By Jagdish D. Shah
Jagdish T. Punjabi
Chartered Accountants
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28 Puja Agencies Pvt. Ltd. vs ACIT
ITAT Mumbai `C’ Bench
Before N. V. Vasudevan (JM)
and Rajendra Singh (AM)
MA No. 452/Mum/2009
A.Y.: 2003-04. Decided on: 6.1.2010
Counsel for assessee / revenue: Vijay Mehta /
L. K. Agarwal
s. 254 — A request made at the time of hearing, which has not
been dealt with in the order of the Tribunal, constitutes an error in the
order—The action of the Tribunal in setting aside the order of CIT(A) and
upholding the action of the AO in a case where the CIT(A) has not adjudicated on
the specific grounds raised by the assessee and also on alternate grounds
raised, constitutes a mistake apparent on record.
Per Rajendra Singh:
Facts :
The assessee filed a miscellaneous application requesting
amendment of the order dated 20.4.2009 of the Tribunal, in ITA No. 1483/M/2007.
The facts of the case and the mistakes pointed out by the assessee in the order
of the Tribunal were as follows:
The assessee had shown a loss of Rs. 1,35,88,144 on account
of trading in shares which the AO had treated as speculative loss in terms of
Explanation to s. 73. Aggrieved, the assessee preferred an appeal to CIT(A).
In an appeal to the CIT(A), the assessee, inter alia,
contended that its case was covered by the exceptions provided in Explanation to
s. 73; and an alternate ground was raised regarding apportionment of expenses
towards speculative businesses, in case the claim of the assessee was not
accepted. The CIT(A) held that the provisions of Explanation to s. 73 were
applicable only in case of purchases and sales of shares of group companies. And
since the assessee was not trading in shares of group companies, the CIT(A),
following the decision of the SMC Bench of the Tribunal in the case of Aman
Portfolio, directed the AO to treat the loss as business loss. He did not
adjudicate on the issue as to whether the assessee was covered by the exceptions
provided in Explanation to s. 73. He also did not deal with the alternate ground
raised by the assessee.
The revenue filed an appeal against the order of the CIT(A).
The assessee did not prefer an appeal to the Tribunal.
The Tribunal, while disposing the revenue’s appeal, noted
that the decision of the SMC Bench of the Tribunal in the case of Aman
Portfolio, had been reversed by the SB of the Tribunal in the case of AMP
Spinning and Weaving Mills Pvt. Ltd (100 ITD 142), in which it was held that
Explanation to s. 73 was applicable to all transactions of purchases and sales
of shares.
It also observed that the main business of the assessee was
trading in shares and that loss had arisen on account of trading in shares.
The assessee contended that in the course of
hearing, the members had expressed an opinion that the issue be set aside to the
file of the AO, to be decided afresh after considering various decisions
regarding applicability of Explanation to s. 73. The assessee was accordingly
asked to file a letter mentioning the issues that required to be considered
afresh before the AO. In compliance, the assessee filed a letter dated
18.3.2009. Therefore, the order of the Tribunal setting aside the order of the
CIT(A) and confirming the order of the AO was contrary to the views expressed at
the time of hearing; and, therefore, there was an apparent mistake.
Held:
(i) The log book of hearing maintained by the Accountant
Member did not show that the bench had expressed any view in the matter. The
notings did show that the AR had made a request for restoring the matter to
the AO, but the bench did not express any view in the matter. The log book of
the Judicial Member was not available. In view of these facts, the Tribunal
did not accept the point made in the MA that the members of the bench had
expressed any view in the matter. However, since the request made by the AR
for restoring the matter was not dealt with, there was an error in the order
to that extent.
(ii) The Tribunal noted that the assessee had specifically
mentioned to the CIT(A) that its case is covered by the exceptions provided to
Explanation to s. 73, and had also raised an alternate ground regarding
apportionment of expenses towards speculative businesses, in case the claim of
the assessee was not accepted. Since the CIT(A) had decided the issue in favor
of the assessee on technical grounds, he had not adjudicated on these issues.
In spite of these facts, the Tribunal had stated in para 3 of its order that
according to the findings by the AO, that the main business was trading in
shares had become final, because the assessee had not appealed against the
order of the CIT(A). This finding of the Tribunal constituted a mistake,
apparent on record.
(iii) It is a settled legal position that the assessee, as
a respondent, can support the order of the CIT(A) on alternate grounds also.
The only limitation is that the assessee, as a respondent, cannot argue
against the finding of the CIT(A) which is in favour of the revenue. In the
present case, the CIT(A) had not given any finding on whether the case was
covered by exceptions provided in Explanation to s. 73 and also regarding
apportionment of expenses.
(iv) Once the Tribunal did not accept the technical ground,
it was required to restore the matter to the file of the CIT(A) for deciding
the issue on merits.
The order passed by the Tribunal was modified by holding that
the order of the CIT(A) had been set aside and the matter restored back to him
for adjudicating the specific grounds raised by the assessee with him. The
miscellaneous application of the assessee was allowed.
