SUNIL DAMODAR NAIK ,THANE V. DY COMMISSIONER OF INCOME TAX CIRCLE -3, THANE

ITA 436/MUM/2024

AI Insights

The case involves Sunil Damodar Naik, who appealed against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2012-13. Initially, Naik declared undisclosed income under the Income Declaration Scheme 2016 and made partial payments. However, due to health issues, he defaulted on the final installment. The Principal Commissioner of Income Tax subsequently canceled his declaration, leading to a reopened assessment. The Tribunal found that despite the default, the retrospective extension of the payment deadline by the Central Government allowed Naik to rectify his default, thus quashing the reassessment and the subsequent order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26552 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-07-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 31-01-2024
• Other Referred Cases: Yogesh Roshanlal Gupta V. Central Board of Direct Tax [2022] 135 taxmann.com 209(SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P. D. CHOUGULE
• Assessee Lawyers: ROHIT KAPURE; PAYING I RS
• Keywords: Set aside
• Section: 148; 142(1); 143(2); 143(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E’ BENCH MUMBAI BEFORE: SHRI BR BASKARAN, ACCOUNTANT MEMBER & SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 436/MUM/2024 (Assessment Year : 2012–13) Sunil Damodar Naik 2nd Floor, Shanti Cottage, Gokhale Road, Naupada, 400602. Vs. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi Circle-3, Thane, Ashar IT Park, 6th Floor, Room No. 16, Wagle Industrial Estate, Thane (W)-400604. PAN/GIR No. AAHPN7603D (Appellant) .. (Respondent) Assessee by Shri. Rohit Kapure Revenue by Shri. P. D. Chougule (Addl. CIT) SR. DR Date of Hearing 18/07/2024 Date of Pronouncement 17/10/2024 आदेश / O R D E R PER SUNIL KUMAR SINGH (J.M): 1. This appeal has been preferred against the impugned order dated 29.11.2023 passed in Appeal no. CIT(A), Thane-2/10398/2018-19 by the Ld. Commissioner of Income–tax(Appeals)/ National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as \"Act\"] for ITA no.436/MUM/2024 Sunil Damodar Naik 2 the Assessment year [A.Y.] 2012-13, wherein learned CIT(A) has partly allowed assessee’s appeal against the assessment order dated 03.12.2018. 2. (i) The brief facts related to the appeal state that assessee filed return of income for A.Y. 2012-13, on 30.09.2012, declaring total income of Rs. 1,03,76,120/-. The return was duly processed u/s. 143(1) of the Act. Consequent upon the Income Declaration Scheme 2016, assessee filed declaration form no. 1, u/s. 183 of the finance Act 2016 on 30.09.2016 declaring the income of Rs. 1,87,00,000/- as under: Assessment year Amount of Undisclosed Income (Rs.) Nature of Undisclosed Income Upto 2010-11 87,00,000/- Business 2011-12 10,00,000/- Business 2012-13 80,00,000/- Business 2014-15 10,00,000/- Business (ii) Assessee worked out the total amount of tax payable after aforesaid declaration of income at Rs. 84,15,000/-. The Principal Commissioner of Income Tax-2 (PCIT)-Thane, issued form No. 2 dated 07.10.2016 and requested the assessee to pay the tax amount in three instalment as specified u/s. 187(1) of the finance Act, 2016. The tax liability was to be discharged by the assessee by paying (i) Rs. 21,03,750/- (25%) by November 2016, which was paid by the assessee vide challan dated 21.11.2016 (ii) Second instalment of Rs. 21,03,750/- (25%) by March 2017, which was paid in March 2017. The third instalment of Rs. 42,07,500/- (50%) by September 2017, however the third instalment of Rs. 24,28,000/- was paid only in ITA no.436/MUM/2024 Sunil Damodar Naik 3 part on 29.09.2017. Assessee made default in the remaining payment of third instalment of Rs.17,79,500/-. (iii) Consequent upon the assessee’s failure to pay the entire amount by 30.09.2017, the principal commissioner of Income Tax- Thane, vide order dated 23.03.2018 passed u/s. 187(3), treated assessee’s declaration as cancelled as provided in the IDS-2016. Consequent upon the order dated 23.03.2018 passed by PCIT and on the basis of disclosure made by the assessee in form no. 1, pertaining to A.Y. 2012-13 to the tune of Rs. 80,00,000/-, which was shown to have been invested in the form of unsecured loan in the books of M/s. Shree Balaji Enterprises and cash in hand, the assessment for A.Y 2012-13 was reopened u/s. 147(b) of the Act. (iv) Notice u/s. 148 of the Act dated 28.03.2018 was issued and served upon the assessee. Statutory notices u/s. 142(1) r/w 143(2) of the Act were issued and served upon the assessee. Assessee made his submissions dated 26.11.2018 and stated that his ROI filed originally may be treated as return filed in response to notice u/s. 148 of the Act and disclosed income of Rs. 1,87,00,000/- and agreed to discharge the tax liability of Rs. 84,15,000/- under the income disclosure scheme 2016. It was stated by the assessee that out of total liability of Rs. 84,15,000/-, he has made partial payment of Rs. 66,35,500/-. (v) Assessee explained before the assessing officer that due to ill health, he could not perform his professional duties and could not pay his remaining payment and requested pardon for his inability to pay the residual balance of Rs. 17,79,500/- before the stipulated date and further requested for time to make the payment. After considering the submission of the assessee, learned assessing officer ITA no.436/MUM/2024 Sunil Damodar Naik 4 made addition of Rs. 80,00,000/- as income from undisclosed sources. 3. Aggrieved, assessee preferred an appeal before learned CIT(A), on 22.12.2018. During first appellate proceedings, central government issued notification no. 103/2019/F.No. 370149/159/2019 TPL dated 13.12.2019 and extended the date of payment till 31.01.2020. The notification was made application with effect from 01.06.2016 i.e the date of commencement of Income Disclosure Scheme-2016. Appellant assessee paid the balance amount of Rs. 17,79,500/- on 21.01.2020 and submitted before learned CIT(A). However, learned CIT(A) partly allowed assessee’s appeal by directing the assessing officer to give credit to assessee for taxes paid under IDS-2016, but declined to grant relief in respect of assessee’s request for treating Rs. 80,00,000/- as disclosed income. 4. Aggrieved by the impugned order, appellant assessee has filed this second appeal before the Tribunal on the ground that the demand raised by the revenue is null and void as he has already paid all the taxes in accordance with the mandate of the Income Declaration Scheme-2016. 5. In response to the notice issued by the tribunal, learned DR appeared and participated in the proceedings. 6. We have perused the records and heard learned representatives for both the parties. 7. Learned representative for the assessee has submitted that learned CIT(A) has erred in confirming AO’s addition of assessee’s disclosed income of Rs. 80,00,000/- for A.Y. 2012-13 as undisclosed income, despite the entire compliance made by assessee by paying the balance tax within the stipulation period prescribed as per notification dated ITA no.436/MUM/2024 Sunil Damodar Naik 5 13.12.2019 r/w IDS-2016, which is made effective retrospectively with effect from 01.06.2016. Prayed to quash the impugned order along with reopening of the assessment and order passed in consequence thereof. 8. Learned DR has vehemently supported the impugned order. 9. The main point for consideration under appeal is as to whether the reopening of the assessment for the A.Y. 2012-13 and the assessment order passed in consequence thereof is bad in law. 10. It is worth noting that the Central Government framed the scheme for declaration of undisclosed income under the finance Act-2016 and was called The Income Declaration Scheme-2016. Section 183 of the said scheme envisages declaration of undisclosed income, the tax, surcharge and penalty payable under the scheme in respect of the undisclosed income, shall be paid on or before a date notified by the central Government in the official Gazette. The scheme subsequently provided that any amount of tax paid u/s. 184 in proceeding of the declaration made u/s. 183 shall not be reopened. 11. In the instant case, the assessee made declaration of the undisclosed Income for A.Y. 2012-13 by clubbing the income for A.Y. 2010-11, 2011-12 and 2014-15. The principal commissioner specified the amounts to be paid by the assessee as tax, surcharge and penalty and the date and percentage of amount was to be deposited in three instalments as stated hereinbefore. The assessee, made default of payment of Rs. 17,79,500/- in the payment of third instalment and could not pay by or before 30.09.2017, which was the stipulated date under the scheme and initial notifications. However notification dated 13.02.2019 was issued by the Central Government and extended date of payment of such amount till 31.01.2020, along with ITA no.436/MUM/2024 Sunil Damodar Naik 6 interest on such amount @1% for every month. The notification was brought into force with effect from 01.06.2016 retrospectively. Assessee paid the balance tax of Rs. 17,79,500/- along with interest of Rs. 4,98,260/- on 21.01.2020 as per CBDT e-receipt for e-tax payment at page 29 of assessee’s paper book. 12. Learned CIT(A), while passing impugned order, has taken support from the judgement of the Hon’ble Supreme Court in Yogesh Roshanlal Gupta V. Central Board of Direct Tax [2022] 135 taxmann.com 209(SC), wherein the limited issue before Hon’ble Supreme Court was with respect to the adjustment of the amount deposited towards first two instalments so that in the tax liability computed by the department after revised assessment, appropriate relief could be afforded to the petitioner. Hon’ble Supreme Court granted this limited relief. The applicability of Central Government notification dated 13.12.2019 was not the issue before the Hon’ble Apex Court. Learned CIT(A) has, misread the judgement of Hon’ble Supreme Court and declined the relief sought by the assessee which was within the four walls of the aforesaid scheme/notification. Learned CIT(A) thus failed to consider the notification dated 13.02.2019 in its true sense. Revenue has neither disputed the genuineness of the aforesaid notification dated 13.12.2019 nor disputed the entire payment of Rs. 84,15,000/- along with interest of Rs. 4,98,260/- made by assessee as depicted at page 23 to 29 of assessee’s paper book. 13. In view of aforesaid discussion, we hold that the assessee has validly deposited the tax, surcharge, interest, penalty as required under IDS- 2016 r/w notification dated 13.12.2019. In such circumstances, learned CIT(A) has failed to appreciate that the default made by ITA no.436/MUM/2024 Sunil Damodar Naik 7 assessee in the part payment of Rs. 17,79,500/- stood rectified retrospectively in view of notification dated 13.12.2019. In view of what we have held hereinabove, the main issue framed for consideration is thus determined in favour of the assessee and against the revenue. 14. In the result, the appeal is allowed. The impugned order dated 29.11.2023 is set aside to the extent of grounds raised by assessee. The reopening, as held bad in law, is quashed. The assessment order dated 03.12.2018 passed in consequence thereof also stands quashed. Order pronounced on 17.10.2024. Sd/- (BR BASKARAN) Sd/- (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 17/10/2024 Anandi Nambi, Steno Copy of the Order forwarded to: BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "