Chhabinder Singh Rajwant, New Delhi V. ITO, New Delhi

ITA 6112/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3883 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHERJEE
• Assessee Lawyers: R BHATIA
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.6112/DEL/2016 ASSESSMENT YEAR : 2007-08 CHHABINDER SINGH RAJWANT, R- 1/546, ASIAD VILLAGE, NEW DELHI. VS. ITO, WARD- 43(4), NEW DELHI. PAN : AENPR5539N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. BHATIA, CA DEPARTMENT BY : MS. RANU MUKHERJEE, SR.DR DATE OF HEARING : 18-01-2018 DATE OF PRONOUNCEMENT : 30-01-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 06.09.2016 OF CIT(A)- 28, NEW DELHI RELATING TO ASS ESSMENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND HAD FILED HIS RETURN OF INCOME ON 21.02.2008 DECLARING TOTAL INCOME OF RS.5,71,290/-. THE ORDER U/S 143(3) WAS PASSED ON 30.12.2009 DETERMINING THE TOTAL INCOME AT RS.7,33,620/-. SUBSEQUENTLY, THE A SSESSING OFFICER REOPENED THE ASSESSMENT U/S 147 ON THE GROUND THAT AS PER THE LI ST OF SHARE TRANSACTIONS FILED ALONG WITH THE RETURN OF INCOME IN A CHART MODE, TO TAL LONG TERM CAPITAL GAIN FROM SALE OF SHARES WERE SHOWN AT RS.36,36,450/-. HOWEVER, AS PER 2 ITA NO.6112/DEL/2016 COMPUTATION OF INCOME, THE EXEMPT INCOME BY WAY OF LONG TERM CAPITAL GAIN WAS SHOWN AT RS.41,41,726/- LEAVING A DIFFERENCE OF RS.4,78,276/- WHICH ESCAPED ASSESSMENT. THE ASSESSING OFFICER ACCORDIN GLY REOPENED THE ASSESSMENT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTANTIATE THE SAME. REJECTING T HE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITIO N OF RS.4,78,276/- UNDER THE HEAD SHORT TERM CAPITAL GAIN. THE ASSESSING OFFI CER FURTHER MADE DISALLOWANCE U/S 14A R.W. RULE 8D AMOUNTING TO RS.2 ,24,927/-. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT( A) WHO UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS.4,78,276/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN. SO FAR AS DISALLOWANCE U/ S 14A R.W. RULE 8D OF RS.2,24,927/- IS CONCERNED, THE LD. CIT(A) ALTHOUGH HELD THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING SUCH EXEMP T INCOME STILL SUSTAINED AN AMOUNT OF RS.57,517/-. 4. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DID N OT PRESS THE GROUND CHALLENGING THE VALIDITY OF THE REASSESSMENT PROCEE DINGS FOR WHICH LD. DR HAS NO OBJECTION. ACCORDINGLY, THE SAID GROUND IS DISM ISSED AS NOT PRESSED. 3 ITA NO.6112/DEL/2016 6. SO FAR AS ADDITION OF RS.4,78,276/- ON ACCOUNT O F SHORT TERM CAPITAL GAIN IS CONCERNED, LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS NEVER SOLD THE SHARES OF L&T WHICH WAS ERRONEOUSLY SHOWN IN THE CHART. HE SUBMITTED THAT ALTHOUGH THESE RELEVANT DETAILS WERE PRODUCED BEFORE THE LOWER AUTHORITIES, HOWEVER, THE SAME WERE NOT PROPERLY LO OKED INTO BY THE LOWER AUTHORITIES. HE SUBMITTED THAT HE HAS NO OBJECTION IF THE ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO E XAMINE THE SAME AND PASS CONSEQUENTIAL ORDER. 7. LD. DR HAS NO OBJECTION FOR THE ABOVE PROPOSITIO N OF LD. COUNSEL FOR THE ASSESSEE. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES. A PERUSAL OF THE PAPER BOOK AT PAGE 24 READ WITH PAGE 29 AND 38 SHOWS THAT THE ASSESSEE HAS NOT SOLD THE SHARES OF L&T LTD. DURING THE YEAR AND THE SAME WERE CARRIED FORWARD TO SUBSEQUENT YEAR. THEREFORE, IN MY CONSIDERED OPINION THE MATTER REQUIRES A REVISIT TO THE FILE OF THE ASSESS ING OFFICER FOR ADJUDICATION OF THE ISSUE AFRESH. NEEDLESS TO SAY, THE ASSESSING O FFICER SHALL GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND DECI DE THE ISSUE AS PER FACT AND LAW. THE GROUND RELATING TO ADDITION OF RS.4,78,17 6/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 4 ITA NO.6112/DEL/2016 9. SO FAR AS DISALLOWANCE U/S 14A AMOUNTING TO RS.5 7,517/- OUT OF RS.2,24,927/- IS CONCERNED, I FIND THE LD. CIT(A) W HILE DEALING WITH THE ISSUE AT PARA 5 AND 5.1 OF THE ORDER HAS DISCUSSED THE ISSUE AND HAS OBSERVED AS UNDER :- 5. GROUND NO.2(C) TAKEN BY THE APPELLANT IS AGAINS T THE DISALLOWANCE OF RS.2,24,927/- MADE BY THE AO UNDER SECTION 14A OF T HE ACT. DURING THE COURSE OF THE APPELLATE PROCEEDING IT WAS SUBMITTED BY THE LD. AR THAT THE AO WHILE CALCULATING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT HAS WRONG LY DISALLOWED RS.1,67,410/- AS INDIRECT/ ADMINISTRATIVE EXPENSES ATTRIBUTABLE TO E ARNING THE EXEMPT INCOME. IT WAS FURTHER STATED THAT THE APPELLANT HAS NOT CLAIMED A NY SUCH EXPENDITURE IN THE COMPUTATION OF INCOME, HENCE THERE IS NO LOGIC FOR CALCULATION OF ANY DISALLOWANCE OF RS.1,67,410/- UNDER RULE 8D(III). 5.1 CONSIDERING THE FACT OF THE CASE, PROVISION OF THE ACT AND THE SUBMISSION OF THE LD. AR THAT DURING THE YEAR UNDER CONSIDERATION NO EXPENDITURE GENERAL/ADMINISTRATIVE EXPENSES HAS BEEN CLAIMED BY THE APPELLANT IN THE COMPUTATION OF INCOME, HENCE THERE IS NO JUSTIFICATION FOR DISA LLOWANCE OF RS.1,67,410/-. ACCORDINGLY THE DISALLOWANCE UNDER SECTION 14A MADE BY THE AO IS RESTRICTED TO RS.57,517/-. THE APPELLANT WILL GET NECESSARY RELI EF ACCORDINGLY. 10. A PERUSAL OF THE SAME SHOWS THAT THERE IS NO JU STIFICATION WHATSOEVER HAS BEEN GIVEN BY THE LD. CIT(A) WHILE RESTRICTING SUCH DISALLOWANCE AT RS.57,517/- ESPECIALLY WHEN HE HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE ON ACCOUNT OF EARNING OF SU CH EXEMPT INCOME. THEREFORE, THE DISALLOWANCE SUSTAINED BY THE LD. CI T(A) TO THE EXTENT OF RS.57,517/- OUT OF THE TOTAL DISALLOWANCE OF RS.1,6 7,410/- MADE BY THE ASSESSING OFFICER HAS NO BASIS. FURTHER, THE PROVI SIONS OF RULE 8D ARE NOT APPLICABLE TO THE ASSESSEE, THE ASSESSMENT YEAR BEI NG 2007-08. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) SUSTAINING THE D ISALLOWANCE OF RS.57,517/- IS SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. 5 ITA NO.6112/DEL/2016 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH JANUARY, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 30-01-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI