Ashok D. Chordia, Pune V. Commissioner of Income-tax - II,

ITA 808/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1824 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Assessment record
• Section: 143(3); 263

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.808/PN/2014 ASSESSMENT YEAR : 2009-10 SHRI ASHOK DHANRAJ CHORDIA, 401/402, AMIT CRYSTAL, S.B. ROAD, ABOVE BANK OF BARODA, PUNE 411006 PAN NO.AAMPC9919J . / APPELLANT V/S CIT - I I , PUNE . / RESPONDENT / ASSESSEE BY : NONE / RESPONDENT BY : SHRI RAJEEV KUMAR / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX-II, PUNE DATED 20-03-2014 PA SSED U/S.263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRE D TO AS THE ACT). 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE REPE ATED NOTICES TO THE ASSESSEE. FIRST NOTICE OF HEARING OF THE APPEAL WAS ISSUED TO THE ASSESSEE ON 02-06-2015 FOR 16-09-2015. ON THE SAID DAT E, NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE, FRESH NOTICE W AS ISSUED FOR 15-12-2015 THROUGH RPAD. AGAIN NONE APPEARED ON BEHA LF OF THE / DATE OF HEARING :26.05.2016 / DATE OF PRONOUNCEMENT:26.05.2016 2 ITA NO.808/PN/2014 ASSESSEE ON THE DATE OF HEARING, I.E. 15-12-2015. AGAIN NO TICE OF HEARING OF THE APPEAL WAS ISSUED TO THE ASSESSEE ON 14- 03-2016 THROUGH RPAD ON THE ADDRESS MENTIONED IN FORM NO.36. T HE RPAD NOTICE WAS RECEIVED BACK WITH POSTAL REMARKS LEFT INDIA . ON 14-03- 2016 NEITHER THE ASSESSEE NOR ANY OF HIS REPRESENTATIVE APPEARED. ON DIRECTIONS OF THE BENCH, FRESH NOTICE WAS ISSUED TO THE A SSESSEE FOR 26- 05-2016. THE FOURTH NOTICE WAS SENT TO THE ASSESSEE AT THE ADDRESS MENTIONED IN FORM NO.36 THROUGH RPAD. AGAIN THE REGISTER ED LETTER COVER WAS RECEIVED BACK WITH THE POSTAL REMARKS LEFT I NDIA. TODAY, AGAIN NO ONE HAS PUT IN APPEARANCE ON BEHALF OF THE ASS ESSEE. THE ASSESSEE HAS NOT BOTHERED TO INFORM THE OFFICE REGISTRY R EGARDING THE CHANGE OF HIS ADDRESS, IF ANY. IT SEEMS THAT THE ASSESSE E IS NOT INTERESTED IN PURSUING THE APPEAL BEFORE THE TRIBUNAL. IN THE BACKDROP OF THESE FACTS, WE ARE DECIDING THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND WITH THE ASSISTANCE OF LD. DEPARTM ENTAL REPRESENTATIVE. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE REC ORDS ARE : THE ASSESSEE IS A MANAGING DIRECTOR OF CHORDIA HOLDINGS A ND CONSTRUCTION PVT. LTD. AND M/S. CLASSIC BUILDERS AND PROMOT ERS LTD. THE ASSESSEE IS RECEIVING SALARY FROM BOTH THE AFORESAID C OMPANIES. THE ASSESSEE IS ALSO RECEIVING REMUNERATION FROM M/S. ATUL BUILDERS, WHEREIN HE IS A PARTNER. APART FROM THE ABOVE, THE ASSE SSEE IS RUNNING A LODGE AT MAHABALESHWAR UNDER THE NAME AND STYLE OF MAHABALESHWAR LODGE. THE ASSESSEE IS HAVING INCOME FRO M CAPITAL GAINS, HOUSE PROPERTY, DIVIDEND AND INTEREST ON BONDS AND DEPOSITS WITH THE BANKS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2009-10 ON 25-09-2009 DECLARING TOTAL INCOME OF RS.1,15,45,3 70/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACC ORDINGLY, NOTICE 3 ITA NO.808/PN/2014 U/S.143(2) WAS ISSUED TO THE ASSESSEE ON 08-09-2010. I N SCRUTINY ASSESSMENT PROCEEDINGS THE AO ACCEPTED THE INCOME RET URNED BY THE ASSESSEE VIDE ASSESSMENT ORDER DATED 28-12-2011. THEREAFTER, THE CIT AFTER EXAMINING THE RECORDS INVOKED TH E PROVISIONS OF SECTION 263 OF THE ACT AND ISSUED NOTICE TO THE ASSESSEE ON 07-11-2013. THE RELEVANT EXTRACT OF THE NOTICE ISSUE D U/S.263 IS REPRODUCED HEREUNDER : '2. IN YOUR CASE, 'AN ASSESSMENT ORDER U/S. 143(3) OF TH E I. T. ACT DATED 28/12/2011 BY DCIT,CIRCLE 3, PUNE FOR THE A.Y. 2009 -10 BY ACCEPTING RETURNED INCOME OF RS. 1,15,45,370/-. 3. ON SUBSEQUENT REVIEW, IT IS NOTICED THAT THE ORDER U/S. 143(3) OF THE I. T. ACT DATED 28/12/2011 MADE BY THE ASSESSING OFFICE R APPEARS TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE FOLLOWING REASONS: 3(I) IN RESPECT OF ABOVE MENTIONED ASSESSMENT YEAR, IT IS NOTICED THAT YOU HAD ENTERED INTO AN MOU ON 311312000 WITH YOUR WIFE ASHA CHORDIA (ON BEHALF OF HER COMPANY M/S. CLASSIC PROMOTERS AND BU ILDERS) WHEREBY YOU SOLD YOUR PROPERTY AT BANER, PUNE FOR AN AMOUNT OF RS. 105 LAKHS. SUBSEQUENTLY, YOU EXECUTED ANOTHER MOU WITH YOUR WIF E (ON BEHALF OF HER COMPANY M/S. CLASSIC PROMOTERS AND BUILDERS) ON 13/8/200 8 WHEREIN THE AFOREMENTIONED DEAL WAY CANCELLED AND YOU WERE REQU IRED TO PAY A SUM OF RS. 41.25 LAKHS AS COMPENSATION. LATER ON ANOTHER AGREEMENT WAS EXECUTED FOR SALE OF T HE SAME PROPERTY TO THE TUNE OF RS. 120 LAKHS AND THE SAME WAS REGISTERED ON 28/7/2009. IT IS NOTICED FROM THE CASE FILE THAT WHILE CALCULATING TH E CAPITAL GAINS, YOU HAVE CLAIMED THE COMPENSATION AMOUNT OF RS. 41.25 LAKHS AS C OST OF IMPROVEMENT. THE ASSESSING OFFICER FAILED TO APPLY HIS M IND IN ANALYZING THE FACTS AND CIRCUMSTANCES OF THESE TRANSACTIONS AND ALL OWED THE CLAIM OF RS. 41.25 LAKHS AS COST OF IMPROVEMENT WITHOUT MAKING A NY VERIFICATION IN THIS REGARD. I 3 (II) IT IS ALSO OBSERVED THAT YOU HAVE SHOWN RS. 96,8 1,295/- AS INTEREST RECEIVED AND THE SAME AMOUNT IS SHOWN AS EXPENSE, THUS DE CLARING NIL INCOME FROM INTEREST. THE ASSESSING OFFICER FAILED TO EST ABLISH THE NEXUS BETWEEN INTEREST INCOME EARNED AND INTEREST EXPENSES CL AIMED. THE A0 HAS FAILED TO SCRUTINIZE THE GENUINENESS OF THE EXPENSES CLA IMED AND ALLOWED THE AMOUNT WITHOUT ANY APPLICATION OF MIND. 4. FOR THE REASONS STATED HEREIN ABOVE, THE ORDER PASSED U/S.143(3) DATED 28/12/2011 IN YOUR CASE FOR THE A.Y. 2009-10 A PPEARS TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, AND BY VIRTUE OF THE AUTHORITY VESTED I N THE UNDERSIGNED AS PER THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT 19 61, THE SAID ORDER IS PROPOSED TO BE REVISED UNDER THE SAID SECTION. 4 ITA NO.808/PN/2014 4. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE THE CIT ON 06-01-2014. AFTER CONSIDERING THE SAM E, THE CIT CONCLUDED THAT DURING ASSESSMENT PROCEEDINGS THE AO DID NOT APPLY HIS MIND ON THE ISSUE MENTIONED IN THE SHOW CAUSE NOTICE ISSUED U/S.263. NEITHER RELEVANT DETAILS WERE CALLED NOR THERE W AS ANY APPLICATION OF MIND WITH RESPECT TO THE DETAILS FILED BY THE A SSESSEE. THE AO MECHANICALLY ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE. THERE IS NO EVIDENCE AVAILABLE ON RECORD WHICH SHOWS THAT THE RETURN OF THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDERED BY THE AO. THE ASSESSMENT ORDER PASSED BY THE AO IS WITHO UT PROPER EXAMINATION OR ENQUIRY. THE AO HAS COMPLETELY OMITTED TO EXAMINE THE ISSUE IN QUESTION FROM CONSIDERATION. THUS, THE ASSESSMENT ORDER IS ERRONEOUS. 5. AGGRIEVED AGAINST THE ORDER OF CIT, THE ASSESSEE HAS FILED PRESENT APPEAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE LD.CIT-II, PUNE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ORDER OF THE LD. AO IS NEITHER ERRONEO US NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 2. THE LD.CIT-II, PUNE ERRED IN LAW IN NOT APPRECIA TING THAT TO HAVE JURISDICTION U/S.263, THE ORDER OF THE AO MUST BE BOT H ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THE APPELLANT CRAVES LEAVE TO ADD/MODIFY/ALTER/DE LETE ALL/ANY OF THE GROUNDS OF APPEAL. 6. SHRI RAJEEV KUMAR REPRESENTING THE DEPARTMENT SUBMIT TED THAT A PERUSAL OF THE ASSESSMENT ORDER WOULD SHOW THAT THE SA ME IS CRYPTIC. THE AO HAS FAILED TO CONDUCT ANY ENQUIRY WITH RESPECT TO THE ISSUE RAISED BY THE CIT IN REVISIONAL PROCEEDINGS. THE AO HAS N OT RECORDED ANY FINDING ON THE ISSUE. NEITHER THERE IS ANY DOCUMENT ON RECORD TO SHOW THAT THE AO HAD SOUGHT CLARIFICATION/INFORMATION FROM THE 5 ITA NO.808/PN/2014 ASSESSEE ON THIS ISSUE. THE LD. DEPARTMENTAL REPRESENT ATIVE VEHEMENTLY SUPPORTED THE FINDINGS OF THE CIT AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DEPART MENTAL REPRESENTATIVE AND HAVE PERUSED THE DOCUMENTS AVAILABLE ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE SAME IS A BRIEF ORDER WITHOUT DISCUSSION ON ANY ISSUE, MUCH LESS THE ISSUE RAISE D BY THE CIT IN REVISIONAL PROCEEDINGS U/S.263. IT SEEMS THAT THE AO A CCEPTED THE INCOME RETURNED BY THE ASSESSEE WITHOUT ADVERTING TO T HE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AVAILABLE ON RECORD. IN RE SPONSE TO THE NOTICE DATED 07-11-2013 ISSUED U/S.263, THE RELEVANT EXT RACT OF WHICH HAS BEEN REPRODUCED IN PARA 3 HEREIN ABOVE, THE ASSES SEE FILED WRITTEN SUBMISSIONS BEFORE THE CIT ON 06-01-2014. AFTER CONSIDER ING THE SAME THE CIT HELD AS UNDER : 5. I HAVE GONE THROUGH THE FACTS OF THE CASE, SUBMISSI ON OF THE ASSESSEE AND THE ASSESSMENT RECORDS. THE ASSESSEE HAD ENTERED INTO AN MOU ON 31/3/2000 WITH HIS WIFE ASHA CHORDIA (ON BEHALF OF TH E COMPANY M/S. CPBPL) WHEREBY THE ASSESSEE WAS TO SELL HIS PROPERTY SITUA TED AT BANER, PUNE FOR AN AMOUNT OF RS. 105 LAKHS. SUBSEQUENTLY, AN OTHER MOU WAS EXECUTED ON 13/8/2008 BETWEEN THE SAME PARTIES WHEREI N THE ABOVE- STATED DEAL WAS CANCELLED AND THE ASSESSEE AGREED TO PAY A SUM OF RS. 41.25 LAKHS AS COMPENSATION. BOTH THESE MOUS HAVE NOT BEEN NOT ARIZED. IT IS STATED BY THE ASSESSEE THAT HE HAD RECEIVED AN AMOUNT OF RS.91.5 LAKHS OVER A PERIOD OF TIME FROM M/S. CPBPL AND ON ACCOUNT OF N ON PERFORMANCE OF SOME TASKS, THE MOU COULD NOT BE ACTED UPON. HAD THE I NTEREST BEEN CALCULATED ON THE ABOVE AMOUNT AT THE SIMPLE INTEREST RATE OF 10% P.A., HE WOULD HAVE TO PAY RS. 64,62,500/-. HOWEVER, ONLY RS.4 1.25 LAKHS WAS PAID AND DEDUCTED AS COST OF IMPROVEMENT FROM THE FINAL SAL E MADE AT RS.120 LAKHS. 5.1 IT IS, HOWEVER, SEEN THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND WITH RESPECT TO THE COST OF IMPROVEMENT CLAIMED AT RS.41.25 LAKHS. THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY WITH RESP ECT TO THE FACT THAT BOTH THE PARTIES TO THE MOUS WERE CLOSELY RELATED. BOT H THE ASSESSEE AND HIS WIFE (PARTIES TO THE MOUS) WERE DIRECTORS IN M/S. C PBPL AND CHMPL. THE ASSESSING OFFICER ALSO IGNORED THAT THE BULK OF THE PAYMENTS HAD ALREADY BEEN MADE IN THE' YEAR 2000 ONLY AND THAT N O DETAILS, WHATSOEVER OF THE TASKS WHICH WERE NOT PERFORMED AND BECAUSE OF WHIC H THE MOU COULD NOT MATERIALISED, HAD BEEN GIVEN BY THE ASSESSEE. THE A SSESSING OFFICER ALSO FAILED TO SEE THAT THE CLOSE CONNECTION BETWEEN THE A SSESSEE AND HIS WIFE RESULTED INTO NO TAX BEING PAID ON THE AMOUNT OF RS. 41.25 LAKHS IN THE HANDS OF THE COMPANY M/S. CPBPL WHILE A DEDUCTION HAS BEEN MADE IN THE 6 ITA NO.808/PN/2014 CASE OF THE ASSESSEE AND NO TAX BEING PAID HERE ALSO. FU RTHER, THE ASSESSEE HAS GIVEN A PARTY-WISE STATEMENT SHOWING DETAILS OF INTE REST PAID ON UNSECURED LOANS TOTALLING TO RS.1,07,70,956/-. HOWEVER , NEITHER ANY WRITTEN SUBMISSION NOR ANY DETAILS HAVE BEEN FILED AS TO HOW THE INTEREST RECEIVED AND PAID CAME TO THE SAME AMOUNT OF RS.96,81,295/-. T HE ASSESSING OFFICER HAD TOTALLY IGNORED THIS ISSUE. 8. THE CIT IN HIS ORDER AFTER DISCUSSING VARIOUS DECISIONS IN SUPPORT OF HIS INVOKING REVISIONAL JURISDICTION U/S.263, FINALLY CONCLUDED AS UNDER : 14. IN VIEW OF THE FOREGOING, IT CAN BE SAID THAT AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE UNDER SECTION 263 IN THE FOLLOWING CASES: A) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF RE ASONING OR OF LAW OR OF FACT ON THE FACE OF IT. B) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON INCORREC T ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. IN THE SAME CA TEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTI CE OR WITHOUT APPLICATION OF MIND. C) THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTY PE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RE TURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE T HE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 15. PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFIC ER DOES NOT SHOW ANY APPLICATION OF MIND ON HIS PART. NEI THER RELEVANT DETAILS WERE CALLED AS REFERRED ABOVE NOR WAS THERE ANY APPLI CATION OF MIND WITH RESPECT TO THE DETAILS FILED. THIS IS A CASE WHERE THE ASSESSING OFFICER MECHANICALLY ACCEPTED WHAT THE ASSESSEE WANTED HIM TO A CCEPT WITHOUT ANY APPLICATION OF MIND OR ENQUIRY. NO EVIDENCE IS A VAILABLE ON RECORD WHICH SHOWS THAT THE RETURN OF THE ASSESSEE WAS OBJECTIVEL Y EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER. IT IS BECAUSE OF SUCH NON-ENQUIRY ON THE PART OF THE ASSESSING OFFICER THAT THE RETURN FILED BY THE ASSESSEE STOOD AUTOMATICALLY ACCEPTED WITHOUT ANY PROPER SCRUTINY. THE ASSESSMENT ORDER IS CLEARLY ERRONEOUS AS IT WAS PASSED WITHOUT PROPER EXAMINATION OR ENQUIRY OR VERIFICATION. THE ASSESSING OFFICER HAS COMPL ETELY OMITTED TO EXAMINE THE ISSUE IN QUESTION FROM CONSIDERATION AND MA DE THE ASSESSMENT IN AN ARBITRARY MANNER. IT IS THEREFORE, A FI T CASE FOR EXERCISE OF REVISIONAL JURISDICTION UNDER SECTION 263 AND DIRECTIN G THE ASSESSING OFFICER TO PASS A FRESH ORDER AFTER VERIFICATION OF TH E CLAIM OF THE ASSESSEE. 9. AFTER EXAMINING THE MATERIAL AVAILABLE BEFORE US AND THE ELABORATE ORDER OF CIT, WE ARE SATISFIED THAT THE CIT HAS RIGHTLY INVOKED HIS REVISIONAL JURISDICTION U/S.263. IT IS A CASE WHERE NO ENQUIRY HAS BEEN MADE BY THE AO AT ALL ON THE ISSUE STATED IN THE NOTICE ISSUED U/S.263. THE CIT IN A VERY REASONED AND DETAILED ORDE R HAS SET ASIDE THE ASSESSMENT ORDER AND REMITTED THE MATTER BACK TO AO TO PASS A 7 ITA NO.808/PN/2014 FRESH ORDER AFTER VERIFICATION OF THE CLAIM OF THE ASSESSEE. IT IS NOT AN ORDER WHERE THE CIT HAS DIRECTED THE AO TO MAKE ADDIT ION ON THIS ACCOUNT. THUS, NO PREJUDICE WOULD BE CAUSED TO THE ASS ESSEE IN THE PRESENT CASE. WE DO NOT FIND ANY REASON TO INTERFERE WIT H THE IMPUGNED ORDER, HENCE, THE SAME IS UPHELD AND THE APPEAL OF THE AS SESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEA RING ITSELF, I.E. ON THURSDAY, THE 26 TH DAY OF MAY, 2016. SD/- SD/- ( R.K.PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER IQ.KS PUNE ; # DATED : 26 TH MAY, 2016. LRH'K % &'( ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT - I I , PUNE 4. 5. ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE