RAJENDRA BHALCHANDRA MOKASHI,MUMBAI V. INCOME TAX OFFICER WARD 27(3)(1), MUMBAI

ITA 5154/MUM/2024

AI Insights

The case involves Rajendra Bhalchandra Mokashi, who appealed against the order of the CIT(A), National Faceless Appeal Centre, which upheld an addition of Rs.66,02,464 to his income for the Assessment Year 2013-14. The addition was based on discrepancies noted in Form 26AS and the assessee's failure to explain the source of this income. The Tribunal found that both the Assessing Officer and the CIT(A) failed to adequately consider the assessee's explanations and submissions, leading to a decision to remit the case back to the Jurisdictional Assessing Officer for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313062 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Reassessment proceedings; TDS; FORM 26AS
• Section: 147

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 5154/MUM/2024 Assessment Year: 2013-14 Rajendra Bhalchandra Mokashi 6/1, Kandhani Colony, 2nd Floor, Chembur, Mumbai – 400 071 (PAN : AAEPM0019M) Vs. Income Tax Officer, Ward 27(3)(1), Mumbai (Appellant) (Respondent) Present for: Assessee : Shri Ajeet Manwani, Advocate Revenue : R. R. Makwana, Addl. CIT Date of Hearing : 30.01.2025 Date of Pronouncement : 28.04.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the Assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1068355466(1). dated 05.09.2024, passed against the assessment order by National Faceless Assessment Centre, Delhi, u/s. 147 r.w.s 144B of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 29.03.2022, for Assessment Year 2013-14. 2. Grounds taken by the Assessee are reproduced as under: “1. Ld. CIT(A) has dismissed the Appeal without any Application of mind. 2 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 2. Ld. CIT(A) has not gone through the case records and even the Show cause Notice issued granting not less than 48 hrs to reply to absurd proposed additions which were without any basis. 3. Ld. CIT(A) has upheld totally erroneous stand taken by the A.O. in making additions of Rs.66,02,464/- to the Appellant's Income for which there are no basis mentioned in the Assessment Order. 4. Ld. CIT(A) has upheld additions without considering the Appellant's explanation to the A.O by his Letters dated 03.03.2022 & 24.03.2022. 5. Appellant has received only Rs.19,45,213/- as refund of amount against booking of Flat with Orbit Constructions on which the Orbit Construction has erroneously deducted the TDS of Rs.2,86,870/- 6. Appellant humbly submits that the amounts paid by him along with his wife Pratibha Mokashi and son Aditya Mokashi jointly and therefore the amounts refunded constitutes only one-third of Rs.19,45,213/-.” 3. Brief facts of the case are that assessee did not file his return of income u/s.139. From the AIMS information available on the system, ld. Assessing Officer noted that assessee had entered into certain financial transactions during the year whereby total income under the Act exceeds the maximum amount which is not chargeable to income tax in view of the Assessing Officer. Details of transactions are tabulated below: INFO CODE INFORMATION DESCRIPTION NUMBER VALUE 194J TDS Return -Professional or Technical Fees 7 3,90,000/- TDS-194A TDS-Return-Other Interest 15 29,11,232/- TOTAL 33,01,232/- 3.1. Case of assessee was thus taken up for reopening u/s. 147 r.w.s. 148. Notice u/s.148 was thus issued on 27.03.2021. Assessee filed his return of income in response to notice u/s.148 on 28.01.2022 reporting total income at Rs.11,72,210/-. In the said return, assessee included income from let out house property at Rs.1,98,380/-, net profit from 3 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 profession towards legal fees of Rs.6,75,792/- and income from other sources of Rs.4,01,218/-. Ld. Assessing Officer issued notices u/s. 142(1), to which assessee furnished his reply vide submission dated 03.03.2022 and 24.03.2022, fact of which is noted in the impugned assessment order. Ld. Assessing Officer observed that on going through the reply of the assessee, his contentions are not acceptable since in Form 26AS, he found that Rs.66,02,464/- is credited against the PAN of the assessee which assessee had not clarified. There is a corresponding TDS of Rs. 6,60,250/- in the Form 26AS against the PAN of the assessee. Ld. Assessing Officer thus, completed the assessment by making an addition of Rs.66,02,464/- to the returned income of Rs.11,72,210/- totalling into total assessed income at Rs.77,74,674/-. Aggrieved, assessee went in appeal before the ld. CIT(A), who has passed a very cryptic order. The contents of the order comprising of 16 lines, dismissing the appeal of the assessee is reproduced for ready reference: “This appeal is filed against the order of Additional/Joint/Deputy/Assistant Commissioner of Income Tax, Income Tax Officer, National Faceless Centre, Delhi passed u/s 147 r ws 144B of the Income Tax Act, 1961 dated 29.03.2022. 1. In ground no.1, the assessee objects to adding Rs.6602464/- which has been credited in the PAN of assessee in Form 26AS during the AY.2013-14 and TDS amounting to Rs.660250/- is also showing The assessee could not explain the source of Rs.6602464/-. The amount of Rs.6602464/- is added to the total income. The assessment of Rs.6602464/- is confirmed. 2. The grounds on charging of interest u/s 234A/234B are consequential in nature and does not require any separate adjudication. 3. The appeal filed by the assessee is dismissed.” 3.2. From the above, it is glaringly evident that ld. CIT(A) has in utter disregard of the provisions of law as contained in section 250 and 251 adjudicated on the matter. To remind such officers entrusted with responsible role of adjudicating first appeal, provisions contained in Section 250 and 251 are discussed below. 4 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 3.3 The Act provides for the powers of Commissioner (Appeal) u/s. 251 which adequately deals with the powers in disposing of the appeal by the Ld. CIT(A). The section is reproduced as under: “Powers of the Commissioner (Appeals) 251. (1) In disposing off an appeal, the Commissioner (Appeals), shall have the following powers: (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; or (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty — he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case — he may pass such orders in the appeal as he thinks fit. The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation – In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.” 3.4. Section 250 of the Act provides for procedure to be adopted while disposing of the appeal by the Ld. CIT(A). Sub-section (4) of section 250 of the Act provides that the Ld. CIT(A) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing officer to make further inquiry and report the result of the same to the Commissioner (Appeals). Further, sub-section (6) provides that the CIT(A) shall pass an order in writing and shall set the points for determination, the decision thereon and the reasons for the decision. The section is reproduced as under: “250. Procedure in appeal (1) The 7 Deputy Commissioner (Appeals)] 8 or, as the case may be, the Commissioner (Appeals)] shall fix a day and place for the hearing of the appeal, and shall give no)ce of the 5 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 same to the appellant and to the 9 Assessing] Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorised representa)ve; (b) the 10 Assessing] Officer, either- in person or by a representa)ve. (3) The 1 Deputy Commissioner (Appeals)] 2 or, as the case may be, the Commissioner (Appeals)] shall have the power to adjourn the hearing of the appeal from )me to )me. (4) The 3 Deputy Commissioner (Appeals)] 4 or, as the case may be, the Commissioner (Appeals)] may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the 5 Assessing] Officer to make further inquiry and report the result of the same to the 6 Deputy Commissioner (Appeals)] 7 or, as the case may be, the Commissioner (Appeals)]. (5) The 8 Deputy Commissioner (Appeals)] 9 or, as the case may be, the Commissioner (Appeals)] may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the 10 Deputy Commissioner (Appeals)] 11 or, as the case may be, the Commissioner (Appeals)] is sa)sfied that the omission of that ground from the form of appeal was not wilful or unreasonable. (6) The order of the 12 Deputy Commissioner (Appeals)] 13 or, as the case may be, the Commissioner (Appeals)] disposing of the appeal shall be in wri)ng and shall state the points for determina)on, the decision thereon and the reason for the decision. (7) On the disposal of the appeal, the 14 Deputy Commissioner (Appeals)] 15 or, as the case may be, the Commissioner (Appeals)] shall communicate the order passed by him to the assessee and to the 16 Chief Commissioner or Commissioner]. 3.5. Principles governing the exercise of powers by the First Appellate Authority are contemplated under sections 250 and 251 of the Act, breach of which has far reaching consequences on the administration of justice culminating in the litigant approaching the higher appellate authority. It is required that the first appellate authority viz. CIT(A) will appreciate the evidence, consider the arguments and apply the law on the given set of facts and circumstances and arrive at findings. 4. In the present case, assessee has furnished his reply on 11.04.2023 against notice issued by ld. CIT(A) on 03.04.2023 for which e-proceeding response acknowledgment along with its annexures are placed in the paper book. In this submission, assessee has duly 6 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 explained the difference of Rs.28,68,699/- which has led to the discrepancy in the income reported by the assessee in his return and that alleged by the ld. Assessing Officer. The explanation on the difference of Rs.28,68,699/- furnished by the assessee and as placed in the paper book is extracted below for ready reference. “In form 26AS of the year under consideration amount of Rs. 28,68,699/- is reflected as other interest from Orbit Construction. However, I have not considered the same while computing my tax liability for the year neither took benefit of Rs. 2,86,870/- as a TDS under pre-paid taxes because of the following reasons:  I have invested Rs. 3,23,94,000/- in the housing project named \"Orbit Grant\" during the financial year: 2010-2011; out of proceedings received from the sale of an agricultural land at Karjat.  The said amount was for flat on 29th Floor having area of about 1810 sqft.  I have paid almost entire amount to the builder well in advance as I was having funds with me, on the trust that they will complete the project as promised.  However, in 2012 builder has allotted us flat on 22nd floor for an area of about 1588 sqft. Due changes implemented in DCR Rules.  This was resulted into price reduction and as per the revised cost working, builder owed me Rs. 64,53,170/-. The said amount they paid me in 9 trenches, out of which 4 installments i.e. Rs. 28,68,699/- was due for F.Y. 2012-13.  However, while transferring the said fund he has deducted taxes and paid me for the reasons better known to them. This is not my income; I got my money back out of the amount I have invested due to changes happened at the time of flat allotment.  The builder of the above-mentioned project \"Orbit Corporation/Orbit Construction\" eventually became bankrupt and declared insolvent by the Bombay High Court. I have not received my invested money back neither I got my flat till date.” 4.1. Despite these details on record, ld. CIT(A) did not bother to take cognisance of the same. There is no whisper of anything on the submissions made by the assessee either before him or in the course of assessment proceedings. Even before the ld. Assessing Officer assessee has made two submissions as already stated above which ld. Assessing 7 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 Officer himself has acknowledged in the assessment order. From the perusal of the first submission dated 03.03.2022, it is noted that assessee has given a detailed note on nature of his professional activities of practicing law. He has also furnished complete set of accounts comprising of computation of income, balance sheet and profit and loss account as well as explained details of interest income and other income reflected in Form 26AS. In the balance sheet of the assessee, he has duly reported the advance paid to Orbit Construction for purchase of flat amounting to Rs.3,23,94,000/- and reduced it by the amount returned by the builder during the year of Rs.19,45,213/-, In the second reply dated 24.03.2022, assessee again explained in detail about the credits appearing in Form 26AS and reconciled the income reported by him in his return filed in response to notice u/s.148, details of which is tabulated as under: Particulars As per Form 26AS As per ITR filed Gross Amount TDS Gross Amount TDS ICICI Bank Ltd. - Interest Income Rs.42,533/- Rs.4,255/- Rs.42,533/- Rs.4,255/- Orbit Construction Rs.28,68,699/- Rs.2,86,870/- Nil Nil Reliance Nippon Life Insurance Co. Ltd. - Professional Fees Rs.3,65,000/- Rs.36,500/- Rs.3,65,000/- Rs.36,500/- Siroya Developers Pvt. Ltd.- Professional Fees Rs.25,000/- Rs.2,500/- Rs.25,000/- Rs.2,500/- Total : Rs.33,01,232/- Rs.3,30,125/- Rs.4,32,533/- Rs.43,255/- 4.2. From the above table, the difference was on account of credit from Orbit Construction amounting to Rs.28,68,699/- for which detailed explanation was furnished which is same as reproduced above. Further, 8 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 assessee has pointed out very categorically that gross amount credited in the Form 26AS downloaded by him is Rs.33,01,232/- with TDS of Rs.3,30,125/-. The addition made by the ld. Assessing Officer is exact twice this amount reflected in Form 26AS, which comes to Rs.66,02,464/-. Assessee thus, explained that what has been added by ld. Assessing Officer is twice the gross amount appearing in Form 26AS downloaded by the assessee. Though the submissions made by the assessee both before the ld. Assessing Officer and ld. CIT(A), none of the authorities below has acted with responsibility and in accordance to the provisions of the law to objectively consider the same and deal with it meritoriously. 5. Taking cognisance of the above submissions of the assessee before the authorities below, we find it appropriate to remit the matter back to the file of ld. Jurisdictional Assessing Officer (JAO) for the limited purpose of verification to consider the claim of the assessee and pass necessary order in accordance with the provisions of the law. 6. Before parting we are compelled to express our dismay at the injudicious manner in which the impugned addition has been foisted upon the assessee by the authorities below. Had they demonstrated the requisite care and caution and exercised their quasi-judicial/judicial authority with judgment it demands, it would have been appreciable that neither the initiation of reassessment proceedings nor the consequent addition was warranted. Such judicious action would have obviated the litigation cost and time and resources, tantamounting to harassment thrust upon the assessee. Such kind of mindless assessment and appeal disposal at the first appellate stage reveals failure to fulfil the responsibilities entrusted on the authorities below. 9 ITA No. 5154/Mum/2024 Rajendra Bhalchandra Mokashi, AY 2013-14 Such an approach cast a shadow on the credibility and fairness of the tax administration in the eyes of citizenry. It should be avoided. 7. Needless to say, that assessee be given reasonable opportunity of being heard and make his submissions to substantiate the claims. We also direct the assessee to be diligent in attending the hearing proceedings and not to seek adjournments unless warranted by compelling reasons so as to expedite the disposal. Accordingly, grounds taken by the assessee are allowed for statistical purposes. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 28 April, 2025 Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member Accountant Member Dated: 28 April, 2025 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 5 Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "