RATNAKANT RAJNIKANT BORKAR, NAVI MUMBAI V. ITO WD 26(1)-(1), MUMBAI

ITA 5652/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71987 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-12-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 05-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SURMISES
• Keywords: Unexplained expenditure; Onus to prove; Reassessment proceedings
• Section: 69C; 234B; 147; 148

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.5652/M/2011 (AY: 2000 - 2001) RATNAKANT RAJNIKANT BORKAR, C - 301, AKASH LEELA, SECTOR - 21, PLOT NO.163, NERUL, MUMBAI - 400706. / VS. ITO - WARD - 26(1)(1), K.G. MITTAL AYURVED HOSPITAL BUILDING, 6 TH FLOOR, R.NO.605, CHERNI ROAD, MUMBAI - 400 002. ./ PAN : AAAPB 5422 B ( / APPELLANT) .. ( / RESPONDENT ) / DATE OF HEARING : 12.12.2013 / DATE OF PRONOUNCEMENT : 18 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE ON 5.8.2011 IS AGAINST THE ORDER OF CIT (A) - 28, MUMBAI DATED 29.6.2011 FOR THE ASSESSMENT YEAR 2000 - 2001. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON FACTS AND IN THE LAW, THE CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO OF REOPENING OF THE ASSESSMENT U/S 147 AND RECORDING FOR ISSUING OF NOTICE U/S 148 IN ABSENCE OF CASE RECORDS FOR THE RELEVANT. 2. THE CIT (A) FAILED TO APPRECIATE THAT REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 ARE ON THE BASIS OF CONJECTURES AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL ON RECORDS. THE ASSESSMENT FRAMED PURSUANCE OF A NOTICE U/S 148 ISSUED AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITHOUT RECORDING PROPER REASONS AND SATISFACTION OF THE AO IS BAD IN LAW AND OUGHT TO BE QUASHED. 3. THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 4,40,000/ - MADE BY THE AO U/ S 69C IN RESPECT OF ALLEGED PAYMENT OF CAPITATION FEES. THE CIT (A) FAILED TO APPRECIATE THAT THE STATEMENT GIVEN BY A THIRD PARTY CANNOT BE RELIED UPON UNLESS CORROBORATIVE EVIDENCE IS AVAILABLE ON RECORDS. 4. THE CIT (A) FAILED TO APPRECIATE THAT IN ORD ER TO MAKE AN ADDITION U/S 69C, ONUS TO PROVE INCURRING OF THE ALLEGED UNACCOUNTED EXPENDITURE LIES UPON THE REVENUE. THE CIT (A) OUGHT TO HAVE HELD THAT THE AO HAS FAILED TO DISCHARGE THE ONUS LAID UPON HIM. / APPELLANT BY : SHRI LALCHAND CHOUDHARY / REVENUE BY : SHRI RITESH MISRA, DR 2 5. THE CIT (A) ERRED IN CONFIRMING ASSESSMENT O F NOTIONAL HOUSE PROPERTY INCOME OF RS. 45,000/ - . THE CIT (A) FAILED TO APPRECIATE THAT DOCUMENTARY EVIDENCE IS RESPECT OF THE TENANCY RIGHTS OF THE GOREGAON FLAT FOR WHICH NOTIONAL INCOME HAS BEEN ASSESSED WERE SUBMITTED AND WERE AVAILABLE ON RECORDS. H IS FINDINGS TO THIS EFFECT ARE PERVERSE. 6. THE CIT (A) ERRED IN NOT ADJUDICATING THE GROUND NO.9 IN RESPECT OF NON - ALLOWANCE OF PREPAID TAXES, REBATE U/S 88 AND EXCESS CHARGE OF INTEREST U/S 234B OF THE ACT. 3. AT THE OUTSET, SHRI LALCHAND CHOUDHA RY, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS AND MENTIONED THAT GROUND S NO.1 AND 2 RELATE TO THE VALIDITY OF THE REASSESSMENT PROCEEDINGS INITIATED UNDER SECTIONS 147 AND 148 OF THE ACT. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE ASSESSING OFFICER DID NOT COMPLY WITH THE REQUIREMENTS OF THE PROVISIONS OF SECTION 151 (2) O F THE ACT AND READ OUT THE PROVISIONS OF THE SAID SUB - SECTION (2) OF SECTION 151 WHICH READS AS U N DER: (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB - SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 AN ASSESSING OFFICER, WHO IS BELOW THE RANK O F [JOINT] COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT] COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 4. FROM THE ABOVE IT IS THE SUBMISSION OF THE ASSESSEE THAT THE JOINT COMMISSIONER SHOULD BE SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148 OF THE ACT. OTHERWISE, THE AO CANNOT ASSUME JURISDICTION UNDER THE SAID PROVISIONS. FURTHER, HE MENTIONED THAT RECORDING OF REASONS IS A STATUTORY REQUIREMENT AT THE TIME OF SEEKING SUCH APPROVAL OF THE JOINT COMMISSIONER. BRINGING OUR ATTENTION TO THE FACTS OF THE PRESENT CASE, LD COUNSEL MENTIONED THAT RECORDING OF THE RE ASONS WAS DONE IN THIS CASE ON 9.3.2007 AND NOT ON 7.3.2007, THE DATE IN WHICH AO SOUGHT APPROVAL OF THE JOINT COMMISSIONER U/S 151(2) OF THE ACT. BEFORE US, ASSESSEE FILED VARIOUS PAPERS PROCURED BY HIM UNDER THE PROVISIONS OF RTI DEPICTING THE FACT THAT THE ASSESSING OFFICER SOUGHT APPROVAL FOR ISSUE OF NOTICE U/S 148 ON 7.3.2007, COPY OF WHICH IS PLACED IN THE PAPER BOOK. THE CASE WAS ADJOURNED REPEATEDLY AT THE REQUEST OF THE LD DR FOR WANT OF DOCUMENTS FROM THE OFFICE OF JOINT COMMISSIONER RELATING T O FORWARDING OF REASONS RECORDED BY THE AO AT THE TIME OF SEEKING APPROVAL ON 7.3.2007. REVENUE COULD NOT FURNISH THE RELEVANT PAPERS IN COMPLIANCE TO THE PROVISIONS OF SECT ION 151(2) OF THE ACT. TODAY, ON 12.12.2013, LD DR FILED A LETTER DATED 11.12.201 3 MENTIONING THAT 3 AFTER MUCH EFFORTS THE SAID FILE COULD NOT BE TRACED. IN FACT, HE SUBMITTED THAT THE REASONS WERE RECORDED ON 9.3.2007 AND WHAT WERE REQUIRED TO BE SUBMITTED TO THE ADDL. CIT ARE ONLY THE DRAFT REASONS. ON EXAMINATION OF THE ABOVE PRO VISIONS OF SUB - SECTION (2) OF SECTION 151, WE FIND THAT THE STATEMENT GIVEN BY THE LD DR IS NOT S USTAINABLE. THE SAID SUB - SECTION IS VERY EXPRESSIVE IN MENTIONING THE REQUIREMENT OF EXISTENCE OF REASONS RECORDED BY THE AO. IT DOES NOT REFER TO DRAFT RE ASONS . UNFORTUNATELY, IT IS THE STATE OF AFFAIRS THAT THE RELEVANT FILES ARE NOT TRACE D OUT AND HE COULD NOT PRODUCE EVEN THE DRAFT REASONS DATED 7.3.2007, WHICH ARE RECORDED BY THE AO. THEREFORE, WE DISMISS THE ARGUMENTS OF THE LD DR IN THIS REGARD. 5 . FURTHER, WE HAVE CONSIDERED THE CITATIONS FILED BEFORE US WHICH ARE RELEVANT FOR THE PROPOSITION THAT THE RECORDING OF THE REASONS MUST BE DONE PRIOR TO THE ISSUE OF NOTICE U/S 148 OF THE ACT AND NOT LATER AFTER THE NOTICE IS ISSUED. CONSIDERING THE STA TED POSITION IN LAW, WE ARE OF THE OPINION THAT THE ISSUE RAISED IN GROUND NO.1 AND 2 OF THE ASSESSEE SHOULD BE ALLOWED IN HIS FAVOUR. HOWEVER, WE FIND IT RELEVANT TO MENTION THAT IN CASE THE ASSESSING OFFICER COMES OUT WITH THE EXISTENCE OF THE REASONS (AND NOT THE DRAFT REASONS) RECORDED AT THE TIME OF SEEKING APPROVAL OF THE ADDL. CIT, THIS ORDER CAN BE ACCORDINGLY MODIFIED. 6. CONSIDERING THE ABOVE DECISION ON GROUND NOS. 1 AND 2 ON TECHNICAL ISSUES, WE ARE OF THE OPINION THAT THE ADJUDICATION OF OTHER GROUNDS ON MERITS BECOME A MERE ACADEMIC EXERCISE. ACCORDINGLY, WE DISMISS THE GROUND NOS. 3 TO 6 RAISED BY THE ASSESSEE CONSIDERING THEIR ACADEMIC NATURE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRO NOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2013. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 18 .12.2013 . . ./ OKK , SR. PS 4 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI