Deputy Commissioner of Income-tax, V. M/s. Mehshen Ropa Plastic Pvt. Ltd., Pune

ITA 1946/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9371 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Transfer pricing; International transaction
• Section: 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1946 /P U N/201 4 / ASSESSMENT YEAR : 20 0 7 - 08 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / APPELLANT VS. M/S. MENSHEN ROPA PLASTIC PVT. LTD., OFFICE NO.402, 4 TH FLOOR, CENTURY ARCADE, NARANGI BAUG ROAD , PUNE . / RESPONDENT PAN: AACCR4678J / APPELLANT BY : SHRI ANIL KUMAR CHAWARE / RESPONDENT BY : NONE / DATE OF HEARING : 05 .0 6 . 2017 / DATE OF PRONOUNC EMENT: 07. 0 6 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - I T/TP, PUNE , DATED 12.08.2014 RELATING TO ASSESSMENT YEAR 20 0 7 - 08 AGAINST ORDER PASSED UNDER SECTION 14 4 R.W.S. 147 OF THE INCOM E - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS ) - IT/TP HAS ERRED IN HOLDING THAT THE ASSESSMENT ORDER U/S 144 R.W.S 147 OF THE IT ACT, 1961 WAS BARRED BY LIMITATION. ITA NO. 1946 /P U N/20 1 4 M/S. MENSHEN ROPA PLASTIC PVT. LTD. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX (APPEALS) - IT/TP HAS ERRED IN NOT TAKING INTO ACCOUNT THE DRAFT ORDER PASSED ON 23.12.2011 AS REQUIRED UNDER SECTION 144C(1) OF THE INCOME - TAX ACT, 1961 EVEN THOUGH THERE WAS VARIATION, WHICH WAS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE, TO BE MADE IN THE INCOME OR LOSS RETURNED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME - TAX (APPEALS) - IT/TP HAS ERRED IN NOT APPRECIATING THE FACT THAT EVEN THOUGH THE TP REFERE NCE IN THIS CASE WAS NOT MADE BY THE ASSESSING OFFICER AFTER THE ISSUE OF NOTICE U/S 148 OF THE ACT, SINCE THERE WAS THE VARIATION OF THE SORT STIPULATED U/S 144C(1), THE A.O. WAS DULY BOUND TO PASS THE DRAFT ORDER, AND ALSO THE COMMISSIONER OF INCOME - TAX (APPEALS) - IT/TP HAS ERRED IN HOLDING THAT WHERE SUCH DRAFT ORDER IS ISSUED THE TIME LIMIT FOR COMPLETION OF ASSESSMENTS AND REASSESSMENTS AS PROVIDED U/S 153 OF THE ACT, ARE MET ONCE SUCH DRAFT ORDER IS ISSUED. 5. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE ID.CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE HEARING IN APPEAL FILED BY THE REVENUE WAS FIXED ON 05.01.2017 AND THEREAFTER ON 06.04.2017. HOWEVER, NONE WAS PRESENT ON BEHAL F OF THE ASSESSEE. SO, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS DIRECTED TO SERVE THE NOTICE UPON THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS FILED ON RECORD THE COPY OF REPORT OF ASSESSING OFFICER IN THIS REGARD, WHEREIN IT IS MENTIONED THAT THE INSPECTOR OF OFFICE WAS DEPUTED FOR SERVICE OF NOTICE OF HEARING IN THE CASE OF ASSESSEE. HOWEVER, ON THE LAST KNOWN ADDRESS OF THE ASSESSEE, ANOTHER COMPANY WAS RUNNING ITS BUSINESS, WHO IN TURN, HAD PURCHASED TH E PREMISES FROM THE ASSESSEE FOR THE PAST 5 - 6 YEARS. THE NOTICE WAS HANDED OVER TO THE MANAGER OF THE SAID COMPANY, WHO ASSURED THAT THE NOTICE WOULD BE HANDED OVER TO THE CONCERNED DIRECTOR. HOWEVER, THE LATEST ADDRESS AND CONTACT NUMBER OF THE DIRECTOR OF THE ASSESSEE COMPANY WAS NOT GIVEN. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLEADED THAT THE NOTICE HAS BEEN SERVED AND THE MATTER BE HEARD. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS FILED ADJOURNMENT. ITA NO. 1946 /P U N/20 1 4 M/S. MENSHEN ROPA PLASTIC PVT. LTD. 3 4 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING NIL INCOME. THEREAFTER, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 14.01.2011 AND SERVED UPON THE ASSESSEE ON 24.01.2011. THE ASSESSING OFFICER NOTES IN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT THAT THE TPO VIDE ORDER PASSED UNDER SECTION 92CA(3) OF THE ACT, DATED 29.10.2010 HAD WORKED OUT THE ADJUSTMENT IN RELATION TO INTERNATIONAL TRANSACTIONS AT RS. 1,46,31,322/ - . IN VIEW THEREOF, REASONS WERE REC ORDED FOR ESCAPEMENT OF ASSESSMENT UNDER SECTION 147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE WHY THE SAID AMOUNT SHOULD NOT BE ADDED TO ITS TOTAL INCOME. HOWEVER, THE ASSESSEE FAILED T O APPEAR AND THE ASSESSING OFFICER PROPOSED TO MAKE THE ADJUSTMENT UNDER SECTION 144 OF THE ACT AND ADDED THE SAID AMOUNT AS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER PASSED A DRAFT ASSESSMENT ORDER ON 23.12.2011 , COPY OF WHICH WA S SENT TO THE ASSESSE E AND THE SAME WAS RETURNED BY THE POSTAL AUTHORITIES. THEREAFTER, ANOTHER LETTER WAS SENT TO THE ADDRESS AVAILABLE OF THE ASSESSEE. THE ASSESSEE IN REPLY, STATED THAT THE DRAFT ASSESSMENT ORDER WAS NOT RECEIVED BY IT. THE ASSESSING OFFICER WAS OF THE V IEW THAT THIS WAS ANOTHER ATTEMPT BY THE ASSESSEE TO DELAY THE PROCEEDINGS ; HENCE, THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 144 R.W.S. 147 OF THE ACT, DATED 29.02.2012. 5. THE CIT(A) HAS HELD THE RE - ASSESSMENT PROCEEDINGS COMPLETED BY THE ASSESSING O FFICER TO BE TIME BARRED AND HAVE QUASHED THE SAME, AGAINST WHICH, THE REVENUE IS IN APPEAL. 6. THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 144 R.W.S 147 OF THE ACT WAS BAR RED BY LIMITATION. ITA NO. 1946 /P U N/20 1 4 M/S. MENSHEN ROPA PLASTIC PVT. LTD. 4 7. ON PERUSAL OF RECORD, IT TRANSPIRES THAT THE REASON FOR REOPENING THE ASSESSMENT IN THE PRESENT CASE W AS THE ORDER PASSED BY THE TPO UNDER SECTION 92CA(3) OF THE ACT, WHEREIN HE HAD WORKED OUT THE UPWARD ADJUSTMENT OF RS.1.46 CRORES TO THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE. THE SAID ORDER IS DATED 29.10.2010 . THEREAFTER, THE ASSESSING OFFICER RECORDS REASONS FOR REOPENING THE SAME UNDER SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT, WHICH WAS SERVED UPON THE ASSESSEE ON 24.01.2011. THE PROVISIONS OF SECTION 153(2) OF THE ACT LAYS DOWN THE TIME LIMIT FOR RE - ASSESSMENT AND IT IS PROVIDED THAT WHERE THE NOTICE UNDER SECTION 148 OF THE ACT IS SERVED ON O R AFTER 1 ST DAY OF APRIL, 2005 BUT BEFOR E THE 1 ST DAY OF APRIL, 2011 , THEN FOR COMPLETING THE ASSESSMENT OR RE - ASSESSMENT OR RE - COMPUTATION UNDER SECTION 147 OF THE ACT, THE PERIOD IS NINE MONTHS FROM THE END OF FINANCIAL YEAR IN WHICH NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. WHERE THE N OTICE UNDER SECTION 148 OF THE ACT WAS SERVED UPON THE ASSESSEE ON 24.01.2011, THE REFORE, THE PERIOD OF NINE MONTHS WOULD EXPIRE BY 31.12.2011. THE ASSESSMENT IN THE CASE HAS BEEN COMPLETED ON 29.02.2012 VIDE ORDER PASSED UNDER SECTION 144 R.W.S. 148 OF T HE ACT. THE CIT(A) HAS ACCORDINGLY, QUASHED THE RE - ASSESSMENT PROCEEDINGS AND HELD THE ASSESSMENT ORDER TO BE INVALID. THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A), SINE THE DRAFT ASSESSMENT ORDER IN THIS REGARD WAS PASSED ON 23.12.2011 I.E. WITHIN ST IPULATED PERIOD. HOWEVER, THE CIT(A) HAS DEALT WITH THE SAID PLEA OF THE ASSESSING OFFICER AND HAS POINTED OUT THAT THE REFERENCE TO THE TPO WAS MADE BEFORE THE PROC EEDINGS OF RE - ASSESSMENT, SINCE THE ORDER OF TPO IS DATED 29.10.2010. THE NOTICE UNDER SE CTION 148 OF THE ACT WAS ISSUED ON 14.01.2011 . AT THE TIME OF MAKING REFERENCE TO THE TPO, NO ASSESSMENT OR RE - ASSESSMENT PROCEEDINGS WERE PENDING, THEREFORE, FOURTH PROVISO TO SECTION 153(2) OF THE ACT WOULD NOT APPLY. THE PROVISIONS OF SECTION 153(2) O F THE ACT READ AS UNDER: - ITA NO. 1946 /P U N/20 1 4 M/S. MENSHEN ROPA PLASTIC PVT. LTD. 5 153(2)(1) . (2) NO ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION SHALL BE MADE UNDER SECTION 147 AFTER THE EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE NOTI CE UNDER SECTION 148 WAS SERVED : PROVIDED THAT WHERE THE NOTICE UNDER SECTION 148 WAS SERVED ON OR AFTER THE 1 ST DAY OF APRIL, 1999 BUT BEFORE THE 1 ST DAY OF APRIL, 2000, SUCH ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE MADE AT ANY TIME UP T O THE 31 ST DAY OF MARCH, 2002: PROVIDED FURTHER THA T WHERE THE NOTICE UNDER SECTION 148 WAS SERVED ON OR AFTER THE 1 ST DAY OF APRIL, 2005 BUT BEFORE THE 1 ST DAY OF APRIL, 2011, THE PROVISIONS OF THIS SUB - SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS ONE YEAR , THE WORDS NINE MONTHS HAD BEEN SUBSTITUTED : PROVIDED ALSO THAT WHERE THE NOTICE UNDER SECTION 148 WAS SERVED ON OR AFTER THE 1 ST DAY OF APRIL, 2006 BUT BEFORE THE 1 ST DAY OF APRIL, 2010 AND DURING THE COURSE OF THE PROCEEDINGS FOR THE ASSESSMENT OR REASSESSMENT OR RECOMPUTATION OF TOTAL INCOME, A REFERENCE UNDER SUB - SECTION (1) OF SECTION 92CA ( I ) WAS MADE BEFORE THE 1 ST DAY OF JUNE, 2007 BUT AN ORDER UNDER SUB - SECTION (3) OF THAT SECTION HAS NOT BEEN MADE BEFORE SUCH DATE; OR ( II ) IS MADE ON OR AFTER THE 1 ST DAY OF JUNE, 2007, THE PROVISIONS OF THIS S UB - SECTION SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN THE SECOND PROVISO, HAVE EFFECT AS IF FOR THE WORDS ONE YEAR , THE WORDS TWENTY - ONE MONTHS HAD BEEN SUBSTITUTED: PROVIDED ALSO THAT WHERE THE NOTICE UNDER SECTION 148 WAS SERVED ON OR AFTER THE 1 S T DAY OF APRIL, 2010 AND DURING THE COURSE OF THE PROCEEDING FOR THE ASSESSMENT OR REASSESSMENT OR RECOMPUTATION OF TOTAL INCOME, A REFERENCE UNDER SUB - SECTION (1) OF SECTION 92CA IS MADE, THE PROVISIONS OF THIS SUB - SECTION SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN THE SECOND PROVISO, HAVE EFFECT AS IF FOR THE WORDS ONE YEAR , THE WORDS TWO YEARS HAD BEEN SUBSTITUTED . 8. THE CIT(A) HAS CORRECTLY INTERPRETED THE SAID PROVISIONS AND OBSERVED AS UNDER: - 3.9 FROM THE ABOVE, IT IS SEEN THAT THE APPELLANT S CASE WOULD FALL EITHER UNDER THE SECOND PROVISO OR UNDER THE FOURTH PROVISO OF THE ABOVE SECTION. CLOSE READING OF THESE PROVISOS WOULD SHOW THAT FOURTH PROVISO GRANTS THE TIME LIMIT OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH, NOTICE U/S 148 WAS SERVED FOR PASSING THE ORDER OF RE - ASSESSMENT. THIS PROVISO IS APPLICABLE IN A CASE IN WHICH, REFERENCE TO THE TPO U/S 92CA(1) WAS MADE DURING THE COURSE OF THE PROCEEDINGS FOR ASSESSMENT OR RE - ASSESSMENT. HOWEVER, ACCORDING TO THE FACTS MENTIONE D AS ABOVE, REFERENCE TO THE TPO IN THIS CASE, WAS MADE BEFORE THE PROCEEDINGS OF RE - ASSESSMENT (TPOS ORDER IS DATED 29.10.2010 AND NOTICE U/S 148 WAS ISSUED ON 14.01.2011) . AT THE TIME OF MAKING REFERENCE TO THE TPO, NO ASSESSMENT OR RE - ASSESSMENT PROCE EDINGS WERE PENDING. THEREFORE, THE FOURTH PROVISO, WHICH DEALS WITH THE EXTENSION OF THE TIME LIMIT FOR RE - ASSESSMENT BECAUSE THE REFERENCE WAS MADE TO THE TPO WOULD NOT BE APPLICABLE. ITA NO. 1946 /P U N/20 1 4 M/S. MENSHEN ROPA PLASTIC PVT. LTD. 6 3.10 THEREFORE, THIS CASE WILL BE GOVERNED BY THE SECOND PROVISO, WH ICH DEALS WITH THE SITUATION IN WHICH, NOTICE U/S 148 WAS SERVED BEFORE 01.04.2011 (IN THIS CASE, NOTICE U/S 148 WAS ISSUED ON 14.01.2011). ACCORDING TO THIS PROVISO, THE AO IS REQUIRED TO COMPLETE THE ASSESSMENT WITHIN NINE MONTHS FROM THE END OF THE FIN ANCIAL YEAR IN WHICH NOTICE U/S 148 WAS SERVED. IN THIS CASE, THE NOTICE U/S 148 WAS SERVED ON 24.01.2011, THEREFORE, NINE MONTHS FROM THE END OF THE FINANCIAL YEAR WOULD BE 31.12.2011 BY WHICH, THE LEARNED ASSESSING OFFICER SHOULD HAVE PASSED THE RE - ASSE SSMENT ORDER. HOWEVER, THE LEARNED AO HAS PASSED THE RE - ASSESSMENT ORDER ON 29.02.2012. THUS, THE RE - ASSESSMENT ORDER IS TIME - BARRED AND THEREFORE CANNOT SURVIVE. ACCORDINGLY, I QUASH THE ASSESSMENT ORDER PASSED BY THE LEARNED AO U/S 144 RWS 147. 9. A CCORDINGLY, THERE IS NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE AND THE SAME ARE DISMISSED. 1 0 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 7 TH DAY OF JUNE , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 7 TH JUNE , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I T/TP, PUNE ; 4. / THE CIT - II I, PUNE ; 5. , , / DR A , I TAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE