P. S. Bedi & Co. Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2196/DEL/2010

• Counselvise Citation: 219620114 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 16-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI DELHI BENCH F : NEW DELHI DELHI BENCH F : NEW DELHI DELHI BENCH F : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.P.TOLANI, JM AND SHRI K.D.RANJAN, AM R.P.TOLANI, JM AND SHRI K.D.RANJAN, AM R.P.TOLANI, JM AND SHRI K.D.RANJAN, AM R.P.TOLANI, JM AND SHRI K.D.RANJAN, AM ITA NO. ITA NO. ITA NO. ITA NO.2196/DEL/2010 2196/DEL/2010 2196/DEL/2010 2196/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2002 2002 2002 2002- -- -03 0303 03 M/S P.S.BEDI & CO.PVT.LTD., M/S P.S.BEDI & CO.PVT.LTD., M/S P.S.BEDI & CO.PVT.LTD., M/S P.S.BEDI & CO.PVT.LTD., E EE E- -- -43/1, OKHLA INDUSTRIAL AREA, 43/1, OKHLA INDUSTRIAL AREA, 43/1, OKHLA INDUSTRIAL AREA, 43/1, OKHLA INDUSTRIAL AREA, PHASE PHASE PHASE PHASE- -- -II, II,II, II, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 0 110 0 110 0 110 020. 20. 20. 20. PAN : PAN : PAN : PAN : AAACP2752K. AAACP2752K. AAACP2752K. AAACP2752K. VS. VS. VS. VS. ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -14(1), 14(1), 14(1), 14(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : DR.RAKESH GUPTA, ADVOCATE. RESPONDENT BY : SMT.PRATIMA KAUSHIK, SR.DR. ORDER ORDER ORDER ORDER PER R.P.TOLANI, JM PER R.P.TOLANI, JM PER R.P.TOLANI, JM PER R.P.TOLANI, JM : : : : THIS IS ASSESSEES APPEAL. FOLLOWING TWO GROUNDS ARE RAISED:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147/148. I T IS CONTENDED THAT THE A.O. HAS EXCEEDED HIS JURISDICTI ON IN REOPENING OF ASSESSMENT U/S 147/148 AND THE IMPUGNE D ORDER IS BAD IN LAW. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF BUSINESS LOSS BEING WRITE OFF OF SE CURITY DEPOSIT AMOUNTING TO RS.4,44,762/-. 2. BRIEF FACTS ARE THAT THE ASSESSEES ORIGINAL ASS ESSMENT WAS FRAMED U/S 143(3). DURING THE COURSE THEREOF, THE ASSESSEE HAD FILED THE DETAILS IN RESPECT OF BUSINESS LOSS OF `4,44,76 2/- AS LOSS OF SECURITY DEPOSIT WITH MODI LUFT VIDE LETTER DATED 7.6.2005. THE ORDER U/S 143(3) WAS PASSED WITHOUT MAKING ANY ADDITION IN THIS BEHA LF. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 REOPENI NG THE ASSESSMENT ITA-2196/DEL/2010 2 ON THE GROUND THAT THIS AMOUNT OUGHT TO HAVE BEEN A DDED BACK TO THE ASSESSEES INCOME. 3. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, T HE ASSESSEE FILED OBJECTIONS BEFORE THE ASSESSING OFFICER IN RE SPECT OF INITIATION OF REASSESSMENT PROCEEDINGS ON FOLLOWING ISSUES:- (I) THE ASSESSEE HAD DISCLOSED ALL THE MATERIAL FACTS R ELEVANT TO THE ASSESSMENT, THEREFORE, NOTICE U/S 148 COULD NOT BE ISSUED BEYOND THE PERIOD OF FOUR YEARS AS PROVIDED BY PROVISION OF SECTION 147. (II) THE REASON RECORDED AMOUNTS TO CHANGE OF OPINION ON BOTH THE COUNTS. THE ASSESSEE CHALLENGED THE INITIATION OF REASSESSMENT PROCEEDINGS. ON MERITS, ASSESSEE CONTENDED THAT IT HAD REGULAR BUSINESS CONNECTION W ITH MODI LUFT WHICH CLOSED ITS OPERATIONS AND DID NOT R ETURN THE SECURITY DEPOSIT PROVIDED BY THE ASSESSEE. THE NON - REALIZATION OF THIS AMOUNT CONSTITUTED A BUSINESS L OSS U/S 37. THEREFORE, THE SAME WAS ALLOWABLE. 4. THE ASSESSING OFFICER REJECTED THE ASSESSEES AR GUMENTS AND MADE THE ADDITION WHICH WAS CONFIRMED IN APPEAL BY THE LEARNED CIT(A). 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE FACTS AND CONTENDED THAT THE RECORD CLEARLY SPELLS OUT THAT A LL THE MATERIAL FACTS WERE FILED BY THE ASSESSEE DURING THE COURSE OF ORI GINAL ASSESSMENT. IF AT ALL THE REASSESSMENT NOTICE COULD HAVE BEEN ISSU ED WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR I.E. 31.3 .2007 WHEREAS IN THIS CASE, IT HAS BEEN ISSUED ON 27.3.2009, THE REO PENING OF ASSESSMENT IS CLEARLY TIME BARRED. ITA-2196/DEL/2010 3 6. ON SECOND ASPECT, IT IS PLEADED THAT THIS AMOUNT WAS CLAIMED BY THE ASSESSEE NOT ONLY IN THE BOOKS OF ACCOUNT BUT A LONGWITH THE ABUNDANT NOTE IN THE STATEMENT AND COMPUTATION OF I NCOME, THEREFORE, THERE WAS A CLEAR DISCLOSURE OF ALL MATERIAL FACTS. THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE IN ORIGINAL PROCE EDINGS U/S 143(3) THEREBY EXERCISING HIS OPINION ON THIS ISSUE. HAVI NG DONE SO, THE REOPENING CLEARLY HAVING SECOND OPINION ON THE SAME ISSUE WHICH IS ALREADY DECIDED BY HIM ON BOTH THE COUNTS, THE ACTI ON OF REOPENING HAS TO FAIL. FOR THE FIRST PROPOSITION, RELIANCE IS PL ACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACR YLIC MANUFACTURING CO. VS. CIT 308 ITR 38, JSRS UDYOG LTD. & ANR. VS . ITO 313 ITR 321 AND WEL INTERTRADE (P) LTD. & ANR. VS. ITO 308 IT R 22 (DEL). APROPOS SECOND PROPOSITION, RELIANCE IS PLACED UPON HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561. 7. APROPOS THE MERITS, IT IS CONTENDED THAT THE AMO UNT CLAIMED CLEARLY CONSTITUTED A BUSINESS LOSS. THE SECURITY DEPOSIT MADE WITH MODI LUFT DURING THE REGULAR COURSE OF BUSINESS OF THE ASSESSEE WAS NOT REFUNDED TO THE ASSESSEE DUE TO CLOSURE OF THE BUSINESS OF MODI LUFT WHICH HAS NOT BEEN DISPUTED. THE AMOUNT WAS A DVANCED DURING THE COURSE OF BUSINESS AND MERELY BECAUSE THE NOMEN CLATURE AS SECURITY DEPOSIT COULD NOT BE USED BY THE DEPARTMEN T TO ALLOW THE JUSTIFIED CLAIM OF THE ASSESSEE. 8. LEARNED DR IS HEARD WHO SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. UPON CONSIDERATION OF ALL THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAVING DISCLOSED ALL THE MATERIAL FACTS NOT ONLY IN THE ITA-2196/DEL/2010 4 BOOKS OF ACCOUNT BUT IN THE AUDITED STATEMENTS AND COMPUTATION OF INCOME, IT AMOUNTS TO DISCLOSURE OF ALL MATERIAL FA CTS NEEDED FOR THE PURPOSE OF ASSESSMENT. BESIDES, THE ASSESSING OFFI CER HAD ENQUIRED ABOUT SUCH CLAIMS OF THE ASSESSEE. IN VIEW THEREOF , WE HOLD THAT REASSESSMENT PROCEEDINGS ARE BAD BOTH BECAUSE OF TH E TIME LIMIT AS WELL AS BEING BASED ON CHANGE OF OPINION. WE RELY ON THE JUDGMENTS OF HON'BLE DELHI HIGH COURT AND THAT OF HON'BLE SUPREM E COURT CITED SUPRA ON THESE ISSUES. COMING TO THE MERITS ALSO, WE ARE OF THE VIEW THAT THE ASSESSEES CLAIM OF ALLOWABILITY OF BUSINE SS LOSS OF THE SAID SECURITY DEPOSIT IS TO BE CLEARLY HELD AS BUSINESS LOSS. IN VIEW OF THE FOREGOING POSITION, WE DELETE THE ADDITION AND ALLO W THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2011. SD/- SD/- ( (( (K.D.RANJAN K.D.RANJAN K.D.RANJAN K.D.RANJAN) )) ) (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 16.11.2011 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR