DCIT CC 23, MUMBAI V. RASILA S. MEHTA, MUMBAI

ITA 5496/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3543 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DR P DANIEL
• Keywords: Reopening of assessment; Opportunity of being heard
• Section: 143(3); 234B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO 5609 /MUM/2011 ASSESSMENT YEAR: 2006-07 SMT. RASILA S . MEHTA . 32, MADHULI, DR. A.B.ROAD, WORLI, MUMBAI- 400018. PAN:- ABNPM8219R VS. THE DCIT, CENTRAL CIRCLE - 23 , MUMBAI. (APPELLANT) (RESPONDENT) ITA NO 5496 /MUM/2011 ASSESSMENT YEAR: 2006-07 THE DCIT, CENTRAL CIRCLE - 23, MUMBAI. VS. SMT. RASILA S. MEHTA. 32, MADHULI, DR. A.B.ROAD, WORLI, MUMBAI- 400018. PAN:- ABNPM8219R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. DHARMESH SHAH RESPONDENT BY : SHRI. DR. P. DANIEL. DATE OF HEARING: 0 1 /03/2016 DATE OF PRONOUNCEMENT: 31/05/20 16 O R D E R PER RAM LAL NEGI, JM THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE SMT. RASILA S. MEHTA AND THE REVENUE IN FOR THE ASST. YEARS 2006-07. ASSESSEE HA S FILED ITA 5609/M/11 AGAINST THE ORDER DATED 27/05/2011 PASSED BY LD. CI T(APPEALS)-40, MUMBAI, AND REVENUE HAS FILED CROSS APPEAL ITA 5496/M/2011 AGAINST THE SAME ORDER. SINCE TWO APPEALS PERTAIN TO SAME ASSESSEE AND THE ISSUES INVOLVED ARE 2 ITA NO 5609 &5496/MUM/2011 ASSESSMENT YEAR: 2006-07 COMMON, BOTH THE APPEALS ARE CLUBBED AND HEARD TOGE THER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO.5609/M/2011 (A.Y- 2006-07) BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT/ASSE SSEE IS A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT,1992 AND ALL HER ASSETS INCLUDING BANK ACCOUNTS HAD BEEN ATTACHED AND VESTED IN THE HANDS OF THE CUSTODIAN APPOINTED UNDE R THE SAID ACT. SINCE THE ASSESSEE HAD NOT FILED RETURN OF INCOME EVEN AFTER THE DUE DATE, NOTICE DATED 29/12/2008, UNDER SECTION 148 OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) WAS SERVED UPON HER. IN RESPONSE THEREOF, THE ASSES SEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 97,90,901/-. AFTER HE ARING THE ASSESSEE, THE AO FRAMED ASSESSMENT ORDER UNDER SECTION 143(3) READ W ITH SECTION 147 OF THE ACT AND DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,96,17,100/-. 2. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY FILING FIRST APPEAL BEFORE THE CIT(A). THE LD. CIT(A) PARTLY ALLOWED THE APPEA L OF THE ASSESSEE, HOWEVER, CONFIRMED CERTAIN ADDITIONS INCLUDING ADDITION OF R S. 3,00,000/- ON ACCOUNT OF PERSONAL DRAWINGS AND RS.1,53,80,576/- ON ACCOUNT O F INTEREST EXPENSES, MADE BY THE AO. 3. STILL AGGRIEVED BY THE IMPUGNED ORDER, THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS FAILED TO APPRECIATE THAT THE REOPENING OF ASSESSMENT U/S 148 IS INVALID AND BAD IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLAN T. 3 ITA NO 5609 &5496/MUM/2011 ASSESSMENT YEAR: 2006-07 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING ADDITION ON ACCOUNT OF PERSONAL DRAWINGS AMOUNTING TO RS. 3,00,000/-. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING DISALLOWANCE ON ACCO UNT OF INTEREST EXPENSE AMOUNTING TO RS. 91,23,497/-. THE ASSESSEE HAS FURTHER RAISED THE FOLLOWING ADDIT IONAL GROUND VIDE APPLICATION DATED 17/02/2014 1. THE LD. ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF HONBLE SPECIAL COURT DT. 26/02/2008 IN MP NO. 1 & 2 OF 2007, THE ASSETS UNDER CONSIDERATION AND THE CONSEQ UENTIAL INCOME BELONGS TO SHRI. HARSHAD S. MEHTA AND HENCE THE INC OME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN T HE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE APPELL ANT. 4. BEFORE US, THE LD. ASSESSEES REPRESENTATIVE (AR ) SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO CONTEST GROUND NOS. 1,2 A ND ADDITIONAL GROUND. ACCORDINGLY, GROUND NO 1, 2 AND ADDITIONAL GROUND O F APPEAL OF THE PRESENT APPEAL ARE DISMISSED AS NOT PRESSED. 5. THE LD. AR FURTHER SUBMITTED THAT GROUND NO 3 AN D 4 ARE COVERED BY THE DECISION DATED 21.10.2015 RENDERED BY THE MUMBAI TR IBUNAL IN ASSESSEES OWN CASE SMT. RASILA MEHTA VS DCIT MUMBAI, ITA NO. 6198 /MUM/2011 AND OTHER GROUP CASES FOR THE ASSESSMENT YEAR 2003-04, AND TH E IDENTICAL ISSUES HAVE BEEN CONSIDERED IN THE SAID CASES. HENCE, THE ISSUE S INVOLVED IN THE PRESENT CASE ARE REQUIRED TO BE DECIDED ACCORDINGLY. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE CON CURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT THE IMPUGNED ORDER DOES NOT SUFFER WITH ANY LEGAL INFIRMITY TO INTERFERE WITH. 6. WE HAVE PERUSED THE MATERIAL PLACED BEFORE US IN THE LIGHT OF THE RESPECTIVE SUBMISSIONS OF THE PARTIES. GROUND NO 3 PERTAINS TO ADDITION ON 4 ITA NO 5609 &5496/MUM/2011 ASSESSMENT YEAR: 2006-07 ACCOUNT OF PERSONAL DRAWINGS. WE NOTICE THAT THE CO ORDINATE BENCH HAS DEALT WITH THE IDENTICAL ISSUE IN SMT. RASILA MEHTA VS DC IT MUMBAI (SUPRA) AND RESTRICTED THE ADDITION TO 50% OF THE ADDITION SUST AINED BY THE CIT(A), HOLDING AS UNDER:- WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE FACT S BROUGHT ON THE RECORD BEFORE US. WE FIND THAT IN THE GROUP CASES, THE ADDITION ON ACCOUNT OF LOW WITHDRAWALS MADE BY THE AO AMOUNTING TO RS. 60,60,000/-HAVE BEEN RESTRICTED BY THE LD. CIT(A) A T RS. 37,80,000/-WHICH ALSO INCLUDES THE PRESENT ADDITION OF RS. 3,00,000/-. CONSIDERING THE FACTUAL MATRIX OF THE E NTIRE FAMILY, IN OUR CONSIDERED OPINION, AN ADDITION OF RS. 1,50,000/-SH OULD MEET THE ENDS OF JUSTICE. WE, MODIFY THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO MAKE DISALLOWANCE OF RS. 1.50,000/-. THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 7. SINCE THE IDENTICAL ISSUE HAS BEEN DECIDED BY TH E COORDINATE BENCH, IN ASSESSEES OWN CASE, WE RESPECTFULLY FOLLOW THE SAM E AND RESTRICT THE ADDITION SUSTAINED BY THE LD.CIT(A) TO 50% AND DIRECT THE AO TO MAKE DISALLOWANCE OF RS.1,50,000/-. ACCORDINGLY, THIS GROUND OF APPEAL I S PARTLY ALLOWED. 8. GROUND NO 4 PERTAINS TO ADDITION ON ACCOUNT OF I NTEREST EXPENSE. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINA TE BENCH IN THE CASE OF M/S GROWMORE RESEARCH & ASSETS MGT. LTD., ITA NOS.5137& 5138 AND ITA NO. 2150/M/13 . THE RELEVANT PARAS OF THE ORDER READ AS UNDER:- WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHOR ITIES BELOW. WHILE DISPOSING THE GROUND RELATING TO DISALLOWANCE OF INTEREST, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE FINDINGS GIVEN IN THE CASE OF EMINENT HOLDINGS PVT.LTD. WE FIND THAT THE TRIBUNAL IN THE CASE OF EMINENT HOLDINGS IN ITA NO. 2139,2140 AND 2141/MUM/ 2013 HAVE FOLLOWED THE DECISION OF THE MUMBAI TRIBUNAL GIVEN IN COMMON GROUP CASES OF HITESH MEHTA AT PARA 2.3 OF THE ORDER AND RESTORED THE 5 ITA NO 5609 &5496/MUM/2011 ASSESSMENT YEAR: 2006-07 MATTER TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJU DICATION. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDINATE BENCH, WE RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATIO N AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. BEFORE CLOSING THIS ISSUE, THE LD.COUNSEL FOR THE A SSESSEE POINTED OUT THAT THE LD. CIT(A) HAS HELD THAT THE ISSUE OF INTEREST EXPENDITURE IS PENDING BEFORE THE HONBLE SPECIAL COURT. IT IS THE SAY OF THE LD. COUNSEL THAT THE PROCEEDINGS IN WHICH THE THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY CONCL UDED WHICH FACT HAS ALREADY BEEN RECORDED BY THE LD.CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE, DIRECT THE LD. CIT(A) TO CONS IDER THE FACTS WHILE DECIDING THE ISSUE AFRESH. LD. CIT(A) MAY ALSO DIR ECT FOR THE TAXING OF INCOME IN THE HANDS OF THE RECIPIENT (FAMILY MEM BERS) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING FOLLOWED B Y THEM AS PER THE PROVISIONS OF THE LAW. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE 9. THE AFORESAID FINDINGS WERE FOLLOWED BY THE COOR DINATE BENCH IN ASSESSEES OWN CASE SMT. RASILA MEHTA VS DCIT MUMBA I (SUPRA). RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCHES IN THE AFORESAID CASES, WE RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) FO R FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY, THIS GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PUR POSE. ITA NO 5496/M/2011 (A.Y. 2006-07) THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER ON TH E FOLLOWING EFFECTIVE GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT LEGAL SANC TITY OF LAW, THE INTEREST CHARGEABLE UNDER SECTION 234A, 234B AND 2 34C IS NOT ONLY CONSEQUENTIAL BUT IS MANDATORY IN NATURE. 6 ITA NO 5609 &5496/MUM/2011 ASSESSMENT YEAR: 2006-07 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE SPECIA L COURT ACT 1992 HAS NOT RULED OUT THE PROVISIONS OF SECTION 2 34A, 234B AND 234C BEING NOT APPLICABLE TO THE NOTIFIED PERS ONS OR THEY ARE EXEMPT FROM THE LIABILITIES OF PAYMENT OF INTER EST UNDER THESE SECTION OF THE INCOME TAX ACT, 1961. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN HOLDING THAT NO INTEREST COULD BE LEVIED IN THE PRE SENT CASE U/S 234A, 234B AND 234C OF THE ACT. THE LD. DR BROUGHT TO OUR NOTICE THAT THIS ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONA L HIGH COURT IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE TO WHICH TH E LD. AR FAIRLY CONCEDED. 3. WE NOTICE THAT THIS ISSUE HAS ALSO COME UP BEFOR E THE ITAT MUMBAI IN ONE OF THE GROUP CASES VIZ., M/S HARSH ES TATE PVT. LTD. IN ITA NO. 1035, 1033 AND 3464/M/2013 AND THE TRIBUNAL ALL OWED THE ISSUE IN FAVOUR OF THE REVENUE, HOWEVER, DIRECTED THE ASSESS ING OFFICER TO RECOMPUTED THE INTEREST LIABILITY AFTER REDUCING TH E AMOUNT OF TAX DEDUCTIBLE AT SOURCE AND DECIDE AS PER THE PROVISIO NS OF LAW. 4. RESPECTFULLY FOLLOWING THE FINDINGS OF THE COORD INATE BENCH, IN M/S HARSH ESTATE PVT. LTD.(SUPRA) AND FOLLOWED IN ASSES SEES OWN CASE THE DCIT VS. SMT. RASILA S. MEHTA, ITA NO. 5870/M/2011, WE ALLOW THE APPEAL OF THE REVENUE FOR STATISTICAL PURPOSE AND D IRECT THE AO TO RE- COMPUTE THE INTEREST LIABILITY AFTER REDUCING THE A MOUNT OF TAX DEDUCTIBLE AT SOURCE AND DECIDE AS PER THE PROVISIONS OF LAW. HENCE, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 7 ITA NO 5609 &5496/MUM/2011 ASSESSMENT YEAR: 2006-07 5. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E AS WELL AS BY THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:31/05/2016 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA