Lalit Johari, Jodhpur V. ACIT, Central Circle-2,Jodhpur Present Juridiction The Dy.CIT, Central Circle-1(4), Ahmedabad

MA 3/AHD/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8494 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-02-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-01-2024
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 274; 254(2); 13

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ “SMC”, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER MA No.3/Ahd/2024 ( arising out of ITA No.493/Ahd/2023 ) Assessment Year : 2014-15 Lalit Johari 65-B, Bank Colony, Rai Ka Bagh Jodhpur Vs The ACIT Central Cir-2, Jodhpur Present Jurisdiction The Dy.CIT Central Circle-1(4) Ahmedabad PAN: AGFPJ 5542 H / (Appellant) / (Respondent) Assessee by : Shri K.C. Thaker, AR Revenue by : Ms.Saumya Pandey Jain, Sr.DR /Date of Hearing : 09/02/2024 /Date of Pronouncement: 28/02/2024 आदेश/O R D E R This Miscellaneous Application is filed by the assessee in respect order dated 15/09/2023 passed by the Tribunal. 2. The Ld.AR submitted that in the course of hearing all the appeal paper-book containing detailed written submissions was filed before the Tribunal and several case laws were also relied upon during the hearing which was noted in paragraph No.6 of the Tribunal’s order dated 15/09/2023. The Ld.AR submitted that the assessee had raised substantive grounds; one of which contested on merits regarding imposition of penalty u/s.271AAB of the Income Tax Act, 1961 (hereinafter referred to as “the MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 2 Act” in short) and the second grievance raised was related to rejection of appeal by the CIT(A) for condonation of delay. The Tribunal allowed the second ground thereby allowing condonation of delay and adjudicated the appeal on merits. The Ld.AR submitted that the notice issued u/s.274 of the Act was not legally valid because relevant clause of section 271AAB(1) was not mentioned and that the notice did not specify the default for rebuttal, if penalty in the facts is leviable in this case. The Ld.AR relied upon the following decisions: Muninaga Reddy vs. ACIT 396 ITR 398 (Karnataka) CIT vs. SSA’s Emerald Meadows 242 Taxman 150 (SC) Ravi Mathur vs. DCIT ITA No.969/JP/2017 dt. 13.06.2018 2.1. The Ld.AR further submitted that penalty imposed by the Assessing Officer and confirmed by the CIT(A) holding that in search case involving surrender of income, penalty was mandatory and not discretionary, ignoring the fact that the provisions do provide discretion for the Assessing Officer by using the words, “may direct” and further provisions of section 274 of the Act. have been specifically made applicable for giving opportunity of hearing before levy of penalty. The Ld.AR has substantiated his arguments in the Miscellaneous Application as follows:- "9. Heard both the sides and perused all the relevant material on record. The Id. Authorized Representative at the time of hearing submitted that the CIT(A) has also dismissed the appeal of the assessee on the ground of delayas well as commented on the merit and dismissed the appeal. Since the Id. CIT(A) has already decided on merit ground nos. 1 & 2 in respect of delay before the CIT(A) is allowed. As regards, the merits of the case are concerned, the Id. Authorized Representative submitted that the notice issued for initiation of penalty u/s. 271AAB(1)(a) is not appropriate notice and bad in law appears to be not justifiable as the Assessing Officer has invoked the penalty provisions u/s. 271AAB and therefore when there is MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 3 undisclosed income which has been surrendered at that juncture, the notice is just and proper. This contention of the Id. Authorized Representative does not survive. As regards the merits once the assessee has admitted the undisclosed income and offer the income for taxes accordingly the penalty u/s.271AAB immediately gets attracted. The penalty u/s.271AAB is on the basic threshold undisclosed income found and the explanation given by the assessee prior on discovery of the undisclosed income is insufficient then the penalty u/s.271AAB is very much applicable. The each case laws referred by the Id. Authorized Representative on each of the aspect of the assessee's case are different in facts and will not be applicable in the present case. Thus, the ground no. 3 of the assessee's appeal is dismissed." 5. The finding recorded by the Hon'ble Tribunal in paragraph 9 of the order, as extracted above, is to the effect that the appellant's contention regarding the notice for penalty being not appropriate and bad in law, is not justified and that the same is just and proper, and that on merits, once undisclosed income is admitted and offered income and taxes, penalty u/s.271AAB is immediately attracted. Hon'ble Tribunal also held that various judgments/decisions relied upon by the appellant in support of these contentions are different in facts and not applicable. We humbly submit that the finding recorded thereby disposing of the appeal suffers from mistakes apparent from record, which needs to be rectified u/s. 254(2) of the Act by recalling the order. In this regard we have to submit as under. 5.2 From the finding of the Hon'ble Tribunal it is apparent that it has just dealt with a single contention raised by the appellant i. e. the notice issued for levy of penalty is bad in law holding the same to be 'just and proper' because the penalty u/s. 271AAB gets immediately attracted once there is admission of undisclosed income and the same is offered and tax and interest is paid. However, there are several contentions as enumerated in sub-paras (a) to (k) of paragraph 4 above, supported by judgments/decisions as per the written submission reproduced in the order. The Hon'ble Tribunal has missed to deal with these contentions in the light of decisions of coordinate benches as well as judgments including of Supreme Court, as shown hereafter. a. The contention regarding the notice for penalty u/s. 271AAB being bad in law was based on the fact that the relevant clause (a) of section 271AAB(1) was not mentioned in the body of the notice, and also the fact that the precise default was not mentioned in the notice thereby denying appropriate opportunity for submitting explanation in breach of principles of natural justice. While it may be true that in case of surrender of income and declaring the same in the return of income after paying tax and interest, section 271AAB would be attracted and notice may be issued, when issuing the notice the AO must precisely mention the relevant default MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 4 in the notice so issued. In the notice, copy of which was placed on record at page 67A of the paper-book, the precise default as applicable u/s.271AAB for which the explanation was called for was not mentioned. In this context the judgment of the Hon'ble Supreme Court in the case of SSA's Emerald Meadows (242 Taxman 150) and the decision of the coordinate Jaipur Bench of ITAT in the case of Ravi Mathur were relied upon. Hon'ble Tribunal has not dealt with the Apex Court judgment and the coordinate bench decision in the context of failure of the AO to mention the precise default while calling for explanation through the impugned notice. b. The appellant raised the contention that the AO and CIT(A) were not correct in holding that in the facts of the case levy of penalty was mandatory as the words 'may direct' used in 271AAB(1) clearly made the provisions of section 271AAB discretionary and not mandatory. It was also contended that sub-section (3) of 271AAB provided that section 274 and 275 shall be applicable, and accordingly the AO issued notice u/s.274 r. w. s. 271AAB calling for explanation. When notice calling for explanation was mandatory, it could not be considered empty formality, which fact also belied the view of the lower authorities that the levy of penalty was mandatory in the facts of the case. On this issued appellant had relied upon the coordinate Vishakhapatnam Bench decision (Pg.14) and several other decisions of coordinate Benches of Tribunals. The Hon'ble Tribunal has not dealt with these coordinate Bench decisions which squarely covers the appellant's contention. c. The appellant had also raised the contention that the penalty u/s. 271AAB was leviable in respect of 'undisclosed income' as defined in the clause (c) of the Explanation to section 271AAB of the Act, and that in the case of appellant the surrendered amount could not be regarded as `undisclosed income. Appellant placed reliance on the issue on the decision of the Coordinate Jaipur Bench in the case of Ravi Mathur (pg.18) which squarely applied to the facts of the appellant's case. The Hon'ble Tribunal has not dealt with the said coordinate Bench decision in the context of the statutory definition. d. It was also contended that the provisions regarding levy of penalty must be strictly construed, and in that regard, appellant had relied upon the Hon'ble Supreme Court judgment in the case of Harshad Shantilal Mehta and decision of coordinate Kolkata Bench in the case of Manish Agarwal. Hon'ble Tribunal has not dealt with this contention and the judgment/decision. MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 5 e. The Hon'ble tribunal has also not dealt with the coordinate Jaipur Bench decision in the case of Padam Chand Pungalia vs. ACIT (Pg.20-23) and Ravi Mathur (Pg.24-25), from which extensive extracts have been reproduced in the order dealing with the precise issues whether advances and expenses could be regarded as 'undisclosed income', and wherein it is held that the same could not be taken as 'undisclosed income’. 5.3 We submit that the Hon'ble Tribunal has mentioned with reference to several judgments and decisions of Tribunals cited for consideration that "The each case laws referred by the Id. Authorized Representative on each of the aspect of the assessee's case are different in facts and will not be applicable in the present case," However, Hon Tribunal has not dealt with the respective cases relied upon, copies of which are provided in the Paper-book, and relevant paragraphs therefrom have been made part of the written submission (and order) so as to facilitate ready reference. Thus, on the aspect of the case-law relied upon on behalf of the appellant, the order of the Hon'ble Tribunal is not a speaking order discussing the pros and cons and providing reasons as to how the cited cases are taken to be different in facts and not applicable. We submit that for this reason also the order needs to be recalled considering the principle that justice is not only to be done, but it should be seen to be done. In this regard we rely upon the judgment of the Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. vs. CIT reported in (2007) 295 ITR 466. Here, we also rely upon the recent judgment of the Hon'ble Supreme Court setting aside the judgment of the High Court for re-adjudication, for not providing reasons for the conclusions drawn, in the case of Manesh Dayashankar Madeka vs. ACIT, Circle 1(1) & Anr, dt.15-12-2023 in SLP (C) No.17236/2023 (copy enclosed). 5.4 We humbly submit that in view of the above facts, the order dt.15-09- 2023 suffers from mistakes apparent from record and therefore the same needs to be recalled for fresh adjudication. In this regard we rely upon the following judgments and decisions in support of our application for recall of the order dt.15-09-2023. 1) Honda Siel Power Products Ltd. vs. CIT-(2007) 295 ITR 466 (SC) "Non-consideration of a decision of co-ordinate Bench placed before the Tribunal amounts to mistake apparent from record within the meaning of s. 254(2); Tribunal was therefore justified in exercising its powers under s. 254(2) when it was pointed out that an order of the co-ordinate Bench placed before the Tribunal was not considered by it while passing the original order." 2) PALIWAL OVERSEAS LTD. vs. DCIT - (2008) 117 TTJ 0427 MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 6 "Thus, a prejudice is caused to the assessee in not considering the said decision of the co-ordinate Bench while passing the order dt. 21st July, 2006. This prejudice has resulted from an order attributable to the Tribunal's mistake. Therefore, the Tribunal has committed a mistake apparent from record. Thus, the mistake being apparent on record in the order dt. 15th Nov.2006 is required to be rectified under s. 254(2).-Honda Siel Power Products Ltd. vs. CIT (2007) 213 CTR (SC) 425 followed." 3) F.F.E. MINERALS INDIA (P) LTD. vs. JCIT - (2004) 84 TTJ 0907 "Conclusion Decision of Tribunal ignoring applicable decisions of Supreme Court, Special Bench and co-ordinate Benches of Tribunal suffers from a mistake apparent from record which the Tribunal is obliged to rectify under s. 254(2)." 4) Amore Jewels Pvt. Ltd. vs. DCIT - (2018) 169 DTR 0369 (Bom) "6. We find that, though the order dated 13 th February, 2015 does render a finding that no positive material was brought on record, there is no discussion whatsoever of the various case laws detailed in the submissions which according to the petitioner clinches the issues in support of its case that the shareholding investment by the five Companies was genuine. In the above view, the Tribunal ought to have allowed the petitioner's Rectification Application and considered the petitioner's Appeal before it on merits, inter-alia, taking into account the material and case laws which has been already filed by the petitioner's during the hearing leading to the order dated 13th February, 2015." 5) India Trimmings P. ltd. vs. ACIT - (2015) 230 ΤΑΧMAN 0185 (Madras) "17. We, therefore, have no hesitation to hold, for the reasons stated above, that the order of the Tribunal is a non-speaking order and the Tribunal has not considered the issue raised and objected by either side. Hence, we set aside the order of the Tribunal and remand the matter to the Tribunal for passing fresh orders on merits." MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 7 CIT vs. NIRAJAN K. ZAVERI - (2009) 77 CCH 0136 GujHC "Tribunal found substance in the submissions made on behalf of the assessee in the miscellaneous application that the observations/findings given by the Tribunal are either not based on material facts on record or the material already available has not been properly appreciated and that the order of the Tribunal has resulted in great injustice to the assessee on account of various unintentional mistakes in the order-Impugned order recalling the original order of the Tribunal for fresh adjudication does not suffer from any legal infirmity so as to warrant any interference- Asstt. CIT vs. Saurashtra Kutch Stock Exchange Ltd. (2003) 183 CTR (Guj) 364: (2003) 262 ITR 146 (Guj) and Asstt. CIT vs Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90 : (2008) 305 ITR 227 (SC) followed" 7) ITO, Ward 3(1)(4), Vadodara vs.Sheelaben D. Manglani 173/Α/2020 - Dt.20-01-2023 - MA 171- "We also note that if a crucial fact and argument brought on record by any party of the appeal which may have impacted the final outcome of the appeal not considered or omitted to be considered will amount mistake apparent from record. In holding so we draw support and guidance from the order of coordinate bench of Mumbai Tribunal in case GOLDEN MEADOWS PROPERTIES (P.) LTD vs, ITO reported in 149 Taxman 17. The principles of law as enunciated by various decisions are summarized as follows: 1. That where there is a wrong assumption of facts it will constitute mistake apparent from record. 2. Where there is a failure to consider certain evidence brought on record it would also constitute a mistake apparent from record. 3. Where there is an omission on the part of the Tribunal to consider the principles of law enunciated by the decisions of various Courts on which reliance was placed in the course of hearing, it will also constitute mistake apparent from record." MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 8 6. In view of the above facts and circumstances of the case and the mistakes parent from record, we humbly request the Hon'ble Tribunal to kindly recall the order Dt. 15-09-2023 passed in this case, in the best interest of justice.” 2.2. Therefore, the sum and substance of the Ld.AR’s submission was that the case laws referred by the Ld.AR at the time of hearing of the appeal was not properly considered despite being factually applicable in assessee’s case. The Ld.AR relied upon the decision of Hon’ble Apex Court in case of Honda Seil Power Products Ltd. vs. CIT (2007) 295 ITR 466 (SC), Paliwal Overseas Ltd. vs. DCIT (2008) 117 TTJ 427 and also Manesh Dayashankar Madeka vs. ACIT (SLP No.17236/2023 order dated 15/12/2023. 3. The Ld.DR submitted that the assessee by filing the present Miscellaneous Application is seeking review of the order dated 15/09/2023 as the Tribunal has categorically given the finding related to the merits of notice issued for initiation of penalty u/s.271AAB of the Act as well as the finding related to all the case laws relied upon by the Ld.AR at the time of hearing of the appeal. Thus, the Ld.DR opposed the present miscellaneous application and submitted that the miscellaneous application may be dismissed. 4. Heard both the parties and perused all the relevant material available on records. At this juncture, this present miscellaneous application is mainly on the basis that all the case laws relied upon by the assessee at the time of hearing of appeal was not taken into account by the Tribunal. For proposition of the same, the Ld.AR relied upon the decision of Hon’ble Apex Court in case of Honda Siel Power Products Ltd.(supra), Paliwal Overseas Ltd. vs. DCIT (supra), F.F.E. Minerals India (P) Ltd. vs. JCIT MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 9 (supra), Amore Jewels Pvt.Ltd. vs. DCIT (supra) and India Trimmings P.Ltd. vs. ACIT (supra), CIT vs. Nirajan K. Zaveri (supra). In respect of these case laws, the Hon’ble Apex Court in case of Honda Siel Power Products Ltd. vs. CIT itself has categorically held that the Tribunal therein has missed out the finding of the Samtel Color Ltd. while determining miscellaneous application/rectification application and if any case laws is not considered, then the mistake error, or omission is attributable and the same should be rectified. The case law related to Paliwal Overseas Ltd.(supra), the same decision also highlights the similar ratio following the decision of Hon’ble Apex Court in case of Honda Siel Power Products Ltd. The decision of the Tribunal in case of F.F.E. Minerals India (P) Ltd., the Tribunal held that issue involved in that case was repetitive nature having bearing in all succeeding assessment years and non-rectification of the same would impact on all succeeding years and decision of Hon’ble Apex Court if not considered suffers from a mistake apparent from record which ought to be rectified. In case of Amore Jewels Pvt.Ltd.(supra), the Hon’ble Bombay High Court highlights that if the order is non-speaking order, the miscellaneous application filed for rectification of the order is justifiable. The case of India Trimmings P.Ltd.(supra), the Hon’ble Madras High Court also highlighted that a non-speaking order/non-application of mind should be rectified. In the decision of Hon’ble Gujarat High Court in case of CIT vs. Nirajan K.Zaveri(supra) also held that the rectification order thereby recalling the original order of the Tribunal for fresh adjudication does not suffer from any legal infirmity and, therefore, dismissed the reference of the Department. The decision of the Tribunal in case of Sheelaben D.Manlani (supra) the issue was related to certain factual error which ITAT has not taken into account due to inadvertently omitting the same and, therefore, MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 10 the Tribunal recalls its common order. The decision of Rakesh Ramani vs. ITO (5 SOT 547) also highlights the same. After going through each of these case laws in respect of miscellaneous applications to be allowed and the guidelines/ratio laid down by the Hon’ble Apex Court in case of Honda Siel Power Products Ltd.(supra), it appears that in the present case, the Tribunal has categorically mentioned in the finding that each case laws referred by the Authorised Representative on each of the aspect of assessee’s case are different in facts and, therefore, the contention of the Ld.AR was not at all considered, is not justifiable. From the perusal of the case laws and the submission which was reproduced in paragraph No.6 of the Tribunal order, it can be clearly seen that each case has a different factual set up which was relied upon by the Ld.AR at the time of hearing of the appeal and, therefore, the Tribunal has given its finding to that extent. The Tribunal has also given the finding to the effect that the notice issuance whether appropriate or bad in law. The contentions of the Ld.AR that the case laws were not reasonably discussed cannot be the criteria for not considering the same as per the ratio laid down by the Hon’ble Apex Court in case of Honda Siel Power Products Ltd.(supra). At the time of hearing the Ld.AR also relied upon the order of the Apex Court in case of Manesh Dayashankar Madek vs. ACIT [SLP (C) No(s). 17236/2023] dated 15/12/2023, but the same is also on the same putting and, therefore, what the assessee at this juncture while filing this present miscellaneous application is asking review of the order dated 15/09/2023 which the Tribunal does not have power to interfere with and, therefore, the present miscellaneous application is dismissed. MA No.3/Ahd/2024 (in ITA No.493/Ahd/2023) Lalit Johari vs. DCIT Asst.Year 2014-15 11 5. In the result, the miscellaneous application filed by the assessee is dismissed. Order pronounced in the Court on 28 th February,2024 at Ahmedabad. Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad, Dated 28/02/2024 . ी. य , . . ./T.C. NAIR, Sr. PS ! "# /Copy of the Order forwarded to : 1. "!ी $% / The Appellant 2. &य$% / The Respondent. 3. '(')* य य + / Concerned CIT 4. य य + )"!ी (/ The CIT(A)-11, Ahmedabad 5. . /ीय )* , य "!ी य ")* , ज /DR,ITAT, Ahmedabad, 6. / 12 3 /Guard file. / BY ORDER, &य ! //True Copy// ह य !'जी (Asstt. Registrar) य "!ी य ")* , ITAT, Ahmedabad 1. Date of dictation (dictation-pad attached with the file)) : 14.02.2024/26.12.24 2. Date on which the typed draft is placed before the Dictating Member. : 15.02.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 28.2.24 7. Date on which the file goes to the Bench Clerk. : 28.2.24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :