CHUNILAL P. MALI, V. CIT CIR 7,

MA 277/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8197 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SINDER SINGH
• Keywords: Unexplained investment
• Section: 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C , BENCH BEFORE SHRI N.V. VASUDEVAN,J.M. AND SHRI RAJENDRA SINGH, A.M. MA NO: 277/MUM/2011 ARISING OUT OF : 1484/MUM/2011 ASSESSMENT YEAR: 2006-07 SHRI CHUNILAL P. MALI 21, ASHISH INDL. ESTATE GOKHALE ROAD(S) DADAR (W) MUMBAI-400 025. PAN NO.: AAHPM 6078 R VS. ASSTT. COMMISSIONER OF INCOME TAX (OSD)-1 CENTRAL RANGE-7 413 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI GIRISH DAVE RESPONDENT BY : SHRI D.S. SINDER SINGH DATE OF HEARING : 27.4.2012 DATE OF PRONOUNCEMENT : 16.5.2012 ORDER PER RAJENDRA SINGH (AM). THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE ASSE SSEE REQUESTING FOR AMENDMENT OF THE ORDER DATED 18.3.201 1 OF THE TRIBUNAL IN ITA NO.1484/M/2010 FOR THE ASSESSMENT YEAR 2006-07 POINTING OUT SOME APPARENT MISTAKES. 2. THE FACTS CONCERNING THE GROUNDS RAISED IN THE MISCELLAN EOUS APPLICATION ARE THAT THE ASSESSEE WHO WAS DEALING IN READ YMADE GARMENTS HAD BEEN SEARCHED UNDER SECTION 132 OF THE ACT O N MA NO.277/M/11 ARISING OUT OF ITA NO. 1484/M/10 A.Y:06-07 2 28.6.2006, DURING THE COURSE OF WHICH DOCUMENTS WERE FOU ND SHOWING UNACCOUNTED PURCHASES AND SALES FOR ASSESSMENT YEAR 2006-07 AN D 2007-08. FOR ASSESSMENT YEAR 2005-06, THERE WAS NO MATE RIAL FOUND SHOWING UNACCOUNTED PURCHASES AND UNACCOUNTED SALES. THE AO BASED ON MATERIAL FOUND IN SUBSEQUENT YEARS, ESTIMATED I NCOME FROM UNACCOUNTED BUSINESS FOR ASSESSMENT YEAR 2005-06 ALSO. THE AO ALSO ESTIMATED INITIAL INVESTMENT FOR THE UNACCOUNTED BU SINESS IN ASSESSMENT YEAR 2005-06 AT RS.15,54,288/- WHICH WAS ADDED AS UNEXPLAINED INVESTMENT IN ADDITION TO THE INCOME ESTIM ATED FROM THE UNACCOUNTED BUSINESS FOR THE SAID YEAR. THE ASSESSEE HAD DI SPUTED THE DECISION OF AO TO MAKE ADDITION IN RELATION TO UN ACCOUNTED BUSINESS IN ASSESSMENT YEAR 2005-06 WHEN NO MATERIAL WAS F OUND. HOWEVER, IN SUBSEQUENT YEARS, THE ASSESSEE HAD DECLARED UND ISCLOSED INCOME IN RELATION TO UNACCOUNTED BUSINESS UNDER SECTION 15 3A. THE TRIBUNAL IN THE IMPUGNED ORDER DATED 18.3.2011 HELD THAT NO ADDITION ON ACCOUNT OF UNACCOUNTED BUSINESS COULD BE MADE IN ASSESSMENT YEAR 2005-06. THE TRIBUNAL HOWEVER, HELD IN PARA 7. 3 THAT ASSESSMENT YEAR 2006-07 BEING FIRST YEAR OF UNACCOUNTED BUSINESS, A DDITIONS WERE REQUIRED TO BE MADE IN RELATION TO INITIAL INVESTMEN T IN THE UNACCOUNTED BUSINESS. THE TRIBUNAL FURTHER OBSERVED THAT INITIAL INVESTMENT HAD TO BE ESTIMATED ON THE BASIS OF BUSINESS CYCLE, VOLUME OF UNACCOUNTED SALES, SALES PERIOD FOR WHICH UNACCOUNTED SALE S WERE MA NO.277/M/11 ARISING OUT OF ITA NO. 1484/M/10 A.Y:06-07 3 FOUND. THE TRIBUNAL ALSO NOTED THAT THE AO ADOPTED T HE BUSINESS CYCLE OF 4 MONTHS WITHOUT ANY EXAMINATION AND WITHOUT ANY OPPORTUNITY TO THE ASSESSEE AS THE SUBMISSION OF THE ASSESSEE ON THIS POINT W ERE NOT AVAILABLE. THE TRIBUNAL THEREFORE RESTORED THIS ISSUE TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER ALLOWING OPPORTUNITY O F HEARING TO THE ASSESSEE. 2.1 THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HAS POINTE D OUT THAT IN ASSESSMENT YEAR 2006-07, THE ASSESSEE ITSELF HAD DISCH ARGED A SUM OF RS.5.00 LACS ON ACCOUNT OF INITIAL INVESTMENT IN TH E UNACCOUNTED BUSINESS WHICH HAD BEEN ACCEPTED BY AO AND THER EFORE, THERE WAS NO DISPUTE REGARDING ADDITION ON ACCOUNT OF INITIAL INVESTMENT IN ASSESSMENT YEAR 2006-07. THE TRIBUNAL WA S, THEREFORE, NOT CORRECT IN RESTORING THIS ISSUE TO THE FILE OF AO AND THIS BEING AN APPARENT MISTAKE, IT WAS REQUESTED, THAT THE ORDER SHOU LD BE AMENDED. 3. WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT ADDITION ON ACCOUNT OF INITIAL INV ESTMENT IN 2006-07 WAS NOT SUBJECT MATTER OF APPEAL AND THEREFORE , THE TRIBUNAL HAD GONE BEYOND THE SUBJECT MATTER OF APPEAL WHICH W AS NOT PERMISSIBLE AND, THERE BEING APPARENT MISTAKE, THE ORD ER SHOULD BE AMENDED. THE LD. DR ON THE OTHER HAND SUBMITTED THA T THE TRIBUNAL MA NO.277/M/11 ARISING OUT OF ITA NO. 1484/M/10 A.Y:06-07 4 HAD PASSED A REASONED ORDER AND HAD ALSO GIVEN REASONS FO R RESTORING THE ISSUE TO THE FILE OF AO. THERE WAS NO APPARENT MI STAKE WHICH COULD BE RECTIFIED. HE ACCORDINGLY OBJECTED TO THE REQUEST FOR RECTIFICATION MADE BY THE ASSESSEE. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE ISSUE IS WHETHER THERE IS AN Y APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL RESTORING THE ISS UE OF ADDITION IN RELATION TO UNACCOUNTED INVESTMENT IN ASSESSMENT YEAR 2006 -07 TO THE FILE OF AO. THE AO HAD MADE ADDITION OF RS.15,54,288 /- ON ACCOUNT OF INITIAL INVESTMENT IN THE UNACCOUNTED BUSINESS IN ASSESSMENT YEAR 2005-06 ON THE GROUND THAT UNACCOUNTED BUSINESS HAD STA RTED IN ASSESSMENT YEAR 2005-06. HAVING MADE THE ADDITION IN 200 5-06, NO FURTHER ADDITION ON ACCOUNT OF INITIAL INVESTMENT ARE REQUIRED TO BE MADE IN THE SUBSEQUENT YEAR. HOWEVER, THE ASSESSEE HAD DECL ARED INCOME OF RS.5.00 LACS ON ACCOUNT OF UNACCOUNTED OF INVESTME NT IN ASSESSMENT YEAR 2006-07 WHICH HAD ALSO GOT INADVERTENTLY ADDED BY AO, THOUGH HE HAD ALREADY MADE SUCH ADDITION IN THE F IRST YEAR. THE TRIBUNAL AS POINTED OUT EARLIER HELD THAT THERE WAS N O MATERIAL TO SHOW UNACCOUNTED BUSINESS IN ASSESSMENT YEAR 2005-06 AND ACCORDINGL Y DELETED THE ADDITION MADE ON ACCOUNT OF INITIAL INVEST MENT MADE IN ASSESSMENT YEAR 2005-06. ONCE THE TRIBUNAL HELD THAT INI TIAL YEAR OF UNACCOUNTED BUSINESS WAS 2006-07 AND NOT ASSESSMENT YEAR 200 5-06 MA NO.277/M/11 ARISING OUT OF ITA NO. 1484/M/10 A.Y:06-07 5 AS A CONSEQUENCE, THE ADDITION IN RELATION TO THE INITI AL INVESTMENT IN UNACCOUNTED BUSINESS IS REQUIRED TO BE MADE IN ASSESSMENT YEA R 2006-07. 4.1 THE AO HAD COMPUTED INITIAL INVESTMENT AT RS.15,54 ,288/- ON THE BASIS OF A PARTICULAR PERIOD OF BUSINESS CYCLE WHICH THE TRIBUNAL NOTED WAS WITHOUT EXAMINATION AND WITHOUT ANY OPPORT UNITY TO THE ASSESSEE. THE TRIBUNAL THEREFORE RESTORED THE ISSUE OF ADD ITION ON ACCOUNT OF INITIAL INVESTMENT IN ASSESSMENT YEAR 2006-07 TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION . THE AO HAD NOT EXAMINED THE USE OF INITIAL INVESTMENT IN ASSESSMENT YEAR 2006-07 AS IN HIS OPINION, THE INITIAL YEAR OF BUSINESS WAS ASSESSMEN T YEAR 2005-06. ONCE THE TRIBUNAL HELD THAT INITIAL YEAR OF BUSINESS WAS ASSESSMENT YEAR 2006-07 AND DELETED THE ADDITION ON ACCOU NT OF INITIAL INVESTMENT IN 2005-06, THE ISSUE OF INITIAL INVESTMENT IS REQUIRED TO BE EXAMINED IN ASSESSMENT YEAR 2006-07 WHICH HAD NOT BEEN DONE BY THE AO AS HE HAD CONSIDERED THE INITIAL YEAR AS ASSESSMEN T YEAR 2005- 06. IT IS WELL WITHIN THE JURISDICTION OF THE TRIBUNA L TO RESTORE THE ISSUE OF INITIAL INVESTMENT TO THE FILE OF AO IN ASSESSMENT YE AR 2006-07 FOR WHICH THE APPEAL WAS PENDING BEFORE IT. WE SEE NO APP ARENT MISTAKE IN THE OF THE TRIBUNAL IN RESTORING THE CASE TO THE FI LE OF THE AO FOR FRESH EXAMINATION. IN ANY CASE, THIS IS AN ARGUABLE ISSUE WHICH CAN NOT BE MADE SUBJECT MATTER OF ACTION 254(2) AS PER WHICH ONL Y PATENT AND MA NO.277/M/11 ARISING OUT OF ITA NO. 1484/M/10 A.Y:06-07 6 OBVIOUS MISTAKES CAN BE RECTIFIED. THE TRIBUNAL HAD PASSE D A REASONED AND SPEAKING ORDER AND WE DO NOT SEE ANY APPA RENT MISTAKE. THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS THER EFORE, REJECTED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION STANDS REJ ECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.05.2012 SD/- SD/- (N.V. VASUDEVAN) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16.05.2012. JV. COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.