M/s Ayush Steels Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 125/DEL/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8916 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-09-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Reopening of assessment; Opportunity of being heard
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI R.K.GUPTA R.K.GUPTA R.K.GUPTA R.K.GUPTA, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.2925/DEL/2010 2925/DEL/2010 2925/DEL/2010 2925/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2003 2003 2003 2003- -- -04 0404 04 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(3), 2(3), 2(3), 2(3), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S AYUSH STEE M/S AYUSH STEE M/S AYUSH STEE M/S AYUSH STEELS PVT.LTD., LS PVT.LTD., LS PVT.LTD., LS PVT.LTD., C CC C- -- -60/1, WAZIR PUR INDUSTRIAL AREA, 60/1, WAZIR PUR INDUSTRIAL AREA, 60/1, WAZIR PUR INDUSTRIAL AREA, 60/1, WAZIR PUR INDUSTRIAL AREA, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAGFA8542B. PAN : AAGFA8542B. PAN : AAGFA8542B. PAN : AAGFA8542B. (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.125/DEL/2011 CROSS OBJECTION NO.125/DEL/2011 CROSS OBJECTION NO.125/DEL/2011 CROSS OBJECTION NO.125/DEL/2011 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2003 2003 2003 2003- -- -04 0404 04 M/S AYUSH STEELS PVT.LTD., M/S AYUSH STEELS PVT.LTD., M/S AYUSH STEELS PVT.LTD., M/S AYUSH STEELS PVT.LTD., C CC C- -- -60/1, WAZIR PUR INDUSTRIAL 60/1, WAZIR PUR INDUSTRIAL 60/1, WAZIR PUR INDUSTRIAL 60/1, WAZIR PUR INDUSTRIAL AREA, AREA, AREA, AREA, DELHI. DELHI. DELHI. DELHI. PAN : PAN : PAN : PAN : AAGFA8542B. AAGFA8542B. AAGFA8542B. AAGFA8542B. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(3), 2(3), 2(3), 2(3), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : MS.Y.KAKKAR, SR.DR. ASSESSEE BY : SHRI VED JAIN, FCA AND SMT.RANO JAIN, CA. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A)-V, NEW DELHI DATED 31 ST MARCH, 2010 FOR THE AY 2003-04. THE ASSESSEE HAS ALSO FILED CROSS-OBJECTION. 2. AT THE TIME OF HEARING BEFORE US, IT WAS STATED BY THE LEARNED COUNSEL THAT IN THE CROSS-OBJECTION, THE ASSESSEE HAS RAISED LEGAL ISSUES WITH REGARD TO VALIDITY OF REOPENING OF ASSESSMENT AS WELL AS VALIDITY OF THE PASSING OF THE ASSESSMENT ORDER WITHOUT ISSUING A ITA-2925/DEL/2010 & C.O.-125/DEL/2011 2 STATUTORY NOTICE UNDER SECTION 143(2). HE, THEREFOR E, SUBMITTED THAT FIRST THE LEGAL ISSUE HAS TO BE DECIDED AND THEN ONLY, THE ISSUE RELATING TO THE COMPUTATION OF TOTAL INCOME WOULD ARISE. ACC ORDINGLY, HE STATED THAT THE CROSS-OBJECTION SHOULD BE HEARD FIRST. 3. LEARNED DR HAD NO OBJECTION TO THE ABOVE REQUEST OF THE ASSESSEES COUNSEL. ACCORDINGLY, WE PROCEED TO HEAR AND ADJUDICATE THE CROSS-OBJECTION. 4. THE GROUNDS RAISED IN THE CROSS-OBJECTION READ AS UND ER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE REOPENING OF THE ASSESSMENT AND THE CONSEQUENT REASSESSMENT ORDER IGNORING THE FACT THAT STATUTORY CONDITIONS PRESCRIBED UNDER SECTION 147 READ WITH SECTION 148 HAVE NOT BEEN COMPL IED WITH BY THE AO. 2.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE REOPE NING OF ASSESSMENT IS BAD AND LIABLE TO BE QUASHED AS THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DOES NOT MEET THE REQUIREMENTS OF THE SECTION 147 OF THE ACT. (II) THAT THE LD.CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF THE APPELLANT THAT THE REASONS RECORDED ARE VAGUE AND SHOWS NON APPLICATION OF MIND. (III) THAT THE LD.CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF THE APPELLANT THAT THERE IS NO LIVE NE XUS WITH THE REASONS RECORDED AND INCOME ESCAPING ASSESSMENT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE ORDE R PASSED BY THE AO U/S 147 READ WITH SECTION 148 IS BAD & LIABLE TO BE QUASHED AS THE SAME HAS BEEN PASSED WITHOUT PROPER SERVICE OF STATUTORY NOTICE U/S 148 OF THE ACT. ITA-2925/DEL/2010 & C.O.-125/DEL/2011 3 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY LEARNED AO UNDER SECTION 147 OF THE A CT IS BAD AND LIABLE TO BE QUASHED AS THE SAME HAS BEEN PASSED WITHOUT ISSUING A STATUTORY NOTICE UNDER SECTION 143( 2) OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE RESPONDENT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF CROSS OBJECTION. 5. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY T HE LEARNED COUNSEL THAT WITH REGARD TO LEGALITY OF SECTION 147 AND 143(2), THE CONCLUSION OF THE LEARNED CIT(A) IS IN PARAGRAPH 4.9. HE SUBMITTED THAT THE FINAL CONCLUSION OF THE CIT(A) IS THAT THE APPEL LANT SUCCEEDS PARTLY IN THIS GROUND OF APPEAL. IT IS SUBMITTED BY THE LEA RNED COUNSEL THAT WITH REGARD TO VALIDITY OF ANY ASSESSMENT OR WITH REGAR D TO VALIDITY OF THE ISSUE OF A NOTICE, THERE CANNOT BE PART SUCCESS, EIT HER THE ASSESSEES GROUND CAN BE ALLOWED OR, IT CAN BE REJECTED BUT, IT CAN NEVER BE PARTLY ALLOWED. HE FURTHER STATED THAT THE CIT(A) HAS ALSO OBSERVED THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED AFTE R THE RETURN OF INCOME WAS FILED BY IT HAS SOME STRENGTH IN IT. HE ST ATED THAT, AGAIN, WHETHER THE NOTICE UNDER SECTION 143(2) HAS BEEN ISSUE D AFTER THE RETURN OF INCOME HAS BEEN FILED OR NOT CAN BE REPLIE D ONLY IN YES OR NO. IT CANNOT BE ADJUDICATED BY SAYING THAT IT HAS SOME STR ENGTH IN IT. HE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT(A ) IS CLEARLY UNSUSTAINABLE AND THE MATTER SHOULD BE SET ASIDE TO HIS FILE FOR READJUDICATION IN ACCORDANCE WITH LAW. 6. LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDE R OF LEARNED CIT(A) IN THIS REGARD BUT, SHE HAS FURTHER SUBMITTED T HAT IF THE MATTER IS TO BE SET ASIDE TO THE FILE OF THE LEARNED CIT(A), T HEN HIS ENTIRE ORDER SHOULD BE SET ASIDE AND THE ISSUES WITH REGARD TO DETERMI NATION OF INCOME WHICH HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSE E SHOULD ALSO BE SET ASIDE. SHE HAS STATED THAT THE REVENUE IS ALREAD Y IN APPEAL ITA-2925/DEL/2010 & C.O.-125/DEL/2011 4 AGAINST THE ADDITIONS DELETED BY THE LEARNED CIT(A) AND GROUND NO.1 OF THE REVENUES APPEAL IS AGAINST THE VIOLATION OF RULE 46A BY THE CIT(A). THEREFORE, SHE STATED THAT THE ENTIRE ORDER OF THE CI T(A) SHOULD BE SET ASIDE AND THE MATTER RESTORED TO HIS FILE FOR READJUDI CATION ON LEGAL AS WELL AS FACTUAL ISSUES BOTH. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND T HAT IN PARAGRAPH 4.9 OF THE ORDER, THE LEARNED CIT(A) OBSERVED AS UNDE R:- 4.9 ON THE BASIS OF ABOVE FINDINGS I AM OF THE VIEW T HAT THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER UNDER SECTION 147 OF THE ACT ARE VALID. ALSO THE NOTICES WO ULD BE DEEMED TO HAVE BEEN SERVED ONCE THEY HAVE BEEN ISSUED AND SENT BY SPEED POST. ONLY ARGUMENT OF THE APPELLA NT THAT NO NOTICE U/S 143(2) HAS BEEN ISSUED AFTER THE RET URN OF INCOME WAS FILED BY IT HAS SOME STRENGTH IN IT. THE APPELLANT SUCCEEDS PARTLY IN THIS GROUND OF APPEAL. 8. WE AGREE WITH THE LEARNED COUNSEL THAT WHETHER TH E NOTICE HAS BEEN ISSUED UNDER SECTION 143(2) AFTER THE RETURN OF INCOME WAS FILED HAS TO BE FACTUALLY VERIFIED AND ITS ANSWER CAN BE ONL Y IN YES OR NO. THIS ISSUE CANNOT BE ADJUDICATED BY SAYING THAT IT HAS SO ME STRENGTH IN IT. SIMILARLY, THE GROUND WITH REGARD TO VALIDITY OF REOPENING OF ASSESSMENT OR VALIDITY OF ISSUE OF NOTICE UNDER SECTION 1 43(2) CAN BE EITHER DECIDED IN FAVOUR OF THE ASSESSEE OR AGAINST THE ASSESSEE. IT CANNOT BE DECIDED PARTLY IN FAVOUR OF THE ASSESSEE AND PARTLY REJECTED. 9. IN VIEW OF THE ABOVE, WE DEEM IT PROPER TO SET ASI DE THE ORDER OF LEARNED CIT(A). SINCE WE ARE SETTING ASIDE THE LEGA L ISSUES, WE AGREE WITH THE LEARNED DR THAT EVEN THE FACTUAL ISSUES DECID ED BY THE CIT(A) IN FAVOUR OF THE ASSESSEE NEED TO BE SET ASIDE TO THE F ILE OF THE CIT(A). WE, THEREFORE, SET ASIDE THE ENTIRE ORDER OF THE LEAR NED CIT(A) AND ITA-2925/DEL/2010 & C.O.-125/DEL/2011 5 DIRECT HIM TO READJUDICATE THE ISSUES AFRESH AFTER ALLO WING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS- OBJECTION OF THE ASSESSEE BOTH ARE DEEMED TO BE ALLOWE D FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2013. SD/- SD/- ( (( (R.K.GUPTA R.K.GUPTA R.K.GUPTA R.K.GUPTA) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 27.09.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S AYUSH STEELS PVT.LTD., M/S AYUSH STEELS PVT.LTD., M/S AYUSH STEELS PVT.LTD., M/S AYUSH STEELS PVT.LTD., C CC C- -- -60/1, WAZIR PUR INDUSTRIAL AREA, 60/1, WAZIR PUR INDUSTRIAL AREA, 60/1, WAZIR PUR INDUSTRIAL AREA, 60/1, WAZIR PUR INDUSTRIAL AREA, DELHI. DELHI. DELHI. DELHI. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(3), NEW DELHI. 2(3), NEW DELHI. 2(3), NEW DELHI. 2(3), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR