DCIT, Circle-3(2), Hyderabad, Hyderabad V. Sri Vasavi Industries Limited, Hyderabad, Hyderabad

ITA 376/HYD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0983 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2003-2004
• Appeal Filed On: 02-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH B HYDERABAD (THROUGH VIDEO CONFERENCE ) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO S . 375 & 376 /HYD./201 7 A .Y : 200 2 - 03 & 2003 - 04 DY.CIT, CIRCLE 3(2) VS. SRI VASAVI INDUSTRIES LIMITED HYDERABAD HYDERABAD [PAN: AADCS 1262L ] (APPELLANT) (RESPONDENT) FOR REVENUE: S RI ROHIT MUJUMDAR, D.R. FOR ASSESSEE: NONE DATE OF HEARING : 17/06/ 2021 DATE OF PRONOUNCEMENT : 12 /0 7 /2021 O R D E R PER S.S. GODARA, J.M. TH ESE REVENUES APPEAL S FOR A.Y. 200 2 - 03 AND 2003 - 04 A RISE AGAINST THE CIT( A) - 3 HYDERABADS ORDER DATED 08.12.2016 PASSED IN CASE NO S . 1371 & 1372 /201 4 - 15 INVOLVING PROCEEDINGS U/S 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 [ IN SHORT THE ACT ]. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHEST. IT IS ACCORDINGLY PR OCEEDED EX PARTE. THE R EVENUE HAS RAISED THE FOLLOWING IDENTICAL SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL. ITA NOS. 375 & 376/HYD/2017 AYS 2002 - 03 & 2003 - 04 SRI VASAVI INDUSTRIES LTD. 2 1. THE LD.CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASES. 2. THE LD..CIT (A) ERRED IN DIRECTING THE AO TO VERIFY THE BANK ACCOUNT OF THE ASSESSEE TO EXAMINE THE ALLOWABILITY OF INTEREST DISALLOWED BY THE AO U/S 14A OF THE ACT. 3, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE PRINCIPLE OF SWAP INVESTMENT DOES NOT APPLY TO THE C A SE OF THE ASSESSEE AS THER E IS NO MERGER/ACQUISITION OF THE COMPANIES TOOK PLACE DURING THE YEAR UNDER CONSIDERATION. 4. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THE ASSESSING OFFICER RIGHTLY DISALLOWED THE INTEREST U/S 14A , IN VIEW OF THE FACT THAT THE ASSESSEE COMPANY COULD NOT PROVE THE GENUINENESS OF ITS CLAIM BEFORE THE AO DURING THE RE - ASSESSMENT PROCEEDINGS, MADE CONSEQUENT TO THE DIRECTIONS OF HON'BLE ITAT. 5. THE LD.CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE MADE BY THE AO IN THE CIRCUMSTANCES THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM EVEN DURING THE APPELLATE PROCEEDINGS, AND ERRED IN DIRECTING THE AO TO VERIFY ONCE AGAIN THEREBY PROVIDING MULTIPLE OPPORTUNITIES TO THE ASSESSEE. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. IT EMERGES DURING THE COURSE OF HEARING THAT THE REVENUES IDENTICAL SUBSTANTIVE GRIEVANCE SEEKS TO REVIVE THE ASSESSING OFFICERS ACTION INVOKING SEC14A DISALLOWANCE OF R S.1,80,12,000/ - AND RS.1,80,00,000/ - AY WISE RESPECTIVELY BY PLEADING THAT THE CIT(A)S REMAND DIRECTIONS TO THE ASSESSING OFFICER TO VERIFY THE ASSESSEES AVAILABILITY OF NON - INTEREST BEARING FUNDS GO CONTRARY TO THE LEGISLATIVE AMENDMENT VIDE FINANCE (II) ACT, 2001 W.E.F. 1 . 6 . 2001 OMITTING THE CLINCHING STATUTORY EXPRESSION OR HE MAY SET ASIDE IN SEC.251(1)(A) OF THE ACT. WE FIND PRIMA FACIE MERIT IN R EVENUES INSTANT ARGUMENT GOING BY THE STATUTORY AMENDMENT. THE FACT ALSO REMAINS THAT THE ASSESSING OFFICER HIMSELF HAD NOT TAKEN INTO CONSIDERATION THE CLINCHING ASPECT OF AVAILABILITY OF ASSESSEES NON - INTEREST BEARING FUNDS WHILST COMPUTING THE IMPU GNED DISALLOWANCE IN BOTH THESE AYS. WE, THEREFORE, REVERSE THE CIT(A)S DIRECTIONS IN PRINCIPLE AND OURSELVES RESTORE THE VERY ISSUE BACK TO THE ASSESSING OFFICER FOR HIS NECESSARY FACTUAL VERIFICATION OF ASSESSEES NON - INTEREST BEARING FUNDS AVAILABILI TY IN THE RELEVANT PREVIOUS YEAR (S) AS WELL AS AT THE TIME OF MAKING INVESTMENT S AS PER LAW. ITA NOS. 375 & 376/HYD/2017 AYS 2002 - 03 & 2003 - 04 SRI VASAVI INDUSTRIES LTD. 3 2.1. NO OTHER ARGUMENT HAS BEEN RAISED BEFORE US. TH ESE REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. PRONOUNCED IN OPEN COURT ON 12 T H JULY, 2021. SD/ - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 12TH JULY, 2021. * GMV COPY OF THE ORDER FORWARDED TO: 1. DY.CIT, CIRCLE 3(2), HYDERABAD. 2. M/S SRI VASAVI INDUSTRIES LIMITED, 51, SAGAR SOCIETY, BANJARA HILLS, HYDERABAD , TELANGANA. 3. A CIT, RANGE 3, HYDERABAD 4. CIT (A) - 3 , HYDERABAD 5. PR.CIT - 3 , HYDERABAD 6 . DR, ITAT, HYDERABAD. 7 . GUARD FILE.