PRAKASH KANAIYALAL JAIN,MUMBAI V. COMMISSIONER OF INCOME TAX (APPEALS)0-11, PUNE

ITA 2715/MUM/2024

AI Insights

The case involves Prakash Kanaiyalal Jain, the Appellant, challenging the order of the Commissioner of Income Tax (Appeals), Pune-11, which was against the Assessment Order passed under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2018-2019. The primary contention revolved around the procedural adherence to Section 127 of the Act concerning the transfer of the case and the principles of natural justice, alongside substantive issues regarding the assessment of undisclosed income and the handling of stock valuation. The Assessee raised multiple grounds including non-communication of reasons for case transfer, lack of personal hearing, and improper handling of evidence related to stock and undisclosed income. However, the appeal was ultimately dismissed as the Assessee chose to settle under a specific tax dispute resolution scheme.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24823 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Other Referred Cases: CIT vs. S Khader Khan Son (2012) 25 taxmann.com 413 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Principle of natural justice
• Section: 143(3); 131; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL \"C” BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 2715/MUM/2024 (Assessment Year: 2018-2019) Prakash Kanaiyalal Jain Shop No.2, Hira Moti Nagar, Wagle Estate, Thane (West), Thane – 400604. Maharashtra. [PAN: ADTPJ5886B] …………. Appellant Deputy Commissioner of Income Tax, Central Circle - 1, Thane. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : None Shri Mahesh Pamnani Date Conclusion of hearing Pronouncement of order : : 20.01.2025 21.01.2025 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Assessee has challenged the order dated 10/04/2024, passed by the Commissioner of Income Tax, Appeal, Pune-11, [hereinafter referred to as the ‘CIT(A)’], whereby the Ld. CIT(A) had partly allowed the appeal of the Assessee against the Assessment Order, dated 19/04/2021, passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year 2018-2019. 2. The Assessee has raised following grounds of appeal : “1. In the facts and circumstances of the case and in law, the ld. CTT(A) erred in holding that the provisions of Section 127 of the Act act applicable as per CBDT notification for ITA No. 2715/MUM/2024 Assessment Year: 2018-2019 2 transfer of case from ACIT Circle 3, Thane to ACTT, Central Circle-1, Thane, notwithstanding that reasons recorded and the order u/s. 127(2) for transfer of case were not communicated/provided to the appellant, resulting in violation of well settled Principle of Natural Justice and hence, the impugned order passed by ACIT, Central Circle- 1, Thane and the order under appeal is illegal and bad in law and liable to be quashed/ annulled. 2. In the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that since, reasons for recording and order u/s 127(2) for transfer of case were not communicated/provided to the appellant, the provisions of Section 127 are not applicable and hence, the impugned assessment order passed by ACIT, Central Circle-1. Thane and the order under appeal is illegal and bad in law and liable to be quashed/ annulled. 3. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not granting opportunity of personal hearing to the appellant in terms of E- Appeals Scheme, 2023 before passing the order under appeal, resulting in violation of wolf settled Principle of Natural Justice and hence the impugned order under appeal is illegal and bad in law and liable to be quashed/annulled. 4. In the facts and circumstances of the case and in law, the Ld. CIT(A) and the Ld. AO failed to appreciate the factual position about the stock on hand as on 29.09.2017 i.e., the date of survey which included 1680.250 grams of having value of Rs. 47,80,311- (1680.250 grams Rs. 2,815/- per gram) which if excluded from Rs.3.53,57,320/- being the value of closing stock an \"selling price\" would give the actual value of the purchase closing stock of Rs.3,05,77,009 which fairly matches with the closing stock of Rs. 3,08.35.341-as worked out on the basis of Tentative Trading Account as on 29.09.2017 (Refer to question 31 of the Statement recorded.) 5. In the facts and circumstances of the case and in law, the Ld. CIT erred in holding that M/s. Vishwas Gold has not responded to the earlier notices which in fact were not received by them as they, filed their reply to the Ld. AO when appellant pointed out about the said requirement upon receipt of show cause notice dated 09.04.2021. 5.1. In the facts and circumstances of the case and in law, the Ld CIT and the ld. AO, both erred and failed to appreciate and acknowledge that Ms. Vishwas Gold had furnished all the details and information as per the summon u/s, 131 of the Act by email on 12.04.2021 which was much before the passing of the order of Ld. AO on 19.04.2021 and therefore ITA No. 2715/MUM/2024 Assessment Year: 2018-2019 3 both of them ought to have considered the said information which was relevant for the purpose of arriving at correct physical stock as explained in Ground No. 4 herein above. 6. In the facts and circumstances of the case and in law, the ld. CIT(A) and the ld. AO both erred in not accepting and rejecting the \"Delivery Memo\" dated 25.09.2017 for Gold ornaments sent on approval basis by Ms. Vishwas Gold only for the reason that the same mentioned about VAT/GST instead of GST without appreciating that these were only a delivery memo and not invoice and within the invoice dated 04.10.2017 was raised, applicable GST (SGST and CGST) had been charged which itself proved about the genuineness of both the documents i.e., delivery memo and invoice. 7. In the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the addition of alleged undisclosed income of Rs. 25,00,000/- made by AO u/s 69A merely on the basis of statement of appellant recorded involuntarily under force and coercion is arbitrary and adhoc as the said addition has no nexus, connection or relation with any of the facts and figures vis-à-vis the records of the appellant and is without any rationale/ basis and hence, the impugned order under appeal is illegal and bad in law and should be quashed/annulled. 7.1 In the facts and circumstances of the case and in law, it is submitted that the appellant had retracted the said Statement recorded before the ld. AO by explaining the receipt of gold ornaments on approval basis from M/s. Vishwas Gold which fact has been recorded by the ld AO in para 10.of the order under appeal and hence no evidentiary value ought to be attached to the said Statement held in various judicial pronouncements including of the Hon'ble Supreme Court in case of CIT vs. S Khader Khan Son (2012) 25 taxmann.com 413 (SC) as also clarified by the Hon'ble CBDT in Circular No. F. No. 286/2/2003/IT-(Inv) dated 10 March, 2003. 8. In the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have directed the AO to delete corresponding sales/revenue against the addition of alleged undisclosed income of Rs 25,00,000/- made us. 69A of the Act rendering the impugned order under appeal as illegal and had in law and should be quashed/ annulled. 9. In the facts and circumstances of the case and in law, the ld. CTT(A) erred in sustaining addition of alleged undisclosed income of Rs. 25,00,000/- u/s 69A of the Act, notwithstanding that the appellant had clearly demonstrated that out of total gold/ gold ornaments ITA No. 2715/MUM/2024 Assessment Year: 2018-2019 4 received by the appellant on approval basis of 1,680.25 grams (which was lying with the appellant on the date of Survey action), only 502.25 grams of gold ornaments were purchased by the appellant on 4 October, 2017 and the balance gold/gold ornaments of 1,180 grams was returned to the Party and hence, the impugned order under appeal is illegal and had in law and should be quashed annulled which fact has been completely ignored by the Ld. AO despite the said M/s Vishwas Gold personally appearing before the Ld. AO and filing the relevant copy of the purchase register and sales register by mail to substantiate the said facts. 9.1. In the facts and circumstances of the case and in law, the ld. CTT(A) erred in not appreciating that the actual physical closing stock as verified by the survey team on 29.09.2017 fairly matched with the closing stock as mentioned in question no. 31 of the Statement recorded by the survey team which itself goes to prove that the additional income of Rs. 25,00,000/- as mentioned and offered by the appellant in question no. 32 of the Statement recorded was under force, coercion and duress. 10. In the facts and circumstances of the case and in law, the alleged undisclosed income of Rs 25,00,000/-has no nexus connection or relation with any of the facts and figures of closing stock an referred to in the assessment order and hence the said amount of Rs. 25,00,000/- is only imaginary and without any rational and basis and consequently, the addition in respect thereof requires to be deleted. 11. It is humbly prayed that the reliefs as prayed for hereinabove should be granted. 12. The appellant craves leave to add, alter, amend and/or rescind any grounds of appeal during the course of the hearing.” 3. When the appeal was taken up for hearing it was noted that the Assessee/Appellant had placed on record letter dated 29/11/2024 and email dated 20/01/2025 (Sent by Manger-Direct Tax) intimating that the Assessee has filed application under the ‘The Direct Tax – Vivad Se Vishwaas Scheme, 2024’ and has opted for settlement. In view of the aforesaid, the present appeal preferred by the Assessee is dismissed as withdrawn with liberty granted to the Assessee to revive the same in case the aforesaid application ITA No. 2715/MUM/2024 Assessment Year: 2018-2019 5 filed by the Assessee does not result in settlement of dispute by way of filing miscellaneous application before the Tribunal within the period prescribed. 4. In terms of above the present appeal is dismissed as withdrawn. Order pronounced on 21.01.2025. Sd/- Sd/- (Amarjit Singh) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated : 21.01.2025. Milan, LDC ITA No. 2715/MUM/2024 Assessment Year: 2018-2019 6 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai "