MADHUKAR NARAYAN SHAHANE,PUNE vs. INCOME-TAX OFFICER, WARD – 3(1), PUNE

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ITA 2714/PUN/2017Status: DisposedITAT Pune28 November 2018AY 2008-095 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee's request for remand was reasonable due to undisputed failures by the AO to provide seized papers, statements, and an opportunity for cross-examination. The appeal was allowed for statistical purposes with directions for fresh adjudication.

What were the facts?

During a search at Samira Group of companies, documents indicated the assessee had given a cash loan of Rs. 25,00,000/- to the group, leading to additions by the AO. The AO also added Rs. 5,10,000/- as interest income on this loan.

What were the issues?

Whether additions made based on seized documents without providing copies, statements, and cross-examination opportunities violate principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 132,Section 132(4A),Section 143(3),Section 147,Section 148,Section 69D

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI D. KARUNAKARA RAO, AM

For Appellant: Shri Suhas P. Bora
For Respondent: Shri Rajesh Gawli
Hearing: 30.10.2018Pronounced: 28.11.2018

आदेश/ ORDER

PER D. KARUNAKARA RAO, AM :

This appeal is filed by the assessee against the order of CIT(A)-3, Pune dated 18.10.2017 for the Assessment Year 2008-09.

2.

The grounds of appeal read as under :- “1. The learned CIT(A) erred in holding that the assessment order passed u/s 143(3) r.w.s. 147 is not valid and bad in law. 2. That ld. CIT(A) while confirming the action of the A.O. about reassessment proceedings has not appreciated the submissions made by the appellant on following grounds : a. that the appellant had never challenged the assumption of jurisdiction u/s 148 of the Act before A.O. thus no speaking order was passed. b. The appellant failed to substantiate addition which was made on the basis of notings on the papers seized during search. c. The appellant had never asked for the copies of any documents for cross examination. 3. The learned CIT (Appeals) erred in confirming the addition made by the A.O. at Rs.25,00,000/- u/sec. 69D on account of unexplained investment

ITA No.2714/PUN/2017

simply by relying on the notings in the seized documents found during the course of search with Samira Group of companies. The addition was made on the basis of note sheet entries which was without any basis nor it was supported by any evidence, purely on presumption and surmises, in violation of principles of natural justice and without any base, and without appreciating the submissions of the appellant. 4. The learned CIT (Appeals) erred in confirming the addition made by the A.O. at Rs.5,10,000/- on account of interest received on cash loan of Rs.22 lakhs given as income from other sources purely on presumptions and surmises in violation of principles of natural justice and without any base, and without appreciating the submissions of the appellant. 5. The ld. CIT(A) while confirming the additions has erred in not considering contention of the appellant that if the addition is made on the basis of statement of third party then providing the opportunity of cross examination is must and if the same is denied by the A.O. the addition based on the said statement is not tenable in law and asked to refer the provisions of section 132(4A) of the Act which says that the contents of books of accounts and other documents found during the course of search and seizure operation are presumed to be true and the appellant should rebut the presumption. 6. The appellant may kindly be permitted to add to or alter any of grounds of appeal, if deemed necessary.”

3.

Briefly stated relevant facts include that the assessee is an individual

having income from salary, remuneration, interest and share of profit from

partnership firm and income from other sources. The assessee filed his partnership firm and income from other sources. The assessee filed his

return of income on 06.03.2009 declaring total income of Rs.2,63,168/-. A

search and seizure operation was conducted u/s 132 of the Act at Samira

Group of companies on 21.03.2013. During the course of search action,

some incriminating documents were found showing that Samira Group of

companies took loans from various persons. It was also found from the

seized papers that Samira Group of companies took loan in cash of

Rs.25,00,000/- from the assessee during the year under consideration.

During the course of assessment proceedings, the Assessing Officer asked

the assessee to explain the source of the said loan. The Assessing Officer

was not satisfied with the explanation of the assessee. Therefore, the

Assessing Officer added the same to the total income of the assessee. The

Assessing Officer further added an amount of Rs.5,10,000/- as undisclosed

income on account of interest thereto.

-3- ITA No.2714/PUN/2017

4.

Aggrieved with the order of Assessing Officer, the assessee filed an

appeal before the CIT(A). Referring to provisions of section 132(4A) of the

Act, the CIT(A) confirmed the above additions.

5.

Aggrieved with the order of CIT(A) confirming the additions, the

assessee is in appeal before me.

6.

Before me, at the outset, ld. Counsel for the assessee submitted that

this appeal be remanded back to the file of the Assessing Officer for fresh

adjudication in view of various reasons. There was a search and seizure

action in the case of Samira Group of companies on 21.03.2013. The ld.

Counsel for the assessee submitted that the Assessing Officer made

addition of Rs.25,00,000/- along with interest accrued of Rs.5,10,000/-

thereon by relying on a document seized from the premises of the said

Samira Group. The ld. Counsel for the assessee further submitted that the

assessee denied giving loan of Rs.25,00,000/- to the said Samira Group in

cash and also denied receiving any interest thereon from the said Samira

Group of companies. The Assessing Officer rejected the said denial of

transaction by the assessee and proceeded to make the re-assessment on

the said amount. Further, the ld. Counsel for the assessee submitted that,

relying on the said paper, the interest income of Rs.5,10,000/- was

repeatedly added in the assessment year 2009-10 as well as in assessment

year 2010-11 by the assessing authorities. Further, the ld. Counsel

submitted that the said addition in the assessment years 2009-10 and

2010-11 were deleted by the ld. CIT(A) in view of failure of the Assessing

Officer to adhere to the said principles of natural justice in the matter

relating to giving copy of the statement of Smt. Vijaya Iyer, Executive

Director of Sasmira Hebitats (India) Ltd. and also giving an opportunity to

-4- ITA No.2714/PUN/2017

cross-examine the said Executive Director etc. Convening the non-

seriousness of the assessee in the matter relates to the validity of the re-

assessment proceedings qua the compliance to the Hon’ble Supreme Court

judgment in the case of GKN Driveshafts (India) Ltd., 259 ITR 19, ld.

Counsel for the assessee mentioned that the requirement of furnishing the

said seized paper, statement of Smt. Vijaya Iyer, providing an opportunity

to cross-examination etc. are basic requirement before making addition.

The ld. AR requested for a direction to the Assessing Officer for providing

basic requirement.

7.

On the other hand, ld. DR for the Revenue heavily relied on the

orders of the Assessing Officer and the CIT(A).

8.

I heard both sides on this limited issue of remanding back the issue

to the file of the Assessing Officer and find undisputed fact includes making

the addition of Rs.5,10,000/-, this accrued interest income on the loan of

Rs.25,00,000/-, is common for all the assessment years i.e. A.Y. 2008-09,

2009-10 and 2010-11. The said addition was deleted by the CIT(A) for the

assessment years 2009-10 and 2010-11 and there is no appeal filed by the

Revenue in this regard. In my view, the same could be due to the limitation

of tax limits. Further, the failures to provide the seized papers, the

statements taken on oath, non-providing of cross-examination of Smt.

Vijaya Iyer etc. to the assessee are undisputed. Considering the same, I am

of the opinion that the request of the ld. AR for the assessee is fairly and

unreasonable.

9.

Therefore, all the grounds raised by the assessee in this appeal stand

remitted to the file of the CIT(A) for fresh adjudication. The Assessing

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Officer is hereby directed to furnish the requisite papers, copy of statement, etc, if need be so and the benefit of cross-examination is required to be provided to the assessee in accordance with the said principles of natural justice. With these directions, all the issues raised in the grounds of appeal stand allowed for statistical purposes.

10.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on this 28th day of November, 2018.

Sd/- (D. KARUNAKARA RAO) लेखासद�य/ ACCOUNTANT MEMBER पुणे/ Pune; �दनांकDated : 28th November, 2018. Sujeet आदेशक���त�ल�पअ�े�षत/Copy of the Order is forwarded to : अपीलाथ�/ The Appellant; 1. ��यथ�/ The Respondent; 2. 3. The CIT(A)-3, Pune; 4. The Pr. CCIT, Pune; �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, पुणे“एक-सद�यमामला” / 5. DR ‘SMC’, ITAT, Pune; गाड�फाईल/ Guard file. 6.

// True Copy // आदेशानुसार/ BY ORDER,स

स�या�पत ��त//True Copy// Senior Private Secretary आयकरअपील�यअ�धकरण ,पुणे/ ITAT, Pune

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