KALAVATI SURANI, MUMBAI V. ACIT CC 15 & 16, MUMBAI

ITA 4530/MUM/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2706 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Corroborative evidences; Assessment record
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4530/MUM/2016 ASSESSMENT YEAR: 2010 - 11 MRS. KALAVATI SURANI B - 2005, CHANDANBALA CHS RR THAKKAR MARG, WALKESHWAR MUMBAI - 400006 VS. ACIT - CC 15 & 16, MUMBAI. PAN NO. AZNPS1185J APPELLANT RESPONDENT ASSESSEE BY : MR. VIJAY MEHTA, AR REVENUE BY : MR. R. MANJUNATHA SWAMY , CIT - DR DATE OF HEARING : 20 /0 7 /2018 DATE OF PRONOUNCEMENT : 12/10/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 51 , MUMBAI [IN SHORT CIT(A) ] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 153C OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND S OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 250 OF THE ACT . MRS. KALAVATI SURANI ITA NO. 4530/MUM/2016 2 2. THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS.5,35,71,250/ - MADE BY THE AO ON ACCOUNT OF ALLEGED FICTITIOUS TRANSACTION OF SALE OF SHARES OF M/S J.B. DIAMONDS LTD. 3. THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF LONG TERM CAPITAL LOSS OF RS.4,46,66,516/ - MADE BY THE AO ON ACCOUNT OF ALLEGED FICTITIOUS TRANSACTION OF SALE OF SHARES OF M/S J.B. DIAMONDS LTD. 3 . BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT A SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN THE CASE OF J.B. DIAMOND GROUP ON 29.10.2010. THE ASSESSEE WAS ONE OF THE PARTNERS OF THE ERSTWHILE FIRM M/S J.B. DIAMONDS AND SUBSEQUENTLY BECAME SHAREHOLDER OF THE COMPANY M/S J.B. DIAMONDS LTD. CONSEQUENT TO THE SEARCH, THE ASSESSING OFFICER (AO) ISSUED NOTICE U/S 153C R.W.S. 153A DATED 17.11.2011 TO THE ASSESSEE. IN RESPONSE TO IT, THE ASSESSEE FILED HER RET URN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 13.04.2012 DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSEE HAD FILED THE ORIGINAL RETURN OF INCOME U/S 139(1) ON 29.09.2010 DECLARING TOTAL INCOME AT RS. NIL AND CURRENT YEAR LOSS OF RS.2,72,77,830/ - . T HE AO COMPLETED ASSESSMENT U/S 143(3) R.W.S. 153C ON 11.11.2013 AT A TOTAL INCOME OF RS.7,19,67,190/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WITH THE FOLLOWING GROUNDS: 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING SHORT TERM CAPITAL LOSS OF RS.5,35,71,250/ - AND LONG TERM CAPITAL LOSS OF RS.4,46,66,516/ - ON SALE OF SHARES OF M/S, J.B. DIAMONDS LTD. MRS. KALAVATI SURANI ITA NO. 4530/MUM/2016 3 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING LONG TERM CAPITAL LOSS OF RS.4,46,66,516/ - ON SALE OF SHARES OF M/S J.B. DIAMONDS LTD. 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING THE SETOFF OF CAPITAL LOSS ON SALE OF SHARES CLAIMED AGAINST THE CAPITAL GAINS EARNED ON SALE OF PROPERTIES. 4. THE LEAR NED ASSESSING OFFICER HAS ERRED IN NOT ALLOWING SET OFF OF BUSINESS LOSS OF RS.10,19,975/ - AGAINST LONG TERM CAPITAL GAIN OF RS.7,19,64,628/ - . 5. THE LEARNED ASSESSING OFFICER HAS FAILED TO APPRECIATE THE FACTS OF THE CASE AND MADE ADDITIONS ON THE BASIS OF PRESUMPTIONS, SURMISES AND CONJECTURES. 6. THE LEARNED ASSESSING OFFICER HAS FAILED TO FOLLOW PRINCIPLE OF NATURAL JUSTICE AND MADE HIGH PITCH ASSESSMENT WITHOUT ANY BASE OR ANY SUPPORTING EVIDENCES. 7. THE LEARNED ASSESSING OFFICER HAS FAI LED TO CONSIDER THE DETAILED SUBMISSIONS GIVEN TO HER AND PASSED ORDER SUMMARILY WITHOUT CONSIDERING EACH AND EVERY CONTENTION OF THE ASSESSEE. 8. THE APPELLANT RESERVES HIS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 4.1 THE LD. CIT(A) ALLOWED THE 4 TH GROUND OF APPEAL AND DISMISSED THE 1 ST , 2 ND , 3 RD , 5 TH , 6 TH AND 7 TH GROUND OF APPEAL. 5. BEFORE THE TRIBUNAL, THE ASSESSEE HAS FILED AN APPLICATION REQUESTING FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUND OF APPEALS: 1. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S. 153C OF THE ACT IS VOID AB INITIO AND BAD IN LAW. MRS. KALAVATI SURANI ITA NO. 4530/MUM/2016 4 2. LET CIT(A) OUGHT TO HAVE HELD THAT ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S. 153C IS BAD IN LAW FOR WA NT OF PROPER SATISFACTION NOTES RECORDED BY THE ASSESSING OFFICERS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) R.W.S 153C OF THE ACT IS TIME BARRED AND IN VIOLATION OF PROVISIONS OF SECTION 153 OF THE ACT AND HENCE, BAD IN LAW. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE APPOINTMENT MADE BY THE ASSESSING OFFICER OF THE SPECIAL AUDI TOR IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 142(2A) OF THE ACT. 5.1 IN APPLICATION FOR ADMISSION OF THE ABOVE ADDITIONAL GROUNDS OF APPEALS, THE ASSESSEE HAS SUBMITTED THAT SINCE THE ASSESSMENT U/S 153C AND THE APPOINTMENT OF THE SPECIAL AUDITO R ITSELF IS BAD IN LAW, THE CONSEQUENTIAL ASSESSMENT ORDER PASSED BY THE AO SUFFERS FROM THE LEGAL INFIRMITY, BAD IN LAW AND VOID AB INITIO. IT IS FURTHER STATED THAT THE ASSESSEE HAD NOT RAISED THE ABOVE GROUND CHALLENGING THE VALIDITY OF THE ASSESSMENT O RDER PASSED BY THE AO U/S 143(3) R.W.S. 153C BEFORE THE LD. CIT(A) FOR WANT OF PROPER ADVICE. IT IS ALSO SUBMITTED THAT THE ABOVE ADDITIONAL GROUND OF APPEAL RAISES PURELY A QUESTION OF LAW AND NO NEW FACTS ARE REQUIRE D TO BE INVESTIGATED. FINALLY, STATING THAT LEGAL GROUNDS GOING TO THE ROOT OF THE VALIDITY OF THE ASSESSMENT CAN BE RAISED AT ANY STAGE OF APPEAL, THE ASSESSEE SUBMITS THAT THE ABOVE ADDITIONAL GROUND S OF APPEAL MAY BE ADMITTED AND ADJUDICATED. 5.2 BEFORE US, R EGARDING THE ISSUE OF VALIDITY OF NOTICE U/S 153C, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION IN PEPSI FOODS P. LTD. V. ACIT (2014) 367 ITR 112 (DELHI), PEPSICO INDIA HOLDINGS P. LTD. V. ACIT MRS. KALAVATI SURANI ITA NO. 4530/MUM/2016 5 (2015) 370 ITR 295 (DELHI), CIT V. M/S ARPIT LAND P. LTD . (ITA NO. 83 OF 2014) & CIT V. M/S AMBIT REALTY PVT. LTD . (ITA NO. 150 OF 2014) (BOMBAY), ARN INFRASTRUCTURE INDIA LTD. V. ACIT 394 ITR 569 (DELHI), CIT V. SINHGAD TECHNICAL EDUCATION SOCIETY 378 ITR 84 (BOMBAY) AND CIT V. SINHGAD TECHNICAL EDUCATION SOCIETY (CIVIL APPEAL NO. 11080 OF 2 017) (SC). ALSO IN SUPPORT OF HIS CONTENTIONS THAT THE ASSESSMENT MADE BY THE AO IS BARRED BY LIMITATION, THE LD. COUNSEL RELIED ON THE DECISION IN CIT V. BJN HOTELS LTD. (2016) 382 ITR 110 (KARN), ORDER OF THE TRIBUNAL IN SHANTI LAL GODAWAD V. ACIT 126 TTJ 135 AND M/S HALDIA PETROCHEMICALS LTD. V. CIT IN ITA NO. 1743/KOL/2013 FOR AY 2008 - 09 (ITAT , KOLKATA). IN SUPPORT OF HIS CONTENTIONS REGARDING VALIDITY OF SPECIAL AUDI T, THE LD. COUNSEL RELIED ON THE DECISION IN SAHARA INDIA (FIRM) V. CIT (2008) 300 ITR 403 (SC), RPS ASSOCIATES V. DIT (INV) (2015) 280 CTR (ALL) 582, ALIDHARA TEXPRO ENGG. P. LTD. V. DCIT (2011) 332 ITR 115 (GUJ), WEST BENGAL STATE COOP BANK LTD. V. JCIT (2004) 267 ITR 345 (CAL), ORDER OF THE TRIBUNAL IN ITO V. VILSONS PARTICLE BOARD INDUSTRIES LTD . (2017) 184 TTJ (PUNE) 84 AND M/S JYOTI TRADERS V. DCIT IN IT(SS) 62/MUM/2008 AND 111/MUM/2008 & OTHERS DATED 20.05.201 (ITAT - MUMBAI). 6. THE LD. DR, HOWEVER, FILED AN APPLICATION DATED 19.07.2018 STATING THAT CERTAIN DETAILS WERE CALLED FOR FROM THE AO AND THOSE DETAILS HAD NOT BEEN RECEIVED AND THEREFORE ADJOURNMENT BE GIVEN . MRS. KALAVATI SURANI ITA NO. 4530/MUM/2016 6 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE CASE WAS INITIALLY HEARD ON 05.03.2018. IT WAS PUT UP FOR CLARIFICATION ON 20.07.2018 IN VIEW OF THE RECENT DECISION OF THE HONBLE SUPREME COURT IN TAPAN KUMAR DUTTA V. CIT (2018) 302 CTR (SC) 102. WHEN THE CASE WAS INITIALLY FIXED FOR HEARING ON 05 .03.2018, THE LD. DR HAD ALSO FILED AN APPLICATION DATED 01.03.2018 STATING THAT CONSIDERING THE QUANTUM OF SUBSTANTIAL ADDITIONS INVOLVED IN THESE CASES, P APER B OOK AND ASSESSMENT RECORDS ARE REQUIRED FROM THE AO AND THEREFORE, ADJOURNMENT MAY BE GIVEN. THUS IT SEEMS INSTEAD OF PRESENTING HIS CASE, THE LD. DR WAS KEEN ON FILING APPLICATIONS SEEKING ADJOURNMENT . 7.1 THE FIRST ISSUE TO BE DECIDED IS WHETHER TO ADMIT THE ADDITIONAL GROUND S OF APPEAL FILED BY THE ASSESSEE. WE FIND THAT THE QUESTION OF LAW R AISED IN THE ABOVE ADDITIONAL GROUND S OF APPEAL GOES TO THE ROOT OF THE MATTER. IN NATIONAL THERMAL POWER CO. LTD. V. CIT (1998) 229 ITR 383, 387 (SC), IT HAS BEEN HELD THAT THE TRIBUNAL HAS JURISDICTION TO EXAMINE A QUESTION OF LAW WHICH ARISES FROM THE F ACTS AS FOUND BY THE AUTHORITIES BELOW AND HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE. THE RATIO LAID DOWN IN THE ABOVE DECISION IS APPLICABLE IN THE INSTANT CASE. THEREFORE, WE ADMIT THE ADDITIONAL GROUND S OF APPEAL FILED BY THE ASSESSEE. HOWEV ER, AS MENTIONED HEREINABOVE THE FIRST APPELLATE AUTHORITY HAD NO OPPORTUNITY TO ADJUDICATE THE ADDITIONAL GROUNDS OF APPEAL AS THESE WERE NOT FILED BEFORE HIM. IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIM TO MRS. KALAVATI SURANI ITA NO. 4530/MUM/2016 7 MAKE A DE NOVO ORDER AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. WE DIRECT THE ASSESSEE TO FILE THESE ADDITIONAL GROUNDS OF APPEAL ALONG WITH RELEVANT DOCUMENTS/EVIDENCE BEFORE THE LD. CIT(A). AS THE MATTER HAS BEEN RESTORED TO THE FILE OF THE LD. CIT(A), WE ARE NOT ADVERTING TO THE CASE LAWS RELIED ON BY THE LD. COUNSEL ON MERIT S OF THE CASE. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12/10/2018. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 12/10/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI