THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), PANAJI vs. SHRI RAHOOL SHANU PAI PANANDIKER, MARGAO

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ITA 292/PAN/2019Status: DisposedITAT Panaji21 November 2022AY 2011-125 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal reversed the CIT(A)'s orders, holding that the CIT(A) erred in deleting additions without verifying refund details with the Assessing Officer and by admitting additional evidence in violation of Rule 46A. The Tribunal accepted the Revenue's appeals.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting additions made to the assessees' income. The CIT(A) had allowed the appeal based on the assessees' submission that amounts received were refunds due to the annulment of an MOU for share sale.

What were the issues?

Whether the CIT(A) erred in deleting additions by admitting additional evidence without proper verification by the AO and in contravention of Rule 46A.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 251(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI ‘SMC’ BENCH : PANAJI

Before: SHRI SATBEER SINGH GODARA

Hearing: 17.11.2022Pronounced: 21.11.2022

Heard together (2 matters)

ITA.No.291/PAN/2019
ITA.No.292/PAN/2019

Read from the judgment's own cause title. This page is filed under one of them.

ORDER These two Revenue’s appeals involving the instant as many assessees Shri Shri Shanu Atmaram Pai Panandiker and Shri Rahool Shanu Pai Panandiker, for assessment year 2011-12, arise against the CIT(A), Panaji-1, separate orders dated 21.08.2019 passed in case No.CIT(A), PNJ-1/10143/2018-19 and in case No. CIT(A), PNJ-1/10129/2018-19, respectively in proceedings u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short "the Act").

1.

ITA.Nos.291 & 292/Pan/2019 Sh Shanu Atmaram Pai Panandiker And Sh Rahool Shanu Pai Panandiker, Margao, Goa. 2. Heard both the parties. Case files perused.

3.

The Revenue pleads the following identical substantive grounds in both these appeals :

1.

“The order of the learned CIT(A) is opposed to law and facts of the case.

2.

The Ld. CIT(A) has erred in appreciating the assessment made u/s. 143(3) r.w.s. 147 in assessing the income as Income from Other source as there is no transfer of shares and only advances are received. 3. The CIT(A) has erred in allowing the appeal in favor of the assessee holding that the money in question has been refunded by the assessee by terminating the MOU for Sale of shares without verifying whether the said amounts has actually been returned or not. 4. The Ld.CIT(A) has erred in allowing the appeal of the assessee by admitting additional evidence in contravention to Rule 46A and without granting opportunity to AO to give comments/ counter the same. 5. The Ld.CIT(A) has failed to appreciate that the contention of the assessee that the amount is merely an advance is nothing but deferral of revenue recognition in order to avoid and evade taxation. 6. The Ld.CIT(A) has failed to appreciate the facts that the complex web of agreement was drawn by the assessee only to disguise the consideration received for the iron ore extracted ITA.Nos.291 & 292/Pan/2019 Sh Shanu Atmaram Pai Panandiker And Sh Rahool Shanu Pai Panandiker, Margao, Goa. and sold from the mine which is evidenced by the entries in the respective bank accounts.

7.

The Ld.CIT(A) has failed to appreciate the fact that other two legal heirs i.e. Shr Vishwanath Panandikar and Shri Kamlesh Panandikar, had shown the receipts received on account of the agreement in their return of income for AY 2011-12 and AY 2012-13 as Capital Gain since during the year under consideration for AY 2011-12 and AY 2012-13 there were actual transfer of shares.

8.

Considering the facts and circumstances of the case order of the Ld.CIT(A) is not acceptable since prosecution complaint is filed by the Department and the same is pen~· · Court and accordingly the case is covered in the exception as prescribed in Pro Para-10(f)of the CBDT's Circular No.3/2018 dated 11.07.2018 and subsequent amendments vide Circular No.18/2019 dated 20.08.2018.

9.

The appellant craves to leave, add, amend or alter any of the grounds of appeal either before or at the time of hearing.”

4. I now advert to the Revenue’s sole identical sole substantive grievance raised during the course of hearing that the CIT(A) has erred in law and on facts in deleting income from other sources additions of Rs.5 lakhs and Rs.20 lakhs, case-wise respectively, thereby admitting additional evidence in violation of Rule 46A of I.T. Rules.

ITA.Nos.291 & 292/Pan/2019 Sh Shanu Atmaram Pai Panandiker And Sh Rahool Shanu Pai Panandiker, Margao, Goa. 4.1. It emerges during the course of hearing that the Revenue’s foregoing identical issue of violation of additional evidence procedure needs to be addressed. I find from a perusal of the CIT(A) detailed discussion(s) in paragraphs 6 to 9 in both these appeals that the assessees had filed their written submissions dated 09.08.2019, case-wise, respectively that the impugned sums stood refunded since the MOU in question regarding mining operations stood annulled.

4.2. Learned authorised representative could hardly dispute that assessees’ bank details to the very effect had never been sent to the Assessing Officer for his factual verification. It is rather noted that the CIT(A) has directed the Assessing Officer to delete these additions after verifying the refund of the foregoing sums, which is nowhere sustainable in law as per the necessary amendment in Section 251(1)(a) of the Act w.e.f. 01.06.2001 omitting the clinching statutory expression “or he may set aside” . The fact further remains that these assessees’ had indeed filed additional submissions before the CIT(A) which remain to be factually verified. Faced with the situation, I reverse the CIT(A)’s orders in both these cases in principle and accept the Revenue’s instant twin appeals for statistical purposes in very terms. It is made clear that assessee shall be at liberty to file on record all necessary evidences in consequential proceedings before Assessing Officer as per law. Ordered accordingly.

ITA.Nos.291 & 292/Pan/2019 Sh Shanu Atmaram Pai Panandiker And Sh Rahool Shanu Pai Panandiker, Margao, Goa. 5. No other ground or arguments has been raised during the course of hearing.

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