2018 (1) TMI 1599 - AT - Income Tax

Rectification of mistake - Reopening of assessment - addition made u/s 69 and u/s 69A of the Act towards unexplained investment in jewellery and cash deposit s - as per CIT-A even if the above addition is deleted it is still liable to be taxed u/s 2(22)(e) - assessee has raised the alternative grounds in both the appeals that it cannot be treated as a deemed divided u/s 2(22)(e) - Revenue filed the M.A. contending that the alternative ground raised by the assessee on similar lines as in A.Y 2010-11 has not been adjudicated by the Tribunal resulting in an apparent mistake which needs rectification - HELD THAT - We find that the appeals before the Tribunal were filed by the assessee and the alternative grounds raised by the assessee are not adjudicated by the Tribunal. However we find that non-adjudication of the said grounds by the Tribunal do not cause any prejudice to the interests of the Revenue and therefore we see no mistake in the order of the Tribunal which needs rectification at the instance of the Revenue.

Summary

Issues:
- Rectification of alleged mistake in the order of the Tribunal dated 30.06.2017 and 06/07/2017 for the A.Ys 2010-11 & 2006-07 respectively.

Analysis:
1. For the A.Y 2010-11, the AO disallowed a specific amount and made an addition under section 69 of the Act. The assessee claimed the amount was from an agreement to sell property, used for jewelry investment. The CIT (A) held that cash withdrawal from the company funded the jewelry investment and even if the addition was deleted, it would be taxed under section 2(22)(e) as the assessee was a Director of a specific company.

2. Regarding the A.Y 2006-07, cash deposits were found during a survey operation, and the AO added them under section 69A. The ITAT deleted the addition as explained deposits. The Revenue filed a Miscellaneous Application (M.A.) stating that an alternative ground raised by the assessee was not adjudicated, leading to a mistake requiring rectification.

3. The Tribunal allowed the appeals, stating the source of investment in jewelry and cash deposits were explained for the relevant financial years. The Revenue argued that the Tribunal failed to address the alternative grounds related to being treated as a deemed dividend under section 2(22)(e), constituting a mistake. The assessee contended that no mistake existed as the Tribunal upheld the CIT (A) order regarding explained sources.

4. After considering the contentions and evidence, it was found that the Tribunal did not adjudicate the alternative grounds raised by the assessee. However, this non-adjudication did not prejudice the Revenue's interests. Consequently, no rectification was deemed necessary in the Tribunal's order for the A.Ys 2010-11 and 2006-07.

5. The Miscellaneous Applications filed by the Revenue for the mentioned assessment years were dismissed, as the Tribunal found no mistake in its previous orders. The decision was pronounced in the Open Court on 10th January 2018.