HIRAN ORGOCHEM LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 6908/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8369 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 18-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 12-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 6908/MUM/2011 ASSESSMENT YEAR-2009-09 M/S. HIRAN ORGOCHEM LTD., 601-A/1, PALM COURT M. BLOCK, LINK ROAD, MALAD (W), MUMBAI-400 064 PAN - AAACHG - 0977 - I VS. THE DCIT 8(2), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI A.B. KOLI DATE OF HEARING :18.10.2012 DATE OF PRONOUNCEMENT:31.10.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-17, MUMBAI DT. 23.8.2011 PERTAINING TO ASSE SSMENT YEAR 2008-09. 2. THE APPEAL WAS FIRST POSTED FOR HEARING ON 12.9. 2012. AS THE BENCH DID NOT FUNCTION, HEARING WAS ADJOURNED TO 18.10.20 12. THE ASSESSEE WAS INFORMED THROUGH THE NOTICE BOARD. AS NO ONE APPEA RED ON THE DATE OF HEARING, WE HAVE PROCEEDED TO DECIDE THE APPEAL EX PARTE. 3. THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF T HE ORDER OF THE LD. CIT(A) BY RAISING TWO GROUNDS OF APPEAL. GROUND NO . 1 RELATES TO ADDITION OF RS. 25,286/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. ITA NO. 6908/MUM/2011 2 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBITED AN AMOU NT OF RS. 25,286/- AS PRIOR PERIOD EXPENSES IN THE PROFIT AND LOSS ACCOUN T. THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE CIT(A) HELD THAT THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE, NEITHER BEFORE THE AO, NOR BEFORE HIM TO EXPLAIN WHY EARLIER YEARS EXPENSES HAVE BEEN CHARGED TO PROFIT AND LOSS ACCOU NT DURING THE YEAR UNDER CONSIDERATION WHEN THE METHOD OF ACCOUNTING IS MERC ANTILE. 6. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORIT IES AND FIND THAT THE ASSESSEE HAS NOT FILED ANY EXPLANATION OR DETAILS S UPPORTING ITS CLAIM OF PRIOR PERIOD EXPENSES. WE ALSO FIND THAT THE ASSESSEE HA S NOT FILED ANY EVIDENCE BEFORE THE LD. CIT(A) TO SUPPORT ITS CLAIM. THEREF ORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A). GROUND NO. 1 IS ACCORDINGLY DISMISSED. 7. GROUND NO. 2 RELATE TO ADDITION OF RS. 4,54,973/ - U/S. 14A R.W. RULE 8D OF THE I.T. ACT. 8. THIS ISSUE FINDS PLACE AT PAGE-3 PARA-5 OF THE A SSESSMENT ORDER. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E AO OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT IN EQUITY SHARES AND M UTUAL FUND AMOUNTING TO RS. 88,79,310/-. THE ASSESSEE WAS ASKED TO EXPL AIN WHY EXPENSES RELATING TO INVESTMENTS, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME BE DISALLOWED U/S. 14A R.W. RULE 8D OF THE A CT. IN RESPONSE TO WHICH THE ASSESSEE FILED A WRITTEN SUBMISSION IN WHICH IT GAVE THE CALCULATION OF DISALLOWANCES U/S. 14A AMOUNTING TO RS. 4,54,973/-. THE AO ACCEPTED THE CALCULATION OF DISALLOWANCES U/S. 14A AS DEMONSTRAT ED BY THE ASSESSEE. SURPRISINGLY, THE ASSESSEE AGITATED THIS MATTER BEF ORE THE LD. CIT(A) CLAIMING THAT SINCE IT HAS NOT EARNED ANY INCOME CLAIMED TO BE EXEMPT FROM TAX DURING ITA NO. 6908/MUM/2011 3 THE YEAR UNDER CONSIDERATION, DECISION OF THE TRIBU NAL CHENNAI BENCH IN THE CASE OF SHIVA INDUSTRY & HOLDINGS PVT. LTD. 11 TAXM AN 404 SQUARELY APPLIES. HOWEVER, THE CONTENTION OF THE ASSESSEE WAS REJECTE D BY THE LD. CIT(A) WHO RELIED UPON THE DECISION OF THE DELHI SPECIAL BENCH IN THE CASE OF M/S. CHEMINVEST LTD IN ITA NO. 87/DEL/2008 AND CONFIRMED THE ADDITION MADE BY THE AO. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE FIND THAT AS PER THE OBSERVATIONS OF THE AO, THE ASSESSE E ITSELF HAS GIVEN THE CALCULATION OF DISALLOWANCE U/S. 14A OF THE ACT. T HEREFORE, AGITATING THE SAME BEFORE THE LD. CIT(A) IS NOT UNDERSTANDABLE. FURTH ER, THE LD. CIT(A) HAS GIVEN A DETAILED REASONING OF CONFIRMING THE DISALL OWANCE RELYING UPON THE DECISION OF DELHI SPECIAL BENCH (SUPRA). WE, THERE FORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A). GROUND NO. 2 IS ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 31 ST OCTOBER, 2012 SD/- SD/- (I.P. BANSAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST OCTOBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI