Akarsh Residence Private Limited, Bangalore V. The Deputy Commissioner of Income Tax, Circle-2(1), Bangalore

ITA 169/BANG/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7268 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN; PRIYD A RSHI MISH
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Commercial expediency; Rule 8D; Set aside
• Section: 14A; 153C; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO S . 169 TO 172/BANG/2021 ASSESSMENT YEAR S : 2010 - 11 TO 2013 - 14 AKARSH RESIDENCE PVT. LTD., NO.10, VITTAL MALLYA ROAD, BENGALURU 560 001. PAN: AAICA 0191P VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1), BE NGALURU. APPELLANT RESPONDENT APPELLANT BY : S MT. SUMAN LUNKAR, CA RESPONDENT BY : SHRI MUZAFFAR HUSSAIN, CIT(DR)(ITAT) & SHRI PRIYD A RSHI MISHRA, ADD.CIT(DR)(ITAT) , B ENGALURU DATE OF HEARING : 07 . 0 9 .202 1 DATE OF PRONOUNCEMENT : 07 .0 9 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS ARE BY THE ASSESSEE DIRECTED AGAIN ST THE SEPARATE ORDERS OF THE CIT(APPEALS)-11, BENGALURU, ALL DATED 26.2.2021 FOR THE ASSESSMENT YEARS 2010-11 TO 2013-14. 2. THE ASSESSEE HAS RAISED COMMON GROUNDS IN ALL T HESE APPEALS, EXCEPT CHANGE IN FIGURES, WHICH WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY. THE GRO UNDS RAISED FOR AY 2010-11 ARE AS FOLLOWS:- ITA NOS. 169 TO 172/BANG/2021 PAGE 2 OF 5 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN DISMISSING THE APPEAL AND CONFIRMING THE O RDER PASSED BY ASSESSING OFFICER. THE ORDER PASSED BY LEARNED ASSE SSING OFFICER BEING BAD IN LAW AND VOID-AB-INITO WAS REQUIRED TO BE QUASHED INSTEAD OF BEING CONFIRMED. 2. IN ANY CASE, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT H AS NOT COMPLIED WITH THE NOTICES ISSUED AND NOT INTERESTED IN PURSU ING THE APPEAL. THE APPELLANT HAD COMPLIED WITH THE HEARING NOTICE ISSUED BY FILING THE DETAILED WRITTEN SUBMISSIONS. THE ORDER PASSED WITHOUT CONSIDERING THE DETAILED WRITTEN SUBMISSIONS IN GRO SS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND SAME IS LIABLE TO BE QUASHED. 3. IN ANY CASE, THE LEARNED CIT(A) SHOULD HAVE QUAS HED THE ORDER, AS THE ORDER PASSED BY ASSESSING OFFICER WAS WITHOUT PROPERLY ASSUMING THE JURISDICTION AND WITHOUT PROP ERLY COMPLYING WITH THE LAW. 4. IN ANY CASE, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING O FFICER HAD NOT PROPERLY ASSUMED THE PROPER JURISDICTION U/S. 153C OF I.T. ACT, 1961. IN THE ABSENCE OF THE ASSUMPTION OF PROPER JU RISDICTION PROPER SATISFACTION NOTE, THE ASSESSMENT ORDER PASS ED BY ASSESSING OFFICER BEING BAD IN LAW AND VOID-AB-INIT O REQUIRED TO BE QUASHED. 5.1 IN ANY CASE, THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE U/S 36(1)(III) OF THE ACT AMOUNTING TO RS. 2,31,44,384/ -HOLDING THAT THE APPELLANT HAD NOT SUBMITTED ANY EXPLANATION DUR ING APPELLATE PROCEEDINGS. THE APPELLANT HAD FILED A DETAILED WRI TTEN SUBMISSIONS AND THE CIT(A) HAS ERRED IN NOT . CONSI DERING THE SAME. THE DISALLOWANCE AS MADE /CONFIRMED IS ERRONE OUS BOTH ON FACTS AND LAW IS TO BE DELETED. 5.2 IN ANY CASE, THE AUTHORITIES BELOW HAVE ERRED I N NOT APPRECIATING THE FACT THAT THE AMOUNTS WERE INVESTE D IN RELATED CONCERN ARE OUT OF COMMERCIAL EXPEDIENCY HENCE NO D ISALLOWANCE U/S 36(1)(III) OF THE ACT IS WARRANTED. ITA NOS. 169 TO 172/BANG/2021 PAGE 3 OF 5 5.3 IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE DISALLOWANCE AS MADE IS ERRONEOUS AND EXCESSIVE. 6.1 THE LEARNED ASSESSING OFFICER HAS ERRED IN HOLD ING THAT THE TOTAL DISALLOWANCE U/S. 14A R.W. RULE 8D OF THE ACT IS RS. 2,48,41,884/- AND ULTIMATELY DISALLOWING A SUM OF R S.16,97,500/- HOLDING THAT THE BALANCE SUM IS ALREADY DISALLOWED U/S 36(1)(III) OF THE ACT. AND THE LEARNED CIT(A) HAS ERRED IN HOL DING THAT THE CONFIRMING THE SAME HOLDING THAT THE APPELLANT HAS NOT FURNISHED ANY EXPLANATION IN SUPPORT OF THE ADDITION MADE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DETAILED WRITTEN SUBMISSIONS FILED, THE PROVISIONS OF SECTION 14A ARE NOT APPLIC ABLE AT ALL. THE ACTION OF AUTHORITIES BELOW IS TOTALLY ERRONEOUS AN D IS TO BE NEGATED. 6.2 IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNED CIT(A) HAS ERRED IN HOLDING THE DISALLOWANCE MADE U/S 14A IS 2 ,48,41,884/- AS AGAINST THE ACTUAL DISALLOWANCE OF RS. 16,97,500 /-. THE CONCLUSION OF CIT(A) BEING WHOLLY ERRONEOUS BOTH ON FACTS AND LAW IS TO BE REJECTED. 6.3 THE LEARNED AUTHORITIES BELOW HAVE ERRED IN NOT APPRECIATING THE FACT THAT FOR THE YEAR UNDER CONSI DERATION, THE APPELLANT HAS NOT EARNED ANY EXEMPT INCOME. IN THE ABSENCE OF EXEMPT INCOME, THE DISALLOWANCE AS MADE BY THE ASSE SSING OFFICER IS NOT WARRANTED. THE DISALLOWANCE AS CALCU LATED AND AS MADE IS TOTALLY ERRONEOUS IS TO BE DELETED IN ENTIR ETY. 6.4 IN ANY CASE, THE DISALLOWANCE AS MADE IS ERRONE OUS AND EXCESSIVE. 7. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IM PUGNED ORDER BE QUASHED OR ATLEAST THE DISALLOWANCE/ADDITIONS AS MA DE BE DELETED AND THE APPELLANT BE ALLOWED TO CARRY FORWARD THE L OSSES AS CLAIMED IN THE RETURN OF INCOME. 3. WE FIRST TAKE UP GROUND NO.2 FOR ADJUDICATION ST ATING THAT THE IMPUGNED ORDER IS PASSED WITHOUT CONSIDERING THE DE TAILED WRITTEN SUBMISSIONS IN GROSS VIOLATION OF PRINCIPLES OF NAT URAL JUSTICE. ITA NOS. 169 TO 172/BANG/2021 PAGE 4 OF 5 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE CIT(APPEALS) HAS PASSED EX PARTE ORDER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD BEFORE HIM STATING THAT THE ASS ESSEE HAS NEITHER RESPONDED TO STATUTORY NOTICES NOR PRESENT FOR THE HEARING. THE CONTENTION OF THE LD. AR IS THAT THE ASSESSEE HAD FILED WRITTE N SUBMISSIONS IN THE PAPERBOOK BEFORE THE CIT(APPEALS) ON 26.4.2019 WHIC H HAS NOT BEEN CONSIDERED WHILE PASSING THE EX PARTE ORDER. A COPY OF THE SAME IS FILED BEFORE US. WE FIND THAT THE WRITTEN SUBMISSIONS OF THE ASSESSEE DATED 19.4.2019 HAS BEEN FILED IN THE OFFICE OF THE CIT(A PPEALS) ON 26.4.2019. HOWEVER, THESE SUBMISSIONS WERE NOT CONSIDERED BY T HE CIT(APPEALS) WHILE PASSING THE IMPUGNED ORDER. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ISSUE TO THE CIT(APPEALS) TO GIVE ONE MORE OPPO RTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF C IT(APPEALS) AND RESTORE THE APPEAL TO HIS FILE FOR FRESH DECISION IN ACCORD ANCE WITH LAW AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE AS SESSEE AND AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. THE ASSESSEE IS DIRECTED TO COOPERATE IN THE PROCEEDINGS BEFORE THE CIT(APPEALS). ORDERED ACCORDINGLY. AT THIS STAGE, WE REFRAIN FROM ADJUD ICATING THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS. 5. IN THE RESULT, ALL THE APPEALS BY THE ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF SEPTEMBER, 2021. SD/- SD/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 7 TH SEPTEMBER, 2021. / DESAI S MURTHY / ITA NOS. 169 TO 172/BANG/2021 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.