ITO 25(3)(1), MUMBAI V. MUKESH K GAGLANI, MUMBAI

ITA 9126/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92691 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 01-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 29-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Condonation of delay
• Section: 147; 68; 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, J UDICIAL M EMBER , A ND S HRI N.K. BILLAIYA , A CCOUNTANT M EMBER ITA NO. 9126/MUM/2010 ASSESSMENT YEAR: 200 5 - 06 INCOME TAX OFFICER WARD - 25(3)(1), C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI 400 051 / VS. SHRI MUKESH K. GAGLANI 202 - E, SHUBH SHANTI COMPLEX, M.G. ROA D, DAHANUKAR WADI KANDIVALI (W), MUMBAI 400067 ( / REVENUE) ( /ASSESSEE) P.A. NO. AEFPG7132G ITA NO. 9127/MUM/2010 ASSESSMENT YEAR: 2005 - 06 INCOME TAX OFFICER WARD - 25(3)(1), C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI 400 051 / VS. SHRI MANISH K. GAGLANI 202 - E, SHUBH SHANTI COMPLEX, M.G. ROAD, DAHANUKAR WADI KANDIVALI (W), MUMBAI 400067 ( / REVENUE) ( /ASSESSEE) P.A. NO.AFDPG7133H SHRI MANISH K. GAGLANI SHRI MUKESH K. GAGLANI 2 ITA NO. 820/MUM/2011 ASSESSMENT YEAR: 2005 - 06 SHRI MANISH K. GAG LANI 202 - E, SHUBH SHANTI COMPLEX, M.G. ROAD, DAHANUKAR WADI KANDIVALI (W), MUMBAI 400067 / VS. INCOME TAX OFFICER WARD - 25(3)(1), C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI 400 051 ( /ASSESSEE) ( / REVENUE) P.A AEDPG713 3H ITA NO. 821/MUM/2011 ASSESSMENT YEAR: 2005 - 06 SHRI MANISH K. GAGLANI 202 - E, SHUBH SHANTI COMPLEX, M.G. ROAD, DAHANUKAR WADI KANDIVALI (W), MUMBAI 400067 / VS. INCOME TAX OFFICER WARD - 25(3)(1), C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUM BAI 400 051 ( /ASSESSEE) ( / REVENUE) P.A AEDPG7133H ITA NO. 822/MUM/2011 ASSESSMENT YEAR: 2005 - 06 SHRI MUKESH K. GAGLANI 202 - E, SHUBH SHANTI COMPLEX, M.G. ROAD, DAHANUKAR WADI KANDIVALI (W), MUMBAI 400067 / VS. INCOME TAX OFF ICER WARD - 25(3)(1), C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI 400 051 ( /ASSESSEE) ( / REVENUE) P.A AEFPG7132G ITA NO. 823/MUM/2011 ASSESSMENT YEAR: 2005 - 06 SHRI MUKESH K. GAGLANI 202 - E, SHUBH SHANTI COMPLEX, M.G. ROAD , DAHANUKAR WADI KANDIVALI (W), MUMBAI 400067 / VS. INCOME TAX OFFICER WARD - 25(3)(1), C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI 400 051 ( /ASSESSEE) ( / REVENUE) SHRI MANISH K. GAGLANI SHRI MUKESH K. GAGLANI 3 P.A AEFPG7132G / ASSESSEE BY SHR I S.C. TIWARI A/W MS. PRIYANKA J. MARU / REVENUE BY SHRI PREMANAND J. / DATE OF HEARING 0 1 /0 6 /2015 / DATE OF ORDER : 01 / 06 /2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THESE APPEALS ARE BY DIFFERENT ASSESSEES AS WELL AS BY THE REVENUE FOR THE ASSESSMENT YEAR 2005 - 06 , DIRECTED AGAINST THE IMPUGNED ORDERS OF THE LEARNED FIRST APPELLATE AUTHORITY, MUMBAI. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE (ITA NO.9126/MUM./2 010 AND ITA NO.9127/MUM./2010), WHEREIN THE REVENUE IS AGGRIEVED WITH THE DIRECTION TO THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT @ 5% ON THE CREDIT ENTRIES TREATING THE SAME AS BUSINESS INCOME OF THE ASSESSEE AS AGAINST THE ESTIMATED PROFIT @ 15% BY THE A.O. W ITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT PRODUCE ANY BOOKS OF ACCOUNTS, BILLS AND VOUCHERS DURING THE ASSESSMENT PROCEEDINGS OR REMAND PROCEEDINGS. FURTHER, DELETION OF ADDITION OF RS.6,60,250, MADE U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINA FTER THE ACT) AMOUNTING TO RS.6,60,250, HAS BEEN CHALLENGED. SHRI MANISH K. GAGLANI SHRI MUKESH K. GAGLANI 4 2. THE CRUX OF THE ARGUMENTS ADVANCED BY SHRI PARMANAND J., LEARNED D.R., IS IDENTICAL TO TH E GROUND RAISED BY ASSERTING THAT NEITHER THE LIST OF BENEFICIARIES NOR THE NECESSARY DETAILS WERE FILE D BY THE ASSESSEE, THUS, THERE IS NO VALID REASON FOR ESTIMATING THE NET PROFIT @ 5% OF THE CREDIT ENTRIES. SO FAR AS DELETING THE ADDITION MADE U/S 68 OF THE ACT IS CONCERNED, THE LEARNED D.R. EXPLAINED THAT NEITHER DURING THE ASSESSMENT PROCEEDINGS NOR D URING THE REMAND PROCEEDINGS, THE ASSESSEE CO - RELATE THE WITHDRAWALS AND DEPOSITS AND INTENTIONALLY AVOIDED FILING OF ANY EVIDENCE BEFORE THE A.O. 3. ON THE OTHER HAND, SHRI S.C. TIWARI, ALONG WITH MS. PRIYANKA J. MARU, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT NECESSARY DETAILS WERE FILED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE LEARNED A.O. MADE THE ADDITION AT HIS OWN WHIMS AND FANCIES. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPO SITION AND ANALYZED, WE FIND THAT UN - COTORVERTEDLY, DURING THE ASSESSMENT STAGE, THE ASSESSEE DID NOT FILE THE LIST OF BENEFICIARIES, THUS, THE ASSESSEE DID NOT DISCHARGE THE ONUS CAST UPON THEM. IT IS ALSO NOTED THAT IN THE ABSENCE OF NECESSARY DETAILS AN D NON - APPEARANCE BY THE ASSESSEE, THE ASSESSMENT WAS FRAMED U/S 144 R/W SECTION 147 OF THE ACT. THE ASSESSEE DID NOT ESTABLISHED THE GENUINENESS OF PURCHASES CLAIMED TO BE SHRI MANISH K. GAGLANI SHRI MUKESH K. GAGLANI 5 MADE FROM MEGHA IMPEX AND ON VERIFICATION OF THE RETURN FILED BY SHRI MUKESH GAGLANI , IT WAS FOUND THAT ONLY THE COMMISSION INCOME WAS DISCLOSED AND THERE WAS NO BUSINESS RECEIPTS. THE TOTALITY OF THE FACTS CLEARLY INDICATES THAT PRACTICALLY, NO LAWFUL BUSINESS WAS CARRIED OUT BY THE ASSESSEE DURING THE RELEVANT TIME. THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) ESTIMATED THE NET PROFIT MERELY BASED ON HIS SUBJECTIVE APPROACH AND DID NOT CONTROVERT THE FINDINGS CONTAINED IN THE ASSESSMENT ORDER. NO VALID REASON WAS ASSIGNED IN ADOPTING THE NET PROFIT @ 5% AGAINST 15% ESTIMATED BY THE A .O. THEREFORE, IN THE INTEREST OF JUSTICE AND KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, NEITHER PARTY SHOULD AGGRIEVE, WE REMAND BOTH THESE APPEALS TO THE FILE OF THE LEARNED A.O. TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH FOR WHICH DUE OPPORTUNI TY OF BEING HEARD BE PROVIDED TO THE ASSESSEE S WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, IN SUPPORT OF THEIR CLAIM. CONSEQUENTLY, BOTH THESE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 5. IN ITA NO.820/MUM./2012, DIRECTION TO THE A.O. TO ESTIM ATE THE NET PROFIT @ 5% AT CREDIT IN THE BANK ACCOUNT HAS BEEN CHALLENGED AGAINST 1% OFFERED BY THE ASSESSEE. IN VIEW OF OUR ABOVE FINDINGS, THIS APPEAL IS ALSO REMANDED BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESS EE BE GIVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, IN SUPPORT OF HIS CLAIM. THUS, THIS APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 6. ITA NO.821, 822 AND 823/MUM./2011, PERTAIN TO IMPOSITION OF PENALTY U/S 271(1)(B) OF THE ACT. THE CRUX OF ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE SHRI MANISH K. GAGLANI SHRI MUKESH K. GAGLANI 6 WAS THAT A SMALL DELAY IN FILING THE APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT CONDONED AND THERE IS NO ADJUDICATION OF THESE APPEALS ON MERIT. ON THE OTHER HAND, THE LEARNED D.R. CONTENDED THAT THE ASSESSEE DID NOT EXPLAIN THE DELAY, THEREFORE, THE IMPUGNED ORDERS WERE DEFENCED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BROADLY, WE FIND THAT THERE WA S DELAY OF ONE MONTH IN FILING THESE APPEALS BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. THE ASSESSEE FILED THE APPLICATION FOR CONDONATION OF DELAY BUT THAT COULD NOT BE FILED WITHIN THE PRESCRIBED TIME DUE TO HOSPITALIZATION OF A FAMILY MEMBER. THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) HAS MENTIONED IDENTICAL REASONING / FACTS IN HIS ORDER AND DID NOT ADMIT THE APPEALS ON THE GROUND THAT THE NAME OF THE FAMILY MEMBER WAS NOT MENTIONED IN THE CONDONA TION PETITION AND FURTHER NO MEDICAL CERTIFICATE WAS FILED. THUS, THE DELAY WAS NOT CONDONED. WITHOUT GOING INTO MUCH DELIBERATION, WE DIRECT THE LEARNED FIRST APPELLATE AUTHORITY TO DECIDE THESE APPEALS ON MERIT. IF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT CONVINCED WITH THE FACTUM OF AILMENT NOTHING PREVENTED HIM TO DIRECT THE ASSESSEE TO FILE THE NECESSARY DETAILS, THEREFORE, KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, FRESH ADJUDICATION IS REQUIRED FOR WHICH T HE ASSE SSEE BE GIVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE HIS CLAIM. THESE APPEALS OF THE ASSESSEE ARE ALSO ALLOWED FOR STATISTICAL PURPOSES. SHRI MANISH K. GAGLANI SHRI MUKESH K. GAGLANI 7 FINALLY, THE APPEAL S OF THE REVENUE AS WELL AS OF THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 1 ST JUNE 2015. SD/ SD/ ( N.K. BILLAIYA ) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 01 / 06 /201 5 SHEKHAR, P.S/. . . /PRADEEP CHOWDHUURY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4 . / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI