Dr. PANDHARINATH K. CHOPADE, THANE v. ITO Wd. -3(1), KALYAN

ITA 6549/MUM/2006 | 1998-1999
Pronouncement Date: 07-05-2010 | Result: Allowed

Appeal Details

RSA Number 654919914 RSA 2006
Bench Mumbai
Appeal Number ITA 6549/MUM/2006
Duration Of Justice 3 year(s) 5 month(s) 2 day(s)
Appellant Dr. PANDHARINATH K. CHOPADE, THANE
Respondent ITO Wd. -3(1), KALYAN
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 07-05-2010
Date Of Final Hearing 26-04-2010
Next Hearing Date 26-04-2010
Assessment Year 1998-1999
Appeal Filed On 05-12-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI T.R. SOOD (AM) ITA NO.6549/MUM/2006 ASSESSMENT YEAR : 1998-99 DR. PANDHARINATH K. CHOPADE (PROP. M/S. K.K. CHEMEINSTRUMENTS) PLOT NO.130 PHASE-I MIDC DOMBIVALI(E) THANE. ..( APPELLANT ) P.A. NO. (AGEPC 9226 G) VS. INCOME TAX OFFICER WARD 3(1) KALYAN. ..( RESPONDENT ) ITA NO.6844/MUM/2006 ASSESSMENT YEAR : 1998-99 INCOME TAX OFFICER KALYAN. ..( APPELLANT ) VS. DR. PANDHARINATH K. CHOPADE THANE. ..( RESPONDENT ) ASSESSEE BY : SHRI C.N. VAZE REVENUE BY : SHRI ARUN BHARAT O R D E R PER D.K. AGARWAL (JM). THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER DATED 26.9.2006 PASSED BY THE LD. C IT(A) FOR THE ITA NO.6549/ & 6844/M/06 A.Y:98-99 2 ASSESSMENT YEAR 1998-99. BOTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE A N INDIVIDUAL DERIVES INCOME FROM MANUFACTURING AND SALE OF FINE CHEMICALS. IN THIS CASE THE AO ON THE BASIS OF ENQUIRIES C ONDUCTED BY THE AO OF ULHASNAGAR WARD AT KALYAN IN THE CASE OF SHR I GHANSHYAM MAHAJAN (ASSESSEES NEPHEW) WHEREIN IT WAS REVEALED THAT SHRI GHANSHYAM MAHAJAN HAS FILED AN AFFIDAVIT BEFORE THE E XECUTIVE MAGISTRATE STATING INTERALIA THAT HE WAS COAXED BY HIS MATERNAL UNCLE I.E. THE ASSESSEE DR. PANDHARINATH K. CHOPADE TO FILE A BOGUS VDIS APPLICATION IN HIS NAME (SHRI GHANSHYAM MAHAJAN) TO D ISCLOSE THE CHARRED CASH OF RS.4.50 LACS . IT WAS FURTHER STATED THAT O N RECEIPT OF MONEY FROM RBI THE SAME WAS DEPOSITED IN SHRI GHANSHYA M MAHAJANS ACCOUNT AND HE WAS ASKED BY DR.PANDHARINATH K. CHOPADE TO ISSUE DEMAND DRAFT IN FAVOUR OF HIM FROM TIME TO T IME FOR THE SAID AMOUNT. ACCORDINGLY THE AO AS PER DIRECTION OF THE CIT -I THANE HAS ISSUED NOTICE U/S.148 OF THE INCOME TAX ACT 1961(THE ACT) TO THE ASSESSEE TO FILE RETURN FOR THE ASSESSMENT YEAR 1998-99. TH EREAFTER NOTICE U/S.142(1) OF THE ACT WAS ALSO ISSUED. THE ASSESSEE A FTER SEEKING TIME FILED RETURN DECLARING TOTAL INCOME OF RS. 18 050/- ALONGWITH A LETTER INTERALIA STATING THAT IT WAS AGREED BETWEEN THE ITA NO.6549/ & 6844/M/06 A.Y:98-99 3 ASSESSEE AND SHRI GHANSHYAM MAHAJAN THAT SHRI GHANSHYAM M AHAJAN SHALL REVIVE THE INDUSTRIAL UNIT OF THE ASSESSEE AT DOMBI VILI. IT WAS ALSO AGREED THAT SHRI GHANSHYAM MAHAJAN SHALL BEAR ALL THE DIRECT EXPENSES AS WELL AS CERTAIN INDIRECT EXPENSES AND THAT HE W AS SUPPOSED TO PAY THE ASSESSEE ROYALTY AND CONSULTANCY CHARGES @ RS.5 000/- PER MONTH. IT WAS ALSO AGREED THAT THE ASSE SSEE SHALL FULLY REIMBURSE EXPENSES BY SHRI GHANSHYAM MAHAJAN IF HE BEAR S ANY EXPENSES. THE TOTAL AMOUNT INCURRED BY THE ASSESSEE ON M EETING SUCH EXPENSES DURING THE FINANCIAL YEAR 1997-98 WAS RS.2 16 4 42/- AND THE ROYALTY AND CONSULTANCY CHARGES RECEIVABLE FROM SHRI GHAN SHYAM MAHAJAN WAS RS.60 000/-. HENCE THE TOTAL AMOUNT RECEIV ABLE WORKED OUT TO RS.2 76 442/- (RS.216442 + RS.60 000) FOR WHICH SHRI GHANSHYAM MAHAJAN ISSUED A CHEQUE OF RS.3.00 LACS IN FAVO UR OF THE ASSESSEE. THE ASSESSEE RECEIVED ANOTHER CHEQUE FROM SHRI GHANSHYAM MAHAJAN OF RS.19 458/- AGAINST THE ELECTRICITY BILL OF FACTORY PAID BY THE ASSESSEE. ON RECEIPT OF ASSESSEE'S REPLY T HE ASSESSEE WAS ASKED TO CLARIFY AS TO WHY THE DECLARATION MADE BY SHRI GHANSHYAM MAHAJAN OF RS.4.5 LACS (CHARRED NOTES) SHOULD N OT BE TREATED AS HIS INCOME. IN RESPONSE THE ASSESSEE SUBMITTED THAT WHATEVER IS STATED BY HIM ABOUT SHRI GHANSHYAM MAHAJAN IS ONLY IN COMMENSURATE WITH THE AFFIDAVIT FILED BY HIM. IT WAS FURTHER STATED THAT THE AGREEMENT WAS ORAL AGREEMENT. IT WAS A LSO CLARIFIED THAT ITA NO.6549/ & 6844/M/06 A.Y:98-99 4 THREE CHEQUES RECEIVED BY SHRI GHANSHYAM MAHAJAN TOTAL ING TO RS.5 18 750/- (ENCASHMENT OF CHARRED NOTES THROUGH RBI) WHEREAS THE DECLARATION AMOUNT IN VDIS IS RS.4.5 LACS. THEREAFT ER THE ASSESSEE SUBMITTED ANOTHER LETTERS DATED 21.12.2005 AND 22.12. 2005 ALONG WITH AN AFFIDAVIT STATING THAT THE MONEY DOES NOT BE LONG TO HIM AND JUST BECAUSE THERE WAS AN INCIDENT OF FIRE IN THE FACTORY IN DECEMBER 1996 THE SAME COULD NOT BE HELD AS BELONGING TO HIM. IN SUPPORT THE ASSESSEE ALSO RELIED ON THE CERTIFICATE OF FIRE FROM THE F IRE OFFICER AND THE PANCHNAMA. THE ASSESSEE ALSO CLARIFIED THAT SHRI GHAN SHYAM MAHAJAN DID NOT GIVE HIM ANY AMOUNT WHILE LEAVING D OMBIVILI. HOWEVER THE AO DID NOT ACCEPT THE ASSESSEE'S CONTENTION FO R THE REASONS THAT (I) SHRI GHANSHYAM MAHAJAN IS RELATIVE OF THE ASSESSEE; (II) IT WAS STATED BY THE ASSESSEE THAT AFTER THE INCIDENT OF FIRE HE DID NOT RE-START HIS FACTORY AS HE HAD NO INCOME. HOWEVER IN CONTRARY IT WAS STATED BY HIM THAT HE HAD INCURRED EXPENDITURE TO THE TUNE OF RS.2 35 900/- AND (III) THE RELATIVE OF THE ASSESSEE HAD EXCHANGED CHARRED NOTES FROM THE RBI TO THE TUNE OF RS.5 18 750/ - AS ADMITTED BY THE ASSESSEE IN HIS AFFIDAVIT FILED DURING THE COURSE OF ASSESSMENT PROCEEDING. THUS THE AO WAS OF THE VIEW THAT THE ASSESSE E HAS TRIED TO AVOID PAYING OF LEGITIMATE TAXES BY WAY OF RE-ROU TING HIS UNDISCLOSED INCOME IN THE FORM OF DECLARATION UNDER VDI S 1997 IN ITA NO.6549/ & 6844/M/06 A.Y:98-99 5 OTHERS NAME WHICH HE DID NOT SUCCEED TO DO SO. HENCE IT WOULD BE CORRECT TO PRESUME THAT THE MONEY DOES BELONG TO THE ASSE SSEE. HOWEVER THE AO WAS OF THE VIEW THAT SHRI GHANSHYAM MA HAJAN IS THE ORIGINAL VDIS 1997 DECLARANT HENCE HE ADDED THE AM OUNT OF RS.5 18 750/- AS INCOME OF THE ASSESSEE U/S.69A OF THE ACT ON PROTECTIVE BASIS AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.5 36 800/- VIDE ORDER DATED 29.12.2005 PASSED U/S.143(3) OF THE ACT. ON APPEAL THE LD. CIT(A) HE LD THAT THE SUM OF RS.5 18 750/- SHOULD NOT BE TAXED IN THE HANDS OF THE APPELLANT PROVIDED IT IS TAXED IN THE HANDS OF SHRI GHANSHYAM MA HAJAN. HOWEVER IN CASE AT ANY STAGE IN APPEAL RELIEF OF THI S AMOUNT OF RS.5 18 750/- IS GRANTED TO SHRI GHANSHYAM MAHAJAN TH EN THE SAME HAS TO BE ADDED IN THE HANDS OF THE APPELLANT AND ACCOR DINGLY PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE AND THE REVENUE BOTH ARE IN APPEAL BEFORE US. ITA NO.6549/M/06 (ASSESSEE'S APPEAL)(A.Y. 1998-99): 4. GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER : 1. THE CIT(A) HAS ERRED IN CONFIRMING ACTION OF ASSESSING OFFICER OF REOPENING THE ASSESSMENT U/S.1 48 WITHOUT SUPPLYING THE REASONS TO THE ASSESSEE DESPI TE HIS REQUESTS. ITA NO.6549/ & 6844/M/06 A.Y:98-99 6 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.5 18 750/- (THOUGH ON PROTECTIVE BAS IS) MADE BY THE AO. THE AO HAD CONSIDERED INCOME OF ANOTHER PERSON AS INCOME OF THE APPELLANT ON THE B ASIS OF THE AFFIDAVIT FILED BY THE OTHER PERSON AND ON T HE BASIS OF PRESUMPTIONS CONJUNCTURES AND SURMISES. ITA NO.6844/M/06 (BY REVENUE)(A.Y. 1998-99): 5. GROUNDS TAKEN BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE CIT(A) THANE ERRED IN DELE TING THE ADDITION MADE ON PROTECTIVE BASIS WITHOUT WAITI NG FOR THE DECISION OF THE CIT(A) NASIK IN THE CASE OF SH RI GHANSHYAM MAHAJAN WHEREIN THE ADDITION MADE ON SUBSTANTIAL BASIS IS PENDING. 2. WITHOUT PREJUDICE TO THE ABOVE WHETHER THE CIT(A) THANE ERRED IN STATING THAT THE ASSESSMENT BE REOPENED IF RELIEF IS GRANTED TO SHRI GHANSYAM MAHA JAN WHERE SUBSTANTIVE ASSESSMENT IS MADE SINCE REOPEN ING OF CASE IS ALREADY BARRED BY LIMITATION OF TIME. 6. ALL THE ABOVE GROUNDS WERE ARGUED AND HEARD TOGET HER AND CONSIDERED HEREUNDER. 7. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE AT THE OUTSET SUBMITS THAT IN THE CASE OF SHRI GHANSHYAM MAHAJA N THE SIMILAR ADDITION OF RS.5 18 750/- WAS MADE ON SUBSTANTIV E BASIS. HOWEVER THE LD. CIT(A) HAS ANNULLED THE ASSESSMENT ON TH E VALIDITY OF THE NOTICE U/S.148 OF THE ACT. HE FURTHER SUBMITS THAT A GAINST THE SAID ORDER PASSED BY THE LD. CIT(A) IT WAS INFORMED VIDE L ETTER DATED ITA NO.6549/ & 6844/M/06 A.Y:98-99 7 9.11.2009 THAT THE REVENUE HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNAL ON THE GROUND OF LOW TAX EFFECT. THE LD. C OUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND LD. CIT(A) FURTHER SUBMITS THE REASONS FOR RE-OPENING OF THE ASSESSMENT U/S.148 ARE ON RECORD THEREFORE HE DOES NOT WANT TO PRESS GROUND NO.1 CHALLENGING THE ACTION OF THE AO O F RE-OPENING THE ASSESSMENT U/S.148 WITHOUT SUPPLYING THE REASONS TO THE ASSESSE E DESPITE HIS REQUESTS. AT THIS STAGE THE LD. COUNSEL FOR T HE ASSESSEE WHILE REFERRING TO THE REASONS RECORDED BY THE ITO WA RD 2(4) JALGAON APPEARING AT PAGE 24 OF ASSESSEE'S PAPER BOOK SUBMITS THAT IT HAS BEEN RECORDED BY THE AO THAT THOUGH THE AMOUNT O F RS.4.50 LACS HAD BEEN DISCLOSED UNDER VDIS SCHEME THE TAX THEREON AT 30% OF RS.1.25 LACS HAD NOT BEEN PAID TO THE CENTRAL GOVERNME NT ACCOUNT BY THE DECLARANT OF SHRI CHOPADE I HAVE THEREFORE REA SON TO BELIEVE THAT AN AMOUNT OF RS.4.50 LACS IS AN ESCAPED INCOME WITHIN THE MEANING OF PROVISIONS OF SECTION 147 OF THE I.T. ACT. HE FURTHER SU BMITS THAT IN THE REMAND REPORT DATED 9.5.2006 IN THE CASE OF THE A SSESSEE FILED AT THE TIME OF HEARING IT HAS BEEN OBSERVED BY THE AO T HAT .I WOULD ALSO LIKE TO ADD THAT THESE ARE CIRCUMSTANTIAL EVIDENCES N OT VERIFIED BY THE UNDERSIGNED....I WOULD ALSO LIKE TO ADD THAT THE ASSESSMENT OF DR. P.K. CHOPADE IS MADE ON CIRCUMSTANTIAL EVIDENCES AS DR. P. K. CHOPADE HAD MEANS TO EARN THAT MUCH AMOUNT WHEREAS SHRI GHANSH YAM ITA NO.6549/ & 6844/M/06 A.Y:98-99 8 MAHAJAN WAS AN UNEMPLOYED YOUTH AND EVEN WHEN HE WAS WORKING AS A TEACHER HE WOULD NOT HAVE EARNED THIS MUCH AMOUNT. IN THE LIGHT OF THE ABOVE HE SUBMITS THAT NOTICE U/S.148 IS NOT VALI D AS THERE SHOULD BE REASON TO BELIEVE AND NOT MERELY REASON TO SU SPECT AND FOR THIS PROPOSITION THE RELIANCE WAS ALSO PLACED IN ACIT VS. O.P. CHAWLA (2008) 114 ITD 69 (DEL.)(TM) ITO VS. SMT. PAYAL G UPTA (2008)114 TTJ 426(CHD.). HE FURTHER SUBMITS THAT NO OPPORTUNIT Y TO CROSS EXAMINE SHRI GHANSHYAM MAHAJAN WAS PROVIDED TO THE ASSE SSEE AND FOR THIS PREPOSITION THE RELIANCE WAS ALSO PLACED ON THE DECISION IN KISHINCHAND CHELLARAM VS. CIT (1980) 125 ITR 713(SC). HE FURTHER SUBMITS THAT THERE IS NO RE-CONCILIATION BETWEEN THE AMO UNT DECLARED BY SHRI GHANSHYAM MAHAJAN RS.4.50 LACS (CHARRED NOTES) A ND RECEIVED RS.5 18 750/-. HE FURTHER SUBMITS THAT THE AO HAS APPLIED THE PROVISIONS OF SECTION 69A OF THE ACT. NEITHER OF T HE CONDITIONS ARE SATISFIED (I) ASSESSEE SHOULD BE FOUND TO BE IN THE POSSESSIO N OF THE ASSETS (I.E. OWNER) AND (II) IT SHOULD BE TAXED IN THE YEAR IN WHICH IT WAS FOUND TO BE IN POSSESSION. IN THE ASSESSEE'S CASE THE FIRE TOOK PLACE OF 21.12.96 WHEREIN THE SAID CHARRED NOTES WERE F OUND THEREFORE IT FALLS IN THE ASSESSMENT YEAR 1997-98 AND NOT 1998-99 AND FOR THIS PROPOSITION THE RELIANCE WAS ALSO PLACED ON THE DECISION IN PATOA BROS. VS. CIT (1982) 133 ITR 672(GAU.). HE TH EREFORE SUBMITS THAT THE ADDITION OF RS.5 18 750/- MADE BY THE AO BE DELETED. ITA NO.6549/ & 6844/M/06 A.Y:98-99 9 8. ON THE OTHER HAND THE LD. DR SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER THERE WAS ESCAPEMENT OF INCOME OF RS.5 18 750/- THEREFORE THE AO HAS RIGHTLY INITI ATED PROCEEDING U/S.148. HE FURTHER SUBMITS THAT THE SIMILAR ADDITION O F RS.5 18 750/- MADE ON SUBSTANTIVE BASIS IN THE CASE OF SHRI GHANSHYAM MAHAJAN HAS BEEN DELETED BY THE LD. CIT(A) IN THE APPEAL FIL ED BY SHRI GHANSHYAM MAHAJAN THEREFORE THE ASSESSEE IS LIABLE TO P AY TAX ON THE SAID AMOUNT AS THE SAID INCOME BELONGS TO HIM AND N OT TO SHRI GHANSHYAM MAHAJAN. THE LD. DR WHILE DISTINGUISHING TH E DECISION OF HONBLE SUPREME COURT IN KISHINCHAND CHELLARAM VS. CIT (SUPRA) ON THE GROUND THAT IN THAT CASE NO AFFIDAVIT WAS FILED W HEREAS IN THE CASE OF THE ASSESSEE THE ASSESSEE'S NEPHEW THROUGH HIS AFFIDAVIT HAS CONFIRMED THAT THE SAID INCOME BELONGS TO THE ASSESSEE. FUR THER IN THE CASE OF THE ASSESSEE OPPORTUNITY WAS PROVIDED AS OBSERV ED IN THE REMAND REPORT SUBMITTED BY THE AO AND IN THE ORDER O F THE LD. CIT(A) THAT THE ASSESSEE WAS GIVEN FULL OPPORTUNITY BY AO TO RE VERT THE STATEMENT OF SHRI MAHAJAN AND HE HAD ACTUALLY DONE SO. HE THEREFORE SUBMITS THAT THE ADDITION MADE BY THE AO B E UPHELD. 9. IN THE REJOINDER THE LD. COUNSEL FOR THE ASSESSEE W HILE REITERATING HIS SAME PLEAS AS SUBMITTED EARLIER SUBMITS TH AT THE ADDITION MADE BY THE AO BE DELETED. ITA NO.6549/ & 6844/M/06 A.Y:98-99 10 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IT IS SETTLED LAW THAT AFTER THE AMENDMENT U/S.147 WITH EFFECT FROM 1.4.1999 THE AO HAS POWER TO RE-OPEN THE ASSESSMENT PROVIDED THERE I S TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEM ENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WIT H THE FORMATION OF THE BELIEF. SECTION 148(2) PROVIDES THAT THE AO SHALL BEFORE ISSUING ANY NOTICE UNDER THIS SECTION RECORD HIS R EASONS FOR DOING SO. IN THE CASE BEFORE US THE LD. COUNSEL FOR TH E ASSESSEE HAS DRAWN OUR ATTENTION TO THE COPY OF ORDER SHEET IN THE CASE OF SHRI GHANSHYAM MAHAJAN APPEARING AT PAGE-24 OF ASSESSEE'S PAPE R BOOK TO SHOW THAT THE FOLLOWING REASONS WERE RECORDED BY THE AO. THE SAME ARE EXTRACTED BELOW: FROM THE AMOUNT OF RS.5 31 000/- RECEIVED FROM THE R.B.I. AN AMOUNT OF RS.4 50 000/- DECLARED IN VDIS SCHEME 1997 IN THE NAME OF GHANSHYAM MAHAJAN. TH IS AMOUNT RELATED TO HIS UNCLE SHRI CHOPADE. THE SON OF SHRI CHOPADE IS LIVING AT AMERICA WHO SETTLED THERE AND SHRI CHOPDES TWO DAUGHTERS ARE MARRIED. IT IS SEE N THAT SHRI CHOPDE DECLARED THAT MONEY IN VDIS SCHEME IN T HE NAME OF SHRI GHANSHYAM MAHAJAN. THOUGH THE AMOUNT OF RS.4 50 000/- HAD BEEN DISCLOSED UNDER VDIS SCHE ME THE TAX THERE ON AT 30% OF RS.1 25 000/- HAD NOT BE EN PAID TO THE CENTRAL GOVERNMENT ACCOUNT BY THE DECLA RANT OR SHRI CHOPADE. I HAVE THEREFORE REASON TO BELIE VE THAT AN AMOUNT OF RS.4 50 000/- IS AN ESCAPED INCOME WIT HIN THE MEANING OF PROVISION OF SECTION 147 OF THE I.T. ACT. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF T HE CASE IN MY OPINION SHRI GHANSHYAM KESHAV MAHAJAN I S ITA NO.6549/ & 6844/M/06 A.Y:98-99 11 NOT THE DEFAULTER AS PER VIDS 1997. HOWEVER TO SAFEGUARD THE INTEREST OF REVENUE THE PROCEEDINGS U/S.147 HAS BEEN INITIATED AND REMEDIAL ACTION ON PROTECTIVE BASIS FOR ASSESSMENT YEAR 1998-99 AND NO TICE U/S.148 HAS BEEN ISSUED AFTER PRIOR APPROVAL OF THE ADDITIONAL CIT RANGE-2 JALGAON. ON READING OF THE ABOVE WE FIND THAT THE ABOVE REASO NS ARE IN THE CASE OF SHRI GHANSHYAM MAHAJAN AND NOT IN THE CASE OF TH E ASSESSEE THEREFORE THE RELIANCE PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE ABOVE REASONS IS DEVOID OF ANY MERIT. HOWEVER FRO M THE READING OF THE ASSESSMENT ORDER WE FIND THAT THE AO HAS MENTIONE D THE REASON FOR RE-OPENING OF THE ASSESSMENT AS UNDER (PARA 1 AND 2 OF THE ASSESSMENT ORDER ): 1. IN THIS CASE A RELATIVE OF THE ASSESSEE SHRI GHANSHYAM KESHAV MAHAJAN WHO WAS THEN RESIDING AT ULHASNAGAR HAD FILED A DECLARATION UNDER THE VOLUN TARY DISCLOSURE OF INCOME SCHEME 1997 OF RS.4 50 000 (AS CHARRED NOTES). INQUIRIES CONDUCTED BY THE ASSESS ING OFFICER OF ULHASNAGAR WARD AT KALYAN IN THE CASE O F SHRI GHANSHYAM KESHAV MAHAJAN HAS REVEALED THAT SHRI GHANSHYAM MAHAJAN HAS SHIFTED TO JALGAON AND IS ASSESSED TO TAX AT WARD-2(4) JALGAON. THERE SHR I GHANSHYAM MAHAJAN HAS FILED AN AFFIDAVIT BEFORE THE EXECUTIVE MAGISTRATE STATING THAT HE WAS COAXED BY HIS MATERNAL UNCLE I.E. THE ASSESSEE DR. PANDHARINATH K . CHOPADE TO FILE A BOGUS VDIS APPLICATION IN HIS (S HRI GHANSHYAMS) NAME. SHRI GHANSHYAM MAHAJAN IN HIS STATEMENT BEFORE THE ITO WARD-2(4) JALGAON HAS S TATED THERE WAS A FIRE AT THE FACTORY PREMISES OF M/S. K. K. CHEMICALS INSTRUMENTS DOMBIVLI A PROPRIETARY CONC ERN OF HIS MATERNAL UNCLE DR. PANDHARINATH CHOPADE AND THAT HIS UNCLE HAD SOME BURNT (CHARRED) CASH. DR. PANDHARINATH CHOPADE ASKED SHRI GHANSHYAM MAHAJAN T O EXCHANGE THE BURNT CASH FROM THE RBI AND FOR THIS S PECIFIC PURPOSE A BANK ACCOUNT WITH ABHINAV SAHAKARI BANK WAS OPENED IN THE NAME OF SHRI GHANSHYAM K. MAHAJAN. TO ITA NO.6549/ & 6844/M/06 A.Y:98-99 12 EXPLAIN THIS CASE THE ASSESSEE DR. PANDHARINATH CHOPADE ASKED SHRI GHANSHYAM MAHAJAN TO FILE THE VD IS APPLICATION DECLARING THE CHARRED CASH OF RS.4 50 0 00/-. ON RECEIPT OF MONEY FROM THE RBI THE SAME WAS DEPOSITED IN SHRI GHANSHYAM MAHANJANS ACCOUNT AND HE WAS ASKED BY DR. PANDHARINATH CHOPADE TO ISSUE DEMA ND DRAFTS IN FAVOUR OF HIM FROM TIME TO TIME FOR THE S AID AMOUNT. 2. IN VIEW OF THE ABOVE AND AS PER THE DIRECTIONS O F THE CIT-I THANE I HAD REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX IN THE CASE OF DR. PANDHARINATH CHOPADE HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEA R 1998-99. THE ASSESSMENT IN THE CASE OF DR. PANDHARINATH CHOPADE FOR ASSESSMENT YEAR 1998-99 WAS THEREFORE REOPENED U/S.147 OF THE I.T. ACT 19 61 WITH THE PRIOR APPROVAL OF THE ADDL. COMMISSIONER O F INCOME TAX RANGE-3 KALYAN. ACCORDINGLY NOTICE U/S.148 OF THE I.T. ACT 1961 FOR ASSESSMENT YEAR 1998- 99 WAS ISSUED TO THE ASSESSEE ON 23.03.2005. THEREAFTER NOTICE U/S. 142(1) OF THE I.T. ACT 196 1 WAS ISSUED AND SERVED TO THE ASSESSEE. NO MATERIAL HAS BEEN PLACED ON RECORD TO SHOW AS TO WHE THER THE REASONS HAVE BEEN RECORDED IN TERMS OF THE PROVISIONS O F SECTION 148(2) OF THE ACT. 11. WE FURTHER FIND THAT IT HAS BEEN CONTENDED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND ALSO BEFORE US THAT NO OPPO RTUNITY TO CROSS EXAMINE SHRI GHANSHYAM MAHAJAN WAS PROVIDED TO THE ASSE SSEE AND IN SUPPORT THE RELIANCE WAS ALSO PLACED IN KISHINCHAND CH ELLARAM VS. CIT (SUPRA). PER CONTRA IT HAS BEEN STATED BY THE REV ENUE THAT THE ASSESSEE WAS GIVEN FULL OPPORTUNITY BY THE AO TO REVERT THE STATEMENT OF SHRI MAHAJAN AND HE HAD ACTUALLY DONE SO. HOWEVER WE FIND FROM THE REMAND REPORT DATED 9.5.2006 WHEREIN IT HAS BEEN SUBMITTED BY THE AO IN THIS REGARD AS UNDER : ITA NO.6549/ & 6844/M/06 A.Y:98-99 13 .THE ASSESSEE HAS CLAIMED THAT NO OPPORTUNITY TO CROSS EXAMINE SHRI GHANSHYAM MAHAJAN WAS GIVEN. SHRI GHANSHYAM MAHAJAN HAD GIVEN A COPY OF THE AFFIDAVIT DT.02.12.2004 AND THERE IS AN ACCEPTANCE LETTER OF DR. P.K. CHOPADE IN THE INCOME TAX RECORDS THAT HE HAD RECEIVED A COPY OF THE AFFIDAVIT OF SHRI GHANSH YAM MAHAJAN. DURING THE ASSESSMENT PROCEEDINGS. DR. P.K. CHOPADE NEVER DEMANDED FOR CROSS EXAMINATION OF SHR I GHANSHYAM MAHAJAN. HENCE HIS CLAIM OF NOT BEING GIVEN AN OPPORTUNITY FOR CROSS EXAMINATION IS NOT C ORRECT. IN VIEW OF THE ABOVE FACTS THE ASSESSEES CLAIM I S NOT ACCEPTABLE. ON THE CONTRARY IT HAS BEEN OBSERVED BY THE LD. CIT(A) AT PAGE-23 OF HIS ORDER AS UNDER : ....FURTHER THE APPELLANT IS NOT CORRECT IN SAYIN G THAT HE WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE MR. MAHA JAN AS HE WAS GIVEN FULL OPPORTUNITY BY THE ASSESSING O FFICER TO REVERT THE STATEMENT OF MR. MAHAJAN AND HE HAD ACTUALLY DONE SO...... 14. WITH REGARD TO THE ADDITION OF RS.5 18 750/- WE FIND THAT THE LD. CIT(A) HAS OBSERVED AND HELD AS UNDER (PAGE-23 AND 2 4 OF THE ORDER OF THE CIT(A): SINCE MR. MAHAJAN DID NOT PAY ANY TAX ON THE VDIS DECLARATION THE SAME AMOUNT HAS ALSO BEEN ADDED ON A SUBSTANTIVE BASIS IN HIS CASE AND THE ASSESSING OF FICER HAS ENCLOSED A COPY OF THE ASSESSMENT ORDER MADE IN THE CASE OF MR. MAHAJAN FOR THE ASSESSMENT YEAR 1998-99 WHEREIN IT HAS BEEN CLEARLY STATED THAT THE AMOUNT OF RS.5 18 750/- IS BEING TREATED AS INCOME OF MR. MAH AJAN ON SUBSTANTIVE BASIS. THE SAID ASSESSMENT IS IN T HE APPEAL BEFORE THE CIT(A) II NASIK. IT IS A CARD INAL PRINCIPLE OF TAXATION THAT SAME AMOUNT CANNOT BE TA XED TWICE IN THE HANDS OF THE TWO DIFFERENT PERSONS. A T THE SAME TIME IT IS OF UTMOST IMPORTANCE TO ENSURE THA T THIS AMOUNT DOES NOT GO UNTAXED. IN THE CASE OF THE APPELLANT THE SAME AMOUNT HAS BEEN ADDED TO HIS INCOME ON PROTECTIVE BASIS. THEREFORE THE ONLY LO GICAL ITA NO.6549/ & 6844/M/06 A.Y:98-99 14 COURSE FOR ME IS TO HOLD THAT THE SUM OF RS.5 18 75 0/- SHOULD NOT BE TAXED IN THE HANDS OF THE APPELLANT PROVIDED IT IS TAXED IN THE HANDS OF MR. GHANSHYAM MAHAJAN. HOWEVER IN CASE AT ANY STAGE IN APPEAL RELIEF OF THIS AMOUNT OF RS.5 18 750/- IS GRANTED TO MR. GHANSHYAM MAHAJAN THEN THE SAME HAS TO BE ADDED IN THE HANDS OF THE APPELLANT. 13. IN THE ABSENCE OF ANY COPY OF REASONS RECORDED BY THE AO KEEPING IN VIEW THAT THERE IS CONTRARY FINDING OF THE AO AND THE LD. CIT(A) ON THE ISSUE OF CROSS EXAMINATION OF SHRI GHANSHYA M MAHAJAN AND THE ORDER PASSED BY THE LD. CIT(A) ON THE ADDITIO N OF RS.5 18 750/- IS NOT A REASONED ORDER WE ARE OF THE V IEW THAT IN THE INTEREST OF JUSTICE THE MATTER SHOULD GO BACK TO THE FI LE OF THE LD. CIT(A) AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO T HE FILE OF THE LD. CIT(A) WHO SHALL DECIDE THE SAME AFRESH IN THE LI GHT OF OUR OBSERVATION HEREINABOVE AND ACCORDING TO LAW INCLUDING THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE AND THE R ECENT DECISION IN CIT AND ANOTHER VS. ASLAM ULLA KHAN (2010) 321 ITR 1 50 (KARN.) WHEREIN IT HAS BEEN HELD (HEADNOTES) THAT THE TRIBUN AL HAD RECORDED A FINDING THAT THERE WAS NO APPLICATION OF MIND ON TH E PART OF THE ASSESSING AUTHORITY FOR REOPENING PARTICULARLY IN THE ACT UAL REASONING AS RECORDED IN THE PROPOSAL FOR REOPENING THE ASSESSING A UTHORITY COULD NOT ACT ON THE DICTATES OF THE COMMISSIONER WHO HAD DIRECTED HIM TO REOPEN THE ASSESSMENT. THE LD. CIT(A) SHALL ALSO PROVIDE ITA NO.6549/ & 6844/M/06 A.Y:98-99 15 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THE GROUNDS TAKEN BY THE ASSESSEE AND REVENUE ARE SET ASID E FOR STATISTICAL PURPOSES. 14. IN THE RESULT THE ASSESSEE'S AND REVENUES APPEALS STAN D ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7.5.2010. SD/- SD/- (T.R. SOOD) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 7.5.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26.4.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 27.4.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7.5.2010 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 11.5.2010 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER