The ACIT, Central Circle-2(1), Ahmedabad V. Shri Vinodrai Himmatlal Kapasi, Ahmedabad

ITSSA 36/AHD/2008

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7830 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-01-2012
• Assessment Year: misc
• Appeal Filed On: 28-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI; SAMIR TEKRIWAL SRDR
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Document seized; Principle of natural justice; Block assessment; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI D.K.TYAGI, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER IT(SS)A NO.36/AHD/2008 BLOCK PERIOD FROM 1/4/96 TO 17/1/03 ACIT, CENTRAL CIRCLE-2(1), AHMEDABAD / V/S . VINODRAI HIMMATLAL KAPASI 32, NAIMESH PARK FLATS, NR. LAW GARDEN, E.B. AHMEDABAD PAN NO.AGFPK2004F / APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ALOK JOHRI CIT-DR & SHRI SAMIR TEKRIWAL, SR-DR / BY RESPONDENT SHRI MUKESH M PATEL, AR / DATE OF HEARING 23-01-2012 / DATE OF PRONOUNCEMENT 25-01-2012 !' !' !' !' / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F LD. COMMISSIONER OF INC-TAX (APPEALS)-III, AHMEDABAD DATED 19-12-200 7 FOR THE BLOCK ASSESSMENT FROM 01-04-1996 TO 17-01-2003. THE REVEN UE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.44,113,492/- MADE ON ACCOUNT OF UNEXPLAINED I NVESTMENT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER ON THE ABOVE POINTS. IT(SS)A NO36./AHD/2008 B.P. 1/4/96 TO 17/1/03 ACIT CC-2(1), ABD V. VINODRAI H KAPASI PAGE 2 3) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. C.I.T.(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE, A NRI WAS A DIRECTOR IN THE FIRM M/S. CROWNTEX N.V., A COMPANY IN BELGIUM, ENGAGED IN MARKETING OF FABRICS, A SEARCH HAD BEEN CONDUCTED U/S.132 IN CAS E OF HIS BROTHER, SHRI PRAVIN K KAPASI AND HIS COMPANY, M/S. TOP IMPEX PVT . LTD. FROM THE DOCUMENTS SEIZED IN THIS SEARCH, THE ASSESSING OFFI CER WAS SATISFIED THAT PROVISIONS OF SECTION 158BD WERE ATTRACTED IN THE C ASE OF THE ASSESSEE AND THEREFORE ISSUED A NOTICE U/S.158BD AND REPEATEDLY SENT LETTERS IN THIS REGARD, WHICH AS PER THE AO WERE NOT RESPONDED TO. EVENTUAL LY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, HIS BROTHER, SHRI P RAVIN K KAPASI FILED THE BLOCK RETURN ON 02-07-2007 AT NIL INCOME. THE AO EXAMINED SHRI PRAVIN K KAPASI U/S.131 ON 23-07-2007 AND ALSO THE ASSESSEE, AS HE HAPPENED TO BE IN TOWN. BASED ON THE STATEMENTS AND THE DOCUMENT, MARKED PAGE NO.12 OF ANNEXURE-A/1-38, WHICH WAS SEIZED FROM THE PREMISES OF M/S. VARDHAN STEEL, AHMEDABAD, (PROPRIETARY CONCERN OF PRAVINKUMAR) THE AO ISSUED QUESTIONNAIRES AND SHOW-CAUSE NOTICE DATED 25-07-20 07 SEEKING EXPLANATION IN RESPECT OF THE ENTRIES ON THIS PAGE. AS PER THE AO, THE ENTRIES ON THIS DOCUMENT UNDER THE HEAD VHK REFLECTED THAT THE AS SESSEE HAD EARNED RS.44.13 LAKH BETWEEN 01-04-1996 TO 17-01-2003, WHI CH HAD NOT BEEN DISCLOSED. THE AO OBSERVED THAT THE ASSESSEE DID NO T OFFER ANY EXPLANATION IN RESPECT OF THE ENTRIES ON PAGE NO.12 OF ANNEXURE-A- 1/38. HIS STATEMENT RECORDED ON 24-07-2007 THAT HE DID NOT KNOW ANYTHIN G ABOUT THIS PAPER AND IT DID NOT BELONG TO HIM, DID NOT ABSOLVE THE ASSESSEE FROM EXPLAINING IT, AND WAS NOT A VALID EXPLANATION. THE AO OBSERVED THAT T HE ASSESSEE HAD MADE INVESTMENTS, WHICH WERE NOT RECORDED, SINCE BOOKS O F ACCOUNT HAD NOT BEEN MAINTAINED. SINCE THE NATURE AND SOURCE OF THESE IN VESTMENTS WERE NOT EXPLAINED, THE AMOUNT OF RS.37,43,895/- WHICH REFLE CTED UNDER THE HEAD VHK, RS.1.20,797/- BEING INTEREST EARNED AND RS.5 ,48,800/- MENTIONED ON THE REVERSE OF THE DOCUMENT NO.12 I.E. TOTAL OF RS. 44,13,492/- WAS THE IT(SS)A NO36./AHD/2008 B.P. 1/4/96 TO 17/1/03 ACIT CC-2(1), ABD V. VINODRAI H KAPASI PAGE 3 UNEXPLAINED INCOME OF THE ASSESSEE. AS SUCH, THE AO MADE THE ADDITION U/S.69 OF THE SAID AMOUNT OF RS.44,13,492/- TO THE INCOME OF THE ASSESSEE. 3. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THE EXPLANATION/DETAILS IN RESPECT OF PAGE-12 OF ANNEXURE-A-1/38 FILED BY SHRI PRAVIN K KAPASI DURING HIS BLOCK PERIOD BEFORE THE ACIT, CENTRAL CIRCLE-2- (1), AHMEDABAD VIDE LETTERS DATED 30-12-2004 AND 28-01-2004 AND UNACCOUNTED INC OME FROM COMMISSION BY SHRI PRAVIIN K KAPASI HAD BEEN OFFERED AT RS.2,5 7,341/- ON THE BASIS OF PAGE NO.12 OF THE SEIZED ANNEXURE-A-1/38 AND ALSO O F PAGE NO.13 OF ANNEXURE-A-1/40. IT WAS ARGUED BEFORE LD. CIT(A) TH AT THE ASSESSEE HAD NO OCCASION TO ENQUIRE INTO THE FACTS RELATING TO THE ASSESSMENT PROCEEDINGS OF HIS BROTHER SHRI PRAVIN K KAPASI. IT WAS ALSO LEARN T LATER THAT IN THE ASSESSMENT MADE BY THE ASSESSING OFFICER OF MR. PRA VIN K KAPASI WHERE HIS BROTHER, SHRI PRAVIN K KAPASI HAD SUBMITTED THE DET AILED EXPLANATION OF THE ENTRIES ON THE PAGE NO.12 OF ANNEXURE-A-1/38 WHICH HAS BEEN ACCEPTED BY THE AO OF HIS BROTHER. LD. AR FURTHER SUBMITTED THE EXPLANATION WITH REGARD TO PAGE NO.12 OF ANNEXURE-A-1/38 THAT THE SAME IS EMER GED IN PAGE NO.13 OF ANNEXURE-A-1/40 WHICH SHOWS THE SUMMARY OF COMMISSI ON BUSINESS UP TO 31- 03-2002. IT REPRESENTS THE AMOUNT GIVEN TO DIFFEREN T PARTIES AND NAMES OF PERSONS FROM WHOM THESE AMOUNTS WERE RECEIVED AS CO MMISSION INCOME SO EARNED AND THE SAME WERE OFFERED FOR TAXATION BY MR . PRAVIN K KAPASI. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THE NAMES AND ADDRESSES OF THE PARTIES WHO HAD MADE FINANCES AVAILABLE AND ALSO THE RECIPIENT PARTIES. THE ASSESSEE COULD NOT SUBMIT THE CONFIRMATIONS OF SUCH PARTIES WITH REGARD TO NATURE OF THE SAID TRANSACTIONS. IT WAS ARGUED T HAT THE INFORMATION/EXPLANATION HAD BEEN PROVIDED TO THE AO . IT WAS FURTHER EXPLAINED BEFORE THE LD. CIT(A) THAT CREDIT COLUMN ON PAGE NO .12 OF ANNEXURE-A-1/38 SHOWS THE NAME OF PARTIES FROM WHOM FUNDS WERE RECE IVED AND TO WHOM THE COMMISSION WAS PAID WHILE DEBIT THE COLUMNS REFERRE D TO THE NAME OF THE PARTIES TO WHOM AMOUNTS WERE ADVANCED AND FROM WHOM COMMISSIONS WAS EARNED. THE GROSS COMMISSION EARNED AND PAID, TAKEN INTO ACCOUNT THEN THE IT(SS)A NO36./AHD/2008 B.P. 1/4/96 TO 17/1/03 ACIT CC-2(1), ABD V. VINODRAI H KAPASI PAGE 4 NET COMMISSION EARNED COMES TO RS.2,50,406/-. THE A SSESSEES BROTHER, MR. PRAVIN K KAPASI HAD OWNED UP THE ACTIVITIES/ENTRIES APPEARING IN THE SEIZED DOCUMENTS NO.12 OF ANNEXURE-A-1/38 AND ALSO OF THE DOCUMENT NO.13 OF ANNEXURE-A-1/40 AND IN OTHER DOCUMENTS REVEALING CO MMISSION ACTIVITY. THE ASSESSEE, AN NRI WAS UNAWARE OF THE TRANSACTION AND HAD NO NEXUS WITH THE SEIZED DOCUMENTS. COPY OF THE LETTER FILED BEFORE T HE ACIT, CENTRAL CIRCLE-2(1), AHMEDABAD BY SHRI PRAVIN K KAPASI IN HIS BLOCK ASSE SSMENT PROCEEDINGS WERE FILED BEFORE THE LD. CIT(A). 4. ON CONSIDERATION OF THE EXPLANATION AND VARIOUS DOCUMENTS FILED BEFORE THE LD. CIT(A), THE LD. CIT(A) WAS CONVINCED WITH T HE EXPLANATION FURNISHED BEFORE HIM THAT SHRI PRAVIN K KAPASI HAD OWNED UP T RANSACTIONS AND HE WAS A COMMISSION AGENT. THE ROLE OF THE ASSESSEE IN EARNI NG OF UNDISCLOSED INCOME HAS NOT BEEN ESTABLISHED ON THE BASIS OF THE SEIZED DOCUMENTS AND EXPLANATION GIVEN BEFORE THE LD. CIT(A). ACCORDINGL Y, LD. CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. LD. CIT-DR, MR. ALOK JOHRI AND SHRI SAMIR TEKRIW AL ARGUED THAT SHRI PRAVIN K KAPASI, WHO IS THE PROPRIETOR OF VARDDHAN STEEL & PAYAL ELECTRONICS DURING THE COURSE OF SEARCH ON 17-01-2003 HAD IN TH E STATEMENT RECORDED U/S.132(4) OF THE ACT HAD STATED ABOUT PAGE-12 OF A NNEXURE-A-1/38 THAT THE SAID SEIZED ANNEXURE-A-1/38 CONTENTS THE DETAILS OF TRANSACTIONS AND OF INTEREST PAYABLE/RECEIVABLES OF VINODRAI H KAPASI A S WELL AS OF HIS OWN, SHRI PRAVIN K KAPASI HAD OFFERED UNDISCLOSED INCOME OF R S.14,18,425/- FOR THE BLOCK PERIOD 01-04-1996 TO 17-01-2003. THE DISCLOSU RE IS ON THE BASIS OF ENTRIES MENTIONED ON PAGE-12 OF SEIZED ANNEXURE-A-1 /38 AND OTHER RELATED DOCUMENTS. THE STATEMENT RECORDED U/S 132(4) OF THE ACT IS AN EVIDENCE WHICH CAN BE USED IN THE CASE OF THE PRESENT ASSESS EE. THE LD. AR HAD SUBMITTED THE EXPLANATIONS WITH REGARD TO THE SEIZE D ANNEXURE WITH REFERENCE TO THE ASSESSMENT MADE IN THE CASE OF SHRI PRAVIN K KAPASI AND THE SAME WAS ACCEPTED BY THE LD. CIT(A) WITHOUT TAKING ANY R EMAND REPORT FROM THE IT(SS)A NO36./AHD/2008 B.P. 1/4/96 TO 17/1/03 ACIT CC-2(1), ABD V. VINODRAI H KAPASI PAGE 5 ASSESSING OFFICER. IN FACT, THE AO HAD NOT EXAMINED SUCH EXPLANATIONS WHICH HAD BEEN SUBMITTED W.R.T THE SEIZED PAPER. THEREFOR E, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, LD. DRS SUPPORTED THE ORDER OF AO AND PRAYED TO REVERSE THE ORDER OF LD. CIT(A). 6. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE, MR. MUKESH M PATEL, ARGUED THAT SHRI PRAVIN K KAPASI HAD ALREADY OWNED UP THE SAID SEIZED ANNEXURE AND HAD OFFERED THE INCOME FOR TAXATION AN D THEREFORE THE STATEMENT MADE BY THE THIRD PARTY CANNOT BE USED AGAINST ANY OTHER ASSESSEE I.E. IN THE CASE OF PRESENT ASSESSEE. MR. PATEL REPEATING THE A RGUMENT MADE BEFORE THE LD. CIT(A) AND SUPPORTING THE ORDER OF LD. CIT(A) R ELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW AS UNDER:- I) ACIT V.MISS LATA MANGESHKAR (1974) 97 ITR 696 ( BOM) II) DCIT V. C. KISHNA YADAV (2011) 12 TAXMAN 4 (HY D) III) CIT V. SHADIRAM, GANGA PRASAD, S.P. KANODIA & SMT. PREMLATA KANODIA (2011) 9 TAXMAN 193 (ALL) IN VIEW OF THE SAID JUDGMENTS AND THE ORDER OF LD. CIT(A), HE PRAYED TO CONFIRM THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT ASSESSING OFFI CER HAD DECIDED THE MATTER ON THE BASIS OF THE STATEMENT MADE BY SHRI PRAVIN K KAPASI, THE BROTHER OF THE ASSESSEE ON 17-01-2003 U/S.132(4) AND AFTER ISSUING THE SHOW-CAUSE NOTICE FOR WHICH THE ASSESSEE DID NOT FURNISH ANY REPLY. T HEN THE AO PROCEEDED TO MAKE THE ADDITIONS IN THE HANDS OF THE ASSESSEE. BE FORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THE EXPLANATION WHICH WERE NOT S UBMITTED BEFORE THE ASSESSING OFFICER ESPECIALLY WITH REGARD TO OWNING UP OF TRANSACTION BY THE BROTHER OF THE ASSESSEE, MR. PRAVIN K KAPASI AND EN TRY-WISE EXPLANATION BEFORE THE LD CIT(A). THE LD. CIT(A) HAD ACCEPTED T HE EXPLANATION OF THE ASSESSEE WITHOUT TAKING ANY REMAND REPORT OF THE AO WHICH IS AGAINST THE IT(SS)A NO36./AHD/2008 B.P. 1/4/96 TO 17/1/03 ACIT CC-2(1), ABD V. VINODRAI H KAPASI PAGE 6 PRINCIPLE OF NATURAL JUSTICE. THEREFORE, IT WILL BE IN THE INTEREST OF JUSTICE, THE MATTER IS RESTORED BACK TO THE FILE OF AO WHO WILL EXAMINE THE ISSUE DE NOVO AS PER THE EXPLANATION AND DOCUMENTS SUBMITTED BEFORE THE LD. CIT(A), AND DECIDE THE ISSUE ACCORDINGLY BUT BY PROVIDING OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. THUS, APPEAL OF REVENUE IS ALLOWED FOR ST ATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR STA TISTICAL PURPOSES. # !' $!%& 25 / 01 /201 2 * + , - THIS ORDER PRONOUNCED IN OPEN COURT ON 25/01/ 201 2. SD/- SD/- ( D.K.TYAGI ) ( B.P. JAIN ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) $!%&- 25/01/2012 /!! - DKP* !' !' !' !' 001 001 001 001 21 21 21 21 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. %%05 6 / CONCERNED CIT 4. 6- / CIT (A) 5. 19, 0005, 05, /!! / DR, ITAT, AHMEDABAD 6. ,<= ># / GUARD FILE. BY ORDER/ !' , /TRUE COPY/ ?// %@ 05, /!! -