ESTRELA BATTERIES LTD, MUMBAI V. PR CIT 2, MUMBAI

ITA 2122/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4096 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A; 115JB; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI .. , , , BEFORE, SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.2122/MUM/2015 ASSESSMENT YEAR:2010-11 M/S ESTRELA BATTERIES LTD. C/O- KARNAVAT & CO. 2A KITAB MAHAL, 1 ST FLOOR, 192, DR. D.N. ROAD, MUMBAI-400001 / VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, ROOM NO.384, 3 RD FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( !'#$ /ASSESSEE) ( % / REVENUE) PAN. NO. AABCE3092Q !'#$ / ASSESSEE BY SHRI SUNIL HIRAWAT % / REVENUE BY DR. GULSHAN RAJ & %'($) / DATE OF HEARING : 03/02/2016 ($) / DATE OF ORDER: 05/02/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER D ATED 23/03/2015 OF THE LD. PRINCIPAL COMMISSIONER OF INC OME TAX, ITA NO.2122/MUM/2015 M/S ESTRELA BATTERIES LTD 2 MUMBAI, INVOKING REVISIONS JURISDICTION U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING OF THIS APPEAL, THE CRUX OF ARGU MENT ADVANCED BY SHRI SUNIL HIRAWAT, LD. COUNSEL FOR THE ASSESSEE, IS IDENTICAL TO THE GROUND RAISED BY CONTENDING THA T ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 22/03/2013, CONSIDERING THE ARGUMENTS OF THE ASSESS EE, THEREFORE, INVOKING THE REVISIONAL JURISDICTION IS NOT JUSTIFIED. IT WAS CONTENDED THAT ASSESSMENT WAS FRAMED AFTER D UE APPLICATION OF MIND BY THE ASSESSING OFFICER, THERE FORE, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICI AL TO THE INTEREST OF THE REVENUE. 2.1. ON THE OTHER HAND, DR. GULSHAN RAJ, LD. CIT- DR, STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE LD. COMMISSIONER JUSTIFIABLY INVOKED REVISIONAL JUR ISDICTION U/S 263 OF THE ACT, MORE SPECIFICALLY, WHEN THE ASS ESSING OFFICER FAILED TO EXAMINE THE ISSUE OF COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT, FOR WHICH OUR ATTENTIO N WAS INVITED TO PARA 2 OF THE IMPUGNED ORDER. IT WAS POI NTED OUT THAT EVEN THE LD. COMMISSIONER SET ASIDE THE FILE T O THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO EXAMI NE THE DETAILS AND AFTER CONDUCTING AN APPROPRIATE ENQUIRY FINALIZE THE ASSESSMENT. RELIANCE WAS PLACED UPON THE DECIS ION IN MALABAR INDUSTRIAL CORPORATION LTD. (243 ITR 83) (S C), PT. ITA NO.2122/MUM/2015 M/S ESTRELA BATTERIES LTD 3 LASHKARI RAM VS CIT 272 ITR 309 (ALL.) AND ASHOK LE YLAND VS CIT 260 ITR 599. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE A LSO PERUSED THE ASSESSMENT ORDER, WHICH IS A SUBJECT MA TTER OF REVISIONAL JURISDICTION U/S 263 AND THE IMPUGNED OR DER PASSED BY THE LD. COMMISSIONER. ADMITTEDLY, AN INCO RRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF L AW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS U/ S. 263. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVE NUE U/S. 263, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESS ION ERRONEOUS ORDER BY THE ASSESSING OFFICER . EVERY LOSS OF REVENUE AS A CONSEQUENCE OF ASSESSMENT ORDER CANNOT BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE . MEANING THEREBY PREJUDICE MUST BE PREJUDICE TO THE REVENU E ADMINISTRATION. AT THE SAME TIME, IF ANOTHER VIEW I S POSSIBLE REVISION IS NOT PERMISSIBLE. OUR VIEW IS FORTIFIED BY THE DECISION FROM HIMACHAL PRADESH FINANCIAL CORPN. (186 TAXMANN 105)(HP), BISMILLAH TRADING CO. (248 ITR 29 2)(KER.) AND CIT VS. GREEN WORLD CORPN. (314 ITR 81)(SC) . FOR INVOKING REVISIONAL JURISDICTION U/S. 263 THE ASSES SMENT ORDER MUST CONTAIN GRIEVOUS ERROR WHICH IS SUBVERSI VE OF THE ADMINISTRATION OF REVENUE. FURTHER, EXACT ERROR MUS T BE DISCLOSED BY THE COMMISSIONER AS WAS HELD IN CIT VS . G.K. KABRA (211 ITR 336)(AP). SECTION 263 OF THE ACT EN ABLES THE COMMISSIONER TO HAVE A LOOK AT THE ORDERS OR PROCEE DINGS OF ITA NO.2122/MUM/2015 M/S ESTRELA BATTERIES LTD 4 THE LOWER AUTHORITY TO EFFECT CORRECTION, IF SO NEE DED, PARTICULARLY, IF THE ORDER IS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. THE OBJECT OF THE PROVISIO N IS TO RAISE REVENUE FOR THE STATE AND SECTION 263 IS ENABLING P ROVISION CONFERRING JURISDICTION UPON THE COMMISSIONER TO RE VISE THE ORDER. THE PROVISION IS INTENDED TO PLUG THE LEAKAG E OF THE REVENUE BY THE ERRONEOUS AND PREJUDICIAL ORDER. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING DECIS IONS:- I. CIT VS INFOSYS TECHNOLOGIES LTD. (2012) 341 ITR 293 (KARN.), II. CIT VS JAWAHAR BHATTACHARYAJI (2012) 341 ITR 434 (GUWAHATI) (FB), III. CIT VS LEISURE WEAR EXPORTS LTD. (2012) 341 ITR 166 ( DEL.), IV. CIT VS TRIVENI ENGINEERING WORKS LTD. (2011) 336 ITR 366 (DEL.), V. R.A. HIMMATSINGHKA & COMPANY VS CIT (2012) 340 ITR 2 53 (PAT.) VI. CIT VS RAJEEV AGNIHOTRI (2011) 332 ITR 608 (P & H), VII. CIT VS DLF LTD. (2013) 350 ITR 555 (DEL.), VIII. CIT VS GABREAL INDIA LTD. (1993) 203 ITR 108, 114 (B OM.), IX. MALABAR INDUSTRIAL COMPANY LTD. VS CIT (2000) 243 ITR 83 (SC), X. NABHA INVESTMENTS PVT. LTD. VS UOI (2000) 246 ITR 41 (D EL.), XI. BISMILLAH TRADING COMPANY LTD. VS IO (2001) 248 ITR 292, 308 (KERALA), ITA NO.2122/MUM/2015 M/S ESTRELA BATTERIES LTD 5 XII. PAUL MATHEWS & SONS VS CIT (2003) 263 ITR 101, 113 (KERALA), XIII. CIT VS SESHASAYEE PAPER & BOARDS LTD. (2000) 242 ITR 490, 500 (MAD.), XIV. RAYON SILK MILLS VS CIT 221 ITR 155 (GUJ.) 2.3. HOWEVER, IF THE RATIO LAID DOWN IN THE AFORES AID CASES IS ANALYZED WITH RESPECT TO THE FACTS OF THE PRESENT APPEAL, IT IS NOTED THAT THE ASSESSEE DECLARED TOT AL LOSS OF RS.68,97,886/- IN ITS RETURN FILED ON 21/09/2010. T HE ASSESSMENT WAS COMPLETED ON 22/03/2013 U/S 143(3) O F THE ACT, DETERMINING THE TOTAL INCOME AT NIL. THE LD. P RINCIPAL COMMISSIONER, FOUND THAT FOR A.Y. 2010-11, THE ASSE SSEE CLAIMED TO HAVE RECEIVED A SUM OF RS.3,56,84,917/-, TOWARDS DIVIDENDS, AS EXEMPT AND DISALLOWED AN AMOUNT OF RS.30,38,413/- U/S 14A OF THE ACT BEING EXPENDITURE INCURRED FOR EARNING THE SAID EXEMPT INCOME AND FUR THER NOTED THE DISALLOWANCE U/S 14A WAS NOT ADDED TO THE NET PROFIT, AS PER PROFIT & LOSS ACCOUNT, IN COMPUTATIO N OF BOOKS PROFIT U/S 115JB OF THE ACT. WE ARE IN AGREEMENT TH AT EVEN THE LD. ASSESSING OFFICER IGNORED CLAUSE (F) OF EXP LANATION (1) OF SECTION 115JB AND THUS THERE WAS UNCERTAINTY IN THE ASSESSMENT ORDER WITH RESPECT TO THE AMOUNT OF RS.30,38,413/-. IN VIEW OF THIS FACTUAL MATRIX, WE AGREE WITH THE FINDING OF THE LD. PRINCIPAL COMMISSIONER THAT THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTEREST OF REVENUE. THE ASSESSING OFFICER NEITHER CONDUCTED PROPER ENQUIRIES NOR APPLIED IS MIND ON THE ISSUE, THUS, THE ITA NO.2122/MUM/2015 M/S ESTRELA BATTERIES LTD 6 ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. TOTALITY OF FACTS, CLEARLY INDICATES THAT EVEN IN THE IMPUGNED ORDER, THE ISSUES WERE SET ASIDE TO THE FI LE OF THE ASSESSING OFFICER TO DECIDE AFRESH AFTER CONDUCTING APPROPRIATE ENQUIRIES AND ON EXAMINING THE DETAILS AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD BEFORE FIN ALIZING THE ASSESSMENT, THUS, NO GRIEVANCE IS CAUSED TO THE ASS ESSEE, BECAUSE THE ASSESSEE IS AT LIBERTY TO CONTEST THE O BSERVATION MADE BY THE LD. PRINCIPAL COMMISSIONER. OUR VIEW I S FORTIFIED BY THE DECISION IN INDIAN TEXTILE VS CIT (157 ITR 1 12) (MAD.), GEE VEE ENTERPRISES VS ADDL. CIT (99 ITR 375)(DEL.) , THALIBAI F JAIN VS ITO 101 ITR 1 (KARN.) AND CIT VS HPFC 186 TAXMAN 105 (HP), CIT VS PUSHPA DEVI 164 ITR 639 (PA TNA). WE ARE AWARE THAT BEFORE THE COMMISSIONER INVOKES T HE REVISIONAL JURISDICTION U/S 263 , HE SHOULD GET SAT ISFIED THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HONBL E GUJARAT HIGH COURT IN CIT VS M. M.KHAMBATBALA 198 ITR 144 ( GUJ.) EVEN WENT TO THE EXTENT THAT REVISIONAL POWERS CAN BE EXERCISED EVEN IF THE ISSUE IS DEBATABLE. TOTALITY OF FACTS, CLEARLY INDICATES THAT THE LD. PRINCIPAL COMMISSION ER JUSTIFIABLY INVOKED REVISIONAL JURISDICTION AS IS O OZING OUT FROM THE FACTS AVAILABLE ON RECORD. WE AFFIRM THE S TAND OF THE LD. PRINCIPAL COMMISSIONER AS WE FIND NO INFIRMITY IN THE DIRECTIONS TO THE ASSESSING OFFICER CONTAINED IN TH E REVISIONAL ORDER. THE APPEAL OF THE ASSESSEE IS THEREFORE HAVI NG NO MERIT, CONSEQUENTLY, DISMISSED. ITA NO.2122/MUM/2015 M/S ESTRELA BATTERIES LTD 7 FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 03/02/2016. SD/- SD/- ( G.S. PANNU ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; + DATED : 05/02/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. , -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 11 & 2$ ( , ) / THE CIT, MUMBAI. 4. 11 & 2$ / CIT(A)- , MUMBAI 5. 4%5/$! , 1, ),!6 , & ' / DR, ITAT, MUMBAI 6. 7'8' / GUARD FILE. / BY ORDER, 04$/$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI