Anjani Kumar Agarwal, Jeypore V. DCIT, Berhampur Circle, Berhampur

ITA 161/CTK/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5369 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-04-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A TIGGA
• Assessee Lawyers: D K SHETH
• Keywords: Principle of natural justice; Earning of tax free income; Corroborative evidences
• Section: 14A

Judgement Text

1 ITA NO.161/CTK/2017 ASSESSMENT YEAR : 2012 - 13 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 161 /CTK/201 7 ASSESSMENT YEAR : 201 2 - 13 ANJANI KUMAR AGARWAL, JYOTI MILL COMPUS, SOURAGUDA, JEYPORE VS. DCIT, BERHAMPUR CIRCLE, BERHAMPUR PAN/GIR NO. AAUPA 6468 (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K,SHETH, AR REVENUE BY : SHRI A.TIGGA, DR DATE OF HEARING : 0 9 / 0 4 / 201 8 DATE OF PRONOUNCEMENT : 10 / 0 4 / 201 8 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 1, BHUBANESWAR DATED 4.1.2017 FOR THE ASSESSMENT YEAR 2012 - 13. 2. GROUND NO.1 OF APPEAL IS GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATIO N. 2. IN GROUND NO.2 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.4,38,020/ - MADE BY THE ASSESSING OFFICER U/S.14A OF THE ACT. 2 ITA NO.161/CTK/2017 ASSESSMENT YEAR : 2012 - 13 3. THE ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE HAS EXEMPT ED DIVIDEND INCOME AND NO EXPENDITURE PERTAINING TO IT WAS DISALLOWED AS PER PROVISIONS OF SEC TION 14A. BEFORE THE ASSESSING OFFICER, IT WAS SUBMITTED THAT SINCE DURING THE RELEVANT PERIOD NO EXEMPT INCOME WAS EARNED, THERE WAS NO SCOPE FOR DISALLOWANCE U/S.14A. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION S OF THE ASSESSEE BY REFERRING TO THE CBDT CIRCULAR NO.5/2014 DATED 11.2.2014, WHEREBY, IT IS CLARIFIED THAT IT IS NOT NECESSARY THAT EXEMPT INCOME SHOULD BE NECESSARILY INCLUDED IN A PARTICULAR YEARS INCOME. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. WE H AVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE CONTENTION OF LD A.R. IS THAT THE ASSESSEE HAS NOT RECEIVED ANY EXEMPT ED INCOME AND, THEREFORE, NO DISALLOWANCE CAN BE MADE. LD A.R. SUBMITTED THE BALANCE SHEET OF TWO FINANCIAL YEARS FOR THE YEAR ENDING 2011 & 2012. ON PERUSAL OF THE ASSESSMENT ORDER, WE FOUND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE U/S.14A OF THE ACT BUT THERE IS NO CLARITY WITH RESPECT TO THE CALCULATION S AS THE PROVISIONS OF RULE 8D SHALL BE APPLICABLE MANDATORILY. THE ASSESSING OFFICER HAS RELIED ON THE CBDT CIRCULAR THAT THE ADDITION HAS TO BE MADE IRRESPECTIVE OF ANY EXEMPTED INCOME. F URTHER THE DISALLOWANCE U/S 14A BE RESTRICTED TO EXEMPT INCOME EARNED BY THE ASSESSEE . ON PERUSAL OF THE BALANCE SHEET FOR BOTH THE FINANCIAL YEARS, WE FOUND THAT THE ASSESSEE HAS MADE FRESH INVESTMENT TO THE EXTENT OF 3 ITA NO.161/CTK/2017 ASSESSMENT YEAR : 2012 - 13 RS.39.82 LAKHS. THE CONTENTION OF LD A.R. IS THAT THESE INVESTMENTS ARE MADE OUT OF SURPLUS FUNDS AND THE A SSESSEE HAS OBTAINED LOAN FROM THE BANK FOR BUSINESS OPERATION S . WE FOUND THAT THE SUBMISSIONS MADE BY THE ASSESSEE ARE REALISTIC AND THE ASSESSING OFFICER HAS MADE DISALLOWANCE WITHOUT MAKING ANY REFERENCE TO THE INVESTMENTS MADE OR INTEREST PAID. ACCOR DINGLY, WE ARE OF THE OPINION THAT THE MATTER HAS TO BE RELOOKED BY THE ASSESSING OFFICER CONSIDERING THE PROVISIONS OF SECTION 14A R.W. RULE 8D AND, THEREFORE, WE REMIT THE ISSUE FOR ADJUDICATION AFRESH BY THE ASSESSING OFFICER. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN GROUND NO.3 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,38,595/ - UNDER THE HEAD DISCOUNT. 7. THE ASSESSING OFFICER OBSERVED THAT AN AMOUNT OF RS.2,38,595/ - I S DEBITED TO PROFIT AND LOSS ACCOUNT UNDER THE HEAD DISCOUNT. IN THE ABSENCE OF RELEVANT DETAILS LIKE NAMES OF THE PARTIES AND THEIR ADDRESSES, THE ASSESSING OFFICER DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. ON APPEAL, THE CI T(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER . IN THE REMAND REPORT, THE ASSESSING OFFICER SUBMITTED THAT EXCEPT LEDGER ACCOUNT COPY OF THE EXPENSES, NO OTHER DETAILS WERE FURNISHED BY THE ASSESSEE. IN VIEW OF ABOVE, THE CIT(A) CONFIRMED THE ADDITION. 4 ITA NO.161/CTK/2017 ASSESSMENT YEAR : 2012 - 13 9. BEFORE US, LD A.R. SUBMITTED THE DETAILS REGARDING DISCOUNT GIVEN TO VARIOUS PARTIES. HE SUBMITTED THAT THE ASSESSEE COULD FURNISH THE DETAILS IN RESPECT OF DISCOUNT GIVEN TO VARIOUS PARTIES FOR VARIOUS REASONS AND THEY ARE AVAILABLE WITH TH E ASSESSEE AND PRAYED THAT IF ONE MORE OPPORTUNITY IS PROVIDED, THE ASSESSEE IS READY TO FURNISH AND CLARIFY THE DETAILS WITH REGARD TO DISCOUNT PAID. WE, ON CONSIDERING THE PRINCIPLE OF NATURAL JUSTICE, PROVIDE ONE MORE OPPORTUNITY TO SUBSTANTIATE THE CL AIM WITH SUPPORTING EVIDENCES AND THE ASSESSEE SHALL PRODUCE THE SAME AS AND WHEN REQUIRED BY THE ASSESSING OFFICER. HENCE, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PU RPOSES. 10. GROUND NO.4 IS NOT PRESSED BY THE LD A.R. OF THE ASSESSEE AND, THEREFORE, SAME IS DISMISSED AS NOT PRESSED. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 10 / 0 4 /201 8 . S D/ - SD/ - ( N.S SAINI) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIALMEMBER CUTTACK; DATED 10 / 0 4 /201 8 B.K.PARIDA, SPS 5 ITA NO.161/CTK/2017 ASSESSMENT YEAR : 2012 - 13 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT: ANJANI KUMAR AGARWAL, JYOTI MILL COMPUS, SOURAGUDA, JEYPORE 2. THE RESPONDENT. DCIT, BERHAMPUR CIRCLE, BERHAMPUR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//