M/s. STATE BANK OF INDIA, MUMBAI V. ACIT Rg. - 2(2), MUMBAI

ITA 1562/MUM/2006

• Counselvise Citation: 156219914 RSA 2006
• Duration Of Justice: 5 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-05-2011
• Assessment Year: 1991-1992
• Appeal Filed On: 06-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Assessee Lawyers: TEJAS MEHTA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI, J. SUDHAKAR REDDY, ACCOUNTANT MEMBER A ND SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER ITA NO. 1562/MUM./2006 (ASSESSMENT YEAR : 1991-92 ) DATE OF HEARING: 2.5.2011 STATE BANK OF INDIA ACCOUNTS & COMPLIANCE DEPARTMENT CORPORATE CENTRE, MADAM CAMA RD. MUMBAI 400 021 - AAACS8577K .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX RANGE-2(2), MUMBAI .... RESPONDENT ASSESSEE BY : MR. TEJAS MEHTA REVENUE BY : MR. AJIT KUMAR SINHA O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL FILED BY THE ASSESSEE, IS DIRECTED AGAI NST THE IMPUGNED ORDER DATED 28 TH DECEMBER 2005, PASSED BY THE COMMISSIONER (APPEALS )-II, MUMBAI, FOR ASSESSMENT YEAR 1991-92. GROUNDS RAISED BY THE ASSESSEE, READ AS FOLLOWS:- 1(A) THE LEARNED CIT(A) ERRED IN GIVING DIRECTIONS IN RESPECT OF THE FOLLOWING ISSUES, WHICH DO NOT ARISE FROM THE ORDER DATED 27 TH MARCH 2002, PASSED BY THE ASSESSING OFFICER IN GIVING EFF ECT TO THE ORDER DATED 30 TH MARCH 1999 PASSED BY THE LEARNED CIT(A). I. MUNICIPAL TAXES AND REPAIRS ` 13,15,940 II. BROKEN PERIOD INTEREST ` 88,91,80,663 AND III. REDUCTION IN RESPECT OF BROKEN PERIOD INTEREST IN T HE RETURN OF INCOME ` 10,40,15,176. STATE BANK OF INDIA ITA NO.1562 /MUM./2006 2 IT IS SUBMITTED THAT THE ABOVE ISSUES DID NOT ARISE OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED AND THEREFORE COULD NOT BE ADJUDICATED UPON BY THE LEAR NED CIT(A). B. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) ERRED IN ENHANCING THE INCOME OF THE APPELLANT WITHOUT GRANT ING THE APPELLANT ADEQUATE OPPORTUNITY OF BEING HEARD TO THE MATTER. 2. LEARNED COUNSEL, MR. TEJAS MEHTA, APPEARING ON BEHA LF OF THE ASSESSEE, SUBMITS BEFORE US THAT HE IS NOT PRESSING THE ISSUE OF DISALLOWANCE IN RESPECT OF MUNICIPAL TAX AND REPAIRS AMOUNTING T O ` 13,15,940. CONSEQUENTLY, THIS ISSUE IS DISMISSED AS NOT PRESSED . 3. ON THE ISSUE OF BROKEN PERIOD INTEREST OF ` 88,91,80,663 AND DEDUCTION IN RESPECT OF BROKEN PERIOD INTEREST IN THE RETURN OF INCOME AMOUNTING TO ` 10,40,15,176, THE LEARNED COUNSEL SUBMITS THAT THER E HAS BEEN ENHANCEMENT BY THE COMMISSIONER (APPEALS) AND THAT SUCH ENHANCEMENT IS ILLEGAL FOR THE REASON THAT THE COMMISSIONER (APPEA LS) HAS NO POWER TO ENHANCE THE ASSESSMENT BY DISCOVERING NEW SOURCE OF INCOME WHICH IS NOT MENTIONED IN THE RETURN OF INCOME OR WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER IN THE ORDER APPEALED AGAINST. HE SUBMITS THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1991-92 AN D 1993-94, IN ITA NO. 1562 AND 1563/MUM./2006, VIDE ORDER DATED 25 TH MARCH 2009, THE TRIBUNAL TOOK A SIMILAR VIEW AND HELD THAT THE DISALLOWANCE OF REDUCTION IN RESPECT OF BROKEN PERIOD INTEREST BY THE LEARNED CIT(A) WAS NO T WARRANTED. ON MERITS, HE REFERRED TO THE SUBMISSIONS MADE BEFORE THE COMM ISSIONER (APPEALS)-II, MUMBAI, IN THE PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ), SPECIFICALLY TO PAGES-5, 6 AND 7 OF THE SUBMISSIONS AND EXPLAINED THAT THIS IS NOT A CASE O F DOUBLE DEDUCTION. HE FURTHER SUBMITTED THAT THE COMMISSIONER (APPEALS), IN PENALTY PROCEEDINGS, ACCEPTED THIS CONTENTION OF THE ASSESSEE. ON A QUER Y FROM THE BENCH, LEARNED COUNSEL COULD NOT PRODUCE THE ORDER OF THE FIRST APPELLANT AUTHORITY ON THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1 )(C) FOR ASSESSMENT YEAR 1991-92. STATE BANK OF INDIA ITA NO.1562 /MUM./2006 3 4. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. AJIT KUMAR SINHA, ON THE OTHER HAND, SUBMITS THAT THE COMMISSIONER (APPEALS) HAS GIVEN A CLEAR DIRECTION IN HIS ORDER, WHEREIN HE DIRECTED THE ASS ESSING OFFICER TO DISALLOW THE DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE. HE TO OK THIS BENCH TO THE ORDER OF THE COMMISSIONER (APPEALS) IN PAGE-17, AND SUBMITS THAT NO FAULT CAN BE FOUND IN THIS DIRECTION. REFERRING TO THE AR GUMENTS THAT THE COMMISSIONER (APPEALS) HAS DISCOVERED A NEW SOURCE OF INCOME WHICH IS NOT MENTIONED IN THE RETURN OF INCOME, LEARNED DEPARTME NTAL REPRESENTATIVE SUBMITS THAT THIS IS A CLEAR CASE OF DOUBLE DEDUCTI ON AND THE ISSUE OF TAXABILITY OF BROKEN PERIOD INTEREST WAS VERY MUCH BEFORE THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER (APPEALS). THE LEARNED DEPARTMENTAL REPRESENTATIVE, THOUGH NOT LEAVING HIS GROUND, AGRE ED THAT THE ORDER OF THE FIRST APPELLATE AUTHORITY MAY BE SET ASIDE AND THE ISSUE BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR VERIFYING AS TO WHETHER TH ERE IS A DOUBLE DEDUCTION OR NOT. 5. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPE RS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOW. (I) THE ISSUE OF ALLOWABILITY OF DEDUCTION OF BROKEN PE RIOD INTEREST PAID AND TAXABILITY OF THE ISSUE OF BROKEN PERIOD INTEREST RECEIVED, WERE VERY MUCH BEFORE THE ASSESSING OFFIC ER AS WELL AS THE COMMISSIONER (APPEALS). IN THE OPINION OF THE C OMMISSIONER (APPEALS), THE ASSESSEE HAS CLAIMED DOUBLE DEDUCTIO N OF ` 10,40,15,176 FOR THE REASON GIVEN IN HIS ORDER. ON THESE FACTS, WE FIND NO MERIT IN THE ARGUMENTS OF THE LEARNED CO UNSEL, THAT THE DETECTION OF A POSSIBLE DOUBLE DEDUCTION BY THE COMMISSIONER (APPEALS), IS A DISCOVERY OF A NEW SOU RCE OF INCOME. THIS IS A MISTAKE APPARENT WHICH IS SOUGHT TO BE RECTIFIED. THUS, THIS ARGUMENT OF THE LEARNED COUNS EL IS DISMISSED. STATE BANK OF INDIA ITA NO.1562 /MUM./2006 4 (II) NOW COMING TO THE ISSUE OF DOUBLE DEDUCTION, THE AS SESSEE HAS, IN A DETAILED LETTER DATED 20 TH FEBRUARY 2006, SUBMITTED BEFORE THE COMMISSIONER (APPEALS)-II, MUMBAI, THAT THERE IS NO CLAIM FOR DOUBLE DEDUCTION. HE HAS DEMONSTRATED WIT H FACTS AND FIGURES AND EXPLAINED THAT THE CONCLUSION DRAWN IN THE QUANTUM APPEAL IS WRONG. (III) WE ARE OF THE OPINION THAT THE COMMISSIONER (APPEAL S) HAS CONSIDERED THE ISSUE THOROUGHLY IN THE PENALTY PROC EEDINGS. HIS CONCLUSIONS ARE NOT KNOWN. HENCE, WE ARE OF THE CON SIDERED OPINION THAT THE ENTIRE ISSUE SHOULD BE SET ASIDE T O THE FILE OF THE ASSESSING OFFICER FOR CONSIDERING THE DETAILED SUBM ISSIONS MADE BY THE ASSESSEE VIDE LETTER DATED 28 TH FEBRUARY 2006, BEFORE THE COMMISSIONER (APPEALS), AS WELL AS ANY OTHER CLARIF ICATIONS / SUBMISSIONS TO BE MADE BY THE ASSESSEE AND ADJUDICA TE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. THUS, WE SET A SIDE THE MATTER TO THE FILE OF ASSESSING OFFICER. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.5.2011 SD/- ASHA VIJAYRAGHAVAN JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 13.5.2011 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, C BENCH, ITAT, MUMBAI TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI