RAMA NARANG, CHURCHGATE V. DCIT CC.36, MUMBAI

ITA 1062/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7438 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 16-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHA AGARWAL
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Set aside
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI R.K. GUPTA, JM AND SHRI T.R. SOOD, AM I.T.A.NO.1062/MUM/2009 ASSESSMENT YEAR : 2004-05 SHRI RAMA NARANG, C/O. AMBASSADOR HOTEL, CHURCHGATE, MUMBAI 400 020. PAN: AAAPN 5740 L VS. THE DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 36, AAYAKAR BHAVAN MUMBAI 400 020 (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI PRAKASH K. JOTWANI RESPONDENT BY : MS. ASHA AGARWAL O R D E R PER T.R. SOOD, AM: THROUGH THIS APPEAL THE ASSESSEE HAS CHALLENGED TH E ORDER DATED 24 TH DECEMBER, 2008 PASSED UNDER SECTION 263 OF THE INCO ME-TAX ACT, 1961 BY THE COMMISSIONER OF INCOME-TAX, CENTRAL-III, MUMBAI. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT UP ON EXAMINATION F THE ASSESSMENT ORDER, THE LEARNED COMMISSIONER OF INCOM E-TAX NOTED THAT A SUM OF RS. 50,26,9334/- WAS SHOWN AS INTEREST PAYABLE, WH ICH IS CUMULATIVE FIGURES OF INTEREST PAYABLE TO M/S. NARANG OVERSEAS PVT. LTD. AND M/S. WESTERN BUILDERS. ACCORDING TO HIM NO SUCH LIABILITY WAS EXISTING AND THEREFORE, THIS AMOUNT SHOULD HAVE BEEN ADDED UNDER SECTION 41(1) OF THE ACT AND ACCORDINGLY A SHOW-CAUSE NOTICE WAS ISSUED. IN RESPONSE TO THE QUERY, IT WAS SUBMITTED THAT NECESSARY ENQUIRIES HAVE BEEN MADE AND AFTER SUCH ENQUIRIES T HE ASSESSING OFFICER WAS SATISFIED THAT LIABILITY FOR INTEREST PAYABLE WAS E XISTING. HOWEVER, THE INTEREST EXPENDITURE WAS DISALLOWED IN THE CURRENT YEAR WHIC H WAS ALREADY HELD TO BE ALLOWABLE BY THE CIT(A). RELIANCE WAS ALSO PLACED O N VARIOUS CASE LAWS. THE LEARNED CIT(A) EXAMINED THE SUBMISSIONS IN DETAIL A ND WAS OF THE VIEW THAT THE ITA NO.1062/M/09 RAMA NARANG 2 ISSUE HAS NOT BEEN EXAMINED AND THEREFORE, THE ASSE SSMENT ORDER WAS SET ASIDE WITH DIRECTION TO RE-EXAMINE THE ISSUE IN DETAIL. 3. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE DISALLOWANCE OF INTEREST WAS CHALLENGED BEFORE THE CIT(A), WHO ALLOWED THE APPEAL OF THE ASSESSEE AND COPY OF THAT ORDER HAS BEEN PLA CED AT PAGE 14 OF THE PAPER BOOK. THIS ORDER WAS FURTHER CONFIRMED BY THE TRIBU NAL ON APPEAL BY THE REVENUE AND COPY OF THE ORDER DATED 13.04.2009 IN ITA NO. 4236/M/07, IS PLACED AT PAGES 16 TO 18 OF THE PAPER BOOK. HE SUBMITTED THAT AFTE R THE TRIBUNAL HAVING ALLOWED THE INTEREST NOTHING SURVIVES AND THE LEARNED COMMI SSIONER OF INCOME-TAX HAS NO POWER FOR REVISION OF THE ASSESSMENT ORDER WHICH ST AND MERGED WITH THE ORDER OF THE TRIBUNAL IN APPEAL PROCEEDINGS. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT THE ISSUE REGARDING EXISTENCE OF LIABILITY WAS NEVER EXAMINED AND IT WAS CLEARLY FOUND THAT IN THE CASE OF ONE OF THE ORGANI ZATION NO SUCH LIABILITY EXISTED. SINCE THE ASSESSING OFFICER FAILED TO MAKE SUCH ENQ UIRIES, THEREFORE, THE ASSESSMENT ORDER IS CLEARLY ERRONEOUS AND PREJUDICI AL TO THE INTERESTS OF THE REVENUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT ADDITION REGARDING INTEREST EXPENDITURE WAS DELETED BY THE C IT(A) VIDE HIS ORDER DATED 20.04.2007 (COPY OF WHICH IS AVAILABLE AT PAGES 14 & 15 OF THE PAPER BOOK). ON APPEAL, THIS ORDER WAS FURTHER CONFIRMED BY THE TRI BUNAL IN ITA NO. 4236/M/07 DATED 13.04.2009(COPY OF WHICH IS AVAILABLE AT PAGE S 16 TO 18 OF THE PAPER BOOK). IF THE DEPARTMENT HAD ANOTHER ISSUE ON THIS MATTER , THE DEPARTMENT WAS FREE TO RAISE ADDITION GROUND BEFORE THE TRIBUNAL BUT CANNO T REVISE THE ORDER WHICH IS THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL. SINCE THE TRIBUNAL HAD ALREADY ITA NO.1062/M/09 RAMA NARANG 3 ALLOWED THE RELIEF, THE REVISIONARY ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX IS NOT MAINTAINABLE AND, THEREFORE, THE SAME IS QUA SHED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 31ST DAY OF MARCH 2010. SD. SD. (R.K. GUPTA) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 31 ST MARCH, 2010. KN COPY TO: 1. 2. THE ASSESSEE 3. THE REVENUE 4. THE CIT, CENTRAL III, MUMBAI 5. THE CIT (A), CENTRAL VI, MUMBAI 6. THE DR, D BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO.1062/M/09 RAMA NARANG 4