DCIT (CC) 3 (4), MUMBAI V. SEAWOOD HOSPITALITY & REALTY PVT. LTD., MUMBAI

MA 305/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4427 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POINTING
• Keywords: Reopening of assessment; Depreciation
• Section: 68; 148; 2; 143(3); 133A; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘G‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER M.A. No.305/Mum/2021 (Arising out of ITA No.92/Mum/2019) (Asse ssment Year :2010-11) DCIT(CC)3(4) Room No.1915, 19 th Floor Air India Building Nariman Point Mumbai – 400 021 Vs. Seawood Hospitality & Realty Pvt. Ltd., B/306-309, Business Dynasty Park J.B.Nagar Opp. Sangam Cinema Andheri(E) Mumbai – 400 059 PAN/GIR No.AAMCS1472M (Appellant) .. (Respondent) Revenue by Shri Dharmesh Shah / Shri Mitali Gopani Assessee by Shri Hoshang B Irani Date of Hearing 25/02/2022 Date of Pronouncement 09/05/2022 आदेश / O R D E R PER M. BALAGANESH (A.M): By virtue of this Miscellaneous Application, Revenue seeks to recall the order passed by this Tribunal on 28/10/2020. For the sake of convenience, the Miscellaneous Application preferred by the Revenue is reproduced hereunder:- MA No. 305/Mum/2021 M/s. Seawoods Hospitality and Realty Pvt. Ltd., 2 “1. The Hon'ble Income Tax Appellate Tribunal, Mumbai Bench "G", Mumbai passed an order dated 28/10/2020 in ITA No. 92/Mum/2019 filed by the Assessee for the A.Y. 2010-11. A copy of the order is enclosed hereto marked as Exhibit 'A. 2. Aggrieved by the order of the Hon’ble ITAT, Mumbai Bench "G", Mumbai, the present Miscellaneous Application is filed on the facts and circumstances of the case. 3. The assessee is private Limited company engaged in the business of investment in shares and securities. The assessee had escaped assessment with regard to issue of share capital and share premium to the tune of Rs. 3,35,00,000/-. The A.O. was of the opinion that it is a bogus, as certain information had emanated out of survey action u/s 133A of the Act carried out in the Mahavir Group of cases. A survey action was also carried out u/s. 133A of the Act, in the business premises of the assessee. The notice u/s 148 was issued to the assessee for reopening of assessment, the assessee, on receipt of reasons recorded for re-opening of assessment, filed objections before A.O. The A.O. disposed of the objections by way of speaking order dated 19/02/2016 rejecting the contentions of the assessee. The A.O. proceeded to frame re-assessment u/s 143(3) r.w.s. 147 of the Act on 13/06/2016 wherein the share capital and share premium received by the assessee to the tune Rs. 3,35,00,000/- was added as unexplained cash credit u/s 68 of the Act. Aggrieved by the A.O.'s order the assessee filed the appeal before the Ld. CIT(A). 4. The Ld. CIT(A) dismissed the assessee's appeal vide order No. CIT(A)-51/IT/241/DCIT-CC-3(4)/2016-17 dated 26.10.2018 stating that no infirmity is found in the action of the AO in making the said addition of Rs. 3,35,00,000/- and accordingly confirmed the addition made by the AO. Aggrieved with the decision of the CIT(A), the assessee has filed appeal before the Hon’ble ITAT. 5. The Hon’ble ITAT allowed the appeal of the assessee by holding that tie reassessment has been initiated without obtaining proper sanction in terms of Section 151(1) of the Act from the Ld. PCIT and hence, held that the approval accorded by the Id. PCIT in a mechanical way is unsustainable in law, hence, on this very jurisdictional issue, set aside the orders of the lower authorities and allowed the appeal of the assessee. The Hon'ble ITAT further held that since the entire reopening of assessment had been quashed on the aforesaid aspect, the other grounds raised by the assessee both on law as well as on merits are therefore left open. MA No. 305/Mum/2021 M/s. Seawoods Hospitality and Realty Pvt. Ltd., 3 6. The decision of Hon'ble ITAT is not acceptable on merits. In this regards, it is submitted that due process was followed by AO before issuance of the notice u/s 148 of the Act. First of all, the Assessing Officer had recorded properly the reasons for re-opening on 08/01/2016, which was made part of the prescribed proforma for recording the reasons for initiating proceedings under Section 148 of the Act and obtained the requisite approval of the Pr. Commissioner of Income Tax. 7. The Hon'ble ITAT Vide Para no. 5.4 of its order dated 28/10/2020 has observed that the provisions of Section 147(b) has been omitted from the statute book long back and was certainly not in force for A.Y. 2010-11. The DCIT (Central Circle)-3(4), Mumbai has signed the prescribed proforma on 08/01/2016. In Sr. No. 7 of the said prescribed proforma, it is mentioned that whether the provisions of Sec. 147(a) or 147(b) are applicable or both the sections are applicable. The Assessing Officer had mentioned only 147(b) in the Prescribed Performa. Actually, this case was re-opened u/s 147 of the Act under Explanation - 2, (b) of the IT. Act. For better clarity, explanation 2 of the Section 147 of the Act is reproduced as under: Explanation 2 - For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a). where no return of income has been furnished by the assessee although his total income or the total income of any other persons in respect of which he is assessable under this Act during the previous year exceeded the maximum about which is not chargeable to income Tax; (b). where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the aassessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c). Where an assessment has been made, but- (i). income chargeable to tax has been underassessed; or (ii). such income has been assessed at too low a rate; or (iii). Such income has been made the subject of excessive relief under this Act; or (iv). excessive loss or depreciation allowance or any other allowance under this Act has been computed. MA No. 305/Mum/2021 M/s. Seawoods Hospitality and Realty Pvt. Ltd., 4 It is pointed out that this case was not selected for scrutiny assessment earlier and only return of income was processed u/s 143(1) of the Income Tax Act. Hence, while fulfilling the prescribed proforma, the then AO had covered this case under 147(b) means, Explanation -2(b) of 147 of the Income Tax Act where a return of income has been furnished by the assessee but no assessment has been made and the Assessing Officer has noticed that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. Therefore, it is just a typographical/technical error and curable u/s 292B of the I.T. Act. Such technical error should not be interpreted as mechanical approval and non-application of mind. 8. The Hon’ble ITAT vide Para No. 5.6 of its order has observed that annexure containing the reasons recorded for re-opening of assessment proceedings was recorded by the AO on 14/01/2016, whereas the prescribed proforma was sent by him on 08/01/2016 to the Pr. GIT for approval. In this regard, it is noticed from the Para No. 5.5 of the Hon'ble ITAT order that the said annexure containing the reasons recorded for reopening the assessment was enclosed in Para 7 of the paper book of assessee, which is totally a misrepresentation of the facts by the assessee company before the Hon'ble ITAT. In this case, the prescribed proforma was duly filled-in and signed by the DCIT (Central Circle)-3(4), Mumbai on 08/01/2016 in which as per Sr. No. 11 of the prescribed proforma, reasons for the belief that income has escaped assessment were enclosed as per Annexure. On verification of the records, it is evident that the annexure was duly enclosed with the proforma which was also signed by the DCIT (Central Circle)-3(4), Mumbai on 08/01/2016. The copy of the prescribed proforma alongwith Annexure as reasons recorded and tabulated in Sr. No. 11, is enclosed as Exhibit-B for kind reference. Thereafter, a letter dated 08/01/2016 was put up to Addl. CIT, vide letter No. DCIT/CC-3(4)/Approval/2015-16, which was subsequently forwarded to Pr. CIT(Central)-2, Mumbai by the Addl. CIT(Central), Range-3, Mumbai for further necessary action. The copy of the letter dated 08/01/2016 is enclosed as Exhibit-C for kind reference. The Pr. CIT(Central)-2, Mumbai vide his letter No. CIT(C)/Approval for reopening u/s 147/15-16 dated 13/01/2016, has conveyed the approval for reopening of the assessment proceedings u/s 147 of the Income Tax Act. The said letter was received in tapal on 14/01/2016. The copy of the approval letter issued by the Pr. CIT(Central)-3, Mumbai dated 13/01/2016 is enclosed as Exhibit-D for kind reference. MA No. 305/Mum/2021 M/s. Seawoods Hospitality and Realty Pvt. Ltd., 5 9. Subsequently, the DCIT (Central Circle)-3(4), Mumbai has again recorded the same duly approved reasons in "order sheet noting" on 14/01/2016 and issued the notice u/s 148 of the Act on 14/01/2016. The Copy of order sheet nothings dated 14/01/2016 is enclosed herewith for kind reference as Exhibit-E and copy of notice issued u/s 148 of the act is enclosed as Exhibit-F. In view of the above, it appears that the facts of the case were intentially mis-reported and misrepresented before the Hon’ble ITAT by the applicant. Actually, the copy of order sheet noting dated 14/01/2016 was submitted by the assessee before the Hon’ble ITAT as page No. 7 in its paper books whereas the real fact is that the annexure enclosed with the prescribed proforma a was overlooked, which was duly recorded on 58/01/2016 by the AO well before the getting approval from the Pr. CIT(Central). The Hon’ble ITAT formed its view on the basis of order sheet noting dated 14/01/2016 that the Assessing Officer had recorded the reason only on 14/01/2016 and not before that date whereas prescribed proforma was duly signed by the AO on 08/01/2016 while seeking PCITs approval. Therefore, it is clear that while according the approval u/s 151 of the act, the Pr. CIT(Central)-2 was very well in possession of reasons as annexure of the prescribed proforma as duly recorded by the assessing officer and the Pr. CIT(Central)-2, Mumbai had conveyed his approval after due diligence, after applying his mind and after getting himself satisfied of the reasons recorded by the AO for re-opening of the assessment proceedings. In view of the above, the decision of Hon'ble ITAT is not acceptable as it is based on perversity of facts. As, it is a prima-facie case of misrepresentation of facts before Hon'ble ITAT, AO is of the view that, a miscellaneous application is required to be filed before the Hon'ble ITAT with a plea to recall the impugned order and to restore the appeal filed by the assessee and to decide the issue on merits. 10. In view of the circumstances set out hereinabove, I pray that the Hon'ble ITAT may be pleased to recall the impugned order restore the appeal to decide the issue on merits filed by the assessee challenging the decision of Ld. CIT(A) dated 26/10/2018, and a great harm and prejudice will be caused to the Applicant and interests of revenue, if the instant appeal is not reinstated.” 2. We find that this Tribunal in its order dated 28/10/2020 had also held that the ld. PCIT had only granted mechanical approval u/s.151(1) of the Act without proper application of mind in para 5.11 of its order. This finding in para 5.11 has not been contested by the Revenue by pointing out any error thereof in the Miscellaneous Application preferred by them. MA No. 305/Mum/2021 M/s. Seawoods Hospitality and Realty Pvt. Ltd., 6 Hence, in any case, even if the other contentions raised by the Revenue in the Miscellaneous Application need to be addressed, the result of the appeal would remain same that “appeals of the assessee are allowed.” Hence, we deem it fit not to go into the Miscellaneous Application preferred by the Revenue as it ultimately does not alter the ultimate result of the appeal. Hence, the Miscellaneous Application preferred by the Revenue is hereby dismissed. 3. In the result, Miscellaneous Application of the Revenue is hereby dismissed. Order pronounced on 09/05/2022 by way of proper mentioning in the notice board. Sd/- (RAHUL CHAUDHARY) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 09/05/2022 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//