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TMI Blog2018 (10) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... t petitioner prayed for the order of the ITAT, initially passed and a consolidated one, to be corrected. 3. What we have found from a reading of the order initially passed by the ITAT is that the appeals of the Revenue and that of the assessee were decided by a common order and both were partly allowed. When they were partly allowed by a common order, but the assessee being concerned with certain issues and arising out of the appeals for particular assessment years, filed a miscellaneous application invoking Section 254(2) of the Income Tax Act, 1961 ("the IT Act" for short). 4. A copy of the miscellaneous application is at Exhibit-V (page 357) to the petition. In that application, it is stated by M/s. D.K. Enterprise, the petitioner before us, that the appeals were disposed of by a common order of the Tribunal on 29-6-2001. There are certain mistakes in this order which need rectification. 5. The application said that the core or major issue was an addition on account of "on-money". 6. It is stated that there was a search and seizure action under Section 132 of the IT Act on 9-3-1992 and 26-10-1994 during which certain incriminating pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeal-wise. 11. It was, therefore, prayed that the mistakes be corrected. 12. The important prayer in this application is that the initial order be recalled and the appeals be reheard. 13. The miscellaneous application was placed before the Tribunal and it passed an order on the same, partly allowing it. That order was passed on 12-7-2002. 14. It appears that the Tribunal also had before it other miscellaneous applications but the petitioner was of the view that the Tribunal's discussion in the order dated 1272002 on one miscellaneous application, revolves around the on-money issue and that the entire on-money cannot be added to income. However, the first ground of appeal raised by the petitioner as regards the quantum of on-money worked out by the Assessing Officer had remained to be considered. Hence, again miscellaneous applications were filed by the petitioner/applicant for the Assessment Years 1989-90 to 1993-94, pointing out in the application for the Assessment Year 1989-90 the first ground of appeal had remained to be considered and that application, so also the other applications were taken on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is how the Tribunal refused to accept the argument of the assessee that there was any mistake apparent from the record in the initial order. It has, therefore, dismissed the miscellaneous applications by order dated 28-9-2007. 18. Aggrieved and dissatisfied with such an order, the present writ petition has been filed. 19. It has been argued before us by Mr. Mistri, learned Senior Counsel, that if the initial as also the subsequent orders are perused, it would be evident that the ground was indeed urged. The assessee never accepted the position that on-money was received. The assessee never, therefore, gave any concession nor could the argument be construed as an acceptance of the receipt of on-money. The Tribunal could not have held that the arguments focused only on the extent of the on-money received and to be offered to tax. In fact, if the impugned order of the Tribunal is perused, it would be evident that this is not the position. 20. Mr. Mistri has taken us through the initial order of the Tribunal, copy of which is at ExhibitU, from page 333 of the paper-book. Mr. Mistri has taken us through the grounds and he would submit that ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred in it by Section 254(1) and subsection (2) of the said section. Thus, the Tribunal may rectify the mistake apparent from the record either suo moto or on an application in that behalf. Mr. Mistri submits that throughout the endeavour of the petitioner was to point out to the Tribunal that the first ground of appeal remained to be considered. This non-consideration of a ground of appeal is a mistake apparent on record. For these reasons, Mr. Mistri would submit that the writ petition be allowed. 21. Pertinently and without prejudice to the above arguments, Mr. Mistri fairly tenders before us some charts. He says that these charts would demonstrate the additions. He relies upon a chart which is, according to him, very crucial. That is chart 2. Mr. Mistri submits that this shows the actual rate at which the Income Tax Department itself was able to auction the appellant/petitioner's shops in the Financial Year 2001-02 for recovery of tax arrears and a comparison thereof with the rates adopted by the Assessing Officer in the assessment of the petitioner/appellant for the Assessment Years 1989-90 to 1993-94. 22. Mr. Mistri would submit that since he is ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lected. These have been termed as on-money. On facts, there has been no dispute ever raised and with regard to the admission in the statement of Shri D.K. Shah. If relying upon that statement, the Counsel or representative of the assessee thought it fit to raise before the Tribunal only some grounds and not all, then, now with the change of Advocate or representative, the assessee cannot be permitted to have a second inning. In other words, what has been admittedly voluntarily, intentionally and deliberately given up, should not be now permitted to be reopened. Mr. Malhotra would submit that a representative or Advocate takes a conscious decision. He has a freedom and latitude which he enjoys as a professional. A client like the assessee may insist on raising all the grounds of memo of appeal but depending upon the position in law and the ambit and scope of appellate powers, such representative or Advocate exercise their discretion. That is strictly as a professional. They know best what is in the interest of their client and how the interest can be protected. Hence, they project and on most occasions like this an alternate plea or ground, though they may only mention in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that eight appeals by the assessee and two appeals of the Revenue can be disposed of by a common order. All of them are directed against the orders of the First Appellate Authority. Therefore, the common order. In para 2, the Tribunal records that the assessee is a partnership firm. It had undertaken the project, namely, of construction of Dadar Manish Market at Dadar (West), Mumbai. That started in the year 1985 and continued upto the Financial Year 199899. The assessee was following the project completion method basis for income tax purposes, which basis was not accepted by the Department and it taxed the income every year on the basis of 15% of the work-in-progress as per the assessee's account. In this backdrop, the first ground of appeal which is common to income tax appeals for the Assessment Years 198990 to 199293 is whether this approach of the Revenue is erroneous. The ground was, that the Revenue wrongly rejected the assessee's method of accounting which was project completion method basis. In para 3, the argument of the assessee on this ground has been noted. That argument continues in para 4 as well. In para 5, the argument of the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition made by the Assessing Officer in respect of the on-money. The addition made in respect of the on-money is exorbitant, excessive and not in conformity with the factual position and the Commissioner of Income Tax (Appeals) ought to have considered the facts and circumstances and deleted/reduced the additions made on this count. The other ground was, the Assessing Officer be directed to work out the on-money collection after considering the various facts and circumstances. Then, there is another ground with regard to reduction of project expenses incurred in cash from the on-money in arriving at the assessee's total income. These four grounds have been indeed noted and what we find is that there is a reference made to it in para 13 of the initial order of the Tribunal. That para 13 reads as under: "13. In ITA No.1708/Bom/95, the assessee has taken an additional ground of appeal in regard to the addition in respect of on-money which had not originally been taken due to oversight. We admit this ground as it was one of the main subject matter of appeal. As we have decided this issue in para 12 above, we direct accordingly." 32. To continue the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Departmental representative referred to the assessment order for the Assessment Year 1990-91, which was passed in pursuance of the exercise carried out under Section 263 of the IT Act, and then the Departmental representative refuted the contention of the assessee and to the effect that the addition under Section 69C should be reduced to nil because the said addition represented revenue expenditure and therefore was allowable, even if not claimed in the return, but that has been rejected since the Commissioner of Income Tax (Appeals) was of the opinion that the expenditure incurred in cash was in any case disallowance under Section 40A(3) of the Act. Section 69C does not contemplate such allowance. Section 69 was the applicable provision. 35. Para 12 of the order, passed initially, reads as under: "12. We have considered the rival submissions and find force in the arguments of the learned counsel for the assessee. It is the fundamental principle of tax jurisprudence that income is to be taxed and not the receipt. In plethora of judgments of the Tribunal, it has been held that a portion of on-money receipt should be taxed as income of the assessee. The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the bank and, therefore, much reliance could not be placed on them. Normally profit element is more in the on-money receipt than in the normal business activity because in the normal business activity almost all the expenses incidental to business are accounted for. The assessee had disclosed 21% of gross receipts in the assessment year 199293 and therefore, it can reasonably estimated that at least double the percentage as disclosed by the assessee constituted the element of profit in the on-money. In our opinion, the A.O. was not justified in adopting the same rate in respect of on-money as was applied to work-in-progress as shown by the assessee in his books of account. There is no evidence on record to suggest the invoking of the provisions of Sec.40A(3). In this view of the matter, we hold that 40% of on-money be taken as income of the assessee and 15% of the workin progress as computed by the A.O. on the basis of the work done as per the books be added." 36. A bare perusal of this para would indicate that the Tribunal indeed found substance in the assessee's argument. After summing up the facts and focusing on the fundamental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was apparent from it, then, that should have been utilised. The order on the miscellaneous application was passed in a haphazard manner. The initial order passed on the miscellaneous application was sought to be recalled by the petitioner by filing other set of miscellaneous applications and which came to be disposed of, without hearing the petitioner, in chambers by an order of 5-5-2004. That order and the approach generally adopted in that regard could not be supported by the Revenue before this Court in the first round of challenge by the petitioner. Therefore, virtually by consent, this order of 552004 was set aside and the Tribunal was directed to reconsider the applications for rectification of mistake and pass a fresh order thereon. We do not think that the Tribunal has performed its duty as a last fact finding authority and in the manner expected by this Court. This Court, without assigning detailed reasons as that would prejudice the case of both sides, found that the manner and methodology of disposal of the appeals and the miscellaneous applications does not satisfy the requirement in law. After this Court's intervention, ample opportunity wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed of. It would be difficult, therefore, to accede to this argument of Mr. Malhotra that the writ petition deserves to be thrown out on this ground alone. 42. We are of the firm opinion that no useful purpose will be served by now sending the matters back to the Tribunal. The matters, if sent back now, may not necessarily benefit the Revenue. It is only a conjecture and surmise or pure guess work that when sent back, the Revenue will necessarily succeed. There is no such guarantee. In fact, what we have found is that in the ground of appeal for the Assessment Year 1989-90 in an appeal which was brought before the Tribunal and challenging the order dated 7.3.1996 of the First Appellate Authority, there is a specific plea or grievance. The ground No.2 of this memo says that the Commissioner of Appeals has erred in confirming that the assessee/appellant had collected on-money to the extent of Rs. 2,19,47,700/ [see page 287 of the paper-book]. Then there is a specific ground that the additions made by the Assessment Officer on this ground be deleted and the income be recomputed. Thereafter, ground No.4 is clearly a without prejudice and alternate groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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