M/s. METMIN INVESTMENT & TRADING P. LTD., MUMBAI V. ITO - 3(2)(2), MUMBAI

ITA 1021/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2581 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 1998-1999
• Appeal Filed On: 11-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Keywords: Reopening of assessment; Business income; Depreciation; Difference of opinion; Procedural lapse; Reason to believe; Change of opinion
• Section: 143(3); 143(1); 292BB; 147; 246; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JM & SHRI R.K. PANDA, AM I.T.A NO. 1021/MUM/2008 (ASSESSMENT YEAR 1998-99) I.T.A NO. 1022/MUM/2008 (ASSESSMENT YEAR 1999-2000) M/S. METMIN INVESTMENT & TRADING PVT. LTD. (IN CASE OF ERSTWHILE METROD INDIA LTD.), 161/162, MITTAL COURT, A WING, NARIMAN POINT, MUMBAI-400 021 PAN: AAACM4061C VS. INCOME-TAX OFFICER WARD 3(2)(2) MUMBAI APPELLANT RESPONDENT APPELLANT BY: SHRI RONAK DOSHI RESPONDENT BY: SHRI VIRENDRA OJHA O R D E R DATE OF HEARING: 01.10.2009 DATE OF ORDER: 18.12.2009 PER R.K. PANDA, AM: THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE SEPARATE ORDERS DATED 5 TH DECEMBER, 2007 OF THE CIT(A)-III, MUMBAI RELATING TO ASSESSMENT YEARS 1998-99 AND 1999-2000, RESPECTIVELY. SINCE IDENTICAL GROUNDS ARE TAKEN IN BOTH THE APPEALS, TH EREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO. 1021/MUM/08 (A.Y. 1998-99): 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 TH JULY, 1998 DECLARING TOTAL LOSS AT RS. NIL. IT WA S PROCESSED U/S. 143(1)(A) OF THE INCOME-TAX ACT, 1961 (THE ACT ) ON 23 RD APRIL, 1999 AFTER MAKING ADJUSTMENTS OF RS.24,96,458. ON THE B ASIS OF INFORMATION AVAILABLE WITH THE ASSESSING OFFICER A NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 22 ND MARCH, 2005 WHICH WAS DULY SERVED ON THE ASSESSEE ON 24 TH I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 2 MARCH, 2005. A COPY OF THE REASONS RECORDED IN WRI TING WHICH READ AS UNDER WAS PROVIDED TO THE ASSESSEE ON 20 TH SEPTEMBER, 2005: ON PERUSAL OF RETURN OF INCOME OF THE ASSESSEE IT WAS NOTICED THAT ASSESSEE HAS RECEIVED RENT OF RS.12,00 ,000/- AND INTEREST ON INCOME TAX REFUND OF RS.7,555/-. AGAIN ST THIS INCOME ASSESSEE HAS CLAIMED EXPENSES ON ACCOUNT OF RENT OF RS.10,59,305/-, PROVISION FOR DOUBTFUL ADVANCES IS RS.24,96,458/-, AUDITORS REMUNERATION RS.6,000/-, ADMINISTRATIVE EXPENSES OF RS.6,045/-, DEPRECIATION AS PER I.T. ACT RS.99,654/- AND PRELIMINARY EXPENSES WRITTEN OF F RS.36,833/-. THE INCOME CREDITED IN THE P & L ACCO UNT ON ACCOUNT OF RENT AND INTEREST ON REFUND IS TAXABLE U NDER THE HEAD INCOME FROM OTHER SOURCES. THE VARIOUS EXPENS ES CLAIMED AS STATED ABOVE ARE NOT AN ALLOWABLE EXPENS ES. THEREFORE, I HAVE REASON TO BELIEVE THAT THE ABOVE INCOME CHARGEABLE TO TAX OF RS.12,07,555/- HAS ESCAPED ASS ESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. 3. AFTER RECEIPT OF THE NOTICE U/S. 148 OF THE ACT THE ASSESSEE FILED LETTER DATED 20 TH APRIL, 2005 OBJECTING THE ISSUANCE OF NOTICE U/S. 148 OF THE ACT RELYING UPON VARIOUS COURT DECISIONS. THE ASSESSING OFFICER DEALT WITH ALL THE OBJECTIONS RAISED BY THE ASSESSEE AND THEREAFTER COMPLETED THE ASSESSMENT ON TOTAL INCOME OF RS.42,551 BY DISA LLOWING THE FOLLOWING EXPENSES FROM THE LOSS OF RS.24,96,740/- AS PER COM PUTATION OF INCOME: 1) AUDITORS REMUNERATION - RS. 6,000 2) PROVISION FOR DOUBTFUL ADVANCES - RS.24,96,458 3) PRELIMINARY EXPENSES - RS. 36,833 4. WHILE DOING SO THE ASSESSING OFFICER OBSERVED THAT THE PAYMENT TO AUDITORS HAS NO CONNECTION WITH REGARD TO RECEIPT O F RENT INCOME. SIMILARLY PROVISION FOR DOUBTFUL ADVANCES HAS NO RE LATION WITH THE EARNING OF LEASE RENTAL INCOME. FURTHER THE PROVISION FOR DOUBTFUL ADVANCES WAS ADDED BACK WHILE PROCESSING THE RETURN OF INCOME U/ S. 143(1)(A) OF THE ACT AND WHICH HAS BEEN CONFIRMED BY THE ITAT, MUMBA I. HE ACCORDINGLY DISALLOWED AND ADDED BACK THE PROVISION FOR DOUBTFU L ADVANCES. AS REGARDS PRELIMINARY EXPENSES WRITTEN OFF AMOUNTING TO RS.36,833 THE ASSESSING OFFICER HELD THAT NEITHER IT CAN BE CALLE D AS EXPENSES RELATED TO THE EARNING OF RENTAL INCOME NOR THE ACT PROVIDES A NY SPECIFIC SECTION/ PROVISION UNDER THE HEAD INCOME FROM OTHER SOURCES UNDER WHICH IT CAN BE ALLOWED. I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 3 5. THE ASSESSEE THEREAFTER PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE SAID APPEAL THE ASSESSEE CHALLENGED THE ISSUE O F NOTICE U/S. 148 OF THE ACT IN THE NAME OF THE COMPANY M/S. METROD INDIA LT D. WHICH HAS ALREADY BEEN AMALGAMATED WITH M/S. METMIN INVESTMENT & TRAD ING PVT. LTD. FURTHER THE ASSESSEE ALSO CHALLENGED THE ORDER PASS ED U/S. 143(3) R.W.S. 147 MADE IN THE NAME OF METROD INDIA LTD., A NON EX ISTENT COMPANY. THE ASSESSEE ALSO CHALLENGED THE REOPENING OF ASSESSMEN T ON THE GROUND THAT IT HAD DISCLOSED ALL THE FACTS IN THE RETURN OF INC OME AS WELL AS AT THE TIME OF ORIGINAL ASSESSMENT AND THE REASONS RECORDED ARE MERELY A CHANGE OF OPINION. NO NEW FACT HAS COME TO THE NOTICE OF THE ASSESSING OFFICER. THEREFORE, THE REOPENING WAS CLAIMED TO BE BAD IN L AW. THE ASSESSEE FURTHER CHALLENGED THE ORDER OF THE ASSESSING OFFIC ER ON THE GROUND THAT IN TERMS OF SECTION 149(1), NOTICE U/S. 148 COULD NOT HAVE BEEN ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSES SMENT YEAR WHEN THE INCOME ESCAPED IS LESS THAN RS. 1.00 LAKH. SINCE T HE INCOME ESCAPED ASSESSMENT WAS BELOW RS.1 LAKH, IT WAS ARGUED THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 149(1)(B) OF THE ACT. AS REG ARDS THE TREATMENT OF RENTAL INCOME AS INCOME FROM OTHER SOURCES AS AGA INST BUSINESS INCOME CLAIMED BY THE ASSESSEE, IT WAS SUBMITTED T HAT THE ASSESSEE HAS TAKEN THE OFFICE PREMISES ON LEASE. EQUIPMENTS, F URNITURE AND FIXTURES WERE PURCHASED FOR THE PURPOSE OF BUSINESS. THE PR EMISES AND THE ASSETS WERE USED BY THE ASSESSEE COMPANY AS A LIAISON OFFI CE FOR A PERIOD OF TWO YEARS. ON SUSPENSION OF THE PROJECT OF LIAISON OFF ICE, THE PREMISES WERE GIVEN ON FURTHER LEASE WHICH IS AN INTEGRAL PART OF THE BUSINESS OF THE COMPANY. 6. HOWEVER, THE CIT(A) DEALT WITH ALL THE ISSUES RAISE D BEFORE HIM AND HELD AGAINST THE ASSESSEE. HE OBSERVED THAT THE PR OCESSING OF THE RETURN OF INCOME HAD ALREADY BEEN COMPLETED U/S. 143(1)(A) IN THE NAME OF METROD INDIA LTD., AND THEREFORE, ISSUE OF NOTICE U /S. 148 OF THE ACT IN THE SAME NAME IN WHICH PROCESSING HAS ALREADY BEEN COMP LETED CAN AT BEST SAID TO BE A PROCEDURAL IRREGULARITY WHICH CANNOT L EAD TO THE ORDER BEING VOID AND BAD IN LAW. I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 4 6.1 AS REGARDS THE OBJECTION OF THE ASSESSEE REGARDING THE ORDERS BEING PASSED U/S. 143(3) R.W.S. 147 IN THE NAME OF METROD INDIA LTD., A NON EXISTENT COMPANY, HE OBSERVED THAT THE RETURN OF IN COME WAS FILED BY THE AMALGAMATING COMPANY AND THE PROCESSING WAS ALSO CO MPLETED U/S. 143(1)(A) IN THE NAME OF THE AMALGAMATING COMPANY I TSELF AND THE ADJUSTMENT OF RS.24,96,458 WAS MADE TO THE RETURNED INCOME. THIS PROCESSING IS IN THE NATURE OF AN ORDER FOR ALL THE PRACTICAL PURPOSES WHICH IS AN APPEALABLE ORDER U/S. 246 OF THE ACT, IF THER E IS ANY OBJECTION TO THE ADJUSTMENT MADE IN THE INTIMATION. IT BECOMES FINA L IF NO SCRUTINY OF THE RETURN FILED IS MADE BY THE ASSESSING OFFICER. HE OBSERVED THAT ONCE THE PROCESSING OF THE RETURN WAS DONE, INTIMATION SERVE D UPON, WHICH IS VALID IN THE EYES OF LAW, THE STATUS AND THE ASSESSEE ON WHICH ASSESSMENT HAS BEEN COMPLETED CANNOT BE ALTERED UNDER ANY CIRCUMST ANCES. HE OBSERVED THAT ALTHOUGH IT IS A FACT THAT WHILE ORDER CONSEQU ENT TO NOTICE U/S. 148 OF THE ACT WAS MADE, THE AMALGAMATING COMPANY WAS NOT IN EXISTENCE, YET, THE LAW DOES NOT PROVIDE THE ASSESSING OFFICER ANY POWERS TO ALTER THE NAME OR THE STATUS OF AN ASSESSEE. HE ACCORDINGLY HELD THAT THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED IN CONTINUING TO AS SESS CONSEQUENT TO NOTICE U/S. 148 THE AMALGAMATING COMPANY ITSELF. 6.2 HE FURTHER OBSERVED THAT IN RESPONSE TO NOTICE U/S. 148, THE AMALGAMATED COMPANY I.E., M/S. METMIN INVESTMENT & TRADING PVT. LTD. HAS RESPONDED TO THE ASSESSING OFFICER AND HAS ALSO REQUESTED TO TREAT THE RETURN FILED ORIGINALLY AS A RETURN IN COMPLIANCE T O NOTICE U/S. 148. EVEN DURING THE ASSESSMENT PROCEEDINGS, THE ISSUE WAS NO T RAISED. CONSEQUENTLY, THERE IS ABSOLUTE INHERENT CONSENT IN THE PROCEEDINGS BY THE AMALGAMATED COMPANY ITSELF. HE ACCORDINGLY HEL D THAT THE NOTICE U/S. 148 BECOMES A VALID NOTICE AND ASSESSMENT MADE ON T HE BASIS OF SUCH NOTICE WILL ALSO BE VALID. REFERRING TO THE DECISI ON OF THE TRIBUNAL IN THE CASE OF CENTURY ENKA LTD., REPORTED IN 101 ITD 489 WHEREIN IT HAS BEEN HELD THAT SUCH ASSESSMENT I.E., ASSESSMENT MADE ON A NON EXISTENT COMPANY IN SIMILAR CIRCUMSTANCES IS ONLY A PROCEDUR AL IRREGULARITY, HE UPHELD THE ACTION OF THE ASSESSING OFFICER. I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 5 7. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT IT H AD DISCLOSED ALL FACTS IN THE RETURN OF INCOME AS WELL AS AT THE TIM E OF ORIGINAL ASSESSMENT AND REASONS RECORDED ARE MERELY A CHANGE OF OPINION , HE OBSERVED THAT AT THE TIME OF PROCESSING OF THE RETURN CERTAIN SPECIF IC ADJUSTMENTS ONLY CAN BE DONE TO THE EXCLUSION OF ANY ISSUE WHICH IS NOT COVERED BY SPECIFIC PROVISIONS FOR MAKING ADJUSTMENTS. HE OBSERVED THA T ALTHOUGH RENT WAS APPEARING IN THE PROFIT AND LOSS A/C., YET AT THE T IME OF PROCESSING OF THE RETURN THE ASSESSING OFFICER COULD NOT HAVE ATTEMPT ED TO BRING THE RENT TO TAX UNDER ANY OTHER HEAD OF INCOME OTHER THAN WHAT WAS CLAIMED BY THE ASSESSEE. FURTHER THE ASSESSING OFFICER COULD NOT HAVE FORMED ANY OPINION ON ANY ISSUE OTHER THAN WHAT SHOULD HAVE BE EN COVERED UNDER THE PROVISIONS OF LAW FOR MAKING ADJUSTMENT U/S. 143(1) (A). HE ACCORDINGLY HELD THAT THERE IS NO QUESTION OF CHANGE OF OPINION BY THE ASSESSING OFFICER. 8. AS FAR AS ASSESSMENT U/S. 143(3) IN RESPECT OF EARL IER YEARS ARE CONCERNED, HE OBSERVED THAT THE SAME CANNOT BE THOU GHT AS HAVING ANY BEARING UPON THE REASONS ON WHICH ASSESSMENT HAS BE EN REOPENED. HE ACCORDINGLY JUSTIFIED THE ACTION OF THE ASSESSING O FFICER. AS REGARDS THE OBJECTION OF THE ASSESSEE THAT IN TERMS OF SECTION 149(1) NOTICE U/S. 148 COULD NOT HAVE BEEN ISSUED AFTER THE END OF FOUR YE ARS FROM THE END OF RELEVANT ASSESSMENT YEAR SINCE THE INCOME ESCAPING ASSESSMENT WAS BELOW RS. 1 LAKH, HE OBSERVED THAT AN AMOUNT OF RS. 12,07,555 BEING INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, TH EREFORE, THERE IS NO VIOLATION OF SECTION 149(1)(B) OF THE ACT. 9. AS REGARDS THE OBJECTION OF THE ASSESSEE FOR TREATI NG THE RENTAL INCOME AS INCOME FROM OTHER SOURCES AS AGAINST BU SINESS INCOME TREATED BY THE ASSESSEE, HE OBSERVED THAT THE PREMI SES AS WELL AS THE EQUIPMENT, FURNITURE AND FIXTURES WHICH WERE USED F OR ITS LIAISON OFFICE BY THE ASSESSEE FOR TWO YEARS WERE LEASED OUT ON WHICH RENT HAS BEEN RECEIVED. THIS LEASE RENT SO RECEIVED CANNOT BE SA ID TO BE BUSINESS INCOME OF THE ASSESSEE AS LEASING IS NOT AN INHERENT BUSIN ESS OF THE ASSESSEE. I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 6 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 11. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUNDS OF APPEAL NO. 5 FOR WHICH THE LEARNED DR HAS NO OBJECTION. ACCORDINGLY GROUNDS OF APPEAL NO. 5 BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 12. GROUNDS OF APPEAL NO. 6 BEING GENERAL IN NATURE IS DISMISSED. 13. GROUNDS OF APPEAL NOS. 1 AND 2 BY THE ASSESSEE READ AS UNDER: GROUND I 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) III ERRED IN UPHOLDING THE ACTION OF THE INCOME TAX OFFICER 3(2)(2), MUMBAI OF ISSUING A NOTICE UNDER SECTION 148 OF THE ACT IN THE NAME OF METROD INDIA LIMITED WHEN IN FACT METROD INDIA LIMITED HAD ALREADY AMALGAMATED WITH METMIN INVESTMENT AND TRADING PRIVATE LIMITED AND HENCE DID NOT EXIST. 2. THE APPELLANT THEREFORE PRAYS THAT THE NOTICE ISSUE D UNDER SECTION 148 OF THE ACT BE HELD AS VOID AND BA D IN-LAW. GROUND II WITHOUT PREJUDICE TO GROUND I: 1. THE CIT(A) ERRED IN UPHOLDING THE ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SECTION 147 OF THE A CT IN THE NAME OF METROD INDIA LIMITED A NON-EXISTENT COMPANY, DISREGARDING THE FACT THAT THE ASSESSMENT COULD NOT BE MADE ON A NON-EXISTENT PERSON. THE ASSESSMENT SHOULD HAVE BEEN MADE, IF AT ALL, ON MIT PL, THE AMALGAMATED COMPANY . 2. THE APPELLANT THEREFORE PRAYS THAT THE ASSESSMENT ORDER BE ACCORDINGLY HELD AS VOID. 14. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PA GE 69 OF THE PAPER BOOK WHICH SHOWS THE CHRONOLOGY OF EVENTS. R EFERRING TO THE SAME HE SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 28 TH JULY, 1998 WHICH WAS PROCESSED ON 23 RD APRIL, 1999. THE HONBLE BOMBAY HIGH I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 7 COURT PASSED AN ORDER ON3RD MARCH, 2004 BY WHICH TH E COMPANY WAS AMALGAMATED WITH M/S. METMIN INVESTMENT & TRADING P VT. LTD. EFFECTIVE FROM 1.4.2003. THE FACT OF AMALGAMATION WAS INFORM ED TO THE ASSESSING OFFICER THROUGH A LETTER DATED 8 TH APRIL, 2004, A COPY OF WHICH IS FILED IN PAPER BOOK AT PAGE 1. THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 ON 22 ND MARCH, 2005 IN THE NAME OF THE ERSTWHILE AMALGAMAT ING COMPANY AND THE ORDER U/S. 143(3) R.W.S. 147 WAS PASSED ON 30 TH SEPTEMBER, 2005 IN THE NAME OF THE AMALGAMATING COMPANY. HE SUBMIT TED THAT SINCE THE NOTICE U/S. 148 AS WELL AS THE ORDER U/S. 143(3) R. W.S. 147 IS ISSUED/ PASSED IN THE NAME OF AN ASSESSEE, NOT IN EXISTENCE , EVEN AFTER BEING SPECIFICALLY INFORMED THE ASSESSING OFFICER ABOUT T HE AMALGAMATION, THEREFORE, THE NOTICE U/S. 148 AND THE ORDER U/S. 1 43(3) R.W.S. 147 OF THE ACT IS BAD IN LAW AND VOID. FOR THIS PROPOSITION H E RELIED ON THE FOLLOWING DECISIONS: 1. CIT V. EXPRESS NEWSPAPER LIMITED (40 ITR 38) 2. MAKERS DEVELOPMENT SERVICES LTD. V. DCIT (40 ITD 18 5) 3. MODI CORP. LTD. VS. JCIT (162 TAXMAN 214) 4. BETTER INVESTMENTS (P.) LTD. VS. ITO (161 TAXMAN 13 0) 5. IMPSAT PVT. LTD. VS. ITO (91 ITD 354) 6. M/S. INTEL TECHNOLOGY INDIA PVT. LTD. V. ACIT (2009 -TIOL- 342-ITAT-BANG). 7. PAMPASAR DISTILLARY LIMITED (15 SOT 331) 8. MARSHALL SONS & CO. (I) LTD. V. ITO (223 ITR 809) 15. THE LEARNED DR, ON THE OTHER HAND, WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT IT IS ONLY A PROCEDURAL L APSE. ASSESSMENT IN THE INSTANT CASE WAS MADE IN THE NAME OF THE EARLIER CO MPANY AND THE SUCCESSOR COMPANY IS ONLY A REPRESENTATIVE. HE SUB MITTED THAT SINCE THE ASSESSEE HAS NOT RAISED ANY OBJECTION TO THE NOTICE U/S.148 AND PARTICIPATED IN THE PROCEEDINGS, THEREFORE, THE NOT ICE AS WELL AS THE ASSESSMENT ORDER CANNOT BE HELD AS VOID AB INITIO. HE SUBMITTED THAT THE PROVISIONS OF SECTION 292B WILL TAKE CARE OF THE MI STAKE, IF ANY, IN THE NOTICE ISSUED OR THE ASSESSMENT MADE. I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 8 16. THE LEARNED COUNSEL FOR THE ASSESSEE, IN HIS REJOIN DER, SUBMITTED THAT PROVISIONS OF SECTION 292BB WERE INSERTED WITH EFFECT FROM 1.4.2008. HE SUBMITTED THAT IT HAS BEEN HELD BY THE SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO THAT INSERTION OF SECTION 292BB W.E.F. 1.4.2008 IS PROSPECTIVE AND NOT RETROSPECTIVE. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT METROD INDIA LTD. WAS AMALGAMATED WITH M/S. METMIN INVESTM ENT & TRADING PVT. LTD. W.E.F. 31 ST MARCH, 2004. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE VIDE ITS LETTER DATED 8 TH APRIL, 2004, A COPY OF WHICH IS FILED IN PAPER BOOK PAGE 1 HAS INFORMED THE OFFICE OF THE AS SESSING OFFICER ON 8 TH APRIL, 2004 ABOUT THE FACTS OF SUCH AMALGAMATION. HOWEVER, A PERUSAL OF THE SAID LETTER SHOWS THAT ONLY AN OFFICE STAMP IS AFFIXED WITHOUT SIGNATURE OF ANY RECEIVING OFFICER OF THE I.T. DEPARTMENT NOR ANY DOCKET NO. IT IS ALSO A FACT THAT AFTER RECEIPT OF THE NOTICE U/S. 1 48 THE ASSESSEE HAS RESPONDED TO SUCH NOTICE AND PARTICIPATED IN THE AS SESSMENT PROCEEDINGS WITHOUT RAISING ANY OBJECTION, WHATSOEVER, ON THIS ISSUE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ISSUING A NOTICE U/S. 148 IN THE NAME OF METROD INDIA LTD. AND FRAMING THE ASSESSMENT U/S. 143(3) R .W.S. 147 IN THE NAME OF METROD INDIA LTD. FURTHER THE TRIBUNAL IN THE C ASE OF CENTURY ENKA (SUPRA) WHICH HAS BEEN RELIED UPON BY THE CIT(A) HA S HELD THAT SUCH AN ASSESSMENT I.E. ASSESSMENT MADE ON A NON EXISTENT C OMPANY UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE IS ONLY AN IRR EGULARITY AND NOT VOID AB INITIO. THE VARIOUS DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSE D. 18. GROUNDS OF APPEAL NOS. 3 AND 4 READ AS UNDER: GROUND III I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 9 WITHOUT PREJUDICE TO GROUND I & II 1. THE CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO, REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961(THE ACT) AND HOLDING THAT THE SAME IS LAWFUL AND VALID, DISREGARDING THE FACT THA T APPELLANT HAD NOT FAILED TO DISCLOSE ANY RELEVANT F ACT IN ITS RETURN OF INCOME RESULTING INTO ANY INCOME ESCAPING ASSESSMENT AND MERE CHANGE OF OPINION CANNOT BE GROUND FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. 2. THE APPELLANT THEREFORE PRAYS THAT IT HE HELD THAT THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE AC T IS VOID AB INITIO AND/OR OTHERWISE VOID AND/OR BAD IN LAW. WITHOUT PREJUDICE TO THE ABOVE GROUNDS: GROUND III 1. THE CIT(A) ERRED IN HOLDING THAT THERE IS NO VIOLAT ION OF SECTION 149(1)(B) OF THE ACT AS THE RENTAL INCOM E HAD ESCAPED ASSESSMENT, DISREGARDING THE FACT THAT RENTAL INCOME WAS OFFERED FOR TAXATION UNDER THE HE AD INCOME FROM BUSINESS IN THE RETURN OF INCOME AND THEREFORE, IN TERMS OF SECTION 149(1)(B) NO NOTICE UNDER SECTION 148 COULD BE SERVED AFTER THE END OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 2. THE APPELLANT THEREFORE PRAYS THAT THE RENT INCOME SHOULD BE ASSESSED AS BUSINESS INCOME AND NOT INCOM E FROM OTHER SOURCES. 19. AFTER HEARING BOTH THE SIDES, WE FIND THE RETURN FI LED BY THE ASSESSEE IN THE INSTANT CASE WAS ONLY PROCESSED U/S . 143(1) AND THERE WAS NO APPLICATION OF MIND BY THE ASSESSING OFFICER. T HEREFORE, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RAJESH JHAVERI STOCK BROKERS PVT. LTD. REPORTED IN 291 ITR 500 THE NOTIC E ISSUED U/S. 148 AFTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT AS SESSMENT YEAR IS VALID. THE VARIOUS DECISIONS RELIED ON BY THE LEARNED COUN SEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE, THE ACTION OF THE CIT(A) ON THIS ISSUE I S UPHELD. I.T.A. NOS. 1021 & 1022/MUM/2008 M/S. METMIN INVESTMENT & TRG. PVT. LTD. =========================== 10 20. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE INCOME SO ESCAPED IS LESS THAN RS. 1 LAKH SINCE THE TOTAL INC OME DETERMINED IS ONLY RS.42,551 AND THEREFORE, THERE IS VIOLATION OF PROV ISIONS OF SECTION 149(1)(B). WE FIND THE SAME IS NOT CORRECT SINCE T HE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER HAS DISALLOWED EXP ENDITURE TO THE TUNE OF RS.25,35,291. THEREFORE, THIS CONTENTION OF THE ASSESSEE BEING DEVOID OF MERIT IS DISMISSED. ACCORDINGLY GROUNDS OF APPE AL NOS. 3 AND 4 ARE DISMISSED. I.T.A. NO. 1022/MUM/08 (A.Y. 1999-2000): 21. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUNDS I N THE IMPUGNED APPEAL ARE IDENTICAL TO GROUNDS OF APPEAL IN I.T.A. NO. 1021/MUM/08. WE HAVE ALREADY DECIDED THE GROUNDS AND HAVE DISMISSED THE SAME. FOLLOWING THE SAME RATIO, THE GROUNDS RAISED IN THE IMPUGNED APPEAL ARE ALSO DISMISSED. 22. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESS EE ARE DISMISSED. ORDER PRONOUNCED ON 18 TH DECEMBER, 2009. SD/- (D.K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 18 TH DECEMBER, 2009 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT (A)-III, MUMBAI, (4) THE CIT-3, MUMBAI, (5) THE DR, B BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO