SANJAY KOTHARI,PUNE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1(1), , PUNE

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ITSSA 11/PUN/2022Status: DisposedITAT Pune14 February 2023AY 2017-1810 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

For AY 2017-18, the Tribunal held that the Assessing Officer's assessment order dated 27.12.2019 and the subsequent section 154 rectification order were invalid for non-compliance with CBDT Circulars 19/2019 and 27/2019, which mandate the inclusion of a DIN and Order number. The Tribunal followed its own decision in Shri H.K. Suresh vs. PCIT, holding that a subsequent intimation cannot cure the defect of an order being deemed to have never been issued. Consequently, the impugned assessment and rectification orders were quashed, and the assessee's appeals were allowed. For AY 2018-19, the Tribunal held that the assessee's argument for telescoping the addition of Rs. 1,66,40,000/- under section 69A was valid. The Tribunal noted that the seized material did not contain clear entries to support the Revenue's presumption of correctness under section 292C. Furthermore, relying on CBDT circulars dated 10.03.2003 and 18.12.2004, the Tribunal held that admissions made by a searched party during search or survey have no significance in the absence of supportive evidence. The Tribunal accepted the assessee's pleadings and allowed the assessee's appeal (ITA No.47/PUN/2021), dismissing the Revenue's cross-appeal (ITA No.59/PUN/2021) as a corollary. The assessee's three appeals were allowed, and the Revenue's appeal was dismissed.

What were the facts?

The appeals concern assessee Shri Sanjay Punamchand Kothari for assessment years 2017-18 and 2018-19. For AY 2017-18, the assessee's appeals IT(SS)A Nos. 12/PUN/2021 and 11/PUN/2022 challenge orders passed by the CIT(A) in proceedings under section 154 and 143(3) r.w.s. 153A of the Income Tax Act, 1961. For AY 2018-19, cross-appeals ITA Nos. 47 and 59/PUN/2021 are against the CIT(A)'s order in proceedings under section 143(3). The core dispute for AY 2017-18 involves the validity of the Assessing Officer's assessment and rectification orders due to the absence of a Document Identification Number (DIN) and Order number as mandated by CBDT circulars. For AY 2018-19, the issue is the 'telescoping' of an addition of Rs. 1,66,40,000/- under section 69A, which the CIT(A) had partly allowed to be set off.

What were the issues?

1. Whether the Assessing Officer's assessment order dated 27.12.2019 and his subsequent section 154 rectification order for AY 2017-18 are invalid for not containing the prescribed DIN and Order number as per CBDT Circulars 19/2019 and 27/2019, rendering them deemed to have never been issued. Assessee's contention: The assessment and rectification orders are invalid due to the non-compliance with mandatory DIN and Order number requirements, as per CBDT circulars. A subsequent intimation by the AO cannot cure this defect. Revenue's contention: The defect in not initially allotting the DIN and Order number could be rectified by a subsequent intimation, and the assessment should be considered valid. 2. Whether the addition of Rs. 1,66,40,000/- under section 69A for AY 2018-19 should be deleted entirely and allowed to be set off against unaccounted cash of Rs. 1,18,22,400/- and unaccounted jewellery of Rs. 1,00,90,400/-, to avoid double addition. Assessee's contention: The addition under section 69A should be deleted in its entirety. Furthermore, it should be eligible for set-off against both unaccounted cash and jewellery to prevent double taxation, relying on precedents like Kantilal & Bros. vs. ACIT and CIT vs. Jawanmal Gemaji Gandhi. Revenue's contention: The Assessing Officer's action of not allowing the set-off should be upheld in its entirety.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(3),Section 153A,Section 69A,Section 292C

AI-generated summary — verify with the full judgment below

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

Before: SHRI S.S. GODARA & DR. DIPAK P. RIPOTE

For Appellant: Shri Neelesh Khandelwal
For Respondent: Shri M.G. Jasnani

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA Nos.47 and 59/PUN/2021 निर्धारण वषा / Assessment Year : 2018-19 Sanjay Punamchand Kothari Vs. ACIT, Central 431, Rasta Peth, Circle 1(1), Pune Pune – 411011 PAN: AIDPK2275L Appellant Respondent/ Cross Appellant

IT(SS)A Nos.12/PUN/2021 & 11/PUN/2022 निर्धारण वषा / Assessment Year : 2017-18 Sanjay Punamchand Kothari Vs. ACIT, Central 431, Rasta Peth, Circle 1(1), Pune Pune – 411011 PAN: AIDPK2275L Appellant Respondent

Assessee by Shri Neelesh Khandelwal Revenue by Shri M.G. Jasnani Date of hearing 06-02-2023 Date of pronouncement 14-02-2023 आदेश / ORDER PER S.S.GODARA, JM:

The instant batch of four appeals pertains to one single assessee Shri Sanjay P. Kothari. Former assessment year 2017-18

2 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

herein contains the assessee‟s twin appeals IT(SS)A Nos.12/PUN/2021 and 11/PUN/2022 arising against the CIT(A), Pune-11‟s separate orders, dated 10.11.2021 and 25.01.2022, passed in case Nos.ITBA/APL/S/250/2021-22/1036818962(1) and ITBA/APL/S/250/2021-22/1039080137(1), in proceedings u/s 154 and 143(3) r.w.s. 153A of the Income Tax Act, 1961, in short „the Act‟. Latter assessment year 2018-19 involves assessee‟s and Revenue‟s cross appeals ITA Nos.47 and 59/PUN/2021 directed against the very CIT(A)‟s DIN & order No. ITBA/APL/S/250/2020-21/1029367933(1), dated 30.12.2020 in proceedings u/s 143(3) of the Act.

Heard both the parties. Case files perused.

2.

It transpires during the course of hearing that the assessee‟s twin appeals IT(SS)A Nos. 12/PUN/2021 and 11/PUN/2022 for former assessment year 2017-18 hardly requires us to delve deeper in the relevant factual matrix. This is for the precise reason that neither the Assessing Officer‟s assessment herein dated 27.12.2019 nor his 154 rectification in both these appeals; respectively contain the corresponding “DIN & Order” details as prescribed in CBDT‟s

3 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

twin circular Nos.19/2019 dated 14.08.2019 and 27/2019 dated 26.09.2019; respectively. The above former circular rather makes it explicitly clear in para 4 thereof that any communication not containing such DIN and Order number “shall be treated as invalid and shall be deemed to have never been issued”. Faced with the situation, Mr. Jasnani filed the Assessing Officer‟s subsequent intimation to the assessee dated 29.12.2019 that he had duly allotted “DIN & Order” number to his assessment order dated 27.12.2019. We find no merit in the Revenue‟s instant vehement argument supporting the assessment herein as once the CBDT circular has clarified that such an order ought to be treated as to have never been issued herein (supra). We conclude that the impugned assessment deserves to be quashed on this count alone. This tribunal‟s order in ITA No.625/Bang/2021 in Shri H.K. Suresh vs. PCIT has already rejected the Revenue‟s identical contentions that its default in allotting “DIN and Order” number in above terms could not be condoned by way of any subsequent intimation as well. We therefore quash the impugned assessment

4 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

herein as well as the Assessing Officer‟s section 154 rectification dated 04.01.2021 in very terms. These assessee‟s twin appeals IT(SS)A Nos.12/PUN/2021 and 11/PUN/2022 stand accepted.

3.

This leaves us with the latter assessment year 2018-19 wherein both the assessee as well as the Revenue have filed their respective appeals ITA Nos.47 & 59/PUN/2021; respectively. The sole issue that arises for our apt adjudication in both these appeals is that of “telescoping” of section 69A unexplained money addition of Rs.1,66,40,000/- made by the Assessing Officer which has been partly allowed to be set off in CIT(A)‟s order to the extent of Rs.1,18,22,400/- vide following detailed discussion:

5 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

6 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

This leaves both the parties aggrieved to the extent indicated

in their respective pleadings.

7 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

The assessee‟s case before us not only seeks to delete the impugned section 69A addition of Rs.1,66,40,000/- in entirety but also learned counsel submitted that the same is very much eligible to be set off as well; both against unaccounted cash of Rs.1,18,22,400/- as well as unaccounted jewellery of Rs.1,00,90,400/-, as per (1995) 52 ITD 412 (Pune) Kantilal & Bros. vs. ACIT and (1983) 15 Taxman 487 (Bom) CIT vs. Jawanmal Gemaji Gandhi, so as to avoid double addition.

The Revenue‟s pleadings on the other hand vehemently support the Assessing Officer‟s action in entirety not allowing the impugned set off.

4.

We have given our thoughtful consideration for vehement rival stands. Learned departmental representative could hardly dispute that the foregoing twin judicial precedents are already in assessee‟s support that such a set off could very well be granted even against jewellery items and vice-versa. This is further coupled with the clinching fact that page 41 before us is the seized

8 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

material against the assessee found during the course of search on 04.11.2017. There is neither any amount mentioned therein nor the sum total thereof so as to draw any presumption of correctness of contents thereof u/s 292C of the Act. Mr. Jasnani at this stage vehemently argued that the assessee‟s search statement had admitted various amounts as per the contents of seized document. We find no merit in the Revenue‟s instant argument in light of CBDT‟s twin landmark circulars dated 10.03.2003 and 18.12.2004 that a searched party‟s admissions or confessions during search or survey hardly carry any significance in the absence of any supportive evidence. We reiterate that the foregoing sole seized document is totally “dumb” as there are no clear-cut entries which could suggest any payments or receipts, as the case may be involving this assessee. Faced with the situation, we accept the assessee‟s pleadings as well as the main appeal ITA No.47/PUN/2021 and dismiss the Revenue‟s cross appeal ITA No.59/PUN/2021 as the necessary corollary. Ordered accordingly.

9 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

5.

To sum up, these assessee‟s three appeals ITA Nos.47/PUN/2021, IT(SS)A Nos.12/PUN/2021 and 11/PUN/2022 are allowed and Revenue‟s cross appeal ITA No.59/PUN/2021 is dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the Open Court on 14th February, 2023.

Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; ददिधांक Dated : 14th February, 2023 GCVSR आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: अपीऱधर्थी / The Appellant; 1. प्रत्यर्थी / The Respondent; 2. 3. The CIT(A), Pune-11 4. The Pr.CIT(Central), Pune 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “B” / DR „B‟, ITAT, Pune 6. गार्ड फाईल / Guard file आदेशानुसार/ BY ORDER,

// True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune

10 ITA Nos.47 & 59/PUN/2021 IT(SS)A No.11/PUN/2022 & 12/PUN/2021 Sanjay P. Kothari

Date 1. Draft dictated on 08-02-2023 Sr.PS 2. Draft placed before author 09-02-2023 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.

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