9911796707
TMI Blog2017 (10) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... r( hereinafter called "the AO" ) , the main allegation against the assessee, which led to the conduct of search , inter-alia was that the assessee's of Shah group were involved in unaccounted production and sale of products, suppressing of profits , generating unaccounted income, ploughing back their unaccounted income into the books by way of manoeuvring bogus/artificial share transactions ( long term capital gains) and also claiming benefit of tax at a lower rate. There were seizure of incriminating documents during the search operations conducted by Revenue u/s 132 on 21-02-2007. The assessee did not file return of income in pursuance to notice u/s 153A issued by the AO. The assessee did not participated in the proceedings for assessment u/s 153A of the Act despite several notices and opportunity granted by the AO which led to framing of best judgment assessment by the AO vide assessment orders dated 24-12-2008 which were common assessment orders for AY 2001-02 to 2007-08 , u/s 153A r.w.s. 144 of Income-tax Act,1961(hereinafter called "the Act") for AY 2001-02 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 Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lna, Area 720 sq. Mt Smt Mayurben Shah Smt Radhika Ketan Shah Rs.15,00,000/- 2001-02 2002-03 Total consideration 85,50,000/- The assessee did not offer any explanation regarding sources of funds for investments in properties and whether the same was offered for taxation on sale of the above properties. The AO observed that the assessee sold these properties for total consideration of Rs. 85,50,000/- in AY 2002-03. The assessee did not filed any return in pursuance of notice u/s 153A nor participated in assessment proceedings u/s 153A despite various notices and opportunities granted 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 Rs. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were shown from the assessee's side. 3.4. The learned CIT(A) forwarded the remand report to the assessee wherein the assessee instead of complying with the adverse observations of the AO in remand report justified that the AO has accepted the property belonged to the other parties . 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 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 Rs. 41,58,241/- on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port as is mandated under Rule 46A of the Income-tax Rule,1962. The assessee also explained that out of total loans of Rs. 41,58,241/- outstanding in the Balance Sheet as on 31-03-2003 , the loans of Rs. 20,54,884/- 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 Rs. 19,84,103/- and the assessee has also paid interest of Rs. 1,19,254/-. 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 . It was also observed by the AO that based on documents now submitted in remand report proceedings, it has transpired that loan of Rs. 20,54,884/- was opening loans as on 01-04-2002 and w.r.t. other loans of Rs. 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee did not filed any return in pursuance of notice u/s 153A nor participated in assessment proceedings u/s 153A despite various opportunities granted to the assessee by the AO as mentioned in the assessment order. The AO added the said amount of Rs. 23,81,553/- in the hands of the assessee as income being unexplained credit u/s 68 , vide assessment order dated 24-12-2008 passed by the AO u/s 144 r.w.s. 153A. 11.2 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 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown same bank account in the original return of income and its regular books of accounts . 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 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 comment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased in financial year 2001-02 for Rs. 20,340/- and sold for Rs. 13,55,355/- during the financial year 2002-03 i.e. AY 2003-04. 14.2. The AO asked the assessee to produce the parties through whom the shares were purchased and sold and also to prove genuineness of the transactions. The assessee did not avail the opportunity despite sufficient opportunity granted by the AO. The AO observed that there is a rampant misuse of the provisions of Section 10(36) and 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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of shares of Database Limited took place. Janak Raja Proprietor of M/s Shailee Securities stated on oath in statement recorded by Revenue that these were merely accommodation entries where in paper documents were issued without any genuine purchase/ sale of shares. Similarly , Mr Narendra Shah , Director of G R Pandya Share Broking Limited denied that any transaction for sale of shares of Database Limited have taken place through them. The evidence 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 Rs. 11.30 per share while 18000 shares of Database Limited were sold for Rs. 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 Rs. 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 state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited was a sham transaction and the assessee has introduced its undisclosed income to the tune of Rs. 13.55 lacs when it purchased 18000 shares of Database Limited on 3-6-2002 wherein market price was around Rs. 75/- per share at that time , which was then sold and long term capital gains were shown to have been earned to the tune of Rs. 13.35 lacs which is claimed as an exempt income. 14.5 We have 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 Rs. 11.30 per share(FV Rs. 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the authorities below in arranging accommodation entries by the brokers which is an estimate made by the authorities below which necessarily involve some guess work in estimating commissions being paid to these brokers for arranging accommodation entries . We donot find that the said guess work made by the authorities below in estimating commission paid by the assessee to brokers 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 Rs. 9,89,100/- as alleged undisclosed income which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is warranted.The learned CIT(A) did not find any infirmity in the order of the AO and also the said amount of Rs. 3 lacs was also not considered excessive or unreasonable and hence the learned CIT(A) dismissed this ground. 19.2 Before us learned CIT-DR has supported the order of learned CIT(A) while none appeared for assessee. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation 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. 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 , 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 Rs. 20,07,590/- on account of unconfirmed loan in its entirelty without considering the remand report mentioning non confirmation of loans of Rs. 16,53,000/- out of total additions of Rs. 20,07,590/- . (ii) On the facts and in the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) placed certain additional evidences by way of loan confirmations 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 assessee also explained that out of total loans of Rs. 20,07,290/- outstanding in the Balance Sheet as on 31-03-2003, the loans of Rs. 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 Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts 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 Corporation(Nhava Sheva) Limited (2015) 374 ITR 645(Bom.) before adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee has submitted copy and proof of payments of these two properties. It was observed by the AO in remand report that properties were in-fact purchased by the assessee during AY 2003-04 The properties in question were reflected in the personal balance sheet of the assessee and purchase consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment 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 Rs. 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 Rs. 50,571/- as alleged unexplained expenditure incurred on purchase and sale of shares, the income from which was declared under the head long term capital gain." 28.2 Since identical issues are involved, our decision in ITA no. 2494/Mum/2013 for assessment year 2003-04 in the case of Ketan V Shah as well our decision in the case of assessee it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 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 any finding as to sources of credits in the bank deposits . It is in 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 despite several notices issued by the AO and adequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned 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. 31. In the result appeal of the Revenue in ITA No.2123/Mum/2013 for assessment year 2007-08 is allowed for statistical purposes. 32. Thus, all the eleven appeals are disposed of as indicated above. Order pronounced in the open court on 23.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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