Sh. Dinesh Shrama, New Delhi V. DCIT, New Delhi

MA 598/DEL/2017

AI Insights

The case revolves around a Miscellaneous Application (MA) filed by Mr. Dinesh Sharma against an earlier ITAT order concerning his income tax assessment for the year 2008-09. The original assessment by the Assessing Officer was contested, leading to various appeals and adjustments regarding the taxable income. The core issue in the MA was the recall of an ITAT order that had included a specific amount as taxable income, which the assessee argued was a mistake of fact and law. The ITAT, however, found no grounds to recall the earlier decision, emphasizing that their powers under section 254(2) of the Income Tax Act do not extend to reviewing their decisions on merits but only to rectifying mistakes apparent from the record.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130458 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-12-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 15-10-2017
• Other Referred Cases: Goetze (India) Ltd. V CIT, CIT vs Sun Engineering Works (P.) Ltd., Sutlej Cotton Mills Ltd. V.V. CIT, C Bazpupr Co-Operative Sugar Factory Ltd, CIT V. J.D. Italia, CIT V. Orissa Cement Ltd, CIT V. V.M. Pyngrope, CIT V. George Williamson (Assam) Ltd, CIT V. Ja, Parabolic Springs, Ramdev Exports V. CIT, Bihar State Warehousing Corporation Ltd. V. CIT, CIT V. Sam Global Securities Ltd., Asian Paints Ltd. V. DCIT, CIT vs Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Revised return
• Section: 147; 148; 132; 28; 144; 139; 143(3); 142(1); 153A; 260A; 139(5); 251; 143(2); 139(1); 139(4); 254(2); 158BC; 13; 158BD; 153C

Judgement Text

Page 1 of 14 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE, SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER MA No.598/Del/2017 (Arising out of ITA No.226/Del/2013) ASSESSMENT YEAR 2008-09 Mr. Dinesh Sharma 389, Masjid Moth NDSE-II New Delhi-110 027 PAN-AARPS 5040F Vs. DCIT, Circle-32 New Delhi (Appellant) (Respondent) Appellant by Mr. Ashok Sikka, Advocate Respondent by Mr. B.S. Anand, Senior Departmental Representative (“Sr. DR”, for short) ORDER PER ANADEE NATH MISSHRA, AM: (A) This Miscellaneous Application (‘MA’, for short) is filed by the assessee in respect of order dated 21/04/2017 passed by Income Tax Appellate Tribunal (“ITAT”, for short) in assessee’s appeal vide ITA No.226/Del/2013. In the present MA, the assessee MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 2 of 14 has requested for recall of aforesaid order dated 21/04/2017 of ITAT; and for hearing of the assessee’s appeal on merits. (B) In this case, assessment order dated 30/11/2010 was passed by the Assessing Officer u/s 143(3) of Income Tax Act; wherein the assessee’s total income was assessed at Rs.1,13,09,885/- as against the returned income of Rs.91,46,470/-. In the aforesaid assessment order, separate additions amounting to Rs.20,60,810/- and Rs.1,42,608/- were made. The assessee filed appeal in the office of the Ld. Commissioner of Income Tax [“Ld. CIT(A)”, for short]. Vide her impugned appellate order dated 31/01/2012, the Ld. CIT(A) deleted the aforesaid additions amounting to Rs.20,60,810/- and Rs.1,42,608/-. Moreover, the Ld. CIT(A) also directed the Assessing Officer to allow further relief amounting to Rs.79,32,289/- to the assessee; though this amount of Rs.79,32,289/- was offered by the assessee as taxable income in the return of income. The Ld. CIT(A) directed the Assessing Officer to reduce the taxable income by Rs.79,32,289/-, which was already included is not only income assessed by the Assessing Officer, but also in returned income MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 3 of 14 declared by the assessee. Vide ITA No.226/Del/2013, Revenue filed appeal against the aforesaid appellate order dated 31/10/2012 of Ld. CIT(A). The following grounds of appeal were taken by Revenue in the appeal filed in Income Tax Appellate Tribunal: “1. Whether the Ld. CIT(A) is justified on merits in holding that amounting of Rs.20,60,810/- was received u/s 28 of the Land Acquisition Act which is exempt from tax.” 2. Whether the Ld. CIT(A) is empowered under the Act reduce the returned income of Assessee after expiry of period specified u/s 139(5) and without any revised returned filed by assessee u/s 139(5) of the Act.” 3 Whether the Ld. CIT(A) is justified on merits in holding that indexation should be given from the year when the property was acquired by the previous owner for computing long term capital gain.” (B.1) The aforesaid appeal of Revenue was disposed of by Co- ordinate Bench of ITAT, Delhi vide appellate order dated 21/04/2017. In the aforesaid order dated 21/04/2017 of Co- ordinate Bench of ITAT, Delhi, the grounds (1) and (3) of appeal pertaining to additions amounting to Rs.20,60,810/- and Rs.1,32,608/- were dismissed and decided in the favour of assessee. The second ground of appeal was allowed and it was held that the aforesaid amount of Rs.79,32,289/- would continue to be MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 4 of 14 included as income of the assessee in accordance with return filed by the assessee u/s 132 (4) of Income Tax Act. The relevant portion of the aforesaid order dated 21/04/2017 of Co-ordinate Bench of ITAT, Delhi, whereby ground no. (2) of appeal was allowed which reproduced as under: “(C.2.1) Before us, at the time of hearing, the Ld. DR supported the second ground of appeal and relied on the assessment order. On the other hand, Ld. Counsel for the assessee strongly supported the order of Ld. CIT(A) and relied on the order of Ld.CIT(A). We have heard both sides patiently. We have also considered all materials on record. We have noticed that the return that was filed u/s 139 of the Act by the assessee was, being a belated return, a return filed u/s 139(4) of the Act. Had the assessee filed the return by due date, it would have been a return filed u/s 139(1) of the Act. Provisions regarding filing of revised return are contained in section 139(5) of the Act and its perusal shows that, while the assessee is permitted to file a revised return, if the original return was filed u/s 139(1) of the Act or was filed in response to notice u/s 142(1) of the I.T.Act. However, there is no permission u/s 139(5) for the assessee to file a revised return if the original return was filed belatedly u/s 139(4) of the Act. Thus, the return filed by the assessee u/s 139(5) of the Act is final qua the assessee, as far as claims beneficial to the assessee are concerned. While Revenue is authorized to scrutinize and examine the claims of the assessee by taking action u/s 143 or 147 of the I.T.Act; the assessee has no authority under law to make a claim before the Assessing Officer beneficial to the assessee subsequent to filing of (belated) return u/s139(4) of the I.T.Act. As the assessee is barred from making any claims even before the Assessing MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 5 of 14 Officer beneficial to him after filing of (belated) return u/s 139(4) of the Act; right of making any such claims at a later stage such as in appellate proceedings have to be, by necessary implication, interpreted as not available to the assessee. It is to be appreciated that even for the instances when an assessee has been permitted to file revised return u/s 139(5) of the Act; such as when the original return was filed u/s 139(1) of the Act within due date or when it was in response to notice u/s 142(1) of the Act; even then the permission to file a revised return is available to the assessee only upto time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. In the instant case, the claim by the assessee regarding the aforesaid amount of Rs.79,32,289/- was made well after the time prescribed for filing of revised return u/s 139(5) of the Act. This matter was considered by the Hon’ble Supreme Court in the case of Goetze (India) Ltd. V CIT [2006] 157 Taxman 1 (SC) in which the Hon’ble Apex Court held that the assessing authority has no power after filing original return otherwise than by filing revised return. Despite these facts and circumstances, the legal position and the precedent in the case of Goetze (India) Pvt. Ltd. (supra), if the claim of the assessee regarding aforesaid amount of Rs.79,32,289/- is to be considered favourably on merits, as the Ld.CIT(A) has done in the impugned order, it results in an extra-ordinary situation wherein the assessed income (after considering the aforesaid claim of the assessee amounting to Rs.79,32,289/-) turns out to be even less than the returned income. We have given our anxious consideration to this extra- ordinary situation and examined the statutory position whether income can be assessed at an income lower than the returned income. The provisions regarding initiation of assessment proceedings are contained in section 143(2) of the Act. The provisions u/s 143(2) of the Act, as they stood at the relevant MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 6 of 14 time before amendment by Finance Act, 2016 w.e.f 01.06.2016, are reproduced below:- 143(2). “Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.” (C.2.2). From a perusal of the aforesaid provisions of section 143(2) of the Act, it is noticed that the purpose of assessment proceedings is to ensure that the assessee had not understated the income or has not computed excessive loss or has not under paid the tax in any manner. It can be readily inferred that the assessment proceedings are meant for scrutinizing the claims made by the assessee and not for entertaining any claims which have not been made by the assessee. The assessment proceedings are not meant for the benefit of the assessee and cannot be carried out to confer a benefit to the assessee, specially when such claim for benefit was not made by the assessee by due date or even by the time of completion of assessment proceedings. The filing of return by the assessee u/s 139(1) or u/s 139(4) or in response to notice u/s 142(1) of the I.T.Act, is on the basis of “self-assessment” by the assessee in accordance with section 140A of the I.T.Act. The “self- assessment” by the assessee can be altered by the Revenue to the disadvantage of the assessee if the case is selected for scrutiny by issue of notice u/s 143(2) of the Act which results in MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 7 of 14 assessment order u/s 143(3) or u/s 144 of the I.T.Act. Revenue does not select all the returns filed by the assessee for scrutiny by issue of notice u/s 143(2) of I.T.Act. It is common knowledge and a well-known fact that a very small percentage of returns filed by the assessee are selected for scrutiny by issue of notice u/s 143(2) of the Act. Unless the return is selected for scrutiny by issue of notice u/s 143(2) of the Act resulting in an assessment order u/s 143(3) or u/s 144 of the Act, the return filed by the assessee in accordance with “self-assessment” made by the assessee is final (barring exceptional circumstances when notice u/s 148 or u/s 153A or u/s 153C or u/s 158BC or u/s 158BD etc. is issued subsequently). The selection of a case for scrutiny by issue of notice u/s 143(2) of the Act cannot put the assessee in a more advantageous position than had the case not been selected for scrutiny, in which case the “self-assessment” made by the assessee and return filed by the assessee would have become final (barring exceptional circumstances when notice u/s 148 or u/s 153A or u/s 153C or u/s 158BC or u/s 158BD etc. is issued subsequently). In the instant case, the consequence of favourably considering the claim of the assessee regarding aforesaid amount of Rs.79,32,289/-, is that the assessed income of the assessee becomes much lower than the returned income and puts the assessee in a much more advantageous position than had the return of the assessee not been selected for scrutiny in which case the “self-assessment” made by the assessee and return filed by the assessee would have become final. As we have discussed earlier such a situation is not permissible under law on careful perusal of section 143(2) of the I.T.Act. Reference to order of Hon’ble Apex Court in the case of CIT vs Sun Engineering Works (P.) Ltd.[1992] 198 ITR 297 (SC) is useful wherein Hon’ble Supreme Court held that since the proceedings under section 147 of the Act are for the benefit of MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 8 of 14 the Revenue and not for an assessee, and are aimed at gathering the ‘escaped income’ of an assessee. Though the decision of Hon’ble Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. [supra] was in the context of proceedings u/s 147 of the Act, the principle is applicable even for proceedings u/s 143(2) of the Act because, as we have seen before, on perusal of provisions u/s 143(2) of the Act, it can be readily inferred that the assessment proceedings u/s 143(2) of the Act are not meant for the benefit of the assessee but are for the benefit of Revenue only so that the AO is able to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid the tax in any manner. (C.2.3). We have already noticed that the aforesaid claim of Rs.79,32,289/-, was made by the assessee after the time limit prescribed u/s 139(5) of the Act for revision of return. We have also noticed that, in any case the assessee was not eligible to revise the return because the return filed by the assessee was not returned filed u/s 139(1) of the Act by prescribed due date but was a belated return under section 139(4) of the Act for which there is no statutory permission u/s 139(5) of the Act to revise the return. We have also noticed that the claim of the assessee for the aforesaid amount of Rs.79,32,289/- having been favouarbly considered by the Ld.CIT(A) has resulted in the extra-ordinary situation, not tenable in law on perusal of section 143(2) of the Act, wherein the assessed income of the assessee turns out to be lower than the returned income thereby placing the assessee in a much advantageous situation, contrary to law, as compared to the likely situation if the return filed by the assessee had not been selected for scrutiny by issue of notice u/s 143(2) of the Act. We are aware of certain precedents wherein it has been held that appellate authorities can admit a legal ground taken by appellant at any stage of appellate MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 9 of 14 proceedings provided all relevant facts are on record and fresh investigation of facts is not necessary. However, in the instant case a fresh investigation of facts on merits of the claim made by the assessee was necessary, the opportunity for which was not given by the Ld.CIT(A) to the AO. In any case, in view of the clear legal position under sections 143(2), 139(1), 139(4) and 139(5) of the Act as discussed earlier in detail; and in view of the facts and circumstances as discussed earlier in detail; and in view of precedents of Hon’ble Supreme Court in the cases of Goetze (India) Pvt. Ltd. [supra] and CIT vs Sun Engineering Works (P) Ltd. [supra], we hold that the Ld.CIT(A) erred in favourably considering the claim of the assessee for the aforesaid amount of Rs.79,32,289/-. Accordingly, we set aside the order of the Ld.CIT(A) on this issue and reverse his direction given to the AO to reduce the taxable income by Rs.79,32,289/-. We direct that this amount of Rs.79,32,289/- will continue to be included as income of the assessee in accordance with return filed by the assessee u/s 139(4) of the I.T.Act. Thus, second ground of appeal filed by the Revenue is allowed.” (C) The present MA before us has been filed by the assessee in respect of decision of Co-ordinate Bench of ITAT, Delhi vide aforesaid order dated 21/04/2017, on ground No.2 of Revenue’s aforesaid appeal vide ITA No.226/Del/2013; wherein it was held that the amount of Rs.79,32,289/- would continue to be included as income of the assessee in accordance with return filed by the assessee u/s 139(4) of the IT Act. In the MA, it has been contended that the aforesaid order dated 21/04/2017 of the Co-ordinate MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 10 of 14 Bench of ITAT, Delhi suffers from mistakes of facts and law and the following request has been made. “i) Allow the present application and recall its order dated 21.04.2017 passed in ITA No.226/Del/2013 in the matter of ACIT, Circle-32(1), New Delhi V. Dinesh Sharma as far as the decision in respect of Revenue’s Ground of Appeal No.2 is concerned, in view of the mistakes of fact and law apparent on record; and ii) Pass such further order as this Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case and in the interest of justice.” (D) At the time of hearing before us, the Ld. Counsel for the assessee contended that the aforesaid order of the Co-ordinate Bench of ITAT, Delhi was erroneous and suffered from mistake of facts and law. For this purpose, he relied on the submissions made in the MA, the relevant portion of which is reproduced below: “As far as the conclusion of Hon’ble Bench in respect of 4.1(a) above is concerned although the Hon’ble Bench has rightly held that in view of the decision of Hon’ble Supreme Court of India in Goetze (India) Ltd V. CIT 284 ITR 323, the AO could not consider any claim of the appellant dehors the return of income yet the Hon’ble Bench that the aforesaid embargo placed on the AO by Hon’ble Supreme Court of India in the case of Goetze (India) Ltd V. CIT ‘s case applied to appellate authorities is patently wrong ,n view of the specific clarification made in para 4 of the decision of Hon’ble Supreme Court of India in Goetze (India) Ltd V CIT’s which reads as:- “however we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinch on the power of the Income Tax Appellate Tribunal u/s 254 of the Income Tax Act, 1961”. Besides during the hearing before the Hon’ble Tribunal had relied upon the decision of Hon,ble Delta High Court in CIT V. Orissa Cement Ltd 215 ITR 409, the decision of Hon,ble MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 11 of 14 Gauhati High Court in CIT V. V.M. Pyngrope 200 ITR 106, the decision Gauhati High Court in CIT V. George Williamson (Assam) Ltd 223 ITR decision of Hon’ble Delhi High Court in CIT V. Ja, Parabolic Springs; Ltd. 306 ITR 42 (Del) (placed in the Compilation of Case Laws at S.No. 6,7,11 & 15 respectively) for the proposition that an assessee can claim deductions/reliefs which have not been claimed in the return of income. The Hon’ble Tribunal did not take into account the aforesaid decisions, two of which having been rendered by the Jurisdictional High Court, were binding on the Hon’ble Bench. ii) As far as the conclusion at 4.1(b) is concerned, the Hon’ble Tribunal was patently wrong in placing reliance on the decision of Hon’ble Supreme Court of India m V. Sun Engineering Works (P) Ltd 198 ITR 297 (SC) for the simple reason that the language of Section 147 is not in parimateria with the language of Section 143(2) the Act Section 147 allows jurisdiction to an AO to issue a notice in the case of an under- assessment of income. Accordingly, the purpose of section 147 is limited in scope as far as the reassessment is concerned namely, bringing to tax escape income. The purpose of section 143(2) is to make a correct assessment of the total income of the appellant as per law. During the hearing of the Hon’ble Bench it was specifically submitted by the appellant’s Counsel that the view of an appellant regarding the taxability or otherwise of an income/deduction was of no consequence in view of the decision of Hon’ble Supreme Court of India in Sutlej Cotton Mills Ltd. V.V. CIT 116 ITR 1 the decision of Hon’ble Supreme Court of India in C Bazpupr Co-Operative Sugar Factory Ltd 172 ITR 321 and the decision of Hon’ble Andhra Pradesh High Court in CIT V. J.D. Italia 141 ITR 948 (placed in the Compilation of Case Laws at S. No.13,14 & 12 respectively). iii) As far as the conclusion of Hon’ble Bench in para 4.1(c) is concerned, it is submitted that this conclusion is prima facie erroneous. This will be clear by a simple illustration. Let it be assumed that an assessee returns an income of Rs. 1 lac alter claiming the deduction of Rs.10,000/- by way of depreciation. No addition is made by the AO u/s 143(3) of the Act; however depreciation of Rs. 15,000/- is allowable u/s 32 of the Act. The total income in such a case would be determined by the AO at Rs. 95.000/- which is below the income returned. That the income computed u/s 143(3) of the Act can be lesser than the income MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 12 of 14 returned will be clear from the decision of Hon’ble Gujrat High Court in the case of Ramdev Exports V. CIT 251 ITR 873, the decision of Hon’ble Patna High Court in the case of Bihar State Warehousing Corporation Ltd. V. CIT 386 ITR 410, the decision of Hon’ble Delhi High Court in CIT V. Sam Global Securities Ltd. 360 ITR 682 and the recent decision of Hon’ble ITAT Mumbai Bench K. Mumbai in the case of Asian Paints Ltd. V. DCIT dated 11.01.2017 in ITA No.3289/Mum/2015 for Assessment Year 2006 -2007.” (D.1) The Ld. Sr. DR for Revenue opposed the MA filed by the assessee. He drew our attention to paragraphs (C.2.1) (C.2.2) and (C.2.3) of the aforesaid order dated 21/04/2017 of Co-ordinate Bench of ITAT, Delhi. He contended that the aforesaid order of ITAT was correct order in the facts and circumstances of the case, having regard to applicable of law and relevant facts; and that there was no mistake apparent from record. (D.2) The Ld. Counsel for the assessee, in response to specific query from Bench, informed that appeal u/s 260A of IT Act has also been separately filed by the assessee in Hon’ble Delhi High Court against the aforesaid order dated 21/04/2017 of Co-ordinate Bench of ITAT, Delhi; and further informed that question of law has already been framed in the aforesaid appellate proceedings before Hon’ble Delhi High Court. MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 13 of 14 (D.2.1) We have heard both sides. We have perused the materials on record. We find that the aforesaid order dated 21/04/2017 of Co-ordinate Bench of ITAT, Delhi in respect of ground No.2 of appeal filed by Revenue is a detailed order on merits having regard to facts and circumstances of the case, and applicable law. It is well settled that ITAT has no power to review its order. After an order has been passed by ITAT under section 254(1) of IT Act on merits; the scope of power u/s 254(2) is limited to rectifying mistake apparent from record. In the present MA, the assessee seeks a review of the decision taken by ITAT on merits; which is beyond the scope of power of ITAT under section 254(2) of IT Act. As there is no mistake apparent from records, we decline to re-look into merits of the decision taken already vide aforesaid order dated 21/04/2017 on ground -2 of aforesaid appeal filed by Revenue vide ITA No.226/Del/2013. For coming to this decision, we place respectful reliance on order of Hon’ble Supreme Court in CIT vs. Reliance Telecom Ltd. 440 ITR 1 (SC). In any case, in addition to this MA, assessee has also separately filed appeal u/s 260A of IT Act, in Hon’ble Delhi High Court and question of law MA.598/Del/2017 Dinesh Sharma vs. DCIT Page 14 of 14 has already been framed in the aforesaid appellate proceedings in Hon’ble High Court; therefore, the order of Hon’ble Delhi High Court will be respectfully followed by all concerned. Presently, in view of the foregoing, and in the facts and circumstances of the present case, and having due regard to applicable law; this MA is rejected. (E) In the result, this Miscellaneous Application filed by assessee is dismissed. Order pronounced in open Court on 03/03/2023. Sd/- Sd/-/-/- (CHANDRA MOHAN GARG) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03/03/2023 Pk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI