ACIT 3(1)(2), MUMBAI V. DRAFT FCB ULKA ADVERTISING P. LTD, MUMBAI

ITA 1642/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2773 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N S JANGPANGI
• Keywords: Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings; Capital expenditure
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAVISH SOOD, JM ITA NO. 1642/MUM/2017 ( ASSESSMENT YEAR: 2008 - 09 ) ACIT - 3(1)(2), ROOM NO. 607, AAYAKAR BHAVAN, MUMBAI - 400 020 VS. M/S. DRAFT FCB - ULKA ADVERTISIN G PVT. LTD. NIRMAL, 4 TH FLOOR, NARIMAN POINT, MUMBAI - 400 021 PAN/GIR NO. AAACU 0566 E ( REVENUE ) : ( ASSESSEE ) CO NO. 248/MUM/2018 (ARISING OUT OF ITA NO. 1642/MUM/2017) (ASSESSMENT YEAR: 2008 - 09 ) M/S. DRAFT FCB - ULKA ADVERTISING PVT. LTD. NIRMA L, 4 TH FLOOR, NARIMAN POINT, MUMBAI - 400 021 VS. ACIT - 3(1)(2), ROOM NO. 607, AAYAKAR BHAVAN, MUMBAI - 400 020 PAN/GIR NO. AAACU 0566 E (ASSESSEE) : (REVENUE) REVENUE BY : SHRI N. S. JANGPANGI ASSESSEE BY : SHRI NARESH KUMAR DATE OF HEARING : 29.10.2018 DATE OF PRONOUNCEMENT : 05.11. 2018 O R D E R PER SHAMIM YAHYA, A. M.: TH IS IS AN APPEAL B Y THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARISING OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 8, MUMBAI ( LD.CIT(A) FOR SHORT) DATED 23.11.2016 AND PERTAINS TO THE A SSESSMENT YEAR (A.Y.) 2008 - 09. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: 2 ITA NO.1642/MUM/2017 & CO NO. 248/MUM/2018 WHETHER LD. CIT(A) ERRED IN TREATING THE REOPENING OF THE ASSESSMENT U/S.147 OF THE ACT AS BAD IN LAW AND INVAL ID. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE CROSS OBJECTION READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 8, MUMBAI ('CIT(A)'), ERRED IN NOT ADJUDICATING THAT REASSESSMENT ORDER PASSED WITHOUT DEALING WITH THE OBJECTIONS FILED BY THE APPELLANT AGAINST THE REOPENING OF THE ASSESSMENT IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THAT THE REASSESSMENT PROCEEDINGS WAS BAD IN LAW AS THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BEYOND LIMITATION PROVIDED IN LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THAT THE REASSESSMENT PROCEEDINGS INITIATED BASED ON THE OBJECTIONS RAISED BY THE AUDIT PARTY ARE INVALID. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THAT THE EXPENDITURE ON ACCOUNT OF INCENTIVE REMUNERATION OF RS. 10,92,09,965, TO THE SENIOR MANAGEMENT, WAS NOT CAPITAL EXPENDITURE IN NATURE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THAT THE ADDITION OF RS. 7,890,146, BEING THE ALLEGED DIFFERENCE ARISING ON RECONCILIATION OF INCOME AS PER ANNUAL INFORMATION RETURN AND THAT AS PER BOOKS OF ACCOUNT, MERITS TO BE DELETED. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY CARRYING OUT THE BUSINESS OF ADVE RTISEMENT AGENCY. THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 06.12.2010. SUBSEQUENTLY, THE CASE WAS REOPENED. IN THIS REASSESSMENT, THE ASSESSING OFFICER (A.O. FOR SHORT) MADE ADDITION ON ACCOUNT OF : A) PAYMENT TO SR. PERSONAL AS DISCUSSED IN PARA 5.1 OF THE ASSESSMENT ORDER RS.10,92,09,965/ - B) RECONCILIATION OF AIR AS PER PARA 5.2 OF THE ASSESSMENT ORDER RS.78,90,146/ - 3 ITA NO.1642/MUM/2017 & CO NO. 248/MUM/2018 5. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A) CHALLENGING THE REOPENING AS WELL AS THE MERITS OF THE ADDI TION. THE VARIOUS FACETS OF CHALLENGE WERE THERE ON ACCOUNT OF REOPENING. IN THIS REGARD, THE LD. CIT(A) HIMSELF HAS NOTED THAT THE REOPENING WAS CHALLENGED AS UNDER: VALIDITY OF REASSESSMENT ORDER ISSUED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN DIN LAW, THE LEARNED A.O. HAS ERRED IN REOPENING ASSESSMENT UNDER SECTION 147 IN ABSENCE OF ANY TANGIBLE MATERIAL AND ON A MERE CHANGE OF OPINION. IT IS PRAYED THAT THE RE - OPEN ING OF ASSESSMENT ON SUCH BASIS BE TREATED AS BAD IN LAW AND THE IMPUGNED ORDER BE HELD TO BE BAD IN LAW, ILLEGAL AND STRUCK DOWN. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN NOT DEALING WITH OBJECTIONS OF T HE APPELLANT BEFORE PASSING THE REASSESSMENT ORDER, IN BREACH OF COMPLIANCE WITH THE DIRECTIONS OF THE HON'BLE SUPREME COURT. IT IS PRAYED THAT THE IMPUGNED ORDER BE HELD TO BE BAD IN LAW, ILLEGAL AND STRUCK DOWN. 6. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW AS THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BEYOND LIMITATION PROVIDED IN LAW. IT IS PRAYED THAT THE IMPUGNED ORDER BE HELD TO BE BAD IN LAW, ILLEGAL AND STRUCK DOWN. 6. I N HIS APPELLATE ORDER, THE LD. C IT(A) ALLOWED THE ASSESSEES APPEAL ON THE GROUND THAT THE REASSESSMENT WAS BAD INASMUCH AS IT WAS A CHANGE OF OPINION. THE LD. CIT(A) DID NOT DEALT WITH THE OTHER ASPECTS OF THE CHALLENGE TO REOPENING AS WELL AS THE MERITS OF THE ADDITION DONE BY THE A.O. THE REVENUE IS IN APPEAL AGAINST THE QUASHING OF ASSESSMENT BY THE LD. CIT(A) BY HOLDING THAT THE REASSESSMENT WAS BAD INASMUCH AS THERE WAS A CHANGE OF OPINION. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED GROUNDS THAT THE OTHER ASPECTS TO THE CHA LLENGE OF THE REOPENING WHICH WERE BEFORE THE LD. CIT(A) HA VE NOT BEEN 4 ITA NO.1642/MUM/2017 & CO NO. 248/MUM/2018 DEALT WITH BY THE LD. CIT(A). THE ASSESSEE IS ALSO AGGRIEVED THAT THE MERITS OF THE ISSUE HAS NOT BEEN ADJUDICATED BY THE LD. CIT(A). 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT HONBLE MA DRAS HIGH COURT IN THE CASE OF CIT VS RAMDAS PHARMACY 77 ITR 276 HA S EXPOUNDED THAT AN APPELLATE AUTHORITY CANNOT DECIDE ONLY ONE ISSUE ARISING OUT OF MANY ISSUES AND DECLINE TO GO INTO TO THE OT HER ISSUES RAISED BEFORE IT ON THE GROUND THAT FURTHER ISSUES WILL NOT ARISE IN VIEW OF THE FINDING ON THE ISSUE DECIDED BY IT. IT WAS EXPOUNDED THAT IF THE APPLET AUTHORITY DECLINES TO CONSIDER AND DECIDE THE OTHER ISSUES IT COULD ONLY PROTRACT AND DELAY THE PROCEEDINGS, FOR THE ASSESSEE HAS TO GET THE DECISION OF THE APPELLATE AUTHORITY ON THE INITIAL POINT SET ASIDE BY APPROACHING A HIGHER APPELLATE AUTHORITY AND THEREAFTER AGAIN GO BEFORE THE APPLET AUTHORITY FOR THE DECISION ON THE OTHER ISSUES LEFT UN DECIDED BY IT EARLIER. IT WAS HELD THAT THIS WILL AMOUNT TO MULTIPLICATION PROCEEDINGS UNDER THE ACT. IT WAS FURTHER EXPOUNDED THAT SUBORDINATE COURTS AND TRIBUNAL'S SHOULD AS FAR AS POSSIBLE GIVE THEIR VIEWS ON ALL THE POINTS RAISED BEFORE THEM SO THAT TH E HIGHER COURTS WILL HAVE THE BENEFIT OF THE DECISION ON OTHER POINT S ALSO IF THE NECESSITY ARISES. 8. EXAMINE THE PRESENT ISSUE ON THE TOUCHSTONE OF ABOVE SAID CASE LAW, WE FIND THAT THE ORDER OF ID CIT(A)HERE DIRECTLY FALLS UNDER THE AMBIT OF HONB'LE HI GH COURT'S ORDER AS ABOVE. THE L D CIT(A) HAS DECIDED ONE ISSUE AND HAS LEFT UNDECIDED OTHER ISSUE S DULY RAISED BEFORE HIM. HENCE WE ARE OF THE CONSIDERED OPINION THAT THE S E ISSUE S RAISED BY THE ASSESSEE NEEDS TO BE REMITTED TO THE FILE OF LEARNED CIT - A. LE ARNED CIT - A IS DIRECTED TO COMPLETE HIS APP ELLATE ORDER BY DECIDING ON TH ESE ISSUES WHICH WERE DULY RAISED BEFORE 5 ITA NO.1642/MUM/2017 & CO NO. 248/MUM/2018 HIM BY THE ASSESSEE. THESE INCLUDE CHALLENGE TO THE REOPENING ON OTHER ASPECTS AS RAISED IN THE GROUNDS OF APPEAL AS WELL AS MERITS OF THE ADD ITION. AFTER THE ORDER OF LEARNED CIT - A IS C OMPLETE UPON ADJUDICATION OF THE S E ISSUE S BOTH THE PARTIES WILL BE AT LIBERTY TO FILE NECESSARY APPEALS AS AND IF NECESSARY. 9. ACCORDINGLY THE S E ISSUE S ARE REMITTED TO THE FILE OF LD CIT - A. IN VIEW OF OUR ORDER REMITTING THESE ISSUE S TO THE FILE OF LEARNED CIT - A LEFT UNADJUDICATED BY HIM SO AS TO COMPLETE HIS ORDER, OTHER ISSUES RAISED IN THESE APPEALS ARE NOT BEING ADJUDICATED. BOTH THE COUNSEL FAIRLY AGREED TO THE ABOVE PROPOSITION. 10. IN THE RESULT THE REVE NUES APPEAL AND ASSESSEES CROSS OBJECTION ARE ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 05.11.2018 SD/ - SD/ - ( RAVISH SOOD ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 05.11.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI