ACIT, New Delhi V. M/s. Mirabelle International, New Delhi

ITA 2213/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7462 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-07-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Assessment record
• Section: 143(3); 80HHC; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 2213/DEL/2014 A.Y. : 2001-02 ACIT, CIRCLE-31(1), NEW DELHI ROOM NO. 1405, 15 TH FLOOR, DR. SHYAMA PRASAD MUKHERJEE, CIVIC CENTRE, NEW DELHI VS. M/S MIRABELLE INTERNATIONAL 13/14, WINDSOR MANSION, JANPATH, NEW DELHI 110 001 (PAN: AABFM1743P) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SURENDER PAL. SR. DR ASSESSEE BY : NONE DATE OF HEARING : 20-07-2016 DATE OF ORDER : 08-08-2016 ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 19/8/2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS-XXVI), NEW DELH I ON THE FOLLOWING GROUNDS:- 1. THE CIT(A) HAS ERRED IN QUASHING THE ASSESSMENT PROCEEDINGS U/S. 148 OF THE I.T. ACT. ITA NO. 2213/DEL/2014 2 2. THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSEE DID NOT RAISE ANY OBJECTION ABOUT THE LEGA LITY OF NOTICE ISSUED U/S. 148 OF THE I.T. ACT DURING TH E ASSESSMENT PROCEEDING THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 292BB OF THE I.T. ACT HE WAS PRECLUDED FROM RAISING SUCH OBJECTION AT THE STAGE OF APPELLATE PROCEEDINGS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE C OURSE OF THE HEARING OF THE APPEAL. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FIRM I S ENGAGED IN MANUFACTURING AND EXPORT OF BED-SPREADS. THE ASSESS EE FILED ITS RETURN OF INCOME SHOWING INCOME OF RS.79,71,980/- AFTER CLAIM ING DEDUCTION UNDER SECTION 80HHC. ORIGINALLY, THE ASSESSMENT WAS COMPL ETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS T HE ACT) VIDE ORDER DATED 31.03.2003 AT INCOME OF RS.1,03,05,490/-, WHI CH LATER ON WAS REOPENED U/S 147 READ WITH SECTION 148 IN VIEW OF T AXATION LAWS (AMENDMENT) ACT 2005. ACCORDING TO ASSESSING OFFICE R THE ASSESSEES TURNOVER EXCEEDED RS.10.00 CRORES AND IT HAS NOT FU LFILLED THE TWIN CONDITIONS OF SECTION 80HHC; AND THE DEDUCTION ALLO WED EARLIER U/S 80HHC WAS RESTRICTED TO RS.1,42,15,280/-. FURTHER, THE IN TEREST RECEIPT ON FDRS WAS TAXED UNDER THE HEAD 'OTHER SOURCES' AND CONSEQ UENTIALLY THE NETTING OF INTEREST WAS NOT ALLOWED BY THE AO. THE REASSESS MENT WAS COMPLETED ON INCOME OF RS,2,55,22,744/-. THE QUANTUM APPEAL W AS DISMISSED BY ITA NO. 2213/DEL/2014 3 THE LD. CIT(A) ON 29.12.2009 AGAINST WHICH, THE ASS ESSEE PREFERRED APPEAL BEFORE THE ITAT AND THE ITAT VIDE ITS ORDER DATED 25.03.2011 PASSED IN ITA NO. 695/DEI/2010, SET ASIDE THE ISSUE OF REOPENING OF THE ASSESSMENT AND RESTORED IT BACK TO THE CIT(APPEALS) FOR ADJUDICATION. LD. CIT(A), VIDE HIS IMPUGNED ORDER DATED 30.1.2014 HAS HELD THE REASSESSMENT AS NULL AND VOID AND ALLOWED THE APPEA L OF THE ASSESSEE. 3. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNE D ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE W OULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THERE FORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEAR ING THE LD. DR AND PERUSING THE RECORDS. 5. AT THE TIME OF HEARING LD. DR RELIED UPON THE OR DER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS AND REQUESTED THAT APPEAL OF THE REVENUE MAY BE ALLOWED . 6. WE HAVE HEARD THE LD. DR AND PERUSED AND CONSIDE RED THE RELEVANT RECORDS AVAILABLE WITH US ESPECIALLY THE IMPUGNED O RDER PASSED BY THE LD. CIT(A). WE FIND THAT LD. FIRST APPELLATE AUTHO RITY HAS ELABORATELY ITA NO. 2213/DEL/2014 4 DISCUSSED THE ISSUE IN DISPUTE BY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ADJUDICATED THE ISSUE IN DISPUTE VID E PARA NOS. 5 TO 6 AT PAGES 7 TO 10 IN HIS IMPUGNED ORDER. THE SAID RELE VANT PARAS OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER:- 5. SINCE THE ITAT HAS NOT SET ASIDE THE ENTIRE APPELLATE ORDER TO BE FRAMED AFRESH DE NOVO; THEREF ORE, I AM CONFINING ONLY ON FOUR ADDITIONAL GROUNDS TAK EN BEFORE THE ITAT, WHICH HAVE BEEN DIRECTED TO BE DEC IDED BY ME. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ASSESSMENT RECORDS. O N CAREFUL CONSIDERATION OF ABOVE, SUBMISSIONS, CONTEN TIONS AND MATERIAL PLACED ON RECORD, I OBSERVE THAT ADMITTEDLY, THERE WAS AN ORDER U/S. 143(3) DURING T HE ORIGINAL ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION. IN THE CASE OF CIT VS. SPLS SIDDHAR THA LTD. 345 ITR 223, THE HONBLE JURISDICTIONAL HIGH C OURT OBSERVED AND HELD AS UNDER:- 6. IT IS RELEVANT TO POINT OUT THAT SUB-SECTION (1 ) AND SUB-SECTION (2) OF SECTION 151 OF THE ACT ARE TWO INDEPENDENT PROVISIONS. THE DEFINITION OF JOINT COMMISSIONER IS CONTAINED IN SECTION 2(28C) AND THE DEFINITION OF COMMISSIONER GIVEN IN SECTION 2(16), WHICH ARE AS UNDER:- ITA NO. 2213/DEL/2014 5 JOINT COMMISSIONER' MEANS A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME-TAX OR AN ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SUB- SECTION (1) OF SECTION 117. 'COMMISSIONER' MEANS A PERSON APPOINTED TO BE A COMMISSIONER OF INCOME-TAX UNDER SUB-SECTION (1) OF SECTION 117.' SECTION 116 OF THE ACT ALSO DEFINES THE INCOME TAX AUTHORITIES AS DIFFERENT AUTHORITIES. SUCH DIFFERE NT AND DISTINCT AUTHORITIES HAVE TO EXERCISE IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN SPECIFIED CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE ARROGATED BY OTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF 'AUTHORITY. IT IS TRITE THAT WHEN A STATE REQUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. IT WAS SO HELD IN THE FOLLOWING DECISIONS: ITA NO. 2213/DEL/2014 6 (I) C.I. T. V. NAVEEN KHANNA (DATED NOVEMBER 18, 2009 IN I. T. A. NO. 21 OF 2009 (DELHI); (II) 'STATE OF BIHAR V. J. A. C. SALDANHA, AIR 1980 SC 326; AND (III) STATE OF GUJARAT VS SHANTILAL MANGALDAS, AIR 1969 SC 634. THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIV E WORDS UPON A DEFINED THE EXPRESSION OF THAT CONDIT ION EXCLUDES THE DOING OF THE ACT UNDER OTHER CIRCUMSTA NCES THAN THOSE AS DEFINED. IT IS ALSO PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER SATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTIO N RECORDED SHOULD BE 'INDEPENDENT' AND NOT 'BORROWED' OR 'DICTATED' SATISFACTION. LAW IN THIS REGARD IS N OW WELL- SETTLED. IN SHEO NARAIN JAISWAL V IT0 (1989) 176 IT R 352 (PATNA), IT WAS HELD: 'WHERE THE ASSESSING OFFICER DOES NOT HIMSELF EXERCISE HIS JURISDICTION U/E 147 BUT MERELY ACTS A T THE BEHEST OF ANY SUPERIOR AUTHORITY, IT MUST BE ITA NO. 2213/DEL/2014 7 HELD THAT ASSUMPTION OF JURISDICTION WAS. BAD FOR NON-SATISFACTION OF THE CONDITION PRECEDENT. ' THE APEX COURT IN THE CASE OF ANIRUDHSINHJI KARANSHINHJI JADEJA VS. STATE OF GUJARAT (1995) 5 S CC 302 HAS HELD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACC ORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED U NDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORI TIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO E XERCISE DISCRETION ALTOGETHER. WE ARE, THEREFORE, OF THE OPINION THAT THE TRIBUNAL HAS RIGHTLY DECIDED THE LEGAL ASPECT, KEEPING IN VIEW W ELL ESTABLISHED PRINCIPLES OF LAW LAID DOWN IN A CATENA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. 5.1 I HAVE PERUSED THE ASSESSMENT RECORD AND FIND MERIT IN THE LD. AR'S CONTENTION. IN THIS CASE, THE SATISFACTION FOR REOPENING THE ASSESSMENT AFTER COMPLETION OF ORIGINAL ASSESSMENT U/S 143(3) HAS BE EN OBTAINED FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX IN CONTRAVENTION TO THE PROVISIONS OF SECTION 1 51. THE SECTION 151 READS AS UNDER: '151. SANCTION FOR ISSUE OF NOTICE. ITA NO. 2213/DEL/2014 8 (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR/ NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER/ WHO IS B ELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER/ UNLESS THE JOINT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE: PROVIDED THAT/ AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR/ NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED/ ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID/ THAT IT IS A FIT C ASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1)/ NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER/ WHO IS BELOW THE RANK OF JOINT COMMISSIONER/ AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR/ UNLESS THE JOI NT COMMISSIONER IS SATISFIED/ ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER/ THAT IT IS A FIT CASE FOR T HE ISSUE OF SUCH NOTICE. ' ITA NO. 2213/DEL/2014 9 5.2 ON SIMILAR FACTUAL MATRIX, THE HON'BLE DELHI HI GH COURT IN THE CASE OF CIT VS. SPL'S SIDDARTHA LTD., (SUPRA) HAS UPHELD THE CANCELLATION OF ASSESSMENT. THE HEAD NOTE IN THE SAID CASE READS AS UNDER: 'WHEN A STATUTE REQUIRES A THING TO BE DONE IN A CERTAIN MANNER/ IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER/ SECTION 116 OF THE INCOME-TAX ACT, 1961/ DEFINES THE INCOME-TAX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN SPECIFIED CIRCUMSTANCES. IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. HELD, THAT UNDER SECTION 151 OF THE ACT, IT WAS ONLY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROVAL FOR ITA NO. 2213/DEL/2014 10 ISSUE OF NOTICE UNDER SECTION 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIONER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF INCOME-TAX. THIS WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 292B. THE NOTICE WAS NOT VALID.' 5.3 THE CASE RECORD DID NOT DISPUTE THE FACT THAT T HE APPROVAL OF THE ADDL. CIT WAS NOT OBTAINED. UNDISPUTEDLY, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) IN THE APPELLANT'S CASE FOR THE RELEVANT AY AND ALSO 4 YEARS HAVE PASSED FROM THE END OF THE AY BEFORE ISSUANCE OF NOTICE U/S 148. HOWEVER, THE LEG AL REQUIREMENT OF SATISFACTION/APPROVAL OF THE CIT WAS NOT OBTAINED BEFORE ISSUANCE OF NOTICE U/S 148. THEREFO RE, AFTER CAREFUL CONSIDERATION OF THE FACTS AND DECISI ON OF JURISDICTIONAL HIGH COURT AS MENTIONED ABOVE, THE REOPENING IS HELD INVALID AND IS LIABLE TO BE QUASH ED. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERE D VIEW THAT THE REASSESSMENT IN PURSUANCE OF NOTICE U /S 148 IS NOT IN ACCORDANCE WITH THE PROVISIONS OF INC OME TAX ACT AND ACCORDINGLY, THE CONSEQUENTIAL REASSESSMENT IS HELD TO BE NULL AND VOID. ITA NO. 2213/DEL/2014 11 6. IN VIEW OF ABOVE, THE OTHER GROUNDS ARE NOT BE ING CONSIDERED WORTH TO BE ADJUDICATED HERE AS NOW THES E ARE OF ACADEMIC IMPORTANCE ONLY. 7. AFTER GOING THROUGH THE FINDINGS OF THE LD. CIT( A), AS AFORESAID, WE ARE OF THE VIEW THAT IN THIS CASE SATISFACTION FOR REOPENING THE ASSESSMENT AFTER COMPLETION OF ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT HAS BEEN OBTAINED FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX IN CONTRAVENTION TO THE PROVISIONS OF SECTION 151 OF THE ACT. HOWEVER, THE ORIGINAL ASSESSMENT WAS COMPLETED ON 31.3.2003 U/S . 143(3) OF THE ACT IN ASSESSEES CASE FOR THE RELEVANT AY AND ALSO 4 Y EARS HAVE PASSED FROM THE END OF THE AY BEFORE ISSUANCE OF NOTICE DATED 2 8.3.2008 U/S. 148. SECONDLY, THE LEGAL REQUIREMENT OF SATISFACTION / APPROVAL OF THE CIT WAS NOT OBTAINED BEFORE ISSUANCE OF NOTICE U/S. 148. TH EREFORE, LD. CIT(A) HAS RIGHTLY HELD THE REOPENING AS NULL AND VOID BY FOLL OWING THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. SPLS SI DDHARTHA LTD. 345 ITR 223 WHEREIN THE HONBLE HIGH COURT HAS UPHELD THE C ANCELLATION OF ASSESSMENT. THE HEADS NOTE OF THE SAID CASE ARE R EPRODUCED AS UNDER:- 'WHEN A STATUTE REQUIRES A THING TO BE DONE IN A CERTAIN MANNER/ IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER/ SECTION 116 OF THE INCOME-TAX ACT, 1961/ DEFINES THE INCOME-TAX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. ITA NO. 2213/DEL/2014 12 SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN SPECIFIED CIRCUMSTANCES. IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. HELD, THAT UNDER SECTION 151 OF THE ACT, IT WAS ONLY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROVAL FOR ISSUE OF NOTICE UNDER SECTION 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIONER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF INCOME-TAX. THIS WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 292B. THE NOTICE WAS NOT VALID.' 7.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENT OF THE HONBLE HIGH COURT O F DELHI IN THE CASE OF CIT VS. SPLS SIDDARTHA LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH D OES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE FIND ING OF THE LD. CIT(A) IN ITA NO. 2213/DEL/2014 13 QUASHING THE REASSESSMENT AND DISMISS THE GROUNDS R AISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/08/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 08/08/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES