ITO(OSD), CHENNAI V. M/s Pyramid Saimira Theatre Ltd., CHENNAI

ITA 1430/CHNY/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51834 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-07-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Opportunity of being heard; Revised return
• Section: 143(3); 115JB; 139(5)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI A BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI, J.M. & SHRI. N.S. SAINI, A .M. I.T.A. NO. 1430/MDS/2009 ASSESSMENT YEAR: 2008-09 THE INCOME TAX OFFICER (OSD), MEDIA CIRCLE I, CHENNAI 34. VS. M/S. PYRAMID SAIMIRA THEATRE LTD., C-1, 2 ND FLOOR, TEMPLE TOWER, 672, ANNA SALAI, NANDANAM, CHENNAI 600 035. [PAN:AAECP0411H] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB, SR. DR ASSESSEE BY : SHRI T. BANUSEKAR DATE OF HEARING : 26.07.2011 DATE OF PRONOUNCEMENT 26.08.2011 ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) VI, CHENNAI DATED 22.07.2009 RELEVANT TO THE ASSESSMENT YEAR 2008-09, WHEREIN THE DEPARTMENT HAS RAISED EFFECTIVE GROUND FROM GROUND NO. 2 TO 10 AND GROUND NO. 11 IS PRAYER PART. GROUND NO. 2 TO 10 AR E REPRODUCED AS UNDER: 2. THE ORDER OF THE CT(A) IS NOT SUSTAINABLE IN L AW IN AS-MUCH-AS THE ORDER HAS BEEN PASSED WITHOUT AFFORDING ADEQUAT E OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER AS REQUIRED U/ S 250(1)(B) OF THE ACT. 3. THE ID. CIT(A) ERRED IN REJECTING THE REQUEST O F THE ASSESSING OFFICER FOR TIME WITHOUT APPRECIATING THAT THERE WA S A CHANGE IN THE INCUMBENT OF THE OFFICE AND THE PRESENT ASSESSING O FFICER HAD JUST THEN TAKEN CHARGE AND THEREFORE NEEDED TIME TO FAMI LIARIZE HIMSELF WITH THE CASE. 4. THE ID CIT(A) ERRED IN REJECTING THE REQUEST OF THE ASSESSING I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1430/MDS/09 1430/MDS/09 1430/MDS/09 1430/MDS/09 2 OFFICER FOR TIME ON THE SOLE GROUND THAT IT WAS A H IGH DEMAND CASE AND THEREFORE HAD TO BE DISPOSED OF ON A PRIORITY B ASIS. 5. THE ID. CIT(A) ERRED IN NOT OBSERVING THAT THE APPEAL FILED BY THE ASSESSEE WAS INCOMPETENT AND NOT MAINTAINABLE I N-AS-MUCH-AS AN INTIMATION UNDER SECTION 143(1) IS NOT AN APPEAL ABLE ORDER EXCEPT WHERE THE ASSESSEE OBJECTS TO THE MAKING OF ANY ADJ USTMENTS. IN THE INSTANT CASE THE ASSESSEE HAD NOT OBJECTED TO ANY A DJUSTMENTS MADE IN THE INTIMATION U/S 143(1). 6. FOR THE REASON STATED IN THE PRECEDING GROUND, T HE APPEAL OUGHT NOT TO HAVE BEEN ADMITTED AND TAKEN UP FOR HE ARING, UNDER THE PROVISIONS OF SEC 246A. 7. THE ID.CIT(A) ERRED IN HOLDING THAT THE IMPUGNE D INTIMATION U/S 143(1) WAS NOT IN CONSONANCE WITH THE DIRECTIONS GI VEN BY THE H'BLE HIGH COURT. 8. THE ID. CIT(A) OUGHT TO HAVE NOTICED THAT THE H 'BLE HIGH COURT HAS ONLY HELD THAT THE VALIDITY OF THE REVISED RETU RN WOULD BE FINALLY DETERMINED IN THE PROCEEDINGS U/S 143(3) OF THE ACT . 9. THE ID. CIT(A) ERRED IN NOT APPRECIATING THAT T HE INTIMATION U/S 143(1) WAS A STEP TOWARDS THE COMPLETION OF THE ASS ESSMENT PROCEEDINGS U/S 143(3) AND THE RIGHT OF THE ASSESSE E TO RELY ON THE REVISED RETURN IN THE PROCEEDINGS U/S 143(3) HAD NO T BEEN PREJUDICED IN ANY WAY. 10. THE ID. CIT(A) ERRED IN RELYING SOLELY ON THE RULINGS CITED ON BEHALF OF THE ASSESSEE WITHOUT REFERRING TO THE DEC ISIONS RELIED ON BY THE REVENUE BEFORE THE H'BLE HIGH COURT. 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASS ESSEE SHRI T. BANUSEKAR SUBMITTED THAT IN THIS CASE THE RETURN WAS FILED ON 30.09.2008 ADMITTING AN INCOME OF ` .79,07,54,470/- AND THE SAME WAS PROCESSED UNDER SE CTION 143(1) ON 12.05.2009 RESULTING IN A DEMAND OF ` .28,50,64,225/-. THE ASSESSEE IS STATED TO HAVE FILED A REVISED RETURN ON 06.03.2009 UNDER SEC TION 139(5) CLAIMING A SUM OF ` .76,94,22,500/- AS A DEDUCTION IN THE SAID REVISED RETURN, THEREBY ADMITTING TOTAL INCOME OF ` .2,13,31,972/- AND BOOK PROFIT UNDER SECTION 115JB AT ` .1,95,49,789/-, I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1430/MDS/09 1430/MDS/09 1430/MDS/09 1430/MDS/09 3 WHEREAS THE ASSESSEE HAD PAID AN AMOUNT OF ` .4,11,76,102/- TOWARDS TAX LIABILITY AND HE HAD CLAIMED REFUND. THOUGH THE ASSESSEE CLAI MED REFUND IN THE REVISED RETURN, BUT THE ASSESSING OFFICER ONLY PROCESSED FI RST RETURN UNDER SECTION 143(1) ON 12.05.2009 TO CREATE DEMAND OF ` .28.50 CRORES AND ODD AMOUNT, WHEREAS THE REVISED RETURN FILED UNDER SECTION 139(5) HAS NOT A T ALL BEEN CONSIDERED AND THE ASSESSEE CHALLENGED SUCH DEMAND IN APPEAL. THE ASSE SSEE HAS ALSO MOVED THE HONBLE HIGH COURT AGAINST THE CREATION OF DEMAND U NDER SECTION 143(1) AND THE LD. CIT(A), WHILE CONSIDERING THE HONBLE HIGH COUR TS ORDER, WHOSE CONCLUSION IS INCORPORATED IN PARA 18 OF HIS ORDER HAS CONCLUDED IN PARA 19 AND BOTH THE PARAS 18 AND 19 ARE REPRODUCED AS UNDER: 18. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON HE BASIS OF OBSERVATION BASED BY THE HONBLE JURISDICTIONAL HC ON THE WP FILED BY THE ASSESSEE THAT THE ACCEPTANCE/NON ACCEPTANCE/REJECTI ON IS PREROGATIVE OF THE AO IN AN ASSESSMENT PROCEEDINGS AND AS PER THE CASE LAWS CITED ABOVE HE CAN DO SO ONLY AFTER, IN THE PRESENT CIRCUMSTANCES, PRO CESSING THE REVISED RETURN FIELD ISSUING A NOTICE AND PASSING AN ORDER IN A SC RUTINY ASSESSMENT U/S. 143(3) OF THE ACT AFTER FOLLOWING PRINCIPLES OF NAT URAL JUSTICE ETC. (EMPHASIS SUPPLIED). THE HONBLE JURISDICTIONAL HIGH COURT IN A WRIT PETITION HAS POINTED OUT THAT SECTION 139(5) DOES NOT SAND IN IS OLATION AND CANNOT BE SUBJECTED TO PIECEMEAL PROCEEDINGS. THE VALIDITY OF 139(5) CAN ONLY BE TESTED BY DUE PROCESS OF LAW. SUMMARY REJECTION OF 139(5) HAS NOT BEEN ENVISAGED. 19. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN CONSONANCE WITH THE DIRECTIONS GIVEN BY THE JURISDI CTIONAL HIGH COURT THE ACCEPTANCE OF OTHERWISE OF THE RETURN COULD BE DONE BY DUE PROCESS OF LAW, AS HAS BEEN DIRECTED BY THE COURT (I.E.) BY MAKING AN ASSESSMENT ON THE REVISED RETURN, TO FIND OUT THE OMISSIONS OR WRONG STATEMEN T THEREIN. I AM OF THE OPINION THAT, THE AO HAS NO POWERS TO SUMMARILY REJ ECT THE REVISED RETURN WITHOUT PUTTING THE SAME INTO TEST OF SCRUTINY ASST . UNDER THE DUE PROCESS OF LAW, WHEN THE REVISED RETURN IS BASED ON THE OPINIO N OF A LEGAL COUNSEL. THEREFORE, THE BONA FIDES CANNOT BE REJECTED OUTRIG HT, WITHOUT THE ARDUOUSNESS OF ASSESSMENT PROCEEDINGS, WHICH HAVE N OT YET COMMENCED ON THE REVISED RETURN. 3. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A), THE DEPARTMENT HAS CAME UP IN I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1430/MDS/09 1430/MDS/09 1430/MDS/09 1430/MDS/09 4 APPEAL AND IT WAS VEHEMENTLY ARGUED BY THE LD. DR T HAT FIRSTLY, THE APPEAL DOES NOT LIE AGAINST THE ORDER PASSED UNDER SECTION 143(1) U NTIL OR UNLESS THE TOTAL TAX LIABILITY IS DENIED AND IN THIS CASE, THE ASSESSEE HAS NOT TOTALLY DENIED THE TAX LIABILITY. THEREFORE, THE APPEAL IS NOT MAINTAINABL E AT ALL AND THIS ASPECT HAS NOT AT ALL BEEN CONSIDERED BY THE LD. CIT(A). THEREFORE, H IS ORDER IS NOT LEGALLY CORRECT. SECONDLY, THE CONCERNED ASSESSING OFFICER FROM WHOM REMAND REPORT WAS CALLED FOR BY THE LD. CIT(A) HAD BEEN SHIFTED AND SINCE TH ERE WAS CHANGE IN INCUMBENT, THEREFORE, IT TOOK SOME TIME TO CONSIDER AND PREPAR E THE REMAND REPORT FOR WHICH THE ASSESSING OFFICER HAS SOUGHT TIME, WHICH WAS NO T GRANTED BY THE LD. CIT(A) AND PASSED THE IMPUGNED ORDER, WHICH IS NOT LEGALLY COR RECT AND IN ALL FAIRNESS, OPPORTUNITY IS REQUIRED TO BE GIVEN IN APPEAL TO TH E ASSESSING OFFICER AS WELL AS TO THE ASSESSEE AND IN THIS CASE THERE IS TOTAL DENIAL OF OPPORTUNITY SO FAR AS THE ASSESSING OFFICER IS CONCERNED, THEREFORE, IT ALSO MAKES THE ORDER TO BE UNTENABLE. IT WAS THUS, PLEADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER OR ALTERNATIVELY MATTER BE RESTORED BACK TO THE LD. CIT(A) FOR RECONSIDERATION OF THE APPEAL AFRESH. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROCESSING OF RETURN IN THIS CASE UNDER SECTION 143(1) WAS DONE ON 12.05.2009 WI TH RESPECT TO FIRST RETURN FILED ON 30.09.2008 AND THE ASSESSEE HAD ALREADY REVISED ITS RETURN ON 06.03.2009 UNDER SECTION 139(5), WHICH HAS NOT AT ALL BEEN CON SIDERED BY THE ASSESSING OFFICER AND THERE IS A VAST DIFFERENCE IN ADMITTING TAX LIABILITY IN THE ORIGINAL RETURN AND IN THE REVISED RETURN FILED UNDER SECTION 139(5 ). SO, IN A WAY, THE ASSESSEE HAS CLAIMED VERY LESS TAX LIABILITY, WHICH MEANS THE AS SESSEE IS NOT ADMITTING THE TAX I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1430/MDS/09 1430/MDS/09 1430/MDS/09 1430/MDS/09 5 LIABILITY AND THE APPEAL IS MAINTAINABLE AND OTHERW ISE ALSO, THE ASSESSING OFFICER, IN REGULAR PROCEEDINGS, HAS TAKEN THE FIGURES FROM THE REVISED RETURN TO COMPUTE TOTAL INCOME, BUT NO 143(1) PROCESSING HAS BEEN DONE WITH RESPECT TO REVISED RETURN. SO, THERE IS A CLEAR CUT MESS IN THE PROCEEDINGS AN D NO DOUBT, THE LD. CIT(A) HAS NOT CONSIDERED THE VITAL ASPECT, WHETHER IN CASE OF NO LIABILITY, WHERE LIABILITY HAS NOT BEEN DENIED, WOULD GIVE RISE TO FILLING, CONSID ERING AND DECIDING THE APPEAL OR NOT. THEREFORE, IN THE INTEREST OF JUSTICE AND TO H AVE FAIR PLAY IN THE MATTER, THE LD. CIT(A) ORDER MAY BE SET ASIDE AND MATTER BE RESTORE D BACK ON HIS FILE TO RECONSIDER THE APPEAL AFRESH. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND RE LEVANT MATERIAL ON RECORD IN THE LIGHT OF PROVISIONS OF LAW. IT IS NOT IN DIS PUTE THAT ORIGINAL RETURN WAS FILED ON 30.09.2008 ADMITTING THE INCOME OF ` 79,07,54,470/-, WHICH WAS PROCESSED UNDER SECTION 143(1) ON 12.05.2009 RESULTING IN DEMAND OF ` .28,50,64,225/-. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS FILED A REVISED RE TURN ON 06.03.2009 UNDER SECTION 139(5) CLAIMING A SUM OF ` .76,94,22,500/- AS DEDUCTION IN THE SAID REVISED RE TURN BY ADMITTING INCOME OF ` . 2,13,31,972/- AND BOOK PROFIT UNDER SECTION 115JB A T ` .1,95,49,789/- AND PAID AN AMOUNT OF ` .4,11,76,102/- TOWARDS TAX LIABILITY AND CLAIMED REFUND OF EXCESS AMOUNT PAID. WE ALSO FIND THAT MAINTAINABILITY OF THE APPEAL AGAINST PROCESSING OF RETURN UNDER SECTION 1 43(1), WHEN THERE IS EXISTENCE OF TAX LIABILITY ON THE BASIS OF ORIGINAL RETURN, W HICH CAME TO BE PROCESSED, AND APPEAL HAS BEEN FILED, HAS NOT BEEN CONSIDERED BY T HE LD. CIT(A). THAT BESIDES, THOUGH THE LD. CIT(A) HAS DOUBTED THE POWER OF THE ASSESSING OFFICER TO SUMMARILY REJECT THE REVISED RETURN WITHOUT PUTTING THE SAME INTO TEST OF SCRUTINY ASSESSMENT I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1430/MDS/09 1430/MDS/09 1430/MDS/09 1430/MDS/09 6 UNDER THE DUE PROVISIONS OF LAW, WHEN THE REVISED R ETURN IS BASED ON OPINION OF LEGAL COUNSEL AND AS PER THE LD. CIT(A), THE BONAFI DE CANNOT BE REJECTED OUTRIGHT, WITHOUT THE ARDUOUSNESS OF ASSESSMENT PROCEEDING, W HICH HAVE NOT YET COMMENCED ON THE REVISED RETURN, BUT ULTIMATELY DID NOT GIVE ANY FINDING OR DIRECTION IN CLEAR AND IN UNAMBIGUOUS TERMS. THE LD . DR, WHILE TAKING ALTERNATIVE PLEA DURING ARGUMENTS HAS SUGGESTED TO RESTORE THE MATTER BACK ON THE FILE OF THE LD. CIT(A) FOR RECONSIDERATION, WHEREAS, THE LD. CO UNSEL FOR THE ASSESSEE HAS ALSO, IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, TAKEN SIMILAR PLEA FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTO RING THE MATTER ON HIS FILE FOR DE NOVO CONSIDERATION OF APPEAL. THEREFORE, LOOKING IN TO THE ENTIRETY OF FACTS, CIRCUMSTANCES AND MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT IT WOULD MEET THE ENDS OF JUSTICE, IF THE ORDER OF THE LD. C IT(A) IS SET ASIDE AND MATTER IS RESTORED BACK ON HIS FILE WITH THE DIRECTION TO DEC IDE THE APPEAL AFRESH AFTER SPECIFICALLY CONSIDERING THE MAINTAINABILITY OF THE APPEAL AND OTHER POINTS RAISED/TO BE RAISED DURING DE NOVO PROCEEDINGS BY GIVING DUE OPPORTUNITY TO THE ASSESSEE AS WELL AS TO THE ASSESSING OFFICER. WE HOLD AND DIREC T ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ACC EPTED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 26.08.2011 SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 26.08.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.