Bharat Forge Ltd., V. Deputy Commissioner of Income-tax,

ITA 1001/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9297 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1001/PUN/2016 / ASSESSMENT YEAR : 2009-10 BHARAT FORGE LTD., MUNDHWA, PUNE 411 036 PAN : AAACB8519L . /APPELLANT VS. DY.CIT, CIRCLE-1(1), PUNE . / RESPONDENT . / ITA NO.1002/PUN/2016 / ASSESSMENT YEAR : 2010-11 BHARAT FORGE LTD., MUNDHWA, PUNE 411 036 PAN : AAACB8519L . /APPELLANT VS. ADDL.CIT, RANGE-1, PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : DR. VIVEK AGGARWAL, CIT-DR / DATE OF HEARING : 21.02.2018 / DATE OF PRONOUNCEMENT: 21.02.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 2 APPEALS FILED BY THE ASSESSEE UNDER CONSIDE RATION INVOLVING ASSESSMENT YEARS 2009-10 AND 2010-11. THEY A RE FILED AGAINST TWO SEPARATE ORDERS OF CIT(A)-1, PUNE, DATED 04- 02-2016 AND 02-02-2016 FOR THE SAID ASSESSMENT YEARS RESPECTIVELY. 2 2. WE SHALL TAKE UP THE APPEAL-WISE ADJUDICATION AS FOLLOWS : ITA NO.1001/PUN/2016 (A.Y. 2009-10) 3. BEFORE US, IN CONNECTION WITH THIS APPEAL, LD. COUNSEL FOR THE ASSESSEE FILED A LETTER DATED 21-02-2018 WITH THE FOLLOWING REQUEST. THE SAME IS EXTRACTED AS UNDER : ........IN THIS RESPECT, WE HEREBY SUBMIT THAT OUR COMPANY DOES NOT INTEND TO PRESS THE ABOVE APPEAL AND HEREBY WITHDRAWS THE ABOVE APPEAL FILED AGAINST ORDER U/S.143(3) OF THE INCOME TAX ACT, 196 1 FOR ASSESSMENT YEAR 2009-10. 4. ON HEARING BOTH THE PARTIES, WE FIND NO REASON TO DEN Y THE PERMISSION TO WITHDRAW THE APPEAL. ACCORDINGLY, THE APPEA L IS DISMISSED AS WITHDRAWN. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO.1002/PUN/2016 (A.Y. 2010-11) 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR AT TENTION TO THE GROUNDS AND SUBMITTED THAT ALL THE GROUNDS RELATE TO THE DISALLOWANCE U/S.14A OF THE I.T. ACT, 1961 ON MERITS OF THE DISALLOWANCE/ADDITION BY THE AO. 6.1 GIVING BRIEF FACTS, LD. COUNSEL SUBMITTED THAT THE ASSES SEE EARNED EXEMPT INCOME FROM THE MUTUAL FUNDS AND WORKED O UT AN AMOUNT OF RS.26,36,226/- AS EXPENDITURE ATTRIBUTABLE TO TH E EARNING OF THE SAME ON PRO-RATA BASIS. THE SAID AMOUNT WAS DISALLOW ED BY THE ASSESSEE WHILE FILING THE RETURN OF INCOME. HOWEVER, IN THE A SSESSMENT, THE AO DISALLOWED THE ADDITIONAL SUM OF RS.11,24,445/- TAKING TOTAL DISALLOWANCE TO RS.37,60,671/-. OTHERWISE, AS PER THE ASSE SSEE, THE DISALLOWABLE SUM AS PER THE FORMULA LAID DOWN IN RULE 8D(2)(III) O F THE 3 I.T. RULES, 1962 QUANTIFIES THE DISALLOWANCE AT RS.11,24,445/- ONLY. DESPITE THE GRIEVANCE OF THE ASSESSEE, THERE IS OMISSION O N PART OF THE ASSESSEE TO NOT RAISE THIS ISSUE BEFORE THE FIRST APPELLA TE AUTHORITY. THEREFORE, THERE IS NO ADJUDICATION BY THE CIT(A) ON THIS IS SUE. HENCE, FOR THE FIRST TIME BEFORE US, ASSESSEE FILED THE FOLLOWING ADD ITIONAL GROUND AND THE SAME IS EXTRACTED AS UNDER : THE ASSESSEE SUBMITS THAT THE ACTUAL DISALLOWANCE AS PER RULE 8D(III) WORKS OUT TO RS.11,24,445/- WHICH IS MUCH LESSER TH AN THE AMOUNT OF RS.26,36,226/- OFFERED BY THE ASSESSEE IN ITS RETUR N OF INCOME AND HENCE, THE AO, WAS NOT JUSTIFIED IN MAKING DISALLOWANCE U/ S.14A OVER AND ABOVE, THE AMOUNT OFFERED BY THE ASSESSEE IN ITS RE TURN. 7. IN THIS REGARD, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE MATTER WAS NOT ADJUDICATED BY THE CIT(A), THE ISSUE RAISED IN THE AFORESAID ADDITIONAL AGROUND MAY BE ADMITTED AND REMITTED TO THE FILE OF AO FOR FRESH ADJUDICATION FOR QUANTIFYING THE DISALLOWANCE IN A CCORDANCE WITH THE PROVISIONS OF RULE 8D(III) OF THE I.T. RULES, 1962. AS PER THE ASSESSEE, THE DISALLOWANCE AS PER THE RULES WORKS OUT T O RS.11,24,445/- AND NOT RS.37,60,671/- (PAGE 28 OF THE PAPER BOOK) EFFECTIVE LY ADDED BY THE AO AT THE END OF THE ASSESSMENT. 8. ON HEARING BOTH THE PARTIES, CONSIDERING THE PRIMA-FACIE FACTS, WE FIND THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS REQUIR ED TO BE ADMITTED. FROM THE FACTS, WE FIND THAT THE DISALLOWANCE A T RS.37,60,671/- IS NOT IN ACCORDANCE WITH RULE 8D(2)(III) OF THE I .T. RULES, 1962. THEREFORE, AO IS DIRECTED TO APPLY THE RULE IN CORRECT PERSPECTIVE AND DECIDE THE ISSUE AFRESH. AO SHALL TAKE IN TO COGNIZANCE THE FACT OF SUO MOTU DISALLOWANCE OF RS.26,36,226/- DURING TH E SET- ASIDE PROCEEDINGS. AO IS DIRECTED TO CONSIDER THE DISALLOWA NCE ALREADY MADE BY THE ASSESSEE IN THE RETURN OF INCOME AND APPLY THE SAID FORMULA. NEVERTHELESS, IF ASSESSEE QUANTIFIED THE DISALLOWANCE AT A HIGHER FIGURE, OBVIOUSLY, THE SAID FIGURE BECOMES DISALLOWABLE. 4 ACCORDINGLY, THE ADDITIONAL GROUND AND THE REGULAR GROUND S RAISED BY THE ASSESSEE IN THE APPEAL ARE SET-ASIDE TO THE FILE OF TH E AO FOR FRESH ADJUDICATION. IT GOES WITHOUT SAYING THAT AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANC E WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE GROUNDS AND THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ARE ALLOWED FOR S TATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 10. TO SUM UP, APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DISMISSED AND THE APPEAL OF THE ASSESSEE FOR A.Y. 2010-11 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF FEBRUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 21 ST FEBRUARY, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-I, PUNE 4. CIT-I, PUNE 5. , , B BENCH PUNE; 6. / GUARD FILE.