The ACIT, Circle-2(1)(1). , Ahmedabad V. Shri Dipak G. Patel, Ahmedabad

ITA 2822/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9173 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Tax effect
• Section: 143(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 2822/AHD/2017 WITH CROSS OBJECTION NO. 26/AHD/2019 ( ASSESSMENT YEAR : 2009-10) THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2(1)(1), AHMEDABAD ROOM NO. 103, FIRST FLOOR, NAVJEEVAN TRUST BUILDING, AHMEDABAD - 380014 / VS. SHRI DIPAK G. PATEL GANESH CORPORATION HOUSE, 100FT. HEBATPUR- THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S. G. HIGHWAY, AHMEDABAD - 54 ./ ./ PAN/GIR NO. : ABEPP8960D ( APPELLANT ) .. RESPONDENT/CROSS OBJECTOR / REVENUE BY : SHRI L. P. JAIN, SR.D.R. / ASSESSEE BY : NUPUR SHAH, A.R. DATE OF HEARING 27/09/2019 ! / DATE OF PRONOUNCEMENT 04/10/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL AND CROSS OBJECTION HAVE BEEN FILED AT THE INSTANCE OF THE REVENUE AND ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AHMEDABAD (CIT(A) IN SH ORT), DATED 04.10.2017 ARISING IN THE ASSESSMENT ORDER DATED 30 .11.2016 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 147 O F THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2009-10. ITA NO. 2822/AHD/17 WITH CO NO. 26/AHD/19 [ACIT VS.SHRI DIPAK G. PATEL] A.Y. 2009-10 - 2 - 2. THE GRIEVANCES, IN REVENUES APPEAL AND ASSESSEE S CROSS OBJECTION, RAISED BEING COMMON, BOTH THE CASES WERE HEARD TOGETHER AND DISPOSED OF BY THE COMMON ORDER. 3. THE SUBSTANTIVE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER:- 1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE U/S. 2(24)(IV) OF THE ACT AMOUNTING TO RS. 81,32,230/- B EING 1/3 RD OF AMOUNT OF RS. 2,43,96,701/- WHICH WAS SELF DISALLOWED IN THE COMP UTATION OF INCOME OF GANESH HOUSING CORPORATION LTD.( IN WHICH THE ASSES SEE IS ONE OF THE DIRECTORS). 1.1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THAT THE ENTIRE SUCH EXPENDITURE INCURRED BY GANESH HOUSING CORPORATION LTD. WAS SELF DISALLOWED IN ITS HAND BEING PERSONAL EXPENSES OF T HE DIRECTORS AND IT IS A FACT THAT THE COMPANY BEING AN INORGANIC BODY CAN NOT HA VE PERSONAL EXPENSES AS SUCH BUT WOULD MEAN THE PERSONAL EXPENSES OF THE DI RECTORS WHICH HAVE BEEN DEBITED IN THE P&L ACCOUNT OF THE COMPANY. 1.2 THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT T HE EXPENSES SO INCURRED WERE DIRECTLY RELATED TO THE FAMILY FUNCTION OF THE THRE E DIRECTORS, THEREFORE, IT WAS THE MONETARY OBLIGATION OF THE ASSESSEE (ALONG WITH OTHER TWO DIRECTORS) TO BEAR SUCH EXPENSES IN THEIR PERSONAL CAPACITY BUT SUCH O BLIGATION WAS MET BY THE COMPANY AND, THEREFORE, THE AO WAS RIGHT IN INVOKIN G THE PROVISION OF THE SECTION 2(24)(IV) OF THE ACT. REFERENCE IN THIS REG ARD IS MADE TO THE DECISION CIT VS. NAR HARI DALMIA [80 ITR 454 (DEL.) AND CIT VS. S. VARADRAJAN[141 CTR MAD 10]. 1.3 THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESS EE WITHOUT APPLICATION OF MIND IN AS MUCH AS HE HAS FAILED TO CONSIDER THE UNEQUIVOCA L PROVISIONS OF SECTION 2(24)(IV) OF THE ACT AND WHICH HAVE BEEN ANALYSED I N VARIOUS CASE LAWS, SOME OF WHICH ARE LISTED ABOVE. 1.4 THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT E VEN IF SUCH SUMS WERE NOT BENEFITS IN PERQUISITES, THE SAME WERE COVERED BY T HE 2ND LIMB OF SECTION 2(24)(IV) WHICH STATES ' AND ANY SUM PAID BY ANY SU CH COMPANY IN RESPECT OF ANY OBLIGATION WHICH, BUT FOR SUCH PAYMENT, WOULD H AVE BEEN PAYABLE BY THE DIRECTOR OR OTHER PERSON AFORESAID.' 1.5 THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT EVEN IF A DIFFERENT AO (WHO WAS ASSESSING THE INCOME OF ANOTHER DIRECTOR) HAD FAILE D TO INVOKE THE PROVISION OF SECTION 2(24)(IV) IN HIS CASE, WOULD NOT JEOPARDIZE THE RIGHTFUL ADDITION IN THE HANDS OF OTHER DIRECTORS AS IT IS A TRITE LAW THAT TO PERPETUATE AN ERROR IS NO HEROISM, TO RECTIFY IS THE COMPULSION OF HUMAN CONS CIENCE (SUPREME COURT IN DISTRIBUTORS BARODA (P) LTD. VS. UOI) ITA NO. 2822/AHD/17 WITH CO NO. 26/AHD/19 [ACIT VS.SHRI DIPAK G. PATEL] A.Y. 2009-10 - 3 - 1.6 THE LD. CIT(A) HAS FAILED TO APPRECIATE DIRE CTING AS THE INACTION AND MISTAKE ON PART OF ONE AO CAN NOT ACT AS A BINDING PRECEDEN CE FOR ALL OTHER AO. 1.7 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY HIS FAILURE TO FOLLOW THE DIRECTION OF THE HON'BLE SUPREME COURT AS LAID DOWN IN THE CASE OF ITO VS. CH. ATCHAIAH (218 ITR 239) AND REITERATED IN SHRI S.P. JAISWAL VS. CIT (6 TH MARCH 1997) THAT 'HE (THE AO) CAN, AND HE MUST TAX THE RI GHT PERSON AND THE RIGHT PERSON ALONE.' 1.8 THE LD. CIT(A) FAILED TO APPRECIATE THAT IN SUCH SITUATION, AN APPROXIMATION HAD TO BE MADE AND IN ANY CASE, THE ONUS WAS ON THE ASSESSEE TO GIVE THE BREAK- UP OF EXPENSES WHICH SHOULD HAVE BEEN ADDED IN HIS HANDS AS SECTION 106 OF THE EVIDENCE ACT MANDATES THAT WHEN ANY FACT IS ESPECIA LLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN OF PROVING THE FACT IS UPON HIM. 2. NO APPEAL IN EARLIER YEAR WAS FILED IN THIS CA SE AS THE TAX EFFECT WAS BELOW THE PRESCRIBED MONETARY LIMITS AS LAID DOWN BY THE HON' BLE CBDT. REFERENCE IN THIS REGARD IS MADE TO THE PROVISION OF SECTION 268 A OF THE I.T. ACT. 4. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD.AR FOR THE ASSESSEE THAT THE APPEAL FILED BY THE REVENUE IS HI T BY RECENTLY ISSUED CBDT CIRCULAR NO.17 OF 2019 DATED 08/08/2019 REVISI NG THE PREVIOUS THRESHOLDS PERTAINING TO TAX EFFECTS. IT IS INTER ALIA NOTICED THAT THE CBDT VIDE INSTRUCTION NO. F. NO. 279/MISC/M-93/2018-ITJ DT. 20/08/2019 HAS OBSERVED THAT CIRCULAR NO.17/2019 DATED 08/08/2019 RELATING TO ENHANCEMENT OF MONETARY LIMITS IS ALSO APPLICABLE T O ALL PENDING APPEALS. AS PER AFORESAID CIRCULAR READ WITH INSTRUCTION, AL L PENDING APPEALS FILED BY REVENUE ARE LIABLE TO BE DISMISSED AS A MEASURE FOR REDUCING LITIGATION WHERE THE TAX EFFECT DOES NOT EXCEED THE PRESCRIBED MONETARY LIMIT WHICH IS NOW REVISED AT RS.50 LAKHS. IN THE INSTANT CASE, T HE TAX EFFECT ON THE DISPUTED ISSUES RAISED BY THE REVENUE IS STATED TO BE NOT EXCEEDING RS.50 LAKHS AND THEREFORE APPEAL OF THE REVENUE IS REQUIR ED TO BE DISMISSED IN LIMINE . 5. THE LEARNED DR FOR THE REVENUE FAIRLY ADMITTED T HE APPLICABILITY OF THE CBDT CIRCULAR NO. 17 OF 2019. ACCORDINGLY, APP EAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. HOWEVER, IT WILL BE OPEN TO THE REVENUE TO SEEK RESTORATION OF ITS APPEAL ON SHOWING INAPPLICA BILITY OF THE AFORESAID CBDT CIRCULAR IN ANY MANNER. ITA NO. 2822/AHD/17 WITH CO NO. 26/AHD/19 [ACIT VS.SHRI DIPAK G. PATEL] A.Y. 2009-10 - 4 - 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. THE LD.AR FOR THE ASSESSEE AT THE TIME OF HEARIN G STATED THAT ASSESSEE DOES NOT WANT TO PRESS THE CROSS OBJECTION. THE CR OSS OBJECTION IS ACCORDINGLY DISMISSED AS NOT PRESSED. 8. IN THE COMBINED RESULT, THE APPEAL OF THE REVENU E IS DISMISSED, WHEREAS ASSESSEES CROSS OBJECTION IS DISMISSED AS NOT PRESSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/10/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- $. / REVENUE 2. / ASSESSEE &. '() * / CONCERNED CIT 4. *- / CIT (A) -. ./0 122()3 ()!3 45' / DR, ITAT, AHMEDABAD 6. 078 9 / GUARD FILE. BY ORDER / 3 /4 ()!3 45' THIS ORDER PRONOUNCED IN OPEN COURT ON 04/10/201 9