PUSHPANJALI INVESTRADE P.LTD., NAVI MUMBAI V. ACIT CIR 10 (3), MUMBAI

ITA 4377/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55314 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 13-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 14A; 115JB

Judgement Text

1 ITA NO. 4377/MUM/2010 (ASST YEAR 2007-08) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI J SUDHAKAR REDDY, AM & SHRI VIJAY PAL RAO, JM ITA NO. 4377/MUM/2010 (ASST YEAR 2007-08) PUSHPANJALI INVESTRADE P LTD PUNIT TOWER II, B WING SECTOR NO.11, CBD BELAPUR NAVI MUMBAI 400 614 VS THE ASST COMMR OF INCOME TAX CIR 10(3), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACP 3767E ASSESSEE BY NONE REVENUE BY SHRI SANJIV DUTT DT.OF HEARING 13 TH SEPT 2011 DT OF PRONOUNCEMENT 21 ST SEPT 2011 PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.3.2010 OF THE CIT(A) FOR THE AY 2007-08. 2 THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE G ROUNDS IN THIS APPEAL: I )THE LD CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORD ER PASSED BY THE ASSESSING OFFICER IN BREACH OF THE PRINCIPLES OF NAT URAL JUSTICE, IN AS MUCH AS NO SUFFICIENT, PROPER AND EFFECTIVE OPPORTUNITY OF B EING HEARD GIVEN TO THE APPELLANT. II)THE ASSESSING OFFICER ERRED IN DISALLOWING SUM OF RS. 2,64,97,940/- TOWARDS ALLEGED EXPENDITURE INCURRED FOR EARNING DIVIDED COME, BY INVOKING THE PROVISIONS OF SEC. 14A OF THE IT ACT. III)THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF T HE ASSESSING OFFICER IN MAKING ADJUSTMENT TO BOOK PROFIT DECLARED BY THE AP PELLANT UNDER THE PROVISIONS OF SEC. 115JB OF THE ACT, BY THE AMOUNT OF THE ADDITION MADE BY HIM U/S 14A OF THE ACT. 2 ITA NO. 4377/MUM/2010 (ASST YEAR 2007-08) 3 NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE APPEAL WAS CALLED FOR HEARING. HOWEVER, SINCE THE ISSUE INVOLVED IN THE A PPEAL OF THE ASSESSEE IS REQUIRED RECONSIDERATION IN VIEW OF THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT REPORTE D IN 328 ITR 81 , WE PROPOSE TO DECIDE THE APPEAL OF THE ASSESSEE EX-PARTE. 4 WE HAVE HEARD THE LD DR AND CONSIDERED THE RELEVA NT MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE APPLIED RULE 8D OF THE I T RULES WHILE MAKING THE DISALLOWANCE U/S 14A OF THE I T ACT. WE FURTHER FIND THAT THE CIT(A) HAS FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT LTD . SINCE RULES 8 D IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT (SUPRA) AND THEREFORE, THE FINDINGS OF THE SPECIAL BENCH OF THE TRIBUNAL HAS B EEN REVERSED ON THIS ISSUE. ACCORDINGLY, WE SET ASIDE THE ISSUE OF DISALLOWANCE U/S 14A TO THE RECORD OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE L IGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT (SUPRA). 5 AS REGARDS THE GROUND NO.3 FOR ADJUSTMENT OF AMOU NT OF DISALLOWANCE U/S 14A WHILE COMPUTING THE BOOK PROFIT U/S 115JB, THE SAME IS CONSEQUENTIAL TO THE WORKING OUT THE QUANTUM OF DISALLOWANCE U/S 14A AS INVOLVED IN THE FIRST GROUND; ACCORDINGLY, THE SAME IS ALSO RESTORED TO FOR RECO NSIDERATION AS PER THE OUTCOME OF THE FIRST ISSUE. 3 ITA NO. 4377/MUM/2010 (ASST YEAR 2007-08) 6 REGARDING THE REMAINING GROUND NO.1 WHEN WE HAVE SET ASIDE THE ISSUES ON MERITS TO THE RECORD OF THE ASSESSING OFFICER; THE N, NO GRIEVANCE IS LEFT WITH REGARD TO GROUND NO.1 FOR VIOLATION OF NATURAL JUSTICE FO R WANT OF PROPER AND EFFECTIVE OPPORTUNITY OF BEING HEARD GIVEN TO THE ASSESSEE. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 21 ST DAY OF SEPT 2011. SD/- SD/- ( J SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 21 ST SEPT 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI