DCIT, CHENNAI V. M/s. Indian Overseas Bank, CHENNAI

ITA 247/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0906 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A.NO.97/MDS/2010 ASSESSMENT YEAR : 2001-02 M/S INDIAN OVERSEAS BANK 763, MOUNT ROAD CHENNAI 600 002 VS THE DY. CIT LARGE TAXPAYER UNIT CHENNAI [PAN AAACI 1223 J] (APPELLANT) (RESPONDENT) I.T.A.NO.247/MDS/2010 ASSESSMENT YEAR : 2001-02 THE DY. CIT LARGE TAXPAYER UNIT CHENNAI VS M/S INDIAN OVERSEAS BANK 763, MOUNT ROAD CHENNAI 600 002 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. NARESH, CA DEPARTMENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 30-01-2013 DATE OF PRONOUNCEMENT : 31-01-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT(A), LARGE TAX PAYER UNIT, CHENNAI, DATED 30.11.2009. I.T.A.NO.97 & 247/10 :- 2 -: 2. GROUND NO.1 IN THE ASSESSEES APPEAL READS AS UNDE R: THE LEARNED CIT(A) HAD ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT ALREADY COMPLETED U/S 143(3) AFTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, TO TAX UNCLAIMED DEPOSITS, ESTIMATED INCOME ON RECOVERY FROM ECGC, DISALLOW EXPENDITURE ON GRATUITY, PENSION AND LEAVE SALARY A ND RECOMPUTE THE BOOK PROFITS, WHERE THERE HAD BEEN NO FAILURE ON THE PART OF THE APPELLANT TO FILE THE RE TURN OF INCOME OR DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR ASSESSMENT. HENCE THE REOPENING WAS BASED ONLY ON CHANGE OF OPINION AND THE ASSESSMENT NEEDS TO BE STRUCK DOWN AS INVALID ON THESE GROUNDS ITSELF. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT FOR THE ASSES SMENT YEAR 2001-02, IN THE CASE OF THE ASSESSEE, ASSESSMENT WAS COMPLE TED U/S 143(3) OF THE ACT ON 31.3.2004. THEREAFTER THE RE-ASSESSMENT PROCEEDINGS U/S 148 WAS INITIATED ON 18.3.2008 BY RECORDING THE REA SONS AS UNDER: I.T.A.NO.97 & 247/10 :- 3 -: I.T.A.NO.97 & 247/10 :- 4 -: 4. IN PURSUANCE TO THE ABOVE INITIATION OF RE-ASSESSME NT PROCEEDINGS, THE ORDER UNDER APPEAL WAS PASSED. TH E ASSESSEE CHALLENGED BEFORE US THE VALIDITY OF THE INITIATION OF RE-ASSESSMENT PROCEEDINGS ON THE ABOVE RECORDED REASONS. WE FIND THAT IN THE INSTANT CASE, RE-ASSESSMENT PROCEEDINGS WERE INITIA TED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. PROVISO TO SECTION 147 PROVIDES THAT IN A CASE ASSESSMENT HAS BEEN MADE U/S 143(3), INITIATION OF RE-ASSESSMENT PROCEEDINGS CAN BE MADE ONLY WHEN THERE IS A FAILURE ON THE PART OF THE ASSESSE E EITHER TO FILE RETURN OF INCOME OR TO DISCLOSE ALL MATERIAL FACTS TRULY A ND COMPLETELY. WE FIND FROM THE RECORDED REASONS THAT NO SUCH DEFAULT HAS BEEN ALLEGED IN THE REASONS RECORDED BY THE ASSESSING OFFICER. FURTHER, THE ALLEGED ESCAPEMENT OF INCOME HAS BEEN ALLEGED ONLY ON THE BASIS OF INFORMATION FURNISHED BY THE ASSESSEE IN THE RETUR N OF INCOME OR ACCOMPANIED DOCUMENTS. THUS, WE FIND THAT IT IS NO T THE CASE OF THE ASSESSING OFFICER THAT THE ALLEGED INCOME ESCAPEMEN T IS BECAUSE OF ANY FAILURE ON THE PART OF THE ASSESSEE AS ENVISAG ED IN THE PROVISO TO SECTION 147 OF THE ACT . THEREFORE, IN OUR CONSIDER ED OPINION, REOPENING OF ASSESSMENT IN THE INSTANT CASE ON 18.3 .2008 AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR WAS BAD IN LAW. FURTHER, WE FIND THAT A PERUSAL OF THE ABOVE RECORD ED REASONS REVEALS THAT THE RE-ASSESSMENT PROCEEDINGS IN THE INSTANT C ASE WAS INITIATED I.T.A.NO.97 & 247/10 :- 5 -: ONLY ON THE BASIS OF THE OBSERVATION OF A SYSTEM RE VIEW AUDIT CONDUCTED BY C&AG AUDIT. 5. RECENTLY, THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS THE SIMBHAOLI SUGAR MILLS LIMITED, IN I.T.A.NOS.139 1/2009, 1362/2009 & 1130/2009, ORDER DATED 9.3.2011, HAS HELD AS UNDE R: 11.THERE IS ALSO CATENA OF JUDGMENTS TO THE EFFECT THAT INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF AUDIT REPORT OBJECTIONS IS BAD IN LAW. A REFERENCE IN THI S REGARD CAN BE MADE TO JUDGMENT OF OUR HIGH COURT TITLED TRANSWORLD INTERNATIONAL INC. V. JOINT COMMISSIONER OF INCOME TAX, (2005) 273 ITR 242 AND ALSO JUDGMENTS OF SUPREME COURT IN INDIAN AND EASTERN NEWSPAPER SOCIETY V. COMMISSIONER OF INCOME TAX, NEW DELHI, (1979) 119 ITR 996 ND COMMISSIONER OF INCOME TAX V. LUCAS T.V.S. LTD., (2001) 249 ITR 306. 12.THE SUM AND SUBSTANCE OF DISCUSSION IS THAT REAS SESSMENT PROCEEDINGS UNDER SECTION 147 READ WITH 148 OF THE ACT CANNOT BE INITIATED MERELY BASED ON THE AUDIT REPOR T . AN AUDIT IS PRINCIPALLY INTENDED FOR THE PURPOSE OF SATISFYI NG THE AUDITOR WITH REGARD TO SUFFICIENCY OF RULES AND PROCEDURES PRESCRIBED FOR THE PURPOSE OF SECURING AN EFFECTIVE CHECK ON T HE ASSESSMENT , COLLECTION AND PROPER ALLOCATION OF RE VENUE. AS PER PARA (3) OF THE CIRCULAR ISSUED BY THE BOARD ON JULY 28, 1960, ALSO AN AUDIT DEPARTMENT SHOULD NOT IN ANY WA Y SUBSTITUTE ITSELF FOR THE REVENUE AUTHORITIES IN TH E PERFORMANCE OF THEIR STATUTORY DUTIES. 6. STILL FURTHER, WE FIND THAT THE RECORDED REASONS DO ES NOT REVEAL OWN BELIEF OF THE ASSESSING OFFICER IN THE E SCAPEMENT OF ALLEGED INCOME FROM ASSESSMENT. I.T.A.NO.97 & 247/10 :- 6 -: 7. FOR ALL THE ABOVE REASONS, WE ARE SATISFIED THAT RE OPENING OF ASSESSMENT IN THE INSTANT CASE WAS BAD IN LAW. WE, THEREFORE, SET ASIDE THE IMPUGNED ASSESSMENT ORDER PASSED U/S 147 OF THE ACT IN PURSUANCE TO SUCH INVALID REOPENING OF ASSESSMENT. THEREFORE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN VIEW OF OUR ABOVE DECISION IN RESPECT OF GROUND NO.1 OF THE APPEAL OF THE ASSESSEE, THE OTHER GROUNDS OF A PPEAL OF THE ASSESSEE AND THE GROUNDS OF APPEAL OF THE REVENUE H AVE BECOME INFRUCTUOUS, HENCE, REQUIRES NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 31 ST OF JANUARY, 2013, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 31 ST JANUARY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR