JCIT, Ghaziabad V. M/s. Ghaziabad Urban Cooperative Bank Ltd., Ghaziabad

ITA 3992/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53083 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: L M AGARWAL
• Keywords: Opportunity of being heard
• Section: 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER I.T. A. NO.3992/DEL/2011 ASSESSMENT YEAR : 2005-06 JOINT COMMISSIONER OF INCOME-TAX, M/S. GHAZIABAD UR BAN COOPERATIVE RANGE-2, GHAZIABAD. VS. BANK LTD., 109, NAVYUG MAR KET, GHAZIABAD. PAN: AAAAG0489J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL MISHRA, DR. RESPONDENT BY : SHRI L .M. AGARWAL, CA. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: IN THIS APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), DATED 23.06.2 011 PASSED IN THE MATTER OF A PENALTY ORDER PASSED BY THE ASSESSING O FFICER UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT, 1961 (THE ACT), DA TED 21.06.2010 FOR THE ASSESSMENT YEAR 2005-06, THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) HAS WRONGLY DELETED THE PEN ALTY U/S 271(1)(C) OF I.T. ACT, 1961 AMOUNTING TO RS.50,00,0 00/- ON THE BASIS OF HONBLE ITATS ORDER BY WHICH THE ONLY ADD ITION OF RS.54,02,728/- ON ACCOUNT OF DISALLOWANCE OF INTERE ST PAID ON FDRS HAS BEEN SET-ASIDE FOR MAKING FRESH ASSESSMEN T, IGNORING THE FACT THAT OTHER ADDITIONS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST OF SB ACCOUNT A T 2 RS.34,28,326/-, DISALLOWANCE OF INTEREST OF RD ACCO UNTS AT RS.2,01,186/- AND OTHER UNVERIFIABLE EXPENSES UNDER THE HEAD OTHER EXPENSES AMOUNTING TO RS.1,00,000/- HAVE BEEN CONFIRMED BY THE HONBLE ITAT, NEW DELHI. 2. HENCE ORDER OF THE LD. CIT(A) BE CANCELLED AND THE ORDER OF AO BE RESTORED. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 3. IN THIS CASE, A PENALTY OF RS.50,00,000/- HAS BE EN LEVIED BY THE AO IN RESPECT OF THE FOLLOWING ADDITIONS MADE IN THE ASSE SSMENT:- I) DISALLOWANCE OF INTEREST PAID ON FDRS RS.54,02, 728/- II) DISALLOWANCE OF INTEREST ON SB A/C RS.34,28,3 26/- III) DISALLOWANCE OF INTEREST ON RD A/C & ALSO RELATED TO PRIOR PERIOD. RS. 2,01,186 /- IV) UNVERIFIABLE EXPENSES DEBITED UNDER THE THE HEAD OTHER EXPENSES. RS. 1,00,000/- TOTAL ADDITION RS.91,32,240/- 4. IN THIS CASE, THE QUANTUM APPEAL FILED BY THE AS SESSEE HAD COME FOR DECISION BEFORE THE TRIBUNAL ALONG WITH APPEALS FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 VIDE ITA NOS.3484, 3485 & 1281/ DEL/2010 PERTAINING TO THE ASSESSMENT YEARS 2003-04 TO 2005-06 RESPECTI VELY. IN THE ASSESSMENT YEAR 2004-05, THE ASSESSEE HAD TAKEN TWO GROUNDS. VIDE GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE AOS A CTION IN PASSING THE ORDER UNDER SEC. 144 OF THE ACT AND UNDER GROUND NO .2, THE ASSESSEE 3 CHALLENGED THE ADDITION OF RS.2,07,54,872/- ON ACCO UNT OF INTEREST ON FDRS. AFTER HEARING BOTH THE PARTIES, IT WAS HELD BY THE TRIBUNAL THAT INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE OF ALLOWING INT EREST ON FDRS IS SET ASIDE AND RESTORED BACK TO THE FILE OF THE AO TO DECIDE T HE SAME AFRESH IN ACCORDANCE WITH LAW AND AFTER GIVING THE ASSESSEE A N OPPORTUNITY OF BEING HEARD. IN THE ASSESSMENT YEAR 2005-06, THE ASSESSE E PRESSED ONLY GROUND NOS.1 & 2 BEFORE THE TRIBUNAL AND REST OF THE GROUN DS WERE NOT PRESSED. FOR THE VERY SAME REASONS AS GIVEN IN ASSESSMENT YEAR 2 004-05 ON THE SIMILAR GROUNDS, THE TRIBUNAL SET ASIDE GROUND NOS. 1 & 2 I N THE ASSESSMENT YEAR 2005-06 ALSO TO THE FILE OF THE AO. AT THIS STAGE, IT IS PERTINENT TO NOTE THAT IN THE GROUND NO.2 IN THE ASSESSMENT YEAR 2005-06, THE ASSESSEE CHALLENGED THE ADDITION MADE BY THE AO UNDER THE HEADS NAMELY, INTEREST PAID ON FDRS, INTEREST PAID ON SAVINGS ACCOUNTS, INTERE ST PAID ON RECURRING DEPOSIT AND INTEREST PAID ON SBI CLEARANCE. IT IS NOT IN DISPUTE THAT IN THE ASSESSMENT YEAR 2004-05, THE ONLY ISSUE INVOLVED WA S WITH REGARD TO INTEREST ON FDRS. HOWEVER, IN THE ASSESSMENT YEAR 2005-06, OTHER ITEMS OF INTEREST MENTIONED ABOVE WERE ALSO SUBJECT MATTER O F GROUND NO.2. IT IS NOT IN DISPUTE THAT ISSUES INVOLVED IN GROUND NO.2 WERE RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE AO. IN THE LIGHT OF TH ESE FACTS, IT IS CLEAR THAT THE ISSUES WITH REGARD TO THE ADDITIONS ON ACCOUNT OF D ISALLOWANCE OF INTEREST ON 4 FDRS ALONG WITH INTEREST ON SB ACCOUNT, INTEREST ON RD ACCOUNT, INTEREST ON SBI CLEARANCE WERE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THEREFORE, THE PENALTY ORDER PASSED BY THE AO UNDER SEC. 271(1)(C) OF THE ACT WITH REGARD TO THE ADDITIONS ON ACCOUNT OF DISA LLOWANCE OF INTEREST PAID ON FDRS, DISALLOWANCE OF INTEREST ON SB ACCOUNT, DI SALLOWANCE OF INTEREST ON RD ACCOUNT AND DISALLOWANCE OF INTEREST ON SBI C LEARING DIFFERENCE, DOES NOT SURVIVE AT THIS STAGE INASMUCH AS THE ADDITIONS MADE BY THE AO HAVE BEEN SET ASIDE AND THE MATTER HAS BEEN RESTORED BAC K TO THE FILE OF THE AO FOR HIS FRESH ADJUDICATION. IN THIS CASE, THE AO HAS A LSO LEVIED PENALTY IN RESPECT OF DISALLOWANCE OF RS.1,00,000/- ON ACCOUNT OF UNVE RIFIABLE EXPENSES. THIS DISALLOWANCE WAS CHALLENGED BY THE ASSESSEE VIDE GR OUND NO.4 BEFORE THE TRIBUNAL IN ITA NO.1281/DEL/2010. IN THIS APPEAL, GROUND NO.1 AND 2 WERE ONLY SET ASIDE AND RESTORED BACK TO THE FILE OF THE AO FOR HIS FRESH ADJUDICATION. THE REST OF THE GROUNDS WERE NOT PRE SSED BY THE ASSESSEE, HENCE, THE SAME WERE STOOD DISMISSED. IT IS, THUS, CLEAR THAT THE DISALLOWANCE OF RS.1,00,000/- ON ACCOUNT OF UNVERIFIABLE EXPENSE S WAS UPHELD AND NOT RESTORED BACK TO THE FILE OF THE AO. HOWEVER, THE LEARNED CIT(A) VIDE IMPUGNED ORDER DATED 23.06.2011 HAS CANCELLED THE W HOLE PENALTY ON THE GROUND THE ITAT HAS SET ASIDE THE RELEVANT ADDITION S BACK TO THE FILE OF THE AO. THE LEARNED CIT(A)S ORDER IS JUSTIFIED ONLY W ITH REGARD TO THE ISSUES 5 INVOLVED IN GROUND NO.2 RAISED BY THE ASSESSEE IN Q UANTUM APPEAL REGARDING DISALLOWANCE OF INTEREST PAID ON FDRS, INTEREST ON SB ACCOUNT, INTEREST ON RECURRING DEPOSIT ACCOUNT AND INTEREST ON SBI CLEAR ING DIFFERENCE BUT IS NOT JUSTIFIED IN RESPECT OF THE ADDITION OF RS.1,00,000 /- ON ACCOUNT OF UNVERIFIABLE EXPENSES. THE LEARNED CIT(A) SHOULD H AVE DECIDED THE ISSUE OF PENALTY IN RESPECT OF THE ADDITIONS OF RS.1,00,000/ - ON ACCOUNT OF UNVERIFIABLE EXPENSES ON ITS MERIT. WE, THEREFORE, MODIFY THE LEARNED CIT(A)S ORDER AND HOLD THAT THE CIT(A) WAS JUSTIFI ED IN CANCELLING THE PENALTY IN SO FAR AS THE ADDITIONS ON ACCOUNT OF DI SALLOWANCE OF INTEREST PAID ON FDRS, DISALLOWANCE OF INTEREST PAID ON SB ACCOUN T, DISALLOWANCE OF INTEREST ON RD ACCOUNT AND DISALLOWANCE OF INTEREST ON SBI CLEARING DIFFERENCE ARE CONCERNED. HOWEVER, THE LEARNED CIT (A) IS NOT JUSTIFIED IN CANCELLING THE PENALTY WITH REFERENCE TO ADDITION O F RS.1,00,000/- MADE BY THE AO ON ACCOUNT OF UNVERIFIABLE EXPENSES. THE LE ARNED CIT(A) SHOULD HAVE DECIDED THE ISSUE OF PENALTY IN RESPECT OF ADD ITION OF RS.1,00,000/- ON ACCOUNT OF UNVERIFIABLE EXPENSES ON MERIT BEFORE CA NCELLING THE SAME. WE, THEREFORE, RESTORE THE ORDER OF THE LEARNED CIT(A) BACK TO HIS FILE FOR A LIMITED PURPOSE TO DECIDE AS TO WHETHER THE PENALTY LEVIED BY THE AO WITH REFERENCE TO ADDITION OF RS.1,00,000/- ON ACCOUNT O F UNVERIFIABLE EXPENSES IS 6 JUSTIFIED. THE LEARNED CIT(A) SHALL PROVIDE REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR A STATISTICAL PURPOSE. 6. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2011. SD/- SD/- (A.N. PAHUJA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 4 TH NOVEMBER, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.