METRO ISPAT P. LTD, MUMBAI V. ACIT 6(3), MUMBAI

ITA 2553/MUM/2010

• Counselvise Citation: 255319914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 01-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARIGOVIND SINGH
• Assessee Lawyers: UTTAM CHAND BOTHRA
• Keywords: Revised return; Reason to believe; Reassessment proceedings; Set aside
• Section: 148; 142(1); 143(1); 143(2); 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.S. SYAL R.S. SYAL R.S. SYAL R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 2553/MUM/2010 ASSESSMENT YEAR-2003-04 M/S. METRO ISPAT PVT. LTD., 3 RD FLOOR, POTIA INDL. ESTATE DARUKHANA, MUMBAI-400 010 PAN-AABCM 8021M VS. THE ACIT 6(3), 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI UTTAMCHAND BOTHRA RESPONDENT BY: SHRI HARI GOVIND SINGH O R D E R O R D E R O R D E R O R D E R PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 9.12.2009 PASSED BY THE LD. CIT(A)-12, MU MBAI FOR THE ASSESSMENT YEAR 2003-04. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE ASSESSEE IN RESPONSE TO THE NOTICE U/S. 148 OF THE I.T. ACT, 1961 HAS FILED THE RETURN OF INCOME ON 30.5.2008 DECLARING TOTAL LOSS AM OUNTING TO `. 82,02,342/-. NOTICES U/S 143(2) AND 142(1) OF THE I. T. ACT, 1961 WERE ISSUED. THE ASSESSING OFFICER PASSED THE ORDER ON 24.11.20 08 AND MADE CERTAIN DISALLOWANCES. 3. THE ASSESSING OFFICER DISALLOWED CLAIM OF EXCISE DUTY AMOUNTING TO `. 12,96,995/- PAID IN RESPECT OF PROCESSING CHARGE S RECEIVED FROM STEEL AUTHORITY OF INDIA FOR CONVERSION PURPOSES. ITA NO. 2553/MUM/2010 2 4. ON FURTHER APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED AS FOLLOWS: GROUND NO.2 IS AGAINST DISALLOWANCE OF EXCISE DUTY CLAI M OF RS.12,96,995/-. THE FACTS ARE THAT WHILE FINALIZING T HE ACCOUNTS OF SUBSEQUENT YEAR I.E. 2005-06 IT WAS NOTICED BY THE APP ELLANT DURING THE RECONCILIATION OF THE EXCISE DUTY ACCOUNT THAT CERTAIN AMOUNT OF EXCISE DUTY PAID DURING THE F.Y. 2002-03 H AD NOT BEEN DEBITED TO THE EXPENDITURE ACCOUNT. THE ACCOUNTS FO R F.Y. 2002- 03 HAD BEEN FINALIZED AT THAT TIME. NO DEBIT COULD ALSO BE MADE IN THE ACCOUNTS FOR F.Y. 2005-06. HOWEVER, WHILE FIL ING THE RETURN OF INCOME THE EXPENDITURE ON ACCOUNT OF EXCISE DUTY PAYMENT IN 2002-03 WAS CLAIMED AS A DEDUCTION. THE DEDUCTION WAS NOT ALLOWED RELYING ON THE S.C. DECISION IN THE CASE OF S UN ENGG. WORKS PVT. LTD. (198 ITR 297) WHERE, IT WAS HELD THAT NO FRESH CLAIM CAN BE MADE BY THE ASSESSEE DURING RE-ASSESSMENT PROCEEDINGS. THE APPELLANT SUBMITTED THAT THE DECISION IN THE CASE OF SUN ENGG. WORKS P. LTD. DID NOT APPLY IN ITS OWN CASE SINCE UNLIKE IN THE CASE OF SUN ENGG. WORKS P. LTD. NO ASSESSMENT HAD BEEN DONE IN THE CASE OF THE APPELLANT. THE RETURN SUBMITT ED BY THE APPELLANT WAS PROCESSED U/S. 143(1) WHICH COULD NOT BE TREATED AS AN ASSESSMENT. THERE WAS NO ORIGINAL ASSESSMENT IN THE APPELLANTS CASE. THE FIRST ASSESSMENT MADE IN THE APPELL ANTS CASE WAS AFTER ISSUE OF NOTICE U/S. 148 I.E. RE-ASSESSMENT PROCEEDINGS. SINCE IT WAS THE FIRST ASSESSMENT IN THE APPE LLANTS CASE, IT COULD NOT BE CALLED AS RE-ASSESSMENT. 5. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSIONS. I AM NOT INCLINED TO AGREE WITH THE APPELLANT. IN THE APPELLANTS CASE THE RETURN HAD BEEN ACCEPTED AND PROCESSED U/S.143(1). THE ASSESSMENT U/S.143(3) HAD NOT BEEN TAKEN UP BY ISSUE OF NOTICE U/ S. 143(2). THE ASSESSMENT PROCEEDINGS IN CASE OF THE APPELLANT WOULD THEREFORE, BE TREATED AS CLOSED. THE S.C. IN THE CASE OF GOETZ INDIA LTD. (284 ITR 323) HAS HELD THAT A DEDUCTION C AN BE CLAIMED IF RETURN HAS BEEN FILED ONLY BY WAY OF FILING OF RE VISED RETURN. THE AO HAS NO JURISDICTION TO ENTERTAIN CLAIM MADE O THERWISE. IN THE CASE OF THE APPELLANT THE TIME LIMIT FOR FILING OF REVISED RETURN U/S.139(5) HAD EXPIRED. NO REVISED RETURN HAS BEEN FI LED. IN THE LIGHT OF THE S.C. JUDGEMENT CITED ABOVE, THE CLAIM OF THE ITA NO. 2553/MUM/2010 3 APPELLANT FOR EXPENDITURE NOT CLAIMED IN THE ORIGIN AL RETURN CAN NO LONGER BE ENTERTAINED. SECONDLY, THE PROVISIONS OF SEC.147 AND 148 CLEARLY ST ATE THAT RE-ASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE WOULD BE TAKEN UP IF THE A.O. HAS REASON TO BELIEVE THAT INCOM E HAS ESCAPED ASSESSMENT. THE A.O. WOULD THEN ASSESS OR REASSESS SUCH INCOME AS ALSO ANY OTHER INCOME CHARGEABLE TO TA X WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE PROCEEDINGS U/S.147. THE EMPHASIS IS ON THE WORDS SUCH INCOME WHICH MEANS INCOME WHICH HAS ESCAPED ASSESSMENT. THE PROVISION OF SEC.147 LEAVES NO SCOPE FOR THE APPELLANT TO MAKE A N ADDITIONAL CLAIM IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.14 8. THERE IS NO JURISDICTION TO THE AO TO ENTERTAIN SUCH CLAIM. THE R EOPENING OF AN ASSESSMENT IS ONLY FOR THE BENEFIT OF REVENUE. THIS PR OPOSITION IS NEW STATUTORILY RECOGNIZED IN THE AMENDED SECTION 8 0 OF THE ACT. IT HAS BEEN HELD THAT LOSS CLAIMED IN RETURN U/S. 148 CANNOT BE DETERMINED OR CARRIED FORWARD [KOPPIND P. LTD. 2 07 ITR 228 (CAL), COMMISSIONER OF INCOME TAX VS. AGRO DEV. CORPN (248 ITR 487) (J&K)]. 6. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISE D THE FOLLOWING GROUND: THE LD. ACIT HAS ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN DISALLOWING EXCISE DUTY CLA IM OF `. 12,96,995/- WITHOUT ASSIGNING ANY VALID REASONS: 7. THE ASSESSEE FURTHER RAISED ADDITIONAL GROUNDS BEFORE US AS FOLLOWS: 2A. THAT WHETHER THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE ERRED IN CON SIDERING THE WHOLE CONVERSION CHARGES (WHICH INCLUDES EXCISE DUT Y) WHILE DETERMINING THE TAXABLE ASSESSED EVEN AFTER THESE FACTS HAVE BEEN BROUGHT TO THEIR NOTICE. 2B. THAT WHETHER THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN NOT CONSIDERIN G THE REGULAR ACCOUNTING SYSTEM FOLLOWED BY YOUR APPELLANT BY NOT INCLUDING EXCISE DUTY IN SALES? ITA NO. 2553/MUM/2010 4 2C. THAT WHETHER THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCE OF THE CASE IN APPLYING THE RATIO OF JUDGMENT DECIDED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SUN ENGINEERING WORKS (P) LTD. (1992) 192 ITR 297 (S C). 2A. THAT WITHOUT PREJUDICE TO ANY OF THE PRAYERS MEN TIONED AT SERIAL NO. 1 & 2 ALTERNATIVELY CONVERSION CHARGES WHIC H IS EXCESSIVELY CONSIDERED TO THE EXTENT OF EXCISE DUTY INC LUDED THEREIN BE CONSIDERED AFTER REDUCING THEREFORM THE C ONTENTS OF EXCISE DUTY, WHICH IS NOT PART OF THE TOTAL INCOME AN D THE INCOME OF YOUR APPELLANT BE ASSESSED ACCORDINGLY. 8. THE LD. COUNSEL FOR THE ASSESSEE SHRI UTTAMCHAND BOTH RA SUBMITTED AS FOLLOWS: BEFORE DISCUSSING FURTHER IN THE MATTER, IT IS BETTER T O ANALYSE THE JUDGMENT OF THE HONBLE SUPREME COURT CI TED BY THE ASSESSING OFFICER. WHILE DISCUSSING THE WORK ASSESSMENT AND REASSESSMENT, THE SUPREME COURT CAME TO THE CONCLUSION T HAT IN CASE OF REASSESSMENT ONLY, NO NEW CLAIMS CAN BE MADE BUT IN THE CASE OF ASSESSMENT MADE FOR THE FIRST TIME U/S. 147, NEW CLAIMS CAN BE MADE. THE SAID OBSERVATION WAS BASED ON T HIS PRINCIPAL THAT WHEN REASSESSMENT IS MADE, THE FIRST ASSESSME NT PROCEEDINGS BECOME FINAL IN ALL RESPECT AND NO NEW CL AIM CAN BE MADE. IN YOUR APPELLANTS CASE, THIS IS FOR THE FIRST TIME ASSESSMENT IS MADE. NO REASSESSMENT IS MADE IN THE CASE OF YOUR APPELLANT. HENCE, YOUR APPELLANT HAS FULL RIGHT S TO CLAIM ANY EXPENSES WHICH ARE OTHERWISE ALLOWABLE. IN VIEW OF THI S, THE JUDGMENT CITED BY THE ASSESSING OFFICER IS NOT APPLICAB LE IN THE CASE OF YOUR APPELLANT. 9. WE FIND THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF EXCISE DUTY AMOUNT ING TO RS.12,96,995/- PAID IN RESPECT OF PROCESSING CHARGES IN RESPECT OF GOODS RECEIVED FROM STEEL AUTHORITY OF INDIA FOR CO NVERSION PURPOSE. SUCH LIABILITY WAS NOTICED WHILE FINALIZING THE ACC OUNTS FOR THE YEAR ENDED 31 ST MARCH, 2005 AND EFFECT OF THE SAME WAS GIVEN IN THAT ITA NO. 2553/MUM/2010 5 BALANCE SHEET. THE AO HAS DISALLOWED THE CLAIM BY MAKI NG THE FOLLOWING OBSERVATION :- IT IS NOTICED FROM THE RETURN OF INCOME FILED IN RESP ONSE TO THE NOTICE U/S.148 THAT THE ASSESSEE HAS CLAIMED AN AMOUN T OF RS.12,96,995/- AS EXCISE DUTY NOT CLAIMED IN THE PROFI T & LOSS ACCOUNT. HOWEVER, NO EVIDENCE IN SUPPORT THEREOF HAS BEEN FILED BY THE ASSESSEE DURING THE COURSE OF REASSESSMENT PROCEEDING S. WITHOUT GOING INTO THE MERITS OF CLAIM, IT IS PERTINE NT TO MENTION HERE THAT THIS CLAIM OF THIS ASSESSEE AMOUNTING TO RS.12,96,995/= AS EXCISE DUTY, CANNOT BE ENTERTAINED A T THIS STAGE IN VIEW OF THE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF SUN ENGINEERING WORKS PVT. LTD. (198 ITR 297), WH EREIN IT HAS BEEN HELD THAT IT MAY NOT BE OPEN TO THE ASSESSEE TO MA KE A FRESH CLAIM, WHICH HAVE NEVER BEEN AGITATED DURING T HE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, IN THE REASSESSMENT PROCEEDINGS. ACCORDINGLY, THE AFORESAID CLAIM OF RS.1 2,96,995/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF T HE ASSESSEE. 11. WE FIND THAT IN THE CASE OF SUN ENGINEERING WORK S (P) LTD. VS CIT IT HAS BEEN HELD AS FOLLOWS: THE HIGH COURT CLEARLY FELL IN ERROR BY PERMITTING THE ASSESSEE TO REAGITATE, IN THE REASSESSMENT PROCEEDINGS UNDE R SECTION 147(A), THE FINALLY CONCLUDED ASSESSMENT PROCEED INGS AND TO GRANT TO HIM RELIEF IN RESPECT OF ITEMS NOT ON LY EARLIER REJECTED, BUT ALSO UNCONNECTED WITH THE ESCAPEMENT OF INCOME BY ASSUMING AS IF THE ORIGINAL ASSESSMENT HAD NOT BEEN CONCLUDED OR WAS STILL OPEN 12. THE RATIO OF THE DECISION IN THE CASE OF SUN ENGI NEERING WORKS (P) LTD. IS THAT ONCE AN ASSESSMENT IS VALIDLY REOPENED ONLY THE PREVIOUS UNDERASSESSMENT IS SET ASIDE AND NOT THE ORIGINAL ASSESSMENT PROCEEDINGS PARTICULARLY IF IT HAS ACQUIRED FINALITY. IN THE REASSESSMENT PROCEEDINGS IT IS NOT OPEN TO AN ASSESSEE TO SEEK A REVIE W OF THE CONCLUDED ITEM, UNCONNECTED WITH ESCAPEMENT OF INCOM E. ITA NO. 2553/MUM/2010 6 13. HENCE IN OUR OPINION WHEN EXCISE DUTY AMOUNTING TO `. 12,96,995/- WHICH IS UNCONNECTED WITH THE ESCAPEMENT OF INCOME HAS BEEN CONCLUDED FINALLY AGAINST THE ASSESSEE IN THE REASSESSM ENT PROCEEDINGS, IT IS NOT OPEN TO THE ASSESSEE TO RAISE A FRE SH CLAIM DE HORS THE ISSUE IN REASSESSMENT. IT IS OBVIOUS THAT THE REA SSESSMENT PROCEEDINGS ARE ALWAYS INTENDED TO PUT THE REVENUE I N THE BENEFICIAL POSITION SO AS TO CHARGE ANY INCOME WHICH ESCAPED TAXAT ION AT AN EARLIER STAGE. SUCH PROCEEDINGS CANNOT BE USED BY THE ASSESSEE FOR MAKING A FRESH CLAIM AND THUS PUTTING IT IN AN ADVANT AGEOUS POSITION. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON THIS 25 TH DAY OF MAY, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 25 TH MAY, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 2553/MUM/2010 7 DATE INITIALS 1 DRAFT DICTATED ON: 13 .0 5 . 2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 18 .0 5 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______