AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 230
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....ssessment year 2004- 05, declaring a total income of Rs. 9,65,896/- on 15.10.2004. The return was, initially, processed u/s 143(1) of the Act. Subsequently, the AO was in receipt of information from the ADIT (Inv), Unit - II(2), Pune to the effect that the Investigation Wing, Bangalore, had seized incriminating documents related to unaccounted sales of Gutkha made by Shri Sohanraj Mehta, C & F of RMD Gutkha Group. On this basis, the Investigation Wing, Pune, had carried out search on 20.1.2001 in the case of RMD Gutkha Group. The documents seized by the Investigation Wing, Bangalore also included the transactions of Rs. 57,50,000/- which had been deployed to Shri Mustufamiya H Shaiakh by RMD Gutkha Group. The AO, on the basis of this information, sought to reopen the assessment of the assessee by issuance of a Notice u/s 148 of the Act along with a copy of the reasons recorded for the same. In compliance, the assessee requested the AO to treat the original return of income filed by him for the assessment year under consideration as the return filed against the Notice u/s 148 of the Act. Thereupon, the assessee was required to furnish the relevant particulars and to show-cause the s....
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....see. 4. Aggrieved, the assessee carried the matter in appeal before the learned CIT (A) for relief. After due consideration of the assessee's lengthy contentions, his correspondences with the AO [Courtesy: Pages 15 & 16 of the CIT(A)'s order], perusal of the relevant assessment order and also extensively quoting the judicial pronouncements with regard to wrongly mentioning of the assessment year in the impugned notice u/s 148 of the Act etc., the CIT (A) had rejected the assessee's objections for the following reasons: "(On page 38) 2.11. A perusal of the above, judicial citations clearly indicate that mere technical / typographical mistake in the notices are to be ignored so far as substance thereof is in order. The consequent asstt orders, cannot be brushed aside only on the basis of such inadvertent and unintentional mistakes. Similar views have also been taken by Hon'ble Punjab & Haryana High Court in the case of CIT vs Rajbeer Singh as at 20 Taxman.com 604 (2012) and in the case of Smt Swarnkanta vs CIT as at 44 Taxman 68 (1989), Hon'ble Karnataka Hgh Court ACIT vs Daleepkumar Balar quoted at 20 Taxman.com 341 (2011), Hon'ble Allahabad High Court in ....
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.... raised the following objections before the CIT (A): (i) that the impugned reference to 'Mustufabhai' on page 34 and page 47 of seized documents bearing No.A/M/8 do not necessarily implicates the appellant as there can be any other person by the same name; (ii) that the opportunity of cross examination was not given by the AO to cross-examine Sri Sohanraj Mehta; (iii) that the Department has not established as to who is the author of page 34 of A/M/8; (iv) that the AO is not clear whether addition was to be treating the impugned receipts as 'cash payments made by the appellant' or as unaccounted receipts; (v) that addition made by the AO amounts to double taxation of income, not permissible in law since the amount in question stands added by AOs being DCIT, Central Circle 2(2), Bangalore & ACI, Central Circle 1(1), Pune in respect of Shri Sohanraj Mehta and M/s. Dhariwal Industries Limited respectively. [Refer: Para 2.8 CIT(A)'s order] 4.3. After taking into account the assessee's arguments and also for the reasons recorded in his findings under dispute, the CIT (A) had rejected the assessee's contentions that - (i) the assessee was not Mustuf....
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....ot postulate that if the giver is taxed, the taker will not be taxed. Both the giver & the payer are required to pay tax in respect of profit earned by them from a transaction made with either of the parties. Sale of one person is purchase of another and the circle continues. The maxim of laws of however postulates that if on a particular income giver has paid tax, the taker would not be taxed. The assessment orders of the AOs at Pune & Bangalore have been examined. It is seen that the impugned amounts indicated on page 34 of annexure A/M/8 had been included by the two AOs. The fact, however, is noted that the AOs therein have not added gross receipts but only estimated profits arising there-from. So far as the case of the appellant is concerned, the amount added represents amounts of monies given by Shri Sohanraj Mehta to the appellant. The appellant, therefore, becomes taxable in his capacity as a receiver/taker to pay taxes on the amounts of monies received from Shri Sohanraj Mehta which was not hitherto offered for taxation. The controversy of any double taxation thus does not lie in this case. On the given facts, arguments of double taxation, hypothetically assuming, may eithe....
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.... strongly objecting to the issuance of notice u/s 148 of the Act and sought permission for urgent inspection of the entire case records and also supply of copies of documents identified etc., However, the AO had not passed any speaking order with regard to the assessee's objection (supra); That the proceedings were initiated u/s 147 of the Act on the basis of alleged seized materials from the premises of a third party; that the position of law is clear that once the matter had been referable to the seized document (seized from the third party), then the only recourse left with the Revenue is to initiate action u/s 153C of the Act on the strength of 'satisfaction' recorded by the AO of the searched person; and there being factual error, the CIT (A) had erred in rejecting the ground of the assessee in a routine manner; That the CIT (A) was not justified in holding that the impugned assessment order does not suffer from legal infirmity for the reasons that there exist illegality, irregularity and infirmity; That the foundation of the case was a statement by a third party as given during the search proceedings at the premises of a third party; that the statement does ....
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.... it was claimed that this itself demolishes the theory of the AO to tax the same as receipt in the hands of the assessee, as a plain reading of this document coupled with the statement of Shri Sohanraj Mehta (supra) proves that the alleged payments noted on the right hand side of Page 34 is the payment made to the 'company' and not to the assessee as an individual and that too without establishing him as an individual beneficiary or proving enjoyment of the same as his personal income; that the addition made in the case of the assessee was on account of the noting on the right side of page 34, but, the fact remained same and time and again the same stand was confirmed by various answers of Shri Sohanraj Mehta that the right side represents the payments made to the company for the purchase of stock from that company and noted on the left side reflecting quantity in boxes and its value which, according to it, worked out at Rs. 218,00,91,198/- and the payment noted on the right side was Rs. 206,76,54,463/- paid between 2003-06 and the balance of Rs. 11,24,30,739/- was settled by Mr. Sohanraj Mehta subsequently. Therefore, it was a case of some alleged transaction made by two i....
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....n any manner. That when the statement of Shri Sohanraj Mehta and other documents on which his statement was recorded was made available to the assessee on only on 9.12.2011 and the assessee vide his letter 14.12.2011 requested the AO to provide cross examination of Shri Sohanraj Mehta, the same was denied citing paucity of time, even though the case was getting barred by limitation only on 31.3.2012 and not on 28.12.2011(sic) 31.12.2011 wrongly held by the CIT (A). In respect of cross examination of the person who made statement, the assessee relies on the ruling of the jurisdictional High Court in the case of DCIT v. Mahendra Ambalal Patel (2010) 40 DTR (Guj) 243; That on a perusal of the assessment order in the case of Shri Sohanraj Mehta clearly reveals that he had retracted all the statements recorded during the search proceedings and, thus, such inconsistency of deposition of a person upon whose statement the Revenue had relied and on the basis of which the assessment order under dispute has been framed; That on the basis of same received material, proceedings were initiated in the case of Taufeeqhussain N Shaikh whose name too appeared in the said seized paper No.34 and....
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....ha made by one Shri Sohanraj Mehta, C & F of RMD Gutkha Group. On the basis of these evidences, the Investigation Wing of Pune had carried out searches in the case of RMD Gutkha Group on 20.1.2011 and the documents unearthed spoke, among others, transaction of Rs. 57.5 lakhs which was deployed to the assessee - Shri Mustufamiya H Shaikh - as it was seen that the assessee was a distributor of RMD Gutkha Group for Ahmedabad Region. Accordingly, on the basis of the said information, the assessee's assessment for the AY 2004-05 was sought to be re-opened by the AO by issuance of a notice u/s 148 of the Act, after recording the reasons for the same. While doing so, the assessment year has been mentioned as 2005-06 in stead of 2004-05. However, while recording the reasons, the assessment year has been correctly mentioned as 2004-05 [courtesy: P 17 & 18 of PB AR]. This has been strongly objected to by the assessee before the learned CIT (A). However, in his letter dated 14.12.2011, the assessee had objected to only the issuance of Notice u/s 148 of the Act dated 29.3.2011, but, not the wrong mentioning of the assessment year as 2005-06 [Refer: P 127 of PB AR] 6.3. After taking into a....
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....before the AO in terms of the proviso to s. 292 BB. In this view of the matter, it shall now be deemed in terms of s. 292BB that the notice which required to be served as per the time provision of s. 143(2) has been duly served upon the assessee in time in accordance with the relevant provisions of the Act and, therefore, the assessee stands statutorily precluded from taking any objection at this stage that the notice was not served upon him, or was not served upon him in time, or was served upon in an improper manner....." 6.7. In consonance with the proposition laid down in the findings of the Tribunal (supra) and also elaborate reasons recorded by the CIT (A) in his impugned order under dispute, we are of the considered view that the AO was within his realm to conclude the assessment and, thus, there was no any infirmity warranting our interference. Accordingly, this ground goes against the assessee. It is ordered accordingly. (ii) Addition of Rs. 57,50,000/- in the hands of the assessee: 7. On a perusal of the seized materials received from the Investigation wing, Pune, the AO had noticed that Page 34 was a summary of the cash payment made by Shri Sohanraj Mehta for the per....
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....akash Dhariwal. Such payments totaling to Rs. 206,76,54,463/- were made in 2003-2006. The balance of Rs. 11,24,36,739/- was settled by me subsequently over a period of time." 7.2. Considering the statement of the said person, there is strong force in the contention of the assessee that even assuming that the receipt of such amount was merely a collection for on behalf of the company and such amount cannot par take the character of income in the hands of those persons. 7.3. Moreover, according to the assessee, the searched person being a third party had retracted all the statements recorded during the search proceedings in the following words: "1. I referred my aforesaid statement recorded by Deputy Commissioner of Income-tax, Central Circle 2(2), Bangalore on 10.8.2011. 2. In this statement dated 10.8.2011 sense conveys that my detailed letter dt.23.12.2009 filed with the Asst. Director of Income-tax (Investigation) Unit 2(1), Bangalore is negated which is incorrect and untrue. 3. Today on 3.12.2011, Saturday I depose in the name of Almighty God that under wrong promises, mistaken beliefs, inadequate guidance and improper advise, I signed the letter dt. 10.8.2011 in the Inc....
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....o be a justifiable time frame in which such right can be exercised. It is as settled principle of law that rights and duties under a statute go hand in hand and cannot be exercised in isolation. The appellant truly had the right to cross examination but at the same time had the duty to ask for it within a reasonable time frame. A right exercised with ulterior motives does not possess the sanction of law. Facts of the case clearly indicate that the appellant had purposefully demanded cross examination at a time when it was considered impractical and unfeasible....." 7.7. In essence, the principles of natural justice on the legitimate request of the assessee, to cross examine the third party on the basis of whose statement the impugned addition sought to be added to his income, has been denied on flimsy grounds. 7.8. At this point of time, we shall analyze the judicial pronouncements on a similar issue, as under (PB -184): (i) the Hon'ble jurisdictional High Court in the case of DCIT v. Mahendra Ambalal Patel reported in (2010) 40 DTR (Guj) 243 had held as under: "From the findings recorded by the Tribunal it is apparent that though it is the case of Revenue that the land ha....
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....ion that the Revenue had not been able to establish its case against the assessee and as such, the order of the Tribunal being based upon findings of fact recorded by it, does not give rise to any question of law. It was, further, submitted on behalf of the assessee that the entire case of the revenue was based upon documents recovered during the course of search from the premises of third parties and the statements of the third parties and that the assessee was not granted an opportunity to cross examine the third parties and as such their statements have no evidentiary value. After due consideration of rival submissions and also taking into account the reliance placed by the assessee's counsel in the cases of (i) Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) & (ii) CIT v. S.C. Sethi (2007) 295 ITR 351 (Raj), the Hon'ble Court had held thus: "[PB - 174] 16. Thus, it is apparent that the conclusions arrived by the Tribunal are based upon the aforesaid findings of fact recorded by it upon appreciation of the evidence on record. On behalf of the revenue nothing is pointed out to show that the findings recorded by the Tribunal are in any manner perverse, nor is it th....