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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
आयकर अपीलीय अधिकरण “SMC” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI श्री महावीर स िंह, न्याययक दस्य BEFORE SRI MAHAVIR SINGH, JUDICIAL MEMBER आयकर अपील सुं./ (यिर्ाारण वर्ा / Assessment Year 2001-02) आयकर अपील सुं./ (यिर्ाारण वर्ा / Assessment Year 2002-03) Velvet Holdings Private The Dy. Commissioner of Limited Income Tax, Central Circle बनाम/ 32, Madhuli Apartment, Dr. 4(3), Mumbai A.B. Road, Worli, Vs. Mumbai-400 018 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा सुं./PAN No. AAACV4445R अपीलार्थी की ओर े / Appellant by : Shri Vijay Mehta, AR प्रत्यर्थी की ओर े / Respondent by : Shri Dr. P Daniel, Special Counsel for Dept. ुिवाई की तारीख / Date of hearing: 18.12.2019 घोर्णा की तारीख / Date of pronouncement : 18.12.2019 आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
These appeals of the assessee are arising out of the orders of Commissioner of Income Tax (Appeals)]-52, Mumbai [in short CIT(A)], in Appeal Nos. CIT(A)-52/DC, CC 4(3)/IT-667&668/17- 18 even dated 17.09.2018. The Assessments were framed by 2 | P a g e & 6964/Mum/2018 Velvet Holdings Pvt. Ltd. the Asst. Commissioner of Income Tax, Circle-31, Mumbai (in short ACIT/ AO) for the AYs. 2001-02 & 2002-03 vide orders dated 18.03.2004, 20.03.2006 respectively under section 144 read with section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only common issue raised in these two appeals by assessee is as regards to the order of CIT(A) confirming the action of the AO in making disallowance of interest expenditure and charging of interest under section 234A, 234B and 234C of the Act.
At the outset, the learned Counsel for the assessee first of all drew my attrition to the additional ground raised. The relevant ground raised in both the years is common and the grounds raised read as under: - “2001-02
1. The learned Commissioner of Income tax (Appeals) ought to have appreciated that the total income of the Appellant was incorrectly recorded by the Assessing Officer as ₹34,009/- instead of correct amount of ₹(-) 34,009/- as per order Giving effect to the order of the Ld. CIT(A) dated 09.05.2013. 2002-03
The learned Commissioner of income tax (Appeals) ought to have appreciated 3 | P a g e & 6964/Mum/2018 Velvet Holdings Pvt. Ltd. that the total income of the Appellant was incorrectly recorded by the Assessing Officer as ₹62,816/- instead of correct amount of ₹(-) 62,816/- as per order Giving effect to the order of the Ld. CIT(A) dated 09.5.2013.”
It was contended that assessee has earned income by way of interest and this was offered by assessee for assessment and assessment was completed on that very basis but the AO has incorrectly recorded total income as positive in both the years as against assessed loss as is evident from grounds raised above. Hence, assessee requested that for admission of the additional grounds and adjudication of the same. The facts and circumstances are exactly identical in both the years and hence, a common order in both the years is being passed.
In the present case, the assessment was originally completed on 18.03.2004 & 20.03.2006 for AY 2001-02 and 2002-03 respectively under section 144 r.w.s. 147 of the Act determining the total income of the assessee on estimated basis at ₹ 6,61,137 & ₹ 6,60,000/- for AY 2001-02 and 2002-03 respectively. In the first round of litigation, the issues were then assailed before the CIT(A) wherein various details and information were submitted. These details were later remanded by the CIT(A) for verification and determination of income on the basis of said details. The assessee submitted the computation of income disclosing the total income of ₹ (-) 11,54,021/- in AY 2002-03 & ₹ (-) 11,30,964 in AY 2001-02. However, in the above referred Remand Report, after 4 | P a g e & 6964/Mum/2018 Velvet Holdings Pvt. Ltd. verification of details and information, the Assessing Officer stated that the interest expenses and audit fees aggregating to ₹ 10,96,955/- & ₹ 10,91,205/- for AY 2001-02 & 2002-03 respectively were not allowable as deduction, Accordingly, the total income of the assessee was determined in the said Remand Report at ₹ (-) 34,009 & ₹ (-) 62,816/- for AY 2001-02 & 2002-03 respectively.
The ClT(A) upheld the working of the Assessing Officer and disposed off the appeal vide his order dated 20.02.2013 in both the years. The orders giving effect to the said appellate order was passed on 09.05.2013 by the AO. However, in the said order, inadvertently and due to oversight, the Assessing Officer determined the income of the assessee at ₹34,009 instead of ₹(-) 34,009/- in AY 2001-02 & ₹ 62,816/- instead of ₹ (-) 62,816/- in AY 2002-03. Since the issue of disallowance of interest expenses was decided against the assessee, the said issue was challenged in appeal before the Tribunal; who vide its order dated 24.12.2014 in had set aside the issue to the file of the Assessing Officer.