Shri Prakash Chandulal Patel, Ahmedabad V. The Dy.CIT, Central Circle-2(1), Ahmedabad

ITSSA 438/AHD/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2967 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OTH; OM PRAKASH MEENA ITSSA NO AHD
• Keywords: Principle of natural justice
• Section: 133A; 153A; 131; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER IT (SS) A NO. AND ASSTT.YEAR APPELLANT VS RESPONDENT 436 /AHD/201 3 A.Y.2007-08 SHRI PRANAY KANTILAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : ACDPP 8720 B THE D CIT, CENT.CIR.2(1) AHMEDABAD. 437 /AHD/201 3 A.Y.2007-08 SHRI DEEPAK MANILAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : AAQPP 3324 H VS THE D CIT, CENT.CIR.2(1) AHMEDABAD. 438 /AHD/201 3 A.Y.2007-08 SHRI PRAKASH CHANDULAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : ACMPP 1947 K VS THE D CIT, CENT.CIR.2(1) AHMEDABAD. 439 /AHD/201 3 A.Y.2007-08 SHRI JAYESKUMAR CHANDULAL PATEL 301/1, PARSHWA OPP: RAJPATH CLUB S.G. ROAD, BODAKDEV AHMEDABAD 380 054. PAN : ACDPP 8627 R VS THE D CIT, CENT.CIR.2(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI DHIREN SHAH, AR REVENUE BY : SHRI OM PRAKASH MEENA, CIT-DR IT(SS)A NO.436 /AHD/2013 & 3 OTHERS 2 / DATE OF HEARING : 21/02/2017 / DATE OF PRONOUNCEMENT: 22/02/2017 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT FOUR APPEALS ARE DIRECTED AT THE INSTANCE O F ASSESSEES AGAINST SEPARATE ORDERS OF LD.CIT(A)-III, AHMEDABAD DATED 1 2.9.2013, 13.9.2013, 13.9.2013 AND 12.9.2013 PASSED ON THE RESPECTIVE A PPEALS OF THE ASSESSEES FOR ASSTT.YEARS 2007-08. 2. SOLE GRIEVANCE OF EACH ASSESSEES IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.95,625/- IN EACH CASE OF T HE ASSESSEE WHICH WAS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE |I NCOME TAX ACT, 1961. 3. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ADDITIONS UPON WHICH THE ASSESSEES HAVE BEEN VISITE D WITH PENALTY HAVE BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 6.12.2 016 PASSED IN ITA NO.2410 TO 413/AHD/2011 IN THE RESPECTIVE APPEALS OF THE AP PELLANTS. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH UNDER SE CTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 23.5.2008 IN THE A VIRAT ADI GROUP. SURVEY UNDER SECTION 133A WAS CARRIED OUT AT THE PR EMISES OF THE ASSESSEES. DURING THE COURSE OF OPERATION VARIOUS DOCUMENTS RE GARDING INVESTMENTS IN LANDS WERE SEIZED. ON VERIFICATION OF THE SAME, IT WAS FOUND THAT THESE ASSESSEES ALONG WITH OTHER MEMBERS OF GROUP HAVE PU RCHASED LAND, AND THEREFORE, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED UPON THE ASSESSEES ON 13.11.2009 REQUESTING THEM TO FILE RETURNS. IN RESPONSE TO THE NOTICE, IT(SS)A NO.436 /AHD/2013 & 3 OTHERS 3 ASSESSEES HAVE FILED THEIR RETURN ON 31.12.2010. S HORT CONTROVERSY IN THESE APPEALS IS TO THE EFFECT THAT ALL THESE APPELLANTS HAVE PURCHASED LAND IN VILLAGE KERALA, TAL-BAVLA. ACCORDING TO THE AO, STATEMENT OF SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR, ALLEGED VEND ORS OF THE LAND AT VILLAGE KERALA WERE RECORDED UNDER SECTION 131 OF THE INCOME TAX ACT. THEY HAVE DISCLOSED THAT 21 BIGHAS OF LAND SITUATED AT VILLAGE KERALA WAS SOLD AT THE RATE OF RS.1,50,000/- PER BIGHA , WHEREAS IN THE SALE DEED THIS RATE WAS NOT DISCLOSED. ACCORDINGLY, THE LD.AO FORMED AN OPINIO N THAT ASSESSEES HAVE PURCHASED THE LAND BY MAKING CASH PAYMENTS OVER AND ABOVE AMOUNTS STATED IN THE SALE DEED. THE TRIBUNAL WHILE DELETING TH E ADDITIONS CONFIRMED BY THE CIT(A) HAS MADE THE FOLLOWING OBSERVATIONS: 6. ON APPEAL, THE LD.CIT(A) HAS RE-APPRECIATED THE FACTS. ACCORDING TO THE LD.CIT(A), THE TOTAL LAND PURCHASE D BY THESE PERSONS IN THESE TWO VILLAGES WAS 133.2848 BIGHAS. OUT OF THIS LAND, TOTAL LAND PURCHASED FROM TWO PERSONS VIZ. SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR WAS 21 BIGHAS ONLY. THE AO H AS DRAWN INFERENCE OF ON-MONEY PAYMENTS QUA TOTAL LAND ON TH E BASIS OF STATEMENT OF THESE TWO PERSONS. ACCORDING TO THE L D.CIT(A), THE AO WAS NOT POSSESSING ANY EVIDENCE EXHIBITING THE FACT THAT THE ASSESSEES HAVE PAID CASH OVER AND ABOVE THE AMOUNTS STATED IN THE SALE DEED. ACCORDINGLY, THE LD.CIT(A) HAS DELETED THE ADDITION S MADE QUA THE LAND ADMEASURING 112.2848 BIGHAS. SIMILARLY, IN OTHER A SSESSMENT YEARS I.E. ASSTT.YEAR 2008-09 AND 2009-10, THE AO HAS MADE ADD ITIONS QUA THE LANDS PURCHASED FROM OTHER FARMERS IN THESE YEARS. THUS, THE ADDITIONS HAVE ALSO BEEN DELETED. THE REVENUE HAS NOT CHALLE NGED THE ORDER OF THE LD.CIT(A). IN THIS WAY, LD.CIT(A) HAS SCALED D OWN THE ADDITION TO RS.3,18,750/- AS AGAINST RS.17,73,278/- MADE BY THE AO. 7. WHILE IMPUGNING ORDERS OF THE LD.CIT(A), THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE STATEMENT OF SHRI BHUDA JI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR WAS RECORDED BY INVE STIGATION TEAM BEHIND BACK OF THE ASSESSEE. THE ASSESSEE HAS SPEC IFICALLY REQUESTED FOR PROVIDING AN OPPORTUNITY TO CROSS-EXAMINE. THI S REQUEST WAS NOT ACCEPTED AND BOTH THESE PERSONS WERE NOT PUT TO CRO SS-EXAMINATION. IN IT(SS)A NO.436 /AHD/2013 & 3 OTHERS 4 ORDER TO SUBSTANTIATE THEIR STATEMENTS, THE LD.AO H AS OBSERVED THAT CASH COMPONENTS RECEIVED BY THESE WERE PERSONS WERE USED BY THEM IN DEPOSITING IN THEIR RESPECTIVE BANK ACCOUNT WITH PU NJAB NATIONAL BANK BRANCH, PURCHASE OF HERO HONDA MOTOR BIKE, LIC INVE STMENTS AND RENOVATION OF WADI AND CONSTRUCTION OF HOUSE. ACCO RDING TO THE LD.COUNSEL FOR THE ASSESSEE, THE AO HAS ALLEGED THA T SHRI BHUDAJI MOTIJI THAKOR HAS STATED IN HIS STATEMENT THAT HE HAS DEPO SITED RS.5 LAKHS IN HIS BANK ACCOUNT WITH PNB. THE ACCOUNT NUMBER IS 0070000100117762. A PERUSAL OF THIS ACCOUNT WOULD SHOW THAT ONLY A SUM OF RS.50,000/- WAS DEPOSITED ON 11.6.2007, WHER EAS MOTIJI THAKOR HAS DEPOSITED CASH IN HIS BANK ACCOUNT AFTER SEVEN- HALF-MONTHS FROM THE SALE DATE. THESE TWO REFERENCES IN THEIR STATE MENTS WERE FACTUALLY INCORRECT. HAD THE ASSESSEE BEEN GIVEN AN OPPORTUN ITY TO CROSS- EXAMINE, THESE FACTS WOULD HAVE COME OUT. THE LD.C OUNSEL FOR THE ASSESSEE CONTENDED THAT DURING THE COURSE OF SEARCH /SURVEY, THE ASSESSEES WERE NOT PUT ANY SUCH SUGGESTION. BOTH F ARMERS HAVE GIVEN THEIR AFFIDAVITS RETRACTING THEIR STATEMENTS GIVEN BEFORE THE INCOME-TAX AUTHORITIES. THUS, ON THE BASIS OF THEIR STATEMENT ADDITION COULD NOT BE MADE. HE FURTHER RELIED UPON THE JUDGMENT OF THE H ONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMM. OF CENTRAL EXCISE, (2015) 62 TAXMANN.COM 3 (SC) WHEREIN THE HO NBLE SUPREME COURT HAS OBSERVED THAT IF AN OPPORTUNITY TO CROSS- EXAMINE WAS NOT GIVEN THEN THOSE STATEMENTS CANNOT BE USED AS AN EV IDENCE AGAINST THE ASSESSEE. ON THE STRENGTH OF THIS JUDGMENT, THE LD .COUNSEL FOR THE ASSESSEE CONTENDED THAT STATEMENT OF BOTH PERSONS, SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKOR OUGHT TO BE E XCLUDED. HE FURTHER RELIED UPON THE JUDGEMENT OF THE HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS. RAMANBHAI B. PATEL RENDERED IN ITA NO.207/2008 AND OTHER APPEALS FOR BUTTRESSING HIS CONTENTION. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUT HORITIES. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE AO FORMED AN OPINION THAT AS SESSEES HAVE PAID MONEY IN CASH TO VENDORS FOR THE PURCHASE OF LAND. ACCORDING TO HIM, THE ASSESSEES HAVE PURCHASED THE LAND BY MAKING PAY MENT IN CASH OVER AND ABOVE THE AMOUNTS STATED IN THE SALE DEED. FOR BUTTRESSING THIS PLEA, HE HAS BEEN HARPING UPON THE STATEMENT OF TWO VENDORS VIZ. , SHRI BHUDAJI MOTIJI THAKOR AND SHRI BHAGAJI MOTIJI THAKO R. IT HAS BEEN ALLEGED THAT FROM THESE TWO FARMERS 21 BIGHAS OF LA ND WAS PURCHASED BY THE APPELLANTS. APART FROM THEIR STATEMENTS, HE MADE REFERENCE TO IT(SS)A NO.436 /AHD/2013 & 3 OTHERS 5 OTHER CIRCUMSTANTIAL EVIDENCE EXHIBITING EXPENDITUR E INCURRED BY THE VENDORS. ACCORDING TO THE AO, HAD THEY NOT RECEIVE D CASH, THEY WOULD NOT BE IN A POSITION TO MEET THIS EXPENDITURE. HE NARRATED SIX HEADS OF EXPENDITURE VIZ. DEPOSITS IN BANK ACCOUNTS, FIXED D EPOSITS WITH PNB, PURCHASE OF HERO HONDA BIKE, EXPENDITURE IN MARRIAG E OF DAUGHTER, INVESTMENT IN LIC AND RENOVATION OF CONSTRUCTION OF HOUSE. THE INVESTMENT IN LIC IS OF ONLY RS.1 LAKHS. THERE IS NO QUANTIFICATION OF EXPENDITURE IN THE MARRIAGE OF DAUGHTER. IT IS A V AGUE TERM. SIMILARLY, THE ASSESSEE HAS POINTED OUT THAT DEPOSITS IN THE B ANK ARE NOT TO THE EXTENT AS MENTIONED BY THE AO. SIMILARLY, IN THE A CCOUNTS OF SHRI BHUDAJI M. THAKOR A SUM OF RS.50,000/- ONLY DEPOSIT ED. SHRI BHAGAJI M. THAKOR HAS STATED IN HIS STATEMENT THAT HE HAS D EPOSITED RS.5.00 LAKHS IN THE BANK ACCOUNT WITH PNB WHEREAS FROM THE BANK STATEMENT OF SHRI BHAGAJI M. THAKORE WITH PNB REPRODUCED BY T HE AO ON PAGE NOS.27 AND 8 OF THE ASSESSMENT ORDER, THERE IS NO D EPOSITS OF RS.5.00 LAKHS. APART FROM THE ABOVE, CIRCUMSTANTIAL EVIDEN CE FOR BUTTRESSING THE MAIN PLEA COULD BE USED IF THE MAIN PLEA IS AN ADMISSIBLE EVIDENCE. HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) HAS OBSERVED THAT IF WITNESS WAS NOT PUT TO CROSS-EXAMINE THEN HIS STATEMENT CANNOT BE USED AGAINST AFFECTED PARTY . IN THE PRESENT CASE ALSO, THE ASSESEES HAVE SPECIFICALLY REQUESTED THE AO FOR PROVIDING AN OPPORTUNITY TO CROSS-EXAMINATION, WHICH HAS BEEN DE CLINED. THE FINDING OF THE HONBLE SUPREME COURT IN THIS CONNEC TION IS WORTH TO NOTE. IT READS AS UNDER: 5. WE HAVE HEARD MR. KAVIN GULATI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AND MR. K. RADHAKRISHNAN, LEARNED SENIOR COUNSEL WHO APPEARED FOR THE REVENUE. 6. ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CR OSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNT ED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUD ICATING AUTHORITY IT(SS)A NO.436 /AHD/2013 & 3 OTHERS 6 HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUN ITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRAN TED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJE CTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED T HAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE AP PELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESSWORK AS TO FOR WHAT PURPO SES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTR ACTION THE APPELLANT WANTED FROM THEM. 7. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS- EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE-LIST AS MAINTAINED AT THE DEPOT TO DETERM INE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS W ERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS ME NTIONED IN THE PRICE- LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EX AMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOS E AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN E ARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING T HE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL O N MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. . 8. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUI NG THE SHOW-CAUSE NOTICE. 9. THE FACTS IN HAND ARE IDENTICAL. DEPARTMENT HAS RECORDED STATEMENT OF TWO PERSONS BEHIND THE BACK OF THE ASS ESSEES AND HE DID NOT PROVIDE THEM AN OPPORTUNITY OF CROSS-EXAMINATIO N. HENCE STATEMENT OF THESE TWO PERSONS ARE EXCLUDED, AND IF THE STATEMENTS ARE EXCLUDED THEN NOTHING WOULD REMAIN WITH THE AO FOR BRINGING THE POINT AT HOME THAT THE ASSESSEES HAVE PAID CASH OVER AND ABOVE THE ONE AS IT(SS)A NO.436 /AHD/2013 & 3 OTHERS 7 STATED IN THE SALE DEED FOR MAKING UNEXPLAINED INVE STMENT. THEREFORE, WE ALLOW ALL APPEALS AND DELETE ADDITIONS CONFIRMED BY THE LD.CIT(A). 10. IN THE RESULT, ALL APPEALS OF THE ASSESSEE ARE ALLOWED. 5. WITH THE ASSISTANCE OF THE LD.REPRSENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT S UB-CLAUSE (III) OF SECTION 271(1)(C) PROVIDES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEMPLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDI TION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN , BUT WHI CH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED B Y REASON OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIFICATION OF THE PENALTY IS DEPENDED UPON THE ADDITION MADE TO THE INCOME OF THE ASSESSE E. SINCE BASIS FOR VISITING THE ASSESSEES WITH PENALTY HAS BEEN EXTING UISHED BY DELETING THE ADDITION VIDE ABOVE ORDER OF THE TRIBUNAL DATED 06. 12.2016 (SUPRA), THEREFORE, THERE CANNOT BE ANY PENALTY UPON THE ASSESSEES UNDE R SECTION 271(1)(C) OF THE ACT, AND ACCORDINGLY, WE DELETE IMPUGNED PENALTY AN D CANCEL ORDERS OF THE BOTH THE AUTHORITIES BELOW. APPEALS OF THE ASSESSE ES ARE ALLOWED. 6. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLO WED. ORDER PRONOUNCED IN THE COURT ON 22 ND FEBRUARY, 2017 AT AHMEDABAD. SD/- SD/- ( AMARJIT SINGH ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 22/02/2017