ACIT (OSD) 8(1), MUMBAI V. FUTURE CAPITAL HOLDING SLTD, MUMBAI

ITA 3785/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0543 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 02-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: M ANISH DESAI
• Keywords: Income from undisclosed sources; Opportunity of being heard; Earning of tax free income
• Section: 14A; 115JB; 133(6); 131; 68; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO. 3785 / MUM/ 201 2 ( / ASSESSMENT YEAR: 2009 - 10 ) THE ACIT (OSD) 8(1), ROOM NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S FUTURE CAPITAL HOLDINGS LTD. (PRESENTLY KNOWN AS CAPITAL FIRST LTD.), INDIA BULLS FINANC E CENTRE, TOWER - II, 15 TH FLOOR, SENAPATI BAPAT MARG, ELPHINSTON (W), MUMBAI - 400013 ./ ./ PAN/GIR NO. : AACCK 6863 C ( / APPELLANT ) .. ( / RESPONDENT ) . / CO NO. 122 / MUM/ 201 3 ( / ASSESSMENT YEAR: 2009 - 10 ) M/S FUTURE CAPITAL HOLDINGS LTD. (PRESENTLY KNOWN AS CAPITAL FIRST LTD.), INDIA BULLS FINANCE CENTRE, TOWER - II, 15 TH FLOOR, SENAPATI BAPAT MAR G, ELPHINSTON (W), MUMBAI - 400013 VS. THE ACIT (OSD) 8(1), ROOM NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AACCK 6863 C ( / APPELLANT ) .. ( / RESPONDENT ) & ./ ITA NO. 4429 / MUM/ 201 4 ( / ASSESSMENT YEAR: 2010 - 11 ) M/S CAPITAL FIRST LTD. (FORMERLY KNOWN AS FUTURE CAPITAL HOLDINGS LTD.), INDIA BULLS FINAN CE CENTRE, TOWER - 2, 15 TH FLOOR, VS. DY. COMMISSIONER OF INCOME TAX, RANGE - 8(1), AAYAKAR BHAVAN MUMBAI 2 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 SENAPATI BAPAT MARG, ELPHINSTON (W), MUMBAI - 400013 ./ ./ PAN/GIR NO. : AACCK 6863 C ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SH. MANISH DESAI /REVENUE BY : SH. B.S. BIST / DATE OF HEARING : 02/05 /2017 / DATE OF PRONOUNCEMENT : 24 /05 /2017 / O R D E R PER RAM LAL NEGI, JM THESE ARE THE APPEALS AND CROSS OBJECTION FILED BY THE REVENUE AND THE ASSESSEE PERTAINING TO THE ASSESSMENT Y EAR 2009 - 10 & 2010 - 11. ITA N O. 3785/MUM/2012 HAS BEEN PREFERRED BY THE D EPARTMENT AGAINST ORDER DATED 19/03/2012 PASSED BY THE LD. CIT (A) - 16, MUMBAI, FOR THE ASSESSMENT YEAR 2009 - 110, VIDE WHICH THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE FILED AGAINST ASSESSMENT O RDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). THE ASSESSEE HAS ALSO FILED CROSS OBJECTION NO. 122/MUM/2013 AGAINST THE SAID ORDER. ITA NO. 4429/MUM/2014 HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 21/03/2014 PASSED B Y THE LD. CIT (A) - 16, MUMBAI, FOR THE ASSESSMENT YEAR 2010 - 11, VIDE WHICH THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE ACT. 3 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 2 . SINCE, BOTH THE APPEAL S AN D THE CROSS OBJECTION PERTAI N TO THE SAME ASSESSEE , ALL THE THREE MATTERS WERE CLUBBED, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 3785/MUM/2012 (ASSESSMENT YEAR: 2009 - 10 ) 3. THE ASSESSEE , A NON - BANKING F INANCIAL COMPANY ENG AGED IN THE BUSINESS OF INVESTMENT, ADVISORY, WHOLESALE CREDIT AND TREASURY ACTIVITIES AND RETAIL FINANCIAL SERVICES, FILED ITS RETURN OF INCOME DECLARING THE TOTAL LOSS OF RS. 4,46,85,575/ - AND BOOK PROFIT U/S 115JB AT RS. 10,15,232/ - . LATER ON REVISED RE TURN OF INCOME WAS FILED DECLARING THE TOTAL LOSS OF RS. 4, 62,27,872 / - AND BOOK PROF IT U/S 115JB AT RS. 10,15,232/ - . THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. IN RESPONSE TO NOTICE U/S 143 (2) AND 142 (1) , THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE SUBMITTED THE RELEVANT DETAILS. 4. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN DIVIDEND INCOME AMOUNTING TO RS. 13,00,92,449/ - AND HAD CLAIMED EXEMPT ION U/S 10(34) OF THE ACT IN COMPUTATION OF INCOME . T HE ASSESSE E HAD MADE DISALLOWANCE OF R S. 1,90,89,747/ - U/S 14A I.E., @ 5% OF THE EXEMPT INCOME. ACCORDINGLY , THE ASSESSE E WAS ASKED AS TO WHY DISALLOWANCE U/S 14A SHOULD NOT BE WORKED OUT AS PER RULE 8D. THE ASSESSEE CONTENDED THAT IT HAD CORRECTLY WORKED OUT THE SUO MOTU DISALLOWANCE . THE AO HOLDING THAT THE ASSESSEE COMPANY HAD TAKEN INTO ACCOUNT ONLY THE DIRECT EXPENSES RELATED TO THE EXEMPT INCOME CALCULATED THE DISALLOWANCE AS PER RULE AND RULE 8D AND WORKED OUT THE TOTAL DISALLOWANCE U/S 14A AT RS. 6,62,37,843/ - . ACC ORDINGLY, THE AO PASSED THE A SSESSMENT ORDER U/S 143 (3) OF THE ACT AFTER MAKING ADDITIONS INTER ALIA THE AFORESAID AMOUNT OF DISALLOWANCE AND RS. 86,259/ - AS UNDISCLOSED INCOME U/S 68 OF THE ACT, TO THE INCOME OF THE 4 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 ASSESSEE, THEREBY DETERMINING THE TOTA L INCOME AT RS. 48,16,333/ - U/S 115JB OF THE ACT. 5. THE ASSESSEE CARRIED THE MATTER TO THE CIT (A) IN FIRST APPEAL AND THE LD. CIT (A ) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE PROVISIONS OF THE SECTION 14A R.W. RULE 8D ARE NOT APPLICAB LE TO THE FACTS OF THE ASSESSEES CASE AND RESTRICTED THE DISALLOWANCE TO THE DISALLOWANCE ALREADY MADE BY THE ASSESSEE IN ITS RETURN OF INCOME. THE LD CIT(A) ALSO DELETED THE ADDITION MADE U/S 68 OF THE ACT. 6 . THE DEPARTMENT HAS CHALLENGED THE IMPU GNED ORDER ON THE FOLLOWING EFFECTIVE GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) FAILED TO INTERPRET THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 AND RULE 8D IN ITS RIGHT PERSPECTIVE AND TRUE MEANI NG. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN SETTING ASIDE THE ORDER OF THE AO AND RESTORING THE ISSUE BACK TO THE AO FOR PASSING A FRESH ORDER AFTER NECESSARY RE - EXAMINATION, IN THE LIGHT OF THE JUDGEMENT O F M/S. GODREJ AND BOYCE MANUFACTURING CO. LTD . V/S. DCIT (328 ITR 81) (SUPRA) WITHOUT APPRECIATING THE FACT THEIR LORDSHIPS HAD UPHELD THE CONTENTIONS OF THE UNION OF INDIA THAT RULE 8D IS REASONABLE IN ITS NATURE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED DELETING THE DISALLOWANCE MADE BY THE AO OF RS. 86,259/ - AS UNDISCLOSED INCOME U/S. 68 OF THE ACT IGNORING THE FACT THAT THE ASSESSEE FAILED TO RECONCILE THE ITS DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. 5 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 7. GROUND NO 1 &2 PERTAIN TO THE DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE INCOME TAX RULES. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE FINDINGS OF THE AO SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY RESTRICTED THE DISALLOWA NCE TO RS. 1,90,89,747/ - ALREADY MADE BY THE ASSESSEE IN ITS RETURN OF INCOME. SINCE, THE ASSESSEE HAD TAKEN INTO ACCOUNT ONLY DIRECT EXPENSES INCURRED IN EARNING EXEMPT INCOME, THE AO HAS RIGHTLY CALCULATED THE DISALLOWANCE UNDER RULE 8D OF THE IT RULES. M OREOVER, THE ASSESSEE HAS NOT CONTEND ED DURING THE ASSESSMENT PROCEEDINGS THAT NO INDIRECT EXPENSES WERE INCURRED FOR EARNING EXEMPT INCOME. HENCE, THE FINDINGS OF THE LD. CIT(A) IS LIABLE TO BE SET ASIDE. 8. ON THE OTHER HAND, THE LD COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS CONTRARY TO THE SETTLED PRINCIPLES OF LAW. THE COMPANYS DIVIDEND INVESTMENT DECREASED DURING THE PREVIOUS YEAR AS COMPARED TO THE FINANCIAL YEAR 2007 - 08 AND THE COMPANY HAD SUFFICIENT FUNDS TO ME ET THE INVESTMENT. RELYING UPON THE DECISIONS OF THE HONBLE SUPREME COURT AND VARIOUS HIGH COURT S THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAD WRONGLY MADE THE SUO MOTU DISALLOWANCE U/S 14A OF THE ACT IN ITS RETURN OF INCOME. SINCE, D URING THE YEAR UND ER CONSIDERATION THE DIVIDEND BEARING INVESTMENT S HA VE BEEN REDUCED SUBSTANTIALLY IT CANNOT BE CONCLUDED THAT THERE HAS BEEN AN INCREASE IN THE ADMINISTRATIVE COST AS COMPARED TO THE A.Y . 2008 - 09. THE LD. COUNSEL REITERATED CONTENTION S OF THE ASSESSEE MADE BEFORE THE LD. CIT (A) THAT THE COST ATTRIBUTABLE TO INVESTMENT IN DIVIDEND EAR N ING INVESTMENT ACTIVITIES @ 10% I.E. RS. 7,19,438/ - . T HEREFORE, THE DISALLOWANCE U/S 14A OF THE ACT HAS TO BE RESTRICTED TO RS. 7,19,438/ - ONLY. W ITHOUT PREJUDICE , THE LD. COUN SEL FOR THE APPELLANT SUBMITTED THAT THE ASSESSEE HAD FURNISHED THE DETAILS TO SUBSTANTIATE ITS CLAIM THAT ONLY 6 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 EXPENDITURE AS MENTIONED ABOVE WAS ACTUALLY INCURRED FOR EARNING THE DIVIDEND INCOME. RELYING ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT PASSED IN GODREJ & BOYCE MFG. COMPANY LTD. V S. DCIT, 328 ITR 8 BOMBAY, THE LD. COUNSEL SUBMITTED THAT THE SUB - SECTION 2 OF SECTION 14A SPECIFICALLY PROVIDES THAT AO SHALL PROCEEDS TO DETERMINE THE AMOUNT OF DISALLOWANCE O NLY IF HE IS NOT SATISFIED WITH TH E CORRECTNESS OF THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED BY HIM IN RELATION TO AN EXEMPT INCOME AND IN DOING SO THE AO IS REQUIRED TO ESTABLISH THE NEXUS OF THE EXPENDITURE SOUGHT TO BE DISALLOWED WITH THE INCOME NOT INCLUDED IN TOTAL IN COME BEFORE QUANTIFYING THE DISALLOWANCE AS PER RULE 8D. THE LD. COUNSEL FURTHER SUBMITTED THAT S INCE, AN AMOUNT OF RS. 7,19,438/ - HAS BEEN INCURRED FOR EARNING EXEMPT INCOME, THE DISALLOWANCE U/S 14A OF THE ACT MAY BE RESTRICTED TO RS. 7,19,438/ - ONLY . T HE LD. C OU N SEL FURTHER POINTED OUT THAT THE MUMBAI TRIBUNAL HAS DEALT WITH THE IDENTICAL ISSUE IN ASSESSEES OWN CASE ITA NO. 2801/MUM/2012 AND ITA NO. 2137/MUM/2012 FOR THE ASSESSMENT YEAR 2008 - 09 AND THE TRIBUNAL HAS SET ASIDE THE IMPUGNED ORDER TO THE F ILE OF THE LD. CIT (A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE UNADDRESSED CLAIM OF THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL PLACED ON RECORD. THE CONTENTION OF THE ASSESSEE IS THAT THE DISALLOWANCE U/S 1 4A OF THE ACT SHOULD NOT EXCEED THE EXPENDITURE INCURRED DIRECTLY OR INDIRECTLY FOR EARNING THE INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME. WE NOTICE THAT VIDE ORDER DATED 18.11.2016, PASSED IN THE ASSESSEES OWN CASE (SUPRA) FOR THE ASSESSMENT YEA R 2008 - 09 , THE CO - ORDINATE BENCH HAS SET ASIDE THE IDENTICAL ISSUE TO THE FILE OF THE LD. CIT (A) FOR RECONSIDERATION IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE. THE RELEVANT PORTION OF THE DECISION READS AS UNDER: - 7 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 4.3.3 IN VIEW OF THE FACT THAT THE LEARNED CIT (A) HAS NOT ADDRESSED THE ASSESSEES CLAIM MADE BEFORE HIM THAT THE DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D OUGHT TO BE NOT MORE THAN RS. 9,46,325/ - , AFTER HAVING NOTED THE ASSESSEES AVERMENTS IN THIS REGARD AT PARAS 2.2.2 TO 2.2.6, W E ARE OF THE VIEW THAT IT WOULD NOT BE APPROPRIATE FOR US TO ADJUDICATE ON THE MERITS OF THE DISALLOWANCE UNDER SECTION 14A W.R. RULE 8D IN THE IMPUGNED ORDER AT THIS STAGE, WITHOUT HAVING THE ASSESSEES CLAIM ADDRESSED BY THE LEARNED CIT (A)/AO. IN THIS F ACTUAL MATRIX OF THE CASE WE ARE OF THE OPINION THAT THE BEST INTEREST OF JUSTICE WOULD BE SERVED IF THE ISSUE OF THE DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D BE SET ASIDE TO THE FILE OF THE LEARNED CIT (A) TO BE RECONSIDERED AFRESH AND ALSO IN THE LIGH T OF THE UNADDRESSED CLAIM OF THE ASSESSEE THAT THE SAME SHOULD BE RESTRICTED TO RS. 9,46,3 25/ - . NEEDLESS TO ADD THAT THE ASSESSEE BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS IN THIS REGARD AND ALSO TO THE AO FOR REBUTTA L OF THE SAME. IT IS ACCORDINGLY ORDERED. CONSEQUENTLY, GROUND (I) AND (II) OF REVENUE APPEAL AND GROUND NO. 1 OF THE ASSESSEES APPEAL ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10. T HE IDENTICAL ISSUE HAS BEEN DEALT WITH BY THE C O - ORDINATE B ENCH IN THE ASSESSEES OWN CASE FOR THE A.Y. 2008 - 09. WE THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE CO - ORDINATE BENCH PASSED IN ASSESSEES OWN CASE AFORESAID SET ASIDE THIS ISSUE TO THE FILE OF LD. CIT (A) TO RECONSIDER AFRESH IN THE LIGHT OF THE U NADDRESSED CLAIM OF THE ASSESSE E THAT THE DISALLOWANCE SHOULD BE RESTRICTED TO RS. 7,19,438/ - AFTER HEARING THE ASSESSEE. CONSEQUENTLY, GROUND NO. 1 AND 2 OF THE REVENUE S APPEAL AND GROUND NO. A & B OF THE GROUNDS OF CROSS OBJECTION RAISED BY THE ASSESSE E STAND PARTLY ALLOWED. 11. AS REGARDS GROUND NO . 2 WHICH RELATES TO ADDITION MADE U/S 68 OF THE ACT, THE LD. DR SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY DELETED THE DISALLOWANCE MADE BY THE AO AS UNDISCLOSED INCOME U/S 68 OF THE 8 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 ACT IGNORING THE FA CT THAT THE ASSESSEE HAS FAILED TO RECONCILE THE ITS DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 12. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE FINDINGS OF THE LD. CIT (A) SUBMITTED THAT THE ASSESSEE HA D PROVIDED ALL INFORMATION RELATING TO ITS AND REQUESTED THE AO TO ISSUE NOTICE U/S 133 (6) TO THE PARTY. MOREOVER, T HE ASSESSEE HAS ACCOUNTED FOR EACH AND EVERY ITEM OF INCOME AND AS SUCH THERE IS NO ELEMENT OF UNACCOUNTED INCOME. THEREFORE, THERE IS NO MERIT IN THE CO NTENTION OF THE REVENUE. 13. HAVING HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RECORD WE ARE INCLINE D TO AGREE WITH THE LD. CIT (A) THAT THE APPELLANT HAS ACCOUNTED EACH AND EVERY ITEM OF INCOME. THE LD. CIT (A) HAS ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE HOLDING AS UNDER: - 4.3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT AND ALSO CAREFULLY GONE THROUGH THE DOCUMENTS AVAILABLE ON RECORD. I FIND THAT THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUESTED THE L D. AO TO ISSUE NOTICE U/S 133(6) TO THE PARTIES TO ASCERTAIN THE FACTS. IT WAS ALSO CONTENDED BY THE APPELLANT THAT AMOUNT SHOWN IN THE ITS DID NOT PERTAIN TO HIM. THE APPELLANT HAS ACCOUNTED EACH AND EVERY ITEMS OF INCOME. THE LD. AO DID NOT ISSUED NOTICE S U/S 133(6) OR CALLED FOR THE ASSESSMENT PARTICULAR OF THESE PARTIES TO ASCERTAIN THE FACT ON RECORD. NO DOUBT THE DATA HAS COME FROM THE ITS BUT IT IS EASY FOR THE LD. AO TO ASCERTAIN THE JURISDICTION OF THE PARTIES CONCERN AND ACCORDINGLY CALLED FOR THE INFORMATION U/S 131 OR U/S 133(6) OF THE ACT OR ALTERNATIVELY THE LD. AO CAN SEEK THE INFORMATION FROM THE CONCERNED AO OF THESE TWO PARTIES. HAVING DONE NOTHING TO ASCERTAIN THE FACTS AND MOREOVER THESE ARE NOT THE CREDITS APPEARING IN THE BOOKS OF ACCOU NT WHICH THE APPELLANT FAILED TO SUBSTANTIATE. ON THE CONTRARY, THESE ARE THE INFORMATION OBTAINED FROM THE ITS HAVING DENIED THAT THE SAME PERTAINS TO THE APPELLANT THE ONUS OF PROVING THE TRANSACTIONS FALLS ON THE 9 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 AO. IT IS THEREFORE, INCUMBENT UPON THE AO TO VERIFY THE SAME AND IF FOUND TO BE RELATING TO APPELLANT THE SAME CAN BE ADDED. HOWEVER, I FIND THAT THE LD. AO HAS DONE NOTHING. IN VIEW OF THE FOREGOING, I DO NOT FIND THE ADDITION CAN BE MADE U/S 68 OF THE ACT. THE SAME IS ACCORDINGLY DELETED . 14. AS POINTED OUT BY THE LD. CIT(A), THE ASSESSEE HAD ACCOUNTED EACH AND EVERY ITEMS OF INCOME . UNDER THESE CIRCUMSTANCES, IT WAS THE DUTY OF THE AO TO ISSUE NOTICES U/S 133(6) OR CALLED FOR THE ASSESSMENT PARTICULAR OF THESE PARTIES TO ASCERTAIN THE FACT ON RECORD . SINCE THE AO HAS OPTED NOT TO ASCERTAIN THE FACTS, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. NO ADDITION CAN BE MADE ON THE BASIS OF ASSUMPTION OR PRESUMPTION. IN OUR CONSIDERED VIEW, T HERE IS NO EVIDENCE ON RECORD TO JUST IFY THE ADDITION. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT (A). WE , THEREFORE, UPHELD THE FINDINGS OF THE LD. CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. CO NO. 122 /MUM/2013 (ASSESS MENT YEAR: 2009 - 10 ) THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS : 1. AGAINST CONFIRMATION OF DISALLOWANCES U/S 14A OF THE ACT AT RS. 1,90,89,747/ - A. THE CIT (A) HAS ERRED IN CONFIRMING DISALLOWANCES UNDER SECTION 14A OF THE ACT AT RS. 1,90, 89,747/ - WITHOUT TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE RESPONDENT DURING THE APPELLATE PROCEEDINGS. B. THE RESPONDENT HUMBLY SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE OUGHT NOT BE EXCEED THE EXPENDITURE INCURRE D DIRECTLY OR INDIRECTLY FOR EARNING THE INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME. 10 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 C. THE RESPONDENT HUMBLY PRAYS THAT APPROPRIATE RELIEF BE GRANTED IN THE INTEREST OF JUSTICE. 2. LEAVE TO ADD, ALTER AND/OR SUPPLEMENT GROUND SO APPEAL. THE RESPO NDENT CRAVES LEAVES TO ADD, ALTER, AND SUPPLEMENT ANY GROUND OR GROUNDS, IF NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 2. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) SUSTAINING THE DISALLOWANCE OF RS. 1,90,89,747/ - UNDER SECTION 14A OF T HE ACT. SINCE, WE HAVE SET ASIDE THE FINDINGS OF THE LD. CIT(A) IN ITA NO 3785/ MUM/2012 AFORESAID THE PRESENT CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 4429/MUM/2014 (ASSESSMENT YEAR: 2010 - 11 ) BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 10,33,02,250/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND AFTER SCRUTINY ASSESSMENT ORDER WAS PASSED DETERMINING THE TOTAL INCOME OF RS. 21,87,01,860/ - AFTER MAKING DISALLOWANCE OF RS. 3,28,69,157/ - UNDER SECTION 14A OF THE ACT. T HE ASSESSMENT ORDER WAS CHALLENGED BEFORE THE LD. CIT (A) . THE LD. CIT (A) AFTER HEARING THE ASSESSEE RESTRICTED THE DISALLOWANCE TO RS. 34,39,162/ - I.E. @ 5% OF THE AVERAGE VALUE OF INVESTMENT. 2 . TH E ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE ASSESSEE FILED THE FOLLOWING GROUNDS OF APPEAL: - 1. DISALLOWANCE UNDER SECTION 14A OF THE ACT RS. 3,28,69,157/ - 11 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 A) THE COMMISSIONER OF INCOME TAX (APPEALS) - 16, MUMBAI [CIT (A) HAS ERRED IN NOT ACCEP TING THE LEGAL PLEA RAISED BY THE APPELLANT DURING THE COURSE OF APP ELLATE PROCEEDING THAT ONLY RS. 12,00,000/ - IS DISALLOWABLE U/S 14A OF THE ACT, WITHOUT GIVING ANY FINDING/REASONING FOR SUCH NON ACCEPTANCE. B) THE APPELLANT PRAYS THAT SINCE THE DISALLOWAN CE AS PER THE PROVISIONS OF SECTION 14A CANNOT BE HIGHER THAN RS. 12,00,000/ - , THE EXCESS DISALLOWANCE BE DELETED. 2. LEAVE TO ADD, ALTER AND/OR SUPPLEMENT GROUND OF APPEAL. THE APPELLANT CRAVES LEAVES TO ADD, ALTER, AND SUPPLEMENT ANY GROUND OR GROUNDS , IF NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3 . ONE OF THE ISSUES INVOLVED IN D EPARTMENTS APPEAL AND CROSS OBJECTION PERTAINING TO THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 IS IDENTICAL TO THE ISSUE INVOLVED IN THE PRESENT CASE. SINCE, W E HAVE SET ASIDE THE IDENTICAL ISSUE TO THE FILE OF LD. CIT (A) FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE THAT THE DISALLOWANCE U/S 14A SHOULD NOT EXCEED THE EXPENDITURE INCURRED DIRECTLY OR INDIRECTLY FOR EARNING THE INCO ME WHICH IS NOT INCLUD I BLE IN THE TOTAL INCOME, BY FOLLOWING THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR THE A.Y. 2008 - 09 AFORESAID, ON THE SAME LINES WE SET ASIDE THE ISSUE INVOLVED IN THIS CASE TO THE FILE OF CIT (A) FOR DEC IDING THE ISSUE AFRESH TAKING INTO ACCOUNT THE CONTENTION OF THE ASSESSEE. NEEDLESS TO SAY THAT THE ASSESSEE BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS AND TO MAKE SUBMISSIONS IN THIS REGARD AND ALSO TO THE AO FOR REBUTTAL OF THE S AME. 12 ITA NO S . 3785/M/12, 122/M/13 & 4429/M/14 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 IN THE RESULT, APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10 AND THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010 - 11 ARE PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COU RT ON 24 TH M AY , 2017 . SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 24 / 0 5 / 2017 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MU MBAI