M/S. HARSH ESTATES PVT.LTD., MUMBAI V. ACIT, CC 31, MUMBAI

ITA 938/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7390 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 10-03-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 11-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DANIEL
• Keywords: Opportunity of being heard; Set aside
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI A.L. GEHL OT ,(AM) ITA NO.938/MUM/2009 ASSESSMENT YEAR : 1999-2000 M/S. HARSH ESTATES PVT. LTD. 32, MADHULI , DR. A.B. ROAD WORLI MUMBAI-400 018. ..( APPELLANT ) P.A. NO. (AAACH 3480 L) VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-31 MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI P. DANIEL O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 10.11.2008 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 1999-2000. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN TRADING AND INVESTMENT IN SECURITIES. THE A SSESSEE IS A NOTIFIED PERSON UNDER THE SPECIAL COURT (TRIAL OF OFF ENCES RELATING TO TRANSACTIONS IN SECURITIES.) ACT, 1992 AND ALL THE ASSETS INCLUDING BANK ACCOUNTS WERE ATTACHED AND VESTED IN THE HANDS OF THE CUST ODIAN ITA NO.938/M/09 A.Y:99-00 2 APPOINTED UNDER THE SAID ACT. DESPITE VARIOUS NOTICES I NCLUDING NOTICE U/S.142(1) OF THE IT ACT, 1961(THE ACT) ISSUED TO THE A SSESSEE FROM TIME TO TIME, THE ASSESSEE FAILED TO MAKE ANY COMPLIANCE AND ACCORDINGLY THE AO PROCEEDED TO COMPLETE THE ASSESSMENT U/S .144 OF THE ACT AND DETERMINED THE INCOME AT RS.68,30,640/- VI DE ORDER DATED 14.2.2002 PASSED U/S.144 OF THE ACT. ON APPEAL, THE LD . CIT(A) WHILE CONFIRMING THE ADDITION/DISALLOWANCE MADE BY THE AO DI SMISSED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITS THAT THE GROUND NO.1, 2, 3 AND 11 ARE GENERA L IN NATURE, THEREFORE HE IS NOT PRESSING THE SAME WHICH WAS NOT OBJE CTED TO BY THE LEARNED DR. 5. THAT BEING SO, AND IN THE ABSENCE OF ANY SUPPORTIN G MATERIAL PLACED ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE REJECTED BEING NOT PRESSED. ITA NO.938/M/09 A.Y:99-00 3 6. GROUND NO.4, 5 AND 6 ARE AGAINST THE SUSTENANCE OF A DDITION OF INTEREST INCOME RS.68,49,683/-, DISALLOWANCE OF REPAIRS A ND MAINTENANCE RS.1,35,480/- AND ELECTRICITY CHARGES RS.88, 125/-. 7. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSESSEE SU BMITS THAT THE AO WITHOUT CONSIDERING THE ACTUAL FIGURES MENTIONE D IN THE UNAUDITED P&L ACCOUNT FILED DURING THE COURSE OF HEARIN G HAS TAKEN SOME OTHER FIGURES NOT KNOWN TO THE ASSESSEE AND MADE AF ORESAID ADDITION/DISALLOWANCES. HE FURTHER SUBMITS THAT THE LD. CIT(A) HAS ALSO NOT CONSIDERED THE ASSESSEES EXPLANATION IN THIS REGARD WH ICH WAS FILED DURING THE COURSE OF HEARING OF APPEAL, COPY OF WHICH IS APPEARING AT PAGE-10 TO 21 TO ASSESSEE'S PAPER BOOK. HE THEREFORE, SUBMITS THAT IN THE INTEREST OF JUSTICE THE ISSUE MAY BE R ESTORED BACK TO THE FILE OF THE AO. 8. ON THE OTHER HAND THE LD. DR SUBMITS THAT THE ASSESSEE HAS FILED UNAUDITED STATEMENT OF ACCOUNTS WITH A NOTE THAT ALL T HE ENTRIES REFLECTED IN THE SAID BOOKS OF ACCOUNT ARE SUBJECT TO CORRECTION/MODIFICATION APPEARING AT PAGE-18 OF ASSESSEE 'S PAPER BOOK, THEREFORE, THE DISALLOWANCE MADE BY THE AO BE U PHELD AND IN ALTERNATIVE, HE SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF THE AO. ITA NO.938/M/09 A.Y:99-00 4 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT REVENUE HAS PLACED NO MATERIAL ON RECORD TO SHOW AS TO HOW AND O N WHAT BASIS THE ADDITION OF INERTEST AND DISALLOWANCE OF REPAIR AN D MAINTENANCE EXPENSE AND ELECTRICITY CHARGES WERE MADE. MERELY BECAUSE THE ASSESSEE HAS FILED UNAUDITED FINANCIAL STATEMENT DOES NOT MEAN THAT THE AO MAY TAKE ANY FIGURE FOR MAKING THE AFORESAID ADDITION/DISALLOWANCE WITHOUT CONSIDERING THE ASSESSEE'S E XPLANATION. IN THIS VIEW OF THE MATTER AND KEEPING IN VIEW THAT NO PROPER EXAMINATION WAS MADE AT THE END OF THE AO WE CONSIDER IT FAIR AND REASONABLE THAT IN THE INTEREST OF JUSTICE THE MATTER SHOULD BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDER P ASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE M ATTER TO THE FILE OF THE AO WHO SHALL DECIDE THE SAME AFRESH AND ACCOR DING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.7 IS AGAINST THE SUSTENANCE OF DISALLOWAN CE OF INTEREST EXPENSES OF RS.3,27,95,923/-. 11. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT THIS ISSUE IS SIMILAR TO THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.938/M/09 A.Y:99-00 5 M/S.HARSH ESTATES PVT. LTD. VS. DCIT IN ITA NO.6890/M/2 008 FOR ASSESSMENT YEAR 2005-06 DATED 15.1.2010 WHEREIN THE TRI BUNAL FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/ S. ORION TRAVELS PVT. LTD. VS. DCIT IN ITA NO.6888,6889/M/2008 HAS REST ORED BACK THE ISSUE TO THE FILE OF THE AO. IT WAS FURTHER SUBMITTED BY BOTH PARTIES THAT IN VIEW OF THE CONSISTENT VIEW OF THE TRIBUNAL IN THE GROUP CASES, THEY HAVE NO OBJECTION IF THE ISSUE IS RESTORED BACK TO T HE FILE OF THE LD. CIT(A). 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE FACTS OF THE IMPUGNED ISSUE ARE SIMILAR TO THE ISSUE RAISED IN THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSME NT YEAR 2005-06 WHEREIN THE TRIBUNAL FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE GROUP OF CASES NAMELY M/S. ORION TRAVELS P. LTD. VS. DCIT IN ITA NO.6888 AND 6889 /M/08 FOR A YS 2004-05 AND 2005-06 ORDER DATED 9.10.2009 VIDE PARA 21 OF THE O RDER HAS RESTORED BACK THE MATTER OF DISALLOWANCE OF INTEREST TO THE FILE OF THE LD. CIT(A). IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE WE, RESPECTFULLY FOLLOWING THE SAME RESTORE BACK THE ISSUE TO THE FILE OF THE LD. CIT(A) WHO SHALL DECIDE THE SAME A FRESH IN THE LIGHT OF THE DIRECTION GIVEN IN THE SAID ORDER OF THE TRIBU NAL AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ITA NO.938/M/09 A.Y:99-00 6 ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO.8 IS AGAINST THE DISALLOWANCE OF DEDUCTIO N ON ACCOUNT OF AUDIT FEE RS.45,000/-. 14. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUND WHICH W AS NOT OBJECTED TO BY THE LD.DR . 15. THAT BEING SO, AND IN THE ABSENCE OF ANY SUPPORTI NG MATERIAL PLACED ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE , THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE REJECTED BEING NOT PRESSED. 16. GROUND NO. 9 IS AGAINST THE SUSTENANCE OF DISALLOWA NCE OF BANK CHARGES RS.50/-. 17. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND IN THE ABSENCE OF ANY SUPPORTI NG MATERIAL IN THIS REGARD, THE GROUND TAKEN BY ASSESSEE IS THEREFORE RE JECTED. 18. GROUND NO.10 IS AGAINST LEVY OF INTEREST U/S.234A, 234B AND 234C OF THE ACT. ITA NO.938/M/09 A.Y:99-00 7 19. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT THIS ISSUE IS DIRECTLY COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF T RIBUNAL IN ASSESSEE'S OWN CASE SUPRA, WHEREIN THE TRIBUNAL HAS HELD THA T THE ASSESSEE IS NOT LIABLE TO PAY INTEREST U/S.234A, 234B & 2 34C. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE TRIBUNA L IN OTHER GROUP OF CASES HAS ALSO TAKEN THE SAME VIEW AND IN SUPPORT HE PLACED ON RECORD ORDERS OF THE TRIBUNAL APPEARING AT PAGE 2 6 TO 67 OF THE ASSESSEES PAPER BOOK. 20. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD WE FIND MER IT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE SUPRA, WHEREIN THE TRIBUNAL VIDE PARA-5 OF ITS OR DER 15.1.2010 HAS HELD AS UNDER : 5. THE FOURTH DISPUTE IS REGARDING CHARGE OF INTER EST UNDER SECTION 234A, 234B AND 234C. THE LEARNED DR FAIRLY CONCEDED THAT THIS ISSUE WAS ALSO COVERED BY THE DECISION OF TRIBUNAL IN CASE OF M/S. ORION TRAVELS PVT. LTD. (SUPRA). THE TRIBUNAL IN THE SAID CASE NOTED THAT FROM THE DATE OF FUNCTIONING OF THE SPECIAL COURT W.E.F. 1.6.1992 THE DISTRIBUTION OF MONIES IN CASE OF NOTI FIED PERSONS HAD TO BE DECIDED BY THE SPECIAL COURT. EV EN IF THE NOTIFIED PERSON WANTED TO PAY ADVANCE TAX IT WA S NOT WITHIN HIS CONTROL TO DO SO. THE TRIBUNAL REFERRED TO A RULING OF THE SPECIAL COURT IN WHICH IT WAS HELD TH AT NO PENALTY OR INTEREST SHOULD BE IMPOSED FOR NON FULFI LLMENT OF ANY PROVISIONS OF THE ACT WHICH A NOTIFIED PARTY WAS PREVENTED FROM DOING BY REASON OF THE SPECIAL COURT THE PROVISIONS OF WHICH WOULD PREVAIL OVER THE PROVISIO NS OF ITA NO.938/M/09 A.Y:99-00 8 OTHER ACTS. THE SPECIAL COURT IN THE SAID CASE ALS O OBSERVED THAT THE MONEY FOR PAYMENT OF TAX COULD BE RELEASED ONLY AFTER ENTIRE DISTRIBUTION HAS TAKEN P LACE AND THEREFORE EVEN IF A NOTIFIED PARTY WAS TO MAKE AN APPLICATION FOR PAYMENT OF ADVANCE TAX, THE COURT S HOULD REFUSE. THE TRIBUNAL THEREFORE OBSERVED THAT THE ASSESSEE COULD BE EXPECTED TO DO THE IMPOSSIBLE AND ACCORDINGLY HELD THAT A NOTIFIED PERSONS WOULD NOT BE LIABLE TO PAY INTEREST UNDER SECTION 234B AND 234C AND EVEN UNDER SECTION 234A AS QUANTIFICATION OF INTERE ST UNDER SECTION 234A DEPENDED UPON THE PAYMENT OF ADVANCE TAX. RESPECTFULLY FOLLOWING THE DECISION O F THE TRIBUNAL (SUPRA) WE HOLD THAT THE ASSESSEE IS NOT L IABLE TO PAY INTEREST UNDER SECTION 234A, 234B AND 234C. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY REVENUE AND CONSISTENT VIEW OF THE TRIBUNAL IN OTHER CASES WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO PAY INTEREST U/S.234 A, 234B AND 234C OF THE ACT. ACCORDINGLY THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 21. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12.3.2010. SD/- SD/- (A.L. GEHLOT) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.3.2010. JV. ITA NO.938/M/09 A.Y:99-00 9 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. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 10.3.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 11.3.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 12.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 18.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER