DCIT, Circle - 4, Kol, Kolkata V. M/s. R. S. T Holdings Pvt. Ltd., Kolkata

ITA 1838/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54507 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 24-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 04-11-2009
• Court: TRIBUNAL
• Assessee Lawyers: A KESHARI
• Keywords: Reasonable cause; Difference of opinion; Change of opinion; Set aside; Capital Gains
• Section: 143(3); 142(1); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1838/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2001-02 & DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. R. S. T. HOLDINGS PVT. LTD. CIRCLE-4, KOLKATA. ( PAN-AABCR 4072 M) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) & C.O. NO.37/KOL/2010 $ $ $ $ / IN I.T.A NO. 1838/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2001-02 M/S. R. S. T. HOLDINGS PVT. LTD. VS. DEPUTY COMMI SSIONER OF INCOME-TAX, CIRCLE-4, KOLKATA (CROSS OBJECTOR) (,-*+/ RESPONDENT ) & $ $ $ $ / I.T.A NO. 1839/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2002-03 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. R. S. T. HOLDINGS PVT. LTD. CIRCLE-4, KOLKATA. ( PAN-AABCR 4072 M) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) & C.O. NO.38/KOL/2010 $ $ $ $ / I.T.A NO. 1839/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2002-03 M/S. R. S. T. HOLDINGS PVT. LTD. VS. DEPUTY COMMI SSIONER OF INCOME-TAX, CIRCLE-4, KOLKATA (CROSS OBJECTOR) (,-*+/ RESPONDENT ) FOR THE REVENUE: SHRI A. K. SINGH FOR THE ASSESSEE: SHRI A. KESHARI '. / ORDER PER MAHAVIR SINGH, JM/ ( , , , , ): 2 ITA 1838-1839/K/2009 & CO 37-38/K/2010 RST HOLDINGS PVT. LTD. .A.Y.01-02 & 02-03 THESE APPEALS BY REVENUE AND THE CROSS OBJECTIONS B Y ASSESSEE ARE ARISING OUT OF ORDER OF CIT(A)-IV, KOLKATA IN APPEAL NOS.175&174/CIT(A)- IV/06-07 DATED 08.07.2009. ASSESSMENTS WERE FRAMED BY ACIT, CIRCLE-4, KOLKATA FOR ASSESSMENT YEARS 2001-02 AND 2002-03 U/S. 143(3) R.W.S. 147 OF THE INCOME TAX AC T, 1961(HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDERS DATED 27.12.2006. FOR THE SAK E OF BREVITY AND CLARITY, WE DISPOSE OF BOTH THESE APPEALS AND CROSS OBJECTIONS BY THIS CONSOLID ATED ORDER. 2. FIRST, WE TAKE UP CROSS OBJECTIONS OF THE ASSES SEE. AT THE OUTSET, IT IS NOTICED THAT THESE CROSS OBJECTIONS ARE DELAYED BY 120 DAYS AND ASSESS EE HAS FILED CONDONATION PETITIONS. ASSESSEE RECEIVED CIT(A)S ORDER ON 14.11.2009 AND AGAINST THE SAME, REVENUE FILED APPEALS BEFORE TRIBUNAL AND FIRST NOTICE OF HEARING FROM TH E TRIBUNAL WAS RECEIVED BY ASSESSEE ON 14.11.2009, THE CROSS OBJECTIONS WERE REQUIRED TO B E FILED WITHIN 30 DAYS FROM THE RECEIPT OF NOTICE, WHICH EXPIRED ON 13.12.2009. ASSESSEE EXPL AINED THE DELAY FILING MEDICAL PAPERS ALONG WITH THE SAME. RELEVANT REASONS READ AS UNDER: IN THIS CONTEXT WE MAKE AN HUMBLE SUBMISSION BEFOR E YOU THAT THE PRINCIPAL DIRECTOR MR. R. S. TULSIAN, WHO IS THE KEY MAN IN THE ORGANI SATION HAS BEEN SUFFERING FROM SERIOUS EYE PROBLEM FOR THE LAST 6 MONTHS, BADLY AF FECTING HIS VISION AND CONSEQUENTLY THE MAJOR ACTIVITIES IN THE COMPANY INCLUDING ADMIN ISTRATIVE AND OTHER POLICY DECISIONS HAVE BEEN ADVERSELY AFFECTED. HIS BOTH EYES HAVE B EEN OPERATED FIVE TIMES DURING LAST FIVE MONTHS. SOME OF THE EVIDENCES IN RESPECT OF H IS MEDICAL TREATMENT AND OPERATIONS ARE ENCLOSED HEREWITH FOR YOUR KIND CONSIDERATION. AS EXPLAINED ABOVE, THE DELAY IN FILING THESE C.OS. IS DUE TO ILLNESS OF PRINCIPAL DIRECTOR AND OTHERS BEING NOT FULLY ACQUAINTED WITH THE I. T. LA WS/PROVISIONS THE C.OS COULD NOT BE FILED IN TIME AND DELAY OCCURRED OF 120 DAYS. ON QUERY FROM THE BENCH, THE LD. DR HAS NOT OBJECTED TO CONDONATION OF DELAY. AFTER HEARING BOTH THE SI DES, WE ARE OF THE VIEW THAT THERE IS REASONABLE CAUSE FOR DELAY. HENCE, WE CONDONE THE SAME AND ADMIT THESE C.OS. 3. THE FIRST LEGAL ISSUE IN THESE C.OS, WHICH IS CO MMON IN BOTH, THAT THE ORDER OF CIT(A) IS WRONG AND UNJUSTIFIED IN NOT CONSIDERING AND NOT DI SPOSING OF ASSESSEES OBJECTION RAISED BEFORE ASSESSING OFFICER AGAINST INITIATION OF REAS SESSMENT PROCEEDINGS. FOR THIS, HE CITED THE CASE LAW OF HONBLE APEX COURT IN THE CASE OF G. K. DRIVESHAFT 259 ITR 19 (SC). THE RELEVANT JURISDICTIONAL ISSUE ALSO IS AS REGARDS TO CHANGE O F OPINION. THE ASSESSEE HAS RAISED FOLLOWING GIVE GROUNDS: 1. FOR THAT IN VIEW AND CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT FIRST CONSIDERING AND DISPOSING OF BY A SPEAKING ORDER THE ASSESSEES 3 ITA 1838-1839/K/2009 & CO 37-38/K/2010 RST HOLDINGS PVT. LTD. .A.Y.01-02 & 02-03 OBJECTION AGAINST INITIATION OF THE REASSESSMENT PR OCEEDING PRIOR TO HIS PROCEEDING WITH THE REASSESSMENT IN VIEW OF THE SPECIFIC RULING OF THE HONBLE SUPREME COURT REPORTED IN 259 ITR 19 (S.C.). THE ACTION OF A.O. IN MAKING THE REASSESSMENT VIOLATING THE APEX COURT DECISION AND OF THE ACTION OF THE LD. CIT(A) IN HOLDING THE REASSESSMENT PROCEEDING U/S.147 AS JUSTIFIED WITHOUT CONSIDERING THIS VITAL ISSUE WAS FULLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. THE PROC EEDING U/S. 147 AND THE ORDER OF THE REASSESSMENT ARE THEREFORE LIABLE TO BE QUASHED/CAN CELLED. 2) FOR THAT IN VIEW AND CIRCUMSTANCES OF THE CASE L D. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN REJECTING GROUND NOS. 1 TO 4 RELATIN G TO INITIATION OF PROCEEDINGS U/S. 147 OF THE I.T. ACT AND MAKING A REASSESSMENT WITHOUT C ONSIDERING AND APPRECIATING THE FACTS THAT THERE WAS A CLEAR CASE OF CHANGE OF OPINION BY THE SUCCESSOR ASSESSING OFFICER FROM THAT OF PREDECESSOR ON AN ISSUE WHICH WAS THOROUGHL Y EXAMINED AND DECIDED IN THE ORIGINAL ASSESSMENT U/S.143(3) DATED 11.12.2003. ACTION OF THE LD. CIT APPEAL IN DISMISSING THE GROU ND WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 3) FOR THAT IN VIEW AND CIRCUMSTANCES OF THE CASE L D. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT APPRECIATING THE QUESTION OF VAL IDITY OF NOTICE U/S. 148 AS THERE WAS NO ESCAPEMENT OF INCOME SO AS TO INVOKE REASSESSMENT P ROCEEDING U/S. 147 AND FURTHER THAT THE SO CALLED BELIEF FOR INITIATION WAS ALSO MISSIN G IN THE SAID CASE. ACTION OF THE LD. CIT(A) IN DISMISSING THE GROUND W AS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 4) FOR THAT IN VIEW AND CIRCUMSTANCES OF THE CASE L D. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT APPRECIATING THE FACT THAT THERE WAS NO FAILURE AS THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT MADE U/S. 143(3) IN RESPECT OF THE RELEVANT ASSESSMENT YEAR A S WELL AS IN THE PRECEDING ASSESSMENT YEARS. ACTION OF THE LD. CIT(A) IN DISMISSING THE GROUND W AS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 5) FOR THAT IN VIEW AND CIRCUMSTANCES OF THE CASE L D. CIT(A) WAS WHOLLY CORRECT AND JUSTIFIED IN ALLOWING THE RELIEF IN RESPECT OF GROU NDS NO.5 TO 8 HOLDING THAT PROVISION OF EXPLANATION TO SECTION 73 OF THE I. T. ACT, 1961 IS NOT ATTRACTED OR APPLICABLE IN THIS CASE AND THE AO HAS BEEN DIRECTED ACCORDINGLY. EXACTLY SIMILAR ARE THE GROUNDS IN ASSESSMENT YEAR 2002-03 IN C.O. NO. 38/K/2010. 4. WE FIND FROM ASSESSMENT ORDERS THAT ASSESSING OF FICER WHILE FRAMING ASSESSMENT U/S. 147 R.W.S. 143(3) OF THE ACT, HAS NOT DEALT WITH FO LLOWING OBJECTIONS RAISED VIDE LETTER DATED 22.9.2006: 1. WE FIND THAT AT THE OUTSET WE WOULD LIKE TO ST ATE THAT IMPUGNED NOTICE U/S. 148 ISSUED BY YOU ON 22.03.2006 FOR THE ASSESSMENT YEAR 2002-0 3 IS INVALID AND VOID AB INITIO AS THERE WAS NO ESCAPEMENT OF ANY INCOME AND PROVISION OF SECTION 147 OF THE I. T. ACT. 1961 DOES NOT APPLY. THE ORIGINAL ASSESSMENT FOR TH E ASSESSMENT YEAR 2002-03 WAS MADE U/S. 143(3) OF I. T. ACT, 1961, COVERING ALL POINTS AND NO AREA WAS LEFT UNTOUCHED. THE 4 ITA 1838-1839/K/2009 & CO 37-38/K/2010 RST HOLDINGS PVT. LTD. .A.Y.01-02 & 02-03 SAME ISSUE OF EXPLANATION TO SECTION 73 WAS EXAMINE D BY YOUR PREDECESSOR THOROUGHLY. WE ARE ENCLOSING HEREWITH THE REQUISITION MADE BY A CIT, CIR.4 U/S. 142(1) WHEREIN POINT NO.8 WAS RELATED TO THE ISSUE OF EXPLANATION TO SEC TION 73. WE ARE ALSO ENCLOSING HEREWITH THE REPLY GIVEN BY US COVERING THE ABOVE POINT WHIC H WAS DULY EXAMINED BY THE OFFICER. HENCE, ACIT CIR.4 DID NOT APPLY THE EXPLANATION TO SECTION 73 AFTER SEEING THE GENUINENESS OF OUR CLAIM AND COMPONENT OF OUR TOTAL INCOME, ACCEPTED OUR RETURNED TOTAL INCOME IN TO TO. THE PROCEEDINGS U/S. 147 WAS BAD IN LAW IN OUR CASE BECAUSE ON THE SAME POINT WHICH WAS THOROUGHLY EXAMINED BY YOUR PREDECESSOR AND ACC EPTED BY HIM. HOW THE SAME THING CAN LEAD YOU TO HAVE AN OPINION OF ESCAPEMENT OF IN COME. 2. IN RESPONSE TO YOUR ALLEGATION FOR ESCAPEMENT OF INCOME BY INVOKING EXPLANATION TO SEC -73 AND TREATING THE LOSS IN SHARE TRADING AS S PECULATIVE LOSS WHICH CANNOT BE SET OFF AGAINST ANY OTHER INCOME WE WANT YOUR HONOR TO HAVE A MINUTE READING OF PROVISION OF EXPLANATION TO SECTION 73 WHICH PROVIDES THAT WHER E ANY PART OF THE BUSINESS OF A COMPANY (WHETHER PRIVATE OR PUBLIC) (OTHER THAN A C OMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME CHARGEABLE UNDER THE HEAD INTEREST ON SECURITIES, INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME F ROM OTHER SOURCES OR A COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BUSI NESS OF BANKING OR GRANTING OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER SUCH COMPANIES, SHALL FOR THE PURPOSE OF THIS SECTION BE DEEMED TO BE CAR RYING ON SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHA SE AND SALE OF SHARES. 5. SINCE THE ISSUE OF NON-DISPOSAL OF OBJECTION BY ASSESSING OFFICER QUA INITIATION OF PROCEEDINGS U/S. 147 RWS 148 OF THE ACT IS A PROCED URAL IRREGULARITY, WHICH CAN BE CURED. ACCORDINGLY, WE SET ASIDE THESE APPEALS OF REVENUE AND CROSS OBJECTIONS RAISED BY ASSESSEE TO DECIDE THE PRELIMINARY ISSUE OF OBJECTIONS RAISED B Y ASSESSEE QUA INITIATION OF PROCEEDINGS U/S. 147 R.W.S. 148 OF THE ACT IN TERMS OF RATIO LAID DO WN BY HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 259 ITR 19 (SC), WHEREIN IT IS HELD THAT WHEN A NOTICE U/S. 148 OF THE ACT IS ISSUED, PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE A RETURN OF INCOME IN RESPONSE TO THE NOTICE AND IF HE SO DESIR ES TO SEEK REASONS FOR ISSUING NOTICE, ASSESSING OFFICER IN TURN IS BOUND TO FURNISH REASO NS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE PRESENT CASE BEFORE US, ADMITTED FACTS ARE THAT NO ORDER IS PASSED BY ASSES SING OFFICER ON THE OBJECTIONS RAISED BY ASSESSEE. HENCE, WE SET ASIDE THIS ISSUE TO THE FI LE OF ASSESSING OFFICER TO DECIDE THE OBJECTIONS OF THE ASSESSEE FIRST AS PER PROVISIONS OF LAW AND ALSO IN TERMS OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. ( SUPRA), WITHOUT BEING INFLUENCED BY THE OPINION OF CIT(A) IN THE APPELLATE ORDER. AFTER DE CIDING THE ISSUE ON LEGAL GROUNDS, ASSESSING OFFICER WILL ALSO DECIDE MERITS OF THE CASE. 5 ITA 1838-1839/K/2009 & CO 37-38/K/2010 RST HOLDINGS PVT. LTD. .A.Y.01-02 & 02-03 6. IN THE RESULT, THE APPEALS AS WELL AS THE CROSS OBJECTIONS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . ! . , '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED 1 ST SEPTEMBER, 2011 /0 %12 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT DCIT, CIR-4, KOLKATA. 2 ,-*+ / RESPONDENT, M/S. R. S. T. HOLDINGS PVT. LTD., 3B, LAL BAZAR STREET, 2 ND FLOOR, KOLKATA-700 001. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, 2 /ASSTT. REGISTRAR .