MUKESH CHOKSI,MUMBAI vs. ACIT CEN CIR 46, MUMBAI

The present appeal filed by the assessee is directed against the order passed by the CIT(A)-22, Mumbai, dated 22.12.2012, which in turn arises from the order passed by the A.O under Sec.271(1)(c) of the Income Tax Act, 1961 (for short ‘Act’), dated 30.05.2014 for A.Y. 2011-12.

Search and seizure proceedings under Sec.132 of the Act were conducted in the case of M/s Mahasagar Securities Pvt. Ltd (now known as M/s Alag Securities Pvt. Ltd.) and its related group entities on 25.11.2009. As the assessee was a director in the aforesaid company, therefore, he was also covered under the aforesaid search action conducted under Sec.132(1). 3. Subsequently, the assessee filed his return of income for A.Y. 2011-12, declaring an income of Rs.1,58,000/-. In the course of the assessment proceedings, it was observed by the A.O, that the assessee had failed to account for certain income/credits appearing in his name P a g e | Mr. Mukesh Choksi Vs. The ACIT,CC-46 as per ‘Form 26AS’ for the year under consideration viz. (i) income from house property:Rs.7,56,550/-; and (ii) income from other sources: Rs.35,000/-. On being called upon to put forth an explanation, it was submitted by the assessee that he was in receipt of only ¼ share of the aforesaid rental income of Rs.7,56,550/-. As regards the income from ‘other sources’ of Rs.35,000/-, the same was admitted by the assessee. However, the A.O not being persuaded to accept the claim of the assessee that his entitlement in the rental income was restricted only to the extent of ¼ share, therein rejected the same. Resultantly, the A.O treating the entire rental income of Rs.7,56,550/- as the income of the assessee, after allowing 30% standard deduction under Sec. 24(a) of the Act, assessed the balance amount of Rs.5,29,585/- as the income of the assessee under the head ‘house property’. Also, the A.O made an addition of Rs.35,000/- under the head income from ‘other sources’. On the basis of his aforesaid observations the A.O assessed the income of the assessee at Rs.7,22,590/-.

Aggrieved, the assessee assailed the assessment order on certain issues before the CIT(A). However, the CIT(A) after necessary deliberations upheld the impugned additions made by the A.O.

After receiving the order of the CIT(A), the A.O called upon the assessee to explain as to why penalty under Sec.271(1)(c) may not be imposed on him as regards the additions/disallowances made by the A.O. As the reply of the assessee did not find favour with the A.O, therefore, he imposed a penalty of Rs.48,330/- under Sec.271(1)(c) of the Act. On appeal, the aforesaid penalty imposed by the A.O under Sec.271(1)(c) was upheld by the CIT(A).

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. On a perusal of the records, we find, that the assessee being aggrieved with the order passed by the CIT(A) in his quantum appeal, has carried the matter before the Tribunal. It was observed by the Tribunal that the lower authorities had made/upheld certain additions/disallowances viz. (i) disallowance of interest on housing loan: Rs.10,07,688/-; (ii) disallowance of the assesses claim of municipal taxes: Rs.1,15,601/-; and (iii) disallowance of the assesses claim for deduction of repayment of housing loan: Rs.62,151/-. It was noticed by the Tribunal that the aforesaid claim for deduction was declined by the A.O, for the reason, that P a g e | Mr. Mukesh Choksi Vs. The ACIT,CC-46 the assessee had failed to furnish the requisite documents in support of his aforesaid claim for deduction before the lower authorities. In the backdrop of the aforesaid facts, the Tribunal had in all fairness restored the matter to the file of the A.O for afresh adjudication, after considering the aforesaid documents and allowing an opportunity of being heard to the assessee. In sum and substance, the Tribunal vide its order passed in the case of the assessee viz. Mr. Mukesh M. Choksi Vs. The ACIT, CC-46, Mumbai [ITA No.4163/Mum/2018, dated 13.11.2009] for A.Y. 2011-12, had restored the quantum appeal to the file of the A.O for fresh adjudication after considering the documents which were filed by the assessee in the course of the appellate proceedings.

In the course of the hearing of the appeal before us, it was submitted by the ld. Authorized Representatives (for short ‘A.R’) for the assessee, that the quantum appeal of the assessee for the year under consideration had been restored by the Tribunal to the file of the A.O for fresh adjudication. In support of his aforesaid claim the ld. A.R has placed on record the copy of the order of the Tribunal passed in the case of the assessee i.e Mr. Mukesh M. Choksi Vs. The ACIT, CC-46, Mumbai [ITA No.4163/Mum/2018, dated 13.11.2009] for A.Y. 2011-12. On the basis of the aforesaid facts, it was averred by the ld. A.R that now when the quantum assessment had been restored to the file of the A.O, therefore, the aforesaid penalty proceedings may also be restored to his file for fresh adjudication.

Per contra, the ld. Departmental Representative (for short ‘D.R’) did not controvert the aforesaid factual position.

We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, the Tribunal while disposing off the quantum appeal of the assessee in Mr. Mukesh M. Choksi Vs. The ACIT, CC- 46, Mumbai [ITA No.4163/Mum/2018, dated 13.11.2009] for A.Y. 2011-12, had restored the matter to the file of the A.O for the purpose of re-adjudicating the core issue, in terms of certain specific directions. In our considered view, as the quantum appeal in itself has been restored by the Tribunal to the file of the A.O for fresh adjudication, therefore, the present appeal of the assessee against the order passed under Sec.271(1)(c) being inextricably interlinked, or in fact P a g e | Mr. Mukesh Choksi Vs. The ACIT,CC-46 interwoven, has to meet a similar fate. Accordingly, we restore the matter to the file of the A.O, with a direction to dispose off the same after re-adjudicating the quantum issue.

Resultantly, the appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.