M/s Handsel Goa Pvt. Ltd., Goa V. The Assistant Commissioner of Income Tax, Central Circle, Panaji

ITSSA 12/PAN/2019

AI Insights

The case involves M/s.Handsel Goa Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals), Panaji, concerning the assessment year 2010-11. The primary contention was the incorrect assessment of capital receipts as income under the provisions of section 153C r.w.s 143(3) of the Income Tax Act, 1961. The assessee argued that the revised return was filed under duress, changing the character of the receipts from capital to revenue, which was against the basic principles of the Income Tax Act. The CIT(A) had dismissed the appeal without adequately addressing these concerns, leading to the ITAT's decision to remand the case for a thorough re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134191 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 09-08-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 21-11-2019
• Other Referred Cases: CIT v. Lovely Exports (2009) 319 ITR (St), Paul Mathews and Sons v. CIT 263 ITR 101 (Ker), Greenview Restaurant v. ACIT 263 ITR 169 (Gauhati), CIT v. Khader Khan Son 2008 300 ITR 157 (Mad), CIT v. Khader Khan Son 2012 254 CTR 228 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMIR ANVEKAR
• Keywords: Source of fund; Capital receipt; Revised return
• Section: 132; 143(3); 250; 153C

Judgement Text

आयकर अपीलीय अिधकरण “पणजी Ɋायपीठ” पणजी मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH :: PANAJI [THROUGH VIRTUAL HEARING AT PUNE] BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND G.D.PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपीलसं. / IT(SS)A No.12/PAN/2019 िनधाᭅरण वषᭅ / Assessment Year : 2010-11 M/s.Handsel Goa Private Limited, F/AS,- Astral Garden, Next to Eden Wood, Taleigao Goa. Goa – 403002. PAN: AABCH3127K Vs . The ACIT, Central Circle, Panaji. Appellant / Assessee Respondent / Revenue Assessee by Shri Samir Anvekar – AR Revenue by Shri Badrinath Yamaji Chavan- DR Date of hearing 10/08/2023 Date of pronouncement 24/08/2023 आदेश/ ORDER Per S.S.Godara, JM: This assessee’s appeal for Assessment Year 2010-11 is directed against the learned Commissioner of Income Tax(Appeal) Panaji-1, Panaji Order No.CIT(A), PNJ-1/10209/2017-18 dated 03.09.2019, in proceedings under section 153C r.w.s 143(3) of the Income Tax Act, 1961 [in short “the Act”]. Heard both the parties at length. Case file perused. IT(SS)A No.12/PAN/2019 : A.Y.2010-11 M/s.Handsel Goa Private Limited [A] 2 2. The assessee pleads the following substantive grounds in the instant appeal. “1. The Order passed by Ld. Commissioner of Income Tax (Appeals) U/s 250 of Income Tax Act, 1961 is perverse on facts as well as on Law. 2. The Ld. Commissioner of Income Tax (Appeals) has erred in relying and affirming the order passed by Ld. AO U/s 153C r.w.s 143(3) of Income Tax Act, 1961 which is totally bad in law and opposite to facts of case. 3. The Ld. Commissioner of Income Tax (Appeals) has erred in confirming the wrong assessment made by Ld.AO on count that Assessee had offered under pressure, Capital Receipts as Income in Income Tax Return in response to Notice U/s 153C of Income Tax Act, 1961. 4. The Ld. Commissioner of Income Tax (Appeals) as well as Ld. AO has erred in relying on the Return of Income filed by Assessee in response to Notice U/s 153C of Income Tax Act, 1961, under due pressure and to buy a peace from Department the Appellant offered Capital Receipts as Revenue Receipts in Return of Income which is against basic principles of Income Tax Act, 1961. 5. The Ld. Commissioner of Income Tax (Appeals) as well as Ld. AO has failed to establish any evidences and/ or establish any cogent records and /or affirmations to assess the same as income on account of nonexplanation of source of source: thereby having no limbs in facts and as well in law to assess the same as income 6. The Ld. Commissioner of Income Tax (Appeals) as well as Ld. AO has erred in ignoring the fact that Appellant Company had discharged its onus by explaining the sources of funds as well as identity of Investors as legal position settled in Judicial Pronouncement of Hon’ble Supreme Court, in case of CIT v. Lovely Exports (2009) 319 ITR (St). 7. The Entire Assessment Proceedings for Relevant A.Y 2010- 11, U/s 153C are totally bad in law as well as bad in facts of case. The Ld. AO had proceeded to draw assessment order U/s 153C in relation to Transactions and /or records in connection with Mr. Praksah Kittur consequent to Sec 132 Proceedings in case of Mr., Prakash Kittur. The Present Assessment order and assessment for the A.Y 2010-11, has no trail of any transaction and /or any cogent IT(SS)A No.12/PAN/2019 : A.Y.2010-11 M/s.Handsel Goa Private Limited [A] 3 records with Mr. Prakash Kittur and as such invoking notices for assessment within purview of Sec 153C were itself bad in law and facts of case for the relevant 2010-11 A.Y. 8. The Ld. AO has not discharged satisfaction for proceeding under Sec 153C. Neither has he made or confirmed any such impugned transactions in course of the rigorous assessment proceedings u/s 153C which have extensive and conclusive powers and rights to the Ld A.0 to reach a logical end in consensus with the report of the Investigation Wing. Further the Ld. AO has not even carried any proceedings or secured any confirmations in regards to impugned share capital issued to determine the income arising from impugned share capital transaction as income on the monies invested by the payees of the same 9. The Ld. AO has failed to take cognizance of fact that the Appellant company has made available all the possible records/ documents to establish the identity of investors and veracity of transactions by providing the PAN details of Investors and as well as Board Resolutions passed and adopted by Investors for Investment in Share Capital of Appellant company and also the Memorandum of Association and Articles of Association of Investor companies. In Addition to this the Appellant Company had produced its Bank Statements to confirm the receipts of share capital from investors. It is reiterated that revision of return has direct nexus of coercion and/ or pressure built on appellant in terms of proceedings U/s 153C which are totally bad in law as far as the impugned share capital transactions concerned. It is well established by original return and revised return and the statement of appellant taken by the Hon Dept, in connection with revision of return and the statement of appellant recorded in this respect that the revised return was filed in response to 153C proceedings and pressure built on changing the character of receipts of share capital which was originally returned in the Original Return of Income as Capital Receipt as Share capital and later in the Revised Return of Income it was changed from Capital Transaction to Revenue Transaction; as there was no other income changed or revised in the Revised Return of Income and as such it was beyond the control of assesse to the satisfaction of Department, to prove source of source of share capital. 10. In as much the Ld. AO as well as Hon’ble CIT (A] have not been able to distinguish same receipts as revenue in character nor lead to any satisfaction on the revenue nature of the share capital which is assessed as income. Here a question arises before the Hon Bench of ITAT that the common ground of the CIT Appellate more IT(SS)A No.12/PAN/2019 : A.Y.2010-11 M/s.Handsel Goa Private Limited [A] 4 specifically in Para’s of 6 11, 12, and 16 of the Hon CIT Appellate's order and/ or of the Ld A.0 that the assessing officer only assessed only what was returned as income is itself bad in law and facts of the case as referred above. The Ld.AO in spite of possession of aforesaid documents, the Ld.AO has insisted for explanation for source of source of funds, which was beyond the control of appellant company. Further the Analysis Para’s of 6 11, 12, and 16 of order of Hon’ble CIT (A), revolve around the same impugned nature or receipts. The Prayer to Judicial authority is to give justice on the character of receipts which has not afforded to appellant company by Department. 10. The Ld. Commissioner of Income Tax (Appeals] as well as Ld. AO has erred in relying on the statement recorded during survey which is against the various Judgments of Hon'ble High Courts and Hon’ble Supreme Court and ratios followed in following cases: i. Paul Mathews and Sons v. CIT 263 ITR lOl(Ker) ii. Greenview Restaurant v. ACIT 263 ITR 169 (Gauhati) iii. CIT v. Khader Khan Son 2008 300 ITR 157 (Mad] iv. CIT v. Khader Khan Son 2012 254 CTR 228 (SC) 11. The Appellant prays to add, alter o amend any of the foregoing grounds of appeal at the time of hearing 12. The Appellant prays to adduce any such evidences and or records as may be required to substantiate its any grounds of appeal.” 3. It emerges during the course of hearing that the CIT(A)’s detailed lower appellate discussion has simply brushed aside the assessee’s corresponding arguments on facts and in law as under: “18. Ground no. 1: It is general, and need not be specifically adjudicated. 19. Ground no. 2: It is directed against assessment order passed by the AO, relying on the statement given under compulsion and pressure. However, this ground totally fails because the AO is not relying on IT(SS)A No.12/PAN/2019 : A.Y.2010-11 M/s.Handsel Goa Private Limited [A] 5 the statement recorded but mainly on the revised return. The appellant has himself revised the return. Therefore, having revised the return himself where is the question of finding fault with the action of the AO. The AO has merely accepted the return. Appeal on this ground, is therefore, dismissed. 20. Ground no. 3: Appeal is filed under this ground again for relying on statement recorded during survey, which is stated to be against the judgment of Hon. High Court and Supreme Court. However, this ground also fails because, as discussed in ground no:- 2, the AO has merely relied on revised return filed and not on the statements recorded. AO has merely accepted the revised return filed. Thus, this ground does not survive, and therefore, is dismissed. 21 Ground no. 4: Once again like in ground nos. 2 and 3, the appellant has challenged the action of the AO in taxing the amount of Rs. 12.70 crores as undisclosed income, even though name, address, PAN and identity etc. were available. However, this ground is also dismissed because the appellant has himself revised the return, which has been the basis for the AO in passing the order merely by accepting what has claimed in the return of income. 22. Ground no. 5: This ground also does not survive because it is claimed that addition has been made without bringing any material to indicate that the funds emanated from undisclosed income of the assessee. However, the Assessing Officer has not made any addition at all. The AO has merely accepted the return. He has not made any addition. Thus, this ground also does not survive. Thus, the appeal on this ground is also rejected. 23. Ground nos. 6 and 7 are general, and need not be adjudicated. 24. In the result, the appeal is dismissed.” 4. Suffice to say, it has come on record that the CIT(A) has merely quoted the assessee’s alleged “revised” return thereby holding that it could not have challenged the Assessing Officer’s action assessing its income at Rs.12,73,20,517/- than dealing with the IT(SS)A No.12/PAN/2019 : A.Y.2010-11 M/s.Handsel Goa Private Limited [A] 6 relevant factual matrix followed by framing of points of determination and detailed discussion thereupon, as prescribed under section 250(6) of the Act. Learned counsel vehemently submitted that once the Assessing Officer had assessed the assessee’s share application/premium in question reading an amount of Rs.12,70,00,000/-, it was incumbent upon both the lower authorities to decide the issue as per law in view of the all relevant facts involved therein. 4.1 The Revenue could hardly dispute that the CIT(A)’s findings nowhere discuss the issue(s) as agitated at the assessee’s behest in its pleadings hereinabove. Faced with the situation, we deem it appropriate to restore the assessee’s instant appeal back to the CIT(A)’s for his afresh appropriate adjudication as per law, preferably within three effective opportunities. Ordered accordingly. 5. This assessee’s appeal is allowed for statistical purpose in above terms. Order pronounced in the open Court on 24 th August, 2023. Sd/- Sd/- (G.D.PADMAHSHALI) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 24 th August, 2023/ SGR* IT(SS)A No.12/PAN/2019 : A.Y.2010-11 M/s.Handsel Goa Private Limited [A] 7 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “पणजी” बᱶच, पणजी / DR, ITAT, “Panaji” Bench, Panaji. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.