UMESH H. GANDHI, V. ASST CIT CEN CIR 29,

MA 26/MUM/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2142 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: K SHIVARAM
• Keywords: Rectification of order
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM !' / MA NO. 26/MUM/2014 (ARISING OUT OF ITA NO.1751/MUM/2013) ( / ASSESSMENT YEAR: 2005-06) UMESH H. GANDHI 34, BALA SINOR CO-OP. HOUSING SOCIETY, S. V. ROAD, KANDIVLI (W), MUMBAI-400 067 # VS. ASST. CIT, CENTRAL CIRCLE-29, ROOM NO.476, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 $#'%' ./PAN/GIR NO. AABPG 9305 P APPLICANT : RESPONDENT APPLICANT BY : SHRI K. SHIVARAM RESPONDENT BY : SHRI M. L. PERUMAL & '()* / DATE OF HEARING : 28.03.2014 +,-()* / DATE OF PRONOUNCEMENT : 27.06.2014 '.# O R D E R PER SANJAY ARORA, A. M.: THIS IS A MISCELLANEOUS PETITION BY THE ASSESSEE IN RESPECT OF THE DISPOSAL OF ITS CAPTIONED APPEAL FOR ASSESSMENT YEAR (A.Y.) 2005-06 BY THE TRIBUNAL U/S.254(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) VIDE I TS ORDER DATED 21.11.2013. 2. THE FOLLOWING GRIEVANCES STAND PROJECTED BY THE ASSESSEE PER THE REVISED VERSION (DATED 29.01.2014) OF HIS MISCELLANEOUS APPLICATION . THE ASSESSEE CLAIMS THAT THE FOLLOWING OBSERVATIONS BY THE TRIBUNAL, WHICH HAS I NFLUENCED ITS MIND IN DECIDING THE APPEAL, ARE NOT APPOSITE: 2 MA NO. 26/MUM/2014 (A.Y. 2005-06) UMESH H. GANDHI VS. ASST. CIT A) INCRIMINATING/UNDISCLOSED MATERIAL WAS FOUND BY THE REVENUE IN THE SEARCH/SURVEY PROCEEDINGS - THE ASSESSEE HAD IN FAC T DISCLOSED THE AMOUNT RECEIVED UNDER THE AGREEMENT PER ITS ACCOUNTS; B) THAT THE REVENUES STAND STOOD ACCEPTED BY THE T RIBUNAL IN THE QUANTUM PROCEEDINGS; C) THAT THE EXPENDITURE INCURRED AFTER A.Y. 2005-06 ON THE PROJECT WAS NOT IN RELATION TO THE AREA SURRENDERED DURING THE YEAR, I.E., 19050 SQ. FT.; D) THAT THERE WAS NO FURTHER OBLIGATION ON THE ASSE SSEE PER THE SURRENDER AGREEMENT, I.E., SO THAT ONLY THE EXPENDITURE UP TO A.Y. 2005-06 WAS TO BE CONSIDERED, AND NOT THAT UP TO 31.03.2011; FURTHER, THE FOLLOWING ISSUES STAND RAISED BY THE A SSESSEE, CLAIMING THE SAME AS RENDERING THE IMPUGNED ORDER AS MISTAKEN, SO AS T O BE RECTIFIABLE U/S.254(2), VIZ. I) THAT THE APPEAL STANDS DECIDED IN SPITE OF THE A SSESSEES APPLICATION U/S.154 IN QUANTUM PROCEEDINGS BEING PENDING; II) THERE BEING ONLY A SURVEY ACTION ON THE ASSESSE E AND NOT SEARCH ACTION; AND III) THAT THE FACT SHEET SUBMITTED AT THE TIME OF H EARING HAD NOT BEEN CONSIDERED. 3.1 BEFORE US, IT WAS ARGUED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE TRIBUNAL HAD WRONGLY ASSUMED THAT WHAT HAD BEEN SOLD BY THE ASSESSEE WERE DEVELOPMENT RIGHTS (IN 19050 SQ. FT. OF SALE ABLE AREA IN THE ELCO PROJECT). THE EXPENSES WERE IN FACT BEING INCURRED ON THE SAID PROJECT, AND CONTINUED TO BE SO UP TO 31.03.2011, WHICH FACT STOOD BROUGHT TO THE NOTICE OF THE TRIBUNAL, AS ALSO THAT SECTION 154 PROCEEDINGS QUA THE QUANTUM WERE PENDING AT THE RELEVANT TIME. THE HEARING BEFORE THE TRIBUNAL WAS IN FACT CONCLUDED WITH THE BENCH STATI NG THAT IT HAD UNDERSTOOD THE MATTER. RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL [1973] 87 ITR 349 (SC) AND HONDA SIEL POWER PRODUCTS LTD. VS. CIT [2007] 295 ITR 466 (SC). 3.2 THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE OTHER HAND, SUBMIT THAT THE CHARGES BEING NOW RAISED BY THE ASSESSEE AMOUNT TO REQUIRING THE TRIBUNAL TO REVIEW 3 MA NO. 26/MUM/2014 (A.Y. 2005-06) UMESH H. GANDHI VS. ASST. CIT ITS ORDER, I.E., FOR ANSWERING THE SAME, WHICH IS I MPERMISSIBLE IN LAW, GIVEN THE LIMITED SCOPE OF SECTION 254(2), RELYING ON THE DECISION IN THE CASE OF T. S. BALARAM VS. VOLKART BROS. [1971] 82 ITR 50 (SC). THE TRIBUNAL HAD, UPON A PR OPER CONSIDERATION OF THE MATTER, TAKEN A CONSCIOUS AND CONSIDERED VIEW, SO THAT IT W AS NOT POSSIBLE TO REVISIT THE SAME, EVEN IF IT WERE TO HOLD THAT TWO VIEWS ARE, OR THAT ANY OTHER VIEW IN THE MATTER WAS, POSSIBLE. NO MISTAKE/S, MUCH LESS THAT APPARENT FRO M THE RECORD, HAD IN ANY CASE BEEN POINTED OUT. RELIANCE WAS ALSO PLACED BY HIM ON THE DECISION IN THE CASE OF ASST. CIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LIMITED [2008] 305 ITR 227 (SC). 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MA TERIAL ON RECORD. 4.1 OUR FIRST OBSERVATION IS THAT NO MISTAKE OR E VEN A MISSTATEMENT OF ANY FACT, AS RECORDED BY THE TRIBUNAL, HAS BEEN BROUGHT TO OUR N OTICE DURING THE DETAILED HEARING IN THE MATTER SPREAD OVER TWO DATES, I.E., ON 07.03.2014 A ND 28.03.2014. IN FACT, THIS WAS THE FIRST ARGUMENT RAISED BY THE LD. DR WHEN HIS TURN F INALLY CAME UP FOR REPRESENTING THE REVENUES CASE AT 12 NOON ON 28.03.2014, I.E., THAT THE PLEADINGS BY THE LD. AR IN THE MATTER HAD CONSUMED CONSIDERABLE TIME ON 07.03.2014 , AS WELL AS OVER 1 HOURS ON 28.03.2014, I.E., TO COMMUNICATE THE ASSESSEES CAS E, WHICH IS ITSELF INDICATIVE OF THE MATTER BEING ARGUABLE; IT BEING NOT APPELLATE BUT O NLY RECTIFICATION PROCEEDINGS. THIS GENERALIZED ARGUMENT NOTWITHSTANDING, BASED ON A FA CT THOUGH, AND WHICH IS THUS NOT BEREFT OF MERIT, WE SHALL NEVERTHELESS ATTEMPT TO D ISCUSS THE OBJECTIONS SOUGHT TO BE RAISED BY THE ASSESSEE, INDEPENDENT OF OUR FIRST OB SERVATION AFORE-STATED, I.E., OF NO MISTAKE HAVING BEEN POINTED TO US BY THE LD. COUNSE L DURING HEARING AND, ACCORDINGLY, NOT RESPONDED TO BY THE LD. DR. 4.2 OUR SECOND OBSERVATION IS THAT WE FIND NO INCON SISTENCY BETWEEN THE FACTS AS RECORDED BY THE TRIBUNAL PER PARA 2 OF THE IMPUGNED ORDER, AND THAT PER THE ASSESSMENT ORDER (DATED 27.12.2011); THE PENALTY ORDER (DATED 28.06.2012); AND THE APPELLATE ORDER BY THE LD. CIT(A) CONFIRMING THE LEVY OF PENALTY (DATE D 23.01.2013). RATHER, WE FIND COMPLETE HARMONY THEREIN, AS ALSO WITH THAT BY THE FIRST APPELLATE AUTHORITY IN THE 4 MA NO. 26/MUM/2014 (A.Y. 2005-06) UMESH H. GANDHI VS. ASST. CIT QUANTUM PROCEEDINGS (IN THE FIRST ROUND), WHICH STO OD REPRODUCED AT PARA 6 OF HIS ORDER (SUPRA), CONFIRMING THE LEVY OF PENALTY, BY THE LD. CIT(A). THE ASSESSEES CHARGE OF THE TRIBUNAL HAVING WRONG LY INFERRED SALE OF DEVELOPMENT RIGHTS BY THE ASSESSEE, AS MADE DURIN G HEARING, TAKING US THROUGH THE DEVELOPMENT AGREEMENT (PB PGS.157-160) AND, THUS, H AVING MISLED ITSELF, ONLY IF IN VIEW OF THE FOREGOING, ONLY NEEDS STATED TO BE REJECTED. THE SAME IS A PRIMARY FACT, AND THERE IS AN ABUNDANT REFERENCE TO THE SAME, I.E., DEVELOPME NT RIGHTS OR RIGHTS (IN THE SURRENDERED AREA) IN THE ORDERS OF THE AUTHORITIES BELOW, AND FOR WHICH REFERENCE MAY BE MADE TO PG.3 (PARA 2) OF THE ASSESSMENT ORDER; PAGE 2 OF THE PENALTY ORDER; AND PGS. 3 & 8 OF THE APPELLATE ORDER. IN FACT, THIS ASPECT STANDS DISCUSSED IN CONSIDERABLE DETAIL BY THE FIRST APPELLATE AUTHORITY IN THE QUANTUM PROCEEDING S, THE OPERATIVE PART OF WHOSE ORDER STANDS, AS AFORE-NOTED, REPRODUCED BY THE LD. CIT(A ) IN HIS ORDER UNDER APPEAL BEFORE US. THE TRIBUNAL HAS ONLY CONSIDERED THE ISSUE FROM THE STAND-POINT OF MAINTAINABILITY OF THE LEVY OF PENALTY IN LIGHT OF THE FACTS AS DETERMINED . AS REGARDS THE ASSESSEES CLAIM OF ITS APPEAL U/S. 154 BEING PENDING AT THE RELEVANT TIME, THE SAME AGAIN MERITS AN OUTRIGHT REJECTION, AND ON MORE THAN ONE GROUND. FIRSTLY, IF THE SAME, I.E., THE OUTSTANDING RECTIFICATION PROCE EDINGS, DID NOT ESTOPP THE REVENUE FROM THE LEVY OF PENALTY OR THE APPELLATE AUTHORITY IN C ONFIRMING IT; BOTH ORDERS BEING PASSED SUBSEQUENT THERETO, WE WONDER AS TO HOW DOES IT PRE VENT THE TRIBUNAL FROM DOING SO. TWO, EQUALLY, IF NOT MORE IMPORTANTLY AND, IN FACT, TO T HE CONTRARY, THE BENCH ADMITTEDLY SOUGHT A REPORT FROM THE REVENUE QUA THE STATUS OF THE ASSESSEES APPLICATION U/S.154, W ITH THE DEPARTMENT DULY COMMUNICATING THE REJECTION THEREOF VIDE ITS LETTER DATED 22.08.2013, ALSO COMMUNICATING THE RECTIFICATION ORDER DATED 20 .08.2013 ALONG WITH (COPY ON RECORD). THERE WAS AS SUCH NO OUTSTANDING RECTIFICATION APPL ICATION BY THE ASSESSEE AT THE RELEVANT TIME, SO THAT NO ISSUE IN ITS RESPECT ARISES IN THE FIRST PLACE . THIRDLY, AS WE OBSERVE, THE SAID RECTIFICATION APPLICATION DATED 23.05.2011 HAS BEEN ACTUALLY RECEIPTED AND, THEREFORE, FILED WITH THE REVENUE (IN THE OFFICE OF THE CONCER NED A.O.) ONLY ON 21.05.2013 , I.E., TWO YEARS AFTER CONCEIVING THE SAME , AND ONLY AFTER THE LEVY OF THE PENALTY, SINCE INI TIATED, AS WELL AS THE APPELLATE ORDER CONFIRMING IT, RAISING SERIOUS DOUBTS QUA THE ASSESSEES BONA 5 MA NO. 26/MUM/2014 (A.Y. 2005-06) UMESH H. GANDHI VS. ASST. CIT FIDES IN THE MATTER. FINALLY, EVEN AS OBSERVED DURING HE ARING, SECTION 154 PROCEEDINGS ARE OF LIMITED SCOPE AND, IN ANY CASE, ANY RECTIFICATIO N IN QUANTUM, I.E., ASSUMING SO, IF GIVEN EFFECT TO AT ANY STAGE, WOULD HAVE A CONSEQUENTIAL EFFECT ON THE QUANTUM OF THE PENALTY. IT IS THEN STATED THAT THE HEARING BEFORE THE TRIB UNAL DID NOT LAST LONG. HOW COULD THAT, THE LENGTH OF THE HEARING, WE WONDER, BE A M ISTAKE IN THE IMPUGNED ORDER. WE ARE AT A LOSS TO COMPREHEND THE IMPORT OF THE STATEMENT IN-AS-MUCH AS WHAT WOULD HAVE BEEN, ASSUMING THE STATEMENT TO BE CORRECT, INDICATED BY THE BENCH TO THE COUNSEL IS THAT IT HAD UNDERSTOOD THE POINT HE WAS LABORING TO BRING HOME, AND THAT HE MAY PROCEED AHEAD. NOTHING MORE AND, NOTHING LESS. THE ASSESSEES ARGU MENT/S FINDS REFERENCE AT PARA 3; PARAS 4.1 TO 4.4 OF THE IMPUGNED ORDER. THERE IS NO CLAIM OF ANY ARGUMENT OMITTED TO BEING CONSIDERED, INCLUDING WITH REGARD TO THE ASSE SSEES CLAIM OF HAVING CONTINUED TO INCUR THE EXPENDITURE ON THE RELEVANT PROJECT UP TO 31.03.2011, WITH, RATHER, THE TRIBUNAL OBSERVING THAT THE ASSESSEE HAD ABYSMALLY FAILED TO MEET THE FINDINGS OF FACT, INCLUDING OF THE ADDITION BEING BASED ON THE ASSESSEES OWN ACCO UNTS/RECORDS, AS WELL AS THE STATEMENT/UNDERSTANDING OF LAW, RELYING ON CASE LAW , PER THE APPELLATE ORDER CONFIRMING THE PENALTY, OR IN ANY MANNER ESTABLISH HIS BONA FIDES IN THE MATTER. TOWARD THIS, IN FACT, THE RELEVANT PARA/S OF THE APPELLATE ORDER WAS SPEC IFICALLY READ OUT BY THE LD. AR DURING THE INSTANT HEARING. RATHER, THE TRIBUNAL OBSERVES THE REVENUE TO HAVE NOT BROUGHT TO TAX, MUCH LESS LEVY PENALTY, ON THE RECEIPT OF RS.75 LAC S BY THE ASSESSEE ON THE SALE OF SHOPS. 4.3 A NUMBER OF OBJECTIONS STAND RAISED, VIZ. NO INCRIMINATING MATERIAL FOUND IN SEARCH; THE TRIBUNALS REMARK THAT THE REVENUES ST AND STOOD ACCEPTED IN THE QUANTUM PROCEEDINGS BY THE TRIBUNAL; OR THAT THE ASSESSEE W AS UNDER NO FURTHER OBLIGATION TO INCUR THE EXPENDITURE. WE FIND THE SAME AS INCONSEQUENTIA L AND OF NO MOMENT. AS POINTED OUT WITH REFERENCE TO EACH OF THEM DURING HEARING ITSEL F THAT THEY CORRECTLY REPRESENT THE STATEMENT OF FACTS AS RECORDED BY THE AUTHORITIES B ELOW, AND ON WHICH ASPECT WE OBSERVE NO DISPUTE, NOR ANY STOOD POINTED OUT TO US EVEN IN THE RECTIFICATION PROCEEDINGS, OR THE TRIBUNALS UNDERSTANDING OF THE ISSUE BASED THEREON . FOR EXAMPLE, THE TRIBUNAL NOWHERE STATES THAT THE SEARCH ACTION WAS CONDUCTED AT THE ASSESSEES PREMISES. ITS OBSERVATION 6 MA NO. 26/MUM/2014 (A.Y. 2005-06) UMESH H. GANDHI VS. ASST. CIT THAT THE REVENUES STAND HAD FOUND ACCEPTANCE BY TH E TRIBUNAL IN THE QUANTUM PROCEEDINGS (AT PARA 2.1), NOT ONLY REPRESENTS ITS CONSIDERED VIEW; IN FACT, STANDS INDEPENDENTLY EXPRESSED BY THE LD. CIT(A) IN HIS OR DER WHEN HE SAYS (AT PARA 8 OF HIS ORDER) THAT THE ONLY MODIFICATION MADE BY THE HONB LE TRIBUNAL IS TO ALLOW THE EXPENSES FOR EARNING THIS INCOME/RECEIPT (OF RS.8.5 CR.), AN D WHICH STOOD SINCE ALLOWED. THE CHARGE OF FACT SHEET NOT BEING CONSIDERED IS AGAIN WITHOUT BASIS. THE SAME IS FIRSTLY NOT A PART OF THE RECORD. TWO, THE FACTS AS RECORDED BY THE TRIBU NAL ARE, AS AFORE-NOTED, IN AGREEMENT WITH THAT BORNE OUT BY THE MATERIAL ON RECORD, AND AS CRYSTALLIZED. NO SPECIFIC, UNDISPUTED FACT, WHICH HAS NOT BEEN CONSIDERED BY THE TRIBUN AL, STOOD POINTED OUT TO US DURING THE HEARING. 4.4 THE TWO DECISIONS BY THE HONBLE APEX COURT CIT ED BEFORE US, CLARIFY PROPOSITIONS OF LAW, WHICH ARE BINDING. HOWEVER, THE MOOT POINT AND THE RELEVANT QUESTION IS, HOW DO THEY OPERATE THE RENDER THE IMPUGNED ORDER AS MISTA KEN, AND WHICH HAS NOT BEEN EXPLAINED BY THE LD. AR IN ANY MANNER DURING HEARIN G. THE SAID RELIANCE WOULD BE OF NO ASSISTANCE TO THE ASSESSEE. 5. IN VIEW OF THE FOREGOING, WE FIND NO MERIT IN TH E ASSESSEES RECTIFICATION APPLICATION. IN FACT, WE STRONGLY DISCOUNTENANCE TH E TENDENCY OF THE COUNSELS TO RAISE FRIVOLOUS CHARGES IN THE RECTIFICATION PROCEEDINGS. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES MISCELLANEOUS APPL ICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 27, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER & /' MUMBAI; 0 DATED : 27.06.2014 1# ROSHANI , SR. PS 7 MA NO. 26/MUM/2014 (A.Y. 2005-06) UMESH H. GANDHI VS. ASST. CIT ! ' #$%& ' &$ # COPY OF THE ORDER FORWARDED TO : 1. $2 / THE APPLICANT 2. 34$2 / THE RESPONDENT 3. '' & 5) 6 7 / THE CIT(A) 4. '' & 5) / CIT CONCERNED 5. 8931)1:! ' *:!- & /' / DR, ITAT, MUMBAI 6. 9;<' # GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , & /' / ITAT, MUMBAI