ANGEL PIPES & TUBES P. LTD, MUMBAI V. ITO 5(1)(1), MUMBAI

ITA 2006/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5420 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N S JANG
• Keywords: Unexplained cash credit; Income from undisclosed sources; Difference of opinion; Change of opinion
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2006/MUM/2013 ASSESSMENT YEAR: 2008 - 09 M/S ANGEL PIPES AND TUBES LTD. 111/112, DR. M.G. MAHIMTURA MARG, 3 KUMBA HA RWADA, MUMBAI - 400020. VS. COMMISSIONER OF INCOME TAX - 5, AAYAKAR BHAVAN, R OOM NO. 515 , M.K. ROAD, MUMBAI - 400020. PAN NO. AAFCA9203P APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI N.S. JANGPANGI, CITDR DATE OF HEARING : 17/07/2018 DATE OF PRONOUNCEMENT : 25/07/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2008 - 09 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX - 5 [IN SHORT CIT ], MUMBAI , PASSED U/S 263 OF THE INCOME TAX ACT 1961, (THE ACT). THE CASE WAS FIXED FOR HEARING BEFORE THE TRIBUNAL ON 12.06.2014. THE COUNSEL OF THE ASSESSEE SOUGHT AN ADJOURNMENT ON THE ABOVE DATE. ACCORDINGLY, THE CASE WAS ADJOURNED TO 29.12.2014. AGAIN THE COUNSEL OF THE ASSESSEE SOUGHT AN ADJOURNMENT. CONSIDERING THE SAME, THE CASE WAS M/S ANGEL PIPES AND TUBES ITA NO. 2006/MUM/2013 2 ADJOURNED TO 17.06.2015. AGAIN THE COUNSEL OF THE ASSESSEE REQUESTED FOR AN ADJOURNMENT. CONSIDERING THE SAME THE CASE WAS ADJOURNED TO 30.12.2015. AGAIN, THE COUNSEL OF THE ASSESSEE REQUESTED FOR AN ADJOURNMENT. CONSIDERING IT , THE CASE WAS ADJOURNED TO 28.06.2016. AG AIN, THE COUNSEL OF THE ASSESSEE REQUESTED FOR AN ADJOURNMENT. CONSIDERING IT , THE CASE WAS ADJOURNED TO 19.01.2017. AGAIN, THE COUNSEL OF THE ASSESSEE REQUESTED FOR AN ADJOURNMENT. CONSIDERING IT, THE CASE WAS ADJOURNED TO 01.06.2017. AGAIN THE COUNSEL OF THE ASSESSEE SOUGHT AN ADJOURNMENT. CONSIDERING IT, THE CASE WAS ADJOURNED TO 05.10.2017. AGAIN, THE COUNSEL OF THE ASSESSEE SOUGHT AN ADJOURNMENT. CONSIDERING IT, THE CASE WAS ADJOURNED TO 16.01.2018. THE BENCH DID NOT FUNCTION ON THE ABOVE DATE. THEN TH E CASE WAS FIXED FOR HEARING ON 12.06.2018. WE FIND THAT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED IN THE ABOVE DATE. AGAIN, THE CASE WAS FIXED FOR HEARING ON 17.07.2018. WE FIND THAT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTA TIVE APPEARED ON THE ABOVE DATE. THE ABOVE NARRATION CLEARLY INDICATES THAT THE ASSESSEE IS NOT AT ALL INTERESTED IN PURSUING THE APPEAL FILED BY HIM. THEREFORE, WE DECIDE BELOW THE ISSUE ON MERIT. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS U NDER: 1. O RDER U / S . 263 IS BAD IN LAW : A THE CIT ERRED IN ASSUMING THE JURISDICTION U/S 263, WITHOUT APPRECIATING THAT THE COMPLETED SCRUTINY ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AS HE HAD PASSED THE SAID ORDER AFTER DUE APPLIC ATION OF HIS MIND, THEREFORE, THE IMPUGNED ORDER U/S 263 IS BAD - IN - LAW AND MAY BE VACATED. M/S ANGEL PIPES AND TUBES ITA NO. 2006/MUM/2013 3 B. WITHOUT PREJUDICE TO ABOVE, ASSUMING JURISDICTION ON THE BASIS OF CHANGE OF OPINION OR ON TWO VIEWS IS NOT JUSTIFIED WHEN DURING THE SCRUTINY ASSESSMENT PROCEEDIN G ENTIRE PARTICULARS AND ITS POINTS OF VIEW HAD BEEN FURNISHED BY THE APPELLANT AND MERELY BECAUSE AFTER DUE APPLICATION OF MIND, THE ASSESSING OFFICER TAKES ONE VIEW, THE JURISDICTION U/S 263 CANNOT BE ACQUIRED TO IMPOSE A POSSIBLE ANOTHER VIEW, THEREFORE , THE IMPUGNED ORDER U/S. 263 MAY BE QUASHED. 2. MERITS. A) THE CIT FAILED TO APPRECIATE T HAT THE ASSESSING OFFICER HAS ALLOWED SET - OFF OF THE BUSINESS LOSS AGAINST THE INCOME FROM OTHER SOURCES WHICH IS PERMISSIBLE U/S. 71(1) AND IT WAS NOT A CASE WHERE THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND BEFORE ALLOWING THE SET - OFF, THEREFORE, THE ASSESSMENT ORDER PASSED WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND CONSEQUENTLY, THE ISSUE NOTICE U/S. 263 IS BAD - IN - LAW AND THE IMP UGNED ORDER MAY BE QUASHED. B. WITHOUT PREJUDICE TO ABOVE, IN SPITE OF THE FACT THAT DEEMED ADDITIONS ARE ASSESSED UNDER THE HEAD OF INCOME FROM OTHER SOURCES, THE SET - OFF OF LOSSES AGAINST INCOME FROM OTHER SOURCES IS A PERMISSIBLE ACT UNDER THE TAX LAWS. AS THE ACTION OF CIT IS AIMED AT MAKING FISHING AND ROVING ENQUIRI ES, THE JURISDICTION U/S 263 BECOMES DEFECTIVE AND THE ORDER U/S 263 MAY, THEREFORE, BE QUASHED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30.10.2008 DECLARING LOSS OF RS.37,87,232/ - . THE ASSESSING OFFICER (AO) PASSED THE ASSESSMENT ORDER U/S 143(3) ON 23.12.2010 MAKING A N ADDITION OF RS.6,16,92,500/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE CIT , AFTER EXAMINING THE RELEVANT CASE RECORDS CAME TO A FINDING THAT (I) THE UNEXPLAINED INCOME IS NOT TO BE CLASSIFIED UNDER ANY M/S ANGEL PIPES AND TUBES ITA NO. 2006/MUM/2013 4 HEAD OF INCOME AND SUCH INCOME IS FINALLY TO THE AGGREGATED WITH THE TOTAL INCOME AND (II) THERE IS NO PROVISION IN THE ACT TO SET OFF THE LOSSES OF THE CURRENT YEAR AGAINST SUCH INCOME. IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT ISSUED A NOTICE U/S 263 OF THE ACT ON 07.01.2013 TO THE ASSESSEE T O EXPLAIN. IN RESPONSE TO IT, THE ASSESSEE FILED A WRITTEN SUBMISSION BEFORE HIM ON 16.01.2013 WHICH HAS BEEN EXTRACTED AT PAGE 1 - 2 OF THE ORDER U/S 263 DATED 18.02.2013. THE ASSESSEE SUBMITTED THAT THE ADDITIONS MADE U/S 68 ARE TO BE TREATED AS INCOME FRO M OTHER SOURCES. HOWEVER, THE CIT WAS NOT CONVINCED WITH THE ABOVE SUBMISSION OF THE ASSESSEE AND NOTED THAT THE SOURCE OF THE ABOVE INCOME IS NOT KNOWN AND HENCE THIS INCOME IS TERMED AS INCOME FROM OTHER SOURCES. IF THE SOURCE OF ANY INCOME IS NOT KN OWN, THE SAME CANNOT BE TAXED UNDER A SPECIFIC HEAD. AS PER HIM, SECTION 68 IS NOT A PART OF CHAPTER IV OF THE ACT IN WHICH CLASSIFICATION OF INCOME HAS BEEN GIVEN. THIS SECTION IS A PART OF CHAPTER VI, WHICH IS TITLED AS AGGREGATE OF INCOME AND SET OFF O R CARRY FORWARD OF LOSS. THUS THE CIT HELD THAT INCOME U/S 68 IS NOT TO BE CLASSIFIED UNDER ANY OF THE HEAD SPECIFIED IN SECTION 14 OF THE ACT BUT IS TO BE FINALLY AGGREGATED TO THE TOTAL INCOME. ON THE BASIS OF THE ABOVE REASONS, THE CIT HELD THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, HE DIRECTED THE AO TO MODIFY THE ASSESSMENT ORDER, AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE CIT. M/S ANGEL PIPES AND TUBES ITA NO. 2006/MUM/2013 5 5. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE AO HAS MENTIONED AT PAGE 6 OF HIS ASSESSMENT ORDER DATED 23.12.2010 THAT THE ASSESSEE HABITUALLY FAILED TO APPEAR BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ALSO IT HAS BE EN MENTIONED BY THE AO THAT THE ASSESSEE FAILED TO FILE DETAILS BEFORE HIM. IN VIEW OF THE ABOVE FACTS, THERE IS MERIT IN THE FINDING OF THE CIT THAT THE SOURCE OF INCOME IS NOT KNOWN AND HENCE THE INCOME IS TREATED AS INCOME FROM UNDISCLOSED SOURCES. RIGHTLY THE CIT HAS HELD THAT AS THE SOURCE OF AN INCOME IS NOT KNOWN , THE SAME CANNOT BE TAXED UNDER A SPECIFIC HEAD. IN VIEW OF THE ABOVE FACTS, WE UPHOLD THE ORDER OF THE CIT. 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON 25/07/2018. SD/ - SD/ - (PAWAN SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 25/07/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI