AHUJA PLATINUM PROPERTIES P. LTD, MUMBAI V. ASST CIT CEN CIR 7, MUMBAI

ITA 2713/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1956 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA
• Keywords: Search and seizure; Assessment record
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I G. MANJUNATHA , ACCOUNTANT MEMBER IT A NO. 2713 , 2714, 2715, 2716 & 2719 /MUM./2017 ( A.Y : 2007 08, 2008 09, 2010 11, 2011 12 & 2012 13 ) AHUJA PLATINUM PROPERTIES P. LTD. ( NOW BHALCHANDRA TRADING CO. PVT. LTD. ) A 201, RAJPIPLE OPP . STANDARD CHARTERED BANK LINKING ROAD, SANTACRUZ (W) MUMBAI 400 054 PAN AAECA4138L . APP ELL ANT V/S ASSTT . COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7 , MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI ANADI VERMA DATE OF HEARING 25 .0 6 .2019 DATE OF ORDER 28.06.2019 O R D E R PER BENCH CAPTIONED APPEALS BY THE ASSESSEE ARE AGAINST FIVE SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER (APPEALS) 47, MUMBAI, FOR THE A.Y. 2007 08, 2008 09, 2010 11, 2011 12 AND 2012 13. 2 . SINCE ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE INVOLVING COMMON ISSUES ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDE R. 2 AHUJA PLATINUM PROPERTIES P. LTD. 3 . WHEN THESE APPEALS WERE CALLED FOR HEARING ON 24 TH JUNE 2019, NO ONE WAS PRESENT FOR THE ASSESSEE TO REPRESENT THE CASES. THEREFORE, THE BENCH ADJOURNED THE APPEALS TO THIS DATE I.E., 25 TH JUNE 2009. HOWEVER, TODAY ALSO, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. THE ASSESSEE HAS NOT EVEN FILED ANY LETTER SEEKING ADJOURNMENT OF THE APPEALS. AS COULD BE S EEN FROM THE ORDER SHEET ENTRY DATED 30 TH APRIL 2019, SINCE NO ONE APPEARED ON THE SAID DATE TO REPRESENT THE CASE, THE BENCH WAS CO MPELLED TO ADJOURN THE HEARING TO 24 TH JUNE 2019 AND A FRESH NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE BY REGISTERED POST WITH A.D. HOWEVER, THE SAID NOTICE ISSUED TO THE ASSESSEE WAS RETURNED BACK UNSERVED WITH REMARK COMPANY IS CLOSED AND LEFT . FURT HER, IT APPEARS THAT THE ASSESSEE IS ALSO NOT VERY MUCH INTERESTED IN PURSUING ITS APPEALS, WHICH IS EVIDENT FROM THE FACT THAT THERE IS NO EFFORT ON ITS PART TO ENQUIRE ABOUT THE STATUS OF THE APPEALS. IN VIEW OF THE AFOR ESAID, WE PROCEED TO DISPOSE OF TH E APPEALS EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIALS ON RECORD. ITA NO.2713/MUM./2017 ASSESSEES APPEAL A.Y. 2007 08 4 . IN GROUNDS NO.1 AND 2, WHICH ARE COMMON IN ALL THE APPEALS, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER PASSED UNDER SECTION 153C OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 3 AHUJA PLATINUM PROPERTIES P. LTD. 5 . BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN T HE BUSINESS OF BUILDERS AND DEVELOPERS. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN CASE OF LILAWATI KIRTILAL MEHTA MEDICAL TRUST ON 11 TH APRIL 2011. ON THE BASIS OF CERTAIN INFORMATION FOUND IN THE COURSE OF SEARCH AND S EIZURE OPERATION , PROCEEDINGS UNDER SECTION 153C OF THE ACT WAS INITIATED AGAINST THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER DISPUTE. ULTIMATELY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT FO R THE AFORESAID ASSESSMENT YEAR UNDER SECTION 143(3) R/W SECT ION 154C OF THE ACT BY MAKING SOME ADDITIONS TO THE INCOME OF THE ASSESSEE. 6 . BEING AGGRIEVED WITH THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, INTER ALIA, ON THE GROUND THAT INITIATION OF PROCEEDINGS UNDE R SECTION 153 C OF THE ACT IS INVALID. L EARNED COMMISSIONER (APPEALS), HOWEVER, UPHELD THE VALIDITY OF THE PROCEEDING INITIATED UNDER SECTION 153C OF THE ACT. 7 . WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS IT APPEARS FROM THE GROUNDS, T HE MAIN PLANK ON WHICH THE ASSESSEE HAS CHALLENG ED THE INITIATION OF PROCEEDING UNDER SECTION 153C OF THE ACT IS DUE TO LACK OF SATISFACTION RE CORDED BY CONCERNED AUTHORITIES FOR ISSUANCE OF NOTICE UNDER SECTION 153C OF TH E ACT. AS COULD BE SEEN, THE BENCH ON 20 TH NOVE MBER 2018 4 AHUJA PLATINUM PROPERTIES P. LTD. HAD DIRECTED THE REVENUE TO PRODUCE THE SATISFACTION RECORDED FOR ISSUANCE OF NOTICE UNDER SECTION 153C OF THE ACT. IN COMPLIANCE TO THE AFORESAID DIRECTION OF THE BENCH, LEARNED DEPARTMENTAL REPRESENTATIVE HAS FURNISHED BEFORE US CERTAIN COMMUNICATIONS RECEIVED FROM THE ASSESSING OFFICER STATING THAT AS PER ASSESSMENT RECORD, SATISFACTION WAS RECORDED FOR ISSUANCE OF NOTICE UNDER SECTION 153C OF THE ACT . B Y ALLOWING ITSELF TO GO UNREPRESENTED AT THE TIME OF HEARING OF APPEALS, THE ASSESSEE HAS NOT CONTROVERTED THE AFORESAID FACTS. IN VIEW OF THE AFORESAID, WE DO NOT FIND MERIT IN THE GROUNDS RAISED BY THE ASSESSEE. ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 8 . GROUNDS NO.3 AND 4, ARE ON THE ISSUE OF ADDITION OF ` 2,35,211, UNDER SECTION 41(1) OF THE ACT. 9 . BRIEF FACTS ARE, FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD ORIGINALLY FILED ITS RETURN OF INCOME ON 26 TH OCTOBER 2007, DECLARING LOSS OF ` 3,57,69,170. WHILE COMPLETING THE ASSESSMENT OR IGINALLY UNDER S ECTION 143(3) OF THE ACT VIDE ORDER DATED 17 TH NOVEMBER 2009, THE ASSESSING OFFICER MADE CERTAIN ADDITIONS / DISALLOWANCES, ONE AMONGST THEM BEING AN AMOUNT OF ` 2,35,211, UNDER SECTION 41(1) OF THE ACT FOR CESSATION OF LIABILITY. AS A RESU LT, A TOTAL LOSS OF ` 2,11,06,162, WAS DETERMINED. IT IS APPARENT , IN THE IMPUGNED ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W SECTION 153C OF THE 5 AHUJA PLATINUM PROPERTIES P. LTD. ACT, THE ONLY ADDITION MADE BY THE ASSESSING OFFICER IS THE AMOUNT OF ` 2,35,211, ON ACCOUNT OF CESSATIO N OF LIABILITY UNDER SECTION 41(1) OF THE ACT. THUS, IT IS PATENT AND OBVIOUS THAT THE ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER HAS BEEN REPEATED IN THE IMPUGNED ASSESSMENT ORDER. WHILE DECIDING ASSESSEES APPEAL ON THE ISSUE, LEARNED COMMISSIONER (A PPEALS) FOUND THAT THE DISPUTED ADDITION ARISING OUT OF THE ORIGINAL ASSESSMENT ORDER WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL HAD RESTORED THE ISSUE BACK TO THE FIRST APPELLATE AUTHORITY FOR FRESH ADJUDICATION . THUS, HE OBSERVED THAT THE DECISION TO BE TAKEN BY THE FIRST APPELLATE AUTHORITY ON THE ISSUE AS PER THE DIRECTION OF THE TRIBUNAL WILL HOLD GOOD IN THE PRESENT APPEAL. ACCORDINGLY, HE DIRECTED THE A .O. TO FOLLOW THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL. 10 . HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE FIND THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND SEIZURE OPERATION . IN FACT, THE ASSESSING OFFICER HAS SIMPLY REPEATED THE ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER. THUS, NOT ONLY THE ADDITION MADE IS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH, BUT, IT WAS ALSO SUBJECT MATTER OF DISPUTE IN THE ORI GINAL ASSESSMENT ORDER. THAT BEING THE CASE, THE ASSESSING OFFICER 6 AHUJA PLATINUM PROPERTIES P. LTD. COULD NOT HAVE MADE THE ADDITION IN THE IMPUGNED ASSESSMENT ORDER. ACCORDINGLY, WE DELETE THE ADDITION. T HESE GROUNDS ARE ALLOWED . 11 . IN THE RESULT, APPEAL IS PARTLY ALLOWED. ITA NO.2714/MUM ./2017 ASSESSEES APPEAL A.Y. 2008 09 12 . GROUNDS NO.1 AND 2, ARE SIMILAR TO GROUNDS NO.1 AND 2, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.2713/MUM./2017. FOLLOWING OUR DECISION GIVEN THEREIN, THESE GROUNDS ARE ALSO DISMISSED. 13 . GROUNDS NO.3 AND 4, ARE MORE OR LESS IDENTICAL TO GROUNDS NO.3 AND 4, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.2713/MUM./2017. ONLY DIFFERENCE IN THE FACTS BEING , THE ADDITION MADE WAS ON ACCOUNT OF INTEREST PAID IN RESPECT OF INTEREST FREE FUND ADVANCED TO GROUP CON CERN. IT IS EVIDENT, IDENTICAL ADDITION WAS MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ORIGINAL ASSESSMENT. THE ADDITION HAS BEEN REPEATED IN THE IMPUGNED ASSESSMENT ORDER. THEREFORE, F OLLOWING OUR DECISION IN GROUND NO. 3 AND 4 OF ITA NO.2713/MUM. /2017 , WE DELETE THE ADDITION. THESE GROUNDS ARE ALLOWED . 14 . IN THE RESULT, APPEAL IS PARTLY ALLOWED. 7 AHUJA PLATINUM PROPERTIES P. LTD. ITA NO.2715/MUM./2017 ASSESSEE S APPEAL A.Y. 2010 11 15 . GROUNDS NO.1 AND 2, ARE SIMILAR TO GROUNDS NO.1 AND 2, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.2713/MUM./2017. FOLLOWING OUR DECISION GIVEN THEREIN, THESE GROUNDS ARE DISMISSED. 16 . GROUNDS NO.3, 4 AND 5, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF INTEREST EXPENDITURE BY APPLYING THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. 17 . BRIEF FACTS ARE, DURING THE ORIGINAL ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAD PAID INTEREST OF ` 4,59,34,042, TO ITS SISTER CONCERN AHUJA PROPERTIES , CALLED UPON THE ASSESSEE TO EXPLAIN THE REASONABLENESS OF SUCH PAYMENT KEEPI NG IN VIEW THE PROVISIONS OF SECTION 40A(2) OF THE ACT. THOUGH , THE ASSESSEE CONTENDED THAT THE INTER EST PAID TO THE SISTER CONCERN IS REASONABLE AND AS PER PREVAILING MARKET RATE, HOWEVER, THE ASSESSING OFFICER FOLLOWING THE ASSESSMENT ORDERS PASSED ON TH E ISSUE FOR ASSESSMENT YEAR S 2007 08, 2008 09 AND 2009 10, HELD THAT THE REASONABLE RATE OF INTEREST BEING 15% , ANY INTEREST PAID ABOVE THAT HAS TO BE DISALLOWED. ACCORDINGLY, HE WORKED OUT THE DISALLOWANCE UNDER SECTION 40A(2)(B) OF THE ACT AT ` 1,27,49,2 81. AGAINST THE SAID ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 8 AHUJA PLATINUM PROPERTIES P. LTD. 18 . WHILE DECIDING THE ISSUE, LEARNED COMMISSIONER (APPEALS) FOLLOWED THE DECISION OF THE TRIBUNAL ON IDENTICAL ISSUE IN A SSESSEES OWN CASE FOR THE ASSESSMENT YEAR S 2003 04, 2007 08 AND 2009 10 AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE VERY SAME ADDITION, AS REFERRED TO ABOVE, WAS REPEATED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTI ON 143(3) R/W SECTION 153C OF THE ACT. WHILE DECIDING THE ISSUE, THE LEARNED COMMISSIONER (APPEALS) HELD THAT INTEREST PAID @ 19.5% I S TO BE ALLOWED. 19 . WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. UNDISPUTEDLY, THE ADDITION MADE ON ACCOUNT OF INTEREST DISALLOWANCE BY INVOKI NG THE PROVISIONS OF SECTION 40 A(2)(B) OF THE ACT WAS A SUBJECT MATTER OF DISPUTE ARISING IN THE ORIGINAL ASSESSMENT ORDER AND WHILE DECIDING SUCH ISSUE IN THE APPEAL ARISING OUT OF THE ORIGINAL ASSESSMENT ORDER, THE LEARNED COMMISSIONER (APPEALS), VIDE ORDER DATED 1 ST JANUARY 2016, HAS DELETED THE ADDITION. IT IS A FACT , IN THE IMPUGNED ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REPEATED THE SAME ADDITION AS WAS MADE IN THE ORIGI NAL ASSESSME NT ORDER. I F THE ADDITION MADE IN THE ORIGINAL ORDER DOES NOT SURVIVE BY VIRTUE OF THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AGAINST THE ORIGINAL ASSESSMENT ORDER, THE 9 AHUJA PLATINUM PROPERTIES P. LTD. SAME CANNOT SURVIVE IN THE ASSESSMENT ORDER PASSED UNDER SECTIO N 143(3) R/W SECTION 153C OF THE ACT. THAT BEING THE CASE, THE ADDITION DESERVES TO BE DELETED. NOTABLY, LEARNED COMMISSIONER (APPEALS) IN THE IMPUGNED ORDER FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THE PRECEDING ASSESSMENT YEARS HAS HELD THAT INTEREST RAT E OF 19,5% PER ANNUM IS REASONABLE. BE THAT AS IT MAY, ONCE THE ADDITION HAS BEEN DELETED BY THE FIRST APPELLATE AUTHORITY WHILE CONSIDERING THE ASSESSEES APPEAL ARISING OUT OF THE ORIGINAL ASSESSMENT ORDER, THE SAME ADDITION MADE IN THE IMPUGNED ASSESSME NT YEAR CANNOT SURVIVE. IN ANY CASE OF THE MATTER, SINCE THE DISPUTED ADDITION IS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL, IT HAS TO BE DELETED. ACCORDINGLY, WE DIRECT THE A .O. TO DELETE THE ADDITION. GROUNDS RAISED ARE ALLOWED. 20 . IN THE RESULT, APPE AL IS PARTLY ALLOWED. ITA NO.2716/MUM./2017 ASSESSEES APPEAL A.Y. 201 1 1 2 21 . GROUNDS NO.1 AND 2, ARE IDENTICAL TO GROUNDS NO.1, 2 RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.2713/MUM./2017. FOLLOWING OUR DECISION THEREIN, THESE GROUNDS ARE DISMISS ED. 22 . IN GROUNDS NO. 3, 4 AND 5, THE ASSESSEE HAS CHALLENGED THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE OF INTEREST DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B). 10 AHUJA PLATINUM PROPERTIES P. LTD. 23 . THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED IN GROUNDS NO.4 AND 5 IN ITA NO.2715/MUM./2017. FOLLOWING OUR DECISION GIVEN THEREIN, WE DELETE THE ADDITION MADE BY THE A .O. THESE GROUNDS ARE ALLOWED. 24 . IN THE RESULT, APPEAL IS PARTLY ALLOWED. ITA NO.2719/MUM./2017 ASSESSEE S APPEAL A.Y. 2012 13 25 . THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS PERTAINING TO DISALLOWANCE OF INTEREST EXPENDITURE U / S 40A(2)(B) OF THE ACT. 26 . THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED IN GROUNDS NO.4 AND 5 IN ITA NO.2715/MUM./2017. ON PERUSING THE ORDERS PASSED BY THE TRIBUNAL IN EARL IER YEARS WE ARE OF THE VIEW THAT THE TRIBUNAL NEVER HELD THAT REASONABLE RATE OF INTEREST HAS TO BE FIXED AT 19.5%. TRIBUNAL HAS ONLY ACCEPTED THE RATE AT WHICH THE ASSESSEE HAD PAID THE INTEREST TO AHUJA PROPERTIES. THEREFORE, IN OUR VIEW, SINCE THE INTE REST PAID TO THE VERY SAME ENTITY HAS BEEN ACCEPTED IN THE EARLIER YEARS, NO DISALLOWANCE/ADDITION IS CALLED FOR. GROUND ARE ALLOWED. 27 . IN THE RESULT, APPEAL IS ALLOWED. 11 AHUJA PLATINUM PROPERTIES P. LTD. 28 . TO SUM UP, APPEAL IN ITA NO.2719/MUM./2017 IS ALLOWED. REST OF THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 28.06 . 2019 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.06.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR) ITAT, MUMBAI