NEW VIJAY CINEMA, MUMBAI V. ITO 11(1),

CO 43/MUM/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6801 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P C MAURYA
• Keywords: Procedural lapse; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI PRAMOD KUMAR (A.M) ITA NO.3832/MUM/2010(A.Y. 2001-02) THE ITO 11(1)(3), ROOM NO.438, AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (APPELLANT) VS. M/S. NEW VIJAY CINEMA, 146, SHIVAJI PARK, DR. M.B.RAUT ROAD, DADAR, MUMBAI 400 028. PAN: AAAFM 2006P (RESPONDENT) C.O. NO.43/MUM2011 (ARISING OUT OF ITA NO.3832/M/10,A.Y. 2001-02) M/S. NEW VIJAY CINEMA, 146, SHIVAJI PARK, DR. M.B.RAUT ROAD, DADAR, MUMBAI 400 028. PAN: AAAFM 2006P (CROSS OBJECTOR) VS. THE ITO 11(1)(3), ROOM NO.438, AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (APPELLANT IN APPEAL) APPELLANT BY : SHRI P.C.MAURYA RESPONDENT BY : SHRI NITESH JOSHI DATE OF HEARING : 20/12/2011 DATE OF PRONOUNCEMENT : /12/2011 ORDER PER N.V.VASUDEVAN, J.M, ITA NO.3832/M/2010 IS AN APPEAL BY THE REVENUE A GAINST THE ORDER DATED 3/3/2010 OF CIT(A)-3, MUMBAI RELATING TO ASSE SSMENT YEAR 2001-02. THE ASSESSEE HAS FIELD THE CROSS OBJECTION AGAINST THE ORDER OF THE CIT(A). THE GROUNDS RAISED BY THE REVENUE READ AS FOLLOWS: ITA NO.3832/MUM/2010&CO 43/M/2011 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(APPEALS) ERRED IN HOLDING THE REOPENING U/S 147 IS INVALID AND BAD IN LAW RELYING ON THE DECISION OF THE SC IN GKN DRI VESHAFTS 259 ITR 19 WITHOUT APPRECIATING THE FACT THAT THE SAID DECISIO N IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS - (I) ALL MANDATORY PROCEDURES FOR REOPENING THE CASE HAS BEEN FULFILLED, WHICH ARE ON RECORD; (II) THE REASONS RECORDED FOR REOPENING OF THE ASSE SSMENT WERE NOT ASKED BY THE ASSESSEE: (III) ASSESSEE NEVER FILED ANY OBJECTION AGAINST TH E REOPENING OF THE ASSESSMENT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(AP PEALS) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. THE ASSESSEE IS A PARTNERSHIP FIRM. FOR A.Y 200 1-02 THE RETURN OF INCOME WAS FILED ON 25/10/2001. AN ORDER OF ASSES SMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) WAS PA SSED ON 28/11/2003. THEREAFTER NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 28/3/2006. ULTIMATELY AN ORDER OF ASSE SSMENT UNDER SECTION 143(3) READ WITH SECTION 147 WAS PASSED ON 13/11/20 06. IN THIS ASSESSMENT CERTAIN ADDITIONS WERE MADE WHICH RESULT ED IN DETERMINATION OF TOTAL INCOME AT A MUCH HIGHER FIGURE THAN WAS DONE IN THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE FILED AN A PPEAL BEFORE THE CIT(A). BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE AO ER RED IN REOPENING THE ASSESSMENT BY ISSUE OF NOTICE U/S. 148 SERVED ON AS SESSEE ON 28/3/2006 AND THAT THE ORDER OF REASSESSMENT IS BAD IN LAW AS NO REASONS WERE RECORDED IN WRITING AND WERE NOT SHOWN TO THE ASSE SSEE DURING ASSESSMENT ITA NO.3832/MUM/2010&CO 43/M/2011 3 PROCEEDINGS. DURING THE COURSE OF APPEAL, IT WAS AR GUED THAT DESPITE REQUEST MADE BY ASSESSEE, REASONS FOR REOPENING WERE NOT PR OVIDED BY AO. IT WAS ALSO ARGUED THAT NOTICE U/S. 148 ITS OR ITS DATE OF SERVICE OR THE FACT THAT SUCH NOTICE WAS ISSUED AND RECEIVED BY ASSESSEE WAS REFERRED TO IN THE ASSESSMENT ORDER NOR WAS THERE ANY REFERENCE TO THE REASONS RECORDED FOR REOPENING, SANCTIONS OBTAINED AND/OR WHETHER A COP Y WAS PROVIDED TO THE ASSESSEE. THE CIT(A) WAS OF THE VIEW THAT AS LAID DOWN IN THE HONBLE SUPREME COURT DECISION IN GKN DRIVESHAFTS, 259 ITR 19 THE CONTENTIONS RAISED BY THE ASSESSEE WERE PROCEDURAL REQUIREMENT, MANDATORY IN CASES WHICH ARE REOPENED U/S. 147, WHICH HAVE NOT BEEN CO MPLIED WITH BY THE AO. IN VIEW OF THE HONBLE SUPREME COURT DECISION IN GK N DRIVESHAFTS (SUPRA), THE REOPENING WAS HELD BY THE CIT(A) TO BE INVALID AND BAD IN LAW. 3. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS FIELD THE APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD. D.R FIELD A COPY OF THE REASO NS RECORDED AND THE APPROVAL OBTAINED FROM THE CIT(A) FOR PROCEEDINGS U NDER SECTION 147 OF THE ACT. THE CIT(A) HOWEVER PROCEEDED ON THE ASSUMPTIO N THAT REASONS WERE NOT RECORDED BY THE AO. NO DEMAND FOR FURNISHING COPY OF THE REASONS RECORDED APPEARS TO HAVE BEEN MADE BEFORE THE AO. IN THE CI RCUMSTANCES WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) HOLDING THE REOPENING OF THE ASSESSMENT TO BE INVALID ON ACCOUNT OF PROCEDURAL LAPSES CANNOT BE SUSTAINED. THE ORDER OF THE CIT(A) IS THEREFORE, SET ASIDE. THE CIT(A) IS DIRECTED TO DECIDE THE VALIDITY OF INITIATION OF R EOPENING AFRESH. WE HOWEVER, CLARIFY THAT THE ASSESSEE WOULD BE ENTITLED TO CHAL LENGE THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS ON GROUNDS O THER THAN THE NON- FURNISHING OF REASONS RECORDED FOR INITIATING REASS ESSMENT PROCEEDINGS. 5. THE CROSS OBJECTION IS WITH REGARD TO THE ADDITI ONS MADE BY THE AO IN THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. SINC E THE CIT(A) HAS NOT ITA NO.3832/MUM/2010&CO 43/M/2011 4 DECIDED THESE ISSUES ON MERITS IT WOULD BE APPROPRI ATE TO DIRECT THE CIT(A) TO DECIDE THESE ISSUE ALSO IN THE SET ASIDE PROCEEDING S. FOR STATISTICAL PURPOSE THE APPEAL AS WELL AS THE CROSS OBJECTION IS TREATE D AS ALLOWED. 6. IN THE RESULT, THE APPEAL AS WELL AS CROSS OBJEC TION IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23RD DAY OF DEC. 2011. SD/- SD/- (PRAMOD KUMAR ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 23 RD DEC.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RB BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.3832/MUM/2010&CO 43/M/2011 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 20/12/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21/12/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER