ACIT CENT. CIR. 4(1), MUMBAI V. NIRVED TRADERS PVT. LTD., MUMBAI

ITA 2849/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2895 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 20-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA S ANJARIA LD
• Assessee Lawyers: M K PATEL LD
• Keywords: Opportunity of being heard; Audit objection; Reassessment proceedings
• Section: 143(3); 133A; 14A; 147

Judgement Text

ITA.NO.2849/MUM/2017 NIRVED TRADERS PVT.LTD. ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2849/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4(1) ROOM NO.1916, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT,MUMBAI-400 021 / VS. NIRVED TRADERS PR IVATE LIMITED 159, INDUSTRY HOUSE CHURCHGATE RECLAMATION MUMBAI-400 020 ./ ./PAN/GIR NO. AAACN-3387-L ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ASSESSEE BY : MS. M.K.PATEL, LD. AR REVENUE BY : CHAITANYA S. ANJARIA, LD. DR / DATE OF HEARING : 16/10/2018 / DATE OF PRONOUNCEMENT : 02/11/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-52 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-52/IT/DC-CC-4(1)/309/2016-17 DATED 19/01/2017 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE. THE ITA.NO.2849/MUM/2017 NIRVED TRADERS PVT.LTD. ASSESSMENT YEAR 2010-11 2 ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(3), MU MBAI [AO] U/S 143(3) READ WITH SECTION 147 ON 26/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.108.23 LACS AFTER CERTA IN ADDITIONS AS AGAINST ASSESSED INCOME OF RS.70.95 LACS U/S 143(3) VIDE ORDER DATED 31/01/2013. 2. THE REASSESSMENT PROCEEDINGS WERE INITIATED PURS UANT TO AUDIT OBJECTION DATED 21/10/2013 POINTING OUT SHORT DISALLOWANCE U /S 14A FOR RS.29.81 LACS AND WRONG ALLOWANCE OF CAPITAL EXPENS ES OF RS.7.46 LACS RELATING TO ACQUISITION OF AN UNDERTAKING BY THE AS SESSEE DURING IMPUGNED AY. ACCORDINGLY, THE ASSESSEE WAS SUBJECTE D TO REASSESSMENT PROCEEDINGS VIDE ORDER DATED 26/03/201 5 WHEREIN THE ASSESSEE WAS SADDLED WITH BOTH THESE ADDITIONS OF R S.29.81 LACS & RS.7.46 LACS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 19/01/2017. THE PERUSAL OF IMPUGNED ORDER REVEAL THAT CONSEQUENT TO COMPLETION OF REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SUBJECTED TO SURVEY P ROCEEDINGS ON 07/01/2014 AND WAS REQUIRED TO FILE A RETURN OF INC OME PURSUANT TO SECTION 153C. THE ASSESSMENT U/S 143(3) READ WITH SECTION 153C WAS COMPLETED ON 23/03/2016 I.E. DURING PENDENCY OF THE INSTANT APPEAL BEFORE FIRST APPELLATE AUTHORITY. ACCORDINGLY, THE ASSESSEE DREW ATTENTION TO THE FACT THAT BOTH THESE ADDITIONS WERE RE-CONSI DERED BY LD. AO IN AN ASSESSMENT U/S 143(3) READ WITH SECTION 153C AND THEREFORE, THE ADDITIONS WERE NOT JUSTIFIED. AFTER PERUSING THE SA ME, LD. CIT(A) ITA.NO.2849/MUM/2017 NIRVED TRADERS PVT.LTD. ASSESSMENT YEAR 2010-11 3 CONCURRED WITH THE STAND OF ASSESSEE AND CONCLUDED THE MATTER BY OBSERVING AS UNDER:- 6.I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE AS WELL AS THE ORDER OF THE AO. IT IS GATHERED THAT WHILE FILING THE RETURN OF INCOME, THE ASSESSEE MADE A DISALLOWANCE U/S 14A AT RS 5,60,431/-. THE AO WHILE COMPLETING THE ASSESSMENT U/S 143(3) WORKED O UT THE DISALLOWANCE AT RS.2,07,35,620/- AND AFTER REDUCING THE DISALLOWANC E MADE BY THE ASSESSEE AT RS.5,60,431/-, NET ADDITION OF RS 2,01,75,189/- WAS MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, THE SAID ASSESSMENT WAS RE-OPENE D BY THE AO U/S 147 AND THEREAFTER WORKED OUT DISALLOWANCE U/S 14A AT RS. 2 ,37,16,832/- AND AFTER REDUCING THE AMOUNT OF RS 2,07,35,620/- DETERMINED EARLIER, NET ADDITION OF RS 29,81,212/- WAS MADE, IT IS GATHERED THAT IN THE MEANWHILE, A S EARCH & SEIZURE OPERATION WAS CARRIED OUT, IN THE CASE OF YASH BIRLA GROUP OF COM PANIES WHEREIN THE ASSESSEE COMPANY WAS ALSO COVERED UNDER AN ACTION OF SURVEY U/S 133A CONSEQUENTLY, A NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE , IN RES PONSE TO WHICH IT FURNISHED THE RETURN WHEREIN IT MADE DISALLOWANCE U/S 14A AT RS 2 ,07,35,620/- AS ORIGINALLY DETERMINED BY THE AO . THE AO IN THE ASSESSMENT ORD ER U/S 143(3) R.W.S 153C HAS WORKED OUT THE DISALLOWANCE U/S 14A AT RS 2,09,84,8 21/- AND CONSEQUENTLY MADE AN ADDITION OF RS.2,49,201/- IN THE HANDS OF THE ASSES SEE. 7. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AR HAS NOT MADE ANY FURTHER ARGUMENT AS TO HOW THE DISALLOWANCE WORKED OUT BY T HE AO U/S 14A R.W.R. 8D AT RS.2,09,84,821/- WAS EXCESSIVE OR UNFAIR OR UNJUSTI FIED. THEREFORE, IN MY CONSIDERED VIEW, THE DISALLOWANCE OF RS.2,09,84,821/- WORKED O UT BY THE AO APPEARS TO BE IN ORDER AND IS UPHELD IN PRINCIPLE. HOWEVER, AS FAR A S THE PRESENT APPEAL IS CONCERNED, THE DISALLOWANCE U/S 14A WORKED OUT BY THE AO AT RS 2,37,16,832/- APPEARS TO BE UNJUSTIFIED IN AS MUCH AS THE AO HAS ITSELF REWORKE D THIS DISALLOWANCE AT RS. 2,09,84,821/- IN A LATER ORDER. NEEDLESS TO SAY THA T THE ASSESSEE HAS ITSELF ACCEPTED THE DISALLOWANCE U/S 14A AT RS.2,07,35,620/- WHILE FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153C, SUBSEQUENT TO THE ORIG INAL ASSESSMENT. CONSEQUENTLY, THE ADDITION AT RS. 29,81,212/- MADE BY THE AO U/S 14A CANNOT BE SUSTAINED IN FULL. THEREFORE, CONSIDERING THE OVERALL FACTS AND AO'S O RDER U/S 153C, OUT OF THE ABOVE ADDITION, AN AMOUNT OF RS.2,49,201/- IS CONFIRMED A ND BALANCE AMOUNT IS DIRECTED TO BE DELETED. THIS GROUND IS ACCORDINGLY PARTLY ALLOW ED. 8. THE NEXT GROUND IS RELATING TO DISALLOWANCE OF C APITAL EXPENSES OF RS.7,46,341/-. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD AR SUBMITTED THAT IN THE ASSESSMENT MADE U/S 143(3) R.W.S. 153C DATED 23.03. 2016, THE AO HAD ACCEPTED THE CLAIM OF THE ASSESSEE AND DID NOT MAKE THIS ADD ITION OF RS 7,46,341/-. SINCE THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE AO I N SUBSEQUENT PROCEEDINGS U/S 153C, THE ADDITION OF RS 7,46,341/- MADE BY HIM IN THE PRESENT ASSESSMENT IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS AC CORDINGLY ALLOWED. UPON PERUSAL OF THE SAME, IT IS NOTED THAT THE RELI EF HAS BEEN PROVIDED TO THE ASSESSEE BY FOLLOWING THE CONCLUSION DRAWN BY L D. ASSESSING OFFICER ITA.NO.2849/MUM/2017 NIRVED TRADERS PVT.LTD. ASSESSMENT YEAR 2010-11 4 IN SUBSEQUENT PROCEEDINGS U/S 153C. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DR PLACED RELIANCE ON THE STAND OF LD. A O WHEREAS LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [AR], DREW A TTENTION TO THE FACT THAT THE FINDINGS OF FIRST APPELLATE AUTHORITY IS B ASED ON SUBSEQUENT ORDER PASSED BY LD. AO WHICH WAS FAIR AND JUSTIFIED. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. SOME UNDISPUTED FACTS TO BE NOT ED ARE THAT THE ASSESSEE WAS ORIGINALLY ASSESSED U/S 143(3) ON 31/0 1/2013. THEREAFTER, THE ASSESSEE WAS SUBJECTED TO REASSESSMENT PROCEEDI NGS WHICH GOT CULMINATED ON 26/03/2015 WHEREIN THE ASSESSEE WAS S ADDLED WITH IMPUGNED ADDITIONS. DURING THE PENDENCY OF APPEAL A GAINST REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SUBJECTE D TO SEARCH / SURVEY ACTION PURSUANT TO WHICH THE ASSESSEE FILED RETURN U/S 153C ON 27/11/2015 AND ASSESSMENT U/S 143(3) READ WITH SECTION 153C GOT COMPLETED ON 23/03/2016. THE FIRST APPELLATE AUTHOR ITY, RELYING UPON THE STAND TAKEN BY LD. ASSESSING OFFICER IN THOSE PROCE EDINGS, PROVIDED RELIEF TO THE ASSESSEE. THE SAME, IN OUR OPINION, W AS NOT CORRECT APPROACH SINCE BOTH THE PROCEEDINGS WERE INDEPENDEN T OF EACH OTHER AND SEPARATE PROCEEDINGS UNDER THE LAW. NOTHING ON RECORD SUGGEST THAT ANY OF THE PROCEEDINGS GOT ABATED OR MERGED INTO EA CH OTHER, IN ANY MANNER. THEREFORE, THE LD. FIRST APPELLATE AUTHORIT Y, IN OUR OPINION, INDEPENDENT OF THE STAND OF LD. AO IN SUBSEQUENT PR OCEEDINGS, WAS REQUIRED TO DEAL WITH THE ISSUE ON MERITS. THEREFOR E, AFTER DUE CONSIDERATION OF FACTUAL MATRIX, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AS PER LAW, ON MERITS, AFTER ITA.NO.2849/MUM/2017 NIRVED TRADERS PVT.LTD. ASSESSMENT YEAR 2010-11 5 PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE. THE ASSESSEE, IN TURN, IS DIRECTED TO SUBSTANTIATE HIS CLAIM, FAI LING WHICH LD. CIT(A) SHALL BE AT LIBERTY TO DISPOSE-OFF THE APPEAL ON THE BASI S OF MATERIAL AVAILABLE ON RECORD. 6. THE APPEAL STANDS ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOVEMBER, 2018. SD/- SD/- ( MAHAVIR SINGH) (MANOJ KUMAR AGGAR WAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02/11/2018 SR.PS:-THIRUMALESH/JV. ! / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI