Kantilal Babulal Solanki, JUNAGADH V. The Income Tax Officer, Ward-1(2), JUNAGADH

MA 35/RJT/2020

AI Insights

The case revolves around a Miscellaneous Application by the assessee, Kantilal B. Solanki, addressing an alleged mistake in the ITAT's earlier order concerning the assessment year 2011-12. The ITAT had previously upheld the lower authorities' decision, which disallowed expenses claimed against income from 'other sources' due to lack of documentary evidence. In the Miscellaneous Application, the assessee argued that the gross total income should not be taxed without allowing corresponding expenses, citing similar cases and judicial precedents. The ITAT acknowledged the oversight in appreciating the facts and the need for a thorough examination of the nature of the income and corresponding expenses, leading to the decision to recall the earlier order and set the matter for fresh adjudication.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 134512 (ITAT-RAJKOT)
• Duration Of Justice: 13 year(s) 3 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-11-2022
• Assessment Year: misc
• Appeal Filed On: 04-09-2009
• Other Referred Cases: Shri Naranrai Rambhai Zala
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Corroborative evidences; Set aside
• Section: 133(6)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER, And Ms MADHUMITA ROY, JUDICIAL MEMBER M.A No.35/Rjt/2020 in आयकर अपील सं./ITA No. 124/Rjt/2016 िनधाᭅरण वषᭅ/Asstt. Years: 2011-2012 Kantilal B. Solanki, 8-Chitrakut Society, Nr. Nobal School, Junagadh. PAN: BPZPS8321D Vs. I.T.O., Ward-(1)2, Junagadh. Assessee by : Written Submission Revenue by : Shri B.D. Gupta, Sr. D.R सुनवाई कᳱ तारीख/Date of Hearing : 04/11/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 21/12/2022 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The present Miscellaneous Application is directed at the instance of the assessee pointing out some apparent mistake in the order of the ITAT dated 20.09.2019 passed in ITA No. 124/RJT/2016 and seeking necessary modification thereof by recalling the same. 2. The ITAT in the instant case has upheld the finding of the authorities below by observing that the assessee failed to file any documentary evidence in support M.A No.35/Rjt/2020 in ITA No. 124/Rjt/2016 A.Y. 2011-12 2 of the expenses claimed against the income shown in the income tax return. Now the assessee by way of this miscellaneous application contends that there is a mistake apparent from the record in the order of the ITAT insofar the gross total income of the assessee cannot be made subject to tax without allowing the corresponding expenses. To this effect, the assessee has also relied on certain judgments. 3. At the time of hearing, it was noticed that the learned AR in his written submission has contended that the ITAT in the identical facts and circumstances in the case of Shri Naranrai Rambhai Zala for the assessment year 2011-12 in ITA No. 477/RJT/2017 has sent the matter back to the AO for fresh adjudication as per the provisions of law after giving the reasonable opportunity of being heard to the assessee. Thus, the learned AR prayed before us to recall the order passed in the case of the assessee as there is a mistake apparent from record. 4. On the other hand, the learned DR opposed to recalling of the order of the ITAT as the same does not suffer from any mistake apparent from record. The learned DR vehemently supported the order of the ITAT. 5. We have heard the rival contentions of both the parties and perused the materials available on record. It is the trite law that the mistake which are apparent from record are those mistakes which are patent, glaring on the face and two views for the same are not possible. The mistakes which requires application of mind and long drawn process to determine cannot be said mistake being apparent from record. However, the order passed by the authorities must be based on correct appreciation of facts and in accordance with the provisions of law. If the facts have not been appreciated correctly, then the order delivered by the authority will not render the justice to the assessee as well as to the revenue which is prerequisite in any justice delivery system. In other words, wrong appreciation of facts while passing the order will amount to a mistake apparent from record. M.A No.35/Rjt/2020 in ITA No. 124/Rjt/2016 A.Y. 2011-12 3 5.1 Coming to the facts of the case on hand, undeniably the assessee failed to furnish the supporting evidences against the income shown under the head other sources except making the statement time and again that he has incurred expenses against the income shown under the head other sources. Even before us the assessee has not brought any material on record about the expenses as claimed by him before the learned CIT-A. Admittedly, the primary onus lies upon the assessee to provide the necessary details in support of his contention. But the question arises if the assessee fails to discharge the onus, what should be the action of the authority below while framing the assessment. In such an event, the assessment has to be made ex parte to the assessee but in scientific manner and on the rational basis. What the AO has done in the present case, he has made the disallowance of all the expenses without carrying out the necessary verification in order to appreciate the facts despite having the power under the provisions of law. There is nothing arising from the order of the authorities below what was the actual nature of income from other sources. This fact has not been appreciated by the authorities below on the reasoning that the assessee has failed to furnish the corroborative materials. Even the learned CIT-A in his order has observed as under: But in the case of non-recurring, non-systematic, one-time receipts falling under the head of “other sources” this logic does not apply unless the appellant is able to show that these receipts are also basically of the nature of a secondary or accessory business. For e.g a trader-manufacturer may also indulge in the side business of money lending or share trading and may return the receipts thereof under the head ‘Income from other sources’ after claiming the required expenses, viz. interest, brokerage etc. But in the present case, no such material is available to arrive at the conclusion that the appellant is actually running a small business. He has himself offered his receipts as ‘income from other sources’ and claimed deduction u/s.57. 5.2 From the above finding of the learned CIT-A, what arises is this that the income shown by the assessee does not require any expenditure to be incurred against such income but it is the surmise and conjecture of the learned CIT-A in the absence of necessary details. M.A No.35/Rjt/2020 in ITA No. 124/Rjt/2016 A.Y. 2011-12 4 5.3 For instance, if the impugned income shown under the head other sources represents the income from interest out of the own interest free fund available with the assessee, then the question of making the deduction of the corresponding expenses under the provisions of section 57 of the Act does not arise. But this fact has to be established which could have been done easily by the authorities below by writing a later to the bank for collecting the information under the provisions of section 133(6) of the Act. But it has not been done so but the entire blame has been put on the head of the assessee without carrying out necessary verification to appreciate the facts in the right perspective. Thus, we are of the view that the ITAT has also passed the order without appreciating the facts and upheld the order of the authorities below. Thus, we are of the view that the order of the ITAT suffers from the mistake apparent from record as it was given without appreciating the fact about the exact nature of the income. 5.4 At this juncture, it is also important to note that the ITAT in the subsequent order in the case of Shri Naranrai Rambhai Zala (supra) has rightly set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. In view of the above, we recall the order passed by the ITAT with the direction to the registry to fix the same for fresh hearing under intimate to both the parties. Hence the MA filed by the assessee is allowed. 6. In the result, the Miscellaneous Application filed by the assessee is allowed. Order pronounced in the Court on 21/12/2022 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 21/12/2022 Manish