ACIT, Jaipur V. HAND MADE PAPER & BORD INDUSTRIES, Jaipur

ITA 1525/JPR/2008

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5125 (ITAT-JAIPUR)
• Duration Of Justice: 7 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S DAGUR CIT DHK
• Keywords: Question of law; Revised return
• Section: 10B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.1525/JP/2008 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 THE ACIT, CIRCLE-7, JAIPUR CUKE VS. M/S HANDMADE PAPER & BOARD INDUSTRIES GRAMODYOG ROAD, SANGNER, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABFH 9173 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.1556/JP/2008 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 M/S HANDMADE PAPER & BOARD INDUSTRIES GRAMODYOG ROAD, SANGNER, JAIPUR CUKE VS. THE ACIT, CIRCLE-7, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABFH 9173 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S.DAGUR (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.07.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 28/07/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE CROSS APPEALS AGAINST ORDER OF LD. CIT(A) -III, JAIPUR DATED 14.08.2008. EARLIER, THE CO-ORDINATE BENCH VIDE IT S ORDER DATED 31.10.2014 ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 2 HAD DECIDED THE MATTER EX-PARTE QUA THE ASSESSEE AF TER HEARING THE LD. DR AND PERUSING THE MATERIAL AVAILABLE ON RECORD. SUBSEQU ENTLY, THE ASSESSEE MOVED AN M.A. APPLICATION DATED 17.02.2016 PRAYING FOR RE -CALL OF THE EX-PARTE ORDER DATED 31.10.2014. THEREAFTER, THE CO-ORDINATE BENCH VIDE ITS ORDER DATED 17.06.2016 RE-CALLED THE EARLIER EX-PARTE ORDER DAT ED 31.10.2014 AND DIRECTED THE REGISTRY TO FIX THE DATE OF HEARING ON 27.07.20 16 FOR WHICH BOTH THE PARTIES WERE INFORMED IN THE OPEN COURT. 2. DURING THE COURSE OF HEARING TODAY, THE LD. AR A GAIN MOVED AN ADJOURNMENT APPLICATION DATED 26.07.2016 CITING CER TAIN UNAVOIDABLE CIRCUMSTANCES FOR NOT REPRESENTING THE MATTER FIXED BEFORE THE BENCH AND SOUGHT FOR ADDITIONAL TIME. AFTER GOING THROUGH TH E RECORDS, IT IS NOTED THAT IT IS AN OLD MATTER FILED WAY BACK IN THE YEAR 2008 AND I NSPITE OF GIVING REPEATED OPPORTUNITIES TO THE ASSESSEE AND THE FACT THAT THE CO-ORDINATE BENCH WAS KIND ENOUGH TO RE-CALL EARLIER EX-PARTE ORDER, NO ONE AP PEAR ON BEHALF OF THE ASSESSEE EXCEPT FILING THE SUBJECT ADJOURNMENT AP PLICATION. KEEPING THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ADJOURNMENT APPLICATION WAS REJECTED AND IT WAS DECIDED TO HEAR THE MATTER EX-PARTE QUA THE ASSESSEE. 3. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE A S UNDER: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING THE TRADING ADDITIONS OF RS.26,75,341/- W ITHOUT APPRECIATING THE REASON EVEN WHILE CONFIRMING THE ACTION FOR IN VOCATION PROVISIONS OF SECTION 145(3) BY A.O. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT(A) HAS ERRED IN DELETING THE TRADING ADDITIONS OF RS. 10,83112/- O N ACCOUNT OF CREDITORS OUTSTANDING PAYABLE FOR MORE THAN 3 YEARS EVEN THO UGH THE ASSESSEE HAS NOT PROVED THE IDENTITY OF CREDITORS AND THE G ENUINENESS OF TRANSACTIONS WITH THEM. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW EXEMPTION U/S 10B OF THE IT ACT AFTER VERIFICATION OF FACTS EVEN WHEN NO SUCH CLAIM WAS MADE BY THE ASSESSEE ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 3 IN RETURN OF INCOME OR BEFORE AO DURING ASSESSMENT PROCEEDINGS AND EVEN WHEN THERE ARE NO POWERS GIVEN TO CIT(A) TO RE MAND AN ISSUE TO AO. THE SOLITARY GROUND OF APPEAL TAKEN BY ASSESSEE IS AS UNDER: (1) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.29,32,241/- MADE BY THE AO ON A/C OF NON-DEDUCTION TAX AT SOURC E IN RESPECT OF CERTAIN EXPENDITURE. 4. REGARDING GROUND NO.1 TAKEN BY THE REVENUE WHERE THE REVENUE HAS CHALLENGED THE DELETION OF TRADING ADDITION OF RS.2 6,75,341/-, IT IS NOTED THAT THE BOOKS OF ACCOUNTS WERE REJECTED U/S 145(3) OF T HE IT ACT AND THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE SAID REJECTION . THEREAFTER THE AO NOTICED THAT THERE IS A FALL IN THE GP RATE DURING THE YEAR UNDER CONSIDERATION AS AGAINST PREVIOUS YEAR AND HE APPLIED G.P.RATE OF 41% AS AG AINST 33.33% DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME. THE LD. CIT( A) NOTED THAT IN LIGHT OF HONBLE RAJASTHAN HIGH COURTS DECISION IN CASE OF GOTTAN LIME KHANIJ UDHYOG, (256 ITR 243), IT IS NOT NECESSARY THAT WHERE THE B OOKS OF ACCOUNTS HAVE BEEN REJECTED, THE AO HAS TO NECESSARILY MAKE AN ADDITI ON UNLESS AND UNTIL THE AO HAS NOTED CERTAIN SPECIFIC DEFAULT IN THE BOOKS OF ACCOUNTS. THE LD. CIT(A) FURTHER NOTED THAT ANOTHER CONCERN BY NAME OF M/S K HANIJ HANDMADE PAPER INDUSTRIES HAS DECLARED GP RATE OF 25% AND THERE AR E SIMILAR OTHER CONCERNS WHICH HAVE DISCLOSED 20% GROSS PROFIT RATE. IN LIG HT OF THAT, HE REJECTED THE ESTIMATION OF GP RATE OF 41% TAKEN BY THE AO AND UP HELD THE GP RATE OF 33.33% AS DISCLOSED BY THE ASSESSEE AND THEREBY RE JECTED THE TRADING ADDITION OF RS.26,75,341/-. 4.1 WE HAVE HEARD THE LD. DR AND GONE THROUGH THE R ECORDS. IT IS NOTED THAT THE AO HAS NOT SPECIFIED ANY BASIS FOR ESTIMATION O F GP RATE OF 41%. IT IS A SETTLED LAW THAT IT IS NOT NECESSARY THAT IN EACH A ND EVERY CASE THAT WHERE THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED, THE AO HAS TO NECESSARILY MAKE AN ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 4 ADDITION AND IT ALL DEPENDS UPON THE FACTS AND CIR CUMSTANCES OF EACH CASE AND IN PARTICULAR WHETHER ANY SPECIFIC DEFECTS HAVE BEE N HIGHLIGHTED BY THE AO OR NOT. IN THE INSTANT CASE NO SPECIFIC DEFECTS HAVE B EEN HIGHLIGHTED BY THE AO AND THE ESTIMATION OF 41% IS CLEARLY ARBITRARY IN N ATURE WHICH HAS NO RATIONAL BASIS AND LINKAGE TO THE MATERIAL AVAILABLE ON RECO RD. FURTHER IT IS NOTED THAT THE LD. CIT(A) HAS EXAMINED OTHER CONCERNS IN SIMIL AR LINE OF BUSINESS AND MENTIONED THAT THESE CONCERNS HAVE DISCLOSED GP RAT E RANGING FROM 20 TO 25% AS AGAINST GP RATE OF 33.33.% DISCLOSED BY THE ASSE SSEE. IN LIGHT OF ABOVE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT(A). WE ACCORDINGLY UPHELD THE SAID FINDING OF THE LD. CIT(A)AND THE GR OUND NO. 1 TAKEN BY THE REVENUE IS DISMISSED. 3. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE D ELETION OF ADDITION OF RS.10,83,112/- IN RESPECT OF OUTSTANDING CREDITORS FOR MORE THAN 3 YEARS STATING THAT THE ASSESSEE HAS NOT PROVED THE IDENTITY OF T HE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS WITH THEM IN RESPEC T OF FOLLOWING SUNDRY CREDITORS: NAME AMOUNT (RS.) (A) BODY SHOP USA 4,02,843 (B) DENIM ANTIDUES UK 3,38,844 (C) LARS MULLERS 1,00,654 (D) LIBERY ISREAL 33,423 (E) MAVI MARKETING INTERNATIONAL 16,475 (F) TONDON CAPITAL ASSOCIATES INC. 15,501 (G) CHAIN WIT CORPN. 1,94,640 (H) MARIE HELERE DE TAIL 80,732 10,83,112 ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 5 3.1 WE HAVE HEARD THE LD. DR AND GONE THROUGH THE R ECORDS. IT IS NOTED THAT THE APPELLANT IS A MANUFACTURER, TRADER AND EXPORT ER OF HAND-MADE PAPER AND PAPER PRODUCTS AND IT HAS RECEIVED ADVANCES AGAINS T THE SUPPLY OF GOODS FROM ITS FOREIGN CUSTOMERS. FURTHER THE APPELLANT HAS D EMONSTRATED IN RESPECT OF CUSTOMERS NAMELY DENIM AANTIDUES UK, CHAIN WIT COR PN. , AND MARIE HELERE DE TAIL BEFORE THE LD. CIT(A) THAT THE SUBJECT TRAN SACTIONS ARE IN RESPECT OF SUPPLY OF GOODS WHEREBY ADVANCES WERE RECEIVED INIT IALLY. EITHER THE SUPPLY HAS HAPPENED SUBSEQUENTLY OR THE REFUND OF THE ADVA NCE MONEY HAS BEEN GIVEN. ON SIMILAR LINES, OTHER TRANSACTIONS HAVE BE EN EXECUTED WITH OTHER CUSTOMERS. IN LIGHT OF THAT, IT IS CLEAR THAT THES E ARE TRADE CREDITORS IN RESPECT OF WHICH THE ASSESSEE HAS RECEIVED CERTAIN ADVANCES AGAINST THE SUPPLY OF GOODS AND THERE ARE SUBSEQUENT MOVEMENT IN THE ACCO UNT OF SUCH CREDITORS BY WAY OF SUPPLY OR REFUND OF MONEY WHICH HAVE BEEN VE RIFIED BY THE LD. CIT(A) AND FOUND TO BE IN ORDER. IN LIGHT OF THAT, WE ARE IN AGREEMENT WITH THE FINDING OF THE LD. CIT(A) THAT THE ADDITION OF RS.1083112/- IS NOT WARRANTED IN THE INSTANT CASE. BOTH THE IDENTITY OF THE CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS HAVE BEEN PROVED AND VERIFIED BY T HE LD. CIT(A). IN LIGHT OF THAT WE CONFIRM THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE GROUND NO. 2 OF THE REVENUE. 4. IN 3 RD GROUND OF APPEAL, THE REVENUE HAS CHALLENGED THE O RDER OF THE LD. CIT(A) WHEREIN HE HAS DIRECTED THE AO TO ALLOW EXEM PTION U/S 10B OF THE IT ACT EVEN WHEN NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN ITS RETURN OF INCOME OR BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND GIVEN THAT THEY ARE NO POWERS GIVEN TO CIT(A) TO REMAND THE ISSUE TO THE A O. 4.1 DURING THE COURSE OF HEARING, THE LD. DR REFERR ED TO THE DECISION OF HONBLE SUPREME COURT IN CASE OF GOETZE INDIA 157 TAXMAN 1 AND SUBMITTED ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 6 THAT IN THAT CASE, THE HONBLE SUPREME COURT HAS HE LD THAT THE ASSESSING AUTHORITY HAS NO POWER TO ENTERTAIN THE CLAIM MADE BY THE ASSESSEE AFTER FILING ORIGINAL RETURN OTHERWISE THAN BY FOLLOWING REVISED RETURN. IN THE INSTANT CASE, THE AO WAS THEREFORE CORRECT IN NOT ALLOWING THE CLAIM U/S 10B AS THE ASSESSEE HAS NOT MADE ANY SUCH CLAIM IN THE RETURN OF INCOME. ACCORDINGLY, WHERE THE ASSESSEE HAS NOT MADE ANY SUCH CLAIM BEFO RE THE AO, THE LD CIT(A), HAS NO POWER TO ENTERTAIN SUCH CLAIM AND ADMIT SUCH CLAIM AND THEREAFTER REMAND THE MATTER TO THE AO. 4.2 WE HAVE HEARD THE LEARNED DR AND GONE THROUGH T HE MATERIAL AVAILABLE ON RECORD. THE DECISION OF THE HONBLE SUPREME COU RT IN CASE OF GOETZE INDIA (SUPRA) WAS IN THE CONTEXT OF THE POWERS GIVEN TO T HE AO TO ENTERTAIN ANY FRESH CLAIM MADE BY THE ASSESSEE AFTER FILING OF RETURN O F INCOME. HOWEVER, THE SAID DECISION NOWHERE SUGGEST AND RESTRICT THE APPELLATE AUTHORITY IN ENTERTAINING A CLAIM MADE BY THE ASSESSEE. IN LIGHT OF HONBLE SU PREME COURT DECISION IN CASE OF JUTE CORPORATION OF INDIA LTD. 187 ITR 688 WHERE IN IT WAS HELD THAT THE DECLARATION OF LAW IS CLEAR THAT THE POWER OF THE A AC IS COTERMINOUS WITH THAT OF THE ITO AND IF THAT IS SO, THERE APPEARS TO BE N O REASON AS TO WHY THE APPELLATE AUTHORITY CANNOT MODIFY THE ASSESSMENT OR DER ON AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE ITO. THE SCOPE OF HIS POWER IS COTERMINOUS WITH THE ITO. HE CAN DO WHAT THE ITO CA N DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO, IN THE INSTANT CASE , THE APPELLANTS CLAIM FOR DEDUCTION U/S 10B IS PURELY A LEGAL GROUND WHICH HA S BEEN RIGHTLY ENTERTAINED BY THE LD. CIT(A). AT THE SAME TIME, WE AGREE WITH THE CONTENTIONS OF THE REVENUE THAT EFFECTIVE 01.06.2001, THE POWERS OF TH E LD. CIT(A) HAVE BEEN MODIFIED WHEREIN POWER RELATING TO SETTING ASIDE TH E MATTER TO THE FILE OF THE AO HAS BEEN CURTAILED . IN LIGHT OF THAT, WE REMAN D THE MATTER TO THE FILE OF THE LD CIT(A) TO EXAMINE THE CLAIM OF THE ASSESSEE U/S 10B OF THE ACT AND DECIDE ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 7 THE SAME AS PER LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. HENCE, THE GROUND TAKEN BY THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSES. 5. NOW COMING TO THE SOLITARY GROUND TAKEN BY THE A SSESSEE WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITIO N OF RS.29,32,291/- MADE BY THE AO U/S 40A(IA) ON ACCOUNT OF NON-DEDUCTION O F TAX IN RESPECT OF CERTAIN EXPENDITURE. DURING THE COURSE OF HEARING BEFORE T HE LD. CIT(A), THE ASSESSEE HAS SUBMITTED THAT PROVISIONS OF SECTION 40A(IA) AR E APPLICABLE WHERE AN AMOUNT IS OUTSTANDING AS ON THE YEAR-END AND WHERE THE AMOUNT IS ALREADY BEEN PAID DURING THE FINANCIAL YEAR AND THERE IS NO AMOUNT OUTSTANDING AS AT THE YEAR-END, THE PROVISIONS OF SECTION 40A(IA) ARE NOT APPLICABLE. IN THIS REGARD, THE LD. AR SUBMITTED BEFORE THE LD CIT(A) T HAT OUT OF TOTAL DISALLOWANCE OF RS.29,32,241/-, ONLY AN AMOUNT OF RS.13,84,957/- WAS OUTSTANDING AS ON 31.3.2005 HENCE THE DISALLOWANCE MADE BY THE AO SHO ULD BE RESTRICTED TO THE AMOUNT OUTSTANDING AS AT THE YEAR END. 5.1 A SIMILAR ISSUE HAS BEEN DEALT RECENTLY BY THE COORDINATE BENCH IN JAIPUR IN CASE OF SIYARAM EXPORT INDIA (P) LTD. VS. ADDL. CIT, RANGE-6, JAIPUR ITA NO. 501/JP/14 WHEREIN THE ISSUE AROUND DISALLOWANCE U/S 40A(IA) HAS BEEN DISCUSSED IN LIGHT OF SPECIAL BENCH DECISION IN CA SE OF M/S MERILYN SHIPPING & TRANSPORT AND THE CONFLICTING DECISIONS OF VARIOUS HIGH COURTS. THE OPERATIVE PART OF THE DECISION IS AS UNDER: 2.5 IN THE CONTEXT OF FACTUAL MATRIX AND ABOVE LEG AL DEVELOPMENTS, FIRSTLY, IT WOULD BE RELEVANT TO REFER TO THE DECIS ION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN CASE OF JANAPRIYA ENGINEERS S YNDICATE (I.T.T.A NO 352 OF 2014 VIDE ITS ORDER DATED 24.06.2014) WHEREI N THE APPEAL FOR STATISTICAL PURPOSE WAS ADMITTED ON THE FOLLOWING S UBSTANTIAL QUESTION OF LAW: ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 8 WHETHER THE LD. TRIBUNAL WAS JUSTIFIED IN LAW ON THE FACTS AND CIRCUMSTANCES OF THIS CASE IN PASSING ORDER OF REMA ND FOR REDECISION IGNORING THE SPECIAL BENCH DECISION OF THE TRIBUNAL ON THE ISSUE THOUGH THE APPEAL AGAINST THE SAME IS PENDING ADJUDICATION BEFORE THE HONBLE COURT? THE FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER : 3. WE FIND THAT THE LEARNED TRIBUNAL TAKING NOTE O F THE PENDENCY OF THE APPEAL IN THIS COURT, PREFERRED BY THE REVENUE AGAINST THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN M/S MERILYN S HIPPING & TRANSPORT IN ITA NO.477/VIZ/2008 DATED 29.03.2012, DIRECTED THE ASSESSING OFFICER TO RE-DECIDE THE ISSUE AFTER THE DISPOSAL OF THE APPEA L BY THIS COURT. 4. WE ARE OF THE VIEW THAT UNTIL AND UNLESS THE DEC ISION OF THE SPECIAL BENCH IS UPSET BY THIS COURT, IT BINDS SMALLER BENC H AND CO-ORDINATE BENCH OF THE TRIBUNAL. UNDER THE CIRCUMSTANCES, IT IS NOT OPEN TO THE TRIBUNAL, AS RIGHTLY CONTENDED BY MR. NARASIMHA SAR MA, LEARNED COUNSEL, TO REMAND ON THE GROUND OF PENDENCY ON THE SAME ISS UE BEFORE THIS COURT, OVERLOOKING AND OVERRULING, BY NECESSARY IMP LICATION, THE DECISION OF THE SPECIAL BENCH. WE SIMPLY SAY THAT IT IS NOT PERMISSIBLE UNDER QUASI JUDICIAL DISCIPLINE. UNDER THE CIRCUMSTANCES, WE SE T-ASIDE THE IMPUGNED JUDGEMENT AND ORDER, AND RESTORE THE MATTER TO THE FILE OF THE TRIBUNAL WHICH WILL DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND IT WOULD BE OPEN TO THE TRIBUNAL EITHER TO FOLLOW THE SPECIAL BENCH DECISION OR NOT TO FOLLOW. IF THE SPECIAL BENCH DECISION IS NOT FOLLO WED, OBVIOUSLY REMEDY LIES ELSEWHERE. 2.6 SUBSEQUENTLY, THE COORDINATE BENCH IN CASE OF S HRI AMIT NARESH SHAH IN ITA NO. 4154/MUM/2013 DATED 10.09.2014 TAKI NG INTO ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 9 COGNISANCE THE DECISION OF HONBLE ANDHRA PRADESH H IGH COURT IN CASE OF JANAPRIYA ENGINEERS SYNDICATE (SUPRA) HAS HELD AS U NDER: FROM THE CLARIFICATION ISSUED BY THE HONBLE HIGH COURT, IT IS CLEAR THAT UNTIL AND UNLESS THE DECISION OF MARILYN SHIPP ING AND TRANSPORT (SUPRA) IS REVERSED BY THE COURT, IT IS BINDING O N ALL THE BENCHES OF THE TRIBUNAL. WE FIND THAT HONBLE COURT HAS HELD THAT JUDICIAL DISCIPLINE MANDATES THAT THE DECISION OF THE SPECIAL BENCH HA S TO BE FOLLOWED BY OTHER BENCHES. AS ON TODAY, THE STAY ORDER GRANTED BY THE HONBLE COURT HAS BEEN VACATED AND THE ORDER OF THE SPECIAL BENCH IS BINDING ON OTHER BENCHES OF THE TRIBUNAL. THEREFORE, RESPECTFULLY F OLLOWING THE SAME, WE HOLD THAT THE FAA WAS JUSTIFIED IN FOLLOWING THE OR DER OF MARILYN SHIPPING & TRANSPORT (SUPRA). CONSIDERING THE FACTS OF THE CASE AND THE CLARIFICATION ISSUED BY THE HONBLE ANDHRA PRADESH HIGH COURT ON 24.06. 2014 IN THE CASE OF JANAPRIYA ENGINEERS SYNDICATE, WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSE E AND CONFIRMED THE ORDER OF THE FAA. 2.7 IN LIGHT OF DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN CASE OF JANAPRIYA ENGINEERS SYNDICATE (SUPRA), IT IS THUS C LEAR THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF M/S ME RILYN SHIPPING & TRANSPORT (SUPRA) CONTINUES TO BIND THE COORDINATE BENCHES TILL THE TIME THE SAME IS NOT OVERRULED BY THE HONBLE HIGH COURT . 2.8 FURTHER, IT IS NOTED THAT THE SPECIAL BENCH DEC ISION IN CASE OF M/S MERILYN SHIPPING & TRANSPORT (SUPRA) HAS BEEN APPR OVED AND REFERRED BY THE ALLAHABAD HIGH COURT IN CASE OF VECTOR SHIPPING SERVICES (P) LTD. AT THE SAME TIME, THERE ARE DECISIONS OF CALCUTTA HIGH COURT IN CASE OF CRESCENT EXPORTS SYNDICATE AND GUJARAT HIGH COURT I N CASE OF ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 10 SIKANDARKHAN N TANVAR WHERE THE HIGH COURTS HAVE DI SAGREED WITH THE VIEW OF THE SPECIAL BENCH IN CASE OF M/S MERILYN S HIPPING & TRANSPORT (SUPRA). IT IS THUS EVIDENT THAT THE VIEW OF THE A LLAHABAD HIGH COURT AND OTHER TWO HIGH COURTS ARE IN DIRECT CONFLICT WITH E ACH OTHER. THE QUESTION THAT ARISES FOR CONSIDERATION IS WHERE THERE IS NO DECISION OF A JURISDICTIONAL HIGH COURT AND THERE ARE CONFLICTING VIEWS OF THE DIFFERENT HIGH COURT, WHICH VIEW SHOULD BE FOLLOWED. IN THIS REGARD, WE DRAW SUPPORT FROM THE JUDGEMENT OF HONBLE SUPREME COU RT IN THE MATTER OF CIT VS. VEGETABLE PRODUCTS LTD. (1972) 88 ITR 192 ( SC) WHEREIN THE HONBLE SUPREME COURT HAS LAID DOWN THE PRINCIPLE T HAT F TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADO PTED. IN VIEW OF THE ABOVE DISCUSSIONS AND THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE OF SUM OF RS.14,14,534/- U/S 40(A)(IA) OF THE IT ACT, IS HEREBY DELETED. 5.2 IN LIGHT OF ABOVE, WE HEREBY RESTRICT THE DISAL LOWANCE UNDER SECTION 40A(IA) TO THE EXTENT OF AMOUNT REMAINING OUTSTANDI NG AS AT THE YEAR END AMOUNTING TO RS 13,84,957 AND DELETE THE SAME DISAL LOWANCE AS CONFIRMED BY THE LD CIT(A). IN RESULT, GROUND TAKEN BY THE ASSE SSEE IS PARTLY ALLOWED. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ITA NO.1525/JP/2008 ACIT, CIRCLE-7, JAI0UR VS. M/S HANDMADE PAPER & BOA RD INDUSTRIES, JAIPUR 11 ORDER PRONOUNCED IN THE OPEN COURT ON 28/0 7/2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 28/ 07/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-7, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S HANDMADE PAPER & BOARD INDUSTRI ES, JAIPUR 3. VK;DJ VK;QDR@ CIT III, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-III, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.1525 /JP/208 & ITANO. 1556/JP/20 08) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.