M/s. Indian Chain Pvt. Ltd., Kolkata V. ACIT, Circle - 12, Kolkata, Kolkata

ITA 129/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48287 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 20-01-2011
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: R SALARPURIA
• Keywords: Business income; Reasonable cause; Condonation of delay
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' $# , ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #% #% #% #% / I.T.A NO. 129/KOL/2011 $&' '() $&' '() $&' '() $&' '()/ // / ASSESSMENT YEAR: 2004-05 M/S. INDIAN CHAIN PVT. LTD. VS. ASSISTANT COMMIS SIONER OF INCOME-TAX, (PAN-AAACI 6291 G) CIRCLE-12, KOLKATA (+, /APPELLANT ) (-.+,/ RESPONDENT ) FOR THE APPELLANT: SHRI R. SALARPURIA FOR THE RESPONDENT: SHRI S. K. ROY / / ORDER PER MAHAVIR SINGH, JM ( ' $# ' $# ' $# ' $#, , , , ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXII, KOLKATA IN APPEAL NO. 78/CIT(A)-XXXII/08-09/AC,CIR-12/R&T/KOL DATED 31.12 .2009. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-12, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORD ER DATED 29.12.2006. 2. AT THE OUTSET, IT IS NOTICED THAT THIS APPEAL IS BARRED BY LIMITATION BY 244 DAYS AND FOR THIS, ASSESSEE HAS GIVEN FOLLOWING REASONS:- A) THE ERSTWHILE EMPLOYEE OF THE APPELLANT COMPANY , SHRI O P LATH, WHO WAS ENTRUSTED WITH THE TAXATION JOB WAS MORE THAN 65 YEARS OF AGE AND WAS SUFFERING FROM A NUMBER OF AILMENTS AND HIS ILL HEALTH PREVENTED HIM FROM REGU LARLY ATTENDING THE WORK. THE APPELLATE ORDER OF THE CIT(A) WAS IN HIS POSSESSIO N; B) THE SAID PERSONNEL OF THE APPELLANT COMPANY DU E TO HIS DETERIORATING HEALTH CONDITION ULTIMATELY LEFT THE JOB ON 30 TH SEPTEMBER, 2010 AFTER SERVING MORE THAN 30 YEARS; C) AFTER SOMETIME, A NEW PERSONNEL MS. POOJA JAISWA L JOINED AND WAS LOOKING INTO THE AFFAIRS OF THE APPELLANT COMPANY SHE ALSO LEFT TH E JOB ON AND AROUND 15 TH DECEMBER 2010. D) ON AROUND END DECEMBER, 2010, THE MANAGEMENT HAD INSTRUCTED TO PREPARE A TAX POSITION OF THE APPELLANT COMPANY WHEN IT WAS DET ECTED THAT THE ORDER OF THE CIT(A) WAS KEPT IN ONE OF THE FOLDERS OF THE PERSON LOOKIN G AFTER THE TAXATION JOB AS REFERRED TO IN (A) ABOVE. E) THE SAID FACT WAS IMMEDIATELY BROUGHT INTO THE N OTICE OF THE FIRM OF CHARTERED ACCOUNTANTS, WHO ADVISED THE APPELLANT TO FILE AN A PPEAL IMMEDIATELY, AND SIMULTANEOUSLY PREFER A CONDONATION PETITION BEFORE THE HONOURABLE MEMBERS. 2 ITA 129/K/2011 INDIAN CHAIN PVT. LTD. A.Y.04-05 3. ON QUERY FROM THE BENCH, THE LD. DR HAS NOT OBJE CTED CONDONATION OF DELAY AND GOING THROUGH REASONS STATED IN CONDONATION PETITION, WE ARE CONVINCED THAT THERE IS REASONABLE CAUSE FOR DELAY. HENCE, WE CONDONE THE DELAY AND ADMIT T HIS APPEAL FOR HEARING. 4. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 14A R.W.S. RULE 8D OF I. T. RULES, 1962. FOR THIS, ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF T HE CASE THE CIT(A) HAD GROSSLY ERRED IN DIRECTING THE A.O. TO RECOMPUTE THE DISALLOWANCE U/S. 14A OF THE ACT, READ WITH RULE 8D OF THE INCOME TAX RULES, WITHOUT APPRECIATING TH E FACT THAT THE A.O. HAD NOT POINTED OUT ANY SPECIFIC EXPENDITURE WHICH THE APPELLANT HA D INCURRED IN EARNING DIVIDEND INCOME, CLAIMED AS EXEMPT UNDER SECTION 10(33) OF T HE ACT. SUCH ACTION OF THE CIT(A) IS BAD IN LAW, ILLEGAL AN D AB INITIO VOID WHICH IS SUBJECTED TO BE CANCELLED/QUASHED/SET ASIDE. 5. AFTER HEARING RIVAL CONTENTIONS AND PERUSING FAC TS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT RULE 8D OF I. T. RULES WILL NOT AP PLY FOR ASSESSMENT YEAR 2004-05 AS HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOY CEE MFG. CO. LTD. VS. DCIT [2010] 328 ITR 81 (BOM.). WE ALSO FIND THAT THE PRINCIPLE LAID DOWN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCEE MFG. CO. LTD. VS. DCIT [ 2010] 328 ITR 81 (BOM.) AT PAGES 138 & 139 VIDE SUB PARAS (V) TO (VII) ARE AS UNDER: (V) THE PROVISIONS OF RULE 8D OF THE INCOME-TAX RU LES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24, 2008, SHALL APPLY WITH E FFECT FROM THE ASSESSMENT YEAR 2008-09; (VI) EVEN PRIOR TO THE ASSESSMENT YEAR 2008-09, WHE N RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER HAS TO ENFORCE TH E PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR THAT PURPOSE, THE ASSESSING OFF ICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE AC T. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTU NITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; (VII) THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2002 -03 SHALL STAND REMANDED BACK TO THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL DETERMINE AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE ( DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH D OES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 14A. THE ASSESSING OFFICER CAN ADOPT REASONABLE BASIS FOR EFFECTING THE APPORTIONM ENT. WHILE MAKING THAT DETERMINATION, THE ASSESSING OFFICER SHALL PROVIDE A REASONABLE OPPORTUNITY TO 3 ITA 129/K/2011 INDIAN CHAIN PVT. LTD. A.Y.04-05 THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT AND GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CAS E IN VIEW OF ABOVE, WE SET ASIDE THIS ISSUE TO THE FI LE OF CIT(A) TO DECIDE THIS ISSUE IN TERM OF DIRECTIONS OF HONBLE BOMBAY HIGH COURT, CITED SUPR A. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN ASSESSING INTERE ST INCOME AND INCOME FROM MUTUAL FUND AS INCOME FROM OTHER SOURCES AS AGAINST INCOME DECLARE D BY ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. FOR THIS, THE AS SESSEE HAS RAISED THE FOLLOWING GROUND NO.2: 2. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF T HE CASE THE CIT(A) HAD GROSSLY ERRED IN UPHOLDING THE ACTION OF THE A.O, IN CONSIDERING THE INCOME EARNED BY THE APPELLANT AS INTEREST INCOME RS.32,50,097/- AND INCOME FROM MU TUAL FUND RS.1,31,000/- AS INCOME TO BE CHARGED UNDER THE HEAD INTEREST FROM OTHER S OURCES INSTEAD INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION, AS CLAIMED BY THE APPELLANT, IN ITS RETURN OF INCOME. SUCH ACTION OF THE CIT(A) IS BAD IN LAW, ILLEGAL AN D ABINITIO VOID WHICH IS SUBJECTED TO BE CANCELLED/QUASHED/SET ASIDE. 7. AFTER HEARING RIVAL CONTENTIONS AND PERUSING FAC TS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT CIT(A) HAS NOT PASSED A SPEAKING ORDER AN D MERELY WRITING THAT NO EVIDENCE WERE ADDUCED IN SUPPORT OF CLAIM OF ASSESSEE THAT IT WAS BUSINESS INCOME, DESPITE THE FACT THAT ASSESSEE IN EARLIER YEAR HAS DISCLOSED THE SAME IN COME UNDER THE HEAD BUSINESS INCOME AND ACCEPTED BY REVENUE ALL ALONG. RELEVANT PORTION OF HIS ORDER READS AS UNDER: 10.4. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT O RDER AND THE SUBMISSION OF THE AR OF THE ASSESSEE. THE A/R HAS NOT ESTABLISHED BEFOR E ME THAT THE ASSESSEE WAS IN THE BUSINESS OF MONEY LENDING DURING THE RELEVANT FINAN CIAL. NO EVIDENCES HAVE BEEN ADDUCED ON BEHALF OF THE ASSESSEE IN SUPPORT OF ITS CLAIM THAT SUCH INTEREST INCOME AND THE INCOME FROM MUTUAL FUNDS WAS BUSINESS INCOME OF THE ASSESSEE. AS REGARDS THE A/RS CLAIM THAT IN EARLIER YEARS THE ASSESSEES TR EATMENT OF SUCH INCOME AS ITS BUSINESS INCOME HAD NOT BEEN DISTURBED, IT MAY BE SAID THAT THE PRINCIPAL OF RES JUDICATA IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS. THE VERY NATURE OF THE INCOMES UNDER CONSIDERATION CLEARLY SHOWS THAT THEY ARE TO BE ASS ESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE LIGHT OF THE ABOVE DISCUSSION, THE ACTION OF THE A.O. IN ASSESSING THE INTEREST INCOME AND THE INCOME FROM MUTUAL FUNDS UNDER THE H EAD INCOME FROM OTHER SOURCES IS UPHELD. THIS GROUND IS, THUS DISMISSED . 4 ITA 129/K/2011 INDIAN CHAIN PVT. LTD. A.Y.04-05 SINCE CIT(A) HAS NOT PASSED A SPEAKING ORDER, WE SE T ASIDE THIS ISSUE TO THE FILE OF AO TO CONSIDER AFRESH AFTER AFFORDING REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTI CAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN OPEN COURT ON 22.7.2011. SD/- SD/- . . , ! ' '' ' $# $# $# $# , ! (S. V. MEHROTRA (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED 22ND JULY, 2011 '12 $&34 $5' JD.(SR.P.S.) / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT M/S. INDIAN CHAIN PVT. LTD., C/O SALARP URIA JAJODIA & CO., 7, C. R. AVENUE, KOLKATA-72. 2 -.+, / RESPONDENT, ACIT, CIRCLE-12, KOLKATA 3 . $/& ( )/ THE CIT(A), KOLKATA 4. $/& / CIT, KOLKATA 5 . '$? -$& / DR, KOLKATA BENCHES, KOLKATA .7 -$/ TRUE COPY, /&@/ BY ORDER, #4 /ASSTT. REGISTRAR .