BOTHRA FINANCIAL SERVICES, NEW DELHI V. ITO, WARD- 5(4), NEW DELHI

ITA 2023/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3968 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Assessee Lawyers: KIRAN KUMARI
• Keywords: Rule 8D
• Section: 143(3); 14A; 115JB

Judgement Text

1 ITA NO. 2023/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SM C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 2023/DEL/2019 ( A.Y 2015-16) BOTHRA FINANCIAL SERVICES A-37, GROUND FLOOR, PHASE-2, VIVEK VIHAR NEW DELHI AAACB0422C (APPELLANT) VS ITO WARD-5(4) ROOM NO. 379, C. R. BUILDING, NEW DELHI (RESPONDENT) APPELLANT BY MS. KIRAN KUMARI, ADV RESPONDENT BY SH. JAGDISH SINGH, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 28/12/2018 PASSED BY CIT(A)-2 NEW DELHI FOR ASSESSMENT YEAR 2 015-16. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, TH E ID. CIT(A) OUGHT TO HAD DELETED THE ENTIRE ADDITION/DISALLOWANCE OF RS. 33,03,808/- MADE U/S 14A READ WITH RULE 8D. 2. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, TH E ID. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION / DISALLOWANCE MADE U/S 14 A READ WITH RULE 8D, TO THE EXTENT OF RS.4,27,000/- (WHICH WAS THE AMOUNT O F DIVIDEND EARNED ON THE SHARES HELD AS STOCK-IN-TRADE). DATE OF HEARING 25.02.2020 DATE OF PRONOUNCEMENT 02.03.2020 2 ITA NO. 2023/DEL/2019 3. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, THE ID. CIT(A) HAS ERRED IN J HOLDING THAT RS.4,27,000/- (WHICH WAS THE AMOUNT O F DIVIDEND EARNED ON THE SHARES HELD AS 'STOCK-IN-TRADE') IS TO BE INCLU DED IN THE AMOUNT OF BOOK 'PROFIT U/S 115JB.' 3. THE ASSESSEE E-FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.3,58,370/- ON 27.09.2015. THE ASSESSMENT WAS HEL D FOR LIMITED SCRUTINY ON THE FOLLOWING POINTS: (I) SALE OF PROPERTY IN FORM 26QB (II) LARGE VALUE SALE OF FUTURES (DERIVATIVES) IN A RECOGNIZED STOCK EXCHANGE (STT CODE 5) (III) LARGE VALUE OF SALE OF SHARE OR UNIT WHICH IS SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER (IV) MISMATCH IN SALES TURNOVER REPORTED IN AUDIT R EPORT AND ITR (V) LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS R ECEIPT (VI) LARGE SQUARED UP LOANS DURING THE YEAR (FORM 3 CD) (VII) LARGE VALUE SALE OF OPTION IN SECURITIES (DER IVATIVE) IN A RECOGNIZED STOCK EXCHANGE (STT CODE4) THE ASSESSING OFFICER ASSESSED THE INCOME OF THE AS SESSEE AT RS. 36,62,178/- VIDE ASSESSMENT ORDER DATED 30.12.2017 PASSED U/S 143(3) AND MADE AN ADDITION / DISALLOWANCE OF RS. 33,03,808/- U/S 14A READ WITH RULE 8D. THE ASSESSING OFFICER ALSO MENTIONED IN THE ASS ESSMENT ORDER THAT THIS AMOUNT OF RS. 33,03,808/- WILL ALSO BE ADDED IN THE COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT AS PER PROVISIONS OF CL AUSE (F) BELOW EXPLANATION-1 TO SECTION 115JB OF THE ACT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 5. THE LD. AR POINTED OUT THAT THIS CASE WAS SELECT ED FOR LIMITED SCRUTINY AND 14A DISALLOWANCE WAS NOT AT ALL MENTIONED IN TH E SAID SCRUTINY. THEREFORE, 3 ITA NO. 2023/DEL/2019 THE ASSESSMENT ITSELF IS BEYOND THE SCOPE OF SCRUTI NY AND HENCE VOID AB INITIO. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE REASON F OR WHICH THE CASE WAS PICKED UP FOR LIMITED SCRUTINY RELATES TO THE AIR INFORMAT ION ON THE CASH DEPOSITS IN THE SAVINGS BANK ACCOUNT. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSING OFFICER DID NOT OBTAIN THE WRITTEN APPROVAL OF THE CONCERNED COMMISSIONER BEFORE EXTENDING THE SCOPE OF SCRUTINY IN RESPECT O F DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961. FURTHER, IT IS ON RECORD THAT THE CBDT INSTRUCTION NO.7/2014, DATED 26-09-2014 DID NOT PER MIT THE ASSESSING OFFICERS TO EXTEND THE SCOPE OF SCRUTINY TO THE ISS UES OTHER THAN THE ONES WHICH ARE AUTHORISED BY THE BOARD IN THIS REGARD UNDER CA SS. IT IS PERTINENT TO NOTE THAT THIS CASE WAS FOR LIMITED SCRUTINY AND IN RESP ECT OF SECTION 14A DISALLOWANCE, NO SCRUTINY WAS MADE BY THE ASSESSING OFFICER. THIS CAN BE SEEN FROM THE ASSESSMENT ORDER ITSELF. THEREFORE, THE A SSESSMENT ORDER ITSELF IS BAD IN LAW AND VOID AB INITIO. CONSEQUENTLY, WE FIND A DJUDICATION OF OTHER GROUNDS BY THE ASSESSEE ON MERITS BECOMES ACADEMIC, HENCE N OT ADJUDICATED AT THIS JUNCTURE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOW ED. 8. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND MARCH, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 02/03/2020 R. NAHEED 4 ITA NO. 2023/DEL/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 26.0 2 .2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.0 2 .2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 0 2 . 0 3 . 2 0 2 0 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 0 2 . 0 3 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 0 2 . 0 3 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER