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Income Tax Appellate Tribunal, MUMBAI “H” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA & SHRI RAVISH SOOD
O R D E R PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-20, Mumbai, dated 24/12/2010, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (for short „Act‟). The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal:- “1. The ld. CIT(A) erred in confirming additions made of Rs. 40,07,453/- on the basis of loose papers seized during the course of survey proceedings on 21/08/2007 at M/s. Bhavin Glass House, Proprietary concern of Mr. Amarshi Gala, relative of the appellant.
2. The ld. CIT(A) erred in confirming additions made by the Assessing Officer merely on the basis of statement recorded Amrutlal Gada vs. ACIT- A.Y 2007-08 133A during the course of survey proceedings on 22/08/2007.
3. The ld. CIT(A) erred in confirming the conclusion of the Assessing Officer that the appellant is the proprietor of M/s. Bhavin Glass House merely on the basis of statements recorded under section 133A of employees of M/s. Bhavin Glass House.
2. Briefly stated, the facts of the case are that the assessee, who is engaged in the business of trading in glass, glass decorative items and sanitary wares, is a proprietor of M/s Sejal Glass House as well as Chairman & director in M/s. Sejal Float Glass Ltd., M/s. Sejal Finance Ltd., M/s. Sejal Insurance Broking Ltd., M/s. Sejal International Ltd. and M/s. Sejal Architectural Glass Ltd. The assessee had filed his return of income for A.Y. 2007-08 on 31.10.2007, declaring total income of Rs. 25,54,620/- including short term capital gain of Rs. 5,19,919/-. The return of income filed by the assessee was processed, as such, under section 143(1) of the Act. Subsequently, the case of the assessee was taken up for scrutiny assessment under section 143(2) of the Act.
3. Survey proceedings under section 133A of the Act were conducted on the assessee by the ITO (Inv.), Unit-III(2), Mumbai on 21/08/2007. During the course of survey proceedings, certain documents pertaining to M/s. Bhavin Glass House were found and impounded. The Survey team during the course of proceedings, recorded the statement on oath of S/sh. Rohit Gada and Dharmesh Chaddva, employees of the said concern on 21/08/2007, who on being queried as to who was the proprietor/partners of the aforesaid concern viz. M/s. Bhavin Glass House, stated that the assessee Shri Amrut Gada was the Amrutlal Gada vs. ACIT- A.Y 2007-08 proprietor of the concern and had set up the said business w.e.f. April, 2007. It was further deposed by Mr. Rohit Gada that the aforesaid business was being carried on in the shop taken on rent by the assessee from his brother-in-law, namely, Shri Amarshi A Gala at a monthly rent of Rs. 30,000/-. The Assessing Officer on the basis of the aforesaid facts, observed that though the assessee was carrying on the aforesaid business under the name and style of M/s. Bhavin Glass House, but however, neither any income nor details pertaining to the said proprietary concern was shown by the assessee in his return of income for the year under consideration. The Assessing Officer during the course of assessment proceedings, confronted the assessee with the documents which were impounded during the course of the survey proceedings pertaining to M/s. Bhavin Glass House and called upon him to furnish explanation as regards the same. The assessee though initially came up with the explanation as regards the statements made by the two employees and the transactions recorded in the impounded documents, but thereafter, submitted that if any discrepancy was found in the aforesaid documents, the same may be treated as covered by the the voluntary declaration of additional income made in the hands of the group concerns viz. (i) Sejal Glass House; (ii) Sejal International Ltd.; and (iii) Sejal Glass Craft P. Ltd. However, the Assessing Officer was not persuaded to be in agreement with the aforesaid claim of the assessee for the reason that the declaration was made by him in relation to three different concerns and not in relation to M/s. Bhavin Glass House. The Assessing Officer being of the view that the assessee failed to explain the nature of the transactions recorded in the impounded documents, viz. Annexures-A1 & A2 Amrutlal Gada vs. ACIT- A.Y 2007-08 M/s Bhavin Glass House, therefore, on the basis of the notings recorded in the said documents made an addition of Rs. 40,07,453/- in the hands of the assessee, as under:- Particulars Amount Details Pages 4,6 & 7 Rs. 1943639 Unaccounted sales notings Page 8 Rs 135501 Unrecorded bank deposits Page 9 Rs 132800 Unexplained cash credits in the name of Shri Amarshi A Gada and Shantilal Gada Page 10 Rs. 21020 Unexplained notings pertaining to Gebi Glass & Ankeet Glass Page 11 Rs. 18000 Unexplained notings pertaining to Shri Dharmesh. Page 12 Rs. 30700 Unexplained notings in the name of Mr. Sachin, Santosh, Raj Kishore, Ramesh, Rahim & Pariket. Page 13 Rs. 61440 Unexplained notings in the name of Mr. Rohit R Gala & Gayatri Glass Page 14 Rs. 28446 Unexplained notings in the name of Glitopiam Hardware & Hamali Charge. Page 15 Rs. 31782 Unexplained notings in the name of Glitopiam, sun + tea + trans. Page 16 Rs. 369400 Unexplained notings in the name of SAGL, Rakesh Jain & Glass Galleria. Page 17 Rs. 54445 Unexplained notings in the name of SIL & SGCPL. Page 18 Rs. 45167 Unexplained notings in the name of MTNL & Electricity deptt. Page 19 Rs. 982170 Unexplained notings in the name of SGH.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee during the course of the appellate proceedings for the very first time, distanced himself from the ownership of the aforesaid concern viz. M/s. Bhavin Glass House and claimed that his brother-in-law, viz. Shri Amarshi A Gala was the proprietor of the said concern. It was further submitted by the assessee that the Assessing Officer had made the impugned additions merely on the basis of the notings in the impounded Amrutlal Gada vs. ACIT- A.Y 2007-08 documents without appreciating his explanation as regards the same in the right perspective. The CIT(A) after deliberating on the contentions advanced by the assessee, did not find favour with the same. It was observed by the CIT(A) that the assessee had nowhere claimed before the Assessing Officer that M/s. Bhavin Glass House was owned by his brother-in-law, viz. Shri Amarshi A Gala. The CIT(A) further dislodging the veracity of the aforesaid claim so raised by the assessee before him, observed that the assessee had at no stage controverted the deposition made to the contrary by Mr. Rohit Gada in his statement recorded on oath during the course of survey proceedings. The CIT(A) taking cognizance of the fact that the assessee except for raising the aforesaid claim in the thin air, had however utterly failed to place on record any material which could go to fortify his assertion that his brother-in-law, viz. Shri. Amarshi A Gala was the proprietor of the concern, viz. M/s. Bhavin Glass House. Rather, it was observed by the CIT(A) that if the assessee was not the proprietor of the aforesaid concern viz. M/s. Bhavin Glass House, then it was beyond comprehension as to how he was able to explain the transactions recorded in the documents impounded during the course of survey proceedings. The CIT(A) in the backdrop of his aforesaid observations, holding a strong conviction that no infirmity did emerge from the addition of an amount of Rs. 40,07,453/- by the A.O, thus, dismissed the appeal.
5. The assessee being aggrieved with the order of the CIT(A), had carried the matter in appeal before us. The Authorised Representative for the assessee (for short „A.R'), at the very outset of the hearing of the appeal submitted that on the basis of Amrutlal Gada vs. ACIT- A.Y 2007-08 133A on 21.08.2007, additions on the basis of impounded documents pertaining to M/s Bhavin Glass House were also made in the hands of the assessee in A.Y 2008-09, by holding him as the proprietor of the said concern. The ld. A.R submitted that though the assessee in his appeal filed before the CIT(A) for the A.Y. 2008- 09, had inter alia assailed the additions made in his hands for the reason that as the concern viz. M/s. Bhavin Glass House was not owned by him, but was owned by his brother-in-law Shri Amarshi A Gala, therefore, no additions in respect of impounded documents pertaining to the said concern viz. M/s. Bhavin Glass House were liable to be made in his hands, but however, the said contentions of the assessee did not find favour with the CIT(A), who dismissed the appeal. It was averred by the ld. A.R that on further appeal, the Tribunal after taking cognizance of the fact that the contention of the assessee that the concern viz. M/s. Bhavin Glass House was owned by his brother-in-law Shri Amarshi A Gala and not by him, was not looked into and addressed by the CIT(A), had thus restored the matter to his file with a direction to decide the matter afresh after giving an opportunity of being heard to the assessee in accordance with law. The ld. AR in order to drive home his aforesaid contention, took us through the order passed by the coordinate bench of the Tribunal, viz. ITAT “A” Bench, Mumbai in the assessee‟s own case for the A.Y 2008-09 passed in dated 09/02/2018. It was, thus, submitted by the ld. A.R that in the backdrop of the aforesaid facts, now when the issue as to the ownership of the aforesaid concern, viz. M/s Bhavin Glass House, as per the directions of the Tribunal in the assesses own case for A.Y 2008-09 was restored to Amrutlal Gada vs. ACIT- A.Y 2007-08 CIT(A) and was pending verification before him as on date, therefore, as the sustainability of the additions made in the hands of the assessee for the year under consideration were also dependant on the adjudication of the said issue, thus, in all fairness the matter for the year under consideration on similar terms may be restored to the file of the CIT(A). Per contra, the ld. Departmental Representative (for short, „D.R') did not object to the aforesaid contention of the ld. A.R.
We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal has been sought for adjudicating the validity of the addition of Rs. 40,07,453/- made in the hands of the assessee on the basis of notings on certain „loose papers‟ pertaining to M/s. Bhavin Glass House, Shop No.6, Yashodham Apts., Building No.3, J.P. Road, 4-Bungalows, Andheri (W), Mumbai-53, which were impounded during the course of survey proceedings conducted on the assessee on 21/08/2007. We find that the assessee had assailed the validity of the aforesaid additions made in his hands on the ground that the aforesaid concern, viz. M/s. Bhavin Glass House was owned by his brother-in-law, Shri Amarshi A Gala and as such, he had nothing to do with the said concern. We find that the additions made in the hands of the assessee on the basis of certain documents pertaining to M/s Bhavin Glass House, relatable to A.Y 2008-09, which were found and impounded during the course of the survey proceedings conducted under Sec 133A on 21/08/2007 were assailed by the assessee before the Tribunal, inter alia on the ground that the concern, viz. M/s Bhavin Glass House was owned by Shri Amarshi A Gala, brother in law of the Amrutlal Gada vs. ACIT- A.Y 2007-08 assessee, and the assessee had nothing to do with it. We find that the coordinate bench of the Tribunal, viz. ITAT “A” Bench, Mumbai, while disposing of the appeal of the assessee for A.Y. 2008-09, being of the view that the contention of the assessee that M/s. Bhavin Glass House was not owned by him was not examined by the CIT(A), therefore, had restored the matter to his file for fresh adjudication after giving opportunity of being heard to the assessee in accordance with law, observing as under:- “8. We have heard the argument and advanced by the ld. Representative of the parties and perused the record. The contention of the assessee is that the statement of Shri Dharmesh Chhadva was recorded who was the employee of M/s. Bhavin Glass House, proprietary concern of Mr. Amarshi Avchar Gala but the addition to the tune of Rs.29,22,949/- was made on account of the assessee wrongly and illegally, therefore, the same is not liable to be sustainable. However, the Ld. DR has argued that the M/s. Bhavin Glass House was under the II ownership of Amarshi Gala in view of the statement of Rohit Gala, therefore, the addition was rightly made, hence, the appeal of the assessee on this ground is liable to be dismissed. The statement of Shri Dharmesh is on the file which was recorded at the premises of M/s. Bhavin glass who made the statement in connection with M/s. Bhavin Glass only. Loose paper found in the premises of M/s. Bhavin glass belonging to the said firm. The contention of the revenue is that the Amrur S Gada was the proprietor of M/s. Bhavin Glass whereas the contention of the assessee is that M/s. Bhavin Glass was not belonging to him. The assessee also submitted the copy of acknowledgment of written of income filed by the Mr. Amrashi Gala proprietor of Bhavin Glass house and profit & loss account and balance-sheet of Bhavin Glass House. The copy of bank account in DCO Bank of Bhavin Glass was also given. These contentions nowhere verified and taken into consideration by the CIT(A). M/s. Bhavin Glass is under the proprietary concern of Mr. Amarshi Gala or not and this fact could only be verified with the other corroborative piece of evidence relied by the assessee. Oral evidence is not sufficient if documentary evidence is available being existence of firm can easily be established with the record of firm. Since this contention was nowhere examined by the CIT(A), therefore, we are of the view that the said addition to the tune of Rs.29,22,949/- is not Amrutlal Gada vs. ACIT- A.Y 2007-08 justifiable. Therefore, we set aside the finding of the CIT(A) on this issue and remand this issue before the CIT(A) to decide the matter of controversy afresh specifically in view of the contention raised by the assessee and observation made above by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue.”
We have deliberated on the aforesaid observations of the co- ordinate bench of the Tribunal, and are of the considered view that as the issue as regards the ownership of the concern, viz. M/s Bhavin Glass House is in itself not settled as on date and pursuant to the directions of the Tribunal in the assesses own case for A.Y 2008-09, is pending verification before the CIT(A), therefore, the adjudication and determination of the said issue shall have a strong bearing on the validity/sustainability of the additions made in the hands of the assessee during the year under consideration. We thus, on same terms as recorded by the Tribunal while restoring the matter to the file of the CIT(A), set aside the matter before us for the year under consideration, viz. A.Y 2009-10 to the file of the CIT(A). The CIT(A) shall after verifying the ownership of the concern, viz. M/s Bhavin Glass House, pass a fresh order. Needless to say, the assessee during the course of the set aside proceedings will be at a liberty to adduce fresh documentary evidence to fortify his claim that the concern M/s. Bhavin Glass House was not owned by him, but rather was under the ownership of his brother-in-law Shri Amarshi A Gala. As we have restored the matter to the file of the CIT(A) for fresh adjudication of the core issue pertaining to the ownership of the concern, viz. M/s. Bhavin Glass House, therefore, we refrain from adjudicating the validity/sustainability of the additions made in the hands of the assessee on merits, which thus are left open.
Amrutlal Gada vs. ACIT- A.Y 2007-08
In the result, appeal filed by the assessee is allowed for statistical purpose.
Order Pronounced in open Court on this 04th day of April, 2018.