SHANTILAL C. RATHOD, MUMBAI V. ACIT 25(3), MUMBAI

ITA 5770/MUM/2014

• Counselvise Citation: 577019914 RSA 2014
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1987-1988
• Appeal Filed On: 12-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BOARA
• Assessee Lawyers: LAKSHMINARAYANAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 5770/MUM/2014 (ASSESSMENT YEAR: 1987-88) SHRI SHANTILAL C. RATHOD VS. A C I T 25(3) 73, CRYSTAL A NEW LINK ROAD C-11 ROAD NO. 308, 3 RD FLOOR DAHANUKAR WADI, KANDIVALI (W) BANDRA KURLA COMPLEX MUMBAI 400067 BANDRA (E), MUMBAI 400051 PAN AAAPR9695N APPELLANT RESPONDENT APPELLANT BY: SHRI LAKSHMINARAYANAN & SHRI VINAY SINHA RESPONDENT BY: SHRI VIJAY KUMAR BOARA DATE OF HEARING: 29.01.2015 DATE OF PRONOUNCEMENT: 29.01.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-35, MUMBAI AND IT PERTAINS TO A.Y. 1987- 88. 2. ASSESSMENT WAS ORIGINALLY COMPLETED ON A TOTAL INCO ME OF RS.4,78,883/-. THE ASSESSEE WAS DERIVING SHARE OF P ROFIT FROM FIRMS WHICH ARE ENGAGED IN DEALERSHIP BUSINESS. A SEARCH WAS CO NDUCTED IN THE PREMISES OF THE ASSESSEE IN 1988 WHEREIN A DOCUMENT REFERRED TO AS RED BOOK WAS FOUND AND SEIZED. THE BOOK COVERED THREE ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89. CONSEQUENT TO THE SEA RCH THE ASSESSEE DISCLOSED A TOTAL SUM OF RS.21,42,260/-. THE AO ADD ED THE SAME IN THE THREE ASSESSMENT YEARS IN 144 PROCEEDINGS. AT THIS STAGE THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE SAME SHOULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE BUT IN THE HA NDS OF THE FIRM. IN THE LIGHT OF THE AVERMENT THE LEARNED CIT(A) DIRECTED T HE AO TO EXAMINE AS TO WHETHER THE DISCLOSED AMOUNTS WERE TO BE ASSESSED I N THE HANDS OF THE FIRM OR IN THE HANDS OF THE ASSESSEE. FRESH ASSESSM ENT ORDER WAS PASSED, WHICH WAS ALSO CHALLENGED AND FINALLY THE SETTLEMEN T COMMISSION PASSED ITA NO. 5770/MUM/2014 SHRI SHANTILAL C. RATHOD 2 AN ORDER ON 09.06.2010 WHEREIN THE TOTAL INCOME WAS DETERMINED AS UNDER: - AY 1986-87 RS.2,79,723/- AY 1987-88 RS.2,92,614/- AY 1988-89 RS.2,.74,880/- 3. IN THE MEANTIME THE TRO SOUGHT TO COLLECT THE TAXES BY ADJUSTING THE AMOUNTS REFUNDABLE. HE ALSO LEVIED INTEREST UNDER S ECTION 220(2) OF THE ACT. ACCORDING TO THE ASSESSEE THERE IS NO SPECIFIC DIRECTION BY THE SETTLEMENT COMMISSION TO CHARGE INTEREST UNDER SECT ION 220(2) AND HENCE THE AO ERRED IN CHARGING INTEREST. IN THE 154 ORDER PASSED BY THE AO IT WAS CLARIFIED THAT THE SETTLEMENT COMMISSION DID NOT PA SS ANY SPECIFIC ORDER WITH REGARD TO NON-CHARGING OF INTEREST UNDER SECTI ON 220(2) OF THE ACT AND THEREFORE REJECTED THE RECTIFICATION PETITION. ON A N APPEAL FILED BY THE ASSESSEE AGAINST THE SAID ORDER THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO AND THUS FURTHER APPEAL WAS FILED BEFORE THE TRIBUNAL. 4. THE BENCH IS CONCERNED HERE WITH A.Y. 1987-88 ONLY WHEREIN INTEREST WAS CHARGED UNDER SECTION 220(2) OF THE AC T. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED THE ATTENTION OF THE BENC H TO THE OBSERVATIONS MADE IN THE ORDER PASSED BY THE SETTLEMENT COMMISSI ON, AT PAGE 28 AND ALSO ANNEXURE-2, I.E. COMPUTATION OF TOTAL INCOME, TO SUBMIT THAT THE CASE OF THE ASSESSEE WAS THAT INTEREST IS NOT PAYABLE AS LARGE AMOUNT OF REFUND IS DUE TO THE ASSESSEE FROM THE INCOME TAX DEPARTME NT AND THE SAME WAS IMPLIEDLY ACCEPTED SINCE THERE IS NO SPECIFIC D IRECTION TO THE AO, IN THE DETAILED COMPUTATION OF INCOME ASSESSABLE, WITH REGARD TO CHARGING OF INTEREST UNDER SECTION 220(2) OF THE ACT. IT IS NOT IN DISPUTE THAT THE TAXES ALREADY PAID BY THE ASSESSEE FOR EARLIER ASSESSMENT YEARS ARE IN EXCESS OF THE TAX PAYABLE FOR THOSE YEARS AND IN FACT IT WAS ADJUSTED AGAINST THE TAX PAYABLE IN THIS YEAR. THE LEARNED COUNSEL FOR THE A SSESSEE RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF L.N. GADODIA & SONS (P) LTD. 207 CTR 669 TO SUBMIT THAT THE AO HAS TO STRICTLY FOLLOW THE ORDER PASSED BY THE SETTLEMENT COMMISSION AND HE IS ENTITLED TO CHARGE INTEREST ONLY IF IT IS SPECIFICALLY MENTIONED IN TH E ORDER PASSED BY THE SETTLEMENT COMMISSION. IT WAS NOT OPEN FOR THE AO T O CHARGE INTEREST ITA NO. 5770/MUM/2014 SHRI SHANTILAL C. RATHOD 3 UNDER SECTION 220(2) SINCE IT WAS NOT INDICATED IN THE SETTLEMENT COMMISSIONS ORDER. THE LEARNED COUNSEL FOR THE ASS ESSEE CONTENDED THAT EVEN IN THE PRESENT CASE THE ASSESSEE RAISED THE PL EA BEFORE THE SETTLEMENT COMMISSION THAT INTEREST IS NOT CHARGEAB LE AND THE SAME WAS NOTED BY THE BENCH OF THE SETTLEMENT COMMISSION AND IN THE COMPUTATION PORTION THERE WAS NO SPECIFIC INDICATIO N WITH REGARD TO CHARGING OF INTEREST UNDER SECTION 220(2) OF THE AC T AND HENCE THE AO WAS NOT JUSTIFIED IN CHARGING INTEREST. 5. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT IN ANNEXURE-2 THE TOTAL INCOME ASSESSABLE WAS INDICATED WITH A FU RTHER DIRECTION TO INCLUDE SURCHARGE AND INTEREST, IF ANY, AFTER GIVIN G CREDIT FOR TAXES ALREADY PAID, WHICH IMPLIES THAT THE AO IS AUTHORISED TO CH ARGE INTEREST INDEPENDENTLY. HE THUS SUPPORTED THE ORDER PASSED B Y THE TAX AUTHORITIES. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE RECORD. IT IS NOT IN DISPUTE THAT AT PAGE 28 OF THE ORDER PASSED BY THE SETTLEMENT COMMISSION THE CLAIM OF THE ASSESSEE WIT H REGARD TO THE REASONS FOR NON-PAYMENT OF TAX WAS MENTIONED AND IT WAS ALSO CONTENDED THAT INTEREST IS NOT CHARGEABLE AS LARGE AMOUNT OF REFUND IS DUE TO THE ASSESSEE FROM THE INCOME TAX DEPARTMENT. THE FACT T HAT LARGE AMOUNT IS DUE IS NOT DISPUTED EVEN AT THIS STAGE. IT IS ALSO NOT IN DISPUTE THAT THERE IS NO DIRECTION BY THE SETTLEMENT COMMISSION TO CHARGE INTEREST UNDER SECTION 220(2) OF THE ACT. IN OTHER WORDS, THE CLAI M OF THE ASSESSEE, NOTICED AT PAGE 28 OF THE ORDER PASSED BY THE SETTLEMENT CO MMISSION, WAS NOT REJECTED SPECIFICALLY. THUS IT CANNOT BE SAID THAT THERE IS ANY SPECIFIC DIRECTION TO THE TAX AUTHORITIES TO CHARGE INTEREST UNDER SECTION 220(2) OF THE ACT. UNDER IDENTICAL CIRCUMSTANCES THE HON'BLE DELHI HIGH COURT, IN THE CASE CITED SUPRA, OBSERVED THAT IN THE ABSENCE OF ANY SPECIFIC DIRECTION BY THE SETTLEMENT COMMISSION IT WAS NOT OPEN FOR TH E AO TO CHARGE INTEREST UNDER SECTION 220(2) OF THE ACT. 7. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE I AM OF THE VIEW THAT INTEREST WAS ERRONEOUSLY CHARGED BY THE AO BY INCOR RECT APPRECIATION OF THE ORDER PASSED BY THE SETTLEMENT COMMISSION. I, T HEREFORE, SET ASIDE THE ITA NO. 5770/MUM/2014 SHRI SHANTILAL C. RATHOD 4 ORDER PASSED BY THE CIT(A) AND DIRECT THE AO NOT TO CHARGE INTEREST UNDER SECTION 220(2) OF THE ACT. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2015. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 29 TH JANUARY, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 35, MUMBAI 4. THE CIT 25, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.