SAYERMAL JAIN, MUMBAI V. DCIT (OSD) II CEN RG VII, MUMBAI

ITA 3403/MUM/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6661 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-05-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 25-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K RAVIKIRAN
• Keywords: Unexplained cash credit; Rectification of order; Block assessment
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, E BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A NO.3403/ MUM/2009 ASSESSMENT YEAR: 1999-2000 SH. SAYERMAL JAIN, .. APPELLANT 13A, DURGADAS BUILDING, ARDHESIR, DADAY X LANE, MUMBAI-400 004 PA NO.ABOPJ 4136 H VS DCIT(OSD)-II,CENTRAL RANGE, ,. RESPONDEN T VII, MUMBAI. APPEARANCES: V.K.TULSIAN, FOR THE APPELLANT K.RAVIKIRAN, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 26.3.2009 PASSE D BY THE CIT(A) UNDER SECTION 250 R.W.S. 154 OF THE INCOME TAX ACT, 1961, SEEKING TO RECTIFY HIS PREDECESSORS ORDER, DATED 31.1.2005 FOR THE ASSESSMENT YEAR 1999-2000. 2. THE GRIEVANCES OF THE ASSESSEE ARE AS FOLLOWS: 1. WHETHER THE CIT(A) IS JUSTIFIED BY RECTIFYING H IS ALLOWED APPELLATE ORDER DT.31.1.2005 U/S.154 JUST BY SUO-MOTO APPLYING THE HONBLE TRIBUNALS ORDER ON BLOCK PERIOD DT.30.9.08. I.T.A NO.3403/ MUM/2009 ASSESSMENT YEAR: 1999-2000 2 2. WHETHER THE CI(A) IS JUSTIFIED TO DRAW AN ADVERS E REFERENCE IN PURSUANCE OF THE HONBLE TRIBUNALS ORDER DT.30.9.08 IN WHICH TH E HONBLE TRIBUNAL NEVER SAYS AS PRESUMED BY THE CIT(A). 3. WHETHER THE CIT(A) IS JUSTIFIED BY NOT AFFORDING A REASONABLE OPPORTUNITY ALTHOUGH THE REQUIREMENTS WERE COMPLIED WITH BY LET TER DT.23.3.09 SENT THROUGH COURIER. WITHOUT PREJUDICE: 4. WHETHER THE CIT(A) IS JUSTIFIED TO EXERCISE THE JURISDICTION WHICH IS EXCLUSIVELY EITHER CIT(A)S OR AOS EVEN IF SOMETHI NG ADVERSE ARISES FROM THE DIFFERENT LEGAL FORUM APPELLATE ORDER. 3. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE L IKE THIS. A COORDINATE BENCH OF THIS TRIBUNAL WHILE ADJUDICATING UPON THE CROSS APP EALS IN THE MATTER OF BLOCK ASSESSMENT FOR THE PERIOD ENDING 4.3.1999 IN THE CA SE OF THIS ASSESSEE VIDE ORDER DATED 30.9.2008, INTER ALIA, OBSERVED AS FOLLOWS: 7. IN REGARD TO THE ADDITION ON ACCOUNT OF CASH CR EDITS, WE FIND THAT THE ASSESSING OFFICER HAS MADE SEPARATE ADDITIONS IN RE GULAR ASSESSMENT. ONCE THE ADDITION HAS BEEN MADE IN REGULAR ASSESSMENT, THERE IS NO JUSTIFICATION FOR MAKING THE SAME ADDITION IN THE BLOCK ASSESSMENT. TH E ASSESSEE IS A REGULAR TAX PAYER AND HAD FILED THE RETURN FOR THE RESPECTIVE A SSESSMENT YEARS. IN REGULAR ASSESSMENT THE ADDITIONS HAVE BEEN MADE AND, THEREFO RE, THERE WAS NO SCOPE FOR ADDITIONS IN THE BLOCK ASSESSMENT FOR THE SAME AMOUN TS. WHEREAS, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS, HE WAS NOT, IN OUR VIEW, JUSTIFIE D IN SUSTAINING THE ADDITION ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNTS , WHEN THE ADDITION IN RESPECT OF SUCH AMOUNTS HAD BEEN MADE IN THE REGULAR ASSESSMENT. WITHOUT GOING INTO THE MERITS OF THE ADDITIONS IN REGULAR A SSESSMENT, WE HOLD THAT THE ADDITION ON ACCOUNT OF CASH CREDITS, NOT BASED ON AN Y MATERIAL FOUND IN THE COURSE OF THE SEARCH, IS NOT JUSTIFIED IN THE CASE OF BLOCK ASSESSMENT. WE, ACCORDINGLY, DELETE THE ADDITION OF ` .37,15,000 FOR THE ASSESSMENT YEAR 1998-99 AND ` .4,50,000 FOR THE ASSESSMENT YEAR 1999-2000. 8. THE ADDITION ON ACCOUNT OF CASH FOUND ON THE DAT E OF SURVEY OF ` .29,600 IS ALSO NOT JUSTIFIED. THE CASH WAS FOUND ON THE DATE OF SURVEY WHICH IS DULY RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE, THE A DDITION COULD NOT BE MADE IN THE BLOCK ASSESSMENT ON THE BASIS OF THE CASH FOUND O N THE DATE OF SURVEY WHICH IS ALSO RECORDED IN THE BOOKS OF ACCOUNT. WE, THERE FORE, DELETE THE ADDITION OF ` .29,600. I.T.A NO.3403/ MUM/2009 ASSESSMENT YEAR: 1999-2000 3 4. BASED ON THE ABOVE OBSERVATIONS, THE CIT(A) SOUG HT TO RECTIFY HIS PREDECESSORS ORDER IN THE MATTER OF REGULAR ASSESS MENT FOR THE ASSESSMENT YEAR 1999-2000 BY OBSERVING AS FOLLOWS:- APPEAL IN THE ABOVE CASE WAS PASSED VIDE ORDER DT.31 .1.2005. IN THIS ORDER, WHILE DECIDING THE ADDITION OF ` .4,50,000, MADE ON PROTECTIVE BASIS ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BANK ACCOUNTS, THE ADD ITION WAS DELETED BECAUSE THEY HAD BEEN CONFIRMED IN THE ASSESSMENT ORDER FOR THE BLOCK PERIOD. SUBSEQUENTLY, VIDE ITS ORDER DTD.30.9.2008, THE HON BLE ITAT B BENCH MUMBAI HAS FORMED A VIEW THAT THIS ADDITION CANNOT BE MADE IN THE BLOCK ASSESSMENT AND THAT IT SHOULD BE MADE IN THE REGULAR ASSESSMENT . IN VIEW OF THIS, THE APPEAL ORDER DTD.31.1.2005 DELETING THE ADDITION RE QUIRES RECTIFICATION. ACCORDINGLY, VIDE LETTER DT.20.3.2009, NOTICE U/S.1 54 WAS ISSUED TO THE APPELLANT TO GIVE HIM AN OPPORTUNITY TO PRESENT HIS VERSION I N THE MATTER. THE CIRCUMSTANCES REQUIRING THE RECTIFICATION WERE ALSO EXPLAINED IN DETAIL IN THE LETTER. THE APPELLANT WAS REQUESTED TO SUBMIT HIS V ERSION EITHER IN WRITING OR BY PERSONAL ATTENDANCE OR THROUGH AN AUTHORIZED REPRES ENTATIVE. THE VERSION IN WRITING WAS CALLED FOR LATEST BY 25.3.2009 AND IN C ASE OF PERSONAL ATTENDANCE OR ATTENDANCE BY AN AUTHORIZED REPRESENTATIVE, HEARING WAS FIXED ON 25.3.2009 AT 11.00 AM. THERE WAS NO RESPONSE TO THIS NOTICE EIT HER IN WRITING OR BY PERSONAL ATTENDANCE OR THROUGH AUTHORIZED REPRESENTATIVE. I N VIEW OF THIS, IT IS PRESUMED THAT THE APPELLANT HAS NOTHING TO PRESENT IN THE MATTER. ACCORDINGLY, IN THE LIGHT OF THE ORDER DT.30.9.2008 OF THE HONBL E ITAT, THE DELETION OF THE ADDITION OF ` .40,15,000 MADE IN THE APPEAL ORDER DT. 31.1.2005 I S WITHDRAWN. THE ADDITION IS NOW CONFIRMED. THE ORDER DTD.31.1. 2005 STANDS MODIFIED TO THIS EXTENT. 5. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 7. A PLAIN READING OF THE ORDER DATED 30.9.2008 PAS SED BY A COORDINATE BENCH IN ASSESSEES OWN CASE RELATING TO BLOCK ASSESSMENT SH OWS THAT THE TRIBUNAL HAS NOT GIVEN ANY CATEGORICAL FINDINGS AS TO WHETHER OR NOT THIS ADDITION DESERVES TO BE ADDED IN THE HANDS OF THE ASSESSEE DURING REGULAR A SSESSMENT PROCEEDINGS. AS A MATTER OF FACT, THE COORDINATE BENCH HAS CATEGORICA LLY OBSERVED THAT . WITHOUT GOING INTO THE MERITS OF THE ADDITIONS IN REGULAR ASSESSM ENT, WE HOLD THAT THE ADDITION ON I.T.A NO.3403/ MUM/2009 ASSESSMENT YEAR: 1999-2000 4 ACCOUNT OF CASH CREDITS, NOT BASED ON ANY MATERIAL F OUND IN THE COURSE OF THE SEARCH, IS NOT JUSTIFIED IN THE CASE OF BLOCK ASSESSMENT IN THIS VIEW OF THE MATTER, BY NO STRETCH OF LOGIC, THE OBSERVATIONS MADE BY THE TRIBUNAL CAN BE SEEN TO POINT OUT THAT THE ADDITIONS SO DELETED BY THE TRIBUNAL IN THE BLOCK A SSESSMENT PROCEEDINGS WERE REQUIRED, ON MERITS, TO BE ADDED IN THE REGULAR ASS ESSMENT PROCEEDINGS. AT THE COST OF REPETITION, WE MAY POINT OUT THAT THERE ARE NO F INDINGS BY THE TRIBUNAL TO THE EFFECT THAT WHAT HAS BEEN DELETED IN THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS DESERVES TO BE ADDED IN THE REGULAR OF REGULAR ASSE SSMENT PROCEEDINGS. THE CIT(A) WAS, THEREFORE, CLEARLY IN ERROR IN LEANING UPON T HE OBSERVATION MADE BY THE COORDINATE BENCH TO COME TO THE CONCLUSION THAT THE SE ADDITIONS DESERVE TO BE CONFIRMED , ON MERITS, IN THE REGULAR ASSESSMENT PR OCEEDINGS. IN THIS VIEW OF THE MATTER, WE VACATE THE IMPUGNED RECTIFICATION ORDER. THE ASSESSEE GETS RELIEF ACCORDINGLY. 8. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2011 SD/- (V. DURGA RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 22 ND JULY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),C-V, MUMBA I 4. COMMISSIONER OF INCOME TAX, C-II , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI