ITO 18(2)(2), MUMBAI V. N R INTERNATIONAL, MUMBAI

ITA 3536/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83484 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Assessee Lawyers: S ATISH CHANDAK
• Keywords: Unexplained investment; Rectification of order; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 263; 144; 154; 68

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI .., ! , ' , # BEFORE SHRI I.P.BANSAL, JM AND SHRI RAJENDRA, AM ITA NO.3536/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000) THE INCOME TAX OFFICER 18(2)(2) 111, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400012 M/S. N.R.INTERNATIONAL, 2 ND ASSEMBLY LANE, DADYSETH AGALALRY LANE, MUMBAI 400002 PAN: AABFN 0676N ( $% / // / APPELLANT) ' ' ' ' / VS. ( ()$%/ RESPONDENT) $% * + * + * + * + /APPELLANT BY : SHRI VIVEK BATRA ()$% * + * + * + * + /RESPONDENT BY : SHRI SATISH CHANDAK ' * ,-' / / / / DATE OF HEARING : 12.8.2014 ./0 * ,-' / DATE OF PRONOUNCEMENT : 12.08.2014 1 1 1 1 / / / / O R D E R PER I.P.BANSAL (JM) : BOTH THESE APPEALS ARE FILED BY THE REVENUE AND TH EY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A)-29, MUMBAI OF EVEN DATED 15/2/2013 FOR ASSESSMENT YEAR 1999-2000. ITA NO.3537/MUM/2013 IS AN APPEAL FILED AGAINST ORDER PASSED UNDER SECTION 154 OF THE INCOME TAX AC T,1961 AND ITA NO.3536/MUM/2013 IS AN APPEAL FILED AGAINST DELETI ON OF CONCEALMENT PENALTY BY THE LD. CIT(A). GROUNDS OF APPEAL IN BOTH THE APPE ALS READ AS UNDER: GROUNDS OF APPEAL IN ITA NO.3537/MUM/2013: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS. 14,50,000/- MADE IN THE ORDER U/S. 154 OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THE FACT THAT THE AO HAD NOT GIVEN ANY FINDINGS ABOUT THE AUTHENTICITY OF THE BOOKS OF ACCOUNTS PRODUCED BEFORE HIM AS THE ISSUE INADVERTENTLY REMAINED TO BE CONSI DERED, IN THE ASSESSMENT ORDER THEREBY DEPICTING THAT IT WAS A MISTAKE APPAR ENT FROM RECORDS. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) FAILED TO CONSIDER THAT THE ADDITION MADE BY THE AO IN THE ORIGINAL ASSESSMENT ORDER HAS BEEN UPHELD BY THE CIT (A) AND THE HON. ITAT HA D ALLOWED THE ASSESSEES APPEAL ON THE ISSUE OF THE PENALTY ONLY BECAUSE THE ADDITION OF RS. ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 2 14,50,000/- U/S. 68 OF THE INCOME TAX ACT, 1961, RE MAINED TO BE MENTIONED IN THE SECOND ROUND OF ASSESSMENT. III FOR THESE AND OTHER REASONS IT IS SUBMITTED THA T THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. GROUNDS OF APPEAL IN ITA NO.3536/MUM/3536: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ISSUE OF ADDIT ION MADE U/S. 68 OF THE INCOME TAX ACT 1961, INADVERTENTLY REMAINED TO BE C ONSIDERED, IN THE ASSESSMENT ORDER THEREBY DEPICTING THAT IT WAS MIS TAKE APPARENT FROM RECORD. II) 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT(A) FAILED TO CONSIDER THE FACT THAT THE HON, ITAT HAD ALLOWED THE ASSESSEES APPEAL ON THE ISSUE OF THE PENALTY ONLY BECAUSE THE ADDITION OF RS.14,50,000/- U/S. 68 OF THE INCOME TAX ACT 1961, REMAINED TO BE MENTIONED IN THE SECOND ROUND OF ASSESSMENT. III) 3) FOR THESE AND OTHER REASONS IT IS SUBMITTED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. THE ASSESSMENT IN THE PRESENT CASE WAS ORIGINAL LY FRAMED UNDER SECTION 144 R.W.S. 148 VIDE ASSESSMENT ORDER DATED 27/3/2003, W HEREIN INCOME OF THE ASSESSEE WAS ASSESSED AT AN AMOUNT OF RS.99,69,790/- AND THE FOLLOWING ADDITIONS WERE MADE. 1. SALE OF MADE UPS NOT REFLECTED IN THE PROFIT A ND LOSS ACCOUNT RS.25,14,450/- 2. OUT OF VARIOUS EXPENSES DEBITED TO THE PROFIT A ND LOSS ACCOUNT FOR LACK OF VERIFICATION RS. 6,68,441/- 3. DISALLOWANCE U/S.40A(3) RS.1,13,174/- 4. CASH DEPOSITED IN BANK U/S.68 RS.14,50,000/- 5. UNEXPLAINED INVESTMENT IN STOCK OF SHIRTS U/S.6 9C RS.24,57,216/- 6. DEDUCTION U/S.80HHC RS.27,66,539/- 3. ACCORDING TO THE DECISION OF LD. CIT(A) IN THE A PPEAL FILED BY THE ASSESSEE ON VARIOUS GROUNDS THE RESULT WAS AS UNDER: 1. THE LD. CIT(A) DELETED THE ADDITION OF RS.25, 14,450/- MADE ON ACCOUNT OF MADE UPS. 2. THE LD. CIT(A) ACCEPTED THE ESTIMATED DISALLO WANCES MADE ON ACCOUNT OF VARIOUS EXPENSES IN PRINCIPLE. HOWEVER, HE RESTRIC TED THE DISALLOWANCES TO 5% AS AGAINST THE DISALLOWANCES OF 10% MADE BY THE ASSES SING OFFICER CONSIDERING THE SAME ON HIGHER SIDE. 3. THE LD. CIT(A) UPHELD THE DISALLOWANCE MADE U /S.40A(3) OF RS.1,13,174/- ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 3 4. THE LD. CIT(A) UPHELD THE ADDITION OF RS.14,5 0,000/- MADE U/S.68. 5. THE LD. CIT(A) DELETED THE ADDITION MADE ON A CCOUNT OF UNEXPLAINED INVESTMENT OF RS.25,14,450/- 6. THE LD. CIT(A) HELD THAT OUT OF TOTAL EXPORT SALES SO NET RS.1,95,16,191/- THE ASSESSEE HAS REALIZED CONVERTIBLE FOREIGN EXCHANGE RS.1,55,25,094/- WITHIN THE SPECIFIED TIME U/S. 80HHC. ACCORDINGLY, SUBJECT T O SATISFACTION OF OTHER CONDITIONS THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S.80 HHC IN RESPECT OF THE REALIZED SALES PROCEEDS ONLY. HE DIRECTED THE ASSESSING OFF ICER TO ALLOW ADMISSIBLE DEDUCTION U/S.80HHC IN ACCORDANCE WITH THE LAW. 3.1 AGGRIEVED BY AFOREMENTIONED ORDER OF LD. CIT(A) THE ASSESSEE AS WELL AS DEPARTMENT BOTH HAD FILED APPEAL BEFORE THE ITAT WH ICH WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 7/12/2005 IN ITA NO.4 533/MUM/2004(ASSESSEES APPEAL) AND 3768/MUM/2004 (DEPARTMENTAL APPEAL) THE MATTER WAS RESTORED TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS: 7.WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE LD. A R AND DR IN THE FACTS OF THE PRESENT CASE THE ASSESSING OFFICER HAD NO OCCASION TO PROP ERLY LOOK AT THE SEVERAL DOCUMENTS AND EXPLANATIONS RELIED UPON BY THE ASSESSEE. IN A LL FAIRNESS FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, WE SET ASIDE THE ASSESSMENT MADE I N THE INSTANT ASSESSMENT YEAR AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSI NG OFFICER TO DECIDE THE ISSUES AFTER AFFORDING A FAIR AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO CO-OPERATE AND APPEAR BEFORE THE ASSESS ING AUTHORITY AND FURNISH ALL THE REQUISITE INFORMATION AND EXPLANATION IN ORDER TO J USTIFY ITS CLAIM REGARDING THE DEDUCTION U/S.80HHC AND ALSO IN RESPECT OF OTHER AS PECTS OF THE ASSESSMENT IN ORDER TO FACILITATE THE ASSESSING OFFICER TO DETERMINE THE INCOME IN ACCORDANCE WITH LAW. THE PROPOSITION OF SET ASIDING THE MATTER WAS PROPOSED TO BOTH THE AR & DR DURING THE COURSE OF HEARING AND BOTH AGREED TO THE PROPOSITI ON. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 3.2 ACTING ON THE DIRECTIONS GIVEN BY THE TRIBUNAL, THE AO AFTER NARRATING THE ABOVE FACTUAL POSITION, HAS FRAMED ASSESSMENT VIDE ORDER DATED 29/12/2006 PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE ACT. THE AO AFTER REPRODUCING THE ABOVE OBSERVATIONS OF THE TRIBUNAL HAS ASSESSED THE ASSES SEE WITH THE FOLLOWING REMARKS: KEEPING IN VIEW THE ABOVE DIRECTIONS OF THE LD. ME MBERS OF THE ITAT THE ASSESSEE WAS ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER. SHRI MANOJ DOSHI, CA FROM M/S. KAILASHCHAND JAIN & CO. CAS ATTENDED ON BEHALF OF THE ASSESSEE, FURNISHED THE DETAILS AND EXPLAINED THE CASE. THE ASSESSEE I S ENGAGED IN THE BUSINESS OF TRADING, MANUFACTURING OF GARMENTS AND FABRICS. TH E ASSESSEE IS A 100% EXPORT ORIENTED UNIT. THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF TWO PARTNERS SHRI RISHAB R. JAIN AND SHRI NARESH C. JAIN EACH HAVING 50% SHARE IN THE PROFIT AND LOSS IN THE SAID FIRM. ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 4 THE ASSESSEE HAS SHOWN TOTAL EXPORT SALES OF RS.1,9 5,16,191/- AND SALE OF LICENSE OF RS.10,77,763/-. THE RATE OF GP WORKS OUT TO 16.97. THE ASSESSEES REPRESENTATIVE SHRI MANOJ DOSHI PRODUCED BOOKS OF ACCOUNTS OF THE ASSES SEE FIRM AND M/S. C.M TEXTILES LTD. AFTER CONSIDERING THE SUBMISSIONS MADE AND DETAILS FURNISHED, THE ASSESSMENT IS FINALIZED AS UNDER: AFTER DISCUSSING ONLY THE ADDITIONS WHICH WERE TO BE MADE IN THE COMPUTATION OF INCOME THE AO HAS DETERMINED THE NET INCOME OF THE ASSESSEE AT RS.6,57,432/- AS FOLLOWS: COMPUTATION OF TOTAL TAXABLE INCOME: INCOME FROM BUSINESS & PROFESSION : AS PER RETURN RS. 27 ,66,539/- ADD:- AS DISCUSSED ABOVE 1. OUT OF VARIOUS EXPENSES DEBITED TO THE P&L A/C. FOR LACK OF VERIFICATIONS RS. 3,34,385/- 2. DISALLOWANCE U/S.40A(3) RS. 1,13,174/- RS. 4,47,559/- GROSS TOTAL INCOME RS. 32,14,098/- LESS: CHAPTER VIA DEDUCTIONS: DEDUCTION U/S.80 HHC(AS DISCUSSED) RS. 25,56,666/- NET TAXABLE INCOME RS. 6,57,432/- 3.3 AFTER FINALIZING THE AFOREMENTIONED ASSESSMENT THE ASSESSEE WAS SERVED WITH A NOTICE ISSUED UNDER SECTION 154 OF THE ACT ON THE G ROUND THAT AO WHILE FRAMING THE ASSESSMENT ORDER DATED 29/12/2006 HAS INADVERTENTLY DID NOT CONSIDER THE ADDITION OF RS.14,50,000/- IN THE COMPUTATION OF T OTAL TAXABLE INCOME. ACCORDING TO THE NOTICE ISSUED UNDER SECTION 154 IT WAS A MISTAK E APPARENT FROM RECORD. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY THE SAID ADDITION SHOULD NOT BE MADE. A REPLY WAS FILED BY THE ASSESSEE VIDE LETTER DATED 12/06/2009, CONTENTS OF WHICH ARE REPRODUCED IN THE ORDER PASSED BY AO DATED 2/12/200 9 UNDER THE PROVISIONS OF SECTION 154 OF THE ACT, WHEREBY ADDITION OF RS.14,5 0,000/- HAS BEEN MADE ON THE GROUND THAT FAILURE TO MAKE SUCH ADDITION IN THE A SSESSMENT ORDER DATED 29/12/2006 WAS A MISTAKE APPARENT FROM THE RECORD A ND REQUIRED RECTIFICATION. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING IN PURSUANCE OF WHICH ORDER IS PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE ACT (HEREINAFTER REFERRED TO AS SET ASIDE AS SESSMENT PROCEEDINGS) THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM AS WELL AS BOOKS OF A CCOUNT OF M/S.CM TEXTILES PVT. ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 5 LTD. (IN SHORT M/S.CMTPL) WERE SUBMITTED AND SUCH F ACT IS RECORDED BY THE AO IN THE ASSESSMENT ORDER ITSELF AND AFTER VERIFYING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS M/S.CMTPL THE AO HAD ACCEPTED THE FACT T HAT AMOUNT OF RS.14,50,000/- WAS RECEIVED BY THE ASSESSEE FROM M/S. CMTPL AS TRA DE ADVANCE AND NOT FROM NINE PARTIES AS HELD BY THE AO IN THE ORIGINAL ASSESSMEN T ORDER DATED 27/3/2003 AND IT WAS CLAIMED THAT THERE WAS NO MISTAKE AS IS BEING ALLEGED BY THE REVENUE. HOWEVER, AO AFTER DETAILED DISCUSSION HAS COME TO A CONCLUSION THAT AS FRESH ASSESSMENT ORDER DATED 29/12/2006 IS SILENT ABOUT T HE FACT THAT WHETHER THE AUDITED BOOKS OF ACCOUNTS OF M/S. CMTPL WERE PRODUC ED AND IT WERE SUCH THAT THE TRANSACTION REFLECTED OF TRADE ADVANCE OF RS.14,50 ,000/- WAS GENUINE AND CORRECT. THE SAID ORDER OF THE AO SPEAK CONCLUSIVELY ABOUT A DDITION OF RS.14,50,000/-, THEREFORE, IT IS CLEAR THAT AO HAD INADVERTENTLY N OT CONSIDERED THE ADDITION ON ACCOUNT OF CASH CREDIT OF RS.14,50,000/-, THEREFORE , IT IS A MISTAKE EVIDENT FROM THE RECORD AND THUS, AO HAD ADDED THE SAID AMOUNT TO TH E INCOME ASSESSED. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A). IT WAS SUBMITTED THAT AO HAS ALREADY CONSIDERED THIS ISSUE AT PAGE -3 OF THE ASSESSMENT ORDER AND DID NOT MAKE ANY ADDITION, THEREFORE, THERE IS NO MISTAKE IN THE ASS ESSMENT ORDER DATED 29/12/2006. TO VERIFY SUCH CONTENTION OF THE ASSESSEE THE PREDE CESSOR OF THE LD. CIT(A) HAD WRITTEN A LETTER DATED 1/8/2011 TO THE AO FOR INFOR MING THE DETAILS SUBMITTED BY THE ASSESSEE IN THE SECOND ROUND OF ASSESSMENT PROCEEDI NGS AND ALSO TO INFORM THAT WHETHER THERE WAS ANY MISTAKE APPARENT FROM THE REC ORD. THE AO VIDE LETTER DATED 29/09/2011 INFORMED THAT THE BOOKS OF ACCOUNT OF M/ S.CMTPL WERE CALLED DURING THE ASSESSMENT PROCEEDINGS BUT WHETHER THE BOOKS OF ACCOUNTS WERE ACCEPTED BY THE AO COULD NOT BE ASCERTAINED AND THE ASSESSMENT ORD ER WAS SILENT ON THIS ISSUE. IT WAS FURTHER MENTIONED THAT THE AO HAS DEALT WITH TH E DISALLOWANCES WHICH WERE CONFIRMED BY THE LD. CIT(A) AND, THEREFORE, IT IMPL IES THAT THE ISSUE OF CASH DEPOSITS WAS ALSO CONSIDERED WHICH THE AO DID NOT CONSIDER BY MISTAKE AND IT WAS REQUESTED THAT THE ACTION OF THE AO MAY BE UPHELD. ON CONSIDERATION OF ARGUMENTS OF BOTH SIDES AND ALSO CONSIDERING THE DIRECTIONS G IVEN BY ITAT, LD. CIT(A) HAS OBSERVED THAT ALL THE ADDITIONS AND DISALLOWANCE MA DE IN THE ORIGINAL ASSESSMENT ORDER ARE NOT RELEVANT AS THE ASSESSMENT ORDER WA S SET ASIDE BY THE TRIBUNAL AND MATTER WAS RESTORED BACK TO THE FILE OF AO FOR FRES H ADJUDICATION OF VARIOUS ISSUES. IN PURSUANCE TO SUCH DIRECTIONS THE AO CONDUCTED TH E ASSESSMENT PROCEEDINGS, WHEREIN ASSESSEE HAD CO-OPERATED FULLY. DURING THE ASSESSMENT PROCEEDINGS BOOKS ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 6 OF ACCOUNT OF THE APPELLANT AND M/S.CMTPL WERE PROD UCED AND SUCH FACT HAS BEEN RECORDED BY THE AO IN THE ASSESSMENT ORDER ITSELF. AFTER RECORDING SUCH FINDING THE AO HAS DISCUSSED OTHER ISSUES LIKE EXPORT SALES, DI SALLOWANCE UNDER SECTION 40(A)(III) AND VARIOUS EXPENSES DEBITED TO P&L ACCOUNT, HOWEVE R, THERE IS NO MENTION IN THE ASSESSMENT ORDER ABOUT THE AMOUNT OF RS.14,50,000/- CLAIMED TO BE RECEIVED FROM M/S. CMTPL. NO ADVERSE FINDINGS WAS RECORDED BY T HE AO IN THE ASSESSMENT ORDER. THOUGH IN THE ORIGINAL ASSESSMENT ORDER THE AO HAS NOTED SOME DISCREPANCIES WHICH DEFINITELY RAISE SOME SUSPICION ABOUT THE TRA NSACTION RECORDED OF RS.14,50,000/- FROM M/S. CMTPL BUT IN THE RE-ASSESS MENT ORDER, THE AO HAS NOT MADE ANY ADVERSE FINDINGS IN THIS REGARD. ON THE O THER HAND, THE AO HAS CLEARLY STATED IN THE ASSESSMENT ORDER THAT BOOKS OF ACCOUN TS OF M/S. CMTPL WERE ALSO PRODUCED BEFORE HIM. FROM SUCH RECORDING OF THE FA CT IT HAS TO BE PRESUMED THAT AO HAS VERIFIED BOOKS OF ACCOUNT OF M/S.CMTPL. AFTER SUCH VERIFICATION, IF AO DID NOT MAKE ANY ADDITION THEN IT WILL IMPLY THAT THE AO W AS SATISFIED ABOUT CORRECTNESS OF THE TRANSACTION. IT IS NOT A CASE WHERE THERE WAS NO MENTION ABOUT THIS ISSUE IN THE ASSESSMENT ORDER. THE FACT THAT ADDITION OF RS.14 ,50,000/- WAS MADE IN THE EARLIER ASSESSMENT ORDER AND WAS SUBSEQUENTLY CONFIRMED BY LD. CIT(A) WILL NOT BE RELEVANT TO THE PRESENT PROCEEDINGS AS THE ORIGINAL ASSESSM ENT WAS SET ASIDE BY THE ITAT. THEREFORE ONLY THE FINDINGS RECORDED IN THE SET A SIDE ASSESSMENT ORDER WILL BE RELEVANT FOR THE PRESENT APPEAL. THUS LD. CIT(A) H AS ARRIVED AT A CONCLUSION THAT THERE WAS NO MISTAKE APPARENT FROM THE RECORD WHIC H COULD ENABLE THE DEPARTMENT TO MAKE SUCH ADDITION AND THE ADDITION H AS BEEN DELETED. THE DEPARTMENT IS AGGRIEVED, HENCE, HAS FILED AFOREMEN TIONED GROUNDS OF APPEAL. 4. AFTER NARRATING THE AFOREMENTIONED FACTS, LD. DR RELYING UPON THE GROUNDS OF APPEAL SUBMITTED THAT AO WHILE FRAMING ASSESSMENT V IDE ORDER DATED 29/12/2006 INADVERTENTLY DID NOT MAKE ADDITION OF RS.14,50,000 /-. THUS, IT WAS A MISTAKE APPARENT FROM THE RECORD, WHICH WAS RIGHTLY RECTIFI ED BY THE AO VIDE ORDER DATED 2/12/2009 PASSED UNDER SECTION 154 OF THE ACT. HE SUBMITTED THAT LD. CIT(A) HAS COMMITTED AN ERROR IN ACCEPTING THE SUBMISSION OF T HE ASSESSEE THAT THERE WAS NO MISTAKE APPARENT FROM THE RECORD. HE SUBMITTED THA T THE ORDER OF LD. CIT(A) SHOULD BE SET ASIDE AND THAT OF AO MAY BE RESTORED . ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 7 5. ON THE OTHER HAND, REFERRING TO THE OBSERVATIONS OF AO IN THE ASSESSMENT ORDER DATED 29/12/2006 IT WAS SUBMITTED BY LD. AR T HAT THE FACT REGARDING FURNISHING OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS OF M/S. CMTPL HAS BEEN WELL RECORDED BY THE AO IN THE ASSESSMENT ORDE R ITSELF. LD. AR SUBMITTED THAT AS IT CAN BE SEEN FROM THE OBSERVATIONS OF ITAT ALL THE ISSUES WERE SET ASIDE TO THE FILE OF AO FOR RE-ADJUDICATION. ON THE ISSUE ON W HICH THE AO WAS SATISFIED NO ADDITION WAS MADE AND ONLY THE ISSUE WITH REGARD TO WHICH ADDITIONS WERE TO BE MADE HAVE BEEN DISCUSSED BY THE AO. ON THE ISSUE R EGARDING ADDITION OF RS.14,50,000/-, THE AO WAS SATISFIED, THEREFORE, DI D NOT MENTION ANYTHING EXCEPT PRODUCTION OF THE BOOKS OF ACCOUNTS BY THE ASSESSEE AS WELL AS BY M/S.CMTPL. THEREFORE, HE PLEADED THAT THERE WAS NO MISTAKE IN THE ORDER PASSED BY AO DATED 29/12/2006 TO THE EXTENT OF NOT MAKING THE ADDITION OF RS.14,50,000/-. LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AS THERE WAS NO MI STAKE IN THE ASSESSMENT ORDER DATED 29/12/2006. THUS IT WAS PLEADED BY LD. AR THAT ORDER PASSED BY LD. CIT(A) SHOULD BE UPHELD AND THE APPEAL FILED BY THE REVENU E SHOULD BE DISMISSED. 6. APROPOS SECOND APPEAL RELATING TO PENALTY LEVI ED UNDER SECTION 271(1)(C) OF THE ACT, IT WAS THE COMMON CONTENTION OF THE PARTI ES THAT THE LEVY OF CONCEALMENT PENALTY IS ONLY ON THE AFOREMENTIONED ADDITION OF R S.14,50,000/-, THEREFORE, THE SAME WILL BE CONSEQUENTIAL TO THE ADDITION. 7. WE HAVE CAREFULLY HEARD BOTH THE PARTIES AND THE IR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. IN THE PRESENT CASE ADDITION OF R S.14,50,000/- HAS BEEN MADE BY INVOKING THE PROVISION OF SECTION 154 OF THE ACT. IT IS THE CASE OF THE REVENUE THAT WHILE FRAMING ASSESSMENT ORDER DATED 29/12/2006 THE AO INADVERTENTLY MISSED TO INCLUDE A SUM OF RS.14,50,000/- IN THE ASSESSABLE I NCOME. IF IT IS INADVERTENT MISTAKE COMMITTED BY THE AO IN THE ASSESSMENT ORDE R DATED 29/12/2006 THEN ONLY IT WOULD FALL WITHIN THE PURVIEW OF SECTION 154 OF THE ACT. THE CLEAR READING OF THE ASSESSMENT ORDER WOULD REVEAL THAT THERE ARE NO ADV ERSE FINDING RECORDED BY THE AO REGARDING A SUM OF RS.14,50,000/-. SEVERAL ADDITIO NS WERE MADE BY THE AO IN THE ORIGINAL ASSESSMENT ORDER AND THE RETURNED INCOME O F RS.27,66,539/- WAS ASSESSED AT A SUM OF RS.99,69,790/-. THE ADDITION OF RS.14 ,50,000/- WAS ONLY ONE OF THE ISSUES ON WHICH THE ADDITION WAS MADE. THE OBSERVA TIONS OF THE TRIBUNAL IN PURSUANCE TO WHICH IMPUGNED ASSESSMENT ORDER DATED 29/12/2006 HAS BEEN ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 8 FRAMED HAVE ALREADY BEEN REPRODUCED. IT CAN BE SEE N FROM THOSE OBSERVATIONS THAT THE ASSESSMENT WAS SET ASIDE AND IT WAS RESTORED B ACK TO THE FILE OF AO TO DECIDE THE ISSUE AFTER AFFORDING FAIR AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. IT WAS ALSO DIRECTED THAT IN RESPECT OF ISSUES OTHER THAN 80 HHC ALSO THE AO WAS REQUIRED TO DETERMINE THE INCOME IN ACCORDANCE WITH LAW. TH E AO HAS ALSO REFERRED TO THE LATEST POSITION REGARDING ADDITIONS AND THE POSITI ON HAS BEEN SO SUMMARIZED BY THE AO IN THE ASSESSMENT ORDER AND THE SAME HAS ALSO B EEN REPRODUCED IN THE ABOVE PART OF THIS ORDER. ONE OF THE ADDITION WAS A SUM OF RS.25,14,450/-, WHICH WAS ALSO MADE ON ACCOUNT OF SALE OF MADE UPS. IN THE E NTIRE ASSESSMENT ORDER THERE IS NO DISCUSSION ABOUT THE SAID ADDITION AND THE SAID ADDITION IS ALSO NOT REPEATED. THE ASSESSMENT FRAMED BY THE AO, AS IT APPEARS FRO M THE TONE IN THE ASSESSMENT ORDER, IS LIKE A FRESH ASSESSMENT FRAMED BY THE AO BASED ON THE REPRESENTATION MADE BY THE ASSESSEE. IT IS CLEARLY WRITTEN IN THE ASSESSMENT ORDER THAT ASSESSEE HAS PRODUCED ITS BOOKS OF ACCOUNT AS WELL AS BOOKS OF ACCOUNT OF M/S. CMTPL. THUS, IT CAN BE SAID THAT IT IS NOT A CASE OF MERE INADVERTENT OMISSION BUT IT IS A CASE WHERE CONSCIOUS DECISION HAS BEEN TAKEN BY T HE AO FOR NOT MAKING THE ADDITION OF RS.14,50,000/- AS AMOUNT LIABLE TO BE ADDED UNDER SECTION 68 OF THE ACT. FROM THE PATTERN OF THE ASSESSMENT ORDER IT IS CLEAR THAT ON THE ISSUES ON WHICH AO DID NOT MAKE ADDITION WERE NOT DISCUSSED I N THE ASSESSMENT ORDER AND, THEREFORE, IT IS LIKELY THAT AO DID NOT DISCUSS ABO UT THE ADDITION OF RS.14,50,000/- THOUGH THE AMOUNT HAS BEEN REPEATEDLY MENTIONED WH ILE MENTIONING THE FACTS. IN THIS VIEW OF THE SITUATION, ARGUMENT OF THE DEPARTM ENT THAT IT WAS AN INADVERTENT MISTAKE COMMITTED BY THE AO FOR NOT ADDING THE AMOU NT OF RS.14,50,000/- CANNOT BE ACCEPTED. 7.1 MOREOVER POWER UNDER SECTION 154 OF THE ACT IS VERY LIMITED AND THIS HAS BEEN EXPLAINED BY HONBLE SUPREME COURT IN THE CASE OF T .S.BALARAM,ITO VS. VOLKART BROTHERS, 82 ITR 50, WHEREIN THEIR LORDSHIPS HAVE O BSERVED THAT MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY LONG DRAWN PROCESS OF REASONI NG ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 9 7.2 FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., 256 ITR 1(DEL) HAVE EXPLAINED THE POWER OF RECTIFICATION AND IT WILL BE RELEVANT TO REPRODUCE THE FOLLOWING OBSERVATIONS: IT IS A WELL SETTLED PRINCIPLE OF INTERPRETATION O F STATUTE THAT THE ENTIRE STA- TUTE SHOULD BE READ AS A WHOLE AND THE SAME HAS TO BE CONSIDERED THEREAFTER CHAPTER BY CHAPTER AND THEN SECTION BY SECTION AND ULTIMATELY WORD BY WORD. IT IS NOT IN DISPUTE THAT THE ASSESSING OFFICER DOE S NOT HAVE ANY JURISDICTION TO REVIEW HIS OWN ORDER. HIS JURISDICTION IS CONFINED ONLY TO RECTIFICATION OF MIS- TAKES AS CONTAINED IN SECTION 154 OF THE ACT. THE P OWER OF RECTIFICATION OF MIS- TAKE CONFERRED UPON THE INCOME-TAX OFFICER IS CIRCU MSCRIBED BY THE PROVISIONS OF SECTION 154 OF THE ACT. THE SAID POWER CAN BE EX ERCISED WHEN THE MISTAKE IS APPARENT. EVEN A MISTAKE CANNOT BE RECTIFIED WHERE IT MAY BE A MERE POSSIBLE VIEW OR WHERE THE ISSUES ARE DEBATABLE. EVEN THE IN COME-TAX APPELLATE TRIBUNAL HAS LIMITED JURISDICTION UNDER SECTION 254 (2) OF THE ACT. THUS WHEN THE ASSESSING OFFICER OR TRIBUNAL HAS CONSIDERED TH E MATTER IN DETAIL AND THE VIEW TAKEN IS A POSSIBLE VIEW THE ORDER CANNOT BE C HANGED BY WAY OF EXER- CISING THE JURISDICTION OF RECTIFICATION OF MISTAKE . IT IS A WELL SETTLED PRINCIPLE OF LAW THAT WHAT CAN NOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. IF THE INCOME-TAX OFFICER DOES NOT POSSESS THE POWER OF REVIEW, HE CANNOT BE PERMITTED TO ACHIEVE THE SAID OBJECT BY TAKING RECOURSE TO INITIATING A PROCEEDING OF REASSESSMENT OR BY WAY O F RECTIFICATION OF MISTAKE. IN A CASE OF THIS NATURE THE REVENUE IS NOT WITHOUT REMEDY. SECTION 263 OF THE ACT EMPOWERS THE COMMISSIONER TO REVIEW AN ORDER WH ICH IS PREJUDICIAL TO THE REVENUE 7.3 ACCORDING TO THE AFOREMENTIONED OBSERVATIONS OF THEIR LORDSHIPS, IT IS CLEAR THAT THE AO DOES NOT HAVE THE POWER OF REVIEW AND HIS JURISDICTION IS CONFINED ONLY TO THE RECTIFICATION OF MISTAKE AS CONTAINED IN SEC TION 154 OF THE ACT. THE POWER OF RECTIFICATION OF MISTAKE IS CIRCUMSCRIBED BY THE P ROVISIONS OF SECTION 154 OF THE ACT. THE SAID POWER CAN BE EXERCISED WHEN THE MISTAKE IS APPARENT. EVEN A MISTAKE CANNOT BE RECTIFIED WHERE IT MAY BE A MERE POSSIBLE VIEW OR WHERE THE ISSUE IS DEBATABLE. IT IS ALSO A WELL SETTLED PRINCIPLE OF LAW THAT WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. IF ITO DOES NOT POSSESS POWER OF REVIEW, HE CANNOT BE PERMITTED TO ACHIEVE THE SAID OBJECT BY TAKING REC OURSE TO INITIATE PROCEEDINGS BY WAY OF RECTIFICATION OF MISTAKE. IN SUCH CASE THE REVENUE IS NOT IS WITHOUT REMEDY AS SECTION 263 EMPOWERS THE COMMISSIONER TO REVIEW AN ORDER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO.3537/MUM/2013 (A.Y.1999-2000) ITA NO.3537/MUM/2013(A.Y.1999-2000 ) 10 7.4 IN THE LIGHT OF AFOREMENTIONED FACTS AND LAW, WE ARE OF THE OPINION THAT LD. CIT(A) HAS NOT COMMITTED ANY ERROR IN GRANTING RE LIEF TO THE ASSESSEE. WE DECLINE TO INTERFERE AND ITA NO.3537/MUM/2013 IS DISMISSED. 8. IT HAS ALREADY BEEN MENTIONED THAT ITA NO.3536/M UM/2013 IS AN APPEAL WHERE REVENUE IS AGITATING THE DELETION OF PENALTY LEVIED ON THE AFOREMENTIONED ADDITION OF RS.14,50,000/- . SINCE WE HAVE UPHELD THE ORDER OF LD. CIT(A) WHEREBY ADDITION OF RS.14,50,000/- IS DELETED, THE PENALTY DOES NOT SURVIVE IN ABSENCE OF EXISTENCE OF ADDITION. THIS APPEAL FILED BY THE RE VENUE IS ALSO DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH AUG., 2014. 1 * ./0 2'3 12.08.2014 / * 9 SD/- SD/- (RAJENDRA) (I.P.BANSAL) ' ' ' ' / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2' DATED : 12TH AUG. 2014. VM. 1 * (,: ; :0, 1 * (,: ; :0, 1 * (,: ; :0, 1 * (,: ; :0,/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. ()$% / THE RESPONDENT. 3. <() / THE CIT, MUMBAI. 4. < / CIT(A)-13, MUMBAI 5. :?9 (,' , , / DR, ITAT, MUMBAI 6. 9@ A / GUARD FILE. 1' 1' 1' 1' / BY ORDER, ):, (, //TRUE COPY// B BB B/ // /C C C C (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI