Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri G S Pannu & Shri Ravish Sood
O R D E R Per G S Pannu, Accountant Member
This appeal is directed against the order of the CIT(A)-33, Mumbai, dated 31.10.2013, which in turn has arisen out of the order passed by the Assessing Officer u/s. 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) relating to A.Y. 2009-10.
The assessee has raised the following Grounds of appeal:
“1. The Learned C.I.T. (A) erred in confirming the disallowance of expenses at 25% amounting to Rs. 3,33,295/- without any basis or valid reason whatsoever.
2. The Learned C.I.T. (A) erred in law and in facts in stating that the addition on a/c of unexplained investments should be assessed in an earlier year when such asstt. year was not before the CIT(A) for consideration./ 3. The Learned C.I.T. (A) erred in directing the A.O. to tax amount of Rs.36,40,000/- in the asstt. year 2008-09 when there was no appeal for that year is pending before him.
The order passed by the learned C.I.T. (A) is bad in law.”
Although assessee has raised multiple grounds of appeal but essentially substantive dispute is manifested in Ground of appeal no.2 and 3 above, which arises from the direction of the CIT(A) to tax an amount of ` 36,40,000/- as unexplained income in A.Y. 2008-09. The basic contention of the appellant is that it was beyond the jurisdiction of the CIT(A) to have given such a direction because the proceedings for A.Y. 2008-09 were not open before him, in as much as the assessment year before the CIT(A) was the instant A.Y. 2009-10.
3. In order to appreciate the said controversy, following discussion is relevant. The appellant before us is an individual in whose case an AIR information was received regarding sale of immovable property for which ` 36,40,000/- has been added to the returned income as unexplained investments by the Assessing Officer. Notably, the assessment was completed by the Assessing Officer ex-parte u/s. 144, after noticing non-appearance by the assessee inspite of issuance of notice of hearing. When the matter travelled to the CIT(A) varied submissions and explanations were furnished including such documents which were not filed before the Assessing Officer. The CIT(A) called for comments from the Assessing Officer and after considering the same he has proceeded to dispose of the appeal of the assessee. Be that as it may, in the ultimate analysis, the CIT(A) took into consideration the report of the Assessing Officer, which showed that assessee had acquired a leasehold property vide registered document No.1367/2008 dated 31.01.2008, which was sold vide registered document No.5803/2008 dated 17.06.2008. The assessee had, inter-alia, claimed before the CIT(A) that the transaction did not belong to her and that she had merely received commission of ` 1,75,000/- for arranging the said deal. An alternative plea was also made that the dates of transaction show that the investment pertained to an earlier year and not the previous year relevant to the assessment year under consideration. The CIT(A), in his operative portion of his order, held as under:
“… The acquisition and transfer has taken place in a span of less than 6 months. AO was, therefore, right in treating the amount of investment in this transaction at Rs 36,40,000/-. However, as rightly pointed out by the AR of the appellant the income from unexplained investment needs to be taxed in FY 2007-08 relevant to AY 2008-09. The action of the AO is modified to that extent with a direction to include the said income in AY 2008-09 instead of AY 2009-10. This ground is decided accordingly. The ground raised by the appellant is dismissed subject to above directions.”
4. In terms of the above discussion, it follows that the CIT(A) deleted the addition for the impugned year with a direction that the same income is liable to be included in earlier assessment year i.e. 2008-09.
Before us, the grievance articulated by the learned representative is that the CIT(A) ought to have confined himself to decide the validity of the addition in the instant assessment year and could not have directed the Assessing Officer to include such income for taxation in A.Y. 2008-09, which was not before him. For the said proposition reliance has been placed on various decisions, inter alia, Mathurdas B Mohta vs. CIT (1965) 56 ITR 269 (Bom); Ivan Singh vs. ACIT, order dated 17.05.2013 in for AY 2008-09; AICT vs. Ivan Singh in Tax Appeal 28 of 2013 (Bom); ITO vs. Murlidhar Bhagwandas (1964) 52 ITR 335 (SC).
On the other hand, on this aspect, learned DR appearing for the Revenue has defended the decision of the CIT(A) by placing reliance thereon and contended that assessee had herself admitted that the investment belonged to an earlier year and since it was unexplained, no mistake was made by the CIT(A) in directing the assessment of such income in the relevant year.
We have carefully considered the rival submissions. The dispute before us lies in narrow compass in as much as whether the CIT(A) was competent to direct that a particular income was assessable in an assessment year which was not before him. Pertinently, in the instant case, the assessment which had come up for challenge before the CIT(A) was for A.Y. 2009-10 in which the Assessing Officer has sought to tax a sum of ` 36,40,000/- as unexplained investment in a transaction of immovable property reported as per AIR information. Apart from other defences, one of the points raised by the assessee before the CIT(A) was that even if the investment was to be treated as unexplained, the year of taxability was not correct and, therefore, no addition was maintainable in this year. The assessee supported this proposition by pointing out that the investment, as being reported in the AIR, was indeed in the earlier assessment year corresponding to the date of a purported date of acquisition i.e. 31.01.2008. Ostensibly, the issue before the CIT(A) was as to whether the said unexplained investment could be taxed in the instant assessment year, which covers the previous year from 01.04.2008 to 31.03.2009. The CIT(A) took cognizance of the aforesaid fact situation and found it fit to set aside the action of the Assessing Officer in assessing the same in the instant year. However, he sought to modify the assessment by directing that said income be included for assessment in A.Y. 2008-09, a year which was not before him. The controversy is directly settled by the Hon’ble Supreme Court in the case of ITO vs. Murlidhar Bhagwandas (52 ITR 335), which lays down a principle that the jurisdiction of the CIT(A) is confined to the assessment order for the particular year that was under appeal before him. The CIT(A) is competent to issue directions which are necessary to dispose of the appeal in respect of the year of assessment which is before him and it could not extend to any other assessment year. The learned representative for the assessee pointed out that similar position has been upheld by the Hon’ble Bombay High Court also in the case of Mathurdas B Mohta (supra). In the case before the Hon’ble Bombay High Court, the issue was relating to capital gains arising on sale of a textile mill on 25.10.1946. The Assessing Officer included the capital gains in the total income of the assessee for A.Y. 1947-48 and the Appellate Commissioner while dealing with assessee’s appeal for A.Y. 1947-48 held that the capital gain was not assessable in the A.Y. 1947-48. After recording so, the Appellate Commissioner gave a direction that the said capital gain was taxable in A.Y. 1948-49. The direction so issued by the Commissioner was held to be untenable as according to the Hon’ble Bombay High Court, the jurisdiction of the Appellate Commissioner was strictly confined to the assessment of the particular year of appeal before him. The facts in the instant case stand on similar footing in as much as it was competent for the CIT(A) to decide whether the impugned amount of investment was assessable in the instant year or not; but, it was not within his jurisdiction to direct in the instant appeal the appropriate year in which the income is liable to be taxed. Therefore, considering the ratio of Hon’ble Supreme Court in the case of Murlidhar Bhagwandas (supra), which has been further enumerated by Hon’ble Bombay High Court in the case of Mathurdas B Mohta (supra), we hold that the direction of the Commissioner saying that the amount of ` 36,40,000/- is assessable in A.Y. 2008-09 is misconceived and beyond his jurisdiction. We hold so. Thus, on this aspect the assessee succeeds.
The only other issue raised by the assessee is against the action of the Assessing Officer in making an adhoc disallowance of 25% out of various expenses, which resulted in disallowance of ` 3,33,295/-. On this aspect the only plea of the learned representative is that the disallowance made @25% is excessive and that restricting the disallowance to 10% would be sufficient. We find that the disallowance made by the Assessing Officer is on a purely adhoc basis, ostensibly, noticing the absence of the assessee during the assessment proceedings. Be that as it may and in the absence of any adverse history on this aspect, we direct the Assessing Officer to restrict the disallowance to 10% of the expenses and allow necessary relief accordingly. Thus, on this aspect assessee partly succeeds.
In the result, assessee’s appeal is partly allowed, as above.
Order pronounced in the open court on this day of 15th June 2018.