Sangeeta Devi Jhunjhunwala, New Delhi V. ITO, Ward-70(1), New Delhi

MA 231/DEL/2023

AI Insights

The case revolves around a Miscellaneous Application filed by Sangeeta Devi Jhunjhunwala against an order of the Income Tax Appellate Tribunal which partly allowed her appeal in ITA No. 747/Del/2022 for the Assessment Year 2015-16. The MA contended that the Tribunal had failed to address specific grounds (No. 2 and No. 3) which were crucial to her case. These grounds pertained to the alleged lack of independent inquiry by the Assessing Officer and reliance on a general investigation report. The Tribunal, however, considered these grounds as arguments supporting the main substantive ground and found no need for separate adjudication. The Tribunal cited various precedents to support its decision, emphasizing that the rectification powers under section 254(2) do not allow for a review of the merits of the case but only for correction of apparent mistakes.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302769 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 29-05-2023
• Other Referred Cases: Honda Siel Power Products Ltd. vs. CIT, M/s. Lachman Das Bhatia Hingwala vs. ACIT, Rolls Royce Marine India (P) Ltd. vs. ITAT, Baljeet Jolly vs. CIT, Express Newspaper Ltd. v. Dy. CIT, CIT vs. Mussadilal Ram Bharose, CIT (IT-4) Mumbai v. Reliance Telecom Ltd., JT (India) Exports and another v. Union of India and another
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tangible material; Bogus
• Section: 131; 69C; 250; 254(2); 113; 2(A)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE DR. B R R KUMAR, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER MA 231/Del/2023 Arising out of ITA No. 747/Del/2022 Assessment Year: 2015-16 O R D E R PER ASTHA CHANDRA This Miscellaneous Application (“MA”) is filed by the assessee under section 254(2) of the Income Tax Act, 1961 (the “Act”) requesting to recall the order dated 18.05.2023 in ITA No. 747/Del/2022 for Assessment Year (“AY”) 2015-16 wherein the Tribunal partly allowed the appeal of the assessee. 2. It is stated that ground No. 2 and ground No. 3 have not been reproduced/mentioned/disposed of in the order of the Tribunal which were not only relevant but raised factual as well as legal aspects and in fact whole arguments were based on those grounds only. Except issuing notice under section 131 of the Act to the assessee, no inquiry whatsoever was made in Sangeeta Devi Jhunjhunwala, IPSO Legal H-35, 1 st Floor, Jangpura Extension, New Delhi – 110 014 PAN AAAPJ3918J Vs. ITO, ward 70(1), New Delhi. (Appellant) (Respondent) Assessee by: Shri Rajiv Saxena, Advocate Shri Shyam Sunder, Advocate Department by : Shri Ram Dhan Meena, Sr. DR Date of Hearing 07.07.2023 Date of pronouncement 03.08.2023 2 the case of the assessee by the Ld. Assessing Officer (“AO”) who relied on the observations of Director of Investigation, Kolkata, [“DI(Inv.)”], modus- operandi etc. in that investigation. This was highlighted before the Bench. The decision of the Hon’ble Delhi High Court in Smt Krishna Devi’s case was followed by the Tribunal in various decisions. Non disposal of said grounds of appeal is mistake apparent from record. Therefore, order of the Tribunal be recalled. Decision of the Hon’ble Supreme Court in Honda Siel Power Products Ltd. vs. CIT (2007) 295 ITR 466 (SC); decision of Hon’ble Delhi High Court in M/s. Lachman Das Bhatia Hingwala vs. ACIT (2011) 196 taxman 563 (Del) and decision of Hon’ble Bombay High Court in Rolls Royce Marine India (P) Ltd. vs. ITAT (2019) 107 taxmann.com 26 (Bom) are referred to. 3. The MA came up for hearing before us on 07.07.2023. 4. The Ld. AR has been heard. The main thrust of his argument is that the Ld. AO did not conduct any independent enquiry and completed the assessment merely on the basis of general investigation report of DI(Inv.), Kolkata which was highlighted in ground No. 2 taken before the Tribunal which the Tribunal has not decided. This amounts to mistake apparent from record. 4.1 It is also submitted that the decisions of Co-ordinate Benches have not been followed. 4.2 It is further submitted that the decision of the Tribunal in the case of assessee is based on the nature of purchase of shares by the assessee “off- line” which was not argued/raised by either party. No opportunity of rebuttal was provided to the assessee. This amounts to mistake apparent from record. Support was derived from the decision in CIT vs. S.Kumar Tyers Mfg. Co. 305 ITR 360 (MP). 5. The Ld. DR advanced no arguments either for or against the assessee. 3 6. We have carefully considered the contents of the MA as also the submissions of the Ld. AR and perused the records. Before going through the merits of contentions raised in the MA and submissions made by the Ld. AR, it is imperative to glance at the relevant provisions of the Income Tax Appellate Tribunal Rules, 1963 (“ITAT Rules”) and of the Act. Rule 8 of ITAT Rules mandates that the grounds of appeal shall inter alia, be without any argument or narrative. Sub-section (2) of section 254 provides that the Appellate Tribunal may, at any time, within six months from the end of the month in which the order was passed, with a view to rectify any mistake apparent from record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer. 7. While deciding the appeal of the assessee the Tribunal found that the assessee has taken only one substantive ground No. 1 with sub-ground (a) and (b) covering the whole grievance of the assessee of confirmation of disallowance of exemption under section 10(38) on long term capital gain in sub-ground (a) and addition under section 69C in sub-ground (b) of ground No. 1. Ground No. 2 and ground No. 3 contained only arguments in support of ground No. 1 (a) and ground No. 1 (b) respectively. Ground No. 2 and 3 clearly violated the mandate of Rule 8 of ITAT Rules which ordains that the grounds of appeal shall be without any argument or narrative. It was in this backdrop of factual matrix that the Tribunal, after having decided the assessee’s substantive ground No. 1(a) and 1(b) observed in para 32 of the order that as stated in the beginning, ground No. 2 and ground No. 3 are only arguments in support of ground No. 1 (a) and 1(b) and by way of clarification added that these arguments have duly been considered by the Tribunal while dealing with the issues related thereto. Therefore, no separate adjudication is called for. It is, thus, obvious that reproduction of ground No. 2 and ground No. 3 in the order would have been nothing but frivolous and violative of the express provision of Rule 8 of ITAT Rules. None-the-less the factual and legal aspect contained in the argumentative ground No. 2 and 3 have duly been considered by the Tribunal as stated in 4 para 32 of its order while dealing with the issues raised therein. In our humble opinion, it is therefore incorrect on the part of the assessee to allege that the Tribunal has not disposed of ground No. 2 and ground no. 3 due to which mistake apparent from record crept into its order. 8. The assessee has admittedly filed this MA under sub-section (2) of section 254 of the Act which permits the Tribunal to rectify any mistake apparent from the record brought to its notice by the assessee or the Assessing Officer and amend its order within the stipulated time frame. 9. The expression ‘mistake apparent from the record’ came up for consideration before the Hon’ble Delhi High Court in Baljeet Jolly vs. CIT (2001) 250 ITR 113 (Del). The Hon’ble Delhi High Court observed that in order to attract the application of section 254(2), a mistake must exist and it must be apparent form the record. The power to rectify the mistake, however, does not cover cases, where a revision or review of the order is intended. A mistake under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. Substitution of the order, if intended, is not permissible. Where an error is far from self evident, it ceases to be an apparent error. Section 254(2) does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. A decision on a debatable point of law or disputed question of fact is not a mistake apparent from the record. Inaccuracies or wrong recording of facts are not patent mistakes which constitute the sine-qua-non for exercise of power under section 254(2) of the Act. 10. In Express Newspaper Ltd. v. Dy. CIT (2010) 186 taxman 111 (Mad), Hon’ble Madras High Court observed that the Tribunal’s power under section 254(2) is not to review its earlier order but only to amend it with a view to rectify any mistake apparent from the record. 11. We are conscious of the judgment of the Hon’ble Supreme Court in Honda Siel Power Products Ltd. (supra) and other precedents relied upon by 5 the Ld. AR wherein their Lordships emphasized that the fundamental principle behind the enactment of section 254(2) is that no party appearing before the Appellate Tribunal, be it an assessee or the department should suffer on account of any mistake committed by the Tribunal. Therefore, existence of ‘mistake’ committed by the Tribunal and that too ‘apparent from record’ is sine-qua-non for exercise of power by the Tribunal under section 254(2) of the Act. If there exists no such mistake in the order of the Tribunal, rectification thereof or recall of the order passed on merit is beyond the scope of section 254(2) of the Act. 12. In its recent judgment in CIT (IT-4) Mumbai v. Reliance Telecom Ltd. (2021) 284 taxman 517 (SC)/440 ITR 1 (SC) their Lordships of the Hon’ble Supreme Court held that while considering application under section 254(2) Tribunal is not required to revisit its original order and go in details on merits and completely recall its order as powers under section 254(2) are only to rectify/correct any mistake apparent from record. 13. There is, thus, no substance in the MA of the assessee requesting the Tribunal to recall its order dated 18.05.2023 in ITA No.747/Del/2022. 14. The Full Bench of Hon’ble Delhi High Court in JT (India) Exports and another v. Union of India and another 262 ITR 269 (Del) (FB) observed that the principles of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of justice in a common sense liberal way. Justice is based substantially on natural ideals and human values, 15. Keeping in view, the observations of the Hon’ble Delhi High Court in JT (India) Exports (supra), we now proceed to consider the arguments advanced by the Ld. AR during the course of hearing before us. It is argued by the Ld. AR that except issuing notice under section 131 of the Act to the assessee no enquiry was made by the Ld. AO who placed reliance on investigation made by DI (Inv.), Kolkata. Admittedly, the assessee is non- resident and resides in Singapore. It has never been the case of the assessee 6 that the assessee was unaware of the said notice under section 131. The fact is that the Ld. AO requested the assessee to attend his office on 12.12.2017 for recording her statement. Non-compliance made the Ld. AO/CIT(A) to draw adverse inference about ignorance of the assessee as to the business activity of M/s. HPC Bioscience Ltd., its financial performance, the growth, risk factors etc. which an investor generally evaluate while trading. The Ld. AO did not rest with issue of summon under section 131 of the Act, he allowed further opportunity but no satisfactory explanation was offered. The Tribunal, therefore concurred with the findings of the Ld. AO/CIT(A). It cannot be denied that in identical type of cases DI (Inv.), Kolkata carried out investigation and the Ld. AO confronted the assessee with results thereof and allowed adequate opportunity to the assessee to rebut the findings but no convincing reply with evidence was submitted before the Ld. AO / CIT(A). In CIT vs. Mussadilal Ram Bharose 165 ITR 14(SC) the Hon’ble Supreme Court has held that it is for the Tribunal to judge the relevancy and sufficiency of the material brought on the records and the conclusion drawn by the Tribunal on the basis of material on record becomes conclusion/finding of fact. 16. The Ld. AR pointed out that in various decisions the Co-ordinate Benches of the Tribunal followed the decision of the Hon’ble Delhi High Court in Smt. Krishna Devi’s case in ITA No. 125/2020 rendered on 15.01.2021. It may be stated that it was so because facts in those cases were identical with that of Smt. Krishna Devi’s case (supra). But in the case of the assessee, the Tribunal found that her case was different on facts from Smt. Krishna Devi’s case (supra) as she had bought the shares “off-line” whereas in the decisions of Co-ordinate Benches of the Tribunal relied upon by the assessee, they had bought the shares “on-line”. The difference between purchase of shares “off-line” and “on-line” is too obvious and needs no elaboration. One has to bear in mind that one different fact may make a world of difference between conclusions in two cases as observed by the Hon’ble Supreme Court in Padmasundara Rao (Decd) vs. State of Tamil Nadu 255 ITR 147 (SC). It is precisely for this reason that the Tribunal did 7 not follow the decisions of the Co-ordinate Benches as facts of the assessee’s case are different from the cases decided by the Co-ordinate Benches relied on by the assessee. 17. The Ld. AR’s argument that the Tribunal should not have relied on the nature of purchase of shares by the assessee “off-line” without allowing the assessee an opportunity is fallacious as it is borne out eloquently from the facts on record that the assessee purchased shares of unlisted company M/s. HPC Biosciences directly and on the day of allotment itself the company issued bonus shares in 1:1 ratio and it was many days thereafter that the company got itself listed at BSE (SME) platform. 18. As stated earlier, ground No. 2(a) to (h) contained arguments/ narrative in support of ground No. 1(a) which have been considered while dealing and deciding ground No. 1(a) as under:- “Ground No. 2(a): That the transaction of purchase & sell of shares were through banking channel / account payee cheque only.” Narration of fact on record. Considered and findings recorded by the Tribunal in para 15.2 of its order. “Ground No. 2(b): That the impugned transaction in scrip is not a penny stock as alleged by AO.” Examined in para 11 and 12 of the order. “Ground No. 2(c): That all the evidences/documents sought were furnished and the same were never controverted to the assessee.” Show cause notice (SCN) dated 21.12.2017 given by the Ld. AO. Assessee’s reply considered not satisfactory by Ld. AO/CIT(A) and the Tribunal concurred with their findings. Para 11 and 12 of the Tribunal’s order refer. “Ground No. 2(d): That Ld. AO did not conduct any independent enquiry regarding the claim made by the assessee.” 8 The Revenue made inquiries and confronted the assessee. No satisfactory explanation given by the assessee. Tribunal endorsed the findings of the Revenue authorities. “Ground No. 2(e): Assessment was made merely relying on general investigation report, which is vague and ambiguous.” Concrete evidence was found by the Revenue that M/s. HPC Bioscience Limited had been identified as BSE Listed stock which has been used for generating bogus LTCG. Considered and finding recorded in para 12 of Tribunal’s order. “Ground No. 2(f): The transactions are genuine and any assumption otherwise is bad in law as well as on facts.” An argument only. No separate adjudication was called for. “Ground No. 2(g): Any addition made on the basis of suspicion and without tangible material is bad in the eyes of law.” Only an argument. Facts have been considered and findings recorded thereon in paras 10 to 15 of the Tribunal’s order. “Ground No. 2(h): Satisfaction of AO for making addition has to be on the basis of reasoning based on adequate appreciation of facts and evidences.” The Ld. AO did record his satisfaction for making the impugned addition on appreciation of facts and evidence on record. His findings have been endorsed by the Ld. CIT(A) as also by the Tribunal. 19. Ground No. 3(i), (ii), (iii) & (iv) contain arguments/narratives in support of ground No. 1(b) which has been decided in favour of the assessee vide para 31 of the Tribunal’s order. Is relief granted by the Tribunal to the assessee constitute ‘mistake’ rectifiable under section 254(2) of the Act deserving recall of the Tribunal’s order as requested in the MA? In our humble opinion request of the assessee to recall Tribunal’s order passed in favour of the assessee is rather strange. 9 20. On the facts and in the circumstance of the assessee’s case together with reasons set out above, we decline to recall the Tribunal’s order in ITA No. 747/Del/2022 dated 18.05.2023. 21. In the result, the MA of the assessee is dismissed. Order pronounced in the open court on 3 rd August, 2023. sd/- sd/- (DR. B R R KUMAR) (ASTHA CHANDRA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 03/08/2023 Veena Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order