Hiren Shankerbhai Uttamchandani, Surat V. Asst. Commissioner of Income Tax CC-4, Surat

CO 15/SRT/2022

AI Insights

The case involves appeals by the Assistant Commissioner of Income-tax against Shri Shankar Nebhumal Uttamchandani and Shri Hiren Shankerbhai Uttamchandani concerning the assessment years 2013-14 and 2017-18. The appeals were based on the deletion of additions made by the Assessing Officer under sections 69 and 69A of the Income Tax Act, 1961, which were later overturned by the CIT(A). The Revenue argued that the CIT(A) erred in deleting these additions without proper appreciation of the facts, particularly concerning seized documents and the conditions of land deals involved. However, the appeals were dismissed due to the low tax effect, which was below the threshold of Rs. 50,00,000 as per the CBDT Circular. The assessee's Cross Objection regarding the validity of re-opening the assessment under section 147 was rendered academic and not adjudicated upon due to the dismissal of the Revenue's appeal for the same assessment year.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301992 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-01-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2022
• Other Referred Cases: Abdul Hamid vs. ITO \\ [2020] 117 taxmann.com 986 (Gauhati \\ Trib)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Residential status; Salary income; Tax effect; Tax effect; TDS; Capital Gains
• Section: 147; 68; 148; 143(3); 244A; 10AA; 69A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A.L.SAINI, AM आयकरअपील सं./IT(SS)A No.91/SRT/2022 (िनधाŊरणवषŊ / Assessment Year: (2017-18) (Physical Court Hearing) Assistant Commissioner of Income-tax, Central Circle-4, Room No.508, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs. Shri Shankar Nebhumal Uttamchandani, 15, Adarsh Society, Athwalines, Surat- 395001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: AABPU 3188 Q (Appellant ) (Respondent) आयकरअपील सं./ITA No.322/SRT/2022 & ᮧ᭜याᭃेप/Cross Objection No.15/SRT/2022 (िनधाŊरणवषŊ / Assessment Year: (2013-14) (a/o ITA No.322/SRT/2022) Assistant Commissioner of Income-tax, Central Circle-4, Room No.508, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs. Shri Hiren Shankerbhai Uttamchandani, 15,Adarsh Society, Athwalines, Surat- 395001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAKPU 5035 F (Appellant ) (Respondent)/ co-objector Ǔनधा[ǐरती कȧ ओर से /Assessee by : Shri Ramesh Malpani, A.R राजèव कȧ ओर से /Respondent by : Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/ Date of Hearing : 13/01/2023 घोषणा की तारीख/Date of Pronouncement : 30/03/2023 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned both appeals filed by the Revenue and Cross Objection (CO) filed the by Assessee, pertaining to assessment years 2013-14 and 2017-18, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals) [‘CIT(A)’ for short], which in turn arise out of separate Page | 2 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani assessment orders passed by the Assessing Officer under section 143(3) r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Since, the issues involved in both the Revenue’s appeals are common and identical except variance of amount; therefore, both appeals and assessee’s CO for in A.Y 2013-14 have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. First we shall take Revenue’s appeal in IT(SS)A No.91/SRT/2022 for A.Y. 2017-18, wherein the grounds of appeal raised by the Revenue are as follows: “[i] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.5,00,000/- made by the Assessing Officer u/s 69A of the I.T.Act without appreciating the fact that the AO has made addition on the basis of facts mentioned in seized sauda chitti dated 26.01.2016, and the ld. CIT(A) has wrongly decided the appeal on the basis of facts found in sauda chitti dated 03.07.2014 which had travelled to the desk of Hon'ble Settlement Commission and assessee has made declaration of Rs.1,17,00,000/-. [ii] On the facts and in the circumstances of the case and in law, the Ld, CIT(A) has erred in deleting the addition of Rs.60,00,000/- u/s 69 of the Act on account of unaccounted investment based on the notarized agreement which was found and seized during the search proceedings, ignoring the fact that the AO made addition on the basis of the conditions mentioned in the said agreement and that the original owner of the said land had committed to alienation of their rights on 70% of the land. [iii] In addition to ground No. 1 & 2, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee was indulging in activities of land deals/speculative land deals wherein expenses / investment of the kind above are routinely done and thereby action of the AO is corrected and in accordance with facts of the case. [iv] It is, therefore, prayed that the order of the Ld. CIT(A)-4,Surat may be set aside and that of assessing officer may be restored to the above extent. [v] The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 3. At the outset, Shri Ramesh Malpani, Learned Counsel for the assessee submitted that tax effect involved in Revenue’s appeal is below monetary limit prescribed by the Central Board of Direct Taxes (‘CBDT’ for short), in Circular No.17/2019 dated 08.08.2019. Therefore Ld. Counsel submitted that since tax Page | 3 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani effect is below of Rs.50 lakh in Revenue’s appeal, hence, the appeal of Revenue should be dismissed. The Ld. Counsel also submitted before the Bench written submission to substantiate his arguments, which is reproduced below: “REF: I.T. Appeal No.: IT(SS)A 91/SRT/2022 (Deptt.) A. 2017-18 Sub: Filing of computation of tax effect in Departmental Appeal date of hearing: 10-01-2023 Tax Effect in this departmental appeal is of less than Rs.50 lakhs as penalty computation sheet of correct tax effect attached herewith. Tax on the disputed addition of unaccounted income by way of alleged token money received of Rs.5,00,000/-has to be computed at normal slab tax rates and not u/s 115BBE as this was the addition of income (source),which does not fall u/s 68 to 69D. Reliance in this regard is placed on case law of Hon'ble ITAT, Gauhati Bench, in the case of Abdul Hamid vs. ITO – [2020] 117 taxmann.com 986 (Gauhati – Trib). Hence correct tax effect in this case is of Rs.46,50,450/- as per computation sheet attached, which is lessthanRs.50 lakhs prescribed by the CBDT in Circular No.17/2019. Hence, this departmental appeal is not maintainable for this reason along i.e. low tax effect.” 4.As per the above arguments, the computation of tax effect is submitted by the ld Counsel, which is reproduced below: Page | 4 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani Page | 5 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani 5.With help of the above computation sheet, ld Counsel pleaded that since the tax effect is only Rs.46,50,450/-, which is below the monetary limit prescribed by CBDT at Rs.50,00,000/-, therefore, Revenue’s appeal, may be dismissed. 6. On the other hand, Ld. CIT-DR for the Revenue submitted that tax effect is more than the prescribed limit by CBDT and he pointed out that Assessing Officer made addition of Rs.5,00,000/- u/s 69 of the Act and ITBA portal has wrongly computed tax effect. 7. We have hard both the parties and perused the materials available on record. We find merit in the submission of ld Counsel for the assessee and noted that that tax effect in the said appeal of revenue is less than Rs.50,00,000/-, therefore, Revenue`s appeal is liable to dismissed on account of low tax effect. 8. Now we shall take Revenue’s appeal in ITA No.322/SRT/2022 and assessee’s CO No.15/SRT/2022 for A.Y 2013-14, wherein the Revenue has raised the following grounds of appeal:- “[i] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,64,26,178/- made by the Assessing Officer on account of unaccounted interest expenses u/s 69A of the I.T. Act without appreciating the fact that the addition was made on the basis of incriminating documents in shape of ledger account showing the interest payment of 3% per month as reflected in the ledger. [ii] In addition to ground No.1, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,64,26,178- made by the Assessing Officer on the basis of evidence found and seized during the search proceedings and ignoring the statement of clerk cum cashier Shri Tejaram Choudhary that the interest calculation was made @ 3% per month and no TDS has been deducted on such interest payment. [iii] In addition to Ground No.1 & 2, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on the submissions of the assessee and granting relief on presumptions stating “it is quite likely that the said interest calculation was manually made as the appellant and his family members intended to retire from the firms of Shri Kuberji Group and the said calculation was for that reason. Ultimately, it is stated that the retirement of Mr.Shanker Uttamchandani Group did not materialize till date and hence, it is quite likely that the payment as worked was not made. Page | 6 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani [iv] In addition and in alternate to grounds No.1 to 3, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made by the Assessing Officer ignoring the principles of “Human Probability Test” i.e., preponderance of probabilities which is applicable for Income Tax proceedings. [v] may be restored to the above extent. [vi] The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 9. The assessee has raised the following grounds in his Cross Objection No.15/SRT/2022: “1. That on the facts and in the circumstances of the case as well as in law, the learned CIT(A) has erred in uploading the validity of re-opening of the case of assessee by issuance of notice u/s 148 of the I.T. Act, 1961(the ‘Act’) and consequent assessment order passed u/s 147 of the Act.” 10. The Ld. Counsel stated that tax effect involved in this Revenue’s appeal is at Rs.49,78,942/- which is below Rs.50,00,000/-. The ld Counsel also pointed out that tax effect worked out by the assessing officer is at Rs.49,87,218/-, which is also below Rs.50,00,000/-. Therefore, ld Counsel contended that tax effect as per assessee and as per assessing officer is below Rs.50,00,000/- hence, Revenue`s appeal in ITA No.322/SRT/2022 should be dismissed on account of low tax effect. 11. On the other hand, ld DR submitted that tax effect is Rs.50,75,689/- which is more that Rs.50,00,000/-, hence Revenue`s appeal should not be dismissed. 12. We have gone through the tax effect calculation of assessee, ld DR and assessing officer. We note that tax effect computed by the assessing officer is correct which is at Rs.49,87,218/-, which is reproduced below: Computation Sheet General Details PAN AAKPU5035F Assessment Year 2013-14 Name HIREN SHANKERBHAI UTTAMCHANDANI Address 15 15, ADARSH SOCIETY ATHWALINES 395001, Gujarat, India Page | 7 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani Residential Status Resident Order Section 147 DIN & Document Number ITBA/AST/S/114/2021- 22/1041745164(1) Order Date 27/03/2022 Sl. No. Reporting Heads Amount as per Current Order (in Rs.) HEADS OF INCOME 1. INCOME FROM SALARY 0 2. INCOME FROM HOUSE PROPERTY 0 3. INCOME FROM BUSINESS OR PROFESSION 3,47,921 4. INCOME FROM CAPITAL GAINS 0 5. INCOME FROM OTHER SOURCES 1,64,34,551 6. INTRA HEAD ADJUSTMENTS 0 7. TOTAL (AFTERINTRA HEAD ADJUSTMENT) 7=(1+2+3+4+5)-6 1,67,82,472 8. LOSSESOF CURRENT YEAR SET OFF AGAINST 7 0 9. BROUGHT FORWARD LOSSES SETOFF AGAINT (7-8) 0 10. GROSS TOTAL INCOME 10+7-(8-9) 1,67,82,472 11. INCOME CHARGEABLE TO TAX AT SPECIALRATE 0 12. DEDUCTION U/S 10A OR 10AA 0 DEDUCTION UNDER CHAPTER VIA 13. TOTAL DEDUCTIONS UNDER CHAPTER (VIA) 75,941 14 TOTALINC AFTER DEDUCTIONS 14 +(10- 12-13) 1,67,06,530 15. NET AGRICULTURAL INCOME/ANY OTHER INCOME FOR RATE PURPOSE 0 16. AGGREGATE INCOME 1,67,06,530 17. LOSS OF CURRENT YEAR TO BE CARRIED FORWARD 0 18. DEEMED TOTALINC U/S 115JC 1,67,06,530 TAX DETAILS 19. TAX PAYABLE ON DEEMED TOTALINC UNDER SECTION 115JC 0 20. SURCHARGE (ON 19) 0 21. EDUCATION CESS (SECONDARY & HIGHER )(ON (19+20) 0 22. TOTAL TAX PAYABLE ON DEEMED TOTAL INCOME (19+20+21) 0 23. TAX ON NORMAL INCOME 48,41,959 24. TAXONSPECIAL INCOME 0 25. REBATE ON AGRICULTURAL INCOME 0 26. TAX PAYABLE ON TOTAL INCOME (26=23+24-25) 48,41,959 27. REBATE U/S 87A 0 28. TAXPAYABLE AFTER REBATE (28=26-27) 48,41,959 29. SURCHARGE (ON 28) 0 30. EDUCATION CESS(SECONDARY & 1,45,259 Page | 8 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani HIGHER) ON (28+29) 31. GROSS TAX LIABILITY 31=(28+29+30) 49,87,218 32. GROSS TAX PAYABLE (HIGHER OF 22 AND 31) 49,87,218 33. CREDIT UNDER SE 115JD OF TAX PAID IN EARLIER YEARS. 0 34. TAX PAYABLE AFTER CREDIT UNDER Section 115JD 34=(32-33) 48,87,218 TAX RELIEF 35. RELIEF U/S 89 0 36. RELIEF U/S 90/90A 0 37. RELIEF U/S 91 0 38. TOTALTAX RELIEF 38=(35+36+37) 0 39. NET TAX LIABILITY 39=(34-38) 49,87,218 INTEREST PAYABLE 40. FOR DEFAULT IN FURNISHIG THE RETURN (SEC234A0 410 41 FOR DEFAULT IN PAYMENT OF ADVANCE PAYMENT (SECTION 234 B) 53,77,212 42. FOR DEFERMENTOF ADVANCE TAX (SECTION 234C) 0 43. INTEREST U/S 234D 0 44. TOTAL INTEREST PAYABLE 44= (40+41+42+43) 53,77,622 45. AGGREGATE INCOME TAX LAABILITY 45= (39+44) 1,03,64,840 PRE PAID TAXES 46. TDS 0 47. TCS 0 48. ADVANCE TAX 0 49. SELF ASSESSMENT TAX 8,690 50. REGULAR TAX PAID 0 51. TOTAL TAXES PAID 51=(46+47+48+49+50) 8,690 TAX PAYABLE / REFUND 52. AMOUNT PAYABLE / REFUND AMOUNT 52=(45-51) 1,03,56,150 53. INTEREST U/S 244A CURRENT AMOUNT 0 54. INTEREST U/S 244A (1A) 0 55. TOTAL AMOUNT PAYABLE / REFUND AMOUNT 55=(52+53+54) 1,03,56,150 56. REFUND ALREADYISSUED (incl. interest u/s 244A and interest u/s 244A (1A) if any) 0 57. BALANCE AMOUNT PAYABLE/REFUNDABLE (incl. Provisional interest u/s 244A till current order and interest u/s 244A (1A) – if any) 57=(55-56) 1,03,56,150 Page | 9 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani 58. INTEREST U/S 220(2) CHARTGED (In Rs.) 0 59. AMOUNT PAYABLE /REFUNDABLE 59=(57+58) 1,03,56,150 60. DEMAND IDENTIFICATION NO AGAINSTORIGINAL DEMAND 2021201337004694772T *In case of refund, Refund Intimation cum Adjustment sheet will be issued subsequently and separate communication will be sent for the same. Sd/- Dinesh Vasantrao Honmane” 13. We have hard both the parties and perused the materials available on record. From the above computation of assessing officer, it is vivid that tax effect is at Rs. 49,87,218/- which is below Rs.50,00,000/-. Hence this appeal filed by the Revenue is liable to be dismissed on account of low tax effect. 14. Before us, ld Counsel also submitted the judgment of Coordinate Bench of ITAT Gauhati in the case of Abdul hamid, 117 taxmann.com986 (Gau-Trib), wherein it was held that where the Department had itself accepted undisclosed amount of assessee in his bank account as undisclosed business receipts/turnover, then in that circumstances, section 115BBE would not attract. 15. We note that in both these appeals of the Revenue, the tax effect is less than Rs.50,00,000/-. Recently the CBDT has issued Circular No. 17/2019 dated 08.08.2019, whereby the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been increased as measure for reducing Litigation. The revised monetary limits laid down in para-2 of this Circular are as follows: 1. Before Appellate Tribunal Rs. 50,00,000/- 2. Before High Court Rs.1,00,00,000/- 3. Before Supreme Court Rs. 2,00,00,000/- 16. In the present case, the tax effect by the revenue is less than Rs.50,00,000/-. Though this appeal had been filed by the revenue on 29.11.2022 and was within the monetary limit in the form of tax effect for filing appeals before Tribunal, in view of the recent Circular of CBDT, even such appeals will be governed by the Page | 10 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani new monetary limits laid down in the CBDT Circular No.17/2019 referred to above. 17. It is a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed by the Apex Court in the case of Commissioner of Customs vs Indian Oil Corporation Ltd. reported in 267 ITR 272 wherein their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. These appeals under consideration has certainly been filed contrary to the Circular issued by the CBDT Circular No.17 dated 08.08.2019. 18. In view of the above, we hold that these appeals filed by the Department, against the impugned orders of the Ld. CIT(A), is contrary to the policy decision of the Department and as such these appeals filed by the Department in IT(ss) No. 91/SRT/2022 and ITA No.322/SRT/2022 are dismissed in limine. 19. Now coming to the cross objection of the assessee. In the Cross Objection No.15/SRT/2022, for assessment year 2013-14, the assessee has challenged the validity of reopening of the assessment under section 147 of the Act. Since we have dismissed the appeal of the Revenue for assessment year 2013-14, on account of low tax effect therefore grounds raised in cross objection by assessee for assessment year 2013-14 becomes academic and does not require adjudication. 20. In the result, both appeals of the Revenue are dismissed and assessee’s Cross Objection is also dismissed as infructuous. Order pronounced in the open court on 30/03/2023 by placing the result on the notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 30/03/2023 Dkp Outsourcing Sr.P.S. Page | 11 IT(SS)A No.91/SRT/2022 & ITA No. 322 & CO No.15/SRT/2022 A.Ys. 17-17 & 13-14 Sh Shanker N & Hiren S Uttramchandani Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat rue copy/