KILLICK NIXON LTD, MUMBAI V. DCIT 1(2), MUMBAI

ITA 1786/MUM/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0902 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBE
• Assessee Lawyers: DEEPAK P TIKEKA R
• Keywords: Bad and doubtful debts; Procedural lapse; Block assessment
• Section: 143(3); 142(1); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1786/MUM/2013 ASSESSMENT YEAR: 2008 - 10 KILLICK NIXON LTD. WALLACE BUSINESS CENTRE, COMMERCIAL UNION HOUSE, 9, WALLACE STREET, MUMBAI - 400001. VS. DY. CIT - 1(2), MUMBAI. PAN NO. AAACK8526A APPELLANT RESPONDENT ASSESSEE BY : MR. DEEPAK P. TIKEKAR, AR REVENUE BY : MR. SACHCHIDANAND DUBE, DR DATE OF HEARING : 05/09/2018 DATE OF PRONOUNCEMENT : 19/11/2018 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2008 - 09 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 [IN SHORT CIT(A) ], MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND OF APPEAL FILED BY THE ASSESS EE READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF BUSINESS LOSS OR BAD DEBTS OF RS.2 CRORE WITH RESPECT TO AMOUNT WRITTEN OFF OF G.K.A.K. RATHI HUF. KILLICK NIXON LTD. ITA NO. 1786/MUM/2013 2 2. THE LD. CIT(A) HAS FAILED TO CONSIDER THAT APPELLANT HAS BEEN REFERRED TO BIFR AS SICK UNIT AND DUE TO AUCTION OF PROPERTY BY SPECIAL COURT, DETAILS WERE NOT READILY AVAILABLE OR MISPLACED. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING INTEREST U/S 234A, 234B & 234C OF THE INCOME TAX ACT. 3. THE ASSESSEE HAS ALSO FILED AN ADDITIONAL GROU ND STATING AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN HOLDING THAT GROUND OF REASONABLE OPPORTUNITY IS IN GENERAL IN NATURE AND NOT CONSIDERED THAT NOTICE UNDER 143(2) WAS ISSUED ON 28.07.2010 I.E. BEFORE FILING OF THE RETURN OF INCOME. THUS, THE ASSESSMENT FR AMED WITHOUT ISSUE OF NOTICE U/S 143(2), AFTER FILING OF RETURN IS AB - INITIO VOID. 2. THE LD. CIT(A) OUGHT TO HAVE CONSIDER ED OBJECT CLAUSE AS PER III (T) OF THE MEMORANDUM OF ASSOCIATION, AS PER WHICH THE APPELLANT HAS BEEN ALLOWED TO LEND MONEY, EITHER WITH OR WITHOUT SECURITY. 3.1 IN THE APPLICATION FOR ADMISSION OF THE ABOVE ADDITIONAL GROUND, THE ASSESSEE HAS SUBMITTED THA T (I) IN THE ORIGINAL GROUNDS, IT COULD NOT THROUGH INADVERTENCE AND OVERSIGHT, INCLUDE IT IN THE ORIGINAL MEMO OF APPEAL FILED BEFORE THE TRIBUNAL, (II) THESE ADDITIONAL GROUNDS CONSTITUTE THE SAME GRIEVANCE AS AGITATED BY THE ASSESSEE IN THE ORIGINAL GR OUNDS ALSO AND (III) THESE ADDITIONAL GROUNDS CAN BE RESOLVED, BASED ON THE FACTS ALREADY ON RECORD AND DO NOT WARRANT ANY FRESH INVESTIGATION INTO FACTS. 3.2 HAVING GONE THROUGH THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL GRO UNDS FILED BY THE ASSESSEE HAVE A BEARING ON ITS TAX LIABILITY AND IT CAN BE ADJUDICATED ON THE BASIS OF FACTS KILLICK NIXON LTD. ITA NO. 1786/MUM/2013 3 ALREADY ON RECORD . THEREFORE, WE ADMIT THE ABOVE ADDITIONAL GROUNDS FOR ADJUDICATION. 4. WE BEGIN WITH THE 1 ST GROUND (ADDITIONAL GROUNDS OF APPEAL). IN THE INSTANT CASE, THE ASSESSING OFFICER (AO) ISSUED NOTICE U/S 142(1) ON 07.07.2009. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2008 - 09 ON 26.10.2010. THE CASE RECORD WAS TRANSFERRED TO T HE DEPUTY COMMISSIONER OF INCOME TAX - 1(2), MUMBAI FROM THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MUMBAI. SUBSEQUENTLY, THE AO ISSUED NOTICE U/S 143(2) ON 28.07.2010 AND DULY SERVED IT ON THE ASSESSEE. FURTHER, NOTICE U/S 142(1) ALONG WITH QU ESTIONNAIRE WAS ISSUED BY THE AO ON 01.10.2010 AND DULY SERVED ON THE ASSESSEE. 5. BEFORE US, T HE LD. COUNSEL OF THE ASSESSEE RELIES ON THE DECISION IN (I) DIT V. SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TRANSACTIONS 323 ITR 265, (II) ACIT V. HOTEL BLUE MOON (2010) 321 ITR 362 (SC), (III) CIT V. CEBON INDIA LIMITED (2012) 347 ITR 583 (P&H), (IV) MANISH PRAKASH GUPTA V. CIT (2012) 249 CTR 0057 (ALL), (V) CIT V. VISHNU & CO. (P) LTD. V. CIT (2009) 319 ITR 151 (DEL). 6. ON THE OTHER HAND, THE LD. DR SUPPORT S THE ORDER PASSED BY THE LD. CIT(A) AND THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE DISCUSS BELOW THE DECISIONS RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE. IN SOCIETY FOR WORLDWIDE INTERBANK FINANCIA L TRANSACTIONS (SUPRA), THE ASSESSEE FILED THE RETURN OF INCOME ON 27.03.2000 AND ASSESSMENT KILLICK NIXON LTD. ITA NO. 1786/MUM/2013 4 WAS COMPLETED ON 31.03.2000. THE NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE ON 23.03.2000. THE HONBLE HIGH COURT HELD THAT ASSESSMENT MADE IN PURSUANCE OF A NO TICE U/S 143(2) ISSUED ON 23.03.2000 WHEN THE RETURN WAS FILED ON 27.03.2000 IS INVALID. IN HOTEL BLUE MOON (SUPRA), THE HONBLE SUPREME COURT HELD THAT IF THE AO, FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO A NOTICE U/S 158 BC(A), HE MUST NECESSARILY ISSUE NOTICE U/S 143(2) WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2); OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S 143(2) CANNOT BE A MERE PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE. IN CEBON INDIA LIMITED (SUPRA), IT IS HELD THAT CIT(A) AS WELL AS THE TRIBUNAL HAVING RECORDED CONCURRENT FINDING THAT THE NOTICE U/S 143(2) WAS NOT SERVED ON THE ASSESSEE WITHIN THE STIPULATED TIME, IMPUGNED ASSESSMENT WAS NOT VALID; ABSENCE OF NOTICE IS NOT A CURABLE DEFECT U/S 292BB. IN MANISH PRAKASH GUPTA (SUPRA), IT IS HELD THAT NOTICE U/S 143(2) NOT HAVING BEEN ISSUED TO THE ASSESSEE, THE ASSESSING AUTHORITY DID NOT HAVE JURISDICTION TO PROCEED FURTHER AND MAKE BLOCK ASSESSMENT; NON - CONSIDERATIO N OF SECTION 292BB, WHICH IS A RULE OF EVIDENCE AND A DEEMING PROVISION TO VALIDATE THE NOTICE IN CERTAIN CIRCUMSTANCES, DID NOT HAVE ANY EFFECT. IN VISHNU & CO. (P) LTD . (SUPRA), IT IS HELD THAT NOTICE U/S 143(2) SERVED BY AFFIXURE ON THE LAST DATE AFTE R OFFICE HOURS IS NOT VALID SERVICE KILLICK NIXON LTD. ITA NO. 1786/MUM/2013 5 AND ASSESSMENT FRAMED IN PURSUANCE OF SUCH NOTICE IS NOT VALID; IT IS IMMATERIAL THAT THE ASSESSEE APPEARED IN THE ASSESSMENT PROCEEDINGS. 7.1 IN THE INSTANT CASE , NOTICE U/S 143(2) WAS ISSUED ON 28.07.2010. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 26.10.2010. AS MENTIONED EARLIER IT HAS BEEN CLEARLY HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TRANSACTIONS (SUPRA), THAT ASSESSMENT MADE IN PURSUANCE OF A NOTICE U/S 143(2) ISSUED ON 23.03.2000 WHEN THE RETURN WAS FILED ON 27.03.2000 IS INVALID. FACTS BEING IDENTICAL, WE FOLLOW THE RATIO LAID DOWN IN THE ABOVE JUDGMENT AND SET ASIDE THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/11/2018. SD/ - SD/ - (SANDEEP GOSAIN) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 19/11/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI