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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
1. This is an appeal filed by the assessee. The relevant assessment year is 2007-08. The appeal is directed against the order of the Commissioner of Income Tax-3, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).
2. The grounds of appeal filed by the assessee read as under:
On the facts and in the circumstances of the case and in law, the re-opening proceedings initiated by issuance of notice u/s 148 of the Actis invalid and bad in law.
On the facts and in the circumstances of the case and in law, the assessment order passed u/s 143(3)r.w.s. 147 of the Act is invalid and bad in law.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in dismissing the appeal. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the A.O. in making an addition of on money investment Rs.23,50,000/- and that too without assigning any proper reason. 5. On the facts and in the circumstances of the case and in law, the A.O. erred in charging interest u/s 234A, 234B and 234C of the Act.
Briefly stated, the facts of the case are that the assessee filed his return of income for the assessment year (AY) 2007-08 on 24.10.2007 declaring total income of Rs.3,01,98,473/-. The assessee is the proprietor of M/s Drishti Architect & Interior Designers. The return of income was processed u/s 143(1) on 06.12.2007. Subsequently, the Assessing Officer (AO) reopened the return processed by issuing notice u/s 148 dated 30.03.2014, as during the search in the Hiranandani Group Builders & Developers, it was found that the assessee had paid cash of Rs.23,50,000/- for purchase of flat in M/s Crescendo Associates of Hiranandani Group, Powai.
During the course of reassessment proceedings, the assessee vide letter dated 12.09.2014 submitted that there is no corroborating evidence in the present case and further the admission by the Directors seems to be of general in nature and they have not referred specifically to his purchase. It was further explained by the assessee before the AO that all the payments made to M/s Crescendo of Hiranandani Group Builders & Developers regarding purchase of property have been duly reflected in the balance sheet filed with the return of income and no payment of any alleged on-money was made. Finally, the 3 Sunil Kanayalal AO that “reliance placed on third party evidence, without proper corroboration from some other source for reopening the case is not correct. Suspicion howsoever strong should not be the basis for reopening of the case”. Stating thus, the assessee submitted before the AO that the reopening of assessment is not justified.
However, the AO was not convinced with the above explanation of the assessee for the reason that during the search in the case of the Hiranandani Group, the final statement of the Director (Shri Niranjan Hiranandani) has been recorded u/s 132(4) of the Act, wherein he has admitted of receiving the “on-money”. The AO has extracted the relevant portion of the statement dated 14.03.2014 which is produced below:
“Q.10. From the running statement of cash transaction pertaining to period from 01.04.2006 the ledger account of the flat buyers has been extracted and is being shown to you. As per the ledger account the total on money cash receipts (over and above the registered value of the flats) comes to Rs.4756019900/-. Kindly go through the same and confirm?
Ans. I have gone through the statement and I confirm the total on money cash receipts (over and above the registered value of the flats) comes to Rs.4756019900/-.”
The AO further noted that as per the information received from the Director of Investigation (Inv.)-II, Income Tax Department, Mumbai the assessee has made investments by paying “on-money” of Rs.23,50,000/- and it is neither recorded in the books of accounts, nor the assessee has furnished any evidence such as confirmation of the builder concerned that no on-money was received against the sale of the Flat No. 1702 (A, B & C) and 2201 (A, B, &C) at Glen Dale, Hiranandani Gardens, Powai. Stating that the onus and the burden to explain the investments, it source and the genuineness of such payments lies with the assessee and as the assessee failed to prove it, the AO made an addition of Rs.23,50,000/- as unexplained investment.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). It is mentioned by the Ld. CIT(A) that during the appellate proceedings, in response to notice u/s 250 of the Act, from time to time, the assessee remained non-cooperative. The events and details of the non- attendance by the assessee as mentioned by the Ld. CIT(A) are as under:
S. No. Date of issue of Date on which Remarks notice/letter hearing fixed 1. 02.05.2016 02.06.2016 Vide letter dated 02.06.2016, the appellant sought adjournment and adjourned to 28.06.2016 2. 28.06.2016 Nobody attended, nor was any adjournment sought. 3. 19.09.2016 18.10.2016 Nobody attended, nor was any adjournment sought. 4. 18.10.2016 21.11.2016 Acknowledgment of service of notice is placed on record with signature of the receiver. However, nobody attended, nor any adjournment was sought.
As neither the assessee nor his authorized representative appeared during the course of appellate proceedings, the Ld. CIT(A) dismissed the appeal after examining it on merits.
Before us, the Ld. counsel for the assessee files a Paper Book containing 58 pages and clarifies that those were produced before the AO. It contains inter alia copy of notice issued u/s 148 by the AO dated 30.03.2014 ; copy of letter dated 07.05.2014 filed by the assessee before the AO in reply to notice
5 Sunil Kanayalal 148; copy of letter issued by the AO on 10.03.2015; copy of letter filed by the assessee before the AO on 10.03.2015 ; copy of ledger account of M/s Crescendo Associates (Hiranandani Builders) as appearing in the books of the assessee for the period 01.04.2006 to 31.03.2012 ; copy of allotment letters issued by M/s Crescendo Associates (Hiranandani Builders) dated 26.04.2007.
Further, the Ld. counsel relies on the decision in CIT v. P.V. Kalyanasundaram (2007) 294 ITR 49 (SC) ; CIT v. Sunita Dhadda : SLP (C) No. 9002 of 2018, the order of the Tribunal in Mr. Vijay Kumar Srinivasan v. ITO (ITA No. 7363/Mum/2017 for AY 2007-08); ITO v. Nikhil Vinod Aggarwal (ITA No. 2574/Mum/2017 for AY 2007-08) ; Shri Anil Jaggi v. ACIT (ITA No. 3049/Mum/2016).
Relying on the above decisions, the Ld. counsel submits that the revenue has no right to make any addition, especially since none of the witnesses were examined before the Assessing Officer, and the assessee did not have any opportunity to cross examine them.
Per contra, the Ld. DR files a written submission and relies on the decision in PCIT v. Paramount Communication (P.) Ltd. (2017-TIOL-253-SC- IT), PCIT v. Paramount Communication (P.) Ltd. [2017] 79 taxmann.com 409 (Delhi)/[2017] 392 ITR 444 (Delhi), Indu Lata Rangwala v. DCIT [2017] 80 taxmann.com 102 (Delhi)/[2016] 384 ITR 337 (Delhi)/[2016] 286 CTR 474 (Delhi), Thakorbhai Maganbhai Patel v. ITO [2017] 78 taxmann.com 201 (SC)/[2017] 245 Taxman 333 (SC), Thakorbhai Maganbhai Patel v. ITO [2017] 79 taxmann.com 409 (Delhi)/[2017] 392 ITR 444 (Delhi), Aravali Infrapower Ltd. v. DCIT (2017-TIOL-42-SC-IT), Aravali Infrapower Ltd. v. DCIT [2017] 77 taxmann.com 322 (Delhi)/[2017] 390 ITR 456 (Delhi), Yogendrakumar Gupta
6 Sunil Kanayalal v. ITO (51 taxmann.com 383) (SC)/[2014] 227 Taxman 374 (SC), Raymond Woollen Mills Ltd. v. ITO And Others (236 ITR 34), R.K. Malhotra ITO v. Kasturbhai Lalbhai [1977] 109 ITR 537 (SC), CIT v. P.V.S. Beedies (P.) Ltd. [1999] 103 Taxman 294 (SC)/[1999] 237 ITR 13 (SC)/[1999] 155 CTR 538 (SC), ACIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316 (SC)/[2007] 291 ITR 500 (SC)/[2007] 210 CTR 30 (SC), Yuvraj v. Union of India [315 ITR 84] (SC) and Ankit Financial Services Ltd. v. DCIT [2017] 78 taxmann.com 58 (Gujarat).
Relying on the above case-laws, the Ld. DR submits that the order passed by the Ld. CIT(A) be confirmed.
We have heard the rival submissions and perused the relevant materials on record. As recoded by the Ld. CIT(A) neither the assessee nor his authorized representative appeared before him during the course of appellate proceedings. Such findings of the Ld. CIT(A) has not been assailed by the Ld. counsel for the assessee. It is settled law that unless an appeal is rejected in limine for any vital defect, section 250(1) of the Act provides that the first appellate authority shall fix a date of hearing and give notice thereof, with the information about the time and place of hearing, to the appellant as well as to the Assessing Officer against whose order the appeal has been filed. If a party could establish that he was not properly served with the notice of hearing and was therefore unable to present his case at the hearing, it could not be said that the party was given an opportunity of being heard as required u/s 250(1) of the Act. This is not so in this case.
In the instant case, the notice dated 02.05.2016 was sent to the assessee fixing the case of hearing on 02.06.2016. The assessee vide letter dated
7 Sunil Kanayalal 02.06.2016 sought adjournment and the case was adjourned by the Ld. CIT(A) to 28.06.2016. However, no one attended on 28.06.2018 nor was any adjournment sought. Again notice dated 19.09.2016 was sent fixing the case for hearing on 18.10.2016. However, nobody attended nor was any adjournment sought. Finally, notice dated 18.10.2016 was sent fixing the case for hearing on 21.11.2016. The office of the CIT(A) received the acknowledgement of service of the notice, however, nobody attended nor any adjournment was sought.
The Ld. counsel has not controverted the above facts. Because of non- compliance by the assessee, the Ld. CIT(A) could not examine the issue in its entirety. Thus considering the facts and circumstances of the case, we set aside the order of the Ld. CIT(A) and restore the matter to him to pass an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to appear before the Ld. CIT(A) and file the relevant documents/evidence.
As the matter has been restored to the Ld. CIT(A), we are not adverting to the case-laws referred to by both sides.
In the result, the appeal is allowed for statistical purposes.