RINA S. METHA, MUMBAI V. DCIT CC 23, MUMBAI

ITA 5451/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1557 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Opportunity of being heard
• Section: 142(1); 234B; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D.KARUNAKARA RAO (AM) AND SHRI. RAM LAL NEGI (JM) ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 RINA S. MEHTA. 32, MADHULI, DR. A.B.ROAD, WORLI, MUMBAI- 400 018. PAN:- ABNPM8226C VS. THE DCIT, CC - 23, ROOM NO. 409, AYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. ASHWIN KASHINATH RESPONDENT BY : DR. P. DANIEL DATE OF HEARING: 18/11 /201 6 DATE OF PRONOUNCEMENT: 16/12/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 30/05/2014 PASSED BY THE LD. CIT (APPEALS)-40, MUMB AI FOR THE ASSESSMENT YEAR 2003-04, WHEREBY THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 30/11/2006 PASSED U/S 144 READ WITH SEC. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT /ASSESSEE A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES.) ACT, 1992 FAILED TO FILE HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, AO ISSUED NOTICE U/S 14 8 OF THE ACT TO BRING THE ESCAPING INCOME TO TAX. SINCE THE ASSESSEE DID NOT RESPOND, THE AO ISSUED 2 ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 NOTICE U/S 142(1) OF THE ACT CALLING FOR VARIOUS DE TAILS. AO ALSO CALLED FOR THE DETAILS FROM THE CUSTODIAN APPOINTED UNDER THE SPEC IAL COURT ACT AND THE CONCERNED BANKS AND COMPLETED THE ASSESSMENT U/S 14 4 READ WITH SECTION 147 OF THE ACT, DETERMINING THE TOTAL INCOME OF THE ASS ESSEE AT RS.14,93,70,590/- ON THE BASIS OF INFORMATION AND DETAILS AVAILABLE W ITH HIM. 3. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL A GAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING EFF ECTIVE GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND IN FACTS IN ASSESSING A SUM OF RS. 5,28, 581/- AS THE INCOME OF THE APPELLANT UNDER THE HEAD OF SUSPENSE ACCOUNT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN NOT ALLOWING THE DEDUCTION O N ACCOUNT OF INTEREST EXPENSE AMOUNTING TO RS. 4,71,67,190/- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN CHARGING INTEREST U/S 234A, 234B AND 234C OF THE ACT. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE INCOM E ASSESSED IN THE HANDS OF THE APPELLANT WERE SUBJECTED TO THE PR OVISIONS OF TDS AND HENCE ON THE SAID AMOUNT OF TAX NO INTEREST CAN BE COMPUTED U/S. 234A, 234B, AND 234C OF THE ACT. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO 1 OF THE APPEAL IS SIMILAR TO ONE OF THE ISSUES DECIDED BY THE ITAT MUMBAI BENCH IN THE CASE OF SH. HITESH S. MEHT A VS. DCIT THE ITAT (ITA NO 5587 TO 5589/MUM/2011) FOR THE ASSESSM ENT YEARS 1994-95, 1995-96 AND 2001-02. THE TRIBUNAL VIDE ITS ORDER DATED 3 ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 12.6.2013 SET ASIDE THE SAID ISSUE TO THE FILE OF C IT(A) FOR FRESH ADJUDICATION. 5. SO FAR AS GROUND NO 2 OF THE APPEAL IS CONCERNED , THE LD. COUNSEL SUBMITTED THAT THIS ISSUE IS IDENTICAL TO T HE ISSUES INVOLVED IN THE ASSESSEES OWN CASE ITA NO 5205/ MUM/2013 FOR T HE AY. 2008-09 AND THE ITAT HAS SET ASIDE THE SIMILAR ISSUE TO THE FILE OF LD. CIT(A) FOR ADJUDICATING THE ISSUES AFRESH. 6. THE LD. COUNSEL FURTHER SUBMITTED THAT GROUND NO 3 & 4 ARE COVERED BY THE DECISION OF THE ITAT RENDERED IN ASS ESSEES OWN CASE ITA NO 5205/ MUM/2013 FOR THE AY. 2008-09 WHEREBY T HE TRIBUNAL UPHOLDING THE LIVABILITY OF PENALTY IN PRINCIPLE SE T ASIDE THE ISSUE TO THE FILE OF AO FOR CALCULATION OF INTEREST WITH THE DIR ECTION TO REDUCE THE TAX DEDUCTABLE AT SOURCE WHILE CALCULATING INTEREST. 7. THE LD. DEPARTMENTAL REPRESENTATIVE THOUGH DID N OT DISPUTE THE FACTS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, RELYING ON THE FINDINGS OF THE LD.CIT(A), SUBMITTED THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER TO INTERFERE WITH THE SAME. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US IN THE LIGHT OF THE RESPECTIVE CON TENTIONS OF THE PARTIES. WE NOTICE THAT THE ISSUE RAISED IN THE FIR ST GROUND OF APPEAL IS SIMILAR TO ONE OF THE ISSUES RAISED IN THE CASE OF SH. HITESH MEHTA VS. DCIT IN ITA NO. 5589/MUM/2011 FOR THE AY 2001-02 AN D THE COORDINATE BENCH VIDE ORDER DATED 12.6.2013 HAS SET ASIDE THE SAID ISSUE TO THE FILE OF THE LD. CIT(A) HOLDING AS UNDE R:- 4 ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 AFTER GOING THROUGH THE FINDINGS OF THE LEARNED C IT(A), WE FOUND THAT THE LEARNED CIT(A) SHOULD HAVE OBTAINED THE DE TAILS FROM CUSTODIAN AS THE CUSTODIAN APPOINTED BY THE SPECIAL COURT, IS NOT OBLIGED TO ASSESSEE BY PROVIDING NECESSARY DETAILS IN SPITE OF VARIOUS REQUEST MADE ON BEHALF OF THE ASSESSEE. COP IES OF REQUESTS ARE PLACED ON RECORD. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ISSUE T O THE FILE OF THE CIT(A) TO DECIDE THE ISSUE AFRESH AFTER OBTAINING N ECESSARY DETAILS FROM THE CUSTODIAN AND AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ORDER ACCORDINGLY. 9. HENCE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH AFORESAID, WE SET ASIDE THIS ISSUE TO THE FILE OF T HE LD. CIT(A) TO ADJUDICATE THIS ISSUE AFRESH IN ACCORDANCE WITH THE OBSERVATIONS OF THE COORDINATE BENCH IN THE CASE OF SH. HITESH MEHTA VS . DCIT(SUPRA). HENCE, GROUND NO 1 IS ALLOWED FOR STATISTICAL PURPO SES. 10. GROUND NO 2 OF THIS APPEAL PERTAINS TO DEDUCTIO N ON ACCOUNT OF INTEREST EXPENSES. WE NOTICE THAT THIS ISSUE IS IDE NTICAL TO THE ISSUE DECIDED BY THE COORDINATE BENCH IN ASSESSEES OWN C ASE ITA NO 5205/MUM/2013 FOR AY 2008-09. VIDE ORDER DATED 29.4 .2016 THE COORDINATE BENCH HAS SET ASIDE THE SAID ISSUE TO TH E FILE OF LD. CIT(A) FOR FRESH ADJUDICATION. THE RELEVANT PORTION OF THE DECISION READS AS UNDER:- 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS COULD BE SEEN, THE LEARNED COMMISSIONER (APPEALS) HAS DISALLOWED THE I NTEREST EXPENDITURE ON THE GROUND THAT ASSESSEES ENTITLEME NT CAN ONLY BE DECIDED AFTER THE DECISION OF THE SPECIAL COURT ON THE ISSUE. 5 ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 HOWEVER, IT IS OBSERVED IN CASE OF PRATIMA H. MEHTA (SUPRA), THE COORDINATE BENCH WHILE DECIDING SIMILAR ISSUE HAS H ELD AS UNDER:- 3. GROUND NO 4 RELATES TO THE DISALLOWANCE OF INTE REST EXPENSE. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOT ICE THAT THE DECISION RELIED UPON BY THE LD.CIT(A) WHILE DISPOSI NG THIS GROUND HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF T HE LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 5 . WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. WHILE DISPOSING THE GROUND RELATING TO THE DISALLOWANCE O F INTEREST, WE FIND THAT THELD. CIT (A) HAS FOLLOWED THE FINDINGS EVEN IN CASE OF EMINENT HOLDINGS PVT. LTD. WE FIND THAT THE TRIBUNA L IN THE CASE OF EMINENT HOLDINGS IN ITA NOS 2139, 2140 AND 2141/MUM /2013 HAVE FOLLOWED THE DECISION OF THE TRIBUNAL GIVEN IN COMMON GROUP CASE OF HITESH S. MEHTA AT PARA 2.3 OF THE ORDER AN D RESTORED THE MATTER TO THE FILE OF THE LD. CIT (A) FOR FRESH ADJ UDICATION. RESPECTFULLY FOLLOWING THE FINDINGS OF THE COORDINA TE BENCH, WE RESTORE THIS ISSUE TO THE FILE OF THE LD.CIT(A) FOR FRESH ADJUDICATION AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. BEFORE CLOSING THIS ISSUE, THE LD. COU NSEL FOR THE ASSESSEE POINTED OUT THAT THE LD. CIT (A) HAS HELD THAT THE ISSUE OF INTEREST EXPENDITURE IS PENDING BEFORE THE HONBLE SPECIAL COURT. IT IS THIS A OF THE LD. COUNSEL THAT THE PROCEEDINGS I N WHICH THE SAID ISSUE OF INTEREST WAS ISSUED BY THE CUSTODIAN HAVE BEEN ALREADY CONCLUDED WHICH FACT HAS ALREADY BEEN RECORDED BY T HE LD. CIT (A) IN THE IMPUGNED ORDER. WE, THEREFORE DIRECT THE LD. CIT (A) TO CONSIDER THIS FACT WHILE DECIDING THE ISSUE AFRESH. THE LD. CIT (A) MAY ALSO DIRECT FOR THE TAXING OF INCOME IN THE HAN DS OF THE RECIPIENT (FAMILY MEMBERS) IN ACCORDANCE WITH THE M ETHOD OF ACCOUNTING FOLLOWED BY THEM AND AS PER THE PROVISIO NS OF THE LAW. GROUND NO 4 IS TREATED AS ALLOWED FOR STATISTICAL P URPOSE 3. LD. SPECIAL COUNSEL DID NOT CONTROL WHAT TO SUCH CONTENTION OF LD. AR THAT THE ISSUE IS COVERED BY THE AFOREMENTIO NED DECISION. 4. IN VIEW OF THE SITUATION, AFTER HEARING BOTH TH E PARTIES, WE PASS SIMILAR ORDER AND THIS GROUND IS CONSIDERED TO BE A LLOWED FOR STATISTICAL PURPOSES IN THE MATTER AFORESAID 6 ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 10. CONSISTENT WITH THE VIEW TAKEN BY THE COORDINA TE BENCH IS AFORESAID, WE RESTORE THE MATTER BACK TO THE FILE O F THE LEARNED COMMISSIONER (APPEALS) FOR DECIDING AFRESH KEEPING IN VIEW THE DIRECTIONS OF THE COORDINATE BENCH AS REFERRED TO H EREINABOVE. THUS, GROUND NO 2 IS ALLOWED FOR STATISTICAL PURPOS ES. 11. WE THEREFORE, RESPECTFULLY FOLLOWING THE DECISI ON OF THE COORDINATE BENCH PASSED IN AFORESAID CASE RESTORE THIS ISSUE T O THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH TH E OBSERVATIONS MADE BY THE COORDINATE BENCH IN THE AFORESAID CASE. GROU ND NO 2 IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO 3 & 4 PERTAIN TO INTEREST CHARGED U/S 234A, 234B, 234C OF THE ACT. WE NOTICE THAT THE COORDINATE BENC H HAS RESTORED BACK THE IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 BY FOLLOWING ITS EARLIER VIEW TAKEN IN SIMI LAR CASE HOLDING AS UNDER:- 23. CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IS AFORESAID, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE INTE REST UNDER SECTION 234B AND 234C WHILE GIVING EFFECT TO THE OR DER OF THE LEARNED COMMISSIONER (APPEALS) IN TERMS OF DIRECTIO NS CONTAINED HEREINABOVE. GROUND NUMBER 4 AND 5 ARE ALLOWED FOR STATISTICAL PURPOSES. 13. IT IS PERTINENT TO MENTION HERE THAT IN THE SAI D CASE THE ASSESSEE HAD CHALLENGED THE CHARGEABILITY OF INTEREST UNDER SECTIONS 234A, 234B AND 234C OF THE ACT. IN THE PRESENT CASE THE ASSESS EE HAS RAISED THE IDENTICAL ISSUES VIDE GROUND NO 3 AND 4. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH, W E RESTORE GROUND 7 ITA NO.5451/MUM/2014 ASSESSMENT YEAR: 2003-04 NUMBER 2 AND 3 OF THE APPEAL TO THE FILE OF THE AO WITH THE DIRECTION TO COMPUTE THE INTEREST UNDER SECTIONS 234B AND 234C W HILE GIVING EFFECT TO THE ORDER OF THE LEARNED COMMISSIONER (APPEALS), TAKING INTO CONSIDERATION THE RELEVANT DECISIONS ON THIS ISSUE. ACCORDINGLY GROUND NO 3 AND 4 OF THE APPEAL ARE ALLOWED FOR STATISTICA L PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 04 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2016 SD/- SD/- ( D.KARUNAKARA RAO ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 16/12/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA