DIVESH N SHAH, MUMBAI V. ITO WD 21(2)(1), MUMBAI

ITA 3792/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71240 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-10-2013
• Assessment Year: 1990-1991
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: HITESH P SHAH
• Section: 143(3)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. . .. . . .. . , ,, , !'# !'# !'# !'# , ' ' ' ' BEFORE S/SH. I.P. BANSAL,JUDICIAL MEMBER & RAJENDRA ,ACCOUNTANT MEMBER /. ITA NO.3792/MUM/2012 , $ $ $ $ % % % % / ASSESSMENT YEAR-1990-91 DIVESH N. SHAH 11/15 APOORVA HIND CHS LTD. 23 NS MANKIKAR MARG, MUMBAI- 400022 VS. ITO WD 21(2)(1) WARD 26(2)(1), R.NO. 608, 6 TH FLOOR, SMT. KAMLADEVI MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI-400002 PAN:AAIPS6801Q ( &' / APPELLANT) ( ()&' / RESPONDENT) &' &' &' &' * * * * ' '' ' / APPELLANT BY : SHRI HITESH P. SHAH ()&' + * ' / RESPONDENT BY : SHRI SANJEEV JAIN $ $ $ $ + ++ + , , , , / DATE OF HEARING : 07-10-2013 -.% + , / DATE OF PRONOUNCEMENT : 07-10-2013 $ $ $ $ , + ++ + ( ) ' '' ' ,/, ,/, ,/, ,/, '0 '0 '0 '0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM FOLLOWING GROUNDS OF APPEAL HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 31-03-2012 OF THE CIT(A)-28,MUMBAI: 1. THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVI ED U/S 271(1)(C) WITHOUT VERIFYING THE ORIGINAL RECORDS AS DIRECTED BY THE HONBLE ITAT. 2. THE LD. CIT(A) WAS NOT JUSTIFIED IN ASSUMING AND PR ESUMING THAT THE PENALTY ORDER WAS PASSED AFTER OBTAINING APPROVAL OF JT. CIT. 3. THE LD. CIT(A) ERRED IN DISREGARDING THE DETAILED S UBMISSIONS FILED BEFORE HIM. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND T HE ABOVE GROUNDS OF APPEAL, AS THE OCCASION MAY DEMAND OR CIRCUMSTANCES MAY REQUIRE. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT LEVY OF PENALTY U/S.271(1)(C)OF THE ACT BY THE AO AND CONFIRMA - TION OF THE SAID ORDER BY THE FIRST APPELLATE AUTHO RITY(FAA).AN ACTION U/S.132 OF THE ACT WAS TAKEN AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESS EE ON 11.01.1990.DURING THE COURSE OF ASSESSMENT PROCEEDINGS,ADDITION AMOUNTING TO RS.40 LACS WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE,WHO CHALLENGED THE ORDER OF THE ASSESSING OFFICER(AO)BE FORE THE FAA.AFTER CONSIDERING HIS SUBMISSIONS, FAA GRANTED PARTIAL RELIEF TO THE ASSESSE VIDE ORDE R DATED 24.11.1994.ASSESSEE AND THE AO FILED 2 ITA NO.3792/MUM/2012 DIVESH N. SHAH APPEALS BEFORE THE TRIBUNAL AGAINST THE ORDER OF TH E FAA.IT WAS ARGUED THAT NO REASONABLE OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO SUBMIT DETAILS AND JUS TIFY AS TO WHY THE ADDITION SHOULD NOT BE MADE.THE EXPARTE ORDER WAS SET ASIDE AND THE MATTER WAS REFE RRED BACK TO THE FILE OF THE AO BY THE ITAT. LATER, AS PER THE DIRECTIONS OF THE ITAT, A FRESH ORDER WAS P ASSED U/S 143(3) R.W.S. 254 OF THE ACT WHEREIN INCOME WAS ASSESSED AT RS.37,94,940/- AS AGAINST RE TURNED LOSS OF RS.1,99,904/-. ASSESSEE FILED AN APPEAL AGAINST THIS FRESH ORDER BEFORE THE FAA.HE D ISMISSED THE APPEAL FILED BY THE ASSESSEE AND CONFIRMED THE INCOME FROM BENAMI CONCERNS TO THE TU NE OF RS.40 LACS.TRIBUNAL, VIDE ORDER DATED 26.02.2008,REDUCED THE ADDITION FROM RS.40 LACS TO RS.5,75,000/-. 2.1. MEANWHILE,CONSEQUENT TO THE ORDER OF FAA,A PENALTY ORDER WAS PASSED BY THE AO U/S.271(1) (C) OF THE ACT WHEREIN THE PENALTY OF RS.21,37,212/- WAS L EVIED BEING 100% OF THE TAX SOUGHT TO BE EVADED. IT IS STATED IN THE PENALTY ORDER THAT, THE PENALTY OR DER WAS PASSED WITH THE APPROVAL OF THE JT.CIT VIDE ORDER DATED 29.03.2005.THE MATTER TRAVELLED TO THE TRIBUNAL AT THE BEHEST OF THE ASSESSEE.IN THE APPEA L PROCEEDINGS, IT WAS POINTED OUT THAT IF THE PENALTY ORDER WAS PASSED ON 28.03.2005 THEN HOW COULD THE APPROVAL BE OBTAINED FROM THE JT.CIT ON 29.03.2005. IT WAS ARGUED THAT THIS CLEARLY INDICATED THAT THE APPROVAL WAS NOT TAKEN FROM THE JT.CIT BY THE AO AS REQUIRED UNDER LAW BEFORE PASSING THE PENALTY ORDER.THE MATTER WAS REMITTED BACK BY THE TRIBUNAL TO THE FAA FOR THE PURPOSE OF FRESH ADJUDICATION ON THE BASIS OF VERIFICATION OF THE RELEVANT ORIGIN AL RECORDS IN THE MATTER. 2.2. AS PER THE FAA HIS PREDECESSOR HAD ASKED THE AO TO VERIFY THE DATE WHEN THE PENALTY ORDER WAS PASSED AND WHEN THE APPROVAL OF JT.CIT WAS TAKEN.HE DIRECTED THE AO TO PRODUCE ORIGINAL D& CR AND SUBMIT A REMAND REPORT IN THIS REGARD. IT WAS REITE RATED,BY THE AO,THAT ORDER WAS PASSED ON 28.03. 2005,INADVERTENTLY, ON ACCOUNT OF TYPOGRAPHICAL ERR OR,THE DATE OF 29.03.2005 WAS PUT /TYPED IN THE ORDER.THE PHOTOCOPIES OF THE RELEVANT PAGES OF D&CR WERE ALSO SUBMITTED SHOWING THAT THE PENALTY PROCEEDINGS WERE OVER ON 28.03,2005 AND ORDER WAS P ASSED ON THE SAME DATE I.E. 28.03.2005 AFTER OBTAINING APPROVAL FROM THE JT.CIT.A COPY OF THE RE MAND REPORT DATED 22.03.2012 RECEIVED FROM THE AO WAS GIVEN BY THE FAA TO THE AR OF THE ASSESSEE F OR PERUSAL AND COMMENTS.AR OF THE ASSESSEE SUBMITTED THAT IT WAS NOT A CASE OF TYPOGRAPHICAL E RROR WITH REGARD TO DATE (WHEN THE APPROVAL WAS GIVEN BY THE JT.CIT) AS MADE OUT BY THE PRESENT AO, BUT THERE WAS NO PRIOR APPROVAL FROM THE JT.CIT BEFORE THE PENALTY ORDER WAS PASSED BY THE AO,THAT PRIOR APPROVAL HAVING BEEN GRANTED PRIOR TO PASSING OF PENALTY ORDER NEEDED TO BE PROVED WITH THE HELP OF ORIGINAL RECORDS LIKE DISPATCH REGISTER OF THE OFFICE OF THE JT.CIT,INWARD REGISTER OF AO SHOWING RECEIPT OF LETTER FROM THE OFFICE OF THE JT.CIT AND ALSO THE LETTER OF JT.CIT GIVING APPROVAL,THAT IN A BSENCE OF THESE RECORDS IT WAS NOT POSSIBLE TO BELI EVE THE CLAIM OF THE PRESENT AO,THAT THE STENO MERELY M ADE A TYPOGRAPHICAL ERROR AND PUT THE DATE AS 29.03.2005 IN PLACE OF 28.03.2005. 2.4. AFTER CONSIDERING THE REMAND REPORT OF THE AO AND T HE SUBMISSIONS OF THE AR,FAA HELD THAT THERE WAS A PRESUMPTION IN FAVOUR OF THE PUBLIC OFFICER T HAT THE PROCEEDINGS HAD BEEN COMPLETED LAWFULLY AND IN ACCORDANCE WITH THE PROCEDURES LAID DOWN.HE FURTHER HELD AS UNDER: IN VIEW OF THE ABOVE DETAILS, IT IS PRESUMED THAT PENALTY ORDER WAS PASSED WITH THE APPROVAL OF THE JT.CIT ON 28.03.2005 ONLY. THERE IS NOTHING TO INDICATE THAT THERE WAS ANY PREDATING OR NON EXISTENCE OF APPROVAL.HOWEVER,I CONCEDE THAT ORIGIN AL ORDER SHOWING APPROVAL OF THE JT.CIT COULD NOT BE TRACED TILL DATE OF PASSING OF THE ORD ER.SINCE NOTHING HAS BEEN BROUGHT ON RECORD TO PROVE THAT PENALTY ORDER IS PASSED WITHOUT TAKIN G APPROVAL OF THE JT.CIT,I GO BY THE D&CR ENTRY AND OTHER ATTENDANT CIRCUMSTANCES AND THEREFO RE, HOLD THAT THE PENALTY ORDER WAS PASSED AFTER OBTAINING APPROVAL OF THE JT.CIT AS PER, THE REQUIREMENT OF LAW ON 28.03.2005. FAA FURTHER OBSERVED THAT THE TRIBUNAL HAD RESTRICT ED THE DISALLOWANCE ONLY TO RS.5,75,000/-. HE DIRECTED THE AO TO LEVY PENALTY FOR RS.5.75 LACS ON LY. 3 ITA NO.3792/MUM/2012 DIVESH N. SHAH 3. DURING THE COURSE OF HEARING,BEFORE US,IT WAS FOUND THAT ON 24.06.2013 BENCH HAD DIRECTED THE DEPARTMENTAL REPRESENTATIVE(DR)TO PRODUCE THE ORIGI NAL CASE RECORDS INCLUDING THE SANCTION LETTER OF THE JT.CIT THAT COULD PROVE THAT HE HAD APPROVED TH E IMPOSITION OF PENALTY ON 28.03.2005.ON A QUERY BY US,DR ACCEPTED THAT HE WAS NOT IN A POSITION TO PRODUCE THE LETTER. WE FIND THAT WHILE SENDING BACK THE MATERIAL TO THE FILE OF THE FAA,TRIBUNAL HAD,VIDE ITS ORDER DATED 17.08.2008,HELD THAT THE FINDINGS OF THE FAA MUST B E BASED ON THE FOUNDATION OF ORIGINAL RECORDS, PARTICULARLY IN THE CONTEXT,WHEN THE ASSESSEE HAD R AISED DEEP DOUBT ABOUT THE VERACITY OF CERTAIN RELEVANT AND MATERIAL FACTS.BUT,FAA CHOSE TO IGNORE THE DIRECTIONS AND DECIDED THE ISSUE ON THE BASIS OF D&C REGISTER.WE FIND THAT FAA HAS ADMITTED THAT HE COULD NOT LAY HIS HANDS ON THE LETTER OF THE JT. CIT.BUT,EVEN THEN HE HAS UPHELD THE PENALTY ORDER,P ASSED BY THE AO,IN PART. IN OUR OPINION ACTION OF THE FAA IS NOT JUSTIFIABLE .AO HAS NOT PROVED THAT HE HAD RECEIVED APPROVAL OF THE JT.CIT BEFORE PASSING THE ORDER ON 28 TH ,MARCH,2005.THEREFORE,WE AGREE WITH THE SUBMISSION OF THE ASSESSEE THAT PENALTY ORDER WAS PASSED BY THE AO WI THOUT OBTAINING PRIOR APPROVAL OF THE JT.CIT.WE ALSO DO NOT AGREE WITH THE OBSERVATION OF THE AO TH AT BECAUSE OF THE TYPOGRAPHICAL MISTAKE 28 TH , MARCH WAS TYPED AS 29 TH ,MARCH. HAD IT BEEN SO,AO COULD HAVE RECTIFIED THE MISTAKE U/S.154 OF THE ACT- BECAUSE IT CAN EASILY AND LEGALLY BE TERMED A MISTA KE APPARENT FROM RECORD. FAILURE ON PART OF THE DEPARTMENTAL AUTHORITIES,TO PROVE THE BASIC FACT OF EXISTENCE OF THE LETTER ISS UED BY THE JT.CIT ON 28.03. 2005,IS COMPELLING US TO REVER SE THE ORDER OF THE FAA.WHEN A CASE HAS TO BE DECIDED ON THE BASIS OF A SOME DOCUMENTARY EVIDENCE ,IT IS IMPERATIVE THAT PARTY MAKING A CLAIM OF EXISTENCE OF SUCH AN EVIDENCE SHOULD PRODUCE IT ON THE FIRST AVAILABLE OPPORTUNITY.IN THE CASE UNDER CONSIDERATION,AO HAS NOT HANDED OVER THE COPY OF TH E LETTER OF THE JT.CIT TO THE DR AND AS A RESULT,HE COULD NOT SUBMIT IT BEFORE US.THEREFORE, REVERSING THE ORDER OF THE FAA,WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. APPEAL FILED BY THE ASSESSEE STANDS ALL OWED. $1, 2 3 !4 + !, 56. ORDER PRONOUNCED IN THE OP EN COURT ON 7 TH ,OCTOBER,2013. '0 + -.% ' 7 89 4 89 4 89 4 89 4 7 77 7 , ,, , 2013 . + /. SD/- SD/- ( . .. . . .. . , ,, , / I.P.BANSAL ) ( !'# !'# !'# !'# / RAJENDRA) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI, :$ /DATE: 07.10.2013 SK '0 '0 '0 '0 + ++ + (,; (,; (,; (,; <';%, <';%, <';%, <';%, / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR D BENCH, ITAT, MUMBAI / ;?/ (,$ . , . . . 4 ITA NO.3792/MUM/2012 DIVESH N. SHAH 6. GUARD FILE/ / @ );, (, //TRUE COPY// '0$ / BY ORDER, A / 5 ! DY./ASST. REGISTRAR , /ITAT, MUMBAI