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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI B.R.BASKARAN (AM) & SHRI RAM LAL NEGI (JM)
The assessee has filed for the Asst. year 1992-93 against order dated 20/01/2012 passed by the Ld. CIT(Appeals)-40 Mumbai whereby the Ld. CIT(A) partly allowed the assessment order passed by the DCIT, Central Circle 23, Mumbai passed u/s 144 r.w section 254 of the Income Tax Act,1961( in short ‘the Act’) and ITA No. 6164/M/2012 for the Asst. year 1992-93 against order 9.8.2012 passed by the CIT(A)-40, Mumbai, u/s 154 of the Act. Since both the appeals pertain to the same assessee for the same assessment year, the same were heard together and are being disposed of by this common order for the sake of convenience.
ITA 1889/M/2012 for A.Y. 1992-93
Brief facts of the case are that the appellant/assessee is the relative of Late Shri. Harshad S. Mehta involved in the securities scam. A search and seizure action u/s 132 of the Act was carried out at the premises of the appellant/assessee on 27/09/1990. During the course of search a large number of documents were seized. A second search and seizure operation was also carried out on 28/02/1992. During the course of second search also a large number of documents and valuables were seized. Since the appellant/ assessee had not filed her return of income for the assessment year under consideration within a prescribed time, assessment proceedings were carried out pursuant to the search action. Ultimately, assessment was completed u/s 144 of the Act on 28/02/1995 determining the total income at Rs. 27,63,93,984/-.
3. The assessee challenged the assessment order before the Ld. CIT(A). The CIT(A) vide order dated 19/03/2003 granted only partial relief to the assessee. Feeling aggrieved by the said order, the assessee filed second appeal before the ITAT. The ITAT after hearing the parties considered it fit to set aside the matter back to the file of the AO to pass assessment order afresh. In compliance of order dated 31/8/2005 passed by the ITAT in the assessing officer passed assessment order dated 22.12.2006, determining the total income of the assessee at Rs. 29,53,91,212/-. The said order was further challenged by the assessee and the order under challenge has been passed by the Ld. CIT(A) in the second round of appeal by the assessee. The assessee has challenged the impugned order on the following effective grounds:-
“1. The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in not appreciating that the Assessing Officer has not complied with the principles of natural justice either during the course of the assessment proceedings or during the course of the remand proceedings.
2. The Learned Commissioner of Income-tax (Appeals) has erred in law and in facts in not determining the income based on the final books of account thereby confirming the manner of determination of income by the Assessing Officer. The Learned Commissioner of Income-tax (Appeals) ought to have accepted book results shown by the appellant.
3. The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in not appreciating that the correct quantity of purchase and sale of shares should be adopted while determining the income of the assessee.
4. The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in upholding the working of unexplained investments relying on the various sources of information.
5. The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in granting partial credit in respect of the purchases made by the appellant and rejecting the balance part on the ground that the evidences thereof were not filed during the original assessment proceedings but only during the set aside proceedings.
6. The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in upholding the determination of unaccounted investment as per Annexure A-1 of the assessment order amounting to Rs. 24,85,56,416/-on the basis of information collected from various companies allegedly showing the shareholding of the appellant without appreciating that the copies of the said letters/information was neither provided to the appellant during assessment proceedings nor during remand proceedings.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the value of the unexplained investment based on the average of the market rates as on 1.4.1992
without appreciating that the value of investment ought to have been determined at the cost of acquisition based on the dates of purchase.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the income from dividend and interest at Rs.67,41,033/-.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the addition of Rs. 29,343/-0n account of unexplained receipts.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the addition of Rs. 2,52,252/-on account of profit from sunrise enterprise.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the disallowance of deduction on account of interest expenditure claimed by the appellant.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in not granting set off of addition on account of source against the application of such source based on telescoping theory.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in confirming the levy of interest u/s 234A and 234B of the Act.
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in not appreciating that the provisions of s.220(2) of the Act cannot be invoked in case of a notified entity.”
4. At the very outset, the Ld. Counsel for the assessee submitted that the grounds raised
in the present appeal are identical to the grounds raised in the case of Hitesh S. Mehta, for the assessment year 1992-93 decided on 01.5.2013 by the Mumbai Tribunal. Therefore, the present appeal is squarely covered by the order passed by the ITAT Mumbai in case Hitesh S. Mehta (supra). On the other hand the Ld. Departmental representative (DR) relying on the findings of the authority below, submitted that there is no infirmity in the order passed by the Ld. Ld. CIT(A).
5. We notice that except ground No 8 and 14 of the present appeal, all the grounds are identical to the grounds raised by the assessee in the case of Hitesh S. Mehta (supra). The coordinate Bench after hearing the rival submissions has set aside the impugned order and restored all the issues to the file of the AO to pass assessment de novo after affording reasonable opportunity of being heard to the assessee, observing as under:
“4. We have heard the rival submissions and consider them carefully. We have also perused the copies of the order of the tribunal in case of Smt. Pratima Metha and the assessment passed in first round.
After considering all the relevant material, we found that the matter should go back to the file of Assessing Officer to pass afresh order. It is seen that for rejecting the books of account, the AO has not given any valid reasons as no specific defect has been pointed out in the books of account, therefore in our view the Assessing Officer should go through the books for determining the income on the basis of books of accounts. The Assessing Officer has to bring on record specific evidence or defect to prove falsity of books of account is no falsity has been proved in the assessment order passed by the AO. Besides this the department has to provide all the details and material on which basis the addition have been made earlier. If such material is disputed by the assessee then in our view correctness of such material has to be examined as per provision of law. We are not convinced with the argument of Ld. DR that assessee can collect information from parties from where Assessing Officer has obtained the copies on which basis the addition have been made. Therefore The assessing officer is directed to provide the copies of all
information on which basis, the AO wanted to made additions in the hands of the assessee. If the AO does not provide the material then in our view addition cannot be made. In view of above facts and circumstances, we set aside order of the authorities below and restore the issue to the file of the assessing officer to pass assessment de novo after affording reasonable opportunity of being heard to the assessee and as per observations of hours made in the order is above. We order accordingly.
Since the coordinate Bench of the Tribunal has restored the identical issues to the file of the AO for fresh adjudication in the case of Harsh S. Metha (supra), we, respectfully following the view taken by the coordinate bench, restore all the grounds except ground number 8 and 14 of the present appeal to the file of AO to pass assessment order afresh after affording reasonable opportunity of being heard to the assessee. Accordingly, ground Nos. 1 to7 and 9 to 13 of the appeal are allowed for statistical purpose.
7. As regards ground No 8 we find no merit in the contention of the assessee that the learned CIT (A) has erred in law and in facts in confirming the income from dividend and interest at Rs. 6 741033/–. As pointed out by the Ld. CIT(A) the appellant/assessee has produced the books of account before the assessing officer in set-aside proceedings and the AO after going through the same in the light of the contention of the assessee determined the dividend and interest income in question. However, no evidence to rebut the findings of the AO was produced either before the Ld. CIT(A) or before us. Therefore, we have no reason to reverse the finding of the CIT(A). Hence we uphold the findings of Ld. CIT(A) and dismiss this ground of appeal of the assessee.
8. So far as ground number 14 is concerned since all the grounds except ground No. 8 are being set aside to the file of AO for fresh adjudication, the AO may examine the same in accordance with law in the set aside proceedings.
ITA 6164/M/2012 for A.Y. 1992-93
This appeal has been filed by the assessee against order dated 09.8.2012 passed by the CIT(A)-40 Mumbai whereby the Ld. CIT(A) rejecting the objection raised by the assessee, directed the AO to enhance the income of the assessee by Rs. 42,49,266/- for the reason that M/s Vyas & Vyas, C.A., appointed by the Special Court to audit the books of account as on 08.6.92 in the case of Harshad S. Mehta and other notified entities including the present appellant/assessee, has pointed out the difference between the balance of parties in books of account of late Harshad S. Mehta and the books of account of the respective notified entities.
2. The assessee has challenged the impugned order on the following effective grounds:-
The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in making the addition of Rs. 42,49,266/- and thereby enhancing the assessment vide the impugned order u/s 154 of the Act which is unsustainable.
2. The Learned Commissioner of Income-Tax (Appeals) has erred in law and in facts in determining the alleged difference between the two accounts at Rs. 42,49,266/- and treating the same as income of the appellant.”
The Ld. Counsel for the assessee submitted that the issue raised in the present case is identical to the issue raised in case of the appellant’s mother- in-law, Smt. Rasila S. Mehta in dated 07.6.2013 for the A. Y. 1992-93 and the Mumbai tribunal has remanded the identical issue to the record of AO for consideration and adjudication.
In view of the fact that the coordinate Bench has remanded back the identical issue to the file of the AO for fresh adjudication, we follow the view taken by the coordinate Bench in the case of Smt. Rasila S. Mehta (supra) and set aside the issue urged in the present appeal against rectification order passed by the Ld. CIT(A) to the file of AO for consideration and fresh adjudication after affording reasonable opportunity of being heard to the assessee. In the result, the first appeal is partly allowed and the second appeal is allowed for statistical purposes.