SHRI. A R RAHMAN, CHENNAI V. ACIT CENTRAL CIRCLE 2 (4), CHENNAI

ITA 1745/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9550 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Reassessment proceedings; Set aside
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , , ( BEFORE SHRI GEORGE MATHAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1745/CHNY/2018 /ASSESSMENT YEAR: 2011-12 SHRI A.R.RAHMAN, C/O.M/S.PASS ASSOCIATES, NO.90, ARMENIAN STREET, 4 TH FLOOR, ORIENT CHAMBERS, CHENNAI-600 001. VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(4), CHENNAI. [PAN: ADMPR 0060 J ] ( * /APPELLANT) ( +,* /RESPONDENT) * - / APPELLANT BY : MR.D.ANAND, ADVOCATE +,* - /RESPONDENT BY : MR.SRIDHAR DORA, JCIT - /DATE OF HEARING : 09.07.2019 - /DATE OF PRONOUNCEMENT : 18.09.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2 , CHENNAI, PASSED U/S.263 OF THE INCOME TAX ACT, DATED 28.03.2018, FO R THE AY 2011-12. ITA NO.1745/CHNY/2018 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEA L: 1) THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX,CENTRAL-2, CHENNAI IS WRONG, ILLEGAL AND IS OPPOSED TO LAW AND FACTS OF THE CASE. 2) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX, CENTRAL-2 CHENNAI OUGHT TO HAVE SEEN THAT THE ORDER OF ASSESSMENT IS NOT ER RONEOUS AND THAT THE LEARNED CIT CAN ASSUME JURISDICTION UNDER SECTION 263 ONLY IF THE TWIN CONDITION OF THE ASSESSMENT ORDER BEING ERRONEOUS AND PRE-JUDICIAL T O THE INTEREST OF THE REVENUE IS SATISFIED. 3) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX, CENTRAL-2 WHILE PASSING ORDERS UNDER SECTION 263 ERRED IN GIVING A SPECIFIC DIRECTION OF RS.3,44,77,220/- IN THE HANDS OF THE APPELLANT IN A PRECONCEIVED MANNER EVEN WHILE THE ASSESSING OFFICER HAS SPECIFICALLY DEALT WITH THE ISSUE WHILE PROCEEDING UNDER SECTION 148. THE ASSESSMENT IS SET ASIDE NOT FOR THE PURPOSE OF MAKING ENQUIRY BUY WITH A PURPOSE OF MAKING AND ADDITION IN A PREDETERMINED M ANNER EVEN WITHOUT ENQUIRY. 4) THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENT RAL-2 FAILED TO SEE THAT THE APPELLANT HAD ONLY COME FORWARD AND AS A MEANS OF Q UID-PROP-QUO, RENDERED FREE SERVICE TO LEBARA MOBILE IN TURN FOR THE GENEROUS C ONTRIBUTION GIVEN BY LEBARA MOBILE TO A.R.RAHMAN FOUNDATION. THE LEARNED PRINCI PAL COMMISSIONER OF INCOME TAX, CENTRAL-2 FAILED TO APPRECIATE THE DUKE OF WES TMINSTER PRINCIPLES AND THE DICTUM LAID DOWN BY THE APEX COURT IN CALCUTTA DISC OUNT CASE. 5) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX, CENTRAL-2 OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER IN ITS REASSESSMENT PROCEEDINGS, AFTER DUE ENQUIRY HAS CONSCIOUSLY NOT ASSESSED THE IMPUGNED SUM AS TH E INCOME OF THE APPELLANT. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, C ENTRAL-2 ERRED IN SETTING ASIDE THE ASSESSMENT BY OBSERVING THAT THE ASSESSIN G OFFICER HAD NOT APPLIED ITS MIND WHILE COMPLETING THE ASSESSMENT. FOR THESE AND OTHER GROUNDS THAT MAY BE RAISED AT T HE TIME OF HEARING IT IS MOST HUMBLY PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEA SE TO QUASH THE ORDER OF REVISION PASSES BY THE LEARNED PRINCIPAL COMMISSION ER OF INCOME TAX, CENTRAL-2 UNDER SECTION 263 OF THE INCOME TAX ACT AND THUS RE NDER JUSTICE. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. THE RETURN OF INCOME FOR THE AY 2011-12 WAS FILED O N 25.09.2011 DECLARING TOTAL INCOME OF RS.15,98,04,415/-. AGAIN ST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE AO VIDE AN ORDER DATED 30.03.2014 PASSED U/S.143(3) OF THE IT ACT. SUBSEQ UENTLY, THE ASSESSMENT WAS REOPENED U/S.148 OF THE IT ACT STATI NG THAT THE AMOUNT OF ITA NO.1745/CHNY/2018 :- 3 -: RS.3,47,77,200/- RECEIVED FROM LEBARA MOBILE, UK, A ND (AN AMOUNT OF RS.54.00 LAKHS RECEIVED FROM M/S.PHOTON KATHAS PROD UCTION PVT. LTD.,) HAD ESCAPED ASSESSMENT OF TAX, THEREAFTER, PROPOSED TO RE-ASSESS THE SAME. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE DETAILED SUBMISSIONS BEFORE THE AO STATING THAT THE CONTRIBUTIONS WERE RECEIVED BY M/S.A.R.RAHAMAN FOUNDATION, CHENNAI, AF TER RECEIVING THE POST FACTO APPROVAL FROM MINISTRY OF HOME AFFAIRS, GOVERNMENT OF INDIA. THE AO CONSIDERED THE EXPLANATION OF THE ASSESSEE A ND CONSIDERED THE FACT THAT THE CONTRIBUTIONS WERE ASSESSED IN THE HA NDS OF M/S.A.R.RAHAMAN FOUNDATION, THE AO HAD CHOSEN NOT T O MAKE ANY ADDITION. SUBSEQUENTLY, THE PRINCIPAL CIT, CHENNAI -2, ISSUED A SHOW CAUSE NOTICE DATED 13.02.2018 U/S.263 OF THE IT ACT CALLI NG UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE RE-ASSESSMENT ORDER DATED 28.03.2016 CANNOT BE SET ASIDE AS THE AO HAD FAILED TO CONSIDER AND E XAMINE THE RELEVANT CLAUSES OF THE AGREEMENT BETWEEN THE M/S.A.R.RAHAMA N FOUNDATION AND M/S.LEBARA LTD., WHICH CLEARLY ESTABLISHES THAT THE ASSESSEE HAD RECEIVED THE REMUNERATION TOWARDS HIS PROFESSIONAL SERVICES. ACCORDINGLY, THE LD.CIT(A) HAS SET ASIDE THE RE-ASSESSMENT ORDER DAT ED 28.03.2016 BY HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE VIDE ORDER D ATED 28.03.2016. 4. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE U S. IT IS CONTENTED BEFORE US THAT THE VERY SAME ISSUE WAS EXAMINED BY THE AO DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, INADEQUATE ENQ UIRY DOES NOT ENABLE ITA NO.1745/CHNY/2018 :- 4 -: THE LD.CIT(A) TO REVISE THE ASSESSMENT AND RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. SUNBEAM AUTO LTD., REPORTED IN [2011] 332 ITR 0167 AND SIMI LARLY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MA X INDIA LTD. ON THE OTHER HAND, THE PRINCIPAL CIT PLACED RELIANCE ON TH E ORDER OF THE ACIT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS PLACED ON RECORD. 6. THE SHORT ISSUE THAT ARISES FOR CONSIDERATION IS WH ETHER OR NOT THE PRINCIPAL COMMISSIONER OF INCOME TAX HAD JUSTIFIED IN EXERCISING THE JURISDICTION OF REVISION U/S.263 OF THE IT ACT. AD MITTEDLY, THIS ISSUE WAS EXAMINED BY THE AO DURING THE COURSE OF THE RE-ASSE SSMENT PROCEEDINGS AND TOOK A VIEW THAT THE CONTRIBUTIONS MADE BY M/S. LEBARA LTD., ARE NOT TAXABLE IN THE HANDS OF THE ASSESSEE SINCE THE SAME WERE ASSESSED TO TAX IN THE HANDS OF M/S.A.R.RAHAMAN FOUNDATION. IT IS A MATTER OF RECORD THAT EVEN THE MINISTRY OF HOME AFFAIRS, GOVERNMENT OF IN DIA, HAD ACCORDED POST FACTO APPROVAL IN RESPECT OF THIS CONTRIBUTION . THEREFORE, THERE IS NOTHING ON THE RECORD SUGGESTING THAT IT IS TAXABLE IN THE HANDS OF THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE CO NSIDERED OPINION THAT THE RE-ASSESSMENT ORDER CANNOT BE HELD TO BE ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE SO AS TO ENABLE THE LD.CIT( A) TO EXERCISE THE POWER OF REVISION U/S.263. THEREFORE, THE PRINCIPA L CIT WAS NOT JUSTIFIED IN EXERCISING THE POWER OF REVISION U/S.263. ITA NO.1745/CHNY/2018 :- 5 -: 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 18 TH SEPTEMBER, 2019 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER /CHENNAI, 4 /DATED: 18 TH SEPTEMBER, 2019. TLN - + 56 76 /COPY TO: 1. * /APPELLANT 4. 8 /CIT 2. +,* /RESPONDENT 5. 6 + /DR 3. 8 ( ) /CIT(A) 6. /GF