SHABNAM S. GULATI,MUMBAI vs. JCIT CEN CIR 39, MUMBAI

The assessee has raised the following issue: A.Y. 2003-04 “1. On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) – 39, Mumbai (hereinafter referred to as ‘the CIT(A)’) has erred in confirming the addition made in respect of opening capital account balance to the extent of Rs.23,56,524/- by treating them as unexplained capital. The appellant being aggrieved, prays that the addition made on account of unexplained capital being unjustified, unwarranted, bad in law and illegal be deleted.”

The brief facts of the case are that the assessee filed the original return of income u/s.139 of the Income Tax Act, 1961 ( in short “the Act”) for A.Y.2003-04 on 27.11.2003 declaring total income to the tune of Rs.3,38,345/-. The assessee was engaged in the business of beauty parlour under the name and style of Shabnam Beauty which is a proprietary concern. Search and seizure action u/s.132 of the Act was conducted in the case of one Shri Madan S. Kolambekar who was dealing in land. The evidences gathered during the course of the search in his case indicated cash payment of Rs.3.50 crore to Shri Sunil Gulathi, the assessee’s husband. Thereafter, search and seizure action u/s.132 of the Act was carried out in the case of Shri Sunil Gulati and the assessee on 18.02.2009. On search, it was found that Shri Sunil Gulati had not filed his return of income after A.Y.2006-07 and his wife Smt. Shabnam had not filed her return of income after A.Y.2005-06. Notice u/s.153A of the Act was issued and served upon the assessee, thereafter, the further notices u/s.143(2) and 142(1) along with questionnaire were issue and served upon the assessee. The proper reply was taken from the assessee and income of the assessee was assessed to the tune of Rs.28,95,685/-. The opening income of the assessee as on A.Y. 2003-04 01.04.2002 was asked which was to the tune of Rs.23,56,521/-, therefore the said opening income was treated as unexplained cash credit u/s.68 of the Act and treated as income of the assessee. The assessee filed the appeal before the CIT(A) but the CIT(A) has confirmed the said order of the Assessing Officer hence the assessee filed the present appeal before us.

We have heard the arguments advanced by the learned representative of the parties and perused the record. The only point which has been raised before us is in connection with the addition of Rs.23,56,524/-u/s 69 of the Act. The contention of the assessee is that the assessee is filing her return of income for the period since 1888-89, 1990-91, 1991-92, 1993-94, 1995-96, 1998-99, 1999-2000 and 2000-2001 but no opportunity of being heard was given, therefore the decision based upon the return for the period w.e.f.2001- 02 to 2002-03 is wrong against law and facts and is liable to be set aside. On the other hand learned departmental representative strongly relied upon the order passed by the CIT(A) in question.

On perusal of the of the assessment order dated 29.12.2011,It was found that an opportunity of being heard was not given to the assessee while finalizing the assessment in the year of 2003-04. Subsequently, when the appeal has been filed before CIT(A) and opportunity of being heard to the assessee was also not given to the assessee. The contention of the assessee is that the assessee was filing the return for period 1888-89, 1990-91, 1991- 92, 1993-94, 1995-96, 1998-99, 1999-2000 and 2000-2001 continuously but due to enable to file the return and shortage of time she failed to file the said return before the CIT(A). To show the opening capital of Rs.23,56,521/-, A.Y. 2003-04 she has contended before the CIT(A) that she was ready to produced the evidence before CIT(A) to substantiate her claim. On perusal of the order of the Assessing Officer dated 29.12.2011 and on perusal of this order of CIT(A) in question we find that no opportunity of any kind was given to the assessee to raise her claim before the authority.

In view of the said circumstances, we are of the view that the order in question is wrong against law and facts and is hereby liable to be set aside therefore we ordered accordingly. We remand the case to the Assessing Officer to decide the matter afresh by giving an opportunity of being heard to the assessee in accordance with law.