ART HOUSING PRIVATE LIMITED , MUMBAI V. INCOME TAX OFFICER 1(1)(1), MUMBAI

MA 281/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9043 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: VISHESH SAN GOI; DHARAM V GANDHI
• Keywords: Bogus Share capital; Rectification of order; Accommodation entries; Assessment record
• Section: 195; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM M .A. NO. 281/MUM/2018 (ARISING OUT OF ITA NO. 522/MUM/2017 ) ( ASSESSMENT YEAR: 2009 - 10 ) M/S. ART HOUSING PVT. LTD. BLOCK NO. 302, MEHTA BUSINESS CENTRE, KHAITAN CHA MBERS, 143/145 MODI STREET, FORT, MUMBAI - 400 001 VS. ITO - 1(1)(1), MUMBAI PAN/GIR NO. AAHCA 6007 F ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI DHARAM V. GANDHI & SHRI VISHESH SANGOI RESPONDENT BY : SHRI CHAUDHARY ARUN KUMAR SINGH DATE O F HEARING : 02.11.2018 DATE OF PRONOUNCEMENT : 06.12 .2018 ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 PER SHAMIM YAHYA, A. M.: BY WAY OF THIS MISCELLANEOUS APPLICATION THE ASSESSEE SEEKS ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT' FOR SHORT) AGAINST THE TRIBUNALS ORDER IN ITA NO. 5 2 2 /MUM/201 7 FOR ASSESSMENT YEAR 20 09 - 10 VIDE ORDER DATED 04.01.2018. 2. IN THE INCOME TAX APPEAL BY THE REVENUE THE ISSUE PERTAINS TO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY PURSUANT TO INVESTIGAT ION WING ACTION ON HAWALA OPERATOR SHRI PRAVEEN KUMAR JAIN. THE ITAT HAS PASSED THE FOLLOWING CONCLUDING ORDER: 2 M.A. NO. 281/M UM/2018 11. A GAINST THE ABOVE ORDER , THE ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMMISSIONER OF INCOME TAX (APP EALS) REPRODUCED THE ASSESSEES SUBMISSIONS IN 18 PAGES OF HIS ORDER. THEREAFTER, BY ONE PARAGRAPH ON PAGE 19, HE DELETED THE ENTIRE ADDITION BY OBSERVING AS UNDER: 3.1 I HAVE GONE THROUGH THE CASE OF CIT VS. LOVELY EXPORTS, 216 CTR 195 (SC) WHEREIN THE HO NBLE SUPREME COURT HAS HELD A VIEW THAT ONCE THAT NAME AND ADDRESS AND OTHER DETAILS GIVEN TO THE DEPARTMENT, THE DEPARTMENT IS FREE TO REOPEN THE CONCERNED INDIVIDUAL ASSESSMENT RECORDS AND THE SHARE APPLICATION MONEY CANNOT BE DECLARED AS UNDISCLOSED IN COME U/S. 68 OF THE INCOME TAX ACT, SO RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS, I DIRECT THE AO TO DELETE THE ADDITION OF RS.45,00,000/ - AND HENCE THIS GROUND OF APPEAL IS ALLOWED. 12. AGAINST THE ABO VE ORDER , THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 13. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT IN THIS CASE THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM NINE CONCERNS WHICH WERE OPERATED BY SHRI PRAVEEN KUMAR JAIN AND HIS GROUP . THE MODUS OPERANDI OF SHRI PRAVEEN KUMAR JAIN AND HIS GROU P HAS BEEN ELABORATELY BROUGHT OUT IN THE ASSESSMENT ORDER. SHRI PRAVEEN KUMAR JAIN HAS CLEARLY ADMITTED THAT HIS GROUP CONCERNS WHICH INCLUDED THE CONCERNS FROM WHICH THE ASSESSEE HAS R ECEIVED SHARE APPLICATION MONEY WERE INDULGING IN PROVIDING BOG U S ACCOMMODATION ENTRY. IT HAS FURTHER BEEN NOTED THAT THESE CONCERNS OPERATED BY SHRI PRAVEEN KUMAR JAIN WERE NOT DOING ANY PROPER BUSINESS BUT WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES . I N THE INVESTIGATION DONE , IT HAS BEEN FOUND THAT THE ADDRESSES GIVEN ARE NON - EXISTENT. IN TH ESE CIRCUMSTANCES , THE ASSESSING OFFICER HAS MADE IT CLEAR CASE THAT THE ASSESSEE HAS OBTAINED BOGUS SHARE CAPITAL ENTRY FROM NON - EXISTE N T CONCERNS WHICH ARE IN E XISTENCE ONLY ON PAPER AND ARE BEING OPERATED BY SHRI PRAVEEN KUMAR JAIN AND HIS GROUP TO PROVIDE BOGUS ACCOMMODATION ENTRIES OF WHICH THE ASSESSEE HAS BEEN RECIPIENT OF RS.45 LAKH AS SHARE CAPITAL. 14. THE ASSESSEE IN ITS RESPONSE HAS ONLY MENTIONED THAT THE ASSESSEE HAS GIVEN THE NAME AND ADDRESS AND PAN NUMBERS OF THE INVESTING COMPANIES AND , HENCE , IT HAS DISCHARGE D THE ONUS. IN NONE OF THE RESPONSES , THE ASSESSEE SUBMITT ED THAT THESE COMPANIES ARE ACTUALLY IN EXISTENCE AT THE ADDRESSES MENTION ED . THAT THESE COMPANIES SHOULD BE ISSUED SUMMONS. THAT ASSESSEE IS PREPARED TO BRING THE DIRECTORS OR T HE PRINCIPAL OFFICERS FOR CONFIRMATION. IN FACT , THE ASSESSING OFFICER HAS NOTED THAT ASSESSEE HAS FAILED TO SUBMIT THE LEDGER COPIES OF THESE CONCERNS DULY SIGN ED BY THE PRINCIPAL OFFICERS. THAT THE DOCUMENTS SUBMITTED ARE ONLY X EROXED COP IES. THIS CLEARLY BOLSTERS THE 3 M.A. NO. 281/M UM/2018 R EVENUE'S CASE THAT THESE ARE NON - EXISTENT COMPANIES AND ARE OPERATING ONLY ON PAPER TO PROVIDE ACCOMMODATION ENTRY BEING RUN BY SHRI PRAVEEN KUMA R JAIN AND HIS GROUP CONCERNS . THE TRANSACTION THROUGH BANKING CHANNEL DOES NOT ABSOLVE THE ASSESSEE FROM THE FINDING THAT THESE ARE DUBIOUS ENTITIES BY WAY OF WHICH THE ASSESSEES UNDISCLOSED INCOME HAS BEEN CHANNELED BACK AS SHARE APPLICATION MONEY. 15 . T HE RELIANCE BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE ORDER OF HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. 216 CTR 195 (SC) IS TOTALLY MISPLACED. IN THE SAID CASE BEFORE THE HONBLE APEX COURT THERE WAS NO CL EAR ESTABLISHMENT THAT THE SHARE APPLICANT COMPANIES ARE BOGUS BEING OPERATED BY SHRI PRAVEEN KUMAR JAIN AND HIS GROUP TO PROVIDE BOGUS ACCOMMODATION ENTRIES. SIMILARLY IS THE POSITION OF THE CASE LAWS REFERRED BY THE LEARNED COUNSEL OF THE ASSESSEE. IN NO NE OF THE CASE THERE WAS CLEAR ESTABLISHMENT THAT THE ASSESSEE HAS RECEIVED BOGUS ACCOMMODATION ENTRY. AND THE ASSESSEE HAS MISERABLY FAILED TO DISLODGE THE FINDING OF THE R EVENUE THAT THESE COMPANIES ARE ONLY OPERATED BY SHRI PRAVEEN KUMAR JAIN TO PROVIDE BOGUS ACCOMMODATION ENTRIES. AS HELD BY THE HONBLE APEX COURT IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC), THE R EVENUE AUTHORITIES ARE NOT SUPPOSED TO PUT ON BLINKERS BUT HAVE TO LOOK I NTO THE SURROUNDING CIRCUMSTANCES. THE CLE AR FACTUAL EVIDENCE THAT THESE BOGUS COMPANIES OF SHRI PRAVEEN KUMAR JAIN AND HIS GROUP ESTABLISHED TO PROVIDE BOGUS ACCOMMODATION ENTRIES CANNOT BE DISREGARDED BY ONLY LOOKING AT THE XEROXED COPIES OF DOCUMENTS SU BMITTED BY THE ASSESSEE. THERE IS NOT A WHISPER BY THE ASSESSEE THAT THESE COMPANIES ARE ACTUALLY IN EXISTENCE AT THAT THE ADDRESS MENTIONED , OR T HAT THE DIRECTORS OF ANY OF THESE COMPANIES ARE ACTUALLY ACCESSIBLE. 16. IN THESE CIRCUMSTANCES , IN LIGHT OF THE OVERWHELMING EVIDENCE THAT ASSESSEE HAS OBTAINED BOGUS ACCOMMODATION ENTRIES FROM ENTITIES OPERATED BY SHRI PRAVEEN KUMAR JAIN AND HIS GROUP, THE MERE PRODUCTION OF XEROXED COPIES OF DOCUMENTS CANNOT SUPPORT THE CASE OF THE ASSESSEE. ACCORDINGLY , I S ET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) A ND DECIDE THE ISSUE IN FAVOUR OF R EVENUE . 3. NOW THE ASSESSEE HAS FILED MISCELLANEOUS APPLICATION AGAINST THIS ORDER SEEKING RECTIFICATION OF MISTAKE WHICH IS APPARENT FROM THE RECORD. 4 . IN THE SUBMISSIONS THE LD. COUNSEL OF THE ASSESSEE HAS STATED THAT NO OPPORTUNITY WAS GIVEN FOR CROSS EXAMINATION OF SHRI PRAVEEN KUMAR JAIN. IN THIS REGARD, HE HAS 4 M.A. NO. 281/M UM/2018 MENTIONED THE DECISION OF HONBLE APEX COURT. FURTHERMORE, THE LD. COUNSEL OF THE ASSESSE E HAS PLACED RELIANCE UPON THE SEVERAL HON'BLE JURISDICTIONAL HIGH COURT DECISIONS AS WELL AS HONBLE SUPREME COURT DECISIONS IN THE CASE OF CIT VS. LOVELY EXPORTS P. LTD. 216 CTR 196 (SC) AND IT IS THE PLEA OF THE LD. COUNSEL OF THE ASSESSEE THAT IN LIGHT OF THESE DECISIONS, THE ISSUE SHOULD HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE. FURTHERMORE , THE LD. COUNSEL OF THE ASSESSEE HAS REFERRED TO THE SEVERAL F INDINGS OF THE TRIBUNAL. IN THIS REGARD, HE HAS PLEADED THAT THESE FINDINGS WERE GIVEN WITHOUT PUTT ING THE SAME ACROSS TO THE ASSESSEE. IT IS THE CLAIM OF THE LD. COUNSEL OF THE ASSESSEE THAT THIS WAS THE DEPARTMENTAL APPEAL AND HENCE, IN THE ASSESSEES PAPER BOOK THE DETAILS IN THIS RESPECT WERE NOT THERE, BUT THEY WERE KEPT HANDY. IN LIGHT OF THE ABOV E, THE ASSESSEE HAS SUBMITTED RECALL OF THE ORDER OF THE TRIBUNAL. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) SUBMITTED THAT WHAT THE ASSESSEE IS SEEKING IS REVISION OF THE ORDER OF THE TRIBUNAL WHICH IS NOT PERMISSIBLE U/S. 25 4(2) OF THE ACT. 6. I FIND THAT IN THIS CASE IT WAS AN APPEAL BY THE REVENUE BEFORE THE ITAT . THE ITAT HAS PASSED AN ORDER AFTER DULY RECORDING THAT THE SAME HAS BEEN PASSED AFTER HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS. THERE WAS NO APPEAL OR CROSS OBJECTION BY THE ASSESSEE THAT THE ASSESSEE IS AGGRIEVED BY NON CONSIDERATION OF LD. CIT(A) FOR ANY GROUND RAISED BEFORE HIM. THE LD. CIT(A) HAD PRIMARILY RELIED UPON THE DECISION OF THE LOVELY EXPORTS P. LTD. (SUPRA) WHICH THE ITAT HAS FOUND TO BE NOT 5 M.A. NO. 281/M UM/2018 APPLICABLE IN THE PRESENT CASE. FURTHER, THE ITAT HAS REFERRED TO OTHER CASE LAWS FROM THE HONBLE APEX COURT. I FIND THAT WHAT THE ASSESSEE IS SEEKING IS THE REV IEW OF THE ORDER. IT IS SETTLED LAW THAT WRONG AP PRECIATION OF FACTS OR WRONG APPRECIATIO N OF THE CASE LAWS MAY BE AN ERROR IN JUDGMENT BUT DO NOT CONSTITUTE MISTAKE APPARENT FROM TH E RECORD. F OR THIS PURPOSE, WE REFER TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAMESH ELECTRIC AND TRADING CO. [1993] 203 IT R 497 (BOM). IN THE SAID ORDER, THE HON'BLE JURISDICTIONAL HIGH COURT HAS REFERRED TO AND DRAWN STRENGTH FROM THE HONBLE APEX COURT DECISION IN THE CASE OF T.S. BALARAM, ITO V. VOLKART BROS. [1971] 82 ITR 50 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT HAS REFERRED TO THE FOLLOWING FROM THE HONBLE APEX COURT DECISION: 'A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD.' 7. THEREAFTER AFTER CONSIDERING THE VARIOUS FACTS AND DECISIONS , THE HON'BLE JURISDICTIONAL HIGH COURT HAS EXPOUNDED AS UNDER: IN OUR VIEW, THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME - TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHIC H IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS, AS HAS BEEN SHOWN IN THE PRESENT CASE. FAILURE BY THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. 6 M.A. NO. 281/M UM/2018 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, I FIND THAT THE ISSUE S POINTED OUT BY THE LD. COUNSEL OF THE ASSESSEE DO NOT FALL UNDER THE REALM OF MISTAKE APPARENT FROM THE RECORD LIABLE TO BE RECTIFIED U/S. 254(2) OF THE ACT. IT IS SETTLED LAW THAT RE - APPRECIATION/RE - ADJUDICATION IS NOT PERMISSIBLE IN THE GARB OF THE RECTIFICATION OF MISTAKE IN THE ORDER OF THE TRIBUNAL. 9 . IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.12.2018 SD/ - (S HAMIM YAHYA) A CCOUNTANT MEMBER MUMBAI ; DATED : 06.12.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI