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Income Tax Appellate Tribunal, “G”BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
Date of Hearing – 01.08.2019 Date of Order – 16.08.2019
O R D E R PER SAKTIJIT DEY. J.M.
Captioned appeal by the assessee arises out of order dated 28thJanuary 2019, passed by the learned Commissioner of Income Tax (Appeals)–18, Mumbai, for the assessment year 2013–14.
The only dispute in the present appeal is with regard to levy of interest under section 234A, 234B and 220(2) of the Income Tax Act, 1961 (for short "the Act").
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Brief facts are, the assessee is a company. For the assessment year under dispute, the assessee originally did not file its return of income. Therefore, the Assessing Officer re–opened the assessment under section 147 and issued noticed under section 148 of the Income Tax Act, 1961 (for short "the Act") directing the assessee to file its return of income. In response to the said notice, the assessee filed its return of income on 9th January 2017, declaring loss of ` 31,488. Assessment in case of the assessee was ultimately completed under section 143(3) r/w section 147 of the Act, vide order dated 27th December 2017, determining the total income at ` 81,67,14,449. While computing the tax liability, the Assessing Officer also levied interest under section 234A, 234B of the Act. Further, he also levied interest under section 220(2) of the Act.
Against the assessment order so passed, the assessee preferred appeal before the first appellate authority. In the said appeal, the assessee also challenged levy of interest under section 234B, 234C and 220(2) of the Act on the ground that since the assessee was not liable to pay advance tax in view of the merger scheme pending before theBoard for Industrial and Financial Reconstruction(BIFR), interest under the aforesaid provisions could not have been levied. As it transpires from the impugned order of the learned Commissioner
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(Appeals), the assessee did not press the ground raised challenging the addition made by the Assessing Officer on account of longterm capital gain. Accordingly, the addition made was sustained. However, as regards grounds raised challenging levy of interest under section 234A and 234B of the Act, learned Commissioner (Appeals) dismissed the grounds raised by simply stating that they are consequential in nature. Similarly, the additional ground raised by the assessee challenging levy of interest under section 220(2) of the Act was not decided by learned Commissioner (Appeals). Being aggrieved, the assessee is before us.
Shri Farrokh V. Irani, learned Sr. Counsel for the assessee submitted, learned Commissioner (Appeals) has not decided assessee’s grounds challenging the levy of interest on merit. He submitted, the decision of learned Commissioner (Appeals) on the issue is completely mechanical and without proper application of mind. He submitted, since, the assessee had specifically contended that it was not liable to pay advance tax due to pendency of scheme of merger before the BIFR, learned Commissioner (Appeals) should have decided the issue on merit. Thus, he submitted, the issue has to be restored back to learned Commissioner (Appeals) for deciding on merit. Further, he submitted, non–application of mind by learned Commissioner (Appeals) is also evident from the fact that though the 4 Seftech Phosphate Pvt. Ltd.
order of learned Commissioner (Appeals) is dated 28th January 2019, however, in the said order he has referred to a letter dated 30th January 2019, furnished by the assessee. He submitted, considering the aforesaid facts, the Tribunal has granted stay of recovery of the outstanding demand fully. In this context, he drew our attention to the order dated 15th March 2019, passed in S.A. no. 116/Mum./2019. Thus, he submitted, the issue raised in the main as well as additional grounds should be restored to the first appellate authority for fresh adjudication.
The learned Departmental Representative has no objection if the issue is restored to the learned Commissioner (Appeals) for fresh adjudication.
We have considered rival submissions and perused the material on record. Undisputedly, in the appeal filed before learned Commissioner (Appeals), the assessee had raised specific ground challenging the levy of interest under section 234A, 234B of the Act. Further, the assessee had also raised additional ground challenging levy of interest under section 220(2) of the Act. On a perusal of the impugned order of learned Commissioner (Appeals), and more specifically Para–8 of the impugned order, it is evident that learned Commissioner (Appeals) has dismissed the grounds raised by the 5 Seftech Phosphate Pvt. Ltd.
assessee challenging levy of interest under section 234A and 234B of the Act by simply stating that they are consequential in nature. He has not at all examined assessee’s claim that it was not liable to pay advance tax due to pendency of merger scheme before the BIFR. Further, learned Commissioner (Appeals) has also failed to decide assessee’s ground challenging levy of interest under section 220(2) of the Act. In view of the aforesaid, we are inclined to restore the issue raised in the present appeal relating to levy of interest under section 234A, 234B and 220(2) of the Act to the file of learned Commissioner (Appeals) for denovo adjudication after providing adequate opportunity of being heard to the assessee.
It needs to be mentioned, before us the assessee has also raised additional grounds vide letter dated 6th June 2019. On a perusal of the additional grounds, it appears that they are off–shoot of ground no.1 of the main ground. Therefore, learned Commissioner (Appeals) should also decide the issue raised in the additional grounds along with the issue raised in the main ground. We must observe, learned Commissioner (Appeals) must pass a well-reasoned order while deciding the issues raised by the assessee. Grounds are allowed for statistical purposes.
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In the result, assessee’s appeal is allowed for statistical purposes. Order pronounced in the open Court on 16.08.2019