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Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
These two appeals have been filed by the Revenue
directed against the common order of the learned Commissioner of
Income Tax (Appeals)-2, Chennai (hereinafter called as ‘CIT(A)’) dated
27.11.2018 for the assessment years 2013-2014 & 2014-2015.
ITA Nos.337 & 338/19 :- 2 -:
Since, the identical facts and issues are involved in these 2.
appeals, we proceed to dispose the same vide this common order.
For the sake of convenience and clarity the facts relevant to the
appeal in ITA No.337/Chny/2019 for assessment year 2013-14 are
stated herein.
The Revenue raised the following grounds of appeal: 4.
‘’The order of the Ld. CIT(A) is contrary to law, facts and circumstances of the case.
The Ld.CIT(A) erred in giving relief to the assessee by giving deleting the disallowance under section 36(l)(iii) without giving opportunity to the AO under Rule 46A of the Income tax Rules, to examine the fresh evidence introduced by the assessee at the appellate stage thereby denying opportunity under the Principles of natural justice to the AO.
The Ld.CIT(A) erred in giving relief to the assessee by deleting the deemed income added by the AO under section 56(2)(viia) of the Act without making a finding of fact nor applying any legal precedent or fiction for allowing the relief. 4. The Ld.CIT(A) erred in giving relief to the assessee by deleting the deemed income added by the AO under section 56(2)(viia) of the Act merely on equity without applying any provisions of the Income tax Act, 1961.
For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the AO restored’’.
The brief facts of the case are as under: 5.
ITA Nos.337 & 338/19 :- 3 -:
The respondent-assessee namely M/s. Jain Housing is a
Partnership firm constituted under the Partnership Act and engaged
in the business of property development. The return of income for the
assessment year 2013-2014 was filed on 30.09.2013 disclosing total
income of Rs.65,98,36,420/-. Against the said return of income, the
assessment was completed by the Deputy Commissioner of Income,
Central Circle-1(1), Chennai (hereinafter referred as ‘’Assessing
Officer’’) vide order dated 30.03.2016 passed u/s. 143(3) of the
Income Tax Act, 1961 (for short ‘the Act’) at total income of Rs.
78,84,38,573/- after making addition of �2,59,00,000/- u/s.56 (2)
(viia) of the Act, disallowance of interest u/s. 36(1) (iii) of the Act of
�46,57,535/- and disallowance of �9,80,44,618/- u/s.14A of the Act.
Being aggrieved by the above additions, the assessee preferred an appeal before the ld. CIT(A), who vide impugned order had granted partial relief by directing the Assessing Officer to delete the addition made u/s.56 (2)(viia) of the Act as the difference in the valuation in the fair market value and the value adopted by the Assessing Officer is less than 1%. As regards to the disallowance u/s.36(1) (iii) of the Act, the ld. CIT(A) had directed the Assessing Officer to restrict the disallowance to the extent of ₹12,45,757/- and raised an addition of ₹9,80,44,618/- u/s.14A of the Act, was confirmed
ITA Nos.337 & 338/19 :- 4 -:
by the ld. CIT(A). Thus, the appeal filed by the assessee came to be partly allowed by the ld. CIT(A).
Aggrieved by that part of the ld. CIT(A) order, which is 7.
against Revenue, the Revenue is in appeal before us. Ld. Sr.
Departmental Representative submitted that the ld. CIT(A) after
considering the additional evidence ought not have granted partial
relief in respect of addition made u/s.36 (1) (iii) of the Act. As regards
to the deletion of addition in respect of Section 56(2) (viia) of the Act,
the ld. Sr. Departmental Representative submitted that the ld. CIT(A)
ought not have granted relief as the addition is based on the plain
provisions of Income Tax Act.
On the other hand, the ld. Authorised Representative placed
reliance on the order of the ld. CIT(A).
We heard the rival submissions and perused the material on 9.
record. The grounds of appeal No.1 & 5 are general in nature
therefore, does not require any adjudication.
Ground No.2, challenges the direction of the ld. CIT(A) in 10.
deleting the addition to the extent of �30,34,323/-. The argument of
the ld. Sr. Departmental Representative is that partial relief was
granted by the ld. CIT(A) after considering the additional evidence
filed in violation of provisions of Rule 46A of the Income Tax Rules,
ITA Nos.337 & 338/19 :- 5 -:
1962. From the perusal of the assessment order, it is clear that the
addition on account of interest was made on the ground that interest
component was not included in the closing work in progress whereas
from the order of the ld. CIT(A) relief was granted under the
provisions of Section 36(1) (iii) of the Act. Thus, the ld. CIT(A) has
granted relief on all together on different premises from that of the
Assessing Officer. Therefore in such circumstances, the only recourse
available to the ld. CIT(A) is to grant an opportunity of hearing to the
Assessing Officer before deleting the addition. Therefore, we are of
the considered opinion that the matter should be remanded back to
the file of the ld. CIT(A) to decide the issue in proper prospective in
accordance with law. Thus, the ground of appeal No.2 raised by the
Revenue is partly allowed for statistical purpose.
Grounds 3 & 4 challenges the direction of the ld. CIT(A) in
deleting the addition made u/s.56(2) (viia) of the Act. The ld. CIT(A)
granted relief after considering the fact that the difference of fair
market value and the value adopted by the Assessing Officer is less
than 1%. Nothing was brought to our notice controverting the findings
of the ld. CIT(A). In these circumstances, we uphold the order of the
ld. CIT(A) in this issue. Accordingly, grounds of appeal 3 & 4 raised
by the Revenue stand dismissed.
ITA Nos.337 & 338/19 :- 6 -:
In the result, the appeal of the Revenue in ITA
No.337/CHNY/2019 for assessment year 2013-2014 is partly allowed
for statistical purpose.
Now, we take up ITA No.338/CHNY/2019, for assessment
year 2014-2015 for adjudication.
It is stated before us that the tax effect in this case is less
than Rs.20 lakhs and therefore, the Circular No. 3/2018 dated
11.07.2018 issued by the Central Board of Direct Taxes (CBDT) in
exercise of its power vested under Sec. 268A(1) of the IT Act comes
into play wherein, the monetary limit for filing the appeal by the
Revenue before the ITAT and various High Courts as well as Apex
Court are revised with an object of the reducing the tax litigation. Vide
para 3 of the said circular (supra) it is stated that in cases where the
tax effect in the appeals to be filed before the Appellate Tribunal does
not exceed Rs. 20 lakhs appeals should not be filed. Thus taking a
note of CBDT Circular No. 03/2018, dated 11.07.2018 and considering
the fact that the tax effect in the instant appeal is less than Rs.20
lakhs, the present appeal deserves to be dismissed as not pressed /
not maintainable. However, we make it clear that the issues raised in
the instant appeal is left open to be examined in the appropriate
proceedings, if arises, in future. At the same time, we also make it
clear that if the appeals fall in any of the exceptions referred to in the
ITA Nos.337 & 338/19 :- 7 -:
above said CBDT Circular, the Revenue is at liberty to move an
application for recalling the order if so advised. Accordingly, in the
light of CBDT circular No.03/2018 dated 11/07/2018, the appeal stands
dismissed.
In the result, the appeal of the Revenue in ITA 15.
No.338/CHNY/2019 for assessment year 2014-2015 is dismissed.
To summarize the results, the appeal of the Revenue in ITA 16.
No.337/CHNY/2019 for assessment year 2013-014 is partly allowed for
statistical purpose whereas the appeal of the Revenue in ITA
No.338/CHNY/2019 for assessment year 2014-2015 stands dismissed.
Order pronounced on 8th day of August, 2019, at Chennai.
Sd/- Sd/ (जॉज� माथन) (इंटूर� रामा राव) (GEORGE MATHAN) (INTURI RAMA RAO) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER
चे�नई/Chennai �दनांक/Dated: 8th August, 2019. KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF