TVS Finance & Services Limited, CHENNAI V. DCIT, CHENNAI

CO 34/CHNY/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2478 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2016
• Court: TRIBUNAL
• Department Lawyers: R VIJAYARAGHAVAN ADVOCTE
• Assessee Lawyers: CLEMENT RAMESH KUMAR ACIT
• Keywords: Reopening of assessment; Depreciation; Audit objection; Principle of natural justice; Difference of opinion; Corroborative evidences; Change of opinion

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ITA NO.50/MDS./2016 ASSESSMENT YEAR : 2007-08 & C.O. NO.34/MDS./2016 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(2), NEW BLOCK, NUNGAMBAKKAM, CHENNAI 600 034. VS. M/S.TVS FINANCE & SERVICES LTD ., NO.29,HADDOES ROAD, CHENNAI. PAN AAACH 6041 B ( #$ / APPELLANT ) ( %&#$ / RESPONDENT/ CROSS OBJECTOR ) / APPELLANT BY : MR.CLEMENT RAMESH KUMAR, ACIT, D.R /RESPONDENT BY : MR.R.VIJAYARAGHAVAN, ADVOCTE / DATE OF HEARING : 19 - 1 0 - 201 6 / DATE OF PRONOUNCEMENT : 30 - 11 - 2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL OF THE REVENUE AND CROSS OBJECTIONS FILE D BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD.CIT(A )-11, CHENNAI, DATED 13.10.2015 PERTAINING TO ASSESSMENT YEAR 2007 -08. ITA NO.50 /MDS./2016 :- 2 -: 2. THE REVENUE IN ITS APPEAL CHALLENGING THE DELE TION OF ADDITION OF EXPENSES ON PROVISION FOR DELINQUENCY O N PORTFOLIO ASSIGNMENTS STATING THAT THE SAME IS ARRIVED SCIENT IFICALLY AND EMPIRICALLY WITHOUT ANY SUPPORTING EVIDENCE. 2.1. IN CROSS OBJECTIONS, THE MAIN GRIEVANCE OF TH E ASSESSEE IS THAT THE LD.CIT(A) ERRED IN CONFIRMING THE VALIDITY OF REOPENING OF THE ASSESSMENT IGNORING THE FACT THAT THE AO HAS COMPL ETED THE ASSESSMENT U/S.143(3) AFTER EXAMINING ALL THE DETAILS IN RESPECT OF DISALLOWANCE NOW MADE. 3. ON PERUSING THE APPEAL, WE FIND THAT THE AO HA D FILED THE APPEAL WITH DELAY OF04 DAYS. THE LEARNED AO HAS SUBMITTED AN AFFIDAVIT DATED 08.01.2016 SEEKING CONDONATION OF DELAY, AND THE AO STATED IN THIS PETITION THAT THE DELAY OF 04 DAYS IN FILING THE AP PEAL BEFORE THIS TRIBUNAL IS ON ACCOUNT OF MIXING UP OF PAPERS IN HI S OFFICE AND IT TOOK TIME TO LOCATE THE SAME AND AS SOON AS HE TRACED TH E RECORDS, HE FILED THE APPEAL ON 08.01.2016. IN OUR OPINION, THE REASO NS EXPLAINED BY THE AO FOR FILING THE APPEAL BELATEDLY IS BONAFIDE. ACCORDINGLY, THE DELAY IS CONDONED. ITA NO.50 /MDS./2016 :- 3 -: 4. IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPL ETED U/S.143(3) OF THE ACT ON 29.12.2009. LATER, THE ASS ESSMENT WAS REOPENED BY ISSUING OF NOTICE U/S.148 OF THE ACT DA TED 30.03.2012 AFTER RECORDING THE REASONS FOR THE PURPOSE OF CONS IDERATION OF DISALLOWANCE OF DELINQUENCIES ON PORTFOLIO ASSIGNME NTS OF ` 6,13,03,571/- AND EXCESS DEPRECIATION ON UPS. ACCOR DINGLY, THE AO PASSED RE-ASSESSMENT ORDER ON DISALLOWANCE OF THESE TWO COUNTS. AGAINST THIS, THE ASSESSEE CARRIED THE APPEAL BEFOR E THE LD.CIT(A). BEFORE LD.CIT(A), THE ASSESSEE CHALLENGED THE REOPE NING OF ASSESSMENT. THE LD.CIT(A) PLACED RELIANCE ON THE DE CISIONS AND UPHELD REOPENING OF ASSESSMENT IS ON MERIT. THE L D.CIT(A) DELETED THE DISALLOWANCE MADE TOWARDS DELINQUENCY ON PORTFO LIO OF ASSIGNMENTS RECEIVABLES OF ` 6,13,03,751/-. 4.1 REGARDING DELETION OF ADDITION MADE BY THE AO, THE DEPARTMENT IS IN APPEAL BEFORE US. 4.2 THE ASSESSEE FILED A CROSS OBJECTIONS CHALLENG ING THE REOPENING OF ASSESSMENT. 5. THE LD.A.R SUBMITTED THAT THE REOPENING OF ASS ESSMENT IS ONLY MERE CHANGE OF OPINION. WHEN THE SIMILAR EXPEN DITURE WAS ALLOWED IN EARLIER YEARS, IT CANNOT BE DISALLOWED I N ANOTHER YEAR BASED ITA NO.50 /MDS./2016 :- 4 -: ON THE AUDIT OBJECTIONS. MORE SO, THE PROVISIONS M ADE TOWARDS DELINQUENCY ON PORTFOLIO OF ASSIGNMENTS IS BASED ON REASONABLE ESTIMATE AND IT IS NOT A CONTINGENT NATURE AND RE- OPENING IS ONLY A CHANGE OF OPINION AS HELD BY THE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD., REPORTED IN 320 I TR 561(SC). ACCORDING TO HIM, THE REOPENING IS BAD IN LAW AND H E SUBMITTED THAT THE LD.CIT(A) WITHOUT DISCUSSING ANY ISSUE REGARDIN G THE FACTS OF THE CASE, HE JUST RELIED ON THE VARIOUS JUDGEMENTS, WHI CH ARE DELIVERY ON DIFFERENT CONTEXTS AND DISMISSED THE GROUNDS RELATI NG TO THE RE-OPENING OF ASSESSMENT . HE SUBMITTED THAT THE REOPENING OF ASSESSMENT SHOULD BE CONSIDERED AS BAD IN LAW. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF LD.CIT(A), SPECIFICALLY PARA NOS.7.4 & 7.4.1. ADMITTEDLY, LD. CIT(A) PLACED RELIANCE ON FEW JUDGEMENTS OF VARIOUS HIGH COURTS A ND OBSERVED THAT THE CONTENTION OF ASSESSEE CANNOT BE ACCEPTED. IN OUR OPINION, CIT(A) BEING A QUASI JUDICIAL AUTHORITY, SHOULD HAVE PASSED A WELL REASONED SPEAKING ORDER AFTER EXAMINED THE ENTIRE FACTS OF T HE CASE. IN OUR OPINION, THE LD.CIT(A) BEING THE QUASI JUDICIAL AUTHORITY S HOULD HAVE PASSED A REASONED ORDER AS HELD BY SUPREME COURT IN THE CASE OF KRANTI ASSOCIATES P.LTD VS. MASOOD AHMED KHAN [2010] 9 SCC 496 WHICH STATUTORILY REQUIRES ITA NO.50 /MDS./2016 :- 5 -: RECORDING OF REASONS AND REQUIREMENT OF PASSING A R EASONED ORDER BY AN AUTHORITY WHETHER ADMINISTRATIVE, QUASI-JUDICIAL OR JUDICIAL, HAD LAID DOWN AS UNDER:- (A) IN INDIA THE JUDICIAL TREND HAS ALWAYS BEEN T O RECORD REASONS, EVEN IN ADMINISTRATIVE DECISIONS, IF SUCH DECISIONS AFFECT ANYONE PREJUDICIALLY. (B) A QUASI-JUDICIAL AUTHORITY MUST RECORD REASON S IN SUPPORT OF ITS CONCLUSIONS. (C) INSISTENCE ON RECORDING OF REASONS IS MEANT TO SERVE THE WIDER PRINCIPLE OF JUSTICE THAT JUSTICE MUST NOT ONLY BE DONE IT MUST ALSO APPEAR TO BE DONE AS WELL. (D) RECORDING OF REASONS ALSO OPERATES AS A VALID RESTRAINT ON ANY POSSIBLE ARBITRARY EXERCISE OF JUDICIAL AND QUASI JUDICIAL O R EVEN ADMINISTRATIVE POWER. (E) REASONS REASSURE THAT DISCRETION HAS BEEN EXER CISED BY THE DECISION MAKER ON RELEVANT GROUNDS AND BY DISREGARDING EXTRA NEOUS CONSIDERATIONS. (F) REASONS HAVE VIRTUALLY BECOMES AS INDISPENSABL E COMPONENT OF A DECISION MAKING PROCESS AS OBSERVING PRINCIPLES OF NATURAL JUSTICE BY JUDICIAL, QUASI-JUDICIAL AND EVEN BY ADMINISTRATIVE BODIES. (G) REASONS FACILITATE THE PROCESS OF JUDICIAL REVI EW BY SUPERIOR COURTS. (H) THE ONGOING JUDICIAL TREND IN ALL COUNTRIES CO MMITTED TO RULE OF LAW AND CONSTITUTIONAL GOVERNANCE IS IN FAVOUR OF REASONED DECISIONS BASED ON RELEVANT FACTS. THI S IS VIRTUALLY THE LIFE ITA NO.50 /MDS./2016 :- 6 -: BLOOD OF JUDICIAL DECISION MAKING JUSTIFYING THE PR INCIPLE THAT REASON IS THE SOUL OF JUSTICE. (I) JUDICIAL OR EVEN QUASI-JUDICIAL OPINIONS THESE DAYS CAN BE AS DIFFERENT AS THE JUDGES AND AUTHORITIES WHO DELIVER THEM. ALL T HESE DECISIONS SERVE ONE COMMON PURPOSE WHICH IS TO DEMONSTRATE BY REASON THAT THE RELEVANT FACTORS HAVE BEEN OBJECTIVELY CONSIDER ED. THIS IS IMPORTANT FOR SUSTAINING THE LITIGANTS FAITH IN TH E JUSTICE DELIVERY SYSTEM. (J) INSISTENCE ON REASON IS A REQUIREMENT FOR BOTH JUDICIAL ACCOUNTABILITY AND TRANSPARENCY. (K) IF A JUDGE OR A QUASI-JUDICIAL AUTHORITY IS NO T CANDID ENOUGH ABOUT HIS/HER DECISION MAKING PROCESS THEN IT IS IMPOSSIB LE TO KNOW WHETHER THE PERSON DECIDING IS FAITHFUL TO THE DOCTRINE OF PRECEDENT OR TO THE PRINCIPLES OF INCREMENTALISM. (L) REASONS IN SUPPORT OF DECISIONS MUST BE COGENT , CLEAR AND SUCCINCT. A PRETENCE OF REASONS OR RUBBER STAMP REASONS, IS N OT TO BE EQUATED WITH A VALID DECISION MAKING PROCESS. (M) IT CANNOT BE DOUBTED THAT TRANSPARENCY IS THE SINE QUA NON OF RESTRAINT ON ABUSE OF JUDICIAL POWERS. TRANSPARENCY IN DECISION MAKING NOT ONLY MAKES THE JUDGES AND DECISION MAKERS LESS PRONE TO ERRORS BUT ALSO MAKES THEM SUBJECT TO BROADER SCRUTINY.(SE E DAVID SHAPIRO IN DEFENCE OF JUDICIAL CANDOR (1987) 100 HARWARD LAW REVIEW 731-737) ITA NO.50 /MDS./2016 :- 7 -: (N) SINCE THE REQUIREMENT TO RECORD REASONS EMANAT ES FROM THE BROAD DOCTRINE OF FAIRNESS IN DECISION MAKING, THE SAID R EQUIREMENT IS NOW VIRTUALLY A COMPONENT OF HUMAN RIGHTS AND WAS CONSI DERED PART OF STRASBOURG JURISPRUDENCE. SEE RUIZ TORIJA V. SPAIN [1994] 19 EHRR 553, AT 562 PARA 29 AND ANYA V. UNIVERSITY OF OXFOR D [2001] EWCA CIV 405(CA) WHEREIN THE COURT REFERRED TO ARICLE 6 OF THE EUROPEAN CONVENTION OF HUMAN RIGHTS WHICH REQUIRES, ADEQUAT E AND INTELLIGENT REASONS MUST BE GIVEN FOR JUDICIAL DECISIONS. (O) IN ALL COMMON LAW JURISDICTIONS, JUDGMENTS PLAY A VITAL ROLE IN SETTING UP PRECEDENTS FOR THE FUTURE. THEREFORE, FOR DEVELOPMENT OF LAW, REQUIREMENT OF GIVING REASONS F OR THE DECISION IS OF THE ESSENCE AND IS VIRTUALLY A PART OF DUE PROC ESS. 7. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINE D TO REMIT THE ISSUE REGARDING REOPENING OF ASSESSMENT TO THE FILE OF L D.CIT(A) TO GIVE A CORRECT FINDINGS HOW THE REOPENING OF ASSESSMENT IS VALID IN THE FACTS AND CIRCUMSTANCES. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF LD.CIT(A) TO PASS SPEAKING ORDER ON THE ISSUE OF REOPENING, THEN DECIDE THE ISSUE RELATING TO THE ADDITIONS MADE BY THE AO CHALLENGED BEFORE H IM. HENCE, THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. SINCE WE HAVE REMITTED THE ISSUE RELATING TO TH E REOPENING OF ASSESSMENT, AT THIS STAGE WE REFRAIN FROM GOING TO OTHER GROUNDS RAISED BY THE REVENUE IN ITS APPEAL WITH REGARD TO VALIDITY O F ADDITIONS. ITA NO.50 /MDS./2016 :- 8 -: 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED AS INFRUCTUOUS AND CROSS OBJECTIONS FILED BY THE ASSES SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI !' / DATED: 30 TH NOVEMBER, 2016 K S SUNDARAM #!$%%&' (% )( / COPY TO: % 1 . / APPELLANT 3. #%# *%+ , / CIT(A) 5. (-.%&&/0 / DR 2. / RESPONDENT 4. #%# * / CIT 6. .12%3 / GF