PRATIBHA MAHENDRA SHAH, MUMBAI V. DCIT CENTRAL CIRCLE- 8(4), MUMBAI

MA 583/MUM/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4838 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 26-10-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 15-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NIRAJ SETH AW JAY BHANSALI
• Keywords: Reassessment proceedings; Capital Gains
• Section: 147; 132; 143(3); 153A; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER, AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER M.A. no.477/Mum./2023 (Arising out of ITA no.802/Mum./2023) (Assessment Year : 2011–12) Mahendra Corporation Premises no.19, 55, Shah House 3 rd Floor, Shahid Bhagat Singh Road Colaba Causeway, Opp. Colaba Police Station Mumbai 400 039 PAN – AASFM6555C ................ Applicant (Original Appellant) v/s Dy. Commissioner of Income Tax Central Circle–8(4), Mumbai ................ Respondent (Original Respondent) M.A. no.582/Mum./2023 (Arising out of ITA no.803/Mum./2023) (Assessment Year : 2011–12) Shirin Mahendra Shah Apt–4, 12 th & 13 th Floor, 7, Marine Drive B.N. Cross Lane–1, Chowpatty Road Mumbai 400 007 PAN – AQYPS1819D ................ Applicant (Original Appellant) v/s Dy. Commissioner of Income Tax Central Circle–8(4), Mumbai ................ Respondent (Original Respondent) M.A. no.583/Mum./2023 (Arising out of ITA no.804/Mum./2023) (Assessment Year : 2011–12) Pratibha Mahindra Shah Apt–4, 12 th & 13 th Floor, 7, Marine Drive B.N. Cross Lane–1, Chowpatty Road Mumbai 400 007 PAN – AQYPS1786P ................ Applicant (Original Appellant) v/s Dy. Commissioner of Income Tax Central Circle–8(4), Mumbai ................ Respondent (Original Respondent) Mahendra Corporation and others M.As. No.477, 582, 583 & 584/Mum./2023 Page | 2 M.A. no.584/Mum./2023 (Arising out of ITA no.805/Mum./2023) (Assessment Year : 2011–12) Emvee Shah Real Estate Pvt. Ltd. (Formerly known as Emvee Shah Holdings Pvt. Ltd.), Apt–4, 12 th & 13 th Floor 7, Marine Drive, B.N. Cross Lane–1 Chowpatty Road, Mumbai 400 007 PAN – AACCE5458P ................ Applicant (Original Appellant) v/s Dy. Commissioner of Income Tax Central Circle–8(4), Mumbai ................ Respondent (Original Respondent) Assessee by : Shri Niraj Seth a/w Shri Jay Bhansali Revenue by : Shri Anil Sant Date of Hearing – 27/10/2023 Date of Order – 01/12/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present batch of four Miscellaneous Applications has been filed by different assessees under section 254(2) of the Income Tax Act, 1961 (“the Act”) seeking rectification of the common order dated 29/05/2023, passed by the coordinate bench of the Tribunal in assessees’ appeal being ITAs no. 802/Mum./2023, 803/Mum./2023, 804/Mum./2023, and 805/Mum./2023, for the assessment year 2011–12. 2. The common grievance of the assessees in the present Miscellaneous Applications is that the coordinate bench of the Tribunal while deciding its appeal vide common order dated 29/05/2023 dismissed the ground raised by the assessee challenging the initiation of reassessment proceedings under section 147 of the Act as not pressed, though the assessees have raised this Mahendra Corporation and others M.As. No.477, 582, 583 & 584/Mum./2023 Page | 3 ground even before the learned CIT(A). It is further the submission of the assessees that oral submissions, inter-alia, on the validity of reopening under section 147 of the Act were made during the course of hearing. However, it was also submitted that if the issue is decided on merits then it would not be necessary to go into the question of validity of reassessment proceedings in the appeals. The learned Authorised Representative (“learned AR”) submitted that the coordinate bench though allowed the appeal filed by the assessees on merits, however, dismissed the grounds raised by the assessee challenging the initiation of reassessment proceedings under section 147 of the Act as not pressed. Accordingly, it was prayed that to this extent the common order dated 29/05/2023 be rectified and the grounds challenging the initiation of reassessment proceedings be kept open instead of dismissing the same as not pressed. 3. On the other hand, the learned Departmental Representative (“learned DR”) objected to the prayer made in the present Miscellaneous Applications. However, the learned DR agreed that the present Miscellaneous Applications will not lead to any change in the conclusion reached by the Tribunal vide order dated 29/05/2023, as the coordinate bench did not render any decision on the validity of reassessment proceedings initiated under section 147 of the Act. 4. Having considered the submissions of both sides and perused the material available on record, we find that the assessee challenged the assessment order passed under section 143(3) read with section 147 of the Act, inter-alia, on the basis that the search action under section 132 of the Act was conducted on 22/03/2018 and hence the provisions of section 153A of the Mahendra Corporation and others M.As. No.477, 582, 583 & 584/Mum./2023 Page | 4 Act would be applicable instead of section 147 of the Act. However, the learned CIT(A) dismissed the ground raised by the assessee and upheld the initiation of proceedings under section 147 of the Act. Being aggrieved, the assessees, inter-alia, raised grounds no. 1-3 in ITAs No. 802-805/Mum./2023 challenging the action of the AO in reopening the case of the assessee under section 147 of the Act instead of taking recourse to the procedure laid down in section 153A of the Act. Apart from the aforesaid jurisdictional ground, the assessees also challenged the order passed by the learned CIT(A) on merits. Vide common order dated 29/05/2023, the coordinate bench of the Tribunal granted the relief to the assessee on merits and deleted the addition made by the AO. However, in respect of ground challenging the jurisdiction, the coordinate bench dismissed the same as not pressed. From the perusal of the record, we agree with the submissions of the assessee that it has always challenged the initiation of proceedings under section 147 of the Act instead of 153A of the Act. As per the assessee, it was submitted before the Tribunal that if the issue is decided on merits then it would not be necessary to go into the question of validity of reassessment proceedings. 5. Accordingly, in view of the facts and circumstances as noted above, and perusal of material available on record, we are of the view that there is a mistake apparent from the record, which requires rectification under section 254(2) of the Act. Accordingly, we deem it appropriate to modify entire paragraph no.4 of the aforesaid common order dated 29/05/2023 in ITA No. 802/Mum./2023, as under:- Mahendra Corporation and others M.As. No.477, 582, 583 & 584/Mum./2023 Page | 5 “4. Grounds no. 1-3 raised in assessee’s appeal, challenging the initiation of reassessment proceedings under section 147 of the Act are kept open, in view of submissions of the assessee.” 6. Similarly, paragraph no.22 of the aforesaid common order dated 29/05/2023 in ITAs No. 803-805/Mum./2023 is modified as under:- “22. In case of other assessees, namely Shirin Mahendra Shah, Pratibha Mahindra Shah and Emvee Shah Real Estate Pvt. Ltd. being partners in Mahendra Corporation, the AO, by placing reliance on Clause No.10 of the consent decree dated 28/01/2011, made an addition of one-third (i.e. 33.33%) of capital gains on a protective basis. The learned CIT(A) vide impugned order in appeals of the partners directed deletion of the addition made on a protective basis, since substantive addition was upheld in the hands of the firm. However, the learned CIT(A) further directed that if in the future the said substantive addition is reduced in the case of the firm then the protective addition shall become substantive to that extent. Since we have already concluded in the case of the firm that the amount received pursuant to consent decree is not taxable as capital gains and have also found Clause No.10 to be merely an arrangement for payment being made directly to the partners, therefore the addition in hands of the partners, either on a substantive basis or protective basis, also do not survive. Accordingly, grounds no.4-6 raised on merits in the other appeals are allowed. In view of the submissions of the assessee, grounds no.1-3 challenging the initiation of reassessment proceedings under section 147 of the Act are kept open.” 7. Accordingly, the present Miscellaneous Applications filed by the assessees are allowed. Order pronounced in the open Court on 01/12/2023 Sd/- B.R. BASKARAN ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 01/12/2023 Mahendra Corporation and others M.As. No.477, 582, 583 & 584/Mum./2023 Page | 6 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai