ACIT, Cir-2(2), Kolkata, Kolkata V. M/s. Tata Korf Engineering Services Ltd., Kolkata

ITA 1357/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9147 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 1999-2000
• Appeal Filed On: 17-06-2016
• Court: TRIBUNAL
• Department Lawyers: SNEHANGSU BISWAS
• Assessee Lawyers: MA NISH SHETH; NIMESH KUMAR A RS
• Keywords: Rectification of order
• Section: 43B; 154

Judgement Text

I.T.A. NO. 1357/KOL./2016 ASSESSMENT YEAR: 1999-2000 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1357/KOL/ 2016 ASSESSMENT YEAR: 1999-2000 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .....................APPELLANT CIRCLE-2(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. TATA KORF ENGINEERING SERVICES LIMITED,....... ................RESPONDENT TATA CENTRE, 43, CHOWRINGHEE ROAD, KOLKATA-700 071 [PAN: AABCT 1387 R] APPEARANCES BY: SHRI SNEHANGSU BISWAS, JCIT, D.R., FOR THE DEPARTME NT SHRI MANISH SHETH & SHRI NIMESH KUMAR, A.RS., FOR T HE ASSESSEE DATE OF CONCLUDING THE HEARING : MARCH 09, 2017 DATE OF PRONOUNCING THE ORDER : MARCH 17, 2017 O R D E R THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATA DAT ED 06.04.2016 ON THE FOLLOWING GROUNDS:- 1. WHETHER ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE LD. CIT(A)-1, KOLKATA HAS ERR ED IN HOLDING THAT THE RECTIFICATION MADE U/S 154 ON 28.09.2007 WAS BAD IN LAW ON THE GROUND OF SERVICE OF THE RECTIFICATION ORDER AFTER A PERIOD OF 3 YEARS F ROM THE END OF THE RELEVANT YEAR. 2. WHETHER ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE LD. CIT(A)-1, KOLKATA HAS ERR ED IN HOLDING THAT THE RECTIFICATION MADE U/S 154 ON 28.09.2007 WAS BAD IN LAW AS THE ISSUE INVOLVED WAS DEBATABLE. I.T.A. NO. 1357/KOL./2016 ASSESSMENT YEAR: 1999-2000 PAGE 2 OF 4 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY. A S PER THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 )/147 ON 21.03.2006, ITS TOTAL INCOME WAS DETERMINED AT A LOSS OF RS.35, 02,370/-. SUBSEQUENTLY IT WAS NOTICED BY THE ASSESSING OFFICER THAT A SUM OF RS.35,69,552/- SHOWN AS UNPAID BY THE ASSESSEE ON ACCOUNT OF CESS ON COST OF DRAWINGS AND DESIGNS/TECHNICAL KNOW-HOW FEES HAD REMAINED TO BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE UNDE R SECTION 43B OF THE ACT. ACCORDING TO HIM, THERE WAS THUS A MISTAKE IN THE ORDER PASSED UNDER SECTION 143(3)/147 BY THE ASSESSING OFFICER AND TO RECTIFY THE SAME, A NOTICE UNDER SECTION 154 WAS ISSUED BY HIM TO THE A SSESSEE ON 14.08.2007. IN REPLY TO THE SAID NOTICE, IT WAS SUB MITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE PROVISION FOR THE SAID CESS HAS ALREADY BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2001 -02 AND, THEREFORE, ANY DISALLOWANCE OF THE SAME IN THE YEAR UNDER CONS IDERATION WOULD RESULT IN DOUBLE DISALLOWANCE. THIS SUBMISSION OF T HE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AND VIDE AN ORDER DATED 28.09.2007 PASSED UNDER SECTION 154 OF THE ACT, HE DISALLOWED THE SUM OF RS.35,69,552/- ON ACCOUNT OF CESS PAYABLE UNDER SEC TION 43B AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 154, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CESS PA YABLE FOR THE FOLLOWING REASON GIVEN IN HIS IMPUGNED ORDER:- I HAVE CAREFULLY GONE THROUGH THE SUBMISSION OF TH E A.R. OF THE APPELLANT AND THE MATERIAL BEFORE ME AND I AM O F THE OPINION THAT THERE HAS BEEN A CONSIDERABLE DELAY OF MORE THAN 3 YEARS FROM THE DATE OF PASSING THE IMPUGNED ORDER U/S 154 [28.09.2007] AND THE DATE OF SERVING SUCH O RDER TO THE ASSESSEE ON 24.12.2010. IN VIEW OF THE ABOVE ME NTIONED FACT, I FIND THAT THERE IS CONSIDERABLE FORCE IN TH E SUBMISSION OF THE APPELLANT AND ALSO CONSIDERING THE JUDICIAL PRONOUNCEMENT IN THE CASE LAWS RELIED UPON BY THE A SSESSEE, I FIND THAT THE ORDER PASSED U/S 154 ON 28.09.2007 IS BAD IN I.T.A. NO. 1357/KOL./2016 ASSESSMENT YEAR: 1999-2000 PAGE 3 OF 4 LAW. MOREOVER, ANY ORDER PASSED U/S 154 RESULTING I N ENHANCING OF INCOME OF THE ASSESSEE SHOULD BE PASSE D ONLY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING H EARD. IN THE INSTANT CASE, THE AO IN HIS RECTIFICATION ORDER U/S 154 DATED 28.09.2007 DID NOT CONSIDER THE SUBMISSION OF THE APPELLANT WHEREIN THE APPELLANT HAD CLEARLY STATED THAT SUCH SUMS WERE NOT DEBITED IN THE PROFIT AND LOSS A CCOUNTS FOR THE YEAR UNDER CONSIDERATION AND THUS, DISALLOW ANCE OF THE SAME DURING THE A.Y. 1999-2000 IS NOT JUSTIFIED . IT IS ALSO SEEN THAT AN ORDER U/S 154 SHOULD BE PAS SED TO RECTIFY A MISTAKE WHICH IS APPARENT FROM RECORD. IN THE INSTANT CASE, THE QUESTION OF DISALLOWANCE OF RS. 3 5.69 LACS IS A DEBATABLE ISSUE AND HAS GOT TWO VIEWS [ONE IN WHICH THE DISALLOWANCE HAS TO BE MADE AND THE OTHER IN WHICH SUCH AN AMOUNT IS NOT LIABLE FOR DISALLOWANCES. THE SCOPE O F SECTION 154 CLEARLY MANDATES THAT ONLY A MISTAKE APPARENT F ROM RECORDS, WHICH IS NOT DEBATABLE, MAY BE RECTIFIED B Y THE AO. IN VIEW OF THE ABOVE MENTIONED FACTS AND CIRCUMSTAN CES, I HAVE NO HESITATION IS TREATING THE RECTIFICATION OR DER DATED 28.09.20007 PASSED U/S 154 AS ILLEGAL AND BAD IN LA W. THESE GROUNDS ARE ALLOWED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS REITERATED BEFORE ME THE CONTENTION RAISED BEFORE T HE LD. CIT(APPEALS) THAT THE PROVISION FOR CESS IN QUESTION WAS MADE BY THE ASSESSEE IN ASSESSMENT YEAR 1998-99 AND NOT IN ASSESSMENT YEAR UNDER CONSIDERATION, I.E. 1999-2000. HE HAS SUBMITTED THA T THE SAID AMOUNT REMAINED PAYABLE EVEN IN THE YEAR UNDER CONSIDERATI ON AND THE QUANTUM THEREOF WAS VARIED ONLY AS A RESULT OF FLUCTUATION IN FOREIGN EXCHANGE. HE HAS ALSO FILED THE AUDITED ACCOUNTS OF THE ASSESSEE -COMPANY FOR BOTH THE YEARS UNDER CONSIDERATION TO SUPPORT AND SUBSTANTIA TE HIS CONTENTION AND A PERUSAL OF THE SAME SHOWS THAT THE PROVISION FOR CESS IN QUESTION DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 4 3B WAS ACTUALLY MADE BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR, I.E. A.Y. 1998-99 AND NOT IN THE YEAR UNDER CONSIDERATION. MOREOVER, AS R IGHTLY HELD BY THE LD. I.T.A. NO. 1357/KOL./2016 ASSESSMENT YEAR: 1999-2000 PAGE 4 OF 4 CIT(APPEALS), A DISALLOWANCE OF SUCH PROVISION UNDE R SECTION 43B INVOLVED A DEBATABLE ISSUE AND THE SAME, THEREFORE, WAS BEYOND THE SCOPE OF RECTIFICATION PERMISSIBLE UNDER SECTION 154. I, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPE ALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF PROVISION FOR CESS UNDER SECTION 43B BY WAY OF RECTIFICATION AND UPHOLDING THE SAME, I DISMISS THIS APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 17, 201 7. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 17 TH DAY OF MARCH, 2017 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. TATA KORF ENGINEERING SERVICES LIMITED , TATA CENTRE, 43, CHOWRINGHEE ROAD, KOLKATA-700 071 (3) COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKAT A; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.