OASIS SECURITIES LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(2), MUMBAI

O R D E R PER C.N. PRASAD (JM) 1. These two appeals are filed by the assessee against different orders of the Learned Commissioner of Income Tax (Appeals)–51, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 08.06.2018 for A.Y. 2010-11 and A.Y. 2013-14.

2 & 4562/MUM/2018 (A.Ys: 2010-11 & 2013-14) M/s. Oasis Securities Ltd., 2. Assessee has raised following common grounds in its appeals except for figures: - “1. The learned CIT(A) erred in confirming re-assessment made u/s 147, despite the fact e AO did not make an addition/ disallowance on the grounds that the assessment was reopened but the disallowance was made on issue not at all connected with the issue on which reasons were recorded.

3. Ld. Counsel for the assessee, at the outset submits that the reopening of assessment is bad in law for the reason that Assessing Officer did not make addition/disallowance on the ground that the assessment was reopened and the disallowance was made on the issue not at all connected with the issue on which the reasons were recorded. Reliance was placed on the decision of the Hon'ble Jurisdictional High Court in the case of Jet Airways Ltd., [331 ITR 236]. Alternatively, Ld. Counsel for the assessee submits that in the earlier assessment years the disallowance was restricted to dividend income. However, during

6. We also found that similar issue had cropped up in assessee’s own case for the A.Y. 2012-13 in ITA.No. 4561/Mum/2018 dated 29.07.2019 wherein on identical facts Tribunal had affirmed the order of the Ld.CIT(A) in deleting the disallowance u/s. 14A on the ground that assessment was reopened for the addition/disallowance made in the reassessment were 4 & 4562/MUM/2018 (A.Ys: 2010-11 & 2013-14) M/s. Oasis Securities Ltd., not the reasons for reopening the assessment and the disallowance was made which was not mentioned in the reasons recorded for reopening of assessment. The Tribunal observed as under: - “4. Brief facts of the case are that the assessee is engaged in the business of NBFC activities, which includes share trading and investment and funds lending. Present appeal relates to reopening of assessment u/s. 147 of the Act. Reopening of the case was done on the reasoning that the assessee has taken loan of Rs. 102.02 crores and the same was actually an accommodation entry. However, in course of assessment pursuant to reopening, no addition was made on this issue. However, the Assessing Officer proceeded to make disallowance on account of invocation of provisions of section 14A.

5. Before learned CIT(A), assessee, inter alia contended that the Assessing Officer cannot make addition u/s. 14A since the issue on which reopening was done, no disallowance was made therein. In this connection, the assessee also referred to Hon'ble Bombay High Court decision in the case of Jet Airways Ltd. (331 ITR 236) and in the case of ICICI Bank Ltd. (349 ITR 482). Considering the aforesaid case laws, learned CIT(A) concluded as under :- In the instant case, it is observed that the assessment in the case of the assessee was reopened on the ground that the loan advanced by the assessee to Shri Vivek Mehrotra of Rs. 102.02 crores is of the nature of an accommodation entry. The AO while completing the re-assessment did not make any addition on the said ground for which the assessment was reopened. Therefore, in view of the decision of the jurisdictional High Court in the case of Jet Airways (supra), the AO could not have completed the re-assessment after making any further addition/ disallowance on a fresh issue. However, in the instant case, the AO has proceeded to make a disallowance u/s. 14A in the re-assessment proceedings, though, no addition was made by him on the ground for which the assessment was re-opened. Therefore, in view of the decision of the jurisdictional High Court in the case of Jet 5 & 4562/MUM/2018 (A.Ys: 2010-11 & 2013-14) M/s. Oasis Securities Ltd., Airways (supra), the action of the Assessing Officer of making the disallowance u/s. 14A is found to be not as per law.

8. Learned Counsel of the assessee submitted that learned CIT(A) has clearly held that no disallowance u/s. 14A as permissible when the issue on which reopening was done was not a subject matter of any disallowance in the reassessment order. Learned counsel submitted that having so held learned CIT(A) has erred in partly upholding disallowance u/s. 14A. Learned counsel submitted that proposition that when the assessment is reopened, in the reopened assessment other allowances are permissible only if disallowance is also done on the issue on which assessment is reopened. Learned counsel submitted that this is duly supported by Hon'ble Jurisdictional High Court decisions referred above.

9. Per contra, learned Departmental Representative relied upon the orders of the authorities below.

10. Upon careful consideration, I find that learned CIT(A) has clearly held that no disallowance is permissible in this case u/s. 14A on the touchstone of Hon'ble Jurisdictional High Court decision in the case of Jet Airways Ltd. (supra) in as much as no disallowance has been done on the issue on which reopening has been done. As a matter of fact, he Revenue is not in appeal against this order of learned CIT(A). Thus, I hold that learned CIT(A) has erred in upholding part of the disallowance u/s. 14A, when he held at the threshold that no disallowance u/s. 14A is permissible in as much as no disallowance was done on the issue on which reopening was made. Accordingly, I set aside the order of learned CIT(A) and delete the disallowance.”

6 & 4562/MUM/2018 (A.Ys: 2010-11 & 2013-14) M/s. Oasis Securities Ltd., 7. On a perusal of the reasons in the appeals under consideration, we find that the reasons as recorded by Assessing Officer for reopening of assessment for the A.Y. 2012-13 was also identical for both these Assessment Years in which there was no mention about escapement of income on account of disallowance u/s. 14A of the Act. Facts being identical applying the ratio of the decision of the Hon'ble Jurisdictional High Court in the case of Jet Airways Ltd., (supra) we hold that the reopening of assessments for both these assessment is bad in law. Thus, Ground No.1 is allowed.

Order pronounced on 30.09.2020 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.