Appeal details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 5767 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-08-2019
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
C
Assessment Year
2013-2014
Appeal Filed On
12-02-2019
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NOS.337 & 338/CHNY/2019 ! ' / ASSESSMENT YEARS : 2013-14 & 2014-15. THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 1(1) CHENNAI 600 034. VS. M/S. JAIN HOUSING, 98/99, HABIBULLAH ROAD, T. NAGAR, CHENNAI 600 017. [PAN AAEFJ 2408B] ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. R. CLEMENT RAMESH KUMAR, ADDL. CIT &' # $ % /RESPONDENT BY : SHRI. M. KARUNAKARAN, ADV. ( ) $ * /DATE OF HEARING : 01-08-2019 +,'! $ * /DATE OF PRONOUNCEMENT : 08-08-2019 / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE DIRECTED AGAINST THE COMMON ORDER OF THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI (HEREINAFTER CALLED AS CIT(A)) DATED 27.11.2018 FOR THE ASSESSMENT YEARS 2013-2014 & 201 4-2015. ITA NOS.337 & 338/19 :- 2 -: 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS R ELEVANT TO THE APPEAL IN ITA NO.337/CHNY/2019 FOR ASSESSMENT YEAR 2013-14 ARE STATED HEREIN. 4. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW, F ACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A) ERRED IN GIVING RELIEF TO THE ASSESSE E BY GIVING DELETING THE DISALLOWANCE UNDER SECTION 36(L)(III) WITHOUT GIVING OPPORTUNITY TO THE AO UNDER RULE 46A OF THE INCOME TAX RULES, TO EXAMINE THE FRESH EVIDENCE INTRODUCED BY THE ASSESSEE AT THE APPELLATE STAGE THEREBY DENYING OPP ORTUNITY UNDER THE PRINCIPLES OF NATURAL JUSTICE TO THE AO. 3. THE LD.CIT(A) ERRED IN GIVING RELIEF TO THE ASSE SSEE BY DELETING THE DEEMED INCOME ADDED BY THE AO UNDER SE CTION 56(2)(VIIA) OF THE ACT WITHOUT MAKING A FINDING OF FACT NOR APPLYING ANY LEGAL PRECEDENT OR FICTION FOR ALLOWIN G THE RELIEF. 4. THE LD.CIT(A) ERRED IN GIVING RELIEF TO THE ASSE SSEE BY DELETING THE DEEMED INCOME ADDED BY THE AO UNDER SE CTION 56(2)(VIIA) OF THE ACT MERELY ON EQUITY WITHOUT APP LYING ANY PROVISIONS OF THE INCOME TAX ACT, 1961. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER: ITA NOS.337 & 338/19 :- 3 -: THE RESPONDENT-ASSESSEE NAMELY M/S. JAIN HOUSING IS A PARTNERSHIP FIRM CONSTITUTED UNDER THE PARTNERSHIP ACT AND ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. THE RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2013-2014 WAS FILED ON 30.09.2013 DISCLOSING TOTAL INCOME OF RS.65,98,36,420/-. AGAINST THE SAID RETU RN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME, CENTRAL CIRCLE-1(1), CHENNAI (HEREINAFTER REFERRED AS ASSESSING OFFICER) VIDE ORDER DATED 30.03.2016 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT TOTA L INCOME OF RS. 78,84,38,573/- AFTER MAKING ADDITION OF E2,59,00, 000/- U/S.56 (2) (VIIA) OF THE ACT, DISALLOWANCE OF INTEREST U/S. 36 (1) (III) OF THE ACT OF E46,57,535/- AND DISALLOWANCE OF E9,80,44,618/- U/S .14A OF THE ACT. 6. BEING AGGRIEVED BY THE ABOVE ADDITIONS, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VID E IMPUGNED ORDER HAD GRANTED PARTIAL RELIEF BY DIRECTING THE ASSESS ING OFFICER TO DELETE THE ADDITION MADE U/S.56 (2)(VIIA) OF THE ACT AS TH E DIFFERENCE IN THE VALUATION IN THE FAIR MARKET VALUE AND THE VALUE AD OPTED BY THE ASSESSING OFFICER IS LESS THAN 1%. AS REGARDS TO TH E DISALLOWANCE U/S.36(1) (III) OF THE ACT, THE LD. CIT(A) HAD DIRE CTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 12,45,757/- AND RAISED AN ADDITION OF 9,80,44,618/- U/S.14A OF THE ACT, WAS CONFIRMED ITA NOS.337 & 338/19 :- 4 -: BY THE LD. CIT(A). THUS, THE APPEAL FILED BY THE A SSESSEE CAME TO BE PARTLY ALLOWED BY THE LD. CIT(A). 7. AGGRIEVED BY THAT PART OF THE LD. CIT(A) ORDER, WHI CH IS AGAINST REVENUE, THE REVENUE IS IN APPEAL BEFORE US. LD. SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LD. CIT(A) AFTER CONSIDERING THE ADDITIONAL EVIDENCE OUGHT NOT HAVE GRANTED PARTIAL RELIEF IN RESPECT OF ADDITION MADE U/S.36 (1) (III ) OF THE ACT. AS REGARDS TO THE DELETION OF ADDITION IN RESPECT OF SECTION 5 6(2) (VIIA) OF THE ACT, THE LD. SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LD. CIT(A) OUGHT NOT HAVE GRANTED RELIEF AS THE ADDITION IS BA SED ON THE PLAIN PROVISIONS OF INCOME TAX ACT. 8. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIV E PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE GROUNDS OF APPEAL NO.1 & 5 ARE GENERAL IN NATURE THEREFORE, DOES NOT REQUIRE ANY ADJUDICATION. 10. GROUND NO.2, CHALLENGES THE DIRECTION OF THE LD. CI T(A) IN DELETING THE ADDITION TO THE EXTENT OF E30,34,323/- . THE ARGUMENT OF THE LD. SR. DEPARTMENTAL REPRESENTATIVE IS THAT PA RTIAL RELIEF WAS GRANTED BY THE LD. CIT(A) AFTER CONSIDERING THE AD DITIONAL EVIDENCE FILED IN VIOLATION OF PROVISIONS OF RULE 46A OF TH E INCOME TAX RULES, ITA NOS.337 & 338/19 :- 5 -: 1962. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT THE ADDITION ON ACCOUNT OF INTEREST WAS MADE ON THE G ROUND THAT INTEREST COMPONENT WAS NOT INCLUDED IN THE CLOSING WORK IN P ROGRESS WHEREAS FROM THE ORDER OF THE LD. CIT(A) RELIEF WAS GRANTE D UNDER THE PROVISIONS OF SECTION 36(1) (III) OF THE ACT. THUS , THE LD. CIT(A) HAS GRANTED RELIEF ON ALL TOGETHER ON DIFFERENT PREMISE S FROM THAT OF THE ASSESSING OFFICER. THEREFORE IN SUCH CIRCUMSTANCES , THE ONLY RECOURSE AVAILABLE TO THE LD. CIT(A) IS TO GRANT AN OPPORTUN ITY OF HEARING TO THE ASSESSING OFFICER BEFORE DELETING THE ADDITION. THE REFORE, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER SHOULD BE RE MANDED BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE ISSUE IN P ROPER PROSPECTIVE IN ACCORDANCE WITH LAW. THUS, THE GROUND OF APPEAL NO. 2 RAISED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 11. GROUNDS 3 & 4 CHALLENGES THE DIRECTION OF THE LD. C IT(A) IN DELETING THE ADDITION MADE U/S.56(2) (VIIA) OF THE ACT. THE LD. CIT(A) GRANTED RELIEF AFTER CONSIDERING THE FACT THAT THE DIFFERENCE OF FAIR MARKET VALUE AND THE VALUE ADOPTED BY THE ASSESSING OFFICER IS L ESS THAN 1%. NOTHING WAS BROUGHT TO OUR NOTICE CONTROV ERTING THE FINDINGS OF THE LD. CIT(A). IN THESE CIRCUMSTANCES, WE UPHO LD THE ORDER OF THE LD. CIT(A) IN THIS ISSUE. ACCORDINGLY, GROUNDS OF APPEAL 3 & 4 RAISED BY THE REVENUE STAND DISMISSED. ITA NOS.337 & 338/19 :- 6 -: 12. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.337/CHNY/2019 FOR ASSESSMENT YEAR 2013-2014 IS P ARTLY ALLOWED FOR STATISTICAL PURPOSE. 13. NOW, WE TAKE UP ITA NO.338/CHNY/2019, FOR ASSESSMEN T YEAR 2014-2015 FOR ADJUDICATION. 14. IT IS STATED BEFORE US THAT THE TAX EFFECT IN THIS CASE IS LESS THAN RS.20 LAKHS AND THEREFORE, THE CIRCULAR NO. 3/ 2018 DATED 11.07.2018 ISSUED BY THE CENTRAL BOARD OF DIRECT TA XES (CBDT) IN EXERCISE OF ITS POWER VESTED UNDER SEC. 268A(1) OF THE IT ACT COMES INTO PLAY WHEREIN, THE MONETARY LIMIT FOR FILING TH E APPEAL BY THE REVENUE BEFORE THE ITAT AND VARIOUS HIGH COURTS AS WELL AS APEX COURT ARE REVISED WITH AN OBJECT OF THE REDUCING TH E TAX LITIGATION. VIDE PARA 3 OF THE SAID CIRCULAR (SUPRA) IT IS STATED TH AT IN CASES WHERE THE TAX EFFECT IN THE APPEALS TO BE FILED BEFORE THE AP PELLATE TRIBUNAL DOES NOT EXCEED RS. 20 LAKHS APPEALS SHOULD NOT BE FILED . THUS TAKING A NOTE OF CBDT CIRCULAR NO. 03/2018, DATED 11.07.2018 AND CONSIDERING THE FACT THAT THE TAX EFFECT IN THE INSTANT APPEAL IS LESS THAN RS.20 LAKHS, THE PRESENT APPEAL DESERVES TO BE DISMISSED AS NOT PRESSED / NOT MAINTAINABLE. HOWEVER, WE MAKE IT CLEAR THAT TH E ISSUES RAISED IN THE INSTANT APPEAL IS LEFT OPEN TO BE EXAMINED IN T HE APPROPRIATE PROCEEDINGS, IF ARISES, IN FUTURE. AT THE SAME TIM E, WE ALSO MAKE IT CLEAR THAT IF THE APPEALS FALL IN ANY OF THE EXCEPT IONS REFERRED TO IN THE ITA NOS.337 & 338/19 :- 7 -: ABOVE SAID CBDT CIRCULAR, THE REVENUE IS AT LIBERTY TO MOVE AN APPLICATION FOR RECALLING THE ORDER IF SO ADVISED. ACCORDINGLY, IN THE LIGHT OF CBDT CIRCULAR NO.03/2018 DATED 11/07/2018, THE APPEAL STANDS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.338/CHNY/2019 FOR ASSESSMENT YEAR 2014-2015 IS DISMISSED. 16. TO SUMMARIZE THE RESULTS, THE APPEAL OF THE REVENUE IN ITA NO.337/CHNY/2019 FOR ASSESSMENT YEAR 2013-014 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE WHEREAS THE APPEAL OF THE REVEN UE IN ITA NO.338/CHNY/2019 FOR ASSESSMENT YEAR 2014-2015 STA NDS DISMISSED. ORDER PRONOUNCED ON 8TH DAY OF AUGUST, 2019, AT CH ENNAI. SD/- SD/ ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER -) / CHENNAI . / DATED: 8TH AUGUST, 2019. KV /0 $0& *12032'* / COPY TO: 0 1 . # / APPELLANT 3. 0 ( 4*056 / CIT(A) 5. 278 0& * 9 / DR 2. &' # / RESPONDENT 4. 0 ( 4* / CIT 6. 8:0;) / GF
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