MR SATISH PADMANABH BHAT, BHAYENDER V. ACIT 12 (1)91), MUMBAI

ITA 296/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3101 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 10-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K BAGCHI
• Keywords: Unexplained cash credit; Opportunity of being heard; Cost of acquisition; Capital Gains
• Section: 13; 147; 148; 144

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.296/MUM/2020 (ASSESSMENT YEAR 20 11 - 12) MR. SATISH PADMANABH BHAT, B - 307, SAI SHIVAM, SAI NAGAR, CABIN ROAD, BHAYENDER (E), THANE - 401105 P AN: AAEOB6571F VS. ACIT - 12(1)(1), AAYAKAR BHAVAN, M.K. RO AD, MUMBAI - 400020 . A PPELLANT RESPONDENT APPELLANT BY : NONE REVENUE BY : SHRI B.K. BAGCHI (DR) DATE OF HEARING : 11 .10.2021 DATE OF PRONOUNCEMENT : 14 . 10.20 2 1 ORDER PER RAVISH SOOD , JUDICIAL MEMBER : 1. THE PRESENT APPEAL FILED BY THE ASS ESSEE IS DIREC TED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 20 *FOR SHORT THE CIT(A)+, MUMBAI , DATED 24.09.2029, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 *HEREINAFTER REFERRED TO AS THE ACT+, DATED 15.12.2018. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS BEFORE US: 1. T HE ORDER DATED 24 - 09 - 2019 PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS) I S INVALID AND UNSUSTAINABLE IN LAW. 1.1 T HE ORDER DATED 24 - 09 - 2019 PASSED BY THE COMMISSIONER O INCOME TAX (APPEALS) IS PASSED IN VIOLATION OF PRINCIPLES OF N ATURAL JUSTICE. ITA NO. 296 MUM 2020 - MR. SATISH PADMANABH BHAT 2 1.2 VIDE NOTICE DATED 13 - 05 - 2019 THE LD. COMMISSIONER O INCOME TAX (APPEALS) HAS FI XED THE HEARING OF THE APPEAL OF 21 - 05 - 2019. MR. SUJIT MODI CHATTERED ACCOUNTANT OF TH E ASSESSEE ATTENDED THE OFFI CE OF LD. COMMISSIONER OF INCOME , TAX (APPEALS) ON 21 - 05 - 2019. HOWEVER THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) WAS NOT AVAILABLE AND THE OFFICE OF THE COMMISSIO NER OF INCOME TAX (APPEALS) REFUSED TO ACCEPT THE SUBMISSIONS FROM THE CHATTERED ACCOUNTANT AND EVEN REFUSED TO TAKE HIS ATTENDANCE ON THE ORDER SHEET. 1.3. THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) HAS ER RED IN IGNORING THE REQUEST OF THE ASSESSEE FO R ADJOURNME NT OF THE HEARING OF THE APPEAL, MADE BY SENDING LETTER DATED 24 - 092019 ON THE E - MAIL AS WELL AS THE REQUEST MADE ON LINE ON THE E - ASSESS MENT MODULE OF THE DEPARTMENT. 1.4 THE COMMISSIONER OF INCOME TAX (APPEALS) HAS PASSED TH E APPELLATE ORDER BY IGNORING E VEN THE SUBMISSIONS FILED ALONG WITH THE FORM NO. 35, ON THE E - PORTAL OF THE DEPARTMENT. 2. THE COMMISSIONER OF INCOM E TAX (APPEALS) HAS ASSESSED THE INCOME OF RS.73,00,000/IN RESPECT OF SALE OF THE PROPERT Y AS INCOME FROM SHORT TERM CAPITA L GAINS, WHEREAS TH E ASSESSING OFFICER HAS MADE THE ADDITION OF RS.73,00,000/ - U/S 68 OF THE INCOME TAX ACT IN RESPECT OF THE SALE CONSIDERATION OF THE PROPERTY RECEIVED BY THE ASSESSEE. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ASSESSING THE CAPITAL GAINS ARI SING ON SALE OF THE PROPERTY AS SHORT TERM CAPITAL GAINS, WHEREAS THE RESULTANT CAPITAL GAINS, IS CHARGEABLE AS LONG TERM CAPITAL GAINS. 2.2 THE COMMISSIONER OF INCO ME TAX (APPEALS) HAS NOT PROPERLY COMPUTED THE CAPITAL GAINS. NO DE DUCTION HAS BEEN ALLOWED IN RESPECT OF THE COST OF ACQUISITION/INDEXED COST O ACQUISITION OF THE PROPERTY SOLD BY THE ASSESSEE. 3. THE ASSESSEE WAS HOLDING 60% OF THE SHARES IN THE COMPAN Y M/S ASTRAL GLASS PVT. LTD. BY THE ORDER DATED 26 - 03 - 2010 PASSED B Y THE HONBLE HIGH COURT BOMBAY IN COMPAN Y PETITION NO 16 OF 2007, COMPANY PETITION NO. 511 OF 2007 AND COMPANY PETITION NO. 159 OF 2009, THE COMPANY WA S ORDERED TO BE WOUND UP. THE SAID ORDER OF THE HONBLE HIG H COURT OF BOMBAY WAS RECEIVED BY THE ASSESSE E IN TH E ITA NO. 296 MUM 2020 - MR. SATISH PADMANABH BHAT 3 FINANCIAL YEAR 2010 - 11 RELEVANT TO A.Y. 2011 - 12 UNDE R CONSIDERATION. AS A RESULT OF THE ORDER OF THE HONBLE HIG H COURT THE LONG TERM ASSETS HEL D BY THE ASSESSEE IN THE SHAPE OF THE SHARES OF M/S ASTRAL GLASS PVT. LTD. WERE EXTINGUISHE D IN THE FIN ANCIAL YEAR 2010 - 11, THE YEAR IN WHICH THE ASSESS E E RECEIVED THE ORDER OF THE HONBLE HIGH COURT. THIS HAS RESULTED IN LONG TERM CAPITAL LOSS ON EXTINGUISHMENT OF TH E SHARES. I F THE PROPER OPPORTUNITY OF HEARING WAS GRANTED BY TH E COMMISSIONER OF INCOME TAX (APPEALS) TO THE ASSESSEE, TH E ASSESSEE WOULD HAVE FURNISHED PROPER EXPLANATION ALON G WITH RELEVANT EVIDENCE AND WOULD HAVE PROVIDED PROPE R COMPUTATION OF THE CHARGEABLE CAPITAL GAINS B Y INCORPORATING THEREIN, THE LONG TERM CAPITAL LOSS ARISING FRO M EX TINGUISHMENT OF SHARES IN THE COMPANY M/S ASTRAL GLAS S PVT. LTD. BOMBAY. 2. BRIEFLY STATED, THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY DURING THE YEAR UNDER CONSIDERATION FOR RS. 17,00,000/ - . ON GATHERING THE AFORESAID DETAILS FROM AIR INFORMATION, THE AO TAKING COGNIZANCE OF THE FACT THAT THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME, RE - OPENED HIS CASE UNDER SECTION 147 OF THE ACT. NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE. HOWEVER, THE ASSESSEE FAILED TO COMPLY WITH THE AFORESAID NOTICE AND D ID NOT FILE ANY RETURN OF INCOME. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THOUGH THE ASSESSEE WAS REPRESENTED BY HIS COUNSEL HOWEVER, AS HE DESPITE SPECIFIC DIRECTIONS BY THE AO NEITHER FLED HIS RETURN OF INCOME NOR CAME FORTH WITH THE REQUISITE I NFORMATION, THEREFORE, THE AO WAS CONSTRAINED TO FRAME THE ASSESSMENT VIDE HIS ORDER PASSED UNDER SECTION 144 R.W.S 147 OF THE ACT , DATED 15.12.2018, WHEREIN THE ENTIRE SALE CONSIDERATION OF RS. 73,00,000/ - WAS ASSESSED AS HIS INCOME. 3. AGGRIEVED, THE ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, AS THE ASSESSEE FAILED TO PUT UP AN APPEARANCE IN THE COURSE OF THE APPELLATE PROCEEDINGS, THEREFORE, THE CIT(A) PROCEEDED WITH AND ITA NO. 296 MUM 2020 - MR. SATISH PADMANABH BHAT 4 DISPOSED O F F THE APPEAL BY WAY OF AN EX - PARTE ORDER. IT WAS OB SERVED BY THE CIT(A) THAT THOUGH THE AO HAD MADE AN ADDITION OF RS. 73,00,000/ - TOWARDS UNEXPLAINED CASH CREDIT, HOWEVER, THERE WAS NOTHING DISCERN I BLE FROM THE RECORDS WHICH WOULD REVEAL THAT THE IMPUGNED AMOUNT WAS CREDITED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. IN FACT, IT WAS OBSERVED BY THE CIT(A) THAT THERE WAS NO MENTION ON THE PART OF THE AO THAT THE ASSESSEE WAS MAINTAINING ANY BOOKS OF ACCOUNTS. BE THAT AS IT MAY, THE CIT(A) WAS OF THE VIEW THAT AS THE ASSESSEE HAD SOLD A PROPERTY, THEREFORE, TH E SALE CONSIDERATION OUGHT TO HAVE BEEN ASSESSED UNDER THE HEAD CAPITAL GAINS. BACKED BY HIS AFORESAID OBSERVATION, THE CIT(A) DIRECTED THE AO TO TREAT THE SUM OF RS. 73,00,000/ - AS SHORT TERM CAPITAL GAIN (STCG). 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. HOWEVER, WE FIND THAT THE ASSESSEE DESPITE HAVING BEEN PUT TO NOTICE ABOUT THE HEARING OF THE APPEAL HAD CHOSEN NOT TO APPEAR BEFORE US. WE, THUS, ARE CONSTRAINED TO PROCEED WITH AND DISPOSE O F F THE APPEAL AS PER RULE 24 OF THE APPELLATE TRIBUNAL RULES, 1963 I.E. AFTER HEARING THE R ESPONDENT R EVENUE AND PERUSING THE ORDER S OF THE LOWER AUTHORIT IES . 5. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HA VE HEARD THE LD. DR AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ON A PERUSAL OF THE GROUNDS ON THE BASIS OF WHICH THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER BEFORE US, WE FIND THAT IT IS CLAIM ED BY HIM VIZ. (I) THAT THE CIT(A) HAD DISPOSE D OF F THE A PPEAL WITHOUT AFFORDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE; (II) THAT THE CIT(A) ITA NO. 296 MUM 2020 - MR. SATISH PADMANABH BHAT 5 HAD ERRED IN DIRECTING THE AO TO ASSESS THE SALE PROCEEDS OF THE PROPERTY AS SHORT TERM CAPITAL GAIN (STCG), WHEREAS THE RESULTING GAIN ON THE SALE OF THE P ROPERTY WAS CHARGEABLE AS LTCG; (III) THAT THE CIT(A) HAD GRAVELY ERRED IN NOT ALLOWING THE COST OF ACQUISITION/INDEXED COST OF ACQUISITION OF THE PROPERTY IN QUESTION WHILE COMPUTING THE CAPITAL GAINS; AND (IV) THAT AS THE ASSESSEE DURING THE YEAR UNDER C ONSIDERATION HAD SUFFERED SUBSTANTIAL LONG TERM CAPITAL LOSS (L TC L) ON EXTINGUIS HMENT OF THE SHARES OF A COMPANY , VIZ. M/S ASTRAL GLASS PVT. LTD. , THEREFORE, IN CASE, IF HE WOULD HAVE BEEN AFFORDED AN OPPORTUNITY OF BEING HEARD BY THE CIT(A), THEN, HE WOU LD HAVE BEEN ABLE TO DEMONSTRATE THE AFORESAID FACT AND SOUGHT SETTING - OFF OF THE AFORESAID LTCL AGAINST THE LTCTG ON THE SALE OF THE PROPERTY IN QUESTION . 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US. ADMITTEDLY, THERE CAN BE NO SECON D THOUGH T ON THE FACT THAT THE ASSESSEE HAD CONSISTENTLY ADOPTED A LACKADAISICAL APPROACH AND HAD NEITHER COMPLIED WITH THE DIRECTIONS OF THE A.O N O R APPEARED BEFORE THE CIT(A). BEFORE US , THE CONDUCT OF THE ASSESSEE WAS NO BETTER , AND AS OBSERVED BY US HE REINABOVE HE HAD FAILED TO PARTICIPATE IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE US. BE THAT AS IT MAY, WE FIND SUBSTANCE IN THE CLAIM OF THE ASSESSEE THAT AS THE CIT(A) HAD NOT ONLY DECLINED HIS REQUEST FOR ADJOURNMENT, BUT HAD ALSO NOT CONSIDERED THE SUBMISSIONS WHICH WERE FILED BY HIM ALONG WITH FORM NO.35 ON THE E - PORTAL OF THE DEPARTMENT , THEREFORE, HE WAS NOT AFFORDED SUFFICIENT OPPORTUNITY OF BEING HEARD . APART FROM THAT, WE FIND THAT IT IS THE CLAIM OF THE ASSESSEE THAT THE CIT(A) HAD NOT ON LY WRONGLY CLASSIFIED THE SALE TRANSACTION AS STCG, AS AGAINST THE LTCG, BUT HAD ALSO ERRED IN NOT DIRECT ING THE AO TO CONSIDER THE COST OF ACQUISITION/INDEXED COST OF ACQUISITION OF THE PROPERTY IN QUESTION WHILE ITA NO. 296 MUM 2020 - MR. SATISH PADMANABH BHAT 6 COMPUTING THE CAPITAL GAIN . IN THE BACKDRO P OF THE AFORESAID FACTS, WE THOUGH DEPRECATE THE CONDUCT OF THE ASSESSEE WHO HAD THROUGHOUT BEEN NON - COOPERATIVE, BUT CANNOT REMAIN OBLIVIOUS OF THE FACT THAT THERE ARE CERTAIN INFIRMITIES ARISING FROM THE ORDER OF THE CIT(A) AS REGARDS THE MODE AND MANNE R OF QUANTIFICATION OF THE INCOME RESULTING FROM THE SALE OF THE PROPERTY IN QUESTION. WE, THUS, IN ALL FAIRNESS ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES TO BE RE - VISITED BY THE AO, WHO IS DIRECTED TO RE - ADJUDICATE THE ISSUE AFTER AFFORDING AN O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO SAY, THE AO SHALL IN THE COURSE OF THE DE NOVO ASSESSMENT PROCEEDINGS ALLOW AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHO SHALL REMAIN AT LIBERTY TO SUBSTANTIATE HIS CLAIM ON THE BASIS OF SUPPORTIN G DOCUMENTARY EVIDENCE/MATERIAL. 8. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES, IN THE TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNC ED IN THE OPEN COURT ON 14 TH OCTOBER 2021. SD/ - SD/ - S.R IFAUR RAHMAN RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 14 .10.2021 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI