Shri Manish M. Chhajed, Surat V. The Income Tax Officer, Ward-3(3)(3), Surat

ITA 3239/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9018 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 16-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Assessee Lawyers: K.R. GHEEWALA
• Keywords: Rectification of order; Right to appeal
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.3239/AHD/2015 / ASSTT. YEAR: 2007-2008 MANISH M. CHHAJED C-30, SHIVAM APARTMENT SHANTI NIKETAN SOCIETY SUMUL DIARY ROAD SURAT 395 006. VS. ITO, WARD-3(3)(3) SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K.R. GHEEWALA REVENUE BY : SHRI SHIVA SEWAK, SR.DR ! / DATE OF HEARING : 09/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 14/03/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD.CIT(A)-3 DATED 21.8.2015 PASSED FOR THE ASSTT.YEAR 2007-08. 2. GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS E RRED IN CONFIRMING THE ORDER OF THE AO PASSED UNDER SECTION 1 54 OF ITA NO.3239/AHD/2015 2 THE INCOME TAX ACT, WHEREBY ADDITION OF RS.1,20,000/- TO THE INCOME OF THE ASSESSEE WAS MADE. 3. IN ORDER TO APPRECIATE THE CONTROVERSY, IT IS PER TINENT TO TAKE NOTE OF FINDING OF THE AO RECORDED IN PARAS-5 OF THE ASSESSMENT ORDER. IT READS AS UNDER: 5. HOUSEHOLD WITHDRAWAL ON VERIFICATION OF THE CAPITAL ACCOUNT OF THE ASSESSEE IT WAS FOUND THAT HE HAS WITHDRAWN ONLY RS.33,000/- TOWARDS HOUSEHOLD EXPENSES. THE ASSESSEE WAS ASKED TO JUSTIFY SUCH LOW HOUSEHOLD WITHDRAWAL FOR HIS FAMILY AND HIMSELF. THE ASSESSEE STATED THAT HIS FAMILY INCLUDES ONLY HIS WIFE AND MINOR SON. BESIDES HE FILED HIS WIFES RETURN OF INCOME WHEREIN IT IS SEEN THAT SHE HAS WITHDRAWN RS.36,000/- IN THE YEAR FROM HER CAPITAL ACCOUNT. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AS THE WITHDRAWALS ARE NVERY LOW I.E. EVEN LESS THAN RS.10,000/- PER MONTH. THEREFORE, THE HOUSEHOLD EXPENSES OF THE ASSESSEE ARE DETERMINED AT RS.20,000/- PER MONTH. A NET ADDITION TO THE INCOME OF THE ASSESSEE ON THIS ACCOUNT IS DETERMINED AT RS.51,000/-. AFTER PASSING OF ASSESSMENT ORDER UNDER SECTION 143(3) ON 18.12.2009, THE LD.AO ASSUMED THAT HOUSEHOLD EXPENSES OF THE ASSESSEE WERE REQUIRED TO BE DETERMINED AT THE RATE OF RS.20,000/- PER MONTH AS OBSERVED IN PARA-5. ACCORDIN GLY, HE TOOK COGNIZANCE UNDER SECTION 154 AND SOUGHT TO RECTIF Y ALLEGED MISTAKE. THE LD.AO HAS DETERMINED TOTAL HOUSE EXPENSES AT RS.2,40,000/-. THE LD.AO DEBITED THE AMUNT OF RS.1,20,000/- WHICH WAS ESTIMATED BY HIM IN THE ASSESS EMT ORDER PASSED U/S.143(3). THIS WAY, HE FURTHER MADE AN ITA NO.3239/AHD/2015 3 ADDITION OF RS.1,20,000/-. ON APPEAL, THE LD.CIT(A) HA S CONFIRMED THIS RECTIFICATION ORDER. 4. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE AO HAD DETERMINED THE TOTAL HOUSEHOLD EXPENSES AT RS.1,20,000/- I.E. AT THE RATE OF RS.10,000/- PER M ONTH AND HE HAS GIVEN CREDIT OF RS.69,000/- OUT OF TOTAL ESTIMAT ED ADDITION, WHICH WERE DISCLOSED BY THE ASSESSEE AND MADE AN ADDITION OF RS.51,000/- = [RS.1,20,000/- MINUS (RS.36, 000/- + RS.33,000/-)]. ACCORDING TO THE LD.COUNSEL, THERE IS AN APPARENT ERROR, WHICH IS DEBATABLE ONE, AND NO ADJUSTMENT CAN BE MADE UNDER SECTION 154 OF THE ACT. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. THE POWER OF RECTIFICATION UNDER S ECTION 154 OF THE INCOME TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE, WHICH IS SOUGHT TO BE RECTIFIED, IS AN OBVIOUS PATENT MISTAKE, WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE, WHICH IS REQUIRED TO BE ESTABLISHED BY ARGUME NTS AND LONG DRAWN PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. HAD THE INTENTIO N OF THE AO WAS TO ESTIMATE HOUSEHOLD EXPENSES AT RS.2,40,0 00/- AT THE RATE OF RS.20,000/- PER MONTH, HE WOULD NOT HAVE CALCULATED THE ADDITION REQUIRED TO BE MADE AT RS.51 ,000/-. THIS STEP OF THE AO HAS PUT AN EMBARGO IN THE RIGHTS OF THE ASSESSEE, WHO COULD HAVE CHALLENGED THAT ESTIMATED ADDITI ON OF RS.2,40,000/- IN FURTHER APPEAL. IN THE PRESENT PROCEEDINGS, THE RIGHT OF THE ASSESSEE IS TO CONTEST W HETHER ITA NO.3239/AHD/2015 4 PRIMA FACIE ADJUSTMENT CAN BE MADE OR NOT. HE CANNOT CHALLENGE ESTIMATION OF EXPENDITURE AT RS.2,40,000/-. THUS, VERY ESTIMATION IS A QUITE DEBATABLE POINT, WHICH HAS T AKEN AWAY THE RIGHT OF APPEAL OF THE ASSESSEE ALSO. IT CA NNOT BE BROUGHT INTO THE AMBIT OF PRIMA FACIE ADJUSTMENT AS CONTEMPLATED UNDER SECTION 154 OF THE INCOME ACT. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND QUAS H THE RECTIFICATION. ORIGINAL ASSESSMENT ORDER IS HEREBY RE STORED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 14 TH MARCH, 2017 AT SURAT CAMP. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER