kalpesh k. shah vs. the asst. commissioner of income--tax

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ITXA/483/2007HC Bombay31 July 2007Bench: HON'BLE SHRI JUSTICE F.I. REBELLO, HON'BLE SHRI JUSTICE J.P. DEVADHAR5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the order of the Tribunal passed in ITA No.6323/Mum/03 could not be sustained. The Court noted that the dispute arose from the reassessment order passed by the AO after remand by the CIT(A). The Tribunal, instead of deciding the matter on merits after the CIT(A) had deleted the additions made by the AO post-remand, had again remanded the matter. This occurred because both the assessee's appeal (challenging the initial remand) and the revenue's appeal (challenging the deletion after remand) were heard and disposed of by a common judgment. Consequently, the impugned order of the Tribunal dated January 30, 2006, insofar as it pertained to ITA No.6323/Mum/03, was quashed and set aside. The Tribunal was directed to hear ITA No.6323/Mum/03 on merits and pass an appropriate order after giving an opportunity of hearing to the parties. No issue was expressly left undecided, as the matter was remitted for fresh adjudication on merits.

What were the facts?

The assessee, Kalpesh K. Shah, is an individual carrying on a chemical business. For Assessment Year 1997-98, the Assessing Officer (AO) made additions of Rs. 38,47,297/- in respect of cash credits from J.M. Shah group and Y.J. Choksi group. The Commissioner of Income Tax (Appeals) [CIT(A)] restored the issue to the AO for determination after affording the assessee an opportunity of hearing. Subsequently, the AO made additions of Rs. 7,00,000/- for loans from Mr. Y.J. Choksi group and disallowed interest of Rs. 3,96,964/-. The CIT(A) deleted these additions. The revenue appealed to the Income Tax Appellate Tribunal (ITAT) against the CIT(A)'s deletion. The ITAT, by a common order dated January 30, 2006, disposed of the assessee's appeal (against the initial remand) by dismissing it and disposed of the revenue's appeal (against the deletion after remand) by remanding the matter again. This appeal is filed by the assessee challenging the ITAT's order in the revenue's appeal.

What were the issues?

1. Whether on the facts and in the circumstances, the Tribunal was justified in setting aside the impugned cash credit of Rs.7 lacs in respect of loans from Shri Y.J. Choksi Group and disallowance of interest of Rs.3,96,964/- thereon? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal ought to have deleted the impugned additions by way of cash credit and disallowance of interest in view of gross violation of the principles of natural justice and directions given by the CIT (A) in his order dated 30.3.2001? Assessee's contentions: The assessee argued that the ITAT ought to have decided the matter on merits rather than remanding it again, especially after the CIT(A) had deleted the additions made by the AO post-remand. The assessee contended that the ITAT's order was passed in a common judgment disposing of two appeals, leading to a situation where the matter was remanded again, which was not justified. Revenue's contentions: The judgment does not record specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 143(3)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICITON INCOME TAX APPEAL NO.483 OF 2007 Kalpesh K. Shah Shantivilla, Shantivani CHS. premises, Nr.Club Acquire, Lawrance High School Lane, Devidas, Borivali (West), Mumbai - 400 013. .. Appellant. Versus The Asstt. Commissioner of Income Tax, Circle 15(1) or his Successor C-11, 3rd Floor, Prathyashkar Bhawan, Bandra Kurla Complex, Bandra (E), Mumbai .. Respondent. Mr.S.N. Vidatia i/by Amarendra Mishra for the appellant. Mr.A.D. Kango for the respondent. CORAM : F.I. REBELLO & J.P. DEVADHAR, JJ. DATED : 31ST JULY, 2007. ORAL JUDGMENT (Per J.P. Devadhar, J.) : 1. Heard. 2. This appeal is filed by the assessee-appellant under Section 260-A of the Income Tax Act, 1961 stating that the following questions of law arising out of the order of the Tribunal dated 30th January, 2006 in I.T.A. No.6323/Mum/03. 1. Whether on the facts and in the CNR No : HCBM020126032006 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:15:40

2 circumstances, the Tribunal was justified in setting aside the impugned cash credit of Rs.7 lacs in respect of loans from Shri Y.J. Choksi Group and disallowance of interest of Rs.3,96,964/- thereon ? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal ought to have deleted the impugned additions by way of cash credit and disallowance of interest in view of gross violation of the principles of natural justice and directions given by the CIT (A) in his order dated 30.3.2001 ? 3. The appeal is admitted on the aforesaid questions and by consent of the parties, taken up for final hearing. 4. The assessment year involved herein is A.Y. 1997-98. 5. The assessee is an individual and carries on business in chemicals in the name and style of M/s.Shital Pharma. 6. Assessments for A.Y. 1997-98 was initially completed under Section 143(3) of the Act on 31st March, 2000 wherein additions aggregating to Rs.38,47,297/- were made in respect of cash credits of J.M. Shah group and Y.J. Choksi group. 7. Being aggrieved by the aforesaid order, the assessee filed an appeal before CIT (A) who by an Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:15:40

3 order dated 30th March, 2001 restored the issue of the appeal to the Assessing Officer with direction that the issue be determined after affording reasonable opportunity of hearing to the assessee. Being aggrieved by the aforesaid order, the assessee filed an appeal before the I.T.A.T. being I.T.A. No.3020/Mum/01. 8. In the meantime, as per directions made by CIT (A) the Assessing Officer passed fresh assessment order wherein additions of Rs.7,00,000/- in respect of loan taken from Mr.Y.J. Choksi group and disallowance of interest of Rs.3,96,964/- was made. Being aggrieved by the aforesaid order, assessee filed an appeal and the CIT (A) by his order dated 1st July, 2003 deleted entire amount of Rs.7,00,000/- added as unexplained cash credit and deleted disallowance of interest of Rs.3,96,964/- made by the Assessing Officer. Being aggrieved by the aforesaid order, revenue filed an Appeal before the Appellate Tribunal being I.T.A. No.6323/Mum/03. 9. By a common order dated 30th January, 2006, the I.T.A.T. disposed of both the appeals being I.T.A. No.3020/Mum/01 and I.T.A. No.6323/Mum/03. By the said order, the Tribunal dismissed the appeal filed by the assessee being I.T.A. No.3020/Mum/01 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:15:40

4 thereby confirming the order of CIT (A) in restoring the issue to the Assessing Officer. The Tribunal disposed of I.T.A. No.6323/Mum/03 filed by the revenue by passing similar order of remand. This appeal is filed by the assessee to challenge the order of the Tribunal in I.T.A. No.6323/Mum/03. 10. The dispute in I.T.A. No.6323/Mum/03 arose from the reassessment order passed by the A.O. after remand. In other words, once the additions of Rs.7,00,000/- as unexplained cash credits in the accounts of parties of Y.J. Choksi Group as well as disallowance of interest of Rs.3,96,964/- was made by the Assessing Officer in compliance with the remand order passed by CIT (A), the Tribunal ought to have decided the matter on merits, in stead of remanding the matter once again. It is apparent that the confession arose because both the appeals, one filed by the assessee challenging the order of CIT (A) in remanding the matter and another appeal filed by the revenue challenging the order of CIT (A) after remand were heard and disposed of by a common judgment. 11. In this view of the matter, order of the Tribunal passed in I.T.A. No.6323/Mum/03 cannot be sustained. Accordingly, impugned order dated 30th Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:15:40

5 January, 2006 insofar as it pertains to I.T.A. No.6323/Mum/03 is quashed and set aside. The Tribunal is directed to hear the I.T.A. No.6323/Mum/03 on merits and pass appropriate order thereon after giving an opportunity of hearing. 12. The Income Tax Appeal is allowed in the above terms with no order as to costs. (F.I. REBELLO, J.) (J.P. DEVADHAR, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:15:40 Powered by TCPDF (www.tcpdf.org)

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