DAYANAND ARYA, KOLKATA v. ACIT CEN CIR 17 & 28, MUMBAI

ITA 713/MUM/2009 | 2000-2001
Pronouncement Date: 23-03-2010 | Result: Allowed

Appeal Details

RSA Number 71319914 RSA 2009
Assessee PAN ADBPA0860E
Bench Mumbai
Appeal Number ITA 713/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant DAYANAND ARYA, KOLKATA
Respondent ACIT CEN CIR 17 & 28, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 23-03-2010
Date Of Final Hearing 17-02-2010
Next Hearing Date 17-02-2010
Assessment Year 2000-2001
Appeal Filed On 03-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI A.L. GEHLOT A.M. AND SMT. P. MADHAVI DEVI J.M. ITA NOS. 713 714 715 716 717 718 719/M/2009 ASSESSMENT YEARS: 2000-01 2001-02 2002-03 2003-0 4 2004-05 2005-06 2006-07 SHRI DAYANAND ARYA APPELLANT 147 TRANSPORT CENTRE ROHTAK ROAD EAST PUNJABI BAGH NEW DELHI 35. (PAN ADBPA0860E) VS. ASSTT. COMMISSIONER OF INCOME-TAX RESPONDENT CENTRAL CIRCLE 17 & 28 MUMBAAI AND ITA NOS. 720 721 722 723 724 725 726/M/2009 ASSESSMENT YEARS: 2000-01 2001-02 2002-03 2003-0 4 2004-05 2005-06 2006-07 SHRI RATAN PARKASH ARYA APPELLANT 3/2/3 KAVI RAJ ROW KOLKATA 700 073 (PAN ADAPA7965P) VS. ASSTT. COMMISSIONER OF INCOME-TAX RESPONDENT CENTRAL CIRCLE 17 & 28 MUMBAI APPELLANT BY : SHRI K. SAMPATH SHRI R.K. RAGHVAN SHRI PAWAN KUMAR RUSTAG I RESPONDENT BY : SHRI G. GURSWAMI SHRI SANJEEV JAIN ORDER PER BENCH: THESE APPEALS FILED BY TWO ASSESSEES ARE DIRECTED AGAINST THE ORDERS OF CIT(A). SINCE THE ISSUES RAISED IN THESE APPEALS ARE BASED ON ITA NOS. 713 TO 726/M/09 SHRI DAYANAND ARYA AND SHRI RATAN PRAKASH ARYA 2 IDENTICAL SET OF FACTS THEY WERE HEARD TOGETHER AN D THEREFORE WE FIND IT CONVENIENT TO DISPOSE OF THE SAME BY THIS CONSOL IDATED ORDER. 2. THE LEARNED REPRESENTATIVES OF THE PARTIES SUBMI TTED THAT SINCE THE GROUNDS RAISED IN ALL THESE APPEALS ARE ON IDEN TICAL SET OF FACTS THE FACTS OF THE CASE OF RATAN PRAKASH ARYA IN ITA NO. 720/M/2009 FOR AY 2000-01 MAY BE CONSIDERED FOR DECIDING THESE APPEALS. WE ACCORDINGLY CONSIDER THE FACTS OF THE CASE OF RATAN PRAKASH ARYA IN ITA NO. 720/M/09 FOR AY 2000-01 AND THE GROUNDS RAI SED IN THE APPEAL ARE REPRODUCED BELOW AS THE GROUNDS IN ALL O THER APPEALS ARE IDENTICAL TO THAT OF AY 2000-01:- 1. THAT THE LEARNED CIT(A) GROSSLY ERRED ON THE FAC TS AND IN LAW IN CONFIRMING THE ORDER OF ACIT U/S 143(3)/153C ASSESSING THE INCOME AT RS. 12 04 360/- AND DISMISSING THE AP PEAL OF THE APPELLANT. 2. (I) THAT THE LEARNED CIT(A) GROSSLY ERRED ON THE FACTS AND IN LAW IN REJECTING THE LEGAL CONTENTIONS OF THE APPEL LANT REGARDING THE NON-APPLICABILITY OF SECTION 153C OF THE ACT TO THE CASE OF THE APPELLANT. (II) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE T HE FACT THAT THE SEIZED DOCUMENTS ON THE BASIS OF WHICH PROCEEDINGS U/S 153C WAS INITIATED IN THE APPELLANTS CASE BELONGED TO T HE FIRM ETO IN WHICH FIRM THE APPELLANT WAS AN ERSTWHILE PARTNER A ND NOT A PARTNER AT THE TIME OF SEARCH CONDUCTED ON 7/8.2.20 06 ON THE ABOVE FIRM AND SUCH DOCUMENT COULD NOT BE USED AGAI NST THE APPELLANT TO INITIATE PROCEEDINGS U/S 153C OF THE A CT. THE ORDER OF THE AO BEING VITIATED IN LAW HAD TO BE ANNULLED. (III) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT WAS NOT A PARTNER OF ETO WHEN THE SEARCH WAS CONDUC TED AT THE BUSINESS PREMISES ON 7/8.2.2006 AS HE HAD RETIRED F ORM THE FIRM AS ON 15/01/05. IV) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE TH E FACT THAT THE DISCLOSURE BY THE FIRM OF INTEREST INCOME HAVING BE EN PAID TO ERSTWHILE PARTNERS ON THEIR RESPECTIVE CAPITAL AS D EPICTED IN THE SEIZED DOCUMENT BELONGING TO THE FIRM ETO DOES NOT IN ANY WAY GIVE AUTHORITY TO THE AO TO PROCEED AGAINST THE APP ELLANT U/S 153C OF THE ACT AS THE DOCUMENTS IN QUESTION UNDISP UTEDLY BELONG TO THE FIRM ETO AND NOT TO THE APPELLANT. ITA NOS. 713 TO 726/M/09 SHRI DAYANAND ARYA AND SHRI RATAN PRAKASH ARYA 3 V) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THE AO ASSESSING THE FIRM DID NOT RECORD ANY SATISFACTION THAT THE ASSETS/DOCUMENTS SEIZED IN THIS CASE BELONG TO THE APPELLANT BEFORE THE SAME WAS HANDED OVER TO THE AO OF THE AP PELLANT FOR PROCEEDINGS U/S 153C OF THE ACT. VI) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE TH E UNDISPUTED FACT THAT THE APPELLANT DID NOT IN ANY WAY ACCEPT T HE CONTENTS OF THE SEIZED DOCUMENTS WHICH BELONGED TO THE FIRM ETO . THE WRITTEN ARGUMENT IN THIS CONTEXT SUBMITTED BY THE APPELLANT ON THIS ISSUE HAS BEEN TOTALLY IGNORED BY THE CIT(A). VII) THAT THE LEARNED CIT(A) GROSSLY ERRED IN HOLDI NG THAT A DOCUMENT RECORDED BY A RIVAL GROUP INDICATING INCOM E EARNED BY THE APPELLANT PROVIDES INDEPENDENT RELIABLE AND AU THENTIC AFFIRMATION OF INCOME NOT RETURNED WITHOUT APPRECIA TING THE CONTENTION OF THE APPELLANT THAT THE PROCEEDINGS U/ S 153C CANNOT BE INITIATED ON SUCH DOCUMENT AS THE SAME DID NOT B ELONG TO THE APPELLANT. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE LEAR NED CIT(A) GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 6 0 7 574/- AS DEPICTED IN THE SEIZED DOCUMENT ON ACCOUNT OF INTE REST ALLEGED TO HAVE ACCRUED AS INCOME TO THE APPELLANT FROM THE FI RM WITHOUT APPRECIATING THE CONTENTION OF THE APPELLANT: A. THAT THE INTEREST INCOME WAS NOT ALLOWED AS DEDU CTION IN THE HANDS OF THE FIRM AND THAT SUCH A CLAIM WAS ONLY PE NDING ADJUDICATION BEFORE HONBLE SETTLEMENT COMMISSION. B. NO SUCH INTEREST WAS RECEIVED OR RECEIVABLE FROM THE FIRM AS SHOWN IN THE SEIZED DOCUMENT AS THE SAME WAS UNILAT ERALLY RECORDED BY THE RIVAL PARTNERS WHO WERE IN CHARGE O F THE AFFAIRS OF THE FIRM AT THE TIME OF SEARCH. C. EVEN OTHERWISE THE ANALYSIS OF WORKING OF INTERE ST ADDITIONS MADE BY AO ON THE BASIS OF SEIZED MATERIAL IS ERRON EOUS. 4. THAT THE LEARNED CIT(A) GROSSLY ERRED ON FACTS AND IN LAW IN SUSTAINING THE DISALLOWANCE MADE BY THE AO OF CAPIT AL LOSS OF RS. 3 24 648/- BEING THE LOSS INCURRED ON PURCHASE AND SALE OF SHARES OF VARIOUS COMPANIES. THE CIT(A) FURTHER ERR ED IN ACCEPTING THE STAND OF THE AO IN NOT ALLOWING CARRY FORWARD OF THE SAID LOSS. 5. THAT THE LEARNED CIT(A) GROSSLY ERRED ON FACTS A ND IN LAW IN SUSTAINING THE ORDER OF AO DISALLOWING LOSS OF RS. 324648 BEING LONG TERM CAPITAL LOSS ORIGINALLY CLAIMED AND ALLOW ED BY AO. 6. THAT IN PASSING THE IMPUGNED ORDER THE LEARNED C IT(A) FAILED TO APPRECIATE THE DETAILED ARGUMENTS AND CON TENTIONS OF ITA NOS. 713 TO 726/M/09 SHRI DAYANAND ARYA AND SHRI RATAN PRAKASH ARYA 4 THE APPELLANT AND PLACED RELIANCE ON IRRELEVANT CON SIDERATIONS IN SUSTAINING THE ORDER OF THE AO. THE ORDER OF THE CI T(A) BEING VITIATED IN LAW IS LIABLE TO BE SET ASIDE. 3. BRIEFLY THE FACTS FROM THE CASE OF RATAN PRAKASH ARYA IN ITA NO. 720/M/2009 FOR AY 2000-01 ARE THAT THE APPELLANT-AS SESSEES WERE PARTNERS IN M/S ECONOMIC TRANSPORT ORGANISATION (IN SHORT ETO). A SEARCH WAS CONDUCTED ON 7/8 TH FEBRUARY 2006 AT THE OFFICE AND OTHER PREMISES OF ETO. THE APPELLANT-ASSESSEES WERE PARTN ERS OF ETO THEREFORE ASSESSMENT PROCEEDINGS U/S 153C OF THE A CT WERE INITIATED. THE AO MADE ASSESSMENT ACCORDINGLY. THE ASSESSEE FI LED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE ON LEGAL ISSUE AS WELL AS ON MERIT. 4. THE LEARNED AR AT THE OUTSET SUBMITTED THAT TH E FIRM M/S ETO HAS FILED APPLICATION U/S 245C BEFORE THE SETTLEMEN T COMMISSION KOLKATTA WHICH HAS BEEN ADMITTED BY THE SETTLEMENT COMMISSION KOLKATTA. HE FURTHER SUBMITTED THAT IN ANNEXURE-2 CONFIDENTIAL SECTION OF THE APPLICATION THE FIRM HAS GIVEN THE CAPITAL ACCOUNT OF THE PARTNERS WHICH HAVE BEEN RECONSTRUCTED ON THE BASIS OF SEIZED DOCUMENTS. THE LEARNED AR SUBMITTED THAT CREDIT OF INTEREST IN THE RECASTED CAPITAL ACCOUNT HAS REFLECTED IN THE SEIZE D DOCUMENT AND HAS BEEN ADMITTED BY THE FIRM IN ITS APPLICATION BEFORE THE SETTLEMENT COMMISSION KOLKATTA THE INTEREST CREDITED ON THE CAPITAL BALANCE BY THE FIRM DID NOT DISCLOSE IN THE REGULAR RETURN OF INCOME IS CONSIDERED AS INCOME OF THE ASSESSEE FOR THE YEAR. THE LEARNED AR SUBMITTED THAT THE ISSUE TO BE DECIDED IN THESE APPEALS BEARS ON T HE FINAL OUTCOME OF THE SETTLEMENT COMMISSION IN THE CASE OF M/S ETO. T HE LEARNED AR ACCORDINGLY SUBMITTED THAT THE MATTER MAY BE SENT B ACK TO THE FILE OF THE AO INCLUDING AY 2006-07 WHERE THE AO HAS INITIA TED ACTION U/S 148 OF THE ACT. 5. THE LEARNED DR ON THE OTHER HAND DID NOT CONTR OVERT THE FACTS POINTED OUT BY THE LEARNED AR TO THE FACT THAT THE SETTLEMENT COMMISSION HAS ADMITTED APPLICATION OF M/S ETO AND THE ASSESSEE ITA NOS. 713 TO 726/M/09 SHRI DAYANAND ARYA AND SHRI RATAN PRAKASH ARYA 5 ARE PARTNERS OF THE M/S ETO THEREFORE THE FINAL O UTCOME OF THE SETTLEMENT COMMISSION BEARS ON THE ISSUES UNDER CON SIDERATION. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. THE FIRM M/S ECONOMIC TRANSPORT ORGANIZATION WAS SUBJECTED TO SEARCH. AN APPLICATION FILED U/S 2 45C BY THE FIRM M/S ECONOMIC TRANSPORT ORGANIZATION HAS BEEN ADMITT ED BY THE SETTLEMENT COMMISSION U/S 245D(1) OF THE ACT. BOTH THE APPELLANT- ASSESSEES ARE PARTNERS OF THE FIRM M/S ECONOMIC TRA NSPORT ORGANIZATION. WE NOTICED THAT THE FINAL OUTCOME OF THE ORDER OF SETTLEMENT COMMISSION IN CASE OF M/S ECONOMIC TRAN SPORT ORGANIZATION BEARS ON THE ISSUES IN THE APPEALS UND ER CONSIDERATION. SINCE THE FACTS AND FIGURES OF THE ISSUES ARE REQUI RED TO BE EXAMINED/CONSIDERED IN THE LIGHT OF FINAL OUTCOME F ROM THE ORDER OF SETTLEMENT COMMISSION IN CASE OF THE FIRM M/S ECONO MIC TRANSPORT ORGANIZATION WE THEREFORE DEEM IT FIT AND PROPER TO REMIT THE MATTERS FOR AY 2000-01 TO 2005-06 BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUES AFRESH CONSIDERING T HE FINAL OUTCOME OF THE ORDER OF SETTLEMENT COMMISSION IN CASE OF THE F IRM M/S ECONOMIC TRANSPORT ORGANIZATION AND IN ACCORDANCE WITH LAW A FTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. IN AY 2006- 07 THE AO REOPENED THE COMPLETED ASSESSMENT U/S 148 OF THE AC T. THE GROUNDS OF THIS YEAR AY 2006-07 ALSO BEARS TO THE FINAL OUT COME OF THE SETTLEMENT COMMISSION THEREFORE THE APPEAL OF THI S YEAR 2006-07 IS ALSO REMITTED BACK TO THE FILE OF THE AO WITH IDENT ICAL DIRECTIONS AS GIVEN IN AY 2000-01 TO 2005-06. ITA NOS. 713 TO 726/M/09 SHRI DAYANAND ARYA AND SHRI RATAN PRAKASH ARYA 6 7. IN THE RESULT THE APPEALS IN THE CASE OF RATAN PRAKASH ARYA AND IN THE CASE OF DAYANAND ARYA FOR ASSESSMENT YEARS 2 000-01 TO 2006- 07 ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ON THIS 23 RD DAY OF MARCH 2010 SD/- SD/- (P. MADHAVI DEVI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 23 RD MARCH 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE D BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 9.03.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 23.03.10 SR.P.S/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.P.S./PS SR.P.S./P.S ITA NOS. 713 TO 726/M/09 SHRI DAYANAND ARYA AND SHRI RATAN PRAKASH ARYA 7 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER