NARAYANDADA CHAVAN SAHAKARI SOOT GIRNI LIMITED, SANGLI V. ITO WARD 2(5), SANGLI

ITA 2093/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4406 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Principle of natural justice; Capital receipt; Reassessment proceedings; Set aside
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 2093 /PUN/20 19 / ASSESSMENT YEAR : 2011 - 12 NARAYANDADA CHAVAN SAHAKARI SOOT GIRNI LTD. FORMERLY M/S. SHIRALA TALUKA SHETKARI SAHAKARI SOOT GIRNI LTD. A/ P BHAT SHIRGAON, SHIRALA SANGLI - 415 408 PAN : AACAS4700L ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 2(5), SANGLI / RESPONDENT A SSESSEE BY : NONE REVENUE BY : SHRI S.P WALIMBE / DATE OF HEARING : 2 6 .0 2 .2020 / DATE OF PRONOUNCEMENT : 27 .02 .2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEAL), KOLHAPUR - 1 DATED 11.12.2019 FOR THE ASSESSMENT YEAR 2011 - 12 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 ITA NO. 2093 /PUN/20 19 A.Y. 2011 - 12 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE INTEREST LEVIED UNDER S.234A OF THE ACT IS NOT JUSTIFIED SINCE NO INCOME BELONGS TO THE APPELLANT AND THE INTEREST RECEIVED OF RS.38,92,957/ - ON FIXED DEPOSITS OUT OF SHARE CAPITAL FROM THE STATE GOVT. CANNOT BE CALLED INCOME OF THE APPELLANT. THE INTEREST LEVIED BY RECTIFYING THE MISTAKE U/S.154 OF THE ACT VIDE ORDER DATED 23.08.2019 OF RS.8,23,928/ - IS ILLEGAL AND WITHOUT JURISD ICTION. IT BE DELETED. 2. THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 2. AT THE TIME OF HEARING, ONE ADJOURNMENT PETITION HAS BEEN FILED. WE REJECT THE ADJOURNMENT PETITION AND PROCEED TO HEAR THE CASE ON MERI TS AFTER TAKING INTO CONSIDERATION OF THE FACTS OF THE CASE AND SUBMISSIONS OF THE LD. DR. 3. AS PER THE GROUNDS OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO THE INTEREST LEVIED U/S.234A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND AS PER THE CONTENTIONS OF THE ASSESSEE, SUCH LEVIED OF INTEREST IS NOT JUSTIFIED. 4. THE BRIEF FACTS IN THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PRODUCTION, COLOURING AND SELLING OF COTTON IN SANGLI, KOLHAPUR AND SATARA. IN THIS CASE, THE A SSESSING O FFICER OBSERVED FROM THE NMS DATA THAT THE ASSESSEE HAD MADE HUGE FIXED DEPOSITS WITH BANK OF INDIA, SHIRALA BRANCH DURING THE FYS 2010 - 11 AND 2011 - 12. THEREFORE THE ASSESSEE'S CASE WAS NOT ED BY ISS UE OF NOTICE U/ S . 148 OF THE ACT . IN THE COURSE OF REASSESSMENT PROCEEDINGS THE A SSESSING O FFICER NOTED THAT THE ASSESSEE HAD BORROWED FUNDS AND HAD KEPT THEM IN FIXED DEPOSITS WITH A BANK ON WHICH IT HAD RECEIVED INTEREST OF RS . 38,92,957 / - FOR A . Y 2011 - 12 AND RS . 17,70, 373/ - FOR AY 2012 - 13. IN THIS CONNECTION THE ASSESSEE EXPLAINED BEFORE THE A SSESSING O FFICER THAT THE FUNDS WERE NOT PART OF SURPLUS FUNDS BUT 3 ITA NO. 2093 /PUN/20 19 A.Y. 2011 - 12 WAS A CONTRIBUTION OF SHARE CAPITAL OF STATE GOVERNMENT WHICH IT HAD RECEIVED IN ORDER TO S ET UP A SPINNING MILL. THE A SSESSING O FFICER OBSERVED THAT THE ASSESSEE HAD NOT UTILIZED THE SAID FUNDS DURING THE PRE - OPERATIVE PERIOD AND PART OF THE SAME WAS KEPT AS SHORT TERM FIXED DEPOSIT IN BANK. HE WAS OF THE VIEW THAT SUCH INTEREST RECEIVED FROM F D HAD NO CONNECTION WITH SETTING UP OF BUSINESS AND WAS HENCE A REVENUE RECEIPT WHICH WAS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE HAD PLACED RELIANCE ON THE DECISIONS OF BOKARO STEEL LTD. V / S. CIT (SC) DATED 18/ 12 / 1998 AND INDIAN OIL PANIPATH POWER CONSTRUCTION V/ S . INCOME TAX OFFICER (HI GH COURT OF DELHI) DATED 26/02/ 2009 IN SUPPORT OF ITS CLAIM THAT THE INTEREST RECEIVED WAS A CAPITAL RECEIPT AND LIABLE TO BE SET OFF AGAINST PRE - OPERATIVE EXPENSES. HOWEVER, THE A SSESSING O FFICER DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE AND ASSESSED THE INTEREST RECEIVED AS INCOME FROM OTHER SOURCES FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. 227 ITR 172. 5 . WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR AND PERUSED THE ORDER OF THE LD. CIT(APPEALS). ON PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS), WE FIND AS PER PARA 10, THE LD. CIT(APPEALS) HAS SUMMARILY DISPOSED OF THIS GROUND WITHOUT PASSING A SPEAKING ORDER. PA RA - 10 OF THE LD. CIT(APPEALS) ORDER IS RELEVANT FOR EXTRACTION WHICH IS AS FOLLOWS: 10. THE APPELLANT HAS ALSO FILED AN APPEAL U/S.154 FOR AY 2011 - 12. THIS APPEAL IS CONSEQUENTIAL TO THE MAIN APPEAL FOR AY 2011 - 12 WHICH HAS BEEN DECIDED BY ME IN THE FOREG OING PARAGRAPHS. IN LIGHT OF THIS, THE APPEAL FILED U/S.154 IS TREATED AS DISMISSED FOR STATISTICAL PURPOSES. THE ISSUE U/S.234A OF THE ACT IS CONSEQUENTIAL TO THE ADDITION ADJUDICATED BY THE LD. CIT(APPEAL) AND THEREFORE, ON THIS ISSUE, THE LD. CIT(AP PEALS) SHOULD HAVE PASSED A WELL REASONED SPEAKING ORDER AND NOT A 4 ITA NO. 2093 /PUN/20 19 A.Y. 2011 - 12 CRYPTIC ORDER LIKE THE PRESENT ONE. THEREFORE, I N THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEAL) AND REMAND THE MATTER BACK TO HIS FILE FOR ADJUDICATION AS PER LAW AND HE SHALL PASS A WELL REASONED SPEAKING ORDER ON THE ISSUE U/S.234A OF THE ACT IN COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 27 TH DAY OF FEBRUARY , 20 20 . SD/ - SD/ - D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 27 TH F EBRUARY , 2020. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL) - 1, KOLHAPUR. 4. THE CIT - 1, KOLHAPUR. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 5 ITA NO. 2093 /PUN/20 19 A.Y. 2011 - 12 DATE 1 DRAFT DICTATED ON 26 .02 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 26 . 0 2 .20 20 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER