Devakrishna K. Prabhu, Pune V. Deputy Commissioner of Income-tax,

ITA 809/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1897 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUBHASH K R
• Keywords: Assessment record
• Section: 143(3); 154

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.809/PN/2014 ASSESSMENT YEAR : 2005-06 DEVAKRISHNA K. PRABHU, 57-58/A, SHREENATH PLAZA, FC ROAD, DYNESHWAR PADUKA CHOWK, PUNE 411 005. PAN : AAUPP2953P . APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 3, PUNE. . RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI (DR.) SUBHASH K.R., JCIT / DATE OF HEARING : 12.04.2016 / DATE OF PRONOUNCEMENT: 27.04.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE ABOVE CAPTIONED APPEAL ARISES OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 154 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) DATED 09.03.2012 WHEREIN ADDITION OF RS.54,84 ,367/- HAS BEEN MADE TO THE INCOME ASSESSED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31.10.2007 RELATING TO ASSESSMENT YEAR 2005-06. 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE. THE LD. DEPARTMENTAL REPRESE NTATIVE, SHRI (DR.) SUBHASH K. R. APPEARED ON BEHALF OF THE RESPONDENT/REVENUE. INITIALLY, THE HEARING WAS FIXED ON 21.10.2015. ON 21.10.2015, NONE APPEARED ON BEHALF OF THE ASSESSEE AND NO ANY ADJOURNMENT WAS SOUGHT BY THE LD. AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE. THE APPEAL WAS RE-FIXED FOR HEARING ON 20.01.2016. THEREAFTER, APPEAL WAS AGAIN RE-FIXED FOR HEARING ON 12.04.2016 . HOWEVER, ON 12.04.2016 2 ITA NO.809/PN/2014 NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJ OURNMENT WAS SOUGHT BY THE ASSESSEE. IT APPEARS THAT ASSESSEE IS NOT INTE RESTED IN PURSUING THE APPEAL. IN THE ABSENCE OF ANY APPEARANCE BY THE ASSESSEE IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE INSPITE OF SERVICE OF NOT ICE, WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING THE RESPONDENT/REVENUE ON MERITS IN TERMS OF RULE 24 OF THE INCOME TAX (AP PELLATE TRIBUNAL) RULES, 1963. 3. BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL EN GAGED IN THE BUSINESS OF MANUFACTURING OF MARINE PARTS, RESELLING AND EXPORT S, ETC.. THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT WHEREIN CERT AIN ADDITIONS/DISALLOWANCES WERE MADE TO THE RETURNED I NCOME AS PER THE ASSESSMENT ORDER. AFTER THE COMPLETION OF THE ASSE SSMENT UNDER SECTION 143(3) OF THE ACT, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS INCURRED CERTAIN LOSSES ON SALE OF UNITS OF MUTUAL FUNDS AND ALSO EARNED DIVIDEND INCOME ON MUTUAL FUNDS AND SHARES TO THE T UNE OF RS.65,15,906/- WHICH IS EXEMPT FROM TAXATION UNDER SECTION 10(34) OF THE ACT. FROM THE PERUSAL OF THE IMPUGNED ORDER UNDER SECTION 154, WE NOTICE THAT THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD NOT FILED DETAI LS OF DIVIDEND INCOME ON UNITS OF MUTUAL FUNDS AT THE TIME OF FILING OF THE RETURN BUT THE LOSS ON SALES OF UNITS OF MUTUAL FUNDS WAS CONSIDERED BY THE ASSESSI NG OFFICER WHICH ACTUALLY SHOULD HAVE BEEN IGNORED AND THE SAME SHOULD HAVE B EEN TAXED UNDER SHORT TERM CAPITAL GAIN. WE ALSO SIMULTANEOUSLY NOTICE THAT APART FROM ABOVE, HE HAS NOT REFERRED TO ANY PROVISION OF THE INCOME TAX ACT NOR MADE REFERENCE TO ANY OBJECTIVE DETAIL WHICH WAS AVAILABLE BEFORE HIM WHICH GIVES RISE TO SUCH ALLEGED APPARENT MISTAKE PERMITTING THE ASSESSING O FFICER TO INVOKING SECTION 154 OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 154 OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CI T(A). THE CIT(A) TABULATED THE DETAILS OF LOSSES ARISING ON SALE OF MUTUAL FUN DS AND INVOKED SECTION 94(7) OF THE ACT. IN CONSEQUENCE, HE CONFIRMED THE ADDIT IONS MADE BY INVOKING SECTION 94(7) OF THE ACT. 3 ITA NO.809/PN/2014 5. AGGRIEVED BY THE ORDER OF THE AUTHORITIES BELOW, THE ASSESSEE IS IN APPEAL BEFORE US. 6. NONE APPEARED FOR THE ASSESSEE. THE LD. DEPARTM ENTAL REPRESENTATIVE FOR THE REVENUE RELIED UPON THE ORDERS OF THE AUTHO RITIES BELOW AND ALSO THE TABULATED STATEMENT FOR THE PURPOSES OF INVOKING SE CTION 94(7) OF THE ACT. 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW AND SUBMISSIONS MADE ON BEHALF OF THE REVENUE. THE PER TINENT QUESTION BEFORE US IS WHETHER THE ACTION OF THE REVENUE IN INVOKING SE CTION 154 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS JUSTIFIED OR NOT. AT THE OUTSET, WE NOTICE FROM THE PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE ORDER UNDER SECTION 154 OF THE ACT THAT THERE IS A CONSPICUOUS ABSENCE OF R EFERENCE TO OBJECTIVE DETAILS, IF ANY, AVAILABLE WITH THE ASSESSING OFFICER IN RES PECT OF PROFITS/LOSS ARISING ON PURCHASE/SALE OF MUTUAL FUNDS UNIT, WHICH ALLOWED H IM TO ENTERTAIN THE BELIEF THAT THERE IS AN APPARENT MISTAKE CREPT IN THE ORIG INAL ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFF ICER HAS MERELY OBSERVED THAT THE ASSESSEE HAS EARNED CERTAIN DIVIDEND INCOM E AND ALSO INCURRED LOSSES ON THE UNITS OF THE MUTUAL FUNDS. EXCEPT FOR THESE VAGUE AND NON-DESCRIPT AVERMENTS, THERE IS NO SPECIFIC DETAILS REFERRED TO BY THE ASSESSING OFFICER. FOR INSTANCE, ADMITTEDLY, THE ASSESSING OFFICER IS NOT PRIVY TO THE SPECIFIC DETAILS OF DIVIDEND INCOME ARISING FROM MUTUAL FUNDS. IN THE ABSENCE OF SUCH PRIMARY DETAILS, IT IS NOT POSSIBLE TO DETERMINE THE APPLIC ABILITY OF SECTION 94(7) AT THE FIRST PLACE. WE FAIL TO UNDERSTAND AS TO HOW AND O N WHAT BASIS AND ON WHICH COGENT MATERIAL THE ASSESSING OFFICER WAS IN A POSI TION TO HOLD THAT APPARENT MISTAKE HAS CREPT IN THE ASSESSMENT ORDER. EXCEPT FOR THE FACT THAT DIVIDEND INCOME AND LOSS ON SALE OF UNITS OF MUTUAL FUNDS CO -EXIST THERE IS NO REFERENCE TO ANY OTHER PARTICULARS. THUS, THE ASSESSING OFFI CER PROCEEDED UNDER SECTION 154 MERE ON PRESUMPTIONS AND SURMISES. IT APPEARS THAT THE ASSESSING OFFICER SUBSEQUENT TO THE ASSESSMENT ORDER FORMED VAGUE BEL IEF THAT CERTAIN DISALLOWANCES ARE PLAUSIBLE UNDER SECTION 94(7) OF THE ACT. HOWEVER, NO ASCERTAINABLE AMOUNT WAS AVAILABLE ON RECORD AT THE TIME OF INVOKING SECTION 154 OF THE ACT. IN THE COURSE OF APPELLATE PROCEED INGS BEFORE THE CIT(A), THE 4 ITA NO.809/PN/2014 ASSESSEE HAS PROVIDED THE DETAILS WHICH SOMEWHAT CO NFIRMED THE SUSPICION OF THE ASSESSING OFFICER ABOUT THE APPLICABILITY OF SE CTION 94(7) OF THE ACT. THE CIT(A) ENDORSED THE ACTION OF THE ASSESSING OFFICER WITHOUT WEIGHING APPLICABILITY OF SECTION 154 ITSELF WHICH GOES TO T HE ROOT OF THE MATTER. NEEDLESS TO SAY, SECTION 154 CAN BE PRESSED INTO SE RVICE TO CORRECT THE ORDER WHICH SUFFERS FROM THE VICE OF MANIFEST ERROR WHICH IS APPARENTLY VISIBLE FROM THE RECORD. A PATENT, MANIFEST AND SELF-EVIDENT ER ROR IS ONE WHICH DOES NOT REQUIRE AN ELABORATE DISCUSSION OF EVIDENCE OR ARGU MENTS TO ESTABLISH IT. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE ORDER WHICH IS SUBJECT-MATTER OF RECTIFICATION IS CORRECT OR NOT. AN ERROR APPARENT ON RECORD MEANS AN ERROR WHICH STRIKES ON MERE LOOKING AND DOES NOT NEED A L ONG DRAWN PROCESS OF REASONING. SUCH ERROR SHOULD NOT REQUIRE ANY EXTER NAL MATERIAL TO SHOW ITS INCORRECTNESS. AS OBSERVED EARLIER, THERE IS NO RE FERENCE TO ANY MATERIAL AVAILABLE ON RECORD FROM WHICH AN APPARENT MISTAKE IN THE ASSESSMENT ORDER IS DISCERNIBLE. THEREFORE, WE HAVE NO HESITATION T O HOLD THAT THE ACTION OF THE ASSESSING OFFICER IN INVOKING SECTION 154 OF THE AC T IS WITHOUT JURISDICTION AND IS BAD IN LAW. 8. IN THE ABSENCE OF ANY APPARENT ERROR PER SE WHICH CAN BE CULLED OUT FROM ASSESSMENT RECORDS AT THE TIME OF INVOKING SECTION 154 OF THE ACT, WE FIND NO MERIT IN THE ACTION OF THE REVENUE AND THEREFORE TH E ORDER UNDER SECTION 154 APPEALED AGAINST IS LIABLE TO BE QUASHED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED EX PARTE . ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH APRIL, 2016. 5 ITA NO.809/PN/2014 % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE