PRAKASH K. SHAH, MUMBAI V. ACIT 17(1), MUMBAI

ITA 4595/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9939 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: N R AGGARWAL
• Keywords: Opportunity of being heard; Transactions in derivatives; Agreed addition; Revised return; TDS
• Section: 201; 246A

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 4595 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) MR. PRAKASH K. SHAH 8 - B, RAJABHADUR MANSION 11/43, TAMARIND LANE FORT, MUMBAI - 400 023. PAN : AACPS8291F V S . AC IT - 17(1) 1 ST FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI N.R. AGGARWAL DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 9 . 7 . 201 9 DATE OF PRONOUNCEMENT 1.10 . 201 9 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 2.7.2018 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS OF APPEAL READ AS UNDER : GROUND NO. 1 : THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION BY ACIT RS. 22,11,9207 - ON ACCOUNT OF CLIENT CODE MODIFICATION. GROUND NO. 2 : THE LEARNED CIT(APPEALS) ERRED IN PARA NO. 3.1 OF THE ORDER THAT NONE OF THE TWO GROUNDS RAISED ARE ABOUT AGREED ADDITION FOR ADDITION BY ACIT RS. 22,11,9207 - ON ACCOUNT OF CLIENT CODE MODIFICATION & FURTHER ERRED IN TREATING THE APPEAL AS INADMISSIBLE & OUTSIDE THE SCOPE OF SECTION 246A . 3. I N THIS CASE LEARNED CIT ( A ) HAS DISMISSED THE ASSESSEE'S APPEAL BOTH ON THE GROUND THAT THE SAME IS NOT MAINTAINABLE UNDER SECTION 246A OF THE ACT AND ALSO HE HAS UPHELD THE ORDER OF THE ASSESSING OFFICER ON MERITS . 4. T HE FACTS OF THE CASE AND THE ACTION OF THE AUTHORITIES BELOW CAN BE GAINFULLY REFERRED TO BY THE ORDER OF THE LEARNED CIT ( APPEALS ) WHICH READS AS UNDER : - MR. PRAKASH K. SHAH 2 THE GROUNDS OF APPEAL PREFERRED ARE A S UNDER: - 1. THE LEARNED ACIT ERRED IN MAKING ADDITION OF RS.22,11,920/ - ON ACCOUNT OF CLIENT CODE MODIFICATION. 2. THE LEARNED ACIT ERRED IN NOT GIVING FULL CREDIT OF TDS CLAIMED RS.5,92,102/ - . 2.1 ITNS 51 HAS BEEN SERVED ON 26.10.2017 WITHOUT RESPON SE FROM AO. HENCE, CERTIFICATIONS THEREIN ARE PRESUMED IN ORDER AND DESIRE FOR PRESENCE IN HEARING VIDE COL.7 IS DEEMED DECLINED. 3. THE RELEVANT FINDING OF THE AO IS AS FOLLOWS: '5. INFORMATION WAS RECEIVED FROM DIT(I&C I ), MUMBAI THAT FICTITIOUS PROFITS /LOSSES WERE CREATED BY SOME BROKERS BY MISUSING THE FACILITY OF CLIENT CODE MODIFICATION IN F&O SEGMENT ON NSE. FURTHER, SPOT VERIFICATION OF FEW CASES OF BROKERS BY DDIT(I&C) UNIT - L(L), MUMBAI, U/S 131(1A) OF I. T . ACT, 1961 THIS FACT WAS REVEALED AND THE Y HAVE CONFIRMED HAVING MISUSED THE FACILITY OF CLIENT CODE MODIFICATION IN ORDER TO CREATE FICTITIOUS LOSS/PROFITS. SINCE, ASSESSEE IS ONE OF THE BENEFICIARY OF SUCH BOGUS LOSS, HENCE THE CASE IS REOPENED. FURTHERMORE, DURING THE COURSE OF ASSESSMENT PROC EEDINGS ALSO, ON VERIFICATION OF DETAILS OF CLIENT CODE MODIFICATION TRANSACTIONS FROM NSE, IT IS FOUND THAT ASSESSEE HAS ENTERED INTO MANY TRANSACTIONS WHEREIN CLIENT CODES WERE MODIFIED. THE ASSESSEE MADE SUBMISSIONS ON 25/10/2016 AND 04/11/2016 REITERA TING THE GENUINENESS OF THE TRANSACTIONS AND ASKING FOR SPECIFIC DETAILS AVAILABLE WITH THE DEPARTMENT REGARDING CLIENT CODE MODIFICATION DONE BV HIM. THE SAME WAS PROVIDED TO THE ASSESSEE. THE ASSESSEE, IN RESPONSE FILED ON 25.11.2016 THAT THOUGH ALL THE TRANSACTIONS ENTERED BY HIM WERE GENUINE IN ORDER TO AVOID LITIGATION AND TO BUY PEACE OF MIND, HE IS OFFERING THE SAID AMOUNT TO TAX. THE ASSESSEE PRESENTS THE FOLLOWING CASE LAWS WHERE ASSESSEE HAD FILED REVISED RETURN AFTER SEARCH TO BUY PEACE OF MIND. CIT V/S SURESH CHANDRA MITTAL CIT V/S AMALENDU PAUL CIT V/S HARSH KUMAR THE ASSESSEE IN THE PRESENT CASE HAS REVISED HIS COMPUTATION B Y OFFERING THE AMOUNT RS.22.LL.920/ - TO TAX FOR A. Y. 2009 - 10. THUS, THE AMOUNT OF RS.22,11,920/ - IS ADDED TO INCOME FR OM BUSINESS AND PROFESSION OF THE ASSESSEE FOR A.Y. 2009 - 10. PENALTY PROCEEDINGS U/S. 271(1) (C) ARE SEPARATELY INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME.' 3.1 THE ISSUE IS ONE OF AGREED ADDITION. NONE OF THE TWO GROUNDS PREFERRED BY APPELLANT RE LATE TO THIS ASPECT. LD. AR HAS MADE THE FATAL MISTAKE OF ARGUING MR. PRAKASH K. SHAH 3 WHAT IS NOT EVEN A GROUND OF APPEAL. IN VIEW OF THIS LEGAL ERROR MADE THE APPEAL IS LIABLE FOR DISMISSAL AS NOT MAINTAINABLE. NONETHELESS, IN INTEREST OF SUBSTANTIVE JUSTICE THE ISSUE OF AGR EED ADDITION IS CONSIDERED AS A LEGAL ISSUE AND ADJUDICATED FIRST AS FOLLOWS. 5. T HEREAFTER LEARNED CIT ( APPEALS ) REFERRED TO SEVERAL CASE LAWS AND FINALLY CONCLUDED AS UNDER : - T HE ORDER OF AO IS UPHELD. THE APPEAL IS HELD AS INADMISSIBLE ON GROUNDS OF MAINTAINABILITY AND IS DISALLOWED FOR ADMISSION. HENCE THE ADJUDICATION IS NOT MADE U/S 250(6) WHICH IS FOR VALID APPEALS BUT RATHER U/S 246A( 1 ). THE REFERENCE BY ASSESSEE IS HELD OUTSIDE THE SCOPE OF S 246A.THE ADJUDICATION ON MERIT IS RENDERED INAPPLICA BLE AND HORS DE COMBAT. FOR STATISTICAL PURPOSES ONLY, THE APPEAL SHALL BE TREATED AS DISMISSED . 6. A GAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT . I HAVE HEARD BOTH THE C OUN SE L AND PERUSED THE RECORDS . I FIND THAT LEARNED CIT (A) IN THIS CASE H AS TOTALLY ERRED IN DISMISSING THE APPEAL BY HOLDING THAT THE SAME IS NOT MAINTAINABLE AND THEREAFTER ALSO DECIDING UPON THE MERITS OF THE CASE. THE ORDER OF THE LEARNED CIT ( APPEALS ) IS NOT SUSTAINABLE ON THIS ACCOUNT ITSELF. 7. FURTHERMORE I HOLD THAT T HE ASSESSEE HAS FILED REVISED RETURN BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER DESPITE NOTING THE REVISED RETURN AND ASSESSEE'S OFFER OF THE AMOUNT FOR TAXATION HAS HELD THAT THE AMOUNT OFFERED BY THE ASSESSEE FOR TAXATION WAS ADDED AS UNDISCLOSE D INCOME. IN THIS VIEW OF THE MATTER ASSESSEE WAS VERY MUCH ENTITLED TO RAISE THE APPEAL BEFORE THE LEARNED COMMISSION OF INCOME TAX APPEALS. MOREOVER AS SETTLED BY THE HONOURABLE SUPREME COURT IN THE CASE OF BHARAT HEAVY ELECTRICALS VS.MAHENDRA PRASAD JAK HMOLA AND OTHER (CIVIL APPEAL NO. 1837 AND OTHERS VIDE ORDER DT. 28.2.2019) THAT ON QUESTIONS OF L AW AND MIXED QUESTION S OF LAW AND FACT CONCESSION BY THE ASSESSEE'S COUNSEL WILL NOT ACT AS A E ST O P PE L FOR THE ASSESSEE TO CHALLENG E T HE SAME. IN THIS VIEW OF THE MATTER IN MY CONSIDERED OPINION ISSUE NEEDS TO BE REMITTED TO THE FI LE OF THE LEARNED CIT ( APPEALS ) . THE LEARNED CIT (A) IS DIRECTED TO CONSIDER THE ISSUE ON MERITS AND PASS A SPEAKING ORDER AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. MR. PRAKASH K. SHAH 4 8. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1.10 . 201 9 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMB AI ; DATED : 1 / 10 / 20 1 9 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// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI