INTER GLOBE FINANCE LIMITED,KOLKATA V. D.C.I.T., CC - 4(1), KOLKATA

ITA 2096/KOL/2024

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Inter Globe Finance Limited appealed against the order of the Commissioner of Income Tax (Appeals)-27, Kolkata, which was passed in response to an assessment order under section 143(3) of the Income Tax Act, 1961. The primary contention was the addition of \\u20b914,32,268 under section 14A of the Act and the inclusion of exempted dividend income of \\u20b93,38,245 in the computed total income. The assessee argued that these additions were made without proper consideration of the information and documents provided. However, both the Assessing Officer and the CIT(A) found that the assessee had not adequately demonstrated that no expenses were incurred in relation to earning the exempt dividend income, leading to the dismissal of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714714 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Rule 8D
• Section: 143(3); 142(1); 139; 14A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री जॉजज माथान, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2096/KOL/2024 Assessment Year: 2018-19 Inter Globe Finance Limited Vs. D.C.I.T., CC-4(1), Kolkata (Appellant) (Respondent) PAN: AAACI5520N Appearances: Assessee represented by : None. Department represented by : Kapil Mandal, Addl. CIT (DR). Date of concluding the hearing : 17-June-2025 Date of pronouncing the order : 05-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-27, Kolkata [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 22.08.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 21.04.2021. Printed from counselvise.com Page | 2 I.T.A. No.: 2096/KOL/2024 Assessment Year: 2018-19 Inter Globe Finance Limited. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. For that the order dated April 21, 2021 is bad in law and in gross violation of the principles of natural justice and has been passed without giving the appellant the opportunity of being heard. 2. For that on the facts and circumstances of the case, the Ld. AO erred in adding back 14,32,268/- u/s 14A of the Act and as well as exempted dividend income of Rs.3,38,245/- also added in computed total income, when all related information, documents and evidences, calculations were duly filed. 3. The Order of AO to make an addition of Rs. 14,32,268/- u/s 14A of the Act and as well as exempted dividend income of Rs.3,38,245/-also added in computed total income is bad in law, hence be deleted.” 3. Brief facts of the case are that the assessee company filed its return of income u/s 139 of the Act on 19.09.2018 showing total income at ₹1,24,66,730/- for AY 2018-19. Later on, the case was processed and selected for scrutiny under Computer Assisted Scrutiny Selection (in short 'CASS') and notices u/s 143(2) and 142(1) of the Act were issued. The assessee uploaded the reply through e-proceedings portal. A Show cause notice was issued to the assessee on 13.04.2021, in response to which, the assessee filed a reply on 15.04.2021. The reply of the assessee was not considered by the Assessing Officer (hereinafter referred to as Ld. 'AO'). During the year, the assessee had made investment in mutual funds and other investments for total sum of ₹80,58,482/-. Further, the assessee had shown closing stock of shares of ₹16,28,76,203/-. Subsequently, the Ld. AO passed the assessment order u/s 143(3) of the Act on 21.04.2021, determining the total income of the assessee at ₹1,38,98,998/-, in which he made addition on only one ground viz. ₹14,32,268/- in the form of 1% of ₹14,32,26,880/- u/s 14A of the Act. Aggrieved with the assessment order, the assessee filed Printed from counselvise.com Page | 3 I.T.A. No.: 2096/KOL/2024 Assessment Year: 2018-19 Inter Globe Finance Limited. an appeal before the Ld. CIT(A) who, vide order dated 22.08.2024 dismissed the appeal of the assessee after holding as under: “5.2.1. I have gone through the assessment order as well as the submission of the assessee. On examining the same, it is observed that the assessee had invested huge sums in variety of shares in various companies there would be a certain element of expenses incurred towards managing of those shares and also a time cost involved for utilizing the funds invested to realize maximum profit. It could be also seen that there are expenses such as printing and stationery, electricity, rent, bank charges, sundry expenses etc. would be relatable to the earning of income from investment. It cannot be denied that the assessee personally involved in the carried out on those transactions. Hence, these grounds of appeal raised by the assessee is dismissed.” 4. None appeared on behalf of the assessee nor any application for adjournment was filed and, therefore, the appeal was heard with the assistance of the Ld. DR. 5. The Ld. DR drew our attention to the assessment order in which the Ld. AO added a sum of ₹14,32,268/- u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 after issuing show cause notice to the assessee and considering the reply filed by the assessee. The computation as para 4 thereof is as under: “4. Accordingly, having regard to the accounts of the assessee, I am not satisfied with the correctness of the assessee's claim that no expenditure has been incurred by it in relation to earning dividend income which is exempted in the hands of assessee. Therefore, proceed to determine the amount of expenditure incurred in relation to the exempt dividend income in relation to the mandatory provisions of Rule 8D. 1. the amount of expenditure directly relating to income which does not from part of total income:- NIL 2. an amount equal to one percent of the average of the value of Investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the fast day of the previous year Rs. 14,32,268/- Average investment + Average interest is shown as closing stock Printed from counselvise.com Page | 4 I.T.A. No.: 2096/KOL/2024 Assessment Year: 2018-19 Inter Globe Finance Limited. =24119210+8058482 + 91399865+162876203 2 2 = 1,60,88,846 + 12,71,38,034 1% of Rs. 14,32,26,880 = Rs.14,32,268/-” 6. The Ld. CIT(A) has discussed the issue in para 5.2.1, to which our attention was drawn by the Ld. DR, who also submitted that the order of the Ld. CIT(A) being a reasoned order and there being no justification for the relief claimed by the assessee, the same ought to be upheld. 7. We have considered the submission made. The assessee contends that the order had been passed without giving a reasonable opportunity of being heard to the assessee. The Ld. AO issued show cause notice on 13.04.2021 to which the assessee replied on 15.04.2021 and after considering the reply and provisions of section 14A of the Act read with Rule 8D of the Rules applicable for AY 2018-19, the Ld. AO made the disallowance of ₹14,32,268/- under section 14A of the Act. Before the Ld. CIT(A), in response to the notice of hearing dated 11.07.2023 and subsequently on 27.04.2024, no response was filed by the assessee, who considered the grounds of appeal and has given a finding as per para 5.2.1 reproduced in the preceding paragraph. Before us as well no submissions have been made as to how the order of the Ld. CIT(A) is erroneous and why Rule 8D of the Rules should not be applied. Therefore, there being no justification for the relief claimed, there is no reason to interfere into the order of the Ld. CIT(A) and the order is upheld and Ground no. 1 raised by the assessee is dismissed. 8. Ground nos. 2 and 3 relate to the AO making addition of ₹14,32,268/- u/s 14A of the Act as well as of exempted dividend income Printed from counselvise.com Page | 5 I.T.A. No.: 2096/KOL/2024 Assessment Year: 2018-19 Inter Globe Finance Limited. of ₹3,38,245/- which is also been added. A perusal of the computation income forming part of the assessment order shows that no such addition has been separately made. Further, even before the Ld. CIT(A) the assessee could not furnish any evidence for the relief claimed. Since the assessee is unable to demonstrate that any such addition was separately made, therefore, Ground nos. 2 and 3 are also dismissed in view of the finding in the preceding para. Hence, the order of the Ld. CIT(A) is upheld. 9. In the result, the appeal filed by the assessee is dismissed and the order of the Ld. CIT(A) is upheld. Order pronounced in the open Court on 5th August, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 05.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 6 I.T.A. No.: 2096/KOL/2024 Assessment Year: 2018-19 Inter Globe Finance Limited. Copy of the order forwarded to: 1. Inter Globe Finance Limited, 6B, Bentinck Street, Kolkata G.P.O., Kolkata, West Bengal, 700001. 2. D.C.I.T., CC-4(1), Kolkata. 3. CIT(A)-27, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "