MR.ARITRO ASHISH ROY, MUMBAI V. PR.CIT(A)-24, MUMBAI

ITA 1791/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4610 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 27-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA
• Keywords: Business income; Opportunity of being heard; Earning of tax free income; Assessment record; Prejudicial to interest; Rule 8D; Set aside
• Section: 143(3); 142(1); 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH M UMBAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEM BER ITA NO.1791/MUM/2019 ( ASSESSMENT YEAR :2014-15 ) ARITRO ASHSISH ROY PLOT NO.121, EDIFICE 5 TH ROAD, KHAR(W) MUMBAI-400 052 VS. ACIT-24(1) ROOM NO.604, 6 TH FLOOR PIRAMAL CHAMBER, LALBAUG, PAREL MUMBAI-400 012 PAN/GIR NO.AGAPR8158C APPELLANT ) .. RESPONDENT ) ASSESSEE BY RAJIV KHANDELWAL REVENUE BY ANADI VARMA DATE OF HEARING 2 2 / 07 /201 9 DATE OF PRONOUNCEMENT 28/08/2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX 24, MU MBAI, PASSED U/S 263 OF THE I.T.ACT, 1961 FOR THE ASSESSMENT YEA R 2014-15. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE NOTICE ISSUED UNDER SECTION 263 BY THE PRINC IPAL COMMISSIONER OF INCOME TAX-24, MUMBAI (HEREINAFTER REFERRED TO AS PR CIT) AND THE ORDER PASSED UNDER SECTION 263 ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, PR. CIT HAS ERRED IN LAW AND ON FACTS IN ASSU MING JURISDICTION B PASSING THE ORDER U/S 263, MORE SO WHEN THE ASSES SMENT ORDER PASSED UNDER SECTION 143(3) IS NEITHER ERRONEOUS NO R PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 2 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, PR CIT HAS ERRED IN SETTING ASIDE THE ASSESSM ENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT BY THE ASSES SING OFFICER ON THE GROUND THAT LACK, OF INVESTIGATIONS' HAVE BEEN CARRIED OUT BY ASSESSING OFFICER. 4. THAT THE PR CIT HAS FAILED TO APPRECIATE THAT DE TAILS WERE FILED AS REQUIRED BY THE AO AND THE ASSESSMENT ORDER HAS BEEN PASSED AFTER DUE APPLICATION OF MIND. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, PR, CIT HAS ERRED IN INVOKING THE PROVISION O F SECTION 263 IN REFERENCE TO DISALLOWANCE U/S 14A OF THE ACT WITHOU T APPRECIATING THAT ASSESSES DID NOT EARN ANY EXEMPT INCOME DURING THE RELEVANT AY, HENCE NO DISALLOWANCE WAS WARRANTED U/S 14A OF THE ACT. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, PR. CIT HAS ERRED IN INVOKING THE PROVISION O F SECTION 263 IN REFERENCE TO INTEREST INCOME OF NIL SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES WITHOUT APPRECIATING THAT THE SA ME HAS BEEN SHOWN AS BUSINESS INCOME IN THE RETURN OF INCOME. 7. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, PR. CIT HAS ERRED IN INVOKING THE PROVISION O F SECTION 263 IN REFERENCE TO MISMATCH OF RS. 1,34,82,973/-IN SALE/T URNOVER REPORTED IN AUDIT REPORT AND 1TR WITHOUT APPRECIATING THAT T HE SAME IS INTEREST INCOME OFFERED FOR TAXATION. 8. THAT THE ASSESSMENT ORDER PASSED AFTER DETAILED ENQUIRIES DOES NOT BECOME ERRONEOUS MERELY BECAUSE CIT FEELS FURTHER ENQUIRIES SHOULD HAVE BEEN MADE. HENCE THE NOTICE I SSUED U/S 263 AND THE ORDER PASSED U/S 263 IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 9. THAT WITHOUT PREJUDICE, THE PCIT HAS WRONGLY AND ILLEGALLY HELD THAT THE ORDER PASSED BY AO IS ERRONEOUS AND P REJUDICIAL TO THE INTEREST WHEN INDEPENDENT ENQUIRY HAS BEEN MADE BY PCIT. HENCE THE NOTICE ISSUED U/S 263 AND THE ORDER PASSED U/S 263 IS ILLEGAL AND BAD IN LAW. 10. THAT THE EVIDENCE FILED AND MATERIAL AVAILABLE ON THE RECORD HAVE NOT BEEN PROPERLY CONSTRUED AND JUDICIOUSLY IN TERPRETED, HENCE THE ADDITION/ DISALLOWANCE MADE IS UNCALLED F OR. ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 3 11. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER TO AMEND THE ABOVE GROUND OF APPEAL AT THE TIME OF HEARING, 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT FOR AY 2014-15 WAS COMPLETED IN THIS CASE U/S. 143(3) OF T HE I.T.ACT, 1961 ON 12/12/2016, ACCEPTING THE RETURN OF INCOME OF RS . 2,19,82,050/-. THEREAFTER, THE PCIT-24, MUMBAI, ISSUED A SHOW CAUS E NOTICE U/S 263 OF THE I.T.ACT, 1961, DATED 18/02/2019 AND CALL ED UPON THE ASSESSEE TO EXPLAIN, AS TO WHY ASSESSMENT ORDER PAS SED BY THE AO U/S 143(3) DATED 12/12/2016, SHALL NOT BE REVISED F OR THE REASONS RECORDED IN HIS SHOW CAUSE NOTICES. THE PCIT, IN TH E SAID SHOW CAUSE NOTICE , QUESTIONED TWO ISSUES, I.E [ ( A ). LARGE INTEREST EXPENSES OF RS. 70,76,669/- RELATABLE TO EXEMPT INC OME U/S 14A AND ( B ). MISMATCH BETWEEN GROSS INCOME SHOWN UNDER SALES TURNOVER REPORTED IN AUDIT REPORT IN FINANCIAL STATEMENT AND INTEREST INCOME SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES AMOU NTING RS. 1,34,82,973/-]. ACCORDING TO THE PCIT, LD. AO HAS C OMPLETED ASSESSMENT WITHOUT VERIFYING NECESSARY RECORDS TO ASCERTAIN, THE CLAIM OF THE ASSESSEE WITH REGARD TO THE INTEREST EXPENDITURE IN LIGHT OF PROVISIONS OF SECTION 14A OF THE ACT, AND ALSO TO FIND OUT, WHETHER ANY PART OF INTEREST EXPENDITURE IS RELATABLE TO EX EMPT INCOME. SIMILARLY, THE LD. AO HAD ALSO FAILED TO VERIFY, TH E ASPECT OF MISMATCH BETWEEN THE SALES TURNOVER REPORTED IN FINANCIAL ST ATEMENT AND ITR ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 4 AND ALSO INTEREST INCOME OF RS. NIL SHOWN UNDER I NCOME OTHER SOURCES, WHICH IS LESSER THAN GROSS INTEREST OF RS . 1,34,82,973/-. THEREFORE, HE OPINED THAT THE ASSESSMENT ORDER PASS ED BY THE AO U/S 143(3) DATED 12/12/2016 IS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE V IDE LETTER DATED 27/1/2019 SUBMITTED THAT THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE, BECAUSE THE AO HAS EXAMINED THE ISSUES QUESTIONED BY YOU, IN YOUR SHOW CAUSE NOTICE DATED 18/02/2019 AND AFTER SATISFIED WITH EXPLANATIONS FURNISHED BY THE ASSESS EE COMPLETED ASSESSMENT WITHOUT THERE BEING ANY ADDITIONS TOWARD S DISALLOWANCES OF INTEREST AND MISMATCH IN TURNOVER REPORTED IN FINANCIAL STATEMENTS AND ITR FORM. THEREFORE, THE A SSESSMENT ORDER PASSED BY THE AO CANNOT BE TERMED AS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL INTEREST OF THE REVENUE. 5. THE LD.PCIT AFTER CONSIDERING RELEVANT SUBMISSIO NS OF THE ASSESSEE AND ALSO BY RELIED UPON VARIOUS JUDICIAL P RECEDENTS OBSERVED THAT IN RESPECT OF PART B AND C OF SHOW CA USE NOTICE REGARDING INTEREST INCOME OF RS. NIL SHOWN UNDER INCOME FROM OTHER ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 5 SOURCES, WHICH IS LESSER THAN GROSS INTEREST RECEIP TS OF RS. 1,34,82,973/- AND MISMATCH OF RS. 1,34,82,973/- IN SALES TURNOVER REPORTED IN AUDIT REPORT AND ITR, THE EXPLANATIONS OF THE ASSESSEE SEEMS TO BE PRIMA-FACIE CORRECT AND ACCEPTABLE. HOW EVER, IN RESPECT OF PART A IE. LARGE INTEREST EXPENSES OF RS. 70,76 ,669/- RELATABLE TO EXEMPT INCOME U/S 14A OF THE ACT, THE LD.PCIT HELD THAT ON PERUSAL OF RELEVANT ASSESSMENT RECORDS, IT WAS NOTICED THAT THE CLAIM OF THE ASSESSEE THAT THE AO HAD DULY EXAMINED AND ANALYZED THE APPLICABILITY OF SECTION 14A R.W.RULE 8D DOES NOT S UPPORT ITS CONTENTION. THE PCIT, FURTHER OBSERVED THAT IT IS S EEN THAT NOTICE U/S 142(1) OF THE ACT, DATED 12/09/2016, WAS ISSUED BY THE AO CONTAINING QUESTIONS OF VERY GENERAL NATURE, INTEND ED TO ASCERTAIN, THE NATURE OF THE BUSINESS OF THE ASSESSEE AND OBT AINED AN OVER ALL VIEW OF THE FINANCIAL. IT IS PERTINENT TO NOTE THAT NO SPECIFIC QUESTION HAS BEEN ASKED BY THE AO, WITH REGARD TO 14A DISALL OWANCES IN THE SAID QUESTION A. ACCORDINGLY, HE OPINED THAT THE AO HAS FAILED TO APPLY HIS MIND TO THE FACTS OF PRESENT CASE IN LIGH T OF PROVISION OF SECTION 14A R.W. RULE 8D, WHICH CAUSED PREJUDICE TO THE INTEREST OF THE REVENUE AND ACCORDINGLY, BY FOLLOWING THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS MALABAR INDUSTR IAL COMPANY LTD. VS CIT 243 ITR 89 SET ASIDE ASSESSMENT ORDER P ASSED BY THE AO AND DIRECT THE AO TO RE-DO THE ASSESSMENT AFRESH IN THE LIGHT OF ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 6 THE DISCUSSION, AFTER FOLLOWING DUE PROCEDURE AND A FFORDING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. AGG RIEVED BY THE LD. PCIT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US . 6. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D.PCIT WAS ERRED IN REVISION OF ASSESSMENT ORDER U/S 263 OF TH E I.T.ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT O RDER PASSED BY THE AO U/S 143(3) IS NEITHER ERRONEOUS, NOR PREJUDI CIAL TO THE INTEREST OF REVENUE. THE LD.AR, FURTHER SUBMITTED THAT THE P CIT HAVING ACCEPTED THE FACT THAT THERE IS PRIMA-FACIE MERIT I N THE ARGUMENTS OF THE ASSESSEE, IN RESPECT OF PART B AND C OF SHOW CA USE NOTICE REGARDING NIL INTEREST INCOME AND MISMATCH OF SAL ES TURNOVER REPORTED IN AUDIT REPORT AND ITR, ERRED IN DIRECTIN G THE AO TO VERIFY THE FACTS WITH REGARD TO RECONCILIATION FURNISHED B Y THE ASSESSEE. THE LD. AR, FURTHER SUBMITTED THAT IN SO FAR AS, LARGE INTEREST EXPENSES, THE AO HAS CALLED FOR NECESSARY DETAILS, IN RESPEC T OF INTEREST EXPENSES, DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AND AFTER SATISFIED WITH EXPLANATIONS FURNISHED BY THE ASSESS E, CHOSEN NOT TO MAKE ANY ADDITIONS IN RESPECT OF DISALLOWANCES OF I NTEREST U/S 14A, WHICH IS EVIDENT FROM THE FACT THAT THE LD. PCIT HA D ACCEPTED IN HIS ORDER THAT THE AO, DURING ASSESSMENT PROCEEDINGS ON 06/12/2016, IN ORDER SHEET ENTRY RECORDED THAT THE AUTHORIZED RE PRESENTATIVE OF ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 7 THE ASSESSEE ATTENDED AND FILED NECESSARY DETAILS TO PROVE THAT THE ASSESEE HAS NOT EARNED ANY EXEMPT INCOME, FOR THE YEAR UNDER CONSIDERATION, CONSEQUENTLY NO EXPENDITURE COULD BE DISALLOWED U/S 14A OF THE ACT. THE PCIT HAVING ACCEPTED THE FACT T HAT THERE IS NO EXEMPT INCOME EARNED FOR THE YEAR UNDER CONSIDERATI ON, ERRED IN DIRECTING THE AO TO RE-DO THE ASSESSMENT, IN RESPEC T OF DISALLOWANCES OF EXPENDITURE U/S 14A OF THE ACT. 7. THE LD. DR, ON OTHER HAND, STRONGLY, SUPPORTING ORDER OF THE LD.PCIT SUBMITTED THAT ASSESSMENT ORDER PASSED BY T HE AO IS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE I NTEREST OF THE REVENUE, IN RESPECT OF TWO ISSUES TAKEN UP BY THE PCIT, WHIC H IS EVIDENT FROM THE FACT THAT THE LD.PCIT HAS BROUGHT OUT VARIOUS FACTS IN ITS ORDER, IN RESPECT OF NON APPLICATION MIND BY THE AO, WHILE COMPLETING ASSESSMENT, ON THE FACTS OF PRESENT CASE AND IN LIG HT OF PROVISION OF SECTION 14A OF THE ACT, 1961, EVEN THOUGH, THE ASSE SSEE HAS CLAIMED LARGE INTEREST EXPENSES. THE LD. DR, FURTHE R SUBMITTED THAT ALTHOUGH, THE LD.PCIT HAD ACCEPTED THE EXPENSES OF THE ASSESSEE WITH REGARD TO PART B AND C OF SHOW CAUSE NOTICE, R EGARDING NIL INTEREST INCOME AND MISMATCH OF TURNOVER REPORTED I N AUDIT REPORT AND ITR, BUT BECAUSE OF INSUFFICIENT RECORD, THE AO MIGHT NOT HAVE ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 8 VERIFIED ABOVE FACTS AND ACCORDINGLY, SET ASIDE TH E ORDER PASSED BY THE AO TO RE-DO ASSESSMENT. 8. THE LD. DR, FURTHER SUBMITTED THAT THE LD.PCIT H AS NOT GIVEN ANY SPECIFIC FINDINGS ON TWO ISSUES AND ITS TAXABIL ITY, BUT ONLY POINTED OUT MISTAKES COMMITTED BY THE AO, WHILE COMPLETING ASSESSMENT. THEREFORE, IT IS INCORRECT TO INTERFERE IN THE PROC EEDINGS OF PCIT TO REVISE ASSESSMENT ORDER U/S 263, WHERE THE ISSUE WA S NOT EXAMINED BY THE AO AND ON THIS GROUND PCIT REVISED THE ORDER WITHOUT GIVING HIS OWN FINDING, BUT DIRECTING THE AO TO DO THE NE CESSARY EXERCISES , THEREFORE, IT WAS NOT PROPER FOR THE TRIBUNAL TO DE CIDE THE SAME, CONVERTING ITSELF TO A COURT OF FIRST INSTANCE AND DECIDING THE FACTUAL ASPECT ON WHICH, NEITHER AO NOR PCIT HAD WRITTEN A NY FINDINGS. IN THIS REGARD, HE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS EASTERN MEDI KIT LTD. 2011 33 7 ITR 56. THE LD.DR HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOYOTA MOTOR CORPORATION VS CIT 2008 306 ITR 52 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE LD.PCIT CAN ASSUME JURISDICTION U/S 263 OF THE I.T.ACT, 1961, TO REVISE ASSESSMENT PASSED BY THE AO, IF HE IS SATISFIED THAT ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 9 THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN O RDER TO INVOKE HIS JURISDICTION, THE LD.PCIT SHOULD ASCERTAIN FROM THE RECORDS THAT THE ORDER PASSED BY THE AO IS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS, THE ORDER PASS ED BY THE AO IS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE I NTEREST OF THE REVENUE, THE LD.PCIT CANNOT ASSUME JURISDICTION TO REVISE AS SESSMENT ORDER, BECAUSE THE TWIN CONDITIONS PRESCRIBED U/S 263 MUST CO-EXIST. IN CASE THE ORDER IS ERRONEOUS, BUT IT IS NOT PREJUDI CIAL TO THE INTEREST OF THE REVENUE OR VICE VERSA, THEN THE LD.PCIT HAS NO JURISDICTION TO REVISE ASSESSMENT ORDER U/S 263 OF THE I.T.ACT, 196 1. IN THIS LEGAL BACKGROUND, IF YOU EXAMINE THE ASSESSMENT ORDER PAS SED BY THE AO, WE FIND THAT ALTHOUGH, THE ASSESSMENT ORDER PAS SED BY THE AO IS BRIEF AND CRYPTIC, BUT THE ASPECT OF DISALLOWAN CE OF 14A AND MISMATCH BETWEEN INTEREST INCOME DECLARED UNDER THE HEAD INCOME FROM OTHER SOURCES AND TURNOVER DIFFERENCE, AS PER ITR AND AUDIT REPORT HAS BEEN EXAMINED BY THE AO, DURING ASSESSME NT PROCEEDINGS, WHICH IS EVIDENT FROM THE FACT THAT TH E LD.PCIT HAD ACCEPTED THE FACT THAT THE AO HAS RECORDED IN ORDE R SHEET ENTRY, DATED 06/12/2016 REGARDING SUBMISSIONS MADE BY THE ASSESSEE, IN RESPECT OF APPLICATION OF PROVISION OF SECTION 14A R.W. RULE 8D , WHEN THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, FOR YEAR UNDER ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 10 CONSIDERATION. ONCE, THE AO HAS EXAMINED THE ISSUE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AFTER BEING SA TISFIED WITH EXPLANATION OFFERED BY THE ASSESSE CHOSEN NOT TO M AKE ANY ADDITIONS, THEN THE LD.PCIT CANNOT ASSUME JURISDICT ION TO REVISE ASSESSMENT ORDER, ON THE GROUND THAT THE AO OUGHT T O HAVE CARRIED OUT FURTHER ENQUIRIES OR THERE IS A LACK OF ENQUIR Y, ON THE PART OF AO TO EXAMINE THE ISSUE, WHICH HE OUGHT TO HAVE VERIFI ED. SIMILARLY, IN RESPECT OF PART B AND C OF SHOW CAUSE NOTICE REGARD ING NIL INTEREST INCOME DECLARED UNDER THE HEAD INCOME FROM OTHER SO URCES AND MISMATCH BETWEEN TURNOVER REPORTED IN AUDIT REPORT AND ITR, THE LD.PCIT HIMSELF, IN HIS ORDER AT PARA 3 HAD ADMITTE D THE FACT THAT IN RESPECT OF PART B AND C, IT SEEMS PRIMA-FACIE, THE EXPLANATION OFFERED BY THE ASSESSEE IS CORRECT AND ACCEPTABLE. THE LD.PCIT HAVING ACCEPTED THE FACT THAT THERE IS NO PREJUDICI AL TO THE INTEREST OF THE REVENUE, IN RESPECT OF PART B AND C OF SHOW CA USE NOTICE REGARDING TURNOVER MISMATCH AND INTEREST INCOME, HE OUGHT NOT TO HAVE REVISE THE ASSESSMENT ORDER AT LEAST ON THIS G ROUND. WE, FURTHER NOTED THAT IF, YOU GO THROUGH THE POINTS TA KEN UP BY THE LD.PCIT FOR VERIFICATION REGARDING INTEREST INCOME AND TURNOVER MISMATCH, THE FIGURE TAKEN UP BY THE LD.PCIT IS EXA CTLY ONE AND THE SAME. THE ASSESSEE HAS REPORTED INTEREST INCOME UND ER THE HEAD SALES TURNOVER IN ITS AUDIT REPORTS, WHEREAS IN ITR SALES TURNOVER AND ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 11 INTEREST INCOME HAS BEEN SHOWN SEPARATELY. IF, YOU ADD BACK SALES TURNOVER AND INTEREST INCOME, THEN THERE WOULD BE N O DIFFERENCE IN TURNOVER REPORTED BY THE ASSESSE IN ITS AUDIT REPOR T. THIS FACT HAS BEEN ACCEPTED BY THE PCIT, BUT HE WENT ON TO DIRECT THE AO TO VERIFY THE FACTS, IN LIGHT OF RECONCILIATION FILED BY THE ASSESSEE WITHOUT POINTING OUT, HOW THE ORDER PASSED BY THE AO IS ER RONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE INTEREST OF THE REVENU E. SIMILARLY, IN RESPECT OF DISALLOWANCES OF INTEREST EXPENDITURE U/S 14A, T HE ASSESSEE HAS MADE OUT A CASE OF AVAILABILITY OF OWN FUNDS IN FOR M OF CAPITAL, WHICH IS OVER AND ABOVE, THE AMOUNT OF INVESTMENTS IN SHA RES AND SECURITIES, WHICH COULD YIELD EXEMPT INCOME. FURTHE R, THE ASSESSEE HAS ALSO MADE OUT A CASE OF NO EXEMPT INCOME FOR TH E YEAR UNDER CONSIDERATION. IT IS SETTLED POSITION OF LAW THAT I N CASE THERE IS NO EXEMPT INCOME EARNED FOR THE YEAR UNDER CONSIDERATI ON, THEN THERE WOULD BE NO DISALLOWANCES OF EXPENDITURE INCURRED I N RELATION TO EXEMPT INCOME U/S 14A. THIS LEGAL PROPOSITION IS SU PPORTED BY NUMBER JUDICIAL PRECEDENTS, INCLUDING DECISION OF H ONBLE SUPREME COURT IN THE CASE OF CIT VS CHETTINAD LOGISTICS PVT .LTD. (2018) 257 TAXMAN 2 (SC) WHERE, THE HONBLE SUPREME COURT HAS DISMISSED SLP FILED BY THE REVENUE AND UPHELD THE FINDINGS OF HONBLE MADRAS HIGH COURT REGARDING NO EXEMPT INCOME, NO DISALLOWA NCES OF EXPENDITURE U/S 14A OF THE I.T.ACT, 1961. THIS LEGA L PROPOSITION WAS ITA NO.1791/MUM/2019 ARITRO ASHISH ROY 12 FURTHER SUPPORTED BY THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE OF PR.CIT VS BALLARPUR INDUSTRIES LIMITED (I.T. APPEAL NO.51 OF 2016 DATED 13/10/2016) WHERE, SIMILAR VIEW HAS BEEN EXPRESSED BY THE HIGH COURT. THEREFORE, WE ARE OF THE CONSIDE RED VIEW THAT THE LD.PCIT HAS SET ASIDE ASSESSMENT ORDER PASSED BY TH E AO WITHOUT POINTING OUT, HOW THE ASSESSMENT ORDER PASSED BY TH E AO IS ERRONEOUS, IN SO FAR AS, IT IS PREJUDICIAL TO THE I NTEREST OF THE REVENUE. ACCORDINGLY, WE SET ASIDE ORDER PASSED BY THE LD.PC IT AND RESTORE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE I.T.ACT, 1961. 10. IN THE RESULT, APPEAL FILED BY THE ASSESEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28/08/2 019 SD/- (RAM LAL NEGI) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 28/08/2019 THIRUMALESH SR.PS P COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//