M/S. SHREE PADMAVATI IRRIGATIONS PVT.LTD., Burhanpur V. THE ITO, Burhanpur

ITA 643/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5828 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

SHREE PADMAVATI IRRIGATION ITA NO. 643/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 643/IND/2015 A.Y.2010-11 M/S SHREE PADMAVATI IRRIGATIONS PVT. LTD. BURHANPUR ::: APPELLANT VS INCOME TAX OFFICER BURHANPUR ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 22.12.10.2015 DATE OF PRONOUNCEMENT 2 . 2 .201 6 O R D E R THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 30.4.2 015. SHREE PADMAVATI IRRIGATION ITA NO. 643/IND/2015 2 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN PIPES. THE RETURN OF INCO ME WAS FILED DECLARING INCOME AT RS. 28,052/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS INVESTED AN AMOUNT O F RS. 1,00,80,000/- IN SHARES. THE ASSESSING OFFICER I NVOKED THE PROVISIONS OF SECTION 14A READ WITH RULE D AND MA DE THE DISALLOWANCE OF RS. 8,86,213/- AGAINST WHICH THE ASSESSEE PREFERRED APPEAL BUT THE LEARNED CIT(A) CONFIR MED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THIS INVESTMENT IN SHARES WAS IN EARLIER YEARS AND NO F RESH INVESTMENT WAS MADE DURING THE YEAR UNDER CONSIDERATIO N. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS CAPITAL OF RS. 4 3 LACS, THEREFORE, DISALLOWANCE WAS NOT JUSTIFIED. HE ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CORRTECH ENERGY (P) LT D.; 272 SHREE PADMAVATI IRRIGATION ITA NO. 643/IND/2015 3 CTR 262 AND ALSO THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. LAKHANI MARKETING; 272 CTR 265. RELIANCE WAS ALSO PLACED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CAS E OF ACG ASSOCIATED CAPSULES PVT. LTD. VS. CIT; 343 ITR 8 9 (SC). 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. AFTER HEARING BOTH THE SIDES, I FIND THAT THE HON' BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CORRTECH ENE RGY P. LTD. (SUPRA) RELIED UPON BY THE LEARNED COUNSEL FO R THE ASSESSEE HAS GIVEN THE DECISION ON THE BASIS THAT ITAT HAS RECORDED THE FINDING THAT THE ASSESSEE DID NOT MAKE ANY CLAIM OF EXEMPTION OF ANY INCOME FROM PAYMENT OF TAX AND ON THAT BASIS THE HON'BLE COURT HELD THAT NO QUESTION O F LAW ARISES AND DISMISSED THE REVENUES APPEAL. THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT SHREE PADMAVATI IRRIGATION ITA NO. 643/IND/2015 4 RELATE TO THE ASSESSMENT YEAR 2001-02 WHEREIN PROVISIO NS OF RULE 8D WERE NOT APPLICABLE. THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. (SUPRA) IS IN RELATION TO DEDUCTIONS CLAIMED U/S 80HHC, THEREFORE, IT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE PROVISIONS OF SECTION 14A OF THE A CT EMPOWER THE ASSESSING OFFICER TO DISALLOW EXPENDITUR E INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT F ORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE W ITH THE METHOD PRESCRIBED UNDER RULE 8D. WHEN THE ASSES SING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATI ON TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME O R EVEN WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT F ORM PART OF THE TOTAL INCOME THEN THE PROVISIONS OF SECT ION 14A ARE APPLICABLE. RULE 8D CAME INTO EFFECT FROM THE SHREE PADMAVATI IRRIGATION ITA NO. 643/IND/2015 5 ASSESSMENT YEAR 2008-09, THEREFORE, THESE PROVISIONS ARE APPLICABLE TO THE CASE OF THE ASSESSEE. HOWEVER, THIS RULE CAN BE INVOKED BY THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE EXPENDITURE MADE BY THE ASSESSEE OR THE CLAIM O F THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF TH E TOTAL INCOME FOR SUCH PREVIOUS YEAR. THE ASSESSEE HAS CLAIME D THAT THE SHARES WERE PURCHASED IN EARLIER YEARS. THERE WAS NO FRESH INVESTMENT AND THE ASSESSEE WAS HAVING CAPITAL RESERVE OF RS. 40 LACS BUT NO FINDING IN THIS REGARD ABOUT CORRECTNESS OF THE ACCOUNTS OF THE ASSESSEE REGARDING THESE CLAIMS MADE BEFORE ME HAS BEEN VERIFIED BY THE AUTHORI TIES BELOW. RULE 8D HAS BEEN INVOKED WITHOUT GETTING SATIS FIED WITH THE INCORRECTNESS OF THE CLAIM OF THE ASSESSEE. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THIS ISS UE SHREE PADMAVATI IRRIGATION ITA NO. 643/IND/2015 6 NEEDS A FRESH LOOK AT THE LEVEL OF THE ASSESSING OFFI CER. I, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WIT H THE DIRECTION TO DECIDE THE SAME AFRESH AFTER PROVIDING TH E ASSESSEE AN ADEQUATE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 2 ND FEB., 2016 SD/- (B.C. MEENA) ACCOUNTANT MEMBER 2/2/2016 DN/-