RASHMI R SAMPAT, MUMBAI V. ITO 19(3)(2), MUMBAI

ITA 311/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79549 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKASH KUMAR AGGRWAL
• Assessee Lawyers: K GOPAL SHRI JITENDRA SINGH
• Keywords: Capital asset; Income from undisclosed sources; Loose papers
• Section: 133A; 147; 144

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. : 311/MUM/2013 (ASSESSMENT YEAR: 2004-05) MS RASHMI R SAMPAT, FLAT NO. 1A, HILL TOP SOCIETY, PALI HILL, BANDRA (WEST), MUMBAI -400 050 .: PAN: AAVPS 1869 C VS ITO 19(3)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI -400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K GOPAL SHRI JITENDRA SINGH RESPONDENT BY : SHRI VIKASH KUMAR AGGRWAL ITA NO. : 313/MUM/2013 (ASSESSMENT YEAR: 2004-05) MR. RAJESH R SAMPAT, FLAT NO. 1A, HILL TOP SOCIETY, PALI HILL, BANDRA (WEST), MUMBAI -400 050 .: PAN: AAVPS 1870 P VS ITO 19(3)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI -400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K GOPAL SHRI JITENDRA SINGH RESPONDENT BY : SHRI VIKASH KUMAR AGGRWAL !'#$% /DATE OF HEARING : 16-07-2014 &'( #$%/ DATE OF PRONOUNCEMENT : 31-07-2014 * + * + * + * + O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED TWO APPEALS PREFERRED BY TWO DIFFE RENT ASSESSEES (VIZ. DAUGHTER AND FATHER IN RELATION) AGAINST TWO DIFFERENT ORDERS OF THE CIT(A) BOTH DATED 14 TH NOVEMBER, 2012. MS RASHMI R SAMPAT ITA NO. 311/MUM/2013 MR. RAJESH R SAMPAT ITA NO. 313/MUM/2013 2 2. SINCE THE FACTS AND ISSUES INVOLVED IN THESE APP EALS ARE IDENTICAL, HENCE, FOR THE SAKE OF CONVENIENCE AND B REVITY THEY HAVE BEEN CLUBBED TOGETHER FOR DISPOSAL BY THIS COMMON O RDER. 3. FOR THE SAKE OF CONVENIENCE, THE FACTS HAVE BEEN TAKEN FROM ITA NO. 311/MUM/2013. ITA NO. : 311/MUM/2013 : MS RASHMI R SAMPAT : 4. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ASSESSMEN T ORDER U/S 144 OF THE I.T. ACT, WHICH IS INVALID AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT ACCEPTING THE ALTER NATIVE SUBMISSION (WITHOUT PREJUDICE) TO TREAT THE ALLEGED ADDITION O F RS. 24,28,570/- RECEIVED FROM DECCAN ENTERPRISE AT THE TIME OF RETI REMENT FROM THE SAID FIRM AS CAPITAL GAIN. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT ACCEPTING THE ALTE RNATIVE SUBMISSION (WITHOUT PREJUDICE) TO TREAT THE ALLEGED ADDITION O F RS. 24,28,570/- RECEIVED AT THE TIME OF RETIREMENT AS INCOME OF THE FIRM. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 24,28,570/- AS INCOME FROM UNDISCLOSED SOURCES U/ 68 OF THE I.T . ACT. 5. THE ASSESSEE MS RASHMI R SAMPAT AND HER FAMILY M EMBERS SMT. KAUSALYA SAMPAT AND MR. RAJESH SAMPAT WERE EAR LIER PARTNERS IN THE FIRM M/S DECCAN ENTERPRISES FROM WHICH THEY RETIRED IN FEB, 2004. 6. A SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF M /S DECCAN ENTERPRISES ON 12.09.2007. DURING THE SURVEY ACTION CERTAIN INCRIMINATING DOCUMENTS AND LOOSE PAPERS WERE FOUND IN THE PREMISES OF THE FIRM WHICH INCLUDED THE RETIREMENT DEED EXEC UTED BY THE ASSESSEE ON 2 ND FEBRUARY, 2004. VIDE SAID RETIREMENT DEED, THE ASSESSEE AND HIS FAMILY MEMBERS RELINQUISHED THEIR SHARES AND INTEREST IN THE PARTNERSHIP FIRM IN FAVOUR OF A CON TINUING PARTNERS AND MS RASHMI R SAMPAT ITA NO. 311/MUM/2013 MR. RAJESH R SAMPAT ITA NO. 313/MUM/2013 3 IN LIEU OF THE ABOVE TRANSFER, THE CONSIDERATION TO THE TUNE OF RS. 24,28,570/- WAS RECEIVED BY THE ASSESSEE. 7. THE ABOVE SAID TRANSACTION WAS NOT REFLECTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR AY 2004-05. THE AO , THEREFORE, IN THE ASSESSMENT PROCEEDINGS U/S 144 R.W.S. 147 OF THE IN COME-TAX ACT, TREATED RS. 24,28,750/- AS INCOME OF THE ASSESSEE F ROM UNDISCLOSED SOURCES U/S 68 OF THE INCOME-TAX ACT AND MADE ADDI TIONS ACCORDINGLY. 8. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE AG ITATED THE SAID ADDITIONS ON MERITS AS WELL AS ON THE ALTERNATIVE S UBMISSION/GROUND THAT THE AMOUNT WAS RECEIVED BY THE ASSESSEE AT THE TIME OF RETIREMENT FROM THE FIRM, HENCE, THE SAID ADDITIONS SHOULD HAV E BEEN CHARGED TO THE FIRM AND NOT TO THE ASSESSEE BY APPLYING SECTIO N 45(4) OF THE INCOME-TAX ACT AND AS SUCH, THE CAPITAL GAIN ON THE TRANSFER OF ASSET AT THE TIME OF RETIREMENT OF THE PARTNER WAS PAYABLE B Y THE FIRM AND NOT BY THE RETIRING PARTNERS I.E. THE ASSESSEE. 9. FURTHER, ALTERNATIVE SUBMISSION WAS MADE BEFORE THE CIT(A) THAT THE AMOUNT WAS RECEIVED ON RETIREMENT FROM THE PART NERSHIP FIRM, THE ASSESSEE WAS PARTNER IN THE FIRM SINCE 1980. THE SH ARE OF THE ASSESSEE IN THE PARTNERSHIP FIRM WAS A CAPITAL ASSET, THEREF ORE, THE AMOUNT WAS A CAPITAL GAIN AND WHILE CALCULATING THE CAPITAL GA IN, THE CAPITAL STANDING TO THE CREDIT OF THE PARTNER IN THE FIRMS ACCOUNT HAS TO BE DEDUCTED. 10. THE CIT(A), HOWEVER, IGNORED ABOVE ALTERNAT IVE SUBMISSION OF THE ASSESSEE AND CONFIRMED THE ADDITIONS BY OBSERVI NG THAT THE ASSESSEE HAD NOT OFFERED THE RECEIPT OF RS. 24,28,5 70/- FOR TAXATION. THE FATHER OF THE ASSESSEE, NAMELY SHRI R.C. SAMPAT HAD ACCEPTED IN HIS STATEMENT DURING THE SURVEY ACTION THAT THE ABO VE SAID AMOUNT HAD NOT BEEN OFFERED FOR TAX AND THAT HE WOULD OFFE R THE SAME FOR TAX. MS RASHMI R SAMPAT ITA NO. 311/MUM/2013 MR. RAJESH R SAMPAT ITA NO. 313/MUM/2013 4 HE, THEREFORE, HELD THAT THE ACTION OF THE AO IN MA KING THE IMPUGNED ADDITION WAS JUSTIFIED. 11. BEFORE US, THE LD. AR OF THE ASSESSEE HAS STATE D THAT, MAKING THE SAID ADDITIONS, NO PROPER OPPORTUNITY WAS GIVEN BY THE AO TO THE ASSESSEE TO PRESENT HER CASE. THE IMPUGNED ADDITION S U/S 144 HAS BEEN WRONGLY MADE BY THE AO. EVEN THE ALTERNATIVE C ONTENTIONS OF THE ASSESSEE; THAT THE ALLEGED ADDITIONS ARE TO BE TREA TED AT THE HANDS OF THE FIRM AND NOT AT THE HANDS OF THE ASSESSEE; EVEN IF SAME IS TO BE TREATED AS INCOME AT THE HANDS OF THE ASSESSEE, THE SAME WOULD BE IN THE SHAPE OF CAPITAL GAINS AND THE AMOUNT STANDING TO THE CREDIT OF THE ASSESSEE AS PARTNER OF THE FIRM HAS TO BE DEDUCTED BEFORE DETERMINING THE CAPITAL GAIN, HAVE NOT BEEN CONSIDERED.. 12. A PERUSAL OF THE IMPUGNED ORDER REVEALS THAT TH E ABOVE LEGAL SUBMISIONS RAISED BY THE ASSESSEE HAVE NOT BEEN CON SIDERED BY THE LOWER AUTHORITIES WHILE MAKING/CONFIRMING THE IMPUG NED ADDITIONS. 13. IN OUR VIEW, THE INTEREST OF JUSTICE WILL BE SE RVED IF THE MATTER IS REMANDED BACK TO THE FILE OF THE AO TO CONSIDER THE ABOVE SUBMISSION AS SAME GO TO THE ROOT OF THE CASE. ACCORDINGLY, TH E IMPUGNED ADDITIONS ARE, HEREBY, SET ASIDE AND THE ISSUE IS R EMANDED BACK TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH ON THE MERITS. NEEDLESS TO SAY, THE AO SHOULD AFFORD PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT HER CASE AND TO ALLOW TO FILE NECESSARY DOC UMENTS RELIED UPON BY HER AS WELL AS TO CONSIDER HER ALTERNATIVE SUBMI SSIONS, AS DISCUSSED ABOVE, THEREAFTER TO PASS A SPEAKING ORDER ACCORDIN GLY. ITA NO. : 313/MUM/2013 : MR. RAJESH R SAMPAT : 14. SINCE THE FACTS AND ISSUES INVOLVED IN THIS APP EAL ARE IDENTICAL TO THE CASE OF MS RASHMI R SAMPAT, HENCE, IN VIEW OF O UR FINDINGS GIVEN ABOVE, THE MATTER IN THIS APPEAL IS ALSO ORDERED TO BE RESTORED TO THE MS RASHMI R SAMPAT ITA NO. 311/MUM/2013 MR. RAJESH R SAMPAT ITA NO. 313/MUM/2013 5 FILE OF THE AO FOR THE FRESH ADJUDICATION & DECISIO N, AS PER OUR OBSERVATION MADE ABOVE. 15. IN THE RESULT, BOTH APPEALS OF BOTH THE ASSESSE ES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2014. SD/- SD/- (B R BASKARAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 31 ST JULY, 2014 $/ COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-30, MUMBAI. 4) , CITY-19 , MUMBAI / THE CIT-CITY -19, MUMBAI. 5) -'./$! D , THE D.R. D BENCH, MUMBAI. 6) /012 COPY TO GUARD FILE. *+! / BY ORDER / / TRUE COPY / / [ 3/45 , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784! '.!. * CHAVAN, SR. PS