Ashok Giri Chennai v. Acit Corporate Circle 3 2 Chennai

In The Income Tax Appellate Tribunal C Bench Chennai Before Shri A Mohan Alankamony Accountant Member Shri Duvvuru R L Reddy Judicial Member I T A No 2 0 6 0 Mds 2017 Assessment Year 20 09 1 0 Shri Ashok Giri No 13 32 Nd Cross Street Besant Nagar Chennai 600 090 Pan A Ac Pa 4186 F Vs The Assistant Commissioner Of Income Tax C Orporat E Circle 3 2 Chennai 34 Appellant R Espondent Appellant By Shri B Ramakrishnan F C A Respondent By Shri N Madhavan Addl Cit Date Of Hearing 31 1 0 201 7 Date Of P Ronouncement 05 1 2 201 7 O R D E R Per Duvvuru Rl Reddy Judicial Member This Appeal Filed By The Assessee Is Directed Against The Order Of The Ld Commissioner Of Income Tax Appeals 11 Chennai Dated 29 0 6 201 7 Rel Evant To The Assessment Year 2009 10 The Assessee Has Raised The Following Grounds 1 For That The Order Of The Ld Cit A Is Contrary To Law Facts And Circumstances Of The Case 2 For That The Ld Cit A Erred In Confirming The Assessing Officer O Rder U S 154 Of The Act On Debatable Issues I T A No 2060 M 17 2 3 For That The Ld Cit A Erred In Confirming The Disallowance Of 38 61 193 U S 14 A R W Rule 8 D 4 For That The Ld Cit A Erred In Confirming The Levy Of Interest U S 234 A In Consequence To The Above Addition For These Grounds And Such Other Grounds That May Be Adduced Before Or During The Hearing Of The Appe Al It Is Prayed That The Hon Ble Tribunal May Be Pleased To Pass Such Other Orders As The Hon Ble Tribunal May Deem Fit 2 Brief Facts Of The Case Are That The Assessee Is An Individual Carrying On A Business Of Money Lending And Also Runs A Proprie Tary Business Of Juice Shop On Retail Basis In The Name Of Squash D The Assessee Filed H Is Return Of Income On 30 09 20 09 Admitting Income Of 18 00 050 The Return Filed By The Assessee Was Processed Under Section 143 1 Of The Income Tax Act 1961 Act In Short Thereafter The Case Of The Assessee Was Selected For Security And Notice Under Section 143 2 Of The Act Was Issued On 23 1 0 2 01 0 In Response Thereto The Assessee Filed Details After Verification Of Details Filed By The Assessee And Considering The Submissions The Assessment Was Completed Under Section 143 3 Of The Act By Assessing Total Income Of The Assessee At 2 06 41 9 54 After Making Various Disallowances Subsequently Notice Under Section 154 Of The Act Dated 06 10 2015 Was Issued And The Assessee Was Requested To Show Cause 1 As To Why Disallowance U S 14 A R W R 8 D Of 38 61 193 Should Not Be Made As Again St 97 463 Disallowed In Order U S 143 3 Passed On 30 12 2011 2 As To Why Interest U S 234 A Should Not Be Levied For 2 Months As The Last Date For Filing The Return Of Income For A Y 2009 10 Was I T A No 2060 M 17 3 31 07 2009 Whereas The Assessee Had Filed The Re Turn On 30 09 2009 Since There Was No Response From The Assessee Nor Filed Any Objection The Assessing Officer Proceeded To Modify The Assessment Order Passed Under Section 143 3 Of The Act By Assessing Total Income Of The Assessee At 2 44 05 684 After Making Disallowance Of 37 63 730 I E 38 61 193 97463 3 Aggrieved The Assessee Carried The Matter In Appeal Before The Ld Cit A After Considering The Various Submissions Of The Assessee The Ld Cit A Dismissed The Appeal Filed By The Assessee 4 On Being Aggrieved The Assessee Is In Appeal Before The Tribunal 5 We Have Heard Both Sides Perused The Materials Available On Record And Gone Through The Orders Of Authorities Below The Assessee Has Claimed Dividend Income Of 19 49 256 As Exempt However The Assessing Officer Has Noticed That The Assessee Has Not Disallowed Any Reasonable Expenditure Incurred In Earning This Exempted Income The Assessee Was Asked To Explain As To Why Rule 8 D Should Not Be Applied In Compu Ting The Disallowance Under Section 14 A Of The Act On Examination Of The Details Submitted By The Assessee The Assessing Officer Estimated Reasonable Expenditure 5 Of The Dividend Income And Accordingly Disallowed 97 463 Subsequently By Issuing Notice Under Section 154 Of The Act The I T A No 2060 M 17 4 Assessing Officer Passed Rectification Order Under Section 154 Of The Act By Disallowing 38 61 193 Since There Was No Response Or Any Objection Filed By The Assessee Against The Above Notice On Appeal The Ld Cit A Confirmed The Rectification Order Passed By Assessing Officer 5 1 Even Though The Assessing Officer Asked The Assessee To Explain As To Why Rule 8 D Should Not Be Applied In Computing The Disallowance Under Section 14 A Of The Act Neither The Asse Ssing Officer Brought On Record The Reply Of The Assessee Nor Determined The Expenditure Component As Per The Provisions Of Rule 8 D The Assessment Order Did Not Speak The Necessity To Estimate The Reasonable Expenditure 5 Of Dividend Income When Various Steps Required To Be Adopted While Determining The Expenditure Component Has Been Clearly Given Under Rule 8 D Further In The Rectification Order Without Giving Any Computation Details The Assessing Officer Determine D The Disallowance Under Section 14 A R W R 8 D Of 38 61 193 Admittedly The Assessee Has Earned Dividend Income Of 19 49 256 For Making Investments Whether The Assessee Had Own Funds Or Utilized Borrowed Funds Are Not Emanating From The Assessme Nt Order And The Assessment Order Is Very Cryptic Otherwise Also Against The Dividend Income Of 19 49 256 The Disallowance Under Section 14 A R W R 8 D Of 38 61 193 Cannot Be Made In View Of The Judgement Of The Hon Ble Delhi High Court In Case O F Joint Investments Pvt Ltd V Cit 372 Itr 694 In The Absence Of I T A No 2060 M 17 5 Any Detailed Paper Book Filed By The Assessee Until And Unless A Detailed Order Is Passed Against The Determination Of Disallowance Under Section 14 A R W R 8 D It Is Not Possible To Arri Ve Whether The Issue Is Debatable Issue Or Not To Pass A Rectification Order The Ld Cit A Has Not Discussed Against The Computation Of Quantum Accordingly We Set Aside The Order Of The Ld Cit A And Remit The Matter To The File Of The Assessing Offi Cer To Pass A Detailed Speaking Order In Accordance With Law After Allowing An Opportunity Of Hearing To The Assessee 6 With Regard To The Levy Of Interest Under Section 234 A Of The Act The Assessing Officer Was Of The Opinion That Due Date For Filin G Of Return Was 31 07 2009 Whereas The Assessee Has Filed His Return Of Income On 30 09 2009 And Therefore He Levied Interest Under Section 234 A Of The Act It Was The Submission Of The Assessee That The Assessee Did Not Have Business Income During The A Ssessment Year Under Consideration And Therefore The Assessing Officer Was Not Justified In Holding That The Due Date For Filing Of Return Of Income Was 31 07 2009 Instead Of 30 09 2009 And Levying Interest Under Section 234 A Of The Act On Appeal Prima Facie The Ld Cit A Accepted The Above Submissions Of The Assessee And Directed The Assessing Officer To Charge The Interest Under Section 234 A Of The Act After Giving An Opportunity To The Assessee I T A No 2060 M 17 6 6 1 In The Assessment Order At Para 4 The Assessin G Officer Held That The Incomes Of The Assessee Should Be Taxed Under The Head Income From Other Sources And Income From Capital Gains Since There Was No Mention About The Business Income It Was The Submission Of The Assessee That Against The Qua Ntum Addition The Income Of The Assessee As To Whether Business Income Or Income From Other Sources Is Pending For Adjudication Before The Ld Cit A Once The Issue Is Pending Before The Ld Cit A For Adjudication The Assessing Officer Has Not Cons Idered The Above Clarification During The Course Of Rectification Proceedings Under These Circumstances The Ld Cit A Has Directed The Assessing Officer To Charge The Interest Under Section 234 A Of The Act As Per Law After Giving An Opportunity Of Heari Ng To The Assessee Thus We Find No Infirmity In The Order Passed By The Ld Cit A On This Issue And Accordingly The Ground Raised By The Assessee Is Dismissed 5 In The Result The Appeal Filed By The Assessee Is Partly Allowed For Statistical Purp Oses Order Pronounced On The 05 Th December 2017 At Chennai Sd Sd A Mohan Alankamony Accountant Member Duvvuru Rl Reddy Judicial Member Chennai Dated 05 1 2 201 7 Vm I T A No 2060 M 17 7 Copy To 1 Appellant 2 Respondent 3 Cit A 4 Cit 5 Dr 6 Gf