The ACIT, Circle -12, Ahmedabad V. Shri Purshottam B.Mistry, Ahmedabad

MA 61/AHD/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6539 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DAVE
• Assessee Lawyers: S N DIVATIA
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD L LL LOZJH OZJH OZJH OZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] ] ] ] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER MISC. APPLICATION NO.61/AHD/2018 (ARISING OUT OF ITA NO.80/AHD/2012) ( / ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 3(2), AHMEDABAD. / VS. SHRI PURSHOTTAM B. MISTRY, PROP. J.P. FABRICATORS, OPP. AMBALAL ESTATE, NH NO.8 GHODASAR, AHMEDABAD 380 050 ./ ./ PAN/GIR NO. : ABWPM 6274 B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. K. DAVE, SR. D.R. / RESPONDENT BY : SHRI S. N. DIVATIA, A.R. / DATE OF HEARING 04/05/2018 !'# / DATE OF PRONOUNCEMENT 08/05/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE REVENUE BY WAY OF THIS MISC. APPLICATION SEEKS TO RECALL/ RECTIFY THE ORDER PASSED BY THE HONBLE I.T.A.T IN ITA NO.80/AHD/2012 DATED 31/07/2017 UNDER SECTION 254(2) OF THE ACT PE RTAINING TO THE ASSESSMENT YEAR 2008-09. MA NO.61/AHD/2018 (ARISIN G OUT OF ITAT NO.80/AHD/2012) DCIT VS. PURSHOTTAM B. MISTRY ASST.YEAR 2008-09 - 2 - 2. THE LD. D.R. BEFORE US SUBMITTED AS UNDER: 2. IN THIS CASE THE ASSESSEE HAS PREFERRED AN APP EAL BEFORE THE HON'BLE ITAT AS AGAINST THE ISSUES CONFIRMED BY LD. CIT(A)-XX ON ACCOUNT OF (I)DISALLOWANCE AMOUNTING TO RS.36,71,54 8/- ON ACCOUNT OF INTEREST EXPENDITURE U/S.36(L)(III) OF IT ACT, 1961 (II)ADDITION OF RS.3,06,008/- ON ACCOUNT OF INCOME FROM HOUSE PROPE RTY, THE ASSESSEE PREFERRED AN APPEAL BEFORE HON'BLE ITAT. THE HON'BL E ITAT, VIDE ITS ORDER ITA NO.80/AHD/ 2012 DATED 31.07.2017 CONFIRME D THE ADDITION OF RS.3,06,008/- ON ACCOUNT OF INCOME FROM HOUSE PROPE RTY BY UPHOLDING THE DECISION OF LD.CIT(A) AND DELETED THE DISALLOWA NCE U/S 36(L)(III) OF IT ACT,1961 AMOUNTING TO RS.36,71,548/-. 3. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT IN RESPECT TO THE ISSUE OF DISALLOWANCE OF INTEREST EXPENDITURE U/S.36(L)(I II) OF THE I.T. ACT, THE HON'BLE ITAT, VIDE ITS ORDER NO ITA NO.428/AHD/2011 DATED 31-07-2017 (ASSESSEE'S APPEAL) FOR A.Y. 2007-08 HAS SET-ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE ISSUE BACK TO THE FILE OF T HE ASSESSING OFFICER FOR THE ISSUE OF DISALLOWANCES U/S.36(L)(III) OF RS .74,36,118/-, WITH THE DIRECTION TO DECIDE THE SAME AS PER FACTS AND LAW. IN PURSUANCE THE DIRECTION OF THE ITAT ORDER, THE ORDER U/S 143(3) R .W.S. 254 PASSED ON 30-06-2017 FINALIZING THE DISALLOWANCES UNDER THE I SSUE OF RS.6,92,500/- AND ASSESSEE HAS ACCEPTED THE ORDER AND NOT FILED F URTHER APPEAL AGAINST THE ORDER. 3(I) SIMILARLY, FOR A.Y. 2009-10, THE HON'BLE ITAT VIDE ITS ORDER NO.ITA NO. 351/AHD/ 2014 DATED 22.08.2017 HAS SET-A SIDE THE ORDER OF THE CIT(A) AND RESTORED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE ISSUE OF DISALLOWANCES U/S.36(1) (I II) OF RS. 14,21,569/-, WITH THE DIRECTION TO DECIDE THE SAME AS PER FACTS AND LAW. 3(II) IN THE A.Y. 2008-09, THE ISSUE OF THE DISALL OWANCE U/S.36(L)(III) OF IT ACT, 1961 ON ACCOUNT OF INTEREST FREE ADVANCES I S INVOLVED OF RS.36,71,548/- HOWEVER, THE HON'BLE ITAT HAS DIRECT ED TO THE AO TO DELETE THE DISALLOWANCES. AS THE A.Y. 2008-09 IS MI D-YEAR OF A.Y. 2007- 08 & 2009-10 AND IN BOTH OF THE YEARS THE ISSUE OF THE DISALLOWANCE U/S.36(L)(III) OF IT ACT, ON ACCOUNT OF INTEREST FR EE ADVANCES WERE SET- ASIDE AND HENCE FOR A.Y. 2008-09, THE ISSUE OF DISA LLOWANCE U/S.36(L)(III) MA NO.61/AHD/2018 (ARISIN G OUT OF ITAT NO.80/AHD/2012) DCIT VS. PURSHOTTAM B. MISTRY ASST.YEAR 2008-09 - 3 - OF I.T. ACT, OF RS.36,71,548/- ON ACCOUNT OF INTERE ST FREE ADVANCES IS REQUIRED TO BE NATURALLY SET-ASIDE. 4. IN VIEW OF THE ABOVE, THIS MISCELLANEOUS APPLIC ATION IS BEING FILED TO DRAW ATTENTION OF THE HON'BLE ITAT IN THE ABOVE MATTER. 3. ON THE OTHER HAND, THE LD. AR BEFORE US SUBMITTE D THAT THE MATTER FOR THE DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT PERTAINING TO THE ASSESSMENT YEARS 2007-08 AND 2009-10 WAS RESTORED B ACK TO THE AO FOR FRESH ADJUDICATION BY THE HONBLE I.T.A.T. ON DIFFE RENT REASONING. IN THOSE YEARS, THE ASSESSEE NEVER ARGUED THAT THE MON EY WAS ADVANCED OUT OF ITS OWN FUND. THE HONBLE ITAT RESTORED THE MATT ER TO THE AO FOR THE ISSUE OF DISALLOWANCE OF INTEREST PERTAINING TO THE ASSESSMENT YEARS 2007- 08 WITH THE FOLLOWING DIRECTION: 5.2 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSING OFFICER OBSER VED THAT ASSESSEE HAS MADE 'LOANS AND ADVANCES' OF RS.8,10,47,890/-, WHER EAS THE ASSESSEE HAS INCURRED SUBSTANTIAL INTEREST EXPENDITURE @ 8% TO 12% DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS CONCLUDED THAT RS.7,43,61,188/- OUT OF INTEREST BEARING FUNDS HAVE BEEN PUT TO NON- BUSINESS PURPOSES; HENCE, BY APPLYING AVERAGE INTER EST OF 10%, THE ASSESSING OFFICER DISALLOWED INTEREST OF RS.74,36,1 18/- U/S 36(1)(III) OF THE ACT. ACCORDING THE LD. AUTHORIZED REPRESENTATIV E, THE ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACT THAT THE TOTAL 'LOANS AND ADVANCES' OF RS.8,10,47,890/- COULD BE DIVIDED INTO THREE CATEGORIES; I.E, (I)LOAN ON WHICH INTEREST HAS BEEN CHARGED AMO UNTING TO RS.4,39,34,142/-, (II) ADVANCE INCOME-TAX/TDS/OTHER S AMOUNTING TO RS.1,14,21,350/- AND (III) BUSINESS ADVANCES AMOUNT ING TO RS.2,56,92,398/-. WITH REGARD TO ADVANCES OF RS.4,3 9,34,142/-, THE ASSESSEE SUBMITTED THAT ON THIS AMOUNT THE INTEREST WAS CHARGED; THEREFORE, QUESTION OF DISALLOWING INTEREST WOULD N OT ARISE. TO SUBSTANTIATE THIS CLAIM OF THE ASSESSEE, LEDGERS OF THE PARTIES WERE PLACED AT PAGE NO.209 TO 212 OF THE PAPER-BOOK. THE CIT(A) IN HIS ORDER MA NO.61/AHD/2018 (ARISIN G OUT OF ITAT NO.80/AHD/2012) DCIT VS. PURSHOTTAM B. MISTRY ASST.YEAR 2008-09 - 4 - STATED THAT THE DETAILS CALLED FOR IN RESPECT OF IN TEREST CHARGED FROM SUCH PARTIES HAVE NOT BEEN FURNISHED WHICH IS FACTUALLY INCORRECT, WHICH THE DETAILS OF THE SAME WAS PROVIDED IN PAGE NO.125 OF THE PAPER-BOOK. WITH REGARD TO THE ADVANCE INCOME-TAX/TDS/OTHERS AG GREGATING TO RS.1,14,21,350/-, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE SAME DO NOT FALL WITHIN THE AMBI T OF ADVANCES FOR NON-BUSINESS PURPOSES. REGARDING BUSINESS ADVANCES OF RS.2,56,92,398/-, THE BUSINESS PURPOSES FOR WHICH T HE SAME HAVE BEEN ADVANCED WERE CLARIFIED AS PER THE DETAILS GIVEN IN PAGE NO.248 TO 266 OF THE PAPER-BOOK. NO INTEREST CAN BE DISALLOWED IN RESPECT OF FUNDS ADVANCED FOR BUSINESS PURPOSES OUT OF COMMERCIAL EX PEDIENCY. OUT OF THE TOTAL BUSINESS ADVANCES OF RS.2,56,92,398/-, TH E CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO DISALLOW INTEREST ON THE A DVANCES OF RS.1,72,98,112/- ON THE GROUND THAT SUCH ADVANCES A RE FOR NON-BUSINESS PURPOSES. IN THIS REGARD, THE STAND OF THE ASSESSEE HAS BEEN THAT THE DETAILS OF INTEREST FREE FUNDS HAD ALREADY BEEN FUR NISHED BEFORE THE LOWER AUTHORITIES VIDE LETTER DATED 11.12.2009, WHI CH WAS PLACED AT PAGE NO.129 & 130 OF THE PAPER-BOOK. IN VIEW OF AFO RESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDER O F THE CIT(A) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE SAME AS PER FACTS AND LAW, AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. LD. A.R. ALSO BROUGHT TO OUR NOTICE THAT THE ISS UE PERTAINING TO THE ASSESSMENT YEAR 2009-10 WAS RESTORED BACK TO THE AO FOR FRESH ADJUDICATION AFTER HAVING RELIANCE ON THE ORDER OF THIS HONBLE TRIBUNAL IN ITA NO.428/AHD/2011 PERTAINING TO THE ASSESSMENT YE AR 2007-08. 5. THE LD. A.R. ALSO SUBMITTED THAT IN THE ASSESSME NT YEARS 2007-08 AND 2009-10, THE PLEA OF OWN FUND EXCEEDING LOAN & ADVANCE GIVEN WITHOUT CHARGING THE INTEREST WAS NEVER TAKEN BEFOR E THE HONBLE ITAT. HOWEVER, IN THE YEAR UNDER CONSIDERATION, THE PLEA THAT OWNED FUND OF THE ASSESSEE EXCEEDS THE LOANS AND ADVANCES WAS TAKEN FOR FIRST TIME BEFORE MA NO.61/AHD/2018 (ARISIN G OUT OF ITAT NO.80/AHD/2012) DCIT VS. PURSHOTTAM B. MISTRY ASST.YEAR 2008-09 - 5 - THE HONBLE I.T.A.T. THEREFORE THE HONBLE I.T.A.T. WAS PLEASED TO DELETE THE ADDITION MADE BY THE LOWER AUTHORITIES. THE LD. AR VEHEMENTLY SUPPORTED THE ORDER OF HONBLE I.T.A.T. 6. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE NOTE THAT THE ASSESSEE HAS TAKEN PLEA FOR FIRST TIME BEFORE THE H ONBLE I.T.A.T THAT ITS OWN FUND EXCEEDS THE AMOUNT OF LOANS AND ADVANCES GIVEN BY IT WITHOUT CHARGING ANY INTEREST. SUCH PLEA WAS NOT TA KEN BY THE ASSESSEE IN THE ASSESSMENT YEARS PERTAINING TO 2007-08 AND 2009 -10. THEREFORE, WE NOTE THAT THE RELIEF GRANTED BY THE HONBLE I.T.A.T FOR THE YEAR UNDER CONSIDERATION WAS BASED ON DIFFERENT REASONING I.E. LOAN & ADVANCES WAS PROVIDED OUT OF THE OWN FUND AND AFTER HAVING RELIA NCE ON THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILIT IES AND POWER LTD. REPORTED IN 313 ITR 340. THERE IS NO AMBIGUITY THAT THE OWN FUND AND FREE RESERVE OF THE ASSESSEE EXCEEDS THE AMOUNT OF LOANS & ADVANCES. THE LD. D.R. BEFORE US HAS NOT BROUGHT ANYTHING CONTRAR Y TO THE ARGUMENT ADVANCED BY THE LD. A.R. BEFORE US. BESIDES THE ABOVE, AT THIS JUNCTURE, WE FIND IMPORT ANT TO REFER THE PROVISION OF SECTION 254(2) OF THE ACT WHICH READS AS UNDER:- (2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS PASSED, WITH A VIE W TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD, AMEND ANY ORDER P ASSED BY IT UNDER SUB- SECTION (1), AND SHALL MAKE SUCH AMENDMENT IF THE M ISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE [ASSESSING] OFFICER : MA NO.61/AHD/2018 (ARISIN G OUT OF ITAT NO.80/AHD/2012) DCIT VS. PURSHOTTAM B. MISTRY ASST.YEAR 2008-09 - 6 - PROVIDED THAT AN AMENDMENT WHICH HAS THE EFFECT OF ENHANCIN G AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LI ABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SUB-SECTION UNLESS THE APPELLATE TRIBUNAL HAS GIVEN NOTICE TO THE ASSESSEE OF ITS INTENTION TO DO SO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD : FROM THE ABOVE PROVISION OF LAW, WE NOTE THAT THE P OWER OF TRIBUNAL IS LIMITED TO THE EXTENT OF THE MISTAKE WHICH IS APPAR ENT FROM RECORD. THE HON'BLE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN ORD ER. IN THE INSTANT CASE, WE FIND THAT REVENUE HAS NOT BROUGHT AND/OR R EFERRED TO ANY OTHER EVIDENCE/ MATERIALS SUGGESTING SOME MISTAKE IN THE FINDING OF HONBLE ITAT. UNLESS THERE IS MISTAKE APPARENT FROM THE REC ORD IN THE SENSE OF PATENT, OBVIOUS, CLEAR ERROR OR MISTAKE, THE TRIBUN AL CANNOT RECALL ITS PREVIOUS ORDER. IF THE ERROR OR MISTAKE IS ONE WHIC H COULD BE ESTABLISHED ONLY BY LONG-DRAWN ARGUMENTS OR BY WAY OF PROCESS O F INVESTIGATION AND RESEARCH, IT IS NOT A MISTAKE APPARENT FROM THE REC ORD. UNLESS THERE IS MANIFEST ERRORS WHICH ARE OBVIOUS, CLEAR AND SELF E VIDENT, THE TRIBUNAL CANNOT RECALL ITS PREVIOUS ORDER IN AN ATTEMPT TO R EWRITE THE SAME. THE TRIBUNAL HAS NO POWER TO RECTIFY A DECISION ON DEBA TABLE POINT OF LAW. A DECISION ON DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD. WHERE THE TRIBUNAL HAS OVERLOOKED THE RELEVANT MATE RIAL ON RECORD, THERE WOULD BE AN ERROR APPARENT FROM RECORD WHICH CAN BE RECTIFIED BY SETTING ASIDE THE ORDER FOR FRESH CONSIDERATION. WHERE A MA TERIAL FACT BROUGHT TO THE NOTICE OF THE TRIBUNAL BUT THE SAME HAS BEEN LO ST SIGHT OF, THE MA NO.61/AHD/2018 (ARISIN G OUT OF ITAT NO.80/AHD/2012) DCIT VS. PURSHOTTAM B. MISTRY ASST.YEAR 2008-09 - 7 - TRIBUNAL HAS THE POWER TO RECTIFY THE MISTAKE SO CO MMITTED, PROVIDED THE MATERIAL FACT HAS AN IMPORTANT BEARING ON THE ULTIM ATE DECISION. THE MISTAKE POINTED OUT IN THE APPLICATION U/S. 254(2)O F THE ACT BY THE REVENUE IN THE PRESENT CASE CANNOT BE SAID TO FALL IN ANY OF THE ABOVE CATEGORIES. IN VIEW OF THE ABOVE, WE HOLD THAT THER E WAS NO APPARENT MISTAKE IN THE ORDER OF HONBLE ITAT FOR THE YEAR U NDER CONSIDERATION. THEREFORE, MA OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, MISC. APPLICATION FILED BY THE RE VENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 08/05/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 08/05/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A) 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD