The ADIT(Exemption)., Ahmedabad V. M.S. Khurana Public Service Trust, Ahmedabad

ITSSA 516/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0600 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-02-2015
• Assessment Year: misc
• Appeal Filed On: 29-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Opportunity of being heard; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , CH CHCH CH BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. IT(SS)A. NO. 516/AHD/2011 (BLOCK ASSESSMENT YEAR:01/04/1996 TO 12/08/2002) ASSTT. DIRECTOR OF INCOME-TAX (EXEMPTION), AHMEDABAD APPELLANT VS. M.S.KHURANA PUBLIC SERVICE TRUST, 60, SANSKAR BHARTI SOC., NARANPURA CROSS ROAD, NARANPURA, AHMEDABAD -380013 RESPONDENT PAN: AAATM8427B / BY REVENUE :SHRI O. P. VAISHNAV, CIT D.R. / BY ASSESSEE : NONE /DATE OF HEARING :16.02.2015 !' /DATE OF PRONOUNCEMENT : 19.02.2015 I.T(SS)A. NO. 516/A/11(ADIT(EXEMPTION) VS. M.S. KHURANA PUBLIC SERVICE TRUST) FOR BLOCK PERIOD 01/04/96 TO 12/08/2002 PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXI, AHMEDABAD, DATED 20.06.2011 FOR BLOCK PERIOD 01.04. 96 TO 12.8.2002 ON THE FOLLOWING GROUND: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN AL LOWING THE APPEAL OF THE ASSESSEE. (I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE ADDITION OF UNACCOUNTED AND UNDISCLOSED FUND OF RS.17,04,000/-. 2. IN FIRST ROUND ITAT SET ASIDE THE ORDER IN APPEA L NO. IT(SS)A NO. 33/AHD/2008, B BENCH VIDE ORDER DATED 07/11/2008 WHEREBY MATTER WAS RESTORED TO CIT(A)S FILE FOR FRESH DECISION BY OBSERVING AS UNDER: 'WE HAVE HEARD BOTH THE PARTIES. THE ORDER PASSED B Y THE SETTLEMENT COMMISSION IN THE CASE OF M.S.KHURANA EN GG LTD AND M.S. KHURANA IS DATED 27-03-2008., QUITE OBVIOU SLY THIS ORDER WAS NOT AVAILABLE BEFORE CIT (A). WE, TH EREFORE, CONSIDER IT APPROPRIATE TO SET ASIDE HIS ORDER AND RESTORE THE MATTER TO HIS FILE FOR A FRESH DECISION. HE WILL CO NSIDER THE ORDER PASSED BY THE SETTLEMENT COMMISSION WHILE DIS POSING OFF THE MATTER . REASONABLE OPPORTUNITY OF BEING HE ARD SHALL BE GIVEN TO BOTH THE PARTIES.' IN RESPONSE TO APPEAL HEARING NOTICE SHRI NITIN K S HAH DULY AUTHORISED ATTENDED AND HE IS HEARD. IN THIS CASE, THE ORIGINAL ASSESSMENT ORDER WAS PASSED BY DDIT (EXEMP TION), AHMEDABAD MAKING UNDISCLOSED INCOME ADDITION IN THE HANDS OF THE ASSESSEE TRUST U/S 158 BC READ WITH SE C 158 I.T(SS)A. NO. 516/A/11(ADIT(EXEMPTION) VS. M.S. KHURANA PUBLIC SERVICE TRUST) FOR BLOCK PERIOD 01/04/96 TO 12/08/2002 PAGE 3 BD FOR RS. 17.04 LACS. THIS INCOME ADDITION WAS DIS PUTED IN FIRST APPEAL BEFORE CIT (A) IN APPEAL NO CIT (A) -XXI/ ABD/191/07-08. THE INCOME ADDITION WAS CONFIRMED VI DE ORDER DATED 21.12.2007. THE ASSESSEE WENT IN TO APP EAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH DISPUTING THE INCOME ADDITION. THE LEARNED ME MBERS OF ITAT AHMEDABAD BRANCH SET ASIDE THE ORDER AND RE STORED THE FILE FOR FRESH ASSESSMENT WITH A DIRECTION TO C ONSIDER THE ORDER PASSED BY SETTLEMENT COMMISSION WHILE DISPOSI NG OFF THE MATTER. THE LEARNED A.R. APPEARED AND ARGUED THAT THE MATTE R IS FINALLY COVERED BY THE DECISION RENDERED AT THE SET TLEMENT COMMISSION UNDER AN ORDER PASSED BY THE SETTLEMENT COMMISSION IN APPLICATION NUMBER 10/CC-L /021/04-05 /IT IN THE CASE OF M/S M.S.KHURANA AND 10/CC-1/022/04- 05/IT IN THE CASE OF M.S.KHURANA ENGG LTD. THE MATT ER RELATING TO THE ISSUE IS CONSIDERED IN THE SAID PET ITION UNDER PG.27 AND 28 OF THE ORDER. THE DECISION RENDERED UN DER THE SETTLEMENT COMMISSION'S ORDER UNDER PARA 12.3 IS REPRODUCED HERE UNDER: 12.1.1 THE AR SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS. 17.04 LACS IN THE HANDS OF THE COMP ANY ON ACCOUNT OF UNACCOUNTED PAYMENTS AND THE SAME HAS BE EN CONFIRMED BY CIT (A). THE SAID TRANSACTION DOES NOT RELATE TO THE COMPANY BUT TO THE INDIVIDUAL MEMBERS OF THE AP PLICANT THOUGH THE ADDITION HAS BEEN CONSIDERED BY THE ASSE SSING OFFICER IN THE HANDS OF THE APPELLANT COMPANY. 12.1.2. THE AR SUBMITTED THAT DURING THE COURSE OF SEARCH, A SEIZED PAPER WAS FOUND IN THE NATURE OF A RECORD NOTE. MEMBERS OF FAMILY OF SHRI SUDHIR KHURANA ALONG WITH HIS BROTHER SHRI RAMESH KHURANA ETC HAD FORMED A CHARIT ABLE TRUST. THE SEIZED PAPER RECORDS THAT OTHER BROTHERS HAVE EXPRESSED THEIR DESIRE TO SEPARATE FROM THE SAID TR UST AND SHRI SUDHIR KHURANA HAD AGREED TO REPAY THEM THEIR CONTRIBUTION TO THE TRUST. THE AO AND CIT (A) HAVE HELD THAT SUM OF RS.17.04 LACS REPRESENTED UNACCOUNTED INVEST MENT. 12-1-3. THE AR OF THE APPLICANT CONTENDED THAT THE SEIZED PAPER REFLECTS THE DESIRE OF THE DISTRIBUTION OF TH E TRUST FUND, I.T(SS)A. NO. 516/A/11(ADIT(EXEMPTION) VS. M.S. KHURANA PUBLIC SERVICE TRUST) FOR BLOCK PERIOD 01/04/96 TO 12/08/2002 PAGE 4 IF POSSIBLE, WHEN DIVISION BETWEEN THE FAMILY MEMBE RS / BROTHERS TAKE PLACE. BUT THE APPLICANTS WERE ADVISE D AGAINST SUCH DISTRIBUTION. BETTER COUNSEL PREVAILED AND THE PROPOSED DISTRIBUTION WAS NOT MADE. THE AR CONTENDE D THAT SEIZED PAPER CLEARLY SAYS THAT BROTHERS WANTED TO L EAVE THE TRUST BUT IN REALITY THAT DID NOT HAPPEN. IT WAS SU BMITTED THAT A SUM OF RS.17.04 LACS WAS INTENDED TO BE PAID TO PERSONS ON LEAVING THE TRUST AND SINCE NO ONE LEFT THE TRUST, OBVIOUSLY THE AMOUNT HAS NOT BEEN PAID. 12.1.4. THE AR ALTERNATIVELY POINTED OUT THAT THE A PPLICANT IS NO SEEKING CAPITALIZATION OF INCOME OFFERED AND THE OFFER IS SUFFICIENT TO EXPLAIN THE SAID SUM OF RS. 17.04 IF TREATED AS PAID. THUS NO ADDITION IS CALLED FOR ON THIS POINT. 12.2. THE CIT (DR) RELIED ON ORDER OF AO AND STATED THAT ADDITION HAS BEEN CORRECTLY MADE ON THE BASIS OF SE IZED PAPERS AND THE ADDITION BE SUSTAINED. DECISION: 12.3. WE HAVE HEARD CIT (DR) AND THE AR AND PERUSED THE RECORD. WE ARE INCLINED TO ACCEPT THE APPLICANT'S E XPLANATION THAT SHRI RAMESH KHURANA HAS NOT BEEN PAID THE AMOU NT OF RS. 17.04 LACS AS HE IS STILL A TRUSTEE OF THE TRUS T. ACCORDINGLY NO ADDITION ON THIS ACCOUNT IS MADE. FURTHER IN THE COURSE OF APPELLATE PROCEEDINGS, IT WAS CONTENDED THAT THE SEIZED PAPER BEING A LOOSE PAPER DATED 09.05.1999 WAS WRITTEN IN THE HAND WRITING OF SHRI SUDHIR M KHURANA, THIS LOOSE PAPER WAS EXPLAINED. IT WAS P OINTED OUT THAT REGULAR RETURNS OF INCOME WERE FILED BY TH E TRUST WHICH INDICATES THAT THE TRUST HAD A CORPUS FUND AN D THAT THERE WAS NO CHANGE IN THE STATUS OF THE CORPUS OF THE TRUST FUNDS. MOREOVER, THE AMOUNT IN QUESTION IS BROUGHT TO TAX IN THE HANDS OF M.S.KHURANA ENGG LTD AS A SOURCE FO R THE LOOSE PAPER TRANSACTION. THIS CONTENTION OF THE APP ELLANT HAS BEEN ADMITTED BY THE SETTLEMENT COMMISSION WHER EIN THE AMOUNT UNDER AGITATION HAS BEEN ULTIMATELY BROU GHT TO TAX IN THE COMPANY'S CASE. THE SETTLEMENT COMMISSIO N AND THE ITAT BEING THE FINAL FACT FINDING AUTHORITY AND THAT THE ORDER OF THE SETTLEMENT COMMISSION BEING BINDING ON BOTH TO I.T(SS)A. NO. 516/A/11(ADIT(EXEMPTION) VS. M.S. KHURANA PUBLIC SERVICE TRUST) FOR BLOCK PERIOD 01/04/96 TO 12/08/2002 PAGE 5 THE APPELLANT AS WELL AS TO DEPARTMENT. THE VERDICT GIVEN BY THE HONOURABLE S.C. IS WITH DUE RESPECT REQUIRED TO BE FOLLOWED. THERE BEING NO OTHER MATERIAL EVIDENCE ON RECORD TO ESTABLISH THAT THE ALLEGED AMOUNT HAS BEEN MOVED FROM THE TRUST TO THE HANDS OF TRUSTEE AND THAT THERE BE ING NO NEXUS TO ESTABLISH THE ALLEGED FINDINGS GIVEN BY AO , I AM SATISFIED UPHOLDING THE FINDINGS GIVEN BY THE SETTL EMENT COMMISSION. THE INCOME ADDITION MADE IN THE HANDS OF THE TRUST IS INCORRECTLY BROUGHT TO TAX IN THE HANDS OF TRUST. 2.1 BEFORE US, ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT, HOWEVER, LEARNED DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT THERE IS NO FINDING OF CIT(A) ON THE ISSUE. HE HAS SIMPLY CUT-PASTE THE ORDER OF SETTLEMENT IN THE CASE. ACCORDINGLY, ORDER OF CIT(A) BE SET ASIDE. 2.2 AGREEING TO THE CONTENTION OF LEARNED DEPARTMEN TAL REPRESENTATIVE, WE FIND THAT THERE IS A LACK OF APP LICATION OF MIND BY CIT(A) ON THE ISSUE. IT SEEMS THAT HE HAD SIMPLY CUT- PASTE THE SETTLEMENT ORDER. EVEN IN OPERATIVE PARA I.E. 12.3 CIT(A) HAS GIVEN FINDING BY ADDRESSING ITSELF AS W E AS MENTIONED ABOVE. THE NEXUS OF ASSESSEE WITH FACTS O F SETTLEMENT COMMISSION HAS NOT BEEN MADE OUT SO AS T O JUSTIFY THE APPLICABILITY OF THE SAME. THIS APPROACH OF CI T(A) CANNOT BE APPROVED. SO, IN THE INTEREST JUSTICE, WE SET A SIDE THE ORDER OF CIT(A) WITH DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. SINCE WE ARE RESTORING THE MATTER AGAIN ON PRELIMIN ARY ISSUE BECAUSE OF ABOVE SAID REASON, WE ARE REFRAINING TO COMMENT ON THE MERIT OF ISSUE AT HAND. I.T(SS)A. NO. 516/A/11(ADIT(EXEMPTION) VS. M.S. KHURANA PUBLIC SERVICE TRUST) FOR BLOCK PERIOD 01/04/96 TO 12/08/2002 PAGE 6 3. IN RESULT, APPEAL FILED BY REVENUE IS ALLOWED FO R STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH DAY OF FEBRUARY, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 19/02/2015 TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;