Alembic Limited, Baroda V. The Dy.CIT., Circle-1(1), Baroda

ITA 1448/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1063 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 115JB; 148

Judgement Text

ITA NO. 1448/AHD/2016 ALEMBIC LIMITED VS. DCIT ASSESSMENT YEAR : 2009-10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR, VP AND MS. MADHUMITA ROY, JM] ITA NO. 1448/AHD/2016 ASSESSMENT YEAR: 2009-10 ALEMBIC LIMITED ..................APPELLAN T 5 TH FLOOR, ADMIN BUILDING, ALEMBIC ROAD, BARODA-390006 [PAN : AABCA 7950 P] VS. DY. COMMISSIONER OF INCOME-TAX ............................RESPONDENT CIRCLE (1)(1), BARODA APPEARANCES BY: SN SOPARKAR & PARIN SHAH, FOR THE APPELLANT MUDIT NAGPAL, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 13.03.2019 DATE OF PRONOUNCING THE ORDER : 14.03.2019 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT : 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 8 TH MARCH 2016, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 19 61, FOR THE ASSESSMENT YEAR 2009-10. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1. REASSESSMENT IS BAD IN LAW AND VOID AB INITIO: 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS 'THE LEARNED CIT (A)] ERRED IN UPHOLDING THE REASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THAT THE REA SSESSMENT IS BAD IN LAW AND VOID AB INITIO AS IT IS BASED ON CONJECTURE S AND SURMISES WITHOUT THERE BEING CONCRETE REASON THAT THE INCOME HAS ESC APED THE ASSESSMENT. 1.2 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN CONSIDERING THE APPELLANTS PLEA THAT THE REASSESSMENT SHOULD BE DROPPED U/S. 152(2) AS EVEN AFTER CONSIDERING DISALLOWANCE OF PURCHASES THE APPELLANT WOULD NOT H AVE BEEN ASSESSED ITA NO. 1448/AHD/2016 ALEMBIC LIMITED VS. DCIT ASSESSMENT YEAR : 2009-10 PAGE 2 OF 4 TO AN AMOUNT OR SUM NOT LOWER THAN THE AMOUNT WHICH HE WAS ASSESSED U/S 143(3). 2. DISALLOWANCE OF PURCHASES AMOUNTING TO RS. 30 ,93,170/-: 2.1 THE LEARNED CIT (A) UPHELD THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES OF PROMOTIONAL MATE RIALS MADE FROM M/S SHAH TRADING COMPANY AS BOGUS PURCHASES BASED ON TH E INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, WITHOUT CONSIDE RING EVIDENCES AND EXPLANATION GIVEN BY THE APPELLANT 2.2 THE LEARNED CIT(A) GROSSLY ERRED IN NOT CONSIDE RING AND ADMITTING THE VAT ASSESSMENT ORDER PASSED BY THE VAT AUTHORITIES IN T HE CASE OF APPELLANT WHEREIN THE VAT AUTHORITIES HAVE GIVEN CREDIT OF VA T PAID BY THE DEALER, PURCHASES FROM WHOM HAVE TREATED AS BOGUS ON THE GR OUND THAT SAME WAS NOT SUBMITTED BEFORE THE ASSESSING OFFICER. 2.3 THE LEARNED CIT(A) UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THAT THE SALES / VAT A SSESSMENT OF SELLER SHOULD NOT FORM THE BASIS OF ADDITION / DISALLOWANC E IN CASE OF THE BUYER OF GOODS. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT. THE ORIG INAL ASSESSMENT WAS DONE ON BOOK PROFITS UNDER SECTION 115JB. EVEN THOUGH AS A RESULT OF REASSESSMENT PROCEEDINGS, THERE WAS AN ADDITION TO THE RETURNED INCOME BUT IT HAD NO IMPACT ON THE ACTUAL TAXABILITY INASMUCH AS, EVEN AFTER THE I MPUGNED ADDITION, THE ACTUAL ASSESSMENT WAS ON THE SAME BOOK PROFITS UNDER SECTI ON 115JB. THESE MATERIAL FACTS ARE NOT IN DISPUTE, AND, IN RESPONSE TO OUR S PECIFIC QUESTION, LEARNED DEPARTMENTAL REPRESENTATIVE SPECIFICALLY CONFIRMED THIS POSITION. 4. THE SHORT QUESTION THAT WE NEED TO ADDRESS OURSE LVES TO IS WHETHER, ON THESE UNDISPUTED FACTS, REOPENING PROCEEDINGS, TO ASSESSE E INCOME ESCAPING ASSESSMENT, CAN BE LEGALLY SUSTAINED. THE AUTHORITIES BELOW HA VE HELD THAT THE IMPUGNED REASSESSMENT PROCEEDINGS ARE VALID AND LAWFUL. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE FIND THAT THE LEGAL POSITION IS WELL SETTLED, IN THIS RESPECT, BY HONBLE JURISDICTIONAL HIGH COURTS JUDGMENTS IN THE CASES OF INDIA GELATI NE & CHEMICAL INDUSTRIES LTD VS. ACIT (364 ITR 649), MOTTOTILES PVT LTD VS. ACIT (38 6 ITR 280) AND PKM ADVISORY SERVICES PVT LTD VS. ITO (339 ITR 585). WE MAY, IN THIS REGARD, REFER TO THE FOLLOWING ITA NO. 1448/AHD/2016 ALEMBIC LIMITED VS. DCIT ASSESSMENT YEAR : 2009-10 PAGE 3 OF 4 OBSERVATIONS MADE BY THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF MOTTO TILES PVT LTD (SUPRA):- ...........THE CONTROVERSY STANDS SQUARELY CONCLUD ED BY THE DECISION OF THIS COURT IN THE CASE OF INDIA GELATINE AND CHEMICALS L TD. (SUPRA) WHEREIN, THE COURT IN A CASE WHERE THE ASSESSEE HAD DECLARED A L OSS OF RS.1.44 CRORES UNDER THE NORMAL COMPUTATION AND THE ASSESSMENT WAS FRAMED ON BOOK PROFIT OF RS.2.89, HAD HELD THAT EVEN IF THE EXPENDITURE O F RS.116.86 LAKHS IS DISALLOWED, THERE WOULD BE NO RESULTANT CHANGE IN T HE PETITIONER'S TAX LIABILITY SINCE THE PETITIONER HAD ALREADY PAID MUCH HIGHER T AX AND HAD ALLOWED THE PETITION. IT APPEARS THAT THE REVENUE HAS ACCEPTED THE SAID DECISION AND HAS NOT CHALLENGED THE SAME BEFORE THE HIGHER FORUM. TH E LEARNED COUNSEL FOR THE RESPONDENT HAS URGED THAT THE DECISION REQUIRES REC ONSIDERATION. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS THE FACT THAT THE REVENUE HAS ACCEPTED THE SAID DECISION, THE COURT D OES NOT FIND ANY REASON TO REFER THE MATTER FOR CONSIDERATION TO A LARGER BENC H. 12. IN THE LIGHT OF THE DECISION OF THIS COURT IN T HE CASE OF INDIA GELATINE AND CHEMICALS LTD. (SUPRA), HAVING REGARD TO THE FACT T HAT EVEN IF THE ENTIRE AMOUNT WHICH IS PROPOSED TO BE ADDED BY THE ASSESSI NG OFFICER IS SUSTAINED, THERE WOULD BE NO ADDITION TO THE TAX LIABILITY OF THE PETITIONER AND THE PETITIONER WOULD STILL BE GOVERNED BY THE PROVISIONS OF SECTIO N 115JB OF THE ACT AND ASSESSED ON THE SAME BOOK PROFIT, IT CANNOT BE SAID THAT THERE WAS SUFFICIENT MATERIAL BEFORE THE ASSESSING OFFICER TO FORM THE B ELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE IMPUG NED NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THEREFORE, CANNOT BE SUSTAINED. 6. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF HON BLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE REASSESSMENT PROCEEDINGS WE RE VITIATED IN LAW, AND WE QUASH THE REASSESSMENT ITSELF. ALL OTHER ISSUES, I N THE LIGHT OF THIS CONCLUSION AND FOR THIS SHORT REASON, ARE RENDERED ACADEMIC AND NOT RE QUIRING ANY SPECIFIC ADJUDICATION AT THIS STAGE. 7. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERM S INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 14 TH MARCH, 2019. SD/- SD/- MS. MADHUMITA ROY PRA MOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT) AHMEDABAD, THE 14 TH DAY OF MARCH, 2019 *BT ITA NO. 1448/AHD/2016 ALEMBIC LIMITED VS. DCIT ASSESSMENT YEAR : 2009-10 PAGE 4 OF 4 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ORDER PREPARED AS PER THE 3 PAGES MANUSCRIPTS OF HONBLE VP WHICH ARE ATTACHED....13.03.2019.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 13.03.2019......... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .14.03.2019.... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT:... 14.03.2019.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ...... 14.03.2019................ 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 8. DATE OF DESPATCH OF THE ORDER: ......