BLITZ BUILDWELL PVT. LTD., NOIDA V. DCIT, CIRCLE- 5(1), NEW DELHI

ITA 3858/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1042 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJOG KAPOOR
• Keywords: Principle of natural justice; Earning of tax free income; TDS; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 3858/DEL/2017 ASSESSMENT YEAR: 2012-13 BLITZ BUILDWELLPVT. LTD., C-56/41, SECTOR-62, NOIDA. AADCB6603N VS DCIT, CIRCLE-5(1), NEW DELHI APP ELLANT RESPONDENT ASSESSEE BY NONE REVENUE BY SH. SANJOG KAPOOR, SR. DR ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 31/01/2017 IN APPEAL NO. 111/15-16 OF CIT(A)-2, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, NEW DELHI (LD. CIT(A)) FOR ASSESSMEN T YEAR 2012-13, M/S BLITZ BUILDWELL PRIVATE LTD (THE ASSESSEE) FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S BEEN ENGAGED IN THE BUSINESS OF PROMOTERS, DEVELOPERS, PROPRIETORS ETC IN REAL ESTATE ACTIVITIES. FOR THE ASSESSMENT YEAR 2012-13, THEY H AVE FILED THEIR RETURN OF INCOME DECLARING A LOSS OF RS. 3,99,39,027/-. AS SESSMENT UNDER SECTION 143(3) OF THE ACT INCOME TAX ACT, 1961 (FOR SHORT THE ACT) WAS DATE OF HEARING 12.12.2019 DATE OF PRONOUNCEMENT 18.12.2019 2 COMPLETE BY ORDER DATED 9/3/2015 AT A LOSS OF RS. 9 ,107/-AFTER MAKING ADDITIONS, INTERALIA, DISALLOWANCE ON LOAN TO THE T UNE OF RS.4,08,10,354/- AND DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES1962 (THE RULES) TO THE TUNE OF R S. 14, 97, 017/-. 3. AGGRIEVED BY THE SAID ADDITIONS, ASSESSEE PREFER RED AN APPEAL BEFORE THE LD. CIT(A). IT IS SEEN FROM THE IMPUGNED ORDER THAT THERE WAS NO REPRESENTATION BEFORE THE ASSESSEE BEFORE THE LD . CIT(A) AND NOTICES TO THE ADDRESSES GIVEN IN FORM NO. 35 WERE RETURNED ANSWERED, AND THEREFORE THE NOTICE WAS SERVED BY AFFIXTURE. 4. LD. CIT(A), HOWEVER, NOTED THE FACTS OF THE CASE , AND OBSERVING THAT THERE NO ONE HAS ATTENDED THE PROCEEDINGS ON B EHALF OF THE ASSESSEENOR ANY DETAILS REGARDING THE ADDITIONS WER E FILED, DECIDED THE ISSUES EX PARTE. 5. FELT AGGRIEVED BY SUCH AN ORDER PASSED EX PARTE, ASSESSEE PREFERRED THIS APPEAL ON SEVERAL GROUNDS RELATING T O THE ADDITIONS, AND ALSO STATING THAT THE PROCEEDINGS BEFORE THE AUTHOR ITIES BELOW WERE CONDUCTED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND THE ASSESSEE WAS NOT GRANTED SUFFICIENT AND PROPER OPPO RTUNITY OF BEING HEARD AND TO ADDRESS EVIDENCE IN ITS SUPPORT. IN TH E GROUNDS OF APPEAL ASSESSEE TRIED TO DEMONSTRATE THAT THE ADDITIONS MA DE WERE UNSUSTAINABLE. 6. WHEN THE MATTER IS CALLED, NEITHER THE ASSESSEE NOR ANY AUTHORISED REPRESENTATIVE ENTERED APPEARANCE. IT COULD BE SEEN FROM THE RECORD THAT THE NOTICE WAS SENT TO THE ADDRESS GIVEN IN FORM NO . 36. IF THE ASSESSEE IS AVAILABLE IN SUCH ADDRESS, SUCH NOTICE SHOULD HAVE BEEN SERVED ON THE 3 ASSESSEE. IF FOR ANY REASON, THE ASSESSEE IS NOT AV AILABLE THERE, IT IS FOR THE ASSESSEE TO MAKE ARRANGEMENTS FOR SERVICE OF SUCH N OTICE BY FURNISHING THE ADDRESS WHERE THE ASSESSEE WOULD BE AVAILABLE, OR TO DELIVER IT TO SOME AUTHORISED PERSON, OR BY MAKING REQUEST TO THE POSTAL DEPARTMENT TO DETAIN THE MAIL TILL THE ASSESSEE CLAIMS THE SAM E. SINCE THE ASSESSEE DOES NOT SEEM TO HAVE ADOPTED ANY OF THESE METHODS, WE ARE THE CONSIDERED OPINION THAT NO TIME COULD BE GRANTED. B ASING ON THE RECORD WE PROCEED TO HEAR THE COUNSEL FOR REVENUE AND DECI DE THE MATTER ON MERITS. 7. IT COULD BE SEEN FROM THE IMPUGNED ORDER THAT ON ONE OCCASION THE NOTICE SENT TO THE ASSESSEE BY THE LD. CIT(A) W AS RETURNED UN-SERVED WITH THE ENDORSEMENT THAT NO SUCH PERSON AT THIS A DDRESS AND ON ANOTHER OCCASION WITH THE ENDORSEMENTS THAT ADDRES S NOT CORRECT. THE AR OF THE ASSESSEE APPEARED ON 14/10/2016 AND SUBMI TTED A NEW ADDRESS. NOTICES SENT TO THIS NEW ADDRESS WAS RETUR NED AND ON VERIFICATION, IT WAS FOUND THAT THE PREMISESWAS LOC KED FROM OUTSIDE. 8. INSOFAR AS THIS APPEAL IS CONCERNED, ASSESSEE CA LLED IN QUESTION THREE ADDITIONS. FIRST ONE IS IN RESPECT OF RS. 4,0 8,10,354/-ON ACCOUNT OF DISALLOWANCE OF INTEREST ON THE LOAN TAKEN BY THE A SSESSEE TREATING THE SAME AS FOR NON-BUSINESS PURPOSES, SECOND ONE IS ON ACCOUNT OF DISALLOWANCE OF RS. 14,97 017/-BY INVOKING SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES, AND THE LAST WAS IN RESP ECT OF THE ADDITION OF RS. 18,468/- ON ACCOUNT OF DISALLOWANCE OF INTEREST ON LATE PAYMENT OF TDS. 10. INSOFAR AS THE 1 ST ADDITION OF RS.4,08,10,354/- IS CONCERNED, DURING THE SCRUTINY LEARNED ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD 4 TAKEN A LOAN OF RS. 25 CRORES FROM M/S ECL FINANCE LTD AND PAID AN INTEREST OF RS.4,08,10,354/-. THOUGH THE ASSESSEE P LEADED THAT NO PART OF SUCH LOAN WAS UTILISED FOR PURCHASE OF SHARES AND T HE SHARES WERE PURCHASED IN THE EARLIER YEARS, LEARNED ASSESSING O FFICER ON VERIFICATION OF THE BALANCE SHEET FOUND THAT OUT OF THE LOAN OF RS. 25 CRORES OBTAINED DURING THE FINANCIAL YEAR 2011-12, THE ASSESSEE ADV ANCED A SUM OF RS. 15 CRORES FOR PURCHASE OF LAND AND A SUM OF RS. 8.13 C RORES AND 1.75 CRORES WAS UTILISED FOR REPAYMENT OF THE LOAN TAKEN DURING THE PREVIOUS YEAR. LEARNED ASSESSING OFFICER RECORDED THAT THERE WAS N O PROPER EXPLANATION ON THIS ASPECT AND THEREFORE DREW AN INFERENCE THAT THE ASSESSEE PAID THE INTEREST-BEARING LOAN FOR REPAYMENT OF THE EARLIER YEAR LOAN UTILISED FOR PURCHASE OF SHARES AND THEREFORE THE ASSESSEE CANNO T BE HEARD TO SAY THAT NO INTEREST-BEARING LOAN WAS USED FOR PURCHASE OF SHARES. 11. NEXTLY, LEARNED ASSESSING OFFICER NOTICED THAT A SUM OF RS.15 CRORES WAS ADVANCED TO DEMAS DEVELOPERS LTD FOR PUR CHASE OF PROPERTY ON 30 /4/2011 BUT EVEN AFTER LAPSE OF 4 YEARS, NO R EGISTRATION OF LAND ON THE NAME OF THE ASSESSEE HAD TAKEN PLACE NOR THE EN TIRE AMOUNT OF ADVANCE WAS RETURNED. ONLY A SUM OF RS. 3.71 CRORE WAS RECEIVED BACK BY THE ASSESSEE. IN THESE CIRCUMSTANCES, LEARNED ASSES SING OFFICER HELD THAT THE INTEREST ON LOAN AMOUNTING TO RS. 4,08,10,354/- WAS NOT ALLOWABLE AND ACCORDINGLY HE ADDED IT BACK TO THE INCOME OF THE A SSESSEE. 12. ON THIS ISSUE, LD. CIT(A) ALSO APPRECIATED THE FACTS AVAILABLE ON RECORD AND RECORDED THAT THERE WAS NO MATERIAL ON R ECORD TO TAKE A CONTRARY VIEW TO THE ONE TAKEN BY THE LEARNED ASSES SING OFFICER. IT IS QUITE IMPROBABLE THAT EVEN AFTER THE LAPSE OF SO MU CH OF TIME, THE ASSESSEE WOULD NOT BE IN A POSITION TO PRODUCE ANY DOCUMENT TO 5 DEMONSTRATE THE BONA FIDES OF THE TRANSACTION OF AD VANCING THE AMOUNT TO DEMAS DEVELOPERS LTD. THERE IS NOTHING ON RECORD TO SHOW THAT THE REPAYMENT OF AMOUNTS FROM OUT OF THE INTEREST-BEARI NG LOAN DURING THE FINANCIAL YEAR 2011-12 WAS NOT FOR THE AMOUNT BORRO WED DURING THE EARLIER FINANCIAL YEAR TO PURCHASE THE SHARES. 13. IN THE CIRCUMSTANCES, WE FIND IT DIFFICULT TO G O BY THE CONTENTION OF THE ASSESSEE THAT THE ENTIRE INTEREST-BEARING LOAN WAS USED FOR BUSINESS PURPOSE DURING THIS YEAR. WE, THEREFORE, WHILE SUBS CRIBING TO THE VIEW TAKEN BY THE AUTHORITIES BELOW DO NOT FIND ANY SUBS TANCE IN THE CONTENTIONS OF THE ASSESSEE AND NO MERITS IN THE GR OUND TAKEN ON THIS ASPECT. WE ACCORDINGLY DISMISS GROUNDS RELATING TO THIS ADDITION. 14. NOW COMING TO THE OTHER ADDITION OF RS. 14,97,0 17/-, IT IS AN ADMITTED FACT THAT DURING THE YEAR UNDER CONSIDERAT ION THE ASSESSEE EARNED DIVIDEND INCOME OF RS. 23.96 LACS AND THE LO NG TERM CAPITAL GAIN (LTCG) OF RS. 8,40,282/-. ASSESSEE DID NOT CLAIM EX EMPTION OF THIS INCOME. ASSESSING OFFICER NOTED THAT JUST TO AVOID THE DISALLOWANCE AS UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF T HE RULES, THE ASSESSEE HAD NOT CLAIMED DIVIDEND INCOME AND LONG-TERM CAPIT AL GAIN ON SALE OF LISTED SHARES AS EXEMPT INCOME, ALTHOUGH IT IS ALLO WED AS PER THE PROVISIONS OF THE ACT. FURTHER, LEARNED ASSESSING O FFICER TOOK NOTE OF THE FACT THAT THE INTEREST HAD ALREADY BEEN DISALLOWED, AND, THEREFORE, DID NOT MAKE ANY DISALLOWANCE OF INTEREST IN SECTION 14 A OF THE ACT. IN THE CIRCUMSTANCES LEARNED ASSESSING OFFICER HELD THAT T HE EXPENSES INCURRED BY WAY OF DEMAT CHARGES AND LOAN PROCESSING FEES TO TALLING TO RS.14,97,017/-WAS TO BE DISALLOWED. 6 15. IMPUGNED ORDER SPEAKS THAT NEITHER THE ASSESSEE NOR ANYONE ON BEHALF OF THE ASSESSEE ENTERED APPEARANCE IN THE AP PELLATE PROCEEDINGS TO SUBMIT ANYTHING CONTRARY TO THE OPINION ENTERTAI NED BY THE LEARNED ASSESSING OFFICER. IN VIEW OF THE PROVISIONS UNDER SECTION 14A OF THE ACT, LD. CIT(A) HELD THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME A ND THEREFORE, UPHELD THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. 16. BEFORE US ALSO, THERE WAS NO SUBMISSIONS TO REA CH A DIFFERENT CONCLUSION FROM THE ONE REACHED BY THE AUTHORITIES BELOW. IN THE CIRCUMSTANCES, WE HOLD THAT THE FINDINGS OF THE AUT HORITIES BELOW HAVE TO BE CONFIRMED. WE ACCORDINGLY DISMISS THE OTHER GROU NDS OF APPEAL RELATING TO THE ADDITION OF RS. 14, 97, 017/-. 17. LASTLY COMING TO THE ADDITION OF RS. 18,468/-, LEARNED ASSESSING OFFICER MADE SUCH AN ADDITION ON ACCOUNT OF DISALLO WANCE OF INTEREST ON TDS. IT IS NOT EXPLAINED BEFORE AS TO HOW THIS FIND ING IS INCORRECT. WE THEREFORE DISMISS THIS GROUND OF APPEAL ALSO. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2019. SD/- SD/- (R.K. PANDA) (K. NARASIMHA CHAR Y) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18/12/2019