Income Tax Appellate Tribunal - Mumbai
Bimal V. Pala Legal Heir Of Late Smt. ... vs Ito 15(2)(3), Mumbai on 17 March, 2017
आयकर अपील य अ धकरण "B" यायपीठ मंब
ु ई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.2735/Mum/2016
( नधा रण वष / Assessment Year : 1996-97)
Sh.Bimal V. Pal a(legal heir of बनाम/ Princip al Commissioner of
Late Smt. Ran jana Vrajlal Income Tax
v.
Pala) 26 BKC , Bandra East
C/o H H Parmer &Co. Mumbai
512, Maker Chambers V
221, Nariman P oint
Mumbai - 400 021.
थायी ले खा सं . /P AN : AP MPP 6636G
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by : Shri Rajesh P. Shah
Revenue by : Sh. Manjunatha
Swamy,CIT- DR
ु वाई क तार ख / Date of Hearing
सन : 26-12-2016
घोषणा क तार ख /Date of Pronouncement : 17.03.2017
आदे श / O R D E R
PER Joginder Singh, Judicial Member
This appeal, filed by the assessee, being ITA No. 2735/Mum/2016, is directed against the order dated 16th March, 2016 passed by learned Principal Commissioner of Income Tax-26, Mumbai (hereinafter called "the Pr. CIT") u/s 263 of Income-tax Act, 1961(hereinafter called "the Act"), for assessment year 1996-97.
2 ITA 2735/Mum/2016
2. The grounds of appeal raised by assessee in memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:-
"1. On the facts and under the circumstances of the case and in law, the learned CIT erred in passing order u/s 263 and setting aside the order dated 19/03/2014 u/s 143(3) r.w.s. 147 on the ground that it was erroneous and prejudicial to the interest of the revenue.
2. On the facts and under the circumstances of the case and in law, the learned CIT erred in passing order u/s 263 without taking on record the details submitted and expecting to do impossible of bring on record the lost passport.
3. On the facts and circumstances of the case and in law, the learned CIT erred in passing order u/s 263 relying on decision of Rampyaridevi Saraogi vs. CIT 67 ITR 84(SC) , Taradevi Aggarwal vs. CIT 88 ITR 323(SC) and Ramaswamy Chettiyar vs. CIT 220 ITR 657, 665(MAD) which are not relevant to the appellant."
3. In the instant case , proceedings u/s 147 of the Act were initiated by AO against the assessee based on information received from Investigation wing that assessee had an operating bank account with HSBC Bank, Geneva, Switzerland. The AO while framing assessment vide orders dated 19.03.2014 passed u/s 143(3) r.w.s. 147 of the Act accepted 'Nil' income declared in Return of income filed with Revenue on 18-04-2013 in response to notice dated 26-03-2013 u/s 148 of the Act. The AO also accepted Non Resident status of the assessee, vide assessment order dated 19.03.2014 passed by the AO u/s 143(3) r.w.s. 147 of the Act.
4. The Pr. CIT received proposal u/s 263 from ACIT, 26(1), Mumbai through JCIT, Range 26(1), Mumbai on 08.01.2016. The Pr. CIT called for records and on going through the assessment records and orders, observed that the status of assessee being Non Resident during the impugned assessment year was accepted by AO as per claim of the assessee without any submissions by 3 ITA 2735/Mum/2016 assessee with respect to stay in India during previous year relevant to the assessment year by observing as under :
" On going through the assessment records and the assessment order passed , it was observed that the assesse had submitted that in 2007 she lost her passport and submitted a copy of passport dated 11.12.2007 issued at Bahrain, on the observation page of which it was written: "This passport is duplicate. Issued in lieu of lost passport No. Z003983 dated 26.12.2006 issued at Bahrain". Thus, no submission was made with regard to her stay in India, but the assessment was completed taking the status as 'Non-resident' , as per the claim of the assessee."
Thus, it was observed by Pr. CIT that assessment order dated 19.03.2014 passed by the AO u/s 143(3) r.w.s. 147 of the Act is erroneous and prejudicial to the interest of Revenue. The Pr. CIT issued show cause notice dated 15.02.2016 u/s 263 of the Act to the assessee , which was not replied with by the assessee. Further, notice dated 26.02.2016 was issued and served on the assessee by Pr. CIT.
The assessee in response submitted before Pr. CIT , a copy of affidavit dated 31.01.2015 explaining the facts of assessee being resident of Bahrain and loss of passport etc. . The assessee also submitted copy of certificate received from Head of Human & Financial Resources Directorate , Bahrain dated 12.11.2014 and copy of police complaint for the complaint lodged for lost passport dated 2.12.2007. The assessee also submitted letter dated 15.03.2016 that the assessee was NRI in assessment year 1996-97. It was submitted that in year 2007, she along with her family members lost passport. The assessee did not submitted passport for relevant previous year.
The Pr. CIT observed that AO has simply accepted the contentions of the assessee without making any enquiry which were called for in the circumstances. The Pr. CIT relied upon decision of Hon'ble Supreme Court in 4 ITA 2735/Mum/2016 the case of Rampyari Devi Sarogi v. CIT (1968) 67 ITR 84(SC) , Tara Devi Agarawal v. CIT (1973) 88 ITR 323(SC) and K.A.Ramaswamy Chettiar v. CIT (1996) 220 ITR 657, 665(Mad.) . The Pr. CIT observed that the AO should have asked for details of assessee stay in India along with documentary evidences and the same should have been thoroughly verified , which was not done by AO. The Pr. CIT observed that AO simply placed the submissions made by the assessee on record and the assessment was completed simply taking status of the assessee as 'Non-resident' as per claim of the assessee. Thus, the assessment order dated 19.03.2014 passed by the AO u/s 143(3) r.w.s. 147 of the Act was held to be erroneous so far as it is prejudicial to the interest of Revenue on the said issue and was set aside by Pr. CIT vide orders dated 16.03.2016 passed u/s 263 of the Act and directions were issued to AO for deciding the issue afresh, after due verification.
5. Aggrieved by the order dated 16.03.2016 passed by Pr. CIT u/s 263 of the Act, the assessee is in appeal before the tribunal.
6. The learned counsel for the assessee submitted that challenge in present appeal is to the order dated 16.03.2016 passed by Pr. CIT u/s 263 of the Act . It was submitted that information was received by Revenue that assessee has an account with HSBC Bank at Geneva, Switzerland , which led to re-opening of assessment u/s 147 of the Act , wherein notice dated 26-03-2013 u/s 148 of the Act was issued to the assessee by AO. It was submitted that assessee was resident of Bahrain during the relevant previous year. It was submitted that Indian passport no. Z003983 issued in Bahrain issued on 26-12-2006 by Indian Consulate , Bahrain in the name of assessee was lost in Bahrain on 02-12-2007. The learned counsel submitted that complaint was filed with Ministry of Interior, Kingdom of Bahrain on 02-12-2007 intimating loss of above passport held by assessee. The copies of certificate issued by Ministry of Interior is enclosed in paper book 20-21 filed with the tribunal.. It was 5 ITA 2735/Mum/2016 submitted that new Indian passport was issued at Bahrain bearing No. F9275653 dated 11/12/2007 by Indian Consulate office which is also enclosed in paper book/page 23. The assessee has also executed affidavit dated 01-02-2015 to support its contentions and was filed before the ld Pr. CIT which is placed in paper book/page 17-18.
7. Ld CIT DR submitted that AO should have verified the contention of the assessee before accepting the same, which was not done by the AO in the instant case. It was submitted that AO merely accepted the contentions of the assessee without verification and hence re-assessment order dated 19-03- 2014 passed by the AO is erroneous so far it is prejudicial to the interest of revenue and was rightly set aside by Pr. CIT u/s 263 of the Act. Thus , it was submitted that it is a case of complete lack of enquiry. The ld CIT DR relied upon decision of Hon'ble Apex Court in the case of CIT v. Amitabh Bachchan (2016) 69 taxmann.com 170(SC).
8. We have considered rival contentions and perused the material on record including case laws cited before us. The AO received information from Investigation wing that assessee has an account during the relevant previous year in Switzerland with HSBC Bank at Geneva. The AO based on such information reopened the assessment u/s 147 of the Act for assessment year 1996-97 by issuing notice dated 26-03-2013 u/s 148 of the Act. The assessee was confronted with the said information during re-assessment proceedings u/s 147 r.w.s. 143(3) of the Act. The assessee in re-assessment proceedings submitted that she is an old lady of 74 years suffering from arthritics. It was submitted that she resided in Bahrain for more than 40 years and accordingly was Non-Resident during the previous year relevant to the impugned assessment year 1996-97. It was submitted that since she was Non-resident at that time, she was under no obligation to file return of income with Revenue during the impugned assessment and hence no return of income 6 ITA 2735/Mum/2016 was originally filed by her for the impugned assessment year with Revenue . In re-assessment proceeding , she filed return of income declaring 'Nil' Income, under protest. It was submitted that she is not able to recollect transaction for assessment year 1996-97 nor she had any bank statement or any other documents of those times to help her recollect the transactions. It was submitted that from the assessment year 2009-10, she was filing return of income in India as 'resident'. It was submitted that in 2007, in Bahrain , the assessee lost her passport which bore the number Z003983 issued on 26- 12-2006, which is reflected in the present passport issued at Bahrain on 09- 01-2012 which referred to old passport dated 11.12.2007 and 26.12.2006. . It was submitted that the assessee did not have copy of old passport. It was submitted that assessee did not had any taxable income in India during the relevant previous year . It was submitted that the assessee had investment income in Bahrain but since there was no tax in Bahrain, she did not preserve any documentary proof of investment.
The AO accepted contentions of the assessee and accepted Non Resident status of the assessee for the relevant previous year , without any enquiry and verifications based on submissions and claims made by the assessee in her submissions before the AO, for which re-assessment order dated 19.03.2014 was passed by the AO u/s 143(3) r.ws. 147 of the Act. We have gone through the assessment order dated 19.03.2014 passed by the AO u/s 143(3) r.w.s. 147 of the Act as well submissions made by the assessee before the AO. The assessment was re-opened as information was received that assessee was holding an bank account in Switzerland with HSBC Bank at Geneva. The assessee during re-assessment proceedings did not commented whether she is holding the said bank account with HSBC, Geneva or not as no comments were offered towards the existence of said bank account. The assessee merely stated that she does not have any bank statement with her for relevant period. The assessee had contended that the assessee is Non 7 ITA 2735/Mum/2016 Resident during the relevant period but no evidence was provided to that effect. It is merely stated that the assessee resided in Bahrain for last more than 40 years and being Non Resident, the assessee does not have taxable income in India and hence no returns were filed till assessment year 2009-10. No details of actual period of stay out of India and specifically during the previous year relevant to the impugned assessment year as also no details as to fulfilling of the requirements as provided under Section 6 of the Act was furnished by the assessee before the AO. It was merely stated that passport was lost and no details are available. Even , if the assessee is held to be Non Resident , then also by virtue of income received in India or deemed to be received in India or income accrued in India or income deemed to accrue or arise in India , the said income shall be taxable in India , by virtue of provisions of Section 5(2) of the Act. These aspects were not gone into by the AO and he merely accepted the contentions of the assessee without verifications and enquiry. Thus, it is a case which is not suffering from inadequate enquiry but rather the re-assessment is vitiated by complete lack of enquiry wherein the AO chose not to make any enquiry or verifications whatsoever . The AO while passing re-assessment order dated 19-03-2014 did not made any enquiry and merely accepted the contentions of the assessee without any verification and enquiry. The re-assessment order dated 19-03- 2014 passed by the AO thus cannot be upheld as it is not based on any cogent material on record to substantiate that assessee was infact non resident in the relevant year as per provisions of Section 6 of the Act and also even if she is held to Non Resident , there was no income falling within purview of Section 5(2) of the Act to take her out of clutches of taxability as provided under provisions of the Act. Thus, the assessment order of the AO cannot be sustained as it is erroneous so far as prejudicial to the interest of Revenue and was rightly set aside by Ld. Pr. CIT u/s 263 of the Act. The AO even did not brought on record whether the assessee was in-fact holding bank account with HSBC , Geneva or not during the relevant previous year or no 8 ITA 2735/Mum/2016 such bank account was held by her . The assessee has merely stated that she does not have bank statement. Even the passport was stated to be lost and status of the assessee being Non Resident for previous year relevant to assessment year was accepted by the AO on self declaration by the assessee.
Attention is drawn to provisions of Section 263 of the Act which stipulates as under:
"E.--Revision by the [Principal Commissioner or] Commissioner Revision of orders prejudicial to revenue.
263. (1) The [Principal Commissioner or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneousin so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
[Explanation 1.]--For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,--
(a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include--
(i) an order of assessment made by the Assistant Commissioner 2[or Deputy Commissioner] or the Income-tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A;
(ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Director General or] Director General or [Principal Commissioner or] Commissioner authorised by the Board in this behalf under section 120;
9 ITA 2735/Mum/2016
(b) "record" [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the [Principal Commissioner or] Commissioner;
(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the [Principal Commissioner or] Commissioner under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] [Explanation 2.--For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,--
(a) the order is passed without making inquiries or verification which should have been made;
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or
(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. ] [(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.] (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [National Tax Tribunal,] the High Court or the Supreme Court.
Explanation.--In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the 10 ITA 2735/Mum/2016 assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded."
We have observed that w.e.f. 1st June, 2015 by Finance Bill 2015, Explanation 2 to section 263 was inserted to declare the law which reads as under:-
" [Explanation 2.--For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,--
(a) the order is passed without making inquiries or verification which should have been made;
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or
(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. ]"
Thus, explanation 2 to Section 263(1) of the Act has introduced deeming provisions where, inter-alia, if the AO did not made the enquiries which it was required to made , the order shall be deemed to be erroneous so far as it is prejudicial to the interest of Revenue. In the instant case , the AO did not made any enquiry or verification whatsoever and accepted the contentions of the assessee. Even as to incriminating information received by AO that the assessee had an account in Switzerland with HSBC Bank at Geneva during the impugned assessment year was not enquired / verified into . The Hon'ble Supreme Court in the case of Malabar Industrial Company Limited v. CIT (2000)109 Taxman 66 (SC) held that if the AO has accepted the entry in the statement of account filed by the taxpayer without making enquiry and application of mind , the said order of the AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue. In our considered 11 ITA 2735/Mum/2016 opinion, the facts of the case of the instant case are similar to the facts in the case of Malabar Industrial Co. Limited(supra) whereby no enquiry/verification is made by AO whatsoever with respect to residential status of the assessee as well as his holding of the bank account in Switzerland with HSBC at Geneva during relevant previous year and the same was accepted based on submissions of the assessee without application of mind as well without any verification/enquiry being made by the AO. Thus, in our considered view learned Pr. CIT rightly invoked provisions of Section 263 of the Act for setting aside re-assessment order dated 19-03-2014 passed by AO being erroneous so far as prejudicial to the interest of Revenue, as no enquiry was made by AO as well there was no application of mind while all the submissions of the assessee were accepted without any enquiry/verification. Thus the view of the AO is not a sustainable view as it was not supported by evidence on records and hence was a perverse view which could not be held to be one of the possible view taken by the AO to take the same out of the purview of mandate of Section 263 of the Act.
In proceedings u/s 263 of the Act , the assessee reiterated its submissions as also filed an affidavit dated 31.01.2015 (pb/page 17-18), wherein she admitted to have opened a bank account in Switzerland with HSBC Bank at Geneva on 15-12-1989. It is the averment of the assessee in the said affidavit that she is staying with her husband in Bahrain since 1957(pb/17) , while certificate ( pb/19) dated 12-11-2014 issued by Head of the Human and Resources Directorate had stated that her first entry to the kingdom of Bahrain was recorded on 21-07-1994 , and the impugned assessment year is 1996-97. The assessee in her affidavit has averred that the assessee has filed an RTI application with FRRO on 05-11-2015 to obtain her entry into and out of India to confirm her residential staus. The assessee has also averred that she has lost her passport no Z003983 dated 26/12/2006 issued at Bahrain by Indian Consulate which was duly reported to Ministry of Interior 12 ITA 2735/Mum/2016 at Kingdom of Bahrain , their certificate is placed in page 20-21, but in our considered view, this is irrelevant as her residential status is to be determined u/s 6 of the Act w.r.t. previous year relevant to assessment year 1996-97 which is a relevant assessment year and any passport which is issued post this period i.e. in this case passport no Z003983 issued on 26-12-2006 is totally irrelevant to determine residential status of the assessee for assessment year 1996-97 under consideration .
Thus, keeping in view of our above detailed discussions , we uphold the order of the learned Pr. CIT passed u/s 263 of the Act setting aside the order of the AO being erroneous and prejudicial to the interest of Revenue on the above mentioned issue and to be set aside the same to the file of the AO for deciding the issue afresh , after due verifications. We order accordingly.
9. In the result, appeal filed by the assessee in ITA No. 2735/Mum/2016 for assessment year 1996-97 is dismissed.
Order pronounced in the open court on 17th March, 2017. आदे श क घोषणा खुले #यायालय म% &दनांकः .............. को क गई ।
Sd/- Sd/-
( RAMIT KOCHAR) (JOGINDER SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
मुंबई Mumbai; &दनांक Dated 1 7.0 3.2 017
व./न.स./ R.K., Ex. 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. आयकर आयु0त(अपील) / The CIT(A)- concerned, Mumbai 13 ITA 2735/Mum/2016
4. आयकर आयु0त / CIT- Concerned, Mumbai
5. 3वभागीय /त/न5ध, आयकर अपील य अ5धकरण, मुंबई / DR, ITAT, Mumbai H" Bench
6. गाड9 फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या3पत /त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai