Shri Prakash Bhogilal Patel, Ahmedabad V. The Income tax Officer,Ward-6(5), Ahmedabad

ITA 931/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89600 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 30-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: B R POPAT
• Keywords: Earning of tax free income; Additional evidence; Non compliance
• Section: 147; 69; 148; 6; 144

Judgement Text

, B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH , !' # $% & , ' ' ! ( BEFORE S/SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AN D KUL BHARAT, JUDICIAL MEMBER) ITA NO.931/AHD/2012 [ASSTT.YEAR : 2003-2004] PRAKASH BHOGILAL PATEL A-403, VALKESHWAR APARTMENT NR. NILKANTH MAHADEV GHATLODIA, AHMEDABAD. PAN : ACTPP 7657 F /VS. ITO, WARD-6(5) AHMEDABAD. ( *+ / APPELLANT) ( ,-*+ / RESPONDENT) ASSESSEE BY : SHRI B.R. POPAT REVENUE BY : SHRI B.L. YADAV, SR.DR DATE OF HEARING : 17 TH JUNE, 2015 DATE OF PRONOUNCEMENT : 19 TH JUNE, 2015 O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS)-XI, AHMEDABAD DATED 30.3.2012. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. NOT ADMITTING THE ADDITIONAL EVIDENCES FILED BE FORE HIM WITH A PRAYER FOR THEIR ADMISSION. CONSIDERING THE FACTS OF THE C ASE AND THE PROVISIONS OF LAW AS INTERPRETED BY VARIOUS COURTS AND TRIBUNA LS, HE OUGHT TO HAVE HELD THAT THE CASE GETS COVERED BY THE EXCEPTIONS C ARVED OUT IN RULE 46A ITA NO.931/AHD/2012 -2- OF THE INCOME TAX RULES 1962 AND THE ADDITIONAL EVI DENCES SO PRODUCED THUS OUGHT TO HAVE BEEN ADMITTED, SO AS TO DECIDE T HE APPEAL ON MERIT. 2. DISMISSING THE APPEAL FOR THE REASONS AS MENTION ED IN THE BODY OF THE APPELLATE ORDER, THEREBY CONFIRMING THE ADDITION OF RS.3,02,75,000/-, WHICH WAS ORIGINALLY MADE BY THE AO UNDER SECTION 6 9 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT IN THE CASE OF THE ASSESSEE, ASSESSMENT UNDER SECTION 144 READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED WHEREBY, THE A O MADE ADDITION OF RS.3,02,75,000/- IN RESPECT OF MARKET VALUE OF 1,00 ,000 SHARES AS ON 26.2.2003 AT THE RATE OF RS.302.75 PER SHARE. AGAINST THIS, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A), WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEAL. 4. THE FIRST GROUND IS AGAINST THE REJECTION OF ADM ISSION OF ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULES, 1 962. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT REVENUE AUTHORITIES WERE NOT JUSTIFIED IN PROCEEDING AGAINST THE ASSESS EE WITHOUT GIVING OPPORTUNITY FOR REPRESENTING ITS CASE. HE SUBMITTED THAT ONE S HRI RONAK PATEL, DIRECTOR OF GROWTH AGRO INDUSTRIES LTD. APPROACHED THE ASSESSEE FOR HOLDING OF 1,00,000 SHARES OF M/S.SOMPLAST LEATHER INDUSTRIES LTD. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID PERSON HAD OBTAINED SIGNATU RE OF THE ASSESSEE ON THE POWER OF ATTORNEY FOR REPRESENTING HIS CASE BEFORE THE AO. HOWEVER, NO SUCH REPRESENTATION WAS MADE BEFORE THE AO. IN THE ABSE NCE OF THE ASSESSEE, IMPUGNED ASSESSMENT WAS FRAMED. HE SUBMITTED THAT ATLEAST THE ASSESSEE DESERVES TO BE REPRESENTED, BEFORE ANY ACTION IS TA KEN AGAINST HIM. HE SUBMITTED THAT THE LD. CIT(A) HAS NOT CONSIDERED TH E SUBMISSIONS ON RIGHT PERSPECTIVE. HE FURTHER SUBMITTED THAT EVEN OTHERW ISE ALSO THE AO FAILED TO APPRECIATE THE FACTS THAT SECTION 69 OF THE ACT WRO NGLY APPLIED IN THE CASE OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE PLAC ED RELIANCE ON THE CASE LAWS, ITA NO.931/AHD/2012 -3- WHICH WERE CITED BEFORE THE LEARNED CIT(A). HE SUB MITTED THAT IN THE CASE OF THE ASSESSEE, A LENIENT VIEW MAY BE ADOPTED. 6. ON THE CONTRARY, THE LD.DR STRONGLY OPPOSED THE SUBMISSIONS OF THE COUNSEL FOR THE ASSESSEE AND SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ASSESSEE DOES NOT DESERVE ANY LENIENCY. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT BEFORE TH E AO THERE WAS NO REPRESENTATION ON BEHALF OF THE ASSESSEE. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, NEITHER THE ASSESSEE NOR HIS REPRESENT ATIVE APPEARED BEFORE THE AO. HOWEVER, BEFORE THE LD.CIT(A) THE ASSESSEE WAS REPR ESENTED BY HIS AUTHORIZED REPRESENTED, SHRI B.R. POPAT. THE LD. CIT(A), AFTE R CONSIDERING THE SUBMISSION MADE BEFORE HIM, REJECTED THE APPEAL OF THE ASSESSE E BY OBSERVING AS UNDER: 3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE LD.AR. I HAVE ALSO PERUSED VARIOUS CASE LAWS RELIED UPON BY THE APPELLANT. IT IS SEEN THAT THE APPELLANT WAS HAVING 1,00,000 EQUITY SHARES OF M/S.SOMPLAT LATHER INDUSTRIES LTD., IN HIS DP ACCOUNT NO.100286 91 MAINTAINED WITH KIFS SECURITY PVT. LTD. THESE EQUITY SHARES ARE ID ENTIFIED WITH SCRIPT NO.INE 021E01010. THE APPELLANT HAS NOT FURNISHED HIS PAN PARTICULARS TO THE DEPOSITOR AND ACCORDINGLY THE ACCOUNT OF THE APPELLANT WAS FREEZED AND SUSPENDED AS PER SEBI'S INSTRUCTIONS. THE MARKE T VALUE OF THE ABOVE SAID SHARES AS ON 26/2/2003 IS WORKED OUT AT THE RA TE OF 302.75 PER SHARE. AT THIS RATE THE MARKET VALUE OF THESE SHARES WILL BE RS.3,02,75,000/- (100000 X 302.75). THIS WAS THE PREVAILING MARKET R ATE OF THESE SHARES AS ON 26.2.2003. SINCE THE APPELLANT HAS NOT FURNISHED SOURCE OF INVESTMENT, ACCORDINGLY, THE A.O. HAD MADE AN ADDITION OF RS.3, 02,75,000/- IN THE INCOME OF THE APPELLANT. DURING THE APPELLATE PROCE EDINGS THE APPELLANT SUBMITTED COPIES OF LETTERS FROM M/S. SOMPFAST LEAT HER INDUSTRIES LTD. AND COPY OF CERTIFICATE VIDE WHICH 00000 SHARES WE RE PURCHASED BY THE APPELLANT FROM GROWTH AGRO INDUSTRIES LTD. AND THE SAME WERE TRANSFERRED IN THE NAME OF THE FGPJ[JAJY|N 29/1200 1. THESE EVIDENCES WERE NOT FURNISHED BEFORE THE A.O. DURING THE ASSES SMENT PROCEEDINGS. THE APPELLANT HAS REQUESTED FOR ADMISSION OF ADDITI ONAL EVIDENCES ON THE GROUND THAT HE WAS PREVENTED BY SUFFICIENT CAUSE FO R PRODUCING THESE ITA NO.931/AHD/2012 -4- EVIDENCES AND THE A.O. HAS NOT GIVEN SUFFICIENT OPP ORTUNITIES TO HIM. PERUSAL OF FACTS ON RECORD REVEALS THAT NOTICE U/S. 148 WAS ISSUED ON 31/3/2010. STATUTORY NOTICES U/S.142(1)/143(2) WERE ISSUED ON 7/6/2010, 17/8/2010 AND 22/10/2010. ANOTHER LETTER WAS ISSUED BY THE A.O. ON 25/11/2010. HOWEVER, THE APPELLANT HAS NOT COMPLIED WITH THESE NOTICES. THE A.O. HAD ALSO IMPOSED PENALTY U/S.271(1)(B) FOR NON COMPLIANCE OF STATUTORY NOTICE ON 30/05/2011, THESE FACTS CLEARLY REVEALS THAT SUFFICIENT OPPORTUNITIES AND TIME WERE GIVEN BY THE A.O. DURIN G THE ASSESSMENT PROCEEDINGS. SECONDLY, THE APPELLANT HAS FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE TO PROVE THE FACT THAT IT WAS PREVENTED BY SUFFICIENT CAUSE TO FURNISH THESE EVIDENCES. THE APPELLANT HAD CITED VARIOUS DECISIONS IN SUPPORT OF HIS ARGUMENTS. HOWEVER, THE RATIO OF THESE CASE LAWS WILL NOT SUPPORT THE CASE OF THE APPELLANT AS THESE CASES WERE DECIDED IN VIEW OF DIFFERENT FACTS. IN VIEW OF THIS , THE CONTENTIONS OF THE APPELLANT ARE FOUND TO BE NOT GENUINE AND INAPPROPR IATE AND ACCORDINGLY, THE ADDITIONAL EVIDENCES AS SUBMITTED BY THE APPELL ANT IS NOT ADMITTED UNDER RULE 46A OF THE I.T.ACT, AS THE CONDITIONS LA ID DOWN UNDER RULE 46A ARE NOT FULFILLED IN THIS CASE. THIS GROUND OF APP EAL IS DISMISSED. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E SUBMISSIONS OF BOTH THE PARTIES, AND GONE THROUGH THE ORDERS OF THE LOW ER AUTHORITIES. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN US THROUGH THE AFFIDAVIT OF SHRI RONAK PATEL, DIRECTOR OF GROWTH A GRO INDUSTRIES LTD. AND IN CONFIRMATION-CUM-AFFIDAVIT DATED 11.6.2011, THE SAI D SHRI RONAK PATEL HAD CONFIRMED THAT 1,00,000 EQUITY SHARES OF SOMPLAST L EATHER LTD. LYING IN DEMAT ACCOUNT OF PRAKASH PATEL WITH KIFC SECURITIES P.LTD . HAVING CLIENT CODE NO.10028691, IS THE SOLE PROPRIETY OF GROWTH AGRO I NDUSTRIES LTD., AND PRAKASH B. PATEL HAS NO INTEREST IN SUCH 1,00,000 EQUITY SH ARES OF SOMPLAST LEATHER LTD., DIRECTLY OR INDIRECTLY. IT IS ALSO CONFIRMED THAT 1,00,000 EQUITY SHARES OF M/S.SOMPLAST LEATHER INDUSTRIES LTD. WERE ALLOTTED TO GROWTH AGRO INDUSTRIES LTD., IN PUBLIC OFFER OF THE COMPANY IN PHYSICAL FO RM. AFTER COMPLETING THE DEMATERIALIZATION PROCEDURE, IT WAS PHYSICALLY TRAN SFERRED TO PRAKASH B. PATEL AND SENT FOR DEMATERILISATION PROCEDURE WHICH WERE DULY MATERIALIZED AND CREDITED ON 23.8.2002 IN THE DEMAT ACCOUNT OF PRAKA SH PATEL WITH KIFS SECURITIES P.LTD. CERTAIN DOCUMENTS IN THE FORM O F TRANSFER MEMORANDUM FOR ITA NO.931/AHD/2012 -5- TRANSFER OF SHARES ARE ENCLOSED AT PAGE NO.22. THE DEMAT CONFIRMATION REPORT IS ALSO ENCLOSED AT PAGE NO.23 OF THE PAPER BOOK RESPE CTIVELY. 9. IN PRESENT CASE, THE ASSESSEE DID NOT COMPLY WIT H THE NOTICES ISSUED BY THE AO AND ALSO DID NOT BOTHER TO KNOW ABOUT WHAT IS HA PPENING IN THE ASSESSMENT PROCEEDINGS. THE ASSESSEE IS ALSO NOT IN A POSITIO N TO GIVE NAME OF THE CHARTERED ACCOUNTANT, WHO WAS ASKED BY THE ASSESSEE FOR REPRESENTING HIS CASE BEFORE THE AO. HOWEVER, THE ASSESSEE HAS FURNISHED A COPY OF AFFIDAVIT OF THE DIRECTOR OF GROWTH AGRO INDUSTRIES LTD., CONFIRMING THAT THE SHARES WERE HELD IN REPRESENTATIVE CAPACITY. ORDINARILY, SUCH NEGLIGEN T ATTITUDE DOES NOT DESERVE ANY LENIENCY. IT IS SUBMITTED BY THE LEARNED COUNS EL FOR THE ASSESSEE THAT THE ASSESSEE IS HAVING MEAGER SOURCE OF INCOME. AS PER THE RETURN FILED BY THE ASSESSEE, THE ASSESSEE HAS DECLARED INCOME FROM BU SINESS OR PROFESSION OF RS.29,370/- AND CLAIMED EXEMPT INCOME FROM TAX OF R S.52,408/- BEING AGRICULTURE INCOME. AS PER THE CAPITAL ACCOUNT OF SHRI BHOGILAL, THE OPENING BALANCE AS ON 1 ST APRIL, 2002 TO 31 ST MARCH, 2003 WAS RS.5,12,451/-. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE REQUIRES VERIFICATION AS TO WHETHER HE HAS ENGAGED CHARTERED ACCOUNTANT, AND AL SO WHETHER HE IS HOLDING SHARES OF M/S.SOMPLAST LEATHER INDUSTRIES LTD. IN R EPRESENTATIVE CAPACITY. SINCE THE GOLDEN PRINCIPLE OF LAW IS THAT NO PERSON SHOUL D BE CONDEMNED UNHEARD. THEREFORE, WE SET ASIDE THE ORDER OF THE LEARNED CI T(A), AND RESTORE THE MATTER BACK TO THE FILE OF THE AO TO MAKE FRESH ASSESSMENT SUBJECT TO PAYMENT OF RS.5,000/- AS COST, TO BE DEPOSITED AS PER INCOME T AX RULES. UPON RECEIPT OF THIS ORDER, THE AO WILL ISSUE NOTICE FOR FRESH ASSE SSMENT TO THE ASSESSEE AND MAKE DE NOVO ASSESSMENT AFTER CONDUCTING IN-DEPTH INQUIRY WITH REGARD TO VERACITY OF THE DOCUMENTS FILED BY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FURNISH THE COPIES DOCUMENTS FILED IN THE PAPER BOO K TO THE AO AND TO COOPERATE WITH THE AO IN THE ASSESSMENT PROCEEDINGS. WE MAKE IT CLEAR THAT WE HAVE NOT EXPRESSED ANYTHING ON THE MERIT OF THE CASE. THE A O WILL APPLY HIS MIND INDEPENDENTLY ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND ON THE BASIS OF THE ITA NO.931/AHD/2012 -6- MATERIAL COLLECTED DURING THE ASSESSMENT PROCEEDING S. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( / ANIL CHATURVEDI) !' # /ACCOUNTANT MEMBER ( & /KUL BHARAT) ' ' /JUDICIAL MEMBER DATE : 19-6-2015 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD