H.Gouthamchand Jain, CHENNAI V. ITO, CHENNAI

MA 221/CHNY/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4301 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 22-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2015
• Court: TRIBUNAL
• Department Lawyers: MATHIVANAN
• Assessee Lawyers: S SRIDHAR
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER M.A.NO.221/MDS/2015 (IN ITA NO. 1222/MDS/2013) / ASSESSMENT YEAR : 2008-09 SHRI H. GOUTHAMCHAND JAIN, NO.8, HASBHAW NIVAS, BAZAAR ROAD, MYLAPORE, CHENNAI 600 004. PAN AAFPC0959B ( /APPLICANT) V. THE INCOME-TAX OFFICER, WARD-I(2), CHENNAI - 34. (/ RESPONDENT) APPLICANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI MATHIVANAN, JCIT / DATE OF HEARING : 22.04.2016 / DATE OF PRONOUNCEMENT : 29.04.2016 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER BY THIS MISCELLANEOUS PETITION, THE ASSESSEE SEE KS RECALL OF THE ORDER OF THE TRIBUNAL IN ITA NO.1222/ MDS/2015 DATED 12.2.2014. MA 221/15 2 2. ACCORDING TO THE LD.AR, THE DEPARTMENT CAME IN APPEAL BEFORE THE TRIBUNAL WITH REGARD TO DELETION OF ADDITION OF ` 15 LAKHS BY THE CIT(A). THE TRIBUNAL DECIDED THE ISSUE AS FOLLOWS : 7. WE HEARD BOTH SIDES IN DETAIL AND EXAMINED THE RECORDS OF THE CASE PLACED BEFORE US. THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE OF ADDITIONAL INCOM E OF ` 15 LAKHS IN A VERY DETAILED MANNER AT PAGES 2 AND 3 OF HIS ORDER. HE HAS POINTED OUT THAT THE SURVEY WAS CARRIED OUT ON 27.2.2008 AND THE MAJOR PORTION OF T HE EXPENSES HAD BEEN BOOKED BY THE ASSESSEE ONLY AFTER THE SAID DATE OF SURVEY. HE COMPARED THE DETA ILS OF THE IMPUGNED ASSESSMENT YEAR 2008-09 WITH EARLIER FOUR ASSESSMENT YEARS 2004-05, 2005-06, 2006-07 AND 2007-08. THE ASSESSING OFFICER HAS POINTED OUT THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE BY WAY OF COMMISSION PAYMENTS FOR THOSE EARLIER FOUR ASSESSMENT YEARS FROM 2004-05 TO 2007-08. BUT, FOR THE IMPUGNED ASSESSMENT YEAR, TH E ASSESSEE HAS CLAIMED A COMMISSION PAYMENT OF ` 6 LAKHS. THE ASSESSING OFFICER HELD THAT THIS NEW ITE M OF EXPENDITURE HAS BEEN BOOKED TO NULLIFY THE EFFEC T OF ADDITIONAL INCOME OF ` 15 LAKHS OFFERED BY THE ASSESSEE AT THE TIME OF SURVEY. THE ASSESSING OFFIC ER HAS ALSO POINTED OUT THAT EVEN THOUGH THERE IS A REMARKABLE INCREASE IN THE TURNOVER REPORTED FOR TH E IMPUGNED ASSESSMENT YEAR, THE INCREASE REFLECTED IN THE CORRESPONDING GROSS PROFIT IS NOT SATISFACTORY, WHICH GOES TO SHOW THAT THE ASSESSEE HAS INFLATED MANY OF THE EXPENDITURES, ESPECIALLY AFTER THE DATE OF SURVEY. THE ASSESSING OFFICER HAS COME TO A FORMIDABLE CONCLUSION THAT THE ASSESSEE HAS NULLIFI ED THE EFFECT OF OFFERING ADDITIONAL INCOME OF ` 15 LAKHS BY OVERSTATING THE EXPENDITURE, ESPECIALLY AFTER TH E DATE OF SURVEY. MA 221/15 3 8. WE FIND THAT THE DETAILED FINDINGS ARRIVED AT BY THE ASSESSING OFFICER HAVE NOT BEEN CONSIDERED AT ALL B Y THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) HIMSELF HAS CLEARLY STATED IN PARAGRAPH 11.2 OF HIS ORDER THAT THE ASSESSEE HAS OFFERED AN ADDITIONAL INCOME OF ` 15 LAKHS OVER AND ABOVE OF HIS REGULAR INCOME. WE EXTRACT THE EXACT OBSERVATION MADE BY THE COMMISSIONER OF INCOME TAX (APPEALS):- I HAD GONE THROUGH THE SUBMISSIONS MADE BY THE AR AND THE OBSERVATIONS OF THE A.O. IT IS A FACT ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY U/S 133A THAT THE BOOKS OF ACCOUNTS WERE NOT REGULARLY MAINTAINED. IN ORDER TO OVERCOME ITS DEFICIENCY, THE ASSESSEE HAS COME FORWARD BY DISCLOSING THE ADDITIONAL INCOME OF ` 15 LAKHS OVER AND ABOVE HIS REGULAR INCOME. 9. IT IS SEEN THAT THE ASSESSEE HAS NOT MAINTAINED PROPER ACCOUNTS. THEN, HOW IT IS POSSIBLE FOR THE ASSESSEE TO ESTABLISH THAT HE HAS INCURRED ADDITION AL AMOUNT OF EXPENDITURE THAT TOO AFTER THE DATE OF SURVEY? IT IS SEEN THAT THE ASSESSEE HAS BROUGHT TH E ADDITIONAL AMOUNT OF ` 15 LAKHS THROUGH HIS CAPITAL ACCOUNT. THE SOURCE OF ADDITIONAL INCOME OF ` 15 LAKHS IS FROM THE IMPUGNED BUSINESS CARRIED ON BY THE ASSESSEE. WHEN THE SAID AMOUNT OF ` 15 LAKHS IS ATTRIBUTABLE TO THE PROFITS AROSE OUT OF THE IMPUGN ED BUSINESS, WHAT IS THE BASIS OF BRINGING ` 15 LAKHS THROUGH ASSESSEES CAPITAL ACCOUNT? THIS AMOUNT OF ` 15 LAKHS OUGHT TO HAVE BEEN OFFERED BY THE ASSESSEE OVER AND ABOVE THE REGULAR PROFITS REFLECTED IN HIS STATEMENT OF ACCOUNTS. 10. THESE VITAL ASPECTS HAVE NOT BEEN EXAMINED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ONLY STATED THAT ONCE THE ASSESSEE HAS TECHNICALLY OFFER ED MA 221/15 4 THIS INCOME OF ` 15 LAKHS FOR THE IMPUGNED ASSESSMENT YEAR, IT IS NOT NECESSARY TO EXAMINE THE BONAFIDES OF THE EXPENDITURE WORKED OUT ON ESTIMATE D BASIS. THIS CANNOT BE A GOOD PROPOSITION IN THE MAT TER OF ASSESSMENT. EVEN IF THE ASSESSEE HAS BROUGHT ADDITIONAL INCOME, IT IS INCUMBENT UPON THE ASSESSI NG OFFICER TO EXAMINE THE GENUINENESS OF THE EXPENDITU RE CLAIMED BY THE ASSESSEE. THIS IS MORE SO IMPORTANT IN A CASE WHERE THE ASSESSEE HAS DELIBERATELY MADE ATTEMPTS TO NULLIFY THE EFFECT OF THE ADDITIONAL IN COME OFFERED BY INFLATING THE QUANTUM OF EXPENDITURE. THEREFORE, WE FIND THAT THE ADDITION CANNOT BE DELE TED ONLY ON THE BASIS OF CERTAIN GENERAL PROPOSITION. O NE HAS TO BE METICULOUS WITH THE FACTS OF THE CASE. 11. FROM THE DETAILED EXAMINATION OF THE SURROUNDIN G FACTS OF THE CASE DISCUSSED BY THE ASSESSING AUTHOR ITY IN DETAIL, WE COME TO A FORMIDABLE CONCLUSION THAT THE ASSESSEE HAS MANIPULATED HIS CLAIM OF EXPENDITURE S O AS TO OFFSET THE REVENUE EFFECT OF ADDITIONAL INCOM E OF ` 15 LAKHS OFFERED BY HIM IN THE COURSE OF SURVEY. IT IS AN UNDISPUTED FACT THAT THE AMOUNT OF ` 15 LAKHS WAS OFFERED BY THE ASSESSEE AS ADDITIONAL INCOME OVER A ND ABOVE HIS REGULAR INCOME FROM THE BUSINESS. THEREFORE, IT IS NOT PERMISSIBLE FOR THE ASSESSEE T O DILUTE THE SAID AMOUNT OF ADDITIONAL INCOME BY OVERSTATING THE EXPENDITURE. 12. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSING OFFICER HAS RIGHTLY MADE AN ADDI TION OF ` 15 LAKHS AND THE SAME HAS TO BE SUSTAINED. WE SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE OF DELETING THE ADDITION OF ` 15 LAKHS. THE SAID ADDITION IS RESTORED. THE ASSESSING OFFICER SHALL REVISE THE ASSESSMENT. 13. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS ALLOWED. MA 221/15 5 2.1 ACCORDING TO THE LD. AR, SUSTAINING THE ADDI TION OF ` 15 LAKHS AMOUNTS TO DOUBLE ADDITION AS THE SAME AMOUNT HAS ALREADY TAKEN AS INCOME OF THE ASSESSEE WHILE COMPUTING THE INCOME FOR THE ASSESSMENT YEAR 2008-09. HE SUBMITTED THAT AS ` 15 LAKHS HAS GONE INTO PROFIT AND LOSS ACCOUNT AND CLAIMED RELEVANT EXPENDITURE, FURTHER ADDITION OF ` 15 LAKHS AMOUNTS TO DOUBLE ADDITION AND THE SAME MAY BE DELETED AND THA T THE DELETION MADE BY THE CIT(APPEALS) TO BE CONFIRM ED BY THE TRIBUNAL. THE LD. AR FURTHER SUBMITTED THAT IN THIS CASE, THERE IS AN OFFER BY THE ASSESSEE AT THE TIME OF SURVEY CONDUCTED ON 27.2.2008. HOWEVER, WHILE COMPUTING THE RETURN OF INCOME, THE ASSESSEE CLAIME D EXPENDITURE TO THAT EXTENT AND NULLIFIED THE OFFER MADE BY THE ASSESSEE. SO THAT, THE AO MADE AN ADDITION OF ` 15 LAKHS WHILE ASSESSING THE INCOME FOR THE ASST. YEAR 2008-09. HOWEVER, THE CIT(APPEALS) DELETED THE SAM E ON THE REASON THAT THE ASSESSEE HAS ALREADY TAKEN INCOME INTO PROFIT AND LOSS ACCOUNT A SUM OF ` 15 LAKHS WHILE COMPUTING THE INCOME OF THE ASSESSEE FOR THE ASST. MA 221/15 6 YEAR 2008-09. HOWEVER, THE TRIBUNAL FOUND THAT THE METHODOLOGY FOLLOWED BY THE ASSESSEE IS NOT APPROPR IATE AND REVERSED THE FINDINGS OF THE CIT(APPEALS) AND RESTORED THAT OF THE AO. THEREFORE, HE REQUESTED T HAT THE ABOVE ORDER OF THE TRIBUNAL MAY BE RECALLED/REC TIFIED. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN EARLIER OCCASI ON FAIRLY CONSIDERED THE ENTIRE ARGUMENTS OF THE ASSESSEE AND HAS GIVEN A FINDING AND DECIDED THE ISSUE AGAINST THE A SSESSEE. NOW, THE ASSESSEES COUNSEL WANTS TO RE-ARGUE THE S ETTLED ISSUE BY PUTTING SOME ARGUMENTS. IN OUR OPINION, I F WE CONSIDER THE ARGUMENTS OF THE ASSESSEES COUNSEL, I T WILL AMOUNT TO REVIEW OF OUR EARLIER ORDER OF THIS TRIBU NAL, FOR WHICH, THE TRIBUNAL HAS NO POWER. 4. IT IS WELL-SETTLED THAT STATUTORY AUTHORIT Y CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRESSLY CONF ERRED. THERE IS NO EXPRESS POWER OF REVIEW CONFERRED ON TH IS TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DOES NOT EXTEND TO REHEARING OF THE CASE ON MERIT. IT IS HE LD IN THE CASE MA 221/15 7 OF CIT VS. PEARL WOOLLEN MILLOS (2011) 330 ITR 164/ (2010) 191 TAXMAN 286 (PUNJ. & HAR.) AS UNDER : THAT THE TRIBUNAL COULD NOT RE-ADJUDICATE THE MATT ER UNDER SECTION 254(2). IT IS WELL SETTLED THAT A STATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRESSLY CONFERRED. THERE WAS NO EXPRESS POWER OF REVIEW CONFERRED ON THE TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DID NOT EXTENT TO REHEARING A CASE ON THE MERITS. NEITHER BY INVOKING INHERENT POWER NOR THE PRINCIPL E OF MISTAKE OF COURT NOT PREJUDICING A LITIGANT NOR BY INVOLVING DOCTRINE OF INCIDENTAL POWER, COULD THE TRIBUNAL REVERSE A DECISION ON THE MERITS. THE TRIBUNAL WAS NOT JUSTIFIED IN RECALLING ITS PREVIOU S FINDING RESTORING THE ADDITION, MORE SO WHEN AN APPLICATION FOR THE SAME RELIEF HAD BEEN EARLIER DISMISSED. 5. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 2 54(2) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFIC ATION OF MISTAKES APPARENT FROM THE RECORD. WE SHALL FIRST D EAL WITH THE QUESTION OF THE POWER OF THE TRIBUNAL TO RECALL AN ORDER IN ITS ENTIRETY. RECALLING THE ENTIRE ORDER OBVIOUSLY WOUL D MEAN PASSING OF A FRESH ORDER. THAT DOES NOT APPEAR TO B E THE LEGISLATIVE INTENT. THE ORDER PASSED BY THE TRIBUNA L UNDER SECTION 254(1) IS THE EFFECTIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED UNDER SECTION 254(2) EI THER ALLOWING THE AMENDMENT OR REFUSING TO AMEND GETS ME RGED MA 221/15 8 WITH THE ORIGINAL ORDER PASSED. THE ORDER AS AMENDE D OR REMAINING UN-AMENDED IS THE EFFECTIVE ORDER FOR ALL PRACTICAL PURPOSE. AN ORDER UNDER SECTION 254(2) DOES NOT HAV E EXISTENCE DE HORS THE ORDER UNDER SECTION 254(1). R E-CALLING OF THE ORDER IS NOT PERMISSIBLE UNDER SECTION 254(2 ). RECALLING OF AN ORDER AUTOMATICALLY NECESSITATES REHEARING AN D RE- ADJUDICATION OF THE ENTIRE SUBJECT-MATTER OF APPEAL . THE DISPUTE NO LONGER REMAINS RESTRICTED TO ANY MISTAKE SOUGHT TO BE RECTIFIED. POWER TO RECALL AN ORDER IS PRESCRIBE D IN TERMS OF RULE 24 OF THE ITAT RULES, 1963, AND THAT TOO ONLY IN CASE WHERE THE ASSESSEE SHOWS THAT IT HAD A REASONABLE C AUSE FOR BEING ABSENT AT A TIME WHEN THE APPEAL WAS TAKEN UP AND DECIDED EX PARTE. JUDGED IN THE ABOVE BACKGROUND TH E ORDER PASSED BY THE TRIBUNAL IS INDEFENSIBLE. 6. THE WORDS USED IN SECTION 254(2) ARE SHALL MAK E SUCH AMENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NO TICE. CLEARLY, IF THERE IS A MISTAKE, THEN AN AMENDMENT I S REQUIRED TO BE CARRIED OUT IN THE ORIGINAL ORDER TO CORRECT THAT PARTICULAR MISTAKE. THE PROVISION DOES NOT INDICATE THAT THE T RIBUNAL CAN RECALL THE ENTIRE ORDER AND PASS A FRESH DECISION. THAT WOULD MA 221/15 9 AMOUNT TO A REVIEW OF THE ENTIRE ORDER AND THAT IS NOT PERMISSIBLE UNDER THE I T ACT. THE POWER TO RECTIFY A MISTAKE UNDER SECTION 254(2) CANNOT BE USED FOR RECALLING T HE ENTIRE ORDER. NO POWER OF REVIEW HAS BEEN GIVEN TO THE TRI BUNAL UNDER THE I T ACT. THUS, WHAT IT COULD NOT DO DIREC TLY COULD NOT BE ALLOWED TO BE DONE INDIRECTLY. 7. IN THE CASE OF CIT VS. HINDUSTAN COCA BEVERAGES (P) LTD. (2007) 293 ITR 163/159 TAXMAN 127 (DELHI), THE IR LORDSHIPS WHILE CONSIDERING THE POWERS OF THE TRIBU NAL UNDER SECTION 254(2) OF THE IT ACT, 1961 OBSERVED AS UNDE R:- UNDER SECTION 254(2) OF THE IT ACT, 1961, THE TRIBUNAL HAS THE POWER TO RECTIFY MISTAKES IN ITS ORDER. HOWEVER, IT IS PLAIN THAT THE POWER TO RECTI FY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICAT ION IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTHOUGH IT IS POSSIBLE THAT THE PRE-REQUISITE FOR EXERCISE OF EITHER POWER MAY BE SIMILAR) A MISTAKE APPARENT FROM THE RECORD), BY ITS VERY NATURE THE POWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE REC ALL AND REVIEW OF THE ORDER SOUGHT TO BE RECTIFIED. FURTHER, A PERSON CANNOT SAY AT ONE TIME ONE THING AND THEN TURN AROUND TO SUIT HIS NEEDS. IN OUR OPINION, THE ASSESSEE WITH SOLE INTENTION TO GO OUT OF OFFER MADE BY THE ASSESSEE CLAIMED ADDITIONAL EXPENDITURE, WHICH IS NOT AS PER THE MA 221/15 10 STATEMENT RECORDED DURING THE SURVEY U/S.133A OF TH E ACT. HOWEVER, CONSIDERING THE MODUS OPERANDI FOLLOWED BY THE ASSESSEE, THE TRIBUNAL HAS TAKEN SERIOUS OBJECTION AND REVERSED THE ORDER OF THE CIT(APPEALS) AND CONFIRME D THE ADDITION OF ` 15 LAKHS. IN OUR OPINION, THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RAMANLAL K AMDAR V. CIT (108 ITR 73), WHEREIN IT WAS HELD THAT ONCE THE ASSESSEE ACCEPTS CERTAIN ADDITION BEFORE AUTHORITIES, HE CAN NOT BE SAID TO BE AGGRIEVED BY THAT ADDITION AND CANNOT APPEAL AGAINST IT BEFORE THE APPELLATE AUTHORITIES. HENCE, WE DECLIN E TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. ACCORDIN GLY, WE REJECT THE MISC. APPLICATION FILED BY THE ASSESSEE. 8. IN THE RESULT, THE MISC. APPLICATION OF THE ASSE SSEE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH OF APRIL, 2016 AT CHENNAI. SD/- SD/- ( . ' ) ( #$% & ) (G. PAVAN KUMAR) (CHANDRA POOJARI) 7 89 /JUDICIAL MEMBER : 89/ACCOUNTANT MEMBER #:7 /CHENNAI, A8$ /DATED, THE 29 TH APRIL, 2016. MPO* MA 221/15 11 B8:C DE F:E /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. B B G ( ) /CIT(A) 4. B B G /CIT 5. EHI J /DR 6. IK L /GF.