APURVA JAGDISH NANVATI, MUMBAI V. JCIT-RG 10(3) , MUMBAI

MA 244/MUM/2022

AI Insights

The case involves Apurva Jagdish Nanavati, who filed a Miscellaneous Application seeking rectification of mistakes in a previous Tribunal order concerning a penalty under section 269SS of the Income Tax Act for alleged cash transactions. The assessee argued that the Tribunal had overlooked the principles of natural justice by not allowing cross-examination of a key witness and relied on a retracted statement. The Department defended the penalty, citing direct evidence linking the assessee to the transactions. The Tribunal acknowledged the mistake in describing the action as an addition rather than a penalty and corrected this in their order, while still upholding the penalty based on the evidence presented.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123166 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 19-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 13-09-2022
• Other Referred Cases: Andaman Timber Industries v. CCE, Kishanchand Chellaram v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Corroborative evidences
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 244/MUM/2022 [ARISING OUT OF ITA NO. 2421/MUM/2021 (A.Y: 2011-12)] Apurva Jagdish Nanavati Arunodaya Bungalow, Sarojini Road Vile Parle (W), Mumbai – 400056 PAN: AAAPN4583F v. JCIT – Range – 10(3) Aayakar Bhavan, M.K. Road Mumbai - 400020 (Appellant) (Respondent) Assessee Represented by : Shri H.S. Raheja Department Represented by : Shri Manoj Kumar Singh Date of Hearing : 20.01.2023 Date of Pronouncement : 03.02.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application assessee is seeking for rectification of certain mistakes crept in the order passed by the Tribunal in ITA.No. 2421/Mum/2021 dated 04.08.2022 for the A.Y. 2011-12 and requested for suitable amendment in the Tribunal order. 2 MA.No. 244/MUM/2022 Apurva Jagdish Nanavati 2. In the Miscellaneous Application, assessee submitted as under: - “18. It has been repeatedly stated that the appellant was not granted an opportunity to cross examine the person whose paper was relied upon nor was a copy of the statement of the person given to the appellant more so keeping in mind that the statement given by the person had been subsequently be withdrawn. 19. Hence The Honorable Tribunal has given a complete go by to the decision of the Hon'ble Supreme Court in Andaman Timber Industries v. CCE (2015) 127 DTR 241/281 CTR 241 (SC), where by the Honorable Supreme Court has had laid down the law that Failure to give the assessee the right to cross-examine witnesses whose statements are relied upon results in breach of principles of natural justice. It is a serious flaw which renders the order a nullity. 20. In Kishanchand Chellaram v. CIT (1980) 125 ITR 713 (SC) the Hob. Supreme Court has held that the department is bound to provide an opportunity to the assessee to cross examine the piece of evidence on which it places reliance to draw an adverse inference to make any addition or disallowance. 21. The Hon. Tribunal in para 9 as reproduced above also holds that "This is basically against the natural justice, any proceeding concluded without giving any proper opportunity of cross examination to the other party and we also noticed that assessee has not made any representation before the Ld.CIT(A) and also Ld.CIT(A) has not considered the written submissions by the assessee. However, we observe that all along assessee was contesting that there are no corroborative evidences involving assessee in these transactions. However, there is a clinching evidence that assessee's name and mobile number is found in the ledger involving cash transactions." 22. In the above para it is mentioned that the appellant has not made any representation before the Ld. CIT(A) and also Ld.CIT(A) has not considered the written submissions by the assessee. 23. The appellant made 2 (two) written representations before the CIT (A), wherein the appellant has asked for cross examination, and also the evidence relied upon besides stating that the Assessing officer has relied upon third party statement which has been ignored by the CIT(A) since in para 5 the CIT(A) has stated that the appellant has not availed of the 2 (two) opportunities. 24. The Hon. Tribunal in para 9 has stated that "However, we observe that all along assessee was contesting that there are no corroborative evidences involving assessee in these transactions" 3 MA.No. 244/MUM/2022 Apurva Jagdish Nanavati 25. The appellant has all along contended that the ledger account was not provided and that the deponent in whose statement the Assessing Officer has so heavily relied on was not given nor was he was not allowed to be cross examined. 26. Hence it is not a mere demand of corroborative evidence but also the copy of statement, legder and cross examination which the appellant has asked for. 27. The Hon. Tribunal has held "however, in this case even though the third parties has retracted the statements, still the evidences contained in the ledger copy found during search clearly indicates that assessee has involved in this case transactions directly or indirectly." 28. This would amount to the Hon. Tribunal confirming an action of the Assessing Officer which violates the principles of natural justice. The action of the Assessing Officer in relying upon a statement which has been retracted, not examining the person who has made the statement, relying upon material without giving a copy of the same to the appellant, not granting the appellant any occasion to cross verify the evidence all amount to flouting the principles of natural justice and the settled law. 29. Finally at the end of para 9 the Hon. Tribunal has held "Therefore, we are inclined to sustain the addition made by the Assessing Officer. Accordingly, ground raised by the assessee is dismissed." 30. It is submitted that this is not a case of an addition made by the Assessing Officer u/s. 68 of the Income Tax act but a case where the Assessing Officer has levied a penalty for borrowing of money in cash in violation of section 269SS of the Income Tax Act. 31. The law relating to penalty requires much more stricter proof and evidence than a mere reliance on a statement which has bene retracted and evidence which has not been put to test. 32. In view of the above it is submitted that as the Honorable Tribunal's order suffers from mistakes which are apparent from record the Honorable Members may kindly recall the order and fix it for fresh hearing for which the appellant shall be very grateful. The order of the Hon. Tribunal is dated 4" August 2022.” 3. At the time of hearing, Ld. AR submitted that Ld.CIT(A) has observed that no details were submitted before him. However, he 4 MA.No. 244/MUM/2022 Apurva Jagdish Nanavati submitted that assessee has filed all the information through ITBA Portal and further, he submitted that no direct evidences were given to the assessee with relating to the alleged transactions. Further, he brought to our notice that the ITAT has observed at Page No. 11 of the order that they are sustaining the addition made by the Assessing Officer, however, it is not the addition but a penalty levied by the Assessing Officer. 4. On the other hand, Ld. DR objected to the submissions of the Ld.AR and he submitted that there is a direct evidences found in the documents traced during the search and in particular mobile number of the assessee are clearly written in those documents. Therefore, there is a clear evidences available on record for sustaining the penalty in the hands of the assessee. 5. Considered the rival submissions and material placed on record, there is no mistake apparent on record brought to the notice of the bench by the assessee and the bench has clearly discussed the issue in detail in Para No. 9 of the order. Therefore, there is no requirement to entertain the submissions of the assessee. However, a simple mistake was brought to the notice of the Bench by the Ld. AR that the issue 5 MA.No. 244/MUM/2022 Apurva Jagdish Nanavati involved in this appeal is penalty not the addition. Accordingly, we modify the above mistake in the following para by reproducing the Para No. 9 of the order: - “9. Considered the rival submissions and material placed on record, we observe that during search certain informations were recovered in the premises of M/s. Evergreen Enterprises which contains the transactions involving cash transaction of ₹.10,00,000/- with the information containing details of assessee and contact number of assessee (Mobile No. 9820061079). This clearly indicates that assessee has directly or indirectly involved in this transaction and the assessee has vehemently argued before us that Assessing Officer has merely relied on the statement of third party and also has not given any opportunity for cross examination. This is basically against the natural justice, any proceeding concluded without giving any proper opportunity of cross examination to the other party and we also noticed that assessee has not made any representation before the Ld.CIT(A) and also Ld.CIT(A) has not considered the written submissions by the assessee. However, we observe that all along assessee was contesting that there are no corroborative evidences involving assessee in these transactions. However, there is a clinching evidence that assessee’s name and mobile number is found in the ledger involving cash transactions. Assessee has heavily relied on the written submissions submitted before the Ld.CIT(A). In the written submissions assessee has merely argued on the fact that no cross examination and no opportunity was granted to the assessee and relied on several decisions. Since there is a direct evidences indicating the name and mobile number in the ledger found in the premises of M/s.Evergreen 6 MA.No. 244/MUM/2022 Apurva Jagdish Nanavati Enterprises that assessee has involved in these transactions, we do not find any reason to remit this issue back to the file of the lower authorities except to find that there is direct corroborative evidence found in the transactions involving the name of the assessee and contact details. At the time of hearing Ld. AR has not denied the fact that the Mobile Number contained in the ledger is not belongs to the assessee. Therefore, there is a clear evidences of involvement of the assessee in this cash transaction of ₹.10,00,000/-. Further, the case laws relied by the assessee before Ld.CIT(A) are factually distinguishable, in those decisions, there was no corroborative evidence found like the case in the present case and the Assessing Officer has merely relied on the statements of third parties, however, in this case even though the third parties has retracted the statements, still the evidences contained in the ledger copy found during search clearly indicates that assessee has involved in this cash transactions directly or indirectly. Therefore, we are inclined to sustain the penalty made by the Assessing Officer. Accordingly, ground raised by the assessee is dismissed.” 6. In the result, Miscellaneous Applications filed by the assessee is partly allowed. Order pronounced in the open court on 03 rd February, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 03/02/2023 Giridhar, Sr.PS 7 MA.No. 244/MUM/2022 Apurva Jagdish Nanavati Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum