M/S. ANIL P. KHIMANI, MUMBAI v. THE DCIT 14(2),

ITA 2855/MUM/2008 | 1999-2000
Pronouncement Date: 23-02-2010 | Result: Allowed

Appeal Details

RSA Number 285519914 RSA 2008
Assessee PAN AAKPK4124D
Bench Mumbai
Appeal Number ITA 2855/MUM/2008
Duration Of Justice 1 year(s) 9 month(s) 28 day(s)
Appellant M/S. ANIL P. KHIMANI, MUMBAI
Respondent THE DCIT 14(2),
Appeal Type Income Tax Appeal
Pronouncement Date 23-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 23-02-2010
Date Of Final Hearing 03-02-2010
Next Hearing Date 03-02-2010
Assessment Year 1999-2000
Appeal Filed On 25-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI. BEFORE SHRI SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMB ER AND SMT. ASHA VIJAYRAGHAVAN JUDICIAL MEMBER. S.NO. I.T.A. NO. ASSTT. YEAR. 1. 2855/MUM/2008 1999-2000 2. 2856/MUM/2008 2000-01 3. 2857/MUM/2008 2001-02 4. 2858/MUM/2008 2002-03 5. 2859/MUM/2008 2003-04 6. 2860/MUM/2008 2004-05. ANIL P. KHIMANI D Y. COMMISSIONER OF INCOME-TAX 518 KALBADEVI ROAD VS. 14(2) MUMBAI. MUMBAI 400002. PAN AAKPK 4124D APPELLANT RESPONDENT APPELLANT BY : SHRI S.M. JAIN. RESPONDENT BY : SHRI ABHIJIT PATANKAR. O R D E R PER J. SUDHAKAR REDDY A.M. ALL THESE APPEALS ARE FILED BY THE ASSESSEE AND A RE DIRECTED AGAINST THE SEPARATE BUT IDENTICAL ORDERS OF THE CI T(APPEALS)-XIV MUMBAI DATED 19-11-2007. AS THE ISSUES ARISING IN A LL THESE APPEALS ARE COMMON FOR THE SAKE OF CONVENIENCE THEY HAVE HEAR D TOGETHER AND DISPOSE OF BY WAY OF THIS COMMON ORDER. 2. THERE IS A DELAY OF 91 DAYS IN FILING OF ALL TH ESE APPEALS. THE ASSESSEE SUBMITTED A LETTER FOR CONDONATION OF DELA Y AND ALSO FILED AN AFFIDAVIT EXPLAINING THE DELAY. IT WAS EXPLAINED TH AT THE ASSESSEE WAS 2 SUFFERING FROM A NEUROLOGICAL HEALTH PROBLEM AND P ROOF OF THE SAME BY WAY OF DOCTORS CERTIFICATE HAS BEEN FURNISHED. ON GOING THROUGH THESE PAPERS AND ON HEARING THE LEARNED DR WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS BEEN PREVENTED BY A REASONAB LE CAUSE IN FILING THESE APPEALS IN TIME. THUS WE CONDONE THE DELAY IN FILIN G ALL THESE APPEALS. 3. THE ASSESSEE FILED TWO ADDITIONAL GROUNDS OF AP PEAL WHICH READ AS FOLLOWS : 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN REJECTING THE GROUND OF APPEAL REGARDING ASSUMPTION OF JURISDICTION BY THE AO TO FRAME THE A SSESSMENT ORDER. REASONS ASSIGNED BY HIM FOR ADJUDICATING THE GROUND OF APPEAL AGAINST THE ASSESSEE ARE WRONG AND INSUFFICIENT IN AS MUCH AS REQUIREMENT OF RECORDING REASONS FOR THE TRANSFER O F CASE IS A MANDATORY DIRECTION AND NON COMMUNICATION THEREOF T O THE ASSESSEE IS NOT SAVED BY SHOWING THAT THE REASONS EXIST IN T HE FILE ALTHOUGH NOT COMMUNICATED TO THE ASSESSEE. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW SINCE NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF TH E SEARCH RELATING TO THE ASSESSMENT YEAR IN QUESTION AND THEREBY DIST URB THE ASSESSMENT CANNOT BE WARRANTED UNDER THE PROVISIONS CONTAINED IN SEC. 153 A. PROVISIONS OF THE ACT OUGHT TO HAVE BEE N PROPERLY CONSTRUED AND RESORT TO SEC. 153 A OUGHT NOT TO HAV E BEEN NMADE. IT WAS PRAYED THAT THESE BEING QUESTIONS OF LAW WH ICH REQUIRE NO FACTUAL INVESTIGATION THE SAME MAY BE ADMITTED. RELIANCE W AS PLACED ON THE DECISION IN THE CASE OF AHMEDABAD ELECTRICITY CO. L TD. VS. CIT 199 ITR 351 (BOM.) (FB). AFTER HEARING THE RIVAL CONTENTIO NS WE ADMIT THESE GROUNDS OF APPEAL. 4. FACTS IN BRIEF : THE ASSESSEE IS A PROPRIETOR OF M/S RONAK ENTERPR ISES TRADING IN OIL AND ELECTRICAL CONTRACT WORKS. ACTIO N U/S 132A WAS CONDUCTED BY THE DDIT (INV.) JABALPUR AND GOLD AB OUT 4 KGS. AND CASH 3 OF RS.79 000/- WAS SEIZED FROM THE ASSESSEE. EARLIE R THE ASSESSEE HAD FILED RETURNS OF INCOME. THE ITO WARD 14(2)-2 HAD ISSUED NOTICE U/S 153A FOR ALL THE ASSESSMENT YEARS. IN RESPONSE THERETO THE A SSESSEE FILED FRESH RETURN OF INCOME DECLARING A SIMILAR AMOUNT AS WHICH WAS D ECLARED WHEN HE FILED THE ORIGINAL RETURN OF INCOME. IN OTHER WORDS THE ASSESSEE HAD IN RESPONSE TO A NOTICE ISSUED U/S 153A FILED THE SAME RETURN OF INCOME AS WAS ORIGINALLY FILED. 5. FOR ALL THE ASSESSMENT YEARS THE AO COMPLETED T HE ASSESSMENTS U/S 143(3) READ WITH SECTION 153A. THE ONLY ADDITION THAT HAS BEEN MADE FOR EACH OF THE ASSESSMENT YEARS IS ON A CCOUNT OF LOW WITHDRAWAL AND FROM OPENING BALANCE IN CAPITAL ACCO UNT. A PERUSAL OF ALL THE ASSESSMENT ORDERS SHOWS THAT NONE OF THE ADDITI ONS WERE BASED ON ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. THE AO ON PAGE 2 PARA 6 EXPLAINED THE BASIS OF THE ADDITION AS FOLLOWS : THE ASSESSEE WAS REQUESTED TO EXPLAIN THE LOW WIT HDRAWALS ON THE HOUSE HOLD EXPENDITURE. THE HOUSE HOLD EXPEN DITURE OF RS.17 000/- DEBITED TO CAPITAL A/C APPEARS TO BE VE RY LOW. THE ASSESSEES REPRESENTATIVE HAS STATED THAT THE ASSES SEE AND HIS FAMILY ARE SUPPORTED BY HIS IN-LAWS. HOWEVER THE ARS SUB MISSION ARE NOT ACCEPTABLE CONVINCING AND RELIABLE. BECAUSE A SSESEES IN-LAWS ARE RESIDING AT ANDHERI WHEREAS THE ASSESSEE IS RE SIDING AT DAHISAR. THEREFORE CONSIDERING THE SIZE OF THE ASSESEES FA MILY I.E. ASSESSEE HIMSELF HIS WIFE AND TWO SCHOOL GOING CHILDREN TH E YEARLY WITHDRAWALS FOR MAINTENANCE OF FAMILY OF FOUR MEMBE RS THE HOUSEHOLD EXPENDITURE IS ESTIMATED AT RS.1 20 000/- FOR THE YEAR. SO BY REDUCING THE WITHDRAWALS SHOWN IN THE CAPITA L A/C THE BALANCE IS ADDED IN THE NET TAXABLE INCOME. THUS T HE SAME WORKS OUT IS RS.1 03 000/-. 6. ON APPEAL THE CIT(APPEALS) DELETED THE ADDITIO N MADE ON ACCOUNT OF OPENING CAPITAL ACCOUNT. ON THE ISSUE OF ADDITIONS MADE ON 4 ACCOUNT OF LOW WITHDRAWALS THE FIRST APPELLATE AUT HORITY CONFIRMED THE SAME. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE U S. 7. IN ADDITION TO THE ADDITIONAL GROUNDS OF APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING ORIGINAL GROUND : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS.1 03 000/- ON ACCOUNT OF LOW WITHDRAWALS. 8. THE LEARNED COUNSEL FOR THE ASSESSEE MR. S.M. JAIN SUBMITTED THAT THE ENTIRE ADDITION IS MADE BASED ON MERE SURMISES AND CONJECTURES. HE SUBMITTED THAT THERE IS NO MATERIAL WHATSOEVER BASED ON WHICH THE AO MADE THE ADDITIONS. ON ADDITIONAL GRO UND NO. 1 WHICH PERTAINS TO JURISDICTION OF THE AO TO FRAME THE ASS ESSMENT ORDER ON THE PLEA THAT THE REQUIREMENT OF RECORDING OF REASONS FOR TRANSFER OF THE CASE AND NOT COMMUNICATION OF THE SAME TO THE ASSESSEE IS NOT PRESSED. IN VIEW OF THIS SUBMISSION OF MR. JAIN WE DISMISS THE FIRST ADDITIONAL GROUND ON THE ISSUE OF TRANSFER OF CASE FROM ONE JU RISDICTION TO ANOTHER AS NOT PRESSED. 9. MR. JAIN EMPHASISED ON THE FACT THAT NOTHING IN CRIMINATING WAS FOUND DURING THE COURSE OF SEARCH WHICH COULD BE SAID TO HAVE RESULTED IN THE ABOVE ADDITION. HE RELIED ON THE FO LLOWING CASE LAWS : LMJ INTERNATIONAL LTD. VS. DCIT KOLKATA E BENC H (2008) 119 TTJ (KOL) 214. HE ALSO RELIED ON THE DECISION OF THE DELHI BENCH O F THE TRIBUNAL IN THE CASE OF ANIL KUMAR BHATIA VS. ACIT FOR THE PROPOSI TION THAT SECTION 153A DOES NOT AUTHORISE DENOVO ASSESSMENT AND NON P ENDING ASSESSMENT DO NOT ABATE AND THAT THE ADDITIONS MUST BE CONFINE D TO SUCH MATERIAL. ON 5 MERITS MR. JAIN SUBMITTED THAT THE AO HAS NOT RAIS ED ANY QUERY WHATSOEVER ON THE ISSUE OF LOW WITHDRAWALS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS HE SUBMITS THAT THE EN TIRE ADDITION IS MADE JUST ON SURMISES. HE SUBMITS THAT THE ASSESSEE WAS RESIDING AT DAHISAR PREMISES OWNED BY HIS WIFE AND HENCE ESTIMATION OF EXPENDITURE WAS ON THE HIGHER SIDE. HE SUBMITTED THAT THE ASSESSEES F ATHER WAS A FARMER AND NECESSARY PROOF WAS PRODUCED BEFORE THE CIT(APPEALS ) AND THE ASSESSEE WAS GETTING FOOD GRAINS CEREALS ETC. FROM HIS NATI VE PLACE. HE PRAYED FOR RELIEF. ON A QUERY FROM THE BENCH HE SUBMITTED THA T HE WOULD BE GIVEN WRITTEN SUBMISSIONS ON THE LEGAL ISSUE. TILL DATE N O SUCH SUBMISSION HAS BEEN FILED. 10. THE LEARNED DR MR. ABHIJIT PATANKAR ON THE OT HER HAND VEHEMENTLY OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE BASIS OF ASSESSMENT U/S 153A IS DIFFERENT FROM THE BASIS OF ASSESSMENT U/S 158BC AND THAT THE ARGUMENT THAT THE ADDITION S HOULD BE BASED ON SEIZED MATERIAL IS BAD IN LAW. HE SUBMITS THAT THE AO CAN PROCEED AND MAKE ADDITIONS BASED ON THE BOOKS OF ACCOUNT THE R ETURNS FILED AND OTHER MATERIAL WHICH MAY COME TO HIS NOTICE DURING THE CO URSE OF ASSESSMENT. HE SOUGHT ONE WEEKS TIME FROM THE BENCH TO FILE WR ITTEN SUBMISSIONS ON THIS LEGAL ISSUE AND ALSO TO PUT FORTH HIS VIEW ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ANIL KUMAR BHA TIA AND THE DECISION OF THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE O F LMJ INTERNATIONAL LTD. (SUPRA). ON MERITS HE RELIED ON THE ORDER OF T HE CIT(APPEALS) AND SUBMITTED THAT THE WITHDRAWALS WERE EXTREMELY LOW A ND THE AO WAS VERY CONSIDERATE IN MAKING A FAIR ESTIMATE. 11. TILL THE DATE OF THIS ORDER THE LEARNED DR HA S NOT FILED ANY WRITTEN SUBMISSION AS STATED IN THE COURSE OF HEARI NG. THUS WE PROPOSE TO 6 DISPOSE OF THIS CASE WITHOUT WAITING ANY FURTHER FO R WRITTEN SUBMISSIONS FROM EITHER SIDE. 12. RIVAL CONTENTIONS WERE HEARD. ON A CAREFUL CON SIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUS AL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS CITED WE HOLD AS FOLLOWS. 13. A PERUSAL OF THE ASSESSMENT ORDERS IN ALL THES E CASES CLEARLY DEMONSTRATE THAT THE SOLE ADDITION IN QUESTION IS O N ACCOUNT OF LOW WITHDRAWALS. THIS HAD NOT BEEN MADE BASED ON ANY M ATERIAL FOUND EITHER DURING THE COURSE OF SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. UNDER THE CIRCUMSTANCES WE EXAMINE TH E LEGAL POSITION. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ANIL KUMAR BHATIA VS. ACIT HELD AS FOLLOWS : S. 153A PROVIDES THAT WHERE A SEARCH IS INITIATED U/S 132 THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR R EQUISITION IS MADE. THE FIRST PROVISO STATES THAT THE AO SHALL A SSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS WHILE THE SECOND PROVISO STATE THAT THE ASSESSMENT OR REASSESSMENT RELATING TO THE SAID SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE S EARCH UNDER SECTION 132 SHALL ABATE. IN THE ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS UNDER S. 153A WERE FRAMED FOR SIX ASSESSMENT YEARS MAKING VARIOUS ADDITIONS. THE ASSE SSEE CLAIMED THAT THE ADDITIONS WERE NOT TENABLE AS REGULAR RETU RNS HAD BEEN FILED WHERE THE PARTICULARS RELATING TO THE ADDITIONS HAD BEEN DISCLOSED AND THE AND THE SAME HAD BEEN ACCEPTED U/S 143(1) A ND ALSO THAT NO MATERIAL HAD BEEN FOUND DURING THE SEARCH TO JUSTIF Y THE ADDITIONS. THE REVENUE CLAIMED THAT THE EFFECT OF THE PROVISOS TO S. 153A WAS THAT ALL ASSESSMENTS ABATE AND THERE HAD TO BE A DE NOVO ASSESSMENT IN WHICH THE AO WAS NOT CONFINED TO THE MATERIAL FOUND DURING THE SEARCH. HELD REJECTING THE CLAIM OF THE REVENUE. 7 (I) S. 153A DOES NOT AUTHORIZE THE MAKING OF A DE NOVO ASSESSMENT. WHILE UNDER THE 1 ST PROVISO THE AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS UNDER THE 2 ND PROVISO ONLY THE ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITI ATION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETE ASSESSMENTS DO NOT ABAT E. THERE CAN BE TWO ASSESSMENTS FOR THE SAME ASSESSMEN T YEAR. ASSESSMENTS WHICH ARE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH BUT ARE PENDING BEFORE AN APPELLATE AUTHO RITY WILL SURVIVE. (II) AN ASSESSMENT CAN BE SAID TO BE PENDING ONL Y IF THE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF A S.143(2) NOTICE HAS BEEN ISSUED THE ASSESSMENT IS PENDING. HOWEVER THE ASSESSMENT IN RESPECT OF A RETURN PROCESSED U/S 143(1) IS NOT PENDING BECAUSE THE AO IS NOT REQUIRED TO DO ANYTHING FURTH ER ABOUT SUCH A RETURN. (III) THE POWER GIVEN BY THE PROVISO TO ASSESS IN COME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLO SED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. (IV) ON FACTS S THE RETURNS HAD BEEN PROCESSED U/S 143(1) THE ASSESSMENTS WERE NOT PENDING AND AS NO MATERIAL W AS FOUND DURING THE SEARCH THE ADDITIONS COULD NOT BE SUSTA INED. RESPECTFULLY FOLLOWING THE SAME WE DELETE ALL THE ADDITIONS MADE AND ALLOW THE APPEALS OF THE ASSESSEE. 14. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF FEBRUARY 2010. SD/- SD/- (ASHA VIJAYRAGHAVAN) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 23 RD FEBRUARY 2010. WAKODE 8 COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR H-BENCH. (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES