INDIAN ALLUMUNIUM COMPANY, MUMBAI V. C.I.T.-12, MUMBAI

ITA 2123/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62643 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 04-07-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 15-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Keywords: Opportunity of being heard; Assessment record
• Section: 43B; 143(3); 147; 263; 63

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I' BENCH, M UMBAI . , !'# $ $ $ $ $ . % . &'( , %) *+ % # BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 2123/MUM/2011 ( , , , , - - - - / ASSESSMENT YEAR : 1999-2000 M/S. INDIAN ALLUMMUNIUM CO. LTD. A C I T - 6(3) (NOW MERGED WITH HINDALCO INDUSTRIES LTD.) AAYAKAR BHAVAN, M.K. ROAD DR. ANNIE BESANT ROAD, WORLI / VS. MUMBAI 400020 MUMBAI 400030 +. %) ./ PAN - AAACH 1201 R ./ / APPELLANT 01./ / RESPONDENT ./ 2 % / APPELLANT BY : SHRI NARESH JAIN 01./ 3 2 % / RESPONDENT BY : SHRI SANJIV DUTT 3 4) / DATE OF HEARING : 04.07.2012 5- 3 4) / DATE OF PRONOUNCEMENT : 11.07.2012 *%6 / O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 14. 12.2010 PASSED BY THE CIT(A)-12, MUMBAI AND IT PERTAINS TO A.Y. 1999- 2000. 2. THE FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED AN INCOME OF ` 17 CRORES AND BOOK PROFIT OF ` 73 CRORES UNDER SECTION 115JA OF THE ACT. THE RETUR N WAS PROCESSED ACCORDINGLY UNDER SECTION 143(1) ON 08.09 .2000. SUBSEQUENTLY, PROCEEDINGS UNDER SECTION 147 WERE INITIATED AND TH E ASSESSMENT CAME TO BE MADE UNDER SECTION 147 R.W.S. 143(3) OF THE ACT ON 30.11.2006 DETERMINING THE TOTAL INCOME AT ` 18.88 CRORES AND BOOK PROFIT UNDER SECTION 115JA AT ` 75 CRORES. 3. IN EXERCISE OF THE JURISDICTION VESTED IN THE COMMI SSIONER OF INCOME TAX 6, MUMBAI, ASSESSMENT RECORD OF THE ASSESSEE WAS CALLED FOR AND EXAMINED. ON GOING THROUGH THE RECORD THE LEARNED C OMMISSIONER WAS OF ITA NO. 2123/MUM/2011 M/S. INDIAN ALLUMMUNIUM CO. LTD. 2 THE OPINION THAT THE AO HAD NOT MADE NECESSARY AND ADEQUATE ENQUIRIES IN RESPECT OF THE ISSUES MENTIONED IN PARA 2 OF HIS OR DER. SINCE HE WAS OF THE VIEW THAT THE CONCLUSION ARRIVED AT BY THE AO IS P RIMA FACIE NOT IN ACCORDANCE WITH LAW, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE WHEREIN IT WAS STATED THAT THE AO DID NOT MAKE NECESSARY AN D ADEQUATE ENQUIRIES AND HAD ALLOWED THE CLAIM OF DEDUCTION WITHOUT EXAM INING THE ALLOWABILITY OF THE SAME IN THE CORRECT PERSPECTIVE. 4. THE ASSESSEE APPEARS TO HAVE CHALLENGED THE JURISDI CTION OF THE COMMISSIONER ON THE GROUND OF LIMITATION, RECKONED FROM THE DATE OF PROCESSING OF THE RETURN. THE LEARNED COMMISSIONER WAS OF THE OPINION THAT THE AO HAD NO OCCASION TO CONSIDER THE ISSUES IN DE TAIL IN THE PROCEEDINGS UNDER SECTION 143(1) OF THE ACT AND, HENCE THE PERI OD OF LIMITATION HAS TO BE RECKONED FROM THE DATE OF MAKING THE REGULAR ASSESS MENT UNDER SECTION 143(3)/147 OF THE ACT. ACCORDINGLY HE CONCLUDED THA T THE PROCEEDINGS INITIATED UNDER SECTION 263 OF THE ACT ARE IN ACCOR DANCE WITH LAW. 5. ON MERITS HE CATEGORICALLY OBSERVED, VIDE PARAS 9 & 10 OF HIS ORDER, THAT THE AO FAILED TO MAKE ENQUIRIES WHICH ARE CALL ED FOR IN THE CIRCUMSTANCES OF THE CASE AND HENCE THE MATTER DESE RVES TO BE SET ASIDE TO THE FILE OF THE AO WITH A DIRECTION TO HIM TO REFRA ME THE ASSESSMENT TO CONSIDER VARIOUS ISSUES, HIGHLIGHTED IN THE NOTICE UNDER SECTION 263, BY MAKING NECESSARY AND ADEQUATE ENQUIRIES. IT WAS ALS O EMPHASISED THAT THE ASSESSEE SHALL BE ALLOWED REASONABLE OPPORTUNITY OF BEING HEARD BEFORE FRAMING ASSESSMENT. 6. A PLAIN READING OF THE ORDER PASSED UNDER SECTION 2 63 OF THE ACT SHOWS THAT THE EXPRESSION PRIMA FACIE IS A CLEAR INDICATION OF THE FACT THAT REVISIONAL AUTHORITY HAD NOT INTENDED TO TAKE A FIN AL VIEW ON THE MATTER AND HENCE HE CHOSE TO REFRAIN FROM GIVING A SPECIFIC DI RECTION TO DISALLOW THE CLAIM. MOREOVER, THE EXPRESSION ASSESSEE SHALL BE ALLOWED REASONABLE OPPORTUNITY OF BEING HEARD BY MAKING NECESSARY AND ADEQUATE ENQUIRIES CANNOT BE CONSIDERED AS A CASUAL REMARK BY THE COMM ISSIONER OF INCOME TAX WITHOUT APPLICATION OF MIND; A SENIOR OFFICER O F THE RANK OF COMMISSIONER MUST HAVE USED THE WORDS WITH A CERTAI N PURPOSE AND IT CANNOT BE ASSUMED THAT DESPITE REACHING A FINAL CON CLUSION ON THE MATTER, ITA NO. 2123/MUM/2011 M/S. INDIAN ALLUMMUNIUM CO. LTD. 3 HE MERELY DIRECTED THE AO TO COMPLETE THE EMPTY FOR MALITY OF MAKING ADEQUATE ENQUIRIES, THAT TOO AFTER GIVING THE ASSES SEE A REASONABLE OPPORTUNITY. 7. IN FACT, WHILE REFRAMING THE ASSESSMENT CONSEQUENT TO THE DIRECTION OF THE COMMISSIONER OF INCOME TAX, THE AO CORRECTLY UN DERSTOOD THAT THE CIT- 6, MUMBAI HAS SET ASIDE THE MATTER TO THE FILE OF T HE AO TO EXAMINE AFRESH AND FOR FRESH ADJUDICATION AND NOT TO MERELY FOLLOW THE PRIMA FACIE VIEW REGARDING NATURE OF THE CLAIMS OF DEDUCTION DISCUSS ED IN PARA 2 OF THE ORDER PASSED UNDER SECTION 263 OF THE ACT. IT IS NOT OUT OF PLACE TO MENTION THAT THE ISSUES THAT WAS SUBJECT MATTER OF SCRUTINY BY T HE COMMISSIONER OF INCOME TAX WERE: (A) DEDUCTION OF ` 3,23,30,453/-, (B) SUM DEBITED TO THE P & L ACCOUNT OF ` 27,97,000/-, (C) CLAIM MADE UNDER THE HEAD CURRENT REPAIRS OF ` 66,01,304/-, AND (D) OPERATING EXPENSES DEBITED TO THE P & L ACCOUNT OF ` 50,55,000/-. WITH REGARD TO THE LAST ITEM ALSO THE LEARNED COMMISSIONER, IN PARA 2(IV), OBSERVED THAT PRIMA FACIE, THIS SUM RE QUIRES TO BE DISALLOWED U/S 40(A) OF THE I.T. ACT. HOWEVER, WHILE PASSING THE ORDER IN CONFORMITY WITH THE DIRECTIONS ISSUED BY THE CIT THE AO NOTICED THA T THE IMPUGNED SUM OF ` 50,55,000/- WAS PAYMENT MADE TO THE CENTRAL EXCISE AND CUSTOMS, WHICH IS ALLOWABLE UNDER SECTION 43B OF THE ACT AND ACCOR DINGLY DID NOT MAKE ANY DISALLOWANCE IN THAT REGARD. 8. WITH REGARD TO THE OTHER THREE ISSUES HE HAS CONSID ERED THE RELEVANT MATERIAL TO COME TO THE CONCLUSION THAT THE CLAIM O F DEDUCTION DESERVES TO BE DISALLOWED AND ACCORDINGLY ADDED A SUM OF ` 4,13,28,757/-. 9. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT(A). THE FIRST APPELLATE AUTHORITY, HOWEVER, DISMISSED THE APPEAL AS NOT MAINTAINABLE ON THE GROUND THAT THE REVISIONAL AUTHORITY GAVE SPECI FIC DIRECTIONS AND THE AO HAVING MERELY CARRIED OUT THE DIRECTIONS, ANY DECIS ION BY THE CIT(A) ON THIS MATTER WOULD TANTAMOUNT TO ADJUDICATING UPON THE DE CISION OF THE CIT UNDER SECTION 263 OF THE ACT, WHICH IS NOT PERMISSI BLE. 10. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE REV ISIONAL AUTHORITY HAS NOT GIVEN ANY SPECIFIC DIRECTION TO DISALLOW ANY CLAIM AND MERELY DIRECTED THE AO TO RECONSIDER THE ISSUES AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF ITA NO. 2123/MUM/2011 M/S. INDIAN ALLUMMUNIUM CO. LTD. 4 BEING HEARD. IN OTHER WORDS, MERELY BECAUSE THE REV ISIONAL AUTHORITY HAD COME TO A PRIMA FACIE CONCLUSION AND SET ASIDE THE MATTER TO ENABLE THE AO TO MAKE DETAILED ENQUIRY, IT CANNOT BE ASSUMED THAT THE COMMISSIONER HAS GIVEN HIS FINAL DECISION ON THE MATTERS AND THUS TH E CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL ON THE GROUND OF JURISDICT ION. HE HAS FILED A PAPER BOOKS CONSISTING OF THE ORDER PASSED UNDER SECTION 263 AND DECISIONS OF VARIOUS BENCHES OF ITAT AND HIGH COURTS, APART FROM THE ORDER OF THE ITAT ARISING OUT OF THE ORDER PASSED UNDER SECTION 263 O F THE ACT, TO SUBMIT THAT WHEN A REVISIONAL AUTHORITY SETS ASIDE THE MATTER W ITH DIRECTION TO THE AO TO MAKE PROPER ENQUIRIES AND TO RECONSIDER THE MATTER AFRESH IT HAS TO BE CONSIDERED AS AN OPEN REMAND ORDER AND IF THE ASSES SEE IS NOT SATISFIED BY THE ORDER PASSED BY THE AO GIVING EFFECT TO THE DIR ECTIONS OF THE CIT SUCH ORDER IS APPEALABLE BEFORE THE CIT(A) IN TERMS OF S ECTION 246A OF THE ACT. HE HAS ALSO TAKEN US THROUGH THE ORDER PASSED BY THE I TAT I BENCH MUMBAI IN ASSESSEES OWN CASE TO SUBMIT THAT THE ONLY ISSU E RAISED IN THAT APPEAL WAS ON THE GROUND OF LIMITATION FOR INVOKING THE JU RISDICTION UNDER SECTION 263 OF THE ACT; NEITHER THE ASSESSEE NOR THE REVENU E CONTESTED THE ORDER PASSED BY THE REVISIONAL AUTHORITY ON THE GROUND TH AT THERE ARE SPECIFIC DIRECTIONS BY THE REVISIONAL AUTHORITY ON MERITS. T HE LEARNED COUNSEL PLACED RELIANCE UPON THE DECISION OF THE HON'BLE BOMBAY HI GH COURT IN THE CASE OF POKHRAJ HIRACHAND VS. CIT 1963] 49 ITR 293 IN SUPPO RT OF HIS CONTENTION THAT THE EXPRESSION PASS SUCH ORDER THEREON, USED IN SECTION 254 OF THE ACT, LIMITS JURISDICTION OF THE TRIBUNAL TO DECIDE THE MATTERS WHICH ARE CHALLENGED BEFORE THEM AND THUS THE ISSUES WHICH WE RE NOT FORMING PART OF THE APPEAL OR ARGUMENTS OF BOTH THE PARTIES CANNOT BE SUBJECT MATTER OF CONSIDERATION BY THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO TAKEN US TO THE ORDER OF THE ITAT I BENCH MUMBAI TO SUBMIT THAT WHETHER THE ORDER PASSED UNDER SECTION 263 OF THE ACT IS BA RRED BY LIMITATION IS THE ONLY CONTROVERSY BEFORE THEM AND NEITHER THE ASSESS EE NOR THE REVENUE ADVANCED RESPECTIVE SUBMISSIONS WITH REGARD TO THE NATURE OF THE DIRECTION BY THE CIT AND HENCE IT CANNOT BE ASSUMED THAT THE TRIBUNAL HAS GIVEN ITS VIEW ON MERITS ALSO; IN PARA 10 OF THAT ORDER, THE BENCH OBSERVED THAT THE ASSESSEE HAS NOT CHALLENGED THE DISALLOWANCES AS PR OPOSED IN THE REVISIONAL ORDER BY THE CIT ON MERITS BUT THIS OBSERVATION HAS TO BE UNDERSTOOD IN THE ITA NO. 2123/MUM/2011 M/S. INDIAN ALLUMMUNIUM CO. LTD. 5 LIMITED CONTEXT THAT THE ASSESSEE HAS CHALLENGED TH E ORDER PASSED BY THE REVISIONAL AUTHORITY ONLY ON TECHNICAL OR LEGAL GRO UND WITHOUT CHALLENGING THE ORDER OF THE CIT ON MERITS I.E. THE ASSESSEE HA S NOT MADE A CLAIM THAT THE COMMISSIONER WAS NOT JUSTIFIED IN DIRECTING THE AO TO RECONSIDER THE MATTER ON MERITS. 11. THE LEARNED CIT-DR, HOWEVER, CONTENDED THAT IN THE LIGHT OF THE OBSERVATIONS OF THE ITAT I BENCH MUMBAI IN ASSESS EES OWN CASE THE CIT(A) WAS JUSTIFIED IN DISMISSING THE APPEAL AS UNADMITTE D. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. AT THE OUTSET WE MAY OBSERVE THAT THE REVIS IONAL AUTHORITY, HAVING SET ASIDE THE ISSUES FOR REFRAMING THE ASSESSMENT U PON MAKING NECESSARY AND ADEQUATE ENQUIRIES, HAS NOT GIVEN ANY SPECIFIC DIRECTION TO DISALLOW THE CLAIMS. WE HAVE CAREFULLY GONE THROUGH THE ORDER PA SSED UNDER SECTION 263 WHICH, IN OUR HUMBLE OPINION, SHOWS THAT IN ORDER T O INVOKE THE POWERS VESTED IN HIM UNDER SECTION 263 OF THE ACT HE ISSUE D A NOTICE TO THE ASSESSEE UPON ARRIVING AT A PRIMA FACIE VIEW ON THE MATTERS IN DISPUTE BUT HE DID NOT INTEND TO GIVE SPECIFIC DIRECTION TO THE AO TO DISA LLOW THE CLAIMS OF DEDUCTION. IF THE COMMISSIONERS INTENTION WAS TO D IRECT THE AO TO DISALLOW THE IMPUGNED CLAIMS THERE WAS NO NEED FOR HIM TO DI RECT THE AO TO MAKE NECESSARY AND ADEQUATE ENQUIRIES AND TO GIVE ASSESS EE A REASONABLE OPPORTUNITY OF BEING HEARD. SUCH A PROCEDURE CAN BE ADOPTED ONLY WHEN A MATTER IS SET ASIDE FOR REFRAMING THE ASSESSMENT AF TER FRESH EXAMINATION OF FACTS. IT IS NOT IN DISPUTE THAT OUT OF THE FOUR IS SUES, WHICH WERE SUBJECT MATTER OF CONSIDERATION BY THE REVISIONAL AUTHORITY , THE AO ACCEPTED THE PLEA OF THE ASSESSEE WITH REGARD TO ONE ISSUE, WHIC H IN ITSELF INDICATES THAT THE DIRECTIONS OF THE REVISIONAL AUTHORITY ARE NOT SPECIFIC/POINTED. THOUGH THE ASSESSEE CHALLENGED THE ORDER PASSED UNDER SECT ION 263 BEFORE THE ITAT ON A TECHNICAL GROUND, IN THE ABSENCE OF ANY SPECIF IC ARGUMENTS ADVANCED BY THE ASSESSEE OR BY THE REVENUE AND IN PARTICULAR THE ASSESSEE HAVING NOT RAISED ANY ISSUE ON MERITS, THE TRIBUNAL IS NOT EMP OWERED TO CONSIDER AN ISSUE WHICH DID NOT FALL IN THE REALM OF DISPUTE BE FORE THEM. THUS, LOOKING AT FROM ANY ANGLE, WE ARE OF THE CONSIDERED OPINION TH AT THE LEARNED CIT(A) HAS COMMITTED A GRAVE ERROR IN LAW IN COMING TO A CONCL USION THAT THE REVISIONAL ITA NO. 2123/MUM/2011 M/S. INDIAN ALLUMMUNIUM CO. LTD. 6 AUTHORITY HAS GIVEN A SPECIFIC DIRECTION AND IN HIS CAPACITY AS CIT(A) HE CANNOT ADJUDICATE THE ISSUE ARISING OUT OF THE ORDE R PASSED UNDER SECTION 143(3)/263 OF THE ACT. ON A CONSPECTUS OF THE MATTE R WE HOLD THAT THE ASSESSEE IS ENTITLED TO PREFER AN APPEAL ON MERITS AGAINST THE ORDER PASSED UNDER SECTION 143(3)/263 OF THE ACT AND THE CIT(A) IS DUTY BOUND TO CONSIDER THEM ON MERITS WITHOUT BEING UNDULY INFLUE NCED BY THE FACT THAT THE REVISIONAL AUTHORITY HAD PRIMA FACIE MAINTAINED A PARTICULAR STAND ON THE SUBJECT MATTER OF DISPUTE IN THE PROCEEDINGS UN DER SECTION 263 OF THE ACT. WITH THESE OBSERVATIONS WE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND DIRECT HIM TO RECONSIDER THE MATTER AFRESH ON MERIT S. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 7 48 , 74 3 93 !:%; %<$ +4 = 3 >4 ' ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY 2012. *%6 3 - ) % ? @*8 11.07.2012 3 A SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) %) *+ / ACCOUNTANT MEMBER !'#/ VICE PRESIDENT MUMBAI ; @* DATED : 11 TH JULY 2012 . , . ./ N.P., SR. PS *%6 *%6 *%6 *%6 3 33 3 0,4 > > > (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI