ACIT, Cir.-10(2), Kolkata, Kolkata V. M/s Nagreeka Synthetics Pvt. Ltd., Kolkata

ITA 2242/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6388 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Speculation loss; Deemed dividend
• Section: 143(3); 14A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (D), KOLKATA [BEFORE SHRI P.M. JAGTAP, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 2242/KOL/2016 ASSESSMENT YEAR: 2010-11 ACIT CIR 10(2) KOLKATA..................................................................APPELLANT AAYAKAR BHAWAN, 3 RD FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069 M/S. NAGREEKA SYNTHETICS PVT. LTD.....................RESPONDENT 18, R.N. MUKHERJEE ROAD, JAIN CHAMBER, 6 TH FLOOR, KOLKATA 700 001 [PAN: AAACN8691 D] APPEARANCES BY: DR. P.K. SRIHARI, CIT APPEARING ON BEHALF OF THE REVENUE. NONE APPEARING ON BEHALF OF THE ASSESSEE DATE OF CONCLUDING THE HEARING : MAY 07, 2018 DATE OF PRONOUNCING THE ORDER : MAY 07, 2018 ORDER PER P.M. JAGTAP, AM THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) 4, KOLKATA DATED 06.10.2016. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING, MANUFACTURING AND INVESTMENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 26.09.2010 DECLARING A LOSS OF RS. 19,40,88,811/-. IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3), THE TOTAL LOSS OF THE ASSESSEE-COMPANY WAS DETERMINED BY THE A.O. AT RS. 15,88,51,770/- AFTER MAKING INTER ALIA ADDITION OF RS. 3,54,17,949/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES UNDER SECTION 14A OF THE INCOME TAX ACT, 1961. THE SAID ASSESSMENT WAS SUBSEQUENTLY REOPENED BY THE A.O. BY 2 I.T.A. NO. 2242/KOL/2016 ASSESSMENT YEARS 2010-11 M/S. NAGREEKA SYNTHETICS PVT. LTD. ISSUING A NOTICE UNDER SECTION 148 ON 27.03.2014 AND IN THE ASSESSMENT COMPLETED IN PURSUANCE OF THE SAID NOTICE UNDER SECTION 147/143(3) OF THE ACT VIDE AN ORDER DATED 20.03.2015, THE MAJOR AMOUNT OF LOSS DECLARED BY THE ASSESSEE WAS TREATED BY THE A.O. AS SPECULATIVE LOSS BY INVOKING EXPLANATION TO SECTION 73 OF THE ACT. IN THE SAID ASSESSMENT, THE A.O. RETAINED THE DISALLOWANCE MADE UNDER SECTION 14A IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3) AND ALSO MADE A FURTHER ADDITION OF RS. 4,23,33,500/- ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. ACCORDINGLY, THE TOTAL INCOME OF THE ASSESSEE-COMPANY WAS DETERMINED BY THE A.O. AT RS. 6,64,45,690/- IN THE ASSESSMENT MADE UNDER SECTION 147/143(3) OF THE ACT. 3. AGAINST THE ASSESSMENT MADE BY THE A.O. UNDER SECTION 147/143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) DISPUTING INTER ALIA THE DISALLOWANCE OF RS. 3,54,17,949/- REPEATED UNDER SECTION 14A. MEANWHILE, THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORIGINALLY PASSED UNDER SECTION 143(3) WAS DISPOSED OF BY THE LD. CIT(A) INTER ALIA ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A AND KEEPING IN VIEW THE SAME, THE ISSUE RELATING TO THE DISALLOWANCE UNDER SECTION 14A HAS RAISED BY THE ASSESSEE IN THE APPEAL FILED AGAINST THE REASSESSMENT UNDER SECTION 147/143(3) WAS DECIDED BY THE LD. CIT(A) VIDE PARAGRAPH NO 6.2 OF HIS IMPUGNED ORDER AS UNDER: I FIND THAT THE A.O. HAS MADE AN ELABORATE DISCUSSION ON THIS ISSUE IN THE REASSESSMENT ORDER. THE AR OF THE APPELLANT HAS NOT CHALLENGED THE ACTION OF THE A.O. ON MERITS, HIS ONLY PRAYER BEFORE ME WAS THAT THE A.O. SHOULD BE DIRECTED TO RECOMPUTED DISALLOWANCE AS DIRECTED BY THE EARLIER CIT(A)S ORDER AS PREFERRED AGAINST THE ORIGINAL ASSESSMENT ORDER. THUS, THE A.O. IS 3 I.T.A. NO. 2242/KOL/2016 ASSESSMENT YEARS 2010-11 M/S. NAGREEKA SYNTHETICS PVT. LTD. ACCORDINGLY DIRECTED TO RESTRICT THE DISALLOWANCE AS PER DIRECTIONS OF CIT(A). HOWEVER, IF THE SAID ORDER OF CIT(A) IS SUBSEQUENTLY REVERSED OR MODIFIED, THAN THE A.O. SHALL ALSO MODIFY THE DISALLOWANCE ACCORDINGLY. THESE GROUNDS ARE ALLOWED ACCORDINGLY. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUND: WHETHER THE LD. CIT(A) WAS CORRECT IN DIRECTING THE A.O. TO RECOMPUTED THE DISALLOWANCE AND TO RESTRICT THE DISALLOWANCE AS PER THE DIRECTION OF THE CIT(A) GIVEN IN EARLIER ASSESSMENT YEARS IN THE ASSESSEES OWN CASE? WHETHER HE WAS CORRECT IN FURTHER DIRECTING THAT SUCH ORDER OF THE ASSESSING OFFICER BE REVERSED IF THE ORDERS OF THE EARLIER ASSESSMENT YEARS OF THE LD. CIT(A) ARE ALSO REVERSED OR MODIFIED? 6. AT THE TIME OF HEARING FIXED TODAY, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE, AN APPLICATION FILED BY THE ASSESSEE DATED 04.05.2018, HOWEVER, IS PLACED ON RECORD WHEREBY THE ASSESSEE HAS SOUGHT ADJOURNMENT ON THE GROUND THAT THE PERSON WHO LOOKS AFTER THE TAXATION MATTER IS NOT COMING TO THE OFFICE DUE TO ILL HEALTH. THE SAID APPLICATION, HOWEVER, IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE IN THE FORM OF MEDICAL CERTIFICATE. NONE IS ALSO PRESENT IN THE COURT ON BEHALF OF THE ASSESSEE TO EXPLAIN THE SUFFICIENCY OF REASONS GIVEN IN THE APPLICATION FOR SEEKING ADJOURNMENT. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS SOUGHT ADJOURNMENT EVEN ON THE EARLIER OCCASIONS ON ONE PRETEXT OR THE OTHER. THE REQUEST OF THE ASSESSEE FOR ADJOURNMENT IS, THEREFORE, REJECTED AND THIS APPEAL OF THE REVENUE IS BEING DISPOSED OF EX-PARTE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LEARNED DR AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE DISALLOWANCE UNDER SECTION 14A WAS ORIGINALLY MADE BY THE A.O. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) AND THE SAME WAS MERELY REPEATED BY HIM IN THE 4 I.T.A. NO. 2242/KOL/2016 ASSESSMENT YEARS 2010-11 M/S. NAGREEKA SYNTHETICS PVT. LTD. ASSESSMENT COMPLETED UNDER SECTION 147/143(3) OF THE ACT. IN THE APPEAL FILED AGAINST THE ORDER ORIGINALLY PASSED UNDER SECTION 143(3), THE DISALLOWANCE MADE UNDER SECTION 14A WAS CHALLENGED BY THE ASSESSEE AND THE SAME WAS DECIDED BY THE LD. CIT(A) VIDE HIS SEPARATE APPELLATE ORDER PASSED WHILE DISPOSING OF THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER UNDER SECTION 143(3). KEEPING IN VIEW THE SAME, THE LIMITED PRAYER THAT THE ASSESSEE MADE BEFORE THE LD. CIT(A) DURING THE COURSE OF HEARING OF HIS APPEAL AGAINST THE ORDER UNDER SECTION 147/143(3) WAS THAT THE A.O. SHOULD BE DIRECTED TO RE- COMPUTE THE DISALLOWANCE UNDER SECTION 14A AS PER THE EARLIER ORDER OF THE LD. CIT(A) PASSED ON THE SIMILAR ISSUE WHILE DISPOSING OF HIS APPEAL AGAINST THE ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3). THE LD. CIT(A) ACCEPTED THIS PRAYER OF THE ASSESSEE AND DIRECTED THE A.O. TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A ACCORDINGLY. IN OUR OPINION, WHEN THE DISALLOWANCE UNDER SECTION 14A WAS ORIGINALLY MADE BY THE A.O. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) AND THE SAME WAS MERELY REPEATED IN THE ASSESSMENT UNDER SECTION 147/143(3), THE ISSUE RELATING TO THE SAID DISALLOWANCE WAS REQUIRED TO BE DECIDED ON MERIT BY THE LD. CIT(A) IN THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER UNDER SECTION 143(3) AND WHEN THE SAME WAS ACTUALLY DECIDED BY HIM AS SUCH ON MERIT, THE RE-COMPUTATION OF DISALLOWANCE UNDER SECTION 14A AS PER THE SAID DECISION WAS REQUIRED TO BE SIMPLY FOLLOWED BY THE A.O. DURING THE PROCEEDINGS UNDER SECTION 147/143(3) AS A NECESSARY COROLLARY. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING SUCH A DIRECTION TO THE A.O. ACCORDINGLY AND EVEN THE LEARNED DR HAS NOT BEEN ABLE TO RAISE ANY MATERIAL CONTENTION TO DISPUTE THIS POSITION. 5 I.T.A. NO. 2242/KOL/2016 ASSESSMENT YEARS 2010-11 M/S. NAGREEKA SYNTHETICS PVT. LTD. WE, ACCORDINGLY, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MAY, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/05/2018 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. M/S. NAGREEKA SYNTHETICS PVT. LTD., 18, R.N. MUKHERJEE ROAD, JAIN CHAMBER, 6 TH FLOOR, KOLKATA 700 001. 2. ACIT CIR 10(2), P-7, CHOWRINGHEE SQUARE, 3 RD FLOOR, KOLKATA 700 069. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA