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PER PAWAN SINGH, JUDICIAL MEMBER:
This appeal by assessee under section 253 of the Income-Tax Act (“The Act”)
is directed against the order ld. CIT(A)-II, Thane dated 06.08.2013 for Assessment Year (AY) 2006-07. The assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts in confirming the additions of Rs. 8,06,89,870/- made by the Assessing Officer on a protective basis.
2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) failed to appreciate that bank accounts and demat accounts held in the name of appellant have been owned up by Mr. Jalaj Batra and the appellant, being his employee, was mere a name lender and man of no means. 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) failed to appreciate that income of Rs. 8,06,89,870/- added in the hands of appellant has already been assessed in the hands of Mr. Jalaj Batra as duly confirmed by his Assessing Officer and also as duly reflected in the assessment order passed in his case.
- Jagdish Uttam Parab
4. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts in upholding the addition of Rs. 6,61,68,798/- made by the Assessing Officer as unexplained income on account of purchase of shares during the period from 7.6.2005 to 13.6.2005.
5. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts in upholding the addition of Rs. 45,78,088/- made by the Assessing Officer on account of profits earned from trading in shares. 6. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in law as well as on facts in upholding the addition of Rs. 96,42,982/- made by the Assessing Officer as unexplained investment on account of shortfall found whereby the shares sold were in excess of shares purchased. 2. The perusal of records reveals that the present appeal is filed after 789 days of prescribed period of limitation. For condonation of delay the assessee has filed his affidavit dated 02.11.2017 duly sworn before Consular in High Commission of India in Zambia. The affidavit is filed on 09.11.2017 before the Tribunal. The assessee has filed only photo copy of the affidavit before the Tribunal. The contents of affidavit disclosed that the order of ld. CIT(A) passed on 06.08.2013 came to assessee’s knowledge on 8th September 2013.
In September 2013, the assessee suffered injury in his leg and was advised rest. The assessee remained at his native place in Sindhudurg. After coming to know the dismissal of appeal, the assessee has gone in depression as he had nothing to do with the addition of income added in the income of assessee.
The affidavit further disclosed that during the relevant period, the assessee was employed with one Shri Mahesh Mistry who was closely associated with Jalaj Batra. Jalaj Batra was engaged in the activity of Stock Market. Jalaj Batra opened Demat and Bank account in his name. The assessee was paid a salary of Rs. 3,000/-pm. only. A search action was carried on 25.10.2005 at 2 Jagdish Uttam Parab the office and residence premises of Jalaj Batra. The search was also carried at the residence, where the assessee was staying. The assessee was not aware about the consequence and has no technical knowledge and he was assured by Jalaj Batra that nothing is going to be happened in assessee’s case. It is further contended in the affidavit that due to depression and injury, the family of assessee advised not to travel to Mumbai and to take rest. Thus, the assessee has not come back to Mumbai thereafter. However, he kept on calling Jalaj Batra to settle the matter with the department. Thereafter, the assessee got a permanent job in Zambia. Accordingly, he left for Zambia in June 2014. The assessee returned in India for a short period on first week of September 2015 and received a summons from the department about the demand raised against him.
The ld. AR of the assessee made his submission on similar line as contended in the affidavit and submits that there is sufficient cause for condonation of delay. The ld AR for assessee prayed for condonation of delay and to allow him to make submissions on the merit of the case. On the other side the ld. DR for the Revenue strongly objected for condoning the delay in filing the appeal. It was argued that the assessee has not properly explained the delay. As per the contents of the affidavit the order of ld. CIT(A) was served upon him in September 2013 itself. It was argued that the assessee is frequently visiting Zambia which is evident from the endorsement on his Passport. The medical papers furnished by assessee nowhere disclosed that he was stable or ITA No. 5497/M/2015- Jagdish Uttam Parab advised complete rest. In rejoinder argument, the ld. AR of the assessee prayed that the assessee was not having complete record of assessment order, seized material and the statement recorded by the Investigating Team. The assessee made an application to the department in 1st week of September 2017 when re-visited India and after that affidavit was sworn before the Consular of High Commission of India in Zambai.
We have considered the submission of ld representatives of both the parties and perused the affidavit, medical reports of the assessee and the copy of Passport filed by assessee. We have noted that the present appeal was filed on 03.12.2015. The defect memo was issued to the assessee immediately, after scrutiny of appeal paper, informing the assessee about the delay of 789 days in filing the appeal. The assessee has not removed the defect immediately. The assessee has filed affidavit for explaining the delay in only on 09.11.2017 i.e. after two year of filing the appeal. The assessee has filed only photo copy of the affidavit, sworn before the Consular, High Commission of India in Zambai. We have noted that the assessee is casual and negligent in removing the defect after notifying the delay in filing of the appeal. The assessee has taken a casual approach and filed the affidavit almost after two years of filing of appeal.
We may mention here that the Supreme Court in the case of Collector, Land Acquisition Vs Mst. Katiji [1987] 167 ITR 471/ 35 Taxman 17 , held that when substantial justice and technical considerations are pitted against each 4 Jagdish Uttam Parab other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a no deliberate delay. Hence, keeping in view the principle laid down by Hon’ble Apex Court, we deem it appropriate to condone the delay. As we have observed that the assessee is casual in pursuing the appeal before Tribunal. Thus, the delay in filing the present appeal is condoned subject to cost of Rs. 10,000/-.The cost of Rs. 10,000/- be deposited with the revenue within four weeks of the receipt of this order. Hence, the delay in filing of the appeal is condoned.
Now, we shall discuss the merit of appeal. Brief facts of the case as culled out from the record are that a search action under section 132 in Jalaj Batra group was carried out by revenue on 25.10.2005. The assessee’s residence was also search on 25.10.2005 as the Bank account, Demat account, trade account of assessee were found at the premises of Jalaj Batra. Consequent upon the search a notice under section 153A dated 11.09.2006 was issued for assessee for furnishing return of income for AY 2000-01 to 2005-06. The assessee made no response to the notice under section 153A, despite repeated reminders by the revenue. However, the assessee vide his letter/application dated 07.12.2007 contended that he was only a name lender, all transaction pertains to Jalaj Batra and the assessee has no income in the transactions made in his accounts. Since, no documentary evidence was furnished by assessee nor, thereafter, assessee attended the proceeding, the AO Jagdish Uttam Parab proceeded to complete the assessment. The AO passed the assessment order under section 153A r.w.s. 144 dated 28.12.2007. The AO assessed the total income of assessee at Rs. 8,06,89,870/- by making addition on account of unexplained income of purchase of share for Rs. 6,64,68,798/-, profit from share trading of Rs. 45,78,088/- and unexplained investment in purchase of share of Rs. 96,42,982/-. The addition was made in the hand of assessee on ‘protective basis’. On appeal before the ld. CIT(A) no relief was granted. The ld. CIT(A) passed the ex-parte order. Thus, further appeal came up before us.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that assessee was employed with Jalaj Batra during the relevant period for about 15 month as a office boy and was getting a salary of Rs. 3,000/- only. The assessee was not assessed to tax as he was not having sufficient income. Jalaj Batra opened bank account in the name of assessee and other staff employed with him and made huge transaction in Stock Market. A search was carried out on 25.10.2005 wherein the bank account, Demat, trade account of assessee were found at the premises of Jalaj Batra, thus, the assessee was also covered by the search by executing warrant of authorization. During the search as well as after search proceeding, Jalaj Batra owned up that all Bank accounts, Demat Account and trade account in the name of various staff. Jalaj Batra filed his return of income and offered the entire incomes which were reflected in the Jagdish Uttam Parab accounts of assessee to tax. The revenue assessed all the income in the hands of Jalaj Batra of substantive basis. The assessment of assessee was completed under section 144 r.w.s. 153A. The AO made the assessment at the hand of assessee on ‘protective basis’. It was further argued that the addition at the hand of Jalaj Batra was upheld by the First appellate authority and confirmed by Tribunal in ITA No. 1931/Mum/2009 vide order dated 03.06.2011. The order of Tribunal has been upheld by jurisdictional High Court. It was finally argued that when substantive addition in the hand of Jalaj Batra have been upheld up to the High Court, the protective addition made against the assessee is liable to be deleted. In support of his submission, the ld. AR of the assessee filed a copy of Panchnama dated 25.10.2005 along with statement of assessee (page 22 to 35). The ld. AR of the assessee also filed the copy of assessment order dated 31.12.2007 in case of Jalaj Batra and the copy of order of Tribunal dated 03.06.2011. The ld AR submits that the ld CIT(A) passed the order without hearing the assessee. The assessee has filed certain document which was not considered by ld CIT(A). On the other hand, the ld. DR for the Revenue supported the orders of authorities below. On specific quarry of the bench the ld CIT-DR confirmed that the substantive addition made in the hand of Jalaj Batra has been confirmed by the Tribunal and upheld by Hon’ble High Court.
We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that in the assessment order, ITA No. 5497/M/2015- Jagdish Uttam Parab the addition against the assessee was made on ‘protective basis,. The addition on substantial basis was made in the hand of Jalaj Batra. We have noted that the substantive addition made in the hand of Jalaj Batra have been confirmed by the Tribunal. We have noted that the order of Tribunal has been stated to be upheld by the Hon’ble High Court. Considering the fact that substantive addition has been upheld in the hand of Jalaj Batra. In our considered view the income from the same transaction cannot be added in two hands. Thus, we restore the case to the file of assessing officer with the direction AO to verify the fact and pass the fresh order in accordance with law.
With these observations, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 19th day of January 2018.