Shri Krishan B.Agarwal, Gandhidham V. The Income tax Officer,Ward-7(2), Ahmedabad

ITA 2176/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8995 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR
• Keywords: Business expenditure; Principle of natural justice; Agreed addition; Right to appeal
• Section: 143(3)

Judgement Text

ITA NO. 2176 / AHD / 201 2 A SSESSMENT Y EAR: 2 00 9 - 10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 2176 /AHD/201 2 ASSESSMENT Y EAR : 20 0 9 - 10 KRISHNA B. AGARWAL, ..... .......... .APPELLANT PLOT NO.356, GOKUL PARK, WARD 12 - B, TAGORE ROAD , GANDHIDHAM. [PAN: ALVPA 8113 A] VS. INCOME TAX OFFICER, WARD 7(2), AHMEDABAD. .. ......... RESPONDENT APPEARANCES BY: P.B. PARMAR , FOR THE APPELLANT RAJ DEEP SINGH , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 31.01.20 17 DATE OF PRONOUNCING THE ORDER : 28 . 0 3 .2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGE D CORRECTNESS OF LEARNED CIT(A) S O R DER DATED 23 RD JULY 201 2 , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE IN COME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 20 0 9 - 10 . 2. GRIEVANCE S RAISED BY THE ASSESSEE ARE AS FOLLOWS : - 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ID. AO IN DISALLOWING INTEREST EXPENDITURE OF RS.11,8 5,430/ - . 2. THE ID. CIT(A) HAS CONFIRMED THE DISALLOWANCE BY OBSERVING THAT BEFORE THE ASSESSING OFFICER THE APPELLANT HIMSELF UNEQUIVOCALLY AGREED FOR THE DISALLOWANCE OF INTEREST EXPENDITURE BY WITHDRAWING SUBMISSION FILED ON 20/11/2011, VIDE ORDER SHEE T ENTRY DATED ON 24/11/2011. 3. THE ID. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT VIDE LETTERS DATED 20/10/2011 AND 20/11/2011 SUBMITTED AND EXPLAINED TO THE ID. ITA NO. 2176 / AHD / 201 2 A SSESSMENT Y EAR: 2 00 9 - 10 PAGE 2 OF 4 AO THAT THE ALLEGED INTEREST FREE ADVANCES IS NOTHING BUT THE BUSINESS ADVANCES PROV IDED TO THE VARIOUS PARTIES AND THEREFORE NO DISALLOWANCE OF INTEREST CAN BE MADE. 4. THE ID. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ACCOUNTANT OF THE APPELLANT HAD SIGNED THE ORDER SHEET ENTRY DATED 24/11/2011 WITH AN UNDERSTANDING THAT HE IS MERELY A GREEING TO THE QUANTUM OF THE DISALLOWANCE AND THE RIGHT OF APPEAL TO CHALLENGE THE IMPUGNED DISALLOWANCE ON MERITS AND LAW WOULD NOT BE TAKEN AWAY. 5. THE ID. CIT(A) OUGHT TO HAVE APPRECIATE THAT IT IS A SETTLED POSITION OF LAW THAT AN AGREEMENT BET WEEN THE ASSESSEE AND THE DEPARTMENT CANNOT OPERATE AS AN ESTOPPEL AGAINST THE ASSESSEE AS ALSO AGAINST THE DEPARTMENT. 6. ACCORDINGLY, THE ID. CIT(A) OUGHT TO HAVE APPRECIATED THE WRITTEN SUBMISSION MADE BY THE APPELLANT DURING THE COURSE OF APPELLATE PR OCEEDINGS AND THE ISSUE WITH REGARD TO DISALLOWANCE OF INTEREST EXPENDITURE OUGHT TO HAVE BEEN DECIDED ON MERITS. 7. LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.1,18,237/ - BEING 20% OF RS.5,91,188/ - IN RES PECT OF VARIOUS BUSINESS EXPENDITURE FOR WANT OF VERIFICATION. 8. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATI ON SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 9 . THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN CHARGING INTEREST U/S 234B/C/D OF THE ACT. 10. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN INITIATING PENALTY PROCEEDINGS U /S 271(L)(C) OF THE ACT. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL HE PRAYS FOR AT THIS STAGE IS FOR THE MATTER BEING REMITTED TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION ON MERITS. HE POINTS OUT THAT A CCOUNTANT OF THE ASSESSEE HAD, UNDER A MISTAKEN IMPRESSION, SIGNED THE PROCEEDINGS SHEET WHICH STATED THAT IT IS AN AGREED ADDITION, AND, THEREFORE , ACCORDING TO LEARNED COUNSEL, THE MATTER SHOULD NOW BE EXAMINED ON MERIT. IT IS ALSO POINTED OU T THAT THE LEARNED C IT(A) HAS, ON THE GROUND OF ITA NO. 2176 / AHD / 201 2 A SSESSMENT Y EAR: 2 00 9 - 10 PAGE 3 OF 4 ALLEGED CONCESSION BY THE ACCOUNTANT DURING THE ASSESSMENT PROCEEDINGS, NOT EXAMINED THE MATTER ON MERITS. LEARNED COUNSEL ALSO INVITES OUR ATTENTION TO THE AFFIDAVIT DATED 27 TH SEPTEMBER, 2012 FILED BY THE SAID ACCOUNTANT SHRI HARISH M. KARNATAK. AS REGARDS ADHOC DISALLOWANCE OF RS.1,18,237/ - , OUT OF BUSINESS EXPENDITURE, ALSO, HE AGREES THAT THE MATTER MAY BE REMITTED TO THE FILE OF THE ASSESSING OFFICER. 4. LEARNED DEPARTMENTAL REPREHENSIVE , HOWEVER, REL IES ON THE STAND OF THE AUTHORITIES BELOW. HE SUBMITS THAT ONCE THE ASSESSEE HAS HIMSELF VOLUNTEERED TH E DISALLOWANCE, HE CANNOT BE ALLOWED TO PRESS FOR ADJUDICATI O N ON MERITS. I AM URGED TO CONFIRM THE ORDER OF THE LEARNED C IT(A) AND DECLINE TO INTERFER E IN TH E MA T TER. 5. I FIND THAT, IN HIS AFFIDAVIT DATED 27 TH SEPTEMBER 2012, THE ACCOUNTANT OF THE ASSESSEE FIRM HAS STATED AS FOLLOWS : - 8 . THAT THE COMMISSIONER OF INC OME TAX (APPEALS) XIV, IN HIS ORDER HAS STATED THAT VIDE ORDER SHEET ENTRY DATED 24.11.2011, THE ASSESSEE HAS WITHDRAWN SUBMISSION MADE ON 20.11.2011 AND ACCORDINGLY, THE ASSESSEE AGREED FOR THE IMPUGNED DISALLOWANCE. IN THIS CONNECTION , I CLARIFY THAT I HAD SIGNED THE SAID ORDER SHEET ENTRY , HOWEVER, WITHOUT UNDERSTANDING THE REPERCU SSION OF IT AND UNDER THE IMPRESSION THAT THE RIGHT OF THE ASSESSEE TO CHALLENGE THE IMPUGNED DISALLOWANCE CANNOT BE TAKEN AWAY MERELY BECAUSE I HAVE AGREED TO THE PROPOSAL OF THE ASSESSING OFFICER TO WITHDRAW A LETTER AND QUANTIFIED THE DISALLOWANCE OF IN TEREST EXPENDITURE. 9. THAT HAD IT BEEN THE INTENTION OF AGREEING TO THE DISALLOWANCE AS PROPOSED BY THE ASSESSING OFFICER, I WOULD HAVE N EVER MADE DETAILED SUBMISSIONS ALONG WITH EVIDENCES TO ESTABLISH THAT INTEREST BEARING FUNDS HAD BEEN UTILISED FOR BU SINESS PURPOSE ONLY. ITA NO. 2176 / AHD / 201 2 A SSESSMENT Y EAR: 2 00 9 - 10 PAGE 4 OF 4 6 . IT IS ALSO ELEMENTARY THAT THERE CANNOT BE ANY ESTOPPELS AGAINST THE LAW. IN CASE THE ASSESSEE HAS GIVEN A CONCESSION, BASED ON MISTAKEN ASSUMPTION OF FACTS OF LAW, SUCH A CONCESSION CANNOT COME IN THE WAY OF ASSESSEE S STATUT ORY RIGHT FOR ASSESSMENT OF INCOME IN ACCORDANCE WITH THE LAW. IN MY CONSIDERED VIEW, THEREFORE, THE MATTER SHOULD BE REMITTED TO THE FILE OF THE ASSESSING O FFICER FOR ADJUDICATION ON MERITS IN ACCORDANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER AND AFTER GIVING YET ANOTHER OPPORTUNITY OF HEARING . I ORDER SO. AS THIS ISSUE REGARDING DISALLOWANCE OF INTEREST IS BEING REMITTED TO THE FILE OF THE ASSESSING OFFICER ANYWAY, I ALSO DEEM IT APPROPRIATE TO REMIT THE MAT T ER REGARDING DISALLOWANCE OF BUSINESS EXPE NSES OF RS.1,18,237/ - TO THE FILE OF THE ASSESSING O FFICER AS WELL, FOR FRESH ADJUDICATION. THE MA T TER REGARDING BOTH THE ABOVE DISALLOWANCES THUS STANDS RESTORED TO THE FILE OF THE ASSESSING O FFICER. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF MARCH, 2017 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 28 TH DAY OF MARCH , 2017 . PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD