Sh. Naresh Chand Jain, New Delhi v. DCIT, New Delhi

ITA 2143/DEL/2010 | 2003-2004
Pronouncement Date: 23-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 214320114 RSA 2010
Assessee PAN DELOF2010A
Bench Delhi
Appeal Number ITA 2143/DEL/2010
Duration Of Justice 2 month(s) 16 day(s)
Appellant Sh. Naresh Chand Jain, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 23-07-2010
Date Of Final Hearing 08-07-2010
Next Hearing Date 08-07-2010
Assessment Year 2003-2004
Appeal Filed On 07-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F ; NEW DELHI BEFORE SHRI C.L. SETHI JM AND SHRI A.K. GARODIA A M I.T.A. NOS.2142 & 2143/DEL OF 2010 ASSESSMENT YEARS: 200203 & 2003-04 SHRI NARESH CHAND JAIN DCIT CIRCLE 24(1) E-13/11 VASANT VIHAR VS NEW DELHI. NEW DELHI. APPELLANT RESPONDENT APPELLANT BY: SHRI ANIL SHARMA ADVOCATE RESPONDENT BY: SMT. BANITA DEVI NAROEM SR. DR ORDER PER C.L. SETHI JM THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST TWO SEPARATE ORDERS DATED 17.3.2010 PASSED BY THE LEARN ED CIT(A) IN THE MATTER OF AN ASSESSMENT MADE BY THE AO U/S 147/143(3) OF T HE INCOME-TAX ACT 1961 (THE ACT) PERTAINING TO THE ASSTT. YEARS 2002- 03 AND 2003-04. 2. THE MAIN GROUND TAKEN BY THE ASSESSEE IS THAT TH E LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS.4 39 580/- AN D RS.4 39 112/- BEING THE ALLEGED UNEXPLAINED CASH CREDITS ON ACCOUNT OF SALE OF SHARES IN THE ASSTT. YEARS 2002-03 AND 2003-04 RESPECTIVELY. 2 3. IN THE ASSTT. YEAR 2002-03 IT WAS CLAIMED BY TH E ASSESSEE THAT HE HAD SOLD SHARES OF M/S CRABTREE TO M/S MKM FINSEC P. LT D. WHICH WERE EARLIER PURCHASED FROM M/S FRIENDS PORTFOLIO P. LTD. HOWEV ER ON THE BASIS OF INFORMATION RECEIVED IN THE BLOCK ASSESSMENT PROCEE DINGS OF M/S FRIENDS PORTFOLIO THE AO HAD TAKEN A VIEW THAT THE CLAIM O F PURCHASES OF SHARES FROM M/S FRIENDS PORTFOLIO LTD. IS NOT GENUINE BUT IS BOGUS. THE AO THEREFORE TREATED THE SALE CONSIDERATION OF RS.4 3 9 580/- AS UNEXPLAINED MONEY INTRODUCED BY THE ASSESSEE IN THE GUISE OF SA LE CONSIDERATION OF SHARES ALLEGEDLY TO M/S MKM FINSEC P. LTD. THE AO ALSO MA DE THE ADDITION OF RS.8792/- BEING THE EXPENDITURE INCURRED BY THE AS SESSEE TO OBTAIN THE ACCOMMODATION ENTRY ON SALE OF SHARES. 4. IN THE ASSESSMENT YEAR 2003-04 IT WAS CLAIMED B Y THE ASSESSEE THAT HE HAD RECEIVED RS.2 29 737/- AND RS.2 09 275/- AS SALE CONSIDERATION OF SHARES OF M/S SUMA FINANCE AND M/S HUNT COMMUNICATI ONS FROM M/S MKM FINSEC P. LTD. AND M/S ONLINE SECURITIES (P) LT D. HOWEVER THE AO TREATED THE TRANSACTION TO BE NON GENUINE AS HE WAS OF THE VIEW THAT THESE SHARES WERE NEVER ACTUALLY PURCHASED BY THE ASSESSE E. HE THEREFORE TREATED THE SALE CONSIDERATION AS UNEXPLAINED MONEY OF THE ASSESSEE AND BROUGHT THE SAME TO TAX. THE AO ALSO MADE AN ADDITION OF RS.879 2/- ON ACCOUNT OF 3 UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE TO OBTAIN THE ACCOMMODATION ENTRY ON SALE OF SHARES. 5. THE ORDER OF AO HAS BEEN CONFIRMED BY THE LEARNE D CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 7. IN THIS CASE IT IS SEEN THAT THE AO HAD MADE TH IS ADDITION ON THE BASIS OF CERTAIN INFORMATION RECEIVED BY THE AO AND ON T HE BASIS OF CERTAIN STATEMENT OF THE PERSONS RECORDED DURING THE COURSE OF THE SEARCH PROCEEDINGS CONDUCTED AGAINST MANOJ AGGARWAL AND M /S FRIENDS PORTFOLIO. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS EE VIDE LETTER DATED 14.10.2007 REQUESTED THE AO TO PROVIDE HIM OPPORTUN ITY TO CROSS EXAMINE THE CONCERNED PERSON ON THE BASIS OF WHOSE STATEMEN T THE ASSESSMENT HAS BEEN MADE BY THE AO. THE ASSESSEES REQUEST IN THI S REGARD HAS BEEN REPRODUCED BY THE CIT(A) IN PARA 10 OF HIS ORDER AS UNDER: IN SO FAR THE ISSUE OF CROSS-EXAMINATION IS CONCERNED A PERUSAL OF THE ASSESSMENT RECORD SUGGESTS THAT THE ASSESSEE HAD FILED A LETTER DATED 14.10.2007 WHERE THE RELEVANT PARAGRAPH STATES THE FOLLOWING: THAT ANY INFORMATION UTILIZED N THE BACK OF A: AND THE A IS ENTITLE TO CROSS EXAMINE THE CONCERNED PERSON AND THE SAID PERSON BE SUMMONED BY ISSUING NOTICE U/S 131 OF THE INCOME- TAX ACT 1961 AND A IS PREPARE TO BEAR THE EXPENSES IN THIS REGARD AND 4 THE SAID EXPENSES BE INTIMATED TO THE A AT THE EARLIEST. THE ASSESSEE CONTENDED BEFORE THE LEARNED CIT(A) TH AT THE AO WAS UNJUSTIFIED IN MAKING THE ADDITION WITHOUT GIVING A NY OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE CONCERNED PERSON ON T HE BASIS OF WHOSE STATEMENT THE ADDITION HAS BEEN MADE. HOWEVER THI S PLEA OF THE ASSESSEE HAS BEEN REJECTED BY THE CIT(A) BY OBSERVING THAT A SSESSEE DID NOT MAKE REQUEST TO CROSS EXAMINE ANY SPECIFIC PERSON OR ENT ITY. AFTER CONSIDERING THE FACTS OF THE CASE WE ARE OF THE CONSIDERED VIEW TH AT CIT(A) HAS ERRED IN REJECTING THE ASSESSEES CONTENTION MERELY FOR THE REASON THAT NO SPECIFIC NAME WAS MENTIONED BY THE ASSESSEE IN HIS LETTER DA TED 14.10.2007. IT IS NOT IN DISPUTE THAT SOME INFORMATION COLLECTED BY THE D EPARTMENT HAS BEEN UTILIZED BY THE AO. IT IS THE AO WHO HAS UTILIZED THE INFORMATION OR STATEMENT OF OTHER PERSONS AGAINST THE ASSESSEE. T HE ASSESSEE HAS CATEGORICALLY STATED THAT HE SHOULD BE GIVEN AN OPP ORTUNITY TO CROSS EXAMINE THE CONCERNED PERSON IF ANY INFORMATION IS UTILIZE D AT THE BACK OF THE ASSESSEE. THE INFORMATION HAS BEEN UTILIZED BY THE AO AND IT WAS WELL WITHIN THE KNOWLEDGE OF THE AO AS TO WHAT INFORMATI ON HE UTILIZED AGAINST THE ASSESSEE FOR MAKING THE ASSESSMENT. THEREFORE ON THIS TECHNICAL PLEA THE CIT(A) IS VERY MUCH UNJUSTIFIED IN REJECTING TH E ASSESSEES CONTENTION. 5 WE ARE THEREFORE OF THE CONSIDERED VIEW THAT AO H AS FAILED TO PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE TO EXAMINE T HE CONCERNED PERSON BEFORE MAKING ADDITION. WE THEREFORE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR HIS FRESH ADJUDICATION AFTER GIVING OPPO RTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE CONCERNED PERSON ON THE BASIS OF WHOSE INFORMATION THE ADDITION HAS BEEN MADE. THE AO SHALL ALSO FURNISH T O THE ASSESSEE COPY OF INFORMATIONS AND DOCUMENTS THAT ARE UTILIZED AGAINS T THE ASSESSEE WHILE FRAMING THE ASSESSMENT AND GIVE HIM OPPORTUNITY TO GIVE HIS EXPLANATION IN RESPECT THEREOF. THE AO SHALL DECIDE THE MATTER AF RESH AFTER EXAMINING AND VERIFYING ALL THE DETAILS AS WELL AS THE EXPLANATIO N OF THE ASSESSEE THAT MAY BE FURNISHED BEFORE HIM BY THE ASSESSEE. WE ORDER ACCO RDINGLY. 8. BEFORE PARTING WITH THE ISSUE WE MAY OBSERVE TH AT WHILE MAKING THE ASSESSMENT THE AO HAD MADE AN OBSERVATION THAT THE ASSESSEE HAS NOT EVEN SHOWN ANY CAPITAL GAIN ON THE SALE OF THE CONCERNED SHARES IN THE RETURN OF INCOME FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDER ATION. HOWEVER IN THE COURSE OF HEARING THE LEARNED COUNSEL FOR THE ASSE SSEE HAS POINTED OUT THAT ASSESSEE HAS ALREADY DISCLOSED THE CAPITAL GAIN IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND THEREFORE AOS OBSERVATION I S TOTALLY WRONG. THIS ASPECT OF THE MATTER SHALL ALSO BE LOOKED INTO BY T HE AO WHILE MAKING FRESH 6 ASSESSMENT AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO THE VALIDITY OF PROCEEDINGS U/S 147 OF THE ACT IS REJECTED INASMUCH AS THE LEARNED COUNSEL FOR THE ASSESSEE IN THAT BEHALF MADE NO SUBSTANTIAL ARGUMENTS. HOWEVER ON THE BASIS OF THE REASONS RECORDED BY THE AO WE ARE OF THE CONSIDERED VIEW THAT AO HAS RIGHTLY RE-OPENED THE ASSESSMENT U/S 14 7 OF THE ACT INASMUCH AS HE HAD MATERIAL AVAILABLE WITH HIM TO ENTERTAIN A P RIMA FACIE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. 10. IN THE RESULT THESE TWO APPEALS FILED BY THE A SSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AS INDICATED ABOVE. 11. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 23 RD JULY 2010. (A.K. GARODIA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD JULY 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XXIII NEW DELHI. 5. DR ASSISTANT REGISTRAR