Rio Tinto Orissa Mining Private Limited, Bhubaneswar V. ACIT, Bhubaneswar

ITA 15/CTK/2011

• Counselvise Citation: 1522114 RSA 2011
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 07-01-2011
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: A DASH
• Keywords: Opportunity of being heard; Difference of opinion; Change of opinion
• Section: 147; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO S . 015 AND 016/ CTK/2011 / ASSESSMENT YEAR S 2001 - 02 AND 20I05 - 06 RIO TINTO ORISSA MINING PRIVATE LTD., N - 3/356 IRC VILLAGE, NAYAPALLI, BHUBANESWAR 751 015 PAN: AABCRE 5371 H - - - VERSUS - ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI A.DASH, AR / FOR THE RESPONDENT: / SHRI A.BHATTACHAR JEE, DR / DATE OF HEARING: 22.08.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THESE APPEALS FOR THE AYS 2001 - 02 AND 2005 - 06 ARE BEING TAKEN UP TOGETHER AS THEY HAVE BEEN CLUBBED FOR HEARING TOGETHER WHEN ASSESSMENT FOR THE ASSESSMENT YEAR 2001 - 02 HAS BEEN PASSED U/S.143(3)/147 OF THE I.T.ACT,1961 AND FOR THE ASSESSMENT YEAR 2005 - 06 THE ASSESSMENT ORDER HAS BEEN PASSED U/S.144 . 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT RIO TINTO ORISSA MINING PRIVATE LIMITED (THE APPELLANT) WAS INCORPORATED AS A JOINT VENTURE COMPANY ON SEPTEMBER 18, 1995 BETWEEN RIO TINTO MINERALS DEVELOPMENT LIMITED, LONDON AND ORISSA MINING CORPORATION (OMC ) WITH THE PRIMARY OBJECTIVE OF CARRYING OUT MINING STUDIES. FOR THE SUBJECT ASSESSMENT YEAR, THE APPELLANT HAD FILED ITS RETURN OF INCOME UNDER SECTION 139(1) OF THE INCOME - TAX ACT, 1961 (ACT) ON OCTOBER 31, 2005, RETURNING A I.T.A.NOS. 015 AND 106/CTK/2011 2 LOSS OF 1,403,956. AS PER THE RETURN OF INCOME, A REFUND OF 22,464 WAS DUE TO THE APPELLANT BEING TAX DEDUCTED AT SOURCE. THE APPELLANT WAS ISSUED A DEFICIENCY LETTER DATED JUNE 21, 2006 BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(1), BHUBANESWAR (LEARNED ASSESSING OFFI CER). THE LETTER STATED THAT THE RETURN OF INCOME FURNISHED BY THE APPELLANT SUFFERED FROM FOLLOWING DEFICIENCIES: ORIGINAL BALANCE SHEET AND PROFIT AND LOSS ACCOUNT HAVE NOT BEEN ATTACHED TO THE RETURN OF INCOME. ORIGINAL TAX AUDIT REPORT HAS NOT BEE N ATTACHED TO THE RETURN OF INCOME. IN RESPONSE TO THE ABOVE MENTIONED NOTICE,, THE APPELLANT FILED. A LETTER DATED AUGUST 10, 2006 ENCLOSING CERTIFIED TRUE COPIES OF THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND AUDIT REPORT. DURING THE SUBJECT ASSESSMEN T YEAR, THE APPELLANT SHIFTED FROM ITS ERSTWHILE OFFICE AT 737 - P, 3RD FLOOR, RATHA BHAWAN, BANK OF BARODA BUILDING, JAYDEV VIHAR, BHUBANESHWAR, ORISSA TO THE NEW OFFICE AT N - 3/356 IRC VILLAGE NAYAPALLY, BHUBANESWAR, ORISSA. IN THE MEANWHILE, THE LEARNED AS SESSING OFFICER INITIATED ASSESSMENT PROCEEDINGS AGAINST THE APPELLANT AND A NOTICE (AS MENTIONED IN THE ASSESSMENT ORDER) UNDER SECTION 143(2) OF THE ACT WAS ISSUED. HOWEVER, THE SAID NOTICE WAS PRESUMABLY DELIVERED TO THE ERSTWHILE ADDRESS OF THE APPELLA NT AND THE PERSON ACCEPTING THE NOTICE ON BEHALF OF THE APPELLANT IS NOT ITS EMPLOYEE AND NEVER INFORMED APPELLANT ABOUT THE NOTICE ISSUED. ACCORDINGLY, THE APPELLANT WAS NOT ABLE TO RESPOND TO SUCH NOTICE. THEREAFTER, A NOTICE UNDER SECTION 142(1) OF THE ACT, DATED SEPTEMBER 11, 2007, WAS ISSUED (AS MENTIONED IN THE ASSESSMENT ORDER) TO THE APPELLANT AND THE SAME WAS AGAIN SENT AT THE OLD ADDRESS OF THE APPELLANT. THUS, THE APPELLANT WAS NEVER AWARE OF THE ASSESSMENT PROCEEDINGS INITIATED BY THE I.T.A.NOS. 015 AND 106/CTK/2011 3 LEARNED AS SESSING OFFICER AND ACCORDINGLY, WAS NOT ABLE TO RESPOND TO ANY OF THE NOTICES ISSUED OR TO MAKE ANY, REPRESENTATION BEFORE THE LEARNED ASSESSING OFFICER. FURTHER THE APPELLANTS INABILITY TO APPEAR BEFORE THE LEARNED ASSESSING OFFICER WAS ESCALATED FOR TH E REASON THAT APPELLANTS OFFICE IN ORISSA HAS ONLY ONE EMPLOYEE AND HE HAS BEEN REGULARLY TRAVELLING ON BUSINESS VISITS AND WAS NOT AWARE OF THE ONGOING ASSESSMENT PROCEEDINGS. SUBSEQUENTLY THE ASSESSING OFFICER CONDUCTED AN EX - PARTE ASSESSMENT OF THE RET URN OF INCOME FOR THE SUBJECT ASSESSMENT YEAR. WHILE CONCLUDING THE ASSESSMENT, THE LEARNED ASSESSING OFFICER HAS CITED NON - APPEARANCE OF THE ASSESSEE AND NON - FURNISHING OF RESPONSE AS THE REASONS FOR BEST JUDGMENT ASSESSMENT AND ACCORDINGLY, HAS DISALLOWE D THE ENTIRE RETURNED LOSS OF 14,03,956. CONSEQUENTLY THE TOTAL LOSS, AS PER RETURN OF INCOME, HAS BEEN REDUCED TO NIL. 2.1. FOR THE ASSESSMENT YEAR 2 001 - 02 THE FACTS IN BRIEF, ARE THAT R ETURN OF INCOME IN THIS CASE WAS FILED ON 31 OCTOBER,2005 SHOWING A LOSS OF 14,03,956 . THE AS SESSEE IS IN THE BUSINESS OF MINING. THE CASE WAS SELECTED FOR SCRUTINY. THE NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE, IN RESPONSE TO WHICH NO ONE APPEARED. LATER A. NOTICE U/S 142(1) WAS ISSUED ON 11.09.2007. THE LEARNED ASSESSING OFFICER OBSERVED THA T THE SAME COULD NOT BE SERVED BECAUSE THE ASSESSEE HAS LEFT THE PREMISES AND THE NEW ADDRESS COULD NOT BE ASCERTAINED. HE FURTHER OBSERVED THAT TILL THE DATE OF THE ORDER, NEITHER ADJOURNMENT PETITION NOR ANY SUBMISSIONS WERE MADE BY THE ASSESSEE IN RESPO NSE TO THE ABOVE NOTICES. MOREOVER THE ASSESSEE HAS NOT SUBMITTED THE AUDIT REPORT IN THE REQUISITE FORM 3CA AND 3CD. THEREFORE, THE ASSESSING OFFICER PASSED THE ASSESSMENT U/S.144 AND HE DID NOT ALLOW THE CLAIM OF LOSS TO THE EXTENT OF 14,03,956. I.T.A.NOS. 015 AND 106/CTK/2011 4 3. BOTH THESE ORDERS WERE BEFORE THE FIRST APPELLATE AUTHORITY WHO UPHELD THE ORDERS OF THE ASSESSING OFFICER WITHOUT CONSIDERING THE CONTENTION OF THE ASSESSEE APPELLANT BEFORE IT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT N O PROPER OPPORTUNITY WAS GRANTED TO THE ASSESSEE INSOFAR AS EVIDENT FROM THE ASSESSMENT ORDERS INCOMES WHICH COULD NOT BE TAXED AS INCOME FOR THE IMPUGNED ASSESSMENT YEAR HAS BEEN SOUGHT TO BE TAXED WITHOUT APPRECIATING THE ISSUES ON HANDS FOR WHICH THE LE ARNED COUNSEL FOR THE ASSESSEE HAS A GOOD CASE INSOFAR AS THE LEGAL ISSUES FOR VALIDITY OF REASSESSMENT U/S.147 AND CONVERTING THE LOSS RETURN INTO INCOME BEING A PRIVATE LIMITED COMPANY U/S.144 BECOMES ABSURD. THE LEARNED COUNSEL THEREFORE, SUBMITTED THAT INSTEAD OF GOING INTO THE LEGAL ISSUE FOR HAVING NOT PROVIDED THE REASONS FOR INITIATING PROCEEDINGS U/S.147/148 AND FURTHERMORE NOT COMPLYING WITH THE PROVISIONS OF SECTION 143(2), HE PRAYED THAT THE ISSUES BE RESTORED TO THE FILE OF THE ASSESSING OFFICE R FOR CONSIDERATION AFRESH AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. THE LEARNED DR OPPOSED THE CONTENTIONS OF THE LEARNED AR BY SUBMITTING THAT THE NATURE OF INCOME COULD NOT BE CHANGED BY THE ASSESSEE VIOLATING THE PROVISI ONS OF THE I.T.ACT SPECIFICALLY WHEN INTEREST HAS BEEN TAXED U/S.57 AND THE EXPENDITURE CLAIMED THERE FROM CANNOT HAVE GENERATED INCOME FROM BUSINESS. IN SUPPORT THEREOF, HE HAS FILED A WRITTEN NOTE RELYING ON VARIOUS DECISIONS AS UNDER: 1. SETH R.DALMIA (110ITR 644)(SC) 2. SMT. VIRMATI RAMKRISHNA (131 ITR 659)(GUJ) 3. CIT V. DR. V.P.GPINATHAN (248 ITR 449)(SC) 4. CIT V. BNIHAR SPINNING & WEAVING MILLS LTD (24 ITR 108) 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THE MATERIAL AVAILABLE ON RECOR D. AS RIGHTLY PRAYED FOR BY THE LEARNED COUNSEL FOR THE I.T.A.NOS. 015 AND 106/CTK/2011 5 ASSESSEE FOR RESTORING THE ISSUES TO THE FILE OF THE ASSESSING OFFICER ON HAVING PASS ED ORDERS U/S.147 AND 144 RESPECTIVELY IN ITSELF JUSTIFIES THE PRAYER THAT THE NATURE INCOME COULD NOT BE DETERMI NED BY WAY OF CHANGE OF OPINION INSOFAR AS SECTION 147 COULD NOT BE INVOKED FOR THE PURPOSE OF DETERMINING INCOME FROM OTHER SOURCES ONLY FOR DISALLOWANCE OF EXPENDITURE AS PER THE FINDING OF THE ASSESSING OFFICER. THE CITATIONS RELIED ON BY THE LEARNED DR , THEREFORE, ARE OF NO AVAIL INSOFAR AS THEY DO NOT INDICATE THE REASONS FOR INITIATING REOPENING OF THE ASSESSMENT. SIMILARLY FOR THE ASSESSMENT YEAR 2005 - 06 THE LOSS RETURNED BY THE ASSESSEE HAS BEEN CONVERTED INTO INCOME WHICH IN UNDER CIRCUMSTANCE CAN BE SO BUT DUE TO LACK OF PROCEDURE OF ISSUING NOTICE U/S.143(2) HA D NOT BEEN FOLLOWED AS PER THE NOTING BY THE ASSESSING OFFICER HIMSELF. THE LEARNED CIT(A) THEREFORE, HAS NOT CONSIDERED THE ISSUES ON MERITS AS AGITATED BY THE ASSESSEE BEFORE IT, WHICH REQ UIRES RECONSIDERATION BY THE ASSESSING OFFICER IF A FAIR OPPORTUNITY IS GRANTED TO THE ASSESSEE, WHICH WE DEEM TO BE A REASONABLE PRAYER FOR RESTORATION TO THE ASSESSING OFFICER . HE IS DIRECTED TO MAKE THE ASSESSMENTS WITHIN A TIME FRAME OF SIX MONTHS INSOFAR AS THE ASSESSMENTS FOR THE LATER YEARS HAVE ALREADY BEEN COMPLETED. IN VIEW THEREOF, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE TO THE ASSESSING OFFICER TO FRA ME FRESH ASSESSMENTS DE NOVO FOR BOTH THE YEARS. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.09.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NOS. 015 AND 106/CTK/2011 6 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : RIO TINTO ORISSA MINING PRIVATE LTD., N - 3/356 IRC VILLAGE, NAYAPALLI, BHUBANESWAR 751 015 2 / THE RESPONDENT: ASST.CIOMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 11.09.2012.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.09.2012OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P .S 14.09.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..