M/S. ASHOK KUMAR KARKAL, MUMBAI v. THE ITO 23(2)(1), MUMBAI

ITA 1372/MUM/2008 | 2000-2001
Pronouncement Date: 21-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 137219914 RSA 2008
Assessee PAN ACGPK7794M
Bench Mumbai
Appeal Number ITA 1372/MUM/2008
Duration Of Justice 3 year(s) 6 month(s) 26 day(s)
Appellant M/S. ASHOK KUMAR KARKAL, MUMBAI
Respondent THE ITO 23(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 21-09-2011
Date Of Final Hearing 31-12-2009
Next Hearing Date 31-12-2009
Assessment Year 2000-2001
Appeal Filed On 25-02-2008
Judgment Text
1 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C BEFORE SHRI D. MAN MOHAN V.P. AND SHRI R.K. PANDA A.M. ITA NO. 1372/MUM/2008 ASSESSMENT YEAR 2000-01 ASHOK KUMAR KARKAL 603 VASANTHI APTS. NAVGHAR ROAD MULUND (E) MUMBAI - 81. PAN ACGPK 7794 M VS. ITO -23(2)(1) C-10 PRATYKSHA KAR BHAVAN BANDRA (E) MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI M. SUBRAMANIAN RESPONDENT BY SHRI P.K.B. MENON DATE OF HEARING 27.6.2011 DATE OF PRONOUNCEMENT 21.9.2011 ORDER PER R.K. PANDA A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DT. 22.01.2008 OF THE CIT(A)- XXIII MUMBAI RELATING TO A.Y. 2000-01. 2. FACTS OF THE CASE IN BRIEF ARE THAT AN INTIMATIO N WAS RECEIVED BY THE A.O. THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FO R A.Y. 2000-01 IN THE CASE OF SMT. RENU DANTE WHO IS ASSESSED WITH ACIT (OSD-2 ) 26-1 MUMBAI IT WAS FOUND THAT SHE HAD TAKEN A LOAN OF ` 1 06 000/- FROM THE ASSESSEE DURING F.Y. 1999-2000. A COPY OF LOAN CONFIRMATION SUBMITTED B Y THE ASSESSEE ALONG WITH COPY OF ASSESSEES BANK ACCOUNT WAS ALSO RECEIVED B Y THE A.O. ALONG WITH THE INTIMATION. ON VERIFICATION OF DETAILS OF THE LOAN TRANSACTIONS BY THE ASSESSEE WITH THE COPY OF HIS BANK ACCOUNT NO. 1125 MAINTAIN ED WITH UNITED WESTERN 2 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL BANK LOWER PAREL BRANCH MUMBAI THE A.O. NOTICED THAT THESE TRANSACTIONS WERE NOT REFLECTED IN THIS BANK A/C THOUGH THE LOAN TRANSACTIONS WERE STATED TO BE MADE BY CHEQUE. THEREFORE THE A.O. HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX OF ` 1 06 000/- HAS ESCAPED ASSESSMENT. HE THEREFORE REOPENED THE ASSESSMENT U/S 147 AFTER RECORDING THE REASONS AND OBTAINING NECESSARY APPROVAL U/S 151(2) OF THE ACT. NOTICE U /S 148 OF THE ACT DTD. 30.3.2005 WAS SERVED UPON THE ASSESSEE ON 31.3.05. THE ASSESSEE DID NOT COMPLY TO THE SAME. SUBSEQUENTLY NOTICE U/S 143(2 ) AND 142(1) OF THE ACT ALONG WITH A QUESTIONNAIRE WERE ISSUED AND SERVED U PON THE ASSESSEE. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSE FILED VARIOUS DETAILS ACCORDING TO WHICH THE ASSESSEE HAS GOT TWO BANK ACCOUNTS I.E. ONE IS WITH UNITED WESTERN BANK (A/C NO. 1125) AND THE OTH ER WITH CENTRAL BANK OF INDIA (A/C NO. 27266). THE A.O. NOTED THAT NOT A S INGLE CHEQUE ISSUED BY THE ASSESSEE AS PER THE LOAN CONFIRMATION IS REFLECTED IN THE ABOVE BANK ACCOUNTS. ON BEING QUESTIONED BY THE A.O. REGARDING VARIOUS D EPOSITS APPEARING IN THE ABOVE TWO BANK ACCOUNTS IT WAS SUBMITTED THAT THE TRANSACTIONS MADE BY THE ASSESSEE IN UNITED WESTERN BANK LOWER PAREL BRANCH MUMBAI WAS IN THE NAME OF HIS PROPRIETARY CONCERN KAPRI INC. AN AMOU NT OF ` 6 61 500/- WAS DEPOSITED IN THIS ACCOUNT IN ADDITION TO OTHER DEPO SITS OF ` 5 42 969/-. SIMILARLY THERE IS CASH DEPOSIT OF ` 3 63 836/- AND OTHER DEPOSITS OF ` 2 71 771/- IN ASSESSEES BANK A/C NO. 27266 MAINTAI NED WITH CENTRAL BANK OF INDIA LOWER PAREL BANK. THE ASSESSEE EXPLAINED THA T HE HAS OBTAINED UNSECURED LOANS FROM VARIOUS PERSONS WHICH WERE DEP OSITED IN THE BANK ACCOUNT. FURTHER CASH WITHDRAWN FROM BANK ACCOUNT H AD ALSO BEEN RE- DEPOSITED IN THE SAME BANK ACCOUNT. 2.2 HOWEVER THE A.O. WAS NOT SATISFIED WITH THE EX PLANATION GIVEN BY THE ASSESSEE. HE MADE ADDITION OF ` 1 06 000/- ON ACCOUNT OF LOAN GIVEN TO MRS. 3 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL RENU DANTE ` 10 25 336/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT S IN BANK ACCOUNTS AND ` 2 20 469/- BEING UNEXPLAINED CREDITS IN THE BANK A CCOUNTS. 2.3 IN APPEAL THE LD. CIT(A) UPHELD THE ACTION OF THE A.O. ON THE GROUND THAT THE ASSESSEE HAD FALSELY CONFIRMED THAT HE HAD GIVE N LOAN OF ` 1 06 000/- TO MRS. DANTE AND THERE WAS NO EVIDENCE NOR ANY EXPLAN ATION FOR THE SAID AMOUNT NOT APPEARING IN THE BANK STATEMENT OF THE ASSESSEE . HE ALSO REJECTED THE THEORY OF RE-DEPOSIT OF CASH WITHDRAWN IN THE BANK ACCOUNT AND UPHELD THE ADDITION OF ` 10 25 336/-. FURTHER HE ALSO REJECTED THE THEORY OF UNSECURED LOAN FROM FRIENDS AND RELATIVES. IN ABSENCE OF PRO PER EXPLANATION OF THE CREDITS IN THE BANK ACCOUNT BY THE ASSESSEE HE UPHELD THE ADDITION OF ` 2 20 469/- TO THE TOTAL INCOME OF THE ASSESSEE. 2.2 AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) TH E ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS:- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W THE LEARNED CIT(A) ERRED IN CONFIRMING THE CASH DEPOSITED IN BA NK ACCOUNT AS UNEXPLAINED CREDIT U/S 68 OF THE IT ACT 1961 AMOUN TING TO ` 10 25 336/-. 2. WITHOUT PREJUDICE TO THE ABOVE ON THE FACTS & CIRC UMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE UNSECURED LOAN RECEIVED AMOUNTING TO ` 2 20 469/- AS UNEXPLAINED DEPOSIT U/S 68 OF THE I.T. ACT 1961. 3. THE ORDER OF THE LEARNED CIT(A) IS AGAINST THE W EIGHT OF EQUITY NATURAL JUSTICE AND GOOD CONSCIENCE. 2.3 THE ASSESSEE VIDE APPLICATION DTD. 12 TH AUGUST 2009 RECEIVED BY THE REGISTRY ON 25.8.2009 HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW THE PROCEEDING INITIATED BY ISSUANCE OF NOTICE U/S 148 OF THE I.T. ACT IS INVALID AND BAD IN LAW. 4 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF TH E I.T ACT IS INVALID AND BAD IN LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW THE INTEREST CHARGED U/S 234A 234B 234C AND 234D OF T HE I.T. ACT ARE INVALID AND BAD IN LAW. 3. AFTER HEARING BOTH THE SIDES AND FOLLOWING THE D ECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC VS. CIT REPORTED IN 229 ITR 383 AND IN THE CASE OF JUTE CORPORATION OF INDIA REPORTED IN 187 I TR 688 THE ADDITIONAL GROUNDS WHICH ARE LEGAL IN NATURE ARE ADMITTED FO R ADJUDICATION. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE A.O. DID NOT ALLOW INSPECTION OF THE RECORDS. THE A.O. HAS WRONGLY MENTIONED THE A.Y. 2001-02 AS AGAINST A.Y. 2000-01AND THE ORDER S HEET ENTRY IS NOT DATED AND THEREFORE THE REASONS RECORDED ARE DOUBTFUL. HE SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 148 THE REASONS SHOULD BE RECORDED PRIOR TO THE ISSUE OF NOTICE U/S 148. FOR ASSUMING THE POWER FOR RE-O PENING THE ASSESSMENT THE BASIC REQUIREMENT IS THAT INCOME SHOULD ESCAPE FROM ASSESSMENT FOR WHICH THERE SHOULD BE CLEAR-CUT REASONS. REFERRING TO PAG E 31 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LETTER OF TH E ADDL. IT RANGE 23(2) TO THE A.O. ACCORDING TO WHICH THE ASSESSEE HAS ADVANCED L OAN OF ` 1 06 000/- TO HIS WIFE OUT OF WHICH ` 32 000/- WAS RETURNED BACK. HE SUBMITTED THAT MRS . RENU DANTE IS NOT THE WIFE OF THE ASSESSEE. HE SUBMITTE D THAT WHEN NO REASONS ARE RECORDED THE ASSESSMENT ORDER PASSED CONSEQUENT TO ISSUE OF NOTICE U/S 148 BECOMES INVALID. FOR THIS PROPOSITION HE RELIED O N THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. GAYATRI GLASS WORKS REPORTED IN [2009] 317 ITR 319 AND THE DECISION OF HONBLE JHAR KHAND HIGH COURT IN THE CASE OF KAVEE ENTERPRISES P. LTD. V. CIT REPORTED IN [2008] 301 ITR 156. 4.1 COMING TO THE MERITS OF THE CASE HE SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ENTRIES IN THE BANK PASS BOOK. REFERRING TO THE 5 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. BHAICHAND M. GANDHI [1983] REPORTED IN 141 ITR 67 HE SUBMITTED THAT THE BANK PASS BOOK IS NOT BOOKS OF ACCOUNT. THEREFORE NO ADDITION COULD HAVE BEEN MADE. IN HIS ALTERNATE ARGUMENT HE SUBMITTED THAT THE AMOUNTS W ITHDRAWN EARLIER AND DEPOSITED SUBSEQUENTLY HAVE BEEN ADDED. THEREFORE ONLY PEAK CREDIT SHOULD HAVE BEEN ADDED BY TELESCOPING THE AMOUNT DEPOSITED AND WITHDRAWN. HE SUBMITTED THAT THERE IS NO PROPER APPLICATION OF MI ND EITHER BY THE A.O. OR BY THE LD. CIT(A). THE VARIOUS FIGURES IN THE BANK ST ATEMENT AND ASSESSMENT ORDER DO NOT MATCH EACH OTHER. HE ACCORDINGLY SUBMITTED THAT IN ABSENCE OF CLEAR- CUT REASONS THAT INCOME HAS ESCAPED ASSESSMENT THE ASSUMPTION OF JURISDICTION TO RE-OPEN THE ASSESSMENT IS INVALID A ND ACCORDINGLY THE SUBSEQUENT ASSESSMENT BECOMES NULL AND VOID. 5. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE O RDER OF THE A.O. AND THE LD. CIT(A). HE SUBMITTED THAT THE ASSESSMENT HAS B EEN RE-OPENED WITHIN A PERIOD OF 4 YEARS WITH THE PRIOR APPROVAL OF THE AD DL. CIT. WRONG TYPING OF ASSESSMENT YEAR OR SOME TYPOGRAPHICAL ERROR IN THE DATE OF NOTICE ETC. WILL NOT INVALIDATE THE RE-ASSESSMENT PROCEEDINGS. HE ACCORD INGLY SUBMITTED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PURSUED 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. WE FIND ALTHOUGH THE ASSESSMENT WAS RE-O PENED U/S 147 THE ASSESSEE HAS NEVER CHALLENGED THE SAME BEFORE THE A .O. OR THE LD. CIT(A) AND FOR THE FIRST TIME CHALLENGED BEFORE THE TRIBUNAL B Y FILING ADDITIONAL GROUNDS OF APPEAL. THEREFORE THE VALIDITY OF RE-ASSESSMENT P ROCEEDING WAS NOT DECIDED BY THE LD. CIT(A). UNDER THESE CIRCUMSTANCES WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE T HE LEGAL GROUNDS WHICH GO TO THE ROOT OF THE MATTER. AT THE SAME TIME WE ALSO FIND FORCE IN THE ARGUMENT OF THE 6 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL LD. COUNSEL FOR THE ASSESSEE THAT WHEN THERE ARE DE POSITS AND WITHDRAWALS AND DEPOSITS IN THE BANK ACCOUNT THE REVENUE AUTHORITI ES SHOULD HAVE GONE FOR TELESCOPING AND ONLY THE PEAK CREDIT SHOULD HAVE BE EN ADDED. WE ACCORDINGLY RESTORE THE MATTER TO THE FILE OF THE LD. CIT(A) TO DECIDE ALL THE ISSUES AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATIONS. WE HOLD AND D IRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED FOR STATISTICAL PURPOSE. 7. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 21.9.2011. SD/- SD/- (D. MAN MOHAN) (R.K. PANDA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED 21.9.2011 RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXIII MUMBAI 4. THE CIT 23 MUMBAI 5. THE DR BENCH L 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 7 ITA 1372/ M/08 SHRI ASHOK KUMAR KARKAL DATE INITIALS 1 DRAFT DICTATED ON 13.9.11 19.9.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 14.9.11 19.9.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER