Income Tax Appellate Tribunal - Mumbai
Art Housing Private Limited , Mumbai vs Income Tax Officer 1(1)(1), Mumbai on 6 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM M.A. No. 281/Mum/2018 (Arising out of ITA No. 522/Mum/2017) (Assessment Year: 2009-10) M/s. Art Housing Pvt. Ltd. ITO-1(1)(1), Block No. 302, Mehta Business Centre, Mumbai Khaitan Chambers, 143/145 Modi Vs. Street, Fort, Mumbai-400 001 PAN/GIR No. AAHCA 6007 F (Appellant) : (Respondent) Appellant by : Shri Dharam V. Gandhi & Shri Vishesh Sangoi Respondent by : Shri Chaudhary Arun Kumar Singh Date of Hearing : 02.11.2018 Date of Pronouncement : 06.12.2018 Order u/s. 254(2) of the Income Tax Act, 1961 Per Shamim Yahya, A. M.:
By way of this miscellaneous application the assessee seeks order u/s. 254(2) of the Income Tax Act, 1961 ('the Act' for short) against the tribunal's order in ITA No. 522/Mum/2017 for assessment year 2009-10 vide order dated 04.01.2018.
2. In the Income Tax Appeal by the Revenue the issue pertains to addition on account of share application money pursuant to Investigation Wing action on hawala operator Shri Praveen Kumar Jain. The ITAT has passed the following concluding order:
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11. Against the above order, the assessee appealed before the ld.
Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) reproduced the assessee's submissions in 18 pages of his order. Thereafter, by one paragraph on page 19, he deleted the entire addition by observing as under:
3.1 I have gone through the case of CIT vs. Lovely Exports, 216 CTR 195 (SC) wherein the Hon'ble Supreme Court has held a view that once that name and address and other details given to the Department, the Department is free to reopen the concerned individual assessment records and the share application money cannot be declared as undisclosed income u/s. 68 of the Income Tax Act, so respectfully following the decision of the Hon'ble Supreme Court in the case of Lovely Exports, I direct the AO to delete the addition of Rs.45,00,000/- and hence this ground of appeal is allowed.
12. Against the above order, the assessee is in appeal before the ITAT.
13. I have heard both the counsel and perused the records. I find that in this case the assessee has received share application money from nine concerns which were operated by Shri Praveen Kumar Jain and his group. The modus operandi of Shri Praveen Kumar Jain and his group has been elaborately brought out in the assessment order. Shri Praveen Kumar Jain has clearly admitted that his group concerns which included the concerns from which the assessee has received share application money were indulging in providing bogus accommodation entry. It has further been noted that these concerns operated by Shri Praveen Kumar Jain were not doing any proper business but were engaged in providing accommodation entries. In the investigation done, it has been found that the addresses given are non-existent. In these circumstances, the assessing officer has made it clear case that the assessee has obtained bogus share capital entry from non-existent concerns which are in existence only on paper and are being operated by Shri Praveen Kumar Jain and his group to provide bogus accommodation entries of which the assessee has been recipient of Rs.45 lakh as share capital.
14. The assessee in its response has only mentioned that the assessee has given the name and address and PAN numbers of the investing companies and, hence, it has discharged the onus. In none of the responses, the assessee submitted that these companies are actually in existence at the addresses mentioned. That these companies should be issued summons. That assessee is prepared to bring the directors or the principal officers for confirmation. In fact, the assessing officer has noted that assessee has failed to submit the ledger copies of these concerns duly signed by the principal officers. That the documents submitted are only xeroxed copies. This clearly bolsters the 3 M. A. No . 2 8 1/ Mu m/ 2 0 18 Revenue's case that these are non-existent companies and are operating only on paper to provide accommodation entry being run by Shri Praveen Kumar Jain and his group concerns. The transaction through banking channel does not absolve the assessee from the finding that these are dubious entities by way of which the assessee's undisclosed income has been channeled back as share application money.
15. The reliance by the ld. Commissioner of Income Tax (Appeals) on the order of Hon'ble Apex Court decision in the case of CIT vs. Lovely Exports Pvt. Ltd. 216 CTR 195 (SC) is totally misplaced. In the said case before the Hon'ble Apex Court there was no clear establishment that the share applicant companies are bogus being operated by Shri Praveen Kumar Jain and his group to provide bogus accommodation entries. Similarly is the position of the case laws referred by the learned counsel of the assessee. In none of the case there was clear establishment that the assessee has received bogus accommodation entry. And the assessee has miserably failed to dislodge the finding of the Revenue that these companies are only operated by Shri Praveen Kumar Jain to provide bogus accommodation entries. As held by the Hon'ble Apex Court in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), the Revenue authorities are not supposed to put on blinkers but have to look into the surrounding circumstances. The clear factual evidence that these bogus companies of Shri Praveen Kumar Jain and his group established to provide bogus accommodation entries cannot be disregarded by only looking at the Xeroxed copies of documents submitted by the assessee. There is not a whisper by the assessee that these companies are actually in existence at that the address mentioned, or that the directors of any of these companies are actually accessible.
16. In these circumstances, in light of the overwhelming evidence that assessee has obtained bogus accommodation entries from entities operated by Shri Praveen Kumar Jain and his group, the mere production of Xeroxed copies of documents cannot support the case of the assessee. Accordingly, I set aside the order of the ld. Commissioner of Income Tax (Appeals) and decide the issue in favour of Revenue.
3. Now the assessee has filed Miscellaneous Application against this order seeking rectification of mistake which is apparent from the record.
4. In the submissions the ld. Counsel of the assessee has stated that no opportunity was given for cross examination of Shri Praveen Kumar Jain. In this regard, he has 4 M. A. No . 2 8 1/ Mu m/ 2 0 18 mentioned the decision of Hon'ble Apex Court. Furthermore, the ld. Counsel of the assessee has placed reliance upon the several Hon'ble jurisdictional High Court decisions as well as Hon'ble Supreme Court decisions in the case of CIT vs. Lovely Exports P. Ltd. 216 CTR 196 (SC) and it is the plea of the ld. Counsel of the assessee that in light of these decisions, the issue should have been decided in favour of the assessee. Furthermore, the ld. Counsel of the assessee has referred to the several findings of the Tribunal. In this regard, he has pleaded that these findings were given without putting the same across to the assessee. It is the claim of the ld. Counsel of the assessee that this was the departmental appeal and hence, in the assessee's paper book the details in this respect were not there, but they were kept handy. In light of the above, the assessee has submitted recall of the order of the Tribunal.
5. Per contra, the ld. Departmental Representative (ld. DR for short) submitted that what the assessee is seeking is revision of the order of the tribunal which is not permissible u/s. 254(2) of the Act.
6. I find that in this case it was an appeal by the Revenue before the ITAT. The ITAT has passed an order after duly recording that the same has been passed after hearing both the counsel and perusing the records. There was no appeal or cross objection by the assessee that the assessee is aggrieved by non consideration of ld.
CIT(A) for any ground raised before him. The ld. CIT(A) had primarily relied upon the decision of the Lovely Exports P. Ltd. (supra) which the ITAT has found to be not 5 M. A. No . 2 8 1/ Mu m/ 2 0 18 applicable in the present case. Further, the ITAT has referred to other case laws from the Hon'ble Apex Court. I find that what the assessee is seeking is the review of the order. It is settled law that wrong appreciation of facts or wrong appreciation of the case laws may be an error in judgment but do not constitute mistake apparent from the record. For this purpose, we refer to the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Ramesh Electric and Trading Co. [1993] 203 ITR 497 (Bom). In the said order, the Hon'ble jurisdictional High Court has referred to and drawn strength from the Hon'ble Apex Court decision in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC). The Hon'ble jurisdictional High Court has referred to the following from the Hon'ble Apex Court decision:
"A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record."
7. Thereafter after considering the various facts and decisions, the Hon'ble jurisdictional High Court has expounded as under:
In our view, the power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions, as has been shown in the present case. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment.6
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8. In the background of the aforesaid discussion and precedent, I find that the issues pointed out by the ld. Counsel of the assessee do not fall under the realm of mistake apparent from the record liable to be rectified u/s. 254(2) of the Act. It is settled law that re-appreciation/re-adjudication is not permissible in the garb of the rectification of mistake in the order of the Tribunal.
9. In the result, the miscellaneous application filed by the assessee stands dismissed.
Order pronounced in the open court on 06.12.2018 Sd/-
(Shamim Yahya) Accountant Member Mumbai; Dated : 06.12.2018 Roshani, Sr. PS Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. The CIT(A)
4. CIT - concerned
5. DR, ITAT, Mumbai
6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai