Income Tax Appellate Tribunal - Ahmedabad
Chandrakant R.Shrivastav, Baroda vs Assessee on 6 April, 2016
आयकर अपील य अ
धकरण, अहमदाबाद यायपीठ 'ए' अहमदाबाद।
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH, AHMEDABAD
BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 499/Ahd/2010
नधा रण वष /Assessment Year: 2005-06
1. Shri Mahendrabhai B. Shrivastav,
Madhu Shrivastav - MLA (Gujarat),
13-A, Prabhat Colony,
Waghodia Road,
Vadodara ..... Appellant
PAN : ADPPS 0191 N
Vs
Income Tax Officer,
Ward - 5 (1),
Vadodara ..... Respondent
आयकर अपील सं./ ITA No. 1233/Ahd/2009
नधा रण वष /Assessment Year: 2005-06
2. Shri Chandrakant R. Shrivastav,
B/h Alpana Cinema,
Pratapnagar Road,
Vadodara ..... Appellant
PAN : ANPPS 3815 H
Vs
Income Tax Officer,
Ward - 5 (1),
Vadodara ..... Respondent
Assessee(s) by : Shri M.K. Patel, AR for assessee No.1
Shri S.N. Soparkar, AR for assessee No.2
Revenue by : Shri Dinesh Singh, Sr. DR
सन
ु वाई क तार ख/ Date of Hearing 06/04/2016
घोषणा क तार ख /Date of Pronouncement 06/04/2016
आदे श/O R D E R
ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009
Shri Mahendrabhai B. Shrivastav &
Shri Chandrakant R. Shrivastav : AY : 2005-06
2
PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER:
These two appeals filed by different assessees are directed against separate order of the Commissioner of Income Tax (Appeals)-V, Baroda dated 08.10.2010 for Assessment Year 2007-08. Since both the appeals relate to some common transactions, these appeals were heard together and are being disposed of by this common order for sake of convenience. ITA No.499/Ahd/2010: AY 2005-06 Assessee - Shri Mahendrabhai B. Shrivastav
2. In this appeal, the assessee has raised following grounds of appeal:-
1. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer, Ward 5 (1) erred in treating and the Ld. Commissioner of Income Tax (Appeals)-V erred in confirming amount of Rs.18 lakhs as unexplained/undisclosed payment made to Ms. Zahira Sheikh and added the same to the total income.
2. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer, Ward 5(1) erred in treating and the Ld. Commissioner of Income Tax (Appeals)-V erred in confirming amount of Rs.3,19,500/-
as unexplained cash credit u/s 68 of the I.T. Act, 1961.
3. The appellant craves leave to amend, to alter, to add or to delete the grounds of appeal.
2.1 The only issue raised by the assessee in this appeal is with regard to the addition made by the Assessing Officer and confirmed ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 3 by the CIT(A) amounting to Rs.18 lakhs paid to Ms. Zahira Sheikh as unexplained/undisclosed payment. The facts of the issue are that in the case of Ms. Zahira H. Sheikh and others vs. State of Gujarat & Others, the Hon'ble Supreme Court delivered its judgment on 08.03.2006 for Criminal Miscellaneous Petition No.6658-6661 of 2004 in Criminal Appeals No.446-449 of 2004. In the said judgment, the Hon'ble Apex Court has given certain directions to the Income-tax Department, inter alia, observed as under:-
"The Chief Commissioner, Baroda is directed to take immediate steps for initiation of appropriate proceedings. It shall be open to Income-tax authorities to direct continuance of the attachment in accordance with law. If so advised, the Income-tax Authorities shall also require Madhu Shrivastava and Bhattoo Shrivastava to explain as to why the claim as made in the VCD of paying money shall not be further enquired into and if any tangible material comes to surface, appropriate action under the Income- tax Law shall be taken notwithstanding the findings recorded by the inquiry officer that there is no acceptable material to show that they had paid money, as claimed to Zahira. We make it clear that we are not directing initiation of proceedings as such, but leaving the matter to the Income-tax Authorities to take a decision".
2.2 On the basis of the above directions of the Hon'ble Supreme Court, the case of the assessee was selected for scrutiny. It was observed by the Assessing Officer in the impugned assessment order that, in spite of request made to the assessee to furnish the details of financial or other transactions made with Ms. Zahira Habibullah ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 4 Sheikh, Baroda, no such details in respect of financial transaction or other transactions made with Ms. Zahira Sheikh were furnished. After going through the transcript of VCD of Tehelka.com which was received by the Assessing Officer on 11.12.2006 from the Registrar General of Supreme Court of India, the Assessing Officer felt that further investigation/inquiry was required to be conducted in the case of assessee. Accordingly, the Assessing Officer issued summons u/s.l31 of the Act to the assessee on 10.12.2007. Subsequently, the assessee appeared before the Assessing Officer on 18.12.2007 and his statement u/s. 131 of the Act was recorded in respect of verification of the financial transactions with Ms. Zahira Sheikh as shown in VCD of Tehelka.Com. In this matter, the assessee was asked vide Question No.7 and thee relevant extract of the same is reproduced as under:-
"During the course of assessment proceedings, you were specifically asked whether any financial transaction was made Ms. Zahira Sheikh by reason of relevant assessment proceedings were pending before the undersigned and called for details in respect of financial transactions. In this context, there is one Thehalka VCD, in which your conversation with Shri Nisar Bapu was made and you admitted that you had given an amount of Rs. 18 lakhs to Ms. Zahira H Sheikh, Best Bakery, Hanuman Tekri, Baroda. Similarly these facts were admitted by your cousin Shri Chandrakant Ramcharan Shrivastava alias Bhattoo with Shri Nisar Bapu that you have given an amount of Rs. 18 lakhs to Ms. Zahira Sheikh and this payments were made at the residence of SHri Shaileshbhai Patel. This VCD narrates various dates of the happenings/events ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 5 occurred in respect of Ms. Zahira Sheikh and accordingly, the financial transaction relates to this assessment year. Please explain the details elaborately in this regard. Do you want to see and go through this VCD and give the reasons thereof including the explanation of sources of this deal. Ans. I have already seen this Tehelka VCD in Supreme Court in big screen. Therefore, I do not want to see this VCD again. In this Tehelka VCD, my picture is reflected, but voice is not mine and it is duplicate. This was made only for the purpose of creating problems in political affairs as I am an MLA from BJP. The Supreme Court relieved me. I never met Ms. Zahira Heikh and I do not know her. Entire transactions of Rs. 18 lakhs with Ms. Zahira Sheikh as seen with Nisar Bapu are not genuine. This can be verified from my bank accounts. I also state that Shri Chandrakant Bhattoo is my cousin and this was done for the defamation of his political career."
The aforesaid reply by the assessee was not acceptable to the Assessing Officer; hence, he issued a show-cause notice dated 24.12.2007 and the relevant extract of the same is reproduced as under:-
"You were given an opportunity to explain your stand as the transcript of Video Compact Disc produced by Tehelka.Com clearly indicated that money was paid to Zahira Sheikh to change her stand. In this matter, your statements u/s. 131(1) of the I.T. Act 1961 was recorded on 18.12.2007 wherein you categorically stated that the voice recorded in C.D. was not yours in reply to Q. No. 7 which was specifically admitted by you at the time of conversation with Shri Nisar Bapu. Further, these facts were noticed from the conversation of Shri Nisar Bapu with your cousin Shri Chandrakant R Shrivastava and Shri Shailesh Patel. Please submit your basis/evidences that the voice is not yours. In absence of your justification and evidences, it is requested to show cause as to why an amount of Rs. 18 lakhs should be treated as unexplained payment made to Ms. Zahira Sheikh and add the same to the total income".ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009
Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 6 In response to the above show cause notice, the assessee denied having paid Rs. 18 lakhs to Zahira Sheikh or knowing or meeting Zahira at any point of time. It was also stated that the VCD had been made to spoil political and party's image of the assessee. However, the Assessing Officer did not accept those submissions made by the assessee and concluded that the assessee had failed to prove/justify his claim in respect of financial transaction of Rs. 18 lakhs made with Zahira Shaikh and he added the same as unexplained payment. 2.3 Matter was carried before the First Appellate Authority, wherein various contentions were raised and having considered the same, the CIT(A) upheld the order of the Assessing Officer, by observing as under:-
"4.6 I have carefully considered the submission made by the AR of the appellant, and the impugned assessment order. Considering the totality of circumstances and the fact that the VCD has not been proved to be fabricated or fake and the fact that Ms. Zahira Sheikh changed her stand in Best Bakery case after her arrival in November, 2004, the addition of Rs.18 lakhs is sustained."
2.4 Before us, the ld. Authorized Representative for the assessee reiterated the submissions as were made before the CIT(A) and submitted that the addition in question be deleted. On the other hand, ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 7 ld. Departmental Representative supported the orders of the authorities below.
2.5 Having considered the rival contentions and perused the material placed before us, we find that the assessee is a sitting MLA from Waghodia, Baroda, Guajrat. During the year under consideration, the assessee has shown income from salary, interest and other miscellaneous income. In case of Ms. Zahira H Sheikh & others V/s. State of Gujarat & Others, the Hon'ble Supreme Court delivered its judgment on 8.3.2006 for Criminal Miscellaneous Petition No. 6658- 6661 of 2004 in Criminal Appeals No.446-449 of 2007, as discussed above, wherein the Hon'ble Apex Court was pleased to direct the Income Tax Department and left it to their discretion to initiate appropriate proceedings as discussed above. It was also directed by the Hon'ble Apex Court that, if required, the Income Tax Authorities may inquire Madhu Shrivastav and Bhattoo Shrivastav to explain as to why the claim made in the VCD of paying money shall not be further enquired into and if any tangible material comes to surface, appropriate action under the Income Tax Law shall be taken. Accordingly the assessee's case was selected for scrutiny. The Assessing Officer has mentioned in his assessment order that after ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 8 going through the transcript of VCD of Tehelka.com, which was received by him from the Registrar General of Supreme Court of India, he was of the opinion that further investigation needed to be conducted in case of the assessee. Accordingly, not being satisfied with the replies given by the assessee, the Assessing Officer issued summons u/s 131 (1) of the I.T. Act, 1961 as discussed above. The assessee's statement was recorded on 18.12.2007 and in his statement recorded also he has clearly denied of having entered into any financial transaction with Ms. Zahira Sheikh. However, based on the Tehelka VCD, the Assessing Officer added the entire amount of Rs.18 lakhs to the income of the assessee by considering the same as unexplained/undisclosed payment. In this regard, the stand of the assessee has been that during the riots that took place in Vadodara in 2002 which involved burning down of Best Bakery, Ms. Zahira Sheikh had emerged as the witness to the said incident. However, after few days she turned hostile saying that she had not seen anything of the attack for which a case was filed against her in the Supreme Court. An Indian Newspaper, Tehelka released a VCD showing the assessee to have allegedly paid Rs.18 lakhs to Ms. Zahira Sheikh. The Hon'ble Supreme Court, vide its order dated 8.3.2006 for Criminal Appeals ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 9 No.446-449 of 2004, found Ms. Zahira Sheikh guilty of perjury and directed the Income Tax Authorities to investigate into her assets. Regarding the involvement of the assessee in the case, the Hon'ble Supreme Court has accepted the findings of the inquiry officer and has mentioned in its order as under:-
"The Inquiry Officer has found that even though materials do exist to show that money played a vital role in the change of Zahira's stand, yet it could not be directly linked to Madhu Shrivastava or Bhatto Shrivastava."
Thus, the Hon'ble Supreme Court did not find any evidence against the assessee and the matter was merely left to the Income-tax Authorities to look into the matter and take the action only if any tangible material came to surface, as discussed above. Again, the direction of the Hon'ble Supreme Court are clear that the Income Tax Authorities could require Madhu Shrivastava and Bhatloo Shrivastava to explain as to why claim as made in the VCD of paying money shall not be further enquired into and if any tangible material comes to surface, appropriate action under the Income Tax Law shall be taken notwithstanding the findings recorded by the inquiry officer that there is no acceptable material to show that they had paid money, as claimed to Zahira. It shows that everything was left with the Income-tax Department. The Income-tax Authorities can take action ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 10 against the assessee only if any tangible material comes to surface during the course of assessment as well as appellate proceedings. In the present case, there is nothing on record to suggest that the Revenue Authorities could unearth any evidence/tangible material against the assessee, either during the course of assessment proceedings or appellate proceedings, to show that the assessee has paid the money of Rs.18 lakhs to Ms. Zahira Sheikh. It is only the version of DVD which is the basis for making the addition in question, on which the enquiry officer gave his finding that there was no acceptable material to establish that the assessee had paid money to Ms. Zahira Sheikh. In these facts and circumstances, the addition of Rs.18 lakhs, claimed to be paid by the assessee to Ms. Zahira Sheikh, as unexplained/undisclosed payment is not justified and same is directed to be deleted.
3. Second issue in this appeal is with regard to confirming the addition of Rs.3,19,500/- as unexplained cash credit u/s 68 of the Income-tax Act.
3.1 The Assessing Officer made addition of Rs.4,50,000/- as unexplained credit as he was not satisfied regarding the credit worthiness of the 9 creditors. In appeal before the CIT(A), the CIT(A) ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 11 observed that six out of nine creditors, i.e., Shri Dipak Patel, Shri Sudeep Shrivastav, Shri Naresh Shrivastav, Shri Ramesh Shrivastav, Shri Jagdishbhai Patel and Shri Vivek Shrivastav have filed returns of income and also have PAN and have also filed the confirmation letters. In the case of Shri Anil Kale, it was claimed that he was doing electrical repair work and his income was below taxable limit; and that the loan was advanced out of his savings. In the case of Smt. Santaben Patel, there was a balance of more than Rs.7 lakhs in her bank account before advancement of loan and she had also stated that the amount was out of savings of 7-8 years out of her agricultural income; however, according to CIT(A), no proof of any agricultural activity such as 7/12 records or sale receipts etc. could be produced to establish the credit worthiness. The CIT(A) also noted that Shri Jayendra Zala could not appear before the Assessing Officer and no details such as confirmation or his creditworthiness could be filed. The CIT(A) also held that the payment received by account payee cheque by itself does not fulfill the requirement of section 68 of the Act. In this background, the CIT(A) rightly held that the creditworthiness was not established in respect of loans of Rs.3,19,500/- in respect of Mrs. Santaben Patel and Shri Jayendra Zala and accordingly confirmed this ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 12 addition. These reasoned findings of the CIT(A) do not require any interference from our side; we uphold the same. In the result, this ground of the assessee is dismissed.
4. In the result, the appeal of the assessee is partly allowed. ITA No.1233/Ahd/2009: AY 2005-06 Assessee - Shri Chandrakant R. Shrivastav
5. The sole ground raised by the assessee in this appeal reads as under:-
The learned Commissioner of Income-tax (Appeals)-V erred in confirming the payment of Rs.18 lacs made to Ms. Zahira H. Sheikh under section 69C of the Income-tax Act, 1961 on protective basis for the AY 2005-06 without considering the facts of the case.
5.1 In this case, the Assessing Officer made the addition of Rs.18 lacs under Section 69C of the Act on protective basis which was confirmed by the CIT(A), by observing as under:-
"3.8 I have carefully considered the submissions made by the AR of the appellant, remand report and also statements averred in the impugned assessment order. There is considerable force in the submissions made by the AR of the appellant. In this regard, it is to be mentioned here that Hon. Supreme Court is very clear that as per the findings recorded by the Inquiry Officer after considering the said VCD, there was no acceptable material to show that the appellant or other persons had paid money to Ms. Zahira as alleged. The AO has not been able to bring on record even an iota of evidence to prove that the appellant had paid Rs.18 lacs to Ms. Zahira. The AO has not even cited the provisions of section under which he made the ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 13 addition of Rs.18 lacs. In the case of the appellant, he has stated all throughout the assessment proceedings that such alleged payment had not been made by him. The AO has also not pinpointed with any cogent material evidence to prove that the appellant has incurred expenditure of Rs.18 lacs, as alleged in the impugned assessment order, during the previous year relevant to the assessment year under consideration. Further, the appellant has not been afforded sufficient time to prove his claim / to submit satisfactory explanation which is also evident from the impugned assessment order, the relevant portion of the assessment order is reproduced as under :-
"As a matter of limitation, the undersigned is constrained to finalize the assessment order within the stipulated time. For this reason, further opportunities requested by the assessee, cannot be granted.
The main person / star witness of Best bakery, Baroda, i.e. Ms.Zahira Sheikh who received money of Rs.18 lacs in cash for changing her stand in press conference after returning from Mumbai i.e. on 3.11.2004 as shown in VCD of Tehelka.Com., could appear on 28.12.2007 before the undersigned after at the fag end of December, 2007 i.e. at the time of assessment proceedings and her statement was taken wherein she accepted that the voice is her as reflected in VCD. Therefore, the onus is on the assessee to prove such transaction with her."
3.9 During the course of appellate proceedings before me, the AR of the appellant has also made an attempt to the show cause notice dated 26.12.2007 issued by the AO to the appellant that, if the appellant does not substantiate with evident that the alleged VCD of Tehelka.Com is fake, the AO would make addition as unexplained money paid to Ms.Zahira. In this regard, it is worthwhile to mention here that the appellant has not been provided the alleged VCD even though he has specifically requested the AO to provide the same. It is an established position of law that unless the appellant is provided with the evidence which is intended to be used against the appellant, such evidence cannot be validly used against him. Moreover, it is a settled law that no material can be used against the appellant ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 14 unless, he is confronted with such material and given an opportunity to rebut the same, that if any evidence is used against the appellant, without confronting the same to him, such an action is illegal, hence the addition needs to be quashed. In this regard, reliance is placed on the decision of Balbir Singh Narula vs. ITO, 53 ITD 88 (Delhi Bench). It is also a well settled legal position after the judgement of Hon'ble Supreme Court in the case of Kishinchadn Chellaram vs. CIT (1980) 125 ITR 713, that any material collected by the AO cannot be used against him unless the assessee has been allowed a chance to rebut the same. It is, therefore, abundantly clear that instead of bringing any material evidence that the appellant paid money to Ms. Zahira, the AO simply directed the appellant to prove that the VCD was fake. Since the AO has not brought any material on record or any evidence to prove that the alleged payment has been made to Ms. Zahira by the appellant, it is very difficult to sustain the addition in the hands of the appellant. Another peculiar feature of the addition is that the same has been added in both the assessment years 2004-05 and 2005-06, which is also very difficult to sustain. Above all, the addition has been made by the AO on protective basis as seen from conclusion paragraph of the assessment year 2004-05 on Page no. 6 of the assessment order, but it has not mentioned there as to in whose hands substantive addition has been made. But, however, the AO in the remand report mentioned that substantial addition was made in the case of Mahendra, B. Shrivastav in the assessment year 2005- 06, which appeal has not yet been decided. Hence, to keep this issue live, the protective addition made in this case for the assessment year 2005-06 is sustained and the addition made in the assessment year 2004-05 is deleted."
5.2 We have decided the issue in the case of Shri Mahendrabhai B. Shrivastav in ITA No.499/Ahd/2010 for AY 2005-06 (supra) inter alia holding that no payment was made, so the protective assessment in ITA Nos. 499/Ahd/2010 & 1233/Ahd/2009 Shri Mahendrabhai B. Shrivastav & Shri Chandrakant R. Shrivastav : AY : 2005-06 15 the case of assessee do not survive. In the result, this appeal of the assessee is also allowed.
5. In the result, appeal bearing ITA No.499/Ahd/2010 is partly allowed and the appeal bearing ITA No.1233/Ahd/2009 is allowed. Order pronounced in the Court on 6th April 2016 at Ahmedabad.
Sd/- Sd/-
Anil Chaturvedi Shailendra Kumar Yadav
(Accountant Member) (Judicial Member)
Ahmedabad; Dated 06/04/2016
Biju T., PS
आदे श क त!ल"प अ#े"षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संब!ं धत आयकर आय#
ु त / Concerned CIT
4. आयकर आय#
ु त(अपील) / The CIT(A)
5. &वभागीय त न!ध, आयकर अपील य अ!धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार / BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद/ ITAT, Ahmedabad