PARESH VAKHARIA, MUMBAI V. PR CIT 16, MUMBAI

ITA 3262/MUM/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2801 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Assessee Lawyers: PARESH VAKHARIAAR
• Keywords: Principle of natural justice; Prejudicial to interest
• Section: 263

Judgement Text

1 INCOME-TAX APPELLATE TRIBUNAL CBENCH MUMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SI NGH, JUDICIAL MEMBER ./I.T.A./3262/MUM/2016 , /ASSESSMENT YEAR: 2012-13 MR. PARESH VAKHARIA M/S. PHD & ASSOCIATES 16, RADHA APTS., TELLY GULLY ANDHERI (E),MUMBAI-400 069. PAN:AABPV 4224 C VS. INCOME TAX OFFICER-16(3)(2) AAYAKAR BHAVAN MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI M. DAYASAGAR-CIT-DR AS SESSEE BY: SHRI PARESH VAKHARIA-AR / DATE OF HEARING: 30.06.2016 / DATE OF PRONOUNCEMENT: 30.06.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 14/03/2016 OF THE CIT-1 6, MUMBAI, PASSED U/S.263 OF THE ACT,THE ASSESSEE HAS FILED THE PRESENT APPEAL. ASSESSEE, AN INDIVIDUAL IS A PROFESSIONAL.HE FILED HIS RETURN OF INCOME ON 28/09/2012,DECLARING TOTAL INCOME AT R S.7.61 LAKHS.THE AO COMPLETED THE ASSESSMENT U/S.143 (3) OF THE ACT, ON 03/02/2015, D ETERMINING THE INCOME OF THE ASSESSEE AT RS. 7, 61,790/-. 2. ON EXAMINATION OF RECORD,THE CIT FOUND THAT THE ASS ESSEE HAD CLAIMED LOSS FROM HOUSE PROPERTY, AMOUNTING TO RS. 3,00,990/- WHICH WAS SET OFF FROM INCOME OF BUSINESS AND PROFESSION, THAT THE POSSESSION OF THE FLAT WAS TO BE GIVEN TO THE ASSESSEE BY THE DEVELOPER ON 31/12/2012, THAT THERE WAS NO SCOPE FOR TAKING POSSESSION OF TH E FLAT IN THE FINANCIAL YEAR 2011-12 AND CLAIMING THE LOSS IN-HOUSE PROPERTY.THE CIT HELD TH AT THE AO HAD FAILED TO EXAMINE THE ISSUE AND HAD ALLOWED THE CLAIM,THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HE ISSUED A SHOW CAUSE NOTICE PROPOSING TO REVISE THE ORDER OF THE AO. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED A LET TER FROM THE BUILDER, DATED 27/03/2012, CLAIMING THAT ON BASIS OF THE SAID LETTER HE HAD TAKEN POSSE SSION. THE ASSESSEE ALSO FILED ELECTRICITY BILL IN SUPPORT OF HIS CLAIM THAT POSSESSION OF THE FLAT WA S TAKEN BY HIM. 3262-PARESHVAKHARIA 2 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,TH E CIT HELD THAT THE LETTER OF THE BUILDER DID NOT INDICATE THE POSSSESSION COULD BE TAKEN BY THE ASSE SSEE, THAT THE SECOND PARAGRAPH OF THE LETTER CLEARLY INDICATED THAT THE OCCUPANCY CERTIFICATE FO R THE FLAT WAS NOT ISSUED BY THE CIDCO,THAT THE ELECTRICITY BILL SHOWED NIL CONSUMPTION, THAT THE A CTUAL POSITION OF THE FLAT WAS NOT GIVEN TO THE ASSESSEE,THAT HE WAS NOT ELIGIBLE TO CLAIM THE LOSS IN RESPECT OF THE SAID FLAT, THAT THE FAILURE ON PART OF THE AO TO EXAMINE AND DISALLOW THE CLAIM OF LOSS IN RESPECT OF THE SAID PROPERTY HAD RENDERED THE ORDER OF THE AO ERRONEOUS AND PREJUDIC IAL TO INTEREST OF REVENUE. ACCORDINGLY, HE SET ASIDE THE SAID ORDER AND DIRECTED HIM TO DECIDE THE ISSUE AFRESH. 3. DURING THE COURSE OF HEARING BEFORE US, THE ASSESSE E ARGUED THAT THE AO HAD MADE DETAILED ENQUIRY WITH REGARD TO PROPERTY INCOME, THAT THE OR DER PASSED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE, THAT TH E CIT ISSUED THE SHOW CAUSE NOTICE WITHOUT TAKING INTO CONSIDERATION THE RELEVANT DOCUMENT ON RECORD I.E. THE LETTER DATED 27/03/2012 ISSUED BY THE BUILDER GIVING THE PHYSICAL POSSESSION OF TH E FLAT,THAT THE CIT DID NOT MAKE ANY INDEPENDENT VERIFICATION OR EXAMINED THE RECORD, TH AT THE REVISION ORDER WAS BASED ON NEW FACTS/GROUNDS, THAT THE FACTS/GROUND MENTION IN THE SHOW CAUSE NOTICE WERE NOT THE BASIS FOR THE REVISIONARY ORDER, THAT THE CIT HAD DIRECTED THE AO TO DISALLOW THE LOSS OF RS. 3,00,990/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY WITHOUT EXPLAIN ING AS TO WHY THE LOSS WAS NOT ELIGIBLE, THAT THE ASSESSEE WAS OWNER OF THE FLAT, THAT THE INCOME FROM THE HOUSE PROPERTY WAS LIABLE TO TAX AND CORRESPONDINGLY HE WAS ENTITLED TO INTEREST DEDUCTI ON U/S.24 (B) OF THE ACT.HE REFERRED TO THE CASES OF MALABAR INDUSTRIAL COMPANY LTD.(243 ITR 83 )GRASIM INDUSTRIES LTD.(321 ITR 92) DESIGN AND AUTOMATION ENGINEERS (BOMBAY) (P) LTD.(3 23 ITR 632), SUNBEAM AUTO LTD. (332 ITR 167). THE DEPARTMENTAL REPRESENTATIVE (DR) SUPP ORTED THE ORDER OF THE CIT AND ARGUED THAT THE AO HAD NOT MADE NECESSARY ENQUIRY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD PURCHASED A RESIDENTIAL UNIT,VIDE AGRE EMENT DATED 08/09/2011,FOR RS. 1.06 CORRODES, THAT HE HAD TAKEN A LOAN OF RS. 90.54 LAKHS FROM A BANK, THAT HE HAD SUBMITTED THE COPIES OF AGREEMENT FOR PURCHASE OF THE FLAT ALONG WITH THE L OAN AGREEMENT AND THE CONFIRMATIONS OF THE FAMILY MEMBERS WHO HAD ADVANCED LOAN TO HIM ,THAT D URING THE ASSESSMENT PROCEEDINGS THE AO HAD DIRECTED THE ASSESSEE IN HIS NOTICE ISSUED U/S. 142 (1) TO FILE DETAILS OF INVESTMENTS MADE DURING THE YEAR, THAT THE AO HAD ALSO DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY DISALLOWANCE 3262-PARESHVAKHARIA 3 SHOULD NOT BE MADE IN RESPECT OF THE INCOME FROM HO USE PROPERTY WHERE THE ASSESSEE HAD DECLARED THE LOSS OF RS. 3,00,990/-(PAGE 16 OF PB). WE FIND THAT THE AO HAD MADE PROPER ENQUIRIES ABOUT THE HOUSE PROPERTY INCOME AND THE L OSS CLAIMED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. AFTER CONSIDERING THE AVAIL ABLE MATERIAL THE AO HAD ARRIVED AT A DEFINITE CONCLUSION.IN OUR OPINION,THE ASSESSMENT PASSED BY THE AO WITH REGARD TO HOUSE PROPERTY INCOME AND LOSS CLAIMED BY THE ASSESSEE CANNOT BE T ERMED AS ERRONEOUS OR PREJUDICIAL TO INTEREST OF REVENUE .IT CANNOT BE HELD THAT THE VIEW TAKEN B Y THE AO WAS AGAINST THE PROVISIONS OF THE LAW OR HE HAS NOT MADE ANY ENQUIRY. IF AFTER MAKING ENQ UIRY AND AO DECIDES NOT TO WRITE A DETAILED ORDER,THE ASSESSEE CANNOT BE PENALISED FOR IT. THE DUTY OF AN ASSESSEE IS TO FURNISH THE DETAILS REQUIRED BY THE AO-HE CANNOT DO MORE THAN THAT.IT I S THE DUTY OF THE AO TO ANALYSE THE DOCUMENTS SUBMITTED BEFORE HIM AND TO DETERMINE THE TAX LIABILITY. IN THE CASE UNDER CONSIDERATION NOTICE U/S.142 (1) WAS ISSUED CALLING FOR VARIOUS DETAILS INCLUDING THE INVESTMENT MADE IN THE FLAT BY THE ASSESSEE.THE ASSESSEE HAD F URNISHED THE AGREEMENT OF PURCHASE OF FLAT TO THE AO AND THE LETTER OF THE ASSESSEE ISSUED BY THE BUILDER.FROM THE LETTER IT WAS CLEAR THAT THE POSSESSION OF THE FLAT WAS HANDED OVER TO THE ASSES SEE BEFORE THE YEAR-END I.E. ON 27 MARCH OF THE YEAR UNDER APPEAL. THE LETTER TALKS OF HANDING OVER OF THE KEYS OF THE FLAT. CONSIDERING THE PECULIAR EFFECT AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION,WE ARE OF THE OPINION THAT THE ORDER PASSED BY THE CIT U/S.263 OF THE ACT WAS AGAI NST THE MANDATE OF THE SECTION. HERE WE WOULD LIKE TO REFER TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD.(SUPRA) AND SAME READS AS UN DER: A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT , 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONE R SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS , NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORDER OF THE INCOME-TAX OF FICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUERECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER , IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPT ION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERR ONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 3262-PARESHVAKHARIA 4 PREJUDICIAL TO THE INTERESTS OF THE REVENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WI DE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRO NEOUS ORDER OF THE INCOME-TAX OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE PREJUDICIAL TO THE INT ERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, C ANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFF ICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR W HERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. IN OUR OPINION,THE ORDER PASSED BY THE AO ABOUT THE HOUSE PROPERTY AND THE TREATMENT GIVEN BY HIM TO THE INTEREST EXPENDITURE WAS AS PER THE PROV ISIONS OF THE ACT. THERE WAS NO PATENT MISTAKE IN HIS ORDER.HE HAD TAKEN A VIEW WHICH WAS MOST APP ROPRIATE-NO OTHER VIEW WAS POSSIBLE CONSIDERING THE PECULIAR FACTS OF THE CASE. THEREFO RE, IN OUR OPINION THE REVISIONARY ORDER PASSED BY THE CIT U/S. 263 HAS TO BE SET ASIDE.EFFECTIVE G ROUND OF APPEAL, RAISED BY THE ASSESSEE , IS DECIDED IN HIS FAVOUR. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2016. 30 , 2016 SD/- SD/- /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :30.06.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3262-PARESHVAKHARIA 5 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.