Assistant Commissioner of Income-tax, V. Shri M N Navale, Pune

ITA 658/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6861 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H B NINAWE
• Assessee Lawyers: S N DOSHI
• Keywords: Reopening of assessment; Income from undisclosed sources; Maximum Marginal Rate; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , !'!!# , $% BEFORE SHRI R.K PANDA, AM AND SHRI VIKAS AWASTHY,JM / ITA NOS. 657 & 658/PUN/2015 $& ' !(' / ASSESSMENT YEARS : 2005-06 & 2006-07 ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE -2(2) PUNE. ....... APPELLANT & / V/S. SHRI M. N. NAVALE, SINHAGAD TECHNICAL EDUCATION SOCIETY, VADGAON CAMPUS, VADGAON (BK) OF SINHAGAD ROAD, PUNE-411041 PAN : AAIPN0909R / RESPONDENT REVENUE BY : SHRI H. B NINAWE ASSESSEE BY : SHRI S.N DOSHI & SHRI PIYUSH BAFNA / DATE OF HEARING : 15.03.2017 / DATE OF PRONOUNCEMENT : 15.03.2017 ) / ORDER PER VIKAS AWASTHY, JM THESE TWO APPEALS HAVE BEEN FILED BY THE DEPARTMENT AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-12, PUNE DAT ED 11.02.2015 COMMON FOR THE ASSESSMENT YEARS 2005-06 & 2006-07. 2 ITA NOS. 657 & 658/PUN/2015 AYS. 2005-06 & 2006-07 2. THE REVENUE HAS ASSAILED THE FINDINGS OF THE COMMISSIONE R OF INCOME TAX (APPEAL) BY RAISING FOLLOWING GROUNDS IN THE APPEA L FOR ASSESSMENT YEAR 2005-06. 1. THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THE REOPENING OF ASSESSMENT BAD IN LAW BY HOLDING THAT THE REASON OF REOPENING THE ASSESSMENT I.E NON- EXISTENCE OF M.N NAVLE ( BIGGER HUF) HAS BEEN HELD IN FAVOUR OF THE ASSESSEE BY THE HONBLE ITAT, PUNE BENCH. THE LD. CIT(A) FAI LED TO APPRECIATE THAT THE ASSESSING OFFICER REOPENED THE ASSESSMENT, AMONG OT HERS, ON THE GROUND THAT M.N NAVALE (BIGGER HUF) HAD NEVER FILED INCOME TAX, WEALTH TAX RETURNS BEFORE SEARCH AND ALL THE EVIDENCES GATHERED AND AV AILABLE ON RECORD SHOWS THAT UNACCOUNTED INCOME/ ASSETS OF SHRI M.N NAVALE ( INDL.) HAS BEEN OFFERED IN THE HANDS OF M.N NAVALE ( BIGGER HUF). 2. THE LD. CIT(A) HAS ERRED IN HOLDING THE REOPENIN G OF ASSESSMENT BAD IN LAW WHEN THERE WAS CLEAR CUT CASE OF ESCAPEMENT OF INCOME. 3. THE ORDER OF LD. CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE DEPARTMENT IN THE APPEAL FOR THE ASSESSMENT YEAR 2006-07. 3. SHRI S.N DOSHI & SHRI PIYUSH BAFNA APPEARING ON BEHALF O F THE ASSESSEE SUBMITTED AT THE OUTSET THAT BOTH THE APPEA LS FILED BY THE DEPARTMENT ARE LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TA X EFFECT. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER DURING COURSE OF R EASSESSMENT PROCEEDING HAD MADE ADDITION OF RS. 5,73,834/- IN ASSESSMEN T YEAR 2005- 06 AND RS. 30,78,579/- IN THE ASSESSMENT YEAR 2006-07 ON ACCOUNT OF RENTAL INCOME AND INTEREST INCOME. THE ASSESSEE FILED APPEA L BEFORE COMMISSIONER OF INCOME TAX (APPEAL) CHALLENGING REOPENING OF ASSESSMENT, AS WELL AS ASSAILING ADDITIONS, MADE DURING REASSESSMENT PR OCEEDINGS. THE COMMISSIONER OF INCOME TAX (APPEAL) ACCEPTED THE CONTENT IONS OF THE ASSESSEE AND HELD THE REOPENING AS INVALID. THE LD. AR POINT ED THAT RENTAL INCOME IS ALREADY INCLUDED IN THE HANDS OF ASSESSEE IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 DATED 3 ITA NOS. 657 & 658/PUN/2015 AYS. 2005-06 & 2006-07 31.12.2007 AND THEREFORE THERE IS NO ESCAPEMENT OF RENTA L INCOME. EVEN OTHERWISE, ADDITION MADE DURING REASSESSMENT PROCEEDING R ESULT IN LEVY OF TAX AT MAXIMUM MARGINAL RATE I.E 30.9%, RS.1,77,315/- IN ASSES SMENT YEAR 2005-06 AND RS. 9,51,287/- IN ASSESSMENT YEAR 2006-07. AS PER CBDT CIRCULAR NO. 21/2015 DATED 10.12.2015, THE MONETARY LIMIT FO R FILING OF APPEAL BY THE DEPARTMENT BEFORE THE TRIBUNAL IS RS. 10 LA KHS, THEREFORE, THE APPEALS FILED BY THE DEPARTMENT ARE NOT MAINTAINABLE. 4. SHRI H. B NINAWE REPRESENTING THE DEPARTMENT VEHEMEN TLY DEFENDED THE ASSESSMENT ORDERS AND PRAYED FOR REVERSING THE FIND INGS OF THE COMMISSIONER OF INCOME TAX (APPEAL). HOWEVER, THE LD. DR FAIRLY ADMITTED THAT TAX EFFECT IN BOTH THE APPEALS IS LESS THAN RS.10 LAKHS. 5. BOTH SIDES HEARD. A PERUSAL OF THE IMPUGNED ORDER COM MON FOR THE ASSESSMENT YEARS 2005-06 & 2006-07 SHOWS THAT FIRST APPELLATE AUTHORITY HAS ACCEPTED THE APPEAL OF THE ASSESSEE CHALLENGING VALIDIT Y OF REASSESSMENT PROCEEDING. THE COMMISSIONER OF INCOME TAX (APPEAL) HAS HELD THE REOPENING OF ASSESSMENT FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL AS INVALID. AS FAR AS ADDITIONS ARE CON CERNED, ADDITIONS MADE IN BOTH THE ASSESSMENT YEARS ARE ON ACCOUNT OF R ENTAL INCOME AND INTEREST INCOME. THE DETAILS OF THE ADDITIONS MADE AND CO MPUTATION OF TAX THEREON IS AS UNDER : PARTICULARS A.Y. 2005-06 A.Y. 2006-07 RENTAL INCOME 3,75,000/- 30,67,500/- INTEREST INCOME 1,98,834/- 11,079/- TOTAL 5,73,834/- 30,78,579/- TAX AT MAXIMUM MARGINAL RATE I.E 30.9% 1,77,315/- 9,51,237/- 4 ITA NOS. 657 & 658/PUN/2015 AYS. 2005-06 & 2006-07 6. UNDISPUTEDLY, THE TAX EFFECT IN PRESENT APPEALS IS LESS THAN RS. 10 LAKHS. THE CBDT CIRCULAR NO.21/2015 DATED 10.12.2015 HAS RAISED THE MONETARY LIMIT OF TAX EFFECT FOR FILING OF APPEALS BY THE DEPART MENT BEFORE THE TRIBUNAL TO RS. 10 LAKHS. THE CIRCULAR APPLIES TO THE APPEALS TO BE FILED BY THE DEPARTMENT IN FUTURE, AS WELL AS THE APPEALS PENDI NG BEFORE THE TRIBUNAL. THUS, IN VIEW OF THE CBDT CIRCULAR THE PRESENT APP EALS OF THE REVENUE ARE LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER HEARING OF THE APPEALS ON WEDNESDAY, THE 15TH DAY OF MARCH, 2017. SD/- SD/- ( /R.K PANDA) ( '!!# /VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 15 TH MARCH, 2017. SB )*+$,-'.'(, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (A)-12, PUNE. #$ %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 5. './01 / GUARD FILE. // TRUE COPY// *2 / BY ORDER, /ASSISTANT REGISTRAR * () , / ITAT, PUNE 5 ITA NOS. 657 & 658/PUN/2015 AYS. 2005-06 & 2006-07