Goldwon Textiles Ltd, Hyderabad V. ACIT, Hyderabad

ITA 1015/HYD/2010

• Counselvise Citation: 101522514 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-05-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Block assessment
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.482 & 483/HYD/2009 : ASSESSMENT YEAR 1995-96 & 1996-97 ITA NO.1014 &1015/HYD/2010 : ASSESSMENT YE AR 1995-96 & 1996-97 M/S.GOLDWON TEXTILES LTD., HYDERABAD ( PAN - AAACG 8331 P) V/S. INCOME-TAX OFFICER,WRD-2(1). HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHU RAM RESPONDENT BY : S HRI B.V.PRASAD REDDY DATE OF HEARING 28.9.2011 DATE OF PRONOUNCEMENT 14.10.2011 O R D E R PER G.C.GUPTA, VICE PRESIDENT: THESE FOUR APPEALS BY THE ASSESSEE FOR THE ASSESS MENT YEARS 1995-96 AND 1996-97 ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A). THESE ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER . ITA NO.482 & 483/HYD/2009 : ASSESSMENT YEAR 1995-96 & 1996-97 2. GROUNDS OF THE ASSESSEE, WHICH ARE IDENTICAL I N THESE TWO APPEALS READ AS FOLLOWS- 01. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE COMMISSIONER OF INCOME-TAX(APPEALS)VI ERRED IN UPHOLDING THE OR DER OF THE RE-ASSESSMENT UNDER SECTION 143(2) READ WITH 147 O F THE INCOME TAX ACT, 1961 PASSED BY THE RESPONDENT HEREI N. ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 2 02. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE ALLOWED THE APPEAL ON THE GROUND THAT THE ORDE R OF ASSESSMENT WAS BARRED BY LIMITATION AND WAS NOT SA VED UNDER THE PROVISIONS OF SECTION 150(1) OF THE INCOME TAX ACT, 1961. 03. THE COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT T O HAVE APPRECIATED THAT THE SAVING OF LIMITATION UNDER SEC TION 151 OF THE INCOME TAX ACT, 1961 IS POSSIBLE ONLY WITH ANY ORDER TO GIVE EFFECT TO A DIRECTION ISSUED BY AN APPELLATE A UTHORITY THAT THE ASSESSMENT BE REOPENED. FURTHER, ANY SUCH DIREC TION OUGHT TO BE A DIRECTION WHICH WAS NECESSARY FOR THE DISPO SAL OF THE APPEAL BY THE APPELLATE AUTHORITY. 04. THE COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT T O HAVE APPRECIATED THAT THERE WAS NO SPECIFIC DIRECTION GI VEN BY THE HONBLE TRIBUNAL DIRECTING THE RESPONDENTS TO REASS ESS THE INCOME OF THE PETITIONER. 05. THE COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT T O HAVE APPRECIATED THAT IT WAS NOT NECESSARY FOR THE HONB LE TRIBUNAL TO DIRECT THAT RE-ASSESSMENT OUGHT TO BE DONE UNDE R SECTION 148 OF THE ACT. THE QUESTION BEFORE THE HONBLE T RIBUNAL WAS WHETHER THE IMPUGNED ISSUES COULD BE CONSIDERED IN BLOCK ASSESSMENT WHICH DEALS WITH ONLY INCOME DETECTED A T THE TIME OF SEARCH. IT WAS NEEDLESS FOR THE HONBLE TRIBUNA L TO HAVE GONE INTO THE QUESTION AS TO WHETHER SUCH ALLEGED I NCOME COULD BE BROUGHT TO TAX BY INVOKING SECTION 147 AND 148 OF THE INCOM E TAX ACT, 1961. 06) CONSEQUENTLY, IT WAS NEITHER NECESSARY NOR PROP ER FOR THE INCOM E TAX APPELLATE TRIBUNAL TO HAVE GIVEN ANY DIRECTIO N TO THE ASSESSING OFFICER IN THIS BEHALF AND ANY SUCH D IRECTION EVEN IF CONTAINED IN AN ORDER DOES NOT BIND THE ASSESSIN G OFFICER AND, AT ANY RATE, DOES NOT BIND THE APPELLANT. 07) THE COMMISSIONER ERRED IN HOLDING THAT THE ASSE SSMENT IN WITHIN LIMITATION AS THE PETITIONER HAD FILED FRESH RETURN ON 17- 8-2004. THE COMMISSIONER OUGHT TO HAVE APPRECIATED THAT THE PETITIONER COMPANY HAD, UPON A NOTICE ISSUED BY THE RESPONDENT, UNDER PROTEST, STATED THAT THE RETURNS FILED ON 30- 11-1995 MAY BE TREATED AS RETURNS PURSUANT TO THE N OTICE ISSUED BY THE RESPONDENT. HOWEVER, THE PETITIONER HAD RAISED AN OBJECTION ON THE GROUND THAT THE ASSESSMENT PRO CEEDINGS ARE BARRED BY LIMITATION AND HAD NOT SUBMITTING IT SELF TO THE JURISDICTION OF THE RESPONDENT. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS A SEARCH CASE AND THE SEARCH OPERATIONS UNDER S.132 OF THE A CT WERE CARRIED ON 15.7.1996. HE SUBMITTED THAT IN THE FIRST ROUND OF APPEAL, HYDERABAD BENCH ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 3 OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN IT(S S)A NO218/HYD/1997, VIDE ORDER DATED 27.2.2004, HELD THAT INTEREST INCOME RE CEIVED FROM THE SCHEDULED BANK ON SHARE APPLICATION MONEY KEPT WIT H IT, WAS ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT AND WAS PART OF AUD ITED ANNUAL ACCOUNTS APPROVED BY THE GENERAL BODY OF THE SHAREHOLDERS AN D SHOULD NOT BE BROUGHT TO TAX IN THE BLOCK ASSESSMENT OF THE ASS ESSEE. THE TRIBUNAL FURTHER OBSERVED THAT IT IS OPEN FOR THE REVENUE TO BRING THE SAME TO TAX IN REGULAR ASSESSMENT. THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THERE WAS NO DIRECTION AS SUCH BY THE TRIBUNAL IN I TS ORDER DATED 27.2.2004 TO INCLUDE THE INTEREST INCOME FROM THE SCHEDULED B ANK ON SHARE APPLICATION MONEY IN THE REGULAR ASSESSMENT OF THE ASSESSEE, AN D ACCORDINGLY, THE NOTICE ISSUED UNDER S.148 READ WITH S.147 OF THE AC T ON 11.6.2004 FOR BOTH THE RELEVANT ASSESSMENT YEARS 1995-96 AND 1996-97 B Y INVOKING THE PROVISIONS OF S.151 OF THE ACT, WAS NOT VALID. HE SUBMITTED THAT NO REASONS WERE RECORDED BY THE ASSESSING OFFICER FOR REOPENIN G THE COMPLETED REGULAR ASSESSMENT AND THE NOTICE WAS ISSUED BY THE ASSESSI NG OFFICER AND NOT BY THE DY. COMMISSIONER OF INCOME-TAX, AS PROVIDED UND ER THE ACT. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V/S. GREENWORLD CORPORATION (314 ITR 81) (SC) IN SUPPORT OF HIS ARGUMENTS. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OP POSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE SUBMITTED THAT IN ACCORDANCE WITH THE PROVISIONS OF S.151 OF THE ACT, THE ASSESSMENT OF THE ASSESSEE COULD BE REOPENED EVEN ON THE BASIS OF A F INDING AND THERE NEED NOT NECESSARILY BE A DIRECTION BY THE APPELLATE AUT HORITY. HE SUBMITTED THAT THERE WAS AN AMENDMENT IN THE STATUTE WITH EFFECT F ROM 1.4.1998 AND THEREFORE, THE NOTICE ISSUED BY THE ASSESSING OFFIC ER INSTEAD OF DCIT ON 11.6.2004 WAS IN ACCORDANCE WITH LAW. HE SUBMITTED THAT THE ASSESSING OFFICER HAS RECORDED REASONS FOR REOPENING THE ASSE SSMENT AND THE SAME ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 4 HAS BEEN RE-PRODUCED IN THE ASSESSMENT ORDER BY T HE ASSESSING OFFICER. HE SUBMITTED THAT THE CASE-LAW RELIED UPON BY THE LEAR NED COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON LAW. HE RELIED ON A SERIES OF DECISIONS IN SUPPORT OF HIS ARGUMENTS, WHICH ARE AS UNDER- (A) CIT V/S. MRS. C.MALATHY (294 ITR 532)-MAD (B) CIT V/S. YAMU INDUSTRIES LTD. (306 ITR 309)- DE L. (C) CIT V/S. SHANKER LAL VED PRAKASH (300 ITR 243)- DEL (D) CIT VS. VINS OVERSEAS INDIA LTD. (305 ITR 320)- DEL. (E) CAPITAL GEM OVERSEAS (P) LTD. V/S. ITO (101 ITD 117)-DEL. (F) YOGESH KUMAR & SONS (HUF) V/S. AO (2008)115 TTJ (ASR) 696 (G) CIT V/S. RAGHUNATH PR. PODDAR (96 ITR 316)-CAL. (H) THANTHI TRUST V/S. ACIT(238 ITR 117)-MAD. (I) SARDAR HARVINDER SINGH SEHGAL AND OTHERS V/S. A CIT- (227 ITR 512) (J) JAYALAKSHMI LEASING CO., IN. RE. (228 ITR (AT) 1)-SETTLEMENT COMMISSION 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE FIND THAT THE SEARCH OPERATION UNDER S.131 OF THE ACT WAS CAR RIED OUT AT THE PREMISES OF THE ASSESSEE ON 15.7.1996. THE TRIBUNAL IN THE F IRST ROUND OF APPEAL BY THE ASSESSEE FOR THE BLOCK PERIOD FROM 1985-86 TO 1 995-96 IN IT(SS) A NO.218/HYD/1997 VIDE ORDER DATED 27.2.2004 HAS HE LD THAT THE INTEREST INCOME RECEIVED FROM THE SCHEDULED BANK ON SHARE APPLICATION MONEY KEPT BY IT, WHICH IS ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT AND WAS PART OF THE AUDITED ANNUAL ACCOUNTS, APPROVED BY THE GENERA L BODY OF THE SHAREHOLDERS CANNOT BE BROUGHT TO TAX IN THE BLOCK ASSESSMENT, AS THE ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 5 ASSESSEE HAS DISCLOSED THE SAME IN THE RETURN OF IN COME, AND AS SUCH THAT INCOME DOES NOT FALL WITHIN THE SCOPE AND AMBIT OF BLOCK ASSESSMENT . IT IS OPEN FOR THE REVENUE TO BRING TO TAX THE SAME TO TA X IN THE REGULAR ASSESSMENT. FOLLOWING SUCH FINDING OF THE TRIBUNAL , RE-ASSESSMENT PROCEEDINGS WERE INITIATED UNDER S.147 READ WITH S. 150 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS CHALLENGED THE LEGALITY OF ISSUING SUCH NOTICE UNDER S.147 READ WITH S.150 OF THE ACT, AS ACCORDIN G TO THE ASSESSEE, THE OBSERVATION OF THE TRIBUNAL DOES NOT AMOUNT TO A DI RECTION TO ASSESS THE DISPUTED AMOUNT OF INTEREST IN THE HANDS OF THE ASS ESSEE. WE FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE LEARNED DEPARTMENTA L REPRESENTATIVE THAT EVEN IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FIN DING IN AN ORDER PASSED BY ANY APPELLATE AUTHORITY IN ANY PROCEEDINGS UNDER TH IS ACT, BY WAY OF APPEAL, ETC., THE ASSESSING OFFICER MAY ISSUE A NOTICE UNDE R S.148 AT ANY TIME FOR MAKING AN ASSESSMENT OR RE-ASSESSMENT OR RE-COMPUT ATION OF THE INCOME OF THE ASSESSEE. WE FIND THAT IN THE PROVISION OF S .150(1), BOTH THE WORDS FINDING AND DIRECTION HAVE BEEN SPECIFICALLY US ED AND THERE IS THE WORD OR IN BETWEEN THE TWO WORDS FINDING AND DIRECTION AND THEREFORE, EVEN ON THE BASIS OF A FINDING BY AN APPELLATE AUTHORITY, T HE ASSESSING OFFICER MAY ISSUE NOTICE UNDER S.148 FOR MAKING THE ASSESSMENT OR RE-ASSESSMENT . IN THIS CASE, THE TRIBUNAL VIDE ITS ORDER DATED 27.2.2 004, NOTED ABOVE, HAS GIVEN A FINDING THAT THE INTEREST INCOME DOES NOT FALL WITHIN THE SCOPE AND AMBIT OF BLOCK ASSESSMENT AND IT IS OPEN FOR THE REVENUE TO BRING THE SAME TO TAX IN THE REGULAR ASSESSMENT. MOREOVER, T HE LEARNED COUNSEL FOR THE ASSESSEE HAS ADMITTED BEFORE US THAT NOTICE UND ER S.148 WAS ISSUED WITHIN THE PERIOD STIPULATED IN THE STATUTE FOR REO PENING THE ASSESSMENT AS PROVIDED UNDER S.147 OF THE ACT. WE FIND THAT THE ASSESSING OFFICER HAS RECORDED THE REASONS FOR REOPENING THE ASSESSMENT U NDER S.148 BASED ON THE FINDING GIVEN BY THE TRIBUNAL AND THIS FACT IS ALSO MENTIONED BY THE ASSESSING OFFICER IN PARA 4 OF HIS RE-ASSESSMENT OR DER DATED 28.3.2006. WE ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 6 FIND THAT THERE WAS AN AMENDMENT IN LAW WITH EFFECT FROM 1.4.1998 AND THEREFORE, THE NOTICE UNDER S.148 ISSUED ON 11.6.20 04 BY THE ASSESSING OFFICER WAS VALID. IN THESE FACTS OF THE CASE, WE HAVE NO HESITATION IN HOLDING THAT THE REOPENING OF THE ASSESSMENT IN TH IS CASE BY ISSUE OF NOTICE UNDER S.148 READ WITH S.150 OF THE ACT WAS VALID UN DER LAW. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONCE DED BEFORE US THAT THE ASSESSEE HAS NO CASE ON MERITS. ACCORDING LY, THE GROUNDS OF APPEAL OF THE ASSESSEE IN BOTH THESE APPEALS ARE RE JECTED. 7. IN THE RESULT, BOTH THE QUANTUM APPEALS OF THE ASSESSEE, BEING ITA NO.482 AND 483/HYD/2009 ARE DISMISSED. ITA NO.1014 &1015/HYD/2010 : ASSESSMENT YEAR 1995-96 & 1996-97 8. THE ONLY ISSUE IN THESE TWO APPEALS OF THE ASSE SSEE IS REGARDING THE VALIDITY OF THE PENALTY IMPOSED UNDER S.271(1)( C) OF THE ACT. 9. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT OF INTEREST INCOME RECEIVED FROM THE SCHEDULED BANK ON SHARE APPLICATION MONEY KEPT WITH IT BY THE ASSESSEE WAS ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT AND WAS PART OF THE AUDITED ANNUAL ACCO UNTS OF THE ASSESSEE AND WERE DISCLOSED IN THE BLOCK RETURN FILED BY THE ASS ESSEE, AND SET OFF THEREOF WAS CLAIMED AGAINST INTEREST PAID ON BRIDGE LOANS . HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN CIT V/S. R ELIANCE PETRO PRODUCTS P. LTD. (230 CTR SC 320) IN SUPPORT OF HIS ARGUMENTS. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OP POSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE SUBMITTED THAT THE ASSESSEE HAS NOT SHOWN INTEREST INCOME IN HIS REGUL AR RETURN OF INCOME FILED ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 7 WITH THE DEPARTMENT, AND IT WAS ONLY DUE TO THE FIN DING OF THE TRIBUNAL THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF INTE REST INCOME ON THE SHARES APPLICATION MONEY, AND ACCORDINGLY, THE ASSESSEE W AS GUILTY OF CONCEALMENT OF INCOME UNDER S.271(1)(C) OF THE ACT. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE INTEREST INCOME FROM THE SCHEDULED BANK ON SHARE A PPLICATION MONEY DEPOSITED BY THE ASSESSEE COMPANY WITH IT WAS ACCOU NTED FOR IN THE REGULAR BOOKS OF ACCOUNT AND WAS PART OF THE AUDITED ANNUAL ACCOUNTS, WHICH WERE APPROVED BY THE GENERAL BODY OF THE SHARE HOLDERS AND WAS DISCLOSED BY THE ASSESSEE IN ITS BLOCK RETURN FOR THE BLOCK ASSE SSMENT OF THE ASSESSEE. THE ASSESSEE HAS INITIALLY CLAIMED THE SET OFF OF T HIS INTEREST INCOME FROM THE SHARE APPLICATION MONEY AGAINST THE INTEREST PAID B Y IT ON BRIDGE LOANS. MERELY BECAUSE THIS CLAIM OF THE ASSESSEE COULD N OT BE ACCEPTED BY THE REVENUE AUTHORITIES, IT COULD NOT BE SAID THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FOR FILING OF INACCURATE P ARTICULARS OF INCOME UNDER S.271(1)(C) OF THE ACT. WE FIND THAT THE ASSE SSEE HAS DISCLOSED ALL THE MATERIAL FACTS RELEVANT TO ITS ASSESSMENT AT THE T IME OF ASSESSMENT ITSELF, AND THE RATIO OF THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF CIT V/S. RELIANCE PETRO PRODUCTS LTD. (SUPRA) APPLIES TO THE FACTS OF THE CASE OF HE ASSESSEE. THE CONDUCT AND THE EXPLANATION OF THE ASSESSEE SEEMS TO BE BONAFIDE. THE FACT THAT THE ASSESSEE HAS DISCLOSED THE INTEREST INCOME AND HAS CLAIMED ITS SET OFF AGAINST THE INTEREST PAID O N BRIDGE LOANS AND HAS DISCLOSED THE INTEREST INCOME IN ITS BLOCK RETURN C LINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE, AND ACCORDINGLY, WE HOLD THAT IT I S NOT A FIT CASE FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT. WE ACCORDING LY CANCEL THE PENALTIES LEVIED FOR BOTH THE YEARS, AND CONSEQUENTLY GROUNDS OF THE ASSESSEE IN BOTH THESE APPEALS ARE ALLOWED. ITA NO.482-483/HYD/200 9 AND 2 OTHERS M/S.GOLDWON TEXTILES LTD., HYDERABAD 8 12. IN THE RESULT, BOTH THESE APPEALS OF THE ASSES SEE ARE ALLOWED. 13. TO SUM, WHILE THE QUANTUM APPEALS OF THE ASSE SSEE, BEING ITA NO.482 AND 483/HYD/2009 ARE DISMISSED, BOTH THE PEN ALTY APPEALS OF THE ASSESSEE BEING ITA NOS.1014-1015/HYD/2010 ARE ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 14.10.2011 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 14TH OCTOBER, 2011 COPY FORWARDED TO: 1. M/S.GOLDWON T E XTILES LTD.,C/O. M/S. K.VASANT KUMAR, A.V.RAGHU RAM & B.PEDDI RAJULU, ADVOCATES, 403 MANI SHA TOWERS, D.NO.10-1-18/31, SHYAM NAGAR, HYDERABAD 500 004. 2. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), HYDERABAD 3. INCOME TAX OFFICER, WRD - 2(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) VI HYDERABAD 4. COMMISSIONER OF INCOME TAX II, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.