Income Tax Appellate Tribunal - Mumbai
Salil Trading & Investment Company, ... vs Acit 18(3), Mumbai on 28 February, 2017
आयकर अपीलीय अिधकरण, मुंबई ायपीठ "ई'' मुं बई
IN THE INCOME TAX APPELLATE TRIBUNAL"E" BENCH, MUMBAI
BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM
आयकरअपीलसं/I.T.A.No.3635/Mum/2013
(िनधा रणवष / Assessment Year: 2007-08)
M/s. Salil Trading & बनाम/ ACIT 18(3)
Investment Company Vs. R. No.219,
164, Senapati Bapat Marg, Piramal Chambers,
Matunga (W), Lalbaugh
Mumbai - 400016 Mumbai - 400012
थायीले खासं ./जीआइआरसं ./PAN/GIR No. AAXFS1327F
(अपीलाथ /Appellant) .. ( थ /Respondent)
Assessee by: None
Revenue by: Shri Sambit Mishra
सु नवाईकीतारीख / Date of Hearing: 17.02.2017
घोषणाकीतारीख /Date of Pronouncement:. 28.02.2017
आदे श / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 06.02.2013 passed by the Commissioner of Income Tax (Appeals)-29, Mumbai [hereinafter referred to as the "CIT(A)"] relevant to the A.Y.2007-
08.
2. The assessee has raised the following grounds:-
"A) Reopening of assessment u/s.148 is bad in law and liable to be quashed ITA No.3635.M.13 A.Y. 2007-08
1. The learned Commissioner of Income-tax (A) erred in not admitting the legal issue raised by way of additional ground challenging the reopening of assessment as bad in law and at the same time also confirming the reopening of the assessment on the ground that the reopening was done in view of decision of Special Bench without appreciating the fact there was no reason to believe that any income has escaped assessment and hence, the reopening of assessment is bad in law, unjustified and liable to be quashed.
2. The Ld. CIT(A) failed to appreciate that there was no new tangible material or evidence brought on record for reopening of the assessment and hence, the reopening of the assessment is mere change of opinion and is thus, bad in law and liable to be quashed.
3. Without prejudice to the above, the Ld. CIT(A) failed to appreciate that the return filed in response to notice u/s.148 of the Act revising the total income was without prejudice to the right of the appellant to contest the issue and hence, the appellant has rightly contested the issue of reopening of the assessment, though by way of additional ground of appeal and this being legal issue, the bona fides and conduct of the appellant could not be doubted and hence, the reopening of the assessment is bad in law and liable to be quashed.
Without prejudice to above, on merits:
B) Disallowance u/s.14A of the Act
4. The Learned Commissioner of Income-tax (A) erred in confirming the disallowance made u/s.14A of the Act merely on the ground that the appellant has itself made the disallowance while filing revised return in response to notice issued u/s.148 and the assessed income cannot be lower than the returned income without appreciating the fact that the disallowance made u/s.14A and offered to tax in return filed in response to notice u/s.148 of the Act was without prejudice to the rights of the appellant to contest the 2 ITA No.3635.M.13 A.Y. 2007-08 said issue and hence, the disallowance confirmed without adjudicating the issue on merits is unjustified and the disallowance made u/s.14A of the Act is liable to be deleted.
5. The Ld. CIT(A) failed to appreciate that since the disallowance in the return filed in response to notice u/s.148 was without prejudice, the Ld. AO correctly dealt the issue on merits and then made disallowance u/s.14A by speaking order on merits and hence, the Ld. CIT(A) ought to have decided the issue on merits of the case and not merely dismissing the appeal on the ground that appellant itself disallowed in revised return and thus, the disallowance confirmed u/s.14A of the Act is without any justification and liable to be deleted.
6. The Ld. CIT(A) failed to appreciate that the appellant is in the business of dealing in shares and the shares were held as stock in trade and that the dividend income was received merely as incidental to the carrying on of the business of share trading and hence, the provisions of section 14A of the Act does not apply to the instant case of the appellant and the disallowance thus made u/.s14A of the Act is without any justification and liable to be deleted.
7. Without prejudice to the above, the Ld. CIT(A) failed to appreciate that Rule 8D was not applicable for the impugned A.Y.2007-08 and hence, the disallowance made of interest expenses directly related to earning of share trading profit applying provisions of sec.14A of the Act is without any justification and liable to be deleted."
3. The brief facts of the case are that the assessee filed its return of income on 10.10.2007 declaring total income to the tune of Rs.2,53,011/-. The said return was processed u/s.143(1)of the Income Tax Act, 1961 ( in short "the Act"). Subsequently, the assessment was reopened u/s.147 of the 3 ITA No.3635.M.13 A.Y. 2007-08 Act after duly recording the reasons for reopening. Thereafter, notice u/s.148 of the Act was issued on 02.02.2011 and duly served upon the assessee. The assessee filed revised return of income on 04.03.2011 and declared total income to the tune of Rs.80,89,560/-. Thereafter, notices u/s.143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee is a partnership firm having partners Mr. Kishore Musale & Chhaya Kishore Musale. The said firm was engaged in the business of buying, selling and dealing in shares, stocks and securities with or without delivery. The assessee paid interest to the tune of Rs.2,07,89,876/- which was not allowed in accordance with provision u/s.14A of the Act, therefore, an amount of Rs.78,36,545/- was added to the income of the assessee. The assessee challenged the reopening u/s.143(3) r.w.s.147 of the Act and also challenged the addition before CIT(A) who confirmed the order passed by the Assessing Officer, hence the assessee has filed the present appeal before us. The appeal is time barred by 3 days which is allowed as the same was not so long.
ISSUE NO.1:-
4. Under this issue the assessee has challenged the reopening u/s.148 of the Act. The representative of the assessee nowhere appeared before the court despite service. Therefore, he was proceeded against Ex-parte. No documents of any kind were placed on record to which it can be assumed that the order passed by the Assessing Officer u/s.148 of the Act is wrong against law and facts. Since the assessee did not appear before us and failed to produce any material in support of his contention, therefore, we are of 4 ITA No.3635.M.13 A.Y. 2007-08 the view that the assessee failed to prove this fact that the reopening u/s.148 of the Act is wrong against law and facts. Therefore, in the said circumstances, we upheld the order passed by CIT(A) in question. Accordingly, this issue is decided in favour of the revenue against the assessee.
ISSUE NO.2:-
5. Under this issue the assessee has challenged the addition to the tune of Rs.78,36,545/- u/s.14A of the Act. The present assessment is for A.Y.2007- 08 to which the provision u/s.14A r.w.Rule 8D of the Act is not directly applicable which has been applied by the Assessing Officer in the instant case. In view of the law settled in Godrej & Boyce Mfg. Co. 328 ITR 81 (Bom), we are of the view that the confirmation of the order of the CIT(A) is not justifiable. Therefore, the order of the CIT(A) is hereby ordered to be set aside and Assessing Officer is hereby directed to re-compute the expenditure incurred to earn the exempt income specifically in view of the law settled in Godrej & Boyce Mfg. Co. 328 ITR 81 (Bom) by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue
6. In the result the appeal filed by the assessee is hereby Partly Allowed for statistical purpose.
5ITA No.3635.M.13 A.Y. 2007-08 Order pronounced in the open court on 28th February, 2017.
Sd/- Sd/-
(D.KARUNAKARA RAO) (AMARJIT SINGH)
लेख ासद! / ACCOUNTANT MEMBER "ाियकसद!/JUDICIAL MEMBER
मुंबई Mumbai; िदनां कDated : 28th February, 2017 MP आदे शकी ितिलिपअ े िषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. आयकरआयु&(अ पील)/ The CIT(A)-
4. आयकरआयु&/ CIT
5. िवभागीय ितिनिध,आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai
6. गाड+ फाईल /Guard file.
आदे शानु सार/ BY ORDER, स ािपत ित //True Copy// उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुं बई / ITAT, Mumbai 6