Saravjit Bhatia, Faridabad V. ITO, Ward-2(3), Faridabad

ITA 7155/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1406 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 29-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: RAKESH JAIN; JUDGMENT OF HONBLE BOMBAY
• Keywords: Depreciation; Deemed to accrue or arise in india; Unabsorbed depreciation; TDS; Set aside; Capital Gains
• Section: 32; 68; 143(3); 251

Judgement Text

ITA NO.7155/DEL/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-I, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA NO. 7155/DEL/2019 A.Y. : 2016-17 SARAVJIT BHATIA, A-362, DABUA COLONY, PALI ROAD, FARIDABAD (PAN: AKMPB4292K) VS. ITO, WARD 2(3), FARIDABAD (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 28.06.2019 PASSED BY THE LD. CIT(A), FARIDABAD IN RELATION TO ASSESSMENT YEAR 2016-17 ON THE FOLLOWING GROUNDS:- 1. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS AND LAW SINCE THE FINDINGS RECORDED QUA APPEAL DISMISSAL OF APPEAL IS IN VIOLATION TO THE PRINCIP LES ASSESSEE BY SH. RAKESH JAIN, ADV. DEPARTMENT BY SH. PRAKASH DUBEY, SR. DR. ITA NO.7155/DEL/2019 2 OF NATURAL AND SUBSTANTIAL JUSTICE FOR A DECISION I N ACCORDANCE WITH LAW. 2. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS AND LAW FOR MAKING ADDITION OF RS. 14,09,372/- BY DISALLOWING SET OFF OF CARRIED FORWARD LOSSES U/S. 7 2 AND UNABSORBED DEPRECIATION U/S. 32 ON THE BASIS OF ASSESSMENT ORDER U/S. 143(3) FOR THE AY 2015- 16. 3. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS AND LAW SINCE CIT(A) HAS NO POWER TO GO BEYOND THE MATTER ARISING OUT OF THE PROCEEDINGS BEFORE THE AO MORE PARTICULARLY WHEN THE SEPARATE PROVISIONS FOR EVENTUALITY ARE PROVIDED UNDER THE INCOME TAX ACT, 1961. 4. BECAUSE THE ACTION FOR ENHANCEMENT OF ADDITION OF RS. 43,91,000/- IS BEING CHALLENGED ON FACTS AND LAW BY MAKING ADDITION U/S. 68 BY TREATING DEEMED INCOME OF THE APPELLANT AS ASSESEE AS NOT EXPLAINED THE SOURCE OF INCOME OVERLOOKING THAT ASSESSEE HAS ALREADY SHOWN THE SAID AMOUNT AS CONSULTANCY PORTFOLIO INCOME. 5. BECAUSE ACTION IS BEING CHALLENGED ON FACTS AND LAW FOR DISALLOWING THE LOSS OF RS. 29,03,880/- FROM TRADING IN SHARES TO BE SET OFF AGAINST ADDITION OF RS. 43,91,000/- U/S. 68 OVERLOOKING THAT ASSESSEE HAS ALREADY SHOWN THE SAID AMOUNT AS CONSULTANCY PORTFOLIO INCOME. ITA NO.7155/DEL/2019 3 6. FOR ANY CONSEQUENTIAL RELIEF AND / OR LEGAL CLAIM ARISING OF THIS APPEAL AND FOR ANY ADDITION, DELETION, AMENDMENT AND MODIFICATION IN THE GROUNDS OF APPEAL BEFORE THE DISPOSAL OF SAME IN THE INTEREST OF SUBSTANTIAL JUSTICE TO THE ASSESSEE . 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESS EE STATED THAT HE IS NOT PRESSING THE GROUND NO. 1 AND 2 AND T HE SAME MAY BE DISMISSED AS NOT PRESSED. HENCE, WE DISMISS T HE SAME. 3. AS REGARDS TO OTHER GROUNDS, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE INVOLVED IN GROUND NO. 3 & 4 IS LEGAL AND IS COVERED BY THE VARIOUS DECISIONS OF THE ITAT AND THE HONBLE DELHI COURT. HE ENCLOSED THE COPIES OF THE SAME DECI SION BY WAY OF A SMALL PAPER BOOK CONTAINING PAGES 1-22 IN WHICH HE HAS ATTACHED THE ORDER OF THE DELHI BENCH, ITAT PASS ED IN THE CASE OF RAMESH KUMAR PABBI VS. ACIT DATED 01.08.2018 IN ITA NO. 5594/DEL/2014 (AY 2010-11) COPY OF WHICH IS AT PAGE NO. 1-7 OF THE PAPER BOOK AND THE JUDGMENT OF THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS. SARDARI LAL & CO. DATED 07.09.2001 WHICH IS AT PAGE NO. 8-13 AND ORDER OF THE ITAT, DELHI BENCH PASSED IN THE CASE OF KISHORE JERAM BHA I KHANIYA VS. ITO DATED 13.05.2014 WHICH IS AT PAGE NO. 14-22 OF THE PAPER BOOK FILED BY THE ASSESSEE. HE STATED THAT I NCOME OF THE ASSESSEE HAS BEEN ENHANCED BY THE LD. CIT(A) WHICH IS ILLEGAL AND INVALID AND BEYOND THE POWERS OF THE LD. CIT(A), BECAUSE THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF CONS ULTANCY INCOME OF RS. 43,91,000/-. HENCE, THE LD. CIT(A) CANNOT MAKE ITA NO.7155/DEL/2019 4 ENHANCEMENT ON THE ISSUE WHICH DOES NOT ARISE OUT OF THE ORDER OF THE ASSESSMENT. HE FURTHER SUBMITTED THAT ACCORDING TO SECTION 251(2) OF THE INCOME TAX ACT, 1961, THE CI T(A) CANNOT ENHANCE THE ASSESSMENT ON THE MATTER WHICH IS NOT ARISING OUT OF THE ASSESSMENT PROCEEDINGS AND THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF RAMESH KUMAR PABBI VS. AC IT (SUPRA); KISHORE JERAM BHAI KHANIYA VS. ITO (SUPRA) AND HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CI T VS. SARDARI LAL & CO.(SUPRA). HE REQUESTED THAT THE IMPUGNED ORDER IS NOT SUSTAINABLE IN THE EYES OF LAW AND MAY BE CANCE LLED BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PA SSED BY THE LD. CIT(A) AND STATED THAT IN VIEW OF SECTION 25 1(2) OF THE I.T. ACT, 1961, THE CIT(A) HAS POWER TO ENHANCE THE ASSESSMENT IN DISPUTE. THEREFORE, THE APPEAL FILED B Y THE ASSESSEE MAY BE DISMISSED. HE FURTHER STATED THAT T HE DECISIONS OF THE ITAT AND THE HONBLE DELHI HIGH CO URTS, AS DISCUSSED ABOVE, ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS PASSED BY THE REVENUE AUTHORITIES ESPECIALLY THE IM PUGNED ORDER DATED 28.06.2019 PASSED BY THE LD. CIT(A) ALON GWITH THE CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF RAMESH KUMAR PABBI VS. ACIT (SUPRA); KISHORE JE RAM BHAI KHANIYA VS. ITO (SUPRA) AND CIT VS. SARDARI LAL & CO. (SUPRA), COPIES OF WHICH, THE ASSESSEE HAS ATTACHED IN THE PAPER BOOK ITA NO.7155/DEL/2019 5 CONTAINING PAGE 1-22, AS AFORESAID. WE HAVE GONE TH ROUGH THE AFORESAID DECISION OF THE TRIBUNAL AS WELL AS HON BLE DELHI HIGH COURT AND WE ARE OF THE VIEW THAT LD. CIT(A) CANNOT ENHANCE THE ASSESSMENT ON THE MATTER WHICH IS NOT ARISING O UT OF ASSESSMENT PROCEEDINGS. AS IN THE CASE OF THE ASSESS EE, THE LD. CIT(A) HAS ENHANCED THE INCOME OF THE ASSESEE ON ACCOUNT OF CONSULTANCY AMOUNTING TO RS. 43,91,000/- WHICH H AS NOT BEEN ARISEN OUT OF THE ORDER OF ASSESSMENT IN DISP UTE. THEREFORE, THE IMPUGNED ORDER DATED 28.06.2019 PASSED BY THE LD. CIT(A) IS ILLEGAL AND INVALID AND BEYOND TH E POWERS OF THE LD. CIT(A) AND IS THUS LIABLE TO BE CANCELLED. ACCORDINGLY, WE CANCEL THE SAME. OUR AFORESAID VIEW IS FORTIFIED BY THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF RAMES H KUMAR PABBI VS. ACIT DATED 01.08.2018 PASSED IN ITA NO. 5594/DEL/2014 (AY 2010-11) WHEREIN, IT HAS BEEN HEL D AS UNDER:- 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENHANCEMENT OF INCOME BY LD. CIT (APPEALS) IS ILLEG AL AND INVALID AND BEYOND THE POWERS OF THE CIT (APPEALS). THE SSESSING OFFICER HAS NOT MADE ANY ADDITION ON ACCOU NT OF COMMISSION PAYMENT. THE LD. CIT (APPEALS) CANNOT MA KE ENHANCEMENT ON THE ISSUE WHICH DOES NOT ARISE OUT O F THE ORDER OF THE ASSESSMENT. ACCORDING TO SECTION 251 ( 2) THE LD. CIT (APPEALS) CANNOT ENHANCE THE ASSESSMENT ON THE ITA NO.7155/DEL/2019 6 MATTER WHICH IS NOT ARISING OUT OF THE ASSESSMENT PROCEEDINGS. HE HAS SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY JUDGMENT OF HONBLE BOMBA Y HIGH COURT IN CASE OF SHAPOOR JI PALLONJI MISTRY VS . CIT 34 ITR 342 AND JUDGMENT OF FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SARDARI LAL AND CO. RE PORTED IN 251 ITR 864. HE HAS ALSO SUBMITTED THAT SIMILAR ISSUE HAVE BEEN CONSIDERED AND DECIDED BY ITAT DELHI BENC H IN THE CASE BIKRAM SINGH VS. DCIT REPORTED IN 82 TAXMANN.COM 230 IN WHICH ABOVE JUDGMENTS HAVE BEEN CONSIDERED AND THE TRIBUNAL IN PARA 11 HELD AS UNDE R :- 11. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH THE COUNSELS, IT IS PERTINENT TO KNOW THAT ASSESSING OFFICER HAS NOT DEALT THE REPLY AND THE ENCLOSURES/ DOCUMENTS GIVEN ON THE DATE OF ASSESSMENT ORDER I.E. 19/11/2011, THE SAME WAS NOT TESTIFIED BEFORE THE CIT(A). THE CIT(A) SHOULD HAVE TAKEN COGNIZANCE OF ALL THOSE RECORDS AND THE LETTERS. THIS SHOWS THAT THE CIT (A) HAS TOTALLY IGNORED THIS LETTER ALONG WITH THE ITA NO.7155/DEL/2019 7 ENCLOSURES/ DOCUMENTS AND PASSED THE ORDER ACCORDINGLY WHICH IS NOT TENABLE UNDER THE LAW. THE APPROPRIATE OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE. THE A. O. HAS PROCEEDED TO COMPUTE INCOME OF THE ASSESSEE ON THE BASIS OF THE INCOME AS PER INTIMATION U/S 143 (1) OF THE ACT; WHEREAS THE A.O. WAS REQUIRED TO COMPUTE THE INCOME OF THE ASSESSEE ON THE BASIS OF INCOME RETURNED. THIS WAS A GROUND RAISED BEFORE THE CIT (A) AND IS A PART OF GROUND OF APPEALS IN THE PRESENT APPEAL. IT BEING WHOLLY LEGAL GROUND OF THE APPEAL DESERVES TO BE ADJUDICATED. THE ASSESSING OFFICER HAS ACTED BEYOND THE JURISDICTION BY COMPUTING INCOME OF THE ASSESSEE ON THE BASIS OF INCOME OF THE ASSESSEE AS PER SECTION 143 (3) WHERE AS THE INTIMATION WAS U/S 143 (1). THE CIT (A) ACTED BEYOND ITS POWER BY DIRECTING THE ASSESSING OFFICER TO TAX THE CAPITAL GAINS IN RESPECT OF SALE OF LAND AT GURGAON, THOUGH, THERE WAS NO ADDITION MADE BY THE ASSESSING ITA NO.7155/DEL/2019 8 OFFICER IN THE ASSESSMENT ORDER TO THAT RESPECT. CAPITAL GAIN IS AN INDEPENDENT AND DIFFERENT SOURCE OF INCOME AND WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE HIM NOR WAS THE ISSUE CONSIDERED BY THE ASSESSING OFFICER BY FRAMING AN ASSESSMENT ORDER. INSTEAD, THE ASSESSING OFFICER TERMED THE SAME AS COMMISSION ON THE SALE OF LAND. THE LD. AR HAS RELIED ON THE VARIOUS CASE LAWS MORE PRECIOUSLY THAT OF SHAPOORJI PALLONJI MISTRY V. CIT [1958] 34 ITR 342 (BOM) (CONFIRMED BY THE APEX COURT IN CIT V. SHAPOORJI PALLONJI MISTRY [1962] 44 ITR 891 (HON'BLE SUPREME COURT) WHEREIN THE HONBLE BOMBAY HIGH COURT WHILE DEALING WITH THE POWERS OF THE CIT(A) HELD THAT CIT (A) WAS NOT EMPOWER TO ENHANCE AN INCOME ON AN ISSUE WHICH WAS NOT THE SUBJECT MATTER OF THE ASSESSMENT. THE RATIO LAID DOWN IN THE JUDGMENT OF FULL BENCH OF DELHI HIGH COURT IN THE CASE OF SARDARI LAL & CO. (SUPRA) IS ALSO RELEVANT IN ASSESSEES CASE THAT THE CIT(A) ITA NO.7155/DEL/2019 9 CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT ARISE FROM THE ORDER OF THE ASSESSMENT AND WAS OUTSIDE THE SCOPE OF THE ORDER OF THE ASSESSMENT. THE ORDER OF THE CIT (A) DOES NOT SUSTAIN. 9. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE ASSESSEE FILED DETAILS OF COMMISSION PAID ON WH ICH TDS WAS ALSO DEDUCTED AND TDS CERTIFICATE HAVE BEEN ISSUED. THEREFORE, THE ADDITION IS UNJUSTIFIED. 10. ON THE OTHER HAND DR HEAVILY RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT ADDITION MADE BY ENHANCEMENT OF COMMISSIO N EXPENSES IS WHOLLY UNJUSTIFIED. IN THIS CASE THE AS SESSING OFFICER DID NOT MADE DISALLOWANCE OUT OF COMMISSION EXPENSES. THE LD. CIT (APPEALS) HAS TAKEN UP THE IS SUE OF COMMISSION EXPENSES SUO-MOTO IN THE APPELLATE ITA NO.7155/DEL/2019 10 PROCEEDINGS, THEREFORE, THE ISSUE OF COMMISSION DID NOT ARISES OUT OF THE ASSESSMENT PROCEEDINGS. IT IS WELL SETTLED LAW THAT LD. CIT (A) WAS NOT EMP OWERED TO ENHANCE AN INCOME WHICH IS NOT MATTER OF ASSESSMENT . THE ISSUE IS COVERED BY AFORESAID JUDGMENTS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE. IT IS, THEREFORE, CLEAR THAT LD. CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NO T ARISE FROM THE ORDER OF THE ASSESSMENT AND WAS OUTS IDE THE SCOPE OF THE ORDER OF THE ASSESSMENT. THUS, THE ORDER OF THE CIT(A) CANNOT BE SUSTAINED IN LAW. THIS ALON E IS SUFFICIENT TO DELETE THE ENTIRE ADDITION. FURTHER W E MAY NOTE THAT IN A. Y. 2011-12, ITAT DELHI BENCH IN THE CASE OF SAME ASSESSEE IN ITA NO.6890/14 HAS DELETED THE SIM ILAR ADDITION VIDE ORDER OF THE EVEN DATE. THERE IS NO B ASIS TO MAKE ADDITION. 12. CONSIDERING THE ABOVE DISCUSSIONS, WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DELETE THE ADDITION OF RS.43,94,545/-. THIS GROUND IS ALLOWED. ITA NO.7155/DEL/2019 11 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 5.1 SINCE WE HAVE DECIDED THE LEGAL ISSUE, AS AFORES AID IN ASSESSES FAVOUR, HENCE, THERE IS NO NEED TO ADJUDIC ATE UPON THE OTHER GROUNDS. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY AL LOWED. THE DECISION IS PRONOUNCED ON 16.12.2020. SD/- SD/- (ANIL CHATURVEDI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI ITA NO.7155/DEL/2019 12