M/s Sheikh Abdullah& Sons, Bhadohi V. CIT(1) Dy.CIT, Varanasi

ITA 108/ALLD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89819 (ITAT-ALLAHABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-04-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJKU MAR LACHHIRAMAKA
• Assessee Lawyers: R K N JAISWAL
• Keywords: Source of fund
• Section: 143(3); 80HHC; 263; 10; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH: ALLAHABAD BEFORE SHRI D. K. RAO, ACCOUNTANT MEMBER AND SHRI C. N. PRASAD, JUDICIAL MEMBER I.T.A .NOS.-108 TO 112/ALLD/2011 ASSESSMENT YEARS : 1997-98 TO 2001-02. M/S SHEIKHABDULLAH & SONS, VS. CIT, VILLAGE ROTAHA, P.O. PERSIPUR, VARANASI, DISTT. BHADOHI. PAN: AAIFS9339N (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. R. K. N. JAISWAL, AD V. REVENUE BY:-SH. RAJKU MAR LACHHIRAMAKA, CIT. DR. DATE OF HEARING: 20/04/2015 DATE OF PRONOUNCEMENT: 22/04/2015 ORDER PER BENCH: ALL THESE APPEALS ARE FILED BY ASSESSEE CHALLENGING THE ORDERS PASSED BY THE LD. CIT, VARANASI, U/S 263 OF THE INC OME TAX ACT DATED 30.03.2011FOR THE ASSESSMENT YEARS 1997-98, 1998-99 ,1999-2000, 2000-01AND 2001-02 RESPECTIVELY. THE ASSESSEE HAS R AISED FOLLOWING COMMON AND CONSOLIDATED GROUNDS IN ALL THESE APPEAL S: 1. BECAUSE THE LEARNED CIT BY GIVING A PASSING REF ERENCE TO THE REPLIES TO SCN HAS INFRINGED THE REQUIREMENT S OF THE RULE OF LAW. 2. BECAUSE, THE EXISTENCE OF ORDER DATED 09.02.2010 PASSED U/S 154, UNDER THE DIRECTION OF THE LEARNED CIT ITSELF; LEFT NO SCOPE FOR ANY EXERCISE OF POWER U/S 263 I.T.A .NOS.-108 TO 112/ALLD/2011 2 AGAINST THE ORDER DATED 29.12.2008 PASSED U/S 143(3)/254/263 BY THE THEN AO. 3. BECAUSE, THE ORDER PASSED ON 29.12.2008 U/S 143(3)/254/263 BY THE THEN AO FULLY COMPLIED WITH T HE DIRECTION OF THE BENCH, GIVEN ITA NO. 144 & 145/ALL./2001 DATED 03.04.2006; THE LEARNED CIT FAI LED TO APPRECIATE THE DETAILS OVER THE DELEGATION OF PO WER TO RBI RESPECTING THE E.C.B. AND THE CERTIFICATION OF THE BANKERS REGARDING THE END USE OF THE FUND. 4. BECAUSE, THE SOURCE OF FUND BEING EXTERNAL, WAS SETTLED BY THE HONOURABLE BENCH ITSELF IN ITA NO. 144/ALL/2001; ANY DIRECTION AGAINST IN THE ORDER U/ S 263, IS AGAINST THE JUDICIAL HIERARCHY. 5. BECAUSE, AFTER ADMISSION OF FRESH GROUND IN ITA NO. 144/ALL/2001 RESPECTING CLAIM OF EXEMPTION THE ISSU E OF APPLICABILITY TO SEC. 80HHC WAS A NON-EST. 6. BECAUSE, THE LEARNED CIT FAILED APPRECIATE THE AUTHORITIES OVER THE RELATIONSHIP OF THE HOLDER OF TDR WITH THE BANKERS ISSUIG THAT. 7. BECAUSE, THE ORDER IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS I N ALL THESE APPEAL CRUX OF THE ISSUE IS THAT ASSESSEE IS CHALLENGING T HE ORDERS OF THE CIT, IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPT ION U/S 10(15)(IV)(E) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT IN ALL THESE AS SESSMENT YEARS AO PASSED ORDER U/S 143(3) R.W.S. 254 OF THE IT ACT ON 11.02.2007. THE COMMISSIONER OF INCOME TAX BY ORDER DATED 03.03.200 8 SET ASIDE THE ASSESSMENT ORDERS PASSED BY AO U/S 143(3) R.W.S. 25 4 DATED 11.2.2007 I.T.A .NOS.-108 TO 112/ALLD/2011 3 DIRECTING THE AO TO WITHDRAW EXEMPTION ALLOWED U/S 10(15)(IV)(E) OF THE ACT IN RESPECT OF INTEREST RECEIVED FROM A FINANCIA L INSTITUTION OR A BANKING COMPANY ON ACCOUNT OF MONEY BORROWED BY ASS ESSEE FROM SOURCES OUTSIDE INDIA. THESE ORDERS OF THE COMMISSI ONER PASSED U/S 263 OF THE ACT ON 3.3.2008 WERE CHALLENGED BY THE ASSES SEE BEFORE THIS TRIBUNAL AND THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS.119 TO 123 OF 2008 DATED 24 TH JULY 2008 UPHOLD THE ORDERS OF THE COMMISSIONER IN DIRECTING TO WITHDRAW THE EXEMPTION U/S 10(15)(I V)(E). THE AO PASSED ORDER U/S 143(3) R.W.S. 263 FOR ALL THESE ASSESSMEN T YEARS GIVING EFFECT TO THE ORDER OF THE CITON 29.12.2008. WHILE GIVING EFF ECT TO THE ORDER OF THE CIT THE AO IGNORING THE DIRECTION OF THE LD. CI T ALLOWED EXEMPTION U/S 10(15)(IV)(E) OF THE ACT. HOWEVER, SUBSEQUENTLY , THE AO PASSED CONSEQUENTIAL ORDER U/S 154 ON 27.11.2009 WITHDRAWI NG EXEMPTION ALLOWED IN THE ORDER DATED 29.12.2008 PASSED U/S 14 3 R.W.S. 263. 4. SUBSEQUENTLY, THE COMMISSIONER ISSUED ONE MORE N OTICE U/S 263 FOR ALL THESE ASSESSMENT YEARS PROPOSING TO WITHDRAW TH E EXEMPTION U/S 10(15)(IV)(E). THE ASSESSEE FILED REPLY AGAINST THE SAID PROPOSAL OF THE COMMISSIONER STATING THAT AO HAS ALREADY ISSUED NOT ICE U/S 154 AND AN ORDER U/S 154 WAS PASSED AND THIS ORDER WAS CHALLEN GED IN THE HIGH COURT. IGNORING THE SAID REPLY FILED BY THE ASSESSE E THE LD. CIT ONCE AGAIN PASSED ORDER U/S 263 BY DIRECTED THE AO TO WI THDRAW EXEMPTION U/S 10(15)(IV)(E) WHICH WAS OMITTED TO WITHDRAW WHI LE GIVING EFFECT TO I.T.A .NOS.-108 TO 112/ALLD/2011 4 THE ORDER PASSED U/S 263 OF THE ACT BY THE AO ON 29 .12.2008 HOLDING THAT THIS ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE LD CIT IS NOT JUSTIFIED IN PASSING ORDER DATED 30.3.2011 FOR ALL THESE ASSE SSMENT YEARS BY HOLDING THAT THE CONSEQUENTIAL ORDER DATED 29.12.20 08 GIVING EFFECT TO THE ORDER OF CIT U/S 263 IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE AS THE AO HAS ALREADY PASSED ORDER U/S 154 WITHDRAWING THE EXEMPTION CLAIMED U/S 10(15)(IV)(E) OF THE ACT FOR ALL THESE ASSESSMENT YEARS. 6. THE LD. DR SUBMITS THAT INITIALLY WHILE GIVING E FFECT TO THE ORDER PASSED BY THE CIT U/S 263 THE AO ALLOWED EXEMPTION U/S 10(15)(IV)(E) IGNORING THE DIRECTIONS OF THE LD. CIT BUT LATTER T HE AO PASSED ORDER U/S 154 DATED 27.11.2009 WITHDRAWING THE EXEMPTION. 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORDS. WE FIND THAT INITIALLY THE COMMISSIONER PASSED ORDER ON 3.3.2008 DIRECTING THE AO TO WITHDRAW THE EXEMPTION U/S 10 (15)(IV)(E) AND THESE ORDERS W ERE ALSO UPHELD BY THE ITAT BY ORDER DATED 24.7.2008. WHILE GIVING EFF ECT TO THE ORDER OF LD. CIT ON 29.12.2008 THE AO IGNORING THE DIRECTION S, OMITTED TO WITHDRAW THE EXEMPTION WHICH WAS LATTER WITHDRAWN B Y PASSING ORDER U/S 154 DATED 27.11.2009. IN THESE CIRCUMSTANCES, W E FIND THAT THE ORDER PASSED BY LD. CIT DATED 30.3.2011 ONCE AGAIN HOLDIN G THAT THE ORDER PASSED U/S 143 R.W.S. 263 DATED 29.12.2008 IS ERRON EOUS AND PREJUDICIAL I.T.A .NOS.-108 TO 112/ALLD/2011 5 TO THE INTEREST OF REVENUE AND THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 10(15)(IV)(E) IS WITHOUT TAKING NOTE OF THE 154 ORDER WHICH IS NOT CORRECT. SINCE THE AO HAS ALREADY PASSED ORDER U/S 154 WITHDRAWING THE EXEMPTION, WE SET ASIDE THE ORDERS OF CIT PASSED U/ S 263 ON 30.3.2011 FOR ALL THE ASSESSMENT YEARS 1997-98 TO 2001-2002. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 /04/2015. SD/- SD/- ( D. K. RAO ) (C. N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/04/2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR