FIRESTROM ELECTRONICS CORPORATION PVT LTD,MUMBAI vs. CIT(A), NFAC, DELHI

This appeal by the assessee is directed against the order dated 17.02.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising grounds as reproduced below:

GROUND NO. 1: ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS BAD-IN-LAW:

Firestorm electronics corporation pvt ltd 1. On the facts and circumstances of the case and in law, Hon'ble CIT(A) erred in passing the impugned order without giving a fair and reasonable opportunity of hearing to the Appellant in respect of addition made in the order and thereby violated the principle of natural justice.

2. He failed to appreciate and ought to have held that the order passed in a haste manner without providing proper opportunity of hearing to the Appellant and without considering submissions of the Appellant is bad-in-law and hence void-ab-initio 3. The Appellant, therefore, prays that the impugned order passed in violation of the principle of natural justice, be quashed. GROUND II: DISALLOWANCE U/S 14A OF THE ACT R.W.R. 8D AMOUNTING TO RS. 10,68,575/-

1. 1. On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO of disallowing a sum of Rs. 10,68,575/- u/s 14A r.w.r. 8D(2)(ii).

2. The Appellant prays that the AO be directed to delete or appropriately reduce the disallowance made u/s 14A r.w.r. 8D(2)(ii). GROUND III: ADDITION OF DISALLOWANCE U/S 14A R.W.R. 8D TO BOOK PROFITS COMPUTED U/S 115JB OF THE ACT AMOUNTING TO RS. 10,68,575/-: 1. On the facts and in the circumstances of the case and in law, Hon'ble CIT(A) erred in upholding the action of the AO of adding the amount of Rs. 10,68,575/- disallowed u/s 14A r.w.r. 8D to the 'book profits' computed u/s 115JB of the Act.

Firestorm electronics corporation pvt ltd The Appellant craves leave to add, amend, alter and/or delete any/all of the above grounds of appeal

2. At the outset, the Ld. Counsel of the assessee referred to ground no.1 of the appeal and submitted that the impugned order has been passed by the Ld. CIT(A) without taking into consideration submission of the assessee, therefore order being in violation of the principle of natural justice, matter might be sent back to the Ld.CIT(A) for deciding afresh after considering the submission of the assessee. The Ld. Counsel referrf to paper book page no. 80, 81, 84, 85 and 87 of the paper book consisting of 125 pages and submitted that for hearing dated 02.02.2023 before the Ld. CIT(A), assessee sought adjournment upto 16.02.2023, which was duly acknowledged by the Income-tax department. The assessee filed submission before the Ld. CIT(A) on 16.02.2023, however, same were not considered and the Ld. CIT(A) passed impugned order on 17.02.2023. On the merit of the issue, the Ld. Counsel referred to the order of the Ld. Assessing Officer wherein he opined that all the mutual fund investment of the assessee were eligible for earning exempted income for the reason that no evidence was filed by the assessee to support that the all mutual funds were in the nature of growth scheme only and none of the investments belonged to dividend option scheme. The Ld. Assessing officer accordingly invoked Rule 8D of income-tax Rules, 1962( in short ‘the Rules’) and computed 1% of annualized average investment of Rs. 10,35,01,230/- for disallowance as against the suo-moto disallowance of Rs. 40,087/- in the return of income , which was Firestorm electronics corporation pvt ltd further increased to Rs.73,650/- during course of assessment proceedings. The Ld. Counsel submitted that all the mutual funds investment of the assessee were in growth scheme, which the Assessing Officer could have confirmed by way of his own research in public domain and there was no necessity for the assessee to file any evidences..

Order pronounced in the open Court on 12/07/2023.