Dy. Commissioner of Income Tax, Hyderabad V. M/s. VITP Pvt., Ltd., Hyderabad

ITA 1419/HYD/2013

• Counselvise Citation: 141922514 RSA 2013
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: SRIDHAR PUROHIT
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1419/HYD/2013 ASSESSMENT YEAR 2007-2008 THE DCIT, CIRCLE 3(3) HYDERABAD VS. M/S. VITP PVT. LTD. HYDERABAD 500 081. PAN AACCV 2672G (APPELLANT) (RESPONDENT) FOR REVENUE : MR. P. SOMASEKHAR REDDY FOR ASSESSEE : MR. RONY ANTONY & MR. SRIDHAR PUROHIT DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT : 28.02.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDERS OF TH E CIT(A)-IV, HYDERABAD DATED 01.08.2013. THE REVENUE HAS RAISED THE FOLLOWING GROUND : 2. THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT AS IT WAS REOPENED WITHIN FOUR YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR AND THE CONDITI ON THAT THE ESCAPEMENT OF INCOME IS DUE TO THE FAILURE ON THE PART OF THE ASSESSEE IN FURNISHING THE PARTICULARS DOES NOT APPLY. 2. IN THIS CASE, ORIGINALLY ASSESSMENT UNDER SECTI ON 143(3) WAS COMPLETED ON 30.12.2009 DETERMINING TOTA L INCOME AT RS.14.33CRORES. A.O. SUBSEQUENTLY REOPENED THE A SSESSMENT UNDER SECTION 147 BY ISSUING A NOTICE ON 16.03.2012 I.E., WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YE AR. THE 2 ITA.NO.1419/HYD/2014 M/S. VITP PVT. LTD. HYDERABAD ASSESSEE SOUGHT REASONS RECORDED FOR ISSUING NOTICE UNDER SECTION 148 WHICH WERE PROVIDED BY THE A.O. VIDE TH E LETTER DATED 23.05.2012. THE A.O. DID NOT MAKE ANY ADDITIO N RELATING TO THE REASONS RECORDED FOR REOPENING THE ASSESSMEN T BUT MADE VARIOUS OTHER ADDITIONS TOTALING TO RS.9,51,77 ,403/-. ASSESSEE IS AGGRIEVED AND HAS RAISED THE FOLLOWING GROUNDS BEFORE THE CIT(A). 1. THE ORDER DATED 22.01.2013 PASSED BY THE LEARNE D A.O. U/S. 147 R.W.S. 143(3) OF THE ACT, FOR THE A.Y. 200 7-08 WITH A CONSEQUENTIAL TAX DEMAND OF RS.4,55,09,497/- ON THE APPELLANT COMPANY, IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE IS BAD IN LAW A ND IS LIABLE TO BE QUASHED. WITHOUT PREJUDICE TO GROUND NO.1 TAKEN HEREINABOVE, THE APPELLANT WISHES TO TAKE BELOW MENTIONED GROUNDS : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED A.O. ERRED IN LAW AND FACTS OF THE CASE IN RAISING FRESH ENQUIRIES ON THE ISSUES WHICH ARE UNCONNECTED WITH THE REASONS FOR REOPENING ASSESSMENT AND THE SAME DID NOT ARISE OUT OF THE PROCEEDINGS/INFORMATI ON PROVIDED BY THE COMPANY AGAINST THE REASONS FOR REOPENING THE ASSESSMENT FOR A.Y. 2007-08. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED A.O. FAILED TO APPRECIATE THE FACT THAT, FR ESH NOTICE U/S 148 OF THE ACT IS REQUIRED TO BE ISSUED WHERE THE LD. A.O. INTENDS TO CONSIDER ANY NEW ITEM OF IN COME ESCAPING ASSESSMENT NOTICED DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED A.O. IN INTERPRETING EXPLANATION 3 TO SEC. 147 OF THE ACT VIS--VIS JUDICIAL PRECEDENTS ON THE SAME. 3. WHILE ADJUDICATING THE ABOVE GROUNDS, THE LEARN ED CIT(A) CONSIDERED THAT PROVISO TO SECTION 147 WILL APPLY TO THE FACTS OF THE CASE AND ALLOWED THE FIRST GROUND OF A PPEAL. THE ORDER OF THE CIT(A) IS AS UNDER : 3 ITA.NO.1419/HYD/2014 M/S. VITP PVT. LTD. HYDERABAD 4.2. THUS, BOTH THE REASONS FOR RE-OPENING THE ASSESSMENT, I.E., ASSESSMENT OF THE LIABILITIES OF RS.6,79,004/- U/S. 41 AND DISALLOWANCE OF RS.1,11,359/- U/S. 40(A)(IA), WERE BASED ON INFORMA TION AVAILABLE IN THE FORM-3CD FILED ALONG WITH THE RETU RN ITSELF. THIS INFORMATION, PART OF THE RECORD BEFORE THE A.O., HAD BEEN DULY DISCLOSED BY THE APPELLANT IN ITS RET URN. BY VIRTUE OF THE FACT THAT THE ASSESSMENT HAD ORIGI NALLY BEING MADE U/S.143(3), THE PROVISO TO SEC. 147 APPL IES TO THE APPELLANTS CASE AND IT IS NECESSARY TO ESTABLI SH THAT THE INCOME HAD ESCAPED ASSESSMENT DUE TO A FAILURE BY THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATER IAL FACTS NECESSARY FOR ITS ASSESSMENT. THE FACT THAT THE INFORMATION USED BY THE A.O. FOR REOPENING THE ASSESSMENT WAS DISCLOSED BY THE APPELLANT ITSELF SH OWS THAT THERE WAS NO SUCH FAILURE. THE ISSUE OF NOTICE U/S 148 IS THEREFORE HELD TO BE INVALID AND THE CONSEQU ENTIAL ASSESSMENT U/S. 147 R.W.S. 143(3) IS HELD TO BE VOI D ABINITIO. THE FIRST GROUND OF APPEAL IS, THEREFORE, ALLOWED. 4. IT WAS THE CONTENTION OF THE LEARNED D.R. THAT THE ORDER OF THE CIT(A) WAS ERRONEOUS TO THE EXTENT THA T PROVISO TO SECTION 147 CAN BE CONSIDERED ONLY IN THE CASE WHER E THE ASSESSMENT WAS REOPENED AFTER THE END OF FOUR YEARS AND REFERRED TO THE OTHER GROUNDS RAISED BY THE ASSESSE E WHICH ARE NOT CONSIDERED BY THE LEARNED CIT(A). IT WAS THE SU BMISSION THAT THIS ISSUE WAS NOT EVEN CONTESTED, AS CAN BE S EEN FROM THE GROUNDS RAISED. 5. LD. COUNSEL HOWEVER, DEFENDED THE ORDER OF THE CIT(A) WHILE ADMITTING THAT THE REASON GIVEN BY THE CIT(A) IS NOT APPLICABLE ON THE FACTS OF THE CASE BUT THERE A RE OTHER REASONS TO CANCEL THE REOPENING. 6. WITHOUT GOING INTO THE MERITS OF THE ISSUE OF REOPENING BY THE A.O. UNDER SECTION 147, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) IS NOT CORRECT ON THE FACTS OF THE CASE AS THE PROVISO TO SECTION 147 CAN ONLY BE INVO KED IN A 4 ITA.NO.1419/HYD/2014 M/S. VITP PVT. LTD. HYDERABAD CASE WHERE THE ASSESSMENT HAS BEEN REOPENED AFTER T HE END OF FOUR YEARS FROM THE END OF THE A.Y. THE RELEVANT PR OVISO TO SECTION 147 IS AS UNDER : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR. 7. THERE IS NO DISPUTE THAT THE ASSESSMENT UNDER SECTION 143(3) HAS BEEN DONE IN THIS CASE. BUT, AS CAN BE SEEN FROM THE ABOVE PROVISO NO ACTION CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A.Y. UNL ESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT ASSESSMENT YEAR. IN THIS CASE, SINCE THE ASSESSMEN T HAS BEEN REOPENED BEFORE THE END OF FOUR YEARS FROM THE A.Y. , THIS PROVISO WILL NOT APPLY. THE ORDER OF THE CIT(A) WAS NOT CORRECT ON THE GIVEN FACTS OF THE CASE. THEREFORE, WITHOUT GOING INTO THE OTHER MERITS OF THE ASSESSEES CONTENTIONS, WE UPHO LD THE REVENUES OBJECTIONS RAISED IN THE GROUNDS. THE ORD ER OF THE CIT(A) IS SET ASIDE AND THE ENTIRE APPEAL IS RESTOR ED TO THE FILE OF THE CIT(A) TO CONSIDER THE APPEAL AFRESH, ACCORDING TO THE FACTS OF THE CASE AND LAW ON THE ISSUE. ASSESSEE IS FREE TO RAISE ANY OTHER OBJECTIONS BEFORE THE CIT(A) IF REQUIRED. WIT H THESE OBSERVATIONS, REVENUES GROUNDS ARE CONSIDERED ALLO WED AND APPEAL IS RESTORED TO THE FILE OF THE CIT(A) FOR FR ESH ADJUDICATION. 5 ITA.NO.1419/HYD/2014 M/S. VITP PVT. LTD. HYDERABAD 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.20 14. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 28 TH FEBRUARY, 2014 VBP/- COPY TO : 1. D CIT, CIRCLE 3(3), HYDERABAD 2. M/S. VITP PVT. LTD. THE V ADMIN BLOCK, MARINER, PLOT NO.17, SOFTWARE UNITS LAYOUT, MADHAPUR, HI-TECH CITY, HYDERABAD-081. 3. CIT(A)-IV, HYDERABAD 4. CIT-III, HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.