ACIT- 19(3), MUMBAI V. RAJENDRA S. BHATE, MUMBAI

ITA 3510/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6474 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 23-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT PATANKAR
• Assessee Lawyers: DINESH R SHAH
• Keywords: Unexplained investment; Opportunity of being heard; Additional evidence; Non compliance; Futures and options; Set aside
• Section: 69C; 250; 201; 143(2); 6; 144; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATH A , ACCOUNTANT MEMBER ITA NO. 3510 / MUM . /201 8 ( ASSESSMENT YEAR : 20 14 15 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 19(3), MUMBAI . APPELLANT V/S RAJENDRA S. BHATE 106, MARINE CHAMBERS NEW MARINE LINES, MUMBAI 400 020 PAN ACJPB0504H . RESPONDENT C.O. NO.221/MUM./2019 ( ARISING OUT OF ITA NO. 3510 /MUM. /2018 ) ( ASSESSMENT YEAR : 20 14 15 ) RAJENDRA S. BHATE 106, MARINE CHAMBERS NEW MARINE LINES, MUMBAI 400 020 PAN ACJPB0504H . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 19(3), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) REVENUE BY : SHRI ABHIJIT PATANKAR ASSESSEE BY : SHRI DINESH R. SHAH DATE OF HEARING 20 .01.2020 DATE OF ORDER 07.02.2020 2 RAJENDRA S. BHATE O R D E R PER SAKTIJIT DEY. J.M. T HE AFORESAID APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF ORDER DATED 19 TH MARCH 2018 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 30 , MUMBAI, PERTAININ G TO THE ASSESSMENT YEAR 201 4 15 . ITA NO.3510/MUM./2018 REVENUES APPEAL 2. G ROUND S RAISED BY THE REVENUE ARE REPRODUCED BELOW : I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING ADDITIONAL EVIDENCE WITHOUT INTIMATING TO THE ASSESSING OFFICER VIOLATING PROVISIONS OF SECTION 45A OF THE INCOME TAX ACT, 1961 . II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LEARNED CIT(A) ERRED IN ACCEPTING ADDITIONAL GROUNDS DURING APPELLATE PROCEEDINGS WITHOUT CALLING FOR REMAND REPORT FROM ASSESSING OFFICER. 3. BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RE TURN OF INCOME ON 29 TH FEBRUARY 2016, DECLARING TOTAL INCOME OF ` 2,53,45,080. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) TO THE ASSESSEE TO APPEAR IN THE ASSESSMENT PROCEEDINGS AND EXPLAIN CERTAIN DETAILS. AS OBSERVED BY 3 RAJENDRA S. BHATE THE ASSESSING OFFICER, THE NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT RETURNED BACK UN SERVED. EVEN , THE NOTICE UNDER SECTION 143(2) OF THE ACT SEN T BY E MAIL ALSO REMAINED NON COMPLIED. ATTEMPT MADE BY THE ASSESSING OFFICER TO SERVE THE NOTICE THROUGH THE WARD INSPECTOR ALSO COULD NOT BEAR ANY RESULT, AS THE INSPECTOR REPORTED THAT THE ASSESSEE IS NOT AVAILABLE IN TH E GIVEN ADDRESS AND ULTIMATELY HE HAS TO SERVE THE NOTICE BY WAY OF AFFIXTURE. THUS, DUE TO NON COMPLIANCE OF THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT UNDER SECTION 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. FRO M THE MATERIAL ON RECORD, HE FOUND THAT ASSESSEES CASE WAS SELECTED FOR SCRUTINY DUE TO THE FOLLOWING REASONS: A) INTEREST INCOME MISMATCH; B) DERIVATIVE (FUTURES) TRANSACTIONS; C) DETAILS OF ASSETS AND LIABILITIES; D) SALES TURNOVER MISMATCH; AND E) SECURITIES TRANSACTIONS. 4. FURTHER, ON VERIFYING THE RETURN OF INCOME AS WELL AS OTHER MATERIAL ON RECORD, HE FOUND THAT WHILE THE ASSESSEE HAS SHOWN INTEREST RECEIVED OF ` 2,41,44,807, WHEREAS , AS PER THE ITS DETAILS, THE TOTAL INCOME RECEIVED IS ` 3,87,15,028=40. SI NCE THE ASSESSEE NEITHER APPEARED NOR EXPLAINED THE MISMATCH AND THE DERIVATIVE TRANSACTION, 4 RAJENDRA S. BHATE THE ASSESSING OFFICER MADE TOTAL ADDITION OF ` 58,21,22,471, TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALL ENGED THE ADDITION BY FILING AN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY. 5. IN COURSE OF PROCEEDINGS BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED CERTAIN ADDITIONAL EVIDENCES WITH REGARD TO THE ADDITION OF ` 56,75,52,250, AS UNEXPLAINED INVESTMENT UNDER SECTION 69C OF THE ACT ON THE BA SIS CIB INFORMATION. TO EXPLAIN THE AFORESAID TRANSACTION, THE ASSESSEE FURNISHED ADD ITIONAL EVIDENCES ALONG WITH A WRITTEN NOTE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EVIDENCES FILED, LEARNED COMMISSIONER (APPEALS) DELETED THE ADDITION MAD E OF ` 56,75,52,250. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE ASSESSING OFFICER HAS RECEIVED CIB INFORMATION WITH REGARD TO THE INVESTMENT OF ` 56,75,52,250, MADE BY THE ASSESSEE IN DERIVATIVE AND FUTURES & OPTIONS TRANSACTIONS. HE SUBMITTED , IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE AN EFFORT TO VERIFY THE AFORESAID TRANSACTION ON THE BASIS OF CIB INFORMATION. HOWEVER, THE ASSESSING OFFICERS ATTEMPT TO MAKE ENQUIRY WAS PREVENTED DUE TO NON COMPLIANCE OF THE ASSESSEE DU RING THE ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSING OFFICER WAS COMPELLED TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT BY ADDING BACK THE AMOUNT OF 5 RAJENDRA S. BHATE ` 56,75,52,250. HE SUBMITTED , BEFOR E THE FIRST APPELLATE AUTHORITY THE ASSESSEE HAS FURNISHE D CERTAIN ADDITIONAL EVIDENCES TO EXPLAIN / RECONCILE THE CIB INFORMATION AND PURELY RELYING UPON THE SUBMISSIONS OF THE ASSESSEE AND THE ADDITIONAL EVIDENCES FILED, LEARNED COMMISSIONER (APPEALS) HAS DELETED THE ADDITION OF ` 56,75,52,250. HE SUBMITTED , C ONSIDERING THE FACT THAT THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER AND FAILED TO F URNISH ANY EVIDENCE TO EXPLAIN/ RECONCILE THE CIB INFORMATION , LEARNED COMMISSIONER (APPEALS) SHOULD HAVE SENT THE SUBMISSIONS OF THE ASSESSEE AND ADDITIONAL EV IDENCES FOR VERIFICATION OF THE ASSESSING OFFICER AND OBTAIN A REPORT FROM HIM . HE SUBMITTED , WITHOUT FOLLOWING THE MANDATE OF RULE 46A, LEARNED COMMISSIONER (APPEALS) HAS NOT ONLY ACCEPTED ADDITIONAL EVIDENCES, BUT HAS DELETED THE ENTIRE ADDITION RELYING UPON SUCH EVIDENCES. DRAWING O UR ATTENTION TO THE ORDER OF LEARNED COMMISSIONER (APPEALS), THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , LEARNED COMMISSIONER (APPEALS) HAS NOT EVEN DISCUSSED IN DETAIL THE NATURE OF EVIDENC ES FILED BY THE ASSESSEE AND SIMPLY GOING BY THE SUBMISSIONS OF THE ASSESSEE HAS DELETED THE ADDITION. THUS, HE SUBMITTED , THE ISSUE NEEDS TO BE RESTORED BACK TO THE ASSESSING OFFICER FOR FRESH EXAMINATION AND ADJUDICATION. 7. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , BEFORE LEAR NED COMMISSIONER (APPEALS), THE ASSESSEE HAS NOT ONLY FURNISHED ALL 6 RAJENDRA S. BHATE INFORMATION/ EVIDENCES EXPLAINING THE MATERIAL CONTAINED IN CIB /AIR INFORMATION, BUT LEARNED COMMISSIONER (APPEALS) AFTER VERIFYING THEM HAVING FOUND ASSESSEES CLAIM ACCEPTABLE HAS DELETED THE ADDITION. DRAWING OUR ATTENTION TO THE GROUNDS RAISED, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE REVENUE HAS NOT CHALLENGED THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON MERITS, BUT ON THE TECHNICAL ISSUE OF VIOLATION OF RULE 46A. HE SUBMITTED , WHEN THE REVENUE HAS NOT CHALLENGED THE ISSUE ON MERITS , NO FRUITFUL PURPOSE WOULD BE SERVED BY MER ELY RESTORING THE ISSUE FOR TECHNICAL REASONS. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE HAS R ECONCILED ALL THE DISCREPANCIES/DIFFERENCES CONTAINED IN CIB /AIR INFORMATION. THEREFORE, THERE IS NO REASON TO AGAIN RESTORE BACK THE ISSUE TO THE ASSESSING OFFICER. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN SMT. PRABHAVATI S. SHAH V/S CIT, [1098] 100 TAXMAN 404 (BOM.). WITHOUT PREJUDICE, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IF R EVENUES PLEA OF VIOLATION RULE 46A IS ACCEPTED, THE ISSUE MAY BE RESTORED BACK TO THE FILE OF LEARNED COMMISSIONER (APPEALS) FOR FRESH ADJUDICATION AFTER COMPLYING TO THE PROVISIONS OF RULE 46A. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTED FACTS ARE, THE RETURN OF INCOME FILED BY THE 7 RAJENDRA S. BHATE ASSESSEE WAS SELECTED FOR SCRUTINY FOR CERTAIN REASONS ENUMERATED IN THE EARLIER PART OF THE ORDER. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WANTED TO VERIFY THE ISSUE S ON WHICH THE RETURN OF INCOME WAS PICKED UP FOR SCRUTINY AND ACCORDINGLY ISSUED NOTICE UNDER SECTION 143(2) OF THE ACT TO THE ASSESSEE CALLING FOR THE REQUIRED INFORMATION. IT IS EVIDENT , THE ASSESSEE DID NOT C OMPLY TO THE NOTICE ISSUED BY THE ASSESSING OFFICER. IN FACT, THE ASSESSEE REMAINED TOTALLY NON RESPONSIVE DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSING OFFICER WAS COMPELLED TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT UNDER SECTIO N 144 OF THE ACT ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. IT IS EVIDENT , THE ASSESSING OFFICER WAS IN POSSESSION OF CIB /AIR I NFORMATION REVEALING INVESTMENT/ TRANSACTION AMOUNTING TO ` 56,75,52,250, IN DERIVATIVE S, FUTURES AND OPTIONS. SINCE THE ASS ESSEE NEITHER APPEARED NOR FURNISHED ANY EVIDENCES TO EXPLAIN THE NATURE AND SOURCE OF SUCH TRANSACTION, IN THE ABSENCE OF ANY EVIDENCES FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAD NO OTHER WAY, BUT TO ADD BACK THE AMOUNT OF ` 56,75,52,250, TO THE INCOME OF THE ASSESSEE. 9. UNDISPUTEDLY, BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAD PRODUCED ADDITIONAL EVIDENCES TO EXPLAIN THE NATURE AND SOURCE OF INVESTMENT/ TRANSACTIONS AS REPORTED IN THE CIB /AIR INFORMATION. ADMITTEDLY, THE AFORESAID EVID ENCES WERE NOT FILED BEFORE THE 8 RAJENDRA S. BHATE ASSESSING OFFICER. THEREFORE, THEY HAVE TO BE TREATED AS ADDITIONAL EVIDENCES. IT IS A FACT ON RECORD , ON THE BASIS OF FRESH EVIDENCES FILED BY THE ASSESSEE AND EXPLANATION SUBMITTED, LEARNED COMMISSIONER (APPEALS) HAS DELET ED THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER. WHILE DOING SO, THOUGH , LEA RNED COMMISSIONER (APPEALS) HAS PRIMARILY RELIE D UPON THE ADDITIONAL EVIDENCES/ EXPLANATION , HE NEITHER SENT THEM FOR EXAMINATION OF THE ASSESSING OFFICER NOR HAS CALLED FOR AN Y REPORT FROM HIM. SIMPLY RELYING UPON THE EVID ENCES FILED BY THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) HAS DELETED THE ADDITION. NO DOUBT, SECTION 250 SUB SEC TION (4) OF THE ACT EMPOWERS LEARNED COMMISSIONER (APPEALS) TO MAKE SUCH FURTHER ENQUIRY AS HE THINKS FIT OR HE MAY DIRECT THE ASSESSING OFFICER TO MAKE SUCH ENQUIRY, HOWEVER, IT IS A T THE COMPLETE DISCRETION OF LEARNED COMMISSIONER (APPEALS). SECTION 250 SUB SECTION (4) OF THE ACT D OES NOT ALLOW THE ASSESSEE TO FURNISH ADDITIONAL EVIDENCES SUO MOTU. F URNISH ING OF ADDITIONAL EVID ENCES BY THE ASSESSEE IS REGULATED UNDER RULE 46A AND SUBJECT TO RESTRICTIONS/ CONDITIONS IMPOSED THEREIN. ON A READING OF RULE 46A(3), IT IS VERY MUCH CLEAR T HAT IF T HE ASSESSEE ON HIS OWN FURNISHES ADDITIONAL EVIDENCES BEFORE THE FIRST APPELLATE AUTHORITY , SUCH EVIDENCES SHALL NOT BE TAKEN INTO ACCOUNT UNLESS THE ASSESSING OFFICER HAS BEEN ALL OWED A REASONABLE OPPORTUNITY VERIFY ING SUCH EVIDENCES AND OFFERING HIS COMMENT. THEREFORE, THE POWER OF THE FIRST APPELLATE AUTHORITY, AS 9 RAJENDRA S. BHATE CONFERRED UNDER SECTION 250(4) R/W RULE 46 A(4) IS DIFFERENT FROM THE OPPORTUNITY GIV EN TO THE ASSESSEE UNDER RULE 46A(1). WHILE RULE 46 A (1) IS CIRCUMSCRIBED BY CERTAIN CONDITION S, RULE 46 A(4) IS NOT SO AS IT PROVIDES AMPLE POWER IN TERMS OF SECTION 250(4) TO THE FIRST APPELLATE AUTHORITY TO MAKE NECESSARY ENQUIRY FOR DISPOSAL OF THE APPEAL. IN THE PRESENT CASE, WE ARE DEALING WITH A SITUATION AS ENVISAGED UNDER RULE 46A(1). IT IS EVIDE NT FROM THE FACTS ON RECORD, LEARNED COMMISSIONER (APPEALS) ON HIS OWN HAS NEITHER MADE ANY ENQUIRY NOR HAS CALLED FOR ANY EVIDENCES FROM THE ASSESSEE. IT IS THE ASSESSEE WHO, ON HIS OWN, HAS FURNISHED THE ADDITIONAL EVIDENCES TO EXPLAIN THE INFORMATION CONT AINED IN CIB/AIR REPORT . THEREFORE, THE PROCEDURE LAID DOWN IN SUB RULE (2) AND (3) OR RULE 46A, HAS TO BE FOLLOWED. IN THE FACTS OF THE PRESENT CASE, UNDISPUTEDLY, THE PROCEDURE LAID DOWN IN SUB RULE (2) AND (3) OF RULE 46 A, HAVE NOT BEEN FOLLOWED. THEREF ORE, IN OUR CONSIDERED OPINION, WHILE GRANTING RELIEF TO THE ASSESSEE BY RELYING UP ON THE ADDITIONAL EVIDENCES, LEARNED COMMISSIONER (APPEALS) HAS VIOLATED THE CONDITIONS OF RULE 46 A , AS DISCUSSED ABOVE. 10. AS REGARDS THE DECISION OF THE HON'BLE JURISDICTIO NAL HIGH COURT IN SMT. PRABHAVATI S. SHAH (SUPRA), THERE CANNOT BE TWO OPINIONS WITH REGARD TO THE RATIO LAID DOWN IN THE AFORESAID DECISION. HOWEVER, THE HON'BLE JURISDICTIONAL HIGH COURT WAS DEALING WITH A CASE WHERE THE 10 RAJENDRA S. BHATE FIRST APPELLATE AUTHORITY REFUSED TO ADMIT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. IN THAT CONTEXT, THE HON'BLE JURISDICTIONAL HIGH COURT EXPLAINING THE POWER OF THE FIRST APPELLATE AUTHORITY UNDER SECTION 250(4) AND (5) OF THE ACT, HELD THAT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE SHOULD NOT BE REJECTED A S THE POWER OF THE LEARNED COMMISSIONER (APPEALS) IN MAKING ENQUIRY AND CALLING FOR EVIDENCES IS MUCH WIDER AND IS NOT RESTRICTED BY RULE 46 A. HOWEVER, THE FACTS ARE COMPLETELY DIFFERENT IN THE PRESENT CASE, AS EXPLAINED BY US HEREIN BEFORE. THEREFORE, THE AFORESAID DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WOULD BE OF NO HELP TO THE ASSESSEE. IN VIEW OF THE AFORESAID, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) AND RESTORE THE I SSUE BACK TO HIS FILE FOR FRESH ADJUDICATI ON AFTER NECESSARY COMPLIANCE WITH THE PROVISIONS OF RULE 46A. NEEDLESS TO MENTION, BEFORE DECIDING THE APPEAL, THE ASSESSEE MUST BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. GROUNDS ARE ALLOWED. 11. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. C.O. NO.221/MUM./2019 12. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER PASSED BY LEARNED COMMISSIONER (APPEALS). IN VIEW OF OUR 11 RAJENDRA S. BHATE DECISION IN REVENUES APPEAL HEREINBEFORE, THE CROSS OBJECTION HAS BECOME INFRUCTUOUS, HENCE, DISMISSED. 13. TO SUM UP, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE AND CROSS OBJECTION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 07.02.2020 SD/ - G. MANJUNATH A ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 07.02.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI