GNANESH V. LAKHIA, MUMBAI V. ADDL CIT RG 20(1), MUMBAI

ITA 1823/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48445 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 29-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Business income; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI R.K. PANDA (A.M.) ITA NO. 1823/MUM /2010 ASSESSMENT YEAR 2006-07 MR. GNANESH V. LAKHIA, 601, PANCH AMRUT, OFF YARI ROAD, VERSOVA, ANDHERI (W), MUMBAI 400 058. PAN : AAAPL 2797 D VS. A DDL . COMMISSIONER OF INCOME - TAX, RANGE 20(1), PIRAMAL CHAMBERS, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANANT N. PAI RESPONDENT BY : SHRI A.K. NAYAK O R D E R PER D.K. AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.12.2009 PASSED BY THE LD. CIT (A) FOR THE A.Y. 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL DERIVES INCOME FROM HOUSE PROPERTY, BUSINESS INCOME VIZ. INCOME FROM DERIVATIVE, INCOME FROM SPECULATION IN SHARES, INTE REST AND SALARY FROM PARTNERSHIP FIRM AND INCOME FROM OTHER SOURCES & IN TEREST, FILED RETURN DECLARING TOTAL INCOME OF ` 2,21,64,580/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS INTER ALIA, OBSERVED BY THE A.O. THAT THE ASSESSEE FILED RE-REVISED RETURN ON 22.12.2008 DECL ARING TOTAL INCOME OF ` 99,83,119/-. THE REASON FOR RE-REVISING RETURN IS STATED TO BE THAT DUE TO AN INADVERTENT MISTAKE, THE ASSESSEE HAS CLAIMED IN THE REVISED RETURN, THE SHORT TERM CAPITAL GAIN INSTEAD OF CLAIMING LON G TERM CAPITAL GAIN IN ITA 1823/M/10 MR. GNANESH V.LAKHIA 2 RESPECT OF SHARES OF DEMERGED COMPANY NAMELY MRIL. HOWEVER, THE A.O. WAS OF THE VIEW THE RE-REVISED RETURN IS NON-EST AS THE SAME WAS FILED BEYOND ONE YEAR TIME FROM THE END OF THE RELEVANT A SSESSMENT YEAR. THE A.O. WHILE RELYING ON THE DECISION OF HONBLE SUPRE ME COURT IN GOETZE (INDIA) LTD. V. CIT REPORTED IN 284 ITR 323 (SC), R EJECTED THE CLAIM OF THE ASSESSEE AND COMPLETED THE ASSESSMENT AT AN INCOME OF ` 2,50,18,220/- VIDE ORDER DATED 22.12.2008 PASSED U/S 143(3) OF TH E INCOME TAX ACT, 1961 (THE ACT). ON APPEAL, THE LD. CIT(A) WHILE AG REEING WITH THE FINDINGS OF THE A.O. CONFIRMED THE ACTION OF THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUND OF APP EAL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE TAX ING EXEMPTED LONG- TERM CAPITAL GAIN AMOUNTING ` 1,43,69,325/- ON SALE OF SHARES OF DE MERGED COMPANY MRIL AS SHORT TERM CAPITAL GAIN. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFOR E THE A.O. AND LD. CIT(A) FURTHER SUBMITS THAT ORIGINAL RETURN OF INCO ME WAS FILED ON 31.10.06 AT AN AMOUNT OF ` 2,21,64,580/-. THE FIRST REVISED RETURN WAS FILED ON 26.10.2007 AT ` 2,43,52,450/- AND SECOND REVISED RETURN WAS FILED ON 22.12.2008 DECLARING TOTAL INCOME OF ` 99,83,119/-. THE LD. COUNSEL FOR THE ASSESSEE WHILE REFERRING TO PAGE NO . 1 TO 7, 17 TO 20, 21 TO 29 & 30 OF THE ASSESSEES PAPER BOOK SUBMITS THAT T HE A.O. AND THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT TREATING THE CAPITA L GAIN AS LONG TERM CAPITAL GAIN AS THE ASSESSEE HAS FILED COMPLETE DET AILS IN RESPECT OF SALES OF SHARE OF MRIL. THE LD. COUNSEL FOR THE ASSESSEE WHILE DISTINGUISHING THE DECISION IN GOETZE (INDIA) LTD. (SUPRA), RELIED ON THE FOLLOWING DECISIONS:- 1. MAHINDRA MILLS VS. ACIT 99 ITR 135,143 (SC) ITA 1823/M/10 MR. GNANESH V.LAKHIA 3 2. CIT VS. SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 ,320 (SC) 3. GOOD YEAR INDIA LTD. VS. STATE OF HARYANA 188 ITR 4 02,428 (SC) 4. CIT VS. RAI BAHADUR BISSESSWARLAL MITILAL HALWASIA TRUST 195 ITR 825, 832 (CAL.) 5. MURALI EXPORT HOUSE VS. CIT 238 ITR 257 (CAL) 6. SMT. PRABHAVATI S. SHAH V. CIT 231 ITR 1 (BOM. ) 7. A.V. SREENIVASALA NAIDU VS. CIT 16 ITR 314 (MAD ) 8. DHANUKAUR VS. STATE OF RAJASTHAN 120 ITR 158 (R AJ.) 9. CIT VS. AARCHANA R. DHANWANTAY [1982] 136 ITR 3 55, 360 (BOM.) 10. BOARD CIRCULAR [2007] 15 SOT 252 (MUM.) CHICAG O PNEUMATICS INDIA LTD. VS. DCIT PAGE NOS. 32-59 OF T HE PAPER BOOK. 11. L. HIRIDAY NARAIN V. ITO [1970] 76 ITR 26,31,3 2 (SC) 12. CIT VS. RAMCO INTERNATIONAL 180 TAXMAN 584 (P& H) 13. CIT VS. ARCHANA R. DHANWANTAY [1982] 136 ITR 3 55,360 (BOM.) 14. JT. CIT VS. HERO HONDA FIN LEASE LTD. [2005] 11 5 TTJ (DEL) [TM] 752. 15. FRANCO-INDIAN PHARMACEUTICALS PVT. LTD. VS. ITO 3 ITR TRIB 754 [MUM] 16. CIT VS. JAI PARABOLIC SPRINGS LTD. 306 ITR 42 ( DEL) HE, THEREFORE, SUBMITS THAT THE ADDITION MADE BY TH E A.O. AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 5. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND LD. CIT(A) FURTHER SUBMITS THAT THE RELIAN CE PLACED BY THE ASSESSEE EXPLANATION 1 (B) TO SECTION 2(42A) IS MIS PLACED. HE FURTHER SUBMITS IN VIEW OF EXPLANATION 1(C) AND (D) TO EXPL ANATION 1 OF SECTION 2(42A), THE ASSESSEE IS NOT ENTITLED TO TREAT THE S HARE AS LONG TERM CAPITAL ITA 1823/M/10 MR. GNANESH V.LAKHIA 4 GAIN AND THEREFORE THE ORDER PASSED BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) BE UPHELD. 6. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED RE-REVISED RETURN CLAIM ING THE LONG TERM CAPITAL GAIN INSTEAD OF SHORT TERM CAPITAL GAIN CLA IMED EARLIER IN RESPECT OF SALE OF SHARES OF MRIL WHICH WAS NOT CONSIDERED BY THE A.O. AS THE SAME WAS FILED BEYOND ONE YEAR TIME FROM THE END OF THE RELEVANT A.Y. THEREFORE THE A.O. TREATED THE SAID RE-REVISED RETU RN AS NON-EST. THE A.O. IN THE ABSENCE OF VALID RE-REVISED RETURN DISALLOWE D THE CLAIM OF THE ASSESSEE IN VIEW OF THE DECISION OF GOETZE (INDIA) LTD. (SUPRA). 7. IN CHICAGO PNEUMATIC INDIA LTD. VS. DY. CIT (200 7) 15 SOT 252 (MUM), IT HAS BEEN OBSERVED AND HELD BY THE TRIBUNA L (PAGE 274):- ...... AS FAR AS THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS CONCERNED, THERE IS NO DISPUTE THAT THE SAME IS BINDING ON EVERYBODY CONCERNED. IN THE SAI D DECISION, THE HONBLE APEX COURT HAS ALSO RULED THAT APPELLATE TR IBUNAL MAY ADJUDICATE THE ISSUE IF A CLAIM IS MADE BY ANY PART Y SUBJECT TO SATISFACTION OF PRESCRIBED RULES, HENCE, EVEN THE H ONBLE APEX COURT HAS NOT BARRED THE ASSESSEE RAISE ITS LEGAL CLAIM BEFO RE APPELLATE AUTHORITIES.... 8. IN CIT VS. JAI PRABOLIC SPRINGS LTD. (2008) 306 ITR 42 (DEL), THEIR LORDSHIPS AFTER CONSIDERING THE DECISION OF THE HON BLE SUPREME COURT IN GOETZE (INDIA) LTD. VS. CIT (2006) 284 ITR 323(SC) HAVE HELD THAT THERE WAS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH ACCORDING TO THE TRIBUNAL A RISES IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. THEREFORE, THERE IS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. ITA 1823/M/10 MR. GNANESH V.LAKHIA 5 9. IN NATHPA JHAKRI JOINT VENTURE VS. ACIT (2010) 1 31 TTJ 702/ 37 SOT 160, (MUM), THE TRIBUNAL AFTER CONSIDERING THE JUDGMENT OF HONBLE SUPREME COURT IN GOETZE (INDIA) LTD. (SUPRA) HAS OB SERVED AND HELD THAT THE HONBLE SUPREME COURT HAS CLARIFIED THE DECISIO N FURTHER IN PARA 04 OF THE JUDGMENT WHICH MAKES IT EXPLICITLY CLEAR THA T THE MANDATE OF THIS JUDGMENT IS LIMITED TO THE POWER OF THE ASSESSING A UTHORITIES AND DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER SECT ION 254 OF THE ACT, HELD THAT IF AN AMOUNT IS LEGALLY DEDUCTIBLE, NOTHI NG CAN PREVENT THE TRIBUNAL FROM ACCEPTING SUCH A PLEA. 10. THE CBDT AS BACK AS IN 1955 ISSUED A CIRCULAR N O. 14(XL-35), DATED 11 TH APRIL, 1955 WHEREIN THE BOARD HAS RECOGNISED THE F ACT THAT RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEF REST S WITH THE ASSESSEE AS IMPOSED BY LAW, EVEN THEN THE BOARD HAS DIRECTED TH E OFFICERS TO DRAW THE ATTENTION OF THE ASSESSEES IN RESPECT OF ANY REFUND S OR RELIEFS TO WHICH THEY ARE ELIGIBLE, WHICH THEY HAVE NOT CLAIMED FOR SOME REASON OR OTHER. 11. IN NATIONAL THERMAL POWER CO. LTD. VS. CIT (199 8) 229 ITR 383(SC) IT HAS BEEN OBSERVED BY THEIR LORDSHIPS (PA GE 386) :- ........ THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE TH E TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILIT Y OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUN AL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTIO N IS DENIED, WE DO NOT SEE REASON WHY THE ASSESSEE SHOULD BE PREVENTED FRO M RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM....... 12. IN VIEW OF THE ABOVE SETTLED POSITION OF LAW AN D IN THE ABSENCE OF ANY OTHER CONTRARY MATERIAL OR DISTINGUISHING FEATU RE BROUGHT ON RECORD BY THE REVENUE AND KEEPING IN VIEW THAT THE ASSESSE E HAS FILED THE RELEVANT DETAILS ALONG WITH ORIGINAL RETURN AND REV ISED RETURN WHICH HAVE NOT BEEN FOUND BY THE REVENUE AS NOT RELEVANT FOR D ECIDING THE ISSUE IN ITA 1823/M/10 MR. GNANESH V.LAKHIA 6 ACCORDANCE WITH LAW, WE ARE OF THE VIEW THAT MERELY BECAUSE THE ASSESSEE HAS MADE CLAIM OF SHORT TERM CAPITAL GAIN AS AGAINS T CORRECT CLAIM OF LONG TERM CAPITAL GAIN ON SALE OF SHARES IS NOT SUF FICIENT TO HOLD THAT THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM THE SALE OF SHARES AS LONG TERM CAPITAL GAIN. SINCE THE A.O. WITHOUT EXAMINING THE ISSUE ON MERITS HAS REJECTED THE CLAIM OF THE ASSESSEE, WE ARE OF THE V IEW THAT IN THE INTERESTS OF JUSTICE, THE MATTER SHOULD GO BACK TO THE FILE O F THE ASSESSING OFFICER AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY T HE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTE R TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE SAME AFRESH AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 08.04.2011 SD/- (R.K. PANDA) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 8 TH APRIL, 2011. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 6, MUMBAI 4. COMMISSIONER OF INCOME TAX, 2, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 1823/M/10 MR. GNANESH V.LAKHIA 7 1 DRAFT DICTATED ON 2 9 .3.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 30 .3.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DA TE OF DESPATCH SR PS