Income Tax Appellate Tribunal - Rajkot
Shri Kishor M. Karia,, Rajkot-Gujarat vs The Assistant Commr. Income ... on 27 September, 2018
आयकर अपील य अ धकरण, राजकोट यायपीठ, राजकोट ।
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
LkoZJh olhe vgen
vgen]] ys[kk lnL; ,o Ek/
Ek/kqkqferk jkW;] U;kf
U;kf;d
kf;d lnL; ds le{kA
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
And SMT MADHUMITA ROY, JUDICIAL MEMBER
Misc. Application No. 08/Rjt/2015
(arising in I.T.A. No.464/Rjt/2012)
( नधा रण वष / Assessment Year : 2001-02)
Sh. Kishor M. Karia, बनाम/ ACIT,
C/o. KSD & Associates, Vs. Circle - 5,
Chartered Accountants, Jamnagar.
411, Cosmo Complex,
Nr. Mahila College Circle,
Rajkot - 360 001
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : ADGPK 8151 R
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से/ Appellant by : Shri Kalpesh Doshi, A.R.
यथ क! ओर से/Respondent by: Smt. Usha N. Shrote, Sr. D.R.
ु वाई क! तार ख/
सन Date of Heari ng 03/07/2018
घोषणा क! तार ख /Date of Pronounce ment 27/09/2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The assessee by way of this Miscellaneous Application is seeking to recall the order of Hon'ble Tribunal in ITA No. 464/Rjt/2012 vide order dated 31/7/2013 pertaining to the AY 2001-02 on the ground of apparent mistake therein.
-2-2. The assessee before us submitted as under:
This application is made against the findings and order of the Hon'ble ITAT vides order dated 31-07-2013.
1. The appeal was filed by the Assessee against the order of the learned CIT(A).
2. It is respectfully submitted that the assessee has raised the ground against the imposition of Penalty u/s 271(1)(C) of the IT. Act.
3. The brief facts of the case are that a survey u/s 133A of the IT.
Act took place at the business premises of M/s M.P. Scrap Traders; the appellant is partner in the said firm.
4. During the course of survey, the appellant had voluntary disclosed investment in FOR in the name of family members as undisclosed investment.
5. The "A" filed revised return on 22-01-2007, the AO issued notice u/s 148 on 19-03-2007 and regularized the revised return filed by "A".
6. The "A" has offered such income voluntarily and the AO in assessment proceedings as well as penalty proceedings has never objected such findings.
7. The AO has accepted the additional income declared by "A" and has not made any contrary comment on such surrender, it can be seen from the assessment order that AO has not initiated any penalty proceedings against the income disclosed during the survey. The same can be seen from the para 3 to 6 of the assessment order.
8. The AO has initiated penalty u/s 271(1)(C) only against the addition made of Rs. 6,20,000/. The said addition was deleted by the Ld . CIT(A)
9. The intention of the AO can further be seen by the show cause notice issued dated 25/02/2011, in which the Ld. AO has specially show-caused as to why penalty should not be levied for the addition confirmed by the CIT(A).
10. We may further draw your kind attention to the Penalty order vide para 5 page 3, the AO has reproduced the findings in the assessment order for the addition made of Rs. 6,20,000/. 11 The Id AO has initiated the penalty vide para 8 on the ground that the addition has been confirmed by the Ld. CIT(A) and therefore the show cause notice has been issued by the AO.
-3-12. We may further draw your kind attention to Para 9 of the Penalty order, it has been clearly stated that the penalty has been imposed on the ground that the addition of Rs. 31,61,869/ has been confirmed by the Ld. CIT(A), this clearly states that the penalty has been imposed merely on the ground that the addition has been confirmed by the CIT(A).
13. The AO has further shown his intention to levy penalty as the income has been duly confirmed by the Ld. CIT(A) vide para 11 of the penalty order.
14. The AO has finally made computation of penalty in Para 13 page 6 and stated that addition of Rs. 31,61,869/- has been confirmed vide order dated 31/12/2007 by the Ld. CIT(A) on which penalty u/s 271(1)(C) is leviable.
15. During the course of appeal proceedings, the above arguments were specifically raised and also made written submission. This fact can be found from the order of ITAT vide para 5 page 4. The Hon'ble ITAT has noted the above arguments raised during the course of appeal.
5. At the time of hearing before us, on behalf of the assessee Shri Kalpesh Doshi CA appeared and drew our attention to penalty order as well as show cause notice dated 25.01.2011 issued by ACIT, Circle 5, Rajkot before issuing the penalty and contended that the Assessing officer levied the penalty mainly on the grounds that additions made by him are confirmed by the Ld. CIT(A). The ld. Counsel for the assessee pointed out that this is not true. He also submitted that both the additions totaling to Rs.31,61,869/- for which the Assessing Officer levied u/s 143(3), in respect of undisclosed income offered in respect of FDRs amounting to Rs.20,00,000/- and accrued interest thereon amounting to Rs. 7,67,869/- were duly declared by the assessee in the return furnished before issuance of notice u/s 148. These additions were not made by the assessing officer and therefore there is no satisfaction for levying penalty u/s 271(1) (c) of the Income tax Act He pleaded that on this ground alone, the penalty levied by the Assessing officer u/s 271(1)(C) be cancelled."
16. We may refer to written submission filed on 25/03/2013, vide para no. 2, 1 - 8 bullet points . in which specific argument has -4- been raised during the course of appeal proceedings before Hon'ble ITAT.
17. In the appeal proceedings various decisions were relied upon to state that the ld AO has not applied mind and the satisfaction / reasoning for imposing penalty was due to additions confirmed by the Id. CIT(A) and therefore the said findings of the Id. AO was incorrect and therefore the penalty was based on incorrect presumption and cannot be levied.
18. During the course of appeal proceedings, various case laws relied upon as under:
o SAS Pharmaceutical 335 ITR 259 (Del.)
o Virgo Marketing Pvt. Ltd. 171 Taxman 156 (Del)
o Ever plus Securities & Finance Ltd. 101 ITD 151 (Del.
Trib)
o Hindustan Milk Food Ltd. 94 TTJ 436 ( Chd. Trib)
o Hoe Leather Garments Ltd. 39 SOT 210 (Hyd. Trib.)
o Signature 85 TTJ 117 (Del. Trib.)
o U.P. State Bridge Corp. Ltd- 17 DTR 297 (Lucknow Trib.)
o Vikram Chadha 115 TTJ 123 (ASR. Trib.)
19. However, the Hon'ble ITAT while considering the issue and findings has not considered this basic and fundamental issue and decided the appeal against the assessee.
20. The whole focus of the findings was on the other issue, whereas very fundamental issue is that whether the Id. AO had intended to impose penalty on the income disclosed during the course of survey has not been dealt in by the Hon'ble ITAT .
21. Therefore, there is mistake apparent of record in the order of the Hon'ble ITAT and therefore the same should be rectified u/s 254(2) of the IT. Act.
22. Therefore, while considering the appeal of the assessee, the Hon'ble ITAT has not considered the various issues in detail and passed the order. The order passed by the Tribunal should reflect not only its "conclusion" but also "decision making process". The reasons, however brief, are the soul and the backbone of an order. In absence of such reasons, which must be reflected on reading of the order, it is not possible to state whether the Tribunal was aware of the controversies made before it in -5- relation to the issues, and the reasons which ultimately weighed with the Tribunal for arriving at a decision.
23. The Tribunal should independently examine the issues and grounds raised in appeal and give an independent judgement and order thereon instead of recording the order that the order under appeal is well reasoned order, there is no infirmity and stop at that.
24. The Hon'ble Tribunal is the final fact finding body in the hierarchy of appellate jurisdiction under the Act, In the present case it cannot be stated that the Tribunal has followed the well- settled position while discharging its duty. The Tribunal has singularly failed in its duty by not considering the facts and evidences produced by the assessee.
25. Reliance is placed on the following decisions:
- S.J. & SP. Family Trust Vs. DCIT 277 ITR 557 (GUJ)
- Dagina Vs. DCIT 290 ITR 622 (GUJ)
- Gautam Harilal Gotecha Vs. DCIT 281 ITR 283 (GUJ)
- CIT Vs. Jadeja Consultants (P) Ltd. 10 DTR 205 (DEL)
26. It is also further stated that the Hon'ble ITAT has relied on the decision of Delhi High court in the case Mak Data , however the Supreme Court in the case of Mak Data vide para 9 has observed as under:
"survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty -6- proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961."
27. Therefore, the SC in the said case has held that if the assessee would have offered the income in the return filed after survey, the same would been considered as voluntary disclosure. The assessee has filed the details in the return even much before the notice u/s 148 of the IT. Act was issued and therefore the offer was voluntary and therefore no penalty is required to be imposed.
28. The Hon'ble ITAT while dealing with the other argument has also not dealt with the said issue.
29. Therefore, it is respectfully submitted to recall the order of the Hon'ble ITAT and the issue may be decided on merits after considering the various facts and evidences produced by the assessee.
PRAYER It is therefore prayed that the Miscellaneous Petition filled by assessee may be allowed and recall the matter and decided according to the merit of the case.
This application is submitted in triplicate along with the order of the Hon'ble ITAT and a challan of Rs. 50/- for payment of fees."
3. On the other hand the ld. DR vehemently supported the order of the Tribunal.
4. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 254(2) of the Act can be invoked for the mistakes which are glaring in nature and can be pointed from the face of the order. The mistakes which require the application of mind and long drawn process to arrive at a conclusion, cannot amount to apparent mistake. If these types of mistakes -7- are considered as apparent from record, then it would lead to review the order.
4.1 Coming to the facts of the instant case we note that the ITAT has passed the order after considering all the arguments of the assessee and perusing the materials available on record. The ITAT also relied on several judgments in its order. Thus in such a case, if the order is recalled, it will amount to review of the order which is not permissible under the provisions of law. In this regard, we find support & guidance from the judgment of Hon'ble Delhi High Court in the case Smt. Baljeet Jolly Vs. CIT reported in 113 taxman 38 wherein it was held as under:
"A bare look at section 254(2) makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 254(2), the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. 'Mistake' means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault, a misunderstanding, a misconception. 'Apparent' means visible; capable of being seen; easily seen; obvious; plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in section 254(2) makes it clear that only amendment to the order passed under section 254(1) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. Amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. What the assessee intended, to do in the instant case was precisely the substitution of the order, which was not permissible under the provisions of section 254(2) and, therefore, the Tribunal was justified in holding that there was no mistake apparent on the face of the record. Where an error is far -8- from self-evident, it ceases to be an apparent error. It is no doubt true that a mistake capable of being rectified under section 254(2) is not confined to clerical or arithmetical mistake. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Apex Court in Master Construction Co. (P.) Ltd. v. State of Orissa [1966] 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law."
Among other things the grievance of the assessee is that the issue of penalty on the income disclosed during the survey has not been dealt by the ITAT in its order.
However on perusal of the order of the ITAT we note that the issue was duly discussed in the order as evident under:
"9. Turning to the facts of the case as presented before us, it is clear that the assessee had furnished his original Return of Income on 30.07.2001 declaring total income at Rs.2,16,935/-. It is this originally returned income with reference to which charge of concealment has to be seen. Survey u/s 133A of the Income-tax Act was carried out on 04.01.2007 by the Investigation Wing of the Income-tax Department at the business premises of M/s M P Scrap Traders. Rajkot which the assessee was a partner) during which it transpired that the assessee had invested a sum of Rs.24 lakhs in fixed deposits and also received interest amounting to Rs.7,61,869/-. Statement of the assessee was recorded during the course of survey. On being confronted about the nature and source of the aforesaid investment, the assessee stated on oath that the said investment was made out of his unaccounted income and resultantly surrendered a sum of Rs. 24 lakhs being investment in fixed deposits as his unexplained income and also offered interest thereon to tax. Before the AO could issue statutory notices to bring the aforesaid amounts to tax, the assessee filed a return of income on 22.1.2007 in which he offered the said sum, i.e., Rs. 24,00,000/- + -9- 7,61,869/-, to tax. Since the aforesaid return was neither a return u/s 139(1) nor 139(4) nor 139(5), the AO treated the same as non-est and accordingly ignored the same. He issued a notice u/s 147/148 pursuant to which order of re-assessment has been passed in which both the aforesaid sums have been taxed in addition to taxing a sum of Rs.6,20,000/- being the income from share transactions. In the course of re-assessment proceedings, the AO has also initiated proceedings for levy of penalty u/s 271(1)(c). On appeal, the Id. CIT(A) deleted the aforesaid addition of Rs.6,20,000/- made by the AO. In other words, the action of the AO in taxing Rs.24,00,000 + 7,61,869 as unexplained income of the assessee has attained finality. It is with reference to the aforesaid amount that the AO has levied the impugned penalty."
5. The other grievance of the assessee among other thing is that the income was offered to tax before the issuance of notice under section 148 of the Act. However, we note that the grievance of assessee was duly answered by the ITAT in its order as discussed above.
In view of above we note that the order of the ITAT does not suffer from the apparent mistake. In this regard we place our reliance on the judgment of Bombay High Court in the case of Ramesh Electric & trading company reported in 77 taxman 43 wherein it was held as under:
"The power of rectification under section 254(2) can be exercised only where the mistake is apparent from the record, and not a mistake which is required to be established by arguments and a long- drawn process of reasoning on points on which there might conceivably be two opinions. 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 have been an error of judgment. In the instant case, the alleged failure, at least on one count, was attributed by the assessee to the ITO and not the
- 10 -
Tribunal, Therefore, the Tribunal had no jurisdiction under section 254(2) to pass the second order."
Besides the above we also note that the Hon'ble ITAT has passed a speaking order after considering many other facts which have been discussed in length therein and no infirmity on such finding was pointed by the assessee. Therefore merely non-consideration of some arguments of the party will not lead to the conclusion that the order of the Tribunal suffers from the apparent mistake.
6. We also note that the arguments of the assessee have been the recorded by the ITAT but some of them were not considered while deciding the issue on hand. Such a mistake could be a mistake of the judgment but the same cannot be construed as a mistake apparent from the record. In this regard, we find support and guidance from the order of Pune Tribunal in the case of Poona pearls poultry breeding farms & hatcheries v DCIT reported in 58 ITD 1(PUNE) (TM) the relevant extract of the order is reproduced below:
"What is rectifiable under section 254(2) is a mistake which is apparent. It must be one for the discovery of which no elaborate reasoning or enquiry is necessary. A bare look at section 254(2) makes it clear that a mistake apparent from record is rectifiable, but in order to attract that section, the mistake must exist and it must be prima facie apparent from the record. To mistake means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault; a misunderstanding or misconception. Unless the alleged mistake falls in these categories, it could not be taken as a mistake apparent from record. In other words, where the Tribunal has committed an error of judgment, the same cannot be sufficient to exercise the power of rectification
- 11 -
under section 254(2). The correctness of a conclusion on facts cannot be the subject-matter of an application for rectification. If the Tribunal on the facts and on the circumstances has taken a conscious decision, that decision cannot be upset by either party to the dispute by moving an application for rectification. Such an application, in fact, would amount to review of the proceedings which the Tribunal is not entitled to do. The Tribunal is the creature of law and, therefore, is debarred from reviewing its own decision. Only a mistake can be rectified by the Tribunal on its own motion or by an application made in this behalf.
On perusal of the order of the Tribunal, it could be seen that it had discussed only one decision out of so many decisions with identical facts cited by the assessee and neither accepted the decisions nor mentioned the other decisions in its order. It could not be said that non-mention of the other decisions had affected the result of the appeal of the assessee. Therefore, the absence of specific mention of the other decisions, did not constitute a mistake apparent from record.
It is well-settled that the decision of the Tribunal need not be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or, whether some incidental facts which appear on the record have not been noticed by the Tribunal in its judgment. If on a bare reading of the judgment of the Tribunal one has found that it has taken into account all relevant material and has also not taken into account any irrelevant material for basing its conclusions, the decision of the Tribunal is not to be interfered with. It is not necessary for the Tribunal to state in its judgment specifically in express words that it has taken into account the cumulative effect of the circumstances, or, has considered the totality of the facts, as if that is a magic formula; if the judgment of the Tribunal showed that it has in fact done so, there was no reason to come to the conclusion that there is an error in the order of the Tribunal.
A careful reading of the appellate order of the Tribunal in the instant case clearly indicated that whatever evidence was filed by the assessee before the Tribunal, it had been taken into account to decide the appeal. All the judicial decisions cited before the Tribunal were considered, though only one decision was mentioned.
- 12 -
There was no necessity of mentioning the other decisions as the issue decided in those cases was the same. In other words, by rejecting the decision mentioned in judgment, the Tribunal had rejected the other decisions decided on similar facts. The omission to mention all other decisions, therefore, was no mistake apparent from record within the meaning of section 254(2). The controversy whether the poultry building is a plant or not has not been set at rest either by a jurisdictional High Court decision or by a Supreme Court decision. Some Benches of the Tribunal have taken a view that the poultry building is a plant, while other Benches have differed from that view. If one of the available views is adopted by the Tribunal. This will not constitute a mistake apparent from record.
The assessee contention based on paragraphs 8 and 13 of the Tribunal's order could not be accepted as these paragraphs did not contain findings of the Tribunal but only arguments advanced by the assessee and the revenue respectively Again, the proposition that an appellate order of the Tribunal is binding on other Benches of the Tribunal is conventional only and not mandatory. There are many decisions where one Bench of the Tribunal may have taken a view different from another Bench on similar facts.
The perceptions of the Members constituting the Bench may differ. In such a circumstance, it must be the duty of the parties to the dispute to make a specific request to the Tribunal to refer the matter to the Special Bench. In the instant case, no request seemed to have been made by the assessee. Therefore, there was no mistake apparent from record, which could be rectified under section 254(2). Therefore, the view expressed by the Accountant Member to the effect that the miscellaneous application was to be dismissed, was agreed to."
In view of the above, we hold that there is no mistake in the order of ITAT which is apparent from the record. Hence the grounds raised by the assessee in its MA are dismissed.
- 13 -
7. In the result, MA filed by the assessee is dismissed.
This Order pronounced in Open Court on 27/09/2018
Sd/- Sd/-
¼e/kqferk jkW;½ ¼olhe vgen½
U;kf;d lnL; Yks[kk lnL;
(MADHUMITA ROY) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 27/09/2018
Priti Yadav, Sr.PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं धत आयकर आयु,त / Concerned CIT
4. आयकर आयु,त(अपील) / The CIT(A).
5. /वभागीय 2त2न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad.
6. गाड7 फाईल / Guard file.
आदे शानुसार/BY ORDER, स या/पत 2त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील%य अ&धकरण, अहमदाबाद / ITAT, Ahmedabad