PREMCHAND ROYCHAND & SONS P.LTD,MUMBAI vs. ASST CIT RG 12(1), MUMBAI

(A.Y. 1998-99) Premchand Roychand & Sons Private Limited vs. Asst. CIT 2. The only issue in this appeal, projected per Grounds 1 to 4, is whether the order giving appeal effect determines the income correctly, i.e., on the basis of the different orders on record. This is as the assessee claims that a sum of Rs.19,61,375/- (comprising two amounts, i.e., Rs.15,18,153/- & Rs.4,43,222/-) has been wrongly included while assessing its income for the year vide assessment u/s. 143(3) dated 30.03.2001 (PB pgs. 17-26). The sum of Rs.15,18,153/- (being municipal tax and office maintenance expenses – Rs.42,149/- and Madhu Kunj Property expenses - Rs.14,76,004/-), debited to the profit and loss account, had been disallowed suo motu by the assessee while returning its’ business income (at a loss of Rs.8,85,435/-) (refer computation of income at PB pg. 13), which figure had been adopted in the assessment order (at page 6). There was thus a double disallowance of the said sum (Rs.15,18,153/-). Further, another sum of Rs.4,43,222/- had been disallowed in assessment toward an assumed excess rent received on Madhukunj Property. Accordingly, rectification application was moved by the assessee on 04.05.2001 (PB pgs. 27-28), which was allowed by the Assessing Officer (A.O.) vide order u/s. 154 dated 27.12.2001. Though the assessee had in fact also appealed against the said disallowance to the first appellate authority, raising a specific ground in its respect (Gd. # 8), the same was not pressed inasmuch as the issue had been settled vide the said rectification order. However, while giving appeal effect – the matter in appeal travelling up to the tribunal, vide order dated 16.12.2013, the A.O. proceeded by taking the income as had been determined vide assessment order dated 30.03.2001, i.e., disregarding the rectification afore-said. The matter was appealed against, but the ld. CIT(A) declined interference, stating that the assessee had failed to produce the rectification order dated 27.12.2001. Though the assessee has applied for the same to the A.O., it has not been received even to date, and is awaited. The Revenue’s case, as pleaded by the ld. DR, on the other hand, is that there is no infirmity in the impugned order in-as-much as the assessee had failed to produce (A.Y. 1998-99) Premchand Roychand & Sons Private Limited vs. Asst. CIT the rectification order u/s. 154 on the basis of which it claims relief. Appropriate instructions in this regard could be issued.

The parties have been heard, and the material on record perused. The issue in appeal is not with regard to the validity or otherwise of the disallowance of Rs.19.61 lacs, i.e., on merits, but whether the appeal effect giving order dated 16.12.2013 computes the assessee’s income correctly, i.e., in terms of the different orders having a bearing on the quantification of its income for the relevant year. Further, irrespective of whether the assessee has been able to produce the rectification order dated 27.12.2001 - which it admittedly has not, or not, it is only the assessing authority who would give effect to the relevant orders - appellate as well as rectification, as on this record, and only in terms thereof. As such, how is the non- production by the assessee - who claims to have not received the said rectification order, thereof, relevant? All that the ld. CIT(A) was required to do was to direct the A.O. to compute the assessee’s income for the relevant year by proceeding from the income as determined prior to the appellate order/s which is sought to given effect to vide his order dated 16.12.2013. Though the assessee has before the tribunal also raised another issue (vide Ground No. 3) by stating that the addition for Rs.4.43 lacs (forming part of Rs.19.61 lacs) could not sustained subsequent to the order (dated 18.07.2012) by the tribunal, no argument in its respect was made before the Bench nor, consequently, responded to by the ld. DR. The said issue was not even raised before the ld. CIT(A). The same would in fact not survive where the disallowance of Rs.19,61,375/- itself has been deleted, i.e., as claimed, vide order u/s. 154 dated 27.12.2001. In view of the foregoing, the A.O. is directed to compute the assessee’s income for the relevant year by giving due effect to the order u/s. 154 dated 27.12.2001, also furnishing one copy of the same, where not already so, along with the order giving appeal effect to this order, to the assessee.

In the result, the assessee’s appeal is partly allowed. Order pronounced in the open court on November 18, 2015