VRM SHARE BROKING P. LTD,MUMBAI vs. ACIT RG 4(2), MUMBAI

This appeal by the assessee is directed against the order of the CIT(A)- 9, Mumbai dated 08.01.2015 for A.Y. 2008-09.

1. The Learned CIT(A) has erred in law and in fact in partially confirming the impugned order u/s 154 r.w.s. 143(3), which is contrary to the provisions of the Act.

2. The Learned CIT(A) has erred in law and in fact in affirming the action of assessing officer and levying of tax to extent of Rs.37,50,386/- (Rs. 40,94,441/- Less Rs.3,44,055/-) after the completion of scrutiny assessment u/s. 143(3) of the I.T. Act, 1961.

3. The Learned CIT(A) has erred in law and in fact in confirming the disallowance of the STT of Rs.22,20,547/- (Rs.25,64,602/- Less Rs.3,44,055/-) paid by the assessee on the share transactions.

4. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.”

4. Ground at Sr. Nos 2 & 4 4.1 At the outset of the hearing, the learned A.R. of the assessee submitted that the grounds at Sr. Nos 2 and 4 (supra) are general grounds, not calling for any adjudication thereon. In this view of the matter, grounds 2 and 4 are rendered infructuous and accordingly dismissed.

5. Ground No. 1 – Validity of proceedings/order under section 154 r.w.s. 143(3) of the Act. 5.1.1 In this ground, the assessee challenges the validity of the order passed by the AO under section 154 r.w.s. 143(3) of the Act dated 22.03.2013 for A.Y. 2008-09, which has been partially upheld by the learned CIT(A) by the impugned order. According to the learned A.R. of the assessee, this technical issue was raised before the learned CIT(A), both at ground No. 1in the original grounds (extracted at para 1.2 of the impugned order of the learned CIT(A)) and by way of written submissions dated 22.10.2013, wherein the assessee had filed revised grounds and the same issues were raised contending that the AO had erred in law and on facts in revising the amount of rebate under section 88E of the Act under section 154 of the Act without appreciating that there was no mistake apparent M/s. VRM Share Broking P. Ltd. from the record at grounds 1 and 3 thereof. It was submitted that a perusal of the impugned order would evidence that the learned CIT(A) has not adjudicated ground No. 1 of the original grounds stating, inter alia, that the same was not pressed by the learned A.R. and therefore dismissed; which is factually incorrect. Further, perusal of the impugned order would also show that the revised ground raised at Sr. No. 3 as per the written submissions dated 22.101.2013 (placed in paper Book at pg. 17 to 42) challenging the validity of the order under section 154 r.w.s. 143(3) of the Act dated 22.03.2013 before the CIT(A) in the course of appellate proceedings, has been ignored and not adjudicated upon by the learned CIT(A). 5.1.2 The submissions dated 22.10.2013 put forth before the learned CIT(A) at paras 14 to 21 thereof have been strongly reiterated by the learned A.R. According to the learned A.R. the invocation of jurisdiction under section 154 of the Act was void and bad in law as the order of the assessment for A.Y. 2008-09 dated 30.10.2010 did not contain any mistake apparent from the record, which are glaring and patent, requiring no elaborate discussions with respect to evidence or arguments. It is contended that the rebate under section 88E of the Act granted to the assessee was after thorough scrutiny and verification of relevant records, after which the AO taking note of the second proviso to section 88E(1) read with sub-section (2) thereof had restricted the rebate to `1,22,15,102/- as `1,30,02,755/- against claimed by the assessee. Therefore, the proceedings under section 154 of the Act invoked by the AO clearly amounts to a relook at facts and evidence resulting in a review of the order of assessment which is to be held as invalid and bad in law, since the issue involves debatable point of law and is consequently beyond the purview of the provisions of section 154 of the Act. In support of the proposition that the order passed by the AO under section 154 r.w.s. 143(3) of the Act dated 22.03.2013 for A.Y. 2008-09 is to be held invalid and bad in law, the assessee placed reliance, inter alia, on the following judicial pronouncements: - (i) Banwari Lal Tlusyan vs. Income Tax Officer (ITA No. 115/Kol/2011 dated 05.08.2011)

M/s. VRM Share Broking P. Ltd. (ii) ACIT vs. Kedar Nath Agarwal (ITA No. 421/Kol/2011 dated 14.10.20111) 5.2 Per contra, the learned D.R. placed strong reliance on the orders of the authorities below. 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. The facts of the matter as emanate from the record are that in the order of assessment for A.Y. 2008-09 passed under section 143(3) of the Act vide order dated 30.11.2010, the AO after specifically examining the assessee’s claim for being allowed `1,30,02,755/- as rebate under section 88E of the Act, allowed the assessee rebate thereunder only to the extent of `1,22,15,102/- after scrutiny and verification of the relevant records and the express provisions of law at paras 4.1 and 4.2 of the said order. 5.3.2 On appeal, we find from a perusal of the impugned order that the learned CIT(A) did not address this issue raised in the original grounds of appeal

(extracted at para 1.2 of the impugned order) brushing them aside as being not pressed. It is also seen that the learned CIT(A) has not acknowledged or adjudicated this very issue, challenging the validity of the order of the AO passed under section 154 r.w.s. 143(3) of the Act on 22.03.2013, in ground No. 3 of the revised ground raised in submissions dated 22.10.2013 (placed at pg. 17 to 42 of the assessee’s paper book). 5.3.3 In this regard we find that on identical facts, in respect of rebate under section 88E of the Act, the ITAT, Kolkata ‘A’ Bench in the case of ACIT vs. Shri Kedar Nath Agarwal in dated 14.10.2011 and Banwari Lal Tulsyan vs. ITO in ITA No. 115/Kol/2011 dated 05.08.2011, holding that the issue of disallowing the claim of expenses while recomputing the rebate under section 88E of the Act being highly debatable and beyond the purview of the provisions of section 154 of the Act; they therefore quashed the rectification order. In the case of Banwari Lal Tulsyan (supra) the ITAT, Kolkata ‘A’ Bench held as under at para 4 thereof: -

4. We find that the Assessing Officer has initiated rectification proceedings u/s 154 of the Act to re-compute rebate u/s 88E of the Act by disallowing the claim of expenses incurred wholly and exclusively