R.G.P Moulds Pvt. Ltd, Kanpur V. Dy. Commissioner of Income Tax, Kanpur

MA 31/LKW/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1869 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER M.A. NO. 31 /LKW/1 3 ( ARISING OUT OF I.T.A. NO. 454 /LKW/ 2012 ) ASSESSMENT YEARS: 2009 - 2010 M/S RGP MOULDS PVT. LTD., C - 6, UDYOG KUNJ, PANKI SITE - 5 INDUSTRIAL ESTATE, KANPUR. PAN:AACCR0739E VS. DY.C.I.T., RANGE - VI, KANPUR. (APPLICANT) (RESPONDENT) O R D E R PER SUNIL KUMAR YADAV: TH IS MISC. APPLICATION IS PREFERRED ON BEHALF OF THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL DATED 28/08/2013 PASSED IN I.T.A. NO.555/LKW/2011 & 454/LKW/2012 SEEKING RECTIFICATION IN THE ORDER OF THE TRIBUNAL ON THE GROUND THAT THE FINDING/OBSERVATION OF THE TRIBUNAL IN PARA 8 OF ITS ORDER ARE CONTRARY TO THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF DHANUKA AND SONS VS COMMISSIONER O F INCOME - TAX [2011] 339 ITR319 (CAL) . THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE TRIBUNAL HAS OBSERVED IN PARA 8 THAT IN THE CASE OF DHANUKA AND SONS VS COMMISSIONER OF INCOME - TAX (SUPRA), IT IS HELD THAT IN CASE IN WHICH THE ASSESSEE DOES NOT OFFER ANY DISALLOWANCE U/S 14A, THE ASSESSING APPLICANT BY SHRI AKSHAY KUMAR GUPTA RESPONDENT BY SHRI AJAY KUMAR, D.R. DATE OF HEARING 28/02/2014 DATE OF PRONOUNCEMENT 1 1 / 0 4 / 2 0 1 4 2 OFFICER CAN MAKE THE DISALLOWANCE WITHOUT RECORDING ANY SATISFACTION ABOUT THE IN CORRECTNESS OF THE CLAIM , WHEREAS NO SUCH FINDING WAS GIVEN BY HON'BLE CALCUTTA HIGH COURT IN THE AFORESAID CASE. BESIDES RELIANCE WAS ALSO PLACED UPON THE VARIOUS JUDGMENTS THOUGH THEY WERE NOT REFERRED DURING THE COURSE OF HEARING OF THE APPEAL IN SUPPORT OF ITS CONTENTION THAT DISALLOWANCE U/S 14A CANNOT BE MADE. 2. THE LEARNED D.R., ON THE OTHER HAND, HAS SUBMITTED THAT THE TRIBUNAL HAS SIMPLY INTERPRETED THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF DHANUKA AND SONS VS COMMISSIONER OF INCOME - TAX (SUPRA) AND HA S NOT GIVEN ANY FINDING CONTRARY TO THE RATIO LAID DOWN BY THE HON'BLE CALCUTTA HIGH COURT. THEREFORE, IT IS A QUESTION OF INTERPRETATION OF A PARTICULAR JUDGMENT BY THE TRIBUNAL AND NO INTERFERENCE IN THE ORDER OF THE TRIBUNAL IS CALLED FOR. 3. HAVING G IVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE MISC. APPLICATION VI S - A - VI S THE ORDER OF THE TRIBUNAL, WE FIND THAT THE TRIBUNAL, VIDE PARA 8 OF ITS ORDER, HAS MADE ITS OBSERVATION IN THE LIGHT OF THE OBSERVATION OF CIT(A) THAT THE ASSESSING OFFICER CANNOT MAKE THE DISALLOWANCE WITHOUT RECORDING DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. FOR THE SAKE OF REFERENCE, WE EXTRACT PARA 8 OF THE ORDER OF THE TRIBUNAL AS UNDER: 8. A S REGARDS THE ASSESSMENT YEAR 2009 - 10, WHILE MATERIAL FACTS ARE BROADLY THE SAME, LEARNED CIT(A) HAS GIVEN RELIEF ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT RECORDED SPECIFIC DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE, AND, THEREFORE, THE ASSESSING OFFICER WAS DENUDED OF THE POWERS TO MAKE DISALLOWANCE UNDER SECTION 14A. THIS ISSUE IS NOW COVERED AGAINST THE ASSESSEE BY HON'BLE CALCUTTA HIGH COURT'S DECISION IN THE CASE OF DHANUKA & SONS VS. C I T 3 (339 1TR 319) WHEREIN IT IS HELD THAT IN CA SE IN WHICH THE ASSESSEE DOES NOT OFFER ANY DISALLOWANCE UN DER SECTION 14A, THE ASSESSING OFFICER CAN MAKE THE DISALLOWANCE WITHOUT RECORDING ANY SATISFACTION ABOUT INCORRECTNESS OF THE CLAIM. TO THIS EXTENT, STAND OF THE C I T(A) IS DISAPPROVED . HOWEVER, SO FAR AS THE QUANTUM OF DISALLOWANCE IS CONCERNED, FOLLOWING OUR DECISION FOR THE ASSESSMENT YEAR 2008 - 09, DISALLOWANCE IS UPHELD ONLY TO THE EXTENT OF ONE HALF OF A PERCENT OF AVERAGE ASSETS HELD, AS PER MANDATE OF RULE 8 D. 3.1 WHATEVER OBSERVATION THE TRIBUNAL HAS MADE IN THIS PARA, IT WAS MADE WITH REFERENCE TO THE FINDING OF THE CIT(A) THAT WITHOUT RECORDING SPECIFIC DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE, NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT. IN THE CASE OF DHANU KA AND SONS VS COMMISSIONER OF INCOME - TAX (SUPRA), THE HON'BLE CALCUTTA HIGH COURT HAS HELD THAT IT IS FOR THE ASSESSEE TO SHOW THE SOURCE OF ACQUISITION OF THOSE SHARES BY PRODUCTION OF MATERIAL THAT THOSE WERE ACQUIRED FROM THE FUNDS AVAILABLE IN THE HAN DS OF THE ASSESSEE AT THE RELEVANT POINT OF TIME WITHOUT TAKING ANY LOAN AND IN ABSENCE OF SUCH MATERIAL PLACED BY THE ASSESSEE, THE AUTHORITIES BELOW CAN MAKE A PROPORTIONATE DISALLOWANCE HAVING REGARD TO THE TOTAL INCOME FROM THE EXPLAINED SOURCE. THE R ELEVANT OBSERVATION OF HON'BLE HIGH COURT IS ALSO EXTRACTED AS UNDER: IN OUR OPINION, THE MERE FACT THAT THOSE SHARES WERE OLD ONES AND NOT ACQUIRED RECENTLY IS IMMATERIAL. IT IS FOR THE ASSESSEE TO SHOW THE SOURCE OF ACQUISITION OF THOSE SHARES BY PRODUCTION OF MATERIALS THAT THOSE WERE ACQUIRED FROM THE FUNDS AVAILABLE IN THE HANDS OF THE ASSESSEE AT THE RELEVANT POINT OF TIME WITHOUT TAKING BENEFIT OF ANY LOAN. IF THOSE SHARES WERE PURCHASED FROM THE AMOUNT TAKEN IN LOAN, EVEN FOR INSTANCE, FIVE O R TEN YEARS AGO, IT IS FOR THE ASSESSEE TO SHOW BY THE PRODUCTION OF DOCU MENTARY EVIDENCE THAT SUCH LOANED AMOUNT HAD ALREADY BEEN PAID BACK AND FOR THE RELEVANT ASSESSMENT YEAR, NO INTEREST IS PAYABLE BY THE ASSESSEE FOR ACQUIRING THOSE OLD SHARES. IN THE ABSENCE OF ANY 4 SUCH MATERIALS PLACED BY THE ASSESSEE, IN OUR OPINION, THE AUTHORITIES BELOW RIGHTLY HELD THAT PROPORTIONATE AMOUNT SHOULD BE DISALLOWED HAVING REGARD TO THE TOTAL INCOME AND THE INCOME FROM THE EXEMPT SOURCE. IN THE ABSENCE OF ANY MATERIAL DISCLOSING THE SOURCE OF ACQUISITION OF SHARES WHICH IS WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE, THE ASSESSING AUTHORITY TOOK A MOST REASONABLE APPROACH IN ASSESSMENT. 3.2 IF THE OBSERVATION OF HON'BLE HIGH COURT IN THE AFORESAID CASE AND THE OBSER VATION OF THE TRIBUNAL ARE READ TOGETHER, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS GIVEN OBSERVATION WITH RESPECT TO THE FACTS OF THE INSTANT CASE IN THE LIGHT OF THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT. THE OTHER CASE LAWS REFERRED BY THE ASSESSEE AR E NOT RELEVANT TO THE CONTROVERSY RAISED IN THE MISC. APPLICATION. SINCE WE ARE OF THE VIEW THAT THE TRIBUNAL HAS GIVEN A CORRECT FINDING OF ACTS IN THE LIGHT OF THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT, THE PRESENT MISC. APPLICATION IS LIABLE TO BE RE JECTED AS NO RECTIFICATION IS CALLED IN THE ORDER OF THE TRIBUNAL. ACCORDINGLY, THE MISC. APPLICATION STANDS DISMISSED. 4. IN THE RESULT, THE MISC. APPLICATION OF THE ASSESSEE IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 / 0 4 / 2 0 1 4 ) SD/. SD/. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 / 0 4 / 2 0 1 4 *SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGIST RAR