RAGHUVIR RAMKISHAN DEVIDAYAL, MUMBAI V. ACIT - 17 (3), MUMBAI

ITA 6884/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8112 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMAL MANGAL J
• Keywords: Opportunity of being heard; Earning of tax free income; Rule 8D; Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUM BAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMB ER & SHRI G. MANJUNATHA, ACCOUNTANT MEMB ER ITA NO.6884/MUM/2018 ( ASSESSMENT YEAR :2013-14 ) RAGHUVIR RAMKISHAN DEVIDAYAL 17, SEKSARIA BUILDING 74, MARINE DRIVE MUMBAI-400 020 VS. ACIT-17(3) 1 ST FLOOR, AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AFWPD7945L ( APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI KAMAL MANGAL, JCIT-DR ASSESSEE BY NONE DATE OF HEARING 1 5 /01/2020 DATE OF PRONOUNCEME NT 22 /01/2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)28, MU MBAI, DATED 14/09/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2013- 14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAI LED TO CONSIDER THE FACT THAT THE NOTICE FOR BEARING OF APPEAL WAS NOT RECEIVED BY THE APPELLANT AND THEREFORE AN ORDER IS PASSED WITHOUT GRANTING AN OPPORTUNITY OF BEING HEARD. THE FILE BE RESTORED TO COMMISSIONER OF INCOME TAX (APPEALS) FOR PASSING THE ORDER AFTER HE ARING THE APPELLANT. WITHOUT PREJUDICE TO THIS GROUND FOLLOWING GROUNDS BE CONSIDERED AND APPROPRIATE RELIEF BE GRANTED; ITA NO.6884/MUM/2018 RAGHUVIR RAMKISHAN DEVIDAYAL 2 2. LEARNED COMMISSIONER OF INCOME TAX (APPEALS), WH ILE PASSING THE ORDER, FAILED TO PROPERLY APPLY SECTION 14A AND RUL E 8D, APPELLANT HAD DULY CONSIDERED , THE FACTS AND HAD ON HIS OWN DISALLOWED SUM OF RS . 60,000/-, THUS THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT FOL LOWING THE CLAUSE (2) OF SECTION 14A, WHICH INCLUDES WORDS 'IF THE ASSESS ING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSES, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM' (FULL SECTION ENCLOSED AS ANNEXURE -1) AND SUB-RULE (1) OF RULE 8D WHICH INCLUDES WORDS 'WHERE THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSES OF A PREVIOUS YEAR. IS NOT SATISFIED' AND SUB-RULE (2)(II) OF RUL E 8D WHICH INCLUDES WORDS 4 'IN A CASE WHERE THE ASSESSEE HAS INCURRED EXPENDITURE BY WAY OF INTEREST DURING THE PREVIOUS YEAR WHICH IS NOT DIRECTLY ATTRIBUTABL E TO ANY PARTICULAR INCOME OR RECEIPT,' (FULL RULE ENCLOSED AS ANNEXURE -2) AND HAS NOT ALLOWED THE DISALLOWANCE MADE BY APPELL ANTS AS RETURNED AT RS. 60,000/- AND TO INTEREST EXPENDITURE IS INCURRE D BY THE ASSESSEE, HAS DISALLOW RS. 5,78,14/- BE EXCLUDED FOR COMPUTING DI SALLOWANCE U/S 14A AND RELIEF OF RS. 5,78,140/- BE ALLOWED. 3. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAV E CONFIRMED THE DISALLOWANCE MADE FOR AN ERRONEOUS JOURNAL ENTRY AN D HAVE CONFIRMED ADDITION OF RS, 3,05,664/-. YOUR APPELLANT PREY THA T RELIEF OF RS. 3,05,664/- BE ALLOWED. 4. APPELLANTS RESERVE HIS RIGHT TO ADD ALTER OR AME ND ANY OF THE GROUNDS IN APPEAL- SECTION 14A: ANNEXURE-1 ''SECTION 14A (1) FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESP ECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHIC H DOES NOT FORM PAN OF THE TOTAL INCOME UNDER THIS ACT. (2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOUN T OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PAR! OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHO D AS MAY BE PRESCRIBED, IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL ALSO AP PLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THT NO EXPENDITURE HAS BEE N INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NO I FORM PART OF THE TOTAL INCOME UNDER THIS ACT: PROVIDED THAT NOTHING ............ BEGINNING ON O R BEFORE THE 1 ST DAY OF APRIL, 2001, ITA NO.6884/MUM/2018 RAGHUVIR RAMKISHAN DEVIDAYAL 3 RULE 8D; ANNEXURE- 2 RULE 8D. (1) WHERE THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE OF A PREVIOUS YEAR, IS NOT SATISFIED WITH - (A) THE CORRECTNESS OF THE CLAIM OF EXPENDITURE MAD E BY THE ASSCSSEC: OR (B)THE CLAIM MADE BY THE ASSESSEE THAT NO EXPENDITU RE HAS BEEN INCURRED, IN RELATION LO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT FOR SUCH PREVIOUS YEAR, HE SH ALL DETERMINE THE AMOUNT OF EXPENDITURE IN RELATION TO SUCH INCOME IN ACCORDANCE WITH (HE PROVISIONS OF SUB-RULE (2). (2) THE EXPENDITURE IN RELATION TO INCOME WHICH DOE S NOT FORM PART OF THE TOTAL INCOME SHALL BE THE AGGREGATE OF FOLLOWING AM OUNTS, NAMELY :- (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME: (II) IN A CASE WHERE THE ASSESSES HAS INCURRED EXPENDITURE BY WAY OF INTEREST DURING THE PREVIOUS YEAR WHICH IS N OT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT, AN AMOUNT COMPUTED IN ACCORDANCE WITH THE FOLLOWING FORMULA, NAMELY : B A X C WHERE A = AMOUNT OF EXPENDITURE BY WAY OF INTEREST OTHER THAN THE AMOUNT OF INCLUDED IN CLAUSE (I) INCURRED DURING TH E PREVIOUS YEAR; B -= THE AVERAGE OF VALUE OF INVESTMENT, INCOME FROM WHI CH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE ; ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR; C = THE AVERAGE OF TOTAL ASSETS AS APPEARING IN T HE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR; (III) AN AMOUNT EQUAL TO ONE-HALF PER CENT OF THE A VERAGE OF THE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE AS SESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR. (3) FOR THE PURPOSE OF THIS RULE, THE TOTAL ASSETS SHALL MEAN TOTAL ASSETS AS APPEARING THE BALANCE SHEET EXCLUDING THE INCREASE ON ACCOUNT OF REVALUATION OF ASSETS BUT INCLUDING THE DECREASE ON ACCOUNT OF REVALUATION OF ASSETS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESEE HAD FILED HIS RETURN OF INCOME FOR AY 2013-14 ON 29/09/2013, DECL ARING TOTAL INCOME OF RS. 2,07,93,600/-. THE CASE WAS SELECTE D FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) ON 22/02/2016 AND DETERMINED TOTAL INCOME AT RS. 2,16,77,400/- BY MAKING ITA NO.6884/MUM/2018 RAGHUVIR RAMKISHAN DEVIDAYAL 4 ADDITIONS TOWARDS DISALLOWANCES OF EXPENDITURE INCU RRED IN RELATION TO EXEMPT INCOME U/S 14A FOR RS. 5,78,140/- AND ADD ITIONS TOWARDS MISTAKE IN ACCOUNTING IN BOOKS FOR SPLITTING OF SH ARES OF ONE COMPANY FOR RS. 3,05,664/-. THE ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD .CIT(A) DISMISSED APPEAL FILED BY THE ASSESSEE EX-PARTE, IN- LUMINE WITHOUT DISCUSSING THE ISSUES ON MERITS. AGGRIEVED BY THE LD.CIT(A) OR DER, THE ASSESEE IS IN APPEAL BEFORE US. 4. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD TH E LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE F IND THAT THE LD.CIT(A) HAS DISMISSED APPEAL FILED BY THE ASSESS EE IN-LIMINE FOR NON APPEARANCE OF THE ASSESSEE FOR HEARING ON THE D ATES FIXED FOR DISPOSAL OF APPEAL AS NOTED BY THE LD.CIT(A) IN PAR A 2.1 OF HIS APPELLATE ORDER. AS PER THE LD.CIT(A), ALTHOUGH FOU R OPPORTUNITIES OF HEARING WAS GIVEN TO THE ASSESEE, BUT THE ASSESSEE EXCEPT IN ONE DATE, NEITHER APPEARED, NOR SOUGHT ADJOURNMENT. TH EREFORE, THE LD.CIT(A) DISPOSED-OFF OF THE APPEAL IN-LIMINE, BUT SUCH APPEAL HAS BEEN DISPOSED OF WITHOUT DISCUSSING THE ISSUES ON M ERITS, IN LIGHT OF VARIOUS GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN ITS MEMORANDUM OF APPEAL. NO DOUBT, IT IS THE DUTY OF THE PERSON, WHO FILED APPEAL TO GO BEFORE THE AUTHORITIES AND PRESE NT ITS CASE FOR SPEEDY DISPOSAL OF APPEAL. FURTHER, IF THE PERSON, WHO FILED APPEAL DOES NOT APPEARED BEFORE THE AUTHORITIES ON THE DAT ES FIXED FOR DISPOSAL OF APPEAL, THEN THE APPELLATE AUTHORITIES ARE AT LIBERTY TO DISPOSE OF APPEAL, BUT SUCH APPEALS SHOULD BE DISPO SED OF ON MERITS ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. IN T HIS CASE, NEITHER THE ASSESSEE APPEARED BEFORE THE LD.CIT(A) TO PRESENT I TS CASE, NOR THE LD.CIT(A) DISPOSED OF THE APPEAL ON MERITS. THEREFO RE, WE ARE OF THE ITA NO.6884/MUM/2018 RAGHUVIR RAMKISHAN DEVIDAYAL 5 CONSIDERED VIEW THAT IN ORDER TO GIVE ONE MORE OPP ORTUNITY TO THE ASSESSEE, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE LD.CIT(A) AND DIRECT HIM TO DECIDE THE ISSUE ON MERITS IN ACC ORDANCE WITH LAW. NEEDLES TO SAY, THE ASSESSEE SHALL GO BEFORE THE LD .CIT(A) AND PRESENT ITS CASE. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 /01 /2020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 22/01/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//