M/s. Kay Jay Fincap Limited, New Delhi V. ACIT, New Delhi

ITA 4601/DEL/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8857 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: APPLICATION REJECT
• Keywords: Opportunity of being heard; Reason to believe
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SH. P.K.BANSAL, ACCOUNTANT MEMBER AND SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO. - 4601 /DEL/201 1 (ASSESSMENT YEAR - 2 008 - 09 ) M/S KAY JAY F I NCAP LIMITED, C/O - M/S WAHI & CO.,K - 1, KAILASH COLONY, NEW DELHI - 11004 8 PAN - AAACK0163H (APPELLANT) VS A CIT, CIRCLE - 5( 1), NEW DELHI (RESPONDENT) I.T.A .NO. - 2433/ DEL/201 3 (ASSESSMENT YEAR - 2 009 - 10 ) M/S KAY JAY F I NCAP LIMITED, (FORMERLY KNOWN AS KAY JAY AUTO LTD.) C/O - M/S WAHI & CO.,K - 1, KAILASH COLONY, NEW DELHI - 11004 8 (APPELLANT) VS DC IT, CIRCLE - 5( 1), NEW DELHI (RESPONDENT) I.T.A .NO. - 2874/ DEL/201 3 (ASSESSMENT YEAR - 2 009 - 10 ) DC IT, CIRCLE - 5( 1), NEW DELHI (APPELLANT) VS M/S KAY JAY FI NCAP LIMITED, (FORMERLY KNOWN AS KAY JAY AUTO LTD.) C/O - M/S WAHI & CO.,K - 1, KAILASH COLONY, NEW DELHI - 11004 8 (RESPONDENT) APPELLANT BY APPLICATION REJECT. RESPONDENT BY SH.GAURAV DUDEJA, SR. DR DATE OF HEARING : - 24 . 02.2015 DATE OF PRONOUNCEMENT: - 27.02.2015 ORDER PER DIVA SINGH, JM ALL TH ESE APPEALS ARE BEING DECIDED BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. WHERE AS ITA NO. - 4601/DEL/2011 IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12.09.2011 OF CIT(A) - VIII, NEW DELHI PERTAINING TO 2008 - 09 2 I.T.A .NO. - 4601 /DEL/201 1; 2433 & 2874/DEL/2013 ASSESSMENT YEAR ; ITA N O. 2433 & 2874/DEL/2013 ARE CROSS APPEAL S FILED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY AGAINST THE ORDER DATED 26.12.2012 OF CIT(A) - XV, NEW DELHI PERTAINING TO 2009 - 10 ASSESSMENT YEAR. SINCE THERE IS NO ONE APPEARING ON BEHALF OF THE ASSESSEE IN THE APPEAL S FILED, THE DEPARTMENT WAS DIRECTED TO ARGUE ITS APPEAL. THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS IN THEIR APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF U/S 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF THE IT RULES AT RS.7,68,838/ - AGAINST THE TOTAL DISALLOWANCE OF R S.34,56,036/ - MADE BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN GIVING THE FINDING THAT INTEREST WAS PAID ON SECURED TERM LOAN FOR PURCHASE OF SPECIFIED ASSET ALLUDING TO FIXED ASSETS AT PAGE 13 OF HIS ORDER, DESPIT E THE FACT THAT THE BALANCE SHEET OF THE ASSESSEE CLEARLY SHOW THAT AS AGAINST INCREASE IN SECURED LOAN OF RS.3.83 CRORES DURING THE YEAR, THE FIXED ASSETS OF THE ASSESSEE INCREASED MERELY BY RS.13.02 LACS. 3. THE LD. CIT(A) ERRED IS NOT APPRECIATING THE FACT THAT THE BALANCE SHEET OF THE ASSESSEE SHOWS THAT THE ASSESSEE HAD INVESTED THE AMOUNTS RECEIVED AS SECURED LOAN IN PURCHASE OF SHARES, INCOME FROM WHICH ARE EITHER EXEMPT AS DIVIDEND OR TAXABLE AS CAPITAL GAINS UNDER SPECIAL METHOD OF COMPUTATION PRESCRI BED IN LAW. THE INTEREST ON SUCH SECURED LOAN IS NOT A AVAILABLE FOR DEDUCTION UNDER THE LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE EITHER BEFORE OR AT THE TIME OF THE HEARING 2. ADDRESSING THE ABOVE GROUNDS, LD. SR. DR POINTING OUT TO THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE STATED THAT THE PAPER BOOK F ILED IS NOT CERTIFIED AS PER ITAT RULES AS IT CONTAINS A GENERAL NON - SPEAKING CERTIFICATION STATING THAT THE DOCUMENTS FILED ARE DRAWN FROM THE RECORD OF THE LOWER AUTHORITIES AND NO FRESH DOCUMENT IS FILED. POINTING TO THE REQUIREMENTS IT WAS SUBMITTED THAT THE ASSESSEE IS SPECIFICALLY REQUIRED TO ADDRESS WHICH DOCUMENTS WAS BEFORE THE AO AND OR ALSO THE CIT(A). POINTING TO THE DOCUMENTS TO SL. NO. 14 & 15 IT WAS HIS SUBMISSION THAT THESE WERE DEFINITELY NOT BEFORE THE AO. IN THE SAID BACKGROUND A DDRESSING THE GROUNDS RAISED ATTENTION WAS INVITED TO THE ASSESSMENT ORDER AT PAGES 07 TO 09 WHEREIN THE AO TAKING COGNIZANCE OF T HE FACT THAT THE MUMBAI HIGH COURT IN THE CASE OF GODREJ & BOYCE LTD. VS. DCIT HAS HELD THAT RULE 8D IS APPLICABLE FROM 2008 - 09 ASSESSMENT YEAR AND THE ASSESSEE S CASE PERTAINS TO 3 I.T.A .NO. - 4601 /DEL/201 1; 2433 & 2874/DEL/2013 2009 - 10 ASSESSMENT YEAR. CONSIDERING THE JUDICIAL PRECEDENT LAID DOWN BY THE SPECIAL BENCH IN M/S CHEM I NVEST LTD. VS ITO 317 ITR 86 (SB) (DEL.) AND THE FACTS ON RECORD WHEREIN THE AO HAS DISCUSSED THE ISSUE IN PARAS 10 TO 10.2 AT PAGES 7 TO 9 OF HIS ORDER DISALLOWANCE WAS MADE IN TERMS OF RULE 8D. THE CIT(A) IN APPEAL IT WA S SUBMITTED HAS GRANTED RELIEF TO THE ASSESSEE WITHOUT ADDRESSING THE FACTS ON RECORD AND HAS BLINDLY ACCEPTED THE ASSERTIONS OF THE ASSESSEE AND THEREAFTER PROCEEDED TO REFER TO DECISION S WITHOUT FIRST ADDRESSING HOW THE FACTS ARE IDENTICAL. ACCORDINGLY IT WAS HIS SUBMISSION THAT THE FINDING OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE TO RS.7,68,838/ - WAS BAD IN LAW AND DESERVES TO BE REJECTED. . 3 . THE LD. AR IN THE MEANTIME AT THIS STAGE MOVED A PETITION DATED 24.02.2015 REQUESTING FOR T IME ON THE GROUND THAT SH. ANIL KUMAR MALHOTRA , WAS DOWN WITH FLU . THE SAID REQUEST WAS ACCOMPANIED BY A MEDICAL CERTIFICATE OF DR.S.P.SETH DATED 22.02.2015 . THE COUNSEL APPEARING ON BEHALF OF THE ASSESSEE WAS DIRECTED TO INFORM IN WHAT CAPACITY HE HAD PRESENTED THE PETITION SEEKING TIME AS ALTHOUGH IT WAS SIGNED ON BEHALF OF THE C .A. FIRM HOWEVER IT D ID NOT SPECIF Y THE NAME OF THE SIGNATORY. THE LD. AR SUBMITTED THAT IT IS HIS S IGNATURE AND IT ALSO APPEARED ON THE POWER OF ATTORNEY A S HE WAS AUTHORIZE D TO ARGUE AND REPRESENT. IN VIEW OF THE FACT THAT THE DEPARTMENT HAD COMPLETELY ARGUE D THEIR APPEAL , T HE LD. AR W AS DIRECTED TO GIVE HIS REPLY THEREON AND ADDRESS THE ASSESSEE S APPEAL. IN RESPONSE TO THE SAME, THE LD. AR MADE NO SUBMISSION. IN THIS B ACKGROUND IT WAS POINTED OUT THAT AS PER THE MEDICAL CERTIFICATE OF DR. S.P.SETH DATED 22.02.2015, SH. ANIL KUMAR MALHOTRA WAS PRESUMABLY ILL FROM THE SAID DATE , I N THESE CIRCUMSTANCES WH Y ADJOURNMENT WAS NOT MOVED A DAY EARLIER AS THE LD. AR PRESUMABLY WA S AWARE THAT HE IS NOT IN A POSITION TO ARGUE. THE LD. AR MADE NO REPLY TO THE SAID QUERY ALSO. IT WAS INDICATED THAT IN THE CIRCUMSTANCES FOLLOWING MULTIPLAN THE ASSESSEE S APPEALS WOULD BE DISMISSED. THE LD. AR REMAINED SILENT. THE RECORD FURTHER SHO WS THAT ON THE LAST TWO DATES WHEN THE APPEAL CAME UP FOR HEARING NAMELY 09.01.2014 & 29.04.2014 THE 4 I.T.A .NO. - 4601 /DEL/201 1; 2433 & 2874/DEL/2013 ASSESSEE MOVED A PETITION ON BOTH THE OCCASIONS SEEKING TIME . ADJOURNMENT ON 09.01.2014 IT IS SEEN WAS SOUGHT VIDE APPLICATION DATED 09.01.2014 STATING THAT THE LD. AR WAS OUT OF STATION ON WHICH REQUEST TIME WAS GRANTED AND ON 29.04.2014 ADJOURNMENT WAS MOVED ON HEALTH GROUNDS ACCOMPANIED BY MEDICAL CERTIFICATE OF DR.S.P.SETH THAT SH. ANIL KUMAR MALHOTRA WAS SUFFERING FROM GASTROENTERITIS SINCE 24.04.2014 . THE RECORD FU RTHER SHOWS THAT ON 25.09.2013 ADJOURNMENT S WERE MOVED BOTH BY THE DEPARTMENT AND THE ASSESSEE. THE DEPARTMENT HAD MOVED AN ADJOURNMENT SEEKING TIME TO PREPARE ; THE ASSESSEE HAD SOUGHT AN ADJOURNMENT ON THE GROUND THAT S H . ANIL KUMAR MALHOTRA WAS DOWN WITH VIRAL FEVER ACCOMPANIED AGAIN BY MEDICAL CERTIFICATE OF DR. S.P.SETH. IN THESE CIRCUMSTANCES SINCE NO RESPONSE WAS MADE BY THE LD. AR WHO STATED THAT HIS SIGNATURE IS APPEARING IN THE POWER OF ATTORNEY FILED, WE FIND THA T IN THE ABSENCE OF ANY REPRESENTATION ON BEHALF OF THE ASSESSEE AND FINDING THE IMPUGNED ORDER QUA THE DEPARTMENTAL APPEAL FILED THAT THE CIT(A) HAS MERELY ACCEPTED THE ASSESSEE S ASSERTIONS WITHOUT CARING TO DISCUSS RELEVANT AND COGENT FACTS AND HAS FAILED TO ARRIVE A T AN INDEPENDENT FINDING ON FACTS , WE FIND THAT THE SAME CANNOT BE UPHELD. A READING OF THE ORDER SHOWS THAT THE CIT(A) ACCEPTING THE ASSERTION S MADE HAS RELIED UPON THE CASE LAW CITED WITHOUT FIRST ESTABLISHING HOW THE SAME IS PA RI MATERIA QUA THE FACTS ON RECORD. IN VIEW OF THE ABOVE THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER AFTER GIVING T HE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IN THE RESULT THE DEPARTMENTAL GROUND IS ALLOWED. 4 . SINCE SH. LALIT KUMAR SHARMA, ADVOCATE WHOSE SIGNATURE I S APPEAR ING IN THE POWER OF ATTORNEY FILED DESPITE A SPECIFIC QUERY FAILED TO ADDRESS THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL S IN 2008 - 09 & 2009 - 10 ASSESSMENT YEAR . ACCORDINGLY FOR WANT OF ANY ARGUMENT AND REPRESENTATION, THE ASSESSEE S APPEAL IS DISMISSED APPLYING COMMISSIONER OF INCOME - TAX VS. MULTI PLAN INDIA (P) LTD.; 5 I.T.A .NO. - 4601 /DEL/201 1; 2433 & 2874/DEL/2013 38 ITD 320 ( DEL) AND ESTATE OF LATE TUKOJIRAO HOLKAR VS. CWT: 223 ITR 480 (M.P) . 5 . BEFORE PARTING, WE DEEM IT APPROPRIATE TO OBSERVE THAT IN CASE ON A FUTURE DATE THE ASSESSEE IF SO ADVISED MOVES A PETITION AND SATISFIES THE BENCH THAT IT IS GENUINELY INTERESTED IN P URSUING ITS APPEALS AND THERE WAS A BONAFIDE REASON WHEN ON EACH OF THE DATES ADJOURNMENT WAS MOVED TIME WAS GRANTED WHEN THE APPEALS CAME UP FOR HEARING WHERE EVERY TIME ACCEDING TO THE ASSESSEE S REQUEST DESPITE LACK OF INFORMATION TO THE OTHER SIDE ; DES PITE THE FACT THAT THE ENTIRE MACHINERY FOR ISSUANCE OF NOTICE ETC. HAD BEEN SET IN MOTION ADJOURNMENTS WERE REPEATEDLY MOVED ON THE DAY ITSELF INSTEAD OF WELL IN TIME AS THE REASONS SUGGEST THAT THE ASSESSEE HAD REASON TO BELIEVE THAT ON THE DATE OF HEARI NG LD. AR WOULD NOT BE APPEARING. THE BENCH I F SO S ATISFIED BY THE GENUINENESS OF ASSESSEE S PETITION MAY RECALL THE EX - PARTE ORDERS IF SO WARRANTED ON FACTS . 6 . IN THE RESULT THE APPEALS OF THE ASSESSEE ARE DISMISSED AND THE APPEAL OF THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 7 T H OF FEBRUARY 2015 . S D / - S D / - ( P.K.BANSAL ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 7 / 02 /201 5 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI