2019 (2) TMI 160 - AT - Income Tax

Rectification of mistake with regard to reopening - assessee submitted that ITAT has erred inasmuch as it has not upheld the proposition that the A.O. should have conclusively prove in the reasons recorded that there was escapement of income - Held that - All the issues raised in these miscellaneous applications have been considered by the Tribunal. As regards the issue on non consideration of the valuation report submitted by the assessee is concerned, we note that the same was duly considered and found to be not acceptable. Further, all the issue on merits referred above has been duly answered in the order by the ITAT. As regards the submission regarding reliance by the ITAT on the statement of Denzil D Souza, it is found that nowhere in its order on adjudication of the merits, the ITAT has relied upon its statement of Denzil D Souza. It is the matter of fact that the CIT(A) in his order reproduced in the ITAT order has referred that a copy of the statement of Denzil D Souza was duly given to the assessee and that the statement given by Denzil D Souza was just an affirmation of what had already gathered by the A.O. from the facts on record. As regards the alternative claim of the assessee, it is noted that the Tribunal has duly considered the same. As noted that except for making the claim, no detail has been furnished whatsoever by the ld. Counsel of the assessee as to how the receipt from the arbitration award amount to a family settlement. That there is no mention whatsoever in the arbitration award as to how the said amount has been determined or that it is a family arrangement. That in the absence of any detail thereof, the amount received cannot be held to be a receipt on account of family arrangements. Thus, we find that the Tribunal has considered all the arguments and passed the order. What the assessee is seeking is a review of the order which is not permissible in the law. None of the issues raised by the assessee in the miscellaneous applications can be termed as mistake apparent from record. Issues which can be taken up u/s.254(2) of the ITAT have to be obvious and patent mistake and not something which can be established by a process of arguments and reasoning. Further on the same basis, an error in judgment also cannot be taken up as mistake apparent from record liable for rectification u/s. 254(2). - Decided against assessee.

Issues Involved:
1. Validity of reopening the assessment.
2. Taxability of the arbitration award amount.
3. Consideration of valuation reports and other submissions by the assessee.
4. Reliance on statements and cross-examination issues.
5. Alternative claims regarding family settlement.

Detailed Analysis:

1. Validity of Reopening the Assessment:
The assessee challenged the reopening of the assessment, arguing that the burden to show that a receipt is of an income nature lies on the Revenue, citing the Supreme Court judgment in Parimisetti Seetharamamma and the Bombay High Court decision in Mehboob Productions Pvt. Ltd. The ITAT had earlier considered the decisions in CIT vs. Rajesh Jhaveri Stock Brokers P. Ltd. and DCIT vs. Zuari Estate Development and Investment Co. Ltd., and found that there was material indicating income had escaped assessment. The tribunal concluded that there was a "live link" between the information received and the escapement of income, and that the reopening was not due to a change of opinion, as the original return was processed under section 143(1) without considering the taxability of the arbitration award. The ITAT upheld the validity of the reopening, noting that the decisions referred by the assessee were distinguishable on facts.

2. Taxability of the Arbitration Award Amount:
The assessee received an arbitration award of ?28 crores for relinquishing her rights in a partnership firm. The ITAT noted that the arbitration award was not specifically for retirement from the firm but for relinquishment of all rights, claims, and demands against the firm and related entities. The tribunal found that the award was received in lieu of a composite bundle of rights, including rights under her father's will and family settlement. The ITAT upheld the CIT(A)'s decision that the award was taxable under section 56(1) as "income from other sources," rejecting the assessee's claim that it should not be considered income.

3. Consideration of Valuation Reports and Other Submissions:
The assessee argued that the CIT(A) and ITAT ignored the valuation reports of the properties. The ITAT found that the assessee failed to justify the basis on which the amount was deleted and upheld the CIT(A)'s decision, noting that the arbitration award did not specify the basis for the amount awarded. The tribunal also noted that the assessee did not provide detailed working of her share in the net assets of the firm, and the valuation reports submitted were not acceptable.

4. Reliance on Statements and Cross-Examination Issues:
The assessee contended that reliance on the statement of Denzil D'Souza, without permitting cross-examination, was a mistake apparent from the record. The ITAT clarified that it did not rely on D'Souza's statement in its adjudication on merits. The CIT(A) had noted that the statement was an affirmation of facts already gathered by the A.O., and a copy of the statement was provided to the assessee.

5. Alternative Claims Regarding Family Settlement:
The assessee alternatively claimed that the receipt was on account of a family settlement. The ITAT found no details or evidence to support this claim, noting that the arbitration award and consent terms did not mention a family arrangement. The tribunal upheld the CIT(A)'s decision that the amount received could not be considered a receipt from a family settlement.

Conclusion:
The ITAT dismissed the miscellaneous application filed by the assessee, concluding that there was no mistake apparent from the record that warranted rectification under section 254(2). The tribunal held that the issues raised by the assessee were attempts to seek a review of the order, which is not permissible by law. The ITAT reaffirmed that errors in judgment or issues requiring arguments and reasoning cannot be rectified under section 254(2).

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