Appeal Details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 8061 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
8 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-01-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
12-01-2017
Assessment Year
2006-2007
Appeal Filed On
06-05-2016
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 1250/MDS/2016 / ASSESSMENT YEAR : 2006-2007 M/S. SAFE CORRUGATED CONTAINERS PVT. LTD, F -17, OLD F-88, SIPCOT INDUSTRIAL COMPLEX, GUMMIDIPUNDI, CHENNAI 601 201. [PAN AAFCS 2534K] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(1) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. A.V. RAGHURAM, ADVOCATE /RESPONDENT BY : SHRI. ASHISH TRIPATHI, IRS, JCIT. /DATE OF HEARING : 12-01-2017 ! /DATE OF PRONOUNCEMENT : 25-01-2017 % / O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST AN ORDER DATED 04.03.2016 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI. ASSESSEE ASSAILS REOPENING DONE FOR THE I MPUGNED ASSESSMENT YEAR. ACCORDING TO IT SUCH REOPENING WA S DONE AFTER FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR, AND DID NOT ITA NO. 1250/MDS/16 :- 2 -: SATISFY THE REQUIREMENTS SET OUT IN FIRST PROVISO T O SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN MANUFACT URER OF CORRUGATED CARTONS HAD FILED RETURN OF INCOME FOR T HE IMPUGNED ASSESSMENT YEAR DECLARING A LOSS OF E18,15,356/-. THE RETURN FILED WAS ALONGWITH AUDITED PROFIT AND LOSS ACCOUNT, BALANCE SHEET, SCHEDULES AND COMPUTATION OF INCOME. THE ASSESSMENT WAS COMP LETED THEREAFTER U/S.143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) ON 15.12.2008. THE LOSS RETURNED WAS ACCEPTED AFTE R MAKING A DISALLOWANCE OF A SUM OF E21,265/- BEING TRANSPORTA TION CHARGES PAID WITHOUT DEDUCTING TDS. THEREAFTER ON 15.03.2013 A N OTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE REASON FOR REOPENING WAS MENTIONED AS ESCAPEMENT OF INCOME DUE TO DEBIT OF A SUM OF E26,51,684/- AS LOSS ON SALE OF SHARES. AS PER LD. ASSESSING OFFICER THIS WAS A CAPITAL LOSS. ASSESSEE THEREUPON REQUES TED THE LD. ASSESSING OFFICER TO TREAT THE RETURN ORIGINALLY FILED AS ONE FILED IN PURSUANCE OF SUCH NOTICE. CLAIM OF THE ASSESSEE WA S THAT IT WAS TRADING IN SHARE MARKET FOR PAST MANY YEARS AND HEN CE LOSS IN SHARE TRADING WAS A BUSINESS LOSS. LD. ASSESSING OFFICER HOWEVER NOTED THAT FOR ASSESSMENT YEAR 2005-2006, ASSESSEE HAD MADE PR OFIT OF ITA NO. 1250/MDS/16 :- 3 -: E43,37,282/- WHICH WAS CLAIMED BY THE ASSESSEE AS L ONG TERM CAPITAL GAINS. THUS AS PER LD. ASSESSING OFFICER FOR IMPU GNED ASSESSMENT YEAR LOSS OF E26,51,684/- DUE TO SALE OF SHARES WAS NOT A BUSINESS LOSS BUT ONLY CAPITAL LOSS. THE ASSESSMENT WAS COMPLETE D AFTER MAKING A DISALLOWANCE OF E26,51,684/-. 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). ONE OF THE GR OUNDS RAISED BY THE ASSESSEE CHALLENGED THE REOPENING. AS PER THE ASSESSEE REOPENING WAS DONE BASED ON A CHANGE OF OPINION AND COULD NOT STAND THE TEST OF LAW. FURTHER, AS PER ASSESSEE IT WAS ENGAGED IN PU RCHASE AND SALE OF SHARES FOR VERY MANY YEARS. HOWEVER, LD. COMMISSIO NER OF INCOME TAX (APPEALS) WAS NOT APPRECIATIVE OF THESE CONTEN TIONS. ACCORDING TO HIM, IN ORIGINAL ASSESSMENT LD. ASSESSING OFFIC ER HAD NOT FORMED ANY OPINION ON THE CLAIM OF LOSS ON SALE OF SHARES. THUS, ACCORDING TO HIM, REOPENING WAS NOT ON ACCOUNT OF ANY CHANGE OF OPINION. HE ALSO HELD THAT LD. ASSESSING OFFICER WAS JUSTIFIED IN TR EATING THE LOSS ON SALE OF SHARES AS CAPITAL LOSS. HE DISMISSED THE APPEAL OF THE ASSESSEE. 4. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE REOPENING DONE FOR THE IMPUGNED ASSES SMENT YEAR SUBMITTED THAT SUCH REOPENING HAVING BEEN DONE AFTE R FOUR YEARS FROM ITA NO. 1250/MDS/16 :- 4 -: THE END OF THE IMPUGNED ASSESSMENT YEAR PROVISO OF SEC. 147 OF THE ACT WOULD BE ATTRACTED. ACCORDING TO HIM, BY VIRT UE OF JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD 320 ITR 561 UNLESS AND UNTIL THERE WAS FRESH TANGIBLE MATERIAL JUSTIFYING A REOPENING, A REOPENING DONE AFTER FOUR YEARS WO ULD NOT BE VALID IN LAW. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT IN THE ORIGINAL ASSESSMENT, LD. ASSESSING OFFICER HAD NOT REACHED ANY OPINION OR EXERCISED HIS MIND ON THE ISSUE REGARDIN G THE NATURE OF LOSS DUE TO SHARE TRADING. HENCE, ACCORDING TO HIM, REO PENING WAS NOT BASED ON ANY CHANGE OF OPINION AND THEREFORE WAS VA LID. 6. I HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. IT IS NOT DISPUTED THAT ALONGWITH ORIGINAL RETURN OF INCOME, ASSESSEE HAD PROVIDED AUDITED BALANCE SHEET, PROFI T AND LOSS ACCOUNT AND SCHEDULES. PROFIT AND LOSS ACCOUNT PLACED AT P APER BOOK PAGE NO.6 CLEARLY MENTIONS LOSS ON SALE OF SHARES OF E26 ,51,684/- AS A SPECIFIC ITEM OF EXPENDITURE. THE LOSS CLAIMED BY THE ASSESSEE IN THE RETURN WAS E18,15,356/-. THE LOSS WAS DETERMINED B Y THE LD. ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT AT E17 ,94,091/-. THE ONLY DISALLOWANCE MADE WAS FOR NON DEDUCTION OF TAX AT S OURCE ON A SUM OF ITA NO. 1250/MDS/16 :- 5 -: E21,265/-. IT WOULD BE NAVE TO PRESUME THAT LD. A SSESSING OFFICER WOULD NOT HAVE GONE THROUGH THE PROFIT AND LOSS ACC OUNT OF THE ASSESSEE, ESPECIALLY WHEN SUCH PROFIT AND LOSS ACCO UNT REFLECTED A LOSS OF E15,93,811/-. IT IS NOT A CASE WERE LOSS CLAIMED WAS NOT VISIBLE. SUBSTANTIAL PART OF LOSS CLAIMED BY THE ASSESSEE WA S ON ACCOUNT OF LOSS IN SALE OF SHARES OF E.26,51,684/-, WHICH WAS DEBIT ED IN ITS PROFIT AND LOSS ACCOUNT AS A SPECIFIC ITEM. IT IS NOT A CASE, WHERE THE LD. ASSESSING OFFICER WAS REQUIRED TO DISCOVER ANY MATERIAL EVID ENCE WITH DILIGENCE. THE ENTRY WAS VISIBLY AVAILABLE ON THE FACE OF THE RECORD ITSELF. THUS, WE CANNOT SAY THAT LD. ASSESSING OFFICER HAD DETERM INED THE LOSS OF THE ASSESSEE WITHOUT VERIFYING THE PROFIT AND LOSS ACCO UNT FILED BY IT. IN A CASE WHERE REOPENING IS ATTEMPTED AFTER FOUR YEARS FROM THE END OF AN ASSESSMENT YEAR, FIRST PROVISO TO SEC. 147 OF T HE ACT WOULD CLEARLY APPLY. NOTHING HAS BEEN BROUGHT ON RECORD BY THE RE VENUE TO SHOW THAT ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. FURTHER, HONBLE APE X COURT IN THE CASE OF KELVINATOR INDIA LTD (SUPRA) HAD HELD THAT IN THE ABSENCE OF FRESH TANGIBLE MATERIAL, REOPENING COULD NOT BE DONE WHER E ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. I AM OF THE OPINION THAT REOPENING DONE FOR THE IMPUGNED ASSESSMENT YEA R WAS BAD IN ITA NO. 1250/MDS/16 :- 6 -: LAW. EX-CONSEQUENTI THE ASSESSMENT IS SETASIDE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON WEDNESDAY, THE 25TH JANUARY, 20 17, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 25TH JANUARY, 2017 KV %& '()( / COPY TO: 1. / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF
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