ASSOCIATED EARTH MOVERS, MUMBAI V. ITO 22(1)(1), NAVI MUMBAI

ITA 1446/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6317 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 18-07-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 22-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDHYADHAR
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Reopening of assessment
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI RAJENDRA , HON'BLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA.NO. 1 444 TO 1446 /MUM/201 0 (A.Y S : 1995 - 96, 1996 - 97 & 1997 - 98 ) M/S. ASSOCIATED EARTH MOVERS C - 7, GROUND FLOOR, SATYAM SHOPPING CENTRE, GHATKOPAR (EAST) , MUMBAI - 400 077 PAN NO: AAAFA 2809 D V. INCOME TAX OFFICER 22(1)(1) I.T. OFFICES, TOWER NO.6, 4 TH FLOOR, VA SHI RAILWAY STATION COMPLEX, NAVI MUMBAI 400 703 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. SUBRAMANIAN REVENUE BY : SHRI VIDHYADHAR DATE OF HEARING : 15 .11 . 2017 DATE OF PRONOUNCEMENT : 17 . 11 .2017 O R D E R PER C. N. PRASAD (JM) 1. THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 33, MUMBAI DATED 17.12.2009 FOR THE ASSESSMENT YEARS 1995 - 96 , 1996 - 97 & 1997 - 98. 2 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS 2. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBMITS THAT ALL THESE ASSESSMENTS WERE REOPENED U/S. 147 OF THE ACT AND THE REASO NS FOR REOPENING HAVE NOT BEEN SUPPLIED TO THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT ASSESSEE HAS BEEN REQUESTING THE ASSESSING OFFICER THROUGH LETTERS DATED 17.09.2007, 2 2.12. 20 08, 28.01. 20 09 AND 24.08.201 7 FOR FURNISHING OF REASONS RECORDED FOR ISSUE OF NOTICE U/S. 148 OF THE ACT. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT ASSESSEE MADE APPLICATION UNDER RIGHT TO INFORMATION ACT AND THE CENTRAL PUBLIC INFORMATION OFFICER BY ORDER DATED 27.09.2017 INFORMED THAT THE INFORMATION CALLED FOR IS NOT ABLE TO PROVIDE AS RECORDS ARE OLDER THAN 15 YEARS AND ARE NOT AVAILABLE IN THE OFFICE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSI NG OFFICER ALSO NOT RECORDED THE REASONS IN THE ASSESSMENT ORDER FOR REOPENING THE ASSESSMENTS. THEREFORE, HE SUBMITS THAT SINCE THE REASONS FOR REOPEN ING OF THE ASSESSMENTS WERE NOT ISSU ED TO THE ASSESSEE AND FURTHER AS IT APPEARS THAT NO REASONS HAVE BEEN RECORDED AT ALL U/S. 148 (2) OF THE ACT, THE RE - ASSESSMENTS MADE PURSUANT TO NOTICE ISSUED U/S. 148 OF THE ACT FOR THE ASSESSMENT YEARS 1995 - 96 TO 1997 - 98 ARE BAD IN LAW. 3. LD.DR SUBMITS THAT THIS ISSUE HAS NOT BEEN RAISED BY THE ASSESSEE IN THE ORIGINAL ROUND OF APPEAL AND IT WAS RAISED ONLY IN THE SECOND ROUND 3 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS OF APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DID NOT ENTERTAIN THIS PLEA OF THE ASSESSEE HOLDING THAT THIS GROUND OF APPEAL CANNOT BE TAKEN UP AT THIS STAGE , AS THE SAME WAS NOT RAISED EITHER BEFORE THE LD.CIT(A) OR BEFORE THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION . 4. W E HAVE HEARD THE BOTH THE PARTIES ON THIS PRELIMINARY ISSUE OF WHETHER THE RE - ASSESSMEN TS MADE PURSUANT TO NOTICE U/S. 148 OF THE ACT CAN BE SUSTAINED IN THE ABSENCE OF FURNISHING OF REASONS TO THE ASSESSEE FOR REOPENING THE ASSESSMENTS AND WHETHER THE ASSE SSEE COULD RAISE THIS LEGAL ISSUE IN THE SECOND ROUND OF LITIGATION. WE FIND THAT I SSUE OF WHETHER A LEGAL ISSUE WHICH IS GOING TO THE ROOT OF THE MATTER CAN BE RAISED BEFORE THE APPELLATE AUTHORITIES IN THE SECOND ROUND OF APPEAL CAME UP BEFORE THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. HEMAL KNITTING INDUSTRIES V. ACIT IN ITA.NO.2089/ MDS /08 AND THE THEN HON'BLE VICE PRESIDENT FOLLOWING THE DECISIONS OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF P.V. DOSHI V. CIT [113 ITR 22], RAMILABEN RATILAL SHAH V. CIT [282 ITR 176] AND THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INVENTORS INDUSTRIAL CORPORATION LTD. V. CIT [1 94 ITR 548] HELD THAT, THE ISSUE RELATING TO JURISDICTION WHICH GOES TO THE VERY ROOT OF THE MATTER CAN BE RAISED AT ANY POINT OF TIME INCLUDING IN THE SECOND ROUND OF LITIGATING AND THAT THERE CANNOT BE A WAIVER SO FAR AS JURISDICTION ASPECT IS 4 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS CONCERNED. ON A DIFFE RENCE OF OPINION OF THE BENCH THE VIEW OF THE HON'BLE VICE PRESIDENT HAS BEEN AFFIRMED ON A REFERENCE TO A THIRD MEMBER . THE THIRD MEMBER BY ORDER DATED 30.08.2010 AGREED WITH THE VIEW OF THE HON'BLE VICE PRESIDENT, OBSERVING AS UNDER: - 11. I HAVE CAREFULLY GONE THROUGH THE RECORDS AS ALSO THE ELABORATE DISCUSSIONS IN THE DISSENTING ORDERS OF THE MEMBERS CONSTITUTING THE BENCH. THE ISSUE RAISED IN THIS APPEAL IS QUITE INTERESTING AND EVEN A MATTER OF DETAILED DISCUSSIONS IN THE DISSENTING ORD ERS. ACCORDING TO ME THE CRUX OF THE MATTER IS WHETHER IN THE FIRST ROUND OF LITIGATION IT COULD BE SAID THAT THE ISSUE RELATING TO THE VALIDITY OF THE PROCEEDINGS U/S 147 HAS REACHED FINALITY. IF THE ANSWER TO THIS IS YES, THERE WOULD BE NO QUESTION OF THE ISSUE BEING RE - AGITATED IN THE SECOND ROUND, BUT THE QUESTION REMAINS WHETHER THE ISSUE IN THIS CASE HAS AT ALL REACHED FINALITY. ACCORDING TO THE LEARNED VICE PRESIDENT, IT HAS NOT REACHED FINALITY, WHEREAS IN THE OPINION OF THE JUDICIAL MEMBER, IT HA S REACHED. NOW MY EXERCISE, THEREFORE, WOULD BE SIMPLY TO CULL OUT FROM THE IMPUGNED ORDERS IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND SEE WHETHER THE ISSUE HAS REACHED FINALITY. THE ONLY ORDER ON THE ISSUE AVAILABLE IS THE ORDER OF THE CI T (APPEALS) DATED 3.12.2004 WHICH HAS BEEN EXTRACTED BY ME IN PARA 2 ABOVE. A CURSORY LOOK AT THIS FOUR SENTENCES ORDER OF THE CIT (A) WHEREIN HE HAS REJECTED THE ASSESSEES GROUND, IN MY OPINION, CANNOT BE SAID TO CONFER A FINALITY OF THE MATTER RELATING TO JURISDICTION OF THE A.O IN ISSUING THE NOTICE U/S 147 OF THE ACT. IN FACT, THE ORDER ITSELF SAYS THAT NO MATERIAL WAS BROUGHT ON RECORD QUESTIONING THE VALIDITY OF ACTION U/S 147 OF THE ACT. THE WHOLE APPROACH OF THE ASSESSEE WAS CASUAL AND IT DID NOT R AISE THE ISSUE SERIOUSLY. IT DOES NOT APPEAR TO HAVE MADE ANY ARGUMENTS ON THE 40 MERITS OF THE MATTER. IN SUCH A CIRCUMSTANCE, TO SAY THAT THE SAID ORDER HAS REACHED A FINALITY AND TO THROW THE ASSESSEE OUT OF THE COURT, IN THE SECOND ROUND OF LITIGATION, WE WILL ONLY BE EXTENDING THE RULES OF TECHNICALITIES IN THE MATTER AND THEREBY RENDERING INJUSTICE. IT IS FOR THESE REASONS, IN MY OPINION, THE LEARNED 5 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS VICE PRESIDENT WAS CORRECT TO DRAW AN INFERENCE HAVING REGARD TO THE FACTUAL CIRCUMSTANCES TO SAY THE ASSESSEE AT BEST COULD BE SAID TO HAVE NOT PRESSED THE ISSUE BEFORE THE CIT (APPEALS). I AM CONSCIOUS OF THE FACT THAT THE CIT (APPEALS) DID NOT RECORD SUCH A FINDING IN SO MANY CLEAR AND POINTING WORDS. BUT SUBSTANCE OF THE DECISION IS THAT THE DISPOSAL W AS NEVER ON MERIT. IT WAS MORE LIKE AN ASSESSEE HAVING TAKEN THE GROUND HAS GIVEN UP THAT GROUND AS WAS APPRECIATED BY THE GUJARAT HIGH COURT IN THE CASE OF P.V. DOSHI (CITED SUPRA). 12. THE ASSESSEE IN THE FIRST ROUND OF LITIGATION DID NOT RAISE THIS ISS UE BEFORE THE TRIBUNAL, ALTHOUGH IT WAS IN APPEAL BEFORE THE TRIBUNAL ON MERITS. THEREFORE, THERE WAS NO SCOPE FOR THE TRIBUNAL IN THE FIRST ROUND EVEN TO HAVE TINKERED WITH THE DECISION AND TO CONFER FINALITY TO SUCH AN ORDER IN A MANNER THAT IN THE SECON D ROUND THAT DOORS OF JUSTICE WOULD BE CLOSED TO THE ASSESSEE ON THE ISSUE REGARDING THE JURISDICTION. IT IS NOW WELL ESTABLISHED THAT THE ISSUE OF JURISDICTION OF THE AUTHORITIES IS FUNDAMENTAL AND IS LIKE THE ROOT OF THE PROCEEDINGS OR MATTER. THE MATTER , IN MY OPINION, HAD NOT REACHED THE FINALITY AND THE DISPUTE OR DEFECT AS REGARDS THE JURISDICTION WAS GOT INBUILT INTO THE ORDER AND SHOULD THEREFORE ALWAYS BE SUBJECT MATTER FOR LEGAL SCRUTINY WHEN QUESTIONED. AFTER ALL THE JURISDICTION TO THE AUTHORITI ES CANNOT BE CONFERRED BY ACCEPTANCE OR NEGLIGENCE OF THE PARTIES TO THE DISPUTE. IT CAN ALWAYS BE AGITATED OR QUESTIONED WHEN THE ASSESSEE GET SOME OPPORTUNITY OVER THE ISSUE. IN A WAY THAT ISSUE IS ALWAYS OPEN TO CHALLENGE EVEN IF THE ROUND IS SECOND OR THIRD. AS LONG AS THE ISSUE HAD 41 NOT REACHED THE FINALITY, IT IS ALWAYS OPEN TO QUESTION OR CHALLENGE IN JUDICIAL PROCEEDINGS. TO SHUT THE DOORS AT THE THRESHOLD ON THE GROUNDS OF TECHNICALITIES IN MY VIEW IS NOT WITHIN THE SPIRIT OF THE DECISION OF THE APEX COURT IN THE CASE OF IMPROVEMENT TRUST (CITED SUPRA). AGAIN THE APEX COURT IN THE AFORESAID CASE HAS STRESSED THAT IN SUCH MATTERS IT SHOULD BE ALLOWED TO BE FOUGHT ON MERITS AND NOT ON TECHNICALITIES AND SUPER TECHNICALITIES. IT IS FROM THIS BACKGROU ND, I AM PERSUADED TO AGREE WITH THE VIEW EXPRESSED BY THE VICE PRESIDENT IN UPHOLDING THE 6 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS ASSESSEES CONTENTION ABOUT THE LACK OF JURISDICTION OF THE A.O IN PROCEEDINGS U/S 147 OF THE ACT AND IT MAY BE STATED THAT ACTION OF THE A.O IN TAKING AN ACTION U/S 147 WITHIN A PERIOD OF TIME AVAILABLE TO HIM TO ISSUE THE NOTICE U/S 143(2) IS AGAIN IMPERMISSIBLE IN THE LIGHT OF THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF QATALYS SOFTWARE TECHNOLOGIES LTD. (CITED SUPRA). IN MY VIEW THE MATTER HAS NOT REA CHED THE FINALITY AND, THEREFORE, IT WAS OPEN TO THE ASSESSEE TO TAKE UP THE ISSUE EVEN IN THE SECOND ROUND OF LITIGATION. I HAVE GONE THROUGH THE FACTS IN THE CASE OF M.S.P. SENTHIL KUMAR (MAD) AND OF BOMBAY HIGH COURT IN THE CASE OF MURLIDHAR BHAGWAN DAS . IN BOTH THESE CASES THE ISSUES, WHICH WERE RE - AGITATED IN THE SECOND ROUND, HAVE REACHED THE FINALITY BY AN ORDER ON MERITS IN THE FIRST ROUND. I THINK THE DIFFERENCE LIES THERE AND THEREFORE SHOULD NOT BE BLINDLY APPLIED TO THE FACTS AND CIRCUMSTANCES O F THIS CASE. AS REGARDS THE RELIANCE OF THE D.R TO THE PROVISIONS OF SECTION 151(2) OF THE ACT, I MAY STATE THE STAND OF THE DEPARTMENT IS NOT ACCEPTED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF QATALYS SOFTWARE LTD. (CITED SUPRA). ACC ORDINGLY, THE SAID CONTENTION DOES NOT GIVE ANY FORCE TO DEVIATE FROM THE VIEW THAT IS BEING EXPRESSED. IN THE LIGHT OF THE DISCUSSIONS, I, THEREFORE, FULLY AGREE WITH THE ORDER OF THE LEARNED VICE PRESIDENT. 5. IN VIEW OF THE ABOVE DECISION, WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF THE LD.CIT(A) THAT THE ASSESSEE CANNOT RAISE THE VERY JURISDICTION OF MAKING ASSESSMENT IN THE SECOND ROUND OF APPEAL. FOLLOWING THE ABOVE DECISION, WE HO LD THAT T HE ASSESSEE CAN RAISE THE GROUND OF JURISDICTION EVEN IN THE SECOND ROUND OF LITIGATION. 6. HAVING SAID SO , COMING TO THE ISSUE OF WHETHER THE ASSESSING OFFICER NEITHER RECORDED NOR SUPPLIED ANY REASONS TO THE ASSESSEE , WE OBSERVE FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT RECORDED 7 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS THE REASONS FO R REOPENING THE ASSESSMENT U/S. 148 OF THE ACT. THERE IS NOTHING ON THE RECORD TO SUGGEST THE BASIS ON WHICH THE ASSESSMENTS WERE REOPENED , NONE OF THE AUTHORITIES HAVE RECORDED THE REASONS FOR REOPENING THESE ASSESSMENTS. WE ALSO FIND THAT THE ASSESSEE THROUGH LETTERS DATED 17.09.20 07, 22.12.08, 28.01.09 AND 24.08 .2017 HAS BEEN REQUEST ING FOR ISSUE OF REASONS AND ULTIMATELY WHEN FILED AN APPLICATION ON 24.08.2017 UNDER RIGHT TO INFORMATION ACT AN ORDER WAS PASSED ON 27.09.2017 STATING THAT THE INFORMATION CALLED FOR IS NOT ABLE TO PROVIDE AS THE RECORDS ARE NOT AVAILABLE. WE FAIL TO UNDERSTAND WHY THE REVENUE COULD NOT SUPPLY THE REASONS TO THE ASS ESSEE AS EARLY AS ON 17.09.2007, WHEN THE ASSESSEE REQUESTED FOR REASONS. WHEN THE ASSESSMENTS WE RE REOPENED U/S. 148 OF THE ACT, THE ASSESSING OFFICER IS DUTY BOUND TO COMMUNICATE THE REASONS TO THE ASSESSEE WHICH IT APPEARS THAT THE ASSESSING OFFICER FAILED TO DO SO. THE REASONS FOR REOPENING THE ASSESSMENTS WERE ALSO NOT RECORDED IN THE ASSESSMENT ORDER S . THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. VIDESH SANCHAR NIGAM LTD. [ 340 ITR 66 ] HELD , DISMISSING THE APPEAL OF THE REVENUE , THAT SINCE THE REASONS RECORDED FOR REOPENING OF ASSESSMENT WERE NOT FURNISHED TO THE ASSESSEE TILL THE COMPLETION OF ASSESSMENT THE RE - ASSESSMENT ORDER COULD NOT BE UPHELD. 8 ITA.NO.1444 TO 1446/MUM/2010 (A.YS: 1995 - 96, 1996 - 97 & 1997 - 98) M/S. ASSOCIATED EARTH MOVERS 7. RESPECTFULLY FOLLOWING THE SAID DECISION, WE HOLD THAT SINCE THE RE VENUE COULD NOT PROVE THAT THE REASONS RECORDED FOR REOPENING OF ASSESSMENT WERE FURNISHED TO THE ASSESSEE , THE RE - ASSESSMENTS CANNOT BE SUSTAINED. THUS WE QUASH THE RE - ASSESSMENTS MADE PURSUANT TO NOTICE ISSUED U/S. 148 OF THE ACT FOR THE ASSESSMENT YEARS 1995 - 96 TO 1997 - 98 . CONSEQUENTLY, THE RE - ASSESSMENT ORDERS PASSED U/S. 143(3) R.W.S. 254 WILL BECOME NULL A ND VOID, HENCE THEY ARE QUASHED. SINCE APPEALS OF THE ASSESSEE ARE ALLOWED ON THE LEGAL ISSUE, WE ARE NOT INCLINED TO GO INTO THE MERITS OF THE AD DITIONS/DISALLOWANCES MADE. 8. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 17 TH NOVEMBER , 2017. SD/ - SD/ - ( RAJENDRA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 17 / 11/2017 VSSGB , SPS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM