Income Tax Appellate Tribunal - Ahmedabad
Income Tax Officer vs Janak Kumar C. Vyas [Alongwith Ita Nos. ... on 28 May, 2004
Equivalent citations: (2005)92TTJ(AHD)1231
ORDER
A.L. Gehlot, A.M.
1. All these appeals by the Revenue are directed against the separate orders of the CIT(A), Surat, for asst. yr. 1992-93. Since grounds raised in all these appeals are based on identical set of facts, for the sake of convenience, these are being disposed of by a single order.
2. None is present in the case of ITA No. 1888 of 2001. The CIT(A) has decided the controversy raised by the Revenue in these appeals after detailed discussion in the case of Shri Janak C. Vyas and the same was followed in other cases. We consider the facts of the case of Shri Janak C. Vyas which are as under:
The assessment in this case was originally made under Section 143(3) of the Act on protective basis. The assessment was set aside by the CIT(A) with the direction that fresh assessment should be made after making enquiries on the line suggested in the appellate order. The background facts of the case noticed from the order of the CIT(A) are that a search was carried out in the case of Shri Manhar M. Kakadia on 19th Jan., 1994. In the course of search it came to light that a large number of flats in Deepa Co-operative Housing Society had been booked in benami names. The assessees under consideration were those benamidars. The money for this investment had come from Shri Narottambhai Patel, an NRI. Since money had been sent from abroad, the FERA authorities were also informed who conducted their own enquiries. Shri M. Kakadia and Shri Jayantilal Patel who acted as middlemen of Shri Narottam Patel were also jailed for their collusion in FERA violations. The CIT(A) noticed that the following persons were involved:
(a) Shri Narottam, Patel, an NRI living in Chicago, USA, who had investible funds. For whatever reasons, Shri Patel wanted to bypass the Reserve Bank of India and make investment off the record.
(b) Shri Jayanti Patel, a nephew of Shri Narottam Patel, who became the latter's agent for investment and provided benamis for this purpose. Shri Jayanti Patel now stays at the Nilkanth Society, Bharat Road, Surat.
(c) Shri Manher M. Kakadia, the builder for Deepa Complex, in whose project the money was invested. The deal between Shri Narottam Patel and Shri Manher Kakadia was brokered by Shri Jayanti Patel.
(d) Shri Bhadresh Modi, accountant of Shri Manher Kakadia, who did the actual work of laundering money received from Shri Narottam Patel, by cycling it as investments of benamis.
(e) Over 40 name-lenders for the flats. These name-lenders were paid in cash off the record for the money they.......their investment.
3. The AO took up the case for assessment on the basis of order of CIT(A) and a notice under Section 143(2) was issued and served on the assessee. The assessee did not attend some of the hearings but finally he made submissions before the AO and denied the investment made by Shri Janak C. Vyas. The AO required personal presence of the assessee and issued summons under Section 131 of the Act but the assessee did not put his presence before the AO. Under these circumstances the AO observed that there is no alternative but to finalise the time-barring assessment on the basis of information available. The AO repeated the addition which was made in the original assessment order. The details of the addition made in these appeals are as under:
Shri Janak C. Vyas 1,50,000
Shri Kantilal Devjibhai Patel 2,00,000
Shri Bharat R. Patel 1,00,000
Smt. Sudhaben H. Bhatt 2,00,000
Shri Himansu M. Bhatt 1,25,000
Shri Ajay D. Patel 1,25,000
Shri Maheshbhai G. Patel 1,50,000
4. The CIT(A) deleted the addition with the following observations:
"Shri Modi states that he is in possession of a lot of evidence on illegal sale of flats. This issue is relevant to the appellant's case as this fact further establishes the benami nature of the investment in the appellant's case and in other similar cases. However, I feel that the evidence that has so far been considered in this order is enough to affirmatively establish the benami nature of the appellant's investment. The next question is-where the amount that has been wrongly assessed in the appellant's case should be assessed. Under the facts, I hold, that such amount should be assessed in the hands of the syndicate. The syndicate may be assessed as an AOP since the role of individual members will not be ascertainable.
Since the issue of assessment of certain amounts in the hands of the syndicate has arisen, it may be mentioned as a suggestion that the amounts estimated to have been received on the sale of flats will have to be assessed in the syndicate's hands. All flats at one time allotted to the benamis which are not in the benamis' hands could be taken as sold. Shri Manhar Kakadia in his statement (Annex. 'B' admitted that in 1991 the flats were transacted for Rs. 4,66,000 each. These are big flats (1,328 sq. ft.) and have excellent location. Considering the rapid increase in the real estate prices since 1991, the sale value around 1996-97 should not be less than Rs. 9-10 lakhs. Since the number of such flats sold should be around 40, one can imagine the massive amount of concealment involved. The issue, therefore, deserves careful and urgent attention of the concerned authorities.
Apart from the tax angle, serious violations of the Indian Penal Code are also involved. It has been mentioned earlier how bank drafts have been purchased in a dead person's name. In all transactions, the purchase of drafts are not the actual purchasers and so signatures at certain places could be forged. Shri Modi states that he is in possession of clear evidence on forging of a signature in connection with illegal sale of a flat. Retraction of a statement on oath is also a criminal offence, punishable with long imprisonment. Since Shri Jayanti Patel has given contradictory statements on oath, at least one version should be wrong. So nothing will need to be proved if prosecution is filed. An AO is competent to file prosecution under the IPC for a violation committed before him and no permission of any authority is perhaps required.
Even though the AO has brushed it aside, conclusive evidence to establish that the appellant is a mere name-lender, is available in this case. The addition of Rs. 1,50,000 in the hands of the appellant is, therefore, deleted. The appeal is allowed."
5. The learned Departmental Representative submitted that the CIT(A) has deleted the additions without appreciating the facts of the case. He further submitted that the CIT(A) has not considered all the relevant facts of the case. He further submitted that the order of the CIT(A) is not acceptable because Shri Manhar Kakadia and his company M/s Kakadia Builders (P) Ltd. have gone before the Settlement Commission. He further submitted that in view of the settlement petition, the assessment of these cases were completed under Section 143(1) of the Act and no scrutiny was carried out. He further submitted that Shri Narottam Patel is an NRI and he is staying abroad. It is also the submission of the learned Authorised Representative that the Settlement Commission has not considered the amount shown to have been received for booking flats in the name of those assessees. He further submitted that on similar facts in the case of Smt. Anitaben M. Parikh and Shri B.M. Patel the Dy. CIT(A) vide order dt. 28th Nov., 1996 and in the case of Shri Jayrajsingh vide CIT(A)'s order dt. 25th Sept., 2000 additions have been confirmed. The learned Authorised Representative submitted that the AO wanted to have examined the facts of the case and issued a summons under Section 131 but the assessee failed to comply with that summons. The learned Departmental Representative urged that the order of the CIT(A) be set aside and that of the AO may be restored.
6. The learned Authorised Representative reiterated his submissions which were made before the lower authorities. The learned Authorised Representative submitted that the AO has not examined the case on the lines of direction given by the CIT(A) in the appellate order filed by the assessee against the original assessment. The learned Authorised Representative pointed out that due to the reason the assessee has raised additional ground of appeal before the CIT(A). The learned Authorised Representative further submitted that since the AO has relied so much on the retraction of statement by Shri Jayantilal Patel, the assessee should have been given an opportunity to cross-examine Shri Jayantilal Patel. He further submitted that the assessee was not given a copy of the statement used against the assessee. The learned Authorised Representative further submitted that the AO made the addition ignoring the direction given by the CIT(A) and the details and evidence filed before the AO. The learned Authorised Representative further submitted that the AO has not considered the details filed before him and even refused to consider those evidence which indicates that he was helpless in view of the direction given by the Jt. CIT. The learned Authorised Representative submitted that the assessee was benami of Shri Mahnar Kakadia, Jayantilal Patel and Narottam Patel. The learned Authorised Representative submitted that Manhar Kakadia, Jayantilal Patel and Narottam Patel are the syndicate who have sold the flats which were booked in benami names. He further submitted that such sale should have presented no problem as the benamis were never given any documents oh the basis of which the benamis could claim ownership or possession. The syndicate naturally wanted their acts to be smoke-screened. One way to do this was to hold the name-lenders to be the real owners. The learned Authorised Representative submitted that the additions were made in the hands of the benami just to support the syndicate's cause. It is also the submission of the learned Authorised Representative that the payments were through banking channel, on examination of this channel it is clearly evident that these persons were the benami persons. The learned Authorised Representative supported the order of the CIT(A).
7. We have considered the rival submissions of the parties and perused the record. After considering the totality of the facts of the case, we find that all the relevant facts of the case have not been properly examined and recorded. The AO did not supply the copies of statement recorded to the assessee. It has also been noticed that the AO completed the assessment at the fag end of financial year when the assessment was getting time-barred. We have also noticed that the CIT(A) has also observed and recorded the fact that the AO did not provide the opportunity of cross-examination of the person whose statements were used against the assessee. The facts and material produced by the assessee before the CIT(A) has also neither been examined nor relevant finding is given by the CIT(A). There are no findings neither by the AO nor by the CIT(A) that how the flat booked in the name of the assessee were finally disposed of by the alleged syndicate. It is also not on record that how those flats sold were considered for the purpose of income-tax. We have also noticed that the transactions through bank have not been properly examined by the lower authorities. On careful reading of CIT(A)'s order, we observe that the CIT(A) himself found that the AO did not provide the reasonable opportunity of hearing and has not considered all the evidence and material filed by the assessee. Under the circumstances the CIT(A) should have examined all the relevant material after providing reasonable opportunity of hearing to the AO or it should be sent back to the AO for the necessary examination and recording the relevant facts. In the light of the above facts of the case there was a proposition from the Bench for sending back the issue to the file of AO for necessary examination and recording all the facts. The learned representatives of the parties have accepted the same. In the light of the above discussion and under the facts and circumstances of the cases, we think it proper to send back these appeals to the file of the AO to decide the issue afresh in accordance with law after providing reasonable opportunity of hearing to the assessee.
8. In the result, all the appeals are treated as allowed for statistical purposes.