Mr. Ajay Chawla, New Delhi V. CIT, New Delhi

ITA 2695/DEL/2013

• Counselvise Citation: 269520114 RSA 2013
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A MISRA
• Assessee Lawyers: A K KHURANA
• Section: 263

Judgement Text

ITA NO.2695/DEL/2013 ASSTT.YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI R.P. TOLANI, JUDICIAL MEMBER I.T.A.NO.2695/DEL/2013 ASSESSMENT YEAR : 2008-09 AJAY CHAWLA, VS COMMISSIONER OF INCOME TAX, H-11, LAJPAT NAGAR-II, NEW DELHI. NEW DELHI. (PAN: AADPC8524N) (APPELLANT) (RESPONDENT ) APPELLANT BY: SHRI A. K. KHURANA RESPONDENT BY : SHRI A. MISRA, C.I.T. DR O R D E R PER R.P. TOLANI, J.M. IN THIS APPEAL, THE ASSESSEE CHALLENGES THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(A)-XI, NEW DELHI U/S 263 HOLDING THE IMPUGNED ORDER OF ASSESSMENT AS ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF REVENUE AND SETTING ASIDE THE FOLLOWING ISSUES:- A) TO RECALCULATE THE DISALLOWANCE OF THE PROPORTIONAT E EXPENSES AS PER RULE 8D OF THE INCOME TAX RULES. B) TO DISALLOW THE REBATE OF SECURITIES TRANSACTION TA X AS THE ASSESSEE HAS NOT FURNISHED THE REQUIRED EVIDENCE. ITA NO.2695/DEL/2013 ASSTT.YEAR: 2008-09 2 2. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE I MPUGNED ASSESSMENT WAS FRAMED U/S 143(3). DURING THE ASSESSMENT, LD. ASSESSING OFFICER CALLED FOR REQUISITE DETAILS ABOUT THE SUO MOTO DISALLOWAN CE OF RS.50,000/- MADE BY THE ASSESSEE U/S 14A. AFTER DUE VERIFICATION THERE OF, THE ASSESSING OFFICER MADE NET ADDITION AMOUNTING TO RS.1,25,000/-. THIS CLEARLY DEMONSTRATES THAT THE ASSESSING OFFICER APPLIED HIS MIND AND PAS SED THE ORDER IN QUESTION KEEPING IN VIEW THE PROVISIONS OF RULE 8D. REFEREN CE WAS INVITED TO THE WRITTEN SUBMISSIONS FILED BEFORE THE ASSESSING OFFI CER IN WHICH DUE EXPLANATION IN THIS BEHALF VIDE LETTER DATED 25.11. 2010 IN WHICH DETAIL OF AVERAGE OF INVESTMENT AND AVERAGE OF ASSETS AS PER RULE 8D OF THE INCOME TAX RULES ARE CLAIMED TO BE ENCLOSED. ON A QUERY F ROM THE BENCH, LD. COUNSEL FOR THE ASSESSEE COULD NOT SHOW US THE WORK ING OF AVERAGE OF INVESTMENT AND AVERAGE OF ASSETS IN TERMS OF RULE 8 D FROM THE RECORD. BESIDES, ON THE SECOND ISSUE OF EVIDENCE OF PAYMENT OF SECURITY TRANSACTION TAX IN PRESCRIBED FORM ALSO, THE LD. COUNSEL FOR TH E ASSESSEE COULD NOT SHOW IT FROM THE RECORD. LD. COUNSEL RELIED ON THE JUDGMEN T OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS COMMISSIONER OF INCOME TAX 243 ITR 83 AND COMMISSIONER OF INCOME TAX VS AR VIND JEWELLERS 259 ITR 502 (GUJ) FOR THE PROPOSITION THAT WHEN THE ASS ESSING OFFICER HAS INQUIRED INTO THE MATTER AND TAKEN A VIEW, THE SAME CANNOT BE HELD TO BE ITA NO.2695/DEL/2013 ASSTT.YEAR: 2008-09 3 ERRONEOUS AS THE ORDER OF ASSESSING OFFICER IS SUST AINABLE AND TAKING ONE OF THE POSSIBLE VIEWS DOES NOT MAKE ASSESSMENT ORDER E RRONEOUS. FURTHER RELIANCE IS PLACED ON THE FOLLOWING DECISIONS:- I) COMMISSIONER OF INCOME TAX VS DLF LTD.(2013) 350 IT R 555(DEL) II) COMMISSIONER OF INCOME TAX VS DEVELOPMENT CREDIT BA NK LTD. (2010) 40 DTR (BOM) 61 III) COMMISSIONER OF INCOME TAX VS MAX INDIA LTD. (2007) 295 ITR 282 IV) UMA CHARAN & SHAH BROS VS COMMISSIONER OF INCOME TA X 37 TR 271(SC) 3. LD. DR, ON THE OTHER HAND, CONTENDS THAT RULE 8D HAS A SPECIFIC MECHANISM AND METHODOLOGY TO ARRIVE AT THE PROPORTI ONATE DISALLOWANCE BASED ON COST OF AVERAGE INVESTMENT AND ASSETS. ON A QUERY RAISED BY THE BENCH, LD. COUNSEL OF THE ASSESSEE COULD NOT SHOW H OW THE SAME WAS WORKED OUT. IN THIS SITUATION, THE ONLY LEGAL COURSE LEFT BY THE ASSESSING OFFICER WAS TO GIVE A WORKING OF RULE 8D AND NOT RESORT TO ANY ESTIMATED DISALLOWANCE. IN THE ABSENCE OF RELEVANT DETAILS AND STATUTORY WO RKING, THE VIEW TAKEN BY THE ASSESSING OFFICER BEING AGAINST THE EXPRESS PRO VISION OF RULE 8D BECOMES PATENTLY ERRONEOUS. APROPOS THE SECURITY T RANSACTION TAX ISSUE ALSO, THE BENEFIT CANNOT BE GIVEN UNLESS THE ASSESSEE PRO DUCES RELEVANT EVIDENCE. ANY RELIEF WITHOUT BRINGING EVIDENCE ON RECORD AND DUE VERIFICATION THEREOF, ALSO BECOMES ILLEGAL AND ERRONEOUS. THEREFORE, THE CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSESSEE DO NOT MAKE IT A CASE OF O NE OF THE POSSIBLE VIEWS ITA NO.2695/DEL/2013 ASSTT.YEAR: 2008-09 4 INASMUCH AS THE VIEW ADOPTED ON FACT OF IT IS ERRON EOUS AND THEY ARE PREJUDICIAL TO THE INTEREST OF REVENUE. ONCE THESE TWO FACTORS ARE THERE ON RECORD, ACTION OF THE COMMISSIONER OF INCOME TAX(A) IS JUSTIFIED IN RECOMPUTING OF SECTION 263 OF THE ACT. BESIDES, LD . COMMISSIONER OF INCOME TAX(A) HAS NOT REVERSED THE ORDER OF ASSESSI NG OFFICER BUT AS AN EXERCISE OF DISCRETION HAS DIRECTED THE ASSESSING O FFICER TO RE-DECIDE THE ISSUE AFTER PROPER VERIFICATION. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND MERIT IN THE WORKING OF LD. DR. QUA THE QU ERIES RAISED BY THE BENCH, COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRA TE ANY AVERAGE INVESTMENT AND AS MANDATED BY RULE 8D IN SPECIFIC T ERMS. BESIDES, THE SECURITY TRANSACTION TAX ISSUE ALSO, THE RELIEF APP EARS TO HAVE BEEN GIVEN WITHOUT THERE BEING ANY EVIDENCE ON RECORD WHICH IS NOT PRODUCED BEFORE US ALSO DESPITE SPECIFIC QUERY. UNDER THESE FACTS AND CIRCUMSTANCES, WE SEE NO INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TA X(A) U/S 263. WE UPHOLD THE SAME. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ITA NO.2695/DEL/2013 ASSTT.YEAR: 2008-09 5 ORDER PRONOUNCED IN THE OPEN COURT ON 28.3.2014. SD/- SD/- (G.D. AGRAWAL) (R.P. TOLANI) VICE PRESIDENT JUDICIAL MEMBER DT. 28TH MARCH 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR