The ACIT, Central Circle-1(4), Ahmedabad V. M/s. Mahalaxmi Housing and Finstock Pvt.Ltd., Ahmedabad

ITSSA 193/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8443 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 23-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K VOHRA
• Keywords: Document seized; Principle of natural justice; Additional evidence; Documents seized
• Section: 142(1); 68; 148; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI D K TYAGI,JM & SHRI A N PAHUJA, AM IT(SS)A NOS.193 & 194/AHD/2009 (ASSESSMENT YEARS:-2001-02 & 2003-04) ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 1(4), ROOM NO. 337, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD V/S M/S MAHALAXMI HOUSING & FINSTOCK PVT. LTD., 1, NARAYAN CHAMBERS, 2 ND FLOOR, NR. NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD PAN: AABCM 0367 R [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI R K VOHRA, DR ASSESSEE BY:- SHRI PRITESH SHAH, AR O R D E R A N PAHUJA: THESE TWO APPEALS BY THE REVENUE AGAINST TWO SEPARATE ORDERS DATED 26-10-2009 OF THE LD. CIT(AP PEALS)-I, AHMEDABAD FOR THE ASSESSMENT YEARS 2001-02 AND 200 3-04 RAISE THE FOLLOWING COMMON GROUNDS :- [1] THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.84,33,000/- IN THE AY 2001-02 & RS. 41,33,925/- IN THE AY 2003-04 MADE U/S 68 OF THE I.T. ACT. [2] THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADMITTING THE ADDITIONAL EVIDENCE IN CONTRAVENTION TO RULE 46A OF THE I.T. RULES, 1962, WITHOUT GRANTING THE ASSESSING OFFICER ANY OP PORTUNITY OF BEING HEARD. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. 2. ADVERTING TO GROUND NOS.1 & 2 IN THESE APPEALS, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 O F THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] WA S CONDUCTED ON 01- 11-2006 IN THE PREMISES OF NAPTUNE GROUP OF CASES. ON THE BASIS OF SEIZED DOCUMENTS / BOOKS OF ACCOUNTS STATEMENTS RECORDED DURING THE SEARCH, A NOTICE U/S 153A(1)(A) DATED 20-01-200 8 OF THE ACT WAS 2 IT(SS)A NOS.193 & 194/AHD/2009 2 SERVED UPON THE ASSESSEE ON 31-01-2008. IN RESPON SE, THE ASSESSEE SUBMITTED ON 10-04-2008 RETURN DECLARING L OSS OF RS.49,790/- FOR THE AY 2001-02 & RETURN DECLARING L OSS OF RS.2,97,806/- FOR THE AY 2003-04. SUBSEQUENTLY, A N OTICE DATED 04- 06-2008 U/S 143(2) OF THE ACT WAS SERVED ON THE ASS ESSEE ON 11-06- 2008. LATER, A NOTICE U/S. 142(1) DATED 30-09-2008, REQUIRING THE ASSESSEE TO FURNISH VARIOUS DETAILS WAS SERVED. IN RESPONSE TO NOTICES DATED 11-12-2008 U/S 143(2) AND 142(1) OF T HE ACT, THE ASSESSEE DID NOT FURNISH ANY DETAILS/DOCUMENTS AND INSTEAD VIDE LETTER DATED 16-12-2008 STATED THAT STATEMENTS RECO RDED DURING SEARCH AND THEREAFTER, MAY BE CONSIDERED FOR ASSESS MENT PURPOSES. SINCE THE ASSESSE DID NOT COMPLY WITH AFORESAID STA TUTORY NOTICES MENTIONED ABOVE NOR SUBMITTED THE DETAILS SOUGHT BY THE ASSESSING OFFICER[AO IN SHORT], THE ASSESSMENTS IN THESE CAS ES WERE FINALIZED U/S. 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILA BLE ON RECORD. 2.1 ON PERUSAL OF BALANCE SHEET FOR THE PERIOD R ELEVANT TO THE AY 2001-02, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE ACCEPTED UNSECURED LOAN OF RS.84,53,000/- . SINCE THE ASSESSE DID NOT FURNISH ANY DETAILS NOR CONFIRMATI ON LETTERS IN RESPECT OF THE SAID LOAN AND THUS, FAILED TO DISCHA RGE THE PRIMARY ONUS CAST UPON IT U/S 68 OF THE ACT , RELYING UPON DECISIONS IN NANAK CHANDRA LAXMAN DAS VS. CIT 140 ITR 151 (ALL);B-TEX CORPORATION 46 ITD 61 (MUMBAI) (TM);SHANKAR INDUSTRIES VS. CIT 114 ITR 689 (CAL); PRECISION FINANCE PVT. LTD. 208 ITR 465 (CAL .), THE AO ADDED AN AMOUNT OF RS.84,53,000/- BY WAY OF UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT. 2.2 FOR SIMILAR REASONS, THE AO ADDED AN AMOUNT OF RS.41,83,925/- U/S 68 OF THE ACT IN THE AY 2003-0 4. 3. ON APPEAL, THE LEARNED CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS AND DOCUMENTS FILED BEFORE HIM ,REDUCED THE ADDITION IN THE AY 2001-02 IN THE FOLLOWING TERMS:- 3 IT(SS)A NOS.193 & 194/AHD/2009 3 ' 6. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. MY FINDINGS AS REGARD TO THE SPECIFIC POINTS RAISED IN THE GROUNDS OF APPEALS ARE AS UNDER:- (I) AS REGARD TO THE ADDITION OF RS.84,53,000/- U/S . 68 OF THE I.T. ACT, I FIND THAT THE TOTAL OPENING BALANCE OF UNSECURED LO ANS AS ON 01-04- 2000 AMOUNTED TO RS.89,53,000/-. OUT OF ABOVE, THE APPELLANT COMPANY MADE REPAYMENT OF RS.5,20,000/- TO M/S. MAH ALAXMI BUILDER AND TOTAL FRESH DEPOSITS OF RS.20,000/-WERE RECEIVED FROM IDEAL EDUCATION PVT. LTD. AND IDEAL SYSTEM PVT. LTD . THE CLOSING BALANCE OF UNSECURED LOANS AS ON 31-03-2001 AMOUNTE D TO RS.84,53,000/-. IT IS, THUS, APPARENT THAT DURING T HE YEAR UNDER CONSIDERATION, THE APPELLANT COMPANY HAS RECEIVED F RESH CREDITS OF RS.20,000/- ONLY. THE APPELLANT HAS NOT FURNISHED E VEN THE PRIMARY EVIDENCE IN THE FORM OF LOAN CONFIRMATION FROM THE NEW DEPOSITORS. IN SUCH CIRCUMSTANCES, THE ADDITION OF UNEXPLAINED AND UNPROVED CASH CREDITS OF RS.20,000/- IN THE YEAR UNDER CONSI DERATION IS CONSIDERED JUSTIFIED AND ADDITION OF THE SAME IS CO NFIRMED. THE BALANCE ADDITION OF RS.84,33,000/- IS DELETED. THE ASSESSING OFFICER IS FREE TO TAKE APPROPRIATE ACTION U/S. 148 OF THE I.T. ACT FOR VERIFICATION OF THE UNSECURED LOANS WHICH ARE CLAIM ED TO BE RECEIVED IN EARLIER YEARS. THIS GROUND OF APPEAL IS PARTLY A LLOWED. 3.1 LIKE WISE, IN THE AY 2003-04, THE LD. CIT(A) REDUCED THE ADDITION IN THE FOLLOWING TERMS:- 6. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT. MY FINDINGS AS REGARD TO THE SPECIFIC POINTS RAISED IN THE GROUNDS OF APPEALS ARE AS UNDER:- (I) AS REGARD TO THE ADDITION OF RS.41,83,925/- U/S . 68 OF THE I.T. ACT, I FIND THAT THE TOTAL OPENING BALANCE OF UNSECURED LO ANS AS ON 01-04-2000 AMOUNTED TO RS.45,83,095/-. OUT OF ABOVE, THE APPEL LANT COMPANY MADE REPAYMENT OF RS.4,49,170/- TO M/S. NEPTUNE INFRASTR UCTURE AND SCHEME ADVANCE AND TOTAL FRESH DEPOSITS OF RS.50,000/-WERE RECEIVED AS SCHEME ADVANCE. THE CLOSING BALANCE OF UNSECURED LOANS AS ON 31-03-2001 AMOUNTED TO RS.41,83,925/-. IT IS, THUS, APPARENT T HAT DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT COMPANY HAS RECE IVED FRESH CREDITS OF RS.50,000/- ONLY. THE APPELLANT HAS NOT FURNISHED E VEN THE PRIMARY EVIDENCE IN THE FORM OF LOAN CONFIRMATION FROM THE NEW DEPOSITORS. IN SUCH CIRCUMSTANCES, THE ADDITION OF UNEXPLAINED AND UNPR OVED CASH CREDITS OF RS.50,000/- IN THE YEAR UNDER CONSIDERATION IS CONS IDERED JUSTIFIED AND ADDITION OF THE SAME IS CONFIRMED. THE BALANCE ADDI TION IS DELETED. THE ASSESSING OFFICER IS FREE TO TAKE APPROPRIATE ACTIO N U/S. 148 OF THE I.T. ACT 4 IT(SS)A NOS.193 & 194/AHD/2009 4 FOR VERIFICATION OF THE UNSECURED LOANS WHICH ARE C LAIMED TO BE RECEIVED IN EARLIER YEARS. THIS GROUND OF APPEAL IS PARTLY ALLO WED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A) IN THESE TWO ASSESSM ENT YEARS. AT THE OUTSET, BOTH THE PARTIES AGREED THAT SINCE THE LD. CIT(A) DID NOT ALLOW ANY OPPORTUNITY TO THE AO BEFORE REDUCING THE ADDITION IN THE LIGHT OF VARIOUS DETAILS/DOCUMENTS FILED BEFORE HIM , MATTER REQUIRES RECONSIDERATION BY HIM. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS OF THE CASE , THE AO COMPLETED THE ASSESSMENT IN THESE TWO ASSESSMENT YE ARS U/S 153A(1)(B) READ WITH SEC. 144 OF THE ACT SINCE THE ASSESSEE DID NOT COMPLY WITH VARIOUS STATUTORY NOTICES NOR FURNISHED THE RELEVANT DETAILS SOUGHT BY HIM. INDISPUTABLY, THE LD. CIT(A) ,WITHOUT GIVING ANY OPPORTUNITY TO THE AO REDUCED THE ADDITIONS MAD E BY THE AO IN THESE TWO ASSESSMENTS YEARS ON THE BASIS OF WRITTEN SUBMISSIONS, DETAILS AND DOCUMENTS FILED BEFORE HIM, EVEN WHEN H E WAS FULLY AWARE THAT ASSESSMENTS HAD BEEN COMPLETED EXPARTE AND THE ASSESSEE DID NOT SUBMIT THE NECESSARY DETAILS/DOCUM ENTS BEFORE THE AO DESPITE SUFFICIENT OPPORTUNITY ALLOWED. THERE IS NO MATERIAL BEFORE US TO INDICATE AS TO WHETHER OR NOT THE WRI TTEN SUBMISSIONS OR THE DETAILS FILED BEFORE THE LD. CIT(A),WERE CONF RONTED TO THE AO. IN NUTSHELL, THE LD. CIT(A) REDUCED THE ADDITIONS O N THE BASIS OF ADDITIONAL EVIDENCE SUBMITTED BEFORE HIM, WITHOUT FOLLOWING THE PROCEDURE LAID DOWN UNDER RULE 46A OF THE IT RULES, 1962 AND THE PRINCIPLES OF NATURAL JUSTICE. AS IS APPARENT FROM THE FACTS OF THE CASE, THE LD. CIT(A) ARRIVED AT THE CONCLUSIONS WIT HOUT ASCERTAINING AS TO WHETHER OR NOT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM SUBMITTING THE AFORESAID ADDITIONAL DOCUMENTS/ INFORMATION BEFORE THE AO AS PER PROVISIONS OF RULE 46A OF THE IT RULES, 1962 NOR THE LD. CIT(A) SEEMS TO HAVE RECORDED ANY REASO NS BEFORE ADMITTING THE AFORESAID DOCUMENTS IN EVIDENCE. HERE WE MAY HAVE A 5 IT(SS)A NOS.193 & 194/AHD/2009 5 LOOK AT THE RELEVANT PROVISIONS OF RULE 46A OF TH E IT RULES 1962, WHICH READS AS UNDER: (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTAR Y, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF P ROCEEDINGS BEFORE THE ASSESSING OFFICER, EXCEPT IN THE FOLLOWI NG CIRCUMSTANCES, NAMELY:-- (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMI T EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED;OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE DEPUTY COMMISSIONER (APPEALS) OR AS THE CASE MAY BE , THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASO NS FOR ITS ADMISSION. (3)THE DEPUTY COMMISSIONER(APPEALS) OR, AS THE CA SE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE INCOME-TAX O FFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXAMINE THE WITNESS PRODUCED B Y THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLAN T (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY B E, THE COMMISSIONER (APPEALS) TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DI SPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDIN G THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER O N HIS OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFICER) UNDER CLAUSE (A) OF SUB SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.' 5.1 IT IS EVIDENT FROM THE AFORESAID PROVISIONS THAT THE LD. CIT(A) CAN TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-R. (1)(B) & (C) OF RULE 46A OF THE IT RULES, 1962 IF THE ASSES SEE WAS PREVENTED BY SUFFICIENT CAUSE .IN THE CASE UNDER CONSIDERATIO N, ADMITTEDLY THE 6 IT(SS)A NOS.193 & 194/AHD/2009 6 NECESSARY DETAILS/DOCUMENTS WERE NEVER SUBMITTED BE FORE THE AO. MOREOVER, THERE IS NOTHING TO SUGGEST AS TO WHETHER OR NOT THE LD. CIT(A) RECORDED ANY REASONS BEFORE ADMITTING THE AFORESAID DETAILS/DOCUMENTS BY WAY OF ADDITIONAL EVIDENCE. I N THIS CONNECTION, HONBLE JURISDICTIONAL HIGH COURT IN THEIR DECISION IN THE CASE OF CIT VS. VALIMOHMED AHMEDBHAI,134 ITR 214(GUJ) WHILE RE FERRING TO PROVISIONS OF SEC. 46A OF THE IT RULES,1962 OBSERVE D THAT NOTICE OF APPEAL ISSUED BY AN AAC CANNOT BE EQUATED WITH NOT ICE OF A FUTURE APPLICATION TO LEAD ADDITIONAL EVIDENCE WHICH NO ON E COULD HAVE ANTICIPATED OR REASONABLY FORESEEN. HONBLE HIGH C OURT HELD THAT ORDINARILY, THE APPEAL WOULD BE DECIDED ON THE EVID ENCE RECORDED IN THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE IN THE CASE UNDER CONSIDERATION, THE ADDITIONAL EVIDENCE/DOCUMENTS FI LED BEFORE THE LEARNED CIT(A) HAVE BEEN ADMITTED WITHOUT RECORD ING ANY FINDINGS AS TO WHETHER OR NOT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE SAID EVIDENCE/DOCUMENTS BEFORE T HE AO AND WITHOUT RECORDING ANY REASONS IN TERMS OF RULE 46A( 2) OF THE IT RULES,1962, WE FIND MERIT IN THE UNDISPUTED CONTENT IONS OF THE LEARNED DR AND THEREFORE, IN THE INTEREST OF JUSTIC E AND FAIR PLAY, VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE T HE ISSUES RAISED IN GROUND NOS.1 TO 2 IN THE APPEAL OF THE REVENUE TO H IS FILE, WITH THE DIRECTIONS TO FOLLOW THE MANDATE IN TERMS OF RULE 4 6A OF THE IT RULES, 1962 AS ALSO PRINCIPLES OF NATURAL JUSTICE A ND THEREAFTER, DISPOSE OF THE MATTER IN ACCORDANCE WITH LAW AFT ER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. WITH T HESE DIRECTIONS, GROUND NOS. 1 TO 2 RAISED IN THESE TWO APPEALS ARE DISPOSED OF, AS INDICATED HEREINBEFORE. 6. GROUND NO 3 IN THESE TWO APPEALS BEING GENERAL IN NATURE , DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THER EFORE, DISMISSED. 7 IT(SS)A NOS.193 & 194/AHD/2009 7 7. IN THE RESULT, BOTH THESE APPEALS ARE ALLOWED ,B UT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 19 -05-2011 SD/- SD/- (D K TYAGI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 19-05-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S MAHALAXMI HOUSING & FINSTOCK PVT. LTD., 1, N ARAYAN CHAMBERS, 2 ND FLOOR, NR. NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE- 1(4), ROOM NO. 337, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-I, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-B, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD