DCIT 4(1), MUMBAI V. GOYAL CAPITAL SERVICES (I) P. LTD, MUMBAI

ITA 2313/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70598 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 01-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHAVALJEET KAPOOR
• Assessee Lawyers: AARATI VISSANJI
• Keywords: Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 14A; 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI . , !'# $ $ $ $ , %& '()* , %+ ,- % # BEFORE SHRI D.MANMOHAN,VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER I.T.A. NO. 2313/MUM/2012 ( . . . . / ASSESSMENT YEAR : 2006-07 THE DY.CIT-4(1), AAYAKAR BHAVAN, MUMBAI-400 020 M/S. GOYAL CAPITAL SERVICES (I) PVT. LTD., 7, RAJ CRESCENT, EKSAR ROAD, BORIVALI (W), MUMBAI-400 092 C.O. NO. 89/MUM/2013 (ARISING OUT OF I.T.A. NO. 2313/MUM/2012 ( . . . . / ASSESSMENT YEAR : 2006-07 M/S. GOYAL CAPITAL SERVICES (I) PVT. LTD., 7, RAJ CRESCENT, BORIVALI (W), MUMBAI-400 092 THE DY.CIT-4(1), AAYAKAR BHAVAN, MUMBAI-400 020 -/ %+ ./ 0 ./PAN/GIR NO. : AABCG 0332K ( /1 /APPELLANT ) .. ( 23/1 / RESPONDENT ) /1 4 % / REVENUE BY : ` SHRI DHAVALJEET KAPOOR 23/1 5 4 % /ASSESSEE BY : MS. AARATI VISSANJI 5 6+ / DATE OF HEARING :01.08.2013 7. 5 6+ / DATE OF PRONOUNCEMENT : 08.08.2013 ,%8 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-8, MUMBAI DT.12.1.2012 PERTAINING TO A.Y. 2006-07. ITA NO.2313/M/2012 C.O. NO. 89/M/2013 2 2. THE CROSS OBJECTION FILED BY THE ASSESSEE IS LAT E BY 40 DAYS. THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR CONDONATION OF DELAY. THE REASONS FOR THE DELAY HAS BEEN GIVEN IN AN AFFIDAVI T DT. 26.4.2013. THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT FOR THE CONDONATION OF DELAY. 3. WE HAVE CAREFULLY PERUSED THE REASONS MENTIONED IN THE AFFIDAVIT. IN OUR HUMBLE OPINION, THE ASSESSEE WAS PREVENTED B Y REASONABLE AND SUFFICIENT CAUSE FOR NOT FILING THE CROSS OBJECTION ON TIME. THEREFORE, THE DELAY IS CONDONED. 4. WE WILL FIRST TAKE UP CROSS OBJECTION FILED BY T HE ASSESSEE BY WHICH THE ASSESSEE HAS CHALLENGED THE REOPENING U/S . 147 OF THE ACT. THE ORIGINAL ASSESSMENT WAS PASSED U/S. 143(3) OF THE A CT AND THE DATE OF THE ORDER IS 24.10.2008. NOTICE U/S. 148 FOR REOPENING THE ASSESSMENT WAS SERVED UPON THE ASSESSEE ON 31.3.2011. THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT U/S. 147 OF THE I.T. AC T IS AS UNDER: IN THIS CASE, RETURN OF INCOME FOR A.Y. 2006-07 WA S FILED ON 2.6.2006 DECLARING TOTAL INCOME OF RS. 1,13,38,480/ -. THE CASE WAS SELECTED FOR SCRUTINY AND ORDER U/S. 143(3 ) WAS PASSED ON 24.10.2008 DETERMINING TOTAL INCOME OF RS . 1,13,52,520/-. SUBSEQUENTLY, IT IS NOTICED THAT DI SALLOWANCE U/S. 14A READ WITH RULE 8D WAS WRONGLY WORKED OUT A T RS. 14,035/- AS DISCUSSED BELOW: A) INTEREST PAID RS. 5,98,892/- B) AVERAGE OF INVESTMENT OF CURRENT AND PREVIOUS YEAR RS.2,13,66,442/- C) AVERAGE OF ASSET OF PREVIOUS AND CURRENT YEAR RS. 4,43,21,757/- ITA NO.2313/M/2012 C.O. NO. 89/M/2013 3 FORMULA IS AXB/C I.E. 598892 X 21366442 44321757 RS. 2,88,711/- (A) HALF PERCENTAGE OF AVERAGE INVESTMENT RS. 1,06,83 2/-(B) (1/2% OF RS. 21366442/-) TOTAL DISALLOWANCE U/S. 14A READ WITH RULE IS (A)+(B) (RS. 288711/- PLUS RS. 106832/-) RS. 3, 95,543/- THEREFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS. 381508/- (RS. 395543 MINUS RS. 14035) HAS ESCAPED A SSESSMENT. TO ROPE IN THE INCOME ESCAPED, ASSESSMENT IS REOPEN ED U/S. 147 OF THE I.T. ACT, 1961 BY ISSUING A NOTICE U/S. 148. NOTICE U/S. 148 IS ISSUED ACCORDINGLY. 5. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESS ING OFFICER HAS NO NEW TANGIBLE MATERIAL FOR REOPENING OF THE ASSESSME NT WHICH IS SINE-QUA- NON FOR THE REOPENING OF THE ASSESSMENT EVEN IF THE REOPENING IS WITHIN 4 YEARS OF THE ASSESSMENT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE REASSESSMENT ORDER. 7. WE HAVE CAREFULLY PERUSED THE REASONS RECORDED F OR THE ASSESSMENT. A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER SHOWS TH AT AT PARA-4, THE AO HAS CONSIDERED THE DISALLOWANCE TO BE MADE U/S. 14A OF THE ACT. WE ALSO FIND THAT THE AO HAS INVOKED PROVISIONS OF SEC. 14A R.W. RULE 8D OF I.T. RULES. FINDINGS OF THE AO IN THE ORIGINAL ASSESSME NT ORDER READ WITH THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT SH OW THAT THE ISSUE RELATING TO THE DISALLOWANCE U/S. 14A R.W. RULE 8D HAS BEEN DULY ITA NO.2313/M/2012 C.O. NO. 89/M/2013 4 CONSIDERED BY THE AO IN THE ORIGINAL ASSESSMENT PRO CEEDINGS AND DISALLOWANCES WERE MADE TO THE TUNE OF RS. 14,035/- . IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT, ACCORDING TO THE AO, THE DISALLOWANCE SHOULD HAVE BEEN RS. 3,95,543/-. THES E FACTS CLEARLY SHOW THAT IT IS A CASE OF CHANGE OF OPINION AS NO NEW TA NGIBLE MATERIAL HAS BEEN BROUGHT ON RECORD WHICH COULD LEAD AND JUSTIFY THE REOPENING OF THE ASSESSMENT. IN THE ABSENCE OF SUCH TANGIBLE MATERI AL, IN OUR CONSIDERATE VIEW, THE NOTICE U/S. 148 IS WITHOUT JURISDICTION A ND THE REASSESSMENT ORDER PASSED IN LIEU OF SUCH NOTICE DESERVES TO BE QUASHED. WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF KELVINATOR OF INDIA 320 ITR 561. THE CROSS OBJECTI ON FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 8. THE APPEAL FILED BY THE REVENUE IS ON MERIT. SIN CE WE HAVE QUASHED THE REASSESSMENT, WE DO NOT FIND IT NECESSA RY TO DECIDE THE ISSUE ON MERIT. THE APPEAL FILED BY THE REVENUE IS ACCORD INGLY DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.08.2013 . ,%8 5 . +% 9 :, ; 8.8.2013 5 B SD/- SD/- (D. MANMOHAN ) (N. K. BILLAIYA ) !'# /VICE PRESIDENT %+ ,- / ACCOUNTANT MEMBER MUMBAI; :, DATED / /2013 . . ./ RJ , SR. PS