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Judgment
Honourable Ms Justice Sonia Gokani
The appellant-assessee, being aggrieved by the order of Income Tax Appellate Tribunal dated 9.1.2009, has preferred the present Appeal u/s 260A of the Income Tax Act, 1961, (hereinafter referred to as "the Act") proposing the following questions of law for determination of this Court:
Whether the ITAT is right in law and on facts in restoring the addition of Rs.30,16,000/-deleted by the CIT(A) on the ground that the addition was made on the basis of statement of third party unverified by way of cross examination, in spite of specific direction of CIT(A) in previous appellate order to allow cross-examination ?
Whether the ITAT is right in law on facts in restoring the addition of Rs.30,16,000/-deleted by the CIT(A), by directing the legal heir of the Respondent to file affidavit regarding facts of which he was not personally aware, and in relying upon a part of sentence from in the said affidavit ?
Whether the ITAT was right in reversing the order of the CIT(A) without dealing with the detailed reasoning of the CIT(A) at all ?
Whether the ITAT was right in law and on facts in restoring the addition of Rs.30,16,000/-relying upon its order in the case of one Hitesh R.Shah, in whose case addition substantively made was deleted accepting the contention of that party that this amount is added in the appellant''s case, but ignoring the fact that the said addition stood deleted by CIT(A) and revenue was in appeal in appellant''s case on the very issue, which appeal was also heard simultaneously ?
Whether the order of the ITAT was not a perverse order having been made without considering the relevant facts and by considering irrelevant facts ?
To briefly summarize the facts -
2.1 Income Tax Department carried out search in case of one Shri Hitesh Rajnikant Shah u/s. 132 of the Income Tax Act on 14.3.1995. Simultaneously, search was also carried out in case of Shri Bhanuvijaysingh M.Vaghela on the very same date. Shri Bhanuvijaysingh passed away three years thereafter. He is survived by his legal heir-the present appellant.
As can be noted from the record, during the search of residential premise of Shri Hitesh R.Shah, various books of accounts and other documents were seized, one of them was a loose paper marked at annexure A-1. On the basis thereof, an addition was made by the Assessing Officer to the tune of Rs. 30,16,000/-in the income of the present appellant vide assessment order dtd. 30.03.2000. This was done on the ground that Shri Hitesh Shah and late father of present appellant had jointly signed the said document. Statement of Shri Hitesh Shah when recovered u/s. 132(4) of the I.T.Act, that revealed that he received the impugned amount from the present appellant and further revealed that the same reflected the liability he owed to the appellant.
On the ground that no opportunity was granted for cross-examining Shri Hitesh Shah, this order was challenged by the appellant before the CIT(Appeals) by the appellant. Twice the matter travelled to CIT(Appeals).
In the first round, CIT(Appeals) instructed the Assessing Officer to provide copies of statement of Shri Hitesh Shah recorded during the search to the appellant and all those papers on which reliance was to be placed for the purpose of assessment. CIT (Appeals) also directed to allow cross-examination of Shri Hitesh Shah.
As Shri Hitesh Shah did not make himself available, Assessing Officer requested CIT(Appeals) to set aside the assessment so as to procure presence of Shri Hitesh Shah for the purpose of cross-examination. Accordingly, assessment was set aside on 28.3.2001 with a direction to complete the assessment de novo. Assessing Officer was also once again directed for availing the opportunity of cross examination.
Despite issuance of summons u/s. 131 upon Shri Hitesh Shah, he chose not to remain present. Assessing Officer treated the entire sum of Rs. 30,16,000/- as "unexplained investment" u/s. 69 and taxed the appellant.
This issue once again was carried before the CIT(Appeals) and by an elaborate order, CIT(Appeals) deleted the said addition of Rs.30,16,000/-.
The Department challenged of this order of CIT(Appeals) before the Tribunal, which decided the same against the assessee and in favour of the revenue vide its impugned order dated 9.1.2009, which is challenged in the present Tax Appeal proposing the aforementioned questions of law for consideration.
Though questions proposed are more than one, the issue essentially is of addition made to the tune of Rs.30,16,000/-to the income of the present appellant, relying on the statement of the 3rd party as also on the basis of affidavit made by the legal heirs of the appellant who was four years old at the time of search made of the premise.
Learned counsel Shri Kirtikant Thaker fervently argued in support of contents of the Appeal Memo and urged that there is not a single word uttered by the Tribunal as to how the order of CIT(Appeals) is fallacious. The affidavit of the heir of appellant was meaningless according to the learned counsel considering his age on the date of occurrence and the same ought to have been discarded. He also further urged that Shri Hitesh Shah never offered himself for cross-examination and therefore, any addition made without availing appropriate opportunity to the appellant tantamounts to violating the principles of natural justice and decision rendered by the Tribunal disregarding these vital aspects requires to be set aside.
As against that, learned counsel Ms. Mauna Bhatt appearing for the Department contended that the order of Tribunal is a well considered order and is based on contemporaneous record placed before the Tribunal. Again it is factual in nature and raises no question of law and therefore, it was urged to dismissed the appeal.
As can be noted from the orders of adjudicating authorities on the basis of seized material, Assessing Officer noted that the loose papers found from the residential premise of Shri Hitesh Shah was jointly signed by him and Shri Bhanuvijaysingh on 25.10.1995. In the statement recorded of Shri Hitesh Shah u/s. 132(4) dated 23.3.1995, he stated that the said paper reflected the transaction between himself and Shri Bhanuvijaysingh. Shri Hitesh Shah paid Rs.30,16,000/-to Shri Bhanuvijaysingh, since he owed that amount to him.
The deceased father of the appellant when was asked to explain this transaction, he refused to have any such transaction with Shri Hitesh Shah and urged that no addition could be made merely on such a statement when no opportunity of cross-examination was given. Admittedly Shri Hitesh Shah did not remain present and instead his Chartered Accountant attended the proceedings. Assessing Officer however concluded that the amount of Rs.30,16,000/-needed to be treated as "unexplained investment" and the same was taxed u/s. 69 of the Act.
CIT (Appeals) deleted the said addition on the ground that Shri Hitesh Shah was not offered for cross-examination. Although specific direction was given by the CIT(Appeals) to the Assessing Officer while directing de novo proceedings Mr.Hitesh Shah did not remain present personally for cross-examination. On the ground that the statement of the third party cannot be depended for making addition unless there is corroborative material for evidence in support thereof, such an addition was found sustainable by the CIT(Appeals). It also further noted that such an addition was to be taxed on substantive basis in the hands of Shri Hitesh Shah and only on the protractive basis to the income of the present appellant. It also further noted that merely because addition was deleted in case of Shri Hitesh Shah that would not ipso facto make appellant liable to pay tax on such an amount. It also held that the burden for providing "unexplained investment" u/s. 69 of the Act was on the Department. Tribunal in terms held that there was no justification on the part of Assessing Officer to make any addition relying upon the statement of Shri Hitesh Shah, recorded behind the back of the assessee-appellant. For not having found any sound basis for making such an addition, the same was deleted.
As can be seen from the order of Tribunal, it has passed a common order in Tax Appeals of Shri Hitesh Shah and that of present appellant. As far as deletion of addition of the said amount made by CIT(Appeals) in case of Shri Hitesh Shah the Tribunal relied heavily on the decision of CIT(Appeals) and confirmed such deletion in the following manner:
7.4 We have carefully considered the rival submissions and perused the material on record. We have also gone through the order of the authorities below. It was contended by the learned AR before the CIT(A) that mere jottings and notings should not be the basis for making any addition in the returned income, more particularly when almost all seized material have been explained by incorporating the same in the form of books prepared as per the directions of the then AO, in which the assets being more the unaccounted assets and the valuable are offered to tax and source being less can not be taxed twice. We find that the assess has also submitted that in the assessment proceedings of Bhunuvijaysing, the same has been treated as an asset and taxed accordingly. However, the unaccounted assets as were found during the course of search represents the assets belonging to Bhunuvijaysingh to the extent of liability of Rs.30 lacs as referred to in the seized material on which neither the assessee possesses the ownership nor the assessee and any right to claim even. We therefore, do not find any infirmity in the order of CIT(A) in deleting the impugned addition. Thus, this issue of the Revenue''s appeal is dismissed.
As far as the present appellant is concerned, he is representing the original appellant in his capacity as a legal heir, the Tribunal noted that the loose paper attached with the paper book showed that the same was signed by Shri Bhanuvijaysing. Of course, evidence of the legal representative finds a reference who stated that the amount was not received. But, Tribunal was of the opinion that when the documents were clearly indicative of the fact that the amount was given as loan by Shri Bhanuvijaysingh, and therefore, it upheld the addition made by the Assessing Officer. Clarifying further that the liability to pay the tax would only to be extent of assets of the appellant. Because, by that time, Shri Bhanuvijaysing had already passed away and he was being represented by his legal heir- present appellant.
Moot question therefore to be answered is whether any need arises to interfere with the order of the Tribunal. On due consideration it can be stated that it would not be possible to uphold the contention of the learned counsel for the appellant. The Tribunal did not rely upon the affidavit of heir of late Shri Bhanuvijaysingh, of course it made only mention of such an affidavit to hold that no liability had been accepted in the affidavit filed. It is true that no elaborate reasonings are given by the Tribunal to assail the order of CIT(Appeals). However, that itself cannot be a ground for this Court to set aside the order of Tribunal. The fact remains that the entire issue is based on factual aspects and the Tribunal by giving cogent reasons deleted such an addition qua the maker of the statement while dealing with the Tax Appeal preferred by Shri Hitesh Shah by way of common order only. What has predominantly weighed with the Tribunal is the fact that the loose paper had clearly indicated the amount given by Shri Bhanuvijaysingh by way of loan. Moreover, it can be noted from the order of Tribunal that it has reproduced the material portion of CIT(Appeals) before concluding the issue and therefore, it would not be feasible to hold that Tribunal disregarded the materials or orders and acted on the extraneous consideration.
On cumulative reading, there does not appear any requirement to interfere with the order of Tribunal as no question of law, much less substantial question of law arises for our consideration. There is no perversity in the conclusion arrived at, which could give rise to interfere in this Tax Appeal. However, decision having been based overwhelmingly on facts, Tax Appeal deserves no further meritorious consideration, and hence is dismissed.