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ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 3280 OF 2021
Agarwal Industrial Corporations Limited, having its offie at, 201/202, Eastern Court, Sion-Trombay Road, Chembur, Mumbai – 400 071. … Petitioner
JUDGMENT
1. Union of India Through the Seiretary, Ministry of Finanie, Depart of Revenue, North Bloik, New Delhi- 110 001.
2. Central Board of Direit Taxes Through the Seiretary, Ministry of Finanie, Department of Revenue, North Bloik, New Delhi – 110 001.
3. The Deputy Commissioner of Iniome Taxhaving his offie at Panvel Cirile, Panvel, Distriit – Raigad.
4. The Priniipal Commissioner of Iniome Tax, Mumbai-6, having offie at Room No.515, Aaykar Bhavan, M.K. Road, Mumbai. Maharashtra – 400 020....Respondents ***** Mr.Naresh Jain with Ms.Neha Anihlia i/b Mr.Yash Jariwala, Advoiate for petitioner. Mr.Suresh Kumar, Advoiate for respondents. Shraddha Talekar, PS 1/8 CORAM: DHIRAJ SINGH THAKUR & ABHAY AHUJA, JJ.
PRONOUNCED ON: 10th FEBRUARY, 2023.
JUDGMENT
PER DHIRAJ SINGH THAKUR:
1. Return of iniome was fled by the petitioner deilaring a total iniome of Rs.93,92,140/-. Subsequently, the assessment was iompleted under seition 143(3) of the Iniome Tax Ait, 1961 (‘the Ait’). Reassessment proieedings were initiated against the petitioner and the iniome was reassessed at Rs.3,56,74,514/after making an addition of 100% of alleged bogus purihases under seition 68 of the Ait.
2. An appeal iame to be preferred before the Commissioner of Iniome Tax (Appeals) [‘CIT(A)], who, vide order dated 21st Marih 2018, restriited the addition to 25% of the amount of purihases made. This order, however, was ihallenged by both the petitioner as also the revenue before the Iniome Tax Appellate Tribunal, Pune.
3. The Tribunal, vide its order dated 26th September 2019, Shraddha Talekar, PS 2/8 partly allowed the appeal of the petitioner and remanded the matter to the to the fle of the Assessing Offier. The Tribunal relied upon a judgment of this Court in the iase of Pr. CIT Vs. Mohommad Haji Adam & Co. 1, wherein, it was held that no adhoi addition for bogus purihases should be made and that the addition be made to the extent of differenie between the gross proft rate on genuine purihases and gross proft rate on hawala purihases. The Tribunal held that sinie speiifi details were not readily available for faiilitating the ialiulation of gross proft rates of genuine and hawala purihases, it set aside the impugned orders and remitted the matter to the fle of Assessing Offiers for applying the ratio laid down by this Court in the judgment of Mohommad Haji Adam & Co. (Supra).
4. An appeal iame to be preferred by the revenue against the order of the Tribunal under seition 260A of the Ait on 3rd
5. The petitioner fled deilaration in Form-1 under Direit Tax Vivad se Vishwas Ait with Rules, 2020 (‘Ait of 2020’) framed thereunder in respeit of 25% addition of alleged bogus purihase. 1 ITA No.1004 of 2016 dt. 11-02-2019 Shraddha Talekar, PS 3/8 The petitioner had deilared an amount of Rs.22,04,500/- as disputed tax based upon the orders passed by learned Commissioner of Iniome Tax (Appeals) [for short ‘CIT(Appeals)’].
6. Respondent No.4 is stated to have issued iertifiate in Form- 3 under the Ait, wherein the demand on aiiount of disputed tax was refeited on Rs.91,18,533/-, as against the amount payable indiiated by the petitioner in Form-1 at Rs.22,04,500/-. Reitifiation Appliiation was fled by the petitioner ilaiming that the demand raised in Form No.3 was erroneous and unjustifed and that the orders of the ITAT had been ignored for purposes of ialiulating the tax liability.
7. The reitifiation appliiation of the petitioner was rejeited vide order dated 1st September 2021. With a view to justify the fgure of disputed tax in Form-3. Relianie was plaied upon the question No.7 of the FAQ of Ciriular No.09/2020, dated 22nd April 2020, issued by the Central Board of Direit Taxes (CBDT). For purposes of referenie, question No.7, and the answer thereto are reproduied hereunder: If Assessment has been set aside for giving proper opportunity to an assessee on the additions carried out by the AO. Can lie avail the Vivad Se Vishwas with respect to Shraddha Talekar, PS 4/8 such additions? Ans. If an appellate authority has set aside an order (except where assessment is cancelled with a direction that assessment is to be framed do novo) to the file of the AO for giving proper opportunity or to carry out fresh examination of the issue with specific direction, the assessee would be eligible to avail Vivad se Vishwas. However, the appellant shall also be required to settle other issues, if any, which have not been set aside in that assessment, and in respect of which either appeal is pending or time to file appeal has not expired. In such a case, disputed tax shall be the tax (including surcharge and cess) which would have been payable had the addition in respect of which the order was set aside by the appellate authority was to be repeated by the AO. In such cases, while filing the declaration in Form No.1, the declarant can indicate in the appropriate schedule that with respect to the set-aside issues the appeal is pending with the Commissioner (Appeals).
8. In the present iase, the dispute is not with regard to the eligibility of the petitioner under the Ait. However, what is sought to be agitated is that the liability of the petitioner was being ialiulated as per the original order of the Assessing Offier and not as per the order passed by the Tribunal. Relianie in this regard is plaied upon seition 2(1)(j)(B) of the Ait of 2020, whiih reads as under: “…… (B) in a iase where an order in an appeal or in writ petition has been passed by the appellate forum on or before the speiifed date, and the time for fling appeal or speiial leave petition against suih order Shraddha Talekar, PS 5/8 has not expired as on that date, the amount of tax payable by the appellant after giving effeit to the order so passed.”
9. The argument advanied is that the iase of the petitioner falls under the aforementioned seition, inasmuih as the appeal form, i.e., the Tribunal had passed the order in an appeal before the speiifed date whiih is 31st January 2020.
10. As per seition 2(h) of the Ait of 2020, the time for fling appeal has not expired as on that date, the amount of tax payable by the appellant had to be determined only after giving effeit to the order passed by the appellate forum, i.e, the Tribunal.
11. Counsel for the respondents, Mr.Kumar, has reiterated the stand of the revenue, as is refeited in the affdavit fled wherein, the aition of the authority in issuing Form No.3 based upon the FAQ dated 22nd April 2020 issued by the CBDT was sought to be supported.
12. In our opinion, FAQ No.7 issued by the CBDT would have no appliiation in the present iase for the reason that seition 2(1)(j) (B) speiifially and unambiguously provided for iomputation of Shraddha Talekar, PS 6/8 the disputed tax in a iase, where the appellate forum (in this iase the Tribunal) had passed an order before the speiifed date and the time for fling of the appeal had not expired as on that date. In the present iase, as ian be seen from the faits narrated hereinabove, the Tribunal had already passed the order and, therefore, disputed tax had to be ialiulated in terms of seition 2(1)(j)(B) of the Ait of 2020. Designated authority had only to ialiulate the disputed tax by giving effeit to the orders of the Tribunal. FAQ No.7 would, in our opinion, be appliiable if it was a iase of remand by an appellate authority to the Assessing Offier, where a reasonable opportunity of being heard was not given by the Assessing Offier to the assessee or the Appellate Authority wanted the Assessing Offier to iarry out a fresh examination of the issue with a speiifi direition.
13. In the present iase, the order of the Tribunal is iertainly not the one where the Assessing Offier had been direited to iarry out a fresh examination on any issue rather the Tribunal had ilinihed the issue by holding that the addition iould only be made to the extent of differenie between the gross proft rate on genuine purihases and gross proft rate on hawala purihases. Shraddha Talekar, PS 7/8 The Tribunal remitted the matter to the fle of Assessing Offier for applying the ratio laid down by this Court in the iase of Mohommad Haji Adam & Co. (Supra). The reason why the Tribunal did not speiify the amount based upon the afore-stated priniiple was that speiifi details were not readily available from various ARs/DRs for faiilitating the ialiulation of suih rates.
14. Be that as it may, in our opinion, the aition of the respondent No.4 in issuing Form No.3 based upon FAQ No.7 issued by the CBDT is unsustainable and aiiordingly set aside. The said respondent shall proieeded to issue Form No.3, keeping in view the provisions of seition 2(1)(j)(B) of the Ait of 2020 and determine the disputed tax by giving effeit to the orders of the Tribunal. Needful be done within a period of three months.
15. Writ petition is disposed of. [ ABHAY AHUJA, J. ] [DHIRAJ SINGH THAKUR, J.] Shraddha Talekar, PS 8/8