AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 1399
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....3.09.1998. During the course of assessment proceedings the assessee requested the AO to supply the copy of reasons recorded under section 148(2) of the Act vide letter dated 24.08.1998 and letter dated 22.02.2001. However, the AO did not provide a copy of the reason recorded to the assessee even after the completion of reassessment proceedings. Even thereafter, the assessee requested to the AO on number of occasions to supply reason but to no avail. The ld CIT (A) affirmed the order of AO on jurisdictional issue of re-opening of assessment. 4. The ld AR submits before the bench that the assessee has challenged the jurisdiction of the AO on the ground that no reasons as recorded under section 148(2) of the Act were supplied to the assessee and therefore the reassessment proceedings are null and void. The ld. AR relied upon the following decisions: a. Rina S. Mehta v. DCIT [ITA No. 3120/Mum/2015] dated 17.07.2019 b. ITO v. Pallavi Vij'en Jhaveri & vice-versa [ITA No. 5998/Mum/2017 & CO No. 225/Mum/2018] dated 17.12.2019 c. CIT v. Videsh Sanchar Nigam Ltd [340 ITR 66 (Bom.)] d. CIT v. IDBI Ltd [76 taxann.com 227 (Bom.)] e. PCIT v. V. Ramaiah [103 taxmann.com 202 (SC)]. ....
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....order of reassessment would be without jurisdiction. The Hon'ble Bombay High Court while passing the decision followed the earlier order in the case of CIT vs. Videsh Sanchar Nigam Ltd. (supra). The case of the assessee is also covered by the decision of Hon'ble Delhi High Court in the case of Pr. CIT vs. Jagat Talkies Distributors (supra) wherein it has been held that failure to provide copy of reasons recorded is not a procedural lapse and such failure renders the notice and consequent proceedings as void ab initio. The Hon'ble Apex court in the case of Pr CIT Vs V. Ramaih (supra) held that non communication of reasons recorded for re-assessment to the assessee did not amount to mere procedural lapse and is a fatal lapse and goes to the roots of the case. The decision relied upon by the Ld. D.R. in the case of DCIT vs. Zuari Estate Development & Investment Co. Ltd. (supra) was perused and found to be distinguishable on facts. We, therefore, respectfully following the decisions as stated hereinabove quash the reassessment proceedings and the consequent order passed by the AO. Since we have allowed the appeal of the assessee on additional ground raised, the main ground raised by th....
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....t was facing several difficulties all the details could not be submitted during the course of assessment proceedings. However, no sooner the appellant was able to compile the details and obtained/received these details from the custodian, the same were incorporated in the books of account and presented before the appellate authority with the prayer to admit the same. 10. However, the Ld. CIT (A) has rejected these books of accounts by stating that the said books of account are inadmissible u/r 46A of the Rules. At the same time, it has been stated by him at para 3.1.9, Page 12 of his order that the books of account have been examined and have been found to be unreliable. It is observed by the Ld. CIT (A) that the assessee has not been able to satisfactorily reconcile the balances as per old books and the revised books of account submitted by the assessee. 11. It is submitted before us that the books of account originally submitted before Ld. CIT (A) have been subsequently revised to account for certain transactions which were not incorporated earlier. It was submitted that the books of account which were placed on record earlier had to be revised for the reason that certain trans....
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....eposits as reflected in the books of account submitted by the appellant. 13. The Ld. A.R. therefore submitted that the Ld. CIT (A) has blown hot and cold as per his convenience as the books have been rejected when he wanted to estimate higher income of the appellant and these very books have been accepted when the income shown in the books was higher than the income determined by the Assessing Officer. 14. The Ld. A.R. therefore contended that the rejection of books of accounts have been made without any cogent reasons and without pointing out any actual defects in the books of account. He also pointed out that the co-ordinate bench of the Tribunal in at least 3 of its following orders has framed guidelines for the AO to be followed when matters are set aside wherein it is directed that the books of accounts drawn with great difficulty and despite adverse circumstances should not be rejected on flimsy grounds. i. Order dated 13.12.2007 passed in the case of Smt Jyoti Harshad Mehta for AY 1994-95. ii. Order dated 02.01.2008 in the case of late Shri Harshad S. Mehta for AY 1989- 90. iii. Order dated 21.03.2014 passed in the case of Smt Jyoti Mehta for AY 1992-93. That in vie....
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....by the assessee and the said incomes were duly accounted for by the assessee in the books of accounts. We also note that in view of such massive search on the assessee, the books of accounts could not be produced before the AO in the first round of litigation because these books could not be completed until the information and documents relating to the transactions of the assessee lying with custodian were made available to the assessee. We note that these books were filed as additional evidences for the first time before the Tribunal in the first round and Tribunal after admitting the same restored the matter to the file of the Ld. CIT (A) with the direction to decide the appeal of the assessee afresh. However, we note that Ld. CIT (A) has disregarded the books of accounts filed by the assessee without even pointing a single defect for the said rejection. In our opinion, the rejection of books of accounts by the Revenue authorities is not correct in view of the fact that the related evidences such as contract notes, dividend, warrants and the bank statements and other relevant evidences were accepted which were used to complete the books of accounts. In our opinion the books of ac....
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....so stated that the ledger accounts submitted by the appellant before the appellate authority clearly reflected the entries constituting the dividend income and the same can be correlated with the bank statements. It was also argued that apart from the fact that the Assessing Officer has not brought on record the figures adopted for determining the dividend income, such figures adopted by the Assessing Officer may be suffering from several errors in as much as it was quite possible that the Assessing Officer may have considered the dividend income which may be below the limit attracting TDS and that even such income would have been grossed up by the Assessing Officer while estimating the dividend income in the hands of the appellant. Further, he brought to our notice that the TDS was deducted by different companies at different rates which could be one of the cause for difference in the dividend income. He therefore submitted that the said dividend estimated by the Assessing Officer arbitrarily and without explaining the basis cannot be sustained. 21. After hearing both the parties, we find force in the arguments of the Ld. AR. It is noticed that the break up of the dividend income....
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....r of the assessee by the decision of co-ordinate bench of the Tribunal in the cases of related entities by the coordinate benches wherein it has been held that dividend earned on unregistered shareholdings cannot be brought to tax. The Ld. A.R. submitted that the said decisions of the co-ordinate bench of the Tribunal have been upheld by the Hon'ble Bombay High Court. The Ld. A.R. specifically relied on the decision of CIT vs. Aatur Holding Pvt. Ltd. ITA No. 2214 of 2006 dated 12.03.2008 wherein the Hon'ble Bombay High Court has affirmed the view of the Tribunal that no addition can be made on the estimated dividend on unregistered holding held by the assessee. The Ld. A.R. also submitted that the issue has travelled up to Hon'ble Supreme Court in one of the related entities and the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue in the case of CIT vs. Pallavi Holding Pvt. Ltd. (SLP) CC No. 2992 of 2008 dated 01.08.2011. The Ld. A.R. brought before the Bench that in view of these facts and ratio laid down by the various judicial forums as stated hereinabove,the ground raised by the assessee may kindly be allowed. 24. The Ld. D.R., on the other hand, reli....
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....benture interest of Rs. 73,21,909/- and adopt the income shown by the appellant at Rs. 29,82,234/- as per the books of account. 29. The issue raised in ground No. 6 is against the order of Ld. CIT (A) confirming the addition of Rs. 18,29,41,410/- on account of interest on PSU bonds. 30. The facts in brief are that the AO, on the basis of bank statements and bank book provided by the assessee during the assessment proceedings, observed that the net interest on PSU bonds credited in the bank account of the assessee after TDS was Rs. 13,77,00,000/-. The AO accordingly grossed up the said interest and determined the interest on PSU Bonds at Rs. 18,29,41,410/- and added the same to income of the appellant. The appellant submitted that there are certain new developments on this issue post assessment because of which the said addition longer stands justified. The appellant submitted before the Ld. CIT (A) that Hon'ble Supreme Court has passed an order dated 01.11.2002 pursuant to which certain securities worth Rs. 258 crores, which included 17% NTPC bonds of face value of Rs. 81 crores belonging to the assessee, have been held to be the property o....
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....ent not constituting property of HSM and that should be appropriated towards liquidation of the liability to SBI/NHB. More specifically, it was held that the custodian and the appellant (being Respondent No. 3) have no right, title or interest in respect of the securities in view of the fact that HSM had ceased to have any right, title or interest in them. The Ld. A.R., therefore, contended that in terms of the aforesaid decision of the Hon'ble Supreme Court, it is categorically proved that the said securities do not belong to the appellant and that any returns or income earned on the said securities since 1992 cannot be brought to tax as income of the appellant. He pointed out that in terms of the aforesaid order, several payments were also made by the custodian from the account of the appellant towards repayment of the interest earned for several years in the past. The copies of correspondences made by the Custodian in respect of these bonds are filed before us at Page 163-173 of PB No. 2. The AR submitted that by virtue of the order passed by Hon'ble Supreme Court, the incomes earned on account of the subject bonds is liable to be taxed in the hand of SBI and in fact SBI....
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....n [Page 148-162 of PB No. 2] are reproduced below: Prayer (a) The applicant therefore pray that this Hon'ble Court be pleased to order and direct/declare i) that the said securities alongwith all accruals thereon handed over by the late Harshad S. Mehta to the said officers of National Housing Bank in March 1992 having then the aggregate value of Rs. 258 crores list whereof is annexed hereto as ANNEXURE "R-1 Colly" does not constitute the property of HSM and should be appropriated towards liquidation of his liability to SBI/NHB ii) that the Custodian, Respondent No. 3 hereto, had and has no right, title or interest to in respect of the said securities in view of the fact that the said late HSM had ceased to have any right, title or interests therein and in view of the fact that the said securities did not then belong to the late HSM. iii) that the said securities not constituting the property of the late HSM and not belonging to the late HSM could not and should not have been handed over to the Custodian. iv) that the said securities and all accruals thereon and the liquidated proceeds thereof should be handed over to SBI in view of the settlement arrived at betw....
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.... said company whereas the appellant has claimed to have sold only 29000 equity shares. The AO thus calculated the capital gain on 2000 equity shares of M/s. Reliance Industries Ltd. at Rs. 4,97,760/- and added the same to the income of the assessee. 38. During the appellate proceedings, the appellant submitted before the Ld. CIT (A) that since the appellant is a notified entity and the details of income earned by it including purchase and sale of shares are provided by the custodian based on which income was offered to tax. The Ld. A.R. submitted before the Ld. CIT (A) that 29000 shares of M/s. Reliance Industries Ltd. have been sold and that the AO has calculated the capital gain on 31,000 equity shares on the basis of information gathered from M/s. Reliance Industries Ltd. The Ld. CIT (A) directed the AO again to verify the issue on the basis of details as furnished by the custodian and also evaluate the same in the light of the information gathered by the AO from M/s. Reliance Industries Ltd and compute the long term capital gain accordingly. The Ld. CIT (A) also directed the AO to allow the carry forward of long term capital loss so determined after allowing the set off o....
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....fter hearing both the parties and perusing the material on record, we find that the assessee is a notified entity w.e.f. 08.06.1992 and post that date of the decisions including that pg banking, issue of sale and purchase of securities, payment of taxes etc. were taken by the custodian. The Ld. A.R. submitted before the Bench that expenses so incurred comprise of primarily electricity expenses of the premises owned by the assessee, certain maintenance charges pertaining to the property, bank charges and interest on loans received. After examining all the aspect of the issue, we are of the view that these expenses were necessary to be incurred by the assessee for the purpose of running and preserving its assets and therefore these expenses are necessarily to be allowed. Moreover, the issue is squarely covered by the decision of the coordinate bench of the Tribunal in the cases of related entities. In the following cases, the co-ordinate benches of the Tribunal have allowed the similar claim: a. DCIT v. Orion Travels Pvt. Ltd. [ITA No. 5035, 5036/Mum/2002] dated 23.09.2005. b. DCIT v. Orion Travels Pvt. Ltd. [ITA No. 4087, 4088/Mum/2002] dated 21.03.2006. 45. Since the facts bef....
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.... 52. At the outset, the Ld. Counsel of the assessee submitted that the issue is a recurring issue over the years and the coordinate benches of the Tribunal have consistently held that interest should be computed by the AO in consonance with the judicial precedents referred to in the respective orders. The Ld. A.R. submitted that the AO has not been following and abiding by the orders of the higher authorities and wrongly levying higher interest on all incomes of the assessee. The Ld. A.R. submitted that in this case also the AO should be directed to compute the interest in terms of the following decisions: a. Growmore Leasing & investments Ltd. v. DCIT [ITA No. 1219/Mum/2017 and others] for A.Y. 2012-13 and others dated 27.12.2017. b. Sudhir S. Mehta v. DCIT [ITA No. 7147/Mum/2018] for A.Y. 2014-15 dated 3.11.2020. c. Harsh Estates Pvt. Ltd. v. DCIT [ITA No. 6957/Mum/2018 and others] for A.Y. 2013-14 to A.Y. 2015-16 dated 15.09.2020. 53. After perusing the facts on records and respectfully following the decisions of the coordinate benches in the case of related entities as stated above, we direct the AO to compute the interest u/s 234A, 234B and 234C of the Act after taking ....
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....hat the issue raised by the assessee are arising out of the assessment records before the authorities below and does not require any verification of facts or any fresh material being brought on record. The assessee is very well within its right to raise these issues before the Tribunal and accordingly we are inclined to admit the additional ground for adjudication before us following the ratio laid in the above decisions. 58. The issue raised in the 1st additional ground is against the order of CIT (A) not allowing interest on borrowed funds to the assessee. 59. The brief facts of the case are that the appellant had purchased shares and securities out of the credit given by the brokerage firms. Subsequent to the notification of the appellant and the brokers as notified entities, the liability towards the purchase of these shares could not be paid as the entire affairs were then controlled by Custodian appointed under the Special Courts Act. Subsequently, the said shares and securities were liquidated and the funds were invested in the term deposits under the orders of Hon'ble Special Court. On these amounts payable by the appellant, the interest payable to the brokerage firms....