Parimal Chandrakant Zaveri, Mumbai V. The Pr. CIT-1, Vadodara

MA 54/AHD/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9654 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-12-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-09-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 05-06-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Depreciation; Rectification of order; Opportunity of being heard; Cost of acquisition; Reasonable cause; Difference of opinion; Valuation report; Change of opinion; Set aside
• Section: 263; 2; 143(3); 260A; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Shri Parimal Chandrakant Zaveri 5/9A,Dreamland Building, New Queen Road, Opera House, Mumbai-400004 Maharashtra PAN: AACPZ2367D (Appellant) Vs The Pr. Commissioner of Income Tax-1, Vadodara (Respondent) Revenue Represented: Ms. Saumya Pandey Jain, Sr. D.R. Assessee Represented: Shri Prakash D Shah, A.R. & Shri Piyush Chhajed, A.R. Date of hearing : 08-09-2023 Date of pronouncement : 06-12-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- The assessee filed this Miscellaneous Application raising the following Grounds of Appeal: 1. The above Appeal No. ITA-283/Ahd/2021 of the Appellant for A.Y. 2015-16 was disposed of by the Honorable 'B' Bench vide its Impugned Order dated 16.12.2022. (hereinafter referred to as 'Impugned Order"). M.A. No. 54/Ahd/2023 (in ITA No. 283/Ahd/2021) Assessment Year 2015-16 M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 2 2. The above- named Appellant, begs to present this Miscellaneous Application for rectification of certain mistakes, which are apparent from the record in the said Impugned Order. 3. The Appellant had filed his Appeal against the order passed u/s 263 of the Income Tax Act on 03.03.2020. The Appellant had against the same taken four grounds of Appeal which are hereby as under: i. On the facts and in the circumstances of the case, the Learned Principal Commissioner of Income Tax - 1, ought to have appreciated that the Assessment order passed for A.Y. 2015-16 did not fall under the provisions of Explanation 2 to Section 263 of the Income Tax Act and therefore the Order passed u/s 263 is beyond jurisdiction. ii. On the facts and circumstances of the case, the Learned Principal Commissioner of Income Tax erred in initiating the proceeding with a view to start the fishing and roving enquiries in order which is already concluded and the same is not permitted as held by Hon Supreme Court in case of Parashuram Pottery works Co. Ltd., 106 ITR 1 and by the Bombay High Court in case of Gabriel India Ltd, 203 ITR 108. iii. On the facts and circumstances of the case, the Learned Principal Commissioner of Income Tax erred in passing the order under section 263 merely been change of opinion. The order under section 143(3) passed by the Ld. AO was not erroneous and neither prejudicial to the interest of revenue. iv. On the facts and circumstances of the case, the Learned Principal Commissioner of Income Tax erred in applying the provisions of sec. 263 as it as on record that the appellant had sold the business assets and offered the income under the business head and the same was submitted and accepted. There was nothing on record to doubt the taxability of the sale of business assets. 4. During the hearing, the Appellant's AR invited attention of the Bench to the questionnaire issued by AO during assessment proceeding and response given to the said questionnaire. Further, the appellant's All placed the copy of the case laws paper book containing various case laws on which appellant placed reliance. Accordingly, the inquiry has been conducted and the response has been made and therefore 263 of the Act, did not arise based on various Judgments placed on record. 5. The impugned order does not discuss or refers or distinguishes any of the Judgment of Supreme Court and Bombay High Court and other high courts mentioned in ground No. 2 and also submitted during course of hearing. M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 3 6. The observation in Para 17, is against the facts on the record of the Assessing Officer in particular the record of the assessment year under consideration and earlier years and from the said record it is evident that the said sold property is a business asset and on which income as "Balance Charge (Profit on sale of Business Assets)" of Rs.3,88,500/- has been offered in the profit and Loss Account. 7. The Hon'ble Bench shall appreciate that the Appeal u/s 263 and the grounds raised were purely on the following issues. i. Whether the order of PCIT fall under provisions of Explanation 2 Section 263 ii. Whether the order of PCIT in directing further enquiries is valid under the law iii. Whether the order of PCIT amounted to change of opinion or not. The said grounds were raised in the grounds of appeal and all the grounds from 1 to 3 have technically not being disposed and should be disposed off by the separate finding on the same and therefore the order needs to be rectified. 8. Furthermore, the Judgments on which the reliance was placed has not be considered and distinguished is also mistake apparent from record. In this regard, we hereby invite your honors attention to Judgment rendered by: (a) Honourable Supreme Court in case of HONDA SIEL POWER PRODUCTS LTD, 295 ITR 466 (b) Honourable Supreme Court in case of SAURASHTRA KUTCH STOCK EXCHANGE LIMITED, 305 ITR 227. 2. We heard rival parties extensively and perused the materials available on record. The case of the Revenue for revising the assessment u/s. 263 is extracted in Para 4 and 4.1 of our order as follows: “...4. After considering the above reply by the Ld. PCIT, it is observed that the assessee has declared the profit of Rs. 3,88,500/- in his profit and loss account for the financial year 2014-15. However this is not acceptable since the assessee in his audited report furnished for the present assessment year as well as earlier assessment years this asset is not declared by the assessee. Further the assessee is engaged in the business of import, export, manufacturing and trading of precious & semiprecious gemstones in the name of Harshil Jewellers. It is nowhere submitted by M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 4 the assessee that he is engaged in business of real estate or carries out the sale and purchase of immovable property, therefore he cannot be allowed to treat the aforementioned net profit of Rs. 3,88,500/- on sale of flats as his business income. Even, if it is accepted that the aforesaid immovable property was used by the assessee for his business purpose then the same acquires the character of depreciable asset and was required to be shown in the depreciation statement and the profit on the sale of the same should have been treated as short term capital gain and offered to taxation u/s. 50 of the Act. However this was not done by the assessee. The assessee also not produced any valuation report in support of his claim of cost of acquisition of the aforesaid immoveable property. Thus the Ld. PCIT held that the assessment order passed by the Assessing Officer is an erroneous order and has not conducted necessary inquiries on the vital aspects which is an erroneous order and prejudicial to the interest of the Revenue. 4.1. The Ld. PCIT relied on the Madras High Court judgment in the case of K.A. Ramaswamy Chettiar (220 ITR 657), wherein it was held that the ITO is expected to make an enquiry of a particular item of income and if he does not make an enquiry as expected, that would be a ground for Commissioner of Income Tax to interfere under section 263 holding that the assessment order passed by the A.O. is an erroneous and prejudicial to the interest of Revenue. Therefore the Ld. PCIT set aside the assessment order with a direction to the Assessing Officer to frame fresh assessment after proper enquiries and verification on the aforementioned issue, examining the accounts and records of the assessee and after allowing reasonable opportunity of being heard to the assessee.” 3. Regarding Ground No. 6 & 7 of the M.A. filed by the assessee, we have considered the submission of the assessee and concurred with arguments of the Ld. D.R. that the assessee has not produced any concrete materials before any authorities that it is business asset and not liable for capital gain. It is also observed in Para 6 of our order that the assessee now claims before Ld. PCIT that the sale of the property at Mumbai is a business asset, but the corresponding entries are not reflected in the balance sheet of the assessee. Even in the reply given by the assessee before the A.O., he has not discussed the nature of the property and how it is a capital asset or Stock-in-trade. M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 5 4. Regarding Ground Nos. 4 & 5 of the M.A., we held in para 8 of our order that “it is categorically held that the case laws relied by the assessee are clearly distinguishable to the facts of the present case. Thus the grounds raised by the assessee does not hold any merits, the same are hereby rejected”. The assessee has not filed any material on record before any of the Authorities to prove the claim of the property as Business asset. Thus every aspect of the appeal were considered by the Tribunal and then dismissed the assessee appeal. 5. Now under the guise of Miscellaneous Application, the assessee is requiring this Tribunal to review its own order which is not permissible u/s. 254(2) of the Act. 5.1. It is appropriate to quote the Hon’ble Supreme Court judgment in the case of CIT vs. Reliance Telecom Ltd. reported in [2021] 133 taxman.com 41 (SC), has considered the powers of the Tribunal u/s. 254(2) and held as follows: “..3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9- 2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. (The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.) ....................... As observed hereinabove, the powers under section 254(2) of the mistake apparent from the record and not beyond that. M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 6 Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.” 5.2. The Hon’ble Jurisdictional Gujarat High Court in the case of Vrundava Ginning and Oil Mill vs. Assistant Registrar reported in [2021] 126 taxmann.com 227 after considering elaborately the powers u/s. 254(2) which has examined by the Delhi High Court judgment in the case of CIT vs. ITAT held as follows: “......13. The contours of the jurisdiction under section 254 (2) were examined by the Delhi High Court in CIT v Income-tax Appellate Tribunal [2005] 204 CTR 349. It was held that: “6. It is evident from the above that the power available to the Tribunal is not in the nature of a review as is understood in legal parlance. The power is limited to correction of mistakes apparent from the record What is significant is that the section envisages amendment of the original order of the Tribunal and not a total substitution thereof. That position is fairly well-settled by two decisions of this Court in Ms. Deeksha Suri v. ITAT and Karan and Co. v. ITAT [2002] 253 1TB 131. This Court has in both these decisions held that the foundation for the exercise of the jurisdiction lies in the rectification of a mistake apparent from the record which object is ensued by amending the order passed by the Tribunal. The said power does not however, contemplate a re-hearing of the appeal for a fresh disposal. Doing so would obliterate the distinction between the power to rectify mistakes and the power to review the order made by the Tribunal. The following passage from the decision of this Court in Karan and Co.'s case (supra) elucidates the difference between review and rectification of an order made by the Tribunal: "The scope and ambit of application of Section 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record. We shall first deal with the question of the power of the Tribunal to recall an order in its entirety. Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under section 254(1) is the effective order so far as the appeal is concerned. Any order passed under section 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under section 254(1). That is the final order in the appeal. An order under section 254(2) does not have existence de hors the order under section 254(1). Recalling of the order is not permissible under section 254(2). Recalling of an order automatically necessitates re-hearing and re-adjudication of the entire subject-matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms or Rule 24 of the Income- tax (Appellate Tribunal) Rules, 1963, and that too only in cases where the assessee shows that it had a reasonable cause for being absent at a time M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 7 when the appeal was taken up and was decided ex parte. This position was highlighted by one of us (Justice Arijit Pasayat, Chief Justice) in CIT v. ITAT. Judged in the above background the order passed by the Tribunal is indefensible." ............................... 19. Having regard to the materials on record, we find it difficult to take the view that the ground No. 3, which the writ applicant is talking about, has not been dealt with at all by the Appellate Tribunal. The Appellate Tribunal, in its own way, has discussed the said issue and recorded a particular finding. If the writ applicant is dissatisfied, then it is always open for him to prefer an appeal under section 260A of the Act before this High Court and in the course of the appeal, it can be pointed out to the Court as regards the ground No. 3 and if the Court is convinced, then it may remit the matter to the Tribunal for fresh consideration of the ground No. 3 which the writ applicant is talking about. The power to rectify an order under section 254(2) of the Act is extremely limited, as observed by the Delhi High Court in the case of CIT v. Maruti Insurance Distribution Services Ltd. [2012] 26 taxmann.com 68/[2013] 212 Taxman 123. It does not extend to correcting the error of law or re-appreciating the factual findings. Those properly fall within the appellate review of an order of Court of first instance. What legitimately falls for consideration are errors (mistakes) apparent from the record. 6. Respectfully following the above judicial precedents of Hon’ble Supreme Court and Jurisdictional High Court, we are of the considered opinion, the present Misc. Application filed by the assessee is to review the earlier order/decision passed by this Tribunal, which is not permissible u/s. 254(2) of the Act. Thus the tribunal has not committed any mistake or error in passing the impugned order. Therefore the present M.A. is devoid of merits and the same is liable to be dismissed. 7. In the result, the Misc. Application filed by the Assessee stands dismissed. Order pronounced in the open court on 06-12-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 06/12/2023 M.A. No. 54/Ahd/2023 A.Y. 2015-16 Page No Shri Parimal Chandrakant Zaveri Vs. PCIT 8 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद