M/s. Sri Kannan Mills, Trichy V. ITO, Trichy

ITA 1886/CHNY/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8257 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-08-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 14-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: R RAJASEKARAN
• Keywords: Reopening of assessment; Depreciation; Principle of natural justice; Set aside
• Section: 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B SMC CHENNAI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER I.T.A. NOS. 1883, 1884, 1885, 1886 & 1887/MDS/2009 ASSESSMENT YEARS: 1998-99, 99-2000, 2000-01, 01-02 & 02-03 M/S. SRI KANNAN MILLS, 23, KAJIAR STREET, BHEEMA NAGAR, TIRUCHIRAPALLI 620 001. [PAN: AAAFS2229P] VS . THE INCOME TAX OFFICER, WAD I(2), TIRUCHIRAPALLI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. RAJASEKARAN REVENUE BY : SHRI P.B. SEKARAN O R D E R PER U.B.S. BEDI, J.M. THESE FIVE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE CONSOLIDATED ORDER PASSED BY THE LD. CIT(A), TIRUCHIRAPPALLI DATED 22. 09.2009 RELEVANT TO THE ASSESSMENT YEARS 1998-99 TO 2002-03. SINCE THESE APPEALS ARISE OUT OF THE CONSOLIDATED ORDER PASSED BY THE LD. CIT(A) AND COMMON FACTS AND SOME COMMON ISSUES ARE INVOLVED AND ALSO THESE APPEALS WERE HEARD TOGETHER AS SUCH ARE BEING DISPOSED OF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE WHILE CHALLENGING REOPENING OF THE ASSESSMENT FOR ALL THE FIVE YEARS AS BAD IN LAW AND DEVOID OF JURISDICTION HAS ALSO CHALLENGED LEVY OF INTEREST UNDER SECTION 234B AND 234D FOR THE ASSESSMENT YEAR 1998- 99; 234A, 234B AND 234D FOR THE ASSESSMENT YEAR 99-2000; 234A, 234B, 234C AND 234D FOR THE ASSESSMENT YEAR 2000- 01; 234B, 234C AND 234D FOR THE ASSESSMENT YEAR 01- 02 AND 234B AND 234D FOR THE ASSESSMENT YEAR 02-03 BEING UNJUST AND IT HAS BEEN PRAYED THAT THE ASSESSMENT ORDERS MAY BE CANCELLED OR IN ALTERNATIVE, THE APPEALS BE RESTORED TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO REDECIDE THE APPEALS IN ACCOR DANCE WITH LAW BY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE AND RENDER JUSTICE. I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 - -- - 1887/MDS/09 1887/MDS/09 1887/MDS/09 1887/MDS/09 2 3. THE FIRST COMMON ISSUE FOR ALL THE YEARS RELATE S TO REOPENING OF ASSESSMENT. THE LD. CIT(A) DEALT THIS ISSUE IN PARA 3 AND CONCLUDED ITS FINDING IN PARA 4. BOTH THE PARAS ARE REPRODUCED AS UNDER: 3. REOPENING OF ASSESSMENTS: AS PER THE PROVISIONS OF THE IT ACT, THE ASSESSING OFFICER CAN REOPEN ANY ASSESSMENT, WHERE HE FINDS THAT THERE HAS BEEN ESCA PEMENT OF INCOME U/S 147 OF THE IT ACT. IN EXPLANATION TO THE SECTION 147, THE FOLLOWING CONDITIONS HAVE BEEN LAID DOWN FOR REOPENING OF THE ASSESSMENTS, WHERE I NCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT NAMELY: (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF A NY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT D URING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEAB LE TO INCOME-TAX; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CL AIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT - (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER-ASSESS ED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXC ESSIVE RELIEF UNDER THIS ACT; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR A NY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED. 4. THE CASE OF THE APPELLANT FIRM FALLS UNDER (C)( I) OF THE ABOVE PROVISIONS. THE ASSESSING OFFICER HAS RIGHTLY FOLLOWED THE CORR ECT PROCEDURE AS PER PROVISION OF THE IT ACT FOR REOPENING ASSESSMENT IN THIS CASE FOR ALL THE YEARS FROM 1997-98 TO 2001-02. SO FAR AS THE ASSESSMENT ORDER 2002-03 IS CONCERNED, I FIND SOME SUBSTANCE IN THE ARGUMENT OF THE APPELLANT THAT NOT ICE FOR REOPENING OF THE A.Y. 2002-03 MAY NOT HAVE BEEN ISSUED BY THE ASSESSING O FFICER BECAUSE THE CASE WAS PENDING BEFORE HIM FOR ASSESSMENT. IT IS A PROCEDUR AL MISTAKE COMMITTED BY THE ASSESSING OFFICER, BUT IN THE SUBSTANCE AND EFFECT IT IS IN CONFORMITY TO THE PROVISIONS OF THE IT ACT. THE ASSESSING OFFICER IN HIS ORDER HAS CLEARLY EXPLAINED I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 - -- - 1887/MDS/09 1887/MDS/09 1887/MDS/09 1887/MDS/09 3 ALL THE FACTS OF THE CASE. THEREFORE I HOLD THAT FO R THE A.Y. 2002-03, IT IS A CASE OF ASSESSMENT ONLY AND NOT REASSESSMENT. 3.1 THE SECOND COMMON ISSUE RELATES TO HEAD OF INCO ME AND THE LD. CIT(A) WHILE DISMISSING THIS GROUND OF APPEAL FOR ALL THE YEARS ALSO HAS CONCLUDED IN PARA 5 OF HIS ORDER AS UNDER: 5. HEAD OF INCOME: THE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE INC OME OF THE APPELLANT FIRM UNDER HEAD INCOME FROM HOUSE PROPERTY REJECTIN G THE CLAIM OF THE APPELLANT TO ASSESS THE INCOME UNDER THE HEAD BUSINESS. FURTH ER, THE DETAILED REASON GIVEN IN THE ASSESSMENT ORDER THAT THE APPELLANT FIRM WAS NOT DOING ANY BUSINESS DURING THE YEAR AND HAD LET OUT THE PROPERTY TO EARN, INCO ME BY WAY OF RENT ONLY. THE APPELLANT IS ENTITLED TO DEDUCTION AS PER PROVISION S OF THE IT ACT RELATING TO INCOME UNDER THE HEAD HOUSE PROPERTY AND THE APPELL ANT FIRM IS NOT ENTITLED TO CLAIM OR DEDUCTION OF ANY EXPENSES UNDER THE HEAD B USINESS INCOME. THE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE INCOME U NDER HEAD INCOME FROM HOUSE PROPERTY AND I FIND NO REASON TO INTERFERE WITH HIS ASSESSMENT ORDER. 4. AGGRIEVED BY SUCH ORDER, THE ASSESSEE PREFERRED FURTHER APPEALS AND RAISED COMMON GROUNDS WITH RESPECT TO THE ISSUE RELATABLE TO REASSESSMENT AS WELL AS HEAD OF INCOME AND WITH REGARD TO CHARGING OF INTEREST, THE ASSESSEE HAS CHALLENGED YEAR-WISE ACTION UNDER DIFFERENT SECTIONS AND THE ASSESSEES COUNSEL MAINLY LAID STRESS ON THE POINT THAT NO SUPPORTIVE REASONS HAVE BEEN RECORDED ON EACH OF THE ASSESSMENT YEARS UNDER CONSIDERATION, BUT REASONS RECORDED FOR THE Y EAR 1997-98 HAS BEEN FOLLOWED FOR THESE YEARS, WHICH IS NOT IN ACCORDANCE WITH LAW AN D THE LD. CIT(A) HAS NOT DEALT WITH THESE ISSUES APPROPRIATELY, WHICH ARE VERY VITAL AN D SINCE LEGAL ISSUES WERE INVOLVED, WHICH HAVE NOT BEEN CONSIDERED, SO HIS ORDER IS BAD IN LAW AND REQUIRES TO BE INTERFERED WITH BY SETTING ASIDE THE SAME. 4.1 THE ASSESSEE HAS ALSO RAISED ANOTHER OBJECTION FOR SCRUTINIZING THE RETURN, THERE CANNOT BE REASSESSMENT AND REFERENCE HAS BEEN MADE TO PAGES 9 AND 10 OF THE WRITTEN I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 - -- - 1887/MDS/09 1887/MDS/09 1887/MDS/09 1887/MDS/09 4 SUBMISSION AND IT WAS ALSO FURTHER SUBMITTED THAT R EASONS RECORDED ARE SIMPLY THE NOTING OF THE ASSESSING OFFICER AND THIS CANNOT BE TERMED AS REASONS. THEREFORE, RELYING UPON THE DECISIONS IN 69 ITR 461 (ALL), 115 ITR 293 (KAR), 128 ITR 326 (CAL), 132 ITR 398 (MP), 155 ITR 748 (KAR) AND 323 ITR 346 (MAD) A ND IT WAS PRAYED THAT EITHER THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. CIT(A) SHOULD BE QUASHED OR ALTERNATIVELY THE MATTER SHOULD BE RESTO RED BACK ON THE FILE OF THE LD. CIT(A) FOR RECONSIDERATION OF THE ISSUES AFRESH. 5. THE LD. DR SUBMITTED THAT SCRUTINY DOES NOT MEA N ONLY ASSESSMENT TO BE SCRUTINIZED BUT IT INCLUDES INVESTIGATION ALSO AND MOREOVER, IT IS A CASE OF ASSESSMENT AND NOT REASSESSMENT. MOREOVER, THE LD. DR HAS RELI ED UPON THE ORDERS OF THE AUTHORITIES BELOW AND PLEADED FOR CONFIRMATION OF T HE ORDER PASSED BY THE LD. CIT(A) FOR ALL THE YEARS BECAUSE, THE ASSESSING OFFICER HAD RE ASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, REOPENING WAS VERY M UCH JUSTIFIED AND AS REGARDS HEAD OF INCOME, THE ASSESSING OFFICER HAS RIGHTLY A SSESSED THE INCOME OF THE ASSESSEE FIRM UNDER HEAD INCOME FROM HOUSE PROPERTY REJECTIN G THE CLAIM OF THE ASSESSEE TO ASSESS THE INCOME UNDER THE HEAD BUSINESS. THE DETA ILED REASON GIVEN IN THE ASSESSMENT ORDER THAT THE ASSESSEE FIRM WAS NOT DOI NG ANY BUSINESS DURING THE YEARS UNDER CONSIDERATION AND HAD ONLY LET OUT THE PROPER TY TO EARN, INCOME BY WAY OF RENT ONLY. THE ASSESSEE IS ENTITLED TO DEDUCTION AS PER PROVISIONS OF THE IT ACT RELATING TO INCOME UNDER THE HEAD HOUSE PROPERTY AND THE ASSESS EE FIRM IS NOT ENTITLED TO CLAIM DEDUCTION OF ANY EXPENSES UNDER THE HEAD BUSINESS I NCOME. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE INCOME UNDER THE H EAD INCOME FROM HOUSE PROPERTY AND THE LD. CIT(A) HAS CORRECTLY UPHELD THE ORDER O F THE ASSESSING OFFICER. IT WAS, THUS I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 I.T.A. NOS. 1883 - -- - 1887/MDS/09 1887/MDS/09 1887/MDS/09 1887/MDS/09 5 PLEADED FOR UPHOLDING THE ORDER OF THE LD. CIT(A) A ND TO DISMISS THE APPEALS OF THE ASSESSEE. 6. BOTH THE SIDES HAVE BEEN HEARD IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD AND CASE LAW CITED. THE CONSOLIDATED ORDER OF THE LD. C IT(A) HAS CAREFULLY BEEN GONE INTO. THE GROUNDS RAISED BEFORE THE LD. CIT(A) HAVE ALSO BEEN SEEN AND IT IS FOUND THAT THE LD. CIT(A) HAS NOT APPROPRIATELY DEALT WITH THE ISSUES RAISED BEFORE HIM BY THE ASSESSEE AND JUST DECIDED THE APPEALS. THEREFORE, KEEPING IN VIEW THE ENTIRETY OF FACTS, CIRCUMSTANCES AND MATERIAL ON RECORD, IT IS SEEN JU ST AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND APPEALS ARE RESTORED BA CK ON HIS FILE WITH THE DIRECTION TO DECIDE ALL THE ISSUES RAISED BEFORE HIM IN THE APP EALS AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE AS WELL AS TO THE ASSES SING OFFICER. IT IS HELD AND DIRECTED ACCORDINGLY. 7. AS A RESULT, APPEALS OF THE ASSESSEE ARE ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20.08.2010. SD/- (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 20.08.2010. VM/- COPY TO : APPELLANT/RESPONDENT/CIT(A)- /CIT, /DR