N H SECURITIES LTD, MUMBAI V. ASST CIT CEN CIR 40, MUMBAI

ITA 2701/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0576 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 21-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 20-04-2012
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Assessee Lawyers: R S KHANDELWAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 2701 /MUM/20 12 (ASSESSMENT YEAR 20 03 - 04 ) NH SECURITIES LIMITED BHUPEN CHAMBERS GROUND FLOOR 9, DALAL STREET, FORT MUMBAI - 400 023. VS. ACIT CC - 40 MUMBAI. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACS7140Q ASSESSEE BY SHRI R.S. KHANDELWAL & SHRI NEELKANTH KHANDELWAL DEPARTMENT BY DR. P. DANIEL DATE OF HEARING 12.4 . 201 7 DATE OF PRONOUNCEMENT 02 . 6 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 17.12.2012 PASSED BY THE LEARNED CIT(A) - 36, MUMBAI AND IT RELATES TO A.Y. 2003 - 04. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE PE NALTY OF ` 2.10 CRORES LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL LOSS OF ` 17.32 CRORES. THE ASSESSIN G OFFICER MADE FOLLOWING DISALLOWANCES: - A) DISALLOWANCE OF SHARES TRADING LOSS : ` 90,87,575/ - B) DISALLOWANCE OF INTEREST EXPENDITURE : ` 4,80,00,000/ - TOTAL : ` 5,70,87,575/ - BOTH DISALLOWANCES WERE CONFIRMED BY THE LEARNED CIT(A) AND H ENCE THE ASSESSING OFFICER HAS PASSED THE ORDER U/S. 271(1)(C) OF THE ACT LEVYING PENALTY NH SECURITIES LIMITED 2 OF ` 210 LAKHS ON THE ABOVE SAID DISALLOWANCES. THE LEARNED CIT(A) CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. LEARNED AR SUBMITTE D THAT THE ADDITION RELATING TO SHARE TRADING LOSS OF ` 90,87,575/ - HAS SINCE BEEN RESTORED BACK BY THE TRIBUNAL , VIDE ITS ORDER DATED 2.8.2013 PASSED IN ITA NO. 2784/MUM/2008. LEARNED AR ALSO FURNISHED A COPY OF THE ORDER PASSED BY THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS. 4. WE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICED THAT THE ISSUE RELATING TO DISALLOWANCE OF ` 90,87,575/ - RELATING TO SHARE TRADING LOSS HAS BEEN DISCUSSED BY THE TRIBUNAL IN PARA 3 TO 5 OF I T S O RDER AND SAID ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER. SINCE THE ADDITION HAS BEEN RESTORED BACK TO THE LEARNED CIT(A), PENALTY LEVIED THEREON SHALL NOT SURVIVE. HOWEVER, THE ASSESSING OFFICER IS AT LIBERTY TO DECIDE ABOUT THE PENALTY, IF ANY, LEVIABLE THEREON IN THE SET ASIDE PROCEEDINGS. 5. NEXT ISSUE RELATES TO PENALTY LEVIED ON DISALLOWANCE OF INTEREST EXPENDITURE OF ` 4.80 CRORES. THE ASSESSEE CLAIMED INTEREST EXPENDITURE OF ` 1565.26 LAKHS AND ` 8.58 LAKHS IN RESPECT OF LOANS OB TAINED FROM MADHAVPURA MERCANTILE COOPERATIVE BANK LTD., CENTURIAN BANK LTD. & SOUSA HOLDINGS. THE ASSESSEE HAD TAKEN THESE LOANS IN THE EARLIER YEARS. WHEN THE ASSESSING OFFICER QUESTIONED AS TO WHY THE INTEREST EXPE N DITURE SHOULD NOT BE DISALLOWED, THE A SSESSEE SUBMITTED THAT THESE LOANS WERE USED FOR THE PURPOSE OF BUSINESS EXCEPT A SUM OF ` 30 CRORES. THE INTEREST ON THE ABOVE SAID SUM OF ` 30 CRORES WAS WORKED OUT TO ` 4.80 CRORES AND THE ASSESSEE SUBMITTED THAT THE SAME MAY BE DISALLOWED. ACCORDINGLY , THE ASSESSING OFFICER DISALLOWED A SUM OF ` 4.80 CRORES OUT OF INTEREST EXPENDITURE CLAIMED BY THE ASS ESSEE. THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) OF THE ACT ON THE ABOVE SAID DISALLOWANCE . SINCE THE ASSESSEE AGREED FOR THIS DISALLOWANCE , IT DID NOT PREFER AN APPEAL ON THIS ISSUE BEFORE THE LEARNED CIT(A). NH SECURITIES LIMITED 3 6. HOWEVER , IN THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A), THE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE PENALTY LEVIED THEREON ON THE REASONING THAT THE SAID ADDITION HAS BEEN CON FIRMED BY HIM IN THE QUANTUM PROCEEDINGS, WHILE THE FACT REMAINS THAT THE ASSESSEE DID NOT CONTEST THE ABOVE SAID ADDITION IN THE APPEAL FILED BEFORE HIM. IN THIS VIEW OF THE MATTER, WE NOTICED THAT THE LEARNED CIT(A) HAS NOT PROPERLY APPRECIATED THE FACT S AND ACCORDINGLY FAILED TO ADJUDICATE THE ISSUE RELATING TO LEVY OF PENALTY ON THE INTEREST DISALLOWANCE OF ` 4.80 CRORES. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE NEEDS TO BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR ADJUDICATING THE SAME. ACCORD INGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON TH E ISSUE OF PENALTY LEVIED ON THE INTEREST DISALLOWANCE, REFERRED ABOVE, AND RESTORE THE SAME TO HIS FILE F OR ADJUDICATING THE SAME AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 2 .6 .201 7. SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 6 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI