M/s Asia Pacific Commodities Ltd., Tadepallegudem V. THE ACIT, CIRCLE - 1, Rajahmundry

ITA 110/VIZ/2014

• Counselvise Citation: 11025314 RSA 2014
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Opportunity of being heard; Application of stay
• Section: 143(3); 14A; 263

Judgement Text

ITA NO.110/VIZAG/2014 & SA NO.15/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES LTD., TADEPALLIGUDEM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 110 /VIZAG/ 2014 ASSESSMENT YEAR : 2006-07 M/S. ASIA PACIFIC COMMODITIES LTD. VS. ACIT CIRCLE-1 RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.AADCA 6369K SA NO.15/VIZAG/2014 ASSESSMENT YEAR : 2006-07 M/S. ASIA PACIFIC COMMODITIES LTD. TADEPALLIGUDEM VS. ACIT CIRCLE-1 RAJAHMUNDRY (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. SUBRAHMANYAM, CA REVENUE BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 09.07.2014 DATE OF PRONOUNCEMENT : 09.07.2014 ORDER PER BENCH:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.2.2014 OF THE CIT(A)-II MUMBAI, CAMP OFFICE VISAK HAPATNAM RELATING TO THE ASSESSMENT YEAR 2006-07. 2. SOLE GRIEVANCE OF THE ASSESSEE IN THE PRESENT AP PEAL IS, THE CIT (A) HAS NOT DECIDED THE DISALLOWANCE MADE U/S 14A OF TH E INCOME-TAX ACT WITHOUT CONSIDERING THE SAME ON MERIT. 3. FACTS IN BRIEF ARE INITIALLY THE ASSESSMENT IN C ASE OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 24 .12.2008 ON A TOTAL INCOME OF RS.82,78,392/-. THE CIT IN EXERCISE OF P OWER U/S 263 OF THE ACT REVISED THE AFORESAID ASSESSMENT ORDER ON SOME ISSU ES ONE OF THEM BEING THE ITA NO.110/VIZAG/2014 & SA NO.15/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES LTD., TADEPALLIGUDEM 2 ISSUE OF DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE ACT. THE SPECIFIC DIRECTION OF THE CIT IN RESPECT OF THE AFORESAID IS SUE IS AS UNDER: THE AO WOULD DO WELL TO DISCUSS THAT THE INTEREST BEARING FUNDS WERE AVAILED TO MAKE SHARE APPLICATION MONEY WITH AN INTENTION TO EARN DIVIDENDS, THEREBY DISALLOWANCE U /S 14A READ WITH RULE 8D SHOULD BE WORKED OUT. 4. AS A CONSEQUENCE OF THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT MAKI NG DISALLOWANCE U/S 14A OF THE ACT OF AN AMOUNT OF RS.1,31,67,550/-. BEING AGGRIEVED OF THE DISALLOWANCE SO MADE, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE WITH THE FOLLOWING OBSERVATIONS: ON THIS ISSUE, AS THERE WERE SPECIFIC DIRECTIONS OF THE CIT IN HIS ORDER UNDER SECTION 263 OF THE ACT, THE AO HAD NO OPTION BUT TO IMPLEMENT SUCH DIRECTIONS GIVEN BY THE CIT. ACCORD INGLY, NO FAULT CAN BE ASCRIBED TO THE ACTION OF THE AO IN CARRYING OUT THE DIRECTIONS ISSUED BY THE CIT. TO THAT EXTENT, APPEAL FILED BY THE ASSESSEE AGAINST THE AOS ACTION IN CARRYING OUT THE DIRECTI ONS OF THE CIT IS HEREBY DISMISSED. 5. THE LD. A.R. SUBMITTED BEFORE US THAT THERE IS N O SPECIFIC DIRECTION OF THE CIT TO MAKE DISALLOWANCE U/S 14A OF THE ACT. IT IS FURTHER CONTENDED BY THE LD. A.R. THAT WHILE DISALLOWING U/S 14A OF THE ACT, THE ASSESSING OFFICER HAS NOT FOLLOWED THE DIRECTION OF THE CIT U/S 263 O F THE ACT. HENCE, IT CANNOT BE SAID THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS AS PER THE DIRECTION OF THE CIT. THUS IT WAS SUBMITTED THAT THE CIT(A) SHOULD HAVE CONSIDERED THE ISSUE ON MERITS. 6. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORD ER OF THE CIT(A). 7. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIA LS ON RECORD. AS CAN BE SEEN FROM THE DIRECTION OF THE CIT U/S 263 OF THE A CT EXTRACTED HEREIN ABOVE, HE HAS DIRECTED THE ASSESSING OFFICER TO WORK OUT T HE DISALLOWANCE U/S 14A READ WITH RULE 8D. HOWEVER, A PERUSAL OF THE ASSES SMENT ORDER WOULD SHOW THAT THE ASSESSING OFFICER HAS NOT STRICTLY COMPLIE D TO THE AFORESAID DIRECTION OF THE CIT. ON THE CONTRARY, THE ASSESSING OFFICER HAS MADE DISALLOWANCE U/S ITA NO.110/VIZAG/2014 & SA NO.15/VIZAG/2014 M/S. ASIA PACIFIC COMMODITIES LTD., TADEPALLIGUDEM 3 14A ON ADHOC BASIS. IN THE AFORESAID CIRCUMSTANCES , IT CANNOT BE SAID THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS A S PER THE DIRECTION OF THE CIT. CONSIDERING THE AFORESAID FACT, WE ARE OF THE VIEW THAT CIT(A) WAS NOT JUSTIFIED IN NOT DECIDING THE GROUND RAISED BY THE ASSESSEE ON MERIT. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO HIS FILE FOR DECIDING AFRESH ON MERITS AFTER AFFORD ING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN VIEW OF OUR DEC ISION IN THE APPEAL, THE STAY APPLICATION FILED BY THE ASSESSEE HAS BECOME I NFRUCTOUS, HENCE, IS DISMISSED. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES AND STAY APPLICATION IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9 TH JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 9 TH JULY, 2014 COPY TO 1 M/S. ASIA PACIFIC COMMODITIES LTD., PRATIPADU, TA NUKU ROAD, TADEPALLIGUDEM, WEST GODAVARI DISTRICT 2 ACIT, CIRCLE-1, RAJAHMUNDRY 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM