Income Tax Appellate Tribunal - Ahmedabad
Kishorbhai Bhagabhai Mistry, Bilimora vs Income Tax Officer,Ward-2,, Navsari on 28 April, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
ITA No. 1668/Ahd/2011
(Assessment Year:2006-07)
Shri Kishorbhai Bhagabhai Mistry,
C/o Arihant Steel, Near GEB Antalia,
Billimora Appellant
Vs.
The Income Tax Officer,
Ward-2, Navsari Respondent
PAN: ABIPM20161N
आवेदक क ओर से/By Assessee : Shri Vijay H. Patel, A.R.
राज व क ओर से/By Revenue : Shri Om Prakash Meena,
Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 27.04.2017
घोषणा क तार ख/Date of
Pronouncement : 28.04.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This assessee's appeal for assessment year 2006-07 arises against the CIT(A), Valsad's order dated 25.02.2011, passed in appeal no. CIT(A)/VLS/482/08-09, confirming Assessing Officer's action making ITA No. 1668/Ahd/2011 (Shri Kishorbhai B. Mistry vs. ITO) A.Y. 2006-07 -2- unexplained investment addition of Rs.15,06,500/-, in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act".
2. The assessee raises following substantive grounds in the instant appeal:
"(1) The learned CIT (Appeals), Valsad has erred in law as well as on facts while confirming the order of the ITO, Ward 2, Navsari making addition of Rs.
15,06,500/- on account of alleged unexplained investment.
(2) The learned CIT (Appeals), Valsad failed to observe that the AO has acted in gross violation of the principles of natural justice by not allowing the appellant opportunity of being heard and to cross examine the third party whose statement recorded at the back of the appellant and relied upon by him and hence, the action of the AO patently in violation of the principles of natural justice as well in contravention of the provisions of law is liable to be struck down.
(3) The learned CIT (Appeals), Valsad has erred in overlooking and in summarily rejecting the detailed statement of facts submitted alongwith memorandum of appeal, various documents and evidences placed in the written submissions filed, while accepting the lop-sided and factually incorrect version of the AO and hence, the addition of Rs.15,06,500/- made on account of alleged unexplained investment, on misleading, misconceived, baseless and 'conjectural observations, deserves to be deleted."
3. We now come to the relevant facts. This assessee is assessed as an individual. It is evident from the instant case file that the above impugned addition has arisen from an FIR dated 20.05.2005 registered at V. P. Road, Police Station, Mumbai. The complainant therein was proprietor of an angadia firm M/s. Rameshkumar Ambalal & Co. namely Shri Rameshkumar K. Patel. He alleged before the police authority that assessee had sent the sum in question of Rs.15,06,500/- to one Shri Riyaz Lokhandwala of Mumbai through the above angadia carrier and its employee(s) had misappropriated the same. This complainant further filed necessary receipt of having received the money in question in assessee's name. One of such receipt forms part of the case records at page 66. All this resulted in the impugned addition being made in assessee's hands of the abovestated amount ITA No. 1668/Ahd/2011 (Shri Kishorbhai B. Mistry vs. ITO) A.Y. 2006-07 -3- of Rs.15,06,500/- as unexplained investment. The assessment order in question dated 31.12.2008 reveals that the Assessing Officer took note of the above criminal case, statement of complainant therein as well as latter inquiry proceedings to reject assessee's explanation of not owning the money above said.
4. The assessee preferred appeal. Ld. CIT(A) declines the same in the order under challenge with the following findings:
"4.2 DECISION : I have carefully gone through the assessment order and the submissions made by the Id. AR. The fact of the case is that the appellant allegedly sent money to Shri. Riyazkamal Lokhandwala of M/s. Z. V. Steel, Mumbai through Angadia Company named M/s. Rameshkumar Ambalal & Co. But due to the misappropriation of the same amount by one of the employees of Angadia Company named M/s. Rameshkumar Ambalal & Co, the police intervention was saught and in the process the alleged amount became the subject matter of Income Tax proceeding. The main contentions of the Id. AR as submitted before me were;
i. The appellant was not given adequate opportunity for defending the case and the assessment was completed on third party evidences.
ii. The appellant did not know about the facts till he received the SCN from the AO.
iii. The AO had not considered the full facts submitted before him for making additions.
iv. No heavy cash withdrawals made by the appellant is evident from the banks statements and books of a/c.
v. The Angadia had yet to return the money shows that the money does not belong to the appellant.
vi. The AO has not brought corroborative evidence for making such huge additions.
vii. The appellant had also relied on many case laws to support the contention.
4.3 From the perusal of the AO the following facts have emerged:
i. The AO had obtained the information from V.P.Road, Police Station along with the statement of Shri. Rameshkumar K. Patel one of the partners of M/s. Rameshkumar Ambalal & Co. recorded by the police authority, in which he has admitted that Shri. Kishorbhai B. Mistry of Billimora has given cash to our Billimora Branch to handover the same to Shri. Riyazkamal Lokhandwala of Mumbai. One of the receipts issued by the Angadia for amount Rs.8.06,500/-ITA No. 1668/Ahd/2011 (Shri Kishorbhai B. Mistry vs. ITO)
A.Y. 2006-07 -4- was placed on record as evidence of receiving money from the appellant.
ii. In reply to the letter dated. 21.04.2006 from the P.S., the appellant had confirmed the facts stated by Shri. Rameshkumar K. Patel one of the partners of M/s. Rameshkumar Ambalal & Co. vide the appellant's statement recorded on 24.05.2006. iii. The AO confronted all the materials collected from the Police Authority vide SCN dated. 26.12.2008.
iv. The AO has established that the appellant has been in the know of the matter since 2005-06.
4.4 On careful consideration to the facts and circumstances, the core issue to be decided is that whether the money in question belongs to the appellant or not ? The facts originates from the police records suggests that the money belongs to the appellant as admitted by the Angadia. Two recepts were issued and one is on assessment records suggests that the Angadia has received money from the appellant for disbursing to Shri. Riyazkamal Lokhandwala of Mumbai. Before the Police Authority the appellant has admitted that the money belongs to him as stated by Shri. Rameshkumar K. Patel of Angadia company. Why the Angadia has not yet return the money to the appellant is a matter between them to sort out. The AO has given adequate opportunity to the appellant to make the stand clear instead the appellant took a new stand that the Kishorebhai referred was not him but somebody else. Before the AO there are evidences, including independent evidences in the form of Angadia, which conclusively suggests that money belong to the appellant. The defence put forth by the appellant was definitely not to the point the AO desired. The appellant has not denied his correspondence with the Police Authority. One important aspect must be taken note here is that Shri. Riyazkamal Lokhandwala of M/s. Z. V. Steel, Mumbai is in the Business of Steel Trading so also the appellant is. In the Steel Trading cash transactions are predominant. The appellant did not demonstrate before the AO nor before me that the appellant had no business transactions with Shri. Riyazkamal Lokhandwala of M/s. Z. V. Steel, Mumbai. In this circumstances, I am constrained to agree with the findings of the AO and the contention raised by the Id. AR is rejected. Thus this ground of appeal is dismissed."
5. We have heard both parties. Case file perused. Learned counsel raises two contentions in the course of hearing. First one is that the lower authorities have violated principles of natural justice in not affording opportunity of cross examination of the above complainant before making the impugned addition in his hands. He quotes hon'ble apex court's decision in Andaman Timber Industries vs. CIT (2015) 62 taxmann.com 3 (SC) in seeking to annul the entire assessment. We however notice that page 9 of the ITA No. 1668/Ahd/2011 (Shri Kishorbhai B. Mistry vs. ITO) A.Y. 2006-07 -5- paper book contains assessee's statement before the police authorities dated 24.05.2005 explaining his business relation with the Mumbai based party.
He further appears to have supported complainant's version therein. We make it clear that this statement is in Marathi language. It was still read over to learned counsel in the course of hearing. He strongly contested the same by stating that the assessee had never appeared before the police authorities nor did he make the impugned statement. Learned counsel however aggreed that this statement is under Section 161 of the criminal procedure code wherein the witness in question is not support to put in his signatures. His plea is that this statement does not carry any evidentiary value. We are not impressed with this plea either as we are sitting in a summary proceedings case wherein the necessary procedure follows preponderance of probability rather than strict rules of evidence law. We also take note of the fact that it was for the assessee to discharge all the primary onus of not having any business relation with the Mumbai based alleged payee in order to come clean out of the impugned addition. There is further no attempt on his part to allege any threat or coercion in challenging veracity of above section 161 statement. We therefore treat the same as sufficient opportunity for the assessee to contradict all the relevant information in challenging correctness of the said complainant's statements who could not have substantiated his misappropriation allegation without producing him. We thus conclude in view of all these facts that non examination of the above complainant at assessee's instance is in any way not fatal to the impugned addition. We accordingly hold that the abovestated hon'ble apex court's decision does not apply to facts of the instant case.
6. The assessee's second plea raised in the course of hearing that neither he had appeared before the police authorities nor made any statement is also found to be devoid of merit in view of our discussion in preceding ITA No. 1668/Ahd/2011 (Shri Kishorbhai B. Mistry vs. ITO) A.Y. 2006-07 -6- paragraphs. We further take note of Section 114(e) of the Indian Evidence Act to presume that once the assessee himself admits the above statement to have been recorded u/s.161 of the Code of Criminal Procedure it was an official act performed in due process of law in taking the assessee as a witness at the abovestated complainant's behest. We thus see no reason to interfere in well reasoned lower appellate findings extracted hereinabove. The same are confirmed.
7. This assessee's appeal is dismissed.
[Pronounced in the open Court on this the 28th day of April, 2017.] Sd/- Sd/-
(PRADIP KUMAR KEDIA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 28/04/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।