SHRI. PRANAY ARVIND SHAH, MUMBAI V. ITO WARD 19 (2)(5), MUMBAI

ITA 7689/MUM/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 1193 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 147; 131; 144; 154

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri B.R. Baskaran (AM) I.T.A. No. 7689/Mum/2019 (A.Y. 2010-11) Shri Pranay Arvind Shah 82/84, Radha Govind 2 nd Floor, Walkeshwar Road, Mumbai-400006. PAN : AAPPS3400F Vs. ITO, Ward- 19(2)(5) Matru Mandir Tardeo Road Mumbai-400 007. (Appellant) (Respondent) Assessee by CA Vimal Punmiya, Amicus Curie Department by Ms. Naina Krishnakumar Date of Hearing 19.07.2022 Date of Pronouncement 01.08.2022 O R D E R The assessee has filed this appeal challenging the order dated 30.9.2019 passed by learned CIT(A)-39, Mumbai and it relates to A.Y. 2010-11. 2. The assessee, inter alia, has raised a legal ground contending that the impugned order dated 30.9.2019 passed by learned CIT(A) by recalling her own order dated 24.6.2019 is without authority of law. 3. None appeared on behalf of the assessee and I noticed that the Registry has sent notice of hearing by registered post on several occasions to him. Hence, I proceed to dispose of the appeal ex-parte, without presence of the assessee. 4. Since the assessee has raised a legal issue stated above and since none appeared on behalf of the assessee, the bench requested Shri Vimal Punmiya, Chartered Accountant, who was present in the court, to assist the bench as Amicus Curie on the legal issue cited above. Shri Pranay Arvind Shah 2 5. The facts relating to the legal issue stated above are stated in brief. The Assessing Officer reopened the assessment of the year under consideration by issuing notice under 148 of Act on noticing that the assessee has deposited cash of Rs.10,49,300/- on 30.3.2010 into his bank account maintained with ICICI Bank Limited. Since the assessee did not respond to the notices issued by the Assessing Officer, the AO completed the assessment to the best of his judgement under section 144 read with section 147 of the Act assessing the above said amount of Rs. 10,49,300/- as income of the assessee under section 68 of the Act. 6. The assessee challenged the above said addition by filing appeal before learned CIT(A). The first appellate authority called for a remand report from the AO. Since the AO did not furnish any remand report, the Ld CIT(A), vide her order No.CIT(A)-30/19(2)(5)/10472/2017-18 dated 24.6.2019 allowed the appeal of the assessee. However, subsequent to the passing of order, the AO has furnished the details of enquiries made by him to Ld CIT(A). It appears that the ICICI Bank has furnished details of bank accounts held by the assessee and it was noticed that the bank account in which the above said deposits were made was in the joint name of the assessee and his wife. 7. Hence the Ld CIT(A) proposed to recall the order dated 24.6.2019 passed by her and in that regard, she issued a show cause notice to the assessee on 11.09.2019. The relevant observations made by Ld CIT(A) in this regard in the impugned order are extracted below:- “5.1 A show cause notice was issued to the appellant on 11.09.2019 as to why the order in CIT(A)-30/19(2)(5)/10472/2017-18 obtained by fraudulent representation should not be recalled. The appellant was directed to comply by 17.09.2019. There was no compliance. Another show cause notice was issued vide letter dated 19-09-2019 giving another opportunity to the appellant. The appellant was informed that this was a last and final opportunity, and that failing compliance, the order in Appeal number CIT(A)-30/19(2)(5)/10472/2017-18 would be recalled as it would be presumed that the appellant has nothing to say with respect to the fraudulent representation made by him. Shri Pranay Arvind Shah 3 5.2 The appellant appeared on 20-09-2019. A summon u/s 131 of the I T Act, 1961 dt 20-09-2019 was issued to him and a sworn statement was recorded u/s 13. The same is placed at Annexure 5. This was in the presence of the Ld AO, ITO 19(2)(5), Mumbai. The appellant sought time to explain the cash deposits and withdrawals of Rs.10,49,300/- I n ICICI Bank, Nana Chowk, Matrumandir, Tardeo, Mumbai 400007 in account no.005701519577 held in the name of appellant Mr Pranay Arvind Shah/Deepa P Shah. On 27.09.2019, the appellant appeared. He was heard in the presence of the AO, ITO 19(2)(5), Mumbai. The appellant stated that he had no knowledge of the deposits and withdrawals in ICICI Bank, Nana Chowk, Matrumandir, Tardeo, Mumbai in account no.005701519577.” 8. The Ld CIT(A) further noticed that the assessee did not disclose the above said bank account in his return of income. The Ld CIT(A) took the view that the assessee has obtained order from her by fraud. The Ld CIT(A) has discussed as under the effect of order obtained by fraud/fraudulent representation:- “6.3 The provision under section 44 of Evidence Act enables a party otherwise bound by a previous adjudication to show that it was not final or binding because it is vitiated by fraud. The provision therefore gives jurisdiction and authority to a court to consider and decide the question whether a prior adjudication is vitiated by fraud. Some salient decisions are as under:- 1. Pranjpe Vs. Kanade (ILR 6 (1882) Bombay 148) – any court may vacate any judgment or order, if it be proved that such judgment or order was obtained by manifest fraud. 2. Lakshmi Charan Shah Vs. Nur Ali – (ILR (1911) 38 Calcutta 936) – The Court in the case observed that the jurisdiction of the Court in trying a suit (questioning the earlier decision as being vitiated by fraud) was not limited to an investigation merely as to whether the plaintiff was prevented from placing his case properly at the prior trial by the fraud of the defendant. The court could and must rip up the whole matter for determining whether there had been fraud in the procurement of the decree. ........................ The Ld CIT(A) also referred to host of other decisions and came to the conclusion that it was abundantly evident that a judgment that has been obtained by playing fraud on the court is null and void. Shri Pranay Arvind Shah 4 9. Accordingly, the learned CIT(A) recalled the order dated 24.06.2019 passed by her and passed the impugned order. Then she proceeded to dispose of the appeal again. The final decision rendered by Ld CIT(A) in the impugned order is extracted below:- “7. DECISION The facts and law in this case, wherein the appellant has obtained relief against the appeal filed by him vide order of the CIT Appeals dt 24.06.2019 In CIT(A) 30/19(2)(5)/10472/2017-18 through fraudulent representation, have been considered are fully. It is unambiguously and unequivocally established that this order was obtained by the appellant by making a fraudulent representation and is therefore vitiated. Such an order cannot be held to be legal, valid or in consonance with law. It is non-existent and non est and cannot therefore be allowed to stand. Accordingly, the order dt 24.06.2019 in CIT(A) 0/19(2)(5)/10472/2017-18 is recalled and the relief granted to the appellant stands cancelled.” It can be noticed that learned CIT(A) has passed the impugned order on 30.9.2019 by recalling suo moto her earlier order dated 24.06.2019. In the impugned order, she has confirmed the addition made by the AO. In the earlier order, the Ld CIT(A) allowed the appeal of the assessee and in the impugned order, she has dismissed the appeal. 10. Hence, the assessee has raised the legal issue contending that the impugned order passed by Ld CIT(A) is without authority of law. The Amicus Curie Shri Vimal Punmiya, Chartered Accountant submitted that learned CIT(A) has become functus officio after passing the appellate order dated 24.6.2019. No authority is given under the Act to Ld CIT(A) to recall the order so passed by her. After passing of the appellate order, only possibility available to learned CIT(A) to interfere with the order so passed by her is to rectify any mistake apparent from record under the authority of sec. 154 of the Act. He further submitted that that the concept of “mistake apparent from record” is well established that the tax authorities are not entitled to review their earlier order under the garb of rectification of mistake apparent from record. The Learned AR further submitted that learned CIT(A) has no authority to recall the Shri Pranay Arvind Shah 5 order passed by her earlier. In any case, in the instant case, the Ld CIT(A) has allowed the appeal of the assessee, vide her order dated 24.6.2019. Subsequently, learned CIT(A) has passed the impugned order whereby she has confirmed the addition made by the Assessing Officer and thus dismissed the appeal of the assessee, meaning thereby, the learned CIT(A) has reviewed her own order which is not permissible under the law as she has become functus officio after passing of here first order dated 24.6.2019. The Ld A.R submitted that the learned CIT(A) has stated that the first order dated 24.6.2019 has been obtained through fraudulent representation. However, at the most, it can be considered as an allegation made by learned CIT(A) and, in any case, she is not the authority to decide herself the correctness or otherwise allegation so made by her, i.e., she cannot be judge in respect of allegation made herself. The Ld A.R further submitted that the assessee has reiterated his stand that he has no knowledge of deposits and withdrawals made in the bank account kept with ICICI Bank. Further, the Ld CIT(A) herself has mentioned that the assessee has not disclosed the above said bank account in his return of income. Even though, it was seen that the bank account stands in the joint name of assessee and his wife, it appears that the stand of the assessee was that he was not aware of the transactions made in the said bank account. Accordingly, the Ld A.R submitted that the view taken by Ld CIT(A) was only an allegation and on that basis, she could not have recalled the earlier order. In any case, the question as to whether the explanations of the assessee would constitute fraudulent representation or not has to be established through proper legal process and it is not for the Ld CIT(A) to come to such a conclusion. Accordingly, learned AR submitted that the Le CIT(A) has committed grave error of law in reviewing her own order by herself and recalling the same. Accordingly, he submitted that impugned order is nullity in the eyes of law and the same requires to be quashed. 11. The Learned DR on the contrary supported the order passed by learned CIT(A). Shri Pranay Arvind Shah 6 12. Having heard the rival contention, I find merit in the submissions made by Amicus Curie, Shri Vimal Punmiya. There should not be any dispute that the Learned CIT(A), after passing her first order on 24.6.2019, has become functus officio, meaning thereby, she cannot interfere with the order so passed by her. The remedy available with the Department is to challenge the said order by filing appeal before the Tribunal. If the Ld CIT(A) finds that there is mistake apparent from record, then the first appellate authority is entitled to rectify the same u/s 154 of the Act. From the facts narrated above, it can be seen that the case of the Ld CIT(A) would not fall under the category of mistake apparent from record. 13. There cannot be any dispute that an order obtained by playing fraud on a court is nullity in the eyes of law and the Court is entitled to recall the order. I noticed that the reasoning given by Ld CIT(A), in the instant case, in recalling her own order is that the same has been obtained by fraudulent representation. As submitted by Ld A.R, it is only an allegation made by Ld CIT(A) herself and the question as to whether the explanations given by the assessee was a case of fraudulent representation has not been proved through the process known to law. I notice that the Ld CIT(A) herself has made the allegation of fraud and she herself has also come to the conclusion that there was fraudulent representation made by the assessee. In my view, the Ld CIT(A) has pre-concluded the case of fraud without proving her allegation and proceeded to recall the order. In my view, the Ld CIT(A) could not have recalled her order without establishing the factum of fraud/fraudulent representation. 14. The facts narrated by Ld CIT(A) would show that the assessee has not disclosed the impugned bank account in his return of income. Non- disclosure of the impugned bank account, in my view, supports the case of the assessee. I notice that the assessee has disowned the impugned bank account before the AO as well as before Ld CIT(A). When the information Shri Pranay Arvind Shah 7 supplied by the ICICI Bank showed that the said bank account stands in the joint name of the assessee and his wife, the assessee has pleaded ignorance about the deposits and withdrawals made from the same bank account. Hence the reply so given by the assessee, in reality, would have called for further probe in the matter to ascertain the veracity of the explanations given by the assessee. On the contrary, the Ld CIT(A) has concluded that the assessee has committed fraud by making fraudulent representation. I notice that the assessee was not questioned from the angle of fraud or fraudulent representation at all. In my view, the action of Ld CIT(A) in recalling her own order on mere allegation of fraud is not permitted under the law. 15. In the instant case, it can be noticed that learned CIT(A) had allowed the appeal of the assessee, vide his order dated 24.6.2019. By the impugned order dated 30-09-2019, the learned CIT(A) has reversed her decision and confirmed the addition made by the Assessing Officer. Thus it is a clear case of review of her own order, which is also not permitted under the law. However, I wish to make it clear that, if the allegation of fraud/fraudulent representation by the assessee is proved in accordance with the law, then the impugned order passed by Ld CIT(A) would be valid in the eyes of law. Since it has not been established, I have no other option but to decide this legal issue on the basis of material available on record. 16. In view of the foregoing discussions, in the facts and circumstances discussed above, I am of the view that the impugned order dated 30-09-2019 passed by Ld CIT(A) has to be held as nullity in the eyes of law. Accordingly, I quash the impugned order dated 30-09-2019 passed by learned CIT(A). Since the impugned order dated 30-09-2019 is quashed, it is not necessary to deal with other grounds urged by the assessee. 17. Before parting I place on record my regards to the Amicus Curie for the able assistance given by him to the Bench. Shri Pranay Arvind Shah 8 18. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 01.08.2022. Sd/- (B.R. BASKARAN) ACCOUNTANT MEMBER Mumbai; Dated : 01/08/2022 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// (Assistant Registrar) PS ITAT, Mumbai