ACIT CEN CIR 1(2), MUMBAI V. GITANJALI INFRATECH LTD, MUMBAI

ITA 1082/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3640 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD LD
• Assessee Lawyers: NEHA PARANJPE LD ARS
• Keywords: Business income; Revision of order; Depreciation; Revised return
• Section: 143(3); 133A; 153A; 139(5); 132; 15; 139

Judgement Text

ITA 1082/MUM/2016 GITANJALI INFRATECH LTD. ASSESSMENT YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1082/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2) ROOM NO.906, 10 TH FLOOR PRATISHTHA BHAWAN OLD CGO BUILDING ANNEXE MUMBAI-400 020 / VS. GITANJALI INFRATECH LIMITED 801-802, PRASAD CHAMBERS OPERA HOUSE MUMBAI-400 004 ./ ./PAN/GIR NO. AACCG-7677-G ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : K. GOPAL & NEHA PARANJPE- LD. ARS REVE NUE BY : B.B. RAJENDRA PRASAD - LD.DR !' / DATE OF HEARING : 07/02/2019 !' / DATE OF PRONOUNCEMENT : 26/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-47, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-36/AP.181/14-15 DATED 30/12/2015 ON FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - ITA 1082/MUM/2016 GITANJALI INFRATECH LTD. ASSESSMENT YEAR: 2009-10 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN HOLDIN G THAT THE SAME ADDITION/DISALLOWANCE CANNOT BE REPEATED IN THE ASS ESSMENT COMPLETED U/S.153C WITHOUT APPRECIATING THE FACT THAT THE PROVISIONS O F THE SAID SECTION AUTHORIZES THE ASSESSING OFFICER TO ASSESS OR REASSESS THE TOTAL I NCOME IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE, WITHOUT ANY EXCEPTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT D ECIDING ON MERIT THE DISALLOWANCE OF EXPENSES OF RS.88,08,042/- U/S.37 O F THE I.T. ACT. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY STATED TO BE ENGAGED AS DEVELOPER WAS ASSESSED FOR IMPUGNED AY ON 20/03/2014 U/S 153C READ WITH SECTION 143(3) BY LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, MUMBA I [AO] WHEREIN THE INCOME WAS DETERMINED AT RS.95.08 LACS. THE AFO RESAID ASSESSMENT GOT TRIGGERED PURSUANT TO SEARCH & SEIZURE / SURVEY ACTION U/S 132/ 133A IN THE CASE OF GITANJALI GROUP OF COMPANIES ON 29/11/2011 WHICH GOT CONCLUDED ON 27/01/2012. THE SEIZED MATERIAL MARKED AS ANNEXURE-A-1, PAGES 1 TO 40 AND PAGES 92 TO 96 WAS FOUND TO BE BELONGING TO THE ASSESSEE AND ACCORDINGLY, NOTICE U/S 153C WAS ISSUE D TO THE ASSESSEE ON 22/10/2012. IN RESPONSE, THE ASSESSEE FILED RETU RN OF INCOME ON 30/11/2012 DECLARING INCOME OF RS.7 LACS. 2.2 IT TRANSPIRED THAT THE ASSESSEE RECEIVED INTERE ST INCOME OF RS.195.61 LACS AND CLAIMED CERTAIN INTEREST EXPENDI TURE AGAINST THE SAME. HOWEVER, THE BANK CHARGES OF RS.2.56 LACS SO CLAIMED WERE DISALLOWED ON THE GROUND THAT THE SAME DID NOT HAVE DIRECT & PROXIMATE NEXUS WITH INTEREST INCOME. IT ALSO TRANSPIRED THAT THE ASSESSEE CLAIMED BUSINESS LOSS ARISING OUT OF ADMINISTRATIVE, FINANCE, PERSONNEL, DEPRECIATION ETC. HOWEVER, SINCE THE PROJECTS BEING CARRIED OUT BY TH E ASSESSEE WERE IN THE PROCESS OF COMPLETION, LD. AO OPINED THAT THESE ITA 1082/MUM/2016 GITANJALI INFRATECH LTD. ASSESSMENT YEAR: 2009-10 3 EXPENSES WERE TO BE CAPITALIZED TO THE RESPECTIVE P ROJECTS. FINALLY, THE ASSESSMENT WAS COMPLETED AT RS.95.08 LACS AND THE S ET-OFF OF BUSINESS LOSSES AS CLAIMED BY THE ASSESSEE WAS DENIED. 3. THE LD. FIRST APPELLATE AUTHORITY, INTER-ALIA, NOTING THAT IDENTICAL ADJUSTMENT / DISALLOWANCES MADE IN ORIGINAL ASSESSM ENT U/S 143(3) ON 30/12/2011 WAS ALREADY DELETED BY THE FIRST APPELLA TE AUTHORITY VIDE ORDER DATED 11/03/2013 AND THEREFORE, THE SAME COULD NOT BE SUSTAINED. FINALLY, THE MATTER WAS CONCLUDED BY FIRST APPELLAT E AUTHORITY IN ASSESSEES FAVOR IN THE FOLLOWING MANNER: - 5. THE SOLE EFFECTIVE GROUND RAISED RELATES TO THE DISALLOWANCE OF BUSINESS LOSS OF 88,08,041/- CLAIMED BY THE APPELLANT. I HAVE CAREF ULLY CONSIDERED THE FACTS RELATING TO THE GROUNDS RAISED IN APPEAL AS T HEY EMANATE FROM THE IMPUGNED ORDER AND THE SUBMISSIONS MADE DURING THES E PROCEEDINGS. 5.1 IN THE IMPUGNED ORDER, THE AO NOTED THAT THE A PPELLANT HAD CLAIMED VARIOUS EXPENSES TOWARDS ADMINISTRATIVE, FINANCE, PERSONNEL , DEPRECIATION COSTS ETC. AND THAT THESE EXPENSES HAD RESULTED IN A BUSINESS LOSS BEING DECLARED FOR THE YEAR UNDER CONSIDERATION. AS THE APPELLANT HAD NOT DECLARED ANY BUSINESS INCOME DURING THE YEAR THE AO ASKED THE APPELLANT T O SUBSTANTIATE THE CLAIM OF BUSINESS LOSS AND ITS SUBSEQUENT SET OFF AGAINST 'INCOME FROM OTHER SOURCES'. THE APPELLANT SUBMITTED THAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF GENERAL DAY-TO-DAY OPERATIONS AND CONDUC T OF THE BUSINESS. IT WAS FURTHER CONTENDED THAT THESE WERE MAINLY FOR THE AD MINISTRATIVE STAFF AT THE HEAD OFFICE AND WERE NOT RELATED TO ANY SPECIFIC PR OJECT. IT WAS ARGUED THAT THESE WERE ALLOWABLE AS DEDUCTION U/S 37. THE AO HO WEVER NOTED THAT THE APPELLANT HAD MADE INVESTMENT IN VARIOUS PROJECTS A T MUMBAI, HYDERABAD, CALCUTTA ETC. HE FURTHER OBSERVED THAT THE APPELLAN T SHOULD HAVE CAPITALIZED THE EXPENSES, ADDED THE SAME TO THE COST OF THEIR R ESPECTIVE PROJECTS AND CARRIED THE AMOUNTS FORWARD TO THE CAPITAL WORK IN PROGRESS ACCOUNT. THE AO ACCORDINGLY HELD THAT THE EXPENSES DEBITED TO THE P &L ACCOUNT WERE OF THE NATURE OF CAPITAL WIP AND DISALLOWED THE BUSINESS L OSS CLAIMED. 5.2 IN APPEAL, IT WAS SUBMITTED THAT THE SAME DISA LLOWANCE WAS MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) ON 30.12.2011 WH EREIN BUSINESS LOSS TO THE TUNE OF RS.88,08,041/- WAS DISALLOWED. IT WAS F URTHER SUBMITTED THAT THE APPEAL FILED AGAINST THIS ASSESSMENT ORDER WAS DECI DED BY CIT(A) VIDE ORDER DATED 11.03.2013 WHEREIN THIS DISALLOWANCE WAS DELE TED. IT IS SUBMITTED THAT AS NO NEW FINDING WAS RECORDED BY THE A.O. ON THIS ISSUE IN THE IMPUGNED ORDER, THE DISALLOWANCE OF BUSINESS LOSS SHOULD BE DELETED. COPY OF THE ASSESSMENT ORDER U/S 143(3) AND CONSEQUENTIAL APPEA L ORDER NO. CIT(A)- 36/AP-234/12-13 DATED 11.03.2013 IS FURNISHED IN SU PPORT OF THE CONTENTION. ITA 1082/MUM/2016 GITANJALI INFRATECH LTD. ASSESSMENT YEAR: 2009-10 4 5.3 ON PERUSAL OF THE ASSESSMENT ORDER DATED 30.12 .2011 AND APPEAL ORDER DATED 11.03.2013, IT IS CLEAR THAT THE DISALLOWANCE OF BUSINESS LOSS OF RS.88,08,804/- COMPRISING PERSONNEL EXPENSES, OFFIC E ADMINISTRATIVE EXPENSES, DEPRECIATION, INTEREST ON SECURED LOAN AN D BANK CHARGES WAS MADE BY THE AO IN THE ORIGINAL ASSESSMENT. THIS DIS ALLOWANCE WAS APPEALED AGAINST AND WAS DECIDED IN FAVOUR OF THE APPELLANT BY THE CIT(A) VIDE THE ABOVE REFERRED ORDER. THE SAID ASSESSMENT CAN THERE FORE NOT BE HELD TO BE AN 'ABATED' ASSESSMENT IN TERMS OF THE PROVISIONS O F SECTIONS 153A/C AND THE CIRCULAR NO.7 OF 2003 DATED 05.09.2003 WHEREIN THE CONCEPT OF ABATED AND NON-ABATED ASSESSMENTS WAS ELABORATED SUBSEQUENT TO THE INTRODUCTION OF THE NEW PROVISIONS. IN THE EXPLANATORY NOTES TO THE FINANCE ACT 2003 (REFER PARA 65.5 OF THE SAID CIRCULAR), IT HAS BEEN CLARIF IED THAT THOUGH THE ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING O N THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER S ECTION 132A SHALL ABATE; THE APPEAL, REVISION OR RECTIFICATION PROCEEDINGS P ENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITI ON SHALL NOT ABATE. THUS THE DISALLOWANCE OF MADE IN ORDER DATED 30.12.2011 (PRI OR TO THE SEARCH) FALLS IN THE CATEGORY OF A 'NON-ABATED' ASSESSMENT, THE APPE AL FILED AGAINST WHICH CONTINUES IN AN INDEPENDENT STREAM. THE DISALLOWANC E MADE ONCE IN THE ORIGINAL ORDER IS THEREFORE NOT OPEN TO BE MADE AGA IN BY THE A.O. AFTER THE SAME IS ALREADY DELETED BY THE FAA. ALSO AS POINTED OUT BY THE APPELLANT, NO FINDING FROM SEARCH PROCEEDINGS HAS BEEN SHOWN WITH REFERENCE TO THE SAID ISSUE I.E. THE DISALLOWANCE OF EXPENSES COMPRISING THE BUSINESS LOSS. THAT BEING SO, THE SAME CANNOT BE REPEATED IN THE ASSESS MENT COMPLETED U/S 153C POST SEARCH AS ISSUES THAT HAVE REACHED FINALI TY IN ORIGINAL ASSESSMENT CANNOT BE RE-AGITATED. IN THE DECISION RENDERED IN THE CASE OF JAI STEEL (INDIA) JODHPUR V ACIT (ITA NOS. 53/2011 DATED 24.05.2013), THE HON'BLE COURT HELD THAT THE 'PROVISIONS OF SECTIONS 153A TO 153C CANNO T BE INTERPRETED AS A FURTHER INNINGS FOR THE AO AND/OR ASSESS BEYOND PRO VISIONS OF SECTIONS 139 (RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOM E), 147 (INCOME ESCAPING ASSESSMENT) AND 263(REVISION OF ORDERS) OF THE ACT' . IN THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V CONTINENTAL WAREHOUSING AND CIT V ALL CARGO GLOBAL LOGISTICS (ITA5 523 AND 1969 OF 2013 RESPECTIVELY - DATED 21.04.2015), THE HON'BLE COURT UPHELD THE V IEW OF THE SPECIAL BENCH THAT CONCLUDED ASSESSMENTS BECOME FINAL EXCEPT TO T HE EXTENT OF UNDISCLOSED INCOME FOUND IN THE COURSE OF THE SEARCH. AS STATED EARLIER, NOTHING IN THE IMPUGNED ORDER SUGGESTS THAT THE DISALLOWANCE OF BU SINESS LOSS HAS BEEN MADE AFRESH ON ACCOUNT OF ANY EVIDENCE UNEARTHED DU RING THE SEARCH. DISALLOWANCE OF THESE EXPENSES MADE EARLIER HAS ALR EADY BEEN DELETED BY THE FAA. FOR THESE REASONS, THE DISALLOWANCE MADE B Y THE AO IN THE IMPUGNED ORDER IS DELETED AND THE GROUND RAISED BY THE APPELLANT IS ALLOWED. AGGRIEVED AS AFORESAID, THE REVENUE IS IN FURTHER A PPEAL BEFORE US. 4. THE LD. CIT-DR SUPPORTED THE STAND OF LD. AO WH EREAS LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR] SUBMITT ED THAT ADJUSTMENTS ITA 1082/MUM/2016 GITANJALI INFRATECH LTD. ASSESSMENT YEAR: 2009-10 5 / DISALLOWANCES AS MADE IN ORIGINAL SCRUTINY ASSESS MENT U/S 143(3) HAS BEEN REPEATED BY LD. AO IN ASSESSMENT PASSED U/S 15 3C READ WITH SECTION 143(3). OUR ATTENTION HAS BEEN DRAWN TO THE FACT THAT THE AFORESAID ADJUSTMENTS MADE U/S 143(3), UPON REVENUE S APPEAL, HAVE ALREADY BEEN RESTORED BACK BY THE TRIBUNAL WITH CER TAIN DIRECTIONS AND THEREFORE, THE SAME WERE ALREADY THE SUBJECT MATTER OF APPELLATE PROCEEDINGS. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS A ND PERUSED RELEVANT MATERIAL ON RECORD. THE UNDISPUTED POSITION THAT EM ERGES IS THAT THE ASSESSEE WAS ORIGINALLY ASSESSED U/S 143(3) ON 30/1 2/2011 WHEREIN THE INCOME WAS DETERMINED AT RS.95.08 LACS. THE SAME WA S AGITATED BY THE ASSESSEE WITH SUCCESS BEFORE FIRST APPELLATE AUTHOR ITY VIDE ORDER DATED 11/03/2013. THE REVENUE ASSAILED THE STAND OF FIRST APPELLATE AUTHORITY BEFORE THIS TRIBUNAL VIDE ITA NO. 4729/MUM/2013 ORDER DATED 22/08/2016 WHEREIN THE MATTER, IN THE CONCLUDING PA RAGRAPH, HAS BEEN RESTORED BACK TO THE FILE OF FIRST APPELLATE AUTHOR ITY FOR RE-ADJUDICATION WITH CERTAIN DIRECTIONS. 5.2 ANOTHER UNDISPUTED FACT IS THAT IN ASSESSMENT F RAMED U/S 153C READ WITH SECTION 143(3) ON 20/03/2014, THE INCOME OF THE ASSESSEE HAS AGAIN BEEN DETERMINED AT RS.95.08 LACS AFTER REPEAT ING THE SAME ADJUSTMENTS / DISALLOWANCES. THE SAME LEAD US TO IN EVITABLE CONCLUSION THAT THE ASSESSEE HAS BEEN SUBJECTED TO PARALLEL PR OCEEDINGS WITH RESPECT TO SAME ADJUSTMENTS / DISALLOWANCES, WHICH IS NOT PERMISSIBLE UNDER LAW. THE STATED ISSUE UNDER APPEAL HAS ALREAD Y BEEN SUBJECT MATTER OF APPELLATE PROCEEDINGS OF ORIGINAL ASSESSM ENT U/S 143(3) AND AT PRESENT, STAND RESTORED BACK BY THE TRIBUNAL TO THE FILE OF FIRST APPELLATE ITA 1082/MUM/2016 GITANJALI INFRATECH LTD. ASSESSMENT YEAR: 2009-10 6 AUTHORITY FOR RE-ADJUDICATION AND THEREFORE, THE LD . AO HAD NO JURISDICTION TO DELVE INTO THE SAME. NOTABLY, PRIMA FACIE, NO INCRIMINATING MATERIAL FOR IMPUGNED AY HAS BEEN FOUND AND THE ADDITIONS / ADJU STMENTS ARE NOT BASED ON ANY SEIZED MATERIAL. THEREFORE, FROM THIS ANGLE ALSO, THE IMPUGNED ADJUSTMENTS / DISALLOWANCES COULD NOT BE M ADE IN THE HANDS OF THE ASSESSEE IN AN ASSESSMENT U/S 153C READ WITH SECTION 143(3). 5.3 VIEWED FROM ANY ANGLE, NO INFIRMITY OR PERVERSI TY COULD BE FOUND IN THE IMPUGNED ORDER. 6. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2019. SD/- SD/- (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % MUMBAI; DATED : 26/02/2019 SR. PS THIRUMALESH/SR.PS: JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. $$% ( ) / THE CIT(A) 4. $$% / CIT CONCERNED 5. & ''() , $) , / DR, ITAT, MUMBAI 6. ' +,- / GUARD FILE % % / BY ORDER, / % (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.