IN INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HON BLE JUDICIAL MEMBER ITA No. 348 & 349/PAN/2015 (Asst. Year : 2006-07) Shri Dattaraj V. Salgaocar, Vs. DCIT, Circle-1, Salgaocar House, Margao Goa. Vasco-Da-Gama, Goa PAN No.ABYPS 1941 H (Appellant) (Respondent) Assessee by : Shri Percy Pardiwala Sr. Adv. with Shri Ashwin D. Bhobe, Adv. Department By : Shri Ramesh S. Mutagar - DR Date of hearing : 15/09/2016. Date of pronouncement : 15/09/2016. ORDER PER GEORGE MATHAN, JUDICIAL MEMBER ITA No. 348/PAN/2015 is appeal filed by assessee against order of Commissioner of Income Tax (Appeals), Panaji-1 in appeal No. 259/MRG/14-15 & 311/MRG/14-15, dated 14/07/2015 for Assessment Year 2006-07 and ITA No. 349/PAN/20158 is appeal filed by assessee against order of Commissioner of Income Tax (Appeals), Panaji-1 in appeal No. 259/MRG/14-15 & 311/MRG/14- 15 dated 14/07/2015 for Assessment Year 2006-07 against order under section 154 appealed before Commissioner of Income Tax (Appeals). 2 ITA No. 348 & 349/PAN/2015 2. Shri Percy Pardiwala, Sr. Advocate with Shri Ashwin D. Bhobe, Advocate represented on behalf of assessee and Shri Ramesh S. Mutagar, Departmental Representative represented on behalf of Revenue. 3. It was submitted by Senior Counsel that assessee is individual and has filed his return of income for relevant Assessment Year on 31/10/2006 declaring income of 2,89,76,500/-. said return was processed and assessment completed under section 143(3) of Act on 29/10/2008. It was submission that subsequently, in August 2011 there was some press reports, based on which he was informed his name along with his wife were appearing in certain data which was stolen from HSBC Bank, Geneva. On basis of this press report, assessee had written letter dated 18/08/2011 which was shown at page No. 6 of paper book to DGIT (Inv.), Bangalore. On 18/08/2011 summons were issued to assessee to appear along with his books of account and details of bank accounts. On 19/08/2011, statement under section 131 had been recorded by DGIT (Inv.), Bangalore, copy of statement was shown at page Nos. 8 & 9 of paper book. In said statement, assessee seems to have specifically denied that he had any overseas bank accounts. In response to question put to him that Directorate was in possession of information regarding bank accounts held in name of assessee and his wife and children in HSBC Bank, Geneva, in which sum of USD $ 51,78,668 for period from July 2005 to 2007 was deposited, assessee had responded that to best of his knowledge, he did not hold any accounts abroad and in order to protect his reputation as honest businessman and honest tax payer and to avoid protracted litigation and to buy peace of mind, he had offered to pay tax along with interest on said amount of USD $ 51,78,668 for Assessment Year 2006-07. It was submission by Senior 3 ITA No. 348 & 349/PAN/2015 Counsel that said document or details of information in possession with Directorate was not available to assessee. It was submission that on 18/11/2011, notice under section 148 had been issued and assessee had filed his return of income in response to notice under section 148 on 07/12/2011 disclosing amount of 23,01,91,793/- as income from other sources. He had also sought for copy of reasons recorded. On 25/01/2012, reasons recorded were provided to assessee wherein it was mentioned that notice under section 148 was issued on basis of statement recorded under section 131 on 19/08/2011 after taking prior approval of Commissioner of Income Tax. Copy of reasons is found at page No. 15 of paper book. It was further submission that in response to return filed, notice under section 143(2) had been issued. In course of assessment also, assessee had reiterated that he had no accounts overseas and disclosure was made only to buy peace. reassessment came to be completed on 14/03/2012 accepting returned income. matter was settled there. Subsequently, on 18/07/2014, Assessing Officer once again issued another notice under section 148 on 26/08/2014 and assessee has sought for reasons recorded. On 07/11/2014, Assessing Officer had provided reasons wherein it was mentioned that information was obtained from DIT (Inv.), Bangalore along with copy of bank account was received, where they showed deposits made between January 2006 to March 2006, aggregating to USD $ 1,39,39,783.33. Further, on 03/06/2014 notice under section 148 was issued on assessee s wife seeking to reopen her assessment for Assessment Year 2006-07. On 27/06/2014, assessee s wife sought for copies of reasons recorded, and on 02/09/2014, reasons were supplied to assessee s wife wherein peak credit deposits in HSBC Bank, Geneva was found at USD $ 51,78,668.83 in previous year relevant to Assessment Year 2006-07. It was submission that this 4 ITA No. 348 & 349/PAN/2015 amount is identical to amount informed to assessee by Directorate of Income Tax (Inv.), Unit-II (3), Bangalore when recording statement of assessee on 19/08/2011. On 12/01/2015, Assessing Officer informed assessee that proceedings initiated by issuance of notice under section 148, dated 18/07/2014 were dropped as case was reopened on wrong facts. This was shown to us at page No. 25 of paper book. On 31/03/2015, reassessment was completed on assessee s wife wherein amount of 23,09,68,630/- representing value of USD $ 51,78,668.83 was added in her hands. Subsequently, on 23/09/2014, Assessing Officer issued show-cause notice on assessee asking him to show cause as to why prosecution proceedings under section 277 and 277A ought not to be initiated against assessee, as assessee has disclosed amount in his return of income, whereas same amount was deposited in account of assessee s wife and consequently, assessee had given factual false statement and verification. On receipt of said notice, assessee filed application seeking rectification of order under section 143(3) read with sec. 147 dated 14/03/2012 on footing that said amount of USD $ 51,78,668 did not belong to assessee having regard to contents of letter dated 23/09/2014 issued by Assessing Officer. However, on 21/11/2014, Assessing Officer withdrew said show-cause notice for prosecution and same was served on assessee on 29/11/2014. It was submission that as assessee noticed that same amount was being attempted to be taxed in both hands of assessee and his wife and as he became aware that even basis of reopening itself was erroneous and his offer to accept statements by Revenue and paid tax thereon for purpose of avoiding protracted litigation was being put to naught, he preferred appeal on 24/11/2014 to Commissioner of Income Tax (Appeals) specifying said reasons for delay in filing of appeal. application under 5 ITA No. 348 & 349/PAN/2015 section 154 filed before Assessing Officer was also rejected vide order dated 27/11/2014, against which also assessee filed appeal before Commissioner of Income Tax (Appeals) on 26/12/2014. It was submission that Commissioner of Income Tax (Appeals) had dismissed assessee s appeal without considering any of submissions of assessee that reopening itself was invalid and basis for reopening was also invalid. Consequently, return filed in response to notice under section 148 was liable to be annulled. It was further submission that statement recorded on 19/08/2011 itself was obtained by misrepresentation insofar as there was no information in possession of Department that there was any bank account being held in name of assessee and his wife or daughter with HSBC Bank, Geneva. It was submission that though it is mentioned in this statement recorded under section 131, none of criterions and preconditions for purpose of recording statement under section 131 were available as is noticed from statement recorded. More specifically, as to who has recorded statement name and seal nothing was available. It was submission that Commissioner of Income Tax (Appeals) had dismissed assessee s appeal simply by holding that assessee s income was equal to returned income. Consequently, he had not condoned delay in filing of appeal. He had also not adjudicated upon issue on reopening. 4. In reply, Departmental Representative vehemently supported order of Assessing Officer and Commissioner of Income Tax (Appeals). On specific query by Bench to Departmental Representative as to what is said information which is in possession of Revenue regarding bank accounts held by assessee and his wife and children in HSBC Bank, Geneva, which is specific query put by Revenue in question No.6 in statement 6 ITA No. 348 & 349/PAN/2015 recorded and as to whether said information has been provided to assessee for his rebuttal, Departmental Representative submitted in negative. It was submitted by Departmental Representative that issues in appeal may be restored to file of Assessing Officer for re-adjudication. At this point, Senior Counsel submitted that appeals of assessee s wife are also pending before Commissioner of Income Tax (Appeals) and also penalty proceedings. It was submission that in view of decision of Hon ble Bombay High Court in case of Sitaldas K. Motwani Vs. DCIT & others reported in 323 ITR 223 (Bom.) wherein it is held when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for other side cannot claim to have vested right in injustice being done because of non-deliberate delay, or on account of culpable negligence, or on account of mala fides. litigant does not stand to benefit by resorting to delay. In fact he runs serious risk. approach of authorities should be justice oriented so as to advance cause of justice. If refund is legitimately due to applicant, mere delay should not defeat claim for refund. It was submission that delay in filing appeal before Commissioner of Income Tax (Appeals) may be condoned and issues in appeal may be restored to file of Commissioner of Income Tax (Appeals) for re-adjudication after granting assessee all documents relied upon for purpose of making assessment and granting adequate opportunity to assessee. To this submission, Departmental Representative did not raise any serious objection. 5. We have considered rival submissions. Admittedly, many of documents referred to for purpose of reopening as also for purpose of obtaining confession of assessee does not seem to have been provided to assessee. This itself is serious lacunae. 7 ITA No. 348 & 349/PAN/2015 However, as interest of natural justice should be protected, we are of view that issues must be restored to file of Commissioner of Income Tax (Appeals) for re-adjudication after condoning delay in filing of appeal before Commissioner of Income Tax (Appeals) and we do so. Commissioner of Income Tax (Appeals) shall not be bogged down just by fact that assessed income is equal to returned income. Commissioner of Income Tax (Appeals) shall provide assessee copies of all documents used against assessee in course of assessment and as are available with Revenue which is proposed to be used against assessee and shall grant assessee adequate opportunity to explain its stand. We are alive to fact that once assessee makes statement, then it is for assessee to substantiate that said income which has been offered does not belong to assessee. However, we noticed from present case that such statement has been obtained from assessee violating all principles of natural justice and by denying assessee, copies of all evidences which are being used against him. It is also not known as to whether said evidence which in fact relate to assessee himself. This being so, issues in this appeal are restored to file of Commissioner of Income Tax (Appeals) for re-adjudication after granting assessee adequate opportunity to substantiate its case. It would also be advisable that as issues are interconnected with appeal in case of assessee s wife, both are disposed of simultaneously. In result, appeal of assessee stands partly allowed for statistical purpose. 6. At time of hearing in ITA No. 349/PAN/2015, Authorized Representative of assessee submitted that as order in case of ITA 348/PAN/2015 has been pronounced condoning delay and restoring issues to file of Commissioner of Income Tax 8 ITA No. 348 & 349/PAN/2015 (Appeals) for re-adjudication, appeal of assessee against order passed under section 154 may be dismissed as withdrawn. To this, Departmental Representative did not raise any objection. Consequently, appeal of assessee in ITA 349/PAN/2015 stands dismissed as withdrawn. 7. In result, appeal in ITA No.348/PAN/2015 is partly allowed for statistical purpose and appeal in ITA No. 349/PAN/2015 is dismissed as withdrawn. Order Pronounced in Court at close of hearing on Thursday, 15th day of September, 2016 at Goa. Sd/- sd/- (N.S.SAINI) (GEORGE MATHAN) Accountant Member Judicial Member Dated : 15 t h September , 2016. vr/- Copy to: 1. Assessee. Shri Dattaraj V. Salgaocar, Salgaocar House, Vasco-Da-Gama, Goa. 2. Revenue. DCIT, Circle-1, Margao Goa. 3. Pr.CIT, Panaji. 4. CIT(A), Panaji-1, Goa. 5. D.R. 6. Guard file. By order Assistant Registrar I.T.A.T., Panaji Dattaraj V. Salgaocar v. DCIT, Circle-1, Margao Goa