BHAICHAND AMOLUK CONSULTANCY SERVICES P.LTD, MUMBAI V. ASST CIT 1(1), MUMBAI

ITA 319/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92577 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Assessee Lawyers: D V LAKHANI
• Keywords: Opportunity of being heard; Source of fund
• Section: 143(3); 234B; 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , . , BEFORE SHRI JOGINDER SINGH , JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO . 319 / MUM./ 2013 ( / ASSESSMENT YEAR : 2009 10 ) BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. , 2 ND FLOOR COMMERCIAL UNION HOUSE 9, WALLACE STREET, FORT MUMBAI 400 020 PAN AAACB6034A .. / APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX 1(1) ROOM NO.533, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... / RESPONDENT / ASSESSEE BY : S HRI D.V. LAKHANI / REVENUE BY : SHRI VIJAY KUMAR BORA / DATE OF HEARING 09.04.2015 / DATE OF ORDER 20.5.2015 O R D E R . , / PER D. KARUNAKARA RAO , A .M. TH E PRESENT APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 23 RD OCTOBER 2012 , PASSED BY THE BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. 2 COMMISSIONER ( APPEALS) I, MUMBAI, FOR THE ASSESSMENT YEAR 20 09 10 . FOLLOW ING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: - 1. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE ON ACCOUNT OF INTEREST OF ` 38,08,000. THE APPELLANT PRAYS THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) IS NOT JUSTIFIED AND BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN GRANTING PART RELIEF AS REGARDS THE DISALLOWANCE U/S 14A IS CONCERNED. THE APPELLANT PRAYS THAT THE ORIGINAL ADDITION MADE BY THE ASSESSING OFFICER U/S 14A AMOUNT ING TO ` 70,64,684 AND THE PART RELIEF GIVEN BY EH LEARNED CIT(A) IS NOT JUSTIFIED. THE APPELLANT PRAYS THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) MAY BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE APPELLANT PRAYS THAT THE DISALLOWANCE U/S 14A BE RESTRICTED TO ` 6,17,100 AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) MAY BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEAR NED CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B AT ` 9,17,922. THE APPELLANT DENIES THE LIABILITY OF PAYMENT OF INTEREST UNDER SECTION 234B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT LEVY OF INTEREST UNDER SECTIO N 234B AT ` 9,17,922 IS NOT JUSTIFIED AND BE DELETED. 2 . T HE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES AND FILED ITS RETURN OF INCOME SHOWING INCOME AT ` 1,10,61,975. DURING THE ASSESSME NT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THERE WERE ENQUIRIES INTO ACCOUNTS OF THE ASSESSEE AND THE ASSESSING OFFICER EVENTUALLY COMPUTED THE ASSESSED INCOME AT ` 1,50,35,480. THE INCREASE IN THE TOTAL INCOME IS ON ACCOUNT OF COUPLE OF ADDITIONS MAD E BY THE ASSESSING BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. 3 OFFICER. THE ASSESSING OFFICER MADE AN ADDITION OF ` 38,08,000, ON ACCOUNT OF INTEREST ALLOCATED FOR INVESTMENT. HE DID NOT ALLOW THE CLAIM OF THE ASSESSEE WHICH RELATES TO CALCULATION OF INTEREST UNDER SECTION 14A R/W RULE 8D OF THE INC OME TAX RULES, 1962. 3 . DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE SUCCEEDED PARTLY. BEING AGGRIEVED BY THE SAID ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US WITH THE GROUNDS MENTIONED ABOVE. THE GROUND WISE ADJUDICATION IS GIVE N IN THE FOLLOWING PARAGRAPHS: 4 . GROUND NO.1, RELATES TO CONFIRMATION OF ADDITION OF ` 38,08,000 ON ACCOUNT OF DISALLOWANCE OF INTEREST. 5 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE INFORMED THAT IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE TRIB UNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003 04 AND 2004 05 , A COPY OF WHICH IS PLACED IN THE PAPER BOOK. HE SUBMITTED THAT SINCE THE ASSESSEE HA D ADEQUATE INTEREST FREE SOURCES OF INCOME FOR INVESTMENT, THEREFORE, THE DISALLOWANCE OF INTEREST IS UNCALLED FOR. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN RELIANCE UTILITIES AND POWER LTD., [2009] 313 ITR 340 (BOM.) . BRINGING OUR ATTENTION TO THE CONTENTS OF PARA 5.2 OF THE ORDER DATED 23 RD JULY 2010 PASSED BY THE TRIBUNAL, IN ITA NO.523 AND 524/MUM./ BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. 4 2008, FOR THE ASSESSMENT YEAR 2003 04 AND 2004 05 CITED SUPRA, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUES RAISED WERE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR PASSING FRESH OR DERS AFTER NECESSARY EXAMINATION OF THE ASSESSEES CLAIM. FURTHER, HE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 3.2 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE LEARNED CIT(A) REFERRED TO THE DECISION OF THE TRIBUNAL CITED SUPRA, HOWEVER, SHE HAS NOT A PPRECIATED THE FACTS OF THE PRESENT CASE. THE FACT OF NOT PASSING A SPEAKING ORDER GIVING THE RELEVANT INFORMATION ABOUT THE AVAILABILITY OF OWN FUNDS AND APPLICABILITY OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT CITED SUPRA WERE ALSO HIGHLIGH TED. 6 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE DUTIFULLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7 . AFTER HEARING THE RIVAL CONTENTIONS AND ON A PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A), WE FIND THAT THE CONTENTS OF PARA 3.2 OF THE IMPUGNED ORDER DOES NOT MAKE ANY REFERENCE TO THE ASSESSEES FUNDS QUA THE BORROWED FUNDS AND THE APPLICABILITY OF THE CITED BINDING JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT. AS PRAYED BY THE LEARNED COUNSEL FOR THE ASSESSEE, WE A RE OF THE CONSIDERED OPINION THAT THE MATER NEEDS TO BE RESTORED FOR WANT OF SPEAKING ORDER. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. 5 PASSED BY THE LEARNED CIT(A) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATION BY PASSING A SPEAKING ORDER AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1, IS ALLOWED FOR STATISTICAL PURPOSES. 8 . GROUND NO.2, RELATES TO DISALLOWANCE OF INTEREST UNDER SECTION 14A OF THE ACT. 9 . BEFORE US, AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT GROUNDS NO.2 AND 3 ARE TO BE REMANDED CONSIDERING THE NEXUS OF INTEREST SEGMENT COMMON LY ATTRACTING TO THE PROVISIONS OF SECTION 36(1) AS WELL AS SECTION 14A. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDER OF THE LEARNED CIT(A). 10 . WE HAVE HEARD BOTH THE PARTIES. SINCE GROUND NO.1 IS RESTORED TO THE FILE OF THE ASSESSING OFFICER, THEREFORE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE GROUND NO.2 AND 3, BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO ADJUDICATE THESE GROUND NO.2 AND 3 AFRESH SIMULTANEOUSLY. WHILE ADJUDICATING THESE GROUNDS, T HE ASSESSING OFFICER MAY NOTE THE ASSESSEES REQUEST FOR RESTRICTING THE DISALLOWANCE TO ` 7,11,585 AS AGAINST ` 6,17,100, AS MENTIONED IN GROUND NO.3 OF THE APPEAL BEFORE US. ACCORDINGLY, GROUND NO.2 AND 3, ARE ALLOWED FOR STATISTICAL PURPOSES. BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. 6 10 . 10 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT O N 20 TH MAY 2015. SD/ - JOGINDER SINGH JUDICIAL MEMBER SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER MUMBAI, DATED : 20.5.2015 / 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 / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI