Bengal Infra Projects Private Limited, Durgapur V. ITO, Ward 2(1), Durgapur, Durgapur

ITA 890/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2090 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Section: 143(3); 56(2); 250; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. GODARA, JUDICIAL MEMBER) I.T.A. NO. 890/KOL/2017 ASSESSMENT YEAR: 2013-14 BENGAL INFRA PROJECTS PVT. LTD...................................................APPELLANT 4/18, SUHATTA SHOPPING COMPLEX CITY CENTER DURGAPUR 713 216 [PAN : AAECB 6462 E] VS. INCOME TAX OFFICER, WARD-2(1), KOLKATA.........................................................................RESPONDENT APPEARANCES BY: SHRI SUNIL SURANA, CA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI C.J. SINGH, JCIT SR. D/R. , APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MAY 14 TH , , 2019 DATE OF PRONOUNCING THE ORDER : MAY 19 TH , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - DURGAPUR, (HEREINAFTER THE LD.CIT(A)), PASSED U/S. 154 R.W.S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 30/01/2017, FOR THE ASSESSMENT YEAR 2013-14. 2. THE LD. CIT(A) IN THIS CASE HAS ORIGINALLY PASSED AN ORDER U/S 143(3) OF THE ACT, FOR THE ASSESSMENT YEAR 2013-14 ON 31/08/2016. IN THAT ORDER AT PAGE 6, HE HELD THAT SECTION 56(2)(VIIB) OF THE ACT, IS APPLICABLE AND THAT IT IS A PROSPECTIVE AMENDMENT AND CANNOT BE APPLIED FOR THE ASSESSMENT YEAR 2013-14. HE ALSO HELD THAT IT IS NOT A CASE WHERE UNACCOUNTED MONEY HAS BEEN INTRODUCED IN THE HANDS OF THE ASSESSEE BUT RATHER IT WAS THE DIRECTORS WHO BROUGHT IN THEIR MONEY FOR BOOSTING THE FINANCIALS OF THE COMPANY AS SHARE APPLICATION MONEY WITH SHARE PREMIUM. HE ALLOWED GROUND NO. 2 RAISED BY THE ASSESSEE WHICH RELATES TO THE ADDITION OF RS. 26,10,981/- BEING SHARE PREMIUM RECEIVED FROM DIRECTORS. IN THE ORDER PASSED U/S 154 OF THE ACT, THE LD. CIT(A)-DURGAPUR HELD THAT THERE IS A MISTAKE APPARENT ON RECORD FOR THE REASON THAT, SECTION 57(2)(VIIB) OF THE ACT IS APPLICABLE FROM ASSESSMENT YEAR 2013-14 AND NOT FROM THE FINANCIAL YEAR 2013-14. AFTER GIVING NOTICE TO THE ASSESSEE, THE LD. CIT(A) 2 I.T.A. NO. 890/KOL/2017 ASSESSMENT YEAR: 2013-14 BENGAL INFRA PROJECTS PVT. LTD CONCLUDED THAT THERE IS A MISTAKE APPARENT ON RECORD REQUIRING RECTIFICATION FOR THE REASON THAT PROVISIONS OF SECTION 56(2)(VIIB) OF THE ACT, IS AVAILABLE FROM THE ASSESSMENT YEAR 2013-14 AND NOT FROM THE FINANCIAL YEAR 2013-14. 3. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. SUNIL SURANA, MADE TWO FOLD SUBMISSIONS. HE ARGUED THAT RELIEF HAS BEEN GIVEN BY THE LD. CIT(A) ON TWO GROUNDS, FIRSTLY ON THE GROUND THAT IT IS NOT A CASE WHERE UNACCOUNTED MONEY HAS BEEN INTRODUCED IN THE HANDS OF THE ASSESSEE AND ON THE OTHER HAND THAT IT WAS THE DIRECTOR, WHO GAVE MONEY IN ORDER TO BOOST THE FINANCIAL STATUS OF THE COMPANY UNDER THE GUISE OF SHARE APPLICATION MONEY THOUGH THE AUTHORISED SHARE CAPITAL COULD HAVE BEEN INCREASED TO SAVE FEES OF REGISTRAR OF COMPANIES AND SECONDLY ON THE GROUND THAT SECTION 56(2)(VIIB) OF THE ACT, IS APPLICABLE FROM THE ASSESSMENT YEAR 2013-14. THUS, HE SUBMITS THAT THE LD. CIT(A) COULD NOT HAVE REVERSED HIS ORIGINAL APPELLATE ORDER ON THIS ISSUE BY SEEKING TO CHANGE HIS VIEW OR ON REASON ONLY. HE SUBMITTED THAT THE VIEW TAKEN BY THE LD. CIT(A) IN THE ORIGINAL APPELLATE ORDER THAT THE AMENDMENT IN QUESTION IS APPLICABLE FOR THE ASSESSMENT YEAR 2013-14 IS SUPPORTED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPINATH GHORAI VS. PCIT IN G.A. NO. 3174 OF 2016 & ITAT NO. 393 OF 2016, JUDGMENT DT. 21 ST NOVEMBER, 2016 AND HENCE THE ISSUE IS A DEBATABLE ISSUE AND IS NOT WITHIN THE PURVIEW OF SECTION 154 OF THE ACT. HE CONSEQUENTLY RELIED UPON CERTAIN CIRCULARS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES ON 31 ST DECEMBER, 2018 AND WHICH WAS APPARENTLY WITHDRAWN SUBSEQUENTLY AFTER A SHORT PERIOD FOR THE PROPOSITION THAT THE INTENTION OF INTRODUCING CLAUSE (VIIA) TO SECTION 56(2) OF THE ACT WAS NEVER TO APPLY THESE PROVISIONS TO FRESH ISSUE OF SHARE CAPITAL AND IT WAS ONLY IN CASE OF TRANSFER OF SHARES FOR INADEQUATE CONSIDERATION THAT THE PROVISION SHOULD APPLY. HE RELIED ON THE DECISION OF THE CHENNAI A BENCH OF THE TRIBUNAL IN THE CASE OF M/S. VAANI ESTATES PVT. LTD. VS. ITO IN ITA NO. 1352/CHY/2018, ORDER DT. 27/08/2018 , FOR THE PROPOSITION THAT CLAUSE (VIIA) TO SECTION 56(2) OF THE ACT WAS INTRODUCED TO CURB GENERATION AND USE OF UNACCOUNTED MONEY AND NOT A CASE WHERE INVESTORS SOURCE OF INVESTMENT IS GENUINE AND NOT IN DISPUTE. HE SUBMITS THAT THE FINDINGS OF THE LD. CIT(A) IN THE APPELLATE ORDER THAT, NO UNACCOUNTED MONEY HAS BEEN INTRODUCED IN THE HANDS OF THE ASSESSEE, WHICH AS A GROUND OF GRANTING RELIEF, HAS 3 I.T.A. NO. 890/KOL/2017 ASSESSMENT YEAR: 2013-14 BENGAL INFRA PROJECTS PVT. LTD NOT BEEN RECTIFIED U/S 154 OF THE ACT. HENCE HE ARGUED THAT RELIEF GRANTED ON THIS PARTICULAR GROUND HAS NOT BEEN AND CANNOT BE WITHDRAWN. 5. THE LD. D/R, ON THE OTHER HAND, DISPUTED THE CONTENTIONS AND SUBMITTED THAT THE PARTICULAR CIRCULAR IN QUESTION DATED 31 ST DECEMBER, 2018, WAS WITHDRAWN AND THAT IN THE CASE OF GOPINATH GORAI (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT RELYING ON ANOTHER JUDGMENT IN THE CASE OF PIU GHOSH VS. DCIT (2016) 386 ITR 322 (CAL) AND THAT IN THE CASE OF PIU GHOSH (SUPRA) THE ASSESSMENT OF THE HONBLE PRESIDENT OF INDIA WAS RECEIVED ON 10/09/2004 AND UNDER THOSE CIRCUMSTANCES, IT WAS HELD THAT THE PROVISO WILL BE APPLICABLE FOR THE FINANCIAL YEAR 2004-05 RELEVANT TO THE ASSESSMENT YEAR 2005-06. HE RELIED ON THE ORDER OF THE LD. CIT(A) PASSED U/S 154 OF THE ACT AND SUBMITTED THAT THE AMENDMENT IN QUESTION IS APPLICABLE FOR ASSESSMENT YEAR 2013-14 AND NOT THE PREVIOUS YEAR 2013-14 AND THAT THERE WAS A MISTAKE APPARENT ON RECORD WHICH HAD TO BE RECTIFIED BY THE LD. CIT(A). HE PRAYED THAT THE IMPUGNED ORDER OF THE LD. CIT(A) BE UPHELD. 6. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 7. A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER PASSED EX-PARTE BY THE LD. CIT(A) DEMONSTRATES THAT RELIEF HAS BEEN GRANTED ON TWO GROUNDS. WE EXTRACT THE RELEVANT PARAGRAPH WHICH IS AT PAGE 6 OF THE ORIGINAL APPELLATE ORDER DT. 31/08/2016:- 4 I.T.A. NO. 890/KOL/2017 ASSESSMENT YEAR: 2013-14 BENGAL INFRA PROJECTS PVT. LTD 7.1. THE SECTION QUOTED BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) WAS SECTION 57(IIIB) OF THE ACT. LATER THE LD. CIT(A) CORRECTED IT AS SECTION 57(VIIB) OF THE ACT. THE CORRECT SECTION IS 56(2)(VIIB) OF THE ACT. THIS WAS INSERTED BY THE FINANCE ACT 2012 W.E.F. 01/04/2013. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PIU GHOSH (SUPRA) HELD THAT THE AMENDMENT BROUGHT INTO THE STATUTE BY THE FINANCE (NO. 2), 2004 WHICH STATED THAT THE SUB-SECTION (IA) WHICH WAS ADDED TO SECTION 40(A) OF THE ACT SHALL BE OPERATIVE FROM 01/04/2005, MEANT THAT IT WOULD BE APPLICABLE DURING THE FINANCIAL YEAR 2005-06 CORRESPONDING TO THE ASSESSMENT YEAR 2006-07. IN THE CASE ON HAND, THE STATUTE LAYS DOWN THAT SECTION 56(2)(VIIB) OF THE ACT IS INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01/04/2013. THE ASSESSEE CLAIMS THAT IF THE RATIO OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PIU GHOSH (SUPRA) IS APPLIED, THE AMENDMENT IS FOR FINANCIAL YEAR 2013-14, RELATABLE TO THE ASSESSMENT YEAR 2014-15. WE ARE NOT INTERPRETING THE PROVISION AS SUCH AS TO THE DATE OF APPLICABILITY BUT ONLY EXAMINING THE ISSUE AS TO WHETHER THE ISSUE IS DEBATABLE FOR THE PURPOSE OF SECTION 154 OF THE ACT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE THAT THIS IS A DEBATABLE ISSUE AND CANNOT BE CONSIDERED A MISTAKE APPARENT ON RECORD FOR THE PURPOSE OF SECTION 154 OF THE ACT, IN VIEW OF THE CONTRARY VIEW TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT. 7.2. COMING TO THE SECOND GROUND ON WHICH THE LD. CIT(A) HAD GRANTED RELIEF TO THE ASSESSEE, WE FIND THAT NO RECTIFICATION HAS BEEN PASSED U/S 154 OF THE ACT REVERSING THE REASONS GIVEN BY THE LD. CIT(A), BASED ON WHICH RELIEF WAS GIVEN. THUS THE ENTIRE DECISION CANNOT HAVE BEEN REVERSED IN THIS ORDER PASSED U/S 154 OF THE ACT. 8. THUS, IN OUR VIEW, THE ORDER OF THE LD. CIT(A) IS BAD IN LAW, AS THE ISSUE IS DEBATABLE AND IT IS NOT A CASE WHERE THERE IS A MISTAKE APPARENT ON RECORD WHICH CAN BE RECTIFIED IN TERMS OF SECTION 154 OF THE ACT. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 19 TH DAY OF MAY, 2019. SD/- SD/- [S.S. GODARA] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19.05.2019 {SC SPS} 5 I.T.A. NO. 890/KOL/2017 ASSESSMENT YEAR: 2013-14 BENGAL INFRA PROJECTS PVT. LTD COPY OF THE ORDER FORWARDED TO: 1. BENGAL INFRA PROJECTS PVT. LTD 4/18, SUHATTA SHOPPING COMPLEX CITY CENTER DURGAPUR 713 216 2. INCOME TAX OFFICER, WARD-2(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES