TOPAZ HOLDINGS PVT. LTD., MUMBAI V. A.C.I.T. C.C. 31, MUMBAI

ITA 7295/MUM/2012

• Counselvise Citation: 729519914 RSA 2012
• Duration Of Justice: 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 05-09-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 07-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Section: 234B; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. 7295/MUM/2012 ASSESSMENT YEAR : 2000-01 M/S. TOPAZ HOLDINGS PVT. LTD. 32, MADHULI, 3 RD FLOOR A.B. ROAD, WORLI MUMBAI-400 018. PAN NO.AAACT 5152 F VS. ACIT, CC - 31 AAYAKAR BHAVAN, 101-M.K. ROAD, CHURCHGATE MUMBAI-400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DHARMESH SHAH REVENUE BY : DR. P. DANIEL DATE OF HEARING : 05/09/2013 DATE OF PRONOUNCEMENT : 17 / 0 9 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-37, MUMBAI DATED 27/09/2012. ASSESSEE BELONGS TO HARSHA D MEHTA GROUP OF CASES AND IS A NOTIFIED ENTITY UNDER SPECIAL COU RT ACT 1992. 2. GROUND NO.1 AND 2 ARE NOT PRESSED AND HENCE, DOE S NOT REQUIRE ADJUDICATION. 3. GROUND NO.3 IS AS UNDER :- ITA NO.7295/M/12 A.Y.00-01 2 3. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS.2 ,86,72,678/-. 3.1 ORIGINALLY THE ASSESSMENT WAS COMPLETED U/S. 14 4 ESTIMATING THE INCOME ON DEPOSITS WITH BANK. BEFORE THE CIT(A), TH E MATTER WAS AGITATED. DURING THE REMAND PROCEEDINGS, THE ASSESS EE MADE A CLAIM OF INTEREST ON THE BASIS OF THE STAND TAKEN BY THE CUS TODIAN THAT THE ASSESSEE HAS TO PAY INTEREST @ 18% PER ANNUM. REVEN UE BEING A PARTY TO THE SAME, ASSESSEE CLAIMED SUCH INTEREST. ASSESSING OFFICER DISALLOWED THE SAME IN THE REVISED COMPUTATION SUBMITTED TO TH E LD. CIT(A). FOLLOWING THE DECISION IN THE CASE OF HITESH MEHTA, LD. CIT(A) CONFIRMED THE DISALLOWANCE. IT WAS SUBMITTED THAT THIS ISSUE WAS BEING SET ASIDE TO THE FILE OF LD. CIT(A) IN ALL THE GROUP CASES FOR F RESH ADJUDICATION. 3.2 IN THE CASE OF HITESH MEHTA IN ITA NO.1945/M/20 12 DATED 13/09/12, IT WAS HELD AS UNDER :- 2.1. GROUND NO. 1 & 2 RELATE TO THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE LIABILITY AMOUNTING TO RS.1,04,35,91 8/- FOR THE AYS 2002-03 TOWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. IT IS PERTINENT TO MENTION THAT THE ITAT IN ASSESSEES OW N CASE IN ITA NOS. 7726 & 7727/MUM/2010 WHILE DECIDING A SIMILAR ISSUE HAS HELD AS FOLLOWS: GROUND NO. 4 RELATES TO THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS.11,24,99 ,052/- AND RS.12,61,36,245/- RESPECTIVELY FOR THE A.YS 2005-06 AND 2006-07 TOWARDS INTEREST EXPENDITURE CLAIMED BY TH E ASSESSEE. IT IS PERTINENT TO NOTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPECT OF REJECTION/RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICATION OF THE LD.CI T(A) IN VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT O N THE ISSUE OF THE IMPUGNED LIABILITY, WE SET ASIDE THIS ISSUE ALSO TO THE FILES OF THE LD.CIT(A) TO ADJUDICATE AFRESH ALONG W ITH THE ADJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION/RELIABILITY OF THE BOOKS OF ACCOUNTS. ITA NO.7295/M/12 A.Y.00-01 3 ALSO, THE ITAT FOR THE AYS 1994-95, 1995-96 & 2001- 02 HAS DECIDED A SIMILAR ISSUE IN THE AFORESAID LINES. IN VIEW OF THAT MATTER, WE, BY FOLLOWING THE FINDINGS OF THE TRIBUNAL IN THE AFORE MENTIONED CASE, SET ASIDE THE ISSUES TO THE FILE OF THE LD.CIT(A) TO AD JUDICATE AFRESH IN THE LINE OF SIMILAR DIRECTION GIVEN BY THE ITAT AS AFOREMENTIONED. ACCORDINGLY, GROUNDS NO.1 & 2 ARE ALLOWED FOR STATI STICAL PURPOSE. 3.3 RESPECTFULLY FOLLOWING THE SAME, THE ISSUE IS S ET ASIDE TO THE FILE OF CIT(A) TO ADJUDICATE THE SAME ACCORDING TO THE STAN D TAKEN IN OTHER CASES. GROUND ALLOWED FOR STATISTICAL PURPOSES. 4. GROUND NO.4 IS AS UNDER :- 4. THE LD. CIT(A) HAS ERRED IN LAW AND IN CONFIRMI NG THE LEVY OF INTEREST U/S. 234A AND 234B OF THE ACT. 4.1 LEVY OF INTEREST WAS CONSIDERED IN THE CASE OF HITESH MEHTA IN ITA NO.1945/M/2012 DATED 13/09/12 IT WAS HELD AS UNDER :- 4.1 HOWEVER, THE ITAT IN ITA NO. 6810/MUM/2008 IN M /S. VELVET HOLDINGS PVT. LTD, A GROUP CASE, WHILE DECIDING A S IMILAR ISSUE, HAS HELD AS FOLLOWS: IN OTHER GROUP CASES, THE ITAT HELD THAT INTEREST U/S. 234B, 234C AND 234D CANNOT BE LEVIED AS THE ASSESSEE IS A NOTIFIED PERSON AND THE PROVISIONS OF THE SPECIAL COURT (TRI AL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) AC T 1992 WILL PREVAIL. REVENUE HAS CARRIED THE MATTER TO HON'BLE HIGH COURT WHICH UPHELD THE REVENUE CONTENTION. IT HELD VIDE P ARA 14 IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD. IN ITA NO.3334 OF 2010 DATED 07-03-2012 AS UNDER : 14. IN PARAGRAPH 14 OF THE JUDGMENT, EXTRACTED ABO VE, THE SUPREME COURT HAS HELD THAT THE PROVISIONS OF THE S PECIAL COURT ACT, WHEREVER THEY ARE APPLICABLE SHALL PREVAIL OVE R THE PROVISIONS OF THE INCOME TAX ACT, 1961. THE WORDS WHEREVER TH EY ARE APPLICABLE ARE CRUCIAL. THE SPECIAL COURT ACT MAKE S NO PROVISION IN REGARD TO THE DETERMINATION OF LIABILITY TO PAY INTEREST UNDER THE INCOME TAX ACT, 1961. THAT LIABILITY IS CLEARLY REF ERABLE TO THE PROVISIONS EMBODIED IN SECTIONS 234A, 234B AND 234C . IN THE CIRCUMSTANCES, THE TRIBUNAL, IN OUR VIEW, WAS IN ER ROR IN COMING TO THE CONCLUSION THAT INTEREST UNDER SECTIONS 234A, 2 34B AND 234C CAN NOT BE LEVIED ON AN ASSESSEE WHO IS A NOTIFIED PARTY UNDER THE ITA NO.7295/M/12 A.Y.00-01 4 SPECIAL COURT ACT. BY THE CIRCULAR WHICH HAS BEEN ISSUED BY THE BOARD, THE POWER TO GRANT SUCH A WAIVER OR REMISSIO N HAS BEEN VESTED WITH THE CHIEF COMMISSIONER. IN TERMS OF THE JUDGMENT OF THE SUPREME COURT IN HARSHAD SHANTILAL MEHTA (SUPRA ), THE NOTIFIED PERSON, THE ASSESSEE IN THE PRESENT CASE, IS NOT WI THOUT REMEDY SINCE IT IS OPEN TO THE ASSESSEE TO TAKE RECOURSE T O THE REMEDY AVAILABLE UNDER THE DIRECTION DATED 26 JUNE 2006.WE ACCORDINGLY ANSWER THE QUESTIONS OF LAW AS FRAMED IN THE NEGATI VE. HOWEVER, WE CLARIFY THAT IT WOULD BE OPEN TO THE NOTIFIED PERSO N TO SEEK A WAIVER OR REDUCTION BY MAKING AN APPLICATION TO THE CHIEF COMMISSIONER OF INCOME TAX IN TERMS OF THE ORDER DATED 26 JUNE 2006 OF THE CENTRAL BOARD OF DIRECT TAXES. THE APPEAL IS ACCORDINGLY DI SPOSED OF. 12.2 THE LD. COUNSEL POINTED OUT THAT THE MATTER IS REFERRED TO THE SAME BENCH FOR RECONSIDERATION IN THE CASE OF C IT VS. CASCADE HOLDINGS PVT. LTD. IN ITA NO.3365 OF 2010 DATED 02/ 07/2013. AS SEEN FROM THE COPY OF THE ORDER PLACED ON RECORD, T HE ABOVE ORDER WAS NOT STAYED. ONLY THE APPEAL WAS TRANSFERRED TO THE SAME BENCH FOR HEARING. IN THESE CIRCUMSTANCES, WE DO NOT SEE ANY REASON TO DIFFER FROM THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD. ACCORDINGLY, IT W AS HELD THAT LEVY OF INTEREST U/S. 234A, 234B AND 234C IS MANDATORY. THE GROUNDS ARE ACCORDINGLY ALLOWED. IT APPEARS THAT THE DECISION OF THE HON'BLE HIGH CO URT IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD HAS NOT BEEN BROUG HT TO THE NOTICE OF THE TRIBUNAL WHILE DECIDING THE ASSESSEES OWN CASE S REFERRED IN PARA 4 ABOVE. WHEN THE FACTS BEING SO, WE DO NOT FI ND ANY REASON TO DIFFER FROM THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. DIVINE HOLDINGS PVT. LTD. ACCORDINGLY, WE HOLD THAT LEVY OF INTEREST U/S. 234A, 234B AND 234C IS MANDATORY. THE GROUNDS ARE ACCORDINGLY ALLOWED. 4.2 SINCE LEVY OF INTEREST MANDATORY, GROUND IS AC CORDINGLY DISMISSED. 5. VIDE LETTER DATED 28/05/2013, THE ASSESSEE HAS R AISED THE FOLLOWING ADDITIONAL GROUND WHICH READS AS UNDER : THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF HONBLE SPECIAL COURT DATED 30.04.2010 IN MP NO. 41 OF 1999, THE ASSETS UNDER CONSIDERATION AND THE CONSEQ UENTIAL INCOME BELONGS TO SHRI HARSHAD S. MEHTA AND HENCE THE INCO ME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED I N THE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE A PPELLANT. 5.1 IT IS PERTINENT TO MENTION THAT THE ITAT, IN TH E ASSESSEE GROUP CASE OF HITESH S MEHTA IN ITA 5587,5589,5068/MUM/2011 DT . 12/06/13 FOR ITA NO.7295/M/12 A.Y.00-01 5 THE ASSESSMENT YEARS 1994-95, 1995-96 & 2001-02 HAS DECIDED A SIMILAR ADDITIONAL GROUND, THE ADJUDICATION OF WHICH READS AS UNDER : 4. THE ASSESSEE HAS ALSO FILED AN APPLICATION DATE D 27.05.2010 FOR ADMITTING THE FOLLOWING GROUND:- 1. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT A S PER THE DECISION OF THE HONBLE SPECIAL COURT DATED 30.04.2 010 IN M.P. NO. 41 OF 1999, THE ASSETS UNDER CONSIDERATION AND THE CONSEQUENTIAL INCOME BELONGS TO SHRI HARSHAD S. MEHTA AND HENCE, THE INCOME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEE N TAXED IN THE HANDS OF SHRI HARSHAD S. MEHTA AND NOT IN THE HANDS OF THE APPELLANT. 5. AFTER GOING THROUGH THE ADDITION GROUND FILED BY ASSESSEE, WE NOTED THAT THE GROUND IS LEGAL GROUND, WHICH DOES N OT REQUIRE ANY NEW FACTS TO BE BROUGHT ON RECORD. IN VIEW OF THE D ECISION OF THE HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, REPORTED IN (1998) 229 ITR 383, THE LEGAL GROUND CAN BE ADMITTED, IF NO NEW FACTS ARE TO BE BROUGHT ON RECO RD. HOWEVER, AFTER GOING THROUGH THE ADDITIONAL GROUND RAISED BY THE A SSESSEE FOR ALL THE ASSESSMENT YEARS INVOLVED HERE BEFORE US, WE FO UND THAT THE GROUND IS FULLY ACADEMIC IN NATURE FOR THE REASON T HAT IF THE HON'BLE SUPREME COURT DECIDES SOMETHING THAT HAS TO BE FOLL OWED WITHOUT ANY DISPUTE. THE DECISION OF THE HONBLE APEX COURT IS LAW OF LAND, WHICH HAS TO BE FOLLOWED BY EVERY AUTHORITY. THEREF ORE, IN OUR VIEW, NO DIRECTION IS TO BE REQUIRED TO BE GIVEN TO THE A O IN THIS RESPECT BECAUSE IF THE HONBLE APEX COURT DECIDES THAT ALL THE INCOME BELONGS TO SHRI HARSHAD S. MEHTA, THEN THE INCOME H AS TO BE ASSESSED IN THE HANDS OF SHRI HARSHAD S. MEHTA, NOT IN THE HANDS OF ANY OTHER PERSON. THEREFORE, IN OUR VIEW, THERE IS NO NEED TO ISSUE ANY DIRECTION AS THE DECISION OF THE HON'BLE SUPREM E COURT HAS TO BE FOLLOWED IN ANY CASE. ACCORDINGLY, BY ADMITTING THE GROUNDS RAISED BY THE ASSESSEE FOR ALL THESE YEARS, WE TREAT THE S AME AS ACADEMIC IN NATURE. 5.2 IN THE ABSENCE OF ANY DISTINGUISHING FACTS BROU GHT ON RECORD BY THE PARTIES FOR THE YEAR UNDER CONSIDERATION, WE, FOLLO WING THE SAID DECISION OF THE TRIBUNAL, DECIDE THE ADDITIONAL GROUND RAISE D BY THE ASSESSEE IN THIS APPEAL IN THE SAME MANNER AS AFOREMENTIONED. ITA NO.7295/M/12 A.Y.00-01 6 6. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2013. SD/- SD/- (SANJAY GARG) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 17/09/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.