Income Tax Appellate Tribunal - Chennai
Pcit-1 , Madurai vs S.Seetharaman, Madurai on 7 June, 2024
आयकर अपीलीय अिधकरण, 'बी' यायपीठ, चे ई IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, CHENNAI ी महावीर सह, उपा य एवं ी जगदीश, लेखा सद य के सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI JAGADISH, ACCOUNTANT MEMBER िविवध यािचका सं / M.A. No.62/CHNY/2023 (arising in I.T.A. No. 1546/CHNY/2019) िनधारण वष / Assessment Year : 2014-15 The Deputy Commissioner of Shri S. Seetharaman, Income Tax, v. Kesar Kunj, Central Circle - 2(4), 40, vindhyachal Apartments, Chennai - 34. Chndragandhi Nagar, Byepass Road, Madurai-625 016.
[PAN: AJKPS 9973K]
(अपीलाथ / Applicant) ( यथ /Respondent)
अपीलाथ क ओर से /Applicant by : Shri P. Sajit Kumar, JCIT
यथ क ओर से/Respondent by : Shri T. Banusekar, Advocate
सुनवाई क तारीख/ Date of he ar ing : 17.05.2024
घोषणा क तारीख /Date of Pronouncement : 07.06.2024
आदेश /O R D E R
PER MAHAVIR SINGH, VICE PRESIDENT:
By way of this Miscellaneous Application, the Revenue want modification in the order of the Tribunal in ITA No. 1546/Chny/2019, dated 22.09.2022 2 M.A No.62/CHNY/2023
2. Brief facts are that a search u/s.132 of the Income Tax Act, 1961 (hereinafter the 'Act') was conducted on 29.11.2017 in the case of Milan Textile Enterprises Pvt. Ltd., and during the search, the residence of the assessee is also covered, who was Director in Visvas Promoters Pvt. Ltd., and was engaged in the business of real estate and also a consultant for identification of lands and farm houses for clients. Accordingly, notice u/s.153C of the Act dated 05.09.2019 was issued and assessee went before Settlement Commission by filing an application u/s.254D of the Act and consequent to application, Settlement Commission passed order u/s.245D(4) of the Act dated 14.12.2020. The appeal in ITA No.1546/CHNY/2019 for assessment year 2014-15 was filed by the assessee against the PCIT order passed u/s.263 of the Act for revising the giving effect order of Settlement Commission by the DCIT, Corporate Circle -2, Madurai for the assessment year 2014-15 u/s.143(3) of the Act dated 30.06.2016. The issue of availing of cash loan of Rs.68,89,65,000/-
borrowed from 106 persons in between period covered for financial year 2014-15 to 2017-18, out of which loans received by cheque of Rs.11.90 crores was accounted by assessee in its books of accounts being received by cheque and balance amount of Rs.44,99,65,000/-
was offered by assessee before Settlement Commission and the 3 M.A No.62/CHNY/2023 same is tabulated by Settlement Commission in its order at para 1.2, page 2 as under:-
Nature of Income Asst.Year Total Undisclosed income identified during search (Rs) Unexplained loans 2012-13 to 2018-19 44, 99,65,000 Unexplained investment in 2012-13 to 2018-19 90,60,000 the form of gold bars Unexplained investment in 2012-13 to 2018-19 29,53,350 the form silver articles Commission received 2017-18 2,50,00,000 Total 48,69,78,350 The Settlement Commission accepted the additional income of Rs.11.87 crores and also returned a sum of Rs.3.80 crores u/s.153C of the Act in the return of income and further sum of Rs.6.21 crores were offered before Settlement Commission and Settlement Commission accepted the same vide order No.TC/CN 51/2019-
20/60/IT dated 14.12.2020 u/s.245D(4) of the Act. The matter travelled up to Tribunal in ITA No.1456/CHNY/2019 for assessment year 2014-15 and Tribunal going through the computation of income (which is reproduced in page 5 of Tribunal's order in tabulated form) accepted the claim of assessee because the Settlement Commission has already considered the entire amount and then recorded its finding. The Tribunal in para 4 observed as under:-
4. After hearing rival contentions going through the facts of the case, order passed by the PCIT dated 31.03.2019, subsequent to that the Hon'ble Income Tax Settlement Commission passed order dated 14.12.2020, in 4 M.A No.62/CHNY/2023 which, the entire cash deposits of Rs.44,99,65,000/- from the AYs 2012-13 to 2018-19 in regard to unexplained loans, was considered and accepted.
Once, the Hon'ble Income Tax Settlement Commission has accepted the explanation of the assessee and assessed the income and made computation of income of the relevant AY 2014-15, we are of the view that the Hon'ble Income Tax Settlement Commission has considered its entirety and hence, revision order passed by the PCIT has become infructuous and accordingly, quashed.
3. Now, the Revenue has moved this Miscellaneous Application for modifying the order in regard to cash loans. The Revenue has raised this Miscellaneous Application and the relevant para 7, which reads as under:-
Upon a perusal of the Hon'ble ITAT order, it appears that the contention of the assessee - that the cash loans considered by the Hon'ble ITSC were the same in respect of which ld. Pr.CIT had passed order of revision u/s 263 of the I.T. Act -is not correct. The contention of the assessee was not factually verified with regard to the records available with the department. As already mentioned, the Hon'ble ITSC proceedings pertained to cash loans raised by the assessee and not.accounted in his books which were discovered during the course of search, whereas the loans under consideration before the ld. PCIT were those reported in books of accounts being examined during assessment proceedings and therefore, distinct from One another. Further, the Hon'ble Income-tax Settlement Commission had been informed, vide Rule 9 report dated 28.07.2020, that cash loan amounts received and interest paid in cash as per excel sheet seized wide loose sheets in ANN/VPP/GARSLS/S1 to S4 dated 30.11.2017 was neither reflected in the books of accounts of the assessee nor of his Company, M/s Visvas Promoters Pvt. Ltd. In view of the above observations, this miscellaneous petition is being filed before the Hon'ble ITAT pointing out the above discrepancy and requesting for appropriate ordes to modify the directions in the order."
When it was pointed out, the ld.CIT-DR could not point out what is the mistake in the order of Tribunal, which is apparent from record 5 M.A No.62/CHNY/2023 and which is to be rectified. He could not controvert the order of Tribunal or could not point out any mistake. We have heard ld.Counsel for the assessee also.
4. We have gone through the Miscellaneous Application of the Revenue and find that the Revenue wants to review the Tribunal order and further, want to review the order of Settlement Commission dated 14.12.2020. On this proposition, as pointed out by ld.counsel for the assessee the decision of Hon'ble Delhi High Court in the case of Omaxe Ltd., vs. ACIT reported in [2012] 209 Taxman 443 (Delhi), where it is categorically held that once application is admitted by Settlement Commission, till order, exclusive jurisdiction in relation to assessee's case would be with it and all matters which can be examined by the AO has to be examined by Settlement Commission only. The Hon'ble Delhi Court considered the decision of Hon'ble Supreme Court in the case of CIT vs. Express Newspapers Ltd., [1994] 206 ITR 443 (SC) and held in para 13 & 14 as under:-
"13. We are afraid that the submission of the Revenue overlooks the fact that in the return the assessee had claimed deduction of ₹78,99,00,509/- u/s. 80IB (10) and it was only after claiming such deduction that the net taxable income was declared at ₹89,20,76,630/-. The Assessing Officer issued notices under Section 143(2) and 142(1) on 12.07.2007 but even before the questionnaire was issued the petitioner had approached the Settlement Commission by an application filed on 31.05.2007. Under 6 M.A No.62/CHNY/2023 Section 245F(1), the ITSC, in addition to the powers conferred on it under Chapter XIX-A, shall have all the powers which are vested in an income-tax authority under the Act. By virtue of the provisions of Section 245F (2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act relating to the case, till the final order of settlement is passed under Section 245D (4). Thus the moment the application of the assessee was allowed to be proceeded with by the ITSC till the final order of the settlement is passed on 17.03.2008, it was the ITSC which had exclusive jurisdiction in relation to the assessee‟s case. Therefore, all matters which could be examined by the Assessing Officer could be examined by the ITSC in these proceedings, including the assessee‟s claim for deduction under Section 80IB (10). The total income of the assessee for the assessment year 2006-07 has been computed by the ITSC at ₹89,38,76,630/- which is ₹18,00,000/- more than the income of ₹89,20,76,630/- declared by the petitioner, which figure is after the petitioner claimed deduction of ₹78,99,00,509/- under Section 80IB (10). It is irrelevant that no undisclosed income was offered by the petitioner in regard to the housing project. Again a harmonious reading of the provisions of the statute would show that it does not postulate the existence of two orders, each of a different income tax authority, determining the total income of an assessee for the same assessment year. If the contention of the Revenue is accepted, not only will the finality of the order of settlement be disturbed, but it will also result in different orders relating to the same assessment year and relating to the same assessee being allowed to stand. We have grave doubts whether such a result, which is likely to create chaos and confusion in the tax administration could have been intended. The order of the ITSC can be reopened only in cases of fraud and misrepresentation and in no other case.
14. Moreover, as earlier pointed out, it is difficult to say that the deduction under Section 80IB (10) was not a matter covered by the order of the ITSC. In the return itself the assessee had claimed the deduction and it was also before the ITSC when the total income was determined by the ITSC in its final order, that took into consideration the deduction claimed and thus formed part of the various matters decided in the final order. Therefore, even factually it is not possible to accept the contention of the Revenue that the deduction under Section 80IB (10) was not a matter covered by the final order of settlement."7 M.A No.62/CHNY/2023
The Hon'ble Delhi High Court finally in para 18 & 19 held that the finality achieved by the order of Settlement Commission passed u/s.254D(4) of the Act cannot be disturbed under any circumstances except the Revenue could prove that the order is obtained by fraud.
The Hon'ble Delhi High Court held in para 18 & 19 as under:-
18. In order to appreciate the impact of the observations it is necessary to read the entire paragraph in which the observations appear in light of the plea taken. In the cited case, the stand of the assessee was that before the ITSC decides to proceed with the matter, that is, before an order is passed under Section 245D (1), it exercises the functions of an income tax authority and it is only after deciding to proceed with the settlement application, that is only after an order under Section 245D (1) is passed, that it exercises a dual function - one as ITSC and the other as an income tax authority. This plea was considered untenable by the Supreme Court.
The reason given by the Court, in its own words, are as under: -
"The plea is untenable for more reasons than one. Before the Commission decides to proceed with the petition, it cannot complete assessment in respect of a return which is pending before the Assessing Officer or even cannot act as an appellate or revisional authority. The return filed is in respect of disclosed income. Similar is the position visà-vis the appellate and the revisional authority. The petition before the Commission is in respect of undisclosed income, therefore, the situation is different till the Commission decides to proceed with the matter. That being the position, the income-tax authorities are free to proceed in the prescribed manner till the Commission decides to proceed with the petition."
Thus if the observations made by the Court in the paragraph at page 484 of the report are read as a whole, it would be clear that the Court was dealing with a plea which attributed an active role as an income tax authority to the ITSC even during the pendency of the application till an order under Section 245D (1) was passed and thereafter once an order was passed allowing the application to be proceeded, a role combining the functions of both an assessing authority and an authority settling the case. The Court 8 M.A No.62/CHNY/2023 repelled the plea by clarifying certain observations made by the Supreme Court in CIT v. Express Newspapers Ltd., (1994) 206 ITR 443. What the learned standing counsel relied upon before us are observations of the Court clarifying the earlier observations made in the case of Express Newspapers Ltd. (supra). The gist and purport of the observations made by the Supreme Court in the case of Damani Brothers (supra), however, is not what the learned standing counsel would like us to accept. These observations of the Supreme Court in Damani Brothers (supra) do not at all support his plea that the matter relating to the deduction under Section 80IB (10) could not have been before the ITSC. The observations of the Supreme Court in Damani Brothers (supra) clarifying the observations of the Court in Express Newspapers Ltd. (supra) only mean that the ITSC does not deal with the disclosed income of the assessee even before it decides to proceed with the case by passing an order under Section 245D (1). It does not however imply that once an order is passed under the aforesaid provision, the ITSC does not deal with both the disclosed and undisclosed incomes of the assessee. On the contrary, it would inevitably follow that once a settlement application is allowed to be proceeded with, the entire case stands transferred to the ITSC and thereafter it is the ITSC alone which shall have exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act in relating to the case, as emphatically stated in sub-section (2) of Section 245F of the Act. In Damani Brothers (supra) the Supreme Court was explaining the position during the pendency of the settlement application till an order is passed under Section 245D (1) allowing the application to be proceeded with. In the case before us, we are not concerned with that position. The question here is what would be the position when an order under Section 245D (4) is passed by the ITSC and whether such an order can be construed as one dealing with the entire gamut of the return filed by the assessee and the issues raised therein. While opining that the observations of the Supreme Court in Damani Brothers (supra) are not relevant to the factual situation or the legal dispute arising therefrom in the present case, we hold that since the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority in relation to the case vests with the ITSC after an order is passed under Section 245D (1) till the final settlement order is passed under Section 245D (4), it is not possible to countenance a situation where it can be said that the assessee‟s claim for deduction under Section 80IB (10) was not the subject matter of the order passed by the ITSC under Section 245D (4). It is further necessary to keep in mind that Section 245B (3) requires that the ITSC shall be manned by "persons of integrity and 9 M.A No.62/CHNY/2023 outstanding ability having special knowledge of, and, experience in, problems relating to direct taxes and business accounts". The provisions of Chapter XIX-A suggest that all matters in relation to the case of the assessee shall be dealt with by the ITSC just as an assessing authority would deal with them while completing an assessment under Section 143 (3) of the Act. If this is the position, it would be difficult to sustain the argument of the revenue that the matter relating to the deduction under Section 80IB (10) was not the subject matter of the final order of settlement. It follows that the Assessing Officer had no jurisdiction to reopen the assessment for the assessment year 2006-07 by issuing a notice under Section 148 of the Act on the ground that the deduction was wrongly allowed.
19. The issue can also be viewed from another angle. Barring the exception of the provisions relating to appeal and revision, the Act does not contemplate or provide for disturbing the finality of an order or proceeding passed or completed by an income-tax authority, by any order or proceeding passed or initiated by a different income-tax authority. An assessment order passed by an Assessing Officer can be rectified or amended under Section 154 or Section 155 or reopened under Section 148 only by him, and by no other income-tax authority. Similarly, an assessment by way of settlement of a case, which is made by the ITSC, can be reopened only by the ITSC and that too only in certain circumstances. Applying this general principle that runs through the Act, an assessment by way of a settlement order passed by the ITSC cannot be reopened by a different authority, viz., the Assessing Officer. The fact that the ITSC has not been designated as an "income-tax authority" under Section 116 of the Act makes the position „a fortiori‟. Section 147 of the Act does not employ language that permits him to do so, nor are the powers and orders of the ITSC made subject to the provisions of Section 147. Section 147 does not appear to fit into the general scheme of Chapter XIX-A, which has been held to be a self contained code by the Supreme Court in Brij Lal and Ors. v. CIT, Jalandhar, (2010) 328 ITR 477 (SC).
4.1 In view of the above, we find no mistake apparent from record in the order of Tribunal dated 22.09.2022 and hence, the Miscellaneous Application filed by the Revenue is dismissed.
10 M.A No.62/CHNY/20235. In the result, the miscellaneous application of the Revenue, MA No.62/CHNY/2023 is dismissed.
Order pronounced in the open court on 7th June, 2024 at Chennai.
Sd/- Sd/-
(जगदीश) (महावीर सह )
(JAGADISH) (MAHAVIR SINGH)
लेखा सद य /ACCOUNTANT MEMBER उपा य /VICE PRESIDENT
चे ई/Chennai,
दनांक/Dated, the 7th June, 2024
RSR
आदेश क ितिलिप अ ेिषत/Copy to:
1. अपीलाथ /Applicant
2. यथ /Respondent
3. आयकर आयु /CIT, Chennai/Coimbatore/Madurai/Salem
4. िवभागीय ितिनिध/DR
5. गाड फाईल/GF.