ITO 1(3)(2), MUMBAI V. SALASAR SILK MILLS P.LTD, MUMBAI

ITA 5777/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5759 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 5777 / M/ 20 1 7 ( ASSESSMENT YEAR : 201 0 - 1 1 ) ITO - 1(3)(2) ROOM NO. 541, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 . VS. M/S. SALASAR SILK, MILLS PVT. LTD. 5, KITAB MAHAL, 1 ST FLOOR, 192, DR. D.N. ROAD, FORT, MUMBAI - 400001. ./ ./ PAN/GIR NO. : AAACS 8753 P ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 08 . 01 .201 9 DATE OF PRONOUNCEMENT : 30. 01 . 201 9 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 23 . 0 6 .201 7 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2010 - 11 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - I WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,12,50,000/ - MADE BY THE AO U/S 68 OF THE I.T. ACT IN THE ASSESSMENT ORDER U/S 143(3) R.W.S. 263 OF THE I.T. ACT, WHICH WAS IN CONSEQUENCE TO ORDER U/S 263 PASSED BY THE PR. CIT - 1, MUMBAI. ASSESSEE BY: SHRI SUNIL HIRAWAT DEPARTMENT BY: SHRI B.B. RAJENDRA PRASAD (DR) ITA. NO. 5777 /M/2017 A.Y. 2010 - 11 2 II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE ORDER U/S 143(3) R.W.S. 263, AS NULL AND VOID, WITHOUT APPRECIATING THE FACT THAT TH E ORDER OF THE ITAT, RELIED UPON BY THE LD. CIT(A) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, TO AMEND OR WITHDRAW THE AFORESAID GROUNDS OF APPEAL. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 02 . 09 .201 0 FOR THE A.Y. 201 0 - 11 DECLARING TOTAL I NCOME TO THE TUNE OF RS.16,33,000/ - . THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 17.01.2013. THEREAFTER, THE HONBLE COMMISSIONER OF INCOME TAX - 1 REOPENED THE CASE U/S 263 OF THE ACT DATED 23.03.2015 AND SET ASIDE THE ORDER PASSED U/S 143(3) OF THE ACT ON THE ISSUE OF HIGH SHARE PREMIUM. THE CIT(A) HAS INVOKED THE POWER U/S 263 OF THE ACT ON THE FOLLOWING GROUNDS .: - (I) THE SHARE PREMIUM AMOUNT RECEIVED BY ASSESSEE, WHILE I NCREASING THE ASSETS IN BALANCE - SHEET IN THE FORM OF CASH/BANK BALANCE DOES NOT CREATE ANY LIABILITY IN THE BALANCE - SHEET. THIS AMOUNT OF PREMIUM GETS REFLECTED IN THE RESERVES AND UNDER THE COMPANYS ACT THE NATURE OF THESE RESERVES ARE SUCH WHICH CAN BE DISTRIBUTED TO THE SHARE - HOLDERS IN THE FORM OF BONUS SHARES. THE RELEVANT PROVISIONS OF COMPANYS ACT APPLICABLE TO SHARE PREMIUM ARE U/S 78 OF COMPANYS ACT. WHAT CAN BE DISTRIBUTED TO SHARE - HOLDERS OF ASSESSEE ARE ONLY PROFITS OR ACCUMULATED PROFITS. TH EREFORE, PRIMARY NATURE OF PREMIUM RECEIPT IS REVENUE AND THEREFORE, CHARGEABLE TO TAX. ITA. NO. 5777 /M/2017 A.Y. 2010 - 11 3 (II) IN THE ALTERNATIVE, SINCE THE NATURE OF RECEIPT HAS NOT BEEN EXPLAINED, THE PREMIUM AMOUNT CREDITED IN THE BOOKS OF ACCOUNT IS CHARGEABLE TO TAX U/S 68 OF THE ACT. 4. THEREAFTER, THE AO REOPENED THE ASSESSMENT OF THE ASSESSEE AND PASSED THE ORDER U/S 143(3) R.W.S 263 OF THE I.T. ACT. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 171,28,03,350/ - . FEELING AGGRIEVED, T HE ASSESSEE FILED AN APPEAL BEFO RE THE CIT(A) WHO DELETED THE SAID ADDITION, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5 . WE HAVE HEARD THE ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. BEFORE GOING FURTHER, WE DEEMED IT NECES SARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 3 SINCE THE ORDER OF THE PCIT, PASSED U/S 263 HAS BEEN QUASHED BY THE HONBLE ITAT D BENCH, MUMBAI FOR THE AY 2010 - 11 VIDE ITA. NO.1964/M/2015 DATED 7.4.2017, THUS THE ORDER PASSED BY THE AO U/S 143(3) R.W.S 263 BECOMES NULL AND VOID AND HENCE NO ADJUDI C ATION IS REQUIRED. THE PRESENT APPEAL IS DISPOSED OFF ACCORDINGLY. FOR STATISTICAL PURPOSES, THE GROUNDS OF APPEAL ARE DISMISSED . 6 . ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE CIT(A) HAS SET ASIDE THE ORDER OF THE AO PASSED U/S 143(3) R.W .S. 263 OF THE ACT ON THE BASIS OF THIS FACT OF HONBLE ITAT D BENCH, MUMBAI HAS SET ASIDE THE ORDER PASSED U/S 263 OF THE ACT IN ITA. NO.1964/M/2015 DATED 07.04.2017. UNDOUBTEDLY, IN THE SAID ITA. NO. 5777 /M/2017 A.Y. 2010 - 11 4 CIRCUMSTANCES , WHEN THE ORDER PASSED U/S 263 OF THE ACT IS NO WHERE IN EXISTENCE, THEREFORE, THE CIT(A) HAS RIGHTLY SET ASIDE THE FINDING OF THE AO DATED 01.03.2016, THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER QUITE JUSTIFIABLE AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPE LLATE STAGE. 7 . IN RESULT, APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED . ORDER P RONOUNCED IN THE OPEN COURT ON 30. 01.2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 30. 01.2019 VIJAY / 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