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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI D.KARUNAKARA RAO (AM) & SHRI. RAM LAL NEGI (JM)
This appeal has been filed by the assessee against order dated 30/05/2014 passed by the Ld. CIT (Appeals)-40, Mumbai for the assessment year 2003-04, whereby the Ld. CIT(A) partly allowed the appeal filed by the assessee against assessment order dated 30/11/2006 passed u/s 144 read with sec. 147 of the Income Tax Act, 1961 (in short ‘the Act’).
Brief facts of the case are that the appellant/assessee a notified person under the Special Court (Trial of Offences relating to Transactions in Securities.) Act, 1992 failed to file her return of income for the year under consideration. Accordingly, AO issued notice u/s 148 of the Act to bring the escaping income to tax. Since the assessee did not respond, the AO issued notice u/s 142(1) of the Act calling for various details. AO also called for the details from the custodian appointed under the Special Court Act and the concerned Banks and completed the assessment u/s 144 read with section 147 of the Act, determining the total income of the assessee at Rs.14,93,70,590/- on the basis of information and details available with him.
3. The assessee is in appeal before the Tribunal against the impugned order passed by the Ld. CIT(A) on the following effective grounds:-
“1. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in assessing a sum of Rs. 5,28,581/- as the Income of the Appellant under the head of ‘suspense account’.
2. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in not allowing the deduction on account of interest expense amounting to Rs. 4,71,67,190/-
3. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in charging interest u/s 234A, 234B and 234C of the Act.
4. The learned 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.”
4. At the outset, the Ld. Counsel for the assessee submitted that ground No 1 of the appeal is similar to one of the issues decided by the ITAT Mumbai Bench in the case of Sh. Hitesh S. Mehta vs. DCIT the ITAT (ITA No 5587 to 5589/Mum/2011) for the assessment years 1994-95, 1995-96 and 2001-02. The Tribunal vide its order dated 12.6.2013 set aside the said issue to the file of CIT(A) for fresh adjudication.
So far as ground No 2 of the appeal is concerned, the Ld. Counsel submitted that this issue is identical to the issues involved in the assessee’s own case Mum/2013 for the AY. 2008-09 and the ITAT has set aside the similar issue to the file of Ld. CIT(A) for adjudicating the issues afresh.
The Ld. Counsel further submitted that ground No 3 & 4 are covered by the decision of the ITAT rendered in assessee’s own case Mum/2013 for the AY. 2008-09 whereby the Tribunal upholding the livability of penalty in principle set aside the issue to the file of AO for calculation of interest with the direction to reduce the tax deductable at source while calculating interest.
The Ld. departmental representative though did not dispute the facts brought to our notice by the Ld. Counsel for the assessee, however, relying on the findings of the Ld.CIT(A), submitted that there is no infirmity in the impugned order to interfere with the same.
We have heard the rival submissions and perused the material placed before us in the light of the respective contentions of the parties. We notice that the issue raised in the first ground of appeal is similar to one of the issues raised in the case of Sh. Hitesh Mehta vs. DCIT in for the AY 2001-02 and the coordinate Bench vide order dated 12.6.2013 has set aside the said issue to the file of the Ld. CIT(A) holding as under:-
“ After going through the findings 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 request 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 the 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. ”
Hence respectfully following the decision of the coordinate Bench aforesaid, we set aside this issue to the file of the Ld. CIT(A) to adjudicate this issue afresh in accordance with the observations of the coordinate Bench in the case of Sh. Hitesh Mehta vs. DCIT(supra). Hence, ground No 1 is allowed for statistical purposes.
10. Ground No 2 of this appeal pertains to deduction on account of interest expenses. We notice that this issue is identical to the issue decided by the coordinate Bench in assessee’s own case for AY 2008-09. Vide order dated 29.4.2016 the coordinate Bench has set aside the said issue to the file of Ld. CIT(A) for fresh adjudication. The relevant portion of the decision reads as under:- “9. we have considered the submissions of the parties and perused the material available on record. As could be seen, the learned Commissioner (Appeals) has disallowed the interest expenditure on the ground that assessee’s entitlement can only be decided after the decision of the special Court on the issue.
However, it is observed in case of Pratima H. Mehta (supra), the coordinate bench while deciding similar issue has held as under:- “3. Ground No 4 relates to the disallowance of interest expense. The Ld. Counsel for the assessee brought to our notice that the decision relied upon by the Ld.CIT(A) while disposing this ground has been set aside by the Tribunal to the file of the Ld. CIT(A).
4. The Ld. Departmental Representative could not bring any distinguishing decision in favour of the Revenue.
5. We have carefully perused the orders of the authorities below. While disposing the ground relating to the disallowance of interest, we find that theLd. CIT (A) has followed the findings even in case of Eminent Holdings Pvt. Ltd. We find that the Tribunal in the case of Eminent Holdings in 2140 and 2141/Mum/2013 have followed the decision of the Tribunal given in common group case of Hitesh S. Mehta at para 2.3 of the order and restored the matter to the file of the Ld. CIT (A) for fresh adjudication. Respectfully following the findings of the coordinate bench, we restore this issue to the file of the Ld.CIT(A) for fresh adjudication after giving reasonable opportunity of being heard to the assessee.
6. Before closing this issue, the Ld. Counsel for the assessee pointed out that the Ld. CIT (A) has held that the issue of interest expenditure is pending before the Hon’ble special Court. It is this a of the Ld. Counsel that the proceedings in which the said issue of interest was issued by the custodian have been already concluded which fact has already been recorded by the Ld. CIT (A) in the impugned order. We, therefore direct the Ld. CIT (A) to consider this fact while deciding the issue afresh. The LD. CIT (A) may also direct for the taxing of income in the hands of the recipient (family members) in accordance with the method of accounting followed by them and as per the provisions of the law. Ground No 4 is treated as allowed for statistical purpose”
Ld. Special counsel did not control what to such contention of Ld. AR that the issue is covered by the aforementioned decision.
In view of the situation, after hearing both the parties, we pass similar order and this ground is considered to be allowed for statistical purposes in the matter aforesaid”
Consistent with the view taken by the coordinate bench is aforesaid, we restore the matter back to the file of the learned Commissioner (Appeals) for deciding afresh keeping in view the directions of the coordinate bench as referred to hereinabove. Thus, ground No 2 is allowed for statistical purposes.”
We therefore, respectfully following the decision of the coordinate Bench passed in aforesaid case restore this issue to the file of the Ld. CIT(A) for fresh adjudication in accordance with the observations made by the coordinate Bench in the aforesaid case. Ground No 2 is accordingly allowed for statistical purposes.
Ground No 3 & 4 pertain to interest charged u/s 234A, 234B, 234C of the Act. We notice that the coordinate bench has restored back the identical issue in assessee’s own case for the assessment year 2008-09 by following its earlier view taken in similar case holding as under:- “23. Consistent with the view taken by the tribunal is aforesaid, we direct the Assessing Officer to compute the interest under section 234B and 234C while giving effect to the order of the learned Commissioner (Appeals) in terms of directions contained hereinabove. Ground number 4 and 5 are allowed for statistical purposes.”
It is pertinent to mention here that in the said case the assessee had challenged the chargeability of interest under sections 234A, 234B and 234C of the Act. In the present case the assessee has raised the identical issues vide ground No 3 and 4. Therefore, respectfully following the view taken by the coordinate bench, we restore ground number 2 and 3 of the appeal to the file of the AO with the direction to compute the interest under sections 234B and 234C while giving effect to the order of the learned Commissioner (Appeals), taking into consideration the relevant decisions on this issue. Accordingly ground No 3 and 4 of the appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee for the assessment year 2003 – 04 is allowed for statistical purposes.