D.C.I.T. CENT. CIR. - 4(1), CENTRAL RANGE - 4, Mumbai V. SHRI HIMMATLAL GOPAL PATEL SENGHANI, Mumbai

MA 207/MUM/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0765 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2015-2016
• Appeal Filed On: 20-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Assessee Lawyers: WAY OF CROSS OBJECTION
• Keywords: Income from undisclosed sources
• Section: 254(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , H BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH , JM MA NO.207/MUM/2020 (ARISING OUT OF ITA NO. 688 /MUM/ 20 18 & CO NO.71/MUM/2019) ( ASSESSMENT YEAR : 2015 - 16 ) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 4(1), R.NO.1916, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 VS. SHRI HIMMATLAL GOPAL PATEL SENGHANI B - 3/1104, LOK EVEREST CHS, JSD ROAD, MULUND, MUMBAI 400 080 PAN/GIR NO. ABAPP6619H (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI GURBINDER SINGH, DR ASSESSEE BY SHRI RAKESH JOSHI, AR DATE OF HEARING 11 / 12 /2020 DATE OF PRONOUNCEMENT 11 / 12 /2020 / O R D E R PER M. BALAGANESH (A.M) : BY VIRTUE OF THIS MISCELLA NEOUS APPLICATION, THE REVENUE SEEKS TO RECALL THE ORDER PASSED BY THIS TRIBUNAL IN ITA NO.688/MUM/2018 DATED 10/07/2019 AND CO NO.171/MUM/2019. 2. THE REVENUE HAS PREFERRED MISCELLANEOUS APPLICATION AS UNDER: - M A NO . 207/MUM/2020 SHRI HIMMATLAL GOPAL PATEL SENGHANI 2 1. THE PRESENT MISCELLANEOUS APPLICATION I S BEING FILED UPON DIRECTIONS OF THE PR. COMMISSIONER OF INCOME TAX, CENTRAL - 2, MUMBAI. THE APPLICATION IS BEING FILED IN RELATION TO THE FOLLOWING ORDERS: - (A) ITAT ORDER DATED 10.07.2019 IN ITA NO. 688/MUM/2018 AND CROSS OBJECTION NO.71/MUM/2019 ( B) CORRIGENDUM ORDER DATED 09.10.2019 IN ITA NO. 688/MUM/2018 AND CROSS OBJECTION NO.71/MUM/2019. 2. THE BRIEF BACKGROUND OF FACTS IS SUBMITTED AS UNDER: - (I) THE SCRUTINY OF THE ASSESSEE'S CASE FOR A.Y. 2015 - 16 WAS COMPLETED U/S 143(3), DATE D 30.12.2016 BY MAKING AN ADDITION OF RS. 8.70 CRORES AS UNEXPLAINED CASH RECEIPTS BEING AMOUNTS RECEIVED BY ASSESSEE FROM RUNWAL DEVELOPERS PVT. LTD. (II) UPON APPEAL, THE LD.CIT(A) HELD, THAT ON APPLYING THE GROSS PROFIT RATE OF 16% ON THE SAID UNACCOUN TED RECEIPTS OF RS. 8,70.00.000/ - , THE UNACCOUNTED PROFIT OF THE ASSESSEE IS DETERMINED AT RS. 1.39,20,000/ - AS AGAINST THE ADDITION MADE BY THE AO OF RS. 8,70,00,000/ - . (III) AGGRIEVED BY THE ORDER OF THE CIT(A). THE REVENUE FILED APPEAL TO THE ITAT CHAL LENGING THE CIT(A)'S DIRECTION TO DELETE THE ADDITION OF RS. 8.70 CRORES. ON THE OTHER HAND, THE ASSESSEE FILED CROSS OBJECTION AGAINST THE REVENUE'S APPEAL. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED THE FOLLOWING GROUND : - ' ON THE FACTS AND CIRCUMS TANCES OF THE CASE AS WELL AS IN LAW, THELD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO THE EXTENT OF RS. 1,39,20,000/ - BY APPLYING GROSS PROFIT RATE OF 16% ON ALLEGED UNACCOUNTED RECEIPT OF RS. 8,70,00,000/ - , AS ALLEGED UNACCOUNTED PROFIT EARNED BY TH E APPELLANT, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE '. (IV) THE HON'BLE ITAT NOTED IN PARA 2 OF ITS ORDER DATED 10.07.2019 THAT, THE ONLY ISSUE TO BE DECIDED IN THESE TWO APPEALS IS AS TO WHETHER THE ADDITION OF RS. 8,70,00,000/ - COUL D BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE HANDS OF THE ASSESSEE. IT IS ALSO PERTINENT TO REFER TO THE LAST TWO SENTENCES OF PARA 3 OF THE ITAT'S ORDER DATED 10.07.2019 WHICH ARE REPRODUCED HEREUNDER : - 'FURTHER, THE ID. CIT(A) OBSERVED T HAT THE GROSS PROFIT EARNED BY THE ASSESSEE FOR THE PRECEDING 3 YEARS IS IN THE RANGE OF 11.6% TO 15.40%, HE OBSERVED THAT THIS GROSS PROFIT FOR THE LAST 3 YEARS SHOULD BE TAKEN AS BASIS M A NO . 207/MUM/2020 SHRI HIMMATLAL GOPAL PATEL SENGHANI 3 FOR PERMITTING THE ADDITION IN RESPECT OF THE SUM OF 8.70 CRORES AND ACCORDINGLY, ADOPTED THE RATE OF 16% AS GROSS PROFIT FOR THE YEAR UNDER CONSIDERATION AND APPLIED THE SUM OF RS. 8.70 CRORES AND MADE AN ADDITION OFRS. 1,39,20,000/ - THEREON. ' (V). IT IS ALSO PERTINENT TO REFER TO PARA 4 OF THE ITAT'S ORDER DATED 10.07.2 019 WHICH IS REPRODUCED AS UNDER: - '4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US '. (VI) IN THE BACKGROUND OF THE ABOVE OBSERVATIONS, THE HON'BLE ITAT HAS CONCLUDED IN PARA 5.2 AND PARA 6 AS UNDER : - '5.2 ACCORDINGLY, WE HAVE NO HESITATION IN DI RECTING THE ID.AO W DELETE THE ADDITION MADE IN THE SUM OF RS. 8.70 CRORES IN THE HANDS OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED'. (VII) THE ASSESSEE APPROACHED THE ITAT VIDE ITS LETTER DATED 23.07.2019 FOR PASSING A CORRIGENDUM ORDER, WHICH IT DID PASS ON 09.10.2019, IN THE SAID ORDER, THE ITAT HELD THAT PARA 6 OF ITS PREVIOUS ORDER DATED 10.07.2019 TO BE READ AS UNDER: - '6. IN THE RESULT, APPEAL OF THE R EVENUE IS DISMISSED WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED '. 4. IT IS TO MENTION HERE THAT THE HON'BLE ITAT VIDE ITS CORRIGENDUM ORDER DATED 09.10.2019, HAS HELD THAT, '...WE HOLD THAT PARA 6 OF THE ORDER IS TO BE READ AS UNDER: - 'IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALLOWED' 4.1 FROM THE CHRONOLOGY OF THE FACTS DISCUSSED ABOVE, IT IS CLEAR THAT THE ITAT HAS ALLOWED THE APPEAL OF THE ASSESSEE BY WAY OF CROSS OBJECTION WHEREIN IT CHALLENGED THE ORDER OF THE LD.CIT(A) CONFIRMING THE ADDITION TO ITS TOTAL INCOME TO THE EXTENT OF RS. 1,39,20,0007 - . THUS, THE HON'BLE ITAT HAS NOT ONLY DISMISSED THE REVENUE'S APPEAL BUT ALSO DELETED THE ADDITION TO THE EXTENT SUSTAINED BY THE CIT(A). 5 . IN PARA 8.6 OF THE ASSESSMENT ORDER OF RUNWAL DEVELOPERS PVT.LTD. FOR A.Y. 2015 - 16, THE ASSESSING OFFICER NOTED INTER - ALIA THAT AN AMOUNT OF RS.17,94,14,102/ - HAS BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THEREFORE, THE ASSESSEE HAD SUFFICIENT UNAC COUNTED CASH BALANCE IN ITS M A NO . 207/MUM/2020 SHRI HIMMATLAL GOPAL PATEL SENGHANI 4 HANDS TO MAKE SUCH PAYMENT TO HIMMATBHAISENGHANI. THE HON'BLE ITAT IN ITS ORDER TOOK NOTE OF THE AFORESAID OBSERVATION BY STATING THAT - ''WE FIND IN PARA 8.6 REPRODUCED (SUPRA) THAT THE ASSESSING OFFICER OF RUNWAL DEVELOPERS PV T.LTD. HAD GIVEN A CATEGORICAL FINDING THAT RUNWAL DEVELOPERS PVT. LTD. HAD INDEED MADE UNACCOUNTED CASH PAYMENT OF RS. 8.70 CRORES TO THE ASSESSEE. HENCE, THE ORDER OF THE DEPARTMENT ITSELF EXPLAINS THE SOURCE OF RS. 8.70 CRORES FOR THE ASSESSEE IN RESPEC T OF LABOUR PAYMENTS THEREON BY THE ASSESSEE. HENCE, THERE CANNOT BE ANY ADDITION THAT COULD BE MADE IN THE HANDS OF THE ASSESSEE IN THE SUM OF RS. 8.70 CRORES IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE '. 5. HOWEVER, IT IS NEEDS TO BE MENTIONED H ERE THAT M/S. RUNWAL DEVELOPERS PVT. LTD. HAD ADMITTED ON - MONEY INCOME FOR AY 2015 - 16 AMOUNTING TO RS. 17,94,14,102/ - . HOWEVER, ONLY AN AMOUNT OF RS. 1,20,00,000/ - WAS OFFERED TO TAX BY THE ASSESSEE IN ITS RETURN OF INCOME. THEREFORE, REMAINING ON - MONEY AM OUNT RS. 16,74,14,102/ - (RS.17,94,14,102 - RS. 1,20,00,000) WAS ADDED BY THE ASSESSING OFFICER. FURTHER, THIS ADDITION OF RS. 16,74,14,102/ - WAS CONTESTED BY M/S. RUNWAL DEVELOPERS PVT. LTD. AT LD.CIT(A) AND LD.CIT(A) SUSTAINED THE ADDITION MADE BY THE ASS ESSING OFFICER. THEREAFTER, M/S. RUNWAL DEVELOPERS PVT. LTD. HAS FILED THE APPEAL AGAINST THE ORDER OF LD.CIT(A) IN HON'BLE ITAT, MUMBAI, WHICH IS STILL PENDING. THUS, THE ISSUE HAS NOT REACHED FINALITY. 6. NOWHERE IN THE ORDER OF THE HON'BLE ITAT, IS THE RE ANY DISCUSSION FOR DELETING THE ADDITION OF RS. 1,39,20,000/ - , HOWEVER, AS CAN BE SEEN FROM PARA 5 OF ORDER DATED 10.07.2019 AND THE CORRIGENDUM ORDER DATED 09.10.2019, THE HON'BLE ITAT HAS GIVEN RELIEF OF RS. 1,39,20,000/ - , SOLELY BY CONSIDERING THAT T HE AMOUNT OF RS. 8.70 CRORES RECEIVED BY THE ASSESSEE WAS EXPLAINED IN THE HANDS OF RUNWAL DEVELOPERS PVT. LTD. HOWEVER, IN DOING SO, IT FAILED TO APPRECIATE THAT SINCE SHRI HIMMATLAL SENGHANI WAS ADMITTEDLY A LABOUR CONTRACTOR FOR RUNWAL DEVELOPERS PVT. L TD., THE AMOUNT OF RS. 8.70 CRORES CONSTITUTED REVENUE / TURNOVER FOR HIM AND HENCE THE LD.CIT(A) HAD RIGHTLY ESTIMATED UNACCOUNTED PROFIT OF 16% THEREON AND DIRECTED AN ADDITION OF RS. 1,39,20,000/ - TO BE MADE IN COMPUTING HIS TOTAL INCOME. THEREFORE, BY ALLOWING THE CROSS APPEAL OF THE ASSESSEE AND DELETING THE ADDITION OF RS. 1,39,20,000/ - , WITHOUT DISCUSSING ANY REASONS FOR DISAGREEING WITH THE CIT(A), THE ORDER OF THE HON'BLE ITAT IS EX - FACIE ERRONEOUS. 7. FURTHER, IT IS FOUND THAT M/S. RUNWAL DEVELOP ERS PVT. LTD. HAS NOT OFFERED THE ENTIRE AMOUNT OF ON - MONEY AS ITS UNACCOUNTED INCOME. FURTHER, IN THE CASE OF THE COMPANY, THE ADDITION MADE BY THE AO & CONFIRMED BY THE LD.CIT(A) HAS BEEN CONTESTED BY M/S. RUNWAL DEVELOPERS PVT. LTD. AND THE SAME IS PEND ING BEFORE HON'BLE ITAT. AS THE ISSUE OF ADDITION OF ON - MONEY HAD NOT REACHED FINALITY, THE ITAT SHOULD M A NO . 207/MUM/2020 SHRI HIMMATLAL GOPAL PATEL SENGHANI 5 NOT HAVE CONSIDERED THE FINDING OF AO OF M/S. RUNWAL DEVELOPERS PVT. LTD. AS FINAL AND DELETED THE ADDITION MADE IN HIMMATLAL GOPAL PATEL SENGHANI. PRA YER 1. WHILE DELETING THE ADDITION MADE BY THE AO OF RS.8.7 CRORES, THE HON'BLE ITAT HAS NOT CONSIDERED THE ADDITION SUSTAINED BY THE LD.CIT(A) TO THE EXTENT OF RS.1,39,20,000/ - ON MERITS. 2. WHILE DELETING THE ADDITION MADE BY THE AO OF RS.8.7 CRORES , THE HON'BLE ITAT HAS NOT CONSIDERED THE CRUCIAL FACT THAT M/S. RUNWAL DEVELOPERS PVT. LTD. HAS NOT OFFERED THE ENTIRE AMOUNT OF ON - MONEY AS ITS UNACCOUNTED INCOME AND THE ADDITION SUSTAINED BY THE LD.CIT(A) IN ITS CASE, HAS BEEN CONTESTED BY M/S. RUNWAL DEVELOPERS PVT. LTD. AND THE SAME IS PENDING BEFORE HON'BLE ITAT AND THEREFORE, FINDING OF THE AO HAS NOT REACHED FINALITY. ACCORDINGLY, HON'BLE ITAT MAY RECONSIDER ITS JUDGEMENT . 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE BASIC FACTS OF THE ISSUE IN DISPUTE ARE ALREADY RECORDED IN THE ORDER PASSED BY THIS TRIBUNAL WHICH ARE ALSO NARRATED BY THE REVENUE IN ITS MISCELLANEOUS APPLICATION. HENCE, SAME ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE FIND THAT T HE LD. AO HAD MADE AN ADDITION OF RS.8,70,00,000/ - IN RESPECT OF CERTAIN PAYMENTS MADE BY THE ASSESSEE IN CASH OUT OF RECEIPTS FROM RUNWAL DEVELOPERS PVT. LTD., THIS ADDITION OF RS.8.70 CRORES WAS BROUGHT DOWN TO RS.1,39,20,000/ - BY THE LD. CIT(A) WHERE TH E LD. CIT(A) HELD THAT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTION COULD BE BROUGHT TO TAX. 4. AGGRIEVED, THE REVENUE HAD PREFERRED AN APPEAL FOR RESTORATION OF THE ORIGINAL ADDITION OF RS.8.70 CRORES AND ASSESSEE HAD PREFERRED CROSS OBJECTION B EFORE US CHALLENGING THE ADDITION OF RS.1,39,20,000/ - . HENCE, THE ENTIRE ADDITION OF RS.8.70 CRORES WAS IN DISPUTE BEFORE THIS TRIBUNAL EFFECTIVELY. WE FIND THAT MAIN GRIEVANCE OF THE REVENUE WAS THAT THE RUNWAL DEVELOPERS PVT. LTD., HAD NOT OFFERED RS.8.7 0 CRORES IN ITS HANDS M A NO . 207/MUM/2020 SHRI HIMMATLAL GOPAL PATEL SENGHANI 6 AND THAT THE TRIBUNAL APPEAL WAS PENDING IN THEIR CASE WHILE DECIDING THE APPEAL BY THIS TRIBUNAL IN THE CASE OF THE ASSESSEE HEREIN . WE FIND THAT THE LD. AR PLACED ON RECORD THE COPY OF THE TRIBUNAL ORDER IN THE CASE OF RUNWAL DEVELO PERS PVT. LTD, FOR A.Y.2015 - 16 IN ITA NO.5622/MUM/2017 DATED 15/07/2020. WE FIND THAT THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL IN THE CASE OF RUNWAL DEVELOPERS PVT. LTD., IN PAGE 7 PARA 10 AND IN PAGE 8 PARA 11 HAD ULTIMATELY REMANDED THE ISSUE TO THE F ILE OF THE LD. AO FOR THE PURPOSE OF QUANTIFICATION OF UNDISCLOSED INCOME ON THE BASIS OF INCRIMINATING MATERIALS / EVIDENCES AND EXAMINE THE AVAILABILITY OF CASH IN THE GROUP AS A WHOLE. WE FIND THAT REVENUE HAD PREFERRED THIS MISCELLANEOUS APPLICATION ON 20/08/2020, ON WHICH DATE THE ORDER OF THE TRIBUNAL IN THE CASE OF RUNWAL DEVELOPERS PVT. LTD., HAD ALREADY BEEN PASSED AND THE PRAYER OF THE REVENUE THAT , APPEAL IN THE CASE OF RUNWAL DEVELOPERS PVT. LTD., HAD NOT ATTAINED FINALITY IS FOUND TO BE FACTUAL LY INCORRECT. HENCE, WE HOLD THAT THE PRAYER OF THE REVENUE DOES NOT FALL WITHIN THE AMBIT OF ANY MISTAKE APPARENT FROM RECORD WITHIN THE MEANING OF SECTION 254(2) OF THE ACT WARRANTING ANY RECTIFICATION. 5. IN THE RESULT, MISCELLANEOUS APPLICATION OF TH E REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11 / 12 /2020. SD/ - ( AMARJIT SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 11 / 12 / 2020 KARUNA , SR.PS M A NO . 207/MUM/2020 SHRI HIMMATLAL GOPAL PATEL SENGHANI 7 CO PY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//