Sh. Ravinder Singhania Prop., Phagwara V. The Deputy Commissioner of Income tax, Phagwara

ITA 257/ASR/2010

• Counselvise Citation: 25720914 RSA 2010
• Duration Of Justice: 3 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-08-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 02-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANDEEP VIJHCA
• Keywords: Retrospective amendment; Reassessment proceedings
• Section: 143(3); 234B; 115JB; 154

Judgement Text

ITA NO.257(ASR)/2010 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.257(ASR)/2010 ASSESSMENT YEAR:1997-98 PAN :AGUPR4068H SH.RAVINDER SINGHANIA, VS. DY. COMMR. OF INCOME TA X, PROP. M/S. SINGHANIA & CO. PHAGWARA CIRCLE, PHAGWARA. PHAGWARA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.SANDEEP VIJH,CA RESPONDENT BY:SH.MAHAVIR SINGH, DR DATE OF HEARING:01/08/2013 DATE OF PRONOUNCEMENT:19/08/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR DATED 22.03.2010 FOR THE ASSESSMENT YEAR 1997-98. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ACCEPTING THE PETITION OF THE A.O. AND DIRECTING THE A.O. TO CHARGE INTEREST U/S 234A AN D 234B THROUGH ORDER U/S 250(6) BY HOLDING THAT PARA NO. 32 OF THE APPELLATE ORDER DATED 23/2/2001 STOOD MODIFIED WH ICH AMOUNTS TO REVISION OF HIS EARLIER ORDER. ITA NO.257(ASR)/2010 2 1.(A) THE SUBMISSIONS MADE HAVE NOT BEEN APPRECIAT ED AND IN ANY CASE, IN LEVY OF INTEREST U/S 234B IN VIEW OF THE FACTS OF THIS CASE AND THE LEGAL POSITION IS NOT JUSTIFIED. 2. THE BRIEF FACTS IN THE PRESENT CASE ARE THAT ASS ESSMENT WAS FRAMED ORIGINALLY THROUGH AN ORDER U/S 143(3) DATED 14.2.2 000. THE ORDER WAS AGITATED IN APPEAL BEFORE THE CIT(A) AND THE ISSUE OF LEVY OF INTEREST U/S 234A, 234B AND 234C ON THE RETURNED OR THE ASSESSED INCOME WAS ALSO INVOLVED. THE LD. CIT(A) THROUGH HIS ORDER DATED 2 3.2.2001 HELD IN PARA NO. 3.1 AND 3.2 THAT THE PART OF THE GROUND RELATIN G TO LEVY OF INTEREST U/S 234C WAS INFRUCTUOUS BUT AS FAR AS LEVY OF INTEREST U/S 234A AND 234B WAS CONCERNED, IT WAS HELD THAT THE INTEREST WAS TO BE LEVIED ON THE RETURNED INCOME IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. RANCHI CLUB LTD. REPORTED AT 247 ITR 209. AGAINST T HE ORDER OF THE CIT(A), THE REVENUE FILED AN APPEAL WITH THE ITAT . BEFORE THE APPEAL WAS HEARD BY THE ITAT AN ORDER U/S 154 DATED 6.12.2011 WAS PASSE D BY THE CIT(A) IN VIEW OF THE APPLICATION FILED BY THE A.O. WHEREIN I T WAS HELD THAT IN VIEW OF THE RETROSPECTIVE AMENDMENT MADE BY THE FINANCE ACT , 2001, W.E.F. 1.4.1989, INTEREST U/S 234A AND 234B WAS TO BE LEVI ED ON THE ASSESSED INCOME. AN APPEAL AGAINST THIS ORDER WAS FILED BEFO RE THE ITAT BY THE ASSESSEE. THE APPEAL WAS DISPOSED OFF TOGETHER THR OUGH ORDER OF ITAT DATED 25.8.2006 WHEREIN THE APPEAL AGAINST THE EX-PARTE O RDER U/S 154 WAS SET ITA NO.257(ASR)/2010 3 ASIDE TO THE FILE OF THE CIT(A) AND IT IS THIS ORDE R OF CIT(A) WHICH IS UNDER APPEAL. 3. THE LD. COUNSEL FOR THE ASSESSEE, SH. SANDEEP VI JH, CA RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW ON THE PRESE NT CONTROVERSY INVOLVED: I) SHRIRAM CHITS (BANGALORE) LTD. VS. JCTI 325 ITR 219 (KAR.) II) CIT VS. SUDHIR S.MEHTA 265 ITR 548 (BOM.) III) ACIT VS. M/S. GTL: M.A. 746/MUM/2009 IV) CIT VS. GIAN TALKIES : 31 CTR 93 (P&H) V) EMAMI LTD. VS. CIT 337 ITR 470 (CAL) VI) DCIT (OSD) AHMEDABAD VS. BOSCH REXROTH (INDIA ) LTD . MA NO.84/AHD/2010 DATED 09.09.2011. VII) STAR INDIA (P) LTD. VS. COMMISSIONER OF CENTRAL EXC ISE 280 ITR 321 (SC) VIII) R.KUPPAYEE AND ANOTHER VS. RAJA GOUNDER 265 ITR 551 (SC) 3.1. HE FURTHER PLACED ON RECORD WRITTEN SUBMISSION S CONTAINING 11 PAGES AND RELIED UPON THE SAME AND THE DECISIONS OF VARIO US COURTS OF LAW MENTIONED HEREINABOVE WHERE THE ISSUE IS SQUARELY C OVERED AND STATED THAT ANY RETROSPECTIVE AMENDMENT CANNOT BE A REASON FOR THE RECTIFICATION IN THE ORDER OF THE A.O. 4. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. ITA NO.257(ASR)/2010 4 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE PRESENT CONTROVERSY BEFORE US IS WHETHER RECTIF ICATION CAN BE CARRIED OUT TO AN ORDER WHICH WAS BASED ON THE DECISION OF THE HONBLE SUPREME COURT AND THE ORDER WAS PASSED WHERE THE LAW HAS BEEN AME NDED SUBSEQUENT TO THE DATE OF THE ORDER EVEN THOUGH THE AMENDMENT WAS RET ROSPECTIVE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF VARIOUS COURTS OF LAW IN THE CASE OF SHRIRAM CHITS (BANGALAORE) LTD. VS. JCI T REPORTED IN 325 ITR 219. THE HONBLE SUPREME COURT IN THE CASE OF STAR INDIA (P) LTD. VS. COMMISSIONER OF CENTRAL EXCISE (2006) 280 ITR 321 HAS HELD THAT IT IS WELL ESTABLISHED THAT WHILE IT IS PERMISSIBLE FOR THE LE GISLATURE TO RETROSPECTIVELY LEGISLATE, SUCH RETROSPECTIVITY IS NORMALLY NOT TO CREATE AN OFFENCE RETROSPECTIVELY. THE SERVICE OF BROADCASTING WAS MADE A TAXABLE SERVICE WITH EFFECT FROM JULY 16, 2001 BY THE FINANCE ACT,2 001 IT WAS ONLY AFTER AN AMENDMENT AND A VALIDATING SECTION WERE INTRODUCED BY THE FINANCE ACT, 2002, THAT AGENTS WHO DID NOT BROADCAST BY THEMSELV ES BUT MERELY SOLD TIME SLOTS FOR ADVERTISEMENT AND OBTAINED SPONSORS FOR S ERIALS, PROGRAMMES OR LIVE EVENTS, ETC; ON TELECAST CHANNELS WERE LIABLE TO PA Y SERVICE TAX AS BROADCASTING AGENCY OR ORGANIZATION W.E.F. JULY 1 6, 2001. IT IS CLEAR FROM THE LANGUAGE OF THE VALIDATION SECTION THAT LIABILI TY WAS EXTENDED TO SUCH AGENTS NOT BY WAY CLARIFICATION BUT BY WAY OF AMEND MENT TO THE FINANCE ITA NO.257(ASR)/2010 5 ACT, 2001, WITH RETROSPECTIVE EFFECT. THEY ARE LIAB LE TO PAY INTEREST ON SERVICE TAX IF THEY DID NOT MAKE PAYMENT OF THE TAX WITHIN 30 DAYS FROM MAY 11, 2002, THE DATE OF THE PRESIDENTIAL ASSENT TO T HE FINANCE BILL, 2002. THIS IS ALSO CLEAR FROM THE EXPLANATION TO THE VALIDATIO N SECTION WHICH SAYS THAT NO ACT OR ACTS ON THE PART OF ANY PERSON SHALL BE PUNISHABLE AS AN OFFENCE WHICH WOULD NOT HAVE BEEN SO PUNISHABLE IF THE SECT ION HAD NOT COME INTO FORCE. IF THEY DID NOT MAKE PAYMENT OF THE TAX WITH IN 30 DAYS FROM MAY 11, 2002, THEY WOULD BE LIABLE TO PAY INTEREST AT THE R ATE SPECIFIED ONLY AFTER THAT DATE. THE LIABILITY TO PAY INTEREST WOULD ONLY ARIS E ON DEFAULT AND IS REALLY IN THE NATURE OF A QUASI-PUNISHMENT. SUCH LIABILITY AL THOUGH CREATED RETROSPECTIVELY COULD NOT ENTAIL THE PUNISHMENT OF PAYMENT OF INTEREST WITH RETROSPECTIVE EFFECT. 5.1. THE SAID DECISION OF HONBLE SUPREME COURT IN THE CASE OF STAR INDIA P. LTD. VS. COMMISSIONER OF CENTRAL EXCISE (SC) WAS FOLLOWED BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD. VS. C OMMISSIONER OF INCOME TAX (2011) 337 ITR 470 (CAL), WHERE THE FACTS OF TH E CASE ARE THAT FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE WAS NOT LIABL E TO TAX UNDER SECTION 115JB. BY THE FINANCE ACT, 2002, SECTION 115JB WAS AMENDED WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2001. IN VIEW OF THE AMENDMENT, THE ASSESSEE WAS NOT IN A POSITION TO DEDUCT THE SUM OF RS.26.51 CRORES ITA NO.257(ASR)/2010 6 WITHDRAWN FROM THE REVALUATION RESERVES. THUS, THE ASSESSEE RECOMPUTED THE BOOK PROFIT U/S 115JB FOR THE A.Y. 2001-02 ON THE B ASIS THAT THE SUM OF RS.26.51 CRORES CREDITED TO THE PROFIT AND LOSS ACC OUNT WAS NOT DEDUCTIBLE. ON SUCH BASIS, THE ASSESSEE WORKED OUT THE AMOUNT O F TAX PAYABLE AT R.1,55,62,511 AND PAID THE TAX. THE A.O. COMPUTED T HE TAX LIABILITY UNDER SECTION 115JB WITH INTEREST U/S 234B AND 234C SINCE THE ASSESSEE DID NOT PAY ANY ADVANCE TAX WITH REFERENCE TO THE LIABILITY FOR TAX UNDER THE AMENDED SECTION 115JB. THE TRIBUNAL UPHELD THE ORDER. ON AP PEAL: HELD, THAT THE LAST DATE OF THE RELEVANT FINANCIAL YEAR WAS MARCH 31, 2001, AND ON THAT DAY, ADMITTEDLY, THE ASSESSEE HA D NO LIABILITY TO PAY ANY AMOUNT OF ADVANCE TAX IN ACCORDANCE WITH THE L AW THEN PREVAILING. THE AMENDED PROVISIONS OF SECTION 115J B HAVING COME INTO FORCE W.E.F. APRIL, 2001, THE ASSESSEE COULD NOT BE HELD A DEFAULTER WITH RESPECT TO THE PAYMENT OF ADVANCE T AX. ON THE LAST DATE OF THE FINANCIAL YEAR PRECEDING THE RELEVANT ASSES SMENT YEAR, AS THE BOOK PROFITS OF THE ASSESSEE IN ACCORDANCE WITH TH E THEN PROVISION OF LAW WERE NIL, THERE WAS NO ADVANCE TAX PAYABLE WI THIN THE LAST DAY OF THE FINANCIAL YEAR PRECEDING THE RELEVANT ASSESSME NT YEAR AS PROVIDED IN SECTIONS 207 AND 208 OR WITHIN THE DATES INDICA TED IN SECTION 211. INTEREST COULD NOT BE LEVIED UNDER SECTION 234B AND 234C. 5.2 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. SUDHIR S. MEHRA, REPORTED IN 265 ITR 548, WHERE THE FACTS OF THE CASE ARE THAT : ON NOVEMBER 7, 1990, NOTICE U/S 148(1) OF THE INC OME TAX ACT, 1961, AS IT STOOD AT THE MATERIAL TIME, WAS GIVEN BY THE ASSESSING OFFICER, CALLING UPON THE ASSESSEE TO FILE A RETUR N OF HIS INCOME WITHIN THIRTY DAYS. HENCE, BEFORE THE TRIBUNAL, AN ADDITI ONAL GROUND OF APPEAL WAS RAISED BY THE ASSESSEE TO THE EFFECT TH AT INITIATION OF REASSESSMENT PROCEEDINGS WAS BAD IN LAW AND VOID A S THE NOTICE DATED ITA NO.257(ASR)/2010 7 NOVEMBER 7, 1980, WAS CONTRARY TO SECTION 148(1, A S IT STOOD AT THE RELEVANT TIME. THIS ARGUMENT WAS ACCEPTED BY THE T RIBUNAL ON JUNE 26, 1996. HOWEVER, THE LAW WAS AMENDED BY THE FINA NCE (NO.2) ACT,1996, RETROSPECTIVELY W.E.F. APRIL 1, 1989 BY WHICH THE EXPRESSION NOT BEING LESS THAN THIRTY DAYS IN SECTION 148(1 ) STOOD DELETED. THIS AMENDING ACT WAS ASSENTED TO BY THE PRESIDENT ON S EPTEMBER 28, 1996. PURSUANT TO THE SAID AMENDMENT, THE DEPARTME NT MOVED A MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL U/S 254(2) OF THE INCOME-TAX ACT FOR RECTIFICATION OF THE ORDER PASS ED BY THE TRIBUNAL ON JUNE 26,1996, ON THE GROUND THAT WITH THE CHANGE I N LAW RETROSPECTIVELY FROM APRIL 1, 1989 THE JUDGMENT DA TED JUNE 26, 1996, NEEDED RECTIFICATION. THE APPLICATIONS WERE DISMIS SED BY THE TRIBUNAL ON THE GROUND THAT THERE WAS NO APPARENT ERROR ON RECORD AS THE AMENDING ACT RECEIVED THE ASSENT OF THE PRESIDENT ON SEPTEMBER 28, 1996, I.E. AFTER THREE MONTHS FROM JUNE 26, 1996, WHEN THE APPEALS WERE DISPOSED OF BY THE TRIBUNAL. ON FURTHER APPEA L TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THE AMENDING ACT OPERATES W.E.F. APRIL 1, 1989. HOWEVER, THE AMENDING ACT GOT THE P RESIDENTIAL ASSENT ONLY ON SEPTEMBER 28, 1996, BY WHICH TIME THE ENTI RE GAMUT OF REASSESSMENT PROCEEDINGS, IN THE CASE, GOT CONCLUD ED BEFORE THE TRIBUNAL WHEN IT ALLOWED THE APPEAL OF THE ASSESSE E STRIKING DOWN INITIATION OF REASSESSMENT PROCEEDINGS UNDER THEN EXISTING LAW. THAT DECISION OF THE TRIBUNAL WAS DELIVERED ON JUNE 26, 1996, I.E. THREE MONTHS PRIOR TO THE AMENDING LAW RECEIVING PRESIDE NTIAL ASSET. THERE WAS NO MISTAKE APPARENT FROM THE RECORD IN THE ORD ER OF THE TRIBUNAL DATED JUNE 26, 1996. 5.3. THE HONBLE SUPREME COURT IN THE CASE OF SHRIR AM CHITS (BANGALORE ) LTD. VS. JCIT REPORTED IN (2010) 325 ITR 219 (KARN. ), WHERE THE FACTS OF THE CASE ARE THAT : THE ASSESSEE FILED ITS RETURN FOR THE ASSESSMENT YEAR 1998-99. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 AND REFUND OF RS.19,52,528 (INCLUDING INTEREST OF RS.1 ,61,168) WAS ORDERED AND THE AMOUNT WAS ADJUSTED TOWARDS THE AR REARS OF TAX PAYABLE BY THE ASSESSEE FOR THE EARLIER ASSESSMENT YEARS. A NOTICE U/S ITA NO.257(ASR)/2010 8 143(2) WAS ISSUED. AFTER HEARING, AN ORDER WAS PA SSED DIRECTING THE ASSESSEE TO PAY THE BALANCE OF RS.74,56,355. THIS ORDER WAS PASSED ON JANUARY 29,2001. SUBSEQUENTLY, A NOTICE U/S 154 WA S ISSUED TO THE ASSESSEE ON THE GROUND THAT INTEREST PAYABLE U/S 234B HAD NOT BEEN LEVIED WHILE PASSING THE ORDER OF ASSESSMENT. THE ORDER OF RECTIFICATION WAS REQUIRED TO BE PASSED BY HIM IN VIEW OF THE SUBSEQUENT RETROSPECTIVE AMENDMENT OR SECTION 234B OF THE FINANCE ACT, 2001. THIS ORDER WAS UPHELD BY THE COMMISSION ER (APPEALS) AND THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: HELD, ALLOWING THE APPEAL, THAT IN VIEW OF THE JU DGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282, IT WAS NOT POSSIBLE FOR THE A.O. TO REOPEN THE CASE SINCE THE A.O. HAD RIGHTLY PASSED THE ORDER RELYING UPON THE JUDGMENT OF CIT VS. RANCHI CLUB LTD. {2001} 247 ITR 209 WHILE PASSING THE ORDER OF ASSESSMENT. JUST BECAUSE THERE WAS A SUBSEQUENT AMENDMENT, THE ASSE SSING OFFICER COULD NOT REOPEN THE FILE. THE ORDER OF RECTIFICAT ION WAS NOT VALID. 5.4. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE ISSUE IS IDENTICAL WHERE THE A.O. HAS MADE THE RECTIFICATION IN VIEW OF THE RETROSPECTIVE AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 1996, RETROSPECTIVELY W.E.F. APRIL 1, 1989 WHERE THE INT EREST UNDER SECTION 234B OF THE ACT WAS TO BE LEVIED ON THE ASSESSED INCOME. TH EREFORE, IN VIEW OF THE DECISION RELIED UPON HEREINABOVE, THERE WAS NO MIST AKE APPARENT FROM RECORD IN THE ORDER OF THE A.O. THEREFORE, ANY RETROSPECTI VE LEGISLATION IN OUR VIEW WILL NOT CREATE ANY LIABILITY RESPECTIVELY SINCE ON THE LAST DATE OF THE FINANCIAL YEAR PRECEDING RELEVANT ASSESSMENT THERE WAS NO AD VANCE TAX PAYABLE WITHIN THE LAST DAY OF THE FINANCIAL YEAR AND THEREFORE, U NDER THE PRESENT FACTS AND CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) IS BAD I N LAW AND NO INTEREST U/S ITA NO.257(ASR)/2010 9 234A & 234B OF THE ACT CAN BE LEVIED AS PER FINDING S HEREINABOVE. ACCORDINGLY, GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.257(ASR)/2010 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH AUGUST, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19TH AUGUST, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. RAVINDER KUMAR SINGHANIA, , PHAGWA RA. 2. THE DCIT, PHAGWARA CIRCLE, PHAGWARA. 3. THE CIT(A), JLR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.