ARYA TEXTURISERS & TWISTER,MUMBAI vs. ASST CIT 14(2), MUMBAI

This appeal by the assessee is arising out of the order of the CIT (A)-25, Mumbai passed in appeal No.CIT (A)-25/IT-389/14(2)/09-10 dated 23-05-2011. Assessment was framed by the ACIT, Circle-14 (2), Mumbai for assessment year 2007-08 vide his order dated 23-11-2009 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

At the outset, the learned Counsel for the assessee stated that the AO has made the following disallowances:- “Ground No.1: Disallowance of deferred revenue expenses of Rs.1,05,240/- Ground No.2: Disallowance of non verifiable expenses of Rs.43,823/- Ground No.3: Disallowance of expenditure u/s. 14A of Rs.15,64,080/-.” The learned Counsel for the assessee took us through the assessment order and the order of the CIT (A) and stated that both the authorities below has wrongly relied on agreed addition by the Accountant of the assessee firm. The learned Counsel for the assessee stated that the assessee’s AR before the AO filed an Affidavit in support of his affirmation that there was no agreement for addition but the CIT (A) overlooked this fact. The learned Counsel for the assessee relied on the decision of the Hon’ble Supreme Court in the case of CIT Vs B. N. Bhattacharjee and Another [(dated 4th May, 1979) 1984 SC 420 (38)] and stated that there is no estoppels against the Law and Rule or estoppels cannot override the statutory mandate. According to him, the assessment should have been framed based on the materials available before him and as per the provisions of Law. When these facts were confronted to the learned Sr. DR, he fairly conceded that all the three issues can be remitted back to the file of the AO for framing fresh assessment as these issues have never been examined by the lower authorities. In terms of the above, we remit all the three issues back to the file of the AO for fresh adjudication in terms of the Law, after allowing reasonable opportunity of being heard to the assessee. Orders of the lower authorities are set aside and the appeal of the assessee is allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 15/06/2016.