ACIT -1(3)(1), MUMBAI V. M/S. TILAKNAGAR IDUSTRIES LTD., MUMBAI

ITA 1044/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5407 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 148; 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER, AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 1044/MUM/2021 (ASSESSMENT YEAR: 2009-10) ACIT -1(3)(1), Mumbai Room No. 540, 5 th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 M/s Tilaknagar Industries Limited, 3 rd Floor, Indl. Assurance Bldg. J.D. Tata Marg, Churchgate, Mumbai - 400020 [PAN: AAACT6047R] .................. Vs ................... Appellant Respondent Appearances For the Appellant/Department For the Respondent/ Assessee : : Shri B.K. Bagchi Shri Rayan Saldanha Date of conclusion of hearing Date of pronouncement of order : : 31.01.2022 31.03.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. This is an appeal filed by the Revenue against the order dated 04.01.2021 passed by the Commissioner of Income Tax (Appeals)-47, Mumbai (hereinafter referred to as [„CIT(A)‟] in appeal [CIT(A)- 47/10025/17-18] deleting the penalty levied by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟). 2. Revenue has raised the following grounds of appeal: ITA. No. 1044/Mum/2021 Assessment Year: 2009-10 2 “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) without going into the merits of the case has directed the AO to delete the penalty levied u/s 271(1)(c) of the I.T. Act on the ground that the Hon‟ble ITAT has held that the relevant proceedings to be void ab initio without appreciating the fact that the Hon‟ble ITAT‟s order being perverse hasn‟t reached finality.? 3. The Departmental Representative appearing before us submitted that the issue has not attained finality in the quantum proceedings, and therefore, the CIT(A) erred in deleting the penalty by relying upon the order, dated 28.08.2020, passed by the Tribunal in the quantum appeal [ITA No. 6357/Mum/2017] without examining the merits of the matter. Per Contra, the Ld. Authorised Representative for the Assessee submitted that since the Tribunal has allowed the appeal of the Assessee by holding that the re-assessment proceedings initiated under Section 147/148 of the Act are void void-ab-initio, levy of penalty cannot be sustained. 4. We have considered the rival submission and perused the copy of the aforesaid order, dated 28.08.2020, placed on record. The Tribunal has allowed the quantum appeal filed by the Assessee pertaining to A.Y. 2009-10 and the addition of INR 2,11,47,228/- made by the Assessing Officer stands deleted. Taking note of this, the CIT(A) has deleted the levy of penalty under Section 271(1)(c) of the Act. The relevant extract of the order of CIT(A) is as under: “7.1 I have considered the arguments of the assessee. The Hon‟ble ITAT vide its order dated 28.08.2020 has set aside the order passed by the Ld. CIT(A), by holding that the notice u/s 148 r.w.s. 147 of the Act and subsequent proceedings were void ab initio and therefore they allowed appeal of the assessee for the A.Y. 2009-10. For clarity the ITA. No. 1044/Mum/2021 Assessment Year: 2009-10 3 relevant observations of the Hon‟ble ITAT are reproduced as under:- “1.1 From the facts and circumstances of the case, discussed above, it can be safely concluded that the AO has passed the original assessment order after taking into consideration each and every details furnished by the assessee in response to the notice issued or query raised by him during the course of assessment proceedings. It can further be concluded that the AO had no tangible material for forming the belief that the income of the assessee has escaped assessment. Hence, in our opinion, since the AO has initiated the re-assessment proceedings on the material already placed on record by the assessee during the assessment proceedings, the action of the AO amounts to change of opinion which is not permissible under law. In the case of CIT v Kelvinator of India Ltd. (supra), the Hon‟ble Supreme Court has held that post 01.04.1989 power of AO to reopen u/s 1417 is much wider, however, the AO has not jurisdiction to reopen assessment on the basis of mere change of opinion. Power u/s 147 of the Act can be exercised by the AO provided there is tangible material to come to conclusion that there is escapement of income from assessment. In our considered view, the AO has no tangible material to come to conclusion that income of the assessee had escaped assessment. Similarly, in the case of State Bank of India v ACIT (supra), the Hon‟ble Bombay High Court had granted interim stay to the appellant holding that no notice u/s 148 read with Section 147 can be issued which is based on change of opinion. Hence, respectfully following the ratio laid down by ITA. No. 1044/Mum/2021 Assessment Year: 2009-10 4 the Hon‟ble Supreme Court and the Hon‟ble High Court, we hold that since the AO had initiated reassessment proceedings in the present case based on change of opinion, the CIT(A) has wrongly upheld the action of the AO. We therefore allow the legal ground raised by the assessee and set aside the order passed by the Ld. CIT(A) holding that the notice u/s 148 read with section 147 of the Act and the subsequent proceedings as void ab initio............. In the result the appeal filed by the assessee for AY 09-10 is allowed. 7.2 Since the assessment order, on the basis of which impugned penalty has been levied is set aside by the Hon‟ble ITAT and the relevant proceedings have been ehld to be void ab initio, the penalty order dated 19.03.2019 becomes unsustainable in law and does not survive. Therefore the penalty levied by the AO is directed to be deleted.” 5. The re-assessment proceedings under Section 147/148 of the Act have been held to be void-ab-initio and the additions made in quantum proceedings stand deleted. Penalty order has no legs to stand. We do not find any infirmity in the order, dated 04.01.2021, passed by the CIT(A) deleting penalty levied under Section 271(1)(c) of the Act. 6. In the result, appeal is of the Revenue is dismissed. Order pronounced on 31.03.2022. Sd/- Sd/- (Amarjit Singh) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 31/03/2022 Alindra, PS ITA. No. 1044/Mum/2021 Assessment Year: 2009-10 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदिकरण, म ुंबई / ITAT, Mumbai