Shri G Somashekar Reddy , Bangalore V. Deputy Commissioner of Income Tax Central Circle-1(3), Bangalore

MA 10/BANG/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2554 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIPIN C K J BENGALURU
• Assessee Lawyers: B S BALACHANDRAN
• Keywords: Unexplained investment; Tax effect
• Section: 143(3); 153A; 153; 22; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER MP NO. 10/BANG/2020 [IN CO. 120/BANG/2018 [ IN IT A 1904 /BANG/201 8 ] ASSESSMENT YEAR: 20 07 - 08 SHRI. G. SOMASHEKAR REDDY, NO. 8, ASHOK NAGAR, HAVAMBHAVI, SIRUGUPPA ROAD, BELLARY 583 103. PAN: AJOPR 6213R VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI B.S. BALACHANDRAN, A DV OCATE RESPONDENT BY : SHRI BIPIN C.K. , JCIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 06 .0 3 .2020 DATE OF PRONOUNCEMENT : 18 .0 3 . 2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS A PETITION FILED BY THE ASSESSEE U/S. 254 (2) OF THE INCOME TAX ACT, 1961 (ACT) PRAYING TO RECALL ITS ORDER 28.8.20 19 INSOFAR AS IT RELATES TO DISMISSAL OF THE CROSS OBJECTION NO.120/BANG/2018 I N ITA NO.1904/BANG/2018 FOR AY 2007-08 FILED BY THE ASSES SEE AND TO DIRECT HEARING OF THE CROSS OBJECTION AND DECIDE THE SAME ON MERITS. MP NO. 10/BANG/2020 PAGE 2 OF 8 2. THE ASSESSEE IS AN INDIVIDUAL. PURSUANT TO A SE ARCH AND SEIZURE OPERATION CARRIED OUT IN THE CASE OF THE ASSESSEE U /S.132 OF THE ACT, AN ORDER OF ASSESSMENT WAS PASSED IN RELATION TO AY 20 07-08. ONE OF THE ADDITION MADE IN SUCH ASSESSMENT WAS ADDITION OF A SUM OF RS.63,27,500/- REPRESENTING UNEXPLAINED INVESTMENT IN JEWELLERY. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION MADE IN THE ORDER OF ASSESSMENT IN AN APPEAL FILED BEFORE THE FIRST APPELLATE AUTHORITY, I.E., CIT(A). THE FIRST APPELLATE AUTHORITY CONFIRMED ADDITION TO THE EXTEN T OF RS.56,71,005/-. THE REVENUE HAD FILED APPEAL AGAINST THE SAID ORDER OF THE CIT(A) AND THE ASSESSEE FILED CROSS-OBJECTION IN THE SAID APPEAL O F THE REVENUE. THE REVENUES APPEAL CAME TO BE DISMISSED BY AN ORDER D ATED 28.8.2019 ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN RS.50 LAK HS, WHICH IS THE TAX EFFECT PRESCRIBED BY THE CBDT IN ITS CIRCULAR DATED 8.8.20 19 FOR THE REVENUE TO FILE APPEAL BEFORE TRIBUNAL. THE CROSS OBJECTION WAS ALSO DISMISSED IN VIEW OF THE DISMISSAL OF THE APPEAL OF THE REVENUE. 3. IN THIS PETITION THE ASSESSEE HAS POINTED OUT TH AT THE ISSUES RAISED IN THE CROSS OBJECTION ARE NOT MERELY SUPPORTIVE OF THE ORDER OF THE CIT(A) TO THE EXTENT RELIEF ALLOWED TO THE ASSESSEE, BUT C ONTESTS THE ORDER OF CIT(A) IN RELATION TO THE VALIDITY OF THE ASSESSMEN T FRAMED U/S.153A OF THE ACT AND ALSO CHALLENGES THE VALIDITY OF THE ORDER O F CIT(A) IN SUSTAINING ADDITION OF RS.63,26,500 MADE BY THE AO TO THE EXTE NT OF RS.56,71,005. THE RELEVANT GROUNDS OF APPEAL IN THE CROSS OBJECTI ON IN THIS REGARD WERE AS FOLLOWS:- LIMITATION U/S. 153A. 2. THE LEARNED APPELLATE COMMISSIONER FAILED TO APP RECIATE THAT THE IMPUGNED ASSESSMENT ORDER PASSED UNDER SEC TION 153A R.W.S. 143(3) OF THE ACT, IS BARRED BY LIMITATION A S PER SECTION 153 OF THE ACT. MP NO. 10/BANG/2020 PAGE 3 OF 8 INVESTMENT IN JEWELLARY. 3. HAVING RECORDED THE FINDING THAT AN AMOUNT OF RS.63,27,500/-, REPRESENTING INVESTMENT IN JEWELLAR Y, WAS ACCOUNTED IN THE HANDS OF MRS.VIJAYA, WIFE OF THE R ESPONDENT- ASSESSEE, THE LEARNED APPELLATE COMMISSIONER ERRED IN UPHOLDING THE ADDITION OF RS.56,71,005/- OUT OF THE TOTAL INVESTMENT OF RS.68,98,057/- AS PER THE INVOICES FO R PURCHASE OF JEWELLARY FOUND DURING THE SEARCH. 4. SINCE THE AFORESAID GROUNDS ARE INDEPENDENT OF T HE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL, THE CO OUGHT TO HAVE BEEN DECIDED INDEPENDENTLY AND NOT DISMISSED ON THE GROUND THAT THE REVENUES APPEAL HAS BEEN DISMISSED. IN OTHER WORDS, IT IS THE PLEA OF THE ASSESSEE THAT, CO WHICH IS INDEPENDENT OF THE GROUNDS RAISED IN TH E REVENUE HAS TO BE DECIDED EVEN THOUGH THE REVENUES APPEAL IS DISMISS ED OR IS WITHDRAWN BY THE REVENUE. IT IS THE PLEA OF THE ASSESSEE THAT T HE ORDER OF THE TRIBUNAL DISMISSING THE CO AS INFRUCTUOUS OWING TO DISMISSAL OF THE REVENUES APPEAL SUFFERS FROM A MISTAKE APPARENT FROM THE FAC E OF THE RECORD AND SHOULD BE RECALLED AND THE CO SHOULD BE DIRECTED TO BE HEARD AND DECIDED ON MERITS AFTER AFFORDING OPPORTUNITY OF HEARING TO THE PARTIES. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE STAND TAKEN BY THE ASSESSEE IN THE APPLICATION AND HAS FURTHER DRA WN OUR ATTENTION TO TWO DECISIONS VIZ., (I) DECISION OF THE HONBLE SUPREME COURT DATED JULY 16, 2019, IN THE CASE OF SHRI BADRU (SINCE DECEASED) V. NTPC LIMITED CIVIL APPEAL NO. 5557-59 OF 2019 DATED 16.7.2019 WHEREIN IT WAS HELD THAT CROSS OBJECTION HAS TO BE DISPOSED OF ON ITS MERITS BY ASSIGNING REASONS NOTWITHSTANDING THE DISMISSAL OF THE APPEAL. THE I SSUE AROSE IN THE CONTEXT OF REVENUES APPEAL CHALLENGING THE ORDER OF THE HO NBLE HIGH COURT OF HIMACHAL PRADESH DISMISSING AN APPEAL BY THE STATE AGAINST AWARD PASSED BY THE COURT TO WHICH THE QUESTION OF CORRECTNESS O F COMPENSATION AWARDED MP NO. 10/BANG/2020 PAGE 4 OF 8 FOR ACQUISITION OF LANDS WERE DISMISSED. THE HONB LE HIGH COURT DID NOT ADJUDICATE THE CROSS OBJECTION OF THE LAND OWNER. THE HONBLE SUPREME COURT NOTED THAT THE HIGH COURT HAD DISMISSED THE C ROSS OBJECTION FILED BY THE LANDOWNERS UNDER ORDER 41 RULE 22 OF THE CODE OF CIVIL PROCEDURE, 1908 , WITHOUT ASSIGNING ANY REASON. THE BENCH OBSERVED THAT IT WAS OBLIGATORY ON THE PART OF THE HIGH COURT TO HAVE IN DEPENDENTLY EXAMINED THE ISSUES RAISED BY THE LANDOWNERS BEFORE THE HIGH COURT IN THE CROSS OBJECTION WITH A VIEW TO FIND OUT AS TO WHETHER ANY CASE WAS MADE OUT ON FACTS BY THE LANDOWNERS FOR FURTHER ENHANCEMENT IN THE COMPENSATION AND, IF SO, TO WHAT EXTENT. (II) DECISION OF THE ITAT D ELHI BENCH IN THE CASE OF AJAY KALIA VS. ACIT (CO 254/DEL/2014 IN ITA NO.245/ DEL/2014 FOR AY 2010-11 ORDER DATED 7.1.2016 WHEREIN BEFORE THE DELHI BENCH, THE REVENUE PLEADED THAT THE ASSESSEES CROSS OBJECTION SHOULD ALSO BE DISMISSED. THE TRIBUNAL HELD AS FOLLOWS: 5. INSOFAR AS THE CROSS OBJECTION OF THE ASSESSE E IS CONCERNED, THE LD. DR AT THE VERY OUTSET VIGOROUSLY ARGUED THAT THE SAME SHOULD ALSO BE CONSEQUENTIALLY DISMISSED B ECAUSE THE REVENUES APPEAL, PURSUANT TO WHICH THE CROSS OBJEC TION WAS FILED, IS LIKELY TO BE DISMISSED AS A RESULT OF LOW TAX EFFECT. HIS CONTENTION WAS THAT THE CO HAS NO INDEPENDENT EXIST ENCE DISTINCT FROM THE DEPARTMENTAL APPEAL AND HENCE THE SAME CAN NOT BE ALLOWED TO SURVIVE. THIS WAS OPPOSED BY THE LD. AR WHO SUBMITTED THAT THE ISSUE RAISED IN THE CO IS DIFFER ENT FROM THE ONE RAISED IN THE REVENUES APPEAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE EMBARKING UPON THE QUEST ION OF THE MAINTAINABILITY OR OTHERWISE OF THE CROSS OBJECTION FILED BY THE ASSESSEE PURSUANT TO THE REVENUES APPEAL, WHICH INVOLVES TA X EFFECT OF LESS THAN RS.10 LAC AND HAS BEEN DISMISSED SUPRA, WE NEED TO CONCENTRATE ON THE PRESCRIPTION OF SECTION 253(4) WHICH EMPOWERS THE R ESPONDENT TO FILE CROSS OBJECTION, THE RELEVANT PART OF WHICH READS AS UNDE R:- MP NO. 10/BANG/2020 PAGE 5 OF 8 `(4) THE ASSESSING OFFICER OR THE ASSESSEE, AS THE CASE MAY BE, ON RECEIPT OF NOTICE THAT AN APPEAL AGAINST THE ORDER OF . THE COMMISSIONER (APPEALS) HAS BEEN PREFERRED UN DER SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SECTION ( 2A) BY THE OTHER PARTY, MAY, NOTWITHSTANDING THAT HE MAY N OT HAVE APPEALED AGAINST SUCH ORDER OR ANY PART THEREO F; WITHIN THIRTY DAYS OF THE RECEIPT OF THE NOTICE, FI LE A MEMORANDUM OF CROSS-OBJECTIONS, VERIFIED IN THE PRESCRIBED MANNER, AGAINST ANY PART OF THE ORDER OF . THE COMMISSIONER (APPEALS), AND SUCH MEMORANDUM SHALL B E DISPOSED OF BY THE APPELLATE TRIBUNAL AS IF IT WERE AN APPEAL PRESENTED WITHIN THE TIME SPECIFIED IN SUB-S ECTION (3) OR SUB-SECTION (3A). 7. A BARE PERUSAL OF THE ABOVE PROVISION TRANSPIR ES THAT THE AO OR THE ASSESSEE (HEREINAFTER REFERRED TO AS `THE OTHER SIDE), ON RECEIPT OF NOTICE OF AN APPEAL HAVING BEEN PREFERRE D BY THE APPEALING PARTY AGAINST THE ORDER PASSED BY THE CIT (A), NOTWITHSTANDING NOT HAVING FILED SEPARATE APPEAL, M AY FILE A CROSS OBJECTION `AGAINST ANY PART OF THE ORDER OF T HE COMMISSIONER (APPEALS). IT IS AMPLY CLEAR FROM THE LANGUAGE OF SUB-SECTION (4) THAT THE RIGHT TO FILE CROSS OBJECT ION HAS BEEN GIVEN TO THE OTHER SIDE AGAINST ANY PART OF THE ORDER OF THE CIT(A), WHETHER OR NOT CONNECTED WITH THE ISSUES RAISED IN THE APPEAL BY THE APPEALING PARTY. THERE CAN BE ONE POSSIBILITY W HEN THE CROSS OBJECTION IS FILED BY THE OTHER SIDE IN SUPPORT OF THE ORDER PASSED BY THE CIT(A) AND THE OTHER POSSIBILITY CAN BE OF F ILING CO AGAINST THE ISSUES DECIDED AGAINST IT IN THE IMPUGN ED ORDER. THERE CAN BE STILL ONE MORE POSSIBILITY WHEN THE OTHER SI DE, APART FROM SUPPORTING THE IMPUGNED ORDER APPEALED AGAINST, MAY ALSO ASSAIL CERTAIN OTHER ISSUES DECIDED AGAINST IT. THIS DIVUL GES THAT THE CO CAN BE FILED BY THE OTHER SIDE, ON RECEIPT OF NOTIC E OF APPEAL HAVING BEEN FILED BY THE APPEALING PARTY, ON ANY IS SUE DE HORS THE ISSUED RAISED BY THE APPEALING PARTY. ON FILING, A CO ASSUMES THE CHARACTER OF AN APPEAL, WHICH IS APPARENT FROM SECT ION 253(4), WHICH PROVIDES THAT: `SUCH MEMORANDUM SHALL BE DISP OSED OF BY THE APPELLATE TRIBUNAL AS IF IT WERE AN APPEAL PRES ENTED WITHIN THE TIME SPECIFIED IN SUB-SECTION (3) OR SUB-SECTION (3 A). RULE 22 OF THE ITAT RULES, 1963 ALSO PROVIDES THAT: A MEMORAN DUM OF CROSS-OBJECTIONS FILED UNDER SUB-SECTION (4) OF SEC TION 253 SHALL BE REGISTERED AND NUMBERED AS AN APPEAL AND ALL THE RULES, SO FAR AS MAY BE, SHALL APPLY TO SUCH APPEAL. THIS SHOWS T HAT A CROSS MP NO. 10/BANG/2020 PAGE 6 OF 8 OBJECTION IS TREATED IN NO WAY DIFFERENT FROM A SEP ARATE APPEAL BY THE TRIBUNAL. 8. THE LANGUAGE OF SECTION 253(4) MAKES IT ABUNDA NTLY VIVID THAT THE SCOPE OF A CROSS OBJECTION IS NOT RESTRICT ED ONLY TO THE POINTS DECIDED AGAINST THE APPEALING PARTY, BUT, AL SO EXTENDS TO THE POINTS DECIDED AGAINST THE OTHER SIDE. THE MAND ATE OF THE PROVISION IS QUITE VAST AND IS UNLIKE THE PRESCRIPT ION OF RULE 27 OF THE ITAT RULES, WHICH IS LIMITED IN ITS REALM EMPOW ERING THE RESPONDENT TO SUPPORT THE IMPUGNED ORDER BY PROVIDI NG THAT: `THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SU PPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDE D AGAINST HIM. 9. THE LD. DRS CONTENTION THAT THE CROSS OBJECTI ONS FILED BY THE ASSESSEES SHOULD BE INVARIABLY DISMISSED IN LIM INE FOR THE REASON OF THE DISMISSAL OF THE APPEALS OF THE DEPAR TMENT BECAUSE OF LOW TAX EFFECT, IN OUR CONSIDERED OPINION, DOES NOT STAND TO ANY LOGIC IN ALL CIRCUMSTANCES. IN A SITUATION WHERE TH E CROSS OBJECTION IS IN SUPPORT OF THE IMPUGNED ORDER, THEN, OF COURS E, SUCH A CROSS OBJECTION HAS NO INDEPENDENT EXISTENCE AND IS LIABL E TO BE DISMISSED AS INFRUCTUOUS PURSUANT TO THE DISMISSAL OF THE APPEAL OF THE REVENUE. HOWEVER, IN A CASE WHERE THE CROSS OBJECTION FILED U/S 253(4) IS ON AN ISSUE INDEPENDENT OF THE APPEAL FILED BY THE REVENUE, THEN, SUCH A CROSS OBJECTION CANNOT BE DISMISSED SIMPLY ON THE GROUND OF DISMISSAL OF THE APPEAL BY THE REVENUE INVOLVING LOW TAX EFFECT. ACCEPTANCE OF THIS CONTEN TION OF THE LD. DR WOULD AMOUNT TO SNATCHING A VALUABLE RIGHT GIVEN BY THE STATUTE TO THE ASSESSEE TO FILE AND PURSUE AN APPEA L BEFORE THE TRIBUNAL IRRESPECTIVE OF ANY TAX EFFECT. WE, THEREF ORE, NEGATE THE CONTENTION OF THE LD. DR BY HOLDING THAT THE INSTAN T CO CHALLENGING THE IMPUGNED ORDER, IS MAINTAINABLE. 7. IT WAS POINTED OUT THAT THE ISSUES RAISED IN THE CROSS OBJECTION IS INDEPENDENT OF THE ISSUE RAISED BY THE REVENUE IN I TS APPEAL AND THEREFORE THE SAME OUGHT TO HAVE BEEN HEARD AND DECIDED ON ME RITS AND OUGHT NOT TO HAVE BEEN DISMISSED AS INFRUCTUOUS. MP NO. 10/BANG/2020 PAGE 7 OF 8 8. THE LEARNED DR SUBMITTED THAT THE CO HAS NO LEGS TO STAND IN VIEW OF THE DISMISSAL OF THE APPEAL OF THE REVENUE AS UN ADMITTED AND THEREFORE THE MISC. APPLICATION SHOULD BE DISMISSED. 9. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL CONTENTIONS. AS RIGHTLY CONTENDED ON BEHALF OF THE ASSESSEE, THE GROUNDS RAISED IN THE CO ARE INDEPENDENT OF THE APPEAL FILED BY THE REVEN UE AND THEREFORE SUCH A CROSS OBJECTION CANNOT BE DISMISSED SIMPLY ON THE GROUND OF DISMISSAL OF THE APPEAL BY THE REVENUE INVOLVING LOW TAX EFFECT. THE RESIDENTIAL PREMISES OF THE ASSESSEE WAS SEARCHED U/S. 132 OF T HE ACT ON 26.10.2007. AN ORDER OF ASSESSMENT DATED 31.12.2017 WAS PASSED BY THE AO. THE ASSESSEE HAD FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A OF THE ACT DECLARING INCOME OF RS.24,06,380/-. IN THE ASS ESSMENT ORDER, THE AO COMPUTED BY MAKING ADDITION OF RS.94,105 AS INCOME FROM HOUSE PROPERTY NOT DECLARED, RS.56,17,005 BEING UNEXPLAINED INVEST MENT IN PURCHASE OF JEWELLERY AS PER SEIZED DOCUMENT AND RS.25,52,000 B EING UNEXPLAINED CASH REMITTANCES TO BANK ACCOUNT U/S.69 OF THE ACT. IN RESPECT OF ADDITION OF RS.56,17,005, THE CIT(A) SUSTAINED THE ADDITION MADE BY THE AO AGAINST WHICH THE ASSESSEE HAS FILED CROSS OBJECTION BEFORE THE TRIBUNAL. THE ADDITION OF RS.25,52,000 WAS DELETED BY THE CIT(A) AGAINST WHICH THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL BUT THAT A PPEAL WAS DISMISSED FOR LOW TAX EFFECT. THEREFORE THE ISSUE TO BE DECIDED IN THE CO WAS AN ISSUE INDEPENDENT OF THE APPEAL FILED BY THE REVENUE. IN SUCH CASES, THE CO CANNOT BE DISMISSED SIMPLY ON THE GROUND OF DISMISS AL OF THE APPEAL BY THE REVENUE INVOLVING LOW TAX EFFECT. THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF AJAY KALIA (SUPRA) SUPPORTS THE PLEA OF THE ASSESSEE. WE THEREFORE RECALL THE ORDER DATED 28.8.2019 IN SO FA R AS IT RELATES TO DISMISSAL OF CO NO. 120/BANG/2018 IN ITA NO.1904/BANG/2018 AS INFRUCTUOUS AND DIRECT THAT THE SAID CO WILL BE HEARD AND DECIDED O N MERITS. THE REGISTRY IS MP NO. 10/BANG/2020 PAGE 8 OF 8 DIRECTED TO FIX THE CO NO.120/BANG/2018 FOR HEARING IN DUE COURSE AFTER NOTICE TO THE PARTIES. 10. IN THE RESULT, THE MISCELLANEOUS PETITION BY TH E ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 18TH DAY OF MARCH, 2020. SD/- SD/- ( A.K.GARODIA ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 18 TH MARCH, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3 . CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE