Maruti Civil Works, Ahmednagar V. ITO, Ahmednagar

ITA 455/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7702 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 20-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA
• Keywords: Reopening of assessment; Transfer pricing; Difference of opinion; Capital receipt; Change of opinion; Revenue expenditure; Reassessment proceedings
• Section: 143(3); 14A; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 455/PN/09 (ASSTT YEAR: 1999-2000) MARUTI CIVIL WORKS, KOPERGAON, AHMEDNAGAR, .. APPELL ANT PAN AACFV5382Q VS. INCOME-TAX OFFICER, WARD-2, AHMEDNAGAR .. R ESPONDENT APPELLANT BY : SHRI PRAMOD SHINGTE RESPONDENT BY : SHRI HEMANT KUMAR C LEUVA ORDER PER G.S. PANNU, A.M: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE DATED 16.2.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 26.12.2006 PAS SED BY THE ASSESSING OFFICER UNDER SECTION 144 R.W.S.147 OF THE INCOME-T AX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 1999-2000. 2. THE FIRST GRIEVANCE OF THE ASSESSEE IS AGAINST THE VALIDITY OF REOPENING OF THE ASSESSMENT BY THE ASSESSING OFFICE R BY INVOKING THE PROVISIONS OF SECTION 147/148 OF THE ACT. IN THIS C ASE, BRIEF FACTS ARE THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF CIVIL CONTRACTING AND IT FILED ITS RETURN OF INCOME FOR THE ASSESSMEN T YEAR 1999-2000 ON 7.12.1999 DECLARING TOTAL INCOME OF RS 7,45,000/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 8.2.2000 ACCEPTI NG THE INCOME RETURNED ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 2 BY THE ASSESSEE. SUBSEQUENTLY, ON 24.3.2006, A NOTI CE UNDER SECTION 148 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER FOR REO PENING THE ASSESSMENT FOR THE REASON THAT CERTAIN INCOME HAD ESCAPED ASSESSME NT, AND SUCH REASONS WERE BASED ON THE ASSESSMENT MADE BY THE ASSESSING OFFICER FOR SUBSEQUENT ASSESSMENT YEAR OF 2001-02. THE REASONS RECORDED BY THE ASSESSING OFFICER FOR INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT ARE AS UNDER: THE VERIFICATION OF THE RECORDS REVEALED THAT AS PER THE BALANCE SHEET ENCLOSED TO THE RETURN OF INCOME, THE ASSESSEE HAS SHOWN THE FOLLOWING ADVANCES TO THE SISTER CONCERNS:- 1) MARUTI WOODLAND MAKERS P LTD RS 23,74,997/- 2) GOJALCONSTRUCTION P LTD. RS 11,70,000/- ------------------- RS 35,44,997/- ========== BESIDES, THERE IS ALSO A MACHINERY ADVANCE TO SHR I S. TIDKE. IT IS NOTICED THAT NO INTEREST ON THESE INVESTMENTS/ADVANCES HAS BEEN OFFERED TO TAX. ON THE OTHER HAND, THE INTEREST DEBITED ON ACCOUNT OF BANK LOAN AND OTHER CREDITORS IS AT RS 6,99,316/-.EVEN IF IT IS SO, THE AFORESAID ADVANCES TO SISTER CONCERNS ARE WITHOUT CHARGING ANY INTEREST. THE INT EREST AT 12% ON THE AMOUNT AS RS 35,44,997/- COMES TO RS 4,25,399/- WHI CH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. IT MAY E MENTIONED HERE THAT DURING THE COURSE OF ASSESSMENT FOR A Y 2001-02, SIMILAR ADDITION ON ACCOUNT OF INTEREST HA S BEEN MADE WHICH HAS BEEN CONFIRMED BY THE CIT(A) IN RESPECT OF THE INTE REST ISSUE ON THE ADVANCE GIVEN TO GOJAL CONSTRUCTION P LTD. THE DECISION OF THE CIT (A) HAS NOT BEEN ACCEPTED AND THE SAME IS PREFERRED IN APPEAL BEFORE THE ITAT, PUNE WHICH IS PENDING. BESIDES, IN VIEW OF THE FACT AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION IS WARRANTED IN VIEW OF THE FOLLOWING DECISIONS: 1. CIT V H R SUGAR P LTD 187 ITR 36 (ALL) 2. CIT V SAVAYA SUGAR P LTD 193 ITR 575 3. CIT V V I BABY & CO 245 ITR 248(MAD) 4. VIJAYALAXMI LORRY SERVICES 194 ITR 197 (MAD) AS SUCH, THE INCOME TO THE TUNE OF RS 4,25,399/- H AS ESCAPED THE ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT H WHICH IS REQUIRED TO BE TAXED BY ISSUE OF NOTICE U/S 148. FURTHER TH E ELEMENT OF INTEREST ON ACCOUNT OF ADVANCE GIVEN TO SHRI S TIDKE APPEARS TO BE A PERSON COVERED U/S 40A(2) AND WHICH ALSO NEEDS TO BE VERIFIED. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE CONDITIONS PRECEDENT FOR A VALID EX ERCISE OF POWER TO REOPEN THE ASSESSMENT IS ABSENT IN THE PRESENT CASE, INASM UCH AS THERE IS NO FAILURE ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 3 ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FA CTS IN THE RETURN FILED ORIGINALLY. IT IS POINTED OUT THAT ALL THE MATERIAL FACTS WERE ALREADY ON RECORD AND ASSESSMENT COULD NOT BE REOPENED MERELY ON THE BASIS OF ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02, WHERE, SIMILAR ADD ITION ON ACCOUNT OF INTEREST HAS BEEN MADE. ON THIS POINT, IT WAS ALSO POINTED OUT THAT FOR ASSESSMENT YEAR 2001-02 ADDITION OUT OF INTEREST EX PENDITURE FOR ADVANCES TO TWO CONCERNS, NAMELY, MARUTI WOODLAND MAKERS P L TD. AND GOJAL CONSTRUCTION P. LTD., WAS MADE, BUT SAME WAS PARTLY DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) VIDE ORDER DAT ED 22.12.2004 AND BALANCE OF THE ADDITION HAS BEEN DELETED BY THE TRI BUNAL, VIDE ORDER DATED 23.11.2007 IN ITA NO 597/PN/05. IN THIS MANNER, THE INITIATION OF PROCEEDING UNDER SECTION 147/148 WAS SOUGHT TO BE ASSAILED AND RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS: 1. PRASHANT S. JOSHI V. ITO WP NO 2287 OF 2009 DT 2 2.2.2010 (BOM) 2. BHAVESH DEVELOPERS V AO WP NO 2508 OF 2009 DT 12 .1.2010 (BOM) 3. GRINDWELL NORTON LTD V. ACIT 267 ITR 673 (BOM) 4. GERMAN REMEDIES LTD V DCIT 285 ITR 26 (BOM) 5. CIT V MANIBEN VALJI SHAH 283 ITR 453 (BOM) 6. SGS INDIA P. LTD. V ACIT 208 CTR 263 (BOM) 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE, APPEARING FOR THE REVENUE, HAS DEFENDED THE INITIAT ION OF PROCEEDINGS ON THE BASIS OF THE ADDITIONS MADE IN A SUBSEQUENT YEAR. I N THIS CONNECTION, REFERENCE HAS BEEN MADE TO THE FOLLOWING JUDGMENTS; 1. ACIT V RAJESH JHAVERI STOCK BROKERS P LTD.291 IT R 500 (SC), 2. RAYMOND WOOLLEN MILLS LTD. V. ITO & ORS 236 ITR 34 (SC), 3. CLAGGETT BRACHI CO. LTD V CIT 177 ITR 409 (SC). TO JUSTIFY THE INITIATION OF PROCEEDINGS UNDER SECT ION 147/148 OF THE ACT. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E, ON A PRIMA FACIE BASIS, THE INFORMATION OBTAINED IN A SUBSEQUENT ASS ESSMENT YEAR IS A GOOD ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 4 GROUND FOR INITIATING PROCEEDINGS UNDER SECTION 147 FOR ANOTHER ASSESSMENT YEAR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. IT IS A WELL SETTLED PROPOSITION THAT VALIDITY OF RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF THE ACT IS TO BE EXAMINED IN THE LIGHT O F THE REASONS RECORDED BY THE ASSESSING OFFICER TO ENTERTAIN BELIEF OF AN INC OME ESCAPING ASSESSMENT. IT IS ALSO A TRITE LAW THAT THE BELIEF CONTEMPLATED UNDER SECTION 147 MUST HAVE A NEXUS WITH THE REASONS. AT THIS STAGE, IT IS ENOU GH IF THE ASSESSING OFFICER HAS A PRIMA FACIE MATERIAL ON THE BASIS OF WHICH, A PRIMA FACIE BELIEF REGARDING EXISTENCE OF ESCAPED INCOME CAN BE ENTERT AINED. IN THE PRESENT CASE, THE REASONS RECORDED, WHICH HAVE BEEN REPRODU CED IN EARLIER PARAGRAPHS SHOW THAT AS PER THE ASSESSING OFFICER I NTEREST EXPENDITURE RELATING TO TWO INTEREST FREE ADVANCES, AMOUNTING T O RS 4,25,399/- ESCAPED ASSESSMENT, INASMUCH AS IN SUBSEQUENT ASSESSMENT YE AR OF 2001-02 INTEREST FREE ADVANCES TO TWO SISTER CONCERNS WERE HELD NOT RELATING TO BUSINESS. SIMILAR ADVANCES ALSO APPEARED DURING THE YEAR UNDER CONSIDERATION AND ON THE BASIS OF THE ADDITIONS MAD E IN THE COURSE OF ASSESSMENT FOR ASSESSMENT YEAR 2001-02, THE ASSESSI NG OFFICER ENTERTAINED A BELIEF REGARDING ESCAPEMENT OF INCOME IN THE PRES ENT YEAR. THE INFORMATION OBTAINED IN A SUBSEQUENT ASSESSMENT YEAR CAN BE A G OOD GROUND TO INITIATE PROCEEDINGS UNDER SECTION 147/148 OF THE ACT, AS OB SERVED BY THE HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. V. ITO & ORS (SUPRA). WHETHER OR NOT THE SAME ULTIMATELY RESULTS IN A DISALLOWANCE, IS NOT REQUIRED TO BE EXAMINED AT THE STAGE OF INITIATION OF PROCEEDINGS. QUITE CLEARLY, SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THE STAGE OF RECORDING OF REASONS FOR INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT. IN THE PRESENT CA SE, THERE IS NO DISPUTE THAT ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 5 THE ADDITIONS MADE IN THE ASSESSMENT YEAR 2001-02 W ERE OBLITERATED IN TOTO, ONLY SUBSEQUENTLY, VIDE ORDER OF THE TRIBUNAL DATED 23.11.2007 (SUPRA). AT THE STAGE OF RECORDING OF REASONS, IN OUR VIEW, THE RE WAS A PRIMA FACIE MATERIAL FOR THE ASSESSING OFFICER TO FORM A REASON ABLE BELIEF THAT CERTAIN INCOME HAD ESCAPED ASSESSMENT, AND, THE MATERIAL WA S THE INFORMATION OBTAINED DURING THE ASSESSMENT FOR THE ASSESSMENT Y EAR 2001-02. THEREFORE, HAVING REGARD TO THE FACTS AND CIRCUMSTA NCES OF THE INSTANT CASE, THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT IS WELL FOUNDED. 6. BEFORE PARTING, WE MAY REFER TO THE AUTHORITIES CITED BEFORE US , ON BEHALF OF THE ASSESSEE. IN THE CASE OF PRASHANT S JOSHI (SUPRA), ASSESSEE RETIRED FROM A PARTNERSHIP AND ON RETIREMENT HE REC EIVED CERTAIN SUM OVER AND ABOVE THE BALANCE LYING TO HIS CREDIT IN THE AC COUNT BOOKS OF THE PARTNERSHIP. IN THE RETURN OF INCOME FILED, THE SAI D SUM WAS NOT OFFERED TO TAX, BEING CAPITAL RECEIPT. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION148 OF THE ACT TO REOPEN THE ASSESSMENT AND TAX THE SAI D SUM FOR THE REASON THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THE CAS E OF PARTNERSHIP ALLOWED A CLAIM FOR TREATING THE PAYMENT OF THE STATED SUM TO THE RETIRING PARTNER AS REVENUE EXPENDITURE AND, THUS, AS PER THE ASSESSING OFFICER THE SAID SUM CLAIMED BY THE ASSESSEE AS EXEMPT IN HIS HANDS, BEI NG A CAPITAL RECEIPT, CONSTITUTED AN INCOME ESCAPING ASSESSMENT. THE AFOR ESAID REASON WAS FOUND TO BE UNTENABLE FOR INITIATION OF PROCEEDINGS UNDER SECTION147/148 OF THE ACT, BECAUSE AS PER THE HONBLE HIGH COURT, IN TERMS OF THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN CIT V MOHANBHAI PAM ABHAI 165 ITR 166 (SC), IT WAS IMPOSSIBLE FOR ANY PRUDENT PERSON TO F ORM A REASONABLE BELIEF THAT THE INCOME HAD ESCAPED ASSESSMENT, AND ACCORDI NGLY THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS SET ASIDE. QUITE C LEARLY, THE JUDGMENT IN THE CASE OF PRASHANT S. JOSHI (SUPRA) HAS BEEN RENDERED IN THE CONTEXT OF AN ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 6 ALTOGETHER DIFFERENT FACTS AND CIRCUMSTANCES. IN TH E PRESENT CASE, THERE IS NO MATERIAL TO HOLD THAT ON THE DATE OF RECORDING OF R EASONS, THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER COULD BE SAID TO BE UNFOUNDED OR IMPRUDENT, RATHER IT WAS BASED ON THE ASSESSMENT PR OCEEDINGS FOR THE ASSESSMENT YEAR 2001-02. THUS, THE RATIO OF THE JUD GMENT IN THE CASE OF PRASHANT S. JOSHI (SUPRA) DOES NOT HELP THE ASSESSE E IN THE PRESENT CASE. SIMILARLY, THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BHAVESH DEVELOPERS (SUPRA), IS ALSO NOT APPLICABLE IN THE PRESENT CASE. THE SAID DECISION HAS BEEN RENDERED IN THE FACT SITUATI ON WHEREIN THE FIRST PROVISO TO SECTION 147 OF THE ACT WAS APPLICABLE INASMUCH A S THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT AND, THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER THE E XPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE PRE SENT CASE, THE ORIGINAL ASSESSMENT HAS NOT BEEN COMPLETED UNDER SECTION 143 (3) OF THE ACT AND, THEREFORE, THE ADDITIONAL CONDITION PRESCRIBED BY W AY OF THE FIRST PROVISO TO SECTION 147, TO REOPEN AN ASSESSMENT AFTER A LAPSE OF FOUR YEARS, IS NOT APPLICABLE. FOR THE AFORESAID REASONING, EVEN THE J UDGMENT IN THE CASE OF GRINDWELL NORTON LTD. (SUPRA) IS NOT APPLICABLE TO THE PRESENT CASE. THUS, THE RELIANCE PLACED BY THE LEARNED COUNSEL ON THE AFORE SAID JUDGMENTS DOES NOT ADVANCE THE CASE OF THE APPELLANT. 7. FURTHER, THE LEARNED COUNSEL HAS RELIED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SGS INDIA P. LTD. (SUPRA) FOR THE PROPOSITION THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION COULD NOT BE REOPENED ON THE BASIS OF THE FINDINGS IN THE ASS ESSMENT ORDER OF ANOTHER ASSESSMENT YEAR. IN THE SAID DECISION, ASSESSEE HAD CHALLENGED THE NOTICE ISSUED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2001-02. IT WAS NOTICED THAT THE REASONS TO BELIEVE THAT THE INCOME FOR THE ASSESSMENT YEAR ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 7 2001-02 HAD ESCAPED ASSESSMENT, WAS BASED ON THE F INDINGS RECORDED IN THE ASSESSMENT ORDER FOR THE SUBSEQUENT ASSESSMENT YEAR OF 2002-03 TO THE EFFECT THAT THE TRANSACTIONS WERE NOT AT ARMS LENG TH AS CONTEMPLATED UNDER THE TRANSFER PRICING REGULATIONS. THE BASIS OF REOP ENING WAS FOUND TO BE INVALID BECAUSE THE TRANSFER PRICING REGULATIONS CA ME INTO FORCE WITH EFFECT FROM 1.4.2002, AND WERE NOT APPLICABLE FOR THE ASSE SSMENT YEAR 2001-02. IN THIS BACKGROUND, IT WAS HELD THAT THE FINDINGS IN A SSESSMENT YEAR 2002-03 COLD NOT FORM THE BASIS TO REOPEN THE ASSESSMENT FO R THE ASSESSMENT YEAR 2001-02. HOWEVER, THE FACT POSITION IN THE PRESENT CASE STANDS ON A DIFFERENT FOOTING. IN THE PRESENT CASE, ASSESSMENT HAS BEEN R EOPENED ON THE BASIS OF THE TWO ADDITIONS MADE IN THE ASSESSMENT YEAR 2001- 02. THOUGH THE TWO ADDITIONS HAVE BEEN WIPED OUT IN THE RESPECTIVE APP ELLATE PROCEEDINGS IN ASSESSMENT YEAR 2001-02, HOWEVER, ON THE DATE OF RE CORDING OF REASONS TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT FOR THE C APTIONED ASSESSMENT YEAR, THE ADDITIONS WERE NOT DELETED IN ENTIRETY AND THER EFORE THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT COULD NOT BE VITIATED DUE TO A SUBSEQUENT DEVELOPMENT. HENCE, THE PARITY OF REASON ING LAID DOWN IN THE CASE OF SGS INDIA P LTD. (SUPRA) IS INAPPLICABLE IN THE FACTS OF THE PRESENT CASE. MOREOVER, THE PROPOSITION THAT THE ASSESSMENT COULD NOT BE REOPENED ON THE BASIS OF THE FINDINGS IN THE ASSESSMENT ORDE R OF A SUBSEQUENT YEAR, CANNOT BE UNDERSTOOD AS AN ABSOLUTE PROPOSITION, BU T IT IS TO BE SEEN IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF EACH CASE. 8. THE LEARNED COUNSEL FOR THE APPELLANT ALSO PLAC ED RELIANCE ON THE JUDGMENT IN THE CASES OF GERMAN REMEDIES LTD. ( SUPRA) AND SMT MANIBEN VALJI SHAH (SUPRA). ON THE BASIS OF GERMAN REMEDIES LTD. (SUPRA), IT WAS SUBMITTED THAT THE REOPENING OF ASSESSMENT C OULD NOT BE MADE ON A MERE CHANGE OF OPINION. IN OUR CONSIDERED OPINION, FACTUALLY, THE INSTANT CASE ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 8 IS NOT A CASE OF A CHANGE OF OPINION, RATHER THE BE LIEF ABOUT ESCAPEMENT IS BASED ON THE ASSESSMENT OF THE ASSESSMENT YEAR 2001 -02 AND THE ORIGINAL RETURN FILED WAS MERELY PROCESSED UNDER SECTION 143 (1) OF THE ACT AND NO ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE A CT. FURTHER, IN THE CASE OF SMT MANIBEN VALJI (SUPRA), THE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT MERELY FOR THE PURPOSE OF INVESTIGATING THE DETAILS OF SOURCES OF FUNDS INVESTED BY ASSESSEE IN PURCHASING A FLAT, AN D IT WAS HELD THAT THERE WAS NO REASONABLE BASIS TO ENTERTAIN A BELIEF THAT ANY PART OF INCOME HAD ESCAPED ASSESSMENT, ACCORDINGLY, THE INITIATION UND ER SECTION 147/148 OF THE ACT WAS HELD TO BE INVALID. IN THE PRESENT CASE, TH E REASONING IN THE CASE OF SMT MANIBEN VALJI SHAH (SUPRA) IS INAPPLICABLE, AS THE FACTS ARE DIFFERENT. 9. IN THE RESULT, THE INITIATION OF PROCEEDINGS UN DER SECTION 147/148 IS HELD TO BE VALID AND THE OBJECTION RAISED BY THE ASSESSEE IS DISMISSED. 10. THE ONLY OTHER GROUND RAISED BY THE ASSESSEE I S TO THE EFFECT THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) BE DI RECTED TO CONSIDER THE DISPUTE ON MERITS. IN THIS REGARD, IT IS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT BEFORE THE COMMISSIONER OF INCOME -TAX (APPEALS) THE ASSESSEE WRONGFULLY DID NOT PRESS THE MERITS OF THE ADDITIONS. ACCORDING TO HIM, THE ASSESSEE, UNDER AN ERRONEOUS IMPRESSION C ONTENDED THAT THE PROCEEDINGS UNDER SECTION 147 WERE INITIATED TO APP LY THE PROVISIONS OF SECTION 14A OF THE ACT. THIS IMPRESSION WAS GATHERE D ON ACCOUNT OF AN OBVIOUS TYPOGRAPHICAL ERROR IN THE ASSESSMENT ORDER , WHEREIN SECTION 14A HAS BEEN REFERRED TO. THE LEARNED COUNSEL POINTED O UT THAT IT WAS A PURE MISTAKE AND THE ASSESSEE HAS OTHERWISE SUCCEEDED ON IDENTICAL FACTS IN THE ASSESSMENT YEAR 2001-02 AS IS EVIDENT FROM THE ORDE R OF THE TRIBUNAL DATED 23.11.2007 (SUPRA). IT WAS, THEREFORE, CONTENDED TH AT THE MATTER BE RESTORED TO THE FILE OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) FOR ADJUDICATION ON ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 9 MERITS IN TERMS OF THE PRECEDENT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02. 11. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL RE PRESENTATIVE HAS OPPOSED THE PRAYER BY POINTING OUT THAT REFEREN CE TO SECTION 14A IN THE ASSESSMENT ORDER AT PAGE 5 WAS ONLY A TYPOGRAPHICAL ERROR AND NO DUTY WAS CAST ON THE COMMISSIONER OF INCOME-TAX (APPEALS) TO CORRECT THE IMPRESSION OF THE ASSESSEE. THEREFORE, THE ACTION OF THE COMMI SSIONER OF INCOME-TAX (APPEALS) IN UPHOLDING THE ADDITIONS BE SUSTAINED. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY. THE DISPUTE PERTAINS TO DISALLOWANCE OF INTEREST EXPEND ITURE IN RELATION TO ADVANCES GIVEN TO TWO SISTER CONCERNS. THE CLAIM OF THE ASSESSEE IS THAT ON SIMILAR FACTS, IN ASSESSMENT YEAR 2001-02, THE ADDI TIONS HAVE BEEN ULTIMATELY FOUND TO BE UNSUSTAINABLE IN THE APPELLATE PROCEEDI NGS VIDE ORDER OF THE TRIBUNAL DATED 23.11.2007 (SUPRA). BEFORE THE COMMI SSIONER OF INCOME-TAX (APPEALS), THE ASSESSEE DID NOT PRESS THE GROUND OF APPEAL ON MERITS, THOUGH IN THE MEMO OF APPEAL, IT HAD CHALLENGED SUCH ADDIT IONS. THE CLAIM OF THE ASSESSEE THAT THE AFORESAID HAPPENED ON ACCOUNT OF ERRONEOUS IMPRESSION CANNOT BE REJECTED AS BEREFT OF BONA FIDES, INASMUC H AS EVEN ON THE DATE OF PASSING OF THE IMPUGNED ORDER BY THE COMMISSIONER O F INCOME-TAX (APPEALS), I.E. 16.2.2009, THE ORDER OF THE TRIBUNA L DATED 23.11.2007 WAS AVAILABLE, WHICH WAS NOT PRESSED INTO SERVICE BY TH E ASSESSEE. QUITE CLEARLY, AS THE LEARNED COUNSEL FOR THE ASSESSEE PUT IT, THE ASSESSEE WAS CONFIDENT OF SUCCEEDING ON THE ISSUE OF VALIDITY OF INITIATIO N OF PROCEEDINGS UNDER SECTION 147, ALBEIT, UNDER WRONG IMPRESSION THAT T HE ASSESSING OFFICER HAD INVOKED SECTION 14A OF THE ACT. INDEED, REFERENCE T O SECTION 14A IN THE ASSESSMENT ORDER WAS A TYPOGRAPHICAL ERROR. NEVERTH ELESS, IN OUR CONSIDERED OPINION, WHERE TECHNICALITIES ARE PITCHED AGAINST T HE SUBSTANTIVE JUSTICE, THE ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 10 LATTER HAS TO PREVAIL IN A CASE WHERE BONA FIDES AR E NOT IN QUESTION. IN THE PRESENT CASE, IN OUR VIEW, THE MATTER DESERVES TO B E SET ASIDE TO THE FILE OF THE COMMISSIONER OF INCOME-TAX (APPEALS), WHO SHALL ADJUDICATE THE GROUND OF APPEAL RAISED BY THE ASSESSEE REGARDING MERITS O F THE IMPUGNED ADDITIONS, IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THE COMMIS SIONER OF INCOME-TAX (APPEALS) SHALL ALLOW THE ASSESSEE A REASONABLE OPP ORTUNITY OF BEING HEARD BEFORE ADJUDICATING THE CLAIM RAISED BY THE ASSESSE E, AS PER LAW. 13. ACCORDINGLY, ON THIS ASPECT THE ASSESSEE SUCCE EDS FOR STATISTICAL PURPOSES. 14. THE OTHER GROUND OF APPEAL RAISED IN THE MEMO OF APPEAL RELATING TO THE STATUS OF THE ASSESSEE HAS NOT BEEN ARGUED BEFORE US AND IS ACCORDINGLY DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 12TH DAY OF JANUARY, 2011. SD/- SD/- (I C SUDHIR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 12TH JANUARY, 2011 COPY TO:- 1) THE APPELLANT. 2) THE ITO WD 2, AHMEDNAGAR 3) THE CIT (A)I PUNE 4) THE CIT I PUNE 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, ITAT, PUNE. BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE B ITA NO 455/PN/09 M/S MARUTI CIVIL WORKS, KOPERGAON 11