Indraprastha Sehkari Bank Ltd., Delhi V. ACIT, New Delhi

MA 556/DEL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4482 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: FRIDAY NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO. 3987/DEL/2015 ASSESSMENT YEAR: 2010-11 AND M.A. NO.556/DEL/2019 [ARISING OUT OF ITA NO.3987/DEL/2015] ASSESSMENT YEAR: 2010-11 INDRAPRASTHA SEHKARI BANK LTD., A-101, WAZIRPUR GROUP INDUSTRIAL AREA, DELHI VS. ACIT, CIRCLE-19(1), NEW DELHI PAN : AAAJI0005P (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSE SSEE IS SEEKING RECALL OF THE ORDER DATED 13.02.2019 PASSED BY THE TRIBUNAL IN ITA NO. 3987/DEL/2015 FOR ASSESSMENT YE AR 2010-11. APPELLANT BY SH. VED JAIN, ADV. SH. ASHISH GOEL, ADV. RESPONDENT BY SH. UMESH TAKYAR, SR.DR DATE OF HEARING 24.09.2021 DATE OF PRONOUNCEMENT 30.09.2021 2 ITA NO.3987/DEL/2015 & M.A. NO.556/DEL/2019 2. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE RE FERRED TO THE MISCELLANEOUS APPLICATION AND SUBMITTED THAT TH E FIRST PART OF GROUND NO. 3 OF THE APPEAL RELATED TO RULE 8D(2)(II ) OF THE INCOME- TAX RULE, 1962 (IN SHORT THE RULES) HAS BEEN REST ORED TO THE FILE OF THE ASSESSING OFFICER, IGNORING BINDING PRECEDENTS OF THE HONBLE SUPREME COURT AND ANOTHER PART OF THE GROUND RELATE D TO RULE 8D(2)(III) HAS NOT BEEN ADJUDICATED BY THE TRIBUNAL AND, THEREFORE, APPEAL NEEDS TO BE RECALLED TO THE EXTENT OF GROUND NO. 3. 3. THE LEARNED DR, ON THE OTHER HAND, OBJECTED THE MISCELLANEOUS APPLICATION AND SUBMITTED THAT THE GR OUND NO. 3 HAS ALREADY BEEN ADJUDICATED AND THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE LEARNED ASSESSING OFFICER. 4. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED RELEVANT MATERIAL ON RECORD. THE GROUND NO. 3 OF AP PEAL, ADJUDICATION OF WHICH HAS BEEN SOUGHT FOR RECALL BY THE ASSESSEE, IS REPRODUCED AS UNDER: 3. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)} HAS E RRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.18,35,948/- MADE BY THE LD. AO BY INVOKING THE P ROVISION OF SECTION 14A OF THE ACT, READ WITH RULE 8D. (II) THAT THE ABOVE ADDITION HAS BEEN CONFIRMED AFT ER ARBITRARILY REJECTING THE EXPLANATION AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE. 5. THE TRIBUNAL IN PARA 5 OF THE ORDER ADJUDICATED TH E ISSUE AS UNDER: 5. AFTER HEARING BOTH THE SIDES AND PERUSING THE E NTIRE MATERIALS AVAILABLE ON RECORD, WE NOTICE THAT THE AR OF THE A SSESSEE HAD 3 ITA NO.3987/DEL/2015 & M.A. NO.556/DEL/2019 SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT OWN FUND S FOR MAKING INVESTMENT IN MUTUAL FUNDS OF RS.6.71 CRORES. WHILE GOING THROUGH THE BALANCE SHEET OF THE ASSESSEE FOR THE LAST YEAR PLACED AT PAGE 6 TO 8 OF THE PAPER BOOK, WC NOTICE THAT THE ASSESSEE 'S OWN FUNDS WAS ONLY RS.18.26 CRORES FOR THE PRECEDING YEAR AS PAID UP CAPITAL PLUS RESERVES AND SURPLUS, WHEREAS IN THE CURRENT YEAR, THE OWN FUNDS WAS INCREASED RS.20.79 CRORES AND BALANCE IN CURREN T DEPOSIT ACCOUNTS HAVE BEEN REDUCED BY 0.60 CRORES (RS.11.54 CRORES - RS.12.14 CRORES). ACCORDINGLY, THE NET INCREASE IN THE OWN FUNDS IS BY RS.2.53 CRORES AND THE ASSESSEE HAS ADMITTEDLY I NVESTED RS.6.71 CRORES DURING THIS YEAR. THEREFORE, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED THAT THE ENTIRE INVESTMENT OF RS .6.71 CROES MADE DURING THIS YEAR WAS OUT OF OWN FUNDS AND CURRENT D EPOSIT ACCOUNT INTEREST FREE BECAUSE THE OWN FUNDS AND CURRENT DEP OSITS INTEREST FREE AVAILABLE WITH THE ASSESSEE IN THE PRECEDING Y EAR STOOD INVESTED IN THE ASSETS AS SHOWN IN THE BALANCE SHEE T ITSELF. THEREFORE, IN OUR OPINION, THE MATTER SHOULD BE SEN T BACK TO THE ASSESSING OFFICER TO EXAMINE WHETHER THE ASSESSEE H AD SUFFICIENT OWN FUNDS AND BALANCE IN CURRENT DEPOSIT ACCOUNT IN TEREST FREE ON THE DATE OF MAKING INVESTMENTS. THE ASSESSEE IS DIR ECTED TO PRODUCE MATERIAL EVIDENCE TO SUPPORT HIS CONTENTION THAT TH E IMPUGNED INVESTMENT OF RS.6.71 CRORES WAS MADE OUT HIS OWN F UNDS AND CURRENT DEPOSIT ACCOUNT INTEREST FREE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEAR D. ACCORDINGLY, THE APPEAL OF THE ASSESSEE DESERVES TO BE PARTLY AL LOWED FOR STATISTICAL PURPOSES. 6. WE FIND THAT IN GROUND NO. 3, DISALLOWANCE OF RS.18,35,948/- RELATED TO DISALLOWANCE UNDER SECTIO N 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) READ WITH RULE 8D OF THE RULES WAS IN DISPUTE. THE DISALLOWANCE OF RS.18,35 ,948/- CONSIST OF TWO PARTS. THE FIRST PART IS DISALLOWANCE OF RS. 16,68,130/- UNDER RULE 8D(2)(II) OF THE RULES. THE SECOND PART OF DISALLOWANCE IS OF RS.1,67,818/- UNDER RULE 8D(2)(III) OF THE RU LES. IN THE ARGUMENTS BEFORE THE TRIBUNAL, THE ASSESSEE CONTEST ED THE DISALLOWANCE MADE BY ASSESSING OFFICER AND SUSTAINE D BY LEARNED CIT(A) OF RS.16,68,130/- UNDER RULE 8D(2)(II) AND D ISALLOWANCE OF RS.1,67,818/- UNDER RULE 8D(2)(III) OF THE RULES. W E FIND THAT THE TRIBUNAL HAS ALREADY ADJUDICATED ON THE DISALLOWANC E UNDER RULE 4 ITA NO.3987/DEL/2015 & M.A. NO.556/DEL/2019 8D(2)(II) OF RULES AND THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE FOR EXAMINATION OF AVAILABILITY OF SUFFICIENT FUNDS IN THE HANDS OF TH E ASSESSEE. THEREFORE, IN OUR OPINION, THE ARGUMENT BEFORE US I N MISCELLANEOUS APPLICATION THAT THE JUDGMENTS OF THE HONBLE SUPREME COURT HAVE NOT BEEN FOLLOWED, ARE BASELESS AND THUS, WE REJECT THE CONTENTION OF THE ASSESSEE TO RECALL THI S PART OF GROUND NO. 3. 6.1 AS FAR AS THE SECOND PART OF GROUND NO. 3, I.E., D ISALLOWANCE OF RS.1,67,818/- UNDER RULE 8D(2)(III) OF THE RULES IS CONCERNED, WE AGREE WITH LEARNED COUNSEL OF THE ASSESSEE THAT THIS ISSUE HAS NOT BEEN ADJUDICATED BY THE TRIBUNAL. THEREFORE, TH IS, BEING AN APPARENT MISTAKE, WE, ACCORDINGLY, RECALL THE APPEA L TO THE EXTENT OF DISALLOWANCE OF RS.1,67,818/-, I.E., THE ISSUE I NVOLVED IN THE SECOND PART OF GROUND NO. 3 OF THE APPEAL. 6.2 WE HAVE HEARD BOTH THE PARTIES ON GROUND NO. 3 TO THE EXTENT OF DISALLOWANCE OF RS.1,67,818/- UNDER RULE 8D(2)(III) OF THE RULES. BOTH THE PARTIES AGREED THAT THE FIRST P ART OF THE DISALLOWANCE UNDER RULE 8D(2)(II) OF THE RULES HAS ALREADY BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER. THER EFORE, THIS ISSUE OF DISALLOWANCE UNDER RULE 8D(2)(III) OF THE RULES MAY ALSO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR D ECIDING AFRESH. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE OF DISALLOWANCE O F RS.1,67,818/- UNDER RULE 8D(2)(III) OF THE RULES WITH THE FILE OF THE LEARNED ASSESSING OFFICER FOR DECIDING AFRESH AFTER AFFORDI NG ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 ITA NO.3987/DEL/2015 & M.A. NO.556/DEL/2019 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS PA RTLY ALLOWED, AS INDICATED ABOVE; AND THE APPEAL BEARING ITA NO. 3987/DEL/2015 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2021 SD/- SD/- (KUL BHARAT) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH SEPTEMBER, 2021. RK/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI