ITO -32(2)(1), MUMBAI vs. M/S. LIBERAL REALTORS LIMITED LIABILITY PARTNERSHIP, MUMBAI

आदेश / O R D E R PERM. BALAGANESH (AM): ITA No.450/Mum/2021 (AY 2015-16) This appeal of the Revenue arises out of independent order passed by the ld. Commissioner of Income Tax-44, Mumbai [hereinafter referred to ‘Ld.CIT(A)’] in appeal No.CIT(A), Mumbai-44/10018/2017-18 dated 29/01/2020 against the order of assessment framed by Income Tax Officer-

2 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership 32(2)(1), Mumbai [hereinafter referred to ‘Ld. AO’] u/s.143(3) of the Income Tax Act [hereinafter referred to the ‘Act’] dated 20/03/2017 for AY 2015-16.

ITA No.449/Mum/2021 (AY 2016-17)

1.1. The other appeal of the Revenue arises out of independent order passed by ld. Commissioner of Income Tax-44, Mumbai [hereinafter referred to ‘Ld. CIT(A)’] in appeal No.CIT(A), Mumbai-44/10478/2018-19 dated 29/01/2020 against theorder of assessment framed by Income Tax Officer-32(2)(1), Mumbai [hereinafter referred to ‘Ld. AO’] u/s.143(3) of the Income Tax Act [hereinafter referred to the ‘Act’] dated 28.12.2018 for AY 2016-17.

1.2. Identical issues are involved in both the appeals, therefore, the same are taken up altogether and disposed of by this common order for the sake of convenience.

2.1. The brief facts of this issue are that the assessee is a Limited Liability Partnership (LLP) formed by conversion of erstwhile company M/s. Liberal Securities and Financial Services Ltd., into LLP as per Companies Act. The assessee LLP filed the return of income for AY 2015-16 on 31/08/2015 declaring total income of Rs. Nil. The assessee had shown exempt income of Rs.67,95,98,197/- on sale of shares of SAL. The predecessor company purchased 14,96,290 shares of SAL for a total consideration of Rs.29,92,580/-

3 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership @2/- per share and the said shares became investments of the LLP after conversion, alongwith other assets and liabilities of the company. Out of the total shares purchased, the assessee sold 13,35,538 shares during the AY 2015-16 and 1,40,952 shares during the AY 2016-17. The total sale consideration received on sale of 13,35,538/-shares during the AY 2015-16 amounted to Rs.68,22,69,273/- and the assessee declared the net capital gain of Rs.67,95,98,197/-, which was claimed as exempt u/s.10(38) of the Act by the LLP in the return of income.

2.2. During the assessment proceedings, the ld. AO felt that the facts of this case have similarity with the enquiries conducted by the Investigation Wing of Income Tax Department, Kolkata. After quoting statement of one Shri. Vipul Vidur Bhat, in whose case a search was conducted by the Investigation Wing of Mumbai and citing the modus operandi mentioned by the Investigation Wing of Kolkata, the ld. AO came to the conclusion that M/s. SAL is a Penny Stock Company and Shri Vipul Vidur Bhat is an entry provider. During the assessment proceedings, the assessee submitted that Shri Vipul Vidur Bhat had already retracted the statement recorded during the search by filing an affidavit before the Investigation Wing within a reasonable time and filed a copy of the retraction affidavit on the file. On request, the ld. AO provided opportunity of cross examination of Shri Vipul Vidur Bhat to the assessee. In the cross examination, Shri Vipul Vidur Bhat reiterated the retraction made by him and stated that he has no role in purchase and sale of shares of SAL by the assessee and the entries of sale found in a book in his premises were made at the request of his friend Shri Kamlesh Sanghvi, who was consultant of the assessee LLP. He stated that the assessee’s transactions were genuine. The ld. AO re-examined Shri Vipul Vidhur Bhatt after cross examination by assessee. However, the ld. AO did not believe in what the deponent has

4 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership stated in the cross examination and rejected the findings of cross examination. Relying on the original statements recorded at the time of search from Shri Vipul Vidhur Bhatt, the ld. AO made addition of the total sale proceeds of shares of SAL amounting to Rs.68,22,69,273/- u/s.68 of the Act. Besides, he also estimated the expenses on commission at 5% at Rs.3,41,13,465 and added the same u/s.69C of the Act.

2.3. The assessee filed detailed submissions before the ld. AO and also filed copies of share purchase agreement dated 11/01/2012, copy of DEMAT account to show receipt of shares purchased and the name and address of the share broker, copies of contract notes for sale together with bank statement wherein sale proceeds of shares were reflected. We find that assessee had also given evidence for purchase of shares of SAL, payments for which were made by account payee cheque and also stating that the shares were duly dematted immediately after the purchase of shares and held thereon for more than 2 years from the date of its purchase. The assessee pointed out that the part of the shares were sold during A.Y.2015-16 and remaining part of the shares for A.Y.2016-17. All the transactions were routed through recognised stock exchange through registered share broker and had duly suffered levy of Security Transaction Tax (STT). Accordingly, it was pleaded that the long term capital gain arising on sale of such listed shares would be eligible for exemption u/s.10(38) of the Act. We find that the ld. AO had primarily made the addition only based on the original statement recorded from Shri Vipur Vidhur Bhatt, ignoring the fact that the said statement had been duly retracted by him by way of filing an affidavit before the Investigation Wing within a reasonable time. Infact, Shri Vipul Vidhur Bhatt, being department’s witness, was also produced for cross examination of the assessee by the ld. AO, during the course of assessment proceedings

5 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership as stated supra. In the said cross examination proceedings, Shri Vipul Vidhur Bhatt had stood on the retraction statement made by him and reaffirmed the contents thereon. Later, we find that the ld. AO had resorted to make re- examination of Shri Vipul Vidhur Bhatt who reiterated what was stated by him in the cross examination proceedings. Despite that, the ld. AO, proceeded to rely on the original statement recorded during search of Shri Vipul Vidhur Bhatt and made an addition on account of sale proceeds of shares of SAL u/s.68 of the Act in the hands of the assessee treating it as bogus.

2.4. The computation of long term capital gains earned by the assessee in A.Y.2015-16 are as under:-

Sale Consideration reed. On Sale of 13,35,538 Shares Rs. 68,22.69,273/- Less: Cost of Purchases of 13,35,538 Scares Rs. 26,71,076/- Net Long term Capital Gain Rs. 67,95,98,197/-

2.5. The main crux of the ld. AO making the addition by disbelieving the transaction of the assessee could be summarised as under:-

a. Pre-arranged transactions b. Sale of scares and unusual rise in the price through rigging not backed by, the financials of M/s Sunrise Asian Limited c. Failure of the assessee to discharge its onus to prove that the LTCG claimed by it is genuine, Ignorance of the assessee about shares and penny stock companies. d. Central Role of Vipul Vidhur Bhatt in M/s. SAL.

6 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership e. Complaint filed by the partner of the LLP namely Shri Navin Popatlal Shah and Priti Navin Shah. f. The declaration filed under Income Disclosure Scheme, 2016 by the exit providers. g. The filing of declaration under Income Disclosure Scheme, 2016 by M/s. DCB N Holdings LLP.

2.6. The assessee made detailed submissions before the ld. CIT(A) as under:-

“1. That the sale transactions in question had taken place in the Stock Exchange electronically through a registered Stock Broker M/s. SUNTECK WEALTHMAX CAPITAL PRIVATE LTD., MUMBAI". All such sale activity was on the platform of the Stock Exchange are logged in, on real time basis It is not possible to sell/purchase the Shares of any Company on the Stock Exchange in variance to the prevailing market price at any point of time. Hence the assessee cannot be nor is supposed to be aware of and know the identity of the persons, who have purchased the Shares at the time of the Sale of the said Shares by the Assessee at the Stock Exchange. 1. It is further submitted that the Share price is a/ways determined by the market mechanism at any given point of time because there is a robust system of the Stock Exchange which is transparent, open and equitable, and the assessee has also sold the Shares on such a platform at a price which was a reflection of the market price derived through the interplay of the forces of market demand and supply. Sir, it is further submitted that the assessee firm or any of its partners are not connected or related with any of their promoters or Directors of the Company M/s. Sunrise Asian Limited or any of the so-called entry operator. As a matter of fact, the assessee firm or any of its partners never indulged any such questionable activity nor has been part of any modus operandi as stated by the A.O. in the assessment order. It is further submitted that investment in a Company with weak fundamentals can be for several reasons such as professional advice, reasonable price for Shares, foreseeable turnaround, past pricing and volume patterns and just market rumor about phenomenal movement in Share price of a particular scrip Moreover, the mere fact that the Shares were sold at a high price cannot be termed as conclusive proof or a ground for an allegation that the assesses has converted some unaccounted money through accommodation entries as alleged by the A.O. in the assessment order. The Learned A.O. in the assessment order relied upon the purported statements of various alleged operators on the basis of which the Learned A.O. had drawn

7 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership adverse inferences in the instant case. It is worthy to note that nowhere any of them has ever named the assessee in the alleged manipulation. Further, the Learned A.O. did provide Cross Examination of Shri. Vipul Vidur Bhat as demanded by the assessee firm. The same appears at page 86 to 96 of the assessment order. At no stage there is any mention of doing anything which will draw an adverse inference in the instant case. It is worthy to note that nowhere he has ever named the assessee in the alleged manipulation. Besides, he had already retracted his Statement taken by the Investigation Wing. That the assessee conducted all the transactions of Sale through :ne recognized Stock Exchange and through the recognized Share Broker and the payments were through account payee cheques. It is prayed that the genuine transactions cannot be and should not be treated as in genuine merely on an arbitrary view of Suspicion. The A.O's contention that the Company in question had insignificant business Operation and lesser number of employees, which fact does not support the unprecedented rise in its price is also of no consequence. It is a well kno ~'n fact in the Stock Market that Share price movement has very often, no correlation with the fundamentals of the Company. The price of the Commodity including Shares is determined by the market forces of demand and supply of the market players and not by their intrinsic worth. It is respectfully submitted that the assessee firm bonafidely purchased the shares as per Purchase agreement dated 11 02 2012. The said shares were dematerialised in early 2012 and were kept in Demat Account till the same were sold in 2014, i.e. almost after about more than two years and almost about three years. It is further submitted that just because the assessee is able to draw benefit out of the rigging of prices done by others in the transaction bonafidely done in the fully legalised system with not a shred of evidence on record to prove the complicity of the assessee in the alleged crime, it is not possible to draw any adverse inference against the assessee. It is submitted that the overwhelming documentary and circumstantial evidence has to be considered and not mere suspicion and preponderance of probabilities. It is submitted that the Hon. Supreme Court in the case of Omar Sa/ay Mohamed Salt (1959) 37 ITR 151 (SC) held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of Umacharan Shaw & Bros, v C.I.T. (1959) 37 ITR 271 (SC), the Hon'ble Supreme Court held that suspicion however strong, cannot take place of evidence. The Hon'ble Supreme Court in the case of CIT (Central) Kolkata v. Daulat Ram Rawatmull reported in 87 ITR 349 held that the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences which would directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect.”

8 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership 2.7. The assessee relied on the following decisions in support of its contentions before the ld. CIT(A) :-

a) Decision of the Hon’ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT reported in 37 ITR 288(SC) wherein it was held that assessment could not be based on background on suspicion and in absence of any evidence to support the same.

b) Decision of the Hon’ble Punjab and Haryana High Court in the case of PCIT vs. Prempal Gandhi in ITA No.95 of 2017 dated 18/02/2018.

c) Decision of Co-ordinate Bench of Kolkata of Tribunal in the case of Navneet Agarwal vs. ITO in ITA No.2281/Kol/2017 dated 20/07/2018.

d) Decision of Hon’ble Jurisdictional High Court in the case of CIT vs. Mukesh Ratilal Marolia in ITA No.456 of 2007 dated 07/09/2011.

e) Decision of Hon’ble Jurisdictional High Court in the case of Shyam R Pawar reported in 54 Taxmann.com 108.

f) Decision of Mumbai Tribunal in the case of Ms. Farrah Markar vs. ITO in ITA No.3801/Mum/2011 dated 27/04/2016.

g) Decision of Mumbai Tribunal in the case of ITO vs. Indravadan Jain HUF and ACIT vs. Indravadan Jain in ITA Nos. 4861 and 5168/Mum/2014 dated 27/05/2016.

9 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership 2.8. It was pointed out that the finding of the ld. AO for purchase and sale of shares of SAL is pre-arranged transaction, is a mere presumption and surmise which has no factual or legal base. It was pleaded that no addition could be made on the basis of surmises, suspicion and conjunctures and also pleaded that suspicion however strong, cannot take place of evidence and that onus to prove that the apparent is not the real is on the party who claims it to be so.

2.9. The ld. CIT(A) duly appreciated the contentions of the assessee both on merits as well as on the fact that the ld. AO had given a favourable remand report. We find that the ld. CIT(A) had categorically stated that the transactions for the purchase of shares of SAL is sufficiently documented and supported by number of evidences in the form of public offer, bank statement reflecting the payment for purchase of shares as well as the DEMAT statement through which the shares were transferred. He also observed that the sale of shares is evidenced by bank statement in respect of share sale consideration, contract notes for sale of shares as well as ledger account of the assessee with the registered share broker. The ld. CIT(A) also categorically observed that the transaction was duly subjected to STT on sale of shares and that none of these evidences were controverted by the ld. AO in his assessment order. The ld. CIT(A) had observed that there was no specific mention of the name of the assessee in the information as beneficiary. Further, Shri. Vipul Vidur Bhat in his detailed statement recorded during search had given names of the entities and names of the beneficiaries of accommodation entries. In none of those lists, he had taken anywhere the name of the assessee LLP or the erstwhile company or name of any partner as beneficiaries of entries provided by him. Further the ld CIT(A) also observed that the statements recorded from alleged brokers during the search at Mumbai (which had been heavily relied upon by the ld. AO), do not directly

10 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership link the assessee with any of said companies or persons, much less with Kolkata operators. None of the persons whose statements were recorded stated that the assessee was involved in price rigging of the shares or that any partner of the LLP gave cash to any of them which they deposited in the bank accounts and which had come back to the assessee in the form of long term capital gain. Accordingly, the ld. CIT(A) concluded on merits that when name of the assessee was not at all mentioned by anybody in the respective statements recorded during the search either by Mumbai or at Kolkata, the inference drawn by the ld. AO could only be construed as a surmise. The ld. CIT(A) also observed that there is no direct or circumstantial evidence to hold that the assessee had unaccounted income / cash which was given to various entry operators with the connivance of the brokers and had got back the same in cheque in the form of long term capital gains.

2.10. The ld. CIT(A) during the course of appellate proceedings directed the ld. AO to record statements of certain persons named in the assessment order and also make certain enquiries including with Borivali Police Station on the compliant lodged thereon and send remand report on the entirety of facts and circumstances of the case. The ld. AO submitted the remand report dated 10/06/2019 before the ld. CIT(A) which is reproduced hereunder:-

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2.11. This remand report was duly forwarded to the assessee for his comments and rebuttal by the ld. CIT(A). The assessee vide letter dated 26/07/2019 and 17/01/2020 made a submission stating that the ld. AO in the remand report, after due verification of all the evidences and after making

18 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership due enquiries with various authorities, various persons including the stock exchange, had finally concluded that evidences filed by the assessee are proper and genuine. The ld. CIT(A) observed that the ld. AO during the remand proceedings had conducted enquiries with Bombay Stock Exchange (BSE), Shri Anirudh Baheti, Shri Hiren Shah, Shri Jitendra Joshi, M/s. Suntech Wealthmax Capital Pvt. Ltd., M/s. DCB Plus and Holding LLP and Borivali Police Station and had finally concluded that the evidences filed by the assessee are proper and genuine.. Accordingly, the ld. CIT(A), from the enquiries made hereinabove and the statements recorded from the aforesaid persons, concluded that the arguments advanced by the assessee proved to be true and these enquiries and statements did not reveal anything against the assessee. Since, nothing adverse was referred by the ld. AO in the remand report, the ld. CIT(A) proceeded to delete the addition made by the ld. AO u/s.68 of the Act treating the sale proceeds of sale of SAL as cash credit.

2.12. Apart from this, the ld. CIT(A) had also dealt with various allegations levelled by the ld. AO on the statement of Shri Vipul Vidhur Bhatt and the modus operandi applied by him. In this regard, the ld. CIT(A) had observed in para 5.27 of his order that since Shri Vipul Vidhur Bhatt had retracted his statement by filing an affidavit, reliance placed by the ld. AO on the original statement is not warranted as it is not backed by any corroborative evidence on record. The ld. CIT(A) also placed reliance on various decisions of various High Courts to drive home the point that statement recorded during search which is not backed by any corroborative evidence cannot be basis for making any addition in addition thereto. He also relied on certain case laws where the statements once retracted would lose its evidentiary value. Further, the ld. CIT(A) also placed reliance on the decision of the Hon’ble Jurisdictional High

19 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership Court in the case of CIT vs. Mukesh Ratilal Marolia in ITA No.456 of 2007 dated 07/09/2011. In that case, the ld. AO had held that long term capital gain shown by that assessee was unexplained since the broker had confirmed in a statement before that AO though he never sold any shares to that assessee. However, taking note of the evidence as available on record, the Tribunal held that the ld. AO had not disproved the genuineness of the transactions and granted relief. The said decision of the Tribunal was upheld by the Hon’ble Bombay High Court. The Revenue had preferred a Special Leave Petition (SLP) before the Hon’ble Supreme Court which was dismissed in SLP (Civil) No.20146/2012 dated 27/01/2014. Similar was the decision rendered by the Hon’ble Delhi High Court in the case of Suman Poddar reported in 112 Taxmann.com 329 wherein SLP filed by the Revenue was dismissed by the Hon’ble Supreme Court.

2.13. Ultimately, the ld. CIT(A) had granted relief to the assessee by placing reliance on the various decisions of the Hon’ble Jurisdictional High court and Hon’ble Delhi High Court stated supra and more particularly in view of the favourable remand report submitted by the ld. AO for the purpose of deleting the addition made u/s.68 of the Act in respect of sale proceeds on sale of SAL. Since the main addition has been deleted, the alleged payment of commission expenses @5% of the transaction value which was added u/s.69C of the Act by the ld. AO was also consequently deleted by the ld. CIT(A).

20 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership CIT(A) and the Revenue had not objected to the validity of the remand report submitted by the ld. AO by way of any ground before us. Yet another moot point that arises for our consideration thereon is whether at all the appeal of the Revenue would be maintainable when the ld. AO had given a favourable remand report before the ld. CIT(A). In our considered opinion, we are unable to persuade ourselves to accept to the various contentions of the ld. DR before us, which was argued on merits , when the ld. AO had given a favourable remand report. It was vehemently pleaded by the ld CIT DR that the ld. AO in the remand report had only stated that the evidences submitted by the assessee are proper and genuine and had not stated that the transactions carried out by the assessee are proper and genuine. We are unable to persuade ourselves to accept to this narrow argument of the revenue, in view of the fact, that the entire evidences are filed by the assessee only in support of the transactions carried out by the assessee. When the evidences are accepted as proper and genuine, that too after due enquiries and examination thereon, obviously the transactions carried out by the assessee also would be proper and genuine. Hence the only logical conclusion would be that the ld. AO had indeed accepted the entire transactions together with its evidences as proper and genuine. We deem it unnecessary to go into the merits of the addition made herein. The entire remand report of the ld. AO had already been reproduced herein supra. We hold that when the ld. AO had given a favourable report in his remand proceedings, then fairly the Revenue ought not to have preferred any further appeal before this Tribunal as there could not be any grievance for them.

3.1. We draw support in this regard on the decision of the Hon’ble Madras High Court in the case of Smt. B.Jayalakshmi vs. ACIT reported in 407 ITR

21 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership 212 (Mad). The relevant operative portion of the said judgement is reproduced hereunder:-

“14. The following substantial questions of law was framed for consideration in the tax case appeals:— "Whether the Income Tax Appellate Tribunal is right in disallowing the claim of agricultural income of the assessee, which having failed to appreciate the evidence available on record by traversing beyond the scope of the records and against the findings given by the various statutory and judicial authorities as also the admissions made in the remand report by the assessing officer?" 15. The sheet anchor of the argument of the learned Senior counsel appearing for the applicant is that an appeal will not lie before the Tribunal when the order of the CIT (A), is based on consideration of the remand report of the Assessing Officer. It is submitted that this being a jurisdictional issue can be raised before this court for the first time and the Court would be entitled to take on record, even the fresh hearing and would be entitled to determine the jurisdictional fact. To examine as to whether there is an error apparent on the face of the judgment, dated 30.09.2013, and whether the jurisdictional fact as raised by the applicants arise for consideration, we would be required to take note of the facts of the case and since facts are identical for all assessment years the facts relating to assessment year 1995-96, is taken into consideration. The applicant filed a return of income originally on 29.01.1999, showing a total income of Rs.3,09,280/- which comprised income from money lending business and interest from bank deposits. The income return was accepted under Section 143(1) of the Act. A search was conducted by the Central Bureau of Investigation on 19.02.1997, at the applicant's residential premises, as well as bank lockers standing in her name. The Assessing Officer reopened the assessment under Section 147 of the Act and made re-assessment by adding the gifts created to capital account of the applicant and her daughters amounting to Rs.4,32,921/-; loan of Rs.2,00,000/- from Mrs. S. Saraswathy and agricultural income of Rs.4,08,840/- treating it as 'non-agricultural income'. Aggrieved by the said order, the assessee preferred appeal before the CIT (A). The applicant objected to the order of the Assessing Officer stating that she has furnished the details of the goods to the Assessing Officer during the assessment proceedings and no further details could be furnished, as the assessment was taken up only around the limitation period and as such sufficient time was not provided to her. The applicant furnished confirmations by way of affidavits from various donors of the gifts in dispute during the appellate proceedings and based on the affidavits, the applicant contended that there was no justification for the Assessing Officer to treat the gifts as 'unexplained credits'. Similar contention was raised with regard to the loan of Rs.2,00,000/- from Mrs. S. Saraswathy. With regard to the order of the Assessing Officer treating the agricultural income as non-agricultural income, the applicants filed certificate from VAO to the effect that her agricultural income was around Rs.7,00,000/- per annum and that she had taken 30 acres of land in

22 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership the village on lease from Mr. Danushkodi and his son D. Muthukumar and paying lease rent of Rs.75,000/- per year to Mr. Danushkodi and Rs.15,000/- per year to Mr. D. Muthukumar. 16. Further, coconut trees were grown in about 17 acres and paddy was cultivated in the remaining 13 acres. This contention raised by the applicant was rejected by the Assessing Officer on the ground that the applicant had not furnished any details such as crop cultivated, area under cultivation, productivity, agricultural income tax paid, sale bills pertaining to agricultural produce and proof for expenditure incurred. Further, the agreement for taking 30 acres of land on lease had not been registered; the return of income admitting agricultural income was filed only after the search by CBI. The Assessing Officer thus added the aforesaid amount as unaccounted income of the applicant holding the same represented undisclosed income of her husband, which had been brought in the name of the applicant in the guise of agricultural income. Further, before the CIT (A), apart from furnishing other details, the applicant produced the copy of the decree passed by the Civil Court granting a decree of permanent injunction in her favour, when an attempt was made to evict her from the leased property. Since fresh evidence in the form of Court orders and other details were placed before the CIT (A), a report was called for from the Assessing Officer on the stand taken by the applicant in the appeal proceedings. Accordingly, the Assessing Officer submitted a report, dated 25.11.2002. In the preceding paragraphs, the contents of the report have been set out. It is suffice to state that the report was wholly in favour of the applicant/assessee. Thus, taking note of the report of the Assessing Officer, dated 25.11.2002, as well as the report of the Inspector of Income Tax, the CIT (A) held that the action of the Assessing Officer treating the sum of Rs.4,08,841/-, as 'non-agricultural income' was incorrect. 17. Aggrieved by the orders passed by the CIT (A), the Revenue preferred appeals before the Tribunal. The Tribunal accepted the stand taken by the Revenue and affirmed the findings recorded by the Assessing Officer. The order passed by the Tribunal is verbatim repetition of the findings of the Assessing Officer in its order dated 29.03.2001, passed under Section 143(3) read with Section 147 of the Act. We find that there is no reference to the remand report dated 25.11.2001, which was called for by the CIT (A) based on which the CIT (A) allowed the appeal. To be noted, the Assessing Officer on report being called for, has made a detailed enquiry, and the Inspector of Income Tax has recorded statements from the landowners verified the Revenue records maintained in the office of the VAO and then submitted his remand report. The Tribunal ought to have made an endeavour to examine as to the effect of the remand report, which was the basis for allowing the appeal filed before the CIT (A). When the assessee filed appeals before this Court in TCA.Nos.819 to 821 of 2010, the appeals were dismissed and the findings in the judgment are contained in paragraphs 9 & 10. We find that while dismissing the assessee's appeals, the question which was required to be considered is whether the Tribunal is right in disallowing the claim of agricultural income of the assessee, having failed to appreciate the evidence available on record and traversing beyond the scope of the records and findings given by authorities as also the admission made in the remand report by the

23 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership Assessing Officer himself. Thus, what was required to be considered, was the effect of the findings given by the authorities more particularly, the admission made in the remand report by the Assessing Officer himself. Thus, a subsidiary substantial question of law, which would arise out of the substantial question of law framed is whether the Revenue was entitled to maintain an appeal as against the order of CIT (A), which itself was based upon a remand report 25.11.2002. If the answer to this subsidiary question of law is answered in favour of the assessee, then the appeal filed by the Revenue before the Tribunal has to be not maintainable in the light of the decisions quoted above. Though such a question was not specifically framed, the effect of the findings given by the authorities and more particularly, the admission of the Assessing Officer in the remand report, was required to be considered. Thus, in the absence of consideration of this important jurisdictional issue, we find that the judgment, dated 30.09.2013, suffers from error which is apparent on the face of the judgment. 18. The learned Standing counsel appearing for the Revenue vehemently contended that before the Tribunal, the assessee did not object to the maintainability of the appeal and for the first time before this Court in a Review Application, the issue cannot be raised. 19. Firstly, we have to take note of the fact that the issue canvassed before us, is a jurisdictional issue, which could be raised at any point of time. Secondly, the Tribunal was required to consider as to whether it had jurisdiction to entertain the appeal filed by the Revenue against the order passed by the CIT (A), which itself was based upon a remand report. As noticed above, the order passed by the Tribunal is a verbatim repetition of the assessment order, dated 29.03.2001. Thus, the Tribunal was required to consider the correctness of the order passed by the CIT (A) and if had been done in a proper prospective, the Tribunal would have noticed that the order allowing the assessee's appeal by the CIT (A) was based on the remand report. If this had been taken note of, the Tribunal would have to consider as to whether the appeal by the Revenue was maintainable before it. In the case of JivatlalPurtapshi (supra), it was held that the department having agreed to delete the amount from the assessment and having considered the deletion before the Appellate Assistant Commissioner, cannot be aggrieved by that part of the order to enable it to file an appeal before the Tribunal and therefore, such an appeal, neither competent nor capable of being entertained by the Tribunal. 20. In the case of RamanlalKamdar v. CIT [1977] 108 ITR 73 (Mad.), the appeal before the Hon'ble Division Bench of this Court was against the order passed by the ITAT, Bangalore Bench and one of the substantial question of law which was framed for consideration, was "whether on the facts and circumstances of the case, it has been rightly held that the proceedings under Section 154, were rightly invoked." The Division Bench held that the reference itself was incompetent for the reason that in the original assessment for the year 1962-63, a mistake at crept in while making out interest under Section 139(1)(iii). Thereafter, the Income Tax Officer issued a notice to the assessee proposing to rectify the mistake under Section 154 and calling upon the objections of the assessee. The said notice

24 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership expressly referred to the tax effect which would result as a consequence of the rectification. The mistake was that instead of treating the assessee as an unregistered firm for the purpose of calculating the interest, the Income Tax Officer had treated the assessee as a registered firm. The assessee appeared before the Income Tax Officer and stated that he had no objection to revision proposed by the Income Tax Officer. Thereafter, the Income Tax Officer passed an order rectifying the mistake under Section 154 of the Act. Notwithstanding the admission before the Income Tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income Tax. The appeal was dismissed upholding the order of the Income Tax Officer. The assessee preferred further appeal to the Income Tax Appellate Tribunal. The Tribunal also dismissed the appeal. It is thereafter, at the instance of the assessee, the above question was referred by the Tribunal for consideration of the Hon'ble Division Bench. The Division Bench opined that the appeals to the Appellate Assistant Commissioner and to the Tribunal by the assessee were incompetent, since the assessee appeared before the Income Tax Officer and stated that the assessee had no objection to the proposed revision and once ,the assessee has stated that it had no objection to the proposed revision and the Income Tax Officer had also revised them the original assessment as proposed by him, the assessee could not be said to be aggrieved by the order of the Income Tax Officer. It was further pointed out that only if the assessee was aggrieved by the order of the Income Tax Officer, he had the right to file an appeal before the Appellate Assistant Commissioner and once the assessee could not have had any grievance in view of the statement made by the partner, the appeal to the Appellate Assistant Commissioner was incompetent and equally the appeal to the Tribunal was incompetent and consequently, it was held that the reference to the Court on the second question said to arise out of order of the Tribunal is also incompetent. In the case of Banta Singh Kartar Singh (supra), a similar question arose in an order under Section 271(1)(c) of the Act. The Division Bench of the High Court of Punjab & Haryana, placing reliance on the decision of the Mumbai High Court in JivatlalPurtapshi's case (supra), held that an order based on agreement cannot give rise to grievances and the same cannot be agitated in appeal. 21. In Cochin Malabar Estates & Industries Ltd.'s case (supra), one of the question which arose for consideration before the Division Bench of the High Court of Kerala was whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the consent by the assessee will not confer jurisdiction on the Income Tax Officer to pass rectification order under Section 154 of the Act, it was held that the appeal filed by the assessee before the CIT (A) itself is incompetent, since the assessee cannot be considered as a person aggrieved by the order passed under Section 154. 22. In the light of the above, we are of the clear view that the question of law as framed for consideration in the appeals, TCA Nos.819 to 821 of 2010, should have been re-framed or in the alternative, the subsidiary question arising out of the question framed namely as to whether the appeal before the Tribunal was competent, was required to be decided. That apart, since the issue touches upon

25 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership the jurisdiction of the Tribunal to entertain an appeal, the Tribunal ought to have first answered the said question before proceeding to take up the other issues. 23. As already noticed, the Tribunal verbatim repeated the order passed by the Assessing Officer, dated 29.03.2001, and ignored the remand report, dated 25.11.2002 and the findings rendered by the CIT (A) based on such remand report. Thus, if such is the situation, the appeal itself would have been incompetent. Hence, this question, which touches upon the jurisdiction of the Tribunal, has not been considered by the Tribunal, we are inclined to review the judgment and remand the matter to the Tribunal for fresh consideration. 24. In the result, the Review Petitions are allowed and the judgment dated 30.09.2013, in Tax Case (Appeal) Nos.819 to 821 of 2010 is reviewed and recalled and the appeals stands disposed of, by remanding the matter to the Tribunal to decide the question of its jurisdiction to entertain the appeals filed by the Revenue against the orders of the CIT (A). In the event, the Tribunal decides the question in favour of the Revenue, it shall reconsider the other issues after opportunity to the Revenue and assessee. 25. One more submission made by the learned Senior counsel for the petitioner is with regard to the monetary limits for filing appeals by the department before the Tribunal. Relying upon circular No.21 of 2015, dated 10.12.2015, issued by the CBDT, it is submitted that for the revenue to maintain an appeal before the Appellate Tribunal, the monetary limit has been fixed as Rs.10,00,000/- and on this ground also, the appeal is not maintainable. It is open to the assessee to canvass such a point before the Tribunal during the hearing.

3.2. From the above, it could be seen that the Hon’ble Madras High Court had categorically held that when the Assessing Officer had accepted the contentions of the assessee in the remand report, the Revenue could not be aggrieved by filing further appeal and since this fact had not been taken cognizance by the Tribunal in that case, the Hon’ble Madras High Court had remanded the matter back to the Tribunal for fresh consideration as is evident in para 23 supra. However, the principle and the ratio decidendi laid down thereon would be squarely applicable to the facts of the instance case before us wherein the ld. AO in the remand report dated 10/06/2019 had not drawn any adverse inference on the transactions carried out by the assessee. Admittedly, such conclusion was drawn by the ld. AO after carrying out detailed investigations and enquiries carried out with various parties as

26 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership mandated. We find that the ld. CIT(A) granted relief based on the said remand report apart from giving relief on merits. We are not giving any opinion on the merits of the case. We find that at the threshold itself, this appeal is required to be decided against the Revenue by following the decision of the Hon’ble Madras High Court referred to supra in view of the fact that the ld. AO had accepted the entire contentions of the assessee in the remand report. We also find that the Revenue had not raised any grounds before us stating that remand report of the ld. AO is incorrect. Accordingly, the grounds raised by the Revenue are dismissed.

Order pronounced on 17/01/2022 by way of proper mentioning in the notice board.

Sd/- Sd/- (AMARJIT SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 17/01/2022 KARUNA, sr.ps

27 ITA No.450 & 449/Mum/2021 M/s. Liberal Realtors Limited Liability Partnership

Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. 6. //True Copy// BY ORDER,

(Asstt.Registrar) ITAT, Mumbai