M.S.Rathi, Ernakulam V. ACIt, Ernakulam

MA 31/COCH/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7351 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 23-09-2011
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: C B M WARRIER CAAR
• Keywords: Tax effect
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM M.P. NOS. 30 & 31/COCH/2011 (ARSG. OUT OF I.T.(SS)A NOS. 17 & 18/COCH/2008 ASSESSMENT YEARS:2001-02 & 2002-03 M.S.RATHI, PARTNER, M/S. LAKSHMI HOSPITAL, DIWANS ROAD, ERNAKULAM. [PAN:AGEPR 8883N] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. (ASSESSEE-APPLICANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI C.B.M.WARRIER, CA-AR REVENUE BY MS. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 21/10/2011 DATE OF PRONOUNCEMENT 27/12/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE TWO MISCELLANEOUS PETITIONS (MPS) BY THE ASSESSEE U/S. 254(2) OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER), ARIS ING OUT OF THE ORDER BY THE TRIBUNAL DATED JULY 26, 2011 IN ITS CASE FOR TWO CONSECUTIV E ASSESSMENT YEARS (AYS), BEING 2001- 02 AND 2002-03. 2.1 THE SUBJECT MATTER OF THE ASSESSEES APPLICATIO N FOR THE FIRST YEAR, I.E., AY 2001-02, CONCERNS THE ADDITION OF ` 9 LAKHS IN RESPECT OF `UNEXPLAINED CASH DEPOSITED IN THE ASSESSEES BANK ACCOUNT (WITH HDFC BANK ACCOUNT) ON 14.10.2002, WHICH STOOD CONFIRMED BY THE TRIBUNAL VIDE THE IMPUGNED ORDER, REVERSING ITS DELETION BY THE FIRST APPELLATE AUTHORITY. ADVERTING TO THE REVENUES GRO UND NO. 3, VIDE WHICH THE SAID DELETION WAS AGITATED BY THE REVENUE, IT WAS SUBMIT TED BY THE LD. AR THAT PER THE SAME, THE ONLY GROUND PROJECTED IS THAT THE ASSESSEES RE -CASTED CASH FLOW STATEMENT HAS BEEN ACCEPTED BY THE FIRST APPELLATE AUTHORITY. HOWEVER , THE IMPUGNED DEPOSIT OF ` 9 LAKHS DID M.P. NOS.30 & 31 /COCH/2011 M.S. RATHI V. ASSTTT. CIT, ERNAKULAM 2 NOT FORM PART OF THE SAID CASH FLOW STATEMENT. THE REVENUES GROUND, WHICH ONLY IS TO BE ANSWERED BY THE TRIBUNAL, ACCORDINGLY, WARRANTED BE ING DISMISSED AT THE THRESHOLD. TAKING US THROUGH THE RELEVANT PART OF ITS ORDER (R EFER PARA 7.1 TO 7.3), HE CONTINUED, THAT THE TRIBUNAL, HOWEVER, TRAVELLED OUTSIDE THE AMBIT OF THE REVENUES CASE, DWELLING INTO AREAS, SUCH AS THE SOURCE OF THE CASH DEPOSITED IN THE BANK ACCOUNT; THE REASON FOR ITS IMMEDIATE WITHDRAWAL BY THE ASSESSEE; ABSENCE OF CO RROBORATIVE EVIDENCE/S IN SUPPORT OF THE ASSESSEES CASE, ETC. THE SAME IS IRRELEVANT IN -AS-MUCH AS IT DID NOT FORM PART OF THE REVENUES CASE FOR REJECTING THE ASSESSEES EXPLANA TION, I.E., THAT THE CASH DEPOSITED WAS MADE AVAILABLE BY THE FIRM, M/S. LAKSHMI HOSPITAL, IN WHICH THE ASSESSEE IS A PARTNER, OUT OF THE CASH IN HAND (PER ITS REGULAR BOOKS OF ACCOU NT, OR ` 4.97 LAKHS) AND THAT GENERATED OUT OF ITS UNDISCLOSED INCOME ( ` 4.03 LAKHS), EVEN AS THE UNDISCLOSED INCOME RETURNED FOR THE YEAR WAS AT ` 6.26 LAKHS. WHAT COULD BE THE CORROBORATIVE EVIDENCE WH EN THE FIRM ITSELF HAS OFFERED IT AS UNDISCLOSED INCOM E FOR THE RELEVANT YEAR? AND WHICH WAS ONLY ON FINDING CASH DEFICIT TO THAT EXTENT. IN VI EW THEREOF, THE IMPUGNED ORDER MAY BE RECALLED FOR CONSIDERATION OF THE ASSESSEES EXPLAN ATIONS/CONTENTIONS. 2.2 THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, WOULD SUBMIT THAT THE REVENUES GROUND CANNOT BE A SUBJECT MATTER OF THE ASSESSEES PETITION U/S. 254(2), WHICH HAS NECESSARILY TO BE QUA THE TRIBUNALS IMPUGNED ORDER. IF AT ALL THE ASSES SEE HAD ANY OBJECTION TO THE REVENUES GROUND, I.E., AS NOT HIG HLIGHTING OR PROJECTING THE TRUE OR REAL CONTROVERSY, THE SAME OUGHT TO HAVE BEEN BROUGHT FO RTH WHILE ARGUING AND DEFENDING ITS CASE DURING THE HEARING OF THE REVENUES APPEAL. RE FERENCE THERE-TO AT THIS STAGE IS NOT PERMISSIBLE. THE TRIBUNAL HAD CONSIDERED THE ASSESS EES EXPLANATION ON MERITS AND PASSED A SPEAKING ORDER, SO THAT THERE IS NO SCOPE FOR ANY INTERFERENCE THEREWITH U/S. 254(2), EVEN AS NO INFIRMITY THEREIN STANDS POINTED OUT. RELIANC E WAS PLACED BY HER ON THE FOLLOWING CASES:- ITO V. ITAT , 229 ITR 651 (PATNA); CIT V. RAMESH ELECTRIC & TDG. CO ., 203 ITR 497 (BOM.); HOMI MEHTA & SONS (P.) LTD. V. DY. CIT , 63 ITD 15 (MUM); AND DHARAMCHAND SURANA VS. ITO , 61 ITD 115 (MAD.). M.P. NOS.30 & 31 /COCH/2011 M.S. RATHI V. ASSTTT. CIT, ERNAKULAM 3 2.3 IN REJOINDER, IT WAS SUBMITTED BY THE LD. A R THAT HE HAS NO OBJECTION TO THE REVENUES GROUND PER SE , BUT TO THE IMPUGNED ORDER INASMUCH AS IT EXCEEDS THE SCOPE OF THE CONTROVERSY RAISED BY THE REVENUE PER ITS SAID GROUND, RATHER THAN LIMITING ITSELF THERETO. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ADDITION UNDER REFERENCE IS U/S. 69 OF THE ACT IN RESPECT OF THE CASH FOUND DEPOSITED IN THE ASSESSEES BANK ACCOUNT (WITH HDFC BANK LTD.) ON 14.10.2000, I.E., ON THE ASSESSING OFFICER (A.O.) BEING NOT SATISFIED WI TH THE ASSESSEES EXPLANATION FURNISHED TOWARD ITS NATURE AND SOURCE. THE ASSESSEES EXPLAN ATION, WHICH WAS WITH REFERENCE TO THE CASH BELONGING TO A FIRM (IN WHICH THE ASSESSEE IS A PARTNER), WAS THE SAME BEFORE THE ASSESSING AND THE FIRST APPELLATE AUTHORITY. WHILE THE A.O. FOUND IT AS NOT SATISFACTORY, THE LD. CIT(A) FOUND IT AS SO, SO THAT THE IMPUGNED DEP OSIT WAS CONSIDERED BY HIM AS EXPLAINED, AND THE ADDITION CONSEQUENTLY DIRECTED T O BE DELETED. IT WAS THIS DIRECTION AND THE FINDING/S ON WHICH IT WAS BASED THAT STOOD CONT ESTED BY THE REVENUE IN APPEAL; THE RESPECTIVE CASES OF BOTH THE SIDES FINDING REITERAT ION IN THE ARGUMENTS ADVANCED DURING HEARING (REFER PARA 5 & 6 OF THE IMPUGNED ORDER). I T WAS THIS `EXPLANATION WHICH WAS CONSIDERED ON MERITS BY THE TRIBUNAL, ONLY TO FIND IT AS WHOLLY UNSUBSTANTIATED AND, THUS, NOT SATISFACTORY, BOTH WITH REGARD TO THE NATURE AN D SOURCE OF THE AMOUNT DEPOSITED. REFERENCE FOR THE PURPOSE IS MADE TO PARA 7.1 TO PA RA 7.3 OF THE IMPUGNED ORDER. WE ARE, THEREFORE, WHOLLY UNABLE TO AGREE WITH THE ASSESSEE S ARGUMENT THAT THE TRIBUNAL DID NOT APPRECIATE THE REVENUES CASE PER ITS RELEVANT GROU ND, WHICH IS WIDE IN ITS SCOPE, OR OF IT HAVING TRAVELLED BEYOND THE AMBIT AND SCOPE OF THE APPEAL, AND DECIDED THE ISSUE NOT BEFORE IT OR ON IRRELEVANT CONSIDERATION/S. THE SAM E, IT MAY BE NOTED, WOULD IN ANY CASE BE A SUBJECT MATTER OF REVIEW, AS, AS WOULD BE EVID ENT, WHAT THE ASSESSEE ESSENTIALLY OBJECTS TO IS THE TRIBUNALS DECISION ON MERITS. HE R APPLICATION IS, IN EFFECT, FOR A REVIEW, WHICH IS IMPERMISSIBLE IN LAW AND, THUS, LIABLE FOR REJECTION AT THE OUTSET. 3.2 SO HOWEVER, WE SHALL MEET THE ASSESSEES ARGUME NT/S, IF ONLY FOR THE SAKE OF COMPLETENESS OF THIS ORDER. THE ASSESSEE STATES THA T THE IMPUGNED CASH DEPOSIT DOES NOT M.P. NOS.30 & 31 /COCH/2011 M.S. RATHI V. ASSTTT. CIT, ERNAKULAM 4 FORM PART OF THE RE-CASTED CASH FLOW STATEMENT, WHI CH IS ONLY SELF-DEFEATING AS IT IMPLIES THAT THERE IS NO EXPLANATION FOR THE IMPUGNED CASH DEPOSIT, IN EXPLANATION OF WHICH ONLY THE CASH FLOW STATEMENTS (ORIGINAL AND/OR RECASTED) STANDS PREPARED BY HER. IN ANY CASE, THE LD. CIT(A), WHOSE ORDER IS UNDER CHALLENGE BEFO RE THE TRIBUNAL, HAS CONSIDERED THE ASSESSEES EXPLANATION ON MERITS, AND ONLY WITH REF ERENCE TO THE CASH FLOW STATEMENT (REFER PARA 5 OF THE APPELLATE ORDER). THE QUESTION S POSED BY THE TRIBUNAL (AT PARA 7.2 OF ITS ORDER) ARE ONLY TOWARD CONSIDERING THE MERITS OF TH E ASSESSEES EXPLANATION, WHICH, IN ITS VIEW, ARE RELEVANT IN ASCERTAINING THE TRUE NATURE AND SOURCE OF THE DEPOSIT UNDER REFERENCE. WHEN THE ASSESSEE STATES OF THEM AS BEIN G NOT SO (RELEVANT), IT IS ONLY QUESTIONING THE TRIBUNALS DECISION ON ITS MERITS, IN THE SAME MANNER AS THE ASSESSEE DOES THAT OF THE ASSESSING OFFICER BEFORE THE FIRST APPE LLATE AUTHORITY, I.E., BY SEEKING ITS REVIEW FOLLOWING THE APPELLATE PROCEDURE. COULD A RECTIFICATION PETITION, ONE MAY ASK, ARISE OUT OF THE ORDERS OF THE AUTHORITIES BELOW ? THE CORROBORATIVE MATERIALS AND EVIDENCES WHICH THE TRIBUNAL REFERS TO ARE QUA THE `ACCEPTANCE OF CASH OF THE PARTNERSHIP FIRM A ND THE SUBSEQUENT `RETURN THERETO, I.E., WHICH FORM THE S UBSTRATUM OF THE ASSESSEES EXPLANATION. IN THE ABSENCE THEREOF, WHICH IS ADMITTED, THE QUES TION OF THE FIRM HAVING NOT AVAILED OF ANY CREDIT IN RESPECT OF ITS CASH IS OF LITTLE CONS EQUENCE. IN FACT, EVEN THE SAID CLAIM WAS FOUND BY IT (TRIBUNAL) AS NOT CORRECT ON FACTS; THE IMPUGNED CASH FLOWING PARTLY OUT OF THE FIRMS REGULAR CASH-BOOK (SO THAT IT STANDS UTILIZE D BY IT FOR ITS PURPOSES IN DUE COURSE), AND THAT ATTRIBUTABLE TO THE UNDISCLOSED INCOME HAV ING NOT BEEN BROUGHT TO TAX, SO THAT THE QUESTION OF THE FIRM HAVING NOT AVAILED OF ANY CRED IT THERE-AGAINST DOES NOT ARISE. 3.3 IN VIEW OF THE FOREGOING, WE DO NOT CONSIDER TH E ASSESSEES MISCELLANEOUS PETITION AS MERITING ACCEPTANCE. WE DECIDE ACCORDINGLY. 4. THE ONLY CONTENTION RAISED BY THE ASSESSEE PER H ER M.P. FOR A.Y.2002-03 IS THAT THE REVENUES APPEAL IS NOT MAINTAINABLE IN VIEW OF SECTION 268A OF THE ACT READ WITH THE INSTRUCTION NO. 5/2008 DATED 15/5/2008 ISSUED BY T HE BOARD THERE-UNDER; THE TAX EFFECT OF ITS APPEAL BEING BELOW ` 2 LAKHS. THE CONTENTION TO THIS EFFECT, IT IS CLAIM ED, STOOD RAISED DURING THE HEARING OF THE REVENUES APPEAL BEFORE T HE TRIBUNAL, WHICH, HOWEVER, HAS BEEN M.P. NOS.30 & 31 /COCH/2011 M.S. RATHI V. ASSTTT. CIT, ERNAKULAM 5 OMITTED TO BE CONSIDERED BY IT. IN VIEW THEREOF, TH E APPEAL MAY BE RECALLED FOR CONSIDERATION OF THE SAID OBJECTION. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 5.1 EVEN AS CLARIFIED BY THE BENCH DURING HEARIN G (WITH REFERENCE TO THE LOG-BOOK MAINTAINED); THE ACCOUNTANT MEMBER BEING A PART OF THE DIVISION BENCH HEARING THE APPEAL, THAT NO DOUBT A CONTENTION TO THIS EFFECT W AS RAISED BY THE LD. AR, BUT HE CONCEDED TO THE REVENUES APPEAL BEING DECIDED ON MERITS. TO THIS, IT WAS SUBMITTED BY THE LD. AR (WHO HAPPENS TO BE THE SAME COUNSEL WHO REPRESENTED THE ASSESSEE IN THE APPELLATE PROCEEDINGS), THAT EVEN SO, THERE BEING NO REFERENC E TO THE SAID FACT IN THE TRIBUNALS ORDER, THE INSTANT APPLICATION IS LIABLE TO SUCCEED. WE DO NOT CONSIDER THIS AS A VALID GROUND. THIS IS AS THE ONLY MISTAKE IN THE IMPUGNED ORDER, THUS, IS THE NON-RECORDING OF THE SAID OBJECTION AND ITS SUBSEQUENT CONCESSION BY THE LD. AR AND, IN FACT, WHICH IS ONLY IN VIEW THEREOF. AND, FURTHER, WHICH DOES NOT RESULT IN ANY PREJUDICE TO THE ASSESSEE. THAT IS, NO PREJUDICE STANDS CAUSED TO THE ASSESSEE THEREBY. 5.2 SO HOWEVER, WE ARE INCLINED TO ACCEPT THE AS SESSEES OBJECTION ON THE BASIS THAT, IN SPITE THE CONCESSION AFORESAID, THE PROVISION OF SE C. 268A BEING MANDATORY, IT WOULD BE, PARTICULARLY WHEN BROUGHT TO ITS NOTICE, INCUMBENT ON THE TRIBUNAL TO CONSIDER THE SAME. THERE IS NO ESTOPPEL AGAINST LAW, SO THAT IT WOULD NOT BE SO EVEN BY CONDUCT. THE SAME REPRESENTS TRITE LAW, AND FOR WHICH REFERENCE BE MA DE TO THE DECISIONS IN THE CASE OF MAYNAK PODDAR (HUF) V. WTO , 262 ITR 633 (MP). FURTHER, AS CLARIFIED BY THE AP EX COURT IN CIT V. C. PARAKH & CO. (INDIA ) LTD . (1956) 29 ITR 661 (SC), IT IS THE CORRECT LEGAL POSITION THAT IS RELEVANT, AND NOT THE VIEW T HAT THE PARTIES MAY TAKE OF THEIR RIGHTS IN THE MATTER. WE, ACCORDINGLY, DIRECT THE RECALL OF T HE REVENUES APPEAL FOR A.Y. 2001-02 (IT(S&S)A NO. 18/COCH/2008) FOR CONSIDERATION OF IT S MAINTAINABILITY IN LIGHT OF S. 268A OF THE ACT AND THE APPLICABLE INSTRUCTIONS/CIRCULAR S ISSUED BY THE BOARD THERE-UNDER. WE DECIDE ACCORDINGLY. M.P. NOS.30 & 31 /COCH/2011 M.S. RATHI V. ASSTTT. CIT, ERNAKULAM 6 6. IN THE RESULT, THE ASSESSEES MISCELLANEOUS PETI TION FOR AY 2001-02 (NO. 30/COCH/2011) IS DISMISSED, AND THAT FOR AY 2002-03 (NO. 31/COCH/2011) IS ALLOWED. . SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 27TH DECEMBER, 2011 GJ COPY TO: 1. SMT. M.S.RATHI, PARTNER, M/S. LAKSHMI HOSPITAL, DIWANS ROAD, ERNAKULAM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-1, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .