MRS SHANTABAI GUNDAPPA MANE,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -1,, AURANGABAD

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ITSSA 105/PUN/2022Status: DisposedITAT Pune16 May 2023AY 2016-1710 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that the assessees' counsel had not pressed grounds 1 to 5 and 8 to 9 during the hearing. The Tribunal clarified that while the counsel had argued against disallowances in cases assessed under Section 44AD, there was no material or evidence filed to counter the CIT(A)'s detailed findings that the assessees had failed to prove their business activities or sub-contract works. Consequently, the Tribunal found no reason to reverse the lower authorities' actions which doubted the assessees' eligibility for the presumptive scheme under Section 44AD. Applying a stricter construction in light of the Supreme Court's decision in Commissioner of Customs vs. Dilip Kumar, the Tribunal held that the assessees were rightly denied the benefit of the presumptive taxation scheme. Accordingly, the sole substantive arguments challenging the expenditure disallowances of Rs. 71,29,920/-, Rs. 73,98,240/-, Rs. 68,08,960/-, and Rs. 67,34,000/- (case-wise) were rejected. The CIT(A)'s findings in all four cases were upheld. No issue was expressly left undecided.

What were the facts?

This judgment concerns four appeals filed by two assessees, Mrs. Sharada Shivani Mane and Mrs. Shantabai Gundappa Mane, against orders of the CIT(A), Pune-12, for assessment years 2015-2016 and 2016-2017. The appeals arise from proceedings under Section 153C read with Section 143(3) of the Income Tax Act, 1961. The assessees did not appear for the hearing, and their appeals were proceeded ex-parte. The Tribunal noted that the assessees had previously sought to de-hear the appeals by leveling accusations of perversity against the bench. The assessees' counsel had previously argued that no disallowance could be made when an assessee opts for assessment under Section 44AD of the Act, citing a previous tribunal order. However, the lower authorities had found that the assessees failed to prove their actual business activities.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the assessment order passed by the Assessing Officer (AO) under Section 153C of the Income Tax Act, 1961, was invalid, bad in law, and without jurisdiction, as upheld by the CIT(A)? 2. Whether the addition/disallowance of Rs. 71,29,920/- made by the AO and upheld by the CIT(A) was erroneous, especially in the absence of incremental material found during a search from Manisha Construction Company's premises? 3. Whether the notice issued under Section 153C by the AO was bad in law because the jurisdiction lay with the Settlement Commission, which had passed an order under Section 245D(1) on an application filed by Manisha Construction Company under Section 245C? 4. Whether the AO erred by taking common approval for all assessment years from 2013-14 to 2018-19, violating Section 153D? 5. Whether the AO erred by recording a common satisfaction note for all assessment years from 2013-14 to 2018-19? 6. Whether the CIT(A) erred in upholding the addition/disallowance of Rs. 71,29,920/- claimed as expenditure under Section 44AD without considering the facts? 7. Whether the CIT(A) erred in not following Section 44AD, which is a presumptive section requiring no maintenance of books of account and presuming 80% of income as expenses? Assessee's contentions (grounds 1-9, though grounds 1-5 and 8-9 were not pressed): - The assessment under Section 153C is invalid, bad in law, and without jurisdiction. - The addition/disallowance of Rs. 71,29,920/- is erroneous as no incremental material was found. - The notice under Section 153C is bad in law as jurisdiction lies with the Settlement Commission. - Common approval and satisfaction notes for multiple years violate Sections 153D and the AO's satisfaction. - The addition/disallowance under Section 44AD is erroneous and Section 44AD should be followed as it is a presumptive section. - The CIT(A) did not consider submissions and proceeded with a preset mind. Revenue's contentions: - The judgment records no specific contentions for the revenue, but the revenue was represented by Shri M.G. Jasnani.

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(3),Section 44AD,Section 245C,Section 245D(1),Section 245F,Section 153D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B” : PUNE

Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE

Hearing: 15.05.2023Pronounced: 16.05.2023

PER BENCH :

The instant batch of four cases pertains to twin assessees herein namely Mrs. Sharada Shivaji Mane and Mrs. Shantabai Gundappa Mane. Their two appeals each i.e.,

2 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune I.T.(S.S.)A.Nos.102 & 103/PUN./2022 [former] along with latter’s as many cases I.T.(S.S.)A.Nos.104 & 105/PUN./2022, arise against the CIT(A), Pune-12’s separate Dins & Order Nos. ITBA/APL/S/250/2022-23/1046144958(1), 1046145302(1) and 1046143617(1), 1046144080(1), all dated 30.09.2022, respectively, involving proceedings u/s.153C r.w.s. 143(3) of the Income Tax Act, 1961 (in short “the Act”).

Cases called twice. None appears at both these assessees’s behest. They are, therefore, proceeded ex-parte.

2.

A combined perusal of all these four case files reveals that way back on 10.02.2023, this bench had put both these assessees’ on notice for rejecting their eligibility to be assessed at the presumptive scheme of taxation u/s.44AD of the Act in light of the learned lower authorities’ detailed findings going against them. Learned counsel had quoted this tribunal’s common order in I.T.(S.S.)A.Nos.106 & 107/PUN./ 2022 in alleged connected cases dated 31.01.2023 that no disallowance could be made in an instance wherein an assessee chooses to be assessed u/s.44AD of the Act. We invited learned counsel’s attention to the CIT(A)'s identical lower appellate detailed discussion holding these assessees’ to have failed in proving the actual business activity(ies) carried- out as under :

3 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune

4 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune

5 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune

6 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune

3.

The identical common notings in all these case files suggest that learned counsel representing these two assessees’ sought time to prepare the instant cases afresh. Neither the learned counsel has appeared thereafter nor these twin assessees’ have turned-up despite the fact that we have waited for them on 02.03.2023, 09.03.2023, 21.03.2023, 10.04.2023, 27.04.2023, 10.05.2023 and 15.05.2023 i.e., today. It rather emerges that both these assessees’ have preferred to file representations before the hon’ble President, Income-tax Appellate Tribunal and hon’ble Vice President, Income-tax Appellate Tribunal, Pune Zone, Pune seeking to de-hear the instant four appeals by leveling accusations of perversity against us. We strongly deprecate their behavior hereinabove; But at the same time, since there is no reason for us to release

7 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune the instant case files so as to succumb to “bench-shopping” as per the foregoing observations, we proceed to decide the assessees’ identical substantive grounds pleaded in [I.T.(S.S.)A.No.102/ PUN./2022] these four appeals reading as under :

1.

“On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the assessment order passed by the Ld. A.O. u/s 153C of the Income Tax Act, 1961. The assessment u/s 153C is invalid, bad in law and without jurisdiction. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) had erred by approving the addition/ disallowance made by the Ld. A.O. of Rs. 71,29,920/- inspite of no incremental material found during the course of search from the premises of Manisha Construction Company. 3. The Manisha Construction Company had filed an application before settlement commission u/s 245C of the I.T. Act, 1961 on 05/02/2020 and order for the same was passed u/s 245D(1) of the I. T. Act, 1961 on 13/02/2020 by the settlement commission. The notice issued u/s 153C by the Ld. A.O. is bad in law because as per section 245F all exclusive powers of Ld. A.O. are transferred to

8 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune settlement commission for issuance of notice and passing the assessment order. Therefore the notice issued u/s 153C and order passed by the Ld. A.O. is bad in law since the jurisdiction lies with settlement commission and not the Ld. A.O. 4. On the facts and circumstances of the case and in law, the Ld. A.O. has erred by taking common approval for all the years i.e. A.Y. 2013-14 to A.Y. 2018- 19 which is in violation of provisions of section 153D. 5. On the facts and circumstances of the case and in law the Ld. A.O. has erred by recording common satisfaction note for all the years i.e. AY 2013-14 to A.Y. 2018-19. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the addition/ disallowance made by the Ld. A.O. of Rs.71,29,920/- being expenditure claimed u/s.44AD of the Income Tax Act 1961, without considering the facts of the case. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not following the provision of section 44AD of the Act since the section is presumptive section and appellant is not required to maintain books of account and it is presumed to have made expenses of 80% of the income received (20% profit shown by assessee u/s 44AD).

9 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune 8. On facts and circumstances of the case the Ld. CIT(A) has not considered the submission filed on record at all and had proceeded with preset minds of making addition. 9. The appellant craves leave to add, alter, amend or modify any or all grounds till the disposal of the Appeal.”

4.

We make it clear that learned counsel representing the assessees’ had not pressed the assessees’ ground nos. 1 to 5 and 8 to 9 during the course of hearing way back on 10.02.2023. The only distinction in all these cases is that of the amount of expenditure sum(s). So far as his arguments that this tribunal has already deleted similar expenditure disallowance in an instance involving sec.44AD presumptive scheme of assessment, we make it clear that there is no material or evidence filed before us in any of these four case files resulting CIT(A)'s detailed discussion holding the assessees as not to have carried-out any business activity or sub-contract works in the impugned assessment years. We are thus constrained to observe that this tribunal finds no reason to reverse the learned lower authorities action seriously doubting the assessees’ action seeking to avail the presumptive scheme taxation benefit u/s.44AD of the Act. Faced with the situation, we adopt stricter construction in light of Commissioner of Customs vs. Dilip Kumar [2018] 9

10 I.T.(S.S.)A.Nos.102 to 105/PUN./2022 Mrs. Sharada Shivani Mane & Mrs. Shantabai Gundappa Mane, Pune SCC 1 (SC) (FB) to hold that these assessees’ have been rightly denied the benefit of impugned beneficial scheme of taxation in the given facts and circumstances of the case. We accordingly reject their sole substantive arguments in all these four appeals challenging expenditure disallowance of Rs.71,29,920/-; Rs.73,98,240/- and Rs.68,08,960/-; Rs.67,34,000/-, case-wise, respectively. The CIT(A)’s lower appellate findings in all these four cases stand upheld.

5.

These twin assessees’ as many appeals I.T.(S.S.)A.Nos.102 & 103/PUN./2022 and I.T.(S.S.)A.Nos.104 & 105/PUN./2022 are accordingly dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open Court on 16.05.2023.

Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 16th May, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A), Pune-12 Pune. 4. The Pr. CIT (Central), Nagpur. 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order//

Assistant Registrar, ITAT, Pune Benches, Pune.

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