Agarwal Industrial Corporation ... vs Union Of India And 3 Ors
2023 Latest Caselaw 1430 Bom

                                                                               WP-3280--2021-J.doc




                                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                    ORDINARY ORIGINAL CIVIL JURISDICTION

                                       WRIT PETITION NO. 3280 OF 2021

                        Agarwal Industrial Corporations Limited,
         Digitally
         signed by
         SHRADDHA
SHRADDHA KAMLESH
KAMLESH TALEKAR         having its offie at, 201/202, Eastern Court,
TALEKAR
                        Sion-Trombay Road, Chembur,
         Date:
         2023.02.10
         17:28:14
         +0530
                        Mumbai - 400 071.                                ... Petitioner

                                  Versus

                        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 Tax-
                           Ward 14(1)(1),
                           having 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
                                                                             WP-3280--2021-J.doc




                            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 21 st 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 26 th September 2019,

Shraddha Talekar, PS 2/8 WP-3280--2021-J.doc

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 ad-

hoi 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 3 rd Marih

2021.

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.

Shraddha Talekar, PS                                                                     3/8
                                                                                    WP-3280--2021-J.doc

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 22 nd 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 :

Question If Assessment has been set aside for giving proper No.7 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 WP-3280--2021-J.doc

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 WP-3280--2021-J.doc

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 WP-3280--2021-J.doc

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
                                                                         WP-3280--2021-J.doc

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