O.P. ENTERPRISES, MUMBAI V. CIT CEN -2, MUMBAI

ITA 1089/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3993 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 20-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A; 68; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1089/MUM/2015 ASSESSMENT YEAR:2011-12 M/S O.P. ENTERPRISES, 4 TH AND 5 TH FLOOR, SAI COMMERCIAL BUILDING, B.K.S. DEVSHI MARG, GOVANDI (EAST), MUMBAI-400088 / VS. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( /ASSESSEE) ( ! / REVENUE) PAN. NO .AAAFO1650Q / ASSESSEE BY SHRI NARESH KUMAR ! / REVENUE BY SHRI M. DAYASAGAR ' !# $ % / DATE OF HEARING : 11/04/2016 $ % / DATE OF ORDER: 13/04/2016 ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 16/12/2014 OF THE LD. COMMISSIONER OF INCOME TAX, MUMBAI, INVOKING REVISIONAL JURISDICTION U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING OF THIS APPEAL, THE CRUX OF ARGU MENT ADVANCED BY SHRI NARESH KUMAR, LD. COUNSEL FOR THE ASSESSEE, IS IDENTICAL TO THE GROUND RAISED BY CONT ENDING THAT ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 28/01/2014, CONSIDERING THE ARGUMENTS OF THE ASSESS EE, THEREFORE, INVOKING THE REVISIONAL JURISDICTION IS NOT JUSTIFIED. IT WAS CONTENDED THAT ASSESSMENT WAS FRAMED AFTER D UE APPLICATION OF MIND BY THE ASSESSING OFFICER, THERE FORE, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICI AL TO THE INTEREST OF THE REVENUE. IT WAS PLEADED THAT NECESS ARY DETAILS WERE FILED BEFORE THE LD. ASSESSING OFFICER FOR WHI CH OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF THE PAPER BOOK BUT FAIRLY AGREED THAT THE LD. ASSESSING OFFICER HAS NO T MADE DISCUSSION ON SOME OF THE ISSUES FOR WHICH THE ASSE SSEE CANNOT BE PENALIZED. FOR THE ISSUE OF SECTION 14A OF THE ACT, OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF THE P APER BOOK INCLUDING BALANCE SHEET. IT WAS CONTENDED THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS, THEREFORE, THE R EVISIONAL ORDER IS NOT LEGALLY VALID. RELIANCE WAS PLACED UPON THE DECISION FROM HONBLE GUWAHATI HIGH COURT IN 290 IT R 395 ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 3 (GAUT.). PLEA WAS ALSO RAISED THAT IT MAY BE A CAS E OF INADEQUATE ENQUIRY BUT NOT THAT NO ENQUIRY WAS MADE . 2.1. ON THE OTHER HAND, SHRI M. DAYASAGAR, LD. DR , STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE LD. COMMISSIONER JUSTIFIABLY INVOKED REVISIONAL JUR ISDICTION U/S 263 OF THE ACT, MORE SPECIFICALLY, WHEN THE ASS ESSING OFFICER FAILED TO EXAMINE THE ISSUES UNDER HAND FOR WHICH OUR ATTENTION WAS INVITED TO CERTAIN PARAS OF THE ASSES SMENT ORDER. IT WAS POINTED OUT THAT EVEN THE LD. COMMISS IONER SET ASIDE THE FILE TO THE FILE OF THE LD. ASSESSING OFF ICER WITH A DIRECTION TO EXAMINE THE DETAILS AND AFTER CONDUCTI NG AN APPROPRIATE ENQUIRY FINALIZE THE ASSESSMENT. RELIA NCE WAS PLACED UPON THE DECISION IN MALABAR INDUSTRIAL CORP ORATION LTD. (243 ITR 83) (SC), PT. LASHKARI RAM VS CIT 272 ITR 309 (ALL.) AND ASHOK LEYLAND VS CIT 260 ITR 599. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE A LSO PERUSED THE ASSESSMENT ORDER, WHICH IS A SUBJECT MA TTER OF REVISIONAL JURISDICTION U/S 263 AND THE IMPUGNED OR DER PASSED BY THE LD. COMMISSIONER. ADMITTEDLY, AN INCO RRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF L AW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS U/ S. 263. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVE NUE U/S. 263, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESS ION ERRONEOUS ORDER BY THE ASSESSING OFFICER . EVERY LOSS OF REVENUE AS A CONSEQUENCE OF ASSESSMENT ORDER CANNOT BE ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 4 TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE, MEANING THEREBY PREJUDICE MUST BE PREJUDICE TO THE REVENU E ADMINISTRATION. AT THE SAME TIME, IF ANOTHER VIEW I S POSSIBLE REVISION IS NOT PERMISSIBLE. OUR VIEW IS FORTIFIED BY THE DECISION FROM HIMACHAL PRADESH FINANCIAL CORPN. (186 TAXMANN 105)(HP), BISMILLAH TRADING CO. (248 ITR 29 2)(KER.) AND CIT VS. GREEN WORLD CORPN. (314 ITR 81)(SC) . FOR INVOKING REVISIONAL JURISDICTION U/S. 263 THE ASSES SMENT ORDER MUST CONTAIN GRIEVOUS ERROR WHICH IS SUBVERSI VE OF THE ADMINISTRATION OF REVENUE. FURTHER, EXACT ERROR MUS T BE DISCLOSED BY THE COMMISSIONER AS WAS HELD IN CIT VS . G.K. KABRA (211 ITR 336)(AP). SECTION 263 OF THE ACT EN ABLES THE COMMISSIONER TO HAVE A LOOK AT THE ORDERS OR PROCEE DINGS OF THE LOWER AUTHORITY TO EFFECT CORRECTION, IF SO NEE DED, PARTICULARLY, IF THE ORDER IS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. THE OBJECT OF THE PROVISIO N IS TO RAISE REVENUE FOR THE STATE AND SECTION 263 IS ENABLING P ROVISION CONFERRING JURISDICTION UPON THE COMMISSIONER TO RE VISE THE ORDER. THE PROVISION IS INTENDED TO PLUG THE LEAKAG E OF THE REVENUE BY THE ERRONEOUS AND PREJUDICIAL ORDER. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING DECIS IONS:- I. CIT VS INFOSYS TECHNOLOGIES LTD. (2012) 341 ITR 293 (KARN.), II. CIT VS JAWAHAR BHATTACHARYAJI (2012) 341 ITR 434 (GUWAHATI) (FB), III. CIT VS LEISURE WEAR EXPORTS LTD. (2012) 341 ITR 166 ( DEL.), ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 5 IV. CIT VS TRIVENI ENGINEERING WORKS LTD. (2011) 336 ITR 366 (DEL.), V. R.A. HIMMATSINGHKA & COMPANY VS CIT (2012) 340 ITR 2 53 (PAT.) VI. CIT VS RAJEEV AGNIHOTRI (2011) 332 ITR 608 (P & H), VII. CIT VS DLF LTD. (2013) 350 ITR 555 (DEL.), VIII. CIT VS GABREAL INDIA LTD. (1993) 203 ITR 108, 114 (B OM.), IX. MALABAR INDUSTRIAL COMPANY LTD. VS CIT (2000) 243 ITR 83 (SC), X. NABHA INVESTMENTS PVT. LTD. VS UOI (2000) 246 ITR 41 (D EL.), XI. BISMILLAH TRADING COMPANY LTD. VS IO (2001) 248 ITR 292, 308 (KERALA), XII. PAUL MATHEWS & SONS VS CIT (2003) 263 ITR 101, 113 (KERALA), XIII. CIT VS SESHASAYEE PAPER & BOARDS LTD. (2000) 242 ITR 490, 500 (MAD.), XIV. RAYON SILK MILLS VS CIT 221 ITR 155 (GUJ.) 2.3. HOWEVER, IF THE RATIO LAID DOWN IN THE AFORES AID CASES IS ANALYZED WITH RESPECT TO THE FACTS OF THE PRESENT APPEAL, IT IS NOTED THAT IN THE ASSESSMENT ORDER, M ERELY, IT HAS BEEN MENTIONED THAT THE DETAILS/EXPLANATION CAL LED FOR HAVE BEEN EXAMINED AND PLACED ON RECORD AND FURTHER THAT THE RECEIPT ON ACCOUNT OF SALE OF WIND POWER, SALE OF FLATS FROM PROJECTS AND STOCK OF UNSOLD PROJECTS. NEXT ISSUE DISCUSSED IN THE ASSESSMENT ORDER IS WITH RESPECT TO DISALLOW ANCE OF DEPRECIATION ON MOTOR CAR AND NO DISCUSSION HAS BEE N MADE ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 6 WITH RESPECT TO SECTION 36(1)(III) ALONG WITH EXPLA NATION 8 TO SECTION 43(1), WHILE ALLOWING THE INTEREST ON BORRO WING. LIKEWISE, NO DISCUSSION HAS BEEN MADE WITH RESPECT TO INVESTMENT OF RS.5.31 CRORES IN UTI MUTUAL FUNDS, W HEREIN, DIVIDEND OF RS.2.53 LAKHS WAS CLAIMED AS EXEMPT. IT IS ALSO NOTED THAT DURING THE YEAR, FRESH INTEREST FREE UNS ECURED LOANS WERE RAISED, AMOUNTING TO RS.3.74 CORES FROM OM PRAKASH AND COMPANY AND RS.7.19 CRORES FROM RESHMA KUKREJA. THE LD. ASSESSING OFFICER NEITHER EXAMINED THE GENUINENESS OF LOANS, ITS CREDITWORTHINESS, IN THE LIGHT OF APPLICABILITY OF SECTION 68 OF THE ACT. TAKING FR ESH LOAN BY THE ASSESSEE WAS NOT EVEN CONTRADICTED BY THE ASSES SEE. IN VIEW OF THIS FACTUAL MATRIX, WE AGREE WITH THE FIND ING OF THE LD. COMMISSIONER THAT THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSE SSING OFFICER NEITHER CONDUCTED PROPER ENQUIRIES NOR APPL IED HIS MIND ON THE ISSUES, THUS, THE ORDER IS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOW COM E TO THE IMPUGNED ORDER, WHICH CLEARLY INDICATES THAT EVEN I N THE IMPUGNED ORDER, THE ISSUES WERE SET ASIDE TO THE FI LE OF THE ASSESSING OFFICER TO DECIDE AFRESH AND TO MAKE APPR OPRIATE ENQUIRIES AND AFTER EXAMINING THE DETAILS AND ALSO TO PROVIDE DUE OPPORTUNITY OF BEING HEARD BEFORE FINALIZING TH E ASSESSMENT, THUS, NO GRIEVANCE IS CAUSED TO THE ASS ESSEE, BECAUSE THE ASSESSEE IS AT LIBERTY TO CONTEST THE O BSERVATION MADE BY THE LD. COMMISSIONER. OUR VIEW IS FORTIFIE D BY THE DECISION IN INDIAN TEXTILE VS CIT (157 ITR 112) (MA D.), GEE ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 7 VEE ENTERPRISES VS ADDL. CIT (99 ITR 375)(DEL.), TH ALIBAI F JAIN VS ITO 101 ITR 1 (KARN.) AND CIT VS HPFC 186 T AXMAN 105 (HP), CIT VS PUSHPA DEVI 164 ITR 639 (PATNA). WE ARE AWARE THAT BEFORE THE COMMISSIONER INVOKES THE REVI SIONAL JURISDICTION U/S 263, HE SHOULD BE SATISFIED THAT T HE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF THE REVENUE. HONBLE GUJARAT HI GH COURT IN CIT VS M. M.KHAMBATBALA 198 ITR 144 (GUJ.) EVEN WEN T TO THE EXTENT THAT REVISIONAL POWERS CAN BE EXERCISED EVEN IF THE ISSUE IS DEBATABLE. TOTALITY OF FACTS, CLEARLY INDI CATES THAT THE LD. COMMISSIONER JUSTIFIABLY INVOKED REVISIONAL JUR ISDICTION AS IS OOZING OUT FROM THE FACTS AVAILABLE ON RECORD . IT IS FURTHER NOTED THAT IN PARA 7 OF THE IMPUGNED ORDER, CERTAIN DIRECTION WITH RESPECT TO EXAMINING THE UNSECURED L OANS, TAKEN BY THE ASSESSEE AND APPLICABILITY OF SECTION 36(1)(III) OF THE ACT AND 14A VIS--VIS EXEMPT INCOME HAS BEEN AS KED FOR AND IT HAS BEEN SPECIFICALLY DIRECTED THAT ADEQUATE OPPORTUNITY BE PROVIDED TO THE ASSESSEE AND FURTHER DIRECTED THE ASSESSING OFFICER TO DECIDE WITH AN OPEN MIND . IT IS NOT THE CASE THAT OWN VIEW OF THE LD. COMMISSIONER HAS BEEN THRUST UPON THE ASSESSING OFFICER TO DECIDE THE CAS E IN A PARTICULAR MANNER. IF THE ASSESSEE IS SATISFIED THA T NECESSARY DETAILS, IF FILED, WERE NOT PUT TO BLACK AND WHITE THEN THERE SHOULD BE NO FEAR IN THE MIND OF THE ASSESSEE. IT I S ALSO NOT THE CASE THAT SCOPE OF EXAMINATION/ENQUIRIES ON THE ISSUES WAS ENLARGED RATHER LIBERTY WAS GRANTED TO THE ASSE SSING OFFICER TO EXAMINE THE ISSUES IN HAND IN A JUSTIFIA BLE MANNER. ITA NO.1089/MUM/2015 M/S O.P.ENTERPRISES 8 EVEN OTHERWISE, THE MANDATE OF ARTICLE 265 OF THE CONSTITUTION OF INDIA IS TO LEVY AND COLLECT DUE TA XES ONLY. THUS, CONSIDERING THE TOTALITY OF FACTS, WE ARE OF THE VIEW, THAT REVISIONAL POWERS WERE JUSTIFIABLY INVOKED BY THE L D. COMMISSIONER, THEREFORE, THE APPEAL OF THE ASSESSEE IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13/04/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 13/04/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0 ( )* ) / THE CIT, MUMBAI. 4. / / ' 0 / CIT(A)- , MUMBAI 5. 2!3 - , / )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI