ACIT CIR. 15(1)(2), MUMBAI V. DESH CONSULTANCY SERVICES PVT. LTD., NAVI MUMBAI

ITA 5015/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9726 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM ./ I.T.A. NO. 5015/MUM/2016 ( / ASSESSMENT YEAR: 2012 - 13 ) ACIT, CIR. 15(1) (2), ROOM NO. 483, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 / VS. M/S. DESH CONSULTANCY SERVICES LTD. NO. 101 - 105, B SHIV CHAMBERS, SECTOR - 11, BELAPUR, NAVI MUMBAI - 400 614 ./ ./ PAN/GIR NO. AACCD 0044 L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAM TIWARI / RESPONDENT BY : SHRI S. L. JAIN / DATE OF HEARING : 20.03.2018 / DATE OF PRONOUNCEMENT : 22.03 .2018 / O R D E R PER S HAMIM YAHYA, A. M.: THIS A PPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 30.05.2016 AND PERTAINS TO THE A SSESSMENT YEAR 2012 - 13. 2. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF DISCOUNT ON CHITS CLAIMED OF RS.6,35,56,496/ - WITHOUT APPRECIATING THE FACT THAT NO EVIDENCE ON RECORD WAS BROUGHT TO SHOW THAT THE ASSESSEE HAD INVESTED IN A NUMBER OF CHITS AND HAD INCURRED A HUGE DISCOUNT OF RS.6,35,56,496/ - . 2 ITA NO. 5015/MUM/2016 M/S. DESH CONSULTANCY SERVICES LTD. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 3. BRIEF FACTS OF THE CASE ARE AS UNDER: T HE ASSESSEE IS A C OMPANY ENGAGED IN THE BUSINESS OF SUBSCRIBING TO CHIT FUNDS. THE RETURN OF INCOME FOR THE YEAR UNDER APPEAL WAS FILED ON 28.09.2012 DECLARING TOTAL LOSS OF RS.1,46,115,814/ - . ASSESSMENT U/S. 143(3) WAS COMPLETED BY THE 26.03.2015 DETERMIN ING INCOME AT RS.8,06,16,250/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AO OBSERVED THAT THE ASSESSEE COMPANY ON BEING ASKED TO SUBMIT THE DETAILS OF THE NATURE OF BUSINESS HAD SUBMITTED VIDE THEIR LETTER DATED 22.01.2015 A NOTE ON THE BIDDING SYS TEM FOLLOWED AND HOW DIVIDENDS WERE BEING GENERATED. THE SUBMISSION OF THE ASSESSEE WAS NO; ACCEPTED ESPECIALLY DUE TO THE FACT THAT THE MAJORITY OF THE SHAREHOLDING OF THE ASSESSEE WAS WITH SGML AND NO OWNER WOULD KEEP ON MAKING INVESTMENTS TO EARN LOSS A ND THUS A NOTICE U/S 142(1) WAS ISSUED. IN RESPONSE TO THE NOTICE, ASSESSEE COMPANY FILED SUBMISSIONS WHERE IT WAS STATED THAT THE AMOUNT RECEIVABLE AS WELL AS PAYABLE IN RESPECT OF ALL THE TRANSACTION APPEARING IN THE BALANCE SHEET ARE FROM/TO SGML ONLY. THE ASSESSEE WAS ALSO ASKED TO SHOW CAUSE VIDE LETTER DATED 11 . 03.2015 AS TO WHY THE DISCOUNT ON CHIT AMOUNTING TO RS.6,35,56,496 / - SHOULD NOT BE DISALLOWED. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE AND ASSESSING OFFICER ALSO NOTICED THAT N O EVIDENCE ON RECORD WAS BROUGHT TO SHOW THAT THE ASSESSEE HAD INVESTED IN A NUMBER OF CHITS AND HAD INCURRED A HUGE DISCOUNT OF RS.6,35,56,496/ - . RELIANCE WAS PLACED ON THE DECISION OF KERALA HIGH COURT IN THE CASE OF RAM BAHADUR THAKUR LTD. 261 ITR 390. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD HUGE RECEIVABLES ON ACCOUNT OF ITS BUSINESS WHEREAS THE INCOME OFFERED WAS VERY MEAGER AND THEREFORE IT 3 ITA NO. 5015/MUM/2016 M/S. DESH CONSULTANCY SERVICES LTD. COULD NOT BE ASCERTAINED WHETHER THE ASSESSEE COMPANY WAS ACCOUNTING FOR ALL ITS INCOME. AS THE FI NDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD NOT .BEEN ACCEPTED BY THE REVENUE FOR A.Y.2011 - 12 AND AN APPEAL TO THE ITAT, MUMBAI HAD BEEN PREFERRED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND AS THE ISSUE HAD NOT REA CHED ITS FINALITY, DISCOUNT PRIZING CHITS AMOUNTING TO RS.6,35,56,4967 - WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE . FURTHER, THE ASSESSING OFFICER OB SERVED THAT THE ASSESSEE COMPANY VIDE ITS LETTER DATED 13.02.2015 HAD SUBMITTED THE D ETAILS OF MONTH WISE BIDDING ON CHITS. DIFFERENCE AMOUNT OF RS.3,16,75,565 / - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS THE ASSESSEE COMPANY HAD SHOWN ITS RECEIPTS LESSER BY THIS AMOUNT 4. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY HOLDING AS UNDER: LD. AO DID NOT ACCEPT THE APPELLANT'S CONTENTION THAT THE SYSTEM FOLLOWED BY IT WAS CONSISTENT SINCE A.Y. 2003 - 04 AS PER THE FORMULA ADOPTED BY THE THEN LD. AO WHICH WAS ALSO AGREED TO BY THE LD. CIT( A) FOR A.Y.2011 - 12 VIDE ORDERDATED 26.09.2014. 2.4.3 HAVING CONSIDERED THE PROS AND CONS, I FIND THAT THE ISSUE AT HAND IS SQUARELY COVERED BY THE DECISION OF THE THEN LD.CIT(A) - 22, MUMBAI IN IT NO. CIT(A) - 22/DCIT(OSD) - 10(3)/LT - 300/13 - 14 DATED 26.09.2014, WHEREIN A SIMILAR ADDITION MADE BY THE LD. AO WAS DELETED. EVEN THE LD. AO HAS REFERRED TO THE SAME AT PARA 4.6 OF ORDER BUT BECAUSE THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE ITAT, MUMBAI, LD. CIT(A)S DECISION FOR A.Y.2011 - 12 HAS NOT BEEN FOLLOWED. H OWEVER, BY NOT FOLLOWING AN ACCEPTED POSITION OF THE DEPARTMENT SINCE A.Y.2003 - 04, LD. AO HAS UNLEASHED A KIND OF JUDICIAL ANARCHY. AS THE FACTS OBTAINING IN THE PRESENT YEAR ARE IN PARI - MATERIA WITH THE FACTS IN EARLIER YEARS ESPECIALLY A.Y.2011 - 12, RESPE CTFULLY FOLLOWING THE DECISION OF THE THEN LD.CIT(A) - 22, MUMBAI, THE GROUNDS RAISED HAVE TO BE ALLOWED IN FAVOUR OF THE APPELLANT. 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4 ITA NO. 5015/MUM/2016 M/S. DESH CONSULTANCY SERVICES LTD. 6. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS WE FIND THAT IN ASSESSEES OWN CASE IN THE EARLIER YEAR, THIS TRIBUNAL HAS CONSIDERED THE ISSUE AND CONCLUDED AS UNDER VIDE ORDER DATED 20.7.2016: 4. WE NOTICED THAT LEARNED CIT(A) HAS MISDIRECTED HIMSELF IN APPRECIATING THE REASONS ON WHICH DISALLOWANCE W AS MADE BY THE ASSESSING OFFICER. AS NOTICED EARLIER THE ASSESSING OFFICER DISALLOWED THE CLAIM ON THE REASONING THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE. FROM THE ASSESSMENT ORDER, WE NOTICED THAT THE ASSESSING OFFICER HAS NOT DISCUSSED ANYTHING A BOUT THE METHOD OF ACCOUNTING ON CHIT DISCOUNT AND HENCE WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF LEARNED CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO ADJUDICATE THE SAME AFRESH AFTER HEARING THE ASSESSEE ON THE GROUND ON WHICH THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER. 7 . THUS, WE NOTE THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE EARLIER YEAR ORDER OF HIS PREDECESSOR , WHICH HAS BEEN SET ASIDE BY THE ITAT . HENCE, WE FOLLOW THE CO - ORDINATE BENCH DECISION AND FOLLOWING THE ABOVE FOR THE SAME REASONING AS MENTIONED ABOVE, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORE THE ISSUE TO HIS F ILE WITH A DIRECTION TO CONSIDER THE ISSUE AFRESH AFTER HEARING THE ASSESSEE ON THE GROUND ON WHICH DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER. 8 . IN THE RESULT, TH IS APPEAL BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2018 SD/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 22.03.2018 . . ./ ROSHANI , SR. PS 5 ITA NO. 5015/MUM/2016 M/S. DESH CONSULTANCY SERVICES LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / B Y ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI