The ACIT, Mehsana Circle, Mehsana V. Shri Sendhabhai M.Desai & Others, Mehsana

MA 153/AHD/2011

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2219 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2014
• Assessment Year: misc
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER M.A. NO.153/AHD/2011 (ARISING OUT OF IT(SS)A NO.154/AHD/2006) THE ACIT MEHSANA CIRCLE, MEHSANA. VS SHRI SENDHABHAI M. DESAI AND OTHERS (AOP), C/O KHEGARBHAI B. DESAI, URVASHI BUNGLOW, NR. RAMASANA JAKATNAKA, MEHSANA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI O.P. BATHEJA, SR.D.R. , ASSESSEE(S) BY : SHRI ANIL KSHATRIYA, A.R. / // / DATE OF HEARING : 06/06/2014 / DATE OF PRONOUNCEMENT: 05/08/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS MISC. APPLICATION HAS BEEN FILED BY THE REVENU E DEPARTMENT ON 16.09.2011 ARISING FROM THE ORDER OF THE TRIBUNA L DATED 22 ND OF JANUARY, 2010. IN THIS MISC. APPLICATION, THE MAIN GRIEVANCE OF THE REVENUE WAS THAT THE TRIBUNAL HAS WRONGLY NOTED THA T THE ADDITION WAS CONFIRMED BY LEARNED CIT(A) IN THE INDIVIDUAL CASE. FOR READY REFERENCE, RELEVANT PORTION OF THE MISC. APPLICATION IS HEREBY REPRODUCED. BRIEF FACTS OF THE CASE ARE THAT SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE VARIOUS PREMISES OF SHRI SENDHABHAI M DE SAI AND OTHERS ON 28.08.1997. CERTAIN INCRIMINATING DOCUMENTS ANNEXE D AS A-37 (LOOSE PAPER FILE) WERE FOUND AND SEIZED FROM SABERA HOTEL PVT. LTD. VARIOUS PAPER AT SR. NO. 119 TO 127 EVIDENCED LAND TRANSACTION OF SALES OF RS. 2,07,58,000/- AND PURCHASES OF RS. 1,92,70,000/-. SHRI SENDHABHAI M DESAI HAD ADMITTED SAID TRANSACTION IN THE HANDS OF PARTNERSHIP CONCERN CON SISTING OF 6 PARTNERS IN THE MA NO.153/AHD/2011 IN IT(SS)A NO.154/AHD/2006 THE ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI SENDHABH AI M. DESAI & OTHERS. - 2 - STATEMENT RECORDED DURING THE COURSE OF SEARCH. T HE A.O. HAS MADE ADDITION OF RS.14, 69,807/- @ 5% AS BROKERAGE TRANSACTIONS O F PURCHASE AND SALES OF LAND ON PROTECTIVE BASIS IN THE HANDS OF ASSESSEE S ENDHABHAI M. DESAI & OTHERS (AOP). SIMILARLY, ADDITION OF RS.20,01,400/- @ 5% AS BROKERAGE ON SUCH TRANSACTION WAS MADE IN CASE OF SENDHABHAI M. DESAI, INDIVIDUAL ON SUBSTANTIVE BASIS. THE CIT(A) IN CASE OF THE ASSESSEE, SENDHABHAI M DE SAI & OTHERS AQP VIDE ORDER NO. CIT(AO-XXI/MEH/293/2004-05 DATED 24.03.2006 DELETED ADDITION OF RS. 14,69,807/- OBSERVING (IN L AST PARA AT PAGE NO.16 & 17) THAT THE INCOME OF RS.14,69,807 CALCULATED BY T HE ASSESSING OFFICER HAS BEEN TAXED ON PROTECTIVE BASIS IN THE CASE OF THE A SSESSEE AS SAME WAS ASSESSED ON SUBSTANTIVE BASIS IN THE CASE OF SHRI S ENDHABHAI M DESAI. THE FACT OF THE CASE IN CIT(A)'S DECISION IN CASE OF SE NDHABHAI M DESAI (INDIVIDUAL) IS THAT THE C1T(A) VIDE ORDER NO.CIT(A )/IV/52/199-2000 DATED 12.04.2000 HAS ALSO DELETED ADDITION OF RS. 20,01,4 00/- (PARA NO. 15. PAGE NO. 48 TO 51) MADE AS SUBSTANTIVE OBSERVING THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL/EVIDENCE TO ESTABLISH THAT SHRI SENDHABHAI M DESAI (INDIVIDUAL) IS HAVING ANY DIRECT OR INDIRECT NEXUS AND/OR CONNECTION WITH ALLEGED LAND TRANSACTIONS AND ACTED AS A BROKER AND ALSO RELYING UPON VARIOUS JUDICIAL PRONOUNCEMENTS. THE HON'BLE ITAT VIDE ORDER NO. IT(SS) A NO. 154/AH D/2006 DATED 22.01.2010 IN CASE OF THE ASSESSEE (AOP) QUASHED THE BLOCK ASSESSMENT PROCEEDINGS U/S. 158 BD OF THE IT ACT, RESULTING IN DELETION OF ALL ADDITIONS. THE HON'BLE ITAT VIDE PARA NO. 19 AND 20 OF THE ORD ER STATED THAT ' THE ADDITION WAS ADMITTEDLY CONFIRMED BY THE LD. CIT(A) IN HIS INDIVIDUAL CASE. THUS ON THE DATE OF INITIATION OF BLOCK ASSESSMENT PROCEEDINGS UNDER SECTION 158BD, IN THE CASE OF AOP ON 06.01.2003, THERE WAS NO DOUBT ABOUT WHO IS TO BE ASSESSED IN RESPECT OF THE SAME SEIZED MATERI AL FOUND DURING THE COURSE OF THE SEARCH.' THERE IS MISTAKE OF FACTS IN THE ORDER OF THE HON'B LE ITAT IN ITA NO.154/AHD/2006 IN IT(SS)A NO.154/AHD/2006 DATED 22 .01.2010 (PARA NO.19 & 20) THAT ADDITION ON THE ISSUE INVOLVED HAS BEEN CONFIRMED ON SUBSTANTIVE BASIS IN THE CASE OF SHRI SENDHABHAI M DESAI (INDIV IDUAL). THE SAME IS HOWEVER NOT SO AS THE ADDITION HAS BEEN DELETED BY LD. CIT(A) VIDE ORDER NO. CIT(A)IV/52/2000 DATED 12.04.200 0. COPY OF THE ORDER IS ENCLOSED. 2. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., M R. O.P. BATHEJA HAS DRAWN OUR ATTENTION AT PAGE 17 OF THE ORDER OF THE TRIBUNAL, WHEREIN IT WAS MENTIONED AS, QUOTE THE ADDITION WAS ALSO ADMI TTEDLY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN HIS INDIVIDUAL MA NO.153/AHD/2011 IN IT(SS)A NO.154/AHD/2006 THE ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI SENDHABH AI M. DESAI & OTHERS. - 3 - CASE UNQUOTE. BUT THE FACT WAS THAT THE LEARNED CI T(A) HAD DELETED THE ADDITION IN THE INDIVIDUAL CASE. ACCORDING TO LEARN ED DR, THE RELIEF WAS GRANTED BY THE TRIBUNAL ON THE WRONG PREMISE THAT I N A SITUATION WHEN THE IMPUGNED ADDITION WAS CONFIRMED IN THE HANDS OF THE INDIVIDUAL ON SUBSTANTIVE BASIS, THEREFORE THAT VERY ADDITION SHO ULD BE DELETED FROM THE HANDS OF THE AOP WHICH WAS MADE ON PROTECTIVE BASIS . HOWEVER, CORRECT FACT WAS THAT THE IMPUGNED ADDITION WAS DELETED IN THE CASE OF INDIVIDUAL; THEREFORE, THE PROTECTIVE ADDITION IN THE HANDS OF THE AOP SHOULD HAVE BEEN CONFIRMED ON SUBSTANTIVE BASIS. ACCORDING TO L EARNED DR, THE MISTAKE BEING APPARENT ON FACTS; HENCE, THE IMPUGNE D ORDER OF THE TRIBUNAL SHOULD BE RECALLED. 3. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LEARNE D AR, MR. ANIL KSHATRIYA APPEARED. HIS FIRST PLANK OF ARGUMENT WAS THAT NO MISTAKE AT ALL WAS COMMITTED BY THE TRIBUNAL. THE QUESTION BEFORE THE TRIBUNAL WAS THAT WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO WAS JUSTIFIED IN PASSING BLOCK ASSESSMENT ORDER U/S.158 BD ON PROTECTIVE BASIS IN THE CASE OF THE AOP. THAT QUESTION WAS DISCUSSED AT LENGTH. THE TRIBUNAL IN PARAGRAPH 19 HAS NOTED THAT THE IMPUGNE D PROTECTIVE ASSESSMENT WAS MADE IN THE HANDS OF THE AOP ON THE BASIS OF A STATEMENT MADE BY SRI SENDHABHAI M. DESAI. THAT STATEMENT WAS RECORDED AT THE TIME OF SEARCH CONDUCTED ON 28.08.1997. HOWEVER, TH E TRIBUNAL HAS GIVEN A CLEAR FINDING THAT ALTHOUGH THE AO HAD NOTE D THE GIST OF THE STATEMENT BUT THAT DID NOT LEAD TO A CONCLUSION THA T THE IMPUGNED INCOME PERTAINED TO THE AOP. EVEN, THE FORMATION OR THE EX ISTENCES OF THE AOP WAS NOT ESTABLISHED. IT WAS ALSO NOTED BY THE TRIBU NAL THAT THE SEIZED MATERIAL DID NOT BELONG TO MR. DESAI IN INDIVIDUAL CAPACITY. THERE WAS NO MA NO.153/AHD/2011 IN IT(SS)A NO.154/AHD/2006 THE ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI SENDHABH AI M. DESAI & OTHERS. - 4 - DOUBT ABOUT THE ASSESSMENT IN THE HANDS OF THE INDI VIDUAL ON THE BASIS OF THE SEIZED MATERIAL. THE SEIZED MATERIAL WAS CONSID ERED IN THE INDIVIDUAL CASE OF MR. DESAI AND THEREUPON A SUBSTANTIVE ASSES SMENT WAS MADE IN HIS CASE. ALTHOUGH THAT ADDITION WAS DELETED BY LEA RNED CIT(A) IN THE HANDS OF THE INDIVIDUAL BUT THE CONCLUSION DRAWN BY THE TRIBUNAL IN THE CASE OF THE AOP WAS NOT MERELY ON THE GROUND THAT T HE SUBSTANTIVE ADDITION IN THE HANDS OF THE INDIVIDUAL WAS CONFIRM ED BY LEARNED CIT(A). THEREUPON, ON THAT BASIS ONLY, THE SAME ADDITION CO ULD NOT BE MADE IN THE HANDS OF THE AOP ON PROTECTIVE BASIS. BUT THE FACT IS THAT THE TRIBUNAL HAS GIVEN A FINDING THAT IT WAS DIFFICULT TO BELIEVE TH AT THE AOP WAS VALIDLY EXISTED. THE ASSESSEE HAD EVEN DENIED THE EXISTENCE OF THE AOP BEFORE THE AO. THERE WAS NO EVIDENCE ON RECORD TO PROVE TH E EXISTENCE OF THE AOP. ONCE, THERE WAS NO EXISTENCE OF AOP THEN THE N ATURAL CONSEQUENCE WAS THAT NO ASSESSMENT, WHAT TO SAY A PROTECTIVE AS SESSMENT, COULD HAVE BEEN MADE IN THE HANDS OF THE AOP. ACCORDING TO LEA RNED AR, THERE WAS NO MISTAKE COMMITTED BY THE TRIBUNAL AFTER ARRIVING AT THE SAID CONCLUSION; HENCE, THE APPLICATION OF THE REVENUE D EPARTMENT DESERVES TO BE DISMISSED. 4. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE NOTED THAT THE ALLEGED MISTAKE, IF ANY, HAD NOT EMANATED FROM THE ORDER OF THE TRIBUNAL. IN FACT, LEARNED CIT(A) AT PAGE 16 IN ORD ER DATED 24.03.2006 IN THE CASE OF THE AOP HAS MADE AN OBSERVATION THAT TH E CONCERNED CIT(A) IN THE CASE OF SENDHABHAI M. DESAI, INDIVIDUAL, HAS CONFIRMED THE ADDITION. IN FACT THAT WAS THE SOURCE OF THE MISTAK E. THE IMPUGNED MISTAKE, IF AT ALL, DID NOT ATTRIBUTE TO TRIBUNAL. MOREOVER, THE MATTER WAS DECIDED NOT ONLY BECAUSE OF THAT REASON BUT IT WAS DECIDED ON THE MERITS MA NO.153/AHD/2011 IN IT(SS)A NO.154/AHD/2006 THE ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI SENDHABH AI M. DESAI & OTHERS. - 5 - OF THE CASE. UNDOUBTEDLY, IT IS CORRECT THAT VIDE A N ORDER IN THE CASE OF MR. DESAI IN INDIVIDUAL CAPACITY LEARNED CIT(A)-IV, AHMEDABAD, VIDE ORDER DATED 12 TH APRIL, 2000 HAD DELETED THE IMPUGNED ADDITION, REL EVANT PORTION FROM PAGE 50 IS REPRODUCED BELOW: IT HAS ALSO BEEN ARGUED THAT THE AO HAS NOT BROUGH T ON RECORD ANY COGENT MATERIAL AND/OR INDEPENDENT CLINCHING EVIDENCES THA T THE APPELLANT HAS ACTED AS BROKER TO THE ALLEGED LAND DEAL TRANSACTIONS. TH E AUTHORIZED REPRESENTATIVE VEHEMENTLY ARGUED THAT ON THE CONTRARY, THE AO HAS ADMITTED THE FACT THAT HE IS PROCEEDING ON A PRESUMPTION THAT THE APPELLANT H AS DEALT WITH THE ALLEGED LAND DEAL TRANSACTION IN HIS CAPACITY AS A BROKER, WHICH OTHERWISE ESTABLISHES THAT THE AO HAS MADE THE ADDITION MERELY ON SURMISE S AND CONJECTURES. IT HAS ALSO BEEN ARGUED THAT THE AO WHILE ESTIMATING THE B ROKERAGE INCOME PROCEEDED MERELY ON PRESUMPTION AND SURMISES AND HA S ASSESSED THE NOTIONAL/HYPOTHETICAL INCOME WHICH IS NOT PERMISSIB LE AS PER THE PROVISIONS OF THE IT ACT, 1961. THE AUTHORIZED REPRESENTATIVE ALS O RELIED UPON THE DECISIONS OF HONBLE SUPREME COURT AND VARIOUS HIGH COURTS CI TED IN THE EARLIER GROUNDS INVOLVING THE SAME ISSUE. 5. FROM THE ABOVE REPRODUCTION, IT IS CLEAR THAT A FINDING WAS GIVEN IN THE CASE OF THE INDIVIDUAL THAT THE IMPUGNED ADDITI ON WAS MERELY ON SURMISES AND CONJECTURE. WHILE COMPUTING THE BROKER AGE INCOME, THE AO HAD ESTIMATED THE SAME AND THAT TOO FOUND TO BE ON PRESUMPTION. THEREFORE, A QUESTION WAS RAISED DURING THE COURSE OF HEARING THAT IN A SITUATION WHEN A SUBSTANTIVE ADDITION COULD NOT BE UPHELD IN THE HANDS OF THE INDIVIDUAL THEN HOW IT IS POSSIBLE TO UPHOLD A PROTECTIVE ADDITION PERTAINING TO THE SAME INCOME. THE IMPUGNED INCOME WAS ONCE DELETED ON MERITS FROM THE HANDS OF THE INDIVIDUAL, THEREFO RE ON THOSE VERY REASONING THAT VERY ADDITION WAS DELETED BY THE APP ELLATE AUTHORITY FROM THE HANDS OF THE AOP. EVEN, THE RESPECT CO-ORDINATE BENCH HAS EXAMINED ALL THOSE ASPECTS ON MERITS AND THEREUPON AFTER ANALYZING FEW CASE LAWS HAVE CAME TO THE CONCLUSION THAT THE AOP WAS NOT IN EXISTENCE AND THEREFORE, THE ADDITION WAS WRONGLY MADE. EVEN, IF WE CONSIDER THE GRIEVANCE OF THE REVENUE DEPARTMENT THAT THE TRIBUN AL HAS COMMITTED A MA NO.153/AHD/2011 IN IT(SS)A NO.154/AHD/2006 THE ACIT, MEHSANA CIRCLE, MEHSANA VS. SHRI SENDHABH AI M. DESAI & OTHERS. - 6 - MISTAKE BY WRONGLY RECORDING A FACT ABOUT THE CONFI RMATION OF ADDITION IN INDIVIDUAL CAPACITY BY LEARNED CIT(A), BUT THEN SIM ULTANEOUSLY OTHER FACT SHALL ALSO REMAIN INTACT THAT THE TRIBUNAL HAS GIVE N A FINDING THAT THE AOP WAS NOT IN EXISTENCES AND HENCE THE ADDITION WAS IM PROPER. MOREOVER, THE ALLEGED WRONG FACT HAD EMANATED FROM THE ORDER OF LEARNED CIT(A), THEREFORE, THE MISTAKE, IF ANY, WAS A MISTAKE OF LE ARNED CIT(A) AND NOT THE TRIBUNAL. THE IMPUGNED ORDER OF THE TRIBUNAL HA S BEEN PASSED AFTER DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, NEED NOT TO BE DISTURBED; BECAUSE ANY TINKERING MAY TANTAMOUNT TO REVIEW OF THE ORDER WHICH IS NOT PERMISSIBLE U/S.25 4(2) OF IT ACT. THE MISC. APPLICATION OF THE REVENUE DEPARTMENT IS HERE BY DISMISSED. 6. IN THE RESULT, THE PRESENT MISC. APPLICATION OF THE REVENUE IS DISMISSED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 05/08/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD