Ishwar Vasantlal Sakla, Pune V. Income-tax Officer,

ITA 1718/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1866 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: S N DOSHI
• Keywords: Additional evidence; Revised return
• Section: 143(3); 234B; 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1717 & 1718/PN/2014 #& & / ASSESSMENT YEAR : 2006-07 SHRI ISHWAR VASANTLAL SAKLA, S.NO.171, PLOT NO.171, PLOT NO.17, CHINCHWAD, PUNE -13 PAN NO. ACOPS8096E . / APPELLANT V/S ITO, WARD-9(4), PUNE . / RESPONDENT / ASSESSEE BY : SHRI S.N. DOSHI / REVENUE BY : SHRI HITENDRA NINAWE / ORDER PER R.K.PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 31-07-2014 OF THE CIT(A)-V, PUNE RELATING TO ASSESSMENT YEAR 2006-07. ITA NO.1717/PN/2014 RELA TES TO THE QUANTUM APPEAL AND ITA NO.1718/PN/2014 RELATES TO THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT. ITA NO.1717/PN/2014 : 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE THE TRIBUNA L. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 23- / DATE OF HEARING :04.05.2016 / DATE OF PRONOUNCEMENT:13.05.2016 2 ITA NOS.1717 & 1718/PN/2014 02-2007 DECLARING TOTAL INCOME AT RS.2,48,750/-. IN THIS CA SE AIR INFORMATION WAS AVAILABLE ACCORDING TO WHICH ASSESSEE HAS IN VESTED VARIOUS AMOUNTS IN MUTUAL FUNDS OF STANDARD CHARTERED M UTUAL FUNDS RS.3 LAKHS, SBI MUTUAL FUNDS RS.2 LAKHS, RELIANCE MUTUAL FUNDS RS.2 LAKHS. THE AO ASKED THE ASSESSEE TO EXPLAIN TH E SOURCE OF INCOME FOR THESE INVESTMENTS. AFTER CONSIDERING THE SU BMISSIONS MADE FROM TIME TO TIME AND EXAMINATION OF THE BANK STATEM ENT THE AO NOTED THAT THE ASSESSEE HAS MADE UNDISCLOSED INVEST MENT IN MUTUAL FUNDS TO THE TUNE OF RS.12,80,000/-, INVESTMENT IN FLAT AT RAVET, PUNE RS.8,80,000/- AND INVESTMENT IN PLOT AT TALAWADE RS.2,32,000/-. HE, THEREFORE, AGAIN ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF ABOVE INVESTMENTS. HE NOTED THAT THE AS SESSEE HAS MADE HUGE CASH DEPOSITS IN HIS NAME AND IN THE NAME OF H IS WIFE IN THE BANK ACCOUNT MAINTAINED WITH UTI BANK FROM WHICH THE SE INVESTMENTS ARE MADE. SINCE UNDISCLOSED INCOME HAS BEEN DEPOSITED IN THE BANK ACCOUNTS BY THE ASSESSEE AND TH E INVESTMENTS MADE FROM THESE ACCOUNTS HAVE ALSO NOT BEEN DISCLOSED E ARLIER, THE AO REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSES SEE MADE ADDITION OF RS.23,42,000/- BEING CASH DEPOSITED IN THE SAID B ANK ACCOUNT DURING THE YEAR. HE ALSO MADE ADDITION OF RS.48,53 0/- ON ACCOUNT OF UNDISCLOSED INTEREST INCOME. WHILE DOING SO, HE R EJECTED THE CONTENTION OF THE ASSESSEE THAT THESE DEPOSITS WER E MADE OUT OF THE INCOME ACTUALLY EARNED IN THE PAST, I.E. A.YRS. 2003-04 TO 2005- 06 AND WHICH REMAINED TO BE UNDISCLOSED. THE ASSESSEE ACCORDINGLY REVISED THOSE RETURNS WITH THE COMPUTATION OF INCOME AND FILED THE SAME BEFORE THE AO. IN THOSE REVISED RETURNS THE ASS ESSEE HAS PAID THE ADDITIONAL TAXES ALONG WITH INTEREST U/S.234A, 234B AND 234C ETC. SINCE THE RETURNS WERE TIME BARRED THE ASSESSEE HAD ALSO REQUESTED THE AO TO ISSUE NOTICE U/S.148. HOWEVER, THE AO REJECT ED 3 ITA NOS.1717 & 1718/PN/2014 THE SUBMISSIONS MADE BY THE ASSESSEE AND PASSED THE O RDER MAKING ADDITION OF RS.23,90,530/- (I.E. RS.23,42,000 + RS.48,530/-). 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A) WHICH WA S DISMISSED BY HIM. ON FURTHER APPEAL, THE TRIBUNAL VIDE ORDER DATED 05-10-2011 IN ITA NO.647/PN/2010 RESTORED THE MATTER TO THE FILE O F THE CIT(A) WITH A DIRECTION TO CONSIDER THE ADDITIONAL EVIDEN CES IN THE SHAPE OF ORDERS PASSED U/S.143(3)/147 FOR A.YRS. 2003 -04 TO 2005-06. SINCE THE CIT INVOKED JURISDICTION U/S.263 SETT ING ASIDE THE REASSESSMENT ORDERS PASSED BY THE AO FOR A.YRS. 20 03-04 TO 2005-06 THE LD.CIT(A) REJECTING THE VARIOUS SUBMISSIONS M ADE BY THE ASSESSEE UPHELD THE ACTION OF THE AO. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE ORDER PASSED BY THE LD. CIT(A) IS TIME BARRED WITHIN THE MEA NING OF SEE 153(2A) OF THE I.T ACT 1961. THE CIT(A) HAS ERRED IN HOLDING THAT THE SAID TIME LAID DOWN IN SEE 153(2A) OF THE I.T ACT IS NOT APPLICABLE TO THE APPELLATE PROCEEDINGS BEFORE HIM OVERLOOKING THE FAC T THAT AS PER THE DIRECTION OF THE ITAT, CIT(A) WAS TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING ALL THE SUBSEQUENT DEVELOPMENTS I.E REASSESSM ENT PROCEEDINGS AND THE OUTCOME THEREOF. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D WITHOUT PREJUDICE TO ABOVE GROUND NO.. 1, THE CIT(A) HAS ERR ED IN NOT CONSIDERING THE AMOUNT OF RS. 18,11,317/- WHICH WAS AV AILABLE FOR MAKING THE INVESTMENTS IN A Y 2006-07 ON THE BASIS OF A SSESSMENT ORDERS' PASSED FOR THE A Y'S 2003-04, 2004-05 AND 2005- 06 U/S 143(3) RWS 147 OF THE ACT ON THE GROUND THAT THESE ASSESSMENT OR DERS' HAVE BEEN CANCELLED BY THE CIT U/S 263. THE ABOVE GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE ALTERED, MODIFIED, AMENDED, ETC IN THE INTEREST OF NATURAL JU STICE. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT THE ORDER PASSED BY THE LD.CIT(A) IS TIME BARRED WITHIN TH E MEANING OF SECTION 153(2A) OF THE I.T. ACT. HE SUBMITTED THAT THE TRIBUNAL IN THE INSTANT CASE HAS PASSED THE ORDER ON 05-10-2011. THEREFORE, AS 4 ITA NOS.1717 & 1718/PN/2014 PER THE PROVISIONS OF SECTION 153(2A) THE CIT(A) WAS BOUND TO PASS THE ORDER ON OR BEFORE 31-03-2013, I.E. WITHIN ONE YEAR FRO M THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE TRIBUNAL WAS PASSED. HOWEVER, THE CIT(A) IN THE INSTANT CASE HAS PASSED THE O RDER ON 05- 07-2014 WHICH IS CLEARLY TIME BARRED. REFERRING TO PARA 3 OF THE ORDER OF CIT(A) HE SUBMITTED THAT WHILE DISCUSSING THIS OBJE CTION RAISED BEFORE HIM THE CIT(A) HAS REJECTED THIS GROUND OF T HE ASSESSEE HOLDING THAT THE SAME IS SUPERFLUOUS AND PROVISIONS OF SECT ION 153(2A) OF THE I.T. ACT ARE NOT APPLICABLE TO THE APPEAL PR OCEEDINGS BEFORE CIT(A). HE HAS ALSO HELD THAT ALTHOUGH THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE AO, HOWEVER, THE APPEAL ORDER PASSED BY THE CIT(A) CANNOT BE CONSIDERED FRESH A SSESSMENT ORDER. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) IS NOT CORRECT IN LAW IN HOLDING THAT PROVISIONS OF SECTION 1 53(2A) ARE NOT APPLICABLE TO HIM. THE LD. COUNSEL FOR THE ASSESSEE FUR THER SUBMITTED THAT IT HAS BEEN ESTABLISHED LAW THAT POWERS O F THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE AO, THE CIT(A) CAN DO WH AT THE AO CAN AND THE CIT(A) CAN ALSO DO WHAT THE AO HAS NOT DO NE. FURTHER, PROCEEDINGS BEFORE THE CIT(A) IS CONTINUATION OF THE ASSES SMENT PROCEEDINGS. THEREFORE, THE PROVISIONS OF SECTION 153(2A) AR E SQUARELY APPLICABLE EVEN TO CIT(A). FOR THE ABOVE PROPOS ITION, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS : 1. GAURAV LUTHRA VS. ITO ITA NO.378AGRA/2011 ORDER DA TED 06-06- 2014 2. INSTRUMENTS AND CONTROL CO. VS. CHIEF CIT REPORTED IN 25 TAXMANN.COM 16 3. SNDP YOGAM VS. ACIT REPORTED IN 68 TAXMANN.COM 162 6. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) DID NOT CONSID ER THE AMOUNT OF RS.18,12,311/- WHICH WAS AVAILABLE FOR MAKING 5 ITA NOS.1717 & 1718/PN/2014 INVESTMENT IN A.Y. 2006-07. HE SUBMITTED THAT WHILE DOING S O, THE CIT(A) HAS RELIED ON THE ORDER PASSED U/S.263 BY THE CIT FOR A.YRS. 2003-04 TO 2005-06. HE SUBMITTED THAT AGAINST THE ORD ER PASSED U/S.263 CANCELLING THE ORDERS FOR A.YRS. 2003-04 TO 2005-0 6, THE ASSESSEE HAD PREFERRED APPEAL BEFORE THE TRIBUNAL. THE T RIBUNAL VIDE ITA NOS. 879 TO 881/PN/2013 ORDER DATED 15-09-20 15 FOR A.YRS. 2003-04 TO 2005-06, COPY OF WHICH IS PLACED AT PAGE S 52 TO 63 OF THE PAPER BOOK, HAS CANCELLED THE ORDER PASSED U/ S.163 AND RESTORED THE REASSESSMENT ORDERS PASSED BY THE AO FO R A.YRS. 2003- 04 TO 2006-07. THEREFORE, IT NOW STANDS ADMITTED THAT T HE ASSESSEE HAD ADDITIONAL INCOME EARNED IN THE A.YRS. 2003-04 TO 200 5-06 OF RS.18,11,317/- WHICH WAS AVAILABLE FOR MAKING THE INVESTMENT/ CASH DEPOSITS IN THE BANK DURING A.Y. 2006-07. HE ACCORDINGLY REQUESTED THAT A DIRECTION MAY BE GIVEN TO THE AO TO ALLOW THE CRE DIT OF RS.18,11,317/- AND REVISE THE ASSESSMENT ORDER ACCORDINGLY. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE AR E DIRECTLY NOT ON THIS ISSUE, I.E. PROVISIONS OF SECTION 153(2A) OF THE I. T. ACT ARE NOT APPLICABLE TO THE CIT(A). SO FAR AS THE MERIT OF THE C ASE IS CONCERNED, HE SUBMITTED THAT THE LD.CIT(A) HAS GIVEN JUS TIFIABLE REASONS WHILE UPHOLDING THE ADDITION MADE BY THE AO. HO WEVER, IT IS A FACT THAT THE TRIBUNAL HAS CANCELLED THE ORDERS PASS ED U/S.263 AND THE RE-ASSESSMENT ORDERS PASSED BY THE AO HAS B EEN RESTORED. HE SUBMITTED THAT IT IS NOT EXPLAINED AS TO HOW THE ADDIT IONAL INCOME DECLARED BY THE ASSESSEE WAS KEPT WITH HIM. SINCE THE INCOME WAS EARNED IN THE PRECEDING ASSESSMENT YEARS, TH ERE IS POSSIBILITY THAT THE ASSESSEE MIGHT HAVE SPENT AND THERE IS NO 6 ITA NOS.1717 & 1718/PN/2014 EVIDENCE THAT THE SAME AMOUNT WAS KEPT IN SHAPE OF CAS H FOR INVESTMENT IN A.Y. 2006-07. HE ACCORDINGLY SUBMITTED THA T THE ORDER OF THE CIT(A) BE UPHELD. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. W E FIND IN THE INSTANT CASE THE AO HAS MADE ADDITION OF RS.23,42,000/ - BEING UNEXPLAINED CASH DEPOSIT IN BANK AND RS.48,530/- AS UNDISC LOSED INTEREST INCOME FROM UTI BANK. WE FIND THE CIT(A) UPHELD T HE ABOVE ADDITION MADE BY THE AO AFTER THE MATTER WAS RES TORED TO HIS FILE BY THE TRIBUNAL FOR FRESH ADJUDICATION. IT IS THE SUBMISS ION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE ASSESSE E HAS DECLARED ADDITIONAL INCOME OF RS.18,11,317/- DURING A.YRS. 2003 -04 TO 2005-06 AND PAID DUE TAXES THEREON AND SINCE THE S AME HAS BEEN ASSESSED BY THE AO IN THE REASSESSMENT PROCEEDS, THER EFORE, THE ABOVE AMOUNT IS AVAILABLE TO THE ASSESSEE FOR EXPLAINING TH E SOURCE TO THE EXTENT OF THIS AMOUNT. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDLY, AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE FOR A.YRS. 2003-04 TO 2005-06 WAS NOT REGULARIZ ED. RETURNS WERE REGULARIZED DURING THE PENDENCY OF THE APPEAL BEFORE THE TRIBUNAL FOR WHICH THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO CONSIDER THE ADDITIONAL EVIDENCE A ND DECIDE THE ISSUE. DURING THE PENDENCY OF THE APPEAL PROC EEDINGS BEFORE THE LD.CIT(A), THE LD.CIT ASSUMED JURISDICTION U/S.26 3 AND SET ASIDE THE ORDERS PASSED BY THE AO IN THE REASSESS MENT PROCEEDINGS FOR A.YRS. 2003-04 TO 2005-06. IN VIEW OF THE ABOVE THE 7 ITA NOS.1717 & 1718/PN/2014 LD.CIT(A) DID NOT CONSIDER THE ADDITIONAL INCOME OF RS.18,11,317 /- DECLARED BY THE ASSESSEE. WE FIND THE TRIBUNAL VIDE ORDER DATED 16- 09-2015 IN ITA NOS. 879 TO 881/PN/2013 FOR A.YRS. 2003-0 4 TO 2005-06 HAS CANCELLED THE 263 ORDER PASSED BY THE CI T AND RESTORED THE ORDERS PASSED BY THE AO IN THE REASSESSMENT PROC EEDINGS FOR A.YRS. 2003-04 TO 2005-06. THEREFORE, ADDITIONAL INCOME TO THE EXTENT OF RS.18,11,317/- EARNED DURING A.YRS. 2003-04 TO 2 005-06 IN OUR OPINION WAS AVAILABLE TO THE ASSESSEE TO EXPLAIN THE DEPOSITS IN THE BANK ACCOUNTS. UNDER THESE CIRCUMSTANCES AND IN VIEW OF THE DISCUSSION ABOVE, WE ARE OF THE CONSIDERED OPINION THAT TH E ASSESSEE IS ENTITLED TO GET CREDIT OF RS.18,11,317/- OUT OF THE ADDITIO N MADE BY THE AO. THEREFORE, GROUND OF APPEAL NO.2 BY THE ASSES SEE IS DECIDED IN FAOVUR OF THE ASSESSEE. 9. SINCE THE ASSESSEE SUCCEEDS ON GROUND OF APPEAL NO.2 , GROUND OF APPEAL NO.1 BY THE ASSESSEE BECOME ACADEMIC IN NATURE FOR WHICH THE SAME IS NOT BEING ADJUDICATED. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.1718/PN/2014 : 10. LEVY OF PENALTY OF RS.8,07,040/- BY THE AO U/S.271(1)(C) OF THE I.T. ACT, 1961 AND UPHELD BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 11. AFTER HEARING BOTH THE SIDES, WE FIND THE AO LEVIED PEN ALTY OF RS.8,07,040/- ON ACCOUNT OF ADDITION OF RS.23,90,530/- WHICH HAS BEEN UPHELD BY THE CIT(A). IN THE PRECEDING PARAGRAPHS, WE HAVE ALLOWED RELIEF OF RS.18,11,317/- TO THE ASSESSEE. THEREFORE, W E RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO RECOMPUTE THE PENALTY LEVIABLE U/S.271(1)(C) IN THE LIGHT OF THE RELIEF ALLOW ED TO 8 ITA NOS.1717 & 1718/PN/2014 THE ASSESSEE. GROUND RAISED BY THE ASSESSEE IS ACCORD INGLY PARTLY ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-05-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED :13 TH MAY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - V, PUNE 4. 5. 6. THE CIT-V, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE