SURESH MADNANI,MUMBAI vs. ACIT 33 (1), MUMBAI

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ITA 6493/MUM/2019Status: DisposedITAT Mumbai26 August 2021AY 2016-174 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the arbitration award, which was pronounced after the CIT(A)'s order and held that the assessee was not entitled to the interest. The issue was restored to the AO for re-examination in light of the award.

What were the facts?

The Assessing Officer added Rs. 12,20,000/- as interest receivable from a company. The assessee contended that there was a dispute regarding this interest, and arbitration proceedings were ongoing. The CIT(A) upheld the addition without waiting for the arbitration award.

What were the issues?

Whether an addition made on account of interest receivable can be sustained when a subsequent arbitration award declares the assessee not entitled to such interest. Whether penalty proceedings under Section 271A and 271B are premature at this stage.

Which sections of the Income-tax Act were involved?

Section 271A,Section 271B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI

Hearing: 17/08/2021Pronounced: 26/08/2021

ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-45, Mumbai [hereinafter referred to as ‘the CIT(A)’] ' dated 01.08.2019 for the Assessment Year (AY) 2016-17.

1.

आअसं. 6493/मुं/2019 (िन.व.2016-17) (A.Y.2016-17) 2. Sh. Pradeep Kapasi appearing on behalf of the assessee submitted that the assessee in appeal has raised five grounds, all arising out of addition of Rs. 12,20,000/- made on account of interest receivable from M/s Shree Ahuja Properties P. Ltd. The Assessing Officer (AO) in the assessment proceedings made addition of Rs. 12,20,000/- in respect of interest received from M/s Shree Ahuja Properties P. Ltd. The said addition was upheld by the CIT(A) in First Appellate proceedings. The ld. Authorized Representative (AR) pointed that during proceedings before the CIT(A), the assessee had highlighted that there is a dispute between the assessee and M/s Shree Ahuja Properties P. Ltd., the arbitration proceedings are at fag end and the arbitral award is likely to be pronounced shortly. The CIT(A) without waiting for the arbitration award passed the impugned order on 01.08.2019. The arbitration award was declared on 23.08.2019, the assessee/appellant wants to place on record arbitration award dated 23.08.2019 as it has bearing on the issue raised in the appeal. The ld. AR submitted that the Arbitrator in award dated 23.08.2019 (supra) has held that the assessee is not entitled for interest from M/s Shree Ahuja Properties P. Ltd. Once the assessee is not entitled to received interest, the same cannot be taxed in the hands of the assessee. The ld. AR pointed that the arbitration award has been accepted by both parties to the dispute, hence, it has become final. The ld. AR prayed for admitting additional evidence and submitted that the matter can be referred back to the AO to consider the award.

3.

Sh. Gurubinder Singh representing the Department submitted that if the Tribunal is admitting additional evidence furnished by the assessee, the Revenue has no objection, if the matter is restored back to the file of AO for examination of the additional evidence.

आअसं. 6493/मुं/2019 (िन.व.2016-17) (A.Y.2016-17) 4. Both sides heard. The solitary addition which is subject matter of dispute in present appeal is alleged interest payment received by the assessee from M/s Shree Ahuja Properties P. Ltd. The contention of assessee before the AO and the CIT(A) is that the assessee has not received interest of Rs. 12,20,000/- from M/s Shree Ahuja Properties P. Ltd. and no TDS has been deposited by the said party in respect of said interest. On the other hand, the stand of Revenue is that the said interest amount has been received by the assessee and TDS has also be deducted on the said amount by Shree Ahuja Properties P. Ltd. The assessee has furnished a copy of Arbitration Award dated 23.08.2019. The ld. AR of the assessee stated at the bar that as per arbitral award, assessee is not eligible to claim interest from M/s Shree Ahuja Properties P. Ltd. The Arbitral Award was passed subsequent to the order of CIT(A), therefore, the same was not available at the time of assessment proceedings and proceedings before the First Appellate authority. Since, the issue settled in the arbitral award has direct bearing on the issue raised in the present assessment proceedings, it is just and proper to admit the additional evidence filed by the assessee in the form of Arbitral Award for proper adjudication of the issue. Without commenting on the merits, we deem it appropriate to restore this issue back to the file of AO to re-examine the same in light of Arbitration Award dated 23.08.2019 filed by the assessee as additional evidence. The AO while re- examining the issue shall grant reasonable opportunity of hearing to the assessee, in accordance with law. The ground no. 1 to 3 raised in appeal are allowed for statistical purpose.

5.

In ground no.4 & 5 of the revised grounds of appeal, the assessee has assailed initiation of penalty under section 271A and 271B of the Act.

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