2019 (12) TMI 1359 - AT - Income Tax

Rectification of assessment - tribunal while adjudicating the appeal filed by the assessee has failed to consider grounds which challenges initiation of reassessment proceedings u/s 147 on the erroneous presumption that the assessee has not pressed grounds relating to initiation of reassessment proceedings u/s 147 - HELD THAT - Fact remains that it is a settled position of law, once there is a specific ground in an appeal, the same needs to be adjudicated irrespective of the fact that whether, said ground is pressed or not . Therefore, we are of the considered view that insofar as, grounds No.1 to 3 of assessee appeal regarding initiation reassessment proceedings u/s. 147. There is an error in the order of the Tribunal in not adjudicating specific ground taken by the assesee, which constitute mistake apparent on record, which can be rectified u/s 254(2) . Disallowance of interest and commission paid on loans - no specific adjudication on those grounds in the order of the Tribunal - HELD THAT - AsseSsee has taken specific grounds challenging additions made by the Ld. AO towards disallowance of consequent interest paid on unsecured loans u/s 68 and related commission expenditure incurred in relation to said unsecured loans, but the Tribunal has by inadvertent mistake omitted to consider and adjudicates those grounds. Further, the issue of addition towards unsecured loans, consequnet interest paid on said loan and related commission and brokerage expenses are interrelated and interconnected, because the findings of one ground may have bearing on the other ground and hence all grounds needs to be considered together. If, one ground is considered and other ground is not adjudicated, then certainly it constitutes a mistake on face of the order - non consideration of specific ground taken by the assessee constitutes a mistake apparent on record, which can be rectified u/s 254(2) - MP of assessee allowed.

Summary

Issues Involved:
1. Initiation of reassessment proceedings under section 147.
2. Confirmation of the assessment order under section 143(3) r.w.s 147.
3. Rejection of books of accounts under section 145.
4. Addition of alleged bogus purchases under section 69C.
5. Disallowance of unsecured loans under section 68.
6. Disallowance of commission/brokerage under section 69C.
7. Disallowance of expenses attributed for exempt income under section 14A.
8. Charging of interest under sections 234A, 234B, 234C, and 234D.
9. Initiation of penalty proceedings under section 274 r.w.s. 271(1)(c).

Detailed Analysis:

1. Initiation of Reassessment Proceedings under Section 147:
The assessee challenged the initiation of reassessment proceedings on multiple grounds, asserting that reassessment cannot be initiated merely for enquiry or verification, nor based solely on information from the investigation wing, and must be based on "reason to believe" rather than "reason to suspect." The Tribunal initially failed to adjudicate these grounds, which constituted a mistake apparent on record. The Tribunal acknowledged this omission and agreed to rectify it under section 254(2) of the I.T. Act, 1961.

2. Confirmation of the Assessment Order under Section 143(3) r.w.s 147:
The assessee contended that the assessment order passed under section 143(3) r.w.s 147 violated the principles of natural justice. This ground was not specifically adjudicated in the initial order. The Tribunal recognized this as an error and agreed to reconsider this ground.

3. Rejection of Books of Accounts under Section 145:
The Tribunal initially did not address the ground related to the rejection of books of accounts under section 145. The assessee argued that this omission was a mistake apparent on record. The Tribunal agreed to rectify this and reconsider the ground.

4. Addition of Alleged Bogus Purchases under Section 69C:
The Tribunal upheld the addition of ?42,05,650, being 12.5% of the total purchases, as bogus non-genuine expenditure based on the findings from the Bhanwarlal Jain group of companies. The Tribunal found that the assessee failed to provide sufficient evidence to contradict the AO's findings and thus rejected the assessee's ground.

5. Disallowance of Unsecured Loans under Section 68:
The Tribunal upheld the addition of ?1.50 crores and ?20,958 as unexplained cash credits under section 68. The Tribunal noted that the assessee failed to prove the genuineness of the transactions despite providing various documents. The AO's findings were supported by evidence from the Bhanwarlal Jain group's parallel books of accounts.

6. Disallowance of Commission/Brokerage under Section 69C:
The Tribunal initially did not adjudicate the ground related to the disallowance of ?3,50,000 as commission/brokerage. The assessee argued that this was a mistake apparent on record. The Tribunal agreed to reconsider this ground.

7. Disallowance of Expenses Attributed for Exempt Income under Section 14A:
The Tribunal partially upheld the AO's disallowance of ?2,24,398 under section 14A r.w.r 8D. While the Tribunal directed the AO to delete the interest expenditure disallowance, it upheld the disallowance of other routine expenses, concurring with the AO's application of rule 8D(2)(iii).

8. Charging of Interest under Sections 234A, 234B, 234C, and 234D:
The Tribunal did not specifically adjudicate the ground related to the charging of interest under sections 234A, 234B, 234C, and 234D. The assessee argued that this was a mistake apparent on record. The Tribunal agreed to reconsider this ground.

9. Initiation of Penalty Proceedings under Section 274 r.w.s. 271(1)(c):
The Tribunal initially did not address the ground related to the initiation of penalty proceedings under section 274 r.w.s. 271(1)(c). The assessee argued that this omission was a mistake apparent on record. The Tribunal agreed to rectify this and reconsider the ground.

Conclusion:
The Tribunal acknowledged several omissions in its initial order and agreed to rectify these mistakes under section 254(2) of the I.T. Act, 1961. The order was recalled, and the registry was directed to post the appeals for hearing in due course. The miscellaneous applications filed by the assessee were allowed.