BHARAT PETROLEUM CORPORATION LTD, MUMBAI V. DCIT RG 2(1), MUMBAI

ITA 5122/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9193 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2013
• Court: TRIBUNAL
• Assessee Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Difference of opinion
• Section: 143(3); 14A; 115JB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 51 22 /MUM/2013 ASSESSMENT YEAR: - 2006 - 07 BHARAT PETROLEUM CORPORATION LTD. TAXATION SECTION, 3 RD FLOOR, BHARAT BHAVAN II 4 & 6, CURRIMBHOY ROAD, BALLARD ESTATE, MUMBAI 400 001. VS.` DCIT, RANGE 2(1), MUMBAI. APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.4.2013 ARISING FROM THE ORDER PASSED U/S 154 FOR A.Y. 2006 - 07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX [CIT(A)] ERRED IN NOT CONDONING THE DELAY IN FILING THE APPEAL BY THE APPELLANT AND CONSEQUENTLY ERRED IN NOT ADMITTING THE APPEAL FILED BY THE APPELLANT AGAINST THE ORDER UNDER SECTION 154 PASSED BY THE ASSESSEE BY SHRI J.D. MISTRI REVENUE BY SHRI S.J. SINGH DATE OF HEARING 17.03.2015 DATE OF PRONOUNCEMENT 25 .03.2015 BHARAT PETROLEUM CORPORATION LTD. 2 | P A G E ASSESSING OFFICER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) OUGHT HAVE CONDONED THE DELAY IN FILING OF AN APPEAL. 2. WITHOUT PREJUDICE TO ABOVE, ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE VALIDITY OF THE NOTICE ISSUED UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 BY THE ASSESSING OFFICER WHEN RULE 80 WAS INAPPLICABLE TO THE ASSESSMENT YEAR UNDER AP PEAL AND CONSEQUENTLY ERRED IN CONFIRMING THE ADDITION OF RS 3,88,75,000/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT READ WITH RULE 80. 2. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 26.12.2008, ASSESSING TOTAL INCOME U/S 115JB AT RS. 294.51 CRORES. DURING THE COMPLETION OF ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSING OFFICER MADE DISALLOWANCE U/S 14A R.W.R 8D AT RS. 12.77 CRORES. SUBSEQUENTLY, THE ASSESSING OFFICER PROPOSED TO INCREASE THE D ISALLOWANCE U/S 14A BY INCLUDING THE DISALLOWANCE UNDER RULE 8D(2)(III) WHICH WAS NOT CONSIDERED WHILE COMPLETING THE ASSESSMENT U/S 143(3). THE ASSESSEE RAISED OBJECTION REGARDING SCOPE OF SECTION 154 AND SUBMITTED THAT ONLY A PATENT AND OBVIOUS MISTAKE C AN BE RECTIFIED U/S 154 AND NOT THE POINT OF DIFFERENCE OF OPINION REQUIRES ARGUMENTS. THE ASSESSING OFFICER DID NOT ACCEPT THE OBJECTION RAISED BY THE ASSESSEE AND PASSED THE ORDER DATED 21.07.2010 U/S 154 WHEREBY AN ADDITIONAL DISALLOWANCE OF RS. 3.88 L AKH U/S 14A R.W.R 8D BEING 0. 5% OF THE AVERAGE INVESTMENT WAS MADE. 3. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFFICER BEFORE CIT(A). THERE WAS A DELAY OF 2 AND HALF MONTHS IN FILING THE APPEAL BEFORE THE CIT(A). THE ASSESSEE FILED A CONDONATION PETITION ALONG WITH APPEAL AND CONTENDED THAT THE ISSUE REGARDING DISALLOWANCE U/S 14A WAS DECIDED BY THE ASSESSING OFFICER IN THE REGULAR ASSESSMENT ORDER INCLUDING THE BHARAT PETROLEUM CORPORATION LTD. 3 | P A G E APPLICABILITY OF RULE 8D. SINCE THE APPEAL AGAINST THE ORIGINAL ASSESSMENT WAS ALREADY PENDING BEFORE THE CIT(A), THEREFORE, THE ASSESSEE WAS UNDER THE BELIEF THAT NO SEPARATE APPEAL IS REQUIRED AGAINST THE ORDER PASSED U/S 154 ON THE SAME ISSUE. SUBSEQUENTLY, ON THE ADVICE OF THE COUNSEL, THE ASSESSEE FILED THE PRESENT APPEAL WHICH IS BE LATED BY 2 AND HALF MONTHS. THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND RE JECTED THE CONDONATION PETITION. 4. BEFORE US, THE LD. SENIOR COUNSEL HAS SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE CAUSE OF DELAY BEFORE THE CIT(A) THAT THER E WAS A CONFUSION REGARDING THE SEPARATE APPEAL AGAINST THE ORDER PASSED U/S 154 ON THE ISSUE OF DISALLOWANCE U/S 14A R.W.R 8D WHEN THE SAME ISSUE WAS ALREADY RAISED BY THE ASSESSEE AGAINST THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3), THEREFORE, THERE WAS A DELAY WHICH WAS EXPLAINED BY THE ASSESSEE. HE HAS RELIED UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISITION VS. ADDITIONAL COMMISSIONER OF INCOME TAX (TDS) (167 ITR 471). 5. ON THE OTHER HAND, THE LD. DR HAS SUBMIT TED THAT THE EXPLANATION SUBMITTED BY THE ASSESSEE WAS NOT FOUND TO BE SATISFACTORY FOR CONDONATION OF DELAY, THEREFORE, THE CIT(A) HAS REJECTED THE SAME. HE HAS RELIED UPON THE FINDINGS OF CIT(A). 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS REL EVANT MATERIAL ON RECORD, WE FIND THAT WHEN THE ASSESSEE HAS EXPLAINED THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ASSESSEE WAS HAVING CONFUSION IN THE MIND FOR FILING THE SEPARATE APPEAL AGAINST THE ORDER PASSED U/S 154 OF THE BHARAT PETROLEUM CORPORATION LTD. 4 | P A G E INCOME TAX ACT ON THE ISSUE OF DISALLOWANCE U/S 14A BECAUSE THE ASSESSEE HAD ALREADY FILED AN APPEAL BEFORE THE CIT(A) RAISING THE GROUND AGAINST THE DISALLOWANCE MADE U/S 14A BY APPLYING RULE 8D. THEREFORE, WHEN THERE IS NO MATERIAL OR CIRCUMSTANCES WHICH SUGGEST THAT THE DELAY IS DELIBERATE OR ON ACCOUNT OF CULPABLE NEGLIGENCE AND THE ASSESSEE COULD NOT STAND TO BENEFIT BY RESORTING THE ALLEGED DELAY THEN THE TECHNICAL CONSIDERATIONS SHOULD GIVE THE WAY TO CAUSE OF SUBSTANTIAL JUSTICE AND, THEREFORE, A LIBERAL INTERPRETATION HAS TO BE GIVEN TO THE EXPRESSION SUFFICIENT CAUSE . W HEN THE ASSESSEE WAS NOT GOING TO TAKE A BENEFIT BY FILING THE APPEAL BELATEDLY THEN THE EXPLANATION OF THE ASSESSEE HAS A SUFFICIENT CAUSE CANNOT BE DOUBTED. ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THAT THE ASSESS EE EXPLAINED A SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL BEFORE THE CIT(A). WE ACCORDINGLY, CONDONE THE DELAY OF 2 AND HALF MONTHS OF FILING THE APPEAL BEFORE CIT(A). 7. GROUND NO. 2 IS REGARDING ADDITION MADE UNDER RULE 8D(2)(III) BEING 0. 5% OF THE AVERAGE INVESTMENT. 8. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT RULE 8D IS NOT APPLICABLE FOR THE A.Y. 2008 - 09 IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT 328 ITR 81. ACCORDINGLY, THE ADDITION MADE BY ASSESSING OFFICER WHILE PASSING THE ORDER U/S 154 IS NOT SUSTAINABLE AND THE SAME IS DELETED. WE MAKE IT CLEAR THAT THE ISSUE OF DISALLOWANCE U/S 14A IS PENDING IN THE A PPEAL AGAINST THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) AND, THEREFORE, OUR OBSERVATION AND FINDING IN THIS MATTER SHALL HAVE NO BEARING ON THE MERITS BHARAT PETROLEUM CORPORATION LTD. 5 | P A G E OF THE ISSUE OF DISALLOWANCE U/S 14A DE HORS THE RULE 8D OF THE INCOME TAX RULES. ACCORDINGLY, WE S ET ASIDE THE ORDER PASSED U/S 154 OF THE INCOME TAX ACT. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUCNED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH 2015 SD/ - SD/ - ( N.K. BILLAIYA ) (VIJAY PAL RAO) ( ACCOUNTANT MEMBER ) (JUDICIAL MEMBER ) MUMBAI DATED 25 .03.2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI