ACIT., Circle-16(2), Hyderabad, Hyderabad V. M/s Deccan Chronicle Holdings Limited, Hyderabad

ITA 1722/HYD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6575 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-07-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1722/HYD/2014 ASSESSMENT YEAR: 2007-08 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 16(2), HYDERABAD. VS. DECCAN CHRONICLE HOLDINGS LTD., HYDERABAD. PAN AABCD 6737D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J. SIRI KUMAR ASSESSEE BY : SHRI S. RAMA RAO DATE OF HEARING 02/07/2018 DATE OF PRONOUNCEMENT 11/07/2018 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 14/08/2014 OF CIT(A) V, HYDERABAD FOR AY 20 07-08. 2. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE COMP ANY, ENGAGED IN THE BUSINESS OF PRINTING AND PUBLICATION OF NEWS PA PERS AND PERIODICALS, FILED ITS RETURN OF INCOME FOR THE AY 2007-08 ON 29/10/2007 ADMITTING TOTAL INCOME AT RS. 174,16,01, 840/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME-T AX ACT, 1961 (IN SHORT THE ACT) ON 29/12/2009 DETERMINING THE INCO ME AT RS. 178,20,37,090/-. LATER, THE CASE WAS REOPENED U/S 1 47 OF THE ACT AND REASSESSMENT WAS COMPLETED DETERMINING THE INCOME A T RS. 194,58,81,644/- BY MAKING THE FOLLOWING DISALLOWANC ES: I) QIB ISSUE EXPENSES RS. 1,65,53,975/- II) DEBENTURE ISSUE EXPENSES RS. 1,84,69,940 /- III) DEBENTURE ISSUE EXPENSES RS. 2,07,30,68 4/- IV) DEPRECIATION CLAIMED ON MACHINERY RS. 6,04,02, 542/- 2 ITA NO. 1722/HYD/14 DECCAN CHRONICLE HOLDINGS LTD., HYD. V) DEPRECIATION ON AIRCRAFT RS. 7,77,04,217 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A) AND FURNISHED ITS SUBMISSIONS AS UNDER: A. THE ASSESSING OFFICER IS NOT JUSTIFIED IN INITIA TION OF RE- ASSESSMENT PROCEEDINGS ON THE BASIS OF MERE CHANGE OF OPINION AND ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW SUCH PROCEEDINGS OUGHT TO BE DECLARED NU LL AND VOID AB-INITIO. IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE RELEV ANT INFORMATION WAS SPECIFICALLY REQUIRED TO BE FURNISH ED DURING ORIGINAL ASSESSMENT PROCEEDINGS BY THE THEN ASSESSI NG OFFICER AND ACCORDINGLY THE ORIGINAL ASSESSMENT WAS COMPLET ED AFTER DUE EXAMINATION OF SUCH ISSUES. IT WAS EXPLAINED TH AT THE FACT, THAT THE ABOVE CLAIMS WERE DULY EXAMINED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, WAS EVIDENT FROM THE QUESTI ONNAIRES ISSUED DURING SUCH PROCEEDINGS AND THE ORIGINAL ASS ESSMENT ORDER ITSELF. THUS, THE ASSESSEE HUMBLY SUBMITTED T HAT IT WAS A CASE, WHEREIN THE EARLIER AO HAD TAKEN A CONSIDERED VIEW AFTER SPECIFICALLY EXAMINING THE RELEVANT DETAILS/EVIDENC ES FURNISHED BY THE APPELLANT ON THE ISSUES IN QUESTION, AND AS SUCH THE REOPENING PROCEEDINGS WERE BAD IN LAW. TO PUT IT DI FFERENTLY, IT IS CONTENDED THAT THE REASSESSMENT PROCEEDINGS WERE LEGALLY UNSUSTAINABLE., IN VIEW OF THE FACT THERE WAS NO FA ILURE, WHATSOEVER, ON THE PART OF THE APPELLANT IN FURNISH ING THE MATERIAL PARTICULARS DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE IMPUGNED REOPENING WAS SOLELY BASED ON MERE CHANGE OF OPINION. FOLLOWING CASE LAWS FOR REOPENING THE ASSESSMENT WH ICH ARE SQUARELY COVERED BY THE FACTS AND CIRCUMSTANCES AS SUCH THE REOPENING PROCEEDINGS WERE BAD IN LAW. A NOTICE ISSUED UNDER S. 148 OF THE ACT SHOULD BE A REASONED ONE. IN THE ABSENCE OF ANY NEW MATERIAL, THE ASSESS ING OFFICER IS NOT EMPOWERED TO REOPEN AN ASSESSMENT IRRESPECTI VE OF THE FACT WHETHER IT IS MADE U/S. 143(1) OR SECTION 143( 3) OF THE ACT. BAPALAL & CO. V/S. JT. CIT - (2007) 2891TR 37 (MAD. ) I) RE-OPENING OF ASSESSMENT ON THE SAME GROUND IN T HE ABSENCE OF ANY TANGIBLE MATERIAL WAS BASED ON MERE CHANGE OF OPINION AND THEREFORE IS NOT SUSTAINABLE. AVENTIS P HARMA LTD. VS. ASTT. CIT (2010) 323 ITR 570 (BORN) (5.77), ICI CI PRUDENTIAL LIFE INSURANCE CO. LTD. (2010) 3251TR 471 . (BORN) 3 ITA NO. 1722/HYD/14 DECCAN CHRONICLE HOLDINGS LTD., HYD. II) MERE CHANGE OF OPINION OF ASSESSING OFFICER IS NOT GROUND FOR REASSESSMENT ICICI PRUDENTIAL LIFE INSURANCE CO. LT D. (2010) 3251TR 471 (80M) ISSUES RAISED NOW, THE INFORMATION AND ALL FACTS WE RE FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND HENCE WE STRO NGLY OBJECT TO THE REOPENING OF THE ASSESSMENT SINCE NO FRESH FACTS HAVE COME TO LIGHT AND MOST OF THESE FACTS WERE CON SIDERED EITHER IN EARLIER YEARS ASSESSMENTS OR WERE SUBMITT ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS SUCH THE RE OPENING PROCEEDINGS WERE BAD IN LAW. TO PUT IT DIFFERENTLY; IT IS CONTENDED THAT THE RE-ASSESSMENT PROCEEDINGS WERE L EGALLY UNSUSTAINABLE. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT THE A.O. WAS NOT JUSTIFIED IN REOPENI NG THE ASSESSMENT U/S 147 OF THE ACT FOR THE FOLLOWING REASONS: I) IN THE ORIGINAL ASSESSMENT U/S 143(3) DATED 29/1 2/2009, THE AO AFTER EXAMINING THE INFORMATION/DETAILS FILED BY THE ASSESSEE, DID NOT MAKE ANY OF THE FIVE ADDITIONS AS MADE BY THE AO IN THE REASSESSMENT PROCEEDINGS, AS MENTIONE D PARA 2 OF THIS ORDER. II) SUBSEQUENTLY, THE PROCEEDINGS U/S 147 WERE PURE LY INITIATED ONLY DUE TO MERE CHANGE OF OPINION ON THE SAME SET OF FACTS, EVIDENCES AND CIRCUMSTANCES OF THE CASE ALREADY CON SIDERED BY THE AO IN THE ORIGINAL ASSESSMENT. THERE WERE NO N EW FACTS/FRESH MATERIAL BROUGHT ON RECORD BY THE AO SU BSEQUENT TO THE ORIGINAL ASSESSMENT FOR REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, OTHER THA N INFORMATION SUBMITTED BY THE ASSESSEE DURING THE OR IGINAL ASSESSMENT PROCEEDINGS. (III) AS THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS AND EVIDENCES NECESSARY FOR THE ASSE SSMENT AS REQUIRED BY THE A.O, THE PRECONDITION FOR INVOKING THE PROVISO TO SECTION 147 WAS NOT SATISFIED AND THEREFORE THE AO ACTED WITHOUT JURISDICTION IN ISSUING A NOTICE U/S 148. (IV) AS PER THE PROVISIONS OF SECTION 147, THE A.O. ALSO CANNOT REOPEN AN ASSESSMENT, WHICH WAS COMPLETED U/S 143 ( 3) OF THE ACT, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 13 9 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR. 4 ITA NO. 1722/HYD/14 DECCAN CHRONICLE HOLDINGS LTD., HYD. IN THIS CASE, THERE IS NO FAILURE OR OMISSION ON TH E PART OF THE APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OR TO MAKE A RETURN AS MENTIONED ABOVE. 4.1 FURTHER, THE CIT(A) AFTER DISCUSSING THE ISSUE WITH VARIOUS CASES, ON WHICH RELIANCE PLACED BY THE ASSESSEE, OB SERVED AS UNDER: BUT, IN THE CASE OF THE ASSESSEE, THE ORIGINAL ASS ESSMENT U/S 143 (3) WAS PASSED BY THE AO AFTER EXAMINING ALL TH E DETAILS / INFORMATION FILED BY THE ASSESSEE AND THE A.O. REOP ENED THE ASSESSMENT U/S 147 ON THE SAME SET OF FACTS / INFOR MATION AVAILABLE WITH THE AO AND NOT ON THE BASIS OF ANY F RESH MATERIAL, WHICH CANNOT BE SUSTAINED. 4.10. ON THE BASIS OF THE REASONS FOR REOPENING THE ASSESSMENT BY THE AO, AND ON THE SUBMISSIONS MADE BY THE APPEL LANT, IT IS APPARENT THAT THE REVENUE COULD NOT CONTEND THAT TH E REASSESSMENT IS FRAMED ON SUBMISSION OF NEW MATERIA L OR INFORMATION. THERE IS NO CHARGE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED FROM ASSESSMENT, BY REASON OF THE FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MA TERIAL FACTS NECESSARY FOR ASSESSMENT. THE AO HAS NOT ESTABLISHE D ANY NEW FACTS DURING THE COURSE OF ASSESSMENT PROCEEDING U/ S 147 TO SUBSTANTIATE, THAT THE ASSESSEE HAS NOT FURNISHED F ULL PARTICULARS DURING THE COURSE OF THE EARLIER ASSESS MENT PROCEEDING U/S 143(3), ALL THE MATERIAL FACTS WERE AVAILABLE AT THE TIME OF MAKING ORIGINAL ASSESSMENT. THEREFORE T HE AO'S REASONS FOR REOPENING OF THE ASSESSMENT U/S 147 CAN NOT BE ACCEPTED. 4.2 THE CIT(A), EVEN, DECIDED THE APPEAL ON MERITS AND DELETED ALL THE DISALLOWANCES MADE BY THE AO BY HOLDING THAT NO TWITHSTANDING THE CANCELLATION OF REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AS NOT SUSTAINABLE AND THE CONSEQUENT DISALLOWANCES BEING TREATED AS INFRUCTUOUS, THE DISALLOWANCES MADE BY THE AO ARE A DJUDICATED ON MERITS. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: I. THE ORDER OF THE CIT(A) IS ERRONEOUS IN LAW AND ON FACTS OF THE CASE. 5 ITA NO. 1722/HYD/14 DECCAN CHRONICLE HOLDINGS LTD., HYD. 2. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT U/S 147'. (ADDITIONAL GROUND OF APPEAL AUTHORIZED AS PER AUTHORIZATION OF PRO CIT-4, HYDERABAD U/S 253(2) OF L.T. ACT- DATED 4.11.2016.) 3. THE C1T(A) ERRED IN ALLOWING EXPENDITURE ON DISA LLOWANCE OF QIB ISSUE EXPENSES RS. 1,65,53,975 BEFORE VERIFYING THE FACT THE BANGALORE EDITION WAS NOT RELEASED IN A Y 20070 8. 4. THE CIT(A) ERRED IN ALLOWING THE DISALLOWANCE OF DEBENTURE ISSUE EXPENSES, RS. 1,84,69,940 PLACING RELIANCE ON FACTUALLY DIFFERENT ISSUE FOR THE A Y 2008-09. 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THE DISALLO WANCE OF DEBENTURE ISSUE EXPENSES RS. 2,07,30,684/- IN VIEW OF THE DEDUCTION U/S. 36(1)(III) IS INAPPLICABLE. 6. THE CIT(A) OUGHT TO HAVE APPRECIATED THE DISALLO WANCE OF DEPRECIATION ON MACHINERY AND AIRCRAFT NOT PUT IN U SE. 7. THE CIT(A) OUGHT TO HAVE AFFORDED OPPORTUNITY TO THE ASSESSING OFFICER AS PER THE PROVISIONS OF SECTION 46 OF THE IT ACT. 8. THE CIT(A) OUGHT TO HAVE APPRECIATED THE DISALLO WANCE OF ADDITION DEPRECIATION AS THE SAME CAN BE CLAIMED BY THE MANUFACTURING ORIENTED BUSINESS. 9. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIM E OF HEARING. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CATEGORICAL FINDING OF THE CIT(A) IS T HAT THE ORIGINAL ASSESSMENT U/S 143 (3) WAS PASSED BY THE AO AFTER E XAMINING ALL THE DETAILS / INFORMATION FILED BY THE ASSESSEE AND THE A.O. REOPENED THE ASSESSMENT U/S 147 ON THE SAME SET OF FACTS / INFOR MATION AVAILABLE WITH THE AO AND NOT ON THE BASIS OF ANY FRESH MATER IAL, WHICH CANNOT BE SUSTAINED. HE FURTHER HELD THAT THE AO HAS NOT E STABLISHED ANY NEW FACTS DURING THE COURSE OF ASSESSMENT PROCEEDIN G U/S 147 TO SUBSTANTIATE, THAT THE ASSESSEE HAS NOT FURNISHED F ULL PARTICULARS DURING THE COURSE OF THE EARLIER ASSESSMENT PROCEED ING U/S 143(3), ALL 6 ITA NO. 1722/HYD/14 DECCAN CHRONICLE HOLDINGS LTD., HYD. THE MATERIAL FACTS WERE AVAILABLE AT THE TIME OF MA KING ORIGINAL ASSESSMENT. THEREFORE THE AO'S REASONS FOR REOPENIN G OF THE ASSESSMENT U/S 147 CANNOT BE ACCEPTED. THEREFORE, I N OUR CONSIDERED VIEW, SINCE THE ASSESSEE HAS DISCLOSED FULLY AND TR ULY ALL THE MATERIAL FACTS AND EVIDENCES NECESSARY FOR THE ASSESSMENT AS REQUIRED BY THE AO, THE PRECONDITION FOR INVOKING THE PROVISO TO SE CTION 147 WAS NOT SATISFIED. FURTHER, AS SUBMITTED BY LD. AR, THE ASS ESSMENT WAS REOPENED AFTER 4 YEARS AND THE AO HAS NOT RECORDED, IN THE REASONS TO REOPEN THE ASSESSMENT, THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO FURNISH ALL THE INFORMATION ON RECORD. ON VERIFICATION OF THE SATISFACTION RECORDED BY AO FOR REOPENING THE A SSESSMENT, WE OBSERVED THAT THERE IS NO SUCH SATISFACTION RECORDE D BY AO, EVEN THOUGH, THE REOPENING OF ASSESSMENT WAS DONE BEYOND FOUR YEARS. THEREFORE, AO HAS NOT ESTABLISHED THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE AND REOPENED THE ASSESSMENT WITHOU T ANY COGENT MATERIAL NECESSARY TO REOPEN THE ASSESSMENT. THEREF ORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) IN CANCELLING THE REASSESSMENT MADE BY THE AO U/S 147 AND, ACCORDINGLY, UPHOLDING THE S AME, WE DISMISS THE GROUNDS RAISED BY THE REVENUE. 6.1 AS THE REASSESSMENT ITSELF IS CANCELLED, THE DI SALLOWANCES MADE IN SUCH ASSESSMENT BECOME INFRUCTUOUS. THEREFORE, W E ARE NOT GOING TO DECIDE THE SAME ON MERITS, AS THE CIT(A) DISMIS SED ALL THE DISALLOWANCES ON MERITS ALSO, WHICH WE UPHOLD. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2018. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 11 TH JULY, 2018 KV 7 ITA NO. 1722/HYD/14 DECCAN CHRONICLE HOLDINGS LTD., HYD. COPY TO:- 1) DCIT, CIRCLE 16(2), 2 ND FLOOR, B BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. 2) M/S DECCAN CHRONICLE HOLDING LTD., 6-3-898, RAJ BHAVAN ROAD, SOMAJIGUDA, HYDERABAD. 3) CIT(A) V, HYDERABAD. 4) CIT - IV, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE