M/s. C.L. Aggarwal Yarn Industries (P) Ltd., Delhi V. ITO, New Delhi

ITA 2812/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6922 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 24-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-II, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2812/DEL/2014 A.Y. : 2008-09 M/S C.L. AGGARWAL YARN INDUSTRIES (P) LTD., 7388, GURU GOBIND SINGH GALI, GANDHI NAGAR, DELHI 110 031 (PAN: AACCC2956J) VS. ITO, WARD 3(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RANJAN CHOPRA, CA DEPARTMENT BY : SH. ANIL SHARMA, SR. DR ORDER ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 25.2.2014 PASSED BY THE LD. CIT(A)-VI, NEW DEL HI RELEVANT TO ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS: - 1. THAT THE ORDER PASSED BY LD. CIT(A) PARTLY SUSTAINING THE ORDER OF THE AO IS BAD IN LAW AND ON THE FACTS OF THE CASE AND IS LIABLE TO BE SET ASIDE. 2. THAT THE LD. CIT(A) HAS ERRED IN ONLY PARTIALLY ALLOWING THE CLAIM OF EXPENDITURE AMOUNTING TO RS. 2,99,545/- UNDER THE HEAD PROFIT & GAINS FROM BUSINESS AND PROFESSION ON MERE ASSUMPTIONS AND WITHOUT ANY BASIS. 2 3. THAT THE LD. CIT(A) HAS ERRED IN TREATING 50% OF THE EXPENDITURE CLAIMED BY THE APPELLANT AS PERSONAL IN NATURE WITHOUT GIVING ANY SHOW CAUSE TO THE APPELLANT IN THIS REGARD, THOUGH HE HIMSELF ACCEPTED, WHILE PASSING ORDER, THAT THE EXPENDITURE AS DEBITED IN P&L ACCOUNT TO THE EXTENT OF RS. 5,99,590/- ARE HEREBY ALLOWABLE U/S. 57(III) INSTEAD OF SECTION 37 OF THE INCOME TAX ACT, 1961. 4. THAT THE ORDER PASSED BY LD. CIT(A) IS AGAINST T HE PRINCIPLES OF NATURAL JUSTICE. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO WITHDRAW, TO AMEND ANY OF THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 31.3.209 DECLARING AN INCOME OF RS. 1, 54,110/-. THE CASE WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961. CASE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY UNDER CASS. NOTIC E U/S. 143(2) OF THE I.T. ACT WAS ISSUED ON 3.8.2009 AND IN RESPON SE THERETO THE ASSESSEES AR ATTENDED THE PROCEEDINGS FROM TIME TO TIM E. THE ASSESSEE COMPANY WAS INCORPORATED ON 13.8.2003 WITH T HE PURPOSE OF MANUFACTURING, PROCESSING, IMPORT, EXPORT OF FIBERS AND YARNS ETC. DURING THE YEAR NO SUCH BUSINESS ACTIVITY WAS CARRIED OUT, AS PER ARS SUBMISSION DATED 15.11.2010 BEFORE THE AO. AO OB SERVED THAT ASSESSEE HAD INTEREST INCOME, PROFIT FROM SALE OF MU TUAL FUND, DIVIDEND INCOME AND INCOME FROM CAPITAL GAINS. ACCOR DINGLY, AO WAS ASKED TO JUSTIFY THE BUSINESS EXIGENCY OF VARIOUS EXP ENSES CLAIMED IN PROFIT AND LOSS ACCOUNT, AMOUNTING TO RS. 5,99,59 0. THE AR OF 3 THE ASSESSEE SUBMITTED ITS REPLY, BUT AO WAS NOT SATISF IED WITH THE REPLY AND OBSERVED TZAT THERE APPEARS TO BE NO BUSIN ESS EXIGENCY FOR THE EXPENSES CLAIMED AND THE NATURE OF INCOME EA RNED I.E. INTEREST INCOME, CAPITAL GAIN ON SALE OF MUTUAL FUNDS AND DIVIDEND. SUCH INCOME BEING THE IN THE NATURE OF INCOME FROM OTHER SOURCES HAS NO CORRELATION WITH THE EXPENSES CLAIMED BY THE A SSESSEE. AO, THEREFORE, DISALLOWED THIS AMOUNT AND ADDED TO THE INC OME OF THE ASSESSEE VIDE HIS ORDER DATED 21.12.2010 PASSED U/S . 143(3) OF THE I.T. ACT, 1961. 3. AGAINST THE AFORESAID ASSESSMENT, THE ASSESEE APPEA LED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 21.12.2010 HAS PARTLY ALLOWED THE APPEAL AND RESTRICTE D THE ADDITION TO 50% AND GAVE THE RELIEF OF RS. 2,99,545/-. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING PAGES 1 TO 19 HAVING COPY OF FO RM OF APPEAL (FORM NO. 36); GROUNDS OF APPEAL; COPY OF ORDER DATE D 25.2.2014 PASSED BY THE LD. CIT(A); COPY OF APPEAL (FORM NO. 35) ALONGWITH GROUNDS OF APPEAL FILED BEFORE LD. CIT(A); COPY OF ORDER DATED 21.12.2010 PASSED BY THE ITO; RECEIPTED CHALLAN OF FEE AND POWER OF ATTORNEY. HE STATED THAT IN THE ASSESSMENT ORDER FOR T HE AY 2006-07 THE AO HAS ALLOWED THE SIMILAR EXPENSES VID E HIS ORDER DATED 10.9.2008 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. HE FURTHER STATED THAT AO FOLLOWED THE SIMILAR PRACTICE IN T HE SUCCEEDING ASSESSMENT YEAR ALSO. HE FURTHER DRAW MY ATTENTION TOWARDS THE ITR 2007 AND 2009-10 WHEREIN THE ASSESSEE HAS CLAIMED SUCH EXPENSES AND FILED THE COMPUTATION THERE OF. THEREFORE, 4 HE REQUESTED THAT FOLLOWING THE CONSISTENT VIEW IN THE P RECEDING AND SUBSEQUENT ASSESSMENT YEARS, THE DISALLOWANCE IN DISP UTE MAY BE DELETED AND APPEAL OF THE ASSESSEE MAY BE ALLOWED AC CORDINGLY. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER O F THE AUTHORITIES BELOW AND REQUESTED THAT THE SAME MAY BE UP HELD. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS AVAILABLE WITH ME ESPECIALLY THE ORDERS OF THE REVENU E AUTHORITIES AND THE PAPER BOOK CONTAINING PAGES 1 TO 19 HAVING CO PY OF FORM OF APPEAL (FORM NO. 36); GROUNDS OF APPEAL; COPY OF OR DER DATED 25.2.2014 PASSED BY THE LD. CIT(A); COPY OF APPEAL (FORM NO. 35) ALONGWITH GROUNDS OF APPEAL FILED BEFORE LD. CIT(A) ; COPY OF ORDER DATED 21.12.2010 PASSED BY THE ITO; RECEIPTED CHALLAN OF FEE AND POWER OF ATTORNEY. I ALSO FIND THAT IN THE ASSESSMENT ORDER FOR THE AY 2006-07 THE AO HAS ALLOWED THE SIMILAR EXPENSES VIDE HIS ORDER DATED 10.9.2008 PASSED U/S. 143(3) OF THE I.T. ACT, 1 961. I HAVE ALSO SEEN THE ITR FOR THE ASSESSMENT YEAR 2007-08 AN D 2009-10 ALONGWITH COMPUTATION THEREOF WHEREIN HE SHOWN THE SI MILAR EXPENSES AND NO ADDITION HAS BEEN MADE BY THE AO IN THIS REGARD. AFTER PERUSING THE AFORESAID DOCUMENTS, I FIND THAT TH E AO HAS NOT MADE ANY DISALLOWANCE ON THE ISSUE IN DISPUTE. THERE FORE, FOLLOWING THE CONSISTENT VIEW ADOPTED BY THE DEPARTMENT, IN THE P RECEDING AND IN SUBSEQUENT ASSESSMENT YEARS, AS AFORESAID, THE ADDITION 5 MADE BY THE AO AND PARTLY RESTRICTED BY THE LD. CIT( A) TO THE EXTENT OF RS. 2.55.545/- IN THE PRESENT ASSESSMENT YE AR 2008-09 IS HEREBY DELETED AND ACCORDINGLY, THE APPEAL OF THE AS SESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/01/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 20/01/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES