ITO, New Delhi v. Khemka Aviation Pvt. Ltd., New Delhi

ITA 1337/DEL/2013 | 2004-2005
Pronouncement Date: 11-11-2014 | Result: Allowed

Appeal Details

RSA Number 133720114 RSA 2013
Assessee PAN AAACK2196A
Bench Delhi
Appeal Number ITA 1337/DEL/2013
Duration Of Justice 1 year(s) 8 month(s) 4 day(s)
Appellant ITO, New Delhi
Respondent Khemka Aviation Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2014
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 11-11-2014
Date Of Final Hearing 11-11-2014
Next Hearing Date 11-11-2014
Assessment Year 2004-2005
Appeal Filed On 07-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER & SHRI T.S. KAPOOR ACCOUNTANT MEMBER ITA NO. 1337/DEL/2013 ASSESSMENT YEAR: 2004-05 ITO VS. KHEMKA AVIATION PVT. LTD. WARD 5(2) M-41/4 & 5 SPEED BIRD HOUSE NEW DELHI. CONNAUGHT CIRCUS NEW DELHI. AAACK2196A (APPELLANT) (RESPONDENT) & ITA NO. 1544/DEL/2013 ASSESSMENT YEAR: 2004-05 KHEMKA AVIATION P. LTD. VS. ITO M-41/2 SPEED BIRD HOUSE WARD 5(2) CONNAUGHT PLACE NEW DELHI. NEW DELHI. AAACK2196A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. GAURAV DUDEJA SR. DR RESPONDENT BY : SH. K.C. SOOD CA ORDER PER H.S. SIDHU J.M. THE REVENUE AS WELL AS THE ASSESSEE FILED THE PRE SENT APPEALS AGAINST THE IMPUGNED ORDER DATED 26/12/2012 PASSED BY THE CIT(A)-VIII NEW DELHI FOR THE A.Y. 2004-05 ON THE FOLLOWING GRO UNDS:. GROUNDS OF REVENUES APPEAL ITA NO. 1337/D/13 : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN RESTRIC TING THE DISALLOWANCE U/S 14A OF THE I.T. ACT TO 2% OF THE ADMINISTRATIVE AND OTHER EXPENSES CLAIMED AT RS. 1 03 51 957/- WHICH AMOUNTS TO RS. 2 07 039/- WITHO UT ANY BASIS AS AGAINST RS. 60 22 615/- AS WORKED OUT BY T HE AO? ITA NOS. 1337 & 1544/D/2013 KHEMKA AVIATION PVT. LTD. 2 2. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AME ND ANY GROUND OF THE APPEAL RAISED ABOVE AT THE TIME OF TH E HEARING. GROUNDS OF ASSESSEES APPEAL ITA NO. 1544/D/13 : 1. THAT THE AUTHORITIES BELOW HAVE NOT CORRECTLY APPR ECIATED THE LEGAL AND FACTUAL POSITION INVOLVED IN THE APPE LLANTS CASE. 2. THAT NO ACTION IS LEGALLY JUSTIFIED TO INVOKE THE P ROVISIONS OF SEC. 147 IN AS MUCH AS IT IS BEYOND THE STATUTORY P ERIOD OF 4 YEARS THE MATTER HAD ALREADY BEEN ADJUDICATED IN T HE ORIGINAL PROCEEDINGS AND DEPARTMENTAL TAX AUDIT CAN NOT BE BASED FOR ACTION U/S 147. RELIANCE IS PLACED ON 34 8 ITR 452 DELHI. 3. THAT THE ADDITION OF RS. 1 07 039/- AS PER THE PROV ISIONS OF SEC. 14A IS NOT LEGALLY CORRECT AND MERITS TO BE DE LETED. 4. THAT THE ASSESSMENT FRAMED IS NOT LEGALLY TENABLE A ND THUS MERITS TO BE CANCELLED. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY THE BOTH PARTIES THEREFORE NO NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE LD. FIRST APPELLATE AUTHORITY HAS NOT PASSED THE SP EAKING ORDER ON THE LEGAL GROUNDS RAISED BY THE ASSESSEE. THEREFORE T HE IMPUGNED ORDER IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND DESERV ES TO BE CANCELLED. HE REQUESTED THAT THE ISSUE IN DISPUTE MAY BE SET ASID E TO THE LD. FIRST APPELLATE AUTHORITY TO DECIDE THE LEGAL ISSUE AS WE LL AS ON MERIT CASE OF THE ASSESSEE AND PASSED THE SPEAKING ORDER. HE ALS O DREW OUR ATTENTION TOWARDS THE IMPUGNED ORDER AT PAGE 2 & 3 AND STATED THAT LD. FIRST APPELLATE AUTHORITY HAS NOT ANSWERED WHETHER THE AC TION U/S 147 OF THE ACT WAS TAKEN AFTER 4 YEARS OR NOT. ON THE CONTRAR Y LD. DR RELIED UPON THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLA TE AUTHORITY. ITA NOS. 1337 & 1544/D/2013 KHEMKA AVIATION PVT. LTD. 3 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS PASSED BY THE REVENUE AUTHORITIES SPECIALLY THE IMPUGNED ORDE R PASSED BY THE LD. FIRST APPELLATE AUTHORITY ALONG WITH THE GROUNDS TA KEN BY THE BOTH PARTIES. FOR THE SAKE OF CONVENIENCE THE RELEVANT ORDER OF T HE LD. FIRST APPELLATE AUTHORITY ON THE LEGAL ISSUE AT PAGE 2 & 3 IS REPRO DUCED AS UNDER: THE FIRST GROUND OF APPEAL IS REGARDING THE CONTENTION OF THE APPELLANT THAT THE AO HAD ERRED IN RE-OPENING THE A SSESSMENT U/S 147/148 OF THE IT ACT. WHILE RE-OPENING THE AS SESSMENT THE AO HAS OBSERVED THAT THE APPELLANT HAD RECEIVED DIV IDEND INCOME WHICH WAS CLAIMED AS EXEMPT. SINCE PROPORTI ONATE MANAGEMENT EXPENSES FOR EARNING OF EXEMPT INCOME HA D NOT BEEN CONSIDERED FOR DISALLOWANCE WHILE COMPLETING T HE ORIGINAL ASSESSMENT U/S 143(3) THEREFORE THE AO HA D REASONED TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND THEREFORE THE ASSESSMENT WAS RE-OPENED BY ISSUING NOTICE U/S 148. DURING THE COURSE OF APPELLATE PROCEEDINGS THE AP PELLANT HAS SUBMITTED THAT THE ISSUES WERE EXAMINED IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND A DISALLOWANCE OF RS. 1 LAC WAS MADE BY THE AO ON ACCOUNT OF EXPENSES INCURRED FOR EARNING OF EXEMPT INCOME. THE APPELLANT HAS FURTHER SUBMIT TED THAT SINCE THE ACTION U/S 147 WAS TAKEN AFTER FOUR YEARS THEREFORE THE NOTICE ISSUED WAS NOT AS PER LAW. IN SUPPORT O F ITS CONTENTIONS THE APPELLANT HAD PLACED RELIANCE ON T HE FOLLOWING JUDICIAL DECISIONS: 1. ROSE SERVICE APARTMENTS (P) LTD. VS. DCIT 348 ITR 4 52 (DEL). 2. CIT VS. BAER SHOES INDIA (P) LTD. 331 ITR 435 (MAD. ) 3. DHAMPUR SUGAR MILLS VS. ACIT 330 ITR 72 (ALL). IN VIEW OF THE ABOVE IT HAS BEEN SUBMITTED THAT THE NOTICE U/S 147/148 MAY BE QUASHED. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT FINDINGS OF THE AO AND THE FACTS ON RECORD. PERUSAL OF THE REASONS RECORDED SHOW THAT THE APPELLANT HAD EARNED EXEMPT INCOME AGAINST WHICH EXPENSES HAD NOT BEEN DISALLOWED IN T HE ASSESSMENT. SINCE EXPENSES HAVE TO BE INCURRED FOR EARNING OF EXEMPT INCOME THEREFORE THE AO HAD REASON TO BELIE VE THAT INCOME HAD ESCAPED ASSESSMENT. THE REASONS RECORDE D BY THE AO SHOW THAT THE AO HAD REASON TO BELIEVE THAT THE INCOME ITA NOS. 1337 & 1544/D/2013 KHEMKA AVIATION PVT. LTD. 4 HAD ESCAPED ASSESSMENT. IN VIEW OF THE FINDINGS AB OVE THE NOTICE ISSUED IS AS PER LAW. THIS GROUND OF APPEAL IS DISMISSED. 5. AFTER GOING THROUGH THE AFORESAID RELEVANT PORTI ON OF THE IMPUGNED ORDER WE ARE OF THE CONSIDERED VIEW THAT THE LD. F IRST APPELLATE AUTHORITY HAS NOT PASSED SPEAKING ORDER ON THE LEGAL ISSUE RA ISED BY THE ASSESSEE BEFORE HIM. HE HAS ALSO NOT ANSWERED WHETHER THE A CTION U/S 147 WAS TAKEN AFTER 4 YEARS OR NOT. THEREFORE THE IMPUGNE D ORDER IS NOT SUSTAINABLE IN THE EYE OF LAW IN THE INTEREST OF JU STICE BE SET ASIDE THE ISSUES IN DISPUTE TO THE LD. FIRST APPELLATE AUTHOR ITY TO DECIDE THE LEGAL ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPE AL AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 6. IN VIEW OF THE AFORESAID DISCUSSION THE APPEALS FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11/11/2014 SD/- SD/- (T.S. KAPOOR) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11/11/2014 *KAVITA P.S. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITA NOS. 1337 & 1544/D/2013 KHEMKA AVIATION PVT. LTD. 5