Heera Lal C/o M/s Prakash Bankers, Bangalore V. Income tax Officer, Bangalore

ITA 957/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5304 (ITAT-BANGALORE)
• Duration Of Justice: 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: H C KHINCHA
• Keywords: Principle of natural justice; Opportunity of cross examination; Accommodation entries
• Section: 143(3); 147; 131; 148; 6; 132; 12; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.957/BANG/2017 AND S.P N O.95/BANG/2017 (ASST. YEAR 2008-09 ) HEERALAL, C/O M/S PRAKASH BANKERS, NO.2POLICE ROAD, RANASINGHPET, BENGALURU. . APPELLANT VS. THE INCOME-TAX OFFICER, WARD 1(3), BENGALURU. . RESPONDENT APPELLANT BY : SHRI H.C KHINCHA, C.A RESPONDENT BY : SHRI M.K BIJU, JCIT DATE OF HEARING : 26-5-2017 DATE OF PRONOUNCEMENT : 31-5-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-2, BANGALORE DATED 24/3/2017, UPHOLDING THE ORDER OF THE ASSESSMENT FOR ASST. YEAR 2008-09, PERUSED U/S 147 R.W.S 143(3) OF THE ITA NO.957/B/17 & SP NO.95/B/17 2 INCOME-TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDE R DATED 31/12/2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- 2.1 THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN O F INCOME FOR ASST. YEAR 2008-09 ON 22/12/2008 DECLARING INCOME OF RS.1 5,15,210/- FROM SALARY, INCOME FROM OTHER SOURCES AND CAPITAL GAINS . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, ON RECEIPT OF INFORMATION FROM DIT(I&CI), NEW DELHI THAT A SEARCH , U/S 132 OF THE ACT WAS CONDUCTED IN THE MAHASAGAR GROUP CASES ON 2 5/11/2009, PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED IN TH E CASE ON HAND, ON THE GROUND THAT DURING THE AFORESAID SEARCH, SHRI M UKESH CHOKSHI IN A STATEMENT ON OATH U/S 131 OF THE ACT HAD ADMITTED THAT, HE AND HIS GROUP CONCERNS WERE ENGAGED IN FRAUDULENT BILLING A CTIVITIES AND INVOLVED IN GIVING ACCOMMODATION ENTRIES IN ORDER TO ENABLE ITS CLIENTS TO DECLARE SPECULATIVE PROFITS/LOSSES AS TH EY REQUIRED AND THAT ONE OF THOSE WAS THIS ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S 147 R.W.S 143(3) OF THE ACT WHEREIN INCOME OF THE A SSESSEE WAS ITA NO.957/B/17 & SP NO.95/B/17 3 DETERMINED AT RS.25,73,558/-. AGGRIEVED BY THE ORD ER OF ASSESSMENT DATED 31/12/2013 FOR ASST. YEAR 2008-09, THE ASSESS EE PREFERRED ON APPEAL BEFORE THE CIT(A)-2, BANGALORE WHO DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 24/3/2017. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-2, BANGALO RE DATED 24/3/2017, THE ASSESSEE HAS PREFERRED THIS APPEAL R AISING THE FOLLOWING GROUNDS:- 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRE D TO BE QUASHED. 2.1 IN ANY CASE, THE CONDITIONS PRECEDENT FOR THE ISSUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT, T HE RE-OPENING OF ASSESSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED/LCONFIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. ITA NO.957/B/17 & SP NO.95/B/17 4 2.2 IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED ASSESSING OFFICER HAD ERRED IN NOT PASSING THE SEPARATE SPEAKING ORDER DISPOSING OF THE OBJECTIONS RAISED BY THE APPELLANT AND THE LEARNED CIT(A) INSTEAD OF QUASHING THE ORDER HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDER WHICH WAS PASSED NOT FOLLOWING THE BINDING DICTUM OF HONOURABLE SUPREME COURT BECOMES BAD IN LAW AND IS LIABLE TO BE QUASHED. 3.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORDER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED. 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLICABLE. ITA NO.957/B/17 & SP NO.95/B/17 5 3.3. IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS PASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS. 23,17,660/- BEING SALE CONSIDERATION RECEIVED ON SALE OF SHARES AS 'INCOME FROM OTHER SOURCES' AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE ACTION OF AUTHORITIES BELOW HAS NO SUPPOR T IN LAW; IS CONTRARY TO FACTS AND EVIDENCE AVAILABLE AND THEREFORE DESERVES TO BE REJECTED. 5.1 IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: A) TAXING CONFIRMING THE ENTIRE SALE CONSIDERATION RECEIVED ON SALE OF SHARES AS INCOME UNDER THE HEAD OTHER SOURCES. B) NOT CONSIDERING THE FACT THAT THE APPELLANT HAD EARNED SHORT TERM CAPITAL GAIN ON SALE OF SHARES AN D SUCH GAIN WAS OFFERED TO TAXATION. C) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN SHARES ARE FRAUDULENT. D) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HA S OBTAINED ACCOMMODATION ENTRIES AND APPELLANTS OWN MONEY COME BACK IN THE GUISE OF CAPITAL GAINS. ITA NO.957/B/17 & SP NO.95/B/17 6 THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND BASIS BOTH ON FACTS AND LAW IS TO BE DISREGARDED. 5.2 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCLUSIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WITHOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES,' PROBABILITIES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY QUASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO BE REJECTED IN TOTO. 6. THE APPELLANT HAD ACTUALLY SOLD SHARES THROUGH DEMAT ACCOUNT AND HAD EARNED CAPITAL GAIN THEREON AND SAME NEEDS TO BE ACCEPTED AS SUCH. 7. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THA T THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE INCOME FROM SHORT TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS RETURNED BY THE APPELLANT BE ACCEPTED, THE ASSESSMENT OF SALE CONSIDERATION RECEIVED ON SALE OF SHARES AS INCOME FROM OTHER ITA NO.957/B/17 & SP NO.95/B/17 7 SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 3.2 IT IS SUBMITTED BY THE LD AR FOR THE ASSESSEE T HAT ON SIMILAR ISSUES AND SIMILAR FACTS IN APPEALS OF THE ASSESSEE S IN THE CASES OF MUKESH KUMAR SOLANKI IN ITA NO.2168/BANG/2016 DATED 17/3/2017 AND ANITHA NAHAR IN ITA NO.2170/BANG/2016 DATED 4/4 /2017, CO- ORDINATE BENCHES HAVE HELD THAT THE MATTER BE RESTO RED TO THE FILE OF THE ASSESSING OFFICER (AO) FOR FRESH EXAMINATION AND ADJUDICATION WITH THE SAME DIRECTIONS AS WERE RENDERED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT P ETITION NO.39370/2014 DATED 2/2/2015. IT WAS FURTHER SUBMI TTED THAT ON SIMILAR ISSUES AND SIMILAR FACTS, ANOTHER SMC BENCH OF THE TRIBUNAL IN THE CASE OF SMT. NARANGI DEVI IN ITA NO.487/BANG/2 017 DATED 19/5/2017 HAS SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO FI RST CONFRONT THE ASSESSEE WITH THE STATEMENT OF SHRI MUKESH CHOKSI A ND AFFORD HIM OPPORTUNITY TO EXAMINE SHRI MUKESH CHOKSI IN ORDER TO FIND OUT THE TRUTH IN THE MATTER. IT WAS PRAYED, THAT IN THE CA SE ON HAND ALSO, THE ISSUE IN DISPUTE MAY BE DECIDED ON SIMILAR LINES AS THE CITED CASES. ITA NO.957/B/17 & SP NO.95/B/17 8 3.3 PER CONTRA, THE LD DR FOR THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED (SUPRA). FROM AN APPRECIATION OF THE FACTS ON RECORD, WE FIND THAT IN THE CASE ON HAND ALSO, THE ADDITION WAS MADE ON THE BASIS OF THE SWORN STATEMENT RECORDED FROM S HRI MUKESH CHOKSI, DIRECTOR OF MAHASAGAR GROUP AND OTHER GROUP COMPANIES. IN THE CASE OF SMT. ANITHA NAHAR IN ITA NO.2170/BANG/2 016 DATED 4/4/2017, TO WHICH ONE OF US IS PARTY, IT WAS NOTED THAT AS PER THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH EXAMINATION AND ADJUDICATION THERE ON, AFTER PROVIDING THE ASSESSEE A COPY OF THE SWORN STATEMEN T OF SHRI MAHESH CHOKASI RELIED ON BY THE AO AND PROVIDING THE ASSE SSEE ADEQUATE OPPORTUNITY OF CROSS EXAMINATION OF SHRI MUKESH CHO KSI AND OF BEING HEARD IN THE MATTER. THE CO-ORDINATE BENCH IN THE CASE OF ANITHA NAHAR (SUPRA) IN ITS ORDER AT PARA 4 TO 7 HAS HELD AS UNDER:- ITA NO.957/B/17 & SP NO.95/B/17 9 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN THE PRESENT CASE ALSO, THE ADDITION WAS MAD E ON THE BASIS OF SWORN STATEMENT RECORDED FROM ONE MR. MUKESH M CHOKSI, DIRECTOR OF MAHASAGAR SECURITIES AND OTHER COMPANIES. IN THE CASE OF SHRI MUKESH KUMAR SOLANKI (SUPRA) ALSO, IT WAS NOTED BY SMC BEN CH OF THIS TRIBUNAL THAT AS PER THE JUDGMENT OF THE HO NBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDR A DEVI KOTHARI (SUPRA), THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING A COPY OF THE STATEMENT OF SHRI MUKESH M CHOKSI. FOR THE SAKE OF READY REFERENCE, WE RE-PROD UCE PARA-5 & 6 OF THIS TRIBUNAL ORDER RENDERED IN THE C ASE OF SHRI MUKESH KUMAR SOLANKI. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRST OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF M/S CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER:- ITA NO.957/B/17 & SP NO.95/B/17 10 6. FROM THE ABOVE PARA FROM THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENT OF SHRI MUKESH CHOKSI. AS PER THE FACTS NOTED BY THE HIGH COURT IN THE EARLIER PARAS OF JUDGMENT AND AS PER THE FACTS OF THE PRESENT CASE, I FIND THAT THE FACTS ARE SIMILAR AND LD DR OF THE REVENUE ALSO COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF KARNATAKA HIGH COURT, I SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE AS PER PARA ITA NO.957/B/17 & SP NO.95/B/17 11 NO.8 OF THE JUDGMENT REPRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. 5. IN THE PRESENT CASE ALSO, THE DISPUTE IN QUESTIO N IS THAT WHETHER THE REASSESSMENT ORDER IS VALID OR NOT AND THIS ASPECT OF THE MATTER WAS DECIDED BY THE LO WER AUTHORITIES WITHOUT SUPPLYING THE COPY OF THE STATE MENT OF SHRI MUKESH M CHOKSI TO THE ASSESSEE. 6. THE LD. DR OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT CASE AND IN THE CASE OF SHRI MUKESH KUMAR SOLANKI (SUPRA) AND ALSO IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA). HENCE , WE DECIDE THE ISSUE REGARDING VALIDITY OF THE RE- ASSESSMENT IN THE SAME LINE BY RESPECTFULLY FOLLOWI NG THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT BECAUSE LD. DR OF THE REVENUE COULD NOT POINT OUT A NY DIFFERENCE IN FACTS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH SAME DIRECTIONS A S WERE GIVEN BY THE HONBLE KARNATAKA HIGH COURT IN THAT CASE AS PER PARA-8 OF THE JUDGMENT RE-PRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. ITA NO.957/B/17 & SP NO.95/B/17 12 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 3.4.2 FOLLOWING THE AFORESAID DECISION OF THE CO-OR DINATE BENCH IN THE CASE OF ANITHA NAHAR (SUPRA), WE FIND THAT A CASE O N HAND ALSO THE DISPUTE IN QUESTION IS WHETHER THE RE-ASSESSMENT OR DER IS VALID OR NOT AND THAT THIS ASPECT OF THE MATTER WAS DECIDED BY T HE AUTHORITIES BELOW WITHOUT SUPPLYING THE ASSESSEE WITH A COPY OF THE S WORN STATEMENT OF SHRI MUKESH CHOKSI; RELIED ON BY THE AUTHORITIES BE LOW FOR MAKING THE ORDER OF ASSESSMENT FOR ASST. YEAR 2008-09. TH E LD. DR FOR REVENUE COULD NOT POINT OUT ANY DIFFERENCES IN FACT S OF THE CASE ON HAND AND IN THE OTHER CITED CASES OF SHRI MUKESH KU MAR SOLANKI (SUPRA), ANITHA NAHAR (SUPRA) AND CHANDRA DEVI KOT HARI (SUPRA). IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE, WE SET A SIDE THE ORDER OF THE LD CIT(A) AND RESTORE THE MATTER BACK TO THE FILE O F THE AO FOR FRESH EXAMINATION AND ADJUDICATION WITH THE SAME DIRECTIO NS AS WERE GIVEN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) AT PARA 8 THEREOF (REPRODUCED SUPRA ). ITA NO.957/B/17 & SP NO.95/B/17 13 4. IN VIEW OF OUR SETTING ASIDE THE IMPUGNED ORDER OF THE LD CIT(A) AND RESTORING THE MATTER TO THE FILE OF THE AO FOR FRESH EXAMINATION AND ADJUDICATION (SUPRA), THE ASSESSEE S STAY PETITION IN S.P NO.95/BANG/2017 IS RENDERED INFRUCTUOUS AND ACC ORDINGLY DISMISSED. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR ASST. YEAR 2008-09 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE STAY PETITION IN S.P NO.95/BANG/2017 IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2017 . SD/- SD/- (LALIET KUMAR) (JA SON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : 31/5/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REG ISTRAR, ITAT, BANGALORE.