TOPAZ HOLDINGS P.LTD, MUMBAI V. ASST CIT CEN CIR 31, MUMBAI

ITA 5131/MUM/2012

• Counselvise Citation: 513119914 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 21-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Rejection of books of accounts
• Section: 234B; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI R.C.SHARMA , ACCOUNTANT MEMBER ITA NO.5131/MUM/2012 (A.Y.2008-09) ITA NO.5132/MUM/2012 (A.Y.2009-10) M/S.TOPAZ HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI 400018 PAN:AAACT 5152F (APPELLANT ) VS. THE ACIT, CC-31, MUMBAI. (RESPONDENT) APPELLANT BY : SHRI DHARMESH SHAH RESPONDENT BY : DR.P.DAN IEL DATE OF HEARING : 21/10/2014 DATE OF PRONOUNCEMENT : 21 /10/2014 ORDER PER I.P.BANSAL, J.M: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND A RE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A)-40, MUMBAI DAT ED 26.06.2012 FOR ASSESSMENT YEARS 2008-09 AND 2009-10. GROUNDS OF A PPEAL FOR BOTH THE YEARS ARE IDENTICAL EXCEPT DIFFERENCE IN THE FIGURES. G ROUNDS OF APPEAL FOR A.Y 2008- 09 READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S.250 OF THE ACT. 2.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO INCOME FROM ATTAC HED ASSETS CAN BE ASSESSED IN THE HANDS OF THE APPELLANT. ITA NO.5131& 5132/MUM/2012 (A.Y.2008-09) 2 3.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF RS.2,86,72, 678/- ON ACCOUNT OF INTEREST EXPENSES. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE CALCULATION OF BOOK PROFIT U/S. 115JB AT RS.2,20,528/- 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING INTEREST CHARGES U/S. 234A, 234 C OF THE ACT. 2. FOR ASSESSMENT YEAR 2009-10 THE FIGURE MENTIONED IN GROUND NO.3 & 4 ARE MENTIONED AS RS.3,12,709/- AND RS.1,76,760/- RE SPECTIVELY. 3. BOTH THESE APPEALS WERE ARGUED TOGETHER BY BOTH THE PARTIES AND GROUND OF APPEAL ARE ALSO IDENTICAL, THEREFORE, FOR THE SA KE OF CONVENIENCE BOTH OF THEM ARE DISPOSED OF BY THIS CONSOLIDATED ORDER. 4. IT MAY ALSO BE MENTIONED HERE THAT IN BOTH APPEA LS ADDITIONAL GROUNDS WERE ALSO FIELD BY THE ASSESSEE WHICH WERE NOT PRES SED BY LD. AR, THEREFORE, ADDITIONAL GROUNDS RAISED IN BOTH THE YEARS ARE DIS MISSED AS BEING NOT PRESSED. 5. IT MAY FURTHER BE MENTIONED THAT GROUND NO.1 & 2 IN BOTH THE APPEALS WERE NOT PRESSED, THEREFORE, THEY ARE ALSO DISMISS ED AS BEING NOT PRESSED. 6. APROPOS GROUND NO.3 & 4 IN BOTH THE APPEALS, IT WAS SUBMITTED BY LD. AR THAT WHILE DECIDING THESE GROUNDS LD. CIT(A) HA S PLACED RELIANCE ON THE DECISION IN THE GROUP CASE OF THE ASSESSEE NAMELY M /S.EMINENT HOLDINGS P. LTD. IN RESPECT OF ASSESSMENT YEAR 2007-08 AND FOLL OWING THE SAME HE HAS DISMISSED THESE GROUNDS. REFERENCE WAS INVITED TO PARAS 7, 7.2 AND 8 OF THE IMPUGNED ORDER PASSED BY LD. CIT(A). IT WAS FURTHE R SUBMITTED THAT THE TRIBUNAL IN THE CASE OF M/S. EMINENT HOLDINGS P. LT D. HAS RESTORED BACK THE ISSUE TO THE FILE OF LD. CIT(A). REFERENCE IN THI S REGARD WAS MADE TO THE ORDER PASSED BY THE TRIBUNAL WHICH IS DATED 12/02/2014 PA SSED IN CROSS APPEALS IN ITA NO.5131& 5132/MUM/2012 (A.Y.2008-09) 3 ITA NO.8200/MUM/2010 AND 8353/MUM/2010 IN THE CASE OF M/S. EMINENT HOLDINGS P. LTD. AND VICE VERSA . COPY OF THE ORD ER WAS PLACED ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. REFERENCE WAS MADE T O THE FOLLOWING PORTION OF THE SAID ORDER: 4. GROUND NO.4 & 5 ARE INTER-CONNECTED RELATING T O THE DISALLOWANCE OF INTER- CONNECTED RELATING TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.5,14,455/-. IN THIS REGARD, AT THE OUTSET, LD. COUNSEL MENTIONE D THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASE OF HITESH S. MEHTA VS. DCIT VIDE ITA NO.7726 & 7727/M/2010 DATED 26.04.20 13, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT(A) FOR ADJU DICATION OF THE ISSUE AFRESH BY ADJUDICATING THE RESPECTIVE GROUND RELATING TO THE REJECTION RELIABILITY OF THE BOOKS OF ACCOUNT. PARA 5 FROM THE SAID ORDER OF THE TRIB UNAL (SUPRA) ISRELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 5. GROUND NO.4 RELATES TO THE ACTION OF THE LD CI T (A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS.11,24,99,052/- AND RS. 12,61,36,245/- RESPECTIVELY FOR THE AYS 2005- 06 AND 2006-07 TOWAR DS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. IT IS PERTINEN T TO NOTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPECT OF REJE CTION / RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICATION OF THE LD CIT (A) III VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGNED LIABILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT (A) TO ADJUDICATE AFRESH ALONG WITH THE ADJUDICATION OF THE RESPECTIV E GROUND PERTAINING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNT S. 5. ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDER OF THE AO/CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. MEHTA (SUPRA). WHETHER THE INTEREST LIABILITIES OF RS.5,1 4,455/- CONSTITUTES ASCERTAINED ONE OR NOT IS ALSO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR COMPUTATION OF BOOK PRO FITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN THE C ASE OF THE HITESH S. MEHTA (SUPRA) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLL OWING THE SAID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.4 SHOULD BE SET ASIDE TO THE FILES OF THE CIT (A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER GRANTING A REASONABLE OPPORTUNITY. OF BEING H EARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKEN ONLY AFTER CONSIDER ING THE DECISION IN THE CASE OF HITESH S MEHTA, (SUPRA). ACCORDINGLY, GROUND NOS.4 & 5 ARE SET ASIDE. 6.1 REFERRING TO ABOVE OBSERVATION IT WAS SUBMITTED BY LD. AR THAT SIMILAR ORDER MAY BE PASSED IN THE PRESENT APPEALS ALSO. ITA NO.5131& 5132/MUM/2012 (A.Y.2008-09) 4 6.2 LD. DR DID NOT OBJECT TO THE SUCH SUBMISSIONS O F LD. A.R. 7. IN VIEW OF THE SITUATION AFTER HEARING BOTH THE PARTIES, RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION OF TRIBUNAL, WE RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AS PER D IRECTIONS GIVEN IN THE AFOREMENTIONED ORDER. WE DIRECT ACCORDINGLY. THES E GROUNDS FOR BOTH THE YEARS ARE CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. IN THE MANNER AFORESAID. 8. APROPOS GROUND NO.5 OF BOTH THE APPEALS, IT WAS SUBMITTED BY LD. AR THAT THIS ISSUE IS COVERED BY THE ORDER OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR A.Y 2001-02. REFERENCE IN THIS REGARD WAS M ADE TO THE ORDER PASSED BY THE TRIBUNAL DATED 18/06/2014 IN ITA NO.2146/MUM/20 13, COPY OF THE ORDER WAS PLACED ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. REFERENCE WAS MADE TO THE FOLLOWING OBSERVATIONS: 3.NEXT GROUND OF APPEAL IS ABOUT LEVY OF INTEREST U/S. 234 OF THE ACT. BEFORE US, AR STATED THAT THE ASSESSEE WAS A NOTIFIED ENTITY, THAT THE PROVISIONS OF S. 234A, 234B AND 234C OF THE ACT WERE DEEMED TO HAVE COMPLI ED WITH, THAT THE ASSETS WERE ALREADY IN ATTACHMENT OF THE CUSTODIAN APPOINT ED UNDER THE PROVISIONS OF THE SPECIAL COURTS ACT, THAT THE TRIBUNAL IN THE CA SE OF THE APPELLANT AND SEVERAL OTHER ENTITIES HAD HELD THE VIEW IN FAVOUR OF THE A PPELLANT, THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIVINE HOLDINGS PV T. LTD. AND CASCADE HOLDINGS PVT. LTD. HAD HELD THAT THE PROVISIONS OF SECTIONS 234A,2348 AND 234C OF THE ACT WERE MANDATORY AND WERE APPLICABLE TO TH E NOTIFIED ENTITIES ALSO, THAT THE ASSESSEE WAS IN THE PROCESS OF FILING AN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE SUPREME COURT, THAT THE INCOME EARNED I N THE YEAR UNDER CONSIDERATION WAS SUBJECTED TO PROVISIONS OF TDS, T HAT THE CHANGEABILITY OF THE SECTION 234A, 234B AND 234C OF THE ACT SHOULD BE AF TER CONSIDERING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED. THE APPELLANT RELIES IN THIS REGARD ON THE FOLLOWING DECISIONS. HE RELIED UPON T HE CASES OF MOTOROLA INC. V. DCIT [95 ITD 269 (DEL.(SB)], SEDCO FORES DRILLING C O. LTD. [264 ITR 320],NGC NETWORK ASIA LLC [313 ITR 1871 ,SUMMIT BHATACHARYA [ 300 ITR (AT) 347 (BOM)(SB)], VIJAL GOPAL JINDAL [ITA NO. 4333/DE1J20 09] & EMILLO RUIZ BERDEJO [320 ITR 190 (BOM)J.DR RELIED UPON THE CASES OF DEV INE HOLDINGS PVT. LTD. 3.1.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF DEVINE HOLDINGS PVT. LTD. HONBLE BOMBAY HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 234A, 234B AND 234C WERE APPLICABLE TO THE NOTIFIED PERSON ALSO. THEREFORE, UPHOLDING THE ORDE R OF THE FAA TO THAT EXTENT, WE HOLD THAT PROVISIONS OF SECTION 234 OF THE ACT ARE APPLICABLE. AS FAR AS CALCULATION ITA NO.5131& 5132/MUM/2012 (A.Y.2008-09) 5 PART IS CONCERNED, WE FIND MERITS IN THE SUBMISSION MADE BY THE ASSESSEE. THEREFORE, WE ARE RESTORING BACK THE ISSUE TO THE F ILE OF THE AO FOR FRESH ADJUDICATION WHO WOULD DECIDE THE ISSUE AFTER CONSI DERING THE AMOUNT TAXED DEDUCTIBLE AT SOURCE ON THE INCOME ASSESSED AND AFT ER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.5 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. 8.1 REFERRING TO THE AFOREMENTIONED ORDER IT WAS SUBMITTED BY LD. AR THAT SIMILAR ORDER MAY BE PASSED. 8.2 ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES. AFTER CONSIDERI NG THE SUBMISSIONS OF BOTH THE PARTIES, RESPECTFULLY FOLLOWING THE AFOREM ENTIONED DECISION WE RESTORE THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER DIRECTIONS GIVEN IN THE AFOREMENTIONED ORDER. WE DIRECT ACCORDINGLY. THI S GROUND FOR BOTH THE YEARS IS ALSO CONSIDERED TO BE ALLOWED FOR STATISTICAL PU RPOSES IN THE MANNER AFORESAID. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE CONSIDERED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANN ER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 21/10/201 4 !' # $%& 21/10/2014 ! ' SD/- SD/- ( . . /R.C.SHARMA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; $% DATED 21/10/2014 ITA NO.5131& 5132/MUM/2012 (A.Y.2008-09) 6 ()* ()* ()* ()* +*') +*') +*') +*') / COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. (.,- / THE RESPONDENT. 3. / ( ) / THE CIT(A)- 4. / / CIT 5. *0' ()% , , / DR, ITAT, MUMBAI 6. '1 2 / GUARD FILE. % % % % / BY ORDER, .*) () //TRUE COPY// 3 33 3 / 4 4 4 4 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . ./ VM , SR. PS