PRATIMA H, MEHTA, MUMBAI V. DCIT CC -23, MUMBAI

ITA 2007/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79464 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 26-03-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 26-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Cost of acquisition
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.2007/M/2012 (ASSESSMENT YEAR: 2003 - 2004 ) PRATIMA H. MEHTA, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI - 18. / VS. DCIT - CC - 23, MUMBAI - 18. ./ PAN : ABNPM 8226 G ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.3330/M/2012 (ASSESSMENT YEAR: 2003 - 2004 ) DCIT - CC - 23, MUMBAI - 18. / VS. PRATIMA H. MEHTA, MADHULI, DR. A.B. ROAD, WORLI, MUMBAI - 18. ./ PAN : ABNPM 8226 G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DHARMESH SHAH / RESPONDENT BY : DR. P. DANIEL / DATE OF HEARING : 10.7.2014 / DATE OF PRONOUNCEMENT : 18 .7.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS. BOTH THESE APPEALS ARE FILED AGAINST THE ORDER OF CIT (A) - 37, MUMBAI DATED 15.02.2012 FOR THE ASSESSMENT YEAR 2003 - 04. SINCE, THE ISSUES RAISED IN BOTH THE APPEALS ARE INTERLINKED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE TWO APPEALS ARE CL UBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS. 2. FIRSTLY, WE SHALL TAKE UP ITA NO. 2007/M/2012 FILED BY THE ASSESSEE ON 26.03.2012 AND THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 2 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE REJECTION OF THE BOOKS OF ACCOUNT OF THE APPELLANT. 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 4,21,17,233/ - . 4. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DETERMINATION OF INCOME FROM LTCG AT RS. 28,68,58,419/ - . 3. AT THE OUTSET, SHRI DHARMESH SHAH, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT GROUND NOS. 1 & 2 ARE NOT PRESSED . AFTER HEARING THE LD DR, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 4. GROUND NO . 3 RELATES T O THE DISALLOWANCE OF INTEREST EXPENDITURE . IN THIS REGARD, AT THE OUTSET, LD COUNSEL MENTIONED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASE OF HITESH S. MEHTA VS. DCIT VIDE ITA NO.7726 & 7727/M/2010 DATED 26.4.2013, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT (A) FOR ADJUDICATION OF THE ISSUE AFRESH BY ADJUDICATING THE RESPECTIVE GROUND RELATING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNT. PARA 5 FROM THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 5. GROUND NO.4 RELATES TO THE ACTION OF THE LD CIT (A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS. 11,24,99,052/ - AND RS. 12,61,36,245/ - RESPECTIVELY FOR THE AYS 2005 - 06 AND 2006 - 07 TOWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE . IT IS PERTINENT TO NOTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPECT OF REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSE D ADJUDICATION OF THE LD CIT (A ) IN VIEW O F THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGNED LIABILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT (A) TO ADJUDICATE AFRESH ALONG WITH THE ADJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION / RELIABILITY OF T HE BOOKS OF ACCOUNTS. 5. ON THE OTHER HAND, LD SPECIAL COUNSEL RELIED ON THE ORDER OF THE AO/CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. MEHTA (SUPRA). WHETHER THE INTEREST LIABILITIES OF RS. 4,21,17,233 / - CONSTITUTES ASCERTAINED ONE OR NOT IS ALSO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR COMPUTATION OF BOOK PROFITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN THE CASE OF THE HITESH S. MEHT A ( SUPRA ) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.3 SHOULD BE SET ASIDE TO THE FILES OF THE CIT (A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER 3 GRANT ING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKEN ONLY AFTER CONSIDERING THE DECISION IN THE CASE OF HITESH S MEHTA, ( SUPRA ) . ACCORDINGLY, GROUND NO.3 IS SET ASIDE . 7. GROUND NO.4 RELATES COMPUTING THE TAX ON LONG TERM CAPITAL GAINS BY APPLYING THE PROPER TAX RATES. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE GROUND IS NOT PROPERLY DRAFTED, HOWEVER, THE COMPUTATION OF TAX ON THE LTCG IS THE CRUCIAL ISSUE AND THE SAME IS EVIDENT FROM THE CONTENTS OF PARA 8.14 .1 OF THE CIT (A)S ORDER. 8. AT THE OUTSET, BOTH THE PARTIES MENTIONED THAT THE CIT (A) HAS N OT ADJUDICATED THE GROUND AND HE HAD ADJUDICATED THE ISSUE OF DETERMINATION OF COST OF ACQUISITION WHICH IS NOT THE CORE ISSUE RAISED BEFORE HIM. ON PERUSAL, WE FIND THERE IS SOME CONFUSION IN THE DRAFTING ON GROUND. ON HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT THIS GROUND SHOULD BE SET ASIDE TO THE FILE OF THE AO FOR PROPER COMPUTATION BY APPLYING THE APPLICABLE TAX RATES. LD COUNSEL FOR THE ASSESSEE FILED A CHART SHOWING MULTIPLE WAYS OF COMPUTING THE TAX ON THE CAPITAL GAINS. AO MAY CONSIDER THE SAME AND ADJUDICATE THE ISSUE AFRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.4 IS ALLOWED FOR STATIS TICAL PURPOSES . 9 . IT DESERVES TO BE NOTICED THAT THE ASSESSEE FILED ADDITIONAL GROUND ALONG WITH LETTER DATED 21 ST AUGUST, 2013 , WHEREIN IT WAS CONTENDED THAT THE INCOME ASSESSED BY THE AO OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE ASSESSEE. HOWEVER, AT THE TIME OF HEARING THE LEARNED COUNSEL ADMITTED THAT THIS ADDITIONAL GROUND WAS W RONGLY RAISED AND IT HAS NO SUBSTANCE. UNDER THESE CIRCUMSTANCES WE REJECT THE ADDITIONAL GROUND . 10 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ./ I.T.A. NO. 3330/M/2012 ( AY: 2003 - 2004 ) (BY REVENUE) 11 . THIS APPEAL FILED BY THE REVENUE ON 1 1.05.2012 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 15.2.2012 FOR THE AY 2003 - 2004 . IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 4 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE INTEREST CHARGED U/S 234A, 234B AND 234C OF THE ACT. 12 . IN THIS APPEAL, REVENUE AGITATED AGAINST THE RELIEF GRANTED BY THE CIT (A) WITH REGARD TO THE INTEREST CHARGED U/S 234A, 234B & 234C OF THE INCOME TAX ACT, 1961. IN THIS REGARD, LD COUNSEL FILED A COPY OF THE ORDER OF THE TRIBUNAL VIDE ITA NO.3285/M/2012 (AY 1998 - 99) AND 3386/M/2012 (2000 - 01) DATED 28.8.2013. ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL WE ARE OF THE OPINION THAT THE IN VIEW OF TH E DIRECTIONS GIVEN IN THE ASSESSEES APPEALS, THE LIABILITY OF THE ASSESSEE U/S 234A, 234B AND 234C SQUARELY DEPENDS UPON THE PROPOSED ADJUDICATION OF THE CIT (A) IN THE SET ASIDE PROCEEDINGS. WHILE ADJUDICATING THE ISSUE RELATING TO THE DEDUCTION OF INTE REST EXPENDITURE, THE CIT (A) HAS TO CONSIDER THE ABOVE REFERRED TRIBUNALS ORDER (SUPRA) DATED 28.8.2013 AND COMPUTE THE INTEREST CORRECTLY. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 13 . IN THE RESULT, APPEAL OF T HE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRON OUNCED IN THE OPEN COURT ON 1 8 T H JULY, 2014. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 8 .7.2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI