DCIT, Trivandrum V. M/s.Cordial Company, Trivandrum

ITA 119/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69053 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-11-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: IYPE MATHEW
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

1 ITA NO.119/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 119/COCH/2013 (ASSESSMENT YEAR 2004-05) THE DY.CIT, CIR.1(2) VS M/S CORDIAL COMPANY TRIVANDRUM NARAYANA BHAVAN KURUPS LANE SASTHAMANGALAM TRIVANDRUM PAN : AAAFC0415B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. JOHN RESPONDENT BY : SHRI IYPE MATHEW DATE OF HEARING : 11-11-2013 DATE OF PRONOUNCEMENT : 22-11-2013 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A), TRIVANDRUM DATED 13-12-2012 AND PERTAINS TO ASSESSMENT YEAR 2004-05. 2. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE ASSES SMENT PROCEEDINGS WERE REOPENED AFTER EXPIRY OF FOUR YEARS AND IS, TH EREFORE, INVALID. 2 ITA NO.119/COCH/2013 ACCORDING TO THE LD.DR, MERE PRODUCTION OF BOOKS OF ACCOUNT IS NOT SUFFICIENT. REFERRING TO THE JUDGMENT OF THE KERAL A HIGH COURT IN THE CASE OF ALAPPAT JEWELS VS ACIT (2013) 30 TAXMANN.COM 212 (KER), COPY OF WHICH IS FILED, THE LD.,DR SUBMITTED THAT ISSUE OF NOTICE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR WILL NOT INVALIDATE THE REASSESSMENT PROCEEDINGS SINCE THE ASSESSEE HAS A D UTY TO BRING TO THE NOTICE OF THE OFFICER THE PARTICULAR ITEM IN THE BO OKS OF ACCOUNT OR PORTION OF THE DOCUMENT WHICH ARE RELEVANT. IN THIS CASE, ACC ORDING TO THE LD.DR, THE ASSESSEE HAD NOT BROUGHT TO THE NOTICE OF THE ASSES SING OFFICER THE CURRENT ACCOUNT BALANCE AS ON 31-03-2003. HENCE, THERE WAS A NEGLIGENCE ON THE PART OF THE ASSESSEE IN DISCLOSING THE ENTIRE DETAI LS NECESSARY FOR COMPLETING THE ASSESSMENT. THEREFORE THE FOUR YEAR S PERIOD PRESCRIBED IN PROVISO TO SECTION 147 CANNOT BE A REASON TO HOLD T HAT THE RE-ASSESSMENT PROCEEDINGS ARE INVALID. 3. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DURIN G THE ORIGINAL ASSESSMENT PROCEEDINGS ASKED FOR SPECIFIC DETAILS W ITH REGARD TO CURRENT ACCOUNT BALANCE, BANK STATEMENT, CAPITAL ACCOUNT, P ARTNERS CAPITAL ACCOUNT, ETC. ALL THE NECESSARY DETAILS INCLUDING THE CURRENT ACCOUNT BALANCE WERE FURNISHED TO THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THE BOOKS OF ACCOUNT SEIZED BY THE DEP ARTMENT DURING THE 3 ITA NO.119/COCH/2013 COURSE OF SEARCH OPERATION WERE WITH THE DEPARTMENT . THEREFORE, IT IS NOT CORRECT TO SAY THAT MERE PRODUCTION OF BOOKS OF ACC OUNT IS NOT SUFFICIENT DISCLOSURE. WHEN THE DEPARTMENT IS IN THE CUSTODY OF THE ENTIRE BOOKS OF ACCOUNT AND THE ASSESSEE HAS ALSO FILED CASH FLOW S TATEMENT INCLUDING THE CURRENT ACCOUNT BALANCE DETAILS ON A SPECIFIC QUERY MADE BY THE ASSESSING OFFICER, ACCORDING TO THE LD.REPRESENTATIVE, THERE IS NO NEGLIGENCE ON THE PART OF THE ASSESSEE TO FURNISH THE DETAILS. REFER RING TO THE JUDGMENT OF THE KERALA HIGH COURT IN ALAPPAT JEWELS (SUPRA), THE LD .REPRESENTTIVE SUBMITTED THAT NO DOUBT, THE JURISDICTIONAL HIGH COURT FOUND THAT MERE PRODUCTION OF BOOKS OF ACCOUNT IS NOT SUFFICIENT AND IT IS THE DU TY OF THE ASSESSEE TO BRING TO THE NOTICE OF THE ASSESSING OFFICER THE PARTICUL AR ITEM IN THE BOOKS OF ACCOUNT OR PORTION OF THE DOCUMENT WHICH ARE RELEVA NT. IN THIS CASE, THE REASON FOR REOPENING THE ASSESSMENT IS WITH REGARD TO PARTNERS CURRENT ACCOUNT BALANCE. THE ASSESSING OFFICER, BY A SPECI FIC LETTER, ASKED FOR DETAILS WITH REGARD TO PARTNERS CAPITAL ACCOUNT AN D CURRENT ACCOUNT. THE ASSESSEE HAS FILED ALL THE DETAILS. MOREOVER, IT I S NOT A CASE OF PRODUCTION OF BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER. THE BOOKS OF ACCOUNT WERE SEIZED BY THE DEPARTMENT DURING THE COURSE OF SEARCH AND THE ENTIRE BOOKS OF ACCOUNT WERE WITH THE DEPARTMENT FOR EXAMI NATION. SINCE THE ASSESSING OFFICER SPECIFICALLY RAISED A QUERY WITH REGARD TO THE CAPITAL AND CURRENT ACCOUNT, ACCORDING TO THE LD.REPRESENTATIVE , THE SAME WAS CLARIFIED SPECIFICALLY BEFORE THE ASSESSING OFFICER, THEREFOR E, THE ASSESSEE, 4 ITA NO.119/COCH/2013 ACCORDING TO THE LD.REPRESENTATIVE, HAS DISCHARGED ITS OBLIGATION OF BRINGING TO THE NOTICE OF THE ASSESSING OFFICER. THEREFORE, THE ASSESSMENT PROCEEDINGS CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSMENT PROCEEDINGS WERE COMPLETED EARLIER U/S 143(3) BY AN ORDER DATED 24-12-2007. THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUIN G NOTICE ON 29-03- 2011. ADMITTEDLY, THE NOTICE WAS ISSUED AFTER EXPI RY OF FOUR YEARS PERIOD. PROVISO TO SECTION 147 CLEARLY SAYS THAT ONCE THE A SSESSMENT WAS COMPLETED U/S 143(3) IT CANNOT BE REOPENED AFTER EX PIRY OF FOUR YEARS UNLESS THERE WAS NEGLIGENCE ON THE PART OF THE ASSE SSEE IN FURNISHING THE REQUIRED DETAILS FOR COMPLETING THE ASSESSMENT. BY PLACING RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT, THE LD.DR SUBMIT TED THAT MERE PRODUCTION OF BOOKS OF ACCOUNT IS NOT SUFFICIENT AN D THAT IT IS THE DUTY OF THE ASSESSEE TO BRING TO THE NOTICE OF THE ASSESSING OF FICER THE PARTICULAR ITEM IN THE BOOKS OF ACCOUNT OR PORTION OF THE DOCUMENTS WHICH ARE RELEVANT. IN THIS CASE, ACCORDING TO THE LD.DR, THE ASSESSEE FAI LED TO DO SO, THEREFORE, THE ASSESSMENT CAN BE REOPENED EVEN AFTER THE EXPIR Y OF FOUR YEARS. WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD.DR. THIS IS NOT A REGULAR ASSESSMENT. THIS IS SEARCH ASSESSMENT. THE ENTIRE BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED AND WERE IN THE CUSTODY OF TH E DEPARTMENT. 5 ITA NO.119/COCH/2013 DURING THE COURSE OF ORIGINAL ASSESSMENT, THE ASSES SING OFFICER SOUGHT DETAILS THROUGH A SPECIFIC QUESTIONNAIRE. IN FACT IT IS APPARENT FROM THE ASSESSMENT ORDER DATED 24-12-2007 THAT THE ASSESSIN G OFFICER HAD CALLED FOR ALL THE DETAILS SPECIFICALLY. THE ASSESSING OF FICER ON 10-05-2007 BY ISSUING A QUESTIONNAIRE HAS CALLED FOR THE FOLLOWIN G DETAILS WHICH ARE APPARENT FROM THE ASSESSMENT ORDER: . A QUESTIONNAIRE WAS ALSO ISSUED TO THE ASSESSEE ON 10.5.2007, REQUESTING THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNT AND TO FILE STATEMENT OF BANK ACCOUNTS, CAS H FLOW STATEMENT, PARTNERS CAPITAL AND CURRENT ACCOUNT, DE TAILS OF ADDITION MADE TO FIXED ASSETS ETC. 5. THE ASSESSING OFFICER, AFTER CONSIDERING THE SPE CIFIC DETAILS WITH REGARD TO BANK ACCOUNTS, CASH FLOW STATEMENT, PARTN ERS CAPITAL AND CURRENT ACCOUNT, DETAILS OF ADDITION MADE TO FIXED ASSETS E TC. FILED BY THE ASSESSEE HAS OBSERVED AS FOLLOWS: AFTER VERIFYING THE BOOKS OF ACCOUNTS, SEIZED DOC UMENTS AND THE REPLY OF THE ASSESSEE ALONG WITH THE DETAIL S FILED IN RESPONSE TO THE QUESTIONNAIRE THE ASSESSEE WAS ISSU ED A PRE- ASSESSMENT PROPOSAL DATED 3.12.L2007. 6 ITA NO.119/COCH/2013 6. IN VIEW OF THE ABOVE, IT IS APPARENT THAT THE AS SESSING OFFICER HAS SPECIFICALLY RAISED A QUERY WITH REGARD TO PARTNERS CAPITAL ACCOUNT AND CURRENT ACCOUNT. THIS WAS ALSO BROUGHT TO THE NOTI CE OF THE ASSESSING OFFICER BY THE ASSESSEE BY A LETTER DATED 21-11-200 7. THEREFORE, IT IS NOT A CASE OF BRINGING TO THE NOTICE OF THE ASSESSING OFF ICER THE PARTICULAR ITEM IN THE BOOKS OF ACCOUNT OR PORTION OF THE DOCUMENTS WH ICH ARE RELEVANT. THE ASSESSING OFFICER SPECIFICALLY INVITED THE ATTENTIO N OF THE ASSESSEE TO THE SPECIFIC ITEM IN THE BOOKS OF ACCOUNT AND THE ASSES SEE ALSO CLARIFIED TO THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT. THER EFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHING THE REQUIRED DETAILS FOR COM PLETING THE ASSESSMENT. THEREFORE, THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF ALAPPAT JEWELS (SUPRA) MAY NOT BE RELEVANT TO THE FACTS OF THIS CASE. SINCE THERE WAS NO NEGLIGENCE ON THE PART OF THE ASSESSEE IN FU RNISHING THE PARTICULARS WITH REGARD TO PARTNERS CAPITAL ACCOUNT AND CURREN T ACCOUNT AND OTHER DETAILS, PROVISO TO SECTION 147 WOULD BE APPLICABLE TO THE FACTS OF THE PRESENT CASE AND HENCE, REOPENING OF ASSESSMENT AFT ER EXPIRY FO FOUR YEARS IS NOT PERMISSIBLE. THIS TRIBUNAL DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. 7 ITA NO.119/COCH/2013 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND NOVEMBER, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 22 ND NOVEMBER, 2013 PK/- COPY TO: 1. THE DY.CIT, CIR.1(2), TRIVANDRUM 2. M/S CORDIAL COMPANY, NARAYANA BHAVAN, KURUPS LA NE, SASTHAMANGALAM, TRIVANDRUM 3. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX(A), KOWDIAR, TRIV ANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH