DCIT CC 23, MUMBAI V. RASILA S.. MEHTA, MUMBAI

ITA 5227/MUM/2011

• Counselvise Citation: 522719914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 5610/MUM/2011 ASSESSMENT YEAR: 2008-09 SMT. RASILA S. MEHTA 32, MADHULI, DR. ANNIE BESANT ROAD OPP. NEHRU CENTRE WORLI, MUMBAI-400 018 PAN :ABNPM 8219 R VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRE CIRCLE-23 MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 5227/MUM/2011 ASSESSMENT YEAR: 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CENTRE CIRCLE-23 MUMBAI VS. SMT. RASILA S. MEHTA 32, MADHULI, DR. ANNIE BESANT ROAD OPP. NEHRU CENTRE WORLI, MUMBAI-400 018 PAN :ABNPM 8219 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DHARMESH SHAH REVENUE BY : DR. P. DANIEL DATE OF HEARING : 18.02.2014 DATE OF PRONOUNCEMENT : 21.02.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THESE CROSS APPEALS FILED BY THE ASSESSEE AND REVEN UE ARE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-40, MUMBAI DATED 31.05.2011 FOR THE ASSESSMENT YEAR 2008-09. BOTH THE APPEALS ARE DISPOSED OFF BY THIS COMMON OR DER. ITA NOS. 5610 &5227/MUM/2011 SMT. RASILA S. MEHTA ASSESSMENT YEAR: 2008-09 2 ASSESSEES APPEAL ITA NO. 5610/M/2011 2. GROUNDS NO. 1 & 2 OF THE APPEAL ARE NOT PRESSED AND HENCE THE SAME DO NOT REQUIRE ADJUDICATION. 3. GROUND NO.3 RELATE TO THE ACTION OF THE LD.CIT(A ) IN CONFIRMING THE LIABILITY AMOUNTING TO RS.1,02,64,463/- FOR THE AYS 2008-09 T OWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. IT IS PERTINENT TO MENTION THAT TH E ITAT IN THE ASSESSEES GROUP CASE IN ITA NOS. 7726 & 7727/MUM/2010 WHILE DECIDING A SIMI LAR ISSUE HAS HELD AS FOLLOWS: GROUND NO. 4 RELATES TO THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS.11,24,99,052/- AND RS.12,61,36,245/ - RESPECTIVELY FOR THE A.YS 2005-06 AND 2006-07 TOWARDS INTEREST EXPENDITURE C LAIMED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE FINDINGS GIVEN IN PARA 3 .3 ABOVE IN RESPECT OF REJECTION/RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICA TION OF THE LD.CIT(A) IN VIEW OF THE SAID DIRECTION MAY HAVE DI RECT IMPACT ON THE ISSUE OF THE IMPUGNED LIABILITY, WE SET ASIDE THIS ISSUE ALSO TO THE FILES OF THE LD.CIT(A) TO ADJUDICATE AFRESH ALONG WITH THE ADJUDICATION OF TH E RESPECTIVE GROUND PERTAINING TO THE REJECTION/RELIABILITY OF THE BOOKS OF ACCOUNTS. ALSO, THE ITAT FOR THE AYS 1994-95, 1995-96 & 2001- 02 HAS DECIDED A SIMILAR ISSUE IN THE AFORESAID LINES. IN VIEW OF THAT MATTER, WE, BY FOL LOWING THE FINDINGS OF THE TRIBUNAL IN THE AFOREMENTIONED CASE, SET ASIDE THE ISSUES TO THE FI LE OF THE LD.CIT(A) TO ADJUDICATE AFRESH IN THE LINE OF SIMILAR DIRECTION GIVEN BY THE ITAT AS AFOREMENTIONED. ACCORDINGLY, GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSE. 4 . VIDE LETTER DATED 17.02.2014, THE ASSESSEE HAS RAIS ED THE FOLLOWING ADDITIONAL GROUNDS WHICH READS AS UNDER: THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF HONBLE SPECIAL COURT DATED 30.04.2010 IN MP NO. 41 OF 1999 , THE ASSETS UNDER CONSIDERATION AND THE CONSEQUENTIAL INCOME BELONGS TO SHRI HARSHAD S. MEHTA AND HENCE THE INCOME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE H ANDS OF THE APPELLANT. IT IS PERTINENT TO MENTION THAT THE ITAT, IN THE AS SESSEES GROUP CASE FOR THE AYS 1994-95, 1995-96 & 2001-02 HAS DECIDED A SIMILAR ADDITIONAL GROUND, THE ADJUDICATION OF WHICH READS AS UNDER: 4. THE ASSESSEE HAS ALSO FILED AN APPLICATION DATE D 27.05.2010 FOR ADMITTING THE FOLLOWING GROUND:- 1. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF HONBLE SPECIAL COURT DATED 30.04.2010 IN M.P. NO. 41 OF 1999, THE ASSETS UNDER CONSIDERATION AND THE CONSEQUENTIAL INCOME BELONGS TO SHRI HARSHAD S. MEHTA AND ITA NOS. 5610 &5227/MUM/2011 SMT. RASILA S. MEHTA ASSESSMENT YEAR: 2008-09 3 HENCE, THE INCOME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE APPELLANT. 5. AFTER GOING THROUGH THE ADDITION GROUND FILED BY THE ASSESSEE, WE NOTED THAT THE GROUND IS LEGAL GROUND, WHICH DOES NOT REQ UIRE ANY NEW FACTS TO BE BROUGHT ON RECORD. IN VIEW OF THE DECISION OF THE H ONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, REPORTED I N (1998) 229 ITR 383, THE LEGAL GROUND CAN BE ADMITTED, IF NO NEW FACTS ARE TO BE B ROUGHT ON RECORD. HOWEVER, AFTER GOING THROUGH THE ADDITIONAL GROUND RAISED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS INVOLVED HERE BEFORE US, WE FOUND THAT THE GROUND IS FULLY ACADEMIC IN NATURE FOR THE REASON THAT IF THE HONB LE SUPREME COURT DECIDES SOMETHING THAT HAS TO BE FOLLOWED WITHOUT ANY DISPU TE. THE DECISION OF THE HONBLE APEX COURT IS LAW OF LAND, WHICH HAS TO BE FOLLOWED BY EVERY AUTHORITY. THEREFORE, IN OUR VIEW, NO DIRECTION IS TO BE REQUIRED TO BE G IVEN TO THE AO IN THIS RESPECT BECAUSE IF THE HONBLE APEX COURT DECIDES THAT ALL THE INCOME BELONGS TO SHRI HARSHAD S. MEHTA, THEN THE INCOME HAS TO BE ASSESSE D IN THE HANDS OF SHRI HARSHAD S. MEHTA, NOT IN THE HANDS OF ANY OTHER PER SON. THEREFORE, IN OUR VIEW, THERE IS NO NEED TO ISSUE ANY DIRECTION AS THE DECI SION OF THE HONBLE SUPREME COURT HAS TO BE FOLLOWED IN ANY CASE. ACCORDINGLY, BY ADMITTING THE GROUNDS RAISED BY THE ASSESSEE FOR ALL THESE YEARS, WE TREAT THE S AME AS ACADEMIC IN NATURE. IN THE ABSENCE OF ANY DISTINGUISHING FACT BROUGHT O N RECORD BY THE PARTIES IN THE PRESENT ASSESSEES CASE, WE, FOLLOWING THE SAID DECISION OF THE TRIBUNAL, DECIDE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IN SAM E MANNER AS AFOREMENTIONED. REVENUES APPEAL ITA NO. 5227/M/2011 5. THE ISSUE RAISED IN THE GROUNDS OF APPEAL RELATE S TO THE DECISION OF THE LD.CIT(A) DELETING THE INTEREST CHARGED U/S 234A, 234B & 234C OF THE INCOME TAX ACT. AS REGARDS THIS ISSUE, IT IS PERTINENT TO MENTION THAT THE ITA T IN ITA NO. 7498 & 7732/M/2010 SET ASIDE THE GROUND AS PREMATURE IN THE ASSESSEES GRO UP CASE FOR THE AYS. 2005-06 & 2006- 07 AND A SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT FO R THE OTHER YEARS FOLLOWING THE SAID ORDER. 5.1 HOWEVER, THE ITAT IN ITA NO. 6810/MUM/2008 IN M /S. VELVET HOLDINGS PVT. LTD, A GROUP CASE, WHILE DECIDING A SIMILAR ISSUE, HAS HEL D AS FOLLOWS: IN OTHER GROUP CASES, THE ITAT HELD THAT INTEREST U/S. 234B, 234C AND 234D CANNOT BE LEVIED AS THE ASSESSEE IS A NOTIFIED PERS ON AND THE PROVISIONS OF THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSA CTIONS IN SECURITIES) ACT 1992 WILL PREVAIL. REVENUE HAS CARRIED THE MATTER TO HON'BLE HIGH COURT WHICH UPHELD THE REVENUE CONTENTION. IT HELD VIDE PARA 14 IN THE CAS E OF CIT VS. DIVINE HOLDINGS PVT. LTD. IN ITA NO.3334 OF 2010 DATED 07-03-2012 AS UND ER : 14. IN PARAGRAPH 14 OF THE JUDGMENT, EXTRACTED ABO VE, THE SUPREME COURT HAS HELD THAT THE PROVISIONS OF THE SPECIAL COURT A CT, WHEREVER THEY ARE ITA NOS. 5610 &5227/MUM/2011 SMT. RASILA S. MEHTA ASSESSMENT YEAR: 2008-09 4 APPLICABLE SHALL PREVAIL OVER THE PROVISIONS OF THE INCOME TAX ACT, 1961. THE WORDS WHEREVER THEY ARE APPLICABLE ARE CRUCIAL. T HE SPECIAL COURT ACT MAKES NO PROVISION IN REGARD TO THE DETERMINATION O F LIABILITY TO PAY INTEREST UNDER THE INCOME TAX ACT, 1961. THAT LIABILITY IS C LEARLY REFERABLE TO THE PROVISIONS EMBODIED IN SECTIONS 234A, 234B AND 234C . IN THE CIRCUMSTANCES, THE TRIBUNAL, IN OUR VIEW, WAS IN ERROR IN COMING T O THE CONCLUSION THAT INTEREST UNDER SECTIONS 234A, 234B AND 234C CAN NOT BE LEVIED ON AN ASSESSEE WHO IS A NOTIFIED PARTY UNDER THE SPECIAL COURT ACT. BY THE CIRCULAR WHICH HAS BEEN ISSUED BY THE BOARD, THE POWER TO GR ANT SUCH A WAIVER OR REMISSION HAS BEEN VESTED WITH THE CHIEF COMMISSION ER. IN TERMS OF THE JUDGMENT OF THE SUPREME COURT IN HARSHAD SHANTILAL MEHTA (SUPRA), THE NOTIFIED PERSON, THE ASSESSEE IN THE PRESENT CASE, IS NOT WITHOUT REMEDY SINCE IT IS OPEN TO THE ASSESSEE TO TAKE RECOURSE TO THE REMEDY AVAILABLE UNDER THE DIRECTION DATED 26 JUNE 2006.WE ACCORDINGLY ANSWER THE QUESTIONS OF LAW AS FRAMED IN THE NEGATIVE. HOWEVER, WE CLARIFY THAT IT WOULD BE OPEN TO THE NOTIFIED PERSON TO SEEK A WAIVER OR REDUCTION BY MA KING AN APPLICATION TO THE CHIEF COMMISSIONER OF INCOME TAX IN TERMS OF THE OR DER DATED 26 JUNE 2006 OF THE CENTRAL BOARD OF DIRECT TAXES. THE APPEAL IS ACCORDINGLY DISPOSED OF. 12.2 THE LD. COUNSEL POINTED OUT THAT THE MATTER IS REFERRED TO THE SAME BENCH FOR RECONSIDERATION IN THE CASE OF CIT VS. CASCADE HOLDINGS PVT. LTD. IN ITA NO.3365 OF 2010 DATED 02/07/2013. AS SEEN FROM THE COPY OF THE ORDER PLACED ON RECORD, THE ABOVE ORDER WAS NOT STAYED. ONLY THE APPEAL WAS TRANSFERRED TO THE SAME BENCH FOR HEARING. IN THESE CIRCUMSTANCES, WE DO NO T SEE ANY REASON TO DIFFER FROM THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD. ACCORDINGLY, IT WAS HELD THAT LEVY OF INTEREST U/S. 234A, 234B AND 234C IS MANDATORY. THE GROUNDS ARE ACCORDINGLY ALLOWED. IT APPEARS THAT THE DECISION OF THE HON'BLE HIGH CO URT IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD HAS NOT BEEN BROUGHT TO THE NOTIC E OF THE TRIBUNAL WHILE DECIDING THE ASSESSEES OWN CASES REFERRED IN PARA 4 ABOVE. WHEN THE FACTS BEING SO, WE DO NOT FIND ANY REASON TO DIFFER FROM THE JUDGMENT OF THE HON'B LE HIGH COURT IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD. ACCORDINGLY, WE HOLD THAT LEVY OF INTEREST U/S. 234A, 234B AND 234C IS MANDATORY. THE GROUNDS ARE ACCORDINGLY ALLO WED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE AND THAT OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 1 ST DAY OF FEBRUARY, 2014. SD/- SD/- (RAJENDRA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.02.2014 *SRIVASTAVA ITA NOS. 5610 &5227/MUM/2011 SMT. RASILA S. MEHTA ASSESSMENT YEAR: 2008-09 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.