Pearey Lal & Sons Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1266/DEL/2010

• Counselvise Citation: 126620114 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 12-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: R M MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 1266(DEL)/2010 ASSESSMENT YEAR: 2007-08 PEAREY LAL & SONS PVT. LTD., ASS TT. COMMISSIONER OF INCOME 42, JANPATH, NEW DELHI. VS. TAX , CIRCLE 14(1), NEW DELHI. PAN: AAACP0003B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.M. MEHTA, ADVOCAT E RESPONDENT BY : MS. Y. KAKKAR, SR. D.R DATE OF HEARIN G: 12.12.2011 DATE OF PRONOU NCEMENT: 16 .12.2011. ORDER PER K.G. BANSAL : AM IN THIS CASE, THE TRIBUNAL HAD PASSED THE ORDER O N 05.10.2010, IN WHICH THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOW ED. THE ASSESSEE HAD NOT PRESSED THE GROUND REGARDING NON-INCLUSION OF L ONG-TERM CAPITAL GAIN OF RS. 6,88,952/- IN THE TOTAL INCOME U/S 10(38) OF THE INCOME-TAX ACT, 1961. THE QUESTION REGARDING DEDUCTION U/S 80-G ON DO NATION OF RS. 1.25 LAKH WAS RESTORED TO THE FILE OF THE AO FOR VERIFICAT ION AND DECISION AS PER LAW. THIS ORDER WAS RECALLED ON 07.10.2011 IN M.A. N O. 2(DEL)/2011 ON THE LIMITED GROUND THAT ADDITIONAL GROUND TAKEN UP BY THE ASSESSEE ON 21.05.2010 AND ADMITTED VIDE ORDER DATED 02.0 6.2010 WAS REQUIRED TO ITA NO. 1266(DEL)/2010 2 BE DECIDED AS IT REMAINED UNDECIDED IN THE AF ORESAID ORDER. THE GROUND IS THAT THE AO ERRED BOTH ON FACTS AND IN LAW IN NOT EXCLUDING FROM THE TAXABLE INCOME THE INTEREST ON TAX-FREE BONDS OF RS. 2,82,206/- AND DIVIDEND INCOME OF RS. 2,63,119/-, EVEN THOUGH I T WAS RECORDED THAT THESE INCOMES ARE EXEMPT FROM TAX. 2. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAD FILED E-RETURN ON 30.10.2007 DECLARING TOTAL INCOME OF RS. 73,25,2 97/-. THERE WERE SOME ERRORS IN THIS RETURN. THESE ERRORS WERE POINTED OUT TO THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. A STATEMENT OF INCOME WAS ALSO FILED BEFORE HIM. HOWEVER, THE AO DID NOT TAKE INTO ACCOUNT THE CLAIMS OF THE ASSESSEE ON THE GROUND THAT NO REVI SED RETURN HAS BEEN FILED. THESE MISTAKES WERE CONSIDERED BY THE LD. CIT(AP PEALS). HIS OBSERVATIONS ARE RECORDED IN PARAGRAPH NO. 3.4, W HICH IS REPRODUCED BELOW:- 3.4 I HAVE CAREFULLY CONSIDERED THE SUBMISS IONS MADE BY THE APPELLANT AND PERUSED THE ASSESSMENT ORDER PA SSED BY THE AO. IT IS SEEN THAT THE APPELLANT HAS DISCLOSED IN ELECTRONIC RETURN AT PART B-T1 AT COLUMN NO. 2.1 BUSINESS LOSS OF RS. 27,74,075/-. BUT IN THE FINAL TOTAL INCOME, THIS FIGURE WAS NOT DEDUCTED FROM TOTAL INCOME. THUS, THERE WAS ARI THMETICAL MISTAKE IN THE RETURN OF INCOME FILED ELECTRONI CALLY. HOWEVER, IN RESPONSE TO NOTICES ISSUED U/S 142(1 ) BY THE AO, ITA NO. 1266(DEL)/2010 3 THE APPELLANT HAS SUBMITTED THE DETAILS IN WHIC H HE AGAIN CLAIMED BUSINESS LOSS OF RS. 27,75,074/-. THE CLAI M OF THE APPELLANT IS SUPPORTED BY THE AUDITED PROFIT & LO SS ACCOUNT AND BALANCE SHEET,. WHICH WAS FILED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THE ABOVE FACTS, I AM OF THE VIEW THAT THE CLAIM OF THE APPELLANT CANNOT BE REJECTED MERELY ON THE GROUND THAT THERE WAS MISTAKE IN TH E RETURN OF INCOME. THE LAW REQUIRES THAT THE TAX SHOULD BE C OLLECTED AS PER THE PROVISIONS OF THE I.T. ACT. IF A CLAIM IS ADMISSIBLE WHICH IS OTHERWISE ALLOWABLE AS PER LAW, IT SHOULD BE ALLOWED. IN THE CASE OF CIT VS. C. PAREKH AND CO., 29 ITR 661, IT HAS BEEN HELD THAT THE APEX COURT THAT ASSESSEE C ANNOT BE STOPPED FROM CLAIMING THE BENEFIT OF SUCH DEDU CTION BY REASON OF A FACT THAT IT HAD ERRONEOUSLY SHOWN IN THE RETURN. HONBLE SUPREME COURT IN THE CASE OF KEDARNATH JU TE MANUFACTURING CO. LTD. VS. CIT, 82 ITR 363, HAS H ELD THAT ACCOUNTING ENTRIES IN THE BOOKS OF ACCOUNT WERE NO T DETERMENT OF THE ALLOWABILITY OR DISALLOWABILITY OF THE CLAI M. THE APEX COURT HELD THAT IF AN ASSESSEE UNDER SOME MISAPP REHENSION OR MISTAKE FAILS TO MAKE AN ENTRY IN THE BOOKS OF A CCOUNTS AND ALTHOUGH UNDER THE LAW DEDUCTION MUST BE ALLOW ED BY THE INCOME TAX OFFICER, THE ASSESSEE WOULD NOT BE DE BARRED FROM BEING ALLOWED THE DEDUCTION. SIMILARLY, IN THE CASE OF CIT VS. MAHENDRA MILLS, (2000) 243 ITR 79 (SC), THE AP EX COURT REFERRING TO THE CBDT CIRCULAR NO. 14 (SL-35) DAT ED 11.04.1955 HAS OBSERVED THAT IT WAS THE DUTY OF THE AO TO ASSIST THE TAX PAYER IN CLAIMING THE RELIEF. RE FERENCE IN THIS REGARD MAY ALSO BE MADE TO THE DECISION OF ITAT, DELHI IN THE CASE OF CHICAGO PNEUMATIC INDIA LTD. VS. DCIT (20 07) 15 SOT 252, WHEREIN THE HONBLE TRIBUNAL REFERRED TO THE ABOVE CIRCULAR WHICH STATES THAT THE OFFICERS OF THE D EPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE A S TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSIST A TAX-PAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CL AIMING AND SECURING RELIEF AND IN THIS REGARD THE OFFICERS SHOULD TAKE THE INITIATIVE IN GUIDING A TAX PAYER WHERE PROC EEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. ITA NO. 1266(DEL)/2010 4 IN VIEW OF THE ABOVE DISCUSSION, THE AO IS DIRECT ED TO ALLOW THE SET OFF OF BUSINESS LOSS OF RS. 27,74,074/- AGAINST THE INCOME DECLARED BY THE APPELLANT FROM OTHER HEADS OF INCOME. THIS GROUND OF APPEAL IS ALLOWED. 2.1 HIS CASE IS QUITE SIMPLE THAT THE AO HAS MADE A NOTING IN THE ASSESSMENT ORDER THAT INTEREST ON TAX-FREE BONDS AND DIVIDENDS ARE NOT LIABLE FOR TAX, YET, HE INCLUDED THESE AMOUNTS I N THE TOTAL INCOME. THEREFORE, IT IS URGED THAT THE GROUND MAY BE DE CIDED IN HIS FAVOUR. 2.2 IN REPLY, THE LD. SENIOR DR SUBMITTED THAT THE QUESTION OF LONG- TERM CAPITAL LOSS OF RS. 10,64,000/- ON SHARES OF ORANGE LEARNING SYSTEMS PVT. LTD. AND NON-INCLUSION OF THE INCOMES IN THE TOTAL INCOME, AS MENTIONED IN THE ADDITIONAL GROUNDS, ARE INEXTR ICABLY LINKED. THEREFORE, THE WHOLE MATTER MAY BE RESTORED TO THE FILE OF T HE AO. 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE HAD INCURRED LOSS OF RS. 10,64,000/- ON SALE OF 30000 SHARES OF ORANGE LEAR NING SYSTEMS PVT. LTD. A GAIN OF RS. 6,88,951/- WAS EARNED ON REDEMPTI ON OF THE UNITS OF TATA DIVIDEND YIELD FUND. THE FINDINGS OF THE LD. CIT(A PPEALS) ARE THAT THE LOSS ON SALE OF SHARES OF ORANGE LEARNING SYSTEMS PVT. LTD. IS NOT ITA NO. 1266(DEL)/2010 5 ALLOWABLE AS THE PURCHASE PRICE OF THE SHARES HA S NOT BEEN ESTABLISHED. THE CAPITAL GAINS ON REDEMPTION OF THE UNITS OF TATA DIVIDEND YIELD FUND CANNOT BE SAID TO BE NOT INCLUDIBLE IN THE TOTAL INCOME U/S 10(38) AND, THEREFORE, THIS AMOUNT WAS DIRECTED TO BE INCLUDED IN THE TOTAL INCOME. NONE OF THESE FINDINGS HAVE BEEN MODIFIED IN ANY MANNER BY THE TRIBUNAL IN ITS ORDER DATED 05.10.2010. THE ADDITIONAL GR OUND HAS BEEN ADMITTED FOR ADJUDICATION AND, THEREFORE, THE ONLY QUESTION IS WHETHER THE TWO INCOMES ARE INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE. ALTHOUGH THE AO HAS RECORDED A FINDING TO THIS EFFECT, YET, WE THIN K IT FIT THAT THE QUESTION OF THEIR NON-INCLUSION IN THE TOTAL INCOME REQUIRES F URTHER VERIFICATION ON THE PART OF THE AO WITH REFERENCE TO THE FACTS AS TO WHETHER THE CONDITIONS FOR NON-INCLUSION ARE SATISFIED OR NOT. THEREFORE , THE MATTER IS RESTORED TO THE FILE OF THE AO FOR DECISION AS PER LAW. THU S, THIS GROUND IS TREATED AS ALLOWED. 4. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (R.P. TOLANI) (K.G. BANS AL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NO. 1266(DEL)/2010 6 COPY OF THE ORDER FORWARDED TO:- PEAREY LAL & SONS PVT. LTD., NEW DELHI. ACIT, CIRCLE 14(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.