ITO, Trichy V. Shri A.L.Jawaharalal, Represented by Shri A.Abdul Kalam Azad, Perambalur

MA 185/CHNY/2010

• Counselvise Citation: [2011] 111 COUNSELVISE.COM (IT) 0362 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 24-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital asset; Opportunity of being heard; Set aside
• Section: 69B; 254(2); 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) M.A. NO. 185/MDS/2010 (IN I.T.A. NO. 1667/MDS/2009) ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER, WARD I(3), O/O THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-I, TIRUCHIRAPALLI. (APPLICANT) V. SHRI A.L. JAWAHARLAL, REPRESENTED BY SHRI A. ABDUL KALAM AZAD, NO.147/M/25, RENGAMMAL NAGAR, (RESPONDENT) APPLICANT BY: SHRI SHAJI P. JACOB RESPONDENT BY: SHRI K. MEENAKSHISUNDHARAM O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPLICATION FILED BY THE REVENUE, ITS GRIE VANCE WHICH APPEARS AT PARA 3 IS REPRODUCED HEREUNDER:- 3. WHILE CLARIFYING THAT IN THE ABSENCE OF ANY AUTH ORIZATION IN FAVOUR OF ANY OTHER PERSON OR ANY EXPRESS DESIRE OF THE ASSESSEE NOT ALLOWING HIS BROTHER AS AN AGENT, THE DIRECTION THAT THE BROTHER OF THE ASSESSEE BE REGARDED AS AN AGENT OF THE ASSESSEE UNDER SECTION 163 OF THE I.T. ACT IS A MIS TAKE APPARENT FROM RECORDS, AS SEEN FROM THE CANCELLATION OF GENE RAL POWER OF ATTORNEY DATED 23.08.2002 GRANTING POWER TO HIS BRO THER SHRI ABUL KALAM AZAD AND ISSUING OF FRESH GENERAL POWER OF ATTORNEY M.A. NO. 185/MDS/10 2 DATED 18.07.2005 GRANTING POWER TO SHRI SOWKATH ALI AND THE INVOKING OF THE PROVISIONS OF SECTION 163 IS NOT AP PLICABLE IN RESPECT OF THIS CASE AS THE SAME IS ONLY AN ENABLIN G PROVISION TO ASSESS AN AGENT ON THE INCOME OF A NON-RESIDENT UND ER CERTAIN CONDITIONS AND THE ASSESSING OFFICER HAS NOT INITIA TED ANY ACTION UNDER THIS SECTION AGAINST THE ASSESSEES BROTHER O N THE INCOME OF THE ASSESSEE. 2. WHEN THE MISCELLANEOUS APPLICATION CAME UP FOR H EARING, LEARNED D.R. SUPPORTING THE APPLICATION, SUBMITTED THAT SHRI A. ABDUL KALAM AZAD, BROTHER OF THE ASSESSEE, HAD NO POWER A T THE POINT OF TIME WHEN APPEAL ITSELF WAS FILED BEFORE THIS TRIBU NAL. THEREFORE, THE APPEAL ITSELF WAS DEFECTIVE. ACCORDING TO HIM, THE ORDER OF THE TRIBUNAL SUFFERS FROM SERIOUS MISTAKE AND REQUIRES TO BE RECALLED. 3. PER CONTRA, LEARNED A.R. SUPPORTING THE ORDER OF THE TRIBUNAL SUBMITTED THAT SHRI A. ABDUL KALAM AZAD WAS NOT ONL Y THE BROTHER OF THE ASSESSEE BUT ALSO CO-OWNER OF THE BUILDING, COS T OF CONSTRUCTION OF WHICH WAS SUBJECT MATTER OF ASSESSMENT. ACCORDING TO HIM, ASSESSING OFFICER HIMSELF HAD ADDRESSED LETTERS TO SHRI A. ABDUL KALAM AZAD AND AS THE AGENT OF A NON-RESIDENT ASSES SEE, HE HAD EVERY AUTHORITY TO SIGN THE APPEAL ALSO. 4. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE CRUCIAL ISSUE BEFORE THIS TRIBUNAL WAS WHETHER THE A.O. WAS M.A. NO. 185/MDS/10 3 JUSTIFIED IN NOT RECOGNIZING SHRI A. ABDUL KALAM AZ AD, BROTHER OF THE ASSESSEE, AS A REPRESENTATIVE OR AGENT OF THE ASSES SEE ON THE BASIS OF A POWER OF ATTORNEY WHICH STOOD REVOKED. RELEVA NT PARA OF THE ORDER OF THIS TRIBUNAL IN I.T.A. NO. 1667/MDS/2009 DATED 19 TH MARCH, 2010 IS REPRODUCED HEREUNDER:- 2. THE ASSESSEE IS A NON-RESIDENT IN INDIA. THE AS SESSEE ALONG WITH HIS BROTHER SHRI A. ABDUL KALAM AZAD, CO NSTRUCTED A KALYANA MANDAPAM DURING THE YEAR. THE A.O. MADE AN ADDITION OF RS.9,79,121/- AS UNEXPLAINED INVESTMENT AS PER THE PROVISIONS OF SECTION 69B OF THE INCOME-TAX ACT, 1961. SHRI A. A BDUL KALAM AZAD, THE BROTHER OF THE ASSESSEE, REPRESENTED BEFO RE THE A.O. BUT, THE A.O. REFUSED TO RECOGNIZE HIM AS A REPRESE NTATIVE OR AGENT OF THE ASSESSEE ON THE BASIS THAT THE POWER O F ATTORNEY HAS ALREADY BEEN REVOKED. ON APPEAL, THE CIT(APPEALS) HAS ISSUED A REMAND ORDER AND ON THE BASIS OF REMAND REPORT, THE ADDITION WAS CONFIRMED. 5. AFTER CONSIDERING THE SUBMISSION OF THE COUNSEL OF EITHER SIDE, THE TRIBUNAL DECIDED IN PARA 5 AND 6 AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. IT IS UNDISPUTED FACT THAT SHRI A. ABDUL K ALAM AZAD IS BROTHER OF THE NON-RESIDENT ASSESSEE. THE INVESTME NT IN KALYANA MANDAPAM IS MADE BY BOTH THE BROTHERS. THE ASSESSE E WHO IS A NON-RESIDENT HAS MADE INVESTMENT IN THE CONSTRUCTIO N OF THE KALYANA MANDAPAM THROUGH HIS BROTHER SHRI A. ABDUL KALAM AZAD, WHO HIMSELF PRESENTED BEFORE THE A.O. AS AN AGENT O F THE ASSESSEE. THE ASSESSING OFFICER REFUSED HIS REPRES ENTATION ON THE GROUND THAT THE POWER OF ATTORNEY WAS CANCELLED . THE PROVISIONS OF SECTION 163 DOES NOT REQUIRE ANY AUTH ORITY FOR M.A. NO. 185/MDS/10 4 TREATING A PERSON AS AGENT OF NON-RESIDENT ASSESSEE . IT IS APPROPRIATE TO QUOTE THE PROVISIONS OF SECTION 163 AS UNDER:- WHO MAY BE REGARDED AS AGENT . 163. (1) FOR THE PURPOSES OF THIS ACT, AGENT, IN RELATION TO A NON-RESIDENT, INCLUDES ANY PERSON IN INDIA- (A) WHO IS EMPLOYED BY OR ON BEHALF OF THE NON- RESIDENT; OR (B) WHO HAS ANY BUSINESS CONNECTION WITH THE NON- RESIDENT; OR (C) FROM OR THROUGH WHOM THE NON-RESIDENT IS IN RECEIPT OF ANY INCOME, WHETHER DIRECTLY OR INDIRECTLY; OR (D) WHO IS THE TRUSTEE OF THE NON-RESIDENT; AND INCLUDES ALSO ANY OTHER PERSON WHO, WHETHER A R ESIDENT OR NON-RESIDENT, HAS ACQUIRED BY MEANS OF A TRANSFER, A CAPITAL ASSET IN INDIA: PROVIDED THAT A BROKER IN INDIA WHO, IN RESPECT OF ANY TRANSACTIONS, DOES NOT DEAL DIRECTLY WITH OR ON BEH ALF OF A NON- RESIDENT PRINCIPAL BUT DEALS WITH OR THROUGH A NON- RESIDENT BROKER SHALL NOT BE DEEMED TO BE AN AGENT UNDER THI S SECTION IN RESPECT OF SUCH TRANSACTIONS, IF THE FOLLOWING C ONDITIONS ARE FULFILLED, NAMELY:- (I) THE TRANSACTIONS ARE CARRIED ON IN THE ORDINARY COURSE OF BUSINESS THROUGH THE FIRST- MENTIONED BROKER; AND (II) THE NON-RESIDENT BROKER IS CARRYING ON SUCH TRANSACTIONS IN THE ORDINARY COURSE OF HIS BUSINESS AND NOT AS A PRINCIPAL. [EXPLANATION FOR THE PURPOSES OF THIS SUB-SECTION , THE EXPRESSION BUSINESS CONNECTION SHALL HAVE THE MEA NING ASSIGNED TO IT IN EXPLANATION 2 TO CLAUSE (I) OF SU B-SECTION (1) OF SECTION 9 OF THIS ACT.] (2) NO PERSON SHALL BE TREATED AS THE AGENT OF A NO N- RESIDENT UNLESS HE HAS HAD AN OPPORTUNITY OF BEING HEARD BY THE ASSESSING OFFICER AS TO HIS LIABILITY TO BE TRE ATED AS SUCH. 6. IT IS MANIFEST FROM THE PROVISIONS OF SECTION 16 3 THAT AN AGENT IN RELATION TO A NON-RESIDENT INCLUDES ANY PE RSON IN INDIA, M.A. NO. 185/MDS/10 5 INTER ALIA, WHO HAS ANY BUSINESS CONNECTION WITH NO N-RESIDENT OR FROM OR THROUGH WHOM THE NON-RESIDENT IS IN RECEIPT OF ANY INCOME WHETHER DIRECTLY OR INDIRECTLY AND INCLUDES ALSO ANY OTHER PERSON WHETHER A RESIDENT OR NON-RESIDENT HAS ACQUI RED BY MEANS OF TRANSFER, A CAPITAL ASSET IN INDIA. UNDISPUTEDL Y, THE CONSTRUCTION OF KALYANA MANDAPAM HAS BEEN COMPLETED BY THE ASSESSEE THROUGH HIS BROTHER SHRI A. ABDUL KALAM AZ AD. THEREFORE, THE BROTHER OF THE ASSESSEE VERY WELL CO MES UNDER THE TERM AGENT AS PER THE PROVISIONS OF SECTION 1 63 OF THE ACT. THE ASSESSEE HAS GIVEN THE AUTHORIZATION UNDER SECT ION 258(2)(V) OF THE I.T. ACT WHICH IS DULY ATTESTED BY THE EMBAS SY OF INDIA, WHICH SHOWS THAT THE ASSESSEE IS WELL AWARE ABOUT T HE PROCEEDINGS UNDER THE INCOME-TAX ACT. WHEN THE AUT HORITY IN FAVOUR OF THE LEARNED A.R. HAS BEEN EXECUTED FOR RE PRESENTATION BEFORE THIS TRIBUNAL FOR PRESENTING THE APPEAL AND THE PRESENT APPEAL HAS BEEN SIGNED BY THE BROTHER OF THE ASSESS EE, THEN IT IS APPARENT THAT THE ASSESSEE HAS OTHERWISE APPROVED H IS BROTHERS REPRESENTATION AS AN AGENT ON HIS BEHALF. WE NOTE THAT IN THE REMAND REPORT, THE A.O. HAS REFUSED THE REPRESENTAT ION OF SHRI A. ABDUL KALAM AZAD, THE BROTHER OF THE ASSESSEE. THEREFORE, THERE IS A VIOLATION OF PRINCIPLE OF NATURAL JUSTIC E FOR NOT AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE . ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AN D REMIT THE MATTER TO THE RECORD OF THE ASSESSING OFFICER TO PA SS A FRESH ORDER AFTER EXAMINING THE DETAILS, MATERIAL AND EVI DENCE TO BE PRODUCED BY THE ASSESSEE THROUGH HIS AGENT. IT IS FURTHER CLARIFIED THAT IN THE ABSENCE OF ANY AUTHORIZATION IN FAVOUR OF ANY OTHER PERSON OR ANY EXPRESS DESIRE OF THE ASSESSEE NOT ALLOWING HIS BROTHER AS AN AGENT, THE BROTHER OF THE ASSESSE E BE REGARDED AS AN AGENT OF THE ASSESSEE UNDER SECTION 163 OF TH E ACT. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 6. THUS, THE TRIBUNAL HAS GIVEN A CLEAR FINDING THA T BY VIRTUE OF CLAUSE (B) OF SUB-SECTION (1) OF SECTION 163OF INCO ME-TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT), SHRI A. ABDUL KA LAM AZAD WAS AN AGENT OF THE ASSESSEE. THUS, IT WAS CONSIDERED THA T APPEAL FORM M.A. NO. 185/MDS/10 6 NO.36 SIGNED BY SHRI A. ABDUL KALAM AZAD AS THE AGE NT OF THE ASSESSEE WAS IN ORDER. IN OUR OPINION, THERE IS NO DEFECT WHATSOEVER SINCE THE TRIBUNAL HAD GIVEN A CLEAR FINDING THAT S HRI A. ABDUL KALAM AZAD HAS TO BE CONSIDERED AS AN AGENT OF THE ASSESS EE AFTER CONSIDERING RELEVANT PROVISIONS OF THE ACT. BY THI S MISCELLANEOUS APPLICATION WHAT IS SOUGHT BY THE REVENUE IS RE-ADJ UDICATION OF THE SAME ISSUE. THIS TRIBUNAL UNDER SECTION 254(2) OF THE ACT IS HAVING POWER ONLY TO RECTIFY MISTAKE WHICH IS APPARENT AND IT DOES NOT HAVE ANY POWER TO REVIEW. WE, THEREFORE, FIND NO MERIT IN THIS MISCELLANEOUS APPLICATION FILED BY THE REVENUE. 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE STANDS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 11 TH FEBRUARY, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMB ER CHENNAI. DATED THE 11 TH FEBRUARY, 2011. KRI. COPY TO: APPLICANT/RESPONDENT/CIT(A)/CIT/D.R./GUARD FILE