Sh. Rajiv Nehru, S/o. Shri M.L.Nehru, Srinagar (J&K) v. The Income-tax Officer,, Srinagar (J&K)

ITA 363/ASR/2013 | 2006-2007
Pronouncement Date: 22-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 36320914 RSA 2013
Assessee PAN AAUPN6313D
Bench Amritsar
Appeal Number ITA 363/ASR/2013
Duration Of Justice 10 month(s) 21 day(s)
Appellant Sh. Rajiv Nehru, S/o. Shri M.L.Nehru, Srinagar (J&K)
Respondent The Income-tax Officer,, Srinagar (J&K)
Appeal Type Income Tax Appeal
Pronouncement Date 22-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 22-04-2014
Date Of Final Hearing 16-04-2014
Next Hearing Date 16-04-2014
Assessment Year 2006-2007
Appeal Filed On 31-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU JUDICIAL MEMBER AND SH. B.P.JAIN ACCOUNTANT MEMBER I.T.A. NO.363(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN :AAUPN6313D SHRI RAJIV NEHRU VS. INCOME TAX OFFICER S/O SH. M.L.NEHRU WARD 3(2) C/O HOTEL NEHRU SRINAGAR ( J & K ) GAGRIBAL BOULEWARD SRINAGAR ( J & K ). (APPELLANT) (RESPONDENT) I.T.A. NO.385(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN :AAUPN6313D INCOME TAX OFFICER VS. SHRI RAJIV NEHRU WARD 3(2) S/O SH. M.L.NEHRU SRINAGAR ( J & K ) C/O HOTEL NEHRU GAGRIBAL BOULEWARD SRINAGAR ( J & K ). (APPELLANT) (RESPONDENT) C.O.NO.37(ASR)/2013 (ARISING OUT OF I.T.A. NO.385(ASR)/2013) ASSESSMENT YEAR:2006-07 PAN :AAUPN6313D SHRI RAJIV NEHRU VS. INCOME TAX OFFICER S/O SH. M.L.NEHRU WARD 3(2) C/O HOTEL NEHRU SRINAGAR ( J & K ) GAGRIBAL BOULEWARD SRINAGAR ( J & K ). (APPELLANT) (RESPONDENT) ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 2 ASSESSEE BY:SH.PADAM BAHL CA DEPARTMENT BY:SH.TARSEM LAL DR DATE OF HEARING: 16/04/2014 DATE OF PRONOUNCEMENT:22/04/2014 ORDER PER BENCH ; THESE CROSS APPEALS OF THE REVENUE AND THE ASSESS EE ARISE FROM THE ORDER OF THE CIT(A) JAMMU DATED 15.03.2013 FOR T HE ASSESSMENT YEAR 2006-07.THE ASSESSEE HAS ALSO FILED CROSS OBJECTION . 2. THE ASSESSEE IN ITA NO. 363(ASR)/2013 HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE HONBLE CIT(A) IS NOT JUSTIFIED IN GIVING R ELIEF OF ONLY 25% REGARDING THE OPENING CAPITAL OUT OF THE TOTAL SALE PROCEEDS OF 19 46 738/- OF THE RURAL AGRICULTURE LAND WHICH BEL ONGED TO HUF M/S. RAJIV NEHRU & SONS OF WHICH THE APPELLANT IS THE KARTA ALSO. TE SAME HAS BEEN REJECTED BY THE LD. CI T(A) ON THE BASIS THAT THE HUF AND INDIVIDUAL ARE TWO SEPARATE ENTITIES AND SALE OF PROPERTY IN THE HANDS OF HUF CANNOT AUTOMAT ICALLY BECOME THE CAPITAL OF THE INDIVIDUAL CASE. IF ON ON E SIDE THE CIT(A) REJECTS THE APPELLANTS EXPLANATION THAT OPEN ING CAPITAL WAS INTRODUCED BY WAY OF BUILDING AMOUNTING TO RS.20 00 000/- WHICH WAS PURCHASED OUT OF THE SALE PROCEEDS OF THE RURAL AGRICULTURE LAND OF HUF THEN WHY NOT TO DELETE ALSO THE AFORE MENTIONED BUILDING. ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 3 THE FLAT IN WHICH MR. RAJIV NEHRU HAD ESTABLISHED H IS OFFICE WAS A FLAT OWNED BY HUF M/S. RAJIV NEHRU & SONS OF WHICH HE WAS KARTA. WHILE PREPARING THE BALANCE SHEET FOR THE ASSESSM ENT YEAR 2006-07 THE CA HAD IN THE LIST OF FIXED ASSETS INC LUDED COST OF THE FLAT (AT RS.20.00 LACS) FOR THE PURPOSE OF CLA IMING DEPRECIATION. ARGUING THAT RS.20 LACS COULD NOT BE SHOWN AS THE F IXED ASSET OF MR. RAJIV NEHRU ( IN HIS INDIVIDUAL CAPACITY) WOULD NECESSITATE DELETION OF THIS AMOUNT FROM THE LIST OF FIXED ASSE TS AND CONSEQUENTLY DELETION OF OPENING CAPITAL ALSO WHIC H HAS BEEN WRONGLY ADDED BACK BY THE ITO AND PARTLY CONFIRMED BY THE CIT(A). IN SUCH A SITUATION THE TOTAL FIXED ASSETS WOULD BE RS.11 11 260/- THE ONLY DIFFERENCE THAT WOULD OCCU R IN THE BALANCE SHEET IS THAT THE DEPRECIATION CALCULATED O N RS.20 LACS WOULD GET ADDED TO THE INCOME OF MR. RAJIV NEHRU. AS REGARDS RS.11 11 260/- SHOWN AS FIXED ASSETS THE APPELLANT COULD BE EXPLAINED AS THE APPELLANT HAD BEEN FILING HIS INCOME TAX RETURNS SINCE EIGHTIES. 2. THE LD. CIT(A) IS NOT JUSTIFIED WHILE CONSIDERING T HE INCOME OF THE ASSESSMENT YEARS WHILE CALCULATING TH E RELIEF OF ONLY 50% OF THE TOTAL INCOME OF THE FOLLOWING ASSES SMENT YEARS ONLY: S.NO. ASSESSMENT YEAR INCOME RETURNED (RS.) 1. 1996-97 62 800.00 2. 1998-99 1 00 990.00 3. 1999-2000 1 71 917.00 4. 2000-01 2 16 192.00 5. 2001-02 2 72 442.00 6. 2002-03 2 87 400.00 7. 2004-05 3 46 281.00 8. 2005-06 2 90 017.00 TOTAL 17 48 039.00 THOUGH THE APPELLANT HAS BEEN FILING INCOME TAX RE TURNS SINCE EIGHTIES THEREFORE IGNORING REST OF THE ASSESSMEN T YEARS WHICH WERE NOT PRODUCED BEFORE THE APPELLATE AUTHORITY. F URTHER THE APPELLANT IS ALSO KARTA OF THE HUF FROM WHERE HE HA S BEEN ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 4 DRAWING HIS SHARE TO MEET OUT THE DAILY EXPENSES T HE FACT HAS BEEN TOTALLY IGNORED BY THE CIT(A). 3. THE BASIS REASON FOR WHICH OPENING CAPITAL HAS B EEN ADDED BY THE AO HAS BEEN STATED THAT THE APPELLANT HAS NOT FILED HIS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2005- 06 IS NOT CORRECT AS THE COPY OF THE SAME HAS BEEN PRODUCED B EFORE HIM AND ALSO BEFORE THE CIT(A) WHICH OTHERWISE COULD HAVE BEEN VERIFIED FROM THE OFFICE RECORDS. THIS FACT HAS NOT BEEN PROPERLY ADDRESSED BY THE CIT(A). 4. THE LD. CIT(A) HAS ERRED BOTH UNDER LAW AND FACT S WHILE DISALLOWING RS.1 10 143/- ON THE BASIS THAT THE SAM E HAS NOT BEEN CONTESTED BY THE APPELLANT. IT HAS BEEN ALREAD Y CONTESTED UNDER THE GROUND OF APPEAL IN POINT NO.(III) BEFORE THE CIT(A) BY STATING THAT THE SAME AMOUNT WAS OUT OF THE EARL IER ASSESSMENT YEARS BALANCE AGAINST WHICH THE APPELLAN T HAS BEEN FILING HIS INCOME TAX RETURNS. 5. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING TH E ADDITION OF RS.72 875/- ON THE GROUND THAT SAME HAS NOT BEEN CONTESTED BY THE APPELLANT WHICH IN FACT IS NOT CORRECT AS TH E SAME ADDITION HAS BEEN CONTESTED UNDER THE GROUNDS OF APPEAL IN P OINT NO.(VII). 6. THAT THE APPELLANT CRAVES LEAVE TO ADD OR ALTER AMEND MODIFY SUBSTITUTE DELETE AND/OR RESCUED ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE FINAL HEARING I F NECESSITY SO ARISES. 7. THEREFORE IT IS PRAYED THAT THE ADDITIONS CONF IRMED BY THE CIT(A) AS CLAIMED BY THE APPELLANT MAY PLEASE BE DELETED. 3. THE REVENUE IN ITA NO385(ASR)/2013 HAS RAISED FO LLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.13 60 704/- MA DE ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL BY ADMITTING THE ADD ITIONAL ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 5 EVIDENCES IN THE SHAPE OF COPIES OF RETURNS OF INCO ME FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS WHEN THE ASSESSEE DURING ASSESSMENT PROCEEDINGS DID NOT FURNISH ANY EVIDENCE/DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS C LAIM OF OPENING BALANCE AND THE ASSESSMENT WAS MADE U/S 144 OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.13 60 704/- MA DE ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL BY ADMITTING THE ADD ITIONAL EVIDENCES IN THE SHAPE OF COPIES OF RETURNS OF INCO ME FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS WITHOUT AFFORDING OPPORTUNITY TO THE A.O UNDER RULE 46A OF THE I.T. R ULES 1962 TO EXAMINE THE EVIDENCES/DOCUMENTS. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.13 60 704/- MA DE ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL BY HOLDING THAT THE SHARE OF ASSESSEE IN HUF M/S. RAJIV NEHRU & SONS ON SALE OF LAND BE CONSIDERED TOWARDS THE OPENING CAPITAL IN INDIVIDUA L CASE WHEN HUF AND INDIVIDUAL ARE TWO SEPARATE ENTITIES AND SA LE OF PROPERTY IN THE HANDS OF HUF CANNOT AUTOMATICALLY B ECOME THE CAPITAL OF THE INDIVIDUAL CASE. 4. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.63 600/- IN RE SPECT OF INVESTMENT IN INSURANCE HOUSEHOLD EXPENSES ETC. BY HOLDING THAT THE INVESTMENT IS FROM HUF M/S. RAJIV NEHRU & SONS AND THE APPELLANT HAPPENS TO BE KARTA WHEN HUF AND INDI VIDUAL ARE TWO SEPARATE ENTITITES AND INCOME OF HUF CANNOT AUT OMATICALLY BECOME THE INCOME OF THE INDIVIDUAL CASE. 5. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.1 00 000/- MAD E ON ACCOUNT OF ESTIMATED HOUSEHOLD EXPENSES AND PERSONAL EXPENS ES WHEN THE ASSESSEE BELONGS TO THE HIGHER STRATA OF SOCIET Y AS HE IS A PROFESSIONAL PERSON WITH TECHNICAL QUALIFICATION AN D HAS TO MAINTAIN A GOOD LIFE STYLE. ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 6 6. THE APPELLANT CRAVES TO AMEND OR ADD ANY ON OR M ORE GROUNDS OF APPEAL. 4. IN C.O. NO.37(ASR)/2013 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF CASE I STRON GLY OBJECT TO THE GROUNDS RAISED BY THE AO REGARDING DELETING THE ADD ITION OF RS.13 60 704/- ON ACCOUNT OF OPENING CAPITAL WHEN THE RESPONDENT HAS PRODUCED THE RELEVANT DOCUMENTS BEFO RE THE CIT(A). 2. ON THE FACTS AND CIRCUMSTANCES OF CASE I STRONG LY OBJECT TO THE GROUNDS RAISED BY THE APPELLANT REGARDING ADMITTING THE ADDITIONAL GROUNDS OF APPEAL. 3. ON THE FACTS AND CIRCUMSTANCES OF CASE I STRONG LY OBJECT TO THE GROUNDS RAISED BY THE APPELLANT REGARDING THE PROOF OF SOURCE IN RESPECT OF OPENING CAPITAL. 4. ON THE FACTS AND CIRCUMSTANCES OF CASE I STRONG LY OBJECT TO THE GROUNDS RAISED BY THE APPELLANT REGARDING DELETING THE ADDITION OF RS.63 600/- IN RESPECT OF INVESTMENT IN INSURANC ES HOUSEHOLD EXPENSES ETC. 5. ON THE FACTS AND CIRCUMSTANCES OF CASE I STRONG LY OBJECT TO THE GROUNDS RAISED BY THE APPELLANT REGARDING DELETING THE ADDITION OF RS.1 00 000/- MADE ON ACCOUNT OF ESTIMATE HOUSEH OLD EXPENSES. 6. THE RESPONDENT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 5. THE BRIE FACTS OF THE CASE ARE THAT THE NOTICES ISSUED FROM TIME TO TIME WERE NOT ATTENDED TO BY THE ASSESSEE. VIDE PARA 4.1 OF THE ORDER A LETTER WAS RECEIVED FROM THE ASSESSEE IN WHICH NO WORTHWHILE I NFORMATION/DOCUMENT AS CALLED FOR WERE FURNISHED. NO BOOKS OF ACCOUNT WER E PRODUCED FOR ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 7 VERIFICATION. FOR DOING SO TIME UPTO 13.11.2009 WA S ALLOWED TO THE ASSESSEE. BUT NOTHING WAS HEARD FROM THE ASSESSEE TILL THAT DATE. ACCORDINGLY ON 4.12.2000 A LETTER WAS WRITTEN TO THE ASSESSEE AS A SHOW CAUSE NOTICE WITH REGARD TO THE PROPOSED ADDITION BUT NOTHING WAS HEA RD FROM THE ASSESSEES SIDE AND NO EXPLANATION WAS SUBMITTED BY THE ASSESS EE. THE AO ACCORDINGLY MADE EX-PARTE ASSESSMENT BY MAKING AN ADDITION OF R S.25 27 619/- ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL RS.5 13 64 1/- AS UNEXPLAINED INVESTMENT IN THE FIXED ASSETS RS.1 10 143/- AS IN COME ON ACCOUNT OF BANK BALANCE NOT DISCLOSED RS.26 125/- INCOME ON ACCOUN T OF SUPPRESSION OF GROSS RECEIPTS OF TDS RS.1 63 600/- INCOME ON ACC OUNT OF UNEXPLAINED INVESTMENTS IN PPF/LIC & UNEXPLAINED EXPENDITURE ON HOUSEHOLD & PERSONAL EXPENSES AND RS.72 845/- INCOME ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE DEBITED TO P & L A/C. 6. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED TH E EXPLANATION WHO DELETED RS.13 60 704/- OUT OF TOTAL ADDITION OF RS. 31 11 260/- AND CONFIRMED RS.1 10 143/- RS.26 125/- AND RS.72875/- BUT DELE TED THE ADDITION OF RS.63 600/- ON ACCOUNT OF VARIOUS ADDITIONS MADE AS MENTIONED HEREINABOVE. 7. THE LD. COUNSEL FOR THE ASSESSEE MR. PADAM BAHL CA ARGUED THAT HE WANTS TO FILE SOME ADDITIONAL EVIDENCE AND IT WILL BE IN THE INTEREST OF JUSTICE ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 8 IF THE MATTER IS SET ASIDE TO THE FILE OF THE LD. C IT(A) TO DECIDE THE ISSUE DENOVO WITH A LIBERTY TO FILE THE ADDITIONAL EVIDEN CE. 8. THE LD. DR ON THE OTHER HAND RELIED UPON THE O RDER OF THE ASSESSING OFFICER AND ARGUED THAT THE LD. CIT(A) HAS DECIDED THE APPEAL AND ACCEPTED THE CONTENTION OF THE ASSESSEE WITHOUT CONFRONTING THE SAME TO THE AO AT THE FIRST INSTANCE AND WITHOUT ADMITTING ANY ADDITIONAL EVIDENCE UNDER INCOME TAX RULES 1962 AND THERE IS CLEAR VIOLATION OF NAT URAL JUSTICE AS PROVIDED UNDER RULE 46A OF THE INCOME TAX RULES 1962. THERE FORE THE LD. DR PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A) AND C ONFIRM THE ORDER OF THE A.O. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS NOT CO-OPERATED IN THE ASSESSMENT PROCEEDINGS AND THE LD. CIT(A) DELETED C ERTAIN ADDITIONS WITHOUT CONFRONTING TO THE AO AND WITHOUT ADMITTING THE ADD ITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES 1962 AND THERE IS CLEAR VIOLATION OF PROVISIONS OF RULE 46A AND DOCTRINE OF NATURAL JUST ICE. BUT IN THE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE WE SE T ASIDE THE MATTER TO THE LD. CIT(A) WHO WILL DECIDE THE ISSUE DENOVO AND ASSESS EE IS DIRECTED TO FILE THE APPLICATION UNDER RULE 46A WHICH SHALL BE DEALT WI TH BY THE LD. CIT(A) AS PER LAW. THE ASSESSEE MAY SUBMIT ANY ADDITIONAL EVI DENCE IF PERMITTED ITA NOS. 367 & 385 (ASR)/2013 C.O.NO.37(ASR)/2013 9 UNDER LAW AND THE LD. CIT(A) SHALL DECIDE THE ISSU E DENOVO AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ACCORDINGLY THE APPEAL OF THE ASSESSEE C.O. OF THE ASSESSEE AND AP PEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT THE APPEAL AND C.O. OF THE ASSES SEE IN ITA NO. 367(ASR)/2013 CO.NO.37(ASR)/2013 AND APPEAL OF THE REVENUE IN ITA NO.385(ASR)/2013 ARE ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND APRIL 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22ND APRIL 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. RAJIV NEHRU C/O HOTEL NEHRU SRINA GAR. 2. THE ITO WARD 3(2) SRINAGAR. 3. THE CIT(A) JAMMU 4. THE CIT JAMMU 5. THE SR DR ITAT AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR