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TMI Blog2022 (4) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ving effect to the order of Hon'ble ITAT dated 17.12.2015 that directed the AO to verify and delete the said addition made u/s 14A 2. The Ld CIT(A) failed to appreciate that the AO sought to rectify the giving effect order, that had merged with the orders of Hon'ble ITAT and therefore interfered with order of Higher Appellate authority by acting beyond his jurisdiction. Reliance is placed on the decision of Hon'ble Madras High Court in case of Seshasayee Paper Boards Ltd v IAC 157 ITR 342 in support of above contention. 3. Without prejudice to above contention, the Ld CIT(A) failed to note that disallowance u/s 14A is a legal and debatable issue as the matter was decided by various High Courts and accordingly is not a matter of rectification u/s 154. 4. Without prejudice to the above, the Ld CIT(A) erred in upholding the disallowance u/s 14A without appreciating that appellant being trader is securities has incurred expenses for buying and selling securities and not for earning of tax free income and accordingly, no disallowance is warranted." Revenue's Appeal: "Whether on the facts and in the circumstances of the cased and in law, Ld. CIT(A) erred in holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 8D(ii) needs to be done. Thus, the decision of Hon'ble Bombay High Court in the case of Reliance Industries and HDFC still holds the forte. Furthermore, in the said case of Maxopp Investment Ltd (supra) itself Hon'ble Supreme Court has upheld the Hon'ble Punjab and Haryana High Court decision to the extent that it was held that disallowances u/s. 14A cannot exceed the exempt income. From the above, it is apparent that said decision of Hon'ble Supreme Court in Maxopp Investment Ltd (supra) does not give a carte blanche to withdraw the relief granted u/s 14A. Or in other words that it mandates that without considering these aspects disallowances has to be done. There is no doubt that Hon'ble Supreme Court held that relief granted from disallowances u/s 14A on the plank that the investment being stock in trade cannot be upheld. Hence, no relief can be granted to assessee on this account. But, it is still deserved relief on the other issue for own interest free funds for the purpose of u/s 8D(ii) and restricting the disallowances with that extent exempt income. These cannot be said to be a subject matter of rectification u/s 154. Hence, upon careful consideration, we hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Madras High Court in case of Seshasayee Paper Boards Ltd v IAC 157 ITR 342 in support of above contention. 3. Without prejudice to above contention, the Ld CIT(A) failed to note that disallowance u/s 14A is a legal and debatable issue as the matter was decided by various High Courts and accordingly is not a matter of rectification u/s 154. 4. Without prejudice to the above, the Ld CIT(A) erred in upholding the disallowance u/s 14A without appreciating that appellant being trader is securities has incurred expenses for buying and selling securities and not for earning of tax free income and accordingly, no disallowance is warranted." Revenue's Appeal "Whether on the facts and in the circumstances of the cased and in law, Ld. CIT(A) erred in holding that as per the decision of Bombay High Court in the case of HDFC Bank Ltd 383 ITR 529, section 14A cannot be applied if assessee's interest free funds are more than its investments yielding tax free income?" 6. We have heard the Ld.AR as well as Ld.DR and carefully perused the impugned orders of the authorities below. Both the authorised representatives have fairly admitted that the issue in the cross appeals for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o allegation by the Assessing Officer that the income chargeable to tax has escaped assessment by the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. He has contended that in view of the various binding precedents, the reopening of the assessment is not valid and liable to be quashed. The Ld.AR has submitted that for the assessment year 2010-11, an identical issue was considered by this Tribunal vide order dated 032/03/2021 in I.T.A. No2128/MUM/2019 & I.T.A. No.2229/MUM/2019. 9. On the other hand, the Ld.DR has relied upon the orders of authorities below and submitted that it is undisputed fact that the assessee has not deducted tax at source in respect of the interest and the Assessing Officer received information from TDS Wing, Nagpur during the course of survey in one of the branches of the assessee which revealed that the assessee has not deducted tax at source in the case where interest credited / paid exceeding the basic exemption limit. 10. We have considered the rival submissions as well as relevant materials on record. The original assessment was completed under section 143(3) on 27/02/2014 whereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 years from the end of relevant assessment year and there was no failure on the part of the assessee to fully and truly disclose all information required for completion of assessment. However, we find that TDS survey carried out by the department against the assessee was subsequent development. The survey findings revealed certain TDS default on the part of the assessee which would require disallowance u/s 40(a)(ia). At the stage of formation of belief, nothing more was required. In our opinion, sufficiency of reason was not a sine-qua-non to reopen assessee's case rather prima-facie opinion of escapement or underassessment of income was required to be formed at this stage. There was no requirement under law to establish that income, in fact, escaped assessment before triggering reassessment proceedings against the assessee as held by Hon'ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO [236 ITR 34]. In the present case, specific tangible information came into the possession of Ld. AO which revealed possible escapement of income in the hands of the assessee. Nothing more, in our opinion, was required at this stage. Undisputedly, once the case was reopened, the other issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that no TDS was required to be deducted or alternatively to prove the applicability of Second Proviso to section 40(a)(ia). Following the earlier decision of this Tribunal, we set aside this issue to the record of the Assessing Officer on same terms and directions. 14. The Revenue in the cross appeal has raised the following ground:- "1. Whether on the facts and in the circumstances of the case and in law, Ld.CIT(A) was right in holding that the provisions of section 115JB of the I.T. Act are not applicable to the assessee, without appreciating the facts of the case?" 15. We have heard the Ld.DR as well as Ld.AR and carefully perused the orders of authorities below. The CIT(A) has decided this issue in favour of the assessee in para 10.1 as under:- "10.1 I have carefully considered the submissions of the assessee. The ClT(A)- 2,Mumbai vide Appeal No.CIT(A)-2/IT/19/20l7-18 dated 26/12/2017 for A.Y. 2011-12 has specifically held that the provisions of section 115 JB do not apply to the assessee. It is not clear as to why the AO hag not noted this direction, Be ns it may, it is also noted that this issue is covered in favour of the assessee by the order of the ITAT in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not find any error or illegality in the impugned order of the CIT(A) on this issue. Consequently, the appeal of the revenue is dismissed. ITA No.1581/Mum/2020 - A.Y. 2000-01 18. This appeal by the assessee is directed against the order dated 13/02/2010 of CIT(A) arising from the order of levy of interest under section 220(2) of the Income-tax Act for the assessment year 2000-01. The assessee has raised the following grounds 1. The Id. CIT(A) erred in dismissing the appeal against order of AO dated 24.05.2018 by merely stating that an order u/s 220(2) is not an appealable order, overlooking the fact that appeal itself was on the ground that there would be no demand outstanding for the relevant assessment year had AO considered the appellate orders passed but not given effect to by him and hence there is no question of any interest due from appellant.. 2. The Id. CIT(A) ought not to have brushed aside appellant's contention that AO was mandated to give effect to order of CIT(A) dated 25.10.2012 to rectify mistake apparent from AO's order dated 02,03.2011 and therefore the order of AO over-Looking the co-existing appellate order being bad in law be set aside. 2.1 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee filed a petition under section 154 of the Income-tax Act to rectify the mistake while levying the interest under section 220(2) without giving effect to the order of the CIT(A) dated 25/10/2012; however, till date the Assessing Officer has not passed any order on the petition filed under section 154 of the Act. 20. On the other hand, the Ld.DR has submitted that the decisions relied upon by the Ld.AR are not applicable in the present case as in this case, there is no order passed by the Assessing Officer under section 154 whereas in those cases, the order was passed by the Assessing Officer under section 154 r.w.s. 220(2) of the Income-tax Act. Therefore, when the Assessing Officer has not disturbed the total income of the assessee while passing the order under section 220(2), then the said order is not an appealable order and cannot be challenged in the appeal. He has relied upon the order of the CIT(A) on this issue. 21. We have considered the rival submissions as well as relevant materials on record. The present controversy a result of multi round litigation for the year under consideration. Originally, the order under section 143(3) was passed on 28/02/2003 whereby the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial relief was granted by the CIT(A) while passing the order dated 25/12/2012. But the Assessing Officer has passed the impugned order under section 220(2) without giving effect to the order of the CIT(A). It appears that the Assessing Officer has deliberately not passed any order to give effect to the order of the CIT(A) despite the fact that the assessee had already filed a petition under section 154 of the Income-tax Act to rectify the mistakes. Once the Assessing Officer has not challenged the order of the CIT(A) dated 25/10/2012, then the Assessing Officer is bound to follow the said order in letter and spirit. The non passing of the giving effect order amounts disobedience and judicial indiscipline on the part of the Assessing Officer which is a serious matter to be considered by the appropriate authority. Accordingly, in the facts and circumstances of the case, we find that the Assessing Officer has acted in a highly arbitrary manner while passing the impugned order under section 220(2) for charging the interest without first determining the tax liability of the assessee in accordance with the issues settled in appeal. Accordingly, in the interest of justice, we set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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