The ITO, Ward- 4(2)(3), Ahmedabad V. Shri Mukesh Keshavlal Patel, Ahmedabad

ITA 963/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8856 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Unexplained investment; Loose papers; Question of law; Initiation of penalty proceedings; Reason to believe
• Section: 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NOS: 963 TO 965/AHD/2016 & C.O. NOS: 123 TO 125/AHD/2016 (ASSESSMENT YEARS: 2006-07, 2009-10 & 2010-11) INCOME-TAX OFFICER, WARD- 4(2)(3), AHMEDABAD SHRI MUKESH KESHAVLAL PATEL 65, GANESHKUNJ TWIN BUNGLOWS, NR. R.C. TECHNICAL GHATLODIA, AHMEDABAD PAN NO. ACIPP5506C V/S V/S SHRI MUKESH KESHAVLAL PATEL 65, GANESHKUNJ TWIN BUNGLOWS, NR. R.C. TECHNICAL GHATLODIA, AHMEDABAD PAN NO. ACIPP5506C INCOME-TAX OFFICER, WARD- 4(2)(3), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI LALIT P. JAIN, SR. D .R. RESPONDENT BY : SHRI S. N. SOPARKAR, SR. ADV OCATE WITH URVAHSI SHO DHAN ( )/ ORDER DATE OF HEARING : 14 -06-201 9 DATE OF PRONOUNCEMENT : 26 -06-2019 ITA NOS. 963 TO 965/AHD/2016 & C.O. NOS. 12 3 TO 125/AHD/2016 . A.Y. 2006-0 7, 2009-10 & 2010-11 2 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THESE THREE APPEALS AND THREE C.OS. NO. 123 TO 125/ AHD/2016 HAVE BEEN FILED BY THE ASSESSEE SHRI MUKESH K PATEL AND THE REVENUE AGAINST EACH OTHER. THERE IS DELAY OF 78 DAYS IN APPEALS FILED BY THE A SSESSEE AND HE HAS FILED AN AFFIDAVIT STATING REASONS FOR DELAY. WE HAVE CONSID ERED THE FACTS AND HEARD BOTH THE PARTIES AND THEREAFTER WE ARE SATISFIED WITH RE ASONS STATED THEREIN. THEREFORE WE CONDONE THE DELAY OF 78 DAYS AND PROCEED WITH TH E APPEALS. FOR THE SAKE OF CONVENIENCE, WE WOULD LIKE TO DISPOSE OF ALL THE AP PEALS BY WAY OF A COMMON ORDER. FIRST OF ALL WE WOULD TAKE UP APPEAL OF THE REVENUE IN ITA NO. 963/AHD/2016. THE REVENUE HAS TAKEN FOLLOWING GROUN DS OF APPEAL: 1). WHETHER THE LD. COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS. 4,01, 00,001/- ON ACCOUNT OF UNEXPLAINED INCOME. 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3). IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME- TAX (APPEALS) MAY BE SET-A-SIDE AND THAT OF THE ORD ER OF THE ASSESSING OFFICER BE RESTORED. 2. IN THIS CASE, APPELLANT HAD FILED HIS ORIGINAL RETU RN SHOWING TOTAL INCOME OF RS. 3,24,920/- WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. THEREAFTER, THE CASE WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT WHICH WAS ISSUED AND SERVED ON 31.03.2013. THE APPELLANT OBJECTED TO THE REOPENING BY HIS LETTER DATED 10.03.2014 WHICH WAS DEALT WITH BY AO BY HIS LETTER DATED 14.03.2014 STATING THAT AS SOME LOOSE PAPERS WERE FOUND AND SE IZED FROM ONE SHRI BHIKHUBHAI PADSALA IN THE COURSE OF SEARCH ACTION I N HIS CASE WHEREIN NOTINGS REGARDING CASH RECEIPTS WERE FOUND AND AS SAID SHRI BHIKHUBHAI PADSALA HAD ACCEPTED BEFORE SETTLEMENT COMMISSION THAT SUCH CAS H RECEIPTS WERE RECEIPT ITA NOS. 963 TO 965/AHD/2016 & C.O. NOS. 12 3 TO 125/AHD/2016 . A.Y. 2006-0 7, 2009-10 & 2010-11 3 PERTAINING TO JAGATPUR LAND, WHICH WERE RECEIVED FR OM ONE SHRI KALPESH PATEL AND SHRI MUKESH PATEL AND COPIES OF SAID LOOSE PAPE RS WERE SUPPLIED TO THE ASSESSEE AND PRESUMPTION U/S 132(4A) WAS APPLICABLE AND SAID LOOSE PAPERS COULD, ACCORDING TO THE A.O. BE USED AS EVIDENCE AG AINST THE ASSESSEE. AND ON THE BASIS OF LOOSE PAPERS WERE FOUND AND SEIZED FRO M BHIKHUBHAI PADSALA AND STATEMENT MADE BY HIM BEFORE THE SEARCHING PARTY AN D DISCLOSURE MADE SHRI BHIKHUBHAI PADSALA BEFORE THE SETTLEMENT COMMISSION . LD. A.O. MADE ADDITIONOF RS. 40100001/- ON ACCOUNT OF UNEXPLAINED INCOME. 3. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPE AL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDIN G THAT APART FROM STATEMENT OF LOOSE PAPERS AND ORDER OF SETTLEMENT COMMISSION, NO MATERIAL IS AGAINST THE ASSESSEE. 4. LD. CIT(A) CITING A JUDGMENT OF HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. VINEET GUPTA (2014) 46 TAXMANN.COM 439 (DEL HI) HELD THAT DECLARATION MADE BY ANY PARTY, BEFORE THE SETTLEMENT COMMISSION IS NOT BINDING UPON THE ASSESSEE, THEREFORE, NO ADDITIONS CAN BE MADE IN AB SENCE OF ANY CONCRETE EVIDENCE AND GRANTED RELIEF TO THE ASSESSEE. 5. NOW BY WAY OF SECOND APPEAL, REVENUE HAS COME BEFOR E US. 6. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND HEARD B OTH THE PARTIES. LD. D.R. CONTENTION IS THAT SHRI BHIKHUBHAI PADSALA MAD E A STATEMENT BEFORE THE DEPARTMENT THAT HE HAS RECEIVED THE CASH IN QUESTIO N FROM THE ASSESSEE AND SAME ARE MENTIONED IN LOOSE PAPER RECEIVED AND SEIZ ED FROM THE POSSESSION OF SHRI BHIKHUBHAI PADSALA. AND FURTHER CONTENDED THAT SHRI BHIKHUBHAI PADSALA ITA NOS. 963 TO 965/AHD/2016 & C.O. NOS. 12 3 TO 125/AHD/2016 . A.Y. 2006-0 7, 2009-10 & 2010-11 4 HAS CATEGORICALLY DECLARED CASH RECEIVED FROM SHRI MUKESH K. PATEL AND ON HIS STATEMENT HONBLE SETTLEMENT COMMISSION PASSED AN O RDER. 7. ON THE OTHER HAND, LD SENIOR COUNSEL, SHRI S.N. SOP ARKAR STATED THAT NOTHING HAS BEEN FOUND FROM SHRI BHIKHUBHAI PADSALA WHICH IS IN THE HANDWRITING OF THE ASSESSEE, NO NAME HAS BEEN MENTIONED OF THE AS SESSEE AND THERE IS NO ANY KIND OF BUSINESS/LAND DEAL TAKEN PLACE BETWEEN THE ASSESSEE AND SHRI BHIKHUBHAI PADSALA AND REQUESTED THAT IN SUCH CASES , ADDITION CANNOT BE MADE. 8. ON THE DIRECTION OF THE BENCH, ASSESSEE FILED AN AF FIDAVIT BEFORE US STATING ON OATH THAT THEY HAVE NOT MADE ANY PAYMENT OF SHRI BH IKHUBHAI PADSALA AND THEREFORE NO LAND WAS PURCHASED BY THEM FROM SHRI B HIKHUBHAI PADSALA. 9. AND IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED A JUDGMENT OF HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. GIAN GUPTA 46 T AXMANN.COM 372 (DELHI) WHEREIN IT IS HELD: SECTION 69, READ WITH SECTION 271(1)(C), OF THE INC OME-TAX ACT, 1961 - UNEXPLAINED INVESTMENTS (IMMOVABLE PROPERTIES) ASSE SSMENT YEAR 2006- 07 - AN UNSIGNED MEMORANDUM OF UNDERSTANDING BETWEE N ASSESSEE AND A SELLER OF LAND AS WELL AS AN UNSIGNED RECEIPT ISS UED BY SELLER WAS RECOVERED - SAID MOU AS WELL AS RECEIPT IN QUESTION WERE FOUND TO BE UNSIGNED DOCUMENTS AND TRANSACTION HAD NOT MATERIAL IZED -WHETHER SINCE BOTH COMMISSIONER (APPEALS) AND TRIBUNAL FOUND THAT FACTS DID NOT ESTABLISH REVENUE'S CONTENTION THAT UNEXPLAINED INV ESTMENT IN CASH HAD BEEN MADE BY ASSESSEE, NO QUESTION OF LAW AROSE FRO M ORDER OF TRIBUNAL DELETING ADDITION ON THAT ACCOUNT - HELD, YES [PARA 6] [IN FAVOUR OF ASSESSEE] 10. LD. A.R. ALSO CITED A JUDGMENT OF HONBLE GUJARAT H IGH COURT IN THE MATTER OF SUNRISE EDUCATION TRUST VS. ITO 92 TAXMANN.COM 74 ( GUJ.) WHEREIN IT IS HELD: ITA NOS. 963 TO 965/AHD/2016 & C.O. NOS. 12 3 TO 125/AHD/2016 . A.Y. 2006-0 7, 2009-10 & 2010-11 5 SECTION 68, READ WITH SECTION 147. OF THE INCOME-TA X ACT, 1961 - CASH CREDIT (BANK DEPOSITS) - ASSESSMENT YEAR 2010-11 - ASSESSE-TRUST FILED ITS RETURN OF INCOME DECLARING NIL INCOME WHICH WAS ACC EPTED UNDER SECTION 143(1) -LATER, ASSESSING OFFICER ISSUED REASSESSMEN T NOTICE ON GROUND THAT ASSESSEE-TRUST HAD DEPOSITED CASH IN A BANK AC COUNT AND THAT NO RETURN OF INCOME WAS FILED BY ASSESSEE FOR RELEVANT ASSESSMENT YEAR - IT WAS NOTED THAT ASSESSING OFFICER IN REASONS RECORDE D, PROCEEDED ON ERRONEOUS FOOTING THAT ASSESSEE HAD NOT FILED RETUR N AT ALL -IT WAS NOT DISPUTED BY REVENUE THAT ASSESSEE DID FILE RETURN O F INCOME FOR YEAR UNDER CONSIDERATION WHICH WAS DULY ACKNOWLEDGED BY DEPART MENT - FURTHER, ASSESSING OFFICER ONLY CONTEDED THAT CASH DEPOSITS COULD ONLY BE VERIFIED THROUGH REASSESSMENT AND HE DID NOT EVEN CONTEND TH AT SAID CASH DEPOSITS WERE NOT DULY REFLECTED IN RETURN FILED, B UT THAT HE WISHED TO VERIFY VALIDITY OF SUCH DEPOSITS - WHETHER REASSESSMENT NO TICE FOR MERE VERIFICATION OR FOR A FISHING INQUIRY WAS NOT PERMI SSIBLE - HELD, YES [PARAS 4 AND 5] [IN FAVOUR OF ASSESSEE] 11. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND SERIES OF JUDGMENT, WE HOLD THAT ORDER OF LD. CIT(A) DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT OUT END AND THEREFORE, APPEAL OF THE REVENUE IS DISMISS ED. 12. NOW WE COME TO THE C.OS. OF THE ASSESSEE. THE ASSE SSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. LD. CIT (A) OUGHT TO HAVE QUASHED RE - OPENING PROCEEDINGS INITIATED BY AO ISSUING NOTICE U/S 148 WITHOUT APPLICATION OF MIND TO THE FACTS OF THE APPELLANT. LD. CI,T (A) FAILED TO APPRECIATE THAT ORDER PASSED BY AO IN ABSENCE OF EITHER 'REASON TO BELIEVE' AS ENVISAGED UNDER SECTION 147 OR ESCAPEMENT OF ANY INCOME WAS WITHOUT JURISDICTION AND BAD IN LAW. 2. LD. CIT (A) OUGHT TO HAVE HELD THAT ID. AO ERR ED IN LAW AND ON FACTS IN FRAMING ASSESSMENT U/S 143 (3) R W S 147 OF THE ACT ON FACT UALLY INCORRECT FOUNDATION. 3. LD. CIT (A) ERRED IN LAW AND ON FACTS IN DISMIS SING GROUND CHALLENGING LEVY OF INTEREST U/S 234A/234B & 234C OF THE ACT. 4. LD. CIT (A) ERRED IN LAW AND ON FACTS IN DISMI SSING GROUND CHALLENGING INITIATION OF PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT. ITA NOS. 963 TO 965/AHD/2016 & C.O. NOS. 12 3 TO 125/AHD/2016 . A.Y. 2006-0 7, 2009-10 & 2010-11 6 THE APPELLANT CRAVES LEAVE TO ADD, AMEND, EDIT, DEL ETE, CHANGE OR MODIFY ALL OR ANY OF THE GROUND BEFORE OR AT THE TIME OF HEARING. 13. FACTS OF THE CASE HAVE BEEN DISCUSSED IN THE CONNEC TED ITA NO. 963/AHD/2016 FOR THE SAKE OF BREVITY, WE DO NOT WA NT TO REPEAT THE SAME. LD. A.O. ISSUED NOTICED FOR REOPENING OF THE CASE ON TH E BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WHICH HAD SEAR CHED THE PREMISES OF SHRI BHIKHUBHAI PADSALA AND SEIZED CERTAIN DOCUMENTS. IN OUR CONSIDERED OPINION, LD. A.O. WAS JUSTIFIED IN ISSUING NOTICE TO THE ASS ESSEE ON THE BASIS OF MATERIAL WAS SUPPLIED BY THE INVESTIGATION WING TO THE A.O. OF THE ASSESSEE. THEREFORE, WE DISMISS C.OS. OF THE ASSESSEE, IT IS PERTINENT TO MENTION HERE THAT IN CONNECTED APPEAL, WE HAVE GIVEN RELIEF TO THE ASSES SEE BY DISMISSING THE APPEAL OF THE REVENUE. 14. IN THE RESULT, APPEALS FILED BY THE REVENUE AND C.O . FILED BY THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 26 - 06- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 26 /06/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD