"C"
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI
BEFORE S/SHRI VIJAY PAL RAO, JM AND N.K. BILLAIYA, AM
, . . ,
./I.T.A. No.3443 /Mum/2012
( / Assessment Year : 1993-1994
Smt. Pratima H. Mehta, / ACIT CC -23,
32, Madhuli, 4 t h floor,
Vs.
Dr. A.B. Road, Aayakar Bhavan,
Worli, M.K. Road,
Mumbai- 400 018. Mumbai 400 020.
. / PAN : ABNPM8226G
( /Appellant) .. ( / Respondent)
./I.T.A. No.4288 /Mum/2012
( / Assessment Year : 1993-1994
ACIT CC -23, / Smt. Pratima H. Mehta,
Cent. Range -7, 32, Madhuli,
Vs.
Room No. 409, 4 t h floor, Dr. A.B. Road,
Aayakar Bhavan, Worli,
M.K. Road, Mumbai- 400 018.
Mumbai 400 020.
. / PAN : ABNPM8226G
( /Appellant) .. ( / Respondent)
Assessee by Shri Vijay Mehta &
Shri Dharmesh Shah
Department by Dr. P. Daniel (standing
counsel by order)
/ Date of Hearing : 2-9-2014
/Date of Pronouncement : 05-09-2014
[
2 ITA 3443/M/12 & 4288/M/12
/ O R D E R
PER N.K. BILLAIYA, A.M. :
. . ,
These cross appeals by the assessee and the Revenue are directed
against the order of the ld. CIT(A) 40, Mumbai dated 30-03-2012 pertaining to
A.Y. 1993-94. These appeals are head together and dispose of by this
common order for the sake of convenience and brevity.
ITA NO. 3443/Mum/12 (Assessee's appeal for A.Y. 1993-94).
2. The assessee has raised the following six grounds of appeal:-
"1. The Learned Commissioner of Income Tax (Appeals) has erred in
law and in facts in not appreciating that the Assessing Officer has not
complied with the principles of natural justice either during the course
of the assessment proceedings or during the course of the remand
proceedings.
2. The Learned Commissioner of Income Tax (Appeals) has erred in
law and in facts in not determining the income based on the final books
of account thereby confirming the manner of determination of income
by the Assessing Officer. The Learned CIT(A) ought to have accepted
the book results shown by the appellant.
3. The Learned Commissioner of Income Tax (Appeals) has erred in
law and in facts in not appreciating that no income from the attached
assets can be taxed in the hands of the appellant.
4. The Learned Commissioner of Income Tax (Appeals) has erred in
law and in facts in confirming the enhancement of income, in principle,
as proposed by the Assessing Officer which is illegal, invalid and
beyond jurisdiction.
5. The Learned Commissioner of Income Tax (Appeals) has erred in
law and in facts in confirming the disallowance of deduction on account
of interest expenditure claimed by the appellant.
6. The Learned Commissioner of Income Tax (Appeals) has erred in
law and in facts in confirming the levy of interest u/s 234A and 234B
pf the Act."
3 ITA 3443/M/12 & 4288/M/12
3. At the outset, the ld. Counsel for the assessee stated that he is not
pressing ground No. 3. The same is accordingly dismissed as not pressed.
4. Ground No. 1 is general in nature, hence need no separate
adjudication.
5. Ground No. 2 relates to the grievance that the ld. CIT(A) ought to have
accepted the book results. It is the say of the ld. Counsel for the assessee
that in the first round of litigation, the Tribunal in ITA No. 5192/Mum/2003
order dated 17-3-2006 at para 8 of its order has directed the ld. CIT(A) to
admit the books of account as an additional evidence. However, we find that
the ld. CIT(A) at para 8.4 of his order has observed that "the only major
addition made by the A.O. is on the ground that the appellant has sold
certain shares and earned capital gain. This ground is being dealt with in the
subsequent para of this order. In light of this, the rejection of book of account
do not prejudicially affect the appellant. Thus, the whole issue is academic in
nature having no bearing on any of the addition made by the Assessing
Officer." With these observations, the ld. CIT(A) dismissed the grievance of the
assessee in respect of rejection of books of account as infructuous. Aggrieved
by this, the assessee is in appeal before us.
6. A perusal of the order of the Tribunal in the first round of litigation in
ITA No. 5192/Mum/2003 shows that the Tribunal has observed that the ld.
CIT(A) himself had admitted the books of account as an additional evidence
and the Department is not in appeal against those orders. Once the
admission of the books of account has been accepted, then the ld. CIT(A)
ought to have gone with the books of account and if the books of account
were not found proper or as per the accounting policies, the same should
have been rejected but that being not the case, we do not find any reason for
not admitting the books of account. Considering the past history and the
order of the Tribunal (supra), in our considered opinion, the books of account
4 ITA 3443/M/12 & 4288/M/12
ought to have been examined by the authorities below. We therefore restore
this issue to the file of the A.O. to examine the correctness of the books of
account with supporting evidences. Ground No. 2 of assessee's appeal is
allowed for statistical purpose.
7. Ground No. 4 relates to the enhancement of income in principle. The
ld. CIT(A) has considered this issue at page 14, para (h) of his order. The ld.
CIT(A) observed that the A.O. has forwarded the proposal for enhancement of
the income on the ground that there is a mismatch in the balances in the
ledger account of the appellant and Late Shri Harshad S. Mehta. It was
found that in the books of late Shri Harshad S. Mehta, the assesse's ledger
accounts shows a debit balance of Rs. 7,81,46,140/- whereas in the case of
assesse's ledger account shows a credit balance of Rs. 7,47,55,547/-. Thus
there was a difference of Rs. 33,90,593/- which the A.O. required the ld.
CIT(A) to add to the total income of the assessee. The assessee was asked to
explain. The assessee filed a detailed reply strongly objecting to the proposed
enhancement. It was claimed that the proposed enhancement was entirely on
presumption not supported by any evidence. The transactions are very much
reflected in the books of account of both the parties. It was further stated that
the A.O. himself has admitted that the assessee has shown the transactions
in her books of account whereas late Shri Harshad S. Mehta has not shown
such transactions. Under these circumstances, the additions cannot be made
in the hands of the assessee. It was further stated that the difference in the
accounts is because there was a difference in the opening balance which is on
account of interest payable by the assessee to Late Shri Harshad S. Mehta.
The assessee has also filed the copies of the ledger account explaining the
difference in opening balances. The copies of the ledger account of Shri Late
Shri Harshad S. Mehta and also the books of the assessee are extracted at
para 14.2 on page 18 of the order of the ld. CIT(A). After considering the facts
and the copies of ledger account, the ld. CIT(A) was convinced that the
5 ITA 3443/M/12 & 4288/M/12
difference to the tune of Rs. 33,90,593/- was on account of difference in the
opening balance therefore no enhancement of income can be made in the year
under appeal. However, at the same time, directed the A.O. to enhance in
respect of the balance entries after excluding the difference on account of
opening balance. Aggrieved by this, the assessee is in appeal before us.
8. The ld. Counsel for the assessee took us to the extract of the copies of
the ledger account as exhibited at page 18 of the order of the ld. CIT(A). It is
the say of the ld. Counsel for the assessee that the opening balances are self
explanatory as the difference can be seen in the opening balances itself. It is
the say of the ld. Counsel for the assessee that the opening balance difference
was to the tune of Rs. 33,90,593/-. The assessee was to pay lease rent to late
Shri Harshad S. Mehta at Rs. 480/- and there was a difference of brokerage
charged by late Shri Harshad S. Mehta and the brokerage calculated by the
assessee. If that difference is also taken into consideration, the accounts can
be reconciled with the difference remaining only in the opening balance.
9. Per contra, the ld. D.R. strongly supported the findings of the A.O. It is
the say of the ld. D.R. that if the ld. CIT(A) was convinced that the difference
was only in the opening balances then, there was no reason to delete the
entire amount of Rs. 33,90,593/-.
10. Having heard the rival submission and carefully perused the order of
the lower authorities, we find that the difference in the opening balance was
to the tune of Rs. 33,59,501/-. The total difference according to the A.O. is at
Rs. 33,90,593/-. We find that the lease rent to be paid by the assessee was
at Rs. 480/- and the difference in the brokerage charged by late Shri Harshad
S. Mehta @ 0.3% and calculated by the assessee @ 0.2% has resulted into a
difference of Rs. 31552/-. If these two figures are taken into consideration
with the opening balance, the total comes to Rs. 33,90,573/-. The difference
calculated by the A.O. is at Rs. 33,90,593/- leaving a megre sum of Rs. 20/-.
Further, we find that Late Shri Harshad S. Mehta has to receive more amount
6 ITA 3443/M/12 & 4288/M/12
from the assessee therefore the difference cannot be treated as income of the
assessee. It is not a case where the assessee is showing more amounts to be
received from Late Shri Harshad S. Mehta. Further, it is an undisputed fact
that the difference is only in respect of opening balances and with a difference
of Rs. 31072/- pertaining to the year under consideration. We, therefore,
restore this issue to the file of the A.O. for the limited purpose of verification
of reconciliation of the difference between the opening balances and the
closing balances relating to brokerage and lease rent. The assessee is directed
to file necessary details. The A.O. is directed to verify the details and decide
this limited issue. Ground No. 4 is accordingly partly allowed for statistical
purpose.
11. Ground No. 5 relates to the disallowance of deduction on account of
interest expenditure.
12. The ld. Counsel for the assessee stated that this issue has been decided
by the Tribunal in assessee's own case for A.Y. 1991-92 in ITA No.
1181/Mum/2012.
13. We have carefully perused the order of the Tribunal (supra). We find
that the Tribunal has decided this issue at para 7 on page 2 of its order
wherein the Tribunal has restored the matter to the file of the A.O. to follow
the directions of the Tribunal in ITA No. 8023/Mum/2011. Respectfully
following the findings of the co-ordinate Bench, we restore this issue to the
file of the A.O. to follow the directions given by the Tribunal in assessee's own
case in ITA No. 1181/Mum/2012 for A.Y. 1991-92. Ground No. 5 is
accordingly allowed for statistical purpose.
14. Ground No. 6 relates to levy of interest u/s 234A and 234B of the Act.
15. A similar issue was decided by the Tribunal in assessee's own case in
ITA No. 1181/Mum/2012 vide para 9 of its order wherein it has been held
7 ITA 3443/M/12 & 4288/M/12
that levy of interest is mandatory, however, the same is consequential in
nature and hence the necessity of adjudicating this ground does not arise.
Respectfully following the aforementioned findings of the Tribunal, we hold
accordingly.
16. The assessee has also raised an additional ground where the grievance
is that the ld. CIT(A) ought to have directed the A.O. to tax the correct amount
of long term capital gain at Rs. 8,98,68,376/- instead in-correct amount
adopted in the original assessment order at Rs. 9,81,15,941/-.
17. After admitting this additional ground, in our considered opinion, it
requires verification of facts. We, therefore, restore the issue to the file of A.O.
The A.O. is directed to verify the correct amount of long term capital gain as
per the details brought to his notice. The assessee is directed to furnish
necessary details. The additional ground is accordingly allowed for statistical
purpose.
18. In the result, appeal of the assessee is partly allowed for statistical
purpose.
ITA No. 4288/Mum/2012 (Revenue's appeal)
19. The first grievance of the Revenue is that the ld. CIT(A) erred in deleting
the addition of Rs. 3,31,20,180/- made on account of profit on sale of shares.
20. The ld. CIT(A) has considered this issue at para 6(C) of his order.
During the course of assessment proceedings, on the basis of several
information obtained from RBI, Custodian, BSE companies and third parties
about the share holding of the assessee, the data were analysed and the
holding in share of the assessee was determined as on 31-3-1992. The same
was taken as opening stock for the year under consideration. The closing
stock of the assessee was determined for the year under consideration and on
8 ITA 3443/M/12 & 4288/M/12
comparing the opening stock and closing stock, whenever there was a
difference where opening stock was higher than the closing stock, it was
treated as sale and wherever the closing stock was higher than the opening
stock, the difference was treated as unexplained purchase. The purchases
were determined at Rs. 8,85,75,861/- and the sales were determined at Rs.
15,55,67,482/-. The profit on sale of shares was determined at Rs.
3,31,20,180/-. The A.O. added this amount. Before the ld. CIT(A), it was
contended that the information relied upon by the A.O. were either given to
the assessee during the proceedings of A.Y. 1992-93 or during the
proceedings for A.Y. 1993-94. It was further contended that the A.O. has
computed the holding of shares from the information collected from difference
sources. It was further submitted that the working of opening stock is
borrowed from the working given in A.Y. 1992-93 without any break-up and
without any basis. After considering the facts and the submissions, the ld.
CIT(A) at para 9.7 of his order observed that the A.O. did not gave any break-
up and the basis as to how the figures of sales and purchases were derived by
him which fact was also admitted by the A.O. in the remand proceedings. At
para 9.8, the ld. CIT(A) held "I find that during the course of present
proceedings also, the things have not improved. The A.O. has still not been
able to provide any break up or the details and information as to how the
figure of profit on sale of shares have been derived by him in the assessment
order. Thus, I find that the very basis details germane to the addition made
by the A.O. are not available on record". Thereafter the ld. CIT(A) followed the
findings given in the case of Shri Hitesh Mehta for A.Y. 1993-94 and deleted
the addition. Aggrieved by this, the Revenue is in appeal before us.
21. The ld. D.R. strongly supported the findings of the A.O. Per contra, the
ld. Counsel for the assessee reiterated what has been submitted before the
lower authorities.
9 ITA 3443/M/12 & 4288/M/12
22. We have carefully perused the orders of the authorities below. We have
also gone through the order of the first appellate authority in the case of Shri
Hitesh Mehta dtd, 29-3-2012. We find that the entire addition has been
made by the A.O. on the basis of information gathered from different sources.
We find that the A.O. has merely picked up figure from the Annexure and
arrived at the figure of addition without making enquiry or bringing any
evidence on record. We find that on identical facts in the case of Shri Hitesh
Mehta, the additions were deleted. The said order was challenged before the
Tribunal in ITA No. 5138/Mum/2003 but this issue was not raised before the
Tribunal. The facts and circumstances are being similar, we do not find any
reason to interfere with the findings of the ld. CIT(A). Ground No. is
accordingly dismissed.
23. Ground No. 2 relates to the direction to enhance the income of the
assessee after excluding the difference to the tune of Rs. 33,90,593/- being
difference in the opening balance.
24. This issue has been discussed by us at length in ITA No.
3443/Mum/2012 vide ground No. 4 in that appeal, for similar reason, this
ground is accordingly decided.
25. In the result, appeal filed by the Revenue is dismissed.
26. In the result, appeal filed by the Revenue is dismissed whereas the
appeal filed by the assessee is partly allowed for statistical purpose.
Order pronounced in the open court on 5th September, 2014.
05 -9-2014
Sd/- sd/-
(VIJAY PAL RAO) (N.K. BILLAIYA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated 05-09-2014.
10 ITA 3443/M/12 & 4288/M/12
[
. ../ R.K., Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A) 40, Mumbai
4. / CIT- Central II, Mumbai
5. , , / DR, ITAT, Mumbai C Bench
6. / Guard file.
/ BY ORDER,
//True Copy//
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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