Dr. Mrs. Anwar Basith, Bangalore v. DCIT, Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER M.P. NO.15/BANG/2010 (ARISING OUT OF ITA NOS. 145 TO 149/B/09) ASSESSMENT YEAR : 1995-96 TO 1997-98 & 1999-00 TO 2000-01 DR. (MRS.) ANWAR BASITH NO.16 DR. OMAR SHARIFF ROAD BASAVANGUDI BANGALORE 560 004. : APPLICANT VS. THE DY. COMMISSIONER OF INCOME-TAX CIRCLE 3(1) BANGALORE. : RESPONDENT APPLICANT BY : SHRI V. SRINIVASAN C.A. RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI ADDL. CIT(DR) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS MISC. PETITION OF THE ASSESSEE IS IN CONSEQUE NCE OF HER ORIGINAL APPEALS IN ITA NOS:145 TO 149/B/2009 FOR THE AYS 19 95-96 96-97 97-98 99-00 AND 2000-01 WHICH WERE DISPOSED OFF ON 27.11. 2009 IN A COMMON ORDER BY THIS BENCH. M.P. NO.15/B/10 PAGE 2 OF 9 2. BRIEFLY THE GRIEVANCE OF THE ASSESSEE WAS THAT CERTAIN MISTAKES HAVE CREPT IN WHILE PASSING THE ABOVE MENT IONED COMMON ORDER WHICH ARE LISTED OUT AS BELOW: (1) NON-CONSIDERATION OF MATERIAL ARGUMENTS AND FACTS T HAT CHANGE THE VERY COMPLEXION OF THE CASE AS RAISED IN GROUND NO.3.1; & (2) DIRECTION TO THE AO TO ALLOW CREDIT FOR ENTIRE TDS IN THE HANDS OF THE PETITIONER CONSISTENT WITH THE FINDING AND REJE CTION OF GROUND NOS.3 & 4. 3. AFTER DUE CONSIDERATION OF THE CONTENTS OF THE MISC. PETITION THE REGISTRY WAS DIRECTED TO TAKE ON RECORD AND BE POSTED FOR HEARING IN A NORMAL COURSE. 4. DURING THE COURSE HEARING THE LD. AR SUBMITTED THAT (I) THE DEPARTMENT HAD ACCEPTED THE PLEA OF THE ASSESSE E THAT SHE WAS ONLY A CO-OWNER OF THE PROPERTY IN COURSE OF SC RUTINY ASSESSMENTS MADE FOR THE AYS 93-94 AND 94-95; (II) THE DEPARTMENT HAD ASSESSED ONE OF THE OTHER CO-OWN ERS MAQSOOD AHMED ON HIS SHARE OF RENTAL INCOME FOR T HE AYS 97- 98 & 98-99; (III) THE ISSUE RELATING TO TREATING THE ASSESSEE AS THE OWNER OF THE PROPERTY ENTIRELY HAD BEEN RAISED FOR THE FIRST FOR THE AY 98-99 IN AN EX-PARTE ASSESSMENT; - ON APPEAL THE HONBLE TRIBUNAL RESTORED THE MATTER ON THE FILE OF THE AO FOR FRESH ASSESSMENT AND THAT NO ORDER HA S BEEN PASSED BY THE AO ON THE DIRECTION OF THE TRIBUNAL; (IV) ASST. ORDERS FOR THE AYS 95-96 TO 97-98 AND 99-00 A ND 00-01 HAVE ALSO BEEN RESTORED ON THE FILE OF THE AO BY THE HO NBLE TRIBUNAL BASED ON THE EARLIER ORDER FOR THE AY 98-99 WHICH A RE UNDER DISPUTE; - THE FACT THAT THE AO HAD NOT GIVEN EFFECT TO THE OR DER OF THE TRIBUNAL FOR THE AY 98-99 WOULD AMOUNT TO ACCEPTANC E OF THE INCOME RETURNED BY THE ASSESSEE; M.P. NO.15/B/10 PAGE 3 OF 9 (V) THERE WAS NO SHAM AS ALLEGED BY THE AO AS THE ENTIR E FACTS WERE PLACED BEFORE THE AUTHORITIES BELOW AS EARLY AS 199 8 IN THE ASSESSMENT OF INJ ENTERPRISES AS WELL AS THE ASSESS EE FOR THE EARLIER YEARS AND HENCE THE DIFFERENT VIEW TAKEN BY THE AO IN THE ORDERS PASSED FOR THE AYS UNDER APPEAL WAS NOT MAIN TAINABLE; (VI) THE CIT(A) HAD IN THE ASSESSEES OWN CASE FOR THE SUBSEQUENT AYS 01-02 TO 06-07 ACCEPTED THAT THE ARRANGEMENT BETWE EN THE CO- OWNERS WAS NOT A SHAM TRANSACTION SINCE THERE WAS N O LOSS TO THE REVENUE; (VII) THOUGH THE MATERIAL CONTENTIONS OF THE ASSESSEE HAS BEEN TAKEN NOTE OF HOWEVER WHILE PASSING THE ORDER THE HON BLE BENCH HAD NOT CONSIDERED THE GROUND RAISED AND CONTENTIONS AD VANCED THEREON; - NON-CONSIDERATION OF A GROUND RAISED AS WELL AS OF MATERIAL FACTS THAT CHANGES THE VERY COMPLEXION OF THE CASE RESULTS IN A MISTAKE APPARENT ON RECORD WARRANTING RECTIFICATION ; - IT IS PRAYED THAT THE ORDER OF THE HONBLE BENCH BE MODIFIED BY HOLDI NG THAT THE DIFFERENT VIEW TAKEN BY THE AUTHORITIES BELOW F OR THE AYS UNDER DISPUTE WAS UNJUSTIFIED CONSIDERING THE UNDISPUTED FACTUAL POSITION THAT THE DEPARTMENT HAD ACCEPTED THE CLAIM OF CO-OWNERSHIP IN THE EARLIER ASSESSMENTS AND THAT THE ASSESSEE BE ASSESSED ON HE R 1/5 TH SHARE OF THE INCOME FROM PROPERTY; & (VIII) WITHOUT PREJUDICE THE ASSESSEE HAD OFFERED ONLY 1/ 5 TH SHARE OF THE INCOME FROM THE PROPERTY IN THE RETURN OF INCOME AN D THE AO HAD ASSESSED THE ENTIRE INCOME IN HER HANDS; THAT SHE H AD CLAIMED ONLY 1/5 TH SHARE OF CREDIT FOR TDS CONSISTENT WITH THE INCOME OFFERED. HOWEVER WHILE ASSESSING THE ENTIRE INCOME IN HER HANDS THE AO HAD GIVEN CREDIT FOR TDS AS CLAIMED IN THE R ETURN. THE ASSESSEES REQUEST FOR THE ENTIRE TDS IN HER HANDS CONSISTENT WITH THE FINDING THAT THE ENTIRE RENTAL INCOME WAS ASSES SABLE IN HER HANDS HAS BEEN TURNED DOWN BY THE AO ON THE GROUND THAT THERE WAS NO SPECIFIC DIRECTION FROM THE APPELLATE AUTHOR ITIES TO DO SO; & - IT IS PRAYED THAT M.P. NO.15/B/10 PAGE 4 OF 9 THE AO BE DIRECTED TO GIVE THE CREDIT FOR THE ENTIR E TDS IN THE HANDS OF THE ASSESSEE CONSISTENT WITH THE ASSESSMEN T OF THE ENTIRE RENTAL INCOME IN THE HANDS OF THE ASSESSEE. (IX) SUCH ARRANGEMENTS CANNOT BE TERMED AS SHAM. IT IS ONLY A DEVICE TO ARRANGE ONESELF WITHIN THE FRAMEWORK OF LAW IN O RDER TO REDUCE TAX LIABILITY. 4.1. ON THE OTHER HAND THE LD D R WAS VERY EMPHAT IC IN HER RESOLVE THAT THE ISSUES RAISED IN THE MISC. PETITIO N HAD IN FACT BEEN DELIBERATED UPON IN THE EARLIER ORDER OF THE HONBL E BENCH AND THAT THERE WAS NO MISTAKE CREPT IN WHICH NECESSITATES TO TAKE RECOURSE UNDER SECTION 254(2) OF THE ACT; THAT THE ASSESSEE IS FORBIDDEN U NDER THE SAID SECTION TO RAISE A NEW ISSUE I.E. THE ALLOWABILITY OF CRED IT FOR THE SO CALLED ENTIRE TDS IN THE HANDS OF THE ASSESSEE AND SO ON SO FORTH . THE EARLIER ORDER OF THE HONBLE BENCH DOESNT SUFFER FROM ANY INFIRMITY AS ALLEGED BY THE ASSESSEE AND THEREFORE PLEADED THAT THE MISC. PE TITION OF THE ASSESSEE CANNOT BE ENTERTAINED WHICH REQUIRES TO BE REJECTED SUMMARILY. DURING THE COURSE OF HEARING THE LD. D R PLACED RELIANCE ON T HE FOLLOWING: (I) M.P.NO: 117/BANG/2009 DATED: 26.2.2010 IN THE CASE OF M/S.ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. V. ACIT (II) CIT & ANR. V. MCDOWELL & CO. LTD. (2009) 310 ITR 21 5 (KAR) 5. WE HAVE CAREFULLY ANALYZED THE RIVAL SUBMISSION S ATTENTIVELY GONE THROUGH THE RELEVANT RECORDS AND ALSO THE LEGA L PRECEDENTS ON WHICH THE LD. D R HAD PLACED HER FAITH. 5.1. AT THE OUTSET WE WOULD LIKE TO EMPHASIS IN C LEAR TERMS THAT THE GROUND NO.3.1. RAISED BY THE ASSESSEE IN HER OR IGINAL APPEALS AS M.P. NO.15/B/10 PAGE 5 OF 9 CONCEDED BY HER IN THE PRESENT MISC. PETITION WAS DULY CONSIDERED BY THIS BENCH. AT THE COST OF REPETITION WE SHALL REPRODU CE THE RELEVANT SEQUENCE OF EVENTS AND BACK-DROP AND SUBSTANCES OF THE GROUN D NO.3.1 FROM THE EARLIER ORDER DT: 27.11.09 AS UNDER: 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS PERUSED THE RELEVANT RECORDS AND ALSO THE VOLUMINOU S PAPER-BOOK FURNISHED BY THE LD. A.R. 7.6. THE ABOVE SEQUENCES CLEARLY VINDICA TE THE ASSESSEES INTENTION THAT THE ENTIRE ARRANGEMENT HAD BEEN CARR IED OUT IN A SYSTEMATIC AND WELL CARVED OUT MANNER THROUGH A LEG AL VEIL SO AS TO ENABLE THE ASSESSEE TO SPLIT THE RENTAL INCOME INTO FIVE HANDS NAMELY IN THE HANDS OF THE ASSESSEE HER HUSBAND A ND THEIR THREE CHILDREN. THE SO CALLED CREATION OF THE PARTNERSHI P FIRM WITH THE FAMILY MEMBERS AS ITS PARTNERS AND ITS SUBSEQUENT D ISSOLUTION AND CO CO-OWNERSHIP OF THE SCHEDULE PROPERTY IN THE HAN DS OF THE ASSESSEE HER HUSBAND AND THEIR THREE CHILDREN WAS NOTHING BUT A CLEAR CASE OF SHAM TRANSACTION. 7.8. ARMED WITH THE RULING OF THE HONB LE APEX COURT REFERRED SUPRA THE AO WENT TO THE ROOT OF THE ISSU E AND CAME OUT TO A CONCLUSION IN A COMPREHENSIVE MANNER THAT THE SO CALLED TRANSFER OF THE PERSONAL ASSET BY THE ASSESSEE TO PARTNERSHI P IN WHICH SHE ALONG WITH HER HUSBAND AND THEIR THREE CHILDREN BEC OME PARTNERS WAS MERELY A DEVICE AND THE TRANSACTION OF CREATING SUCH A PARTNERSHIP WAS A SHAM TRANSACTION ... M.P. NO.15/B/10 PAGE 6 OF 9 7.9. THE LD. CIT(A) IN HIS IMPUGNED ORDER WHIC H IS UNDER DISPUTE HAD BROUGHT OUT ALL THE FACTS WHICH HAVE B EEN ANALYZED IN DETAIL. AFTER CONSIDERING THE PROS AND CONS OF THE ISSUE EXHAUSTIVELY HE HAD ARRIVED AT A CONCLUSION THAT THE ENTIRE RENTAL INCOME AS WELL AS SERVICE CHARGES DERIVED FROM THE SCHEDULE PROPER TY AT NO.29 CUNNINGHAM ROAD WAS ASSESSABLE IN THE HANDS OF THE ASSESSEE. 7.11. IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AND ALSO LEGAL PRECEDENT S AS DELIBERATED UPON IN THE FOREGOING PARAGRAPHS WE ARE OF THE UNA NIMOUS VIEW THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN HIS ENDE VOUR .. 5.2. THE ABOVE NARRATION IN OUR CONSIDERED VIEW GOES WITHOUT SAYING THAT THE EARLIER BENCH TOOK COGNIZANCE OF TH E MATERIAL ARGUMENTS VALIANTLY PUT FORTH BY THE LD. A R THE FACTS CULLE D OUT FROM THE ASSESSMENT ORDERS AND ALSO THE VERY ISSUE WHICH WAS DELIBERATE D UPON BY THE LD. CIT (A) AND THUS CAME TO THE CONCLUSION THAT THE LD. CIT (A) WAS JUSTIFIED IN HIS FINDING. 5.3. SUCH BEING THE GROUND REALITIES THE ASSESSEE CANNOT COME UP WITH THE PRESENT MISC. PETITION IN THE GUISE OF THE BENCH WHILE PASSING THE ORDER UPHOLDING THE ORDERS PASSED BY THE AUTHOR ITIES BELOW THE AFORESAID GROUND RAISED AND CONTENTIONS ADVANCED HA VE NOT BEEN CONSIDERED AT ALL. 5.4. IN CONCLUSION THE ASSESSEES MISCONCEPTION T HAT THE EARLIER BENCH HAD NOT TAKEN COGNIZANCE OF THE MATERIAL FACT S ADVANCED BY HER A R M.P. NO.15/B/10 PAGE 7 OF 9 IS TO PUT IT GENTLY WITHOUT ANY BASIS WHICH DESER VES TO BE REJECTED OUT- RIGHTLY. IT IS ORDERED ACCORDINGLY. 6. THE OTHER ISSUE AGITATED UPON IS TO DIRECT THE AO TO ALLOW CREDIT FOR ENTIRE TDS IN THE HANDS OF THE PETITIONE R CONSISTENT WITH THE FINDING AND REJECTION OF GROUND NOS.3 & 4. 6.1. WITH REGARD TO TDS CREDIT IT IS PERTINENT T O MENTION HERE THAT THIS VERY ISSUE WAS NEITHER FINDING A PLACE IN THE GROUNDS OF APPEAL IN ALL THE AYS UNDER DISPUTE NOR BROUGHT OUT DURING THE CO URSE OF EARLIER HEARING BEFORE THIS BENCH. EVEN ON A GLIMPSE OF THE GROUND S RAISED BEFORE THE FIRST APPELLATE AUTHORITY TOO THERE WAS NO MENTION OF SUCH AN ISSUE. 6.2. THIS ISSUE HAS NOW BEEN BROUGHT IN IN THE GU ISE OF A MISTAKE HAD CREPT IN THE EARLIER ORDER OF THE BENCH AND TH US TO DIRECT THE AO TO ALLOW CREDIT FOR THE ENTIRE TDS IN THE HANDS OF THE ASSESSEE CONSISTENT WITH THE FINDING AND REJECTION OF GROUND NOS: 3 AND 4. IRONICALLY THIS ISSUE WAS NEITHER A SUBJECT MATTER OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY NOR BEFORE THIS BENCH WHEN THE ORIGINAL APPEALS WERE SU BJECT MATTER OF ADJUDICATION. A NON-EXISTENT ISSUE ON AN EARLIER A PPEAL CANNOT BE BROUGHT IN IN THE DISGUISE OF A MISC. PETITION WHICH IS I N OUR CONSIDERED VIEW QUITE CONTRARY TO THE SPIRIT OF THE PROVISIONS OF S. 254( 2) OF THE ACT. WHAT SECTION 254(2) OF THE ACT SAYS? 254. (2) THE APPELLATE TRIBUNAL MAY AT ANY TIME W ITHIN FOUR YEARS FROM THE DATE OF THE ORDER WITH A VIEW TO RECTIFYI NG ANY MISTAKE APPARENT FROM THE RECORD AMEND ANY ORDER PASSED BY IT UNDER SUB- SECTION (1) AND SHALL MAKE SUCH AMENDMENT IF THE M ISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESSING OFFI CER. M.P. NO.15/B/10 PAGE 8 OF 9 6.3. IN VIEW OF THE ABOVE THIS BENCH IS OF THE FI RM VIEW THAT THERE WERE NO MISTAKES APPARENT FROM RECORDS WHICH REQUIR E RECOURSE TO ACTION U/S 254 (2) OF THE ACT. 6.4. LET US ALSO DRAW STRENGTH FROM THE LEGAL PRE CEDENTS FOR OUR ENDEAVOURS AS DISCUSSED BELOW: (1) THE HONBLE DELHI HIGH COURT IN THE CASE OF RAS BIHARI BANSAL V. CIT & ANR. REPORTED IN 293 ITR 368 WHILE ELABORATING ON THE SCOPE OF S.254 (2) OF THE ACT HAS UNFOLDED THE ISSUE THUS - THIS SECTION ENABLES THE CONCERNED AUTHORITIES TO RECTIFY ANY 'MISTAKE APPARENT FROM THE RECORD'. IT IS WELL SETTLED THAT AN OVERSIGHT OF A FACT CANNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE U NDER THIS SECTION. SIMILARLY FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT AD VANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NO T AN ERROR APPARENT ON THE RECORD ALTHOUGH IT MAY BE AN ERROR OF JUDGM ENT THE MERE FACT THAT THE TRIBUNAL HAS NOT ALLOWED A DEDUCTION EVEN IF THE CONCLUSION IS WRONG THAT WILL BE NO GROUND FOR MOVING AN APPLICA TION UNDER SECTION 254(2) OF THE ACT. FURTHER IN THE GARB OF AN APPLICATION FOR RECTIFICATION THE ASSESSEE CANNOT BE ALLOWED TO BE PERMITTED TO REOPEN AND RE-ARGUE THE WHOLE MATTER WHICH IS BEYOND THE SCOPE OF THIS SECTION. (2) THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT & ANR. V. MCDOWELL & CO. LTD. REPORTED IN (2009) 310 ITR 215 IN ITS WISDOM HAS RULED THUS - APPLICATION OF THE PRINCIPLES LAID DOWN BY THE SU PERIOR COURTS TO THE FACTS OF THE CASE BEFORE THE TRIBUNAL ON ERRONEOUS UNDERSTANDING OF SUCH PRINCIPLES RECORDING OF AN ERRONEOUS FINDING BY IT BASED ON THE FACTS ON RECORD ARRIVING AT A CONCLUSION ON ERRONE OUS APPLICATION OF PROVISIONS OF LAW TO THE FACTS OF THE CASE ETC. C ANNOT BE HELD TO BE 'A MISTAKE APPARENT FROM THE RECORD' WARRANTING ANY RE CTIFICATION BY THE TRIBUNAL IN EXERCISE OF ITS POWER UNDER S. 254(2) O F THE IT ACT BY RECONSIDERING THE APPLICATION OF PRINCIPLES OF SUPE RIOR COURTS TO THE M.P. NO.15/B/10 PAGE 9 OF 9 FACTS OF THE CASE OR BY RECONSIDERING ITS FINDINGS RECORDED OR BY RECONSIDERING THE APPLICATION OF THE RELEVANT PROVI SIONS OF LAW TO THE FACTS OF THE CASE AS IS DONE BY THE TRIBUNAL IN THE INSTANT CASE. SUCH AN EXERCISE OF POWER UNDER S. 254(2) OF THE ACT AMOUNT S TO REVIEW OF ITS EARLIER ORDER ON MERITS BUT NOT 'RECTIFICATION OF M ISTAKE APPARENT FROM THE RECORD' AND SUCH REVIEW WOULD CERTAINLY BE BEYO ND THE SCOPE OF S. 254(2) OF THE IT ACT. 6.5. TO ILLUSTRATE FURTHER IN THE CASE OF THE PRE SENT ASSESSEE IT CANNOT BE SAID THAT THERE WERE MISTAKES ON THE FA CE OF THE RECORDS WARRANTING INTERFERENCE OF THIS BENCH U/S 254(2) OF THE ACT. 7. IN THE RESULT THE MISC. PETITION OF THE ASSESS EE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 5TH DAY OF APRIL 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 5 TH APRIL 2010. DS/- COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.