THE ACIT, CEN. Circle-2., Baroda v. SHRI DINESHCHANDRA G. SHARMA, Baroda

ITSSA 87/AHD/2003 | misc
Pronouncement Date: 07-05-2010 | Result: Dismissed

Appeal Details

RSA Number 8720516 RSA 2003
Bench Ahmedabad
Appeal Number ITSSA 87/AHD/2003
Duration Of Justice 7 year(s) 1 month(s) 11 day(s)
Appellant THE ACIT, CEN. Circle-2., Baroda
Respondent SHRI DINESHCHANDRA G. SHARMA, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 07-05-2010
Date Of Final Hearing 04-05-2010
Next Hearing Date 04-05-2010
Assessment Year misc
Appeal Filed On 27-03-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S.SAINI ACCOUNTANT MEMBER DATE OF HEARING : 4.05.10 DRAFTED ON: 4.05.10 IT(SS)A NO.87/AHD/2003 BLOCK PERIOD 1990-1991 TO 28.07.1999 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 6 TH FLOOR AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA. VS. SHRI DINESHCHANDRA G. SHARMA PRATAPNAGAR BARODA. PAN/GIR NO. : (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ANIL KUMAR CTI D.R. RESPONDENT BY: SHRI ANKIT TALSANIA A.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV AHM EDABAD DATED 31.12.2002 BY TAKING FOLLOWING GROUNDS. THE C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE FOLLOWING ADDITIONS ON THE BASIS OF CASH FLOW STATE MENT FILED BEFORE THE LD.C.I.T.(APPEALS) WHICH HAS NOT BEEN PROVIDED TO THE ASSESSING OFFICER UNDER RULE 46A(3) FOR HIS REBUTAL. 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.35 500/- MADE ON ACCOUNT OF UNEXPLAI NED CASH. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.32 700/- MADE ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN IVPS. - 2 - 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.15 000/- MADE ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN SANSUI T.V. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.3 61 000/- MADE ON ACCOUNT OF UNEXPL AINED INVESTMENT IN PURCHASE OF GOPAL DIARY. 5. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.48 000/- MADE ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN CHAPANER SHOP. 6. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.4 82 100/- MADE ON ACCOUNT OF UNEXPL AINED INVESTMENT IN FDRS ETC. 7. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.15 64 000/- MADE ON ACCOUNT OF UNACC OUNTED MONEY LENDING BUSINESS PROMISSORY NOTES BLANK CHE QUES. 8. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.64 421/- MADE ON ACCOUNT OF VISI INV ESTMENT. 9. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.2 50 000/- MADE ON ACCOUNT OF CASH L OANS. 10. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.1 97 879/- MADE ON ACCOUNT OF UNEXPL AINED INVESTMENT IN MACHINERY & FURNITURE. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE C.I.T.(APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF T HE ASSESSING OFFICER. 2. AT THE OUTSET THE LEARNED DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS)HAS VIOLATED RULE 46A(3) OF THE INCOME TAX RULES 1962 BY ACCEPTING CASH FLOW STATEMENT OF THE ASSESSEE AND TAKING INTO CONS IDERATION THE SAME HAS DELETED THE VARIOUS ADDITIONS MADE BY THE LEARN ED ASSESSING OFFICER WITHOUT CONFRONTING THE SAME TO THE LEARNED ASSESSING OFFICER. HE FURTHER SUBMITTED THAT OTHERWISE ON MERITS THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS PASSED A WE LL REASONED ORDER CONSIDERING ALL ASPECTS OF THE ISSUES AND THE REVENUE HAS NO CASE. - 3 - 3. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE ON THE OTHER HAND SUPPORTED THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS)HAS ACCEPTED CASH FLOW STATEMENT FILED BY THE ASSESSEE WHICH WAS NOT FILED BEFORE THE LEARNED ASSESSING OFFICER AND WHICH WAS NOT CONFRONTED TO THE LEARNED ASSESSING OFFICER BY THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) BEFORE ACCEPTING THE SAME AND TAKING T HE SAME INTO CONSIDERATION AND DELETING THE VARIOUS ADDITIONS MA DE BY THE LEARNED ASSESSING OFFICER. WE FIND THAT THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS) HAS HELD AS UNDER:- IT IS SEEN THAT THE ADDITIONS ARE BASICALLY RELATE D TO ASSETS IN THE FORM OF ADVANCES FDS VALUABLE ASSETS AND UNACCOUN TED INVESTMENT IN PROPERTY. WITH REGARD TO MONEY LENDIN G BUSINESS IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT GIVEN TH E BENEFIT OF PEAK AND ADDED ALL THE ADVANCES TREATING THEM OUTSTANDI NG AS ON 28/7/99 I.E. THE DATE OF SEARCH. IN THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED A STATEMENT OF ASSETS AND LIABIL ITIES AS ON 28.07.1999 FOR THE ENTIRE BLOCK PERIOD CLAIMED TO BE PREPARED ON THE BASIS OF SEIZED MATERIAL AND OTHER MATERIALS AV AILABLE WITH HIM. THE ASSESSING OFFICER DID NOT ACCEPT THE SAME. THE REASONS FOR NOT ACCEPTING AS GIVEN BY THE AO. IS THAT THE SAME IS CREATED AFTER THOUGHT AND FABRICATED ONE. THOUGH IT IS SEE N THAT IN THE ASSESSMENT ORDER HE FAILED TO GIVE ANY REASONS WHI CH COULD PROVE THAT THE SAME IS FABRICATED ONE. HOWEVER IN THE APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED TO PREPARED A CASH FLOW STATEMENT TO SHOW THE AVAILABILITY OF FUNDS AT A P ARTICULAR TIME TO EXPLAIN THE INVESTMENT OF VARIOUS ASSETS FOUND DURI NG THE COURSE OF SEARCH. IN OTHER WORDS HE WAS ASKED TO PROVE NE XUS BETWEEN THE RECEIPTS AND ITS APPLICABILITY IN THE FORM OF V ARIOUS UNACCOUNTED ADVANCES FDS AND INVESTMENTS ETC. HE SUBMITTED THE SAME FOR THE ENTIRE BLOCK PERIOD SHOWING THE S OURCE OF RECEIPTS AND ITS APPLICABILITY IN VARIOUS ASSETS. P ERUSAL OF THE CASH FLOW STATEMENT REVEAL THAT THE INFLOW IS MAINLY ADV ANCES RECEIVED - 4 - BACK INTEREST INCOME EARNED ON THESE ADVANCES AN A MOUNT OF RS.2 50 000/- RECEIVED ON VARIOUS DATES FROM HIS FA THER UNCLE WILL DATED 20.08.1996 RS.9 LACS FROM VISI (CHIT F UND) SCHEMES RS.4 20 154/- BY WAY OF LOANS FROM VARIOUS BANKS ON VARIOUS FDS. NOW LET US EXAMINE THE EACH HEAD OF R ECEIPT SEPARATELY. IT MAY BE MENTIONED HERE THAT ALL THE A BOVE MENTIONED FACTS RELATED TO RECEIPTS WERE DISCLOSED BY THE ASS ESSEE BEFORE THE SEARCH PARTY AS WELL AS THE ASSESSING OFFICER. 5. RULE 46A READS AS UNDER:- [PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPU TY COMMISSIONER (APPEALS)][AND COMMISSIONER (APPEALS)] . (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS THE CASE MA Y BE THE COMMISSIONER (APPEALS)] ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OTHER THAN THE EVIDENCE PRODUCED BY HI M DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER ] EXCEPT IN THE FOLLOWING CIRCUMSTANCES NAMELY: (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO A DMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER]; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDE NCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORD ER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS THE CASE MA Y BE THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REAS ONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS TH E CASE MAY BE THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [A SSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY - 5 - (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROS S-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT; OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR AS THE CASE MA Y BE THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT OR THE EXAMINATION OF ANY WITNESS TO ENA BLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETH ER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFF ICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271. 6. FURTHER THE HON'BLE BOMBAY HIGH COURT IN THE CAS E OF SMT. PRABHAVATI S. SHAH VS. CIT (1998) 231 ITR 1(BOM) HE LD AS UNDER:- ON A PLAIN READING OF R. 46A IT IS CLEAR THAT THI S RULE IS INTENDED TO PUT FETTERS ON THE RIGHT OF APPELLANT TO PRODUCE BEFORE THE AAC ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OTHER TH AN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF THE P ROCEEDINGS BEFORE THE ITO EXCEPT IN THE CIRCUMSTANCES SET OUT THEREIN. IT DOES NOT DEAL WITH THE POWERS OF THE AAC TO MAKE FU RTHER ENQUIRY OR TO DIRECT THE ITO TO MAKE FURTHER ENQUIR Y AND TO REPORT THE RESULT OF THE SAME TO HIM. THIS POSITION HAS BE EN MADE CLEAR BY SUB-R. (4) WHICH SPECIFICALLY PROVIDES THAT THE RESTRICTIONS PLACED ON THE PRODUCTION OF ADDITIONAL EVIDENCE BY THE APPELLANT WOULD NOT AFFECT THE POWERS OF THE AAC TO CALL FOR THE PRODUCTION OF ANY DOCUMENT OR THE EXAMINATION OF ANY WITNESS T O ENABLE HIM TO DISPOSE OF THE APPEAL. UNDER SUB-S. (4) OF S. 25 0 THE AAC IS EMPOWERED TO MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT OR TO DIRECT THE ITO TO MAKE FURTHER INQUIRY AND REPORT T HE RESULT OF THE SAME TO HIM. SUB-S. (5) OF S. 250 EMPOWERS THE AAC TO ALLOW THE APPELLANT AT THE HEARING OF THE APPEAL TO GO INTO ANY GROUND OF APPEAL NOT SPECIFIED IN GROUNDS OF APPEAL ON HIS B EING SATISFIED THAT THE OMISSION OF THE GROUND FROM THE FORM OF AP PEAL WAS NOT WILFUL. IT IS CLEAR FROM THE ABOVE PROVISIONS THAT THE POWERS OF THE AAC ARE MUCH WIDER THAN THE POWERS OF AN ORDINARY C OURT OF APPEAL. THE SCOPE OF HIS POWERS IS CO-TERMINOUS WIT H THAT OF THE ITO. HE CAN DO WHAT THE ITO CAN DO. HE CAN ALSO DIR ECT THE ITO - 6 - TO DO WHAT HE FAILED TO DO. THE POWER CONFERRED IN AAC UNDER SUB-S. (4) OF S. 250 BEING QUASI-JUDICIAL POWER IT IS INCUMBENT ON HIM TO EXERCISE THE SAME IF THE FACTS AND CIRCUMSTA NCES JUSTIFY. IF THE AAC FAILS TO EXERCISE HIS DISCRETION JUDICIALLY AND ARBITRARILY REFUSES TO MAKE ENQUIRY IN A CASE WHERE THE FACTS A ND CIRCUMSTANCES SO DEMAND HIS ACTION WOULD BE OPEN F OR CORRECTION BY A HIGHER AUTHORITY. ON A CONJOINT REA DING OF S. 250 AND R. 46A IT IS CLEAR THAT THE RESTRICTIONS PLACE D ON THE APPELLANT TO PRODUCE EVIDENCE DO NOT AFFECT THE POWERS OF THE AAC UNDER SUB-S. (4) OF S. 250. THE PURPOSE OF R. 46A APPEARS TO BE TO ENSURE THAT EVIDENCE IS PRIMARILY LED BEFORE THE ITO. B.L . CHOUDHURY VS. CIT (1976) 105 ITR 371 (ORI) : TC 7R.289 RELIED ON. 7. A READING OF THE ABOVE RULE 46A AND THE DECISION OF THE HON'BLE BOMBAY HIGH COURT SHOWS THAT RULE 46A ONLY PREVENTS THE ASSESSEE FROM FILING ANY ADDITIONAL EVIDENCE BEFORE THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BEFORE ACCEPTING THE SAME SHOULD CONFR ONT IT TO THE LEARNED ASSESSING OFFICER. THERE IS NO RESTRICTION ON THE POWER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TO CALL FOR ANY EVIDENCE FROM THE ASSESSEE FOR THE PURPOSE OF DECID ING THE APPEAL OF THE ASSESSEE. WHEN AN EVIDENCE IS FURNISHED BY THE ASSE SSEE IN COMPLIANCE TO THE DIRECTION OF THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) THE ADMISSION OF SUCH EVIDENCE BY THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) CANNOT BE READ AS VIOLATING THE PROVISIONS OF RULE 46A. IN THE INSTANT CASE THE CASH FLOW STATEMENT WAS FILED BY THE ASSESSEE ON THE REQUIREMENT OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) AND NOT OF ITS OWN. THEREFORE RULE 46 A(4) WILL COME INTO PLAY AND IT IS NOT NECESSARY FOR THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) TO CONFRONT THE LEARNED ASSESSING OFFI CER WITH THE SAME. THEREFORE WE FIND NO ERROR IN THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) IN DECIDING THE APPEAL OF THE A SSESSEE ON THE BASIS - 7 - OF CASH FLOW STATEMENT WHICH WAS SUBMITTED BY THE A SSESSEE ON THE DIRECTION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 8 MOREOVER WE FIND THAT THE REVENUE COULD NOT DISP UTE THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT THE SOURCES OF THE RECEIPT WHICH WERE TABULATED IN THE CASH FLO W STATEMENT WERE ALSO FURNISHED BY THE ASSESSEE BEFORE SEARCH OFFICIALS A ND LEARNED ASSESSING OFFICER. THUS IT IS OBSERVED THAT THE INFORMATION CONTAINED IN THE CASH FLOW STATEMENT WAS NOT A FRESH INFORMATION GIVEN TO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR THE VERY FI RST TIME AND THUS IN TRUE SENSE IT WAS NOT A FRESH EVIDENCE ALSO. ON MERIT WE FIND THAT THE LEARNED ASSESSING OFFICER HAS NOT GIVEN A FINDING T HAT EVEN AFTER TAKING INTO CONSIDERATION ALL THE SOURCES WHICH WERE AVAIL ABLE TO THE ASSESSEE AS PER SEARCH MATERIAL WAS NOT SUFFICIENT TO EXPLAI N THE INVESTMENTS OF THE ASSESSEE IN RESPECT OF WHICH ADDITIONS WERE MAD E IN THE ORDER OF ASSESSMENT. THUS THE ORDER MADE ON THIS COUNT IS E VEN OTHERWISE UNSUSTAINABLE. THE LEARNED DEPARTMENTAL REPRESENTA TIVE SQUARELY ADMITTED BEFORE US THAT ON MERITS THE REVENUE HAS N O CASE AS THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS PASSED A WE LL REASONED ORDER CONSIDERING ALL THE ASPECTS OF ISSUE WHILE DE LETING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. THEREFORE THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 07 TH DAY OF MAY 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 07 TH DAY OF MAY 2010 PARAS - 8 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 04.05.2010 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 04.05.2010 ----- -------------- 3. DRAFT PROPOSED & PLACED 04.05.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 05.05.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 05.05.2010 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 07.05.2010 ---------- ---------- 7. FILE SENT TO THE BENCH CLERK 07.05.2010 ------- ------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------