Ratanlal C. Bafna, Jalgaon V. Deputy Commissioner of Income-tax, Jalgaon

MA 409/PUN/2022

AI Insights

The case involves Shri Ratanlal C. Bafna, the proprietor of R.C. Bafna Silver Palace, who filed three miscellaneous applications under section 254(2) of the Income Tax Act, 1961, seeking to recall a Tribunal order dated 19.10.2022. The applications were based on alleged typographical errors in the Tribunal's previous order concerning the assessment years 2005-06, 2006-07, and 2007-08. The Tribunal had partly allowed the main appeals, and the assessee contended that the entries found in a seized diary were not related to him but to the Chhoriya Group, which had claimed these entries as their income. The Tribunal's earlier order directed the Assessing Officer to verify the factual position regarding the double addition of income. The Tribunal dismissed the miscellaneous applications, upholding the need for verification by the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138028 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-04-2023
• Appeal Filed By: Assessee
• Order Result: DismissedDismissed
• Bench Allotted: B
• Next Hearing Date: 20-04-2023
• Assessment Year: 2005-2006
• Appeal Filed On: 11-12-2022
• Other Referred Cases: Andaman Timber Industries V/s CCE, State of Kerala Vs. K.T. Shaduli Yusuff, R.B Shreeram Durga Prasad & Fatechand Nursing Das Vs. Settlement Commission, ACIT vs. Saurashtra Kutch Stock Exchange Ltd., CIT vs. Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Document seized; Principle of natural justice; Documents seized; Reassessment proceedings; Set aside
• Section: 132; 254(2); 13; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER M.A.Nos. 409, 410 & 411/PUN./2022 Arising out of ITA Nos.01, 02 & 03/PUN./2016 Assessment Years 2005-06, 2006-07 & 2007-08 Shri Ratanlal C. Bafna, Proprietor of R.C.Bafna Silver Palace, 96 Subhash Chowk, Jalgaon – 425 001 PAN : AAMPB 3939K .......अपीलाथᱮ / Appellant बनाम / V/s. DCIT, Range 1, Jalgaon .......ᮧ᭜यथᱮ / Respondent Assessee by : Shri Sunil Ganoo Revenue by : Shri M.G.Jasnani सुनवाई कᳱ तारीख / Date of Hearing : 21.04.2023 घोषणा कᳱ तारीख / Date of Pronouncement : 25.04.2023 आदेश / ORDER PER SATBEER SINGH GODARA, JM : These assessee’s three miscellaneous applications M.A.Nos. 409, 410 & 411/PUN./2022 are filed u/s. 254(2) of the Income Tax Act, 1961 [in short “the Act”] seek to recall this tribunal’s common order dated 19.10.2022 partly allowing his main appeals ITA.Nos.01 to 03/PUN./2016. 2 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, Heard both the parties. Case files perused. 2. The assessee’s instant three miscellaneous applications raise the following identical pleadings : “The Hon. Bench was pleased to partly allow the appeal of appellant for statistical purposes by its above referred order dt. 19/10/2022. The appellant most respectfully submits that there is serious typographical error in the impugned order as herein mentioned below which needs to be corrected and hence this Miscellaneous application u/s 254[2] of the I. T. Act 1961. 1. In Para No. 11 Page No. 10 of the impugned order, the Hon. Bench has mentioned the arguments of the appellant assessee and the same may please be referred The appellant most respectfully submits that it was the contention of the appellant since beginning that whatever entries were found in the diary recovered /seized during the course of search u/s 132 of the I.T. Act 1961 from the premises of Mr. Chhoriya were not concerned to the assessee. In respect of all those entries, Mr.Chhoria has claimed and declared before the 3 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, Department that they are the income of the Chhoriya Group itself and Mr.Chhoriya had filed an affidavit that no loans were taken from Bafana family and this fact had not been disputed by the revenue. 2. However in Para No. 13 on Page No. 11 of the impugned order the Hon. Bench has observed that “We have perused the case records and heard the rival contentions on merits. We are of the considered view that if the income of the entries found in the diary during the course of search in the premises of Chhoriya Group, had been declared by Mr. Chhoriya as his own income, in such circumstances no addition should be made in the hands of the assessee. 3. The appellant most respectfully submits that considering the facts and circumstances of the case and the evidences and arguments advanced in the matter by both the parties the correct direction should have been if the entries found in the diary during the course of search in the premises of Chhoriya Group had been declared by Mr.Chhoriya as income of Chhoriya Group [i.e. the various members of Chhoriya family as their income] in 4 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, such circumstances no addition should be made in the hands of the assessee. 4. The appellant most respectfully submits that in view of the admitted facts as hereinabove mentioned, there is a mistake apparent from the record which needs to be corrected in the interest of justice and equity.” 3. Mr. Ganoo invited our attention to the tribunal’s finding in issue as under : “2. It emerges at the outset that the assessee’s instant three appeals raise identical issue(s) of validity of the impugned section 148/147 proceedings followed by his pleadings on merits that the additions herein made i.e. loans/ advances, interest received thereupon with gold and silver involving sum of Rs.1,82,45,081/-, Rs.76,00,880/- and Rs.2,13,432/- in first, Rs.37,23,380/-, Rs.24,79,333/- and Rs.2,10,096/- in second and Rs.1,10,59,853/-, Rs.86,91,182/- and Rs.3,91,882/- in last assessment year; respectively, are not sustainable in law. Learned counsel invited our attention to assessee’s identical subsequent grounds regarding jurisdiction, validity of section 148/147 proceedings viz-a-viz 5 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, special provision section 153C applicability of Section 132 of the Act regarding seized documents’ contents etc. to substantiate his case that this taxpayer not only deserves relief on above stated legal issue(s) but also on merits. 3. There is hardly any dispute between the parties that the assessee’s instant three appeals have emanated from ground the search in issue 22.08.2008 carried out in M/s. Chhoriya Group of cases at Jalgaon. It is further an admitted fact that the department had come across the alleged incriminating /seized material wherein the assessee was found to have given the forgoing loan and advances and loans as well as varying quantities of gold and silver. The Assessing Officer in assessee’s case thereafter initiated section 148/147 proceedings and completed his three re-assessments on 30.03.2013 making the above additions which stand confirmed in CIT(A)’s order. 4. Mr. Ganoo strongly argued during the course of hearing that both the lower authorities had wrongly initiated section 148/147 proceedings and the impugned additions deserve to be deleted. He took pains to refer to the case records that the 6 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, lower authorities had not made said seized material available to the assessee much less the concerned searched assessee’s cross-examination thereby violating the principle of natural justice in light of Andaman Timber Industries V/s CCE (2015) 127 DTR 241(SC). He further referred to the searched party Shri Devichand Chhoriya’s search statement as well as his cross-examinations (latter one dated 11.12.2009) that he had already paid all the taxes regarding the forgoing three entries alleged to have been found in the seized documents in the impugned assessment herein and therefore, the necessary presumption herein is only of double addition of the very income which goes against section 292 C of the Act. Mr. Ganoo lastly argued that this is very peculiar case wherein the searched assessee has all along made it clear that the assessee is in no way concerned with the seized documents entries which has gone un-rebutted from the department’s side. 5. Mr. Jasnani on the other hand has placed strong reliance on this tribunals common order in assessee’s appeal ITA No. 951/PN/2010 and ITA.718/PN/11 decided on 31.03.2015 wherein learned co-ordinate bench has confirmed the very 7 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, nature of addition in AY 2002-03 and 2008-09; case wise, respectively. The Revenue’s case in light thereof once learned co-ordinate bench had applied its mind on the very evidence thereby rejecting the assessee’s factual as well as legal arguments, we ought to restrain ourselves from adopting different approach in the impugned AY 2005-06 to 2007-08 relating to same search. 6. Mr. Ganoo next submitted hon’ble jurisdictional high court order dated 26.11.2018 has already admitted assessee’s IT appeals No.471 & 475 of 2016 called very substantial question(s) of law regarding the forgoing twin Assessment year. He further pointed out that tribunals yet another coordinated bench’s order in assessee’s appeals ITA No. 109-110/PN/14 dated 15.07.2019 for AYs 2003-04 and 2004-05; again relating to the very search has partly allowed the corresponding appeals for statistical purposes as under :- “2. These cases were heard together. Since issues common, facts are similar, these cases are being disposed of vide this consolidated order. For the sake of convenience, we would take ITA No.109/PUN/2014 as the lead case. ITA No.109/PUN/2014 8 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, A.Y. 2003-04 3. The Ld. AR of the assessee has raised legal grounds as well as grounds on merits. In the legal ground, the assessee has challenged the re-assessment proceedings u/s.147/148 of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟). In view of the provision of Section 153C(1)(b) of the Act, it is contended by the assessee that the Assessing Officer instead of resorting to the re-assessment proceedings, should have conducted the proceedings as per Section 153C(1)(b) of the Act. Therefore, in the present circumstances, the reassessment proceedings undertaken u/s.147/148 of the Act is bad in law and should be quashed. 4. Per contra, the Ld. DR submitted that provision of Section 153C(1)(b) of the Act got amended from 01.06.2015. In that amendment, the word “belong” was replaced by the word “pertain” Therefore, prior to amendment, whether proceedings would be conducted u/s.153C of the Act would be determined by the fact that whatever incriminating documents were found in the place of person who is searched, it should belong to the assessee. By this word “belong”, there is sense of ownership attached to it. However, after the amendment when the word “pertain” has been included replacing the word „belong‟, it means ownership is not attached with it nor now it is relevant. However, these incriminating documents should pertain or relate to the assessee. Assessment order in the case of the assessee was passed on 16.12.2011. During that time, therefore, the word “belong” was there and as facts and 9 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, situation in this case, the diary recovered during the course of search from the premises of the Chhoriya Group did not belong to the assesse and therefore, provisions of Section 153C(1)(b) of the Act is not applicable to the case of the assessee since amendment itself come into place on 01.06.2015. In this regard, the Ld. DR placed reliance on the order of the Coordinate Bench of the Tribunal, Pune in assessee‟s own case where this issue has been specifically discussed and decided in ITA No.204/PN/2012 for assessment year 2008- 09. On this issue, it was held by the Tribunal as follows: “56. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that in the instant case the search took place in the residential and business premises of the Chhoriya group on 22-08-2008 during which certain books of account marked as Annexure B item Nos. 1 to 4 were seized. These are rough cash books of the Chhoriya group which contain various entries according to which the various lenders had advanced various amounts during the impugned assessment year. The entries in the rough cash books on one hand reflected the receipt of money and simultaneously entries against which the said money was utilized was also mentioned. Meticulous details have been written in the seized diary. Entries relating to the assessee are also found in the seized 10 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, diaries, which reflect that the assessee Shri Ratanlal C. Bafna had advanced various amounts during the impugned year. No books of account or other documents belonging to the assessee Shri Ratanlal C. Bafna was found from the premises of Chhoriya. 56.1 The provisions of section 153C as it stood at the relevant time read as under: “(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ” 56.2 From the above, it is clear that for invoking provisions of sections 153C of the I.T. Act in case of a non-searched persons money, bullion, jewellery, books of 11 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, account or documents are required to be found from the premises of the searched person. 56.3 However, in the instant case as mentioned earlier, no money, bullion, jewellery or other valuable article or thing or books of account or documents belonging to the assessee has been found or seized from the residence/business premises of the Chhoriyas. Only diaries belonging to Chhoriyas containing entries in the name of different persons including that of the assessee were found. It is only the entries relating to assessee recorded in the books of account of Chhoriya were the basis on which the assessment has been completed in the case of Shri Ratanlal C. Bafna. In our opinion the entries in the books of Chhoriya cannot be equated with any money, bullion, jewellery or other valuable article or thing or books of account or documents belonging to the assessee. Therefore, the provisions of section 153C in our opinion are not applicable to the facts of the present case.” We therefore observe that in assessee‟s own case itself in assessment year 2008-09, it is specifically analyzed regarding the applicability of Section 153C of the Act. Respectfully following the aforesaid decision wherein the facts and circumstances in this relevant assessment year 2003-04 are similar, we dismiss the contention of the assessee regarding applicability of Section 153C of the Act and uphold the validity of the reassessment proceedings by the Revenue 12 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, Authorities u/s.147/148 of the Act. Thus, ground No. 2 and 3 raised in appeal by the assessee are dismissed. 5. The assessee in addition has also put forth before us another legal ground wherein it is asserted by the assessee that there has been gross violation of natural justice since the assessee was denied opportunity to cross examine Mr. Devichand Chhoriya, Author of the seized documents and also copies of alleged papers on the basis of which addition was made, was not supplied. The Ld. AR on this issue relied on the following decisions: i) State of Kerala Vs. K.T. Shaduli Yusuff reported in 1977 (SC-2)- GJX-0054-SC ii) R.B Shreeram Durga Prasad & Fatechand Nursing Das Vs. Settlement Commission, 176 ITR 169 (SC) 6. Per contra, the Ld. DR made reference to the order of Assessing Officer wherein it is mentioned on record that “the assessee was informed about reasons as well as details of the permission given by the JCIT, Range-1, Jalgaon as per letter dated 28.09.2010. The assesee vide his letter dated 11.10.2010 requested for supply of copy of letter from JCIT, Range-1, Jalgaon under which permission was granted to issue notice u/s.148. The Assessing Officer vide his letter dated 26.10.2010 informed to assessee about the satisfaction made by the JCIT, Range-1, Jalgaon, on the proposal submitted by this office. The assesee vide his letter dated 13 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, 01.11.2010 requested to inspect the seized documents found from the premises of Shri Kanhaiyalal D. Chhoriya. The Assessing Officer vide his letter dated 18.11.2010 requested to assessee to attend on 29.11.2010 for inspection over the seized documents during the course of search action u/s.132 of the Act in the premises of Chhoriya group. However, nobody attended and trade inspection.” 7. The Ld. DR further referred to the order of the Ld. CIT(Appeals) on this issue. The Ld. CIT(Appeals) observed that “It is not a case where the AO has not shown the said seized papers on the basis of which the additions were made. It is not a case that the AO has recorded statement of Mr. Chhoriya and not given an opportunity of being cross examination. The AO has provided the necessary opportunity to the appellant to examine and inspect the seized materials. The appellant was aware of the exact contents of the seized materials and had participated in the assessment proceedings involving the seized materials. The appellant had the opportunity to inspect the seized material as many times as he wanted and make notings. The Department or the AO cannot be faulted if the appellant is not interested to inspect the materials again.” On the basis of this observation the Ld.DR prayed that there has been no violation of natural justice. Rather, adequate opportunity were provided to the assessee of which the assessee did not avail of. 8. We have perused the case records and heard the rival contentions. We observe that nothing on record demonstrates 14 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, that prayer for cross examination of Mr. Devichand Chhoriya was made by the assessee before the Assessing Officer or before the Ld. CIT(Appeals). The Ld. AR of the assessee fairly conceded that they had not made any prayer before the Revenue Authorities for cross examination since it is a legal ground, the assessee is taking this ground for the first time before the Tribunal. We have also observed from the facts on records that sufficient opportunity to cross examine the seized materials were provided by the Assessing Officer but the assessee was not present for such inspection of these documents neither even at a later date he submitted any further request for such examination of the documents. The assessee has never prayed for cross examination. The decisions of the Hon‟ble Supreme Court relied on by the Ld. AR are substantially different on facts from the case of the assessee. The spirit of these judgments referred to the bonafide assessee who has been denied essential right of cross examination but the assessee has taken active part in the respective Department proceeding. However, facts are substantially different in the case of the assessee. In the present case of the asessee, the records itself demonstrates that all opportunities were provided to the assessee for examination of the documents by the Ld. Assessing Officer but the assessee slept through the proceedings. He did not avail the opportunity of examination of the seized documents. He has neither prayed for any cross examination before the Revenue Authorities. The assessee all throughout has neglected the proceedings before the Revenue Authorities but now suddenly wakes up before the Income Tax Appellate 15 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, Tribunal alleging that natural justice have been violated. This exercise is solely an afterthought and is not permissible within the ambit of our legal framework. The conduct of the assessee does not qualify him to be a bonafide assessee. In view of the matter, we dismiss the ground No.6 raised in appeal by the assessee. 9. The Ld. AR of the assessee submitted that he is not pressing grounds No. 1 and 4. In view of the submissions of the assessee, grounds No. 1 and 4 are dismissed as „not pressed‟. 10. Ground No.8 is general in nature and hence, requires no adjudication. 11. With regard to the grounds No. 5 and 7, the Ld. AR submitted that these are the grounds on merits. The Ld. AR further submitted that whatever entries were found in the diary recovered during the course of search u/s.132 of the Act from the premises of Chhoriya are not concerned to the assessee. In respect of income of all those entries, Mr. Chhoriya has claimed and declared before the Department that they are income of the Chhoriya Group itself and it has got nothing to do with the assessee. The Ld. AR further submitted that Mr. Chhoriya had also filed an affidavit stating no loans were taken from the assessee. Therefore, the Ld. AR prayed that no additions should be made in the hands of the assessee. 16 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, 12. Per contra, the Ld. DR placed strong reliance on the orders of the Subordinate Authorities. 13. We have perused the case records and heard the rival contentions on merits. We are of the considered view that if the income of the entries which were found in the diary during the course of search in the premises of Chhoriya group, had been declared by Mr. Chhoriya as his own income, in such circumstances, no addition should sustain in the hands of the assessee. However, if it is found that there is a contrary scenario in that case, addition has to be sustained in the hands of the assessee. This issue, therefore needs detailed factual verification. We therefore, set aside the order of the Ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for proper verification as hereinabove directed by us and re-adjudicate the matter in conformity with the principles of natural justice. Thus, grounds No. 5 and 7 raised in appeal by the assessee are allowed for statistical purposes. 14. In the result, appeal of the assessee in ITA No.109/PUN/2014 is partly allowed for statistical purposes. ITA No.110/PUN/2014 A.Y.2004-05 15. We observe that both sides are unanimous in stating that the facts and grounds of appeal in ITA No.110/PUN/2014 for assessment year 2004-05 are identical to ITA No. 17 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, 109/PUN/2014 for assessment year 2003-04. As facts and issues raised in ITA No.110/PUN/2014 are identical to ITA No.109/PUN/2014, our decision rendered in ITA No.109/PUN/2014 would apply mutatis-mutandis to ITA No.110/PUN/2014. Thus, appeal of the assessee in ITA No.110/PUN/2014 is partly allowed for statistical purposes.” 7. We have heard the forgoing vehement rival contentions and perused the case files. Suffice to say, we do not find merit in either parties submissions in entirety. This is for the reason so far as Revenue’s stand seeking to place reliance on the tribunal’s order dated 31.03.2015 (supra) is concerned, our subsequent order dated 15.07.2019 reproduced in preceding paras has already diluted the same thereby restoring the issue back to the Assessing Officer with specific terms that in case Mr.Chhoriya i.e. the searched assessee is found to have been assessed for the very sums as his taxable income, these impugned additions in this taxpayer’s hands would not survive. And also that if the factual position is found to be contrary, the impugned additions in the assessee’s hands would stand upheld. We therefore reject the Revenue’s arguments in very terms. Faced with this situation, there is hardly any other option available to us than 18 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, to direct the learned assessing authority to reverify the issue of double addition in very terms. Ordered accordingly. These assessee’s three appeals raising the above stated identical issues as partly allowed for statistical purposes in above terms.” 3.1. Learned counsel next submitted that our order in issue involves an apparent mistake on record since our detailed discussion therein in para-7 has already decided the issue against the department based on Mr. Chhoriya search statement. Learned counsel thereafter submitted that our conditional directions to the Assessing Officer regarding verification of the impugned addition deserve to be recalled as identically prayed for in the instant three miscellaneous applications. 5. We have given our thoughtful consideration to the assessee’s vehement arguments and find no merit therein. We wish to quote ACIT vs. Saurashtra Kutch Stock Exchange Ltd., [2008] 305 ITR 227 (SC) and CIT vs. Reliance Telecom Ltd., [2021] 133 taxmann.com 41 (SC) holding that sec.254(2) proceedings are not meant to enter into detailed roving enquiries as the purpose thereof is only to rectify the apparent mistakes on record. We 19 M.A.Nos.409, 410 & 411/PUN/2022 Shri Ratanlal C. Bafna, reiterate that our directions on merits have directed the Assessing Officer to re-verify the issue of double addition which have attained finality. We have further adopted judicial consistency as wel (supra). The assessee fails in his instant miscellaneous applications therefore. Ordered accordingly. 5. These assessee’s three miscellaneous applications are dismissed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the Open Court on this the 25 th day of April, 2023. Sd/- Sd/- (DR.DIPAK P.RIPOTE) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 25 th April, 2023. VBP Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-12, Pune. 4. The JCIT Circle Range, Nashik. 5. DR, ITAT, “B” Bench, Pune. 6. Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary ITAT : Pune.