ARCHWAY INVESTMENT COMPANY LTD, MUMBAI V. ITO 2(1)(1), MUMBAI

ITA 1977/MUM/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3296 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 26-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 10-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reasonable cause; Revised return
• Section: 143(3); 14A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI J BENCH , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAM LAL NEGI,JUDICIAL MEMBER /. /./. /. ITA NO.1977/MUM/2011, / // / ASSESSMENT YEAR-2005-06 ARCHWAY INVESTMENT COMPANY LTD. NEVILLE HOUSE, J.N. HEREDIA MARG, BALLARD ESTATE,MUMBAI-400 001. PAN:AAACA 5507 H VS INCOME TAX OFFICER-2(1)(1) AAYAKAR BHAVAN MUMBAI. ( / APPELLANT) ( /RESPONDENT) /ASSESSEE BY : SHRI YOGESH THAR / REVENUE BY : MS. LATA SUNDER-DR / DATE OF HEARING : 19.01.2016 / DATE OF PRONOUNCEMENT : 29.01.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.27.10.2009 OF CIT-4, MUMBA I, THE ASSESSEE HAS FILED THE PRESENT APPEAL. THERE WAS DELAY OF 430 DAYS IN FILING THE APPEAL.TH E DIRECTOR OF THE COMPANY, S. RAJA HAD FILED AN APPLICATION ALONG WITH AN AFFIDAVIT IN THAT REGA RD.IT WAS STATED THAT THE ORDER OF THE FIRST APPELLATE AUTHORITY (FAA) WAS RECEIVED BY ONE OF THE EMPLOYEES, THAT HE DID HAND OVER THE RELEVANT PAPERS TO THE TAX CONSULTANT LOOKING AFTER TAX LITIGATION, THAT LATER ON THE TAX ADVISOR LEARNT ABOUT THE DISPOSAL OF THE APPEAL BY THE FAA, THAT IMMEDIATELY AN APPEAL WAS PREFERRED BEFORE THE TRIBUNAL.WE FIND THAT ASSESSING OFFICER (AO) WAS DIRECTED TO FILE A REPORT IN THIS REGARD.VIDE HIS LETTER DATED 3.12.15,THE AO HAS INF ORMED THAT HE HAD RECORDED THE STATEMENT OF RAMESH JAIN, THE TAX CONSULTANT AND SHRI PRAFUL WAD IWALA-THE PERSON WHO HAD RECEIVED THE ORDER OF THE FAA, THAT HE HAS STATED THAT THE REASONS MEN TIONED BY THE ASSESSEE FOR FILING RELATED APPEAL WERE GENUINE.WE HAVE GONE THROUGH THE STATEMENTS OF THE ABOVE MENTIONED PERSONS AND THE AFFIDAVIT FILED BY THE DIRECTOR OF THE COMPANY. IN OUR OPINION, THERE WAS REASONABLE CAUSE FOR NOT FILING THE APPEAL ON TIME. THEREFORE, DELAY,IN PREF ERRING THE APPEAL,IS CONDONED. THE ASSESSEE COMPANY,ENGAGED IN THE BUSINESS OF IN VESTMENT,FILED ITS RETURN OF INCOME ON 28. 10.05,DECLARING TOTAL INCOME OF RS.15.87LAKHS. LATE R ON, A REVISED RETURN WAS FILED ON 27.12.2005 FOR LOSS OF RS.2.12 LAKHS. THE AO COMPLETED THE AS SESSMENT U/S. 143(3) OF THE ACT ON 28. 12. 2007,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 27,75,130/-. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE MA DE BY THE AO AND ENHANCED BY THE FAA FOR THE YEAR UNDER CONSIDERATION. DURING THE ASSESS MENT PROCEEDINGS,THE AO MADE DISALLOWANCE OF RS.29,87,636/- U/S. 14A, THAT THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS.50.98 LAKHS AND HAD CLAIMED EXEMPTION U/S.10(34) OF THE ACT,THAT IT HAD NOT DISALLOWED ANY EXPENDITURE FOR EARNING THE INCOME. ACCORDINGLY, HE MADE A DISALLOW ANCE OF RS. 28.87 LAKHS. ITA/1977/M/11,AY.05-06-ARCHWAY INVESTMENT 2 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA REFERRED TO THE CASE OF DAGA CAPITAL MANAGEMENT DELIVERED BY THE T RIBUNAL AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. HE ALSO HELD THAT PROVISIONS OF RULE 8D OF I.T.RULES (1962) WERE APPLICABLE AND DISALLOWANCE HAD TO BE MADE ACCORDINGLY. 4. BEFORE US, THE AUTHORISED REPRESENTATIVE(AR)STATED THAT THE DECISION OF DAGA CAPITAL MANAGE -MENT(SUPRA),HAD BEEN REVERSED BY THE JUDGMENT OF G ODREJ AND BOYCE (328 ITR 81), THAT PROVISIONS OF RULE 8D WERE NOT APPLICABLE FOR THE A Y 2005-06.HE REFERRED TO THE CASE OF GODREJ AGROVET LTD.(INCOME TAX APPEAL NO.934 OF 2011 DT.8. 11.2013) .HE ALSO RELIED UPON THE CASES OF SMT. BINDU C. ZAVERI (ITA NO./7771/M/2011-AY07-08, DT.8.4.15 AND MAHANAGER GAS LTD. ITA NO./958, 402/MUM/2011 DATED 11.12.2013. DEPARTMENTA L REPRESENTATIVE (DR) STATED THAT THE ISSUE SHOULD BE DECIDED ON MERITS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE DISALLOWANCE OF RS.29.87 LAKHS INVOKING TH E PROVISIONS OF SECTION 14A OF THE ACT, THAT THE FAA HAD ENHANCED THE DISALLOWANCE TO RS.63.63 L AKHS AS PER THE PROVISIONS OF RULE 8D OF THE RULES.AS PER THE HONBLE BOMBAY HIGH COURT RULE 8D CANNOT BE APPLIED FOR THE YEAR UNDER APPEAL.THE FAA HAD RELIED UPON THE ORDER OF DAGA CA PITAL AND MANAGEMENT (SUPRA).BUT,THE ABOVE DECISION STANDS REVERSED BY THE JUDGMENT OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF GODREJ BOYCE.WE FIND THAT THE HONBLE COU RT HAS IN THE CASE OF GODREJ AGROVET LTD.(SUPRA)HAS LAID DOWN CERTAIN GUIDELINES WITH RE GARD TO DISALLOWANCE TO BE MADE U/S.14A OF THE ACT R.W.RULE 8D.IN OUR OPINION,IN THE INTEREST OF JUSTICE THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE IS DIR ECTED TO DECIDE THE ISSUE AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER THE CONSIDERING THE CASES RELIED UPON BY THE AR BEFORE US,INCLUDING THE MATTER OF GODREJ AGROVET LTD.(SUPRA).EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART . AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PAR TLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY , 2016. , 2016 SD/- SD/- ( /RAM LAL NEGI) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 29.01. 2016 . . . .. . JV.SR.PS. ITA/1977/M/11,AY.05-06-ARCHWAY INVESTMENT 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.