MODEPRO INDIA PVT.LTD., MUMBAI V. DCIT-10(2), MUMBAI

ITA 2681/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7286 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-03-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 27-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA; S S RANA
• Assessee Lawyers: SUBHODH L RATNAPARKHI
• Keywords: Invalid notice; Reason to believe
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.K.GUPTA, JM AND SHRI R.S.SYAL, AM ITA NO.2681/MUM/2009 : ASST.YEAR 2000-2001 M/S.MODEPRO INDIA PRIVATE LIMITED 409, BEZZOLA COMPLEX SION TROMBAY ROAD, CHEMBUR, MUMBAI 400 071. PA NO.AAACM5846P. VS. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 10(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHODH L.RATNAPARKHI RESPONDENT BY : S/SHRI VIRENDRA OJHA & S.S.RANA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER P ASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 30.1.2009 IN RELATION TO THE ASSESSMENT YEAR 2005- 2006. 2. THE FIRST GROUND IS AGAINST THE REOPENING OF THE ASSESSMENT. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS R ETURN DECLARING TOTAL INCOME AT RS.1,07,10,220 ON 29.11.2000. THE ASSESSMENT U/S.14 3(3) WAS COMPLETED ON 26.3.2003. SUBSEQUENTLY ON THE PERUSAL OF THE RECOR DS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE FAILED TO INCLUDE MODVAT CREDIT O F RS.2,09,274 IN ITS CLOSING STOCK IN CONTRAVENTION OF THE PROVISIONS OF SECTION 145A. NOTICE U/S.148 WAS ISSUED ON 30.3.2006. THE ASSESSMENT WAS FINALLY COMPLETED AT AN INCOME OF RS.1.09 CRORE THEREBY MAKING ADDITION OF RS.2,09,274 ON ACCOUNT O F MODVAT CREDIT. THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE FACTS AND MAKE ADDITION IF THERE WAS DIFFERENCE IN THE FIGURE AS POINTED OUT BY THE ASSESSEE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. COPY OF THE REASONS RECORDED BY THE A.O. FO R REOPENING OF THE ASSESSMENT IS ITA NO.2681/MUM/2009 M/S.MODEPRO INDIA PRIVATE LIMITED. 2 AVAILABLE AT PAGE 3 OF THE PAPER BOOK. THE FOLLOWIN G REASON HAS BEEN NOTED BY THE ASSESSING OFFICER. ON GOING THROUGH THE RECORDS OF THE ASSESSEE COMPA NY FOR A.Y. 2000-01 IT IS SEEN THAT THERE WAS BALANCE OF MODVAT CREDIT IN RG- 23 PART-KII OF RS.2,09,274/- AS REPORTED IN TAX AUD IT REPORT. HOWEVER IT IS NOTICED THAT THE BALANCE OF MODVAT CREDIT OF RS.2,09,274 AT THE END OF THE YEAR HAS NOT BEEN INCLUDED IN THE CLOSIN G STOCK. AS PER THE PROVISIONS OF SECTION 145A OF THE IT AC T 1961, THE VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSE OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD P ROFIT AND GAINS OF BUSINESS SHALL BE FURTHER ADJUSTED TO INCLUDE T HE AMOUNT OF ANY TAX, CESS OR FEES ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO PLACE OF ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION. THEREFORE, THE BALANCE OF MODVAT CREDIT UNAVAILED OF RS.2,09,274/- IS REQUIRED TO BE INCLUDED IN THE VAL UE OF CLOSING STOCK. I HAVE THEREFORE REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.2,09,274 HAS ESCAPED ASSESSMENT WITHIN THE MEANI NG OF SECTION 147 OF THE IT ACT 1961 BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. 4. FROM THE REASONS FOR REOPENING AS RECORDED ABOVE , IT IS SEEN THAT THE ASSESSING OFFICER PROCEEDED TO MAKE REASSESSMENT ON ACCOUNT OF MODVAT CREDIT OF RS.2.09 LAKHS WHICH WAS NOT INCLUDED IN THE VALUE O F CLOSING STOCK. IT IS SEEN THAT THE REFERENCE TO SUCH AMOUNT OF RS.2.09 LAKHS WAS R EPORTED IN TAX AUDIT REPORT. THE FIRST PROVISO TO SECTION 147 PROVIDES THAT WHER E AN ASSESSMENT HAS BEEN MADE U/S.143(3), NO ACTION SHALL BE TAKEN UNDER THIS SEC TION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IT IS CLEAR THAT WHER E ORIGINAL ASSESSMENT U/S.143(3) WAS MADE, THE A.O. WOULD NOT BE ENTITLED TO TAKE AC TION U/S.147 BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THERE IS FAILURE ON THE PART OF ITA NO.2681/MUM/2009 M/S.MODEPRO INDIA PRIVATE LIMITED. 3 THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT. ADVERTING TO THE FACTS OF THE INSTANT C ASE IT IS NOTED THAT THE ASSESSMENT U/S.143(3) WAS COMPLETED ON 26.3.2003. FROM THE REA SONS FOR REOPENING EXTRACTED ABOVE IT IS SEEN THAT THERE WAS NO FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS QUA THE MODVAT CREDIT OF RS.2.09 LAKHS AS THE SAME WAS PART OF TAX AUDIT REPORT ANNEXED TO THE BALANCE SHE ET FILED ALONG WITH THE RETURN OF INCOME. THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR COMPLETED ON 31.3.2005. FROM THE INSTANT ASSESSMENT ORDER U/S.143(3) R.W.S. 147 IT IS SEEN THAT THE NOTICE U/S.148 WAS ISSUED ON 30.3. 2006. SUCH NOTICE BEING BEYOND THE PERIOD OF FOUR YEAR WAS OBVIOUSLY TIME BARRED. WE, THEREFORE, HOLD THAT THE ASSESSMENT FLOWING OUT OF SUCH TIME BARRED NOTICE C ANNOT STAND AND IS LIABLE TO BE QUASHED. WE ORDER ACCORDINGLY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF MARCH 2010. SD/- SD/- ( R.K.GUPTA ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 29 TH MARCH, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A) - VI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.