The DCIT, Circle-10,, Ahmedabad v. Smt. Shantaben K.Patel, Ahmedabad

MA 174/AHD/2010 | 2004-2005
Pronouncement Date: 08-10-2010 | Result: Dismissed

Appeal Details

RSA Number 17420524 RSA 2010
Assessee PAN AAATJ0260F
Bench Ahmedabad
Appeal Number MA 174/AHD/2010
Duration Of Justice 2 month(s) 17 day(s)
Appellant The DCIT, Circle-10,, Ahmedabad
Respondent Smt. Shantaben K.Patel, Ahmedabad
Appeal Type Miscellaneous Application
Pronouncement Date 08-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 08-10-2010
Assessment Year 2004-2005
Appeal Filed On 21-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) M.A. NO. 143/AHD/2010 (ARISING OUT OF I.T.A. NO. 15 59/AHD./2009) ASSESSMENT YEAR : 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX -VS.- JETHIBEN K. PATEL DISCRETIONARY FAMILY TRUST CIRCLE-10 AHMEDABAD. AHMEDABAD (P.A. NO. AAATJ 0260 F) (APPLICANT) (RESPONDENT) & M.A. NO. 144/AHD/2010 (ARISING OUT OF I.T.A. NO. 15 60/AHD./2009) ASSESSMENT YEAR : 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX -VS.- KISA N DISCRETIONARY FAMILY TRUST CIRCLE-10 AHMEDABAD. AHMEDABAD (P.A. NO. AA AKT 2653 D) (APPLICANT) (R ESPONDENT) & M.A. NOS. 157 & 158/AHD/2010 (ARISING OUT OF I.T.A. NOS. 1562 & 1561/AHD./2009) ASSESSMENT YEARS : 2004-2005 & 2005-2006 DEPUTY COMMISSIONER OF INCOME TAX -VS.- KA RSANBHAI KHODIDAS PATEL HUF CIRCLE-10 AHMEDABAD. AHMEDABAD (P.A. NO. AA VPP 9688 G) (APPLICANT) (RESPONDENT) & M.A. NO. 174/AHD/2010 (ARISING OUT OF I.T.A. NO. 15 63/AHD./2009) ASSESSMENT YEAR : 2004-2005 ASSISTANT COMMISSIONER OF INCOME TAX -VS.- SMT. SHANTABEN K. PATEL CIRCLE-10 AHMEDABAD. AHMEDABAD (P.A. NO. AG GPP 2908 J) (APPLICANT) (R ESPONDENT) & M.A. NOS. 175 & 176/AHD/2010 (ARISING OUT OF I.T.A. NOS. 1564 & 1817/AHD./2009) ASSESSMENT YEAR : 2004-2005 ASSISTANT COMMISSIONER OF INCOME TAX (OSD) -VS. - SHIVA SPECIFIC FAMILY TRUST CIRCLE-10 AHMEDABAD. AHMEDABAD (P.A. NO . AANHS 5646 J) (APPLICANT) (R ESPONDENT) APPLICANT BY : SHRI R.K. DHANES TA S.R. D.R. RESPONDENT BY : SHRI HIMANSHU SHAH 2 M.A. NOS. 143-144 157-158 & 174-176/AHD/2010 O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER :- WE FIRST TAKE UP THE MISCELLANEOUS APPLICATION NO. 143/AHD/2010 ARISING OUT OF ITA NO. 1559/AHD/20 09. THIS M.A. IS FILED BY THE REVENUE IN RESPECT OF ASSESSEE JETHIBEN K. PATEL DISCRETION ARY FAMILY TRUST POINTING OUT THAT TRIBUNAL HAS COMMITTED CERTAIN MISTAKES IN THE ORDER OF THE TRIB UNAL DATED 18.09.2009 IN ITA NO. 1559/AHD/2009 FOR THE ASSESSMENT YEAR 2004-2005. TH E CONTENTS OF THIS MISCELLANEOUS APPLICATION ARE AS UNDER :- THE HON'BLE ITAT HAS PASSED THE ORDER DATED 18.09. 2009 WHICH IS RECEIVED ON 15.10.2009. 2. THE ASSESSEE HAD FILED RETURN OF INCOME ON 21.1 0.2004 DECLARING TOTAL INCOME OF RS.1 54 52 370/-. THE ASSESSING OFFICER I N HIS ASSESSMENT ORDER MADE ADDITION OF RS.2 76 07 579/- IN RESPECT OF ACCRUED INTEREST IN RESPECT OF BONDS OF RURAL ELECTRIFICATION. THE A.O. HELD THAT INTEREST IS TAXABLE ON DEEP DISCOUNT BONDS ON ACCRUAL BASIS IN VIEW OF CIRCULAR NO. 2 OF 2002 DATED 15.02.2002. THE DETAILS OF INVESTMENT MADE BY THE ASSESSEE ARE AS UNDER :- PARTICULARS INVESTMENT DATE MATURITY DATE AMOUNT OF INVESTMENT OFCPN AADESH FINSTOCK 05.08.2001 05.08.2006 3 00 00 000/- NETWORD COMM. LTD. 01.01.2001 01.03.2006 3 00 00 00 0/- OFCPN ECHOLAC FINVEST 29.10.2002 29.10.2007 1 00 00 000/- REC BOND-1 30.03.2002 30.03.2005 3 23 00 000/- REC BOND-2 30.03.2002 30.03.2005 7 91 10 000/- OFCPN SUNRISE FINCAP LTD. 21.03.2002 20.03.2007 12 00 00 000/- 3. IN APPEAL LEARNED CIT (A) DELVED THE ADDITION FO LLOWING THE DECISION OF ITAT IN THE CASE OF ASSESSEE FOR A.Y. 2005-06 WHEREIN IT W AS HELD THAT SINCE THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING THE NOTIONAL I NTEREST CANNOT BE ADDED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE ON THE G ROUND THAT IT IS ASSESSABLE ON MERCANTILE BASIS US PER BOARD'S CIRCULAR NO.2 OF 20 02. 4. AGAINST THE DEPARTMENT'S APPEAL THE HON'BLE ITA T CONFIRMED THE VIEW OF LEARNED CIT(A) DELETING THE ACCRUED INTEREST INCOME ON ACCR UAL BASIS FOLLOWING ITS DECISION IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST IN ITA NO. L850/AHD/2007 DATED 02/11/2007 FOR A.Y.2003-04 WHEREIN IT WAS HELD THA T THE CIRCULAR CANNOT BE APPLIED IN RESPECT OF THOSE ASSESSEES WHO ARE FOLLOWING THE CASH SYSTEM OF ACCOUNTING AND ALSO IN RESPECT OF SECURITIES ISSUED PRIOR TO 15/02 /2002. 5. THE HON'BLE ITAT AND THE LEARNED CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE MAINLY ON THE GROUND THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTS AND IT SHOULD BE TAXED ON RECEIPT BASIS AN D THAT DDB/OFCPNS/SECURITIES ARE ACQUIRED BEFORE THE DATE OF ISSUE OF BOARD'S CI RCULAR NO. 2 OF 2002 DATED 3 M.A. NOS. 143-144 157-158 & 174-176/AHD/2010 15/02/2002. IT MAY BE MENTIONED THAT FROM THE ABOVE CHART IT CAN BE SEEN THAT THE INVESTMENTS IN THE BONDS OF REC/ OFCPN EHHOLAC FINV EST OFCPN SUNRISE FINCAP LTD WERE MADE AFTER THE DATE OF ISSUE OF BOARD'S CI RCULAR NO.2 OF 2002 DATED 15.02.2002 AND THEREFORE THE PRINCIPLE LAID DOWN IN THE BOARD'S CIRCULAR ARE SQUARELY APPLICABLE IN RESPECT OF THE INVESTMENTS M ADE IN THESE REC BONDS/OFCPNS. THE ACCRUED INTEREST FROM REC BONDS/O FCPNS IS TAXABLE BY APPLYING THE PRINCIPLE OF BOARD'S CIRCULAR NO.2 OF 2002 DATED 15/02/2002 FOR DDB ISSUED ON OR AFTER 15/02/2002. THIS POSITION WAS AC CEPTED BY THE ITAT ITSELF IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST. THE RELEV ANT PORTION OF ITAR'S ORDER IS AS UNDER :- 'THE LEARNED ACCOUNTANT MEMBER HAS ALSO AGREED WITH THIS FINDING OF THE LEARNED JUDICIAL MEMBER UNDER PARA 67 THAT THE CIRC ULAR IS APPLICABLE ONLY TO DDBS ACQUIRED AND OR AFTER 15/02/2002.' THE HON'BLE ITAT HAS NOT CONSIDERED THE ABOVE FACTS THAT THE BONDS OF REC/OFCPNS WERE ISSUED AFTER 15/02/2002. IN FACT IT AT HAS IN THE PRESENT ORDER REFERRED TO THE DECISION OF ITAT IN THE CASE OF KIS AN DISCRETIONARY FAMILY TRUST FOR A.Y. 2003-04 AND ALSO OBSERVED THAT THE BOARD'S CIR CULAR IS APPLICABLE TO ALL INVESTMENTS MADE AFTER 15/02/2002. HOWEVER IT HAS OBSERVED THAT 'ADMITTEDLY ALL INVESTMENTS IN SIX CASES ARE MADE PRIOR TO 15/02/20 02. THIS OBSERVATION IS FACTUALLY INCORRECT AS SEEN FROM THE DATE(S) OF INVESTMENT GI VEN IN PARA-2 ABOVE AND THEREFORE THE ACCRUED INTEREST IS TAXABLE IN THE H ANDS OF THE ASSESSEE ACCEPTED BY THE HON'BLE II AT ITSELF. 6. THUS THE HON'BLE ITAT HAS OMITTED TO CONSIDER T HE RELEVANT FACTS AS MENTIONED ABOVE WHILE DECIDING THE ISSUE PRAYER OF THE DEPARTMENT :- IT IS THEREFORE HUMBLY PRAYED THAT :- THE HON'BLE ITAT MAY RECALL THE ORDER PASSED ON 18/ 09/2009 AND DECIDE THE CASE ON MERITS ON THE BASIS OF FACTS MENTIONED HEREINABO VE AND AMEND THE ORDER ACCORDINGLY. 2. AT THE TIME OF HEARING OF THE AFORESAID MISCELLA NEOUS APPLICATIONS SHRI R.K. DHANESTA LD. SR. D.R. APPEARED ON BEHALF OF THE REVENUE AND CONTENDED THAT THE FACTS AND CIRCUMSTANCES UNDER WHICH ALL THE MISCELLANEOUS APPLICATIONS ARE FILED ARE IDENTICAL. THE LD. D.R. SUBMITTED THAT ITAT IN ITS ORDER DATED 18.09.2009 HAS NOT CON SIDERED THE FACT THAT BONDS OF REC/ OFCPNS WERE ISSUED AFTER 15.02.2002. HE ALSO POINTED OUT T HAT IN THIS ORDER THE ITAT HAS REFERRED TO THE DECISION OF ITAT IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST FOR THE ASSESSMENT YEAR 2003- 04 AND ALSO OBSERVED THAT THE BOARDS CIRCULAR IS A PPLICABLE TO ALL THE INVESTMENTS MADE AFTER 15.02.2002. HOWEVER TRIBUNAL HAS OBSERVED THAT ADM ITTEDLY ALL THE INVESTMENTS IN SIX CASES ARE MADE PRIOR TO 15.02.2002. THIS OBSERVATION IS FACTU ALLY INCORRECT WHICH CAN BE SEEN FROM THE INVESTMENTS GIVEN IN PARA 2 OF MISCELLANEOUS APPLIC ATIONS IN CASE OF JETHIBEN K. PATEL DISCRETIONARY FAMILY TRUST THEREFORE ACCRUED INTE REST IS TAXABLE IN THE HANDS OF THE ASSESSEE 4 M.A. NOS. 143-144 157-158 & 174-176/AHD/2010 ACCEPTED BY THE ITAT ITSELF. IN VIEW OF THE ABOVE THE LD. D.R. POINTED OUT THAT THE ABOVE MISTAKE IS APPARENT FROM THE RECORD AND TRIBUNAL MA Y RECALL ITS ORDER WITHIN THE MEANING OF SECTION 254(2) OF THE ACT AND DECIDE THE CASES ON M ERIT ON THE BASIS OF FACTS MENTIONED THEREIN. 3. ON THE OTHER HAND SHRI HIMANSHU SHAH LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEES VEHEMENTLY POINTED OUT THAT THERE IS NO MISTAKE APP ARENT FROM THE RECORD WITHIN THE MEANING OF SECTION 254(2). THE LD. COUNSEL OF THE ASSESSEE DRE W OUR ATTENTION TO THE OPERATIVE PORTION OF THE ORDER OF TRIBUNAL DATED 18.09.2009 I.E. IN PARA 5 WHICH READS AS UNDER :- 5. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIE S BELOW. WE HAVE ALSO GONE THROUGH THE EARLIER ORDER OF THIS TRIBUNAL IN ITA N O.1855/AHD/2007 DATED 02.11.2007 (SUPRA). IT IS PERTINENT TO NOTE THAT TH E ITAT IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST FOR THE ASSESSMENT YEAR 2003-04 AND RAKESHBHAI K. PATEL FOR THE ASSESSMENT YEAR 2004-05 HAS HELD THAT METHOD OF ACCOUNTING SHOULD BE TAKEN AS CASH SYSTEM AND NOT MERCANTILE SYSTEM. THE FACTS OF ALL THE CASES BEFORE US ARE IDENTICAL WITH THE FACTS OF CASES DEC IDED BY ITAT IN ITA NO. 1855/AHD /2007 DATED 02.11.2007 (SUPRA). THEREFORE IN OUR CONSIDERED OPINION THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT TO DIRECT THE A.O. TO ADOPT CASH METHOD OF ACCOUNTING IN THE CASE OF ALL THE ASSESSEES. WITH REGARD TO DELETION OF ACCRUED I NTEREST ON OFCP NOTES & BONDS OF REC & PNS OF ADESH FINSTOCK (P) LTD. ETC. THE A.O. ASSESSED THE INCOME ON MERCANTILE BASIS ON THE BASIS OF CIRCULAR NO. 2 OF 2002 DATED 15.02.2002. THE ITAT IN THE CASE OF KISAN DISCRETIO NARY FAMILY TRUST IN ITA NO. 1850/AHD./2007 ORDER DATED 02.11.2007 FOR THE ASSE SSMENT YEAR 2003-04 HAS HELD THAT THIS CIRCULAR CANNOT BE APPLIED IN RESPEC T OF THOSE ASSESSEES WHO ARE FOLLOWING THE CASH SYSTEM OF ACCOUNTING AND ALSO IN RESPECT OF SECURITIES ISSUED PRIOR TO 15.02.2002. ADMITTEDLY SECURITIES IN ALL T HE ASSESSEES BEFORE US WERE ISSUED PRIOR TO 15.02.2002. THEREFORE BY CONSIDERI NG THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOLLOWING THE D ECISION OF ITAT A BENCH AHMEDABAD IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST AND DIRECT THE A.O. TO DELETE THE ADDITION OF ACCRUED INTEREST . AS A NATURAL COROLLARY IF THE INCOME IS ASSESSED ON ACCRUAL BASIS IN EARLIER YEAR S THEN A.O. WILL EXCLUDE THE SAME IN THE YEAR OF RECEIPT. 3.1. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT FROM THE PERUSAL OF THE AFORESAID PARA IT IS CLEAR THAT THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) DIRECTED THE ASSESSING OFFICER TO ADOPT CASH METHOD OF ACCOUNTING IN THE CASE OF ALL THE ASSESSEES. THEREFORE IT WILL NOT MAKE ANY DIFFERENCE WHETHER THE INVESTMENTS WERE MADE IN THE BONDS OF REC/ OFCPN ECHOLAC FINVEST OFCPN SUNRISE FINCAP LTD. PRIOR TO 15.02.2002 OR AF TER THAT DATE. THIS ASPECT HAS BEEN DULY CONSIDERED BY THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) AND WHOSE ORDER HAS BEEN UPHELD BY THE TRIBUNAL IN ITS ORDER DATED 18.09.200 2. FINALLY THE LD. COUNSEL OF THE ASSESSEE 5 M.A. NOS. 143-144 157-158 & 174-176/AHD/2010 SUBMITTED THAT UNDER SECTION 254(2) TRIBUNAL HAS N O POWER TO REVIEW ITS OWN ORDER. BY THESE MISCELLANEOUS APPLICATIONS THE REVENUE IS MERELY S EEKING REVIEW WHICH IS NOT PERMISSIBLE UNDER SECTION 254(2) OF THE ACT. HE ACCORDINGLY SUB MITTED THAT MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE BE DISMISSED. 4. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH ALL THE MISCELLANEOUS APPLICATIONS. THE ALLEGED MISTAKE POINTED OUT IS TH AT TRIBUNAL HAS NOT CONSIDERED THAT BONDS OF REC/OFCPN WERE ISSUED AFTER 15.02.2002. ON PERUSAL OF THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED BY THE TRI BUNAL IT CAN BE SEEN THAT DATE OF PURCHASE OF REC/ OFCPN HAS BEEN DULY CONSIDERED. THIS IS EVI DENT FROM THE FACT THAT TRIBUNAL HAS MERELY FOLLOWED THE DECISION OF KISAN DISCRETIONARY FAMILY TRUST FOR THE ASSESSMENT YEAR 2003-04 AND RAKESHBHAI K. PATEL FOR THE ASSESSMENT YEAR 2004-05 WHEREIN ALSO DATE OF PURCHASE WAS AFTER 15.02.2002 AND HELD THAT METHOD OF ACCOUNTING SHOUL D BE TAKEN AS CASH SYSTEM AND NOT MERCANTILE SYSTEM. ON THIS BASIS TRIBUNAL HAS UPHE LD THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF ALL THE ASSESSEES. WE ARE THEREFORE OF THE VIEW THAT THERE IS NO MISTAKE APPARENT FROM THE REC ORD WITHIN THE MEANING OF SECTION 254(2) OF THE ACT. IT IS WELL SETTLED LAW THAT UNDER SECTION 254(2) NEITHER THE DEPARTMENT NOR THE ASSESSEE HAS POWER TO RE-ARGUE ITS CASE BY FURNISHING FRESH EVIDENCE. UNDER SECTION 254(2) TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER. BY THE PRESENT MISCEL LANEOUS APPLICATIONS THE DEPARTMENT IS MERELY SEEKING REVIEW OF ORDER OF THE TRIBUNAL WHI CH IS NOT PERMISSIBLE. 5. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KA RAM CHAND THAPAR AND BROSS P. LTD. REPORTED IN 176 ITR 535 (SC) HELD THAT THE DE CISION OF THE TRIBUNAL HAS NOT TO BE SCRUTINIZED SENTENCE BY SENTENCE MERELY TO FIND OUT WHETHER SOM E INCIDENTAL FACT WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTICED BY THE TRIBUNAL IN ITS JUDGMENT. IN OUR OPINION THERE IS NO MISTAKE APPARENT FROM RECORD WITHIN THE MEANING OF SECTION 254 (2). HOWEVER IT IS WELL SETTLED LAW THAT WHAT CAN BE RECTIFIED U/S. 254 (2) IS A MISTAKE WH ICH IS APPARENT AND PATENT FROM THE RECORD. UNLESS THERE ARE MANIFEST ERRORS WHICH ARE OBVIOUS CLEAR AND SELF-EVIDENT THE TRIBUNAL CANNOT RECALL ITS PREVIOUS ORDER IN AN ATTEMPT TO REVIEW T HE ORDER. THE MISTAKE HAS TO BE SUCH FOR WHICH NO ELABORATE REASON OR ENQUIRY IS NECESSARY. THE PO WERS SO CONFERRED U/S. 254 (2) DO NOT CONTEMPLATE REHEARING WHICH WOULD HAVE THE EFFECT O F RE-WRITING AN ORDER AFFECTING THE MERITS OF THE CASE. OTHERWISE THERE WOULD BE NO DISTINCTION B ETWEEN THE POWER TO REVIEW AND THE POWER TO 6 M.A. NOS. 143-144 157-158 & 174-176/AHD/2010 RECTIFY A MISTAKE. THE POINT RAISED IN THE MISC. AP PLICATIONS SUBMITTED BY THE DEPARTMENT VIRTUALLY SEEKS A REVIEW OF THE ORDER PASSED BY THI S TRIBUNAL WHICH IS CLEARLY BEYOND THE SCOPE OF SECTION 254 (2). 6. IN VIEW OF THE FOREGOING DISCUSSION WE ARE CONV INCED THAT THERE CANNOT BE ANY DISPUTE WITH THE PROPOSITION THAT POWER UNDER SUB-SECTION ( 2) OF SECTION 254 IS TO RECTIFY THE MISTAKE APPARENT FROM THE RECORD BUT THAT POWER DOES NOT C LOTHE THE TRIBUNAL WITH THE JURISDICTION TO REVIEW OF ITS EARLIER ORDER OR RE-WRITE A FRESH JUD GMENT. BY PRESENT MISCELLANEOUS APPLICATIONS REVENUE VIRTUALLY SEEKING REVIEW THEREFORE ALL TH E MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE ARE DISMISSED. THE ORDER PRONOUNCED IN THE COURT ON 08.10.2010 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARM A) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08 / 10 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE RESPONDENT 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.