M/s. Aakash Gases Pvt. Ltd., Vadodara V. The Income Tax Officer, Ward-1(1)(1), Baroda

ITA 225/AHD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0147 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-08-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Retrospective amendment; Additional evidence; Fair market value
• Section: 143(3)

Judgement Text

I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 225 /A HD/ 20 1 6 ASSESSMENT Y EAR : 20 12 - 13 AAKASH GASES PVT. LTD. ..... ...... . ... . APPELLANT C - 117, SUN PLAZA COMPLEX, MAKARPURA GIDC ROAD, VADO DARA 390 019. [ PAN: AA ACE 8486 B ] VS. INCOME TAX OFFICER , WARD 1(1)(1), BARODA . ............... . RESPONDENT APPEARANCES BY: MANISH J. SHAH FOR THE APPELLANT SATISH SOLANKI FOR THE RESPONDENT D ATE OF CONC LUDING THE HEARING : 0 4 .0 8 .2016 DATE OF PRONOUNCING THE ORDER : 28 .10.2016 O R D E R 1. BY THIS APPEAL, THE ASSESSEE HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 12.11.2015, PASSED BY THE LEARNED CIT(A), IN THE MATTER OF ASSESSMENT UND ER SECTION 143(3) OF THE INCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 2012 - 13. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. THE LEARNED C.I.T.(APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSE OF RS.2,74,175 / - PAID TO NON BANKING FINANCIAL COMPANY U/S 40(A)(IA) OF THE IT ACT, 1961 DUE TO NON DEDUCTION OF TDS. YOUR APPELLANT SUBMITS THAT M/S TATA CAPITAL LTD. HAS PAID TAX ON THE INTEREST AMOUNT PAID TO THEM WHICH IS EVIDENT FROM THE CERTI FICATE ISSUED BY THE CHARTERED ACCOUNTANT OF M/S. TATA CAPITAL LTD. AND THEREFORE, NO TDS IS REQUIRED TO BE DEDUCTED ON INTEREST EXPENSE OF RS.2,74,175 / - . IT IS SUBMITTED THAT IT BE SO HELD NOW. I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 2 OF 7 3. SO FA R AS THIS GROUND OF APPEAL IS CONCERNED, IT IS SUFFI CIENT TO TAKE NOTE OF THE FACT THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) WAS MADE ON THE GROUND THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM CERTAIN NBFC (I.E. NON - BANKING FINANCIAL INSTITUTIONS). THE DISALLOWANCE WAS CONFIRMED IN APPEAL BUT T H IS ISSUE, AS LEARNED REPRESENTATIVES FAIRLY AGREE, IS NOW COV E RED, IN FAVOUR OF THE ASSESSEE, BY A DIVISION BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF RKP & CO . VS. I TO (ITA NO.106/RPR/2016, ORDER DATED 24.06.2016) WHICH, INTER ALIA, HOLDS AS FOLLOWS : - 4. WE FIND THAT HON BLE DELHI HIGH COURT HAS SPECIFICALLY APPROVED THE STAND TAKEN BY A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF RAJEEV KUMAR AGARWAL VS ACIT [(2014) 149 ITD 363 (AGRA)] , AND UPHELD THE ACTION OF THE TRIBUNAL IN FOLLOWING THE SA ME. 9. . NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIV E AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISIO N WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN INTENDED CONSEQUENCE TO PUNISH THE ASSESSEES FOR NON DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECL ARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004. 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CARRYING OUT NECESSARY VERIFICATIONS REGARDING RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENTS IN COMPUTATION OF THEIR INCOME, REGARDING PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND REGARDING FILING OF THE RELATED INCOME TAX RETURNS BY THE RECIPIENTS. WHILE GIVING EFFECT TO THESE DIRECTIONS, THE ASSESSING OFFICER SHALL GIVE DUE AND FAIR OPPORTUNITY OF HEARING T O THE ASSESSEE, DECIDE THE MATTER IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 3 OF 7 5. IN EFFECT THUS, THEIR LORDSHIPS HAVE APPROVED THE ACTION OF THE TRIBUNAL IN REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECT ION TO ASCERTAIN WHETHER THE RECIPIENT HAS TAKEN INTO ACCOUNT RELATED PAYMENTS INTO COMPUTATION OF HIS INCOME AND OFFERING THE SAME TO TAX, AND, IF SO, DELETE THE DISALLOWANCE UNDER SECTION 40(A)(IA) IN RESPECT OF THE SAME. 6. WHEN, HOWEVER, WE ASKED TH E LEARNED DEPARTMENTAL REPRESENTATIVE AS TO WHY WE SHOULD ALSO NOT REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH THE SAME DIRECTIONS, HE, ALONGWITH HIS SENIOR COLLEAGUE SHRI DARHAN SINGH, WHO HAPPENS TO BE THE CIT(A) AUTHORING THE IMPUGNED OR DER AND WHO WAS ON DUTY AS CIT(DR) BEFORE US, HAD THREE POINTS TO MAKE - FIRST, THAT THERE ARE DECISIONS IN SUPPORT OF THE STAND OF THE ASSESSING OFFICER S STAND, BY WAY OF HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT VS CIT [(2 015) 63 TAXMANN.COM 99 (KERALA)] ; SECOND, THAT EVEN IF INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) CAN BE CONSTRUED AS RETROSPECTIVE IN EFFECT, THE CORRESPONDING RULE IN THE INCOME TAX RULES 1962 IS NOT, AND HAS NOT BEEN HELD TO BE, RETROSPECTIVE, AND THE SECOND PROVISO TO SECTION 40(A)(IA) CANNOT, THEREFORE, BE GIVE RETROSPECTIVE EFFECT; AND, THIRD, THAT THERE IS NO DECISION ON THIS ISSUE BY HON BLE JURISDICTIONAL HIGH COURT AND, AS SUCH, THE STAND OF THE ASSESSING OFFICER CANNOT BE FAULTED. 7. AS FO R HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA), UNDOUBTEDLY, OUTSIDE THE JURISDICTION OF HON BLE KERALA HIGH COURT AND OUTSIDE THE JURISDICTION OF HON BLE DELHI HIGH COURT - WHICH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THERE ARE CONFLICTING DECISIONS ON THE ISSUE OF RESTROSPECTIVITY OF SECOND PROVISO TO SECTION 40(A)(IA). IT IS THUS EVIDENT THAT VIEWS OF THESE TWO HIGH COURTS ARE IN DIRECT CONFLICT WITH EACH OTHER. CLEARLY, THEREFORE, THERE IS NO MEETING GROUND BETWEEN THESE TWO JUDGMENTS. THE DIFFICULTY ARISES AS TO WHICH OF THE HON BLE NON JURISDICTIONAL HIGH COURT IS TO BE FOLLOWED BY US IN THE PRESENT SITUATION. IT WILL BE WHOLLY INAPPROPRIATE FOR US TO CHOOSE VIEWS OF ONE OF THE HIGH COURTS BASED ON OUR PE RCEPTIONS ABOUT REASONABLENESS OF THE RESPECTIVE VIEWPOINTS, AS SUCH AN EXERCISE WILL DE FACTO AMOUNT TO SITTING IN JUDGMENT OVER THE VIEWS OF THE HIGH COURTS SOMETHING DIAMETRICALLY OPPOSED TO THE VERY BASIC PRINCIPLES OF HIERARCHICAL JUDICIAL SYSTEM. WE HAVE TO, WITH OUR HIGHEST RESPECT OF BOTH THE HON BLE HIGH COURTS, ADOPT AN OBJECTIVE CRITERION FOR DECIDING AS TO WHICH OF THE HON BLE HIGH COURT SHOULD BE FOLLOWED BY US. WE FIND GUIDANCE FROM THE JUDGMENT OF HON BLE SUPREME COURT IN THE MATTER OF CIT VS . VEGETABLE PRODUCTS LTD. [(1972) 88 ITR 192 (SC)] . HON BLE SUPREME COURT HAS LAID DOWN A PRINCIPLE THAT 'IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED'. THIS PRINCIPLE HAS BEEN CONSISTENTLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY THE HON BLE SUPREME COURT ITSELF. IN ANOTHER SUPREME COURT JUDGMENT, PETRON ENGG. CONSTRUCTION (P) LTD. & ANR. VS. CBDT & ORS. (1988) 75 CTR (SC) 20 : (1989) 175 ITR 523 (SC), IT HAS BEEN RE ITERATED THAT THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND THERE IS NO DOUBT ABOUT THAT. HON BLE SUPREME COURT HAD, HOWEVER, SOME OCCASIONS TO DEVIATE FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TAXING STATUTE WHICH CAN BE CONSTRUED AS EXCEPTION S TO THIS GENERAL RULE. IT HAS BEEN HELD THAT THE RULE OF RESOLVING AMBIGUITIES IN FAVOUR OF TAX - PAYER DOES NOT APPLY TO DEDUCTIONS, EXEMPTIONS AND EXCEPTIONS WHICH ARE ALLOWABLE ONLY WHEN PLAINLY AUTHORISED. THIS EXCEPTION, LAID DOWN IN LITTMAN VS. BARRON 1952(2) AIR I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 4 OF 7 393 AND FOLLOWED BY APEX COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. VS. DY. COMMR. OF CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS. CCE & C 1994 (73) ELT 769 (SC ), HAS BEEN SUMMED UP IN THE WORDS OF LORD LOHEN, 'IN CASE OF AMBIGU ITY, A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF A TAX - PAYER DOES NOT APPLY TO A PROVISION GIVING TAX - PAYER RELIEF IN CERTAIN CASES FROM A SECTION CLEARLY IMPOSING LIABILITY'. THIS EXCEPTION, IN THE PRESENT CASE, HAS NO APPLICATION. THE RULE OF RESOL VING AMBIGUITY IN FAVOUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE THE INTERPRETATION IN FAVOUR OF ASSESSEE WILL HAVE TO TREAT THE PROVISIONS UNCONSTITUTIONAL, AS HELD IN THE MATTER OF STATE OF M.P. VS. DADABHOY S NEW CHIRMIRY PONRI HILL COLLIERY CO. LTD. AIR 1972 (SC) 614 . THEREFORE, WHAT FOLLOWS IS THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE AND LOOKING TO THE NATURE OF THE PROVISIONS WITH WHICH WE ARE PRESENTLY CONCERNED, THE VIEW EXPRESSED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK (SUPRA), WHICH IS IN FAVOUR OF ASSESSEE, IS REQUIRED TO BE FOLLOWED BY US. REVENUE DOES NOT, THEREFORE, DERIVE ANY ADVANTAGE FROM HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA). 8. THE SECOND ISSUE IS WITH RESPECT TO TH E SECOND PROVISO TO SECTION 40(A)(IA) BEING HELD TO BE RETROSPECTIVE, WITHOUT CORRESPONDING ENABLING PROVISION IN THE RULES BEING HELD TO BE RETROSPECTIVE. THAT IS A HYPER TECHNICAL ARGUMENT AND TOO PEDANTIC AN APPROACH. THE SECOND PROVISO TO SECTION 40(A) (IA) WAS HELD TO BE RETROSPECTIVE IN IN THE CONTEXT OF FINDING SOLUTION TO THE PROBLEM TO THE TAXPAYER, AND THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS ABOUT FACTUAL VERIFICATIONS ON THE RECIPIENT HAVING INCLUDED T HE SAME IN THE RECEIPTS BASED ON WHICH TAXABLE INCOME IS COMPUTED, AND THE INCOME HAVING BEEN OFFERED TO TAX. IT IS THIS ACTION OF THE COORDINATE BENCH THAT WAS UPHELD BY THE TRIBUNAL AND THE COURSE OF ACTION SO ADOPTED BY THE COORDINATE BENCH APPROVED BY THEIR LORDSHIPS. IT IS IMPERMISSIBLE TO PICK UP ONE OF THE ASPECTS OF THE DECISION OF THE JUDICIAL AUTHORITY AND READ THE SAME IN ISOLATION WITH OTHER ASPECTS. THE DECISION IS NOT ON THE RETROSPECTIVITY OF THE PROVISO ALONE, ITS ALSO ON DELETION OF DISALLO WANCE IN THE EVENT OF THE RECIPIENT HAVING TAKEN INTO ACCOUNT THESE RECEIPTS IN THE COMPUTATION OF INCOME. THE JUDGE MADE LAW IS AS BINDING ON THE AUTHORITIES BELOW AS IS THE LEGISLATED STATUE. THE HYPER TECHNICAL STAND OF THE DEPARTMENTAL REPRESENTATIVES, THEREFORE, DOES NOT MERIT OUR APPROVAL. 9. AS REGARDS LACK OF GUIDANCE FROM HON BLE JURISDICTIONAL HIGH COURT, THAT CAN NOT BE REASON ENOUGH TO DISREGARD THE DECISIONS FROM NON - JURISDICTIONAL HIGH COURTS. HON BLE COURTS ABOVE, BEING A HIGHER TIER OF THE JUDICIAL HIERARCHY, BIND THE LOWER FORUMS NOT ONLY IN THE JURISDICTION OF RESPECTIVE HIGH COURTS, BUT UNLESS, THERE IS ANYTHING CONTRARY THERETO BY THE JURISDICTIONAL HIGH COURTS, OTHER JURISDICTIONS AS WELL. THERE CANNOT BE ANY DISPUTE ON THE FUNDAMENTAL PROPOSITION THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE, BETTER WISDOM OF THE COURT BELOW HAS TO YIELD TO HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE WE HAVE TO HUMBLY BOW BEFORE THE VIEWS EXPRESSED BY HON BLE COURTS ABOVE. SUCH A HIGH COURT BEING A NON - JURISDICTIONAL HIGH COURT DOES NOT ALTER THE POSITION AS LAID DOWN BY HON BLE BOMBAY HIGH COURT IN THE MATTER OF CIT VS. GODAVARI DEVI SARAF ([1978) 113 ITR 589 (BOM)] AND AS ANALYSED BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V S AURANGABAD HOLIDAY RESORTS PVT LTD [(2009) 118 ITD 1 (PUNE)] . I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 5 OF 7 10. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED VERIFICATION ON THE ASPECT AS TO WHETHER RECIPIENT OF PAYMENT HAS INCLUDED THE SAME IN HIS COMPUTATION OF BUSINESS INCOME OFFERED TO TAX, AND, IF FOUND TO BE SO, DELETE THE DISALLOWANCE IN QUESTION. WITH THESE DIRECTIONS, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 4. IN THIS VIEW OF THE MATTER, I DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE A SSESSING OFFICER FOR FACTUAL VERIFICATION ON THE SAME LINES, AND, IN THE EVENT OF RECIPIENT ACTUALLY HAVING PAID DUE TAXES, DELETE THE DIS ALLOWANCE. I ORDER SO. 5. GROUND NO.1 IS THUS ALLOWED FOR STATISTICAL PURPOSES IN THE ABOVE TERMS. 6. IN GROUND NO.2, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: 2. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EX PENSE OF RS.59,176/ - OUT OF TOTAL INTEREST EXPENSE OF RS.6,24,709/ - CONSIDERING THAT NO EXPLANATION WAS GIVEN FOR SUBMITTING THE ADDITIONAL EVIDENCE FOR THE SAME. YOUR APPELLANT SUBMITS THAT SAID AMOUNT WAS GIVEN AS MERE ADVANCE WHICH IS EVIDENT FROM CONFI RMATION FROM M/S. SHREEJI CHEMICALS AND THEREFORE IT IS SUBMITTED THAT THE DISALLOWANCE BE WAIVED NOW. 7. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED INTEREST PAYMENT TO THE EXTENT OF RS.59,176/ - ON THE GROUND THAT IT RELATE TO INTEREST FREE ADVANCES TO SHREEJI ASSOCIATES, FOR NON - BUSINESS PURPOSES, WHILE ASSESSEE IS PAYING INTEREST ON LOANS. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. NOT SATISFIED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE ME. 8. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 9. I FIND THAT THE ASSESSEE HAS SHARE CAPITAL AND RESERVE AND SU RPLUS, AGGREGATING TO RS.84.42 LAKHS. AS SUCH, THE PRESUMPTION HAS TO BE THAT AMOUNT WAS ADVANCED OUT OF INTEREST FREE FUNDS, EVEN IF IT WAS NON BUSINESS USE. IN THIS VIEW OF THE MATER, AND I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 6 OF 7 FOLLOWING HON BOMBAY HIGH COURT DECISION IN THE CASE OF CIT S RE LIANCE UTILITIES AND POWER LIMITED [(2009) 313 ITR 340 (BOM)], I DELETE THE IMPUGNED DISALLOWANCE OF INTEREST OF RS.59,176/ - . 10. GROUND NO.2 IS THUS ALLOWED. 11. IN GROUND NO.3, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE : - 3. THE LEARNED C.I.T. (AP PEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE U/S 40A(2)(B) OF THE IT ACT OF RS.4,06,200/ - TOWARDS SALARY CONSIDERING IT TO BE EXCESSIVE IN NATURE. YOUR APPELLANT SUBMITS THAT SAID AMOUNT TOWARDS SALARY WAS REASONABLE COMPARED TO THE FAIR MARKET VALUE IN ACCORDANCE WITH SECTION 40A(2)(B) OF THE IT ACT, 1961 AND THEREFORE IT IS SUBMITTED THAT THE DISALLOWANCE BE WAIVED NOW. 12. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER NOTICED THAT THE ASSESSEE HAS PAID SALARIES OF RS.3, 15,400/ - TO THREE ELDERLY LADIES WHO WERE CLOSE RELATED TO THE DIRECTORS. THE ASSESSING OFFICER WAS OF THE VIEW THAT, GIVEN THE NATURE OF SERVICES PERFORMED BY THESE LADIES, ANNUAL SALARIES OF RS.1,80,000/ - WOULD HAVE BEEN REASONABLE. THE BALANCE AMOUNT WAS DISALLOWED. THE ASSESSEE DID NOT RAISE ANY GRIEVANCE AGAINST THE AFORESAID DISALLOWANCE BEFORE THE LEARNED CIT(A), AND YET THE ASSESSEE IS IN APPEAL BEFORE ME IN THIS ISSUE AS WELL. 13. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECOR D AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 14. I FIND THAT THE BASIC CONTENTION OF THE ASSESSEE IS THAT IT WAS AN INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE NOT TO HAVE RAISED GRIEVANCE BEFORE THE LEARNED CIT(A) AND HE NOW SEEKS ADJUDICATION, ON MERITS, ON THIS ISSUE. ON MY CONSIDERED VIEW, IT WOULD NOT BE APPROPRIATE TO TAKE UP THE MATTER ON MERITS DIRECTLY AT THIS STAGE. I , THEREFORE , REMIT THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE I.T.A. NO . 2 25 /AHD/201 6 A SSESSMENT Y EAR: 20 12 - 13 PAGE 7 OF 7 NOVO IN THE LIGHT OF SUBMISSIONS OF THE ASSESSEE, IN ACCORDANCE WITH THE LAW AND AFTER GIVING YET ANOTHER OPPORTUNITY OF HEARING. I ORDER SO. 15. GROUND NO.3 IS THUS ALLOWED FOR STATISTICAL PURPOSES. 16. GROUND NO S .5 & 6 DO NOT CALL FOR ANY ADJUDICATIO N BY ME, AND ARE DISMISSED AS SUCH. 17. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 28 TH DAY OF OCTOBER , 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 28 TH DAY OF OCTOBER , 2016. 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 AHMEDABA D BENCHES, AHMEDABAD