Amitabh Sonthalia, Kolkata V. CIT(A) -9, KOLKATA, Kolkata

ITA 884/KOL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3360 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2015
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM] I.T.A NO.884/KOL/2015 ASSESSMENT YEAR: 2009-10 AMITABH SONTHALIA VS. INCOME-TAX OFFICER, WD- 31(3), KOLKATA (PAN: ALWPS4432K) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 28.12.2015 DATE OF PRONOUNCEMENT: 20.01.2016 FOR THE APPELLANT: SHRI AKKAL DUDHEWALA, FCA FOR THE RESPONDENT: MD. GHAYAS UDDIN, JCIT, SR. DR ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-9, KOLKATA VIDE APPEAL NO. 119/CIT(A)-9/WD.31(3)/2014-15/KOL DATED 10.03.2015. ASSESSMENT WAS FRAMED BY ITO, WD. 31(3), KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009-10 VIDE HIS ORDER DATED 29.12. 2011. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF EXPENSES MADE BY AO ALLEGEDLY CLAIM ED TO HAVE BEEN MADE AGAINST EXEMPTED INCOME AMOUNTING TO RS.12,77,081/- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D(2)(I) AND (III) OF THE I. T. RULES, 19 62 (HEREINAFTER REFERRED TO AS THE RULES) ON ESTIMATE BASIS. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS DECLARED INCOME UNDER THE HEAD CAPITAL GAINS ON SALE OF SHARES HELD BY WAY OF INVESTMENT. LD. C OUNSEL FOR THE ASSESSEE TOOK ME TO THE ASSESSMENT ORDER WHEREIN THE AO MADE DISALLOWANCE O F THE EXPENSES BY INVOKING SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES AS UNDER: I CALCULATE THE AMOUNT OF DISALLOWANCE U/S. 14A; RULE 8D OF THE INCOME TAX ACT, 1961; THE EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME SHALL BE THE AGGREGATE OF FOLLOWING AMOUNTS, NAMELY; (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCO ME WHICH DOES NOT FORM PART OF TOTAL INCOME: TOTAL EXPENDITURE SHOWN IN PROFIT & LOSS A/C X TOTAL EXEMPTED INCOME TOTAL INCOME SHOWN IN PROFIT & LOSS A/C = 764875 X (46,70,667 + 7937368) = 1043600 92,40,678 2 ITA NO.884/KOL/2015 AMITABH SONTHALIA, AY 2009-10 2 BUT RESTRICTED TO TOTAL EXP OF P/L A/C IS RS.764875 TOTAL DISALLOWANCE AS CALCULATED IS RS.764875/- AND 0.5% OF AVERAGE VALUE OF INVESTMENT, INCOME FRO M WHICH 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 AT RS.5,12,206/-. ACCORDI NGLY, HE MADE TOTAL DISALLOWANCE OF RS.12,77,081/-. AGGRIEVED, ASSESSEE PREFERRED APPE AL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THERE IS NO SATISFACTION RECORDED BY THE AO FOR MAKING DISALLOWANCE WHICH IS PRIMARY CON DITION FOR MAKING DISALLOWANCE OR FOR INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R EAD WITH RULE 8D OF THE RULES. LD. COUNSEL FOR THE ASSESSEE DREW MY ATTENTION TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TAIKISHA ENGINEERING INDIA LTD. (2015) 54 T AXMANN 109 (DEL.), WHEREIN IT HAS BEEN HELD AS UNDER: 18. IT IS IN THIS CONTEXT WE FEEL THAT THE FINDIN GS RECORDED BY THE CIT(A) AND THE TRIBUNAL ARE APPROPRIATE AND RELEVANT. THE CLEAR FINDINGS ARE T HAT THE ASSESSEE HAD SUFFICIENT FUNDS FOR MAKING INVESTMENTS IN SHARES AND MUTUAL FUNDS. THE SAID F INDINGS COUPLED WITH THE FAILURE OF THE ASSESSING OFFICER TO HOLD AND RECORD HIS SATISFACTION CLINCHE S THE ISSUE IN FAVOUR OF THE RESPONDENT ASSESSEE AND AGAINST THE REVENUE. THE SELF OR VOLUNTARY DE DUCTIONS MADE BY THE ASSESSEE WERE NOT REJECTED AND HELD TO BE UNSATISFACTORY, ON EXAMINATION OF AC COUNTS. JUDGMENTS IN TIN BOX CO. (SUPRA), RELIANCE UTILITIES & POWER LTD. (SUPRA). SUZLON EN ERGY LTD. (SUPRA) AND EAST INDIA PHARMACEUTICAL WORKS LTD. (SUPRA) WOULD BE RELEVANT IF THE SATISFACTION OF THE ASSESSING OFFICER IS IN ISSUE, AND SUCH QUESTION OF SATISFACTION IS WITH REFERENCE TO THE ACCOUNTS. SIMILARLY, HE REFERRED TO THE DECISION OF THIS TRIB UNALS ORDER IN THE CASE OF DCIT VS. REI AGRO LTD. IN GA NO.3022 OF 2013, ITAT 161 OF 2013 DATED 23.12.2013, WHICH WERE AFFIRMED BY HONBLE CALCUTTA HIGH COURT BY OBSERVING AS UNDER: THE ASSESSING OFFICER ALSO DISALLOWED THE EXPENDI TURE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 WITHOUT FIRST RECORDING THAT HE WAS NOT SATISF IED WITH THE CORRECTNESS OF THE CLAIM AS REGARDS THE CLAIM THAT NO EXPENDITURE WAS MADE BY THE ASS ESSEE. THE CONTRIBUTION TOWARDS PROVIDENT FUND, EVEN IF D EPOSITED BEYOND THE STIPULATED PERIOD, IS ALLOWABLE BY VIRTUE OF THE AMENDMENT AND THE DISALL OWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 IS PLAINLY CONTRARY TO THE PROVISIONS OF THE STATUTE. THE CIT, IN THE CIRCUMSTANCES, ALLOWED THE APPEAL OF THE ASSESSEE AND THE TRIBUNAL DID NOT INTERFERE. ACCORDING TO LD. COUNSEL, THIS ISSUE STANDS COVERED IN FAVOUR OF ASSESSEE. ON THE OTHER HAND, LD. SR. DR RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES. 5. I FIND FROM THE FACTS OF THE CASE THAT THE AO HA S NOT RECORDED ANY SATISFACTION THAT THE BOOKS OF ACCOUNT OF ASSESSEE ARE NOT RELIABLE OR TH E INVESTMENT IS MADE OUT OF THE INTEREST BEARING FUNDS TO THE INVESTMENTS WHICH GIVES EXEMPTED INCOM E OR EXPENSES ARE RELATABLE TO EXEMPTED 3 ITA NO.884/KOL/2015 AMITABH SONTHALIA, AY 2009-10 3 INCOME. IN ABSENCE OF SUCH FINDING, THE ISSUE STAN DS COVERED BY JURISDICTIONAL HIGH COURT AND HONBLE DELHI HIGH COURT IN THE CASES OF TAIKISHA E NGINEERING INDIA LTD. AND REI AGRO LTD., SUPRA. IN TERM OF THE ABOVE, I DELETE THE ADDITION AND ALLOW THE APPEAL OF ASSESSEE. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20.01.2016 SD/- (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 20TH JANUARY, 2016 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI AMITABH SONTHALIA, SUITE NO. 218, IDEAL PLAZA, 11/1, SARAT BOSE ROAD, KOLKATA-700020 2. RESPONDENT ITO, WD-31(3), KOLKATA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .