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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAM LAL NEGI
consolidated order is being passed for the sake of convenience and brevity.
Appeal in pertaining to Assessment Year 1986-87 is being taken as the lead case. The said appeal is directed against the order of CIT(A), Mumbai dated 23.03.2015, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 22.03.1999 under section 143(3) r.w.s 148 of the Income Tax Act, 1961 (in short ‘the Act’).
In this appeal, assessee has raised the following Grounds of appeal :
“1. On facts and circumstances of the case and in law, the learned C.I.T.(A) erred in holding that there were no exceptional circumstances and hence appeal filed before the CIT (A) cannot be revived and by said action, the appeal has wrongly been dismissed without considering on merits of each ground, though, Hon'ble Tribunal has held that on abatement of Settlement Petition, matter is revert with CIT(A) to decide the case.
2. On facts and circumstances of the case and in law, the learned C.I.T.(A) erred in dismissing the appeal though Settlement Commission has abated the petition, which itself is an exceptional circumstance and which warranted revival of the appeal.
3. On facts and circumstances of the case and in law, the learned C.I.T.(A) erred in holding that there were no exceptional circumstances, where as in exceptional circumstances of the case only, the Settlement Commission has been abated the case. The circumstance under which case was abated by the Settlement Commission, is an exceptional circumstance and the proceedings pending before the Income Tax
Authorities gets revived. The CIT(A) ought to have considered these facts and the appeal should have been heard and considered on merit. The appeal is required to set aside to consider all the grounds of appeal.
4. On facts and circumstances of the case and in Iaw, the learned C.I.T.(A) erred in dismissing the appeal though Settlement Commission has abated the petition.
Once the petition is abated, the matter revert backs to the income authorities, where the matter was pending on the date of Settlement Petition was admitted. The matter is ought to revert back to CIT( A) to decide the case a fresh, as original order was passed by CIT (A) as infructuous since matter was pending on the date of order of CIT(A) with Settlement Commission.
On facts and circumstances. of the case and in law, CIT(A) erred in not considering following grounds of appeal which may be considered by the Hon'ble Tribunal or may be set aside.
i) The Assessing Officer ought to have appreciated that the very circumstances that the appellant was not fond of possessing assets level of assessed income showed that the assessing officer was wrong in making addition in the hands of the appellant. ii) The learned Officer has not given the proper opportunity to the appellant to put forward his case. The Officer erred in relying on certain papers & without verifying the facts and circumstances of the case and made additions in the hands of the appellant. The appellant ought to have been given proper opportunity and showed the documents on which he relied on. No enquiry of any kind was made by the officer. iii) The Assessing Officer had not asked the details in respect of which he had made additions nor have given any opportunity to the appellant to submit reply in respect of the items on which the additions have been made. Though the appellant himself presented before the officer. iv) The Assessing Officer has made the additions of source as well as the applications of the funds. The additions cannot be in respect of only alleged application of funds without considering the source of the same. A telescoping effect is required to be given. v) The Assessing Officer has wrongly added Rs 1,13,097/- being the rental income received for the period 1/7/84 to 30/6/85 though no rental income has been received by the appellant. The Officer has relied on documents seized which has not been shown nor any opportunity was been provided to the appellant to rebut the alleged income of rent. The appellant was not the owner of the property the said Sarvoday Nagar. vi) The Assessing Officer erred in making addition of Rs 58,65,000/- on account of pagdi from Sarvoday Nagar Chawl even though no amount has been received. In fact the said chawl was not belonged to the appellant till Sept/ November, 1987. vii) Without prejudice to above, the chawl was constructed by the original owner in 1981; hence the same can not be added during the year. viii) The Assessing Officer erred in making addition of Rs 2,71,250/ - on account of transfer charges of Sarvoday Nagar chawl even though Chawl was not belonged to the appellant. The appellant was not shown such register. ix) The assessing Officer erred in making addition of Rs 47,25,000/ - on account of estimated cost of construction of Sarvoday Nagar Chawl even though no construction has been carried out by the appellant. The chawl was not belonged to the appellant. Without prejudice to above the chawl was constructed in 1981. x) The Assessing Officer erred in making addition of Rs 2,40,000/- on account of Jai Ambe Tea Mart even though no such rental income and pagdi receipt nor given nor any cost has been incurred by the appellant during the assessment year 1986-87. xi) The Assessing Officer erred in making addition of Rs.5,00,000/- on account of investment in land in native place even though no such investment was made. The property was not belonged to the appellant and there is nothing to suggest that investment was made during the year. xii) The Assessing Officer erred in making addition of Rs 89,000/ - on account of investment in flat purchase by appellant's wife Smt.Prabhadevi B.Shukla even though Purchase agreement was dated 10/2/1986 relevant to the assessment year 1987-88 and therefore question of making addition of the said amount does not arise. xiii) The Assessing Officer erred in making addition of Rs 10,000/- on account of plot at Satarai even though no such investment was made by the appellant during the year. xiv) The Assessing Officer erred in making addition of Rs 8,00,000/- on account of investment in movable property like tractor, bus, Maruti van, motor cycle etc. even though above assets were not belonged to the appellant. The Officer has ignored the details given and has also not verified date of purchase and cost of the same. xv) The Assessing Officer erred in making addition of Rs 1.0,00,000/- on account of investment in residential building at native place even though no documents or the other evidence are available to show that the properties were belonged to the appellant and investments were made during the year. xvi) The Assessing Officer erred in making addition of Rs.5,00,000/- on account of estimated investment in brick klinn even though no such investment made by the appellant and such alleged investment were made by the appellant during the year.
6. On the facts and circumstances of the case and in law, the CIT(A) erred in not considering the ground in respect of charging interest under section 234A, 234B & 234C of the Act, though no such working of the interest was provided to the appellant. According to the appellant the interest under section 234A, 234B & 234C of the Act has not been correctly worked out.”
At the time of hearing, the learned representative for the assessee has primarily articulated the grievance contained in Ground of appeal nos. 1 to 4 above, in terms of which it is prayed that the matter be reverted back to the file of CIT(A) to decide the appeal afresh. In order to appreciate the preliminary plea of assessee, the following fact- situation is relevant. The appellant before us is an individual engaged in the business of development and construction of small rooms/shops besides earning rental income from rooms/shops in Mumbai. A search and seizure action u/s 132(1) of the Act was carried out at the office and residential premises of the assessee on 11.10.1994. As a consequence of the search, an assessment u/s 143(3) r.w.s. 147/148 of the Act dated 22.3.1999 was finalised for Assessment Year 1986-87 whereby the total income was assessed at Rs.1,41,43,020/-. Against such an assessment, assessee filed an appeal before the CIT(A) on 9.4.1999. Meanwhile, during the pendency of appeal before the CIT(A), assessee made an application before the Income Tax Settlement Commission (ITSC) on 10.8.1999, which was admitted by the ITSC on 1.11.1999. In view of the proceedings before the ITSC, the CIT(A) dismissed the appeal of assessee as infructuous vide his order dated 3.10.2002. This order of the CIT(A) has since been affirmed by the Tribunal also vide & Ors. dated 13.4.2010 whereby the appeal was dismissed for being belated as well as by approving the approach of CIT(A) of treating the appeal of assessee as infructuous on account of proceedings before the ITSC. Subsequently, it transpires that the proceedings before ITSC stood abated on account of non-compliance with the provisions of Sec. 245D(2D) of the Act by the assessee. As a consequence, the assessee approached the CIT(A) for revival of the appeal filed on 9.4.1999. By way of the impugned order, CIT(A) has refused to revive the appeal and the reasons advanced by him can be understood from the following discussion in his order :-
“2. The Hon'ble Settlement Commission has subsequently decided to abate the proceedings in respect to the captioned year on account of non-compliance of the appellant with the provisions of section 245D(2D) of the Income Tax Act. In view of the direction of the ITAT for the captioned year that under exceptional circumstances if no orders are passed by the Settlement Commission the matter would revive. The appellant has not made out a case as to what are the “exceptional circumstances” as stated by the Hon'ble ITAT. Hence, it has to be held that in respect of the appeal for the captioned year, the appeal filed before the CIT(A) cannot be revived and has not revived. The order of assessment is hereby sustained.”
5. Before us, the learned representative for the assessee has pointed out that the CIT(A) has wrongly refused to revive the appeal of the assessee because on abatement of the proceedings before the Settlement Commission, the earlier proceedings before the CIT(A) get automatically revived. It has also been pointed out that the CIT(A) has misunderstood the order of Tribunal dated 13.4.2010 (supra) in order to deny the revival of appeal.
The ld. CIT-DR has not disputed the factual matrix, but has referred to the following discussion in the order of Tribunal dated 13.4.2010 (supra) :-
“2. ......................... Even otherwise we are of the opinion that the Orders passed by the CIT(A) are in accordance with law. When applications filed by the assessee are admitted by the Settlement Commission, exclusive jurisdiction vests with the Settlement Commission and hence appeals filed before the CIT(A) automatically become infructuous. Under exceptional circumstances, if no orders passed by the Settlement Commission, appeals or proceedings pending before the Income Tax authorities automatically gets revived in which event the assessee has to approach the Commissioner of Income Tax (Appeals). In other words, appeals cannot be filed before the Income Tax Appellate Tribunal and, instead, the assessee has to approach the CIT(A) for appropriate remedy.”
According to the ld. CIT-DR, the CIT(A) has rightly noted that no exceptional circumstance has been made out by the assessee to justify revival of appeal and that the said approach of the CIT(A) was consistent with the aforesaid order of the Tribunal.
We have carefully considered the rival submissions. In the present case, in terms of the fact-situation noted by the CIT(A), application of the assessee before the ITSC abated on account of non- compliance with the requirement of Sec. 245D(2D) of the Act which envisages payment of additional tax on the income disclosed in the application and interest thereon before the application can be proceeded with. Be that as it may, for the present purpose, it is not relevant as to why the application of the assessee before the ITSC abated; what is of relevance is the effect of abatement of proceedings before the ITSC which, so far as it is relevant for our purpose, is governed by sub-section (2) of Sec. 245HA of the Act, which reads as under :-
“(2) Where a proceeding before the Settlement Commission abates, the Assessing Officer, or, as the case may be, any other income- tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made.”
The aforesaid provision clearly points out that once the proceeding before the ITSC abates, the Assessing Officer or any other income-tax authority before whom the proceeding at the time of making of application was pending, shall dispose of the case in accordance with the provisions of the Act as if no application u/s 245C had been made. In the context of the present case, it is clear that after abatement of the proceeding before the Settlement Commission, the CIT(A) was required to revive and dispose of the appeal of assessee, as if no application was made to ITSC by the assessee u/s 245C of the Act; and, the only caveat is that the proceeding before the CIT(A) ought to have been pending at the time when the application was made before the ITSC. The phraseology of the said section is quite clear and does not obligate the CIT(A) to look for any “exceptional circumstances” before reviving the appeal of assessee and disposing it off in accordance with the law.
Therefore, in our considered opinion, the impugned approach of the CIT(A) is explicitly contrary to the mandate of Sec. 245HA(2) of the Act and, therefore, it deserves to be set-aside. Even otherwise, we find that the CIT(A) has mis-directed himself in applying the wordings of order of the Tribunal dated 13.4.2010 (supra) to mean that the appeal could be revived only “Under exceptional circumstances”. In this context, we may refer to the relevant portion of the order of Tribunal dated 13.4.2010 (supra) which we have extracted in the earlier part of this order. It is quite clear that the words “Under exceptional circumstances” used by our coordinate Bench is in relation to passing or non-passing of the order by the Settlement Commission and not in relation to the revival of proceeding before the income-tax authorities which, even according to our coordinate Bench, gets revived “automatically”. Therefore, on the point of law as manifested by Sec.245HA(2) of the Act as well as on the reading of the order of Tribunal dated 13.4.2010 (supra), we find that the CIT(A) has mis- directed himself in refusing the revival of appeal after abatement of proceeding before the ITSC.
Under these circumstances, we, therefore, deem it fit and proper to accept the preliminary plea of assessee for remanding the matter back to the file of CIT(A) for consideration afresh since he has not passed any order on the merits of the dispute before him. As a consequence, we set-aside the impugned order of CIT(A) and restore the matter back to his file for a decision afresh in accordance with law. We may clarify here that our decision to remand the matter back to the file of CIT(A) is no reflection on the merits of the assessment, which shall be decided by the CIT(A) as per law.
In the result, appeal of assessee for Assessment Year 1986-87 is allowed as above.
Insofar as appeals for Assessment Years 1991-92 to 1993-1994 are concerned, as the facts and circumstances in the said appeals are pari materia to those considered by us in for Assessment Year 1986-87, our decision therein shall apply mutatis mutandis to the said appeals also.
Resultantly, the captioned appeals of the assessee are allowed as above.
The above decision was pronounced in the open court in the presence of both the parties at the conclusion of hearing on 28th February, 2017.