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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI ASHWANI TANEJA
Date of hearing : 17-01-2017 Date of order : 07 -02-2017
O R D E R
Per ASHWANI TANEJA, AM:
This appeal has been filed against the order of the Commissioner of Income-tax (Appeals)-52, Mumbai [hereinafter called CIT(A)] dated 28-01- 2015 passed against the assessment order u/s 143(3) r.w.s. 147 of the Act dated 30-1-2006 for A.Y. 2002-03 on the following grounds:- “
Grounds of appeal against the order dated 28.01.2015 u/s 250 of the Act passed by the learned Commissioner of Income-tax (Appeals) -52, Mumbai. Following grounds of appeal are without prejudice to each other.
1. The Ld. CIT(A) has erred in law and in facts in confirming the addition to the tune of Rs.2,09,77,827/- on account of unexplained entries in the bank account of the
2. The Ld. CIT(A) has erred in law and in facts in directing the Assessing Officer that the dividend income of Rs.7,02,45,3661- (Rs.6,39,42,574/- + Rs.63,92,792/-) is liable to tax in the hands of the appellant without appreciating that the dividend income in the year under appeal was exempt u/s. 10(33) of the Act.
3. The Ld. Commissioner of Income-Tax (Appeals) has erred in law and in facts that in confirming the levy of interest u/s. 234A, 234B and 234C of the Act.
4. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in not appreciating that the income assessed in the hands of the appellant were subjected to the provisions of TDS and hence on the said amount of tax no interest can be computed u/s 234A, 234B and 234C of the Act.”
Ground 1 : In this ground, the assessee is aggrieved with the action of the lower authorities in making addition to the tune of Rs.2,09,77,827 on account of unexplained entries in the bank account of the assessee.
In this case, the Ld. Counsel submitted at the very outset during the course of hearing that on this issue addition was made because of want of requisite details and supporting evidences which could not be furnished for the reason that all the books of account and documents were kept in the custody of the custodian as per order of Civil Court. Admittedly, primary responsibility of providing the documents and evidences is upon the shoulders of the assessee, but in the peculiar facts of this case, this obligation could not be discharged as the books of accounts and other documents were held in the custody of the Custodian. Therefore, if an opportunity is given, then these details can be brought on record before
AO. He placed reliance on the order of the Tribunal in the case of Hitesh S Mehta & Pratima H Mehta, who are family members of the assessee wherein identical issue was sent back to the file of the Ld. CIT(A) under identical circumstances. It was requested that this issue is also required to be sent back to the file of the lower authorities.
Per contra, Ld. Special Counsel submitted that though this case may be sent back to the file of the Ld. CIT(A), but the primary responsibility of bringing evidences should be on the shoulders of the assessee.
We have gone through the orders passed by the lower authorities. It is noted that during the course of assessment proceedings, assessee was required by the AO to furnish details and evidences with respect to credit entries in the bank account. But since assessee could not furnish requisite details and documentary evidences, therefore AO made an addition of Rs.108,79,67,118 under the head ‘suspense account’ being aggregate of the credit entries appearing in bank accounts of the assessee. During the course of hearing before the Ld.CIT(A), assessee gave details and evidences with respect to various entries in the bank accounts. The Ld. CIT(A) called for remand report from the AO with respect to each and every entry. In response, the AO submitted remand report wherein it was observed by him that all the entries were stood explained by the assessee except entries to the extent of Rs.2,09,77,827. The break-up of the same has been provided by Ld. CIT(A) on page 10 of his order. Accordingly, Ld. CIT(A) sustained the addition to this extent and deleted the balance addition made by the AO. It has been stated before us that these entries are also duly explained and these amounts do not represent undisclosed income of the assessee. But since all the documents were in the custody
Custodian, therefore, desired details and documents etc. could not be furnished to the AO.
It is brought to our notice that similar situation arose in the case of other family members. It is noted that in the case of Hitesh S Mehta vs DCIT, the ITAT, vide its order dated 12-06-2013 disposed of similar issue as under:- “ 6. There is no other ground in the appeal of the assessee for assessment years 1994-95, 1995-96 and 2008-09. However, there are two more grounds in appeal of the assessee for assessment year 2001-02 i.e. grounds No.3 & 4, which relate to confirming the addition of interest income and confirming the addition on account of suspense entries at Rs.15,67,491/- and Rs,2,79,396/-, respectively. 6.1 In respect to these grounds, the learned counsel of the assessee stated that the AO as well as learned CIT(A) has made and confirmed these additions by observing that onus lay upon the assessee remained undischarged. It was submitted that all the details are lying with the custodian and this is not possible to the assessee to get the details from custodian. The assessee written various letters to the custodians also, copies of which are placed in compilation at pages 1 to 5. It was stated that time and again the assessee tried to get the details from the custodian but could not get the details. Accordingly, it was requested that the matter should be sent back to the file of the CIT(A) and to collect the details from custodian and thereafter the issue should be decided accordingly. 6.2 on the other hand, learned DR stated that ample opportunities have already been given and since no details could be filed on behalf of the assessee, therefore, this will be a futile exercise if the appeal is sent to the file of CIT(A) once again. 6.3 After considering the rival submissions and considering the material on record, we found that this issue needs
CIT(A). Learned CIT(A) has dismissed the ground of the assessee by observing in para 8.2(iii) at page 6, which are as under :- "(iii) In respect of the item at sr. no-2 to 4, the appellant has merely claimed that the same represents dividend income of the appellant. He has however, pleaded before the Assessing Officer that the said evidence is not in his possession and hence the same may be obtained from the custodian. / find that the onus to explain the deposit entry is on the appellant and hence unless the burden of proving the deposit is discharged, the onus does not shift on the Assessing Officer it is seen that no evidence is filed in respect of the claim of the appellant that the amount of Rs.37, 715/-, Rs.2,54,500/- and Rs 6,80,500/- does not represent interest income. In the light of the, same, the said addition of the '' said amounts as interest income is confirmed." After going through the finding of the learned CIT(A),'we found that the learned CIT(A) should have obtained the details from custodian as the custodian appointed by the Special Court,. is not obliged to assessee by providing necessary details in spite of various requests made on behalf of the assessee. Copies of requests are placed on record. In view of the above facts and circumstances of the case, we set aside this issue to the file of the CIT(A) to decide the issue afresh after obtaining necessary details from the custodian and after affording opportunity of hearing to the assessee. We order accordingly.”
Similarly, in the case of Mrs Pratima H Mehta also, the Tribunal vide its order dated 28-08-2013 following the order of Nitesh S Mehta, supra, remitted this matter to the file of the Ld. CIT(A). We find that facts circumstances of the case before us are identical to the one as has been already dealt by the Tribunal in aforesaid cases. Therefore, following these orders and in the interest of justice and fairness, we remit this Ld. CIT(A) with the same directions as has been given in these cases. We order accordingly. Ground 1 may be treated as allowed for statistical purposes.
Ground 2 : In this ground, the assessee is aggrieved with the action of Ld.CIT(A) in holding that dividend income of Rs.7,02,45,366 was liable to be taxed in the hands of the assessee notwithstanding the claim of the assessee that dividend income in the impugned order was exempt u/s 10(33) of the Act. It is noted that Ld. CIT(A) in his order at paragraph 18 on page 11 has merely mentioned that dividend income of aggregate amount of Rs.6,39,42,574 + 63,02,272 is also liable to be taxed in the hands of the assessee. No reasoning has been given by Ld. CIT(A) as to how and why dividend income was taxable during the year. It is brought to our notice that assessee has filed rectification application dated 26-02- 2015 to Ld. CIT(A) pointing out the mistake apparent on record and requesting that dividend income was not liable to be taxed and was exempt u/s 10(33) in the impugned year, therefore, addition made by the AO should be deleted. It is informed that rectification application has still not been disposed of. It is further brought to our notice that the Ld. AO in his remand report dated 02-12-2013 confirmed this fact that the impugned amounts are actually dividend income of the assessee. Thus, the addition confirmed by Ld. CIT(A) was contrary to law and facts once the fact that these amounts are actually dividend income of the assessee was brought on record by the AO by way of the remand report.
Per contra, the Ld. Special Counsel fairly submitted that this issue may be sent back to the file of Ld. CIT(A) for proper examination.
We have gone through the orders of the lower authorities and also submissions made before us. It is noted that the Ld. AO has mentioned in the assessment order that the impugned amounts represent dividend income. Under these circumstances, Ld. CIT(A) ought to have dealt with this issue with proper reasoning. Whereas, no reasoning at all has been given by Ld. CIT(A) while confirming addition of these amounts. Therefore, we send this issue back to the file of Ld. CIT(A) with the direction to consider the details and documentary evidences as may be brought on record by the assessee and adjudicate this ground afresh after affording opportunity of hearing to the assessee. With these directions, this issue is sent back to the file of CIT(A). Thus, Ground 2 may be treated as allowed, for statistical purposes.
Grounds 3 & 4 deal with levy of interest u/s 234A, 234B and 234C. During the course of hearing, the Ld. Counsel stated at the very outset that this issue is covered by the decision of the Tribunal given in case of group company of the assessee, biz. M/s Growmore Exports Ltd vs DCIT (ITA No.4358/Mum/2013) dated 08-02-2016 and therefore this order should be followed. The Ld. Special Counsel did not point out any distinction in facts or legal position.
We have gone through the orders passed by lower authorities and find that identical issue has been decided by the Tribunal in the case of M/s Growmore Exports Ltd (supra). Relevant part of order of the Tribunal is reproduced below:- “11. Ground No 6 relates to levy of interest u/s 234A, 234B and 234C of the Act. The Id. Counsel for the assessee company submitted that interest u/s 234A, 234B and 234C is mandatory but the interest liability is to be calculated after
taking into account tax deducted at source. The Ld. Counsel for the assessee company relied upon decisions of the Tribunal in the case of DCIT v. Smt Rasila S. Mehta in vide orders dated 21. 10.201.5, Divine Holding Pvt. Ltd. v. ACIT in ITA no. 560/Mum/20 1.3 dated 21.10.2015 and Aatur Holdings Private Limited v. DCIT in ITA no. 846, 1032 & 147/ Mum/ 20 1 0 dated 23-09-2015, whereby Tribunal has restored the issue to the file of the learned assessing officer who would levy the interest as per provisions of Section 234 after reducing the amount of tax deductible at source and decide as per the provision of law. The Tribunal’s decision in ITA no. 846,1032,2147/Mum/ 2010 dated 23.09..2015 is reproduced below:- “6. Last ground of appeal for all the three assessment years pertain, to levy of interest u/s 234A, 234B and 234C of the Act. Before us, the representative of both the sides agreed that identical issue was decided in the cases of Topaz Holdings Pvt. Limited ( ITA/21461/Mum/2013, A. Y. 2002 -02 dt. 78.06.2014) and Eminent Holdings Pvt. Ltd. (ITA/2139/Mum/2013 A.Y.2002-03, dated 18.06.2014) that the Tribunal had upheld the levy of interest in principal, that it had set aside the issue for calculating the interest to the file of the AO) with direction that the tax deducted at source should be reduced while calculating the interest. We find that the issue was discussed in the case of Eminent Holdings Pvt. Ltd. (supra) as under:
5. Next ground of appeal is about levy of interest u/s. 234 of the Act. Before us, AR stated that the assessee was a notified entity, that the provisions of s. 234A234.B and 234C of the Act were deemed to have complied with, that the assets were already in attachment of the Custodian appointed under the provisions of the .3'ecial Courts Act, that the Tribunal in the case of the appellant and several other entities had held the view in favour of the appellant that the Hon’ble Bombay High, Court in the case of Divine Holdings Pvt. Lid. and Cascade Holdings Pvt. Ltd, had held that the provisions of sections 234A, 234.8 and 234C of the Act were mandatory and were applicable to the notified entities also that the assessee was in the process of filing an appeal against the said order before the Hon’ble Supreme Court , that the income earned in the year under consideration was subjected to the provisions of TDS, that the chargeability of section 234A, 234B and 234C of the Act should be after considering the amount of tax deductible at source on the income assessed. The appellant relies in this regard on the following decisions. He relied upon the cases of Motorola Inc. vs DCIT (95 LTD 269(Del)( SB). Sedco Pores Drilling Co. Ltd. (264 ITR 320), NGC Network Asia LLC (313 ITR 187). Summit Bhatacharya (300 ITR (AT) 347 (Bom)(SB), Vijay Gopal Jindal (ITA No. 4333/Del/2009) & Emillo Ruiz Berdejo (320 ITR 190(Bom). DR relied upon the cases of Divine Holdings Pvt. Ltd. 3.1 We have heard the rival submissions and perused the material before us. We find that in the case of Divine Holdings Put. Ltd..Hon’ble Bombay High Court has held that provisions of Section 234A, 234B and 234C were applicable to the notified person also. Therefore, upholding the order of the FAA to that extent, we hold that- provisions of Section 234 of the Act are applicable. As far as calculation part is concerned, we find merits in the submission made by the assessee. Therefore, we are restoring back the issue to the file of the AO for fresh adjudication who would decide the issue after considering the amount taxed deductible at source on the income assessed and after affording a reasonable opportunity of hearing to the assessee. Ground no. 5 is allowed in part in favour of the assessee. Respectfully following the above order we restore back the issue to the file of the AO who would levy the interest as per the provisions of section 234 of the Act and give credit for the TDS amounts. Ground no, 6 for all the three A. Y s Stands partly allowed.” The Ld. Counsel for the assessee company submitted that the Tribunal has in the assessee company's own case has adjudicated the issue in for assessment year 2003-04, vide orders dated 18. 12.2014 as under: 9. Ground No.5 relates to charging of interest u/s 234A and 234B of the Act. In connection with the charge of interest u/s 234B of the Act, Ld. Counsel for the assessee submitted that the assessee being a 'notified person there is no charge of interest. it is his further submissions that the receipts- of the assessee are subjected to TDS.
On the contrary, Special Counsel for the Revenue flied various decisions of the Tribunal in support of charge of interest. The judgment of the jurisdictional High Court in the case of CIT vs. Divine Holding Pot, Ltd. was relied on by the Spl. Counsel for the Revenue. During the rebuttal time, Ld. Counsel submitted that this issue should also revisit the file of the AO for removal of certain inaccuracies in calculating the interest. We order accordingly. Thus, ground no. 6 is allowed for statistical purposes. 10. in the result, assesses's appeal is partly allowed for statistical purposes.' Ld. Special counsel of the Revenue submitted that the leviability of interest u/s 234A 234B and 234C of the Act is mandatory. He Relied upon decision of the Hon'ble jurisdictional High Court in the ease of Divine Holdings Private Limited in of 2010, whereby Hon’ble Bombay High Court has held that in case of notified parties under the Special Court Act interest u/s 234A, 234B and 234C of the Act has to be levied, and contended that the interest u/s 234 is mandatory. After hearing both the parties and carefully considering the material on records including relied upon case, Respectfully following the above order's of the Tribunal we restore the issue back to the file of learned, assessing officer who would levy interest as per provisions of Section 234 of the Act and give credit for the TDS amount. We order accordingly.”
Both the parties jointly stated that aforesaid order is applicable on the facts of the case before us. Therefore, following the order, we send this issue back to the file of the AO with the same directions as have been given in the aforesaid order. The AO is directed to follow the order and decide the same afresh after giving adequate opportunity of hearing to the assessee. The assessee shall also be free to raise all legal and factual issues in this regard. This ground may be treated as allowed for statistical
In the result, the appeal of the assessee is treated as partly allowed for statistical purposes.
Order was pronounced in the open court at the conclusion of the hearing.