TOPAZ HOLDINGS P.LTD, MUMBAI V. ACIT CEN CIR 31, MUMBAI

ITA 2146/MUM/2013

• Counselvise Citation: 214619914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2001-2002
• Appeal Filed On: 18-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Rejection of books of accounts; Opportunity of being heard
• Section: 142(1); 234B

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.2146/MUM/2013, ' ' ' ' # # # # / ASSESSMENT YEAR-2001-02 M/S. TOPAZ HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI-400018 VS ACIT CENTRAL CIRCLE-31, R.NO.409, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AAACT5152F ( $% / APPELLANT) ( &'$% / RESPONDENT) '( '( '( '() )) ) * * * * / ASSESSEE BY : SHRI DHARMESH SHAH + * / REVENUE BY : DR. P. DANIEL ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 18-06-2014 -.# + ), / DATE OF PRONOUNCEMENT : 18-06-2014 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDERS DT.29.01.2013 OF THE CIT(A)- 37,MUMBAI,ASSESSEES HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S. 250 OF THE ACT. 2.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATU RAL JUSTICE. 3.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CA N BE ASSESSED IN THE HANDS OF THE APPELLANT. 4.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWING THE INTEREST EXPENDITURE OF RS. 2,8 6,72,678/-. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT THE IN TEREST EXPENSES TO THE EXTENT OF RS. 15,100/- NEED TO BE ALLOWED WHILE CALCULATING INCOME OF THE APPELLANT. 5.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING INTEREST CHARGED U/S. 234A, 234B AND 234C OF THE AC T. 6.THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD TO, AMEND OR ALTER ALL OR ANY OF THE GROUNDS APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF TRADING AND INVESTING IN SECURITIES.AS THE ASSESSEE DID NOT FILE RETURN OF INCOME ON DUE DATE,SO,THE AS SESSING OFFICER (AO) 142(1) OF THE ACT.EVEN THEN THERE WAS NO COMPLIANCE BY THE ASSESSEE.AO PAS SED AN ORDER U/S.144 OF THE ACT ON 18.03.2004, DETERMINING THE INCOME OF THE ASSESSEE AT RS.16.31LAKHS.DURING THE ASSESSMENT PROCEEDINGS, CERTAIN ADDITIONS WERE MADE BY THE AO AND SAME WERE CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY(FAA).AGAINST THE ORDER OF THE F AA,ASSESSEE HAS RAISED SIX GROUNDS OF APPEAL,BEFORE US,AS STATED EARLIER. DURING THE COURSE OF HEARING BEFORE US AUTHORISED R EPRESENTATIVE DID NOT PRESS GROUNDS NO.1 TO 3. THEREFORE,FIRST THREE GROUNDS RAISED FOR THE YEAR U NDER APPEAL STAND DISMISSED AS NOT PRESSED. 2 ITA NO. 2146/MUM/2013 M/S. TOPAZ HOLDINGS PVT. LTD. 2.1. GROUND NO.4 IS ABOUT DISALLOWANCE OF INTEREST EXPEN DITURE OF RS.2,86,72,678/-.BEFORE US,AR STATED THAT IDENTICAL ISSUE HAD COME UP FOR ADJUDIC ATION BEFORE THE TRIBUNAL IN ONE OF THE GROUP CASES I.E. IN THE CASE OF EMINENT HOLDINGS PVT.LTD. (ITA/8200/2010 DT. 12.02.2014), THAT MATTER WAS RESTORED BACK TO THE FILE OF THE FAA.DEPARTMENT AL REPRESENTATIVE(DR) LEFT TO THE ISSUE TO THE DISCRETION OF THE BENCH. 2.3. AFTER HEARING THE RIVAL CONTENTIONS,WE ARE OF THE O PINION THAT MATTER SHOULD BE REMANDED BACK TO THE FILE OF THE FAA.WE FIND THAT WHILE DECIDING THE APPEAL IN THE CASE OF EMINENT HOLDINGS PVT.LTD.,FOR THE AY 2007-08(SUPRA),E BENCH OF TRIBU NAL HAS DECIDED THE ISSUE AS UNDER: 4. GROUND NOS. 4 & 5 ARE INTER-CONNECTED RELATING TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 5,14,455/-.IN THIS REGARD, AT THE OUTSET, LD COUNSE L MENTIONED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASED O F HITESH S. MEHTA VS. DCIT VIDE ITA NO. 7726 & 7727/M/2010 DATED 26.04.2013, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT(A) FOR ADJUDICATION OF THE ISSUE AFRESH BY ADJUDICATING TH E 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. 12,61,36,24 5/- 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 RESPEC T OF REJECTION/ RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICATION OF THE LD CI T(A) IN VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGNED LIA BILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT(A) TO ADJUDICATE AFRESH ALONG WITH THE A DJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION/ RELIABILITY OF THE BOO KS OF ACCOUNTS. 5 . ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDER OF THE AO/CIT(A). 6 .WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORD ERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. MEHT A (SUPRA). WHETHER THE INTEREST LIABILITIES OF RS. 5,14,455/- CONSTITUTES ASCERTAINED ONE OR NOT IS AL SO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR C OMPUTATION OF BOOK PROFITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN T HE CASE OF THE HITESH S. MEHTA (SUPRA) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLLOWING THE SA ID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.4 SHOULD BE SET ASIDE TO THE FILES OF THE CIT(A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER GR ANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKE N ONLY AFTER CONSIDERING THE DECISION IN THE CASE OF HITESH S MEHTA, (SUPRA). ACCORDINGLY, GROUND NOS . 4 & 5 ARE SET ASIDE. RESPECTFULLY,FOLLOWING THE ABOVE ORDER,WE ARE RESTO RING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE IS DIRECTED TO AFFORD A REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.4 IS ALLOWED IN FAVOUR OF THE ASSESSEE,IN PART. 3. NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S . 234 OF THE ACT.BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY,THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLIED WITH,THAT THE ASSETS WERE A LREADY IN ATTACHMENT OF THE CUSTODIAN APPOINTED UNDER THE PROVISIONS OF THE SPECIAL COURT S ACT,THAT THE TRIBUNAL IN THE CASE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE V IEW IN FAVOUR OF THE APPELLANT,THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PV T. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A,234B AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO THE NOTIFIED ENTITIES ALSO,THAT THE A SSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME C OURT,THAT THE INCOME EARNED IN THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS,TH AT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AFTER CONSIDERIN G THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS R EGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON THE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL .(SB)], SEDCO FORES DRILLING CO. LTD. [264 3 ITA NO. 2146/MUM/2013 M/S. TOPAZ HOLDINGS PVT. LTD. ITR 320],NGC NETWORK ASIA LLC [313 ITR 187] ,SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DEL/20 09] & EMILLO RUIZ BERDEJO [320 ITR 190 (BOM)].DR RELIED UPON THE CASES OF DEVINE HOLDINGS PVT. LTD. 3.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HI GH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO.THEREFORE, UPHOLDING THE ORDER OF THE FAA TO THAT EXTENT,WE HOLD THAT PROVISIONS O F SECTION 234 OF THE ACT ARE APPLICABLE.AS FAR AS CALCULATION PART IS CONCERNED,WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE.THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSIDERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE.GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY T HE ASSESSEE STANDS PARTLY ALLOWED. 1)2 '() + 0)2 3 + ) 45. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE,2014 . 0 + -.# 6 7' 18 TWU , 201 4 . + / 8 SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7' /DATE: 18.06 . 2014. SK 0 0 0 0 + ++ + &)9 &)9 &)9 &)9 : 9#) : 9#) : 9#) : 9#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ ; < , 4. THE CONCERNED CIT / ; < 5. DR E BENCH, ITAT, MUMBAI / 9=/ &)' , . . . 6. GUARD FILE/ / 1 '9) '9) '9) '9) &) &)&) &) //TRUE COPY// 0' / BY ORDER, > / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI