TMI Blog2017 (10) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to these immovable properties and its sources leading to adverse comments by the AO in remand report which remained un-complied with as of now as the learned CIT(A) just accepted the contentions of the assessee without satisfying the adverse comments by the AO which were valid observations of the AO in the context of search assessment as also seized material during search operations u/s 132. The assessee is also not appearing before the tribunal in second round of litigation despite several notices. Revenue has filed this appeal as it is aggrieved by learned CIT(A) granting relief to the assessee. The learned CIT-DR has vehemently objected to learned CIT(A) allowing the relief to the assessee without complying with all the adverse finding of the AO in remand report proceedings. Thus with the above background, the appellate order of learned CIT(A) cannot be sustained in the eyes of law and is set aside and matter is once again restored back to the file of learned CIT(A) for fresh adjudication on merits in accordance with law. The assessee be given proper and adequate opportunity of being heard by the learned CIT(A) in denovo proceedings and all relevant evidences and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 to 2006-07 and u/s 153B(1)(b) r.w.s. 144 for AY 2007-08. The assessee went in appeal before learned Commissioner of Income Tax(Appeals) ( hereinafter called the CIT(A) ) in first round of litigation who dismissed the appeal in limine by passing common order dated 21-08-2009 by not condoning the delay of 92 days in filing appeal late by the assessee beyond limitation period as prescribed u/s 249(2). The assessee went in appeal before the Income-Tax Appellate Tribunal( hereinafter called the tribunal ) in the first round of litigation and the tribunal was pleased to condone the delay of 92 days in filing appeal late by the asessee before learned CIT(A) and the matter was remitted back to learned CIT(A) to be decided on merits, vide common orders dated 15-09-2010 in ITA No. 6089-6094/Mum/2009 for AY 2002-03 to 2007-08 passed by the tribunal. The learned CIT(A) in second round of litigation was pleased to pass common order dated 12-12-2012 in Appeal no. CIT(A)-37/I.T.437,438, 439 441/ACCC-11/11-12 for AY 2002-03 to 2004-05 and 2006-07 , which is subject matter of appeal before us. 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee by the AO as mentioned in the assessment order. It was also not brought on record whether the other joint owners have declared the said property in their return of income filed with the Revenue. The AO added the said amount of ₹ 85,50,000/- in the hands of the assessee , vide assessment order dated 24-12-2008 passed by the AO u/s 144 r.w.s. 153A. 3.2. The assessee challenged the additions by filing first appeal with learned CIT(A) which was delayed by 92 days. The learned CIT(A) dismissed the appeal in limine by not condoning the delay of 92 days in filing the appeal late beyond period of limitation as stipulated u/s 249(2) in first round of litigation vide appellate orders dated 21-08-2009. The assessee went in appeal before the Income-Tax Appellate Tribunal( hereinafter called the tribunal ) in the first round of litigation and the tribunal was pleased to condone the delay of 92 days in filing appeal late by the asessee before learned CIT(A) and the matter was remitted back to learned CIT(A) to be decided on merits, vide common orders dated 15-09-2010 in ITA No. 6089-6094/Mum/2009 for AY 2002-03 to 2007-08 passed by the tribunal. The learned CIT(A) in seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O and adequate opportunities of being heard granted by the AO to the assessee during assessment proceedings . The AO have adversely commented in remand report that the authenticity of cheques could not be verified as the cheques were issued by family members who are not assessed with AO and also sources of credits in the bank are not verifiable because the assessee has not provided complete bank statements as the assessee has only shown relevant transactions from his side. The learned CIT(A) whose powers are co-terminus with the powers of the AO instead of ensuring that all the adverse comments of the AO in remand report are met either by learned CIT(A) himself by making necessary enquiries /verifications or seeking second remand report from the AO , instead entered into blame game by blaming AO wherein he erred in holding that the AO is satisfied with respect to the investments in property are being made by the family members. This is a perverse finding of learned CIT(A) which cannot be sustained in the eyes of law as the AO had categorically stated in remand report that he is not satisfied as the authenticity of cheques could not be verified as cheques were issued by family membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Corporation(Nhava Sheva) Limited (2015) 374 ITR 645(Bom.) before adjudicating appeal de-novo in set aside proceedings. We order accordingly. 4. In the result appeal of the Revenue in ITA No.2118/Mum/2013 for assessment year 2002-03 is allowed for statistical purposes. Revenue Appeal in ITA No. 2119/Mum/2013-AY 2003-04-Ketan V Shah 5. The Revenue has filed this appeal and raised following ground of appeal before the tribunal: (i) On the facts and in the circumstances of the case and in law , the Ld. CIT(A) has erred in deleting the additions of ₹ 41,58,241/- on account of unconfirmed loans in its entirety without considering the remand report mentioning non confirmation of loans of ₹ 23,17,210/- out of total addition of ₹ 41,58,241/- 5.2 The background of this addition is similar to the issue dealt within appeal of the Revenue for AY 2002-03 which has been adjudicated by us in preceding para s. The assessee was searched by Revenue on 21-02-2007 u/s 132. The issue in this appeal is with respect to loans of ₹ 41,58,241/- raised by the assessee and compliance of mandate of Section 68. The assessee was asked by the AO to file confirmatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of loan creditors but commented that the loan confirmations could not be verified . It was also observed by the AO that based on documents now submitted in remand report proceedings, it has transpired that loan of ₹ 20,54,884/- was opening loans as on 01-04-2002 and w.r.t. other loans of ₹ 23,17,210/- raised during the year the assessee has furnished loan conformations which could not be verified and hence authenticity of loans cannot be confirmed as also cheques payments are also not verifiable. It is important to highlight the background that these are assessment pursuant to search and incriminating material was found and seized from the assessee. The assessee did not file return of income in pursuant to the notice u/s 153A nor participated in the assessment proceedings u/s 153A despite several notices issued by the AO and adequate opportunities of being heard granted by the AO. The learned CIT(A) whose powers are co-terminus with the powers of the AO instead of ensuring that all the adverse comments of the AO in remand report are met either by himself by making necessary enquiries /verifications or seeking second remand report from the AO , instead entered into bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f being heard by the learned CIT(A) in denovo proceedings and all relevant evidences and explanations be admitted in the interest of justice. The learned CIT(A) shall also consider ratio of decision of Hon ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation(Nhava Sheva) Limited (2015) 374 ITR 645(Bom.) before adjudicating appeal de-novo in set aside proceedings. We order accordingly. 6. In the result appeal of the Revenue in ITA No.2119/Mum/2013 for assessment year 2003-04 is allowed for statistical purposes. Revenue Appeal in ITA No.2120/Mum/2013-AY 2004-05-Ketan V Shah 7. Similar issues with respect to sale of immovable property as well not explaining sources for making investment made in immovable property as also second ground is with respect to raising of loans and non satisfaction of mandate u/s 68 has arisen in AY 2004-05 which are dealt with by us in AY 2002-03 and 2003-04 vide our orders in preceding para s . Our decision with respect to said assessment years shall apply mutatis mutandis to issues during the impugned assessment year. We order accordingly. 8. In the result appeal of the Revenue in ITA No.2120/Mum/2013 for assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was delayed by 92 days. The learned CIT(A) dismissed the appeal in limine by not condoning the delay of 92 days in filing the appeal late beyond period of limitation as stipulated u/s 249(2) in first round of litigation vide appellate orders dated 21-08-2009. The assessee went in appeal before the tribunal in the first round of litigation and the tribunal was pleased to condone the delay of 92 days in filing appeal late by the asessee before learned CIT(A) and the matter was remitted back to learned CIT(A) to be decided on merits, vide common orders dated 15-09-2010 in ITA No. 6089-6094/Mum/2009 for AY 2002-03 to 2007-08 passed by the tribunal. The learned CIT(A) in second round of litigation was pleased to pass common order dated 12-12-2012 in Appeal no. CIT(A)-37/I.T.437,438, 439 441/ACCC-11/11-12 for AY 2002-03 to 2004-05 and 2006-07. The assessee in second round of litigation before learned CIT(A) placed certain additional evidences by way of bank book, bank statements , explanation w.r.t. deposits, ledger account of investments which were admitted by learned CIT(A) in the interest of substantial justice and the said additional evidences were forwarded by learned CIT(A) to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough out assessment proceedings as the assessee neither filed return of income in pursuant to notice u/s 153A nor participated in the assessment proceedings u/s 153A. The assessee has also not filed complete evidences to support its contentions before learned CIT(A) and in remand report proceedings before AO thereby crippling AO to do complete enquiry/verification as is required with respect to these deposits by the assessee in HDFC Bank account and proving the mandate of Section 68 leading to adverse comments by the AO in remand report which remained un-complied with as of now as the learned CIT(A) just accepted the contentions of the assessee without satisfying the adverse comments by the AO which were valid observations of the AO in the context of search assessment as also seized material during search operations u/s 132. The assessee is also not appearing before the tribunal in second round of litigation despite several notices. Revenue has filed this appeal as it is aggrieved by learned CIT(A) granting relief to the assessee. The learned CIT-DR has vehemently objected to learned CIT(A) allowing the relief to the assessee without complying with all the adverse finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 10(38) to avail tax benefits wherein fabricated transactions in sale and purchase were used to obtain artificial long term capital gains by utilising unaccounted money through share market hawala operations. The detailed modus operandi adopted by unscrupulous tax-payers in collusion with hawala operators was explained by the AO in his assessment order. The AO also verified various parties who were connected with sale and purchase of shares wherein Shailee Securities stated on oath in the statement recorded of its proprietor namely Janak Raja that merely accommodation bills were issued for sale and purchase of shares of Database Finance Limited while Mr Narendra Shah , Director of G R Pandya Share Broking Limited in its statement recorded on oath denied transactions with the assessee with respect to sale of said shares shown by the assessee through said concern . With respect to two parties namely Trimiti Investment and Finance Services Private Limited and M/s T H Vakil Shares and Securities Private Limited, both could not be served with notices issued by the AO in order to carry out verifications. The assessee was given sufficient opportunity from time to time by the AO to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making payment for purchase of shares is not produced by the assessee. The 1800 shares of Database Finance Limited were stated to have been purchased on 11.04.2001 for ₹ 11.30 per share while 18000 shares of Database Limited were sold for ₹ 75.30 per share on 3-6-2002(debit on demat account on 15-06-2002)(stock split 10:1) , leading to alleged capital gains of ₹ 13,35,015/-. The said shares came into demat account of the assessee only on 7-6-2002. There is no evidence of receipt of shares by the assessee either on physical or in electronic form in demat account on 11-04-2001 when shares were stated to be purchased till 07-06-2002 when it actually got credited in demat account of the assessee. The brokers who were stated to have been involved for purchase and sale of shares have denied the transactions as detailed above. The learned CIT(A) observed that the assessee has not made any attempt to cross examine the issuers of the bogus bills/contract notes at any stage before the AO or before learned CIT(A). Thus, the learned CIT(A) dismissed the appeal of the assessee as the assessee failed to discharge its burden which lay on him and also relying on various case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard learned CIT-DR and carefully perused the material on record . We have observed that the assessee has allegedly shown to have purchased 1800 shares of Database Finance Limited on 11-04-2001 for ₹ 11.30 per share(FV ₹ 10). The assessee has not shown how the payment for said shares were made by the assessee towards purchase of said shares. The assessee has also not demonstrated receipt of these 1800 shares of Database Finance Limited which were allegedly purchased on 11-04-2001. The assessee has not shown whether these shares were physically received on purchase of shares or electronically received by it at the time of alleged purchase on 11-04-2001 . If physically received, then what happened to the said shares of Database Finance Limited in the intervening period from 11-04-2001 till 07-06-2002 when the shares came into assessee s demat account , is also not demonstrated by the assessee. The assessee has shown that 18000 shares (post split into FV ₹ 1 per share) were sold for ₹ 75.30 per share on 03-06-2002. The assessee s broker namely Janak Raja Properietor of Shailee Securities who was allegedly involved in purchase of shares have deposed on oath th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... okers was perverse or is unconsciously high which shook conscience and hence we uphold the same. The assessee also fails on second ground. We order accordingly. 15. In the result appeal of the assessee in ITA No.2494/Mum/2013 for assessment year 2003-04 is dismissed. Assessee s appeal in ITA no. 2495/Mum/2013 for AY 2004-05 Ketan V Shah 16. Similar issues are raised in this appeal as were raised by the assessee in ITA no. 2494/Mum/2013 for AY 2003-04 as identical grounds of appeal are raised (only difference is amounts) . The grounds of appeal raised by the assessee in ITA no. 2495/Mum/2013 for AY 2004-05 in memo of appeal filed with the tribunal are as under: 1. The ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of ₹ 9,89,100/- as alleged undisclosed income which was declared by the appellant as long term gain on sale of shares. 2. The ld. Commissioner of Income Tax(Appeals) further erred in confirming the addition of ₹ 49,455/- as alleged unexplained expenditure incurred on purchase and sale of shares, the income from which was declared under the head long term capital gain. 17. Since identical issues are inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 19.3 We have considered the submissions of the learned CIT-DR and also perused the material on record. We are of the considered view that the assessee deserves one more opportunity to explain its case before the learned CIT(A) wherein learned CIT(A) is directed to consider all the contentions so raised by the assessee to support its stand that the estimation of household expenses is higher , which contentions shall be disposed of by learned CIT(A) on merits instead of dismissing the said contentions in limine without disposing of all the contentions as has happened presently by the learned CIT(A) while adjudicating this issue vide orders dated 12-12-2012. Let the assessee be given proper opportunity of being heard in set aside proceedings before the learned CIT(A) in accordance with principles of natural justice in accordance with law. The explanations and evidences in support of his contentions be admitted by learned CIT(A) and adjudicated on merits in accordance with law. The issue is set aside and restored to the file of learned CIT(A) for de-novo adjudication on merits in accordance with law wherein learned CIT(A) shall consider all contentions of the assessee and dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 passed by the tribunal. The learned CIT(A) in second round of litigation was pleased to pass common order dated 12-12-2012 in Appeal no. CIT(A)-37/I.T.433,434, 435 436/ACCC-11/11-12 for AY 2003-04, 2004-05 , 2006-07 and 2007-08 , which is subject matter of appeal before us. 22. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) in ITA no. 2122/Mum/2013 for AY 2003-04 in the case of Ketan V Shah(HUF) read as under:- (i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 20,07,590/- on account of unconfirmed loan in its entirelty without considering the remand report mentioning non confirmation of loans of ₹ 16,53,000/- out of total additions of ₹ 20,07,590/- . (ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 17,45,000/- on account of unaccounted income from sale of properties by holding that the purchase consideration of both the parties is reflected in the balance sheet and payments are through banking chann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Rule,1962. The assessee also explained that out of total loans of ₹ 20,07,290/- outstanding in the Balance Sheet as on 31-03-2003, the loans of ₹ 3,54,590/- were opening loans as on 01-04-2002 while fresh loan raised during financial year 2002-03 (AY 2003-04) were to the tune of ₹ 16,35,000/- . The AO based on additional evidences submitted remand report wherein the AO confirmed that loan confirmations were submitted along with PAN and address of loan creditors but commented that the loan confirmations could not be verified and authenticity of loan could not be verified as also cheques payments are also not verifiable. The AO observed that as per additional evidences , the loans of ₹ 16,35,000/- is raised from the Karta of the assessee which is reflected in the bank account of the assessee and Karta has also reflected the said loan in its books of accounts . The AO commented that the cheque payments in this regard is also not verifiable , because the source of credits in bank is not verified. It is pertinent to mention the background that these are assessment pursuant to search and incriminating material was found and seized from the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue has filed this appeal as it is aggrieved by learned CIT(A) granting relief to the assessee. The learned CIT-DR has vehemently objected to learned CIT(A) allowing the relief to the assessee without complying with all the adverse finding of the AO in remand report proceedings . Thus with the above background , the appellate order of learned CIT(A) cannot be sustained in the eyes of law and is set aside and matter is once again restored back to the file of learned CIT(A) for fresh adjudication on merits in accordance with law. The assessee be given proper and adequate opportunity of being heard by the learned CIT(A) in denovo proceedings and all relevant evidences and explanations be admitted in the interest of justice. The learned CIT(A) shall also consider ratio of decision of Hon ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation(Nhava Sheva) Limited (2015) 374 ITR 645(Bom.) before adjudicating appeal de-novo in set aside proceedings.We order accordingly. 23.3 Next ground of appeal raised by the Revenue is concerning relief granted by learned CIT(A) w.r.t. addition of ₹ 17,45,000/- on account of unaccounted income from sale of properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond period of limitation as stipulated u/s 249(2) in first round of litigation vide appellate orders dated 21-08-2009. The assessee went in appeal before the tribunal in the first round of litigation and the tribunal was pleased to condone the delay of 92 days in filing appeal late by the assessee before learned CIT(A) and the matter was remitted back to learned CIT(A) to be decided on merits, vide common orders dated 15-09-2010 in ITA No. 6095-6098/Mum/2009 for AY 2003-04 , 2004-05, 2006-07 and 2007-08 passed by the tribunal. The learned CIT(A) in second round of litigation was pleased to pass common order dated 12-12-2012 in Appeal no. CIT(A)-37/I.T.433,434, 435 436/ACCC-11/11-12 for AY 2003-04, 2004-05 , 2006-07 and 2007-08. The assessee in second round of litigation before learned CIT(A) placed certain additional evidences which were admitted by learned CIT(A) in the interest of substantial justice and the said additional evidences were forwarded by learned CIT(A) to the AO for remand report as is mandated under Rule 46A of the Income-tax Rule,1962. The AO based on additional evidences submitted remand report wherein the AO based on the additional evidences submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifiable . It was also observed by the AO that the assessee did not produce original purchase documents and merely photocopies are furnished. It was all the more incumbent on the learned CIT(A) to have directed the assessee to comply with all the adverse remarks of the AO more-so with the background that it is an assessment pursuant to search u/s 132 and during search incriminating material were found and seized during the course of search from the assessee. It is all the more pertinent also in the back drop of the assessee being non co-operative through out assessment proceedings as the assessee neither filed return of income in pursuant to notice u/s 153A nor participated in the assessment proceedings u/s 153A. The assessee has also not filed complete evidences to support its contentions before learned CIT(A) and in remand report proceedings before AO crippling AO to do complete enquiry/verification as is required with respect to these immovable properties and its sources leading to adverse comments by the AO in remand report which remained un-complied with as of now as the learned CIT(A) just accepted the contentions of the assessee without satisfying the adverse comments by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2003-04 in the case of Ketan V Shah shall apply mutatis mutandis to the appeal of the assessee namely Ketan V Shah(HUF) for AY 2003-04 in ITA no. 2497/Mum/2013 for AY 2003-04. The assessee fails on both the grounds. We order accordingly. 26. In the result appeal of the assessee in ITA No.2497/Mum/2013 for assessment year 2003-04 is dismissed. Assessee s appeal in ITA no. 2498/Mum/2013 for AY 2004-05 -Ketan V Shah(HUF) 27. The issues involved in this appeal filed by the assessee namely Ketan V Shah(HUF) are similar to the issue involved in ITA no 2494/Mum/2013 for AY 2003-04 in the case of Ketan V Shah as well ITA no. 2497/Mum/2013 in the case of assessee itself for AY 2003-04 , wherein identical grounds were raised (only difference in the amount) . The assessee has raised following grounds of appeal in the memo of appeal filed with the tribunal: 1. The ld. Commissioner of Income Tax (Appeals) erred in confirming the addition of ₹ 10,11,427/- as alleged undisclosed income which was declared by the appellant as long term gain on sale of shares. 2. The ld. Commissioner of Income Tax(Appeals) further erred in confirming the addition of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst round of litigation vide appellate orders dated 21-08-2009. The assessee went in appeal before the tribunal in the first round of litigation and the tribunal was pleased to condone the delay of 92 days in filing appeal late by the assessee before learned CIT(A) and the matter was remitted back to learned CIT(A) to be decided on merits, vide common orders dated 15-09-2010 in ITA No. 6094-6098/Mum/2009 for AY 2003-04, 2004-05, 2006-07 and 2007-08 passed by the tribunal. The learned CIT(A) in second round of litigation was pleased to pass common order dated 12-12-2012 in Appeal no. CIT(A)-37/I.T.433,434, 435 436/ACCC-11/11-12 for AY 2003-04,2004-05,2006-07 and 2007-08. The assessee in second round of litigation before learned CIT(A) placed certain additional evidences by way of bank book, bank statements , explanation w.r.t. deposits, ledger account of investments which were admitted by learned CIT(A) in the interest of substantial justice and the said additional evidences were forwarded by learned CIT(A) to the AO for remand report as is mandated under Rule 46A of the Income-tax Rule,1962. The AO based on additional evidences submitted remand report wherein the AO did not give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions of the assessee without satisfying the adverse comments by the AO which were valid observations of the AO in the context of search assessment as also seized material during search operations u/s 132. The assessee is also not appearing before the tribunal in second round of litigation despite several notices. Revenue has filed this appeal as it is aggrieved by learned CIT(A) granting relief to the assessee. The learned CIT-DR has vehemently objected to learned CIT(A) allowing the relief to the assessee without complying with all the adverse finding of the AO in remand report proceedings . Thus with the above background , the appellate order of learned CIT(A) cannot be sustained in the eyes of law and is set aside and matter is once again restored back to the file of learned CIT(A) for fresh adjudication on merits in accordance with law. The assessee be given proper and adequate opportunity of being heard by the learned CIT(A) in denovo proceedings and all relevant evidences and explanations be admitted in the interest of justice. The learned CIT(A) shall also consider ratio of decision of Hon ble Bombay High Court in the case of CIT v. Continental Warehousing Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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