THE ZORASTRIAN CO-OP BANK LTD, MUMBAI V. ITO WD 1(3)(4), MUMBAI

CO 4/MUM/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4956 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-06-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 07-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P PEERYA
• Assessee Lawyers: S B BULSARA
• Keywords: Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI R.S.PADVEKAR, JM ITA NO.3878/MUM/2009 : ASST.YEAR 2004-2005 THE INCOME TAX OFFICER WARD 1(3)(4) MUMBAI. VS. M/S.ZORASTRIAN CO-OPERATIVE BANK LIMITED 1 ST FLOOR, 16, HORNIMAN CIRCLE MUMBAI 400 001. PA NO.AAAAZ0071B (APPELLANT) (RESPONDENT) CO NO.4/MUM/2010 : ASST.YEAR 2004-2005 M/S.ZORASTRIAN CO - OPERATIVE BANK LIMITED 1 ST FLOOR, 16, HORNIMAN CIRCLE MUMBAI 400 001. VS. THE INCOME TAX OFFICER WARD 1(3)(4) MUMBAI. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI P.PEERYA ASSESSEE BY : SHRI S.B.BULSARA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 21.4.2009 IN RELATION TO THE ASSESSMENT YEAR 2004-2005. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE, A CO-OPERATIVE BANK, FILED ITS RETURN DECLARING INCOME AT RS.NIL BY CLAI MING DEDUCTION U/S 80P. THE ASSESSMENT WAS FRAMED U/S.143(3) ON 27.12.2005 AT N IL INCOME. THEREAFTER THE ASSESSING OFFICER OBSERVED THAT THE INCOME SHOWN BY THE BANK INCLUDED A SUM OF RS.3,56,474 REPRESENTING INTEREST ON INCOME-TAX REF UND WHICH IN HIS OPINION WAS NOT ELIGIBLE FOR DEDUCTION U/S.80P. ACCORDINGLY NOT ICE U/S.148 WAS ISSUED AND THE ASSESSMENT WAS FRAMED U/S.143(3) R.W.S. 147 BY DETE RMINING TOTAL INCOME AT RS.3,56,474. THE ASSESSEE CHALLENGED THE INITIATION OF REASSESSMENT PROCEEDINGS AS WELL AS THE ADDITION ON MERITS. THE LEARNED CIT(A) DECIDED THE ASSESSEES GROUND ON MERITS BY HOLDING THAT DEDUCTION U/S.80P BE ALLO WED ON INCOME-TAX REFUND. IN ITA NO.3878/M/09 & CO NO.4/M/10 M/S.ZORASTRIAN CO-OP. BANK LIMITED. 2 THE LAST PARA OF THE IMPUGNED ORDER HE HELD THAT TH E ISSUE OF REOPENING OF THE ASSESSMENT HAD BECOME ACADEMIC IN VIEW OF HIS DECIS ION ON MERITS. 3. THE ASSESSEE IN ITS CROSS OBJECTION I S AGAINST THE VALIDITY OF REASSESSMENT WHEREAS THE REVENUE IS AGGRIEVED AGAINST ALLOWING O F DEDUCTION U/S 80P ON THE AMOUNT OF INTEREST ON INCOME TAX REFUND. 4. FIRSTLY WE ARE TAKING UP THE ASSESSEES CR OSS OBJECTION BY WHICH THE REOPENING OF THE ASSESSMENT HAS BEEN CHALLENGED. FR OM THE FACTS RECORDED ABOVE IT IS CLEAR THAT THE ASSESSEE CLAIMED DEDUCTION U/S.80 P OF THE ACT ON THE AMOUNT OF INTEREST ON INCOME-TAX REFUND. IN THE ASSESSMENT MA DE U/S.143(3) THE A.O. ACCEPTED THE ASSESSEES CLAIM AND GRANTED DEDUCTION ACCORDIN GLY. THEREAFTER NOTICE WAS ISSUED U/S.148 ON THE PREMISE THAT SUCH INTEREST IN COME ON REFUND OF INCOME-TAX REFUND WAS NOT ELIGIBLE FOR DEDUCTION U/S.80P. THUS IT BECOMES APPARENT THAT THE REOPENING WAS DONE SIMPLY ON THE BASIS OF CHANGE OF OPINION INASMUCH AS THE ASSESSING OFFICER INITIALLY ALLOWED DEDUCTION U/S.8 0P ON INTEREST ON INCOME-TAX REFUND IN THE SCRUTINY ASSESSMENT BUT SUBSEQUENTLY HE REALIZED, WITHOUT ANYTHING FURTHER, THAT DEDUCTION WAS NOT PERMISSIBLE. RECENT LY THE HONBLE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. [(2010) 320 ITR 5 61(SC)] HAS HELD THAT THE REASSESSMENT CANT BE MADE ON MERE CHANGE OF OPINIO N EVEN AFTER 1.4.1989. ADVERTING TO THE FACTS OF THE INSTANT CASE WE FIND THAT NO TANGIBLE MATERIAL CAME INTO POSSESSION OF THE ASSESSING OFFICER AFTER FRAM ING OF THE ORIGINAL ASSESSMENT BY WHICH HE COULD HAVE FORMED THE REASON THAT THE INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS A SIMPLE CASE OF CHANGE O F OPINION FOR REOPENING THE ASSESSMENT ORIGINALLY MADE U/S 143(3), WHICH CANNOT BE PERMITTED. WE, THEREFORE, HOLD THAT THE INITIATION OF REASSESSMENT PROCEEDING S WAS NOT PROPER. CONSEQUENTLY THE ASSESSMENT FLOWING THERE FROM SUCH INITIATION D ESERVES TO BE AND IS HEREBY SET ASIDE. ITA NO.3878/M/09 & CO NO.4/M/10 M/S.ZORASTRIAN CO-OP. BANK LIMITED. 3 5. IN VIEW OF OUR DECISION ON THE CROSS OBJECTION O F THE ASSESSEE, THERE IS NO NEED FOR DISPOSING OFF THE REVENUES APPEAL ON MERI TS. 6. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESS EE IS ALLOWED AND THE APPEAL PREFERRED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 11 TH DAY OF JUNE, 2010 . SD/- SD/- (R.S.PADVEKAR) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 11 TH JUNE, 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-XXI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.