The Assistant Commissioner of Income Tax, Circle 1(1), Panaji., Panaji V. Shri Ajit R. Phatarpekar., Panaji

ITA 169/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1234 (ITAT-PANAJI)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMESH S MUTAGAR
• Assessee Lawyers: SANDEEP BHANDARI
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard
• Section: 143(3); 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO S . 1 69 & 170 /P A N/201 6 (ASST. YEAR : 20 09 - 1 0 ) ACIT, CIRCLE - 2(1), PANAJI GOA. VS. 1) SHRI AJIT R. PHATARPEKAR , 601 - 602, 6 TH FLOOR, GERA EMPORIUM, PATTO, PANAJI GOA. PAN NO. AFJPP 5786 N 2) SMT. NEELAM A. PHATARPEKAR, 601 - 602, 6 TH FLOOR, GERA EMPORIUM, PATTO, PANAJI GOA. PAN NO. AFJPP 5785 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDEEP BHANDARI CA . DEPARTMENT BY : SHRI RAMESH S. MUTAGAR - DR DATE OF HEARING : 14 / 0 9 /201 6 . DATE OF PRONOUNCEMENT : 14 / 0 9 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANAJI - 1 IN APPEAL NOS. 88 & 89/CIT(A)PNJ - 1/15 - 16, BOTH DATED 01/06/2016 FOR THE ASSESSMENT YEAR 2009 - 10 , IN THE CASE OF SHRI AJIT R. PHATARPEKAR AND HIS WIFE SMT. NEELAM A. PHATARPEKAR. 2. SHRI RAMESH S. MUTAGAR, DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI SANDEEP BHANDARI, CA REPRESENTED ON BEHALF O F THE ASSESSEES. 2 ITA NO. 169 & 170/PAN/2016 3 . IT WAS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE THAT ORIGINALLY THE ASSESSMENT HAD BEEN COMPLETED UNDER SECTION 143(3) ON 29/12/2011. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX , PANAJI PASSED AN ORDER UNDER SECTION 263 DATED 07/02/2014, WHEREIN THE COMMISSIONER OF INCOME TAX HAS SPECIFIED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER HAD GIVEN EFFECT T O THE ORDER OF THE COMMISSIONER OF INCOME TAX PASSED UNDER SECTION 263 VIDE ORDER DATED 17/03/201 5 . IT WAS THE SUBMISSION THAT IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. SUNITA AJIT PATIL IN ITA NO. 190/PAN/2015 DATED 28/06/2016, THE ASSESSEE COULD NOT HAVE FILED APPEAL TO THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE SAID ASSESSMENT ORDER DATED 17/03/2015 GIVING EFFECT TO THE ORDER UNDER SECTION 263 OF THE ACT. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) ITSELF WAS WITHOUT JURISDICTION AND WAS CONSEQUENTLY LIABLE TO BE SET ASIDE . HE SPECIFICALLY DREW OUR ATTENTION AT GROUND NO.4 OF THE REVENUES APPEAL. 4 . IN REPLY, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER AND AGAINST THE SAID ASSESSMENT ORDER , THE ASSESSEE HAS A RIGHT TO FILE APPEAL. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS . A PERUSAL OF THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT.SUNITA AJIT PATIL (SUPRA) SHOWS THAT THE TRIBUNAL HAS HELD AS FOLLOWS: - 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH SIDES. A PERUSAL OF THE ORDER PASSED UNDER SECTION 263 BY THE COMMISSIONER OF INCOME TAX, BELGAUM, DATED 23/03/2010 CLEARLY SHOWS THAT IN PARA 5.7 AT PAGE NO. 10 OF THE SAI D ORDER, THE COMMISSIONER OF INCOME TAX HAS DIRECTED THE ASSESSING OFFICER TO 3 ITA NO. 169 & 170/PAN/2016 BRING TO TAX THE AMOUNTS OF 3 LAC AND 2,50,000/ - , BEING GIFTS RECEIVED BY THE ASSESSEE FROM HER FATHER AND SISTER, AS UNEXPLAINED CASH CREDITS BY MODIFYING THE ORIGINAL ASSESS MENT. IN PARA 6.3 AT PAGE NO. 12, COMMISSIONER OF INCOME TAX HAS DIRECTED THE ASSESSING OFFICER TO MODIFY THE ORIGINAL ASSESSMENT AFTER OBTAINING THE SOURCE OF ADDITION TO FIXED ASSETS ETC. AND IF NO EVIDENCE IS FURNISHED, THE ENTIRE INVESTMENT IS TO BE A DDED TO THE TOTAL INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF LAW. THIS REPRESENTING THE ADDITION MADE UNDER SECTION 69, REPRESENTING THE INVESTMENT IN THREAD DIES. IN PARA 7.2 AT PAGE NO. 13, COMMISSIONER OF INCOME TAX HAS DIRECTED THE A SSESSING OFFICER TO MODIFY THE ORIGINAL ASSESSMENT BY BRING TO TAX THE BANK INTEREST, NOT OFFERED TO TAX BY THE ASSESSEE. IN PARA 4.5 AT PAGE NO.6, THE COMMISSIONER OF INCOME TAX HAS DIRECTED THE ASSESSING OFFICER TO MODIFY THE ORIGINAL ASSESSMENT MADE BY DISALLOWING THE ENTIRE JOB WORK CHARGES PAID TO THE TWO SISTER CONCERNS UNDER SECTION 40(A)(IA) OF THE ACT AND IN PARA 8, THE COMMISSIONER OF INCOME TAX HAS SPECIFICALLY HELD THAT THE ORIGINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO MODIFY THE ORIGINAL ASSESSMENT IN THE LIGHT OF THE ABOVE DISCUSSIONS. THUS, THESE ARE CLEAR DIRECTIONS GIVEN BY THE COMMISSIONER OF INCOME TAX TO THE A SSESSING OFFICER. IN SHORT, THE COMMISSIONER OF INCOME TAX AFTER INVOKING THE POWERS UNDER SECTION 263, HAS DONE THE INVESTIGATION AND HAS COMPLETED THE ASSESSMENT, IN THE ORDER PASSED UNDER SECTION 263 AS IS EXPECTED TO BE DONE WHILE PASSING THE ORDER UND ER SECTION 263. THE ASSESSING OFFICER IN HIS ORDER DATED 15/12/2012 HAS ONLY GIVEN EFFECT TO THE ORDER PASSED UNDER SECTION 263. HERE, IT WOULD BE WORTHWHILE TO EXTRACT THE PROVISIONS OF SECTION 263(1), WHICH READS AS UNDER: - 263. (1) THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE M AY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMEN T, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 7. A PERUSAL OF THE SAID PROVISIONS CLEARLY SHOWS THAT THE PRINCIPAL COMMISSIONER (OR) COMMISSIONER....... PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE WORDS 4 ITA NO. 169 & 170/PAN/2016 PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY SHOWS THAT IT IS THE ORDER UNDER SECTION 263 WHICH HAS TO BE LOOKED INTO TO FIND OUT AS TO WHAT IS THE INTENTION OF THE COMMISSIONER. IN THE PR ESENT CASE, CLEARLY THERE IS NO INTENTION ON THE PART OF THE COMMISSIONER TO CANCEL THE ASSESSMENT AND DIRECT A FRESH ASSESSMENT, BUT IT IS CLEAR ONE WHERE THE ORIGINAL ASSESSMENT HAS BEEN MODIFIED BY HIM. ONCE THE PRINCIPAL COMMISSIONER/COMMISSIONER PASSE S AN ORDER UNDER SECTION 263 CANCELLING THE AMENDMENT AND DIRECTING A FRESH ASSESSMENT, THEN THE ASSESSING OFFICER GIVES EFFECT TO SUCH ORDER UNDER SECTION 153(2A) WHICH ALSO PRESCRIBES THE TIME LIMIT, IN CASE THE PRINCIPAL COMMISSIONER/ COMMISSIONER HAS D IRECTED A FRESH ASSESSMENT. THIS IS BECAUSE THE WORDS USED IN SECTION 153(2A) IS AN ORDER OF FRESH ASSESSMENT IN PURSUANCE TO AN ORDER UNDER SECTION 250 OR SECTION 254 OR SECTION 263 OR SECTION 264, SETTING ASIDE OR CANCELLING AN ASSESSMENT. THUS, IF T HERE IS A CANCELLATION OF AN ASSESSMENT UNDER SECTION 263 AND DIRECTION FOR FRESH ASSESSMENT, THEN IN VIEW OF THE PROVISIONS OF SECTION 153(1) READ WITH SECTION 153(2A), THE ASSESSING OFFICER HAS TO DO A FRESH ASSESSMENT AS PER THE DIRECTIONS GIVEN IN THE ORDER UNDER SECTION 263. IF THERE IS NO CANCELLATION OF AN ASSESSMENT, BUT IT IS ONLY A MODIFICATION OF THE ASSESSMENT, THEN THE ASSESSING OFFICER ONLY GIVES EFFECT TO THE ORDER OF THE COMMISSIONER UNDER SECTION 263 AND SUCH ORDER GIVING EFFECT TO THE ORD ER UNDER SECTION 263 DOES NOT TAKE COLOUR OF AN ORDER UNDER SECTION 143(3) OR 144 AND IT REMAINS AN ORDER UNDER SECTION 263 AND IT IS ONLY FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME AND RAISING OF THE DEMAND THAT THE ASSESSING OFFICER DOES IN THE ORDER GIVING EFFECT TO THE ORDER UNDER SECTION 263. APPEALABLE ORDERS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) IS VERY SPECIFIC INSOFAR AS IT IS AN ORDER OF ASSESSMENT UNDER SECTION 143(3) OR 144 WHERE THE ASSESSEE OBJECTS TO THE AMOUNT OF INCOME ASSESSE D OR TO THE AMOUNT OF TAX DETERMINED, WHICH IS APPEALABLE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). A PERUSAL OF THE PROVISIONS OF SECTION 253 PROVIDES FOR THE APPEAL AGAINST THE ORDER UNDER SECTION 263 TO THE APPELLATE TRIBUNAL. THUS, IT CAN BE N OTICED THAT AN ORDER UNDER SECTION 263 CAN BE ONE WHERE THERE IS AN ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT AND ONE WHERE THERE IS CANCELLING OF THE ASSESSMENT AND DIRECTING OF THE FRESH ASSESSMENT. WHEN IT IS AN ISSUE OF ENHANCING OR MODIFYING THE ASSESSMENT ORDER, THEN THE ASSESSING OFFICER ONLY GIVES EFFECT TO THE ORDER UNDER SECTION 263 BY RE - COMPUTING THE TOTAL INCOME / TOTAL TAX LIABILITY AND SUCH ORDERS WHERE ASSESSING OFFICER HAS GIVEN EFFECT BY ONLY RE - COMPUTING AS PER ORDER OF TH E COMMISSIONER OF INCOME TAX UNDER SECTION 263 IS NOT APPEALABLE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). IN A CASE WHERE THE COMMISSIONER OF INCOME TAX HAS BY INVOKING HIS POWERS UNDER SECTION 263 HAS CANCELLED THE ASSESSMENT AND 5 ITA NO. 169 & 170/PAN/2016 HAS DIRECTED A FR ESH ASSESSMENT, HE WOULD HAVE TO GIVE SPECIFIC DIRECTIONS IN REGARD TO THE METHODOLOGY OF THE FRESH ASSESSMENT. A FAILURE ON THIS PART BY THE COMMISSIONER OF INCOME TAX WOULD RENDER THE ORDER UNDER SECTION 263 UNSUSTAINABLE. THIS VIEW GETS SUPPORT FROM T HE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. (203 ITR 108) (BOM.) IF THE ENTIRE ASSESSMENT HAS NOT BEEN CANCELLED AND ONLY A PART OF THE ASSESSMENT ORDER IS TINKERED WITH BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 26 3, IT FALLS UNDER THE CATEGORY OF ENHANCING OR MODIFYING THE ASSESSMENT. THE ENHANCING OR MODIFYING THE ASSESSMENT HAVING BEEN BY THE COMMISSIONER OF INCOME TAX, THE ASSESSING OFFICER IS PRECLUDED FROM APPLYING HIS OPINION TO SUCH ENHANCEMENT OR MODIFICAT ION AND CONSEQUENTLY THE ORDER GIVING EFFECT BY THE ASSESSING OFFICER IN RESPECT OF SUCH ENHANCEMENT OR MODIFICATION CANNOT BE CHALLENGED IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), INSOFAR AS IT WOULD IN EFFECT BE A CHALLENGE BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF ORDER PASSED UNDER SECTION 263 BY THE COMMISSIONER OF INCOME TAX. 8. IN SHORT, SHORN OF ALL THE FRILLS AN ORDER GIVING EFFECT TO AN ORDER PASSED UNDER SECTION 263 BY THE COMMISSIONER OF INCOME TAX IS NOT AN APPEALABLE ORDER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) OR THE APPELLATE TRIBUNAL INSOFAR AS WHEN THE COMMISSIONER OF INCOME TAX INVOKES HIS POWERS UNDER SECTION 263 HE IS INVOKING HIS COTERMINOUS POWERS OF THE ASSESSING OFFICER AND IS DOING T HE ASSESSMENT IN THE SHOES OF THE ASSESSING OFFICER AFTER EXAMINING OR CAUSING INQUIRY TO BE CONDUCTED AS PROVIDED IN THE PROVISIONS OF SECTION 263. 9. IN THE PRESENT CASE, ADMITTEDLY, THE ORDER UNDER SECTION 263 HAS ONLY MODIFIED THE ASSESSMENT. THE AS SESSMENT ORDER HAS NOT BEEN CANCELLED NOR ANY FRESH ASSESSMENT DIRECTED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263. THIS BEING SO, THE ENTERTAINMENT OF THE APPEAL BY THE COMMISSIONER OF INCOME TAX (APPEALS) ITSELF IS ERRONEOUS AND WITHOUT JURISDI CTION. BE THAT AS IT MAY, NO APPEAL AGAINST THE ORDER GIVING EFFECT TO THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 BY THE ASSESSING OFFICER IS MAINTAINABLE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) NOR BEFORE THE APPELLATE T RIBUNAL ALSO AS THIS APPEAL IS NOT AGAINST THE ORDER PASSED UNDER SECTION 263 BY THE COMMISSIONER OF INCOME TAX. IN THESE CIRCUMSTANCES, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED AS NOT MAINTAINABLE. 6 ITA NO. 169 & 170/PAN/2016 6 . A PERUSAL OF THE SAID DECISION CLEARLY SHO WS THAT THE TRIBUNAL HAS HELD THAT AN APPEAL IS NOT MAINTAINABLE AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER GIVING EFFECT TO THE ORDER PASSED UNDER SECTION 263 BY THE COMMISSIONER OF INCOME TAX. THIS BEING SO, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. SUNITA AJIT PATIL (SUPRA) , THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) STANDS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 7 . IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE STAND ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 14 TH DAY OF SEPTEMBER , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14 TH SEPTEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. A) SHRI AJIT R. PHATARPEKAR, 601 - 602, 6 TH FLOOR, GERA EMPORIUM, PATTO, PANAJI GOA. B) SMT. NEELAM A. PHATARPEKAR, 601 - 602, 6 TH FLOOR, GERA EMPORIUM, PATTO, PANAJI GOA. [ 2 . THE REVENUE. ACIT, CIRCLE - 2(1), PANAJI GOA 3 . THE CIT, PANAJI. 4 . THE CIT(A) , PANAJI - 1, GOA. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI