SMT. AMI RASHESH BHANSALI,MUMBAI V. ADDL.COMM OF INCOME TAX, CENTRAL RAGE-1, MUMBAI

MA 98/MUM/2022

AI Insights

The case involves Shri Rashesh Manhar Bhansali and Smt. Ami Rashesh Bhansali, who filed Miscellaneous Applications against the orders of the Income Tax Appellate Tribunal (ITAT) concerning the assessment of income from an offshore bank account held in UBS Bank Singapore by M/s Gold Jewel Corporation. The income, amounting to $32,13,307.60, was equally divided between the two assessees and assessed in their respective hands. The CIT(A) had initially granted relief to the assessees, which was later reversed by the ITAT, leading to the filing of these applications. The assessees contended that the ITAT had overlooked their detailed written submissions and relevant evidence, constituting a mistake apparent from the record under section 18(7) of the Black Money Act. The Tribunal, acknowledging the oversight, allowed the applications and recalled the earlier orders for re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37932 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Other Referred Cases: Sony Pictures Networks India (P) Ltd vs. ITAT, Amore Jewels P Ltd vs. The DCIT
• Laws Referred To: Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONICA PANDE
• Assessee Lawyers: MADHUR AGARWAL; MANI JAIN
• Keywords: Transfer pricing
• Section: 254(2); 22

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “E” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER M.A. No. A.Y. Applicant Respondent 97/Mum/2022 (Arising out of BMA No.5/Mum/2021) 2017-18 Shri Rashesh Manhar Bhansali, Nishika Terrace, 55A, 5th Floor, AG Khan Road, Worli Sea Face, Mumbai PAN: AABPB5614N Addl. Commissioner of Income Tax, Central Range-1, 901, 9th Floor, Pratishtha Bhavan, Old CGO Building (Annexe), M.K. Road, Mumbai 98/Mum/2022 (Arising out of BMA No.4/Mum/2021) 2017-18 Smt. Ami Rashesh Bhansali, Nishika Terrace, 55A, 5th Floor, AG Khan Road, Worli Sea Face, Mumbai PAN: AACPB7754Q Addl. Commissioner of Income Tax, Central Range-1, 901, 9th Floor, Pratishtha Bhavan, Old CGO Building (Annexe), M.K. Road, Mumbai For Assessee : Shri Madhur Agarwal & Shri Mani Jain For Revenue : Ms. Monica Pande, Sr.DR Date of Hearing : 24-01-2025 Date of Pronouncement : 28-02-2025 O R D E R PER B.R. BASKARAN, A.M : These Miscellaneous Applications have been filed by both the assessees herein u/s 18(7) of Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as “Black Money Act”). In these applications, both the assessees contend that there 2 MA Nos. 97 & 98/Mum/2022 is a mistake apparent from the record in the order dated 02-11-2021 passed by the Tribunal in their respective hands separately. Since the facts relating to both the cases and since the alleged mistake pointed by both the assessees is identical in nature, both these miscellaneous applications were heard together and they are being disposed of by this common order. 2. Both the assessees as well as revenue had filed separate appeals before ITAT challenging the order dated 5th July, 2021 passed by the Ld CIT(A) under Black money Act in their respective hands for assessment year 2017-18. The present miscellaneous applications have been filed against the orders passed by the ITAT in respect of appeals filed by the Revenue. 2.1. The appeal filed by the revenue for Shri Rashesh Manhar Bhansali was numbered as BMA No. 05/Mum/2021 and the appeal filed for Smt Ami Rashesh Bhansali was numbered as BMA No.04/Mum/2021. The Tribunal disposed of all the appeals on 02-11-2021. 3. The Ld A.R submitted that the income arising out of an offshore bank account held in UBS Bank Singapore bearing No.167573 by a concern named M/s Gold Jewel Corporation was divided equally between both the assessees herein and the amount so divided was assessed in their respective hands. The income so assessed was related to the amount of $32,13,307.60 found credited in the bank account of Gold Jewel Corporation on 22.02.2010 and as stated earlier, it was divided equally between the assessees herein and was assessed in their respective hands. The Ld CIT(A) granted relief holding that the sources of the above said deposit stood explained and hence no separate addition is called for in the hands of both the assessees. The revenue had challenged order so passed by Ld CIT(A) in the hands of both the assessees herein by filing appeals 3 MA Nos. 97 & 98/Mum/2022 before the Tribunal. The Ld A.R submitted that the Tribunal, however, reversed the relief so granted by Ld CIT(A) in the hands of both the assessees. In this regard, the Ld A.R invited our attention to paragraph no.62 of the order passed by the Tribunal in the case of Shri Rashesh M Bhansali. 3.1. The Ld A.R submitted that the ITAT has taken the view that the Ld CIT(A) has granted relief on the basis of explanations given by the assessees, which were not substantiated on the basis of any documents. The Ld A.R submitted that the assessees herein had furnished a detailed written submission on 26-10-2021 before the Tribunal explaining that the above said amount of US$ 32,13,307.60 represents maturity of investments made earlier. He submitted that the above said written submissions were furnished as per the direction given by the Tribunal on an earlier date. It was mentioned in the written submissions that the above said explanation of the assessee is supported by the bank statements and investment portfolio statements, which were provided by the revenue only. In fact, the proceedings under Black Money Act were initiated by the AO on the basis of very same information only. Thereafter, the Tribunal concluded the hearing on 27-10-2021, meaning thereby, the above said written submission containing detailed explanations along with the relevant bank/portfolio statements, was furnished prior to the conclusion of the hearing. However, while passing the orders, the Tribunal has completely overlooked the written submissions so given by the assessees. In support of the above submissions, the Ld A.R invited our attention to the copy of written submissions filed before the Tribunal on 26-10-2021, which is attached to the miscellaneous petitions as “Annexure B”. 4 MA Nos. 97 & 98/Mum/2022 3.2. Elaborating the contents of the written submissions, the Ld A.R submitted that the assessees have explained the modus operandi followed by it in making investments in paragraph 2 of the written submissions ahd it reads as under:- “2. On perusal of the entries in the bank accounts, it can be observed that the bank account reflect various entries in the nature of loans, investments, call deposits, interest etc. The assessee has predominantly obtained loans from UBS bank on certain interest and has invested the same in callable bonds giving interest. The assessee would also keep the surplus fund in the call deposits which were in the nature of fixed deposits. The banks provided loans against the investments to be made in their own portfolios and against call deposits made by the assessee. Further, the loans were short term. The assessee would either repay loan out of the call deposit or take a fresh loan to pay the earlier loan. Further, the assessee would make investment out of the loans taken from banks or out of the call deposit. As a result, the assessee would earn interest on investment and profit on sale of investment. Similarly, the assessee would pay interest on loans or incur loss on sale of investment.” The Ld A.R submitted that the assessees have given detailed explanations with regard to the amount of US$32,13,307.60 found credited on 22-02- 2010 in the bank account no.167573 of „Gold Jewel Corporation‟. The explanations so given earlier are reproduced in paragraphs 11 to 22 of the written submissions. Accordingly, the Ld A.R submitted that the Tribunal has completely ignored the explanations so given by the assessees. 3.3. The Ld A.R submitted that non-consideration of the submissions made by the assessee is a mistake apparent from record within the meaning of sec. 18(7) of Black money Act (equivalent to sec. 254(2) of the Income tax Act.), as held in the following decisions rendered by Hon‟ble Bombay High Court:- (a) Sony Pictures Networks India (P) Ltd vs. ITAT (156 taxmann.com 443)(Bom); (b) Amore Jewels P Ltd vs. The DCIT (2018)(8) TMI 522 (Bom) 5 MA Nos. 97 & 98/Mum/2022 Accordingly, the Ld A.R prayed that the impugned orders passed by the Tribunal may be rectified or it may be restored for hearing on the issues mentioned above in the normal course. 4. The Ld D.R, on the contrary, submitted that the Tribunal has passed the order after appreciating the facts prevailing in these cases and hence there is no mistake apparent from record as alleged by the parties. Accordingly, he opposed the miscellaneous applications filed by both the parties. 5. We heard the rival contentions and perused the record. We notice that the assessee has furnished written submissions on 26-10-2021 and the hearing of the appeals of both the assessees has been concluded on 27-10-2021. A copy of the above said written submissions is attached as „Annexure B‟ to the miscellaneous applications. According to Ld A.R, the assessees have duly explained the sources of above said amount to be the maturity proceeds of earlier deposits and hence there is no requirement of assessing the same again. According to the assessees, they have attached relevant statements of banks and portfolio investments in order to substantiate the above said claim. The Ld A.R further submitted that the said statements were supplied by the revenue only and the proceedings under Black money Act were initiated on the basis of very same statements only. According to the assessees, the Ld CIT(A) had granted relief to the assessees on the basis of very same information and explanations. However, the detailed explanations so furnished by way of written submissions were not considered by the Tribunal at all and hence the Tribunal was constrained to observe in paragraph 62 of its order as under:- “none of these submissions is based on copies of any sale or purchase documents produced by the assessee, but only simply based on the bland explanations given by the assessee. There is no evidence 6 MA Nos. 97 & 98/Mum/2022 whatsoever to support the sale or purchase of a security, the nature of security or any other details” Accordingly, the Tribunal has reversed the order passed by Ld CIT(A) in granting relief to the assessees on this issue and thus restored the addition made by the AO in the hands of both the assessees. 6. We notice that the co-ordinate bench did not consider the written submissions furnished by the assessee, which contained detailed explanations along with the relevant statements with regard to the receipt of above said amounts in the bank accounts of M/s Gold Jewel Corporation. Without considering the written submissions so filed, the Tribunal has confirmed the additions made by the AO by reversing the relief granted by the Ld CIT(A). It is the contention of the Ld A.R that non- consideration of written submissions so furnished by the assessee would result in a mistake apparent from record. We notice that the above said contentions of Ld A.R would get support from the decisions rendered by Hon‟ble jurisdictional Bombay High Court, referred supra. We may now refer below to the decisions rendered by the jurisdictional High Court in the above said cases:- (a) In the case of Sony pictures Networks India (P) Ltd (supra), the Tribunal did not deal with the fundamental dispute, viz., that the distribution fee paid by it to the Associated Enterprises are not payments in the nature of royalty, but restored the matter to the file of AO/TPO. This is so even after recording the petitioner‟s submissions. Hence the assessee filed a rectification application u/s 254(2) of the Act, which came to be rejected. Hence the assessee filed a writ petition before the Hon‟ble Bombay High Court. The jurisdictional Hon‟ble Bombay High Court has, inter alia, held that “non-consideration of the basic submission made at the hearing as recorded, is clearly a mistake apparent from the record and hence 7 MA Nos. 97 & 98/Mum/2022 the Tribunal ought to have allowed the rectification application dated… and recalled the order dated….for fresh consideration of the appeal.” (b) In the case of Amore Jewels Private Ltd vs. DCIT (supra), the assessee had filed detailed written submissions before the Tribunal containing case laws and documents to support the cash credits received by it. However, the appeal of the assessee and the appeal of the revenue came to be dismissed by the Tribunal and the assessee pleaded before the Hon‟ble Bombay High Court that the Tribunal has passed the order without considering their submissions. Hence the assessee filed a rectification application before the Tribunal u/s 254(2) of the Act specifically inviting the attention of the Tribunal to the written submissions which were filed at the time of hearing in support of the case and in particular the binding decisions in support of their appeal. However, the Tribunal did not entertain the rectification application filed u/s 254(2) of the Act. Hence the assessee filed a writ petition before Hon‟ble Bombay High Court, which held as under:- “6 We find that, though the order dated 13th February 2015 does render a finding that no positive material was brought on record, there is no discussion whatsoever of the various case laws detailed in the submissions which according to the petitioner clinches the issues in support of its case that the shareholding investment by the five Companies was genuine. In the above view, the Tribunal ought to have allowed the petitioner’s Rectification Application and considered the petitioner’s appeal before it on merits, inter-alia, taking into account the material and case laws which has been already filed by the petitioner’s during the hearing leading to the order dated 13th February, 2015. 7. In view of the peculiar facts of the present case, we are not only setting aside the impugned order dated 4th May 2018 but also the order dated 13th February, 2018 to the extent it dismissed the petitioner’s Appeal before it. This for the reason that, we find the order dated 13th February, 2015 in the context of material 8 MA Nos. 97 & 98/Mum/2022 available on record to be a nonspeaking order as it gives no reasons to reject the appeal in the context of the decisions admittedly relied upon at the hearing by the petitioners.” 7. We notice both the above cited decision of Hon‟ble jurisdictional High Court support the plea of the assessees made in the miscellaneous petitions. Since the Co-ordinate Bench did not consider the detailed written submissions furnished by it along with the evidences in support of the impugned additions made in their hands by the AO, it has led to the reversal of relief granted by Ld CIT(A). As held in the above said cases, non-consideration of the detailed written submissions furnished by the assessees along with relevant evidences would result in a mistake apparent from the record in the orders passed by the Tribunal in the hands of both the assessees with regard to the impugned issue. 8. Accordingly, following the above said decisions of the Hon‟ble jurisdictional High Courts, we recall the orders dated 02-11-2021 passed in ITA No.5/Mum/2021 in the case of Shri Rashesh M Bhansali and ITA No.4/Mum/2021 in the case of Smt Ami R Bhansali in respect of the issue relating to addition of US$ 32,13,307.60 made in their hands respectively. Accordingly, we direct the registry to post both the above said appeals in the normal course before the regular bench for limited purpose of disposing the above said issue raised in the respective appeals filed by the revenue, referred supra. 9. In the result, both the Miscellaneous Applications filed by the assessees are allowed. Order pronounced in the open court on 28-02-2025 Sd/- Sd/- [AMIT SHUKLA] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER [Mumbai, Dated: 28-02-2025 TNMM 9 MA Nos. 97 & 98/Mum/2022 Copy to : 1. The Applicant 2. The Respondent 3. The Pr.CIT concerned 4. D.R. ITAT, Mumbai. 5. Guard File. //By Order// //True Copy // Dy./Asst. Registrar, ITAT, Mumbai "