ZEST HOLDINGS P. LTD, MUMBAI V. DCIT CEN CIR 31, MUMBAI

ITA 2801/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84509 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 29-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2013
• Court: TRIBUNAL
• Department Lawyers: P DANIEL SPECIAL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Principle of natural justice
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 2801/M/2013 ( AY: 2010 - 2011 ) M/S. ZEST HOLDINGS PVT LTD., 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI 400 018. / VS. ACIT, CC - 31, R.NO.409, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. ./ PAN : AAACZ0443M ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DHARMESH SHAH / REVENUE BY : SHRI P. DANIEL, SPECIAL COUNSEL / DATE OF HEARING :15.12.2014 / DATE OF PRONOUNCEMENT :15.12.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 10.4.2013 IS AGAINST THE ORDER OF THE CIT (A) - 40, MUMBAI DATED 11.2.2013 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 250 OF THE ACT. 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS AND IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE. 4. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AMOUNTING TO RS. 50,24,522/ - TOWARDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. 5. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING CALCULATION OF BOOK PROFIT U/S 115JB AMOUNTING TO RS. 1,37,85,581 / - . 6. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 3. AT THE OUTSET, SHRI DHARMESH SHAH, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT GROUND NOS. 1, 2 & 3 ARE NOT PRESSED . AFTER HEARING THE LD SPECIAL COUNSEL, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 2 4. GROUND NO.4 RELATES TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 50,24,522/ - . IN THIS REGARD, AT THE OUTSET, LD COUNSEL MENTIONED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASE OF HITESH S. MEHTA VS. DCIT VIDE ITA NO.7726 & 7727/M/2010 DATED 26.4.2013, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT (A) FOR ADJUDICATION OF THE ISSUE AFRESH BY ADJUDICATING THE RESPECTIVE GROUND RELATING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNT. PARA 5 FROM THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 5. GROUND NO.4 RELATES TO THE ACTION OF THE LD CIT (A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS. 11,24,99,052/ - AND RS. 12,61,36,245/ - RESPECTIVELY FOR THE AYS 200 5 - 06 AND 2006 - 07 TOWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE . IT IS PERTINENT TO NOTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPECT OF REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICATION OF THE LD CIT (A) IN VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGNED LIABILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT (A) TO ADJUDICATE AFRESH ALONG WITH THE ADJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS. 5. ON THE OTHER HAND, LD SPECIAL COUNSEL FOR THE REVENUE DUTIFULLY RELIED ON THE ORDER OF THE AO/CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN T HE CASE OF HITESH S. MEHTA (SUPRA). WHETHER THE INTEREST LIABILITIES OF RS. 50,24,522/ - CONSTITUTES ASCERTAINED ONE OR NOT IS ALSO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR COMPUTATION OF BOOK PROFITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN THE CASE OF THE HITESH S. MEHT A ( SUPRA) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.4 SHOULD BE SET ASIDE TO THE FILES OF THE CIT (A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER GRANT ING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKEN ONLY AFTER CONSIDERING THE DECISION IN THE CASE OF HITESH S MEHTA, ( SUPRA). ACCORDINGLY, GROUND NOS. 4 IS SET ASIDE . 7. GROUND NO.5 , CONSIDERING ITS CONSEQUENTI AL NATURE OF GROUND NO.4, WHICH IS REMANDED TO THE FILES OF CIT (A), IS ALSO REMANDED TO THE FILES OF THE CIT (A) TO DECIDE THE ISSUE ALONG WITH THE GROUND NO.4. ASSESSEE SHALL BE GRANTED A REASONABLE OPPORTUNITY OF BEING HEARD. 3 8. GROUND NO.6 RELATES TO CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. IN CONNECTION WITH THE CHARGE OF INTEREST U/S 234B OF THE ACT, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE BEING A NOTIFIED PERSON, THERE IS NO CHANGE OF INTEREST. IT IS HIS FURTHER S UBMISSION THAT THE RECEIPTS OF THE ASSESSEE ARE SUBJECTED TO TDS. ON THE CONTRARY, SPECIAL COUNSEL FOR THE REVENUE FILED VARIOUS DECISIONS OF THE TRIBUNAL IN SUPPORT OF THE CHANGE OF INTEREST. THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DEVINE HOLDINGS PVT LTD WAS RELIED ON BY THE SPL. COUNSEL FOR THE REVENUE. DURING THE REBUTTAL TIME, LD COUNSEL SUBMITTED THAT THIS ISSUE SHOULD ALSO REVISIT THE FILE OF THE AO FOR REMOVAL OF CERTAIN INACCURACIES IN CALCULATING THE INTEREST. WE O RDER ACCORDINGLY. THUS, GROUND NO.6 IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH DECEMBER, 2014. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 15.12 .2014 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI