Essen Finance & Investments Pvt.Ltd., Gandhinagar V. The Income tax Officer,GNR Ward-1, Gandhinagar

ITA 1240/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9824 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 1240/AHD/2013 / ASSESSMENT YEAR: 2007-08 ESSEN FINANCE & INVESTMENT LTD, C/O. CA MANOJ LEKINWALA, PLOT NO.289, NR. GH-6, SECTOR-29, GANDHINAGAR .. APPELLANT PAN : AAACE 4144 J VS ITO, WARD-1 GANDHINAGAR .. RESPONDENT ASSESSEE(S) BY : SHRI S.N. DIVATIA , AR REVENUE BY : SHRI JAMES KURIAN , SR - DR / DATE OF HEARING 10/12/2015 /DATE OF PRONOUNCEMENT 19/01/2016 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), GANDHINAGAR, AHMEDABAD DATED 20.02.2013 FOR ASSESSM ENT YEAR 2007-08, ON THE FOLLOWING GROUNDS:- 1. THE ADDITION IS MADE ON AD-HOC BASIS. 2. NO CORRELATION ESTABLISHED FOR EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME OF DIVIDEND. 3. THE COMPANY HAS NOT INCURRED ANY EXPENSES FOR EARNING EXEMPT INCOME OF DIVIDEND. ITA NO. 1240/AHD/2013 ESSEN FINANCE & INVESTMENT LTD VS. ITO AY 2007-08 - 2 - 4. THE SUBMISSION GIVEN TO AO AND CIT(A) IS TOTALLY IGNORED. 5. EVEN DIRECTION OF ITAT THAT ONLY DIRECT RELATED EXPENDITURE SHALL BE DISALLOWED IS ALSO TOTALLY IGN ORED. 6. NO SHOW-CAUSE IS GIVEN FOR PROPOSED ADDITION. NO OPPORTUNITY GIVEN BEFORE FINALIZING ADDITION. 7. THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT R EAL INCOME OF ASSESSEE. 8. THE ADDITION MADE IS BAD IN LAW AND AGAINST PRINCIP LE OF NATURAL JUSTICE. 2. THIS IS THE SECOND ROUND OF LITIGATION. THE FACT S OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31. 10.2007 DECLARING NIL INCOME. THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT ON 24.12.2009 AFTER MAKING DISALL OWANCE OF RS.67,615/- U/S 14A OF THE ACT. THE MATTER WAS CARR IED BEFORE THE TRIBUNAL, WHICH HAS SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECISION AFRESH, AFTER RELYIN G THE ORDER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. AND ANOTHER, 328 ITR 81. IN THE SET ASIDE PROCEEDINGS, THE ASSESSING OFFICER DIRECTED THE ASS ESSEE TO PRODUCE RELEVANT MATERIALS ON THE FACTS OF THE CASE AND ALSO ASKED TO PRODUCE THE BOOKS OF ACCOUNTS WHICH ASSESS EE FAILED TO PRODUCE. THEREFORE, THE ASSESSING OFFICER DISAL LOWED RS.1,03,088/-, BY TREATING 20% OF THE TOTAL EXPENDI TURE CLAIMED UNDER THE HEAD ADMINISTRATIVE EXPENSES AMOUNTING TO ITA NO. 1240/AHD/2013 ESSEN FINANCE & INVESTMENT LTD VS. ITO AY 2007-08 - 3 - RS.4,12,350/- U/S 14A OF THE ACT, AND ADDED THE SAM E TO THE TOTAL INCOME OF THE ASSESSEE. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHO AGAIN CONFIRMED THE ADDITION MADE BY THE ASSESS ING OFFICER ON THE GROUND THAT THE ASSESSEE FAILED TO P RODUCE THE BOOKS OF ACCOUNTS DESPITE OF VARIOUS OPPORTUNITIES PROVIDED TO THE ASSESSEE. THE CIT(A) ALSO OBSERVED THAT IT IS T HE DUTY OF THE ASSESSING OFFICER TO PROVE THAT CERTAIN EXPENSES HA VE BEEN INCURRED FOR EARNING THE EXEMPT OR NON-TAXABLE INCO ME; HOWEVER, WHEN THE ASSESSEE ITSELF FAILED TO PRODUCE THE BASIC RECORD FOR EXAMINATION BEFORE THE ASSESSING OFFICER , THE ASSESSING OFFICER HAS NO OTHER ALTERNATIVE BUT TO M AKE A REASONABLE ESTIMATE. IN THIS REGARD, IT IS PERTINE NT TO NOTE THAT IN THE GROUNDS RAISED BY THE ASSESSEE ITSELF, IT WA S MENTIONED BY THE ASSESSEE THAT NO SHOW-CAUSE WAS GIVEN TO THE ASSESSEE FOR THE PROPOSED ADDITION AND NO OPPORTUNITY WAS AL SO GIVEN BEFORE FINALIZING THE ADDITION. THEREFORE, IT WOUL D MEET THE ENDS OF JUSTICE, IF WE SET ASIDE THE ISSUE TO THE F ILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE A SSESSEE. WE ORDER ACCORDINGLY. WE ALSO DIRECT THE ASSESSEE TO PRODUCE ALL THE RELEVANT MATERIALS AND EVIDENCES BEFORE THE ASS ESSING ITA NO. 1240/AHD/2013 ESSEN FINANCE & INVESTMENT LTD VS. ITO AY 2007-08 - 4 - OFFICER WHO WOULD CONSIDER THE SAME WHILE ADJUDICAT ING THE ISSUE AFRESH. 3. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 19TH OF JANUARY, 2 016 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED /01/2016 *BT !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), 5. !'# $$ , , / DR, ITAT, AHMEDABAD 6. #() / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD