Pramod Kumar Agarwal, Cuttack v. ITO, Cuttack

ITA 350/CTK/2011 | 2006-2007
Pronouncement Date: 09-11-2011

Appeal Details

RSA Number 35022114 RSA 2011
Assessee PAN IORTO2001W
Bench Cuttack
Appeal Number ITA 350/CTK/2011
Duration Of Justice 4 month(s) 1 day(s)
Appellant Pramod Kumar Agarwal, Cuttack
Respondent ITO, Cuttack
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 09-11-2011
Date Of Final Hearing 18-10-2011
Next Hearing Date 18-10-2011
Assessment Year 2006-2007
Appeal Filed On 08-07-2011
Judgment Text
IN THE INC O ME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 350/CTK/2011 (ASSESSMENT YEAR 2006 - 07) PRAMOD KUMAR AGARWAL (THROUGH L.R.SANGITA AGARWAL) C/O.JHOHARIMAL GAJANAND BAKHAR ABAD CUTTACK 753 002 VERSUS INCOME - TAX OFFICER WARD 2(3) CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH AR FOR THE RESPONDENT SHRI S.C.MOHANTY DR DATE OF HEARING : 18.10.2011 DATE OF PRONOUNCEMENT : 09.11.2011 ORDER SHRI K.S.S.PRASAD RAO JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.30.03.2011 FOR THE ASSESSMENT YEAR 2006 - 07 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED T HE SOLE ISSUE REGARDING THE ADDITION AND DISALLOWANCE OF 4 37 455 MADE BY THE DEPARTMENTAL AUTHORITIES AS UNSUSTAINABLE UNDER LAW. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE RAISED BY THE ASSESSEE AND ITS LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES THE UNDISPUTED FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE DERIVES INCOME FROM SALARY AS WELL AS INCOME FROM HOUSE PROPERTY. RETURN WAS FILED BY THE ASSESSEE FOR THE ASSES SMENT YEAR UNDER CONSIDERATION ON 29.12.2006 SHOWING TOTAL INCOME OF 9 20 930 AND THIS RETURN WAS PROCESSED U/S.143(1) BY ISSUING INTIMATION ON 14.1.1008. LATER ON IT WAS TAKEN UP FOR SCRUTINY BY ISSUING STATUTORY NOTICES AS REQUIRED UNDER THE LAW. IN RESPONSE TO THE SAID NOTICES THE ASSESSEES LEGAL REPRESENTATIVE APPEAR ED BEFORE THE 2 ASSESSING OFFICER AS THE ASSESSEE DIED ON 23.06.2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS SHOWN DIVIDEND INCOME OF 16 141 BUT HE CLAIMED EXPENSES U/S.57(III) AMOUNTING TO 4 37 455 THEREBY HE HAS OFFERED LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES AMOUNTING TO 4 35 720. BY INVOKING THE PROVISIONS CONTAINED IN SECTION 14A OF THE INCOME - TAX ACT 1961 THE AO DISALLOWED THE INTEREST OF 347 455 CLAIMED BY THE ASSESSEE AS EXPE NDITURE FOR EARNING THE INCOME DISCLOSED UNDER THE HEAD OTHER SOURCES ON THE GROUND THAT THE DIVIDEND INCOME IS EXEMPT UNDER THE HEAD EXPENSES INCURRED FOR EARNING THE SAID DIVIDEND INCOME IS NOT PERMISSIBLE U/S.14A OF THE INCOME - TAX ACT 1961 AND PASS E D ASSESSMENT ORDER RAISING A DEMAND OF 2 18 448 AS TAX PAYABLE BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO OBSERVED FOR INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME - TAX ACT 1961 AGAINST THE ASSESSEE. 5. AGGRIEVED BY THIS ASSESSMENT OR DER THE ASSESSEE WENT ON APPEAL BEFORE THE LEARNED CIT(A) AND IS UNSUCCESSFUL. HENCE THE PRESENT APPEAL IS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. 6. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED CONTENDING INTERAL IA THAT THE HONBLE APEX COURT IN THE CASE OF CIT V. RAJENDRA PRASDAD MODDY & OTHERS [110 ITR 644)(SC)] HAS HELD THAT THE ASSESSEE IS ENTITLED FOR CLAIMING ALLOWANCE TOWARDS THE EXPENSES INCURRED FOR EARNING INCOME FROM OTHER SOURCES THOUGH NO INCOME FROM OTHER SOURCES WAS OFFERED FOR TAXATION DURING THE PERIOD. THIS VIEW WAS FURTHER FORTIFIED BY THE ORDER OF THE ITAT BOMBAY IN THE CASE OF INCOME - TAX OFFICER V. NAWAB IQBAL MOHD. KHAN OF PALANPUR REPORTED IN 31 ITD 396. HE ALSO RELIED ON ANOTHER DECISION O F ITAT JEYPORE IN THE CASE OF INCOME - TAX OFFICER V. MANOHAR DAS AGARWAL (102 TTJ 636) AND THE DECISION OF HONBLE PUNJAB & 3 HARYANA HIGH COURT IN THE CASE OF CIT V. PANKAJ MUNJAL FAMILY TRUST REPORTED IN 326 ITR 286. THUS CONTENDING THE LEARNED AR OF THE ASSESSEE SOUGHT FOR DELETION OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). 7. CONTRARY TO THIS THE LEARNED DR HAS SUPPORTED THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES CONTENDING INTERALIA THAT HE HAS NO DISP UTE TO THE PROPOSITION GIVEN BY THE HONBLE SUPREME C OURT AS WELL AS THE P & H HIGH COURT AND BY THE ITAT BOMBAY AND JEYPORE BENCHES BUT HE BROUGHT TO OUR NOTICE THAT THE CITED DECISIONS WERE PRONOUNCED FOR THE AYS PRIOR TO 2001 WHEN SECTION 14A WAS INTRO DUCED UNDER THE INCOME - TAX ACT 1961 WHICH CATEGORICALLY SAYS THAT ANY EXPENDITURE INCURRED FOR EARNING THE EXEMPTED INCOME IS NOT ALLOWABLE. THEREFORE HE VEHEMENTLY CONTENDED THAT THE VIEW TAKEN BY THE DEPARTMENTAL AUTHORITIES IS VERY MUCH CORRECT AS PER THE PROVISIONS OF THE INCOME - TAX ACT 1961 THAT WAS AVAILABLE FOR THE PERIOD UNDER CONSIDERATION. THE DECISIONS RELIED ON BY THE LEARNED AR OF THE ASSESSEE ARE THEREFORE OF NO HELP TO HIM IN THE LIGHT OF THE PROVISIONS CONTAINED IN SECTION 14A OF THE INCOME - TAX ACT 1961. THUS HE SOUGHT FOR UPHOLDING THE ORDERS OF THE DEPARTMENTAL AUTHORITIES BY DISMISSING THE APPEAL OF THE ASSESSEE. 8. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PART IES AS WELL AS MATERIAL MADE AVAILABLE TO THE TRIBUNAL IT IS FOUND THAT THE ASSESSEE HAS CLAIMED THE INTEREST OF 4 37 455 CONSISTING OF INTEREST PAID TO CONTINENTAL JEWELTECH MINING (P) LTD GAJANAND AGARWAL AND LIFE INSURANCE COMPANY OF INDIA. AS CAN BE SEEN FROM THE SYNOPSIS FILED BY THE LEARNED AR OF THE ASSESSEE BEFORE THE TRIBUNAL THERE ARE LOANS BORROWED BY T HE ASSESSEE TO THE TUNE OF 45 63 322 OUT OF WHICH 22 52 322 ARE UP TO THE COMMENCEMENT OF THE PERIOD OF CONSIDERATION WHEREAS 23 05 000 WAS BORROWED DURING THE 4 PERIOD UNDER CONSIDERATION AND THE INTEREST OF 4 37 455 IS RELATED TO BOTH THE PERIODS CONSI STING OF 3 59 560 PAID ON THE LOANS BORROWED UP TO THE COMMENCEMENT OF THE PERIOD UNDER CONSIDERATION AND 77 895 IS RELATED TO LOANS BORROWED DURING THE PERIOD UNDER CONSIDERATION. THIS AMOUNT OF 77 985 CONSISTS OF TWO ELEMENT S I.E. 35 484 I S ON BORR OWALS OF 10 50 000 FOR PURCHASE OF SHARES WHEREAS 12 65 000 IS BORROWED FOR INVESTMENT IN CONSTRUCTION OF A HOUSE BY THE ASSESSEE. IN THE LIGHT OF THESE PECULIAR CIRCUMSTANCES THE PROPOSITION RELIED ON BY THE LEARNED DEPARTMENTAL AUTHORITIES FOR THE ENT IRE INTEREST OF 4 37 455 IS RELATED TO THE BORROWALS MADE FOR INVESTMENT IN THE SHARES IS NOT CORRECT. THEREFORE THE VIEW TAKEN BY THE DEPARTMENTAL AUTHORITIES IS PER SE APPEARS ERRONEOUS AND REQUIRES TO BE RECONSIDERED AFRESH TAKING INTO CONSIDERATION T HE ABOVE STATED PECULIAR CIRCUMSTANCES PREVAILED DURING THE YEAR UNDER CONSIDERATION. THIS EXERCISE CAN PROPERLY BE DONE AT THE LEVEL OF THE ASSESSING OFFICER. HENCE WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE TO BE RESTORED TO THE FILE OF THE A SSESSING OFFICER FOR DE NOVO CONSIDERATION BY THE ASSESSING OFFICER IN THE LIGHT OF THE ABOVE PECULIAR CIRCUMSTANCES MADE OUT BY THE ASSESSEE BEFORE THE TRIBUNAL AND AFTER DULY HEARING THE ASSESSEE AND CONSIDERING THE EVIDENCES. WITH THIS DIRECTION THE IS SUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION AND FOR PASSING NECESSARY CONSEQUENTIAL ORDER AS PER LAW OF COURSE STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) J UDICIAL MEMBER DATE: 9 TH NOVEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SANGI TA AGARWAL L.R. OF PRAMOD KUMAR AGARWAL C/O.JHOHARIMAL GAJANAND BAKHARABAD CUTACK 753 002. 2. THE RESPONDENT: INCOME - TAX OFFICER WARD 2(3) CUTTACK. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.