PANKAJ INVESTMENTS, MUMBAI V. ADDL CIT 16(30, MUMBAI

ITA 4446/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9388 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: SAMEER G DALLAL
• Keywords: Depreciation; Opportunity of being heard; Deemed dividend; Assessment record
• Section: 143(3); 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , ! '#$% , & ' BEFORE S/SHRI DINESH KUMAR AGARW AL, JM AND N.K. BILLAIYA, AM ./I.T.A. NO.4446/MUM/2010 ( ( ( ( ( / ASSESSMENT YEAR: 2005-06 M/S. PANKAJ INVESTMENTS, M/S. CHANDRAVIJAY SHAH & CO., CHARTERED ACCOUNTANTS, 401, RAINBOW CHAMBERS, S.V. ROAD, NR. MTNL, KANDIVLI (W), MUMBAI-400 067 / VS. THE CIT-16, MATRU MANDIR, TARDEO, MUMBAI-400 0087 ) & ./ *+ ./PAN/GIR NO. : AAAFP 2940G ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI SAMEER G. DALLAL -.), 0 / / RESPONDENT BY : SHRI PRAVIN KUMAR 0 1& / DATE OF HEARING : 08.11.2012 23( 0 1& / DATE OF PRONOUNCEMENT:21.11.2012 4 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE CIT-16 PASSED U/S. 263 OF THE ACT DT. 29.3.2010. 2. IT IS CONTENDED BY THE ASSESSEE BEFORE US THAT TH E CIT INSTEAD OF GIVING DIRECTIONS U/S. 263 HAS ACTUALLY QUANTIFIED THE ASSESSMENT WHICH IS BAD ITA NO. 4446/MUM/2010 2 IN LAW. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE LAST PARA OF THE ORDER OF THE CIT WHICH IS AS UNDER: THE SUBMISSIONS MADE BY THE ASSESSEE HAS BEEN DULY CONSIDERED AND I AM OF THE VIEW THAT OF THE ISSUE RA ISED IN THE PROCEEDINGS U/S. 263 DT. 26.11.2009 IS CLEARLY APPL ICABLE IN THE CASE OF THE ASSESSEE AND ALL THE CONDITION STIPULATED U/S. 2(22)(E) OF THE ACT ARE SATISFIED IN ASSESSEES CASE. HENCE, THE LOAN AMOUNT OF RS. 22,73,38,511/- NEEDS TO BE TAXED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. HOWEVER, THE ACCUMULATED PROFIT OF M/S. A NISH METALS PVT. LTD. AS ON 31.3.2005 IS OF RS. 8,12,47,927/-, THE T AXABLE DEEMED DIVIDEND IS RESTRICTED TO THE EXTENT OF RS. 8,12,45 ,927/-. FURTHER, THE ALLOWANCE OF DEPRECIATION AS PER THE INCOME TAX ACT IS CONCERNED, IN VIEW OF THE JURISDICTIONAL HIGH COURT DECISIONS IN THE CASE OF JMNADAS K. KOTHARI 92 ITR 105, THE AO IS DIRECTED TO RECHEC K AND VERIFY VIS--VIS THE ASSESSMENT RECORDS THE FIGURES OF DEPRECIATION FOR ALLOWANCE IN LIGHT OF THE SAID JUDGMENT. IN THE CIRCUMSTANCES, I T IS CONSIDERED FAIR AND REASONABLE TO SET ASIDE THE ASSESSMENT ORDER DT . 31.12.2007 U/S. 143(3) OF THE I.T. ACT, 1961 FOR THE A.Y. 2005-06 F OR BEING MADE AFRESH ON THE ISSUE RAISED ABOVE AFTER CAREFULLY CO NSIDERING THE FACTS OF THE CASE AND DIRECTION GIVEN ABOVE. IN THE FRESH AS SESSMENT, THE AO SHALL CARRY OUT IN DEPTH INVESTIGATION ON THE POINT BY CAREFULLY SCRUTINIZING THE RECORDS OF THE ASSESSEE. THE ASSE SSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE FINALIZA TION OF FRESH ASSESSMENT. 3. IT IS THE SAY OF THE COUNSEL THAT HE IS NOT QUEST IONING THE VALIDITY OF THE ORDER U/S. 263, BUT THE MANNER IN WHICH THE CIT HAS QUANTIFIED DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. IT IS THE SAY O F THE COUNSEL THAT THE PROPER APPROACH SHOULD HAVE BEEN TO DIRECT THE AO TO CONSI DER THIS ISSUE AFRESH IN THE LIGHT OF THE EVIDENCE SUBMITTED BY THE ASSESSEE , TO WHICH THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED THAT TH E ISSUE MAY BE RESTORED BACK TO THE FILES OF THE AO. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. CO UNSEL AND CAREFULLY PERUSED THE ORDER OF THE CIT U/S. 263 OF THE ACT. AFTER CAREFULLY READING THE FINDINGS OF THE CIT AS MENTIONED HEREINABOVE, WE FI ND FORCE IN THE CONTENTION OF THE COUNSEL THAT THE CIT SHOULD NOT HAVE DIRECTE D THE AO TO DO THE ASSESSMENT IN A PARTICULAR MANNER INSTEAD HE SHOULD HAVE GIVEN PROPER DIRECTIONS TO THE AO . THE OBSERVATION OF THE HONBLE APEX COURT IN THE ITA NO. 4446/MUM/2010 3 CASE OF UNION OF INDIA V. TATA ENGG. & LOCOMOTIVES CO. LTD. AIR 1998 SC 287 ARE WORTH MENTIONING HERE : 4. IN OUR VIEW, THIS WRIT PETITION SHOULD NOT HAVE BEEN ENTERTAINED BY THE HIGH COURT AT ALL. THE ASSISTANT COLLECTOR I S ENTITLED TO COMPLETE THE ASSESSMENT AS HE THINKS FIT IN EXERCIS E OF THE JUDGMENT AND ACCORDING TO HIS UNDERSTANDING OF THE LAW AND F ACTS. FOR THIS PURPOSE, HE CAN CALL FOR AND EXAMINE WHATEVER DOCUM ENTS HE CONSIDERS RELEVANT. IF THE ASSISTANT COLLECTOR FAIL S TO FOLLOW ANY JUDGMENT OF THE HIGH COURT OR THIS COURT, THE ASSES SEE HAD ADEQUATE STATUTORY REMEDIES BY WAY OF AN APPEAL AND REVISION AGAINST THE ASSESSMENT ORDER. THE COURT SHOULD NOT TRY TO CONTR OL THE MODE AND MANNER IN WHICH AN ASSESSMENT SHOULD BE MADE. IF TH E ASSISTANT COLLECTOR IS OF THE VIEW THAT ENQUIRIES ARE NECESSA RY TO BE MADE AS TO THE PRICE AT WHICH TRUCKS WERE SOLD AT THE REGIO NAL SALES OFFICES, THE COURT CANNOT STOP HIM FROM MAKING SUCH ENQUIRIE S. (P. 288) 5. A READING OF THE ABOVESAID JUDGMENT WOULD CLEARL Y SHOW THAT WHILE REMANDING THE MATTER, THE COMMISSIONER OF INCOME-TA X OUGHT NOT TO HAVE GIVEN A SPECIFIC DIRECTION TO COMPLETE THE ASSESSME NT IN A PARTICULAR MANNER. IN OUR HUMBLE OPINION THE ASSESSEE SHOULD GET ONE M ORE OPPORTUNITY TO EXPLAIN ITS CASE BEFORE THE AO , AS THE COUNSEL HAS FAIRLY CONCEDED THAT HE IS NOT QUESTIONING THE VALIDITY OF THE ORDER U/S. 263 OF THE ACT. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE BACK T O THE FILE OF THE AO WITH A DIRECTION TO GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO MUST CONSIDER AFRESH THE ISSUE RELATING TO T HE TAXABILITY OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT IN THE LIGHT OF T HE EVIDENCES AS MAY BE BROUGHT ON RECORD BY THE ASSESSEE. ITA NO. 4446/MUM/2010 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. 5 16 51 0 7 80 9:; <1 ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2012 . 4 0 3( & 7 = 6 21.11.2012 3 0 > SD/- SD/- (DINESH KUMAR AGARWAL) (N.K. BILLAIYA) / JUDICIAL MEMBER & / ACCOUNTANT MEMBER MUMBAI; = DATED 21.11.2012 . . ./ RJ , SR. PS 4 4 4 4 0 00 0 -1' -1' -1' -1' '(1 '(1 '(1 '(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. ? ( ) / THE CIT(A)- 4. ? / CIT 5. '@> -1 , , / DR, ITAT, MUMBAI 6. > A / GUARD FILE. 4 4 4 4 / BY ORDER, .'1 -1 //TRUE COPY// 9 99 9 / B B B B * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI