THE BOMBAY BULLION ASSOICATION LTD, MUMBAI V. ITO WD 4(3)(2), MUMBAI

ITA 18/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7892 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: SHAILESH PARMARLD
• Keywords: Gift; Revision of order; Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 263; 2

Judgement Text

ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.18/MUM/2013 ( / ASSESSMENT YEAR: 2006-07) THE BOMBAY BULLION ASSOCIATION LIMITED C/O KARNAVAT & CO. 2A KITAB MAHAL,1 ST FLOOR 192, DR.D.N.ROAD MUMBAI-400 001 / VS. INCOME TAX OFFICER WARD 4(3)(2) MUMBAI ! ./ ./PAN/GIR NO. AAACT-1449-D ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : SHAILESH PARMAR ,LD.AR RE VENUE BY : SUMAN KUMAR, LD. SR.DR / DATE OF HEARING : 30/10/2017 / DATE OF PRONOUNCEMENT : 13/12 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2006-07 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-8 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-8/CIR.4/111/2011-12 DATED 25/10/2012. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER, WARD 4(3)(2), MUMBAI [AO] U/S 1 43(3) READ WITH ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 2 SECTION 147 OF THE INCOME TAX ACT,1961 ON 12/09/2011. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEA L:- 1. ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD FA ILED TO APPRECIATE THAT THE LEARNED CIT HAD DROPPED THE PROCEEDINGS INITIATED U /S.263 FOR THE REASON THAT THE ASSESSING OFFICER HAD ALREADY EXAMINED THE ALLO WABILITY OF RS.3,24,540/- BEING GIFT AND PRESENTATION EXPENSES AND FOUND THE SAME IN ORDER IN HIS ORDER U/S.143(3) DATED 12.12.2008. UNDER THE FACTS AND CI RCUMSTANCES OF THE MATTER, HE OUGHT TO HAVE DELETED THE DISALLOWANCE OF RS.3,2 4,540/- MADE BY THE ASSESSING OFFICER. 2. ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD FAIL ED TO APPRECIATE THAT THE JURISDICTIONAL CONDITIONS PRECEDENT TO ISSUE OF NOT ICE U/S.148 DATED 29.03.2011 NOT COMPLIED, THE ASSESSMENT MADE U/S.143(3) R.W.S. 147 IS BAD-IN-LAW. 3. ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD ERRE D IN HOLDING THAT THE PROCEEDINGS U/S.147 ARE NOT BAD-IN-LAW. 4. ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD ERRE D IN UPHOLDING THE DISALLOWANCE OF RS.3,24,540/- BEING GIFT AND PRESENTATION EXPENS ES BY TREATING THE SAME AS PERSONAL EXPENDITURE. UNDER THE FACTS AND CIRCUMSTA NCES OF THE MATTER, HE OUGHT TO HAVE DELETED THE DISALLOWANCE OF RS.3,24,5 40/- MADE BY THE ASSESSING OFFICER. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF REFINING, MELTING, CUTTING AND ASSAYING OF SILVER & GOLD ORNAMENTS, UTENSILS E TC. WAS SUBJECTED TO AN ASSESSMENT FOR IMPUGNED AY U/S 143(3) READ WITH SECTION 147 OF THE ACT ON 12/09/2011 AT RS.21,80,208/- AFTER CERTAIN A DDITIONS OF RS.3,24,540/- . THE ORIGINAL RETURN OF INCOME WAS F ILED BY THE ASSESSEE ON 26/11/2006 AT RS.18,49,880/- WHICH WAS ASSESSED U/S 143(3) ON 12/12/2008 AT RS. 18,55,668/-. 2.2 THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) DATED 12/12/2008 WAS SUBJECTED TO EXERCISE OF REVISIONAL JURISDICTIO N U/S 263 BY LD. COMMISSIONER OF INCOME TAX-4, MUMBAI [CIT] VIDE SHO W CAUSE NOTICE DATED 18/01/2011 UPON NOTICING THAT THE ASSESSEE CL AIMED EXPENDITURE OF RS.3,24,550/- TOWARDS GIFTS AND PRESENTATION AND UPON NOTICING CERTAIN DISCREPANCIES IN THE TDS CERTIFICATES. THE EXPENDIT URE, IN THE OPINION OF LD. CIT, OUGHT TO HAVE BEEN DISALLOWED, BEING PERSO NAL IN NATURE. THE ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 3 ASSESSEE CONTENDED THAT THE LD. AO DURING SCRUTINY ASSESSMENT HAD ALREADY CONSIDERED THE ASSESSEES SUBMISSION IN THI S REGARD AND TOOK A CONSCIOUS DECISION TO ALLOW THE SAME, FINDING THE S AME IN ORDER AND HENCE, THE REVISION WAS NOT JUSTIFIED. THE LD. CIT CONCURRED WITH ASSESSEES SUBMISSIONS AND DROPPED PROCEEDINGS U/S 263 VIDE ORDER DATED 21/03/2011. 2.3 HOWEVER, SUBSEQUENTLY, LD. AO, UPON PERUSING TH E TAX AUDIT REPORT IN FORM 3CD AND NOTICING DISCREPANCIES IN THE INTEREST INCOME FIGURES REFLECTED BY THE ASSESSEE VIS--VIS FIGURES REFLECTED IN THE TDS CERTIFICATES AND ON THE BASIS OF CERTAIN AIR INFORMATION , INVOKED REASSESSMENT PROCEEDINGS U/S 147 BY ISSUANCE OF NOT ICE U/S 148 DATED 29/03/2011 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1). 2.4 THE ASSESSEE CONTESTED THE REOPENING ON THE PRE MISES THAT THERE WAS MERE CHANGE OF OPINION AND MOREOVER, PROCEEDING S U/S 263 WAS ALREADY DROPPED BY LD. CIT, FINDING MERITS IN ASSES SEES CONTENTIONS. RELIANCE WAS PLACED ON SEVERAL JUDICIAL PRONOUNCEME NTS FOR VARIOUS CONTENTIONS. HOWEVER, NOT CONVINCED, LD. AO REJECTE D ASSESSEES VARIOUS SUBMISSIONS AND COMPLETED REASSESSMENT PROC EEDINGS AFTER MAKING ADDITION OF RS.3,24,540/-, BEING EXPENDITURE TOWARDS GIFT AND PRESENTATION, BEING PERSONAL IN NATURE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 25/10/2 012 ON LEGAL GROUNDS AS WELL AS ON MERITS. THE LD. CIT(A) UPHELD THE VALIDITY OF REASSESSMENT PROCEEDINGS ON THE PREMISES THAT APART FROM THE ISSUE OF GIFTS & PRESENTATION EXPENDITURE, THE OTHER TWO ITE MS VIZ. INTEREST AND BROKERAGE WERE SHOWING ESCAPEMENT OF INCOME AND HEN CE, THE ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 4 REASSESSMENT PROCEEDINGS WERE JUSTIFIED. THE QUANTU M ADDITION WAS CONFIRMED SINCE THE EXPENDITURE WAS PERSONAL IN NAT URE. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] ASSAILED THE R EOPENING ON LEGAL GROUNDS BY REITERATING THE CONTENTIONS AS RAISED BE FORE LOWER AUTHORITIES. OUR ATTENTION WAS DRAWN TO THE FACT THAT EVEN ON ME RITS THE ADDITION WAS NOT SUSTAINABLE SINCE THE EXPENDITURE WAS INCURRED FOR BUSINESS PURPOSES OF THE ASSESSEE AND THE ASSESSEE WAS REGUL ARLY CLAIMING SIMILAR EXPENSES OVER THE YEARS, WHICH HAS BEEN ACC EPTED BY THE REVENUE IN SCRUTINY PROCEEDINGS U/S 143(3). PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] JUSTIFIED THE REOP ENING AND CONTENDED THAT TAX AUDITOR CLEARLY OPINED THAT THE EXPENDITUR E WERE OF PERSONAL NATURE AND HENCE, DISALLOWABLE TO THE ASSESSEE. THE SAME ESCAPED THE ATTENTION OF LD. AO AND THEREFORE, PROCEEDINGS WERE RIGHTLY INITIATED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. FIRST OF AL L, WE DO NOT CONCUR WITH THE SUBMISSIONS THAT SINCE PROCEEDINGS U/S 263 HAS BEEN DROPPED, THE REVENUE IS PRECLUDED TO RESORT TO REASSESSMENT PROCEEDINGS U/S 147. BOTH THE PROCEEDINGS, IN OUR OPINION, ARE SEPARATE AND OPERATE UNDER DIFFERENT SITUATIONS AND HAVE NO BEARING UPON EACH OTHER. TO INVOKE THE SAME, THE STATUTORY CONDITIONS AS ENVISAGED BY THE RESPECTIVE PROVISIONS HAVE TO BE FULFILLED. 6. PROCEEDING FURTHER, THE IMPUGNED AY IS 2006-07 A ND REOPENING HAS BEEN DONE VIDE NOTICE DATED 29/03/2011 WHICH IS WITHIN FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. THEREFORE , THE ONLY CONDITION, IN THIS CASE, WHICH IS REQUIRED TO BE FULFILLED IN TERMS OF SECTION 147 IS THAT THE ASSESSING OFFICER HAS REASONS TO BELIEVE T HAT ANY INCOME ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 5 CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. A PERUSAL OF ORIGINAL QUANTUM ASSESSMENT ORDER DATED 12/12/2008 AS PLACED ON RECORD REVEALS THAT THE IMPUGNED ISSUE OF GIFT AND PRESENT ATION IS NOWHERE DISCUSSED BY THE LD. AO IN THE ORDER. HOWEVER, THE ASSESSEE, VIDE ITS REPLY DATED 28/11/2008 HAD MADE THE FOLLOWING SUBMI SSIONS AGAINST THE SAME- 5. DETAILS OF GIFTS & PRESENTATION ALONG WITH THE P HOTOCOPY OF THE BILLS AND VOUCHERS IS ENCLOSED HEREWITH. THE SAID GIFTS WERE GIVEN TO THE MEMBERS IN ITS ORDINARY ACTIVITY OF THE ASSOCIATION. AS SUCH, IT IS RELATED TO THE ASSOCIATION ACTIVITIES AND FULLY ALLOWABLE. UPON PERUSAL OF THE SAME, WE FIND THAT THE ASSESSEE , DURING ORIGINAL PROCEEDINGS, SUBMITTED COMPLETE DETAILS OF THE EXPE NDITURE WITH SUPPORTING BILLS AND VOUCHERS AND ALSO JUSTIFIED TH E ALLOWABILITY OF THE SAME. 7. THE ASSESSEE CONTESTED THE PROCEEDINGS U/S 263 O N THE SAME PREMISES AND THE LD. CIT, AFTER CONSIDERING THE SAM E, CONCURRED WITH ASSESSEES SUBMISSIONS AND DROPPED THE SAID PROCEED INGS. FURTHER, THE ASSESSEE CLAIMED SIMILAR EXPENDITURE OF RS.3.01 LAC S IN AY 2005-06 WHICH IS EVIDENT FROM THE RESPECTIVE FINANCIAL STAT EMENTS AS PLACED ON RECORD AND THE LD. AO, VIDE QUANTUM ASSESSMENT ORDE R DATED 27/12/2007 FOR AY 2005-06 ACCEPTED THE RETURNED INC OME FILED BY THE ASSESSEE. 8. ALL THE ABOVE FACTORS LEAD US TO FORM AN OPINION THAT LD. AO, DURING ORIGINAL ASSESSMENT PROCEEDINGS, HAD ALREADY APPLIE D HIS MIND ON THE ISSUE AND WAS CONVINCED WITH ASSESSEES EXPLANATION IN THIS REGARD. APPARENTLY, THERE WAS NO NEW TANGIBLE MATERIAL WHIC H CAME TO THE ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 6 POSSESSION OF LD. AO SUBSEQUENT TO COMPLETION OF QU ANTUM ASSESSMENT SO AS TO JUSTIFY REOPENING AND THE LD. AO, ON THE S AME FACTS RESORTED TO REASSESSMENT PROCEEDINGS. IT IS SETTLED LEGAL PROPO SITION THAT THE AO HAS THE POWER TO REASSESS BUT NO POWER TO REVIEW AND RE VIEW IN THE GARB OF REASSESSMENT IS NOT PERMISSIBLE IN LAW. THE LD. AO COULD NOT BE GRANTED SECOND CHANCE TO HAVE A RELOOK AT THE MATTER WITHOU T THERE BEING ANY COGENT MATERIAL ON RECORD WHICH COMES TO HIS POSSES SION SUBSEQUENTLY SO AS TO JUSTIFY REOPENING. HENCE, WE ARE OF THE OP INION THAT REASSESSMENT PROCEEDINGS QUA THIS EXPENDITURE, STOOD VITIATED FOR WANT OF FULFILLMENT OF PRIMARY CONDITIONS AS ENVISAGED B Y SECTION 147 SINCE LD. AO HAD FORMED AN OPINION AND REOPENING WAS NOT JUST IFIED ON MERE CHANGE OF OPINION. THE ASSESSEE HAS SUFFERED SOLE A DDITION ON THIS ACCOUNT IN REASSESSMENT PROCEEDINGS. THEREFORE, BY QUASHING THE SAME, WE DELETE IMPUGNED ADDITIONS AND ALLOW ASSESSEES A PPEAL ON LEGAL GROUNDS. 9. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.12. 2017 SR.PS:- THIRUMALESH ITA NO.18/MUM/2013 THE BOMBAY BULLION ASSOCIATION LIMITED ASSESSMENT YEAR-2006-07 7 ! / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI