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Income Tax Appellate Tribunal, MUMBAI BENCH “I” BENCH
Before: SHRI VIKAS AWASTHY & SHRI GAGAN GOYALvk-vk-la- 583@eaqcbZ@2020 ¼fu-oa- 2011&12½ Shri Ajay Ramchandra Chande
vihykFkhZ }kjk@Appellant by : Shri Soumendu Kumar Dash izfroknh }kjk@Respondent by : Shri Gaurav Bansal lquokbZ dh frfFk@Date of hearing : 24/11/2022 ?kks”k.kk dh frfFk@Date of pronouncement : 20/02/2023 vkns’k/ ORDER
PER VIKAS AWASTHY, JM:
This appeal by the Revenue is directed against the order of Commissioner of Income Tax Appeals-36, Mumbai [hereinafter referred to as “the CIT(A)”] dated 29/11/2019 for the assessment year 2011-12.
P a g e | (A.Y.2011-12) AJAY RAMCHANDRA CHANDE
The Revenue in appeal has assailed the order of CIT(A) on three (3) grounds: “1. a) Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) violated Rule 46A(1) by accepting additional evidence in spite of the fact that the assessee did not produce details/documents before AO without any reasonable cause and despite being given sufficient opportunities?
b) Whether on the facts and in the circumstance of the case and in law, the action of the Ld. CIT(A) in accepting additional evidence is not correct as per judgment of the Delhi High Court in case of M/s Manish Build Well (P) Ltd. (204 taxmann.com 106 (Delhi)?
2. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) erred in holding that the assessee has established the source and genuineness of the cash deposits amounting to Rs.40,00,000/-?
Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) erred in holding that the investment in property amounting to Rs.2,88,20,240/- is from the funds available in NRE account without ascertaining whether the funds available NRE account are earned outside India and transferred to NRE account?”
3. Shri Soumendu Kumar Dash appearing on behalf of the Revenue submits that the CIT(A) has admitted additional evidences filed by the assessee in violation of Rule 46A of the Income Tax Rule, 1962. During assessment proceedings, the Assessing Officer (AO) gave sufficient opportunity to the assessee to furnish necessary documents. However, the assessee failed to furnish the documents. No plausible reason whatsoever was given by the assessee for non-furnishing of the relevant documents during assessment proceedings. Even in remand proceedings, the AO strongly objected to the admission of additional evidence. Thus, the learned Departmental Representative (DR) prayed for reversing the findings of CIT(A) on admission of additional evidences filed in First Appellate Proceedings. 3.1 Without prejudice to the submissions made in respect of ground no. 1, the learned DR submits that the CIT(A) has erred in holding that the assessee has established the source and genuineness of the cash deposits amounting to P a g e | (A.Y.2011-12) AJAY RAMCHANDRA CHANDE Rs.40,00,000/-. The AO had categorically mentioned in remand report that the assessee had submitted cash book and bank statement during the course of assessment proceedings. The explanation offered by the assessee for cash deposits was not accepted by the AO. During remand proceedings, the assessee has not submitted any further evidences in support of his claim. No valid explanation was offered by the assessee with respect to cash withdrawals/cash expenditures. The learned DR placed reliance on the decision in the case of Kavita Chandra vs. CIT by Hon’ble Punjab and Haryana High Court in of 2016 (O & M) decided on 07/03/2017. In respect of ground 3 of appeal, the learned DR submits that the CIT(A) has deleted the addition in respect of investment in property amounting to the tune of Rs.2.88 crores. The alleged amount was stated to be transferred from the funds available in Non-Resident (External) (NRE) account. However, no investigation was carried out with regard to source of funds. Thus, the learned DR prayed for reversing the findings of CIT(A) in respect of the issue raised in appeal by the Department.
Shri Gaurav Bansal appearing on behalf of the assessee submitted at the outset that relief in respect of ground no. 3 relating to investment in property has been allowed to the assessee by the CIT(A) on the basis of remand report. After examining the documents on record the AO has given findings in favour of the assessee in remand proceedings. The addition has been deleted on the basis of comments in remand report, therefore, no appeal was maintainable on this issue. As no appeal is maintainable in respect of ground no. 3, the other issues raised in ground no. 1 and 2 of the appeal are liable to be dismissed on account of low tax effect. In support of his submissions, the learned Authorised Representative (AR) placed reliance on the decision in the case of Jivatlal Purtapshi vs. CIT, 65 ITR 261 (Bom.) and the decision in the case of Smt. B Jayalakshmi vs. ACIT, 407 ITR 212 (Madras).
On merits, the learned AR submits that the assessee had furnished the relevant documents during assessment proceedings in “tapal”. The learned AR referred to P a g e | (A.Y.2011-12) AJAY RAMCHANDRA CHANDE submissions filed before the AO at page 19 of the paper book which bears the acknowledgment of receipt dated 25/02/2014 from the office of Income Tax Officer, Ward-20 (1) (4). The learned AR submits that on the same day, the AO passed the assessment order. Thus, the AO failed to consider the documents filed by the assessee in “tapal” on the date of passing assessment order. It is not a case where the assessee did not file the documents at all during assessment proceedings. The learned AR in support of his submissions, placed reliance on the decision in the case of CIT vs. Sureteck Hospital & Research Centre Limited, 293 ITR 53 (Bom). In respect of ground no. 3 of appeal, the learned AR submits that the assessee is a non-resident. The AO has wrongly mentioned the status of assessee in assessment order as resident. The investments are made from funds available in NRE account of the assessee. This fact has been examined by the AO in remand proceedings and the AO has not disputed the fact that investments are made from funds transferred from outside India. The assessee is a resident of Qatar, the assessee has transferred the amount from his income overseas, therefore, Article 22 of DTAA between India and Qatar will come into force. Accordingly, no addition can be made in the hands of assessee for any unexplained investment, if any. The assessee does not have any activity or business in India. The assessee is running saloons overseas and the investments are made from the business income of the assessee. The learned AR in support of his submissions, placed reliance on the decision in the case of ITO vs. Rajeev Suresh Ghai in dated 23/11/2021.
We have heard the submissions made by rival sides and have examined the orders of authorities below. First, we will deal with the preliminary objection raised on behalf of the assessee regarding maintainability of the present appeal. In ground no. 3 of appeal, the Revenue has assailed addition of Rs.2.88 crores deleted by the CIT(A). We find that the assessee had filed additional document to substantiate the source of funds for purchase of property. The documents furnished during First Appellate
P a g e | (A.Y.2011-12) AJAY RAMCHANDRA CHANDE Proceedings were forwarded by the CIT(A) to AO. The AO after examining the same commented as under in the remand report:
“As regards the source of payment for property purchase are concerned, has made payment for purchase of property from the funds available in his NRE account. This contention is clear from the submission of copy of Statement highlighting payments made and Receipts issued by the Builder which also confirms the payments made by the assessee. The Investment is made through NRE account and stated that NRE account belongs to an NRI only through which his/her foreign earnings are transferred to India as per the provisions of Section 5 (2) of the Act. Income received or deemed to be received in India and Income accrue or arise or deemed to be accrue or arise in India is taxable in the hands of NRI. However, the income earned by NRI outside India is out of the scope of taxation in India. Since the investment is made by NR\assessee through his NRE account, therefore it is safe to say that the assessee has purchased the property from the funds available in his NRE Bank Account and the same should be treated as from explained source of funds.”
Since, the AO was satisfied with the explanation furnished by the assessee, hence, gave no adverse findings for making the addition. Consequently, the CIT(A) deleted the addition of Rs.2.88 crores. The Revenue in appeal has assailed the findings of CIT(A) stating that no enquiry was made for deleting the addition. In remand proceedings, the AO was given opportunity to examine the documents and made further enquiries It is on the basis of the remand report that the CIT(A) deleted the addition. There was no reason for the CIT(A) to make further enquiries.
The Hon’ble Bombay High Court in the case of Jivatlal Purtapshi vs. CIT (supra) in somewhat similar situation where the Department had accepted the claim of the assessee in First Appellate Proceedings and despite that appeal was filed by the Department, the Hon’ble High Court held:
“From the facts which we have already stated and from the two documents to which we have already referred, there is no doubt whatsoever that the item of Rs. 4,72,500 was agreed to be deleted from the assessment of the assessee and P a g e | (A.Y.2011-12) AJAY RAMCHANDRA CHANDE it was further agreed that the assessee's claim in appeal in respect of that item should not be contested and accepted by the department before the appellate authority. It is also clear from the appellate order that such a concession was, in fact, made before the appellate authority and an order deleting the said amount from the assessment of the assessee was accordingly passed by the Appellate Assistant Commissioner. It is, therefore, impossible that the department could be treated as being aggrieved by this part of the order so as to be entitled to take an appeal to the Tribunal. An appeal to the Tribunal could only be taken against a part of the order against which the appellant can be said to be feeling aggrieved. What is voluntarily accepted cannot give rise to a grievance which can be taken further in appeal. In the appeal memo, which was filed by the department, the only ground taken was that the deletion of the item by the Appellate Assistant Commissioner was erroneous. The said ground was obviously unsustainable, since there could be no error on the part of the Appellate Assistant Commissioner in accepting the concession which was made by the department before him. In these circumstances, the preliminary contentions, which Were raised on behalf of the assessee before the Tribunal, were entitled to succeed and the Tribunal should have held in favour of the assessee that the appeal of the department in respect of the deletion of the said item was neither competent nor capable of being entertained by the Tribunal.”
The Hon’ble Madras High Court in the case of Smt. B Jayalakshmi vs. ACIT (supra) held that where the CIT(A) on the basis of remand report from AO allowed the claim of assessee, the Revenue was not entitled to maintain an appeal before the Tribunal against the said order of CIT(A). The Hon’ble High Court while holding so placed reliance on the decision in the case of Jivatlal Purtapshi vs. CIT (supra). Thus, in the facts of the case and in the light of aforesaid decisions, we hold that once the AO in remand report had accepted the claim of assessee and the CIT(A) based on the remand report deleted the addition, no appeal could have been filed by the Department in respect of the said issue. Consequently, the ground no. 3 raised by the Department in its appeal is misconceived and not maintainable.
In view of our findings that ground no. 3 of appeal is not maintainable, the other two (2) grounds raised in appeal have the tax effect of Rs.12,36,000/- which is less than the mandatory limit prescribed by the CBDT vide Circular No. 3/2018 for filing of P a g e | (A.Y.2011-12) AJAY RAMCHANDRA CHANDE appeal before the Tribunal. Hence, the appeal of Revenue is liable to be dismissed on account of low tax effect. 10. In the result, appeal of the Revenue is dismissed on account of low tax effect.
Order pronounced in the open court on Monday the 20th day of February 2023.