Parvathy Palaniappan, CHENNAI V. ACIT, CHENNAI

CO 28/CHNY/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6169 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-07-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 28-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHRIV D GOPAL
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 513/MDS/2010 ASSESSMENT YEAR : 2000-01 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(3), CHENNAI. V. MRS. PARVATHY PALANIAPPAN, 19, PRAKASAM STREET, T. NAGAR, CHENNAI-600 017. (PAN : AAAPP7677C) (APPELLANT) (RESPONDENT) A N D C.O. NO. 28/MDS/2010 (IN ITA NO. 513/MDS.2010) ASSESSMENT YEAR : 2000-01 MRS. PARVATHY PALANIAPPAN, V. THE ASST. COMMISSIONER OF 19, PRAKASAM STREET, IN COME-TAX, COMPANY T.NAGAR, CHENNAI-600 017. CIRCLE-I(3), CHE NNAI. (CROSS OBJECTOR) (RESPOND ENT) DEPARTMENT BY : SHRI SHAJI P. JACOB ASSESSEE BY : SHRIV. D. GOPAL O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : ITA NO. 513/MDS/2010 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF TH E LEARNED CIT(APPEALS)-III, CHENNAI IN ITA NO. 372/07-8/A.III DATED 11-01-2010 FOR THE ASSESSMENT YEAR I.T.A. NO.513 & CO 28/MDS/2010 2 2000-01 AND CO NO. 28/MDS/2010 IS A CROSS OBJECTION FILED BY THE IN THE REVENUES APPEAL IN ITA NO. 513/MDS/2010. 2. SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI V.D. GOPAL, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE R EOPENING OF THE ASSESSMENT U/S 147 IS INVALID. 3. IT IS SUBMITTED THAT ORDER OF SINGLE JUDGE IN THE CASE OF APPOLLO HOSPITALS ENTERPRISES LTD. (287 ITR 25) RELI ED ON BY THE LEARNED CIT(A) HAS BEEN REVERSED BY THE DIVISION BE NCH OF THE HON'BLE HIGH COURT OF MADRAS. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCE D AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORE D. 4. IT WAS THE SUBMISSION BY THE LEARNED DR THAT TH E LEARNED CIT(A) HAD ANNULLED THE RE-ASSESSMENT ON THE GROUND THAT THE O RIGINAL ASSESSMENT IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2000-01 HAD BEEN PASSED U/S. 143(3) ON 29-11-2002 AND THE RE-OPENING OF THE ASSESSMENT HAD BEEN DONE BY ISSUANCE OF NOTICE U/S. 148 DATED 30-03-2003 AND THE CONSEQUENT IAL ASSESSMENT DATED 17-12- 2007 WAS ON THE BASIS OF CHANGE OF OPINION WHICH WA S NOT PERMISSIBLE. FOR THIS PURPOSE IT WAS THE SUBMISSION THAT THE LEARNED CIT( A) HAD RELIED UPON THE I.T.A. NO.513 & CO 28/MDS/2010 3 DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF APPOLLO HOSPITALS ENTERPRISES LTD. V. ASSISTANT COMMISSIONER OF INCOME -TAX REPORTED IN 287 ITR 25 WHICH HAD BEEN REVERSED BY THE DECISION OF THE HON' BLE JURISDICTIONAL HIGH COURT. IT WAS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE REVERSED. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LEARNED CIT(A) HAD NOT ONLY RELIED ON THE DECISION OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF APPOLLO HOSPITALS ENTERPRISES LTD. BUT HAD ALSO RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT V. CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LTD. REPORTED IN 309 ITR 110 AND THIS DECISION HOLDS THE FIELD. IT WAS THE FURTHER SUBMISSION THA T THE ASSESSMENT YEAR UNDER APPEAL WAS 2000-01 AND THE ASSESSMENT ORDER WAS PAS SED U/S. 143(3) ON 29-11- 2002 AFTER LOOKING INTO ALL THE DETAILS. IT WAS TH E SUBMISSION THAT THE NOTICE U/S. 148 WAS ISSUED ON 30-03-2007 WHICH WAS BEYOND THE 4 YEAR PERIOD AND IN THE REASONS RECORDED THERE WAS NOTHING TO SHOW THAT ANY MATERIAL OR INFORMATION HAD COME TO THE KNOWLEDGE OF THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT THERE WAS NOTHING IN THE REASONS TO SHOW THAT ALL THE NEC ESSARY FACTS AND DETAILS FOR THE PURPOSE OF ASSESSMENT IN THE ASSESSEES CASE HAD NO T BEEN FURNISHED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT THE RE-OPENIN G CLEARLY SHOWED THAT IT WAS ON THE BASIS OF A CHANGE OF OPINION. IT WAS THE SU BMISSION THAT AS THERE WAS NO ALLEGATION THAT THE ASSESSEE HAD NOT DISCLOSED FULL Y AND TRULY ALL MATERIAL FACTS I.T.A. NO.513 & CO 28/MDS/2010 4 NECESSARY FOR HER ASSESSMENT FOR THE RELEVANT ASSES SMENT YEAR IN THE REASONS RECORDED AND AS THE RE-OPENING WAS DONE BEYOND 4 YE ARS, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561, THE ORDER OF THE LEARNED C IT(A) WAS LIABLE TO BE SUSTAINED INSOFAR AS THE REOPENING WAS INVALID. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. UNDIS PUTEDLY, THE ORIGINAL ASSESSMENT IN THE PRESENT CASE WAS COMPLETED U/S 14 3(3) ON 29-11-2002 AND THE NOTICE FOR RE-OPENING HAS BEEN ISSUED ON 30-03-2007 WHICH IS BEYOND THE FOUR YEAR PERIOD. THE REASONS RECORDED FOR THE PURPOSE OF RE-OPENING ARE AS FOLLOWS: FROM THE BALANCE SHEET AND OTHER DOCUMENTS OF THE ASSESSEE AND AS CERTIFIED BY THE ASSESSEES AUDITOR, THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND ANY IN COME ARISING FROM SALE OF SHARES HAS TO BE TREATED AS IN COME FROM BUSINESS AND TAXED AT THE RATE OF 30%. HOWEVER, IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE INCOME OF ` 4,11,305/- ARISING FROM SALE OF SHARES HAS BEEN TREATED AS LON G TERM CAPITAL GAINS AND TAXED AT THE RATE OF 10%. THIS HAS RESUL TED IN SHORT LEVY OF TAX TO THE TUNE OF ` 1,90,381/-. SINCE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND HAS BE EN INVESTING SUBSTANTIAL AMOUNTS CONSISTENTLY FOR SEVE RAL YEARS IN SHARES IT IS FELT THAT THE INCOME SHOULD BE TAXED A T THE RATE OF 30% AS SET OUT IN THE CASE OF CIT VS. RAJ BAHADUR V ISHWESHAREA SINGH (1961) 41 ITR 685 BY THE SUPREME COURT OF IND IA. THE CLAIM OF INTEREST PAYMENT OF ` 2,77,392/- IN SHARE TRADING BUSINESS APPEARS TO BE EXCESSIVE. THE ASSE SSEE HAS I.T.A. NO.513 & CO 28/MDS/2010 5 FILED SEPARATE TRADING AND PROFIT AND LOSS ACCOUNT FOR THE SAID BUSINESS. BUT SHE HAS NOT FILED SEPARATE BALANCE S HEET IN RESPECT OF THE SAID BUSINESS. THE AVERAGE OF STOCK HOLDING IS OF LESS THAN 4 LAKHS, PRIMA-FACIE, DOES NOT JUSTIFY TH E CLAIM OF INTEREST TO THE EXTENT OF ` 2,77,392/-. IN THIS CONNECTION, IT MAY ALSO BE NOTED THAT IN THE MAIN BALANCE SHEET, THE A SSESSEE HAS ASSETS BY WAY OF LAND, PERSONAL EFFECTS, INVESTMENT S, DEBTORS AND ADVANCES ETC. TO THE EXTENT OF BORROWED FUNDS ARE DIVERTED FOR INVESTMENTS IN THESE ITEMS, THE CORRES PONDING INTEREST IS NOT ELIGIBLE FOR DEDUCTION. BECAUSE DI VIDEND IS EXEMPTED FROM TAX, INTEREST PAYMENTS CORRESPONDING TO INVESTMENTS IN SHARES ARE NOT ELIGIBLE FOR DEDUCTIO N. INVESTMENTS IN ABOVE SAID ITEMS FAR EXCEED THE FUND S AVAILABLE BY WAY OF CAPITAL CONTRIBUTION AND OTHER NON-INTERE ST LOAN BEARING CREDITS. A PERUSAL OF THE REASONS RECORDED CLEARLY SHOWS THA T THE REOPENING HAS BEEN DONE NOT ON ACCOUNT OF THE FACT THAT THE ASSESSEE HAS NO T FULLY AND TRULY DISCLOSED ALL MATERIALS FACTS NECESSARY FOR HER ASSESSMENT BUT TH E SAME HAS BEEN DONE ONLY ON THE CHANGE OF OPINION. IN FACT, IN THE ORIGINAL AS SESSMENT THE INCOME SHOWN BY THE ASSESSEE AS ALSO HER INVESTMENTS SHOWN IN THE B ALANCE SHEET IN REGARD TO THE SHARES HAD BEEN THE SUBJECT MATTER OF ADJUDICATION. IN THE CIRCUMSTANCES, AS IT IS NOTICED THAT THE RE-OPENING IS ONLY ON THE BASIS OF CHANGE OF OPINION, WE ARE OF THE VIEW THAT IN VIEW OF THE DECISION OF THE HON'BL E SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD., REFERRED TO SUPRA, THE RE -OPENING IS BAD IN LAW. IN THE I.T.A. NO.513 & CO 28/MDS/2010 6 CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED. 7. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE CROSS OBJECTION WAS ONLY IN SUPPORT OF THE ORDER OF THE L EARNED CIT(A). AS IT IS NOTICED THAT THE CROSS OBJECTION IS ONLY IN SUPPORT OF THE LEARNED CIT(A) AND AS WE HAVE ALREADY CONFIRMED THE ORDER OF THE LEARNED CIT(A), THE CROSS OBJECTION FILED BY THE ASSESSEE STANDS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 15/07/201 1. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 15 TH JULY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE