Dy. Commissioner of Income Tax , Circle-17(2), Hyderabad V. Zelan Projects Private Limited, Hyderabad

ITA 1048/Hyd/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5015 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 28-01-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR PANDEY
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Audit objection; Revised return; Reason to believe
• Section: 143(3); 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1048/HYD/2018 ASSESSMENT YEAR: 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD VS M/S.ZELAN PROJECTS PRIVATE LIMITED, HYDERABAD [PAN: AAACZ2295B] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR DATE OF HEARING : 28-01-2021 DATE OF PRONOUNCEMENT : 09-02-2021 O R D E R PER BENCH : THIS REVENUES APPEAL FOR AY.2009-10 ARISES FROM THE CIT(A)-5, HYDERABADS ORDER DATED 16-03-2018 PASSED IN APPEAL NO.0473/2016-17/CIT(A)-5, IN PROCEEDINGS U/S .143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE A CT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE HAS PLEADED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: 1.THE LD.CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE. ITA NO. 1048/HYD/2018 :- 2 -: 2.THE LD.CIT(A) ERRED IN HOLDING THAT RE-OPENING IS BAD IN LAW IGNORING THE FACT THAT THE ASSESSEE HAS FAILED TO DISCLOSE T HE FACTS FULLY AND TRULY. 3.THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAS DISCLOSED FULLY AND TRULY THE FACTS WHILE THE FACTS PROVED CONTRARY AS THE ASSESSEE HAS NOT OFFERED THE DUTY DRAW BACK IN A.Y.2010-11. 4.ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING. 3. BOTH THE LEARNED REPRESENTATIVES NEXT TOOK US TO THE CIT(A)S DETAILED DISCUSSION ON THIS VALIDITY OF REOP ENING OF ISSUE, READS AS FOLLOWS: 6. DECISION: .~ IN THIS CASE THE APPELLANT FILED A RETURN ON 27.09. 2009 FOR A.Y. 2009- 10 AND SUBSEQUENTLY FILED REVISED RETURN ON 24.09.2 010 AND THE SAME WAS PROCESSED U/S.143(1) ON 24.03.2011. THE CA SE WAS ASSESSED U/S. 143(3) ON 16.12.2011. THE NOTICE U/S. 148 WAS ISSUED ON 04.02.2016, RECOR DING THE REASONS AS UNDER: REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF EXECUTION OF CONTRACT WORKS. ASSESSEE HAS MADE A CLAIM OF DUTY DRAWBACK OF RS. 5 ,77,67,104/ - AND RECOGNIZED THIS AMOUNT AS INCOME IN THE FINANCI AL YEAR 2008-09 RELEVANT TO ASST. YEAR 2009-10 AND ACCORDINGLY FILE D THE ORIGINAL RETURN INCLUDING THIS AMOUNT ALSO AS INCOME. BUT LA TER THE COMPANY FILED REVISED RETURN OF INCOME FOR A.Y.2009-10 WITH OUT OFFERING THE SAID DUTY DRAWBACK OF RS. 5,77,67,104/- TO TAX. THU S, AN AMOUNT OF RS. 5,77,67,104/- NEEDS TO BE TAXED IN A.Y.2009-10. I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX OF RS.5, 77,67,104/- HAS ESCAPED ASSESSMENT. IN VIEW OF THIS , THE ASSESSMENT FOR AY: 2009-10 MADE U/S.143(3) IS REQUI RED TO BE REOPENED.' AS THE NOTICE U/S.148 IS ISSUED AFTER 4 YEARS FROM THE END OF THE ASSESSMENT YEAR FOR WHICH THE SCRUTINY ASSESSMENT U /S.143(3) HAS BEEN MADE, THEN THE PROVISO TO SECTION 147 APPLIES AND THEREFORE THE REASON OF THE FAILURE ON THE PART OF THE APPELLANT IN RESPONSE TO NOTICE U/S.142(1) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT HAS TO BE ATTRIBUTED. ITA NO. 1048/HYD/2018 :- 3 -: FROM THE REASONS RECORDED IT IS CLEAR, THAT THERE I S NO DEFAULT ON THE PART OF THE APPELLANT AND THE REVISED RETURN REASON IS ALSO MENTIONED BY THE AO, WHICH WAS FILED WAY BEFORE THE ORDER U/S .143(3) ON 16.12.2011 WAS PASSED BY THE AO THEREFORE, AS THE R EASONS RECORDED DO NOT ATTRIBUTE ANY FAILURE ON PART OF THE APPELLA NT, IT FAILS THE REQUIREMENT FOR ISSUE OF NOTICE U/S. 147. THEREFORE , THE REOPENING IS BAD IN LAW AND OUT OF JURISDICTION WITHIN THE MEANI NG OF SECTION 147. THEREFORE THE GROUND NO. 2, 3 AND 4 ARE ALLOWED. THE FIRST GROUND IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. THE GROUND NO. 5 BECOMES IN CONSEQUEN TIAL AS THE RELIEF IS ALREADY GRANTED IN GROUND NO. 2,3,4 HOWEVER, THE SAME IS DISMISSED ON MERITS AS THE REASONS RECORDED BY THE AO CAN BE BECAUSE OF INFORMATION FROM ANY SOURCE AND FURTHER THERE IS NO MENTION OF AUDIT OBJECTION IN THE REASONS RECORDED, THEREFORE THE ATTRIBUTE MADE BY THE APPELLANT IS INCORRECT. THE G ROUND NO. 6,7,8,9,10,11,12 AND 13 ARE BECAUSE OF AN ADDITION MADE CONSEQUENT TO REOPENING, AS THE APPELLANT HAS ALREADY GOT RELI EF ON THE REOPENING U/S. 147 ITSELF, THEREFORE, THE SAME ARE INCONSEQUE NTIAL IN VIEW OF THE RELIEF ALREADY GRANTED. THE GROUND NO. 14 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. IN VIEW OF THE ABOVE THE APPEAL IS ALLOWED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO REVENU ES SOLE SUBSTANTIVE GRIEVANCE SEEKING TO REVIVE THE IMPUGN ED REOPENING MECHANISM SAID IN MOTION BY THE ASSESSING O FFICER AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR. THE CIT(A) HAS ALREADY REPRODUCED TH E REOPENING REASONS WHEREIN THE ASSESSING OFFICER HAD NOWHERE QUOTED ASSESSEES FAILURE IN DISCLOSING; FULLY AND TR ULY, ALL PARTICULARS OF ITS INCOME DURING THE COURSE OF REGULAR ASSESSMENT FRAMED ON 16-12-2011. HONBLE BOMBAY HIGH COURTS LANDMARK DECISION IN HINDUSTAN LEVER LTD., VS. R.B. WADKAR [268 ITR 332] (BOM) HELD LONG BACK THAT - THE ASSESSING OFFICERS REOPENING REASONS HAVE TO BE RE AD ON STANDALONE BASIS WITHOUT ANY FURTHER SCOPE OF SUBST ITUTION OR DELETION THEREIN. NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE ITA NO. 1048/HYD/2018 :- 4 -: BASIS OF REASONS NOT RECORDED. AND THAT IT IS FOR T HE ASSESSING AUTHORITY TO DISCLOSE AND OPEN ITS MIND THROUGH THE REASONS RECORDED OR; IN OTHER WORDS, HE HAS TO SPEAK THROUG H THE REASONS . 5. MR.PANDEY FAILS TO DISPUTE THAT ONCE THE ASSESSING OFFICER HAS NOT RECORDED ASSESSSEES FAILURE IN ABOV E TERMS, SECTION 147, 1 ST PROVISO APPLIES IN THE FACTS OF THE INSTANT CASE THEREFORE. WE QUOTE CIT VS. K.Y.PILLIAH (1967) [63 I TR 411] (SC) TO AFFIRM CIT(A)S ACTION QUASHING THE IMPUGNED REOPE NING ON THIS COUNT ALONE. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH FEBRUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 09-02-2021 TNMM ITA NO. 1048/HYD/2018 :- 5 -: COPY TO : 1.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17( 2), HYDERABAD. 2.M/S.ZELAN PROJECTS PRIVATE LIMITED, FLAT NO.5, PL OT NO.429, B.K.COMPLEX, ROAD NO.14, BANJARA HILLS, HYDERABAD. 3.CIT(APPEALS)-5, HYDERABAD. 4.PR.CIT-5, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.