SHRI. RAJENDRA GHAG, MUMBAI v. Pr. CIT-20, MUMBAI

ITA 3110/MUM/2016 | 2011-2012
Pronouncement Date: 06-10-2016

Appeal Details

RSA Number 311019914 RSA 2016
Assessee PAN AEUPG9093B
Bench Mumbai
Appeal Number ITA 3110/MUM/2016
Duration Of Justice 5 month(s) 4 day(s)
Appellant SHRI. RAJENDRA GHAG, MUMBAI
Respondent Pr. CIT-20, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Assessee
Bench Allotted D
Tribunal Order Date 06-10-2016
Date Of Final Hearing 26-07-2016
Next Hearing Date 26-07-2016
Assessment Year 2011-2012
Appeal Filed On 02-05-2016
Judgment Text
D IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI SANJAY GARG JUDICIAL MEMBER AND SHRI ASHWANI TANEJA ACCOUNTANT MEMBER ITA NO.3110/MUM/2016 ASSESSMENT YEAR: 2011-12 SHRI RAJENDRA GHAG 105 B-WIN SEA FLAMA DOSTI FLAMINGO T.J. ROAD SEWREE(W) MUMBAI-400015 / VS. PR. CIT - 20 PIRAMAL CHAMBERS LALBAUGH MUMBAI ( APPELLANT ) ( REVENUE ) P.A . NO . AEUPG9093B APPELLANT BY SHRI GIRISH DAVE & SMT. MAKHIJA (AR) REVENUE BY SHRI SUNIL K. JHA ( CIT - DR) ! ' # $% / DATE OF HEARING : 06/10/2016 # $% / DATE OF ORDER: 06/10/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX MUMBAI-20 {(IN SHORT CIT} DATED 28.03.2016 U/S 263 FOR THE ASSE SSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS: RAJENDRA GHAG 2 1.THE LEARNED PR. CIT HAS ERRED IN HOLDING THAT TH E ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) WAS ERRONEOUS & PREJUDICIAL TO THE INTEREST OF REVENUE. WITHOUT PREJUDICE TO THE ABOVE 2. THE APPELLANT SUBMITS THAT LEARNED PR. CIT HAS E RRED IN NOT APPRECIATING THAT ASSESSING OFFICER WHILE COMPL ETING THE ASSESSMENT HAS TAKEN ONE OF THE POSSIBLE VIEWS WHICH IS DULY SUPPORTED BY HIGHER JUDICIAL FORUMS INCLUDING JURISDICTIONAL HIGH COURT & THEREFORE THE ORDER PASSED BY THE ASSESSING OFFICER CAN NEITHER B E HELD AS ERRONEOUS NOR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER AND /OR VARY ANY OF THE GROUNDS 3.AT THE TIME OR BEFORE THE HEARING OF THIS APPEAL. 4. THE APPELLANT THEREFORE PRAYS THAT ORDER PASSED BY THE PR. CIT MAY PLEASE BE SET ASIDE. 2. DURING THE COURSE OF HEARING ARGUMENTS WERE MADE B Y SHRI GIRISH DAVE & SMT. MAKHIJA AUTHORISED REPRESE NTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI SUNIL K. JHA DEPARTMENTAL REPRESENTATIVE (CIT-DR) ON BEHALF OF T HE REVENUE. 3. DURING THE COURSE OF HEARING LD. SENIOR COUNSEL VEHEMENTLY ARGUED THE CASE ON BEHALF OF THE ASSESSE E AND BROUGHT TO OUR NOTICE THAT IN THIS CASE AO HAD EXAM INED ALL THE ASPECTS DURING COURSE OF ORIGINAL ASSESSMENT PR OCEEDINGS AND THEREAFTER THE ORIGINAL ASSESSMENT ORDER U/S 14 3(3) DATED 18.03.2014 WAS PASSED BY THE AO. LD. CIT HAS INDEED OVER LOOKED THE FACT THAT ALL THE DETAILS AND EVIDENCES IN REGARD TO THE ISSUE RAISED BY HIM HAVE ALREADY BEEN CONSIDERE D BY THE AO. FURTHER THE ORDER PASSED BY THE LD. CIT MAY CR EATE CONFUSION IN THE MIND OF THE AO AND IT MAY LEAD TO ASSESSMENT OF SAME INCOME TWICE I.E. IN THE IMPUGNED YEAR AS W ELL AS IN THE SUBSEQUENT YEAR. UNDER THESE CIRCUMSTANCES IT WAS RAJENDRA GHAG 3 REQUESTED THAT IMPUGNED ORDER OF LD. CIT PASSED U/S 263 SHOULD BE QUASHED. IT WAS ALTERNATIVELY PRAYED THAT TO RENDER JUSTICE TO BOTH THE PARTIES THE DIRECTIONS GIVEN B Y LD CIT SHOULD BE SUITABLY MODIFIED SO AS TO AVOID DOUBLE T AXATION. 3.1. PER CONTRA LD. DR RELIED UPON THE ORDERS OF THE L OWER AUTHORITIES. IT WAS FAIRLY SUBMITTED BY THE LD. DR THAT IT IS NOT THE INTENTION OF THE REVENUE TO MAKE DOUBLE TAXATIO N OF THE SAME INCOME. 3.2. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES AND ALSO HEARD SUBMISSIONS MADE BY LD. SENIOR COUNSEL OF THE ASSESSEE AS WELL AS LD. CIT-DR APPEA RING ON BEHALF OF THE REVENUE. 3.3. THE BRIEF BACKGROUND OF THIS ISSUE IS THAT THE ASS ESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF RUNNIN G AN EVENT MANAGEMENT COMPANY IN THE NAME AND STYLE OF M/S. RO YAL SERVICES. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS CARRIED OUT U/S 143(3) THE AO NOTED THAT AS PER TD S DETAILS THE ASSESSEE HAD CONTRACT RECEIPTS OF RS.1 73 38 39 9/- WHEREAS THE ASSESSEE HAD ACCOUNTED THE SAME TO THE EXTENT OF RS.1 07 56 680/- ONLY AND THEREFORE HE ASKED THE A SSESSEE THAT WHY NOT DIFFERENCE OF RS.65 81 719/- SHOULD BE BROUGHT TO TAX. IN RESPONSE THE ASSESSEE SUBMITTED TO AO T HAT FULL AMOUNT WAS NOT ACCOUNTED FOR DURING THE YEAR AS THE TOTAL PROJECT WAS NOT COMPLETED AND THE AMOUNT OF DIFFERE NCE REPRESENTED THE AMOUNT OF ADVANCE RECEIPTS TOWARD S THE TOTAL PROJECT WHICH WAS COMPLETED IN SUBSEQUENT YEARS. BU T WITH A VIEW TO AVOID LITIGATION THE ASSESSEE OFFERED THE AO TO BRING TO TAX NET PROFIT @ OF 15% OF RS.65 81 719/- I.E. RS. 9 87 258/- TO RAJENDRA GHAG 4 TAX AS ADDITIONAL INCOME FOR THE IMPUGNED YEAR. THE AO ACCEPTED THE OFFER OF THE ASSESSEE AND MADE ADDITIO N OF RS.9 87 258/- AND COMPLETED THE ASSESSMENT ACCORDIN GLY. 3.4. SUBSEQUENTLY LD. CIT ISSUED NOTICE U/S 263 ON THE GROUND THAT WHOLE AMOUNT OF DIFFERENCE OF RS.65 81 519/- SHOULD HAVE BEEN ADDED TO THE TOTAL INCOME OF THE A SSESSEE FOR THE REASON THAT PROJECT WAS COMPLETED AND ALL THE E XPENSES HAVE BEEN DEBITED DURING THE YEAR UNDER CONSIDERATI ON AND HE DIRECTED THE AO TO BRING TO TAX THE ENTIRE AMOUNT O F RS.65 81 519/- ON ACCOUNT OF SUPPRESSION OF RECEIPT S INSTEAD OF RESTRICTING THE SAME TO 15% OF RECEIPTS. THE LD. SENIOR COUNSEL OBJECTED TO THE DIRECTION OF LD. CIT MAINLY ON THE GROUND THAT PROJECT WAS NOT COMPLETED IN THE YEAR U NDER CONSIDERATION AND THEREFORE TOTAL EXPENSES RELATING TO THE PROJECT WERE NOT BOOKED DURING THE YEAR UNDER CONSI DERATION AND THAT REMAINING AMOUNT HAS ALREADY BEEN INCLUDED IN ITS INCOME BY THE ASSESSEE IN SUBSEQUENT YEARS. 3.5. WE HAVE CAREFULLY CONSIDERED SUBMISSIONS OF THE LD . SENIOR COUNSEL AS WELL AS FACTS OF THIS CASE BROUGH T BEFORE US. IT IS NOTED THAT CRUCIAL FACTS IN THIS CASE ARE THA T WHETHER THE PROJECT WAS COMPLETED IN THE YEAR UNDER CONSIDERATI ON OR NOT AND WHETHER THE ENTIRE EXPENSES RELATED TO THE PROJ ECT WERE DEBITED IN THE YEAR UNDER CONSIDERATION OR NOT. IT APPEARS THAT AO OUGHT TO HAVE MADE THIS INQUIRY SO AS TO BRING C OMPLETE FACTS ON RECORD. THUS TO THIS EXTENT WE FIND THAT LD. CIT IS JUSTIFIED IN MAKING REVISION OF THE ORDER. BUT LD. CIT HAS ALSO NOT DONE COMPLETE JUSTICE TO THIS CASE. HE HAS ALSO NOT TAKEN ANY PAIN TO VERIFY WHETHER THE PROJECT WAS COMPLETE D IN THIS RAJENDRA GHAG 5 YEAR OR NOT AND WITHOUT VERIFYING THIS CRUCIAL FACT HE HAS ASKED THE AO TO BRING TO TAX THE ENTIRE AMOUNT DURING THE YEAR UNDER CONSIDERATION. IF THE CONTENTION OF LD. SENIOR COUN SEL THAT REMAINING AMOUNT HAS ALREADY BEEN BROUGHT TO TAX IN THE NEXT YEAR IS CORRECT THEN IT SHALL LEAD TO DOUBLE TAXAT ION OF THE SAME INCOME WHICH IS NOT PERMITTED UNDER THE INCOM E TAX LAW. THEREFORE WHILE PARTLY SUSTAINING THE ORDER O F LD. CIT WE MODIFY HIS DIRECTIONS. THE AO IS DIRECTED TO VERIFY THE CORRECT FACTS IN THIS REGARD WHILE MAKING ASSESSMENT U/S 14 3(3) IN PURSUANCE TO ORDER U/S 263. IN CASE PROJECT IS NOT COMPLETED IN THIS YEAR FOR WHICH IMPUGNED ADVANCE OF RS. 65 8 1 719/- HAS BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATI ON AND IF THIS AMOUNT HAS BEEN INCLUDED IN THE INCOME BY THE ASSESSEE IN THE NEXT YEAR THEN IT SHALL NOT BE INCLUDED IN THE INCOME OF THE IMPUGNED YEAR. PRIMARY BURDEN IS UPON THE SHOUL DERS OF THE ASSESSEE TO SHOW THAT IMPUGNED AMOUNT OF ADVANC E HAS ALREADY BEEN INCLUDED IN THE INCOME OF SUBSEQUENT Y EARS. THE AO SHALL GIVE ADEQUATE OPPORTUNITY OF HEARING TO TH E ASSESSEE AND THE ASSESSEE SHALL EXTEND REQUISITE COOPERATION TO THE AO BY FILING DETAILS AND EVIDENCES AS MAY BE REQUIRED BY THE AO AS PER LAW AND FACTS OF THIS CASE. OUR VIEW IS SUPP ORTED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T V. EXCEL INDUSTRIES LTD. 358 ITR 295. THE RELEVANT PORTION O F THE SAME IS REPRODUCED HEREUNDER: 32. THIRDLY THE REAL QUESTION CONCERNING US IS TH E YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DISPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR THE ASSESSEE DID MAKE IMPORTS AND DID DERIVE BENEFITS U NDER THE ADVANCE LICENCE AND THE DUTY ENTITLEMENT PASS B OOK RAJENDRA GHAG 6 AND PAID TAX THEREON. THEREFORE IT IS NOT AS IF TH E REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEA R AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFOR E THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS THEREF ORE NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATI ON WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS ( ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH T O THE PUBLIC COFFERS. 3.6. THUS KEEPING IN VIEW THE FACTS OF THE CASE AND L EGAL POSITION AS DISCUSSED ABOVE WE SUSTAIN THE ORDER OF LD. CIT SUBJECT TO THE MODIFICATIONS GIVEN ABOVE. THE AO IS DIRECTED TO FOLLOW OUR AFORESAID DIRECTIONS WHILE PASSING FRESH ASSESSMENT ORDER AND SHALL ALSO KEEP IN VIEW THE JUDGMENT OF H ONBLE SUPREME COURT AS MENTIONED ABOVE. THUS WITH THESE DIRECTIONS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER ! ' MUMBAI; ' DATED : 06 /10/2016 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. ) *+ / THE APPELLANT 2. -*+ / THE RESPONDENT. 3. .$ . ! / ( ) ) / THE CIT MUMBAI. 4. .$ . ! / / CIT(A)- MUMBAI 5. 23 45 .$ )% 45$6 ! ' / DR RAJENDRA GHAG 7 ITAT MUMBAI 6. 7 8 ' / GUARD FILE. / BY ORDER - 2) //TRUE COPY// / (DY./ASSTT. REGISTRAR) ! ' / ITAT MUMBAI