Late Shri Atmaram J. Navani through L/H Gangaben A. Navani, Adipur-Kutch V. The Deputy Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITSSA 5/RJT/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8159 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: LD BHARTI
• Keywords: Gift; Additional evidence; Block assessment
• Section: 153A; 68; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.606/RJT/2010 (ASSESSMENT YEAR 2006-07) DY.CIT, CENT.CIR.1 VS SMT. GANGABEN A NAVANI RAJKOT AS L/H OF LATE ATMARAM J NAVANI PLOT NO.406/407, WD.2/B ADIPUR, GANDHIDHAM PAN : AATPN1652N (APPELLANT) (RESPONDENT) I.T.(SS)A. NO.05/RJT/2010 (ASSESSMENT YEAR 2006-07) SMT. GANGABEN A NAVANI VS DY.CIT, CENT.CIR.1 AS L/H OF LATE ATMARAM J NAVANI RAJKOT ADIPUR, GANDHIDHAM (APPELLANT) (RESPONDENT) REVENUE BY : SHRI LD BHARTI RESPONDENT BY: SHRI VIMAL DESAI O R D E R PER N.R.S. GANESAN, JM BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL AG AINST THE ORDER OF THE CIT(A)-IV, AHMEDABAD DATED 30-10-2009 PERTAINING TO ASSESSING YEAR 2006-07. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND D ISPOSE THEM OFF BY THIS COMMON ORDER. ITA NO.606/RJT/2010 APPEAL BY REVENUE 2. THE ONLY GROUND IN THE REVENUE APPEAL IS WITH RE GARD TO DELETION OF ADDITION OF RS. 10,51,000 MADE BY THE ASSESSING OFF ICER. 3. SHRI LD BHARTI, THE LD.DR SUBMITTED THAT DURING THE COURSE OF SEARCH OPERATION SEVERAL INCRIMINATING MATERIALS WERE FOUN D AND ONE OF THEM DISCLOSED ITA NO.606/RJT/2010 ITSS NO.05/RJT/2010 2 PAYMENT OF RS.10,51,000. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN WHY ADDITION COULD NO T BE MADE ON THE BASIS OF THE SEIZED MATERIAL. HOWEVER, THE ASSESSEE HAS NOT RESPONDED TO THE QUERY RAISED BY THE ASSESSING OFFICER. REFERRING TO PAGE 4 OF THE ASSESSMENT ORDER, THE LD.DR SUBMITTED THAT ONE OF THE SEIZED MATERIALS SH OWED THAT THE AMOUNT WAS PAID BY CHEQUE. THE CHEQUE NUMBER WAS MENTIONED AS 234181 DRAWN ON GANDHIDHAM MERCANTILE CO-OPERATIVE BANK. THE SALE PRICE WAS SHOWN IN THE SALE DEED AT RS.13,20,000 WHICH HAS BEEN PAID BY CH EQUE NO.234182 AND FOUND DEBITED IN THE BOOKS OF ACCOUNT ALONG WITH THE AQNC ILLARY CHARGES TOWARDS STAMP PAPER AND REGISTRATION FEE. HOWEVER, THE SEIZED MA TERIAL INDICATED PAYMENT OF RS.10,51,000 VIDE CHEQUE NO.234181. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE PAYMENT OF ON-MONEY OF R S.10,51,000 OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE SALE DEED. THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF PAYMENT OF RS.10,51,000. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.10,51,000 U/S 69B OF TH E ACT. HOWEVER, ON APPEAL, THE CIT(A), AFTER ADMITTING THE ADDITIONAL EVIDENCE FOUND THAT THE CHEQUE NUMBER 234181 MENTIONED IN THE SEIZED MATERIAL WAS ENCASHE D BY SHRI M.R. SHAH. REFERRING TO THE ORDER OF THE CIT(A), THE LD.DR SUB MITTED THAT THE CIT(A) FOUND THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY OPPORT UNITY TO THE ASSESSEE TO EXPLAIN THE SEIZED MATERIAL. ACCORDING TO THE LD.D R, THE ASSESSING OFFICER SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT RESPONDED TO THE QUERY RAISED BY THE ASSESSING OFFI CER WITH REGARD TO THE SEIZED MATERIAL. THEREFORE, THE CIT(A) IS NOT CORRECT IN S AYING THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE. THE REFORE, ACCORDING TO THE LD.DR, THE CIT(A) IS NOT CORRECT IN DELETING THE AD DITION OF RS.10,51,000. 4. ON THE CONTRARY, SHRI VIMAL DESAI, THE LD. REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT CHEQUE NUMBER 234181 WAS ISSUED IN T HE NAME OF SHRI M.R. SHAH AND IT WAS ENCASHED BY SHRI M.R. SHAH. REFERR ING TO COPY OF THE BANK STATEMENT THE LD.REPRESENTATIVE SUBMITTED THAT AN A MOUNT OF RS.10,51,000 WAS GIVEN TO SHRI M.R. SHAH AS A LOAN FOR FEW DAYS AND THE SAME WAS RETURNED BY HIM BY CHEQUE. THIS WAS CLEARLY ENTERED IN THE BAN K STATEMENT, THE COPY OF ITA NO.606/RJT/2010 ITSS NO.05/RJT/2010 3 WHICH IS AVAILABLE IN THE PAPER BOOK AVAILABLE IN T HIS TRIBUNAL. THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN MAKING ANY ADDI TION ON THE BASIS OF THE SEIZED MATERIAL. 5. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING T HE COURSE OF SEARCH OPERATION, AN INCRIMINATING DOCUMENT WAS FOUND AND SEIZED. IT DID ALSO MENTION THE AMOUNT AS RS.10,51,000. THE ASSESSING OFFICER EXTRACTED T HE CONTENTS OF THE SEIZED DOCUMENT ON PAGE 4 OF THE ASSESSMENT ORDER. AT PAR AGRAPH 4.2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAS NOT REPLIED TO THE SHOW CAUSE NOTICE ISSUED BY HIM. HO WEVER, THE CIT(A) FOUND THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE. THE FACT REMAINS THAT THERE IS A SEIZED MATERIAL, THERE IS A REFERENCE ABOUT RS.10,51,000. THE CHEQUE NUMBER IN THE SEIZED MATERIAL PRIMA FACI E SHOWS THAT IT IS ISSUED TO SHRI M.R. SHAH FOR RS.10,51,000. THEREFORE, THERE IS NO QUARREL WITH REGARD TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION AND THE AMOUNT OF CHEQUE ISSUED IN THE NAME OF SHRI MR SHAH. THOUGH THE ASSESSEE CLAIMS THAT THE CHEQUE WAS ISSUED IN THE NAME OF MR SHAH FOR RS .,10,51,000 AS A LOAN, NO AUTHORITY EXAMINED THE REASON FOR ISSUING THE CHEQU E IN THE NAME OF SHRI MR SHAH. THEREFORE, IN OUR OPINION, THE ASSESSING OFF ICER HAS TO EXAMINE THE SEIZED MATERIAL, THE COPIES OF THE BANK STATEMENT AND THE REASONS FOR ISSUING CHEQUE TO SHRI MR SHAH. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND REMAND BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE ISSUE RELATING TO ADDITION OF RS. 10,51,000 AFRESH AND BRING ON RECORD TO WHOM THE CHEQUE NO.234181 WAS ISSUED AND THE REASONS FOR ISSUING SUCH CHEQUE AND THEREAFTER SHALL DECIDE THE ISSUE A FRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSSESSEE. ITSS A NO.05/RJT/2010 ASSESSEES APPEAL 6. NOW COMING TO THE ASSESSEES APPEAL, THE FIRST I SSUE IS WITH REGARD TO ADDITION OF RS. 21,949 BEING AMOUNT TO KANDLA PORT TRUST. THIS PAYMENT WAS NOT ITA NO.606/RJT/2010 ITSS NO.05/RJT/2010 4 RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, THE A SSESSING OFFICER MADE THE ADDITION. THE CIT(A) CONFIRMED THE ADDITION MADE B Y THE ASSESSING OFFICER ON THE GROUND THAT THE FEES PAID TO KANDLA PORT TRUST WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE ONLY CONTENTION OF THE LD.REPRESENTAT IVE FOR THE ASSESSEE IS THAT THE COPY OF THE SEIZED MATERIAL WAS NOT GIVEN TO THE AS SESSEE. IT IS TOO LATE TO CONTEND THAT THE COPY OF THE SEIZED MATERIAL WAS NO T GIVEN TO THE ASSESSEE. THE FACT REMAINS THAT THE PAYMENT MADE TO KANDLA PORT T RUST OF RS.21,949 WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. SINCE IT WAS NOT RECORDED IN THE BOOKS OF ACCOUNT, IN OUR OPINION, THE CIT(A) HAS RIGHTLY CON FIRMED THE ADDITION. THE ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO CONF IRMATION OF ADDITION OF RS.5 LAKHS U/S 68 OF THE ACT IN RESPECT OF GIFT SAI D TO HAVE BEEN RECEIVED FROM SMT. KOMAL SAMBHWANI FROM THE NRE ACCOUNT. THE ASS ESSEE HAS FILED AN ADDITIONAL GROUND TO THE EFFECT THAT NO MATERIAL WA S FOUND DURING THE COURSE OF SEARCH OPERATION. THE LD.REPRESENTATIVE SUBMITTED THAT FOR THE PURPOSE OF MAKING ADDITION IN THE BLOCK ASSESSMENT, THE ASSESSING OFF ICER HAS TO CONFINE HIMSELF ONLY ON THE MATERIAL SEIZED DURING THE COURSE OF SE ARCH. ACCORDING TO THE LD. REPRESENTATIVE, SINCE NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION IN RESPECT OF GIFT, THERE CANNOT BE ANY A DDITION IN THE BLOCK ASSESSMENT AS UNDISCLOSED INCOME PERTAINING TO THE SAME. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISION OF THE KOLKATA BENCH OF TH IS TRIBUNAL IN THE CASE OF LMJ INTERNATIONAL LTD V DCIT 119 TTJ 14 (KOL) AND SUBMI TTED THAT THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE SEIZED M ATERIAL FOR THE PURPOSE OF MAKING BLOCK ASSESSMENT. SINCE NO MATERIAL WAS FOU ND DURING THE COURSE OF SEARCH IN RESPECT OF GIFT, ACCORDING TO THE LD.REPR ESENTATIVE, THERE CANNOT BE ANY ADDITION IN THE BLOCK ASSESSMENT. 8. ON THE CONTRARY, SHRI LD BHARTI, THE LD.DR PLACE D HIS RELIANCE ON THE OBSERVATIONS MADE BY THE LOWER AUTHORITIES. ITA NO.606/RJT/2010 ITSS NO.05/RJT/2010 5 9. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE HAS RAISED A LEGAL GROUND BY WAY OF ADDITIONAL GROUND TO THE EFFECT TH AT THERE CANNOT BE ANY ASSESSMENT AS UNDISCLOSED INCOME IN THE ABSENCE OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. ADMITTEDLY, THE SEARCH TOOK PLACE ON 11- 10-2006 AND THE ASSESSMENT WAS COMPLETED U/S 153A O F THE ACT. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 15 3A OF THE ACT. THE LEGISLATURE, BY FINANCE ACT, 2003, WITH EFFECT FROM 01-06-2003 H AS INTRODUCED A NEW METHOD FOR COMPUTING THE UNDISCLOSED INCOME. AS PER THE NE W METHOD INTRODUCED BY FINANCE ACT, 2003, THE ASSESSING OFFICER HAS TO ASS ESS OR RE-ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS IN WHICH THE SEARCH WAS CO NDUCTED. UNLIKE THE EARLIER METHOD, THE ASSESSING OFFICER HAS TO COMPUTE THE TO TAL INCOME OF THE ASSESSEE OR RE-ASSESS THE SAME IN RESPECT OF EACH ASSESSMENT YE AR SEPARATELY FALLING WITHIN THE SIX ASSESSMENT YEARS. IT WAS ALSO SPECIFICALLY PROVIDED THAT THE ASSESSMENT OR RE-ASSESSMENT RELATING TO ANY ASSESSMENT YEAR FA LLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO, IF PENDING ON THE DAT E OF INITIATION OF SEARCH OPERATION, SHALL ABATE. THE LANGUAGE EMPLOYED BY T HE LEGISLATURE IN SECTION 153A DOES NOT SAY THAT THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE SEARCH MATERIAL. THE LEGISLATURE IN PLAIN AND CLEA R LANGUAGE SAYS THAT THE PENDING ASSESSMENT PROCEEDINGS SHALL ABATE AND THE ASSESSING OFFICER SHALL ASSESSEE OR RE-ASSESS THE INCOME FOR THE SIX ASSESS MENT YEAR SEPARATELY. 10. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISI ONS OF SECTION 158BB(1) OF THE ACT. THE LEGISLATURE PRESCRIBED SEPARATE METHO D IN RESPECT OF SEARCH WHICH WAS INITIATED BEFORE 31-05-2003. IN RESPECT OF SEA RCH INITIATED BEFORE 31-05- 2003, THE PROVISIONS OF SECTION 158BB(1) WOULD APPL Y. AS PER SECTION 158BB(1), THE ASSESSING OFFICER HAS TO NECESSARILY CONFINE HI MSELF ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION OR THE INFORM ATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. THIS IS BECAUSE, THE LANGUAGE EMPLOYED BY THE LEGISLATURE SAYS SO. IN O RDER TO DEPART FROM THE EARLIER METHOD, THE LEGISLATURE INTRODUCED NEW METHOD UNDER SECTION 153A WHICH DOES ITA NO.606/RJT/2010 ITSS NO.05/RJT/2010 6 NOT SAY THAT THE ACTION WOULD BE CONFINED ONLY TO T HE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THIS LEGAL DISTINCTION WAS EXAMINED BY THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VISH NU AGARWAL. THE HYDERABAD BENCH OF THIS TRIBUNAL FOUND THAT FOR THE PURPOSE O F COMPUTING UNDISCLOSED INCOME U/S 153A IT IS NOT NECESSARY TO CONFINE ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE ASSESSING OFFI CER IS WELL WITHIN HIS LIMIT TO CONSIDER ALL THE MATERIAL AVAILABLE ON RECORD INCLU DING THE SEARCH MATERIAL FOR THE PURPOSE OF COMPUTING UNDISCLOSED INCOME. THIS LEGI SLATIVE CHANGE WAS NOT CONSIDERED BY THE KOLKATTA BENCH OF THIS TRIBUNAL I N THE CASE OF LMJ INTERNATIONAL LTD (SUPRA). THEREFORE, IT CANNOT BE OF ANY ASSIST ANCE TO THE ASSESSEE. 11. NOW COMING TO THE GENUINENESS OF THE GIFT, NO D OUBT, IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE DONOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE DONOR. THOUGH THE ASSESSEE HAS FILED THE CONFIRMATION, THE ASSESSING OFFICER COULD NOT VERIFY THE SAME SIN CE, ACCORDING TO THE ASSESSING OFFICER, THE DONORS WERE NOT PRODUCED BEFORE HIM. IF THE ASSESSING OFFICER HAS ANY DOUBT ABOUT THE CONFIRMATION IT IS FOR THE ASSE SSING OFFICER TO SUMMON THE DONORS FOR EXAMINATION. THEREFORE, THE ASSESSING O FFICER CANNOT FIND FAULT WITH THE ASSESSEE FOR NON PRODUCTION OF DONORS FOR EXAMI NATION. THE CIT(A) FOUND THAT THE CONFIRMATION SAID TO BE FILED BY THE ASSES SEE IS NOT CLEAR. THE CONFIRMATION DOES NOT SHOW WHETHER THE AMOUNT WAS P AID IN CASH OR BY DD / CHEQUE. IT DOES NOT DISCLOSE FROM WHICH BANK ACCOU NT THE GIFT WAS GIVEN. EXCEPT THE FACT THAT THE DONOR WAS SISTER OF THE ASSESSEE, NO OTHER DETAILS WERE FORTHCOMING FROM THE SO-CALLED CONFIRMATION LETTER SAID TO BE FILED BY THE ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE, I N OUR OPINION, THE MATTER NEEDS TO BE CONSIDERED AFRESH BY THE ASSESSING OFFICER. TH E ASSESSING OFFICER SHALL EXAMINE THE CONFIRMATION LETTER AND IF NECESSARY IT IS OPEN TO THE ASSESSING OFFICER TO SUMMON THE DONOR FOR EXAMINATION. BY SA YING SO, WE ARE NOT SHIFTING THE BURDEN ON THE SHOULDER OF THE ASSESSING OFFICER . THE INITIAL BURDEN OF PROVING THE IDENTITY, GENUINENESS OF THE TRANSACTION AND TH E CREDITWORTHINESS OF THE DONOR ALWAYS LIES ON THE SHOULDER OF THE ASSESSEE. IT IS FOR THE ASSESSEE TO FILE ALL THE RELEVANT MATERIAL WITH THE ASSESSING OFFICER. IF T HE ASSESSING FEELS THAT THE DONOR ITA NO.606/RJT/2010 ITSS NO.05/RJT/2010 7 HAS TO BE EXAMINED, HE CAN DO SO BY SUMMONING THE D ONOR. ACCORDINGLY WE SET ASIDE THE ORDER OF LOWER AUTHORITY AND REMAND THE I SSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DEC IDE THE ISSUE AFRESH IN THE LIGHT OF JUDGMENT OF THE HONBLE APEX COURT IN THE CASE O F CIT VS P MOHANA KALA (2007) 291 ITR 278 (SC) AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS TRE ATED AS ALLOWED AND THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED , FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 21-07-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 21 ST JULY, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV, AHMEDABAD 4. THE CIT, CENTRAL-II, AHMEDABAD 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT