER OF LOW ER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. LD.A.R. SUBMITTED THAT IDENTICAL ISSUE AROSE IN A SSESSEES OWN CASE IN A.Y. 2006-07 AND 2007-08 ON ACCOUNT OF SAME SURVEY ACTION CARRIED OUT ON 22.01.2009. THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE ISSUE FOR A.YS. 2006-07 AND 2007 -08 REMITTED THE MATTER BACK TO THE FILE OF LD.CIT(A) BY OBSERV ING AS UNDER : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BE LOW. IT IS AN UNDISPUTED FACT THAT DURING IMPUGNED ASSESSMENT YEA RS, THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF IMPOUNDED LOOSE PAPE RS/SLIPS/POCKET DIARIES AND OTHER DOCUMENTS FOUND AND SEIZED DURING SURVEY OPERATION CARRIED OUT AT THE PREMISES OF ASSESSEE ON 22.01.20 09. DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, COMMISSIONER OF INCOME TAX (APPEAL) VIDE ORDER DATED 20.10.2011 CALLED FOR REP ORT FROM THE ASSESSING OFFICER IN RESPECT OF VARIOUS TRANSACTION S RECORDED ON LOOSE PAPERS/DIARIES SEIZED DURING SURVEY FOR THE ASSESSM ENT YEARS 2006-07 AND 2007-08 AFTER NECESSARY ENQUIRIES. THE LD. AR O F THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE NOTICE DATED 28.02.2014 ISSUED BY ASSESSING OFFICER TO THE ASSESSEE GRANTING FINAL OPPORTUNITY TO SUBMIT POINT WISE EXPLANATION 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. 28.02.2014, THE ASSESSING OFFICER FINALIZ ED THE REMAND REPORT AND FURNISHED TO THE COMMISSIONER OF INCOME TAX (AP PEAL) DISREGARDING THE FACT THAT HE HAS ISSUED NOTICE TO THE ASSESSEE GRANTING FINAL OPPORTUNITY TO SUBMIT DOCUMENTS AND 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 FI NAL/SUPPLEMENTARY 6 ITA NO.912/PUN/2015 REMAND REPORT AFTER RECEIVING FINAL SUBMISSIONS OF THE ASSESSEE ON 06.03.2014. THE PRECLOSURE OF REMAND PROCEEDINGS AN D FURNISHING OF REPORT BY THE ASSESSING OFFICER ON 28.02.2014 WITHO UT CONSIDERING THE FINAL SUBMISSIONS OF THE ASSESSEE IS PATENT VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE. 7. A PERUSAL OF THE WRITTEN SUBMISSIONS MADE BY ASS ESSEE BEFORE COMMISSIONER OF INCOME TAX (APPEAL) ON 12.05.2014 RE VEAL THAT ASSESSEE HAD TAKEN A SPECIFIC OBJECTION THAT THE RE MAND REPORT WAS SENT BEFORE CONSIDERING THE FINAL SUBMISSION OF ASSESSEE WHICH THE ASSESSEE HAD FILED ON 06.03.2014 IN ACCORDANCE WITH THE NOTI CE OF THE ASSESSING OFFICER. THE IMPUGNED ORDER SHOWS THAT THE COMMISSI ONER OF INCOME TAX (APPEAL) HAS NEITHER DEALT WITH THE OBJECTION R AISED BY ASSESSEE NOR HAS CONSIDERED THE SUBMISSION OF ASSESSEE DATED 06. 03.2014 FILED BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDI NGS. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE MANNER IN WHICH TH E PROCEEDINGS HAVE BEEN CONDUCTED BY AUTHORITIES BELOW, WE ARE OF CONS IDERED VIEW THAT BOTH THE APPEALS NEED RE-VISIT TO THE FILE OF COMMI SSIONER OF INCOME TAX (APPEAL). THE COMMISSIONER OF INCOME TAX (APPEAL) S HALL CONSIDER THE SUBMISSION OF THE ASSESSEE DATED 06.03.2014 FILED B EFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS. THE COMMISSIONER OF INCOME TAX (APPEAL) IS AT LIBERTY TO CONSIDER THE SUBMISSIONS OF ASSESSEE AND THE MATERIAL PLACED BEFORE HIM BEFORE PASSING THE FRESH ORDER OR THE COMMISSIONER OF INCOME TAX (APPEAL) MAY SEEK REPORT/ COMMENTS FROM THE ASSESSING OFFICER BEFORE PASSING THE ORDER. NEE DLESS TO SAY THAT COMMISSIONER OF INCOME TAX (APPEAL) SHALL FOLLOW PRI NCIPLES OF NATURAL JUSTICE BEFORE DECIDING THE ISSUES AFRESH, IN ACCOR DANCE WITH LAW. THUS, WITHOUT COMMENTING ON THE MERITS OF ADDITIONS IN BO TH THE APPEALS, WE ARE RESTORING THE APPEALS TO COMMISSIONER OF INCOME TAX (APPEAL). ACCORDINGLY, APPEALS OF THE ASSESSEE ARE ALLOWED FO R STATISTICAL PURPOSES. 7. BEFORE US, SINCE THE ASSESSEE HAS SUBMITTED THAT THE FACTS IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF EARLIER Y EARS AND SINCE THE AFORESAID CONTENTION OF LD.A.R. HAS NOT BEEN CONTROVER TED BY THE REVENUE, WE THEREFORE FOLLOWING THE SAME REASONING AND FO R SIMILAR REASONS, REMIT THE ISSUE BACK TO THE FILE OF LD.CIT(A) AND FUR THER DIRECT THE LD.CIT(A) TO DECIDE THE ISSUE IN ACCORDANCE WITH THE LAW. NEEDLESS TO STATE THAT LD.CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH ALL THE DETAILS CALLED FOR BY THE AUTHORITIES. IN VIEW OF OUR DECISIO N TO RESTORE THE ISSUE TO LD.CIT(A), WE ARE NOT ADJUDICATING ON MERITS T HE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7 ITA NO.912/PUN/2015 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 21 ST DAY OF JANUARY, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 21 ST JANUARY, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-2, NASHIK. PR. CIT-5, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.