Commercial Body Builders, Kanpur V. Astt. Commissioner of Income Tax-II, Kanpur

ITA 249/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1110 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 17-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 249/LKW/2017 ASSESSMENT YEAR: 2005 - 06 COMMERCIAL BODY BUILDERS 84/105, G.T. ROAD KA NPUR V. ASSTT. CIT - II KANPUR T AN /PAN : AABFC3001A (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI RAJIV KUMAR, D.R. DATE OF HEARING: 07 02 201 8 DATE OF PRONOUNCEMENT: 12 0 2 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - I, KANPUR DATED 16/1/2017. 2 . AS PER THE GROUNDS OF APPEAL RAISED BEFORE US, THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS MADE ADDITION BY APPL YING THE PROVISIONS OF SECTION 14A OF THE ACT WHEREAS THE LD. CIT(A) IN HIS ORDER HAS STATED THAT SECTION 14A OF THE ACT SHOULD NOT HAVE BEEN APPLIED AND INSTEAD MADE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT WITHOUT GIVING ANY NOTICE TO THE ASSESSE E TO SUBSTANTIATE ASSESSEES SUBMISSION. 3 . THE FACTS THAT TRANSPIRES FROM THE ORDER OF THE LD. CIT(A) IS THAT ASSESSEE HAS MADE TOTAL INVESTMENT OF RS. 2,20,05,128/ - INCLUSIVE OF AMOUNT OF RS. 56,00,000/ - AND HAS CLAIMED THAT HE HAS MADE INVESTMENT ITA NO.249/LKW/2017 PAGE 2 OF 3 OF RS.56 LA KHS OUT OF COMMISSION AND, THEREFORE, THIS AMOUNT SHOULD ALSO BE INCLUDED IN THE CALCULATION. THE LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS BORROWED FUNDS IN THE COMPANY WITH THE OBJECTIVE TO REDUCE THE BORROWING AND NOT TO PASS THIS FUND TO SIS TER CONCERN FREE OF COST. THEREAFTER , THE LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS WRONGLY DISALLOWED THIS AMOUNT UNDER SECTION 14A AND IN FACT IT IS COVERED BY THE PROVISIONS OF SECTION 36(1)(III). ACCORDINGLY, HE ENHANCED THE AMOUNT OF DISALL OWANCE FROM RS.17,11,035/ - MADE UNDER SECTION 14A OF THE ACT TO RS.30,55,360/ - BY APPLYING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT. 4 . AT THE TIME OF HEARING BEFORE US, THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE ASSESSING OFFICER HAS MADE ADDITION UNDER SECTION 14A OF THE ACT AND THE LD. CIT(A) WAS OF THE VIEW THAT ADDIT I ON UNDER SECTION 14A WAS WRONG AND THE REFORE HE RESORTED TO THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT AND DISALLOWANCE OF RS.17,11,035/ - WAS ENHANCED TO THE ENTIRE I NTEREST PAYMENT OF RS.30,55,360/ - FOR MAKING INVESTMENT IN SHARES WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE TO REBUT THIS ADDITION BEFORE THE LD. CIT(A) . T HE LD. A.R. OF THE ASSESSEE FURTHER SUBMITTED THAT THERE BEING VIOLATION OF THE NATURAL JUST ICE, THE ADDITION SHOULD NOT BE SUSTAINED. 5 . THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE FACTS & CIRCUMSTANCES OF THE CASE, HEARD THE RIVAL CONTENTIONS AND WE FIND THAT T HE ADDITIO N MADE BY THE ASSESSING OFFICER PERTAINS TO APPLICABILITY OF SECTION 14A WHEREAS THE LD. CIT(A) IN HIS ORDER HAS MADE DISALLOWANCE BY APPLYING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT WITHOUT PROVIDING OPPORTUNITY TO PUT FORTH THE SUBMISSION S ON BEHALF OF THE ITA NO.249/LKW/2017 PAGE 3 OF 3 ASSESSEE REGARDING THE SAID PROVISION , THERE FORE, THERE HAS BEEN VIOLATION OF NATURAL JUSTICE AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE TO DECIDE THE ISSUE AFRESH AFTER GIVING OPPORTU NITY OF HEARING TO THE ASSESSEE. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 / 0 2 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE D: 12 TH FEBR UARY , 201 8 JJ: 0702 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR