MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD, MUMBAI v. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 10(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI C.N. PRASAD HON'BLE JUDICIAL MEMBER & SHRI RAJESH KUMAR HON'BLE ACCOUNTANT MEMBER M .A. NO. 694 /MUM/201 7 [ ARISING OUT OF ITA.NO. 720 /MUM/201 0 (A.Y: 2006 - 07 )] M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. PRAKASHGAD ANANT KANEKAR MARG STATION ROAD BANDRA (E) MUMBAI 400 051 V. ACIT 10(1) R.NO. 455 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KETAN V E D DEPARTMENT BY : SHRI CHOUDHARY ARUNKUMAR SINGH DATE OF HEARING : 29.03.2019 DATE OF PRONOUNCEMENT : 13 . 11 .2019 O R D E R PER C. N. PRASAD (JM) 1. THROUGH THIS MISCELLANEOUS APPLICATION THE ASSESSEE IS SEEKING RECTIFICATION OF THE ORDER PA SSED BY THE TRIBUNAL IN ITA.NO. 720/MUM/2010 DATED 12.08.2015 . 2. IN ITS MISCELLANEOUS APPLICATION ASSESSEE STATED THAT THOUGH THE TRIBUNAL IN RESPECT OF THE GROUND NO S .1 & 1 D RECORDED A FINDING THAT ASSESSEE MADE ARGUMENTS AND FILED ADDITIONAL EVIDENCES WHILE DISPOSING OF F THE SAID GROUND IN PARAGRAPH NO . 27 DECIDED THE ISSUE AGAINST THE ASSESSEE STATING THAT FINDINGS OF THE LD.CIT(A) WERE NOT ASSAILED. 2 M.A. NO.694/MUM/2017 M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. THEREFORE IT IS SUBMITTED THAT TRIBUNAL HAVING NOTED IN PARAGRAPH NO . 26 THAT ARGUMENTS AND ADDITIONAL EVIDENCES FILED HAD INADVERTENTLY IN PARAGRAPH NO. 27 HELD THAT ORDER OF THE LD.CIT(A) HAS NOT BEEN ASSAILE D . THE COUNSEL SUBMITTED THAT THIS I S A MISTAKE APPARENT ON RECORD T HEREFORE REQUESTED FOR RECALL OF TH E ORDER OF THE TRIBUNAL. 3. LD. DR SUBMITS THAT THERE IS NO MISTAKE APP ARENT ON RECORD IN PASSING THE ORDER BY THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDER OF THE TRIBUNAL. WE FIND THAT TRIBUNAL DISPOSED OFF GROUND NO. 1 & 1D OF THE GROUNDS OF APPEAL OF THE ASSESSEE IN RESPECT OF THE DISALLOWANCE MADE ON RECOVERY FROM TEMPORARY SERVICE CONNECTIONS IN ITS ORDER PASSED OBSERVING AS UNDER: 26. IN GROUND NO.1 D IN THIS GROUND THE ASSESSEE HAD CHALLENGED THE ACTION OF LD. CIT(A) I N CONFIRMING THE ADDITION MADE BY LD. AO ON ACCOUNT OF RECOVERY FROM TEMPORARY SERVICE COMMUNICATION AMOUNTING TO RS.7.68 CRORES. LD. AO HAS DISCUSSED THIS ISSUE ON PARA NO. 11 ON PAGE 3 WHEREAS THE LD. CIT(A) HAS DISCUSSED THIS ISSUE IN PARA NO.11.3 ON PA GE NO.25 OF THE APPELLATE ORDER. THE ID. AO HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE RECOVERY IS MADE AMOUNTING TO RS.7.68 CRORES FROM TEMPORARY SERVICE COMMUNICATION WERE TRANSFERRED TO LIABILITY ACCOUNT BY THE ASSESSEE COMPANY. THE LD. AO FURTHER OB SERVED THAT STATUTORY AUDITOR HAVE ALSO POINTED OUT THAT THIS AMOUNT SHOULD HAVE BEEN ADDED TO THE MISCELLANEOUS INCOME IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE BUT THE ASSESSEE DID NOT INCLUDE THE SAID AMOUNT IN ITS INCOME. ACCORDINGLY LD. AO MADE THE ADDITION FOR THE SAME IN THE ASSESSMENT ORDER. BEFORE THE LD. CIT(A) THE ARGUMENTS OF THE ASSESSEE IN NUTSHELL WAS THAT DUE TO VOLUMINOUS TRANSACTIONS AND TEMPORARY DEMERGER PROCESS THE ASSESSEE COULD NOT FOCUS ON ITS ACCOUNTING METICULOUSLY AND THERE FORE IT COULD NOT BE TRANSFERRED TO THE INCOME DURING THE YEAR UNDER CONSIDERATION BUT IN THE SUBSEQUENT YEARS RECTIFICATION ENTRIES HAVE BEEN PASSED BUT LD. CIT(A) DID NOT AGREE WITH THE 3 M.A. NO.694/MUM/2017 M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. SUBMISSION OF THE ASSESSEE AND IT WAS HELD BY HIM THAT THE IMPUGNED AMOUNTS OF RECOVERIES MADE FROM THE TEMPORARY SERVICE COMMUNICATIONS WAS NEITHER A CAPITAL RECEIPT NOR A LIABILITY BUT WAS IN FACT INCOME OF THE APPELLANT AND THEREFORE THE ASSESSEE COMPANY SHOULD HAVE SHOWN THE SAME IN THE INCOME ACCOUNT. BEFORE US ID. COUNSEL HAS MADE HIS ARGUMENTS IN DETAIL AND THE ARGUMENTS MADE IN THE WRITE UP SUBMITTED BY LD. COUNSEL ARE REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE: IN LIGHT OF THE UNCERTAINTY AND LACK OF CLARITY PERSISTING AT THAT POINT IN TIME DUE TO THE THEN RECENT RESTRUCTURING OF THE ERSTWHILE MSEB WHICH ALSO HAPPENED IN THE SAME YEAR THE PAYMENTS THOUGH MADE BY THE APPELLANT WERE ACCOUNTED FOR AS HAVING BEING MADE BY MSEBHCL FOR THE VARIOUS CIRCLE OFFICES OF THE APPELLANT COMPANY. THIS ENTRY WAS WR ONG BECAUSE THOUGH THE RELEVANT EXPENSE / CAPITAL ASSET WAS DEBITED / CREATED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY CORRESPONDING CREDIT WAS GIVEN TO THE MSEBHCL AND NOT TO THE BANK ACCOUNT THROUGH WHICH THE PAYMENT WAS MADE SINCE IT WAS NOT CLEAR AT THE RELEVANT POINT OF TIME AS TO WHICH ENTITY THE BANK ACCOUNT PERTAINED TO AND SINCE THE POSITION WAS NOT CLEAR THE ACCOUNT OF MSEBHCL WAS CREDITED. THIS ERROR WAS REALIZED DURING THE FINALIZATION OF ACCOUNTS WHEN THE PICTURE VIS - A - VIS THE DEMERGER OF THE VARIOUS UNDERTAKINGS OF THE MSEB ALSO BECAME CLEAR AND ACCORDINGLY AN ENTRY WAS PASSED ON 31 MARCH 2006 RECTIFYING THE AFORESAID ERROR ALONG WITH TH E OTHER SIMILAR ERRORS - FILED AS AN ADDITIONAL EVIDENCE ON 29 JUNE 2015. THIS FACT WAS ADEQUATELY COMMUNICATED TO THE CAG BY THE APPELLANT VIDE ITS LETTER DATED 17 FEBRUARY 2007 (BEARING REFERENCE NO.AD/WMI2006 - 07/325 W.M. SECTION) TITLED 'REPLY TO AUDI T ENQUIRY NO.3.' FILED AS AN ADDI TIONAL EVIDENCE ON 29 JUNE 2015. J 27. ON THE OTHER HAND ID. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE WAS SUPPRESSION OF THE INCOME ON THE PART OF THE ASSESSEE COMPANY AND LD. CIT(A) HAS RI GHTLY CONFIRMED THE ADDITION AND THEREFORE THE ORDER OF LD. CIT(A) SHOULD BE CONFIRMED. WE HAVE GONE THROUGH THE ARGUMENTS OF BOTH THE SIDES THIS FACT HAS NOT BEEN REBUTTED BY LD. COUNSEL THEN BEFORE US THAT THE IMPUGNED AMOUNT IS INCOME OF THE ASSESSEE. THE ASSESSEE IS OBLIGED UNDER THE LAW TO INCLUDE IT IN ITS INCOME. SINCE THE ASSESSEE HAD NOT DONE SO THE AO HAD RIGHTLY BROUGHT THIS AMOUNT TO TAX AS PART OF INCOME OF THE YEAR UNDER CONSIDERATION AND LD. CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF AO ON T HIS ASPECT. LD. COUNSEL COULD NOT ASSAIL THE FINDINGS OF THE LD. CIT(A) AND WE DO NOT 4 M.A. NO.694/MUM/2017 M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. FIND ANY ERROR IN THE ORDER OF LD. CIT(A) AND THE SAME IS UPHELD AND GROUND NO.ID OF THE ASSESSEE IS DISMISSED. 5. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL WE FIND THAT T HE TRIBUNAL HAD CONSIDERED THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE ESPECIALLY THE WRIT E - UP FILED UP BEFORE THE TRIBUNAL AND THE REASONING OF THE LD.CIT(A) AND DID NOT AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND THUS AFFIRME D THE ORDER OF THE LD.CIT(A) AND DISMISSED THE GROUND OF THE ASSESSEE. IN THIS VIEW OF THE MATTER WE DO NOT SEE ANY MISTAKE APPARENT ON RECORD IN THE ORDER OF THE TRIBUNAL IN DISPOSING OFF THE GROUND RAISED BY THE ASSESSEE. IT IS QUITE APPARENT THAT THE TRIBUNAL HAD CONSIDERED THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE LD. DR AND THE REASONING OF THE LD.CIT(A) AND CAME TO THE CONCLUSION BASED ON APPRECIATION OF FACTS ON RECORD . THUS THERE IS NO MISTAKE APPARENT ON RECORD WITHIN THE MEANING OF S ECTION 254(2) OF THE ACT. TRIBUNAL HAS NO POWER TO REVIEW ITS ORD ER. 6. IN THE RESULT MISCELLANEOUS APPLICATION FILE D BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH NOVEMBER 2019 SD/ - SD/ - ( RAJESH KUMAR ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 13 / 11 / 2019 GIRIDHAR S R. PS 5 M.A. NO.694/MUM/2017 M/S. MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT MUM