DCIT CC -4(1), CENTTRAL RANGE-4, MUMBAI V. PRATIMA H. MEHTA, MUMBAI

ITA 6392/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7865 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 1991-1992
• Appeal Filed On: 31-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Search and seizure; Period of limitation; Additional evidence; Set aside
• Section: 148; 144; 139

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G. S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 6392/MUM/2017 (ASSESSMENT YEAR 1991-92 ) DCIT CC -4(1) ROOM NO. 1916, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. VS. SMT. PRATIMA H MEHTA 32, MADHULI, D.A.B. ROAD, WORLI, MUMBAI-400026. PAN: ABNPM8226G APPELLANT RESPONDE NT APPELLANT BY : DR. P. DANIEL (STANDING COUNSEL) RESPONDENT BY : SHRI DHARMESH SHAH (AR) DATE OF HEARING : 01.05.2019 DATE OF PRONOUNCEMEN T : 26.07.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER (APPEALS)-52, MUMBAI DATED 28 TH JULY 2017 FOR ASSESSMENT YEAR 1991-92. THE REVENUE HAS RAISED FOLLOWING GROU NDS OF APPEAL; (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LEARNED COMMISSIONER (APPEALS) ERRED WHILE DETERMINING THE INCOME OF ASSESSEE, IN ACCEPTING HIS BOOKS OF ACCOUNTS NOTWITHSTANDING THE FACT THAT DURING THE ASSESSMENT PROCEEDING IT WAS CONCLUSIVELY FOUND THA T ASSESSEE HAS NOT MAINTAINED HIS BOOKS OF ACCOUNTS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LEARNED COMMISSIONER (APPEALS) ERRED IN REDUCING THE ASSESS ED INCOME TO THE EXTENT OF RS. 1,07,97,934/- BEING INTEREST EXPENDIT URE WITHOUT ASSIGNING ANY REASON AS TO HOW BOOKS OF ACCOUNTS WERE RELIED UPON. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LEARNED COMMISSIONER (APPEALS) ERRED IN ALLOWING INTEREST E XPENDITURE IN ABSENCE OF COMPLETE DETAILS AND FURTHER SUCH CLAIM REMAINED PAYABLE FOR THE YEAR UNDER CONSIDERATION. ITA NO. 6392/MUM/2017- SMT. PRATIMA H MEHTA 2 (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER (APPEALS) WHILE DIRECTING THE ASSESSIN G OFFICER TO QUANTIFY THE ALLOWABLE INTEREST EXPENSES ARE ERRED IN COMPUT ING THE INCOME OF THE ASSESSEE PRIOR TO ALLOWABLE CLAIM OF INTEREST AT RS . 1,29,03,374/- AS INCOME CANNOT BE COMPUTED PARTLY. 2. BRIEF FACTS OF THE CASE AS GATHERED FROM THE RECORD OF LOWER AUTHORITIES ARE THAT ASSESSEE IS AN INDIVIDUAL AND RELATIVE (WIFE) OF LATE HARSHAD MEHTA, WHO WAS INVOLVED IN SECURITY SCAM IN 1992. THE ASSESSEE IS ONE OF THE NOTIFIED ASSESSEE UNDER THE PROVISION S OF SPECIAL COURT ACT. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE RE VENUE ON THE PREMISES OF ASSESSEE ON 27 TH SEPTEMBER 1990 AND AGAIN ON 28 TH OF FEBRUARY 1992. DURING THE SEARCH VOLUMINOUS DOCUMENT WERE SEIZED. NO VALID RETURNED WITHIN THE PRESCRIBED PERIOD OF LIMITATION PROVIDED UNDER SECTION 139 OF THE ACT WAS FILED BY THE ASSESSEE, THEREFORE THE NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 20 TH MAY 1992 DIRECTING THE ASSESSEE TO FURNISH RETURN OF INCOME. AFTER REPEATED NOTICE TO THE ASSE SSEE, NO RETURN WAS FILED, ACCORDINGLY ASSESSMENT WAS COMPLETED UNDER SECTION 144 READ WITH SECTION 143(3)/147 ON 24 TH OF MARCH 1994 ASSESSING TOTAL INCOME AT RS. 5,37,15,976/-. THE ASSESSING OFFICER ALSO USED AN A LTERNATIVE NETTING METHOD OF ESTIMATING INCOME ON THE BASIS OF REVENUE RECEIPT AS PER LEDGER SEIZED DURING THE SEARCH OPERATION AND APPORTIONMEN T OF INCOME DECLARED BY HER HUSBAND. THE ASSESSING OFFICER AS PER ALTERN ATE METHOD DETERMINED TOTAL INCOME AT RS. 2,57,24,717/- AS INCOME COMPUT ED AS PER NET ACCRETION TO THE ASSETS METHOD WAS MORE THAN OTHER ALTERNATE METHOD, ACCORDINGLY THE ITA NO. 6392/MUM/2017- SMT. PRATIMA H MEHTA 3 ASSESSING OFFICER ADOPTED THE FIGURE OF RS. 5,37,15 ,976/- FOR DETERMINING TOTAL INCOME OF THE ASSESSEE. ON APPEAL BEFORE COMM ISSIONER (APPEALS) NO RELIEF WAS GRANTED TO THE ASSESSEE EXCEPT ON ADDITI ON OF RS. 2,18,62,000/- MADE ON ACCOUNT OF APPORTIONMENT OF DECLARATION BY HER HUSBAND IN THE HAND OF ASSESSEE FOR AN AMOUNT OF RS. 7,37,878 /- ON ACCOUNT OF CERTAIN FACTUAL INACCURACIES. THE ASSESSEE ALSO FILED APPLI CATION FOR ADMITTING CERTAIN ADDITIONAL EVIDENCE IN THE FORM OF BOOKS OF ACCOUNT; HOWEVER THE LEARNED COMMISSIONER (APPEALS) REFUSED TO ADMIT SAI D ADDITIONAL EVIDENCE. ON FURTHER APPEAL BEFORE TRIBUNAL, THE CASE WAS REM ANDED BACK TO THE FILE OF COMMISSIONER (APPEALS) TO DECIDE THE ISSUE AFRESH WIDE ORDER DATED 15 TH SEPTEMBER 2005 IN ITA NO. 4599/MUM/2003. 3. IN THE SET-ASIDE PROCEEDING IS THE LD. COMMISSIONER (APPEALS) AGAIN CONFIRMED THE ACTION OF ASSESSING OFFICER IN COMPUT ING THE INCOME AS PER NET ACCRETION TO THE ASSETS METHOD. AGAIN, AGGRIEVE D BY THE ORDER OF COMMISSIONER (APPEALS), THE ASSESSEE FILED APPEAL B EFORE TRIBUNAL. THE TRIBUNAL HELD THAT REJECTION OF BOOKS OF THE ASSESS EE WAS INCORRECT AND THE COMPUTATION OF INCOME ON THE BASIS OF NET ASSERTION TO THE ASSETS METHOD IS NOT VALID. THE CASE WAS AGAIN SET ASIDE TO LD. COMM ISSIONER (APPEALS) WITH THE DIRECTION TO DETERMINE THE INCOME AS PER REGULA R BOOKS AND AS PER DIRECTION OF TRIBUNAL IN CASE OF HITESH MEHTA IN IT A NO. 8023/MUMBAI 2011 (FOR AY-991-92). IN THE PROCEEDING TAKEN BY LD . COMMISSIONER (APPEALS) ON THE DIRECTION OF TRIBUNAL, THE LD. COM MISSIONER (APPEALS) ITA NO. 6392/MUM/2017- SMT. PRATIMA H MEHTA 4 DIRECTED THE ASSESSING OFFICER TO EXAMINE THE BOOKS OF ASSESSEE AND DETERMINE ITS TOTAL INCOME AS PER BOOKS VIDE ORDER DATED 19 TH OF JUNE 2017 AND FURNISH HIS REMAND REPORT NOT LATER THAN 28 TH OF JUNE 2017. THE ASSESSING OFFICER NOT FURNISHED ANY REMAND REPORT; ACCORDINGLY THE LD. COMMISSIONER (APPEALS) EXAMINED THE BOOKS PRODUCED BY ASSESSEE ALONG WITH THE INCOME AND EXPENDITURE ACCOUNT. ON PERUSAL OF BOOKS OF ACCOUNT AND THE CLAIM OF ASSESSEE FOR INTEREST EXPENDITURE OF RS. 1,07,97,934/-, THE TOTAL INCOME OF ASSESSEE WAS WORKED OUT BY LD. COMM ISSIONER (APPEALS) TO RS. 1,29,03,374/-, WHICH CONSIST OF CAPITAL GAIN OF RS. 1,01,96,129/- AND INCOME FROM OTHER SOURCES OF RS. 27,07,242/- AND DIRECTED THE ASSESSING OFFICER TO QUANTIFY THE ALLOWABLE INTEREST EXPENSES AS PER THE DIRECTION OF TRIBUNAL AND TO ALLOW THE SET OFF AGAINST THE TOTAL INCOME PRIOR TO THE INTEREST EXPENDITURE. AGGRIEVED, BY THE ORDER OF LD . COMMISSIONER (APPEALS) THE ASSESSING OFFICER/REVENUE HAS FILED T HE PRESENT APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSION OF DR. P. DANIEL, LD. SPECIAL COUNSEL (LD. DR) FOR THE REVENUE AND THE LD. AUTHORISED REP RESENTATIVE (AR) FOR ASSESSEE. WE HAVE ALSO PERUSED THE RECORD WITH THE ACTIVE ASSISTANCE OF THE LD. REPRESENTATIVES OF THE PARTIES. THE LD. DR FOR THE REVENUE SUBMITS THAT ACCEPTED THE BOOKS OF ACCOUNTS DESPITE THE FACT THA T DURING THE ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS. THE LD. COMMISSIONER (APPEALS) WRONGLY RE DUCED THE ASSESSED ITA NO. 6392/MUM/2017- SMT. PRATIMA H MEHTA 5 INCOME TO THE EXTENT OF RS. 1,07,97,934/- BEING INT EREST EXPENDITURE WITHOUT ASSIGNING ANY REASON AS TO HOW BOOKS OF ACCOUNTS WE RE RELIED UPON. THE LD. COMMISSIONER (APPEALS) WRONGLY ALLOWED THE INTE REST EXPENDITURE IN ABSENCE OF COMPLETE DETAILS. THE LD. DR FOR THE REV ENUE SUBMITS THAT THE TRIBUNAL REMANDED THE CASE TO LD. COMMISSIONER (APP EALS) TO FOLLOW THE DECISION IN CASE OF HITESH METHA IN ITA NO. 8023/MU MBAI 2011 (FOR AY- 991-92). THE LD. DR FOR THE REVENUE FURTHER SUBMITS HONBLE BOMBAY HIGH COURT ON IDENTICAL GROUNDS AND FACTS IN CASE OF JYO TI MEHTA IN ITA NO. 1193/2014 HAS RESTORED THE ISSUE TO THE FILE OF ASS ESSING OFFICER. THEREFORE, THIS APPEAL MAY ALSO BE RESTORED TO THE FILE OF ASS ESSING OFFICER. 5. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE SUPPO RTED THE ORDER OF THE LD. COMMISSIONER (APPEALS). THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT THE LD. COMMISSIONER (APPEALS) GRANTED OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND TO FURNISH REMAND REPORT. THE ASSESSING OFFICER FAILED TO EXAMINE AND TO FURNISH THE REMAND REPORT THE LD. COMMISSIONER (APP EALS) EXAMINED THE BOOKS OF ASSESSEE AND AFTER FULL SATISFACTION GRANT ED RELIEF TO THE ASSESSEE. THE LD. AR FOR THE ASSESSEE SUBMITS THAT STAND OF R EVENUE IN CASE OF HITESH MEHTA BEFORE HONBLE HIGH COURT IN ITA NO. 1193 OF 2014 WAS DIFFERENT. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE QUESTI ON OF LAW BEFORE HONBLE HIGH COURT WAS DIFFERENT WHEREIN THE HONBLE COURT AFFIRMED THE ORDER OF TRIBUNAL FOR PRODUCTION OF ADDITIONAL EVIDENCE I.E. BOOKS OF ACCOUNT, ITA NO. 6392/MUM/2017- SMT. PRATIMA H MEHTA 6 HOWEVER, THE TEST OF GENUINENESS AND AUTHENTICITY O F ENTRIES IN THE BOOKS OF ACCOUNT WAS LEFT OPEN FOR ASSESSING OFFICER. HOWEVE R, IN THE PRESENT CASE, THE LD. COMMISSIONER (APPEALS) AFTER GRANTING OPPOR TUNITY TO THE ASSESSING OFFICER ACCEPTED THE GENUINENESS OF THE ENTRIES. 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE HAVE NO TED THAT THE LD. COMMISSIONER (APPEALS) IN THIRD ROUND OF RESTORATIO N/REMAND PROCEEDINGS VIDE HIS ORDER DATED 19.06.2017 DIRECTED THE ASSESS ING OFFICER TO EXAMINE THE BOOKS OF ACCOUNT OF THE ASSESSEE AND FURNISH HI S REMAND REPORT NOT LATER THAN 28.06.2017. THE LD. COMMISSIONER (APPEALS) PAS SED THE ORDER ON 28.07.2017 ON RECORDING THAT TILL THAT DATE NO REMA ND REPORT WAS FURNISHED BY ASSESSING OFFICER. THE LD. COMMISSIONER (APPEALS ) HIMSELF EXAMINED THE BOOKS OF ACCOUNT IN ACCORDANCE WITH THE DIRECTI ON OF TRIBUNAL AND CAME TO THE CONCLUSION THAT ASSESSEE INCURRED EXPENDITUR E OF RS. 1,07,97,934/- IN EARNING THE INTEREST INCOME OF RS. 1,29,03,374/-, W HICH CONSIST OF CAPITAL GAIN OF RS. 1,01,96,129/- AND INCOME FROM OTHER SOU RCES OF RS. 27,07,242/- AND DIRECTED THE ASSESSING OFFICER TO Q UANTIFY THE ALLOWABLE EXPENSES. WE HAVE NOTED THAT WHILE EXAMINING THE BO OKS OF ACCOUNT OF ASSESSEE. THE LD. CIT(A) HAS EXAMINED THE AUTHENTIC ITY OF BOOKS OF ACCOUNT, THEREBY COMPLIED THE DIRECTIONS OF HONBLE HIGH COURT AS DIRECTED IN HITESH MEHTAS CASE IN ITA NO. 1193/2014, EVEN I F, WE ARGUED WITH THE STAND OF LD. DR THAT FACTS OF THIS CASE ARE SIMILAR TO FACT OF HITESH MEHTA. ITA NO. 6392/MUM/2017- SMT. PRATIMA H MEHTA 7 THE LD. DR FOR THE REVENUE FAILED TO SPECIFY AS TO HOW THE CONCLUSION ARRIVED BY LD. COMMISSIONER (APPEALS) ARE ERRONEOUS OR PERVERSE. NO DOCUMENTARY EVIDENCE IN SUPPORT OF GROUNDS OF APPEA L IS FILED BY ASSESSING OFFICER. NO CONTRARY FACT IS BROUGHT ON RECORD TO D ISCARD THE FINDING OF LD. COMMISSIONER (APPEALS). THEREFORE, WE DO NOT FIND A NY JUSTIFICATION IN INTERFERING WITH THE FINDING OF LD. COMMISSIONER (A PPEALS), WHICH WE AFFIRM. HENCE, THE GROUNDS OF APPEAL RAISED BY REVE NUE ARE DISMISSED. 7. IN THE RESULT, THE GROUNDS OF APPEAL RAISED BY REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COU RT ON 26/07/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 26.07.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI