SHRI VINEET N. SUCHANTI, MUMBAI v. THE DY CIT CEN CIR-8,

ITSSA 156/MUM/2007 | misc
Pronouncement Date: 16-02-2010 | Result: Allowed

Appeal Details

RSA Number 15619916 RSA 2007
Assessee PAN AAKPS3700P
Bench Mumbai
Appeal Number ITSSA 156/MUM/2007
Duration Of Justice 2 year(s) 1 month(s) 28 day(s)
Appellant SHRI VINEET N. SUCHANTI, MUMBAI
Respondent THE DY CIT CEN CIR-8,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 16-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted K
Tribunal Order Date 16-02-2010
Date Of Final Hearing 22-12-2009
Next Hearing Date 22-12-2009
Assessment Year misc
Appeal Filed On 18-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'K' BENCH MUMBAI BEFORE SMT P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER IT(SS) NO. 154/MUM/2007 (BLOCK PERIOD: 01.04.1988 TO 06.01.1999) MR. VIVEK N. SUCHANTI DCIT CENTRAL CIRCLE 8 13-B JOLLY MAKER APRT. NO. 1 MUMBAI 2ST FLOOR CUFFE PARADE VS. MUMBAI 400005 PAN - AAKPS 3700 P APPELLANT RESPONDENT IT(SS) NO. 155/MUM/2007 (BLOCK PERIOD: 01.04.1988 TO 06.01.1999) SMT. RITA SUCHANTI DCIT CENTRAL CIRCLE 8 13-B JOLLY MAKER APRT. NO. 1 MUMBAI 2ST FLOOR CUFFE PARADE VS. MUMBAI 400005 PAN - AAQPS 4668 A APPELLANT RESPONDENT IT(SS) NO. 156/MUM/2007 (BLOCK PERIOD: 01.04.1988 TO 06.01.1999) SHRI VINEET N. SUCHANTI DCIT CENTRAL CIRCLE 8 13-B JOLLY MAKER APRT. NO. 1 MUMBAI 2ST FLOOR CUFFE PARADE VS. MUMBAI 400005 PAN - AAKPS 2291 K APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAY KOTHARI RESPONDENT BY: SHRI A.K. SINHA O R D E R PER B. RAMAKOTAIAH A.M. THESE ARE GROUP APPEALS AGAINST THE ORDER OF THE CI T(A) CENTRAL II MUMBAI DATED 26.09.2007 HAVING SIMILAR ISSUES. ASSE SSEES HAVE RAISED COMMON GROUNDS WITH VARYING AMOUNTS HENCE THESE ARE CONSIDERED TOGETHER. FOR THE SAKE OF CLARITY THE APPEAL IN IT( SS) NO. 145/MUM/2007 IS CONSIDERED IN DETAIL. IT(SS) NO. 154TO 156/MUM/2007 MR. VIVEK N. SUCHANTI & OTHERS 2 IT(SS) NO. 154/MUM/2007 2. GROUND NO. 1 RAISED IN THIS APPEAL IS AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS GROSSLY ERRED IN CONFIRMING THE ADDITIONS OF UNDISCLOSED IN COME OF RS.7 50 000/- DURING ASSESSMENT YEAR 1997-98 RECEI VED IN CASH FROM CONCEPT COMMUNICATION LTD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SE ARCH IN THE CASE OF COMPANY M/S. CONCEPT COMMUNICATION LTD. AND OTHER G ROUP COMPANIES AT THEIR OFFICE PREMISES OF THE COMPANY AS WELL AS THE RESIDENCES OF ITS DIRECTORS ON 06.01.1999. AS PER THE ASSESSMENT ORDER ASSESSE E IS DIRECTOR IN SOME OF THESE GROUP COMPANIES. THE ASSESSEE HAD FILED HIS R ETURN OF INCOME UNDER SECTION 158BC FOR THE BLOCK PERIOD ON 09.11.1999 DE CLARING UNDISCLOSED INCOME OF RS.11 66 115/-. THE ASSESSMENT HAS BEEN M ADE BY THE DCIT CC- 8 MUMBAI ON 28.01.2001 WHEREIN HE HAS DETERMINED T HE UNDISCLOSED INCOME FOR THE ENTIRE BLOCK PERIOD AT RS.24 45 858/ - MAKING CERTAIN ADDITIONS. THE A.O. HAS NOT ACCEPTED THE RECEIPT OF RS.7 50 000/- SHOWN IN THE SUMMARY OF CASH TRANSACTION FROM M/S. CONCEPT C OMMUNICATION LTD. ON 30.04.1996. IT WAS THE CONTENTION THAT THE SAID COMPANY HAS GIVEN THIS AMOUNT OUT OF THEIR UNDISCLOSED INCOME. THE A.O. DI D NOT ACCEPT AT THE TIME ASSESSMENT BUT ON REMAND SENT A REPORT ACCEPTING TH E ASSESSEES EXPLANATION. THE CIT(A) HOWEVER DID NOT ACCEPT TH E SAME STATING THAT THE SAME WAS NOT DISCLOSED AT THE TIME OF SEARCH THE B LOCK ASSESSMENTS IN EACH PERSONS HAND IS DIFFERENT AND THE SAID CASH OUT FLO W WAS NOT EXPLAINED WHEN THE APPEAL OF CONCEPT COMMUNICATION LTD. WAS DECIDE D BY HIM EARLIER. HE CONFIRMED THE ADDITION. 4. BEFORE US REFERRING TO THE VARIOUS EXPLANATIONS GI VEN DURING THE ASSESSMENT AND TO THE CIT(A) AND THE REMAND REPORT IT WAS SUBMITTED THAT THE ISSUE IS WHETHER THE AMOUNT RECEIVED FROM THE S AID CONCEPT COMMUNICATION LTD. WAS ACCOUNTED AND EXPLAINED IN T HE HAND OF THE SAID CONCEPT COMMUNICATION LTD. FROM THE BEGINNING OR NO T WHEN THE GROUP ASSESSMENTS WERE BEING TAKEN UP. IT WAS THE SUBMISS ION THAT THE ASSESSMENTS IN THE GROUP HAVE TAKEN THE SEIZED MATE RIAL INTO CONSIDERATION AND ASSESSEES GAVE CASH FLOW STATEMENTS AND WHEREVE R THERE WAS NO SOURCE IT(SS) NO. 154TO 156/MUM/2007 MR. VIVEK N. SUCHANTI & OTHERS 3 THE SAME WAS ADMITTED AS UNDISCLOSED INCOME. REFERR ING TO THE EXPLANATION GIVEN FROM THE BEGINNING THE LEARNED COUNSEL SUBMI TTED THAT HE HAD NO OBJECTION IF THE MATTER IS REMANDED TO THE A.O. TO EXAMINE WHETHER THE AMOUNT OF RS.7 50 000/- RECEIVED FROM M/S. CONCEPT COMMUNICATION LTD. WAS EXPLAINED IN THE HANDS OF THE SAID COMPANY DURI NG THE BLOCK ASSESSMENT PROCEEDINGS. THE LEARNED D.R. HAS NO OBJ ECTION. 5. WE HAVE CONSIDERED THE ISSUE AND THE CONTENTIONS RA ISED BEFORE US. ADMITTEDLY THE STAND OF THE ASSESSEE WAS THAT THE A MOUNT WAS RECEIVED ON 30.04.1996 FROM THE SAID COMPANY. SIMILAR EXPLANATI ON WAS ALSO GIVEN IN OTHER PERSONS CASES ALSO AND THE SAID AMOUNT WAS E XCLUDED IN QUANTIFYING THE UNDISCLOSED INCOME. AT THE TIME OF COMPLETING T HE ASSESSMENT THE A.O. DID NOT ACCEPT THE EXPLANATION BUT IN REMAND PROCEE DINGS THE CASH FLOW WAS ACCEPTED. THE CIT(A) HOWEVER DID NOT ACCEPT FOR T HE REASONS STATED BY HIM. WE ARE OF THE OPINION THAT THE ISSUE CAN BE EXAMINE D BY VERIFYING THE STATEMENTS SUBMITTED IN THE HANDS OF THE COMPANY IN WHOSE CASE ALSO UNDISCLOSED INCOME WAS BROUGHT TO TAX. IF ON THE SA ID DATE THERE WAS OUTFLOW OF MONEY TO THE VARIOUS PEOPLE IN THE CASH FLOW STATEMENT OR OTHER STATEMENTS FURNISHED AT THE TIME OF QUANTIFYING THE UNDISCLOSED INCOME OF THE COMPANY THE SAME HAS TO BE GIVEN CREDIT IN THE INDIVIDUAL HANDS WHO HAVE STATED TO HAVE RECEIVED FROM THE COMPANY. SAME AMOUNT CANNOT BE TAXED TWICE ONCE IN THE HAND OF THE COMPANY WHERE IT WAS EARNED AND AGAIN IN THE HANDS OF THE INDIVIDUAL WHEN IT WAS RECEIVED . HOWEVER THIS REQUIRE EXAMINATION OF RECORD. IN VIEW OF THIS THE A.O. IS DIRECTED TO EXAMINE THE ISSUE AFRESH PARTICULARLY WITH REFERENCE TO THE DOCUMENTS/STATEMENTS/EVIDENCES AVAILABLE IN THE REC ORDS OF THE COMPANY AND GIVE CREDIT IF THE AMOUNT WAS RECEIVED FROM THE COMPANY. MATTER IS SET ASIDE TO THE A.O. TO DO THE NEEDFUL. 6. GROUND NO. 2 IS AS UNDER: 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ALSO ERRED IN ENHANCING THE ASSESSED INCOME BY RS.12 15 445/- IN RESPECT OF UNDISCLOSED INVESTMENT IN SHARES AND DEBENTURES AND THE REASONS ASSIGNED BY HIM IN ENHANCING THE INCOME ARE WRONG A ND ARE CONTRARY TO THE PROVISIONS OF INCOME TAX ACT 1961 AND RULES MADE THERE UNDER. IT(SS) NO. 154TO 156/MUM/2007 MR. VIVEK N. SUCHANTI & OTHERS 4 7. IN THE RETURN FILED UNDER SECTION 158BC OF THE I.T. ACT THE ASSESSEE HAD DISCLOSED THE HITHERTO UNDISCLOSED DIVIDEND IN COME FROM VARIOUS COMPANIES ON THE SHARES/DEBENTURES HELD BY THE ASSE SSEE OUTSIDE THE BOOKS OF ACCOUNTS. ONLY DIVIDEND INCOME WAS OFFERED BY TH E ASSESSEE. NO INCOME IN RESPECT OF THE INVESTMENT IN THE SHARES/DEBENTURES WHICH ALSO HAD REMAINED/WERE INVESTED OUTSIDE THE BOOKS OF ACCOUNT WERE OFFERED. THEREFORE AN ENHANCEMENT PROPOSAL WAS SENT TO THE ASSESSEE BY THE CIT(A) VIDE HIS OFFICE LETTER DATED 29.10.2002. SUBSEQUENT LY VIDE HIS OFFICE LETTER DATED 26.11.2002 THE A.O. WAS ASKED TO EXAMINE THI S ASPECT AND SUBMIT HIS REPORT IN RESPECT OF THE INVESTMENTS MADE IN TH E SHARES AND OR DEBENTURES FROM WHICH THE ASSESSEE HAS DISCLOSED DI VIDEND OF INCOME. AFTER EXAMINING ALL THESE ASPECTS THE A.O. HAD SENT THE R EMAND REPORT VIDE HIS LETTER DATED 21.04.2007. IT EXPLAINED THAT THE ASSE SSEE HAD NO SHARES AT THE TIME OF SEARCH AND THAT THE ADDITIONS CANNOT BE MAD E WHEN NO ASSETS ARE FOUND PERTAINING THE SHARES. THE ASSESSEEE HOWEVER GAVE THE VALUATION OF SHARES AS OF THE YEAR IN WHICH THE DIVIDEND WAS REC EIVED. THE VALUATION OF SUCH SHARES ON WHICH DIVIDEND WAS RECEIVED WAS QUAN TIFIED AT RS.12 15 445/-. INSPITE OF OBJECTION FROM THE ASSES SEE THE CIT(A) HAS ENHANCED THE ASSESSMENT BY THE ABOVE AMOUNT STATING AS UNDER: - 4.2 I HAVE CONSIDERED THIS ASPECT. IN THE ABSENCE OF ANY DETAILS THE METHOD SUGGESTED BY A.R. SHRI BL SARDA SEEMS TO BE MORE APPROPRIATE AND HENCE TO THE EXTENT OF RS.12 15 445/- THE INCOM E IS ENHANCED IN RESPECT OF THIS UNDISCLOSED INVESTMENT IN SHARES AN D DEBENTURES. THE AO IS DIRECTED TO BRING TO TAX THIS ENHANCED INCOME OF RS.12 15 445/- AND RAISE THE ADDITIONAL DEMAND IN RESPECT OF THIS UNDI SCLOSED INCOME. 8. DRAWING OUR ATTENTION TO THE FACTS AND OBJECTIONS P LACED BEFORE THE A.O. AND THE CIT(A) THE LEARNED COUNSEL SUBMITTED THAT T HE UNDISCLOSED INCOME WERE OFFERED ON THE BASIS OF TRANSACTIONS IN THE BA NK ACCOUNT OF PURCHASE OF SHARES AND SECURITIES AND THE DIVIDENDS IF ANY RE CEIVED ON THE SO CALLED SHARES WERE SEPARATELY OFFERED AS INCOME. HE DREW O UR ATTENTION TO THE METHOD OF QUANTIFYING THE UNDISCLOSED INCOME ON SHA RE TRANSACTIONS AND SUBMITTED THAT THE NET TRANSACTIONS OF THE PERIOD W AS OFFERED WHICH COULD NOT BE EXPLAINED AND THE SHARES ON WHICH DIVIDENDS WER E RECEIVED IN THE INTERIM PERIOD WAS AGAIN SOLD LATER AND THE PROCEEDS WENT INTO THE SAME ACCOUNT. NO IT(SS) NO. 154TO 156/MUM/2007 MR. VIVEK N. SUCHANTI & OTHERS 5 SHARES WERE SEIZED AT THE TIME OF SEARCH INDICATING THAT THE SHARES WERE SOLD. IT WAS THE SUBMISSION THAT THE ENTIRE ACCOUNT OPERA TED OVER A PERIOD WAS CONSIDERED IN ADDING AT THE UNDISCLOSED INCOME FROM SHARE TRANSACTIONS AND SO VALUATION OF INDIVIDUAL SHARES SHOULD NOT ARISE. IT WAS HIS SUBMISSION THAT THE ORDER OF ENHANCEMENT BY THE CIT(A) WAS NOT CORR ECT. 9. THE LEARNED D.R. HOWEVER SUBMITTED THAT THE ASSES SEE HAS GIVEN VALUATION AND THE CIT(A) HAS MADE THE ADDITION ON T HE METHOD SUGGESTED BY THE A.R. NO INTERFERENCE IS CALLED FOR. 10. ON THIS ISSUE WE HAVE TO ACCEPT THE SUBMISSIONS OF THE LEARNED COUNSEL. FIRST OF ALL THERE ARE NO UNDISCLOSED ASS ETS OF SHARES FOUND ON THE DAY OF SEARCH. THE SHARE TRANSACTIONS WERE OUTSIDE THE BOOKS OF ACCOUNT AND ASSESSEE HAD QUANTIFIED THE UNDISCLOSED INCOME ON T HE NETTING PRINCIPLE OF TOTAL PURCHASES/SALES IN DEBIT AND CREDIT IN THE AC COUNT AND THE METHOD WAS ACCEPTED. IN THE METHOD ADOPTED THERE CANNOT BE AD DITION ON VALUATION OF INDIVIDUAL SHARES ON ANY PARTICULAR DATE WHEN THE ACTUAL PURCHASE HOLDING PERIOD AND SUBSEQUENT SALE WERE NOT AVAILABLE. THE ASSESSEE ALSO ADMITTED THAT INDIVIDUAL DETAILS WERE NOT AVAILABLE HENCE T HE APPROPRIATE METHOD WAS CONSIDERED FOR ARRIVING AT THE UNDISCLOSED INCOME. WE ARE OF THE VIEW THAT THE ENHANCEMENT CONSIDERED BY THE CIT(A) ON THE BAS IS OF THE VALUE OF SHARES ON BASIS OF NAMES OF THE COMPANIES FROM WHOM DIVIDENDS WERE RECEIVED AS AT THE END OF THE YEAR CAN NOT BE SUPPO RTED EITHER ON FACTS OR ON LAW. SINCE INDIVIDUAL SHARE TRANSACTIONS COULD NOT BE CORRELATED THE A.O. ADOPTED THE METHOD OF NETTING ALL THE TRANSACTIONS YEAR-WISE ON THE BASIS OF BANK TRANSACTIONS AND DETERMINED THE UNDISCLOSED IN COME. HENCE VALUATION OF INDIVIDUAL SHARE PURCHASES ON PRESUMPTIONS DOES NOT ARISE IN THE METHOD ADOPTED. THE ACTION OF THE CIT(A) CANNOT BE SUPPORT ED ON THESE FACTS. THE GROUND IS ALLOWED. ASSESSEE GETS RELIEF ACCORDINGLY . 11. APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. IT(SS) NO. 155/MUM/2007 12. GROUND NO. 1 IS AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS GROSSLY ERRED IN CONFIRMING THE ADDITIONS OF UNDISCLOSED IN COME OF IT(SS) NO. 154TO 156/MUM/2007 MR. VIVEK N. SUCHANTI & OTHERS 6 RS.5 00 000/- DURING ASSESSMENT YEAR 1997-98 RECEI VED IN CASH FROM CONCEPT COMMUNICATION LTD. 13. THE GROUND IS SIMILAR TO THE FIRST GROUND IN ITA NO . 154/MUM/2007. FOR THE REASONS STATED THEREIN THE A.O. IS DIRECTED TO EXAMINE THE EXPLANATION OF THE ASSESSEE WITH THE COMPANY RECORD S AND DO THE NEEDFUL. FOR THIS PURPOSE THE MATTER IS RESTORED TO THE FILE OF THE A.O. 14. APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. IT(SS) NO. 156/MUM/2007 15. GROUND NO. 1 OF THE APPEAL IS AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS GROSSLY ERRED IN CONFIRMING THE ADDITIONS OF UNDISCLOSED IN COME OF RS.7 50 000/- DURING ASSESSMENT YEAR 1997-98 RECEI VED IN CASH FROM CONCEPT COMMUNICATION LTD. 16. THE GROUND IS SIMILAR TO THE FIRST GROUND IN ITA NO . 154/MUM/2007. FOR THE REASONS STATED THEREIN THE A.O. IS DIRECTED TO EXAMINE THE EXPLANATION OF THE ASSESSEE WITH THE COMPANY RECORD S AND DO THE NEEDFUL. FOR THIS PURPOSE THE MATTER IS RESTORED TO THE FILE OF THE A.O. 17. GROUND NO. 2 IS AS UNDER: - 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ALSO ERRED IN ENHANCING THE ASSESSED INCOME BY RS.1 71 102/- I N RESPECT OF UNDISCLOSED INVESTMENT IN SHARES AND DEBENTURES AND THE REASONS ASSIGNED BY HIM IN ENHANCING THE INCOME ARE WRONG A ND ARE CONTRARY TO THE PROVISIONS OF INCOME TAX ACT 1961 AND RULES MAKE THERE UNDER. 18. THIS GROUND IS SIMILAR TO GROUND NO. 2 CONSIDERED I N THE ABOVE APPEAL IN IT(SS) NO. 154/MUM/2007. FOR THE REASONS STATED THEREIN SINCE THE FACTS ARE SIMILAR THE GROUND IS ALLOWED. ASSESSEE GETS R ELIEF ACCORDINGLY. 19. IN THE RESULT ALL THE APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH FEBRUARY 2010. SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEM BER ACCOUNTANT MEMBER MUMBAI DATED: 16 TH FEBRUARY 2010 IT(SS) NO. 154TO 156/MUM/2007 MR. VIVEK N. SUCHANTI & OTHERS 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CENTRAL II MUMBAI 4. THE CIT CENTRAL-I MUMBAI CITY 5. THE DR K BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.