ACIT, CHENNAI V. M/s. G.G., CHENNAI

ITA 2822/CHNY/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5374 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER / .I.T.A. NO. 2822/CHNY/2016 /ASSESSMENT YEAR : 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE -4, 16, GREAMS ROAD, ROOM NO. 215, II FLOOR, BSNL BUILDING, TOWER -1, CHENNAI 600 006. VS. M/S. GG, NO. 68, ARATHOON ROAD, ROYAPURAM, CHENNAI 600 013. [PAN: AACFG 7105J] ( /APPELLANT) ( /RESPONDENT) REVENUE BY : SHRI. AR. V. SREENIVASAN, JCIT ASSESSEE BY : SHRI K. BALASUBRAMANIAN, ADVOCATE $ /DATE OF HEARING : 01.08.2018 $ /DATE OF PRONOUNCEMENT : 26.10.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI IN ITA NO. 97/CIT(A )-5/14-15 DATED 28.07.2016 FOR ASSESSMENT YEAR 2007-08 WITH FOLLOWI NG GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN HOLDING THE ORDER P ASSED U/S.154 AS WITHOUT JURISDICTION. :- 2 -: ITA NO.2822/CHNY/2016 2.2 THE LD. CIT(A) FAILED TO NOTE THAT THE FACTS OF T HE CASE ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE OF TAMIL NADU MAGNESITE LTD.(19 6 TAXMAN 271) RELIED UPON BY LD.CIT(A). 2.3 THE LD.CIT(A) FAILED TO CONSIDER THAT IN THE NOT ICE U/S.154/155 THE AO HAS CLEARLY STATED THE ORDER TO BE RECTIFIED AS ASSESSM ENT U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 FORTHEAY2007-08 MADE ON 31.12.2 011 2.4 THE LD.CIT(A) FAILED TO CONSIDER THAT WHEN ASSES SEE DID NOT RESPOND TO THE ABOVE NOTICE, ANOTHER LETTER WAS ALSO ISSUED TO ASS ESSEE ENCLOSING COPY OF THE ABOVE NOTICE TO WHICH ASSESSEE VIDE LETTER DATED 9/ 10/2014 REQUESTED FOR 15 DAYS TIME FOR FILING REPLY. 2.5 THE LD. CIT(A) FAILED TO CONSIDER THAT ASSESSEE WAS FULLY AWARE THAT THE ORDER SOUGHT TO BE RECTIFIED WAS ORDER PASSED U/S.143(3) R .W.S 147 OF THE INCOME TAX ACT, 1961 FOR THE AY 2007-08 MADE ON 31.12.2011. 2.6 LD. CIT(A) FAILED TO CONSIDER THAT VIDE LETTER D ATED 9/10/2014, ASSESSEE HAD REQUESTED AC FOR GRANTING 15 DAYS TIME FOR FILING RE PLY. THIS CLEARLY PROVES THAT FILING OF APPEAL ON A DIFFERENT SET OF FACTS IS AN AFTER THOUGHT AND THE LD. CIT(A) OUGHT NOT TO HAVE DELETED THE ADDITION. 2.7 THE LD. CIT(A) FAILED TO CONSIDER THAT THE WORDI NGS IN THE ORDER PASSED U/S.154 IS ONLY AN INADVERTENT MISTAKE SINCE THE NOTICE WAS ISSUED CLEARLY INTIMATING THE ORDER TO BE RECTIFIED AS ORDER U/S.143(3) R.W.S.147. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE LD DR SUBMITTED THAT THE ASSESSEE HAD FILED RETURN FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 ADMITTING A L OSS OF RS. 78,42,071/-. THE ASSESSMENT U/S. 143(3) R.W.S. 147 WAS COMPLETED ON 31.12.2011 DETERMINING THE LOSS AT RS 37,04,735/-, AFTER A DIS ALLOWANCE OF RS. 41,37,336/-. THE REVENUE AUDIT FOUND THAT IN THE O RDER PASSED U/S. 143(3) R.W.S. 147 IN THE EARLIER ASSESSMENT YEAR IE IN AY 2006-07 DT 19.12.2011, THE AO HAS NOT ALLOWED THE ASSESSEE TO CARRY-FORWARD A ND SET-OFF ANY OF THE LOSSES IN FUTURE. HOWEVER, IN THE AY 2007-08, THE ASSESSEE HAD CLAIMED CARRY- :- 3 -: ITA NO.2822/CHNY/2016 FORWARD LOSS OF RS. 50,18,763/- RELATING TO THE EAR LIER YEARS , WHICH WAS WRONGLY ALLOWED BY THE ASSESSING OFFICER IN THE ORD ER PASSED U/S. 143(3) R.W.S. 147 ON 31.12.2011 FOR AY 2007-08. HENCE, TH E CARRY-FORWARD LOSS OF RS. 50,18,763/- ALLOWED BY THE ASSESSING OFFICER IN THA T ORDER IS A MISTAKE AND IF SUCH MISTAKE IS CONSIDERED, THERE WOULD BE AN ADDI TIONAL DEMAND OF RS. 4,06,035/- AS UNDER: LOSS CLAIMED FOR AY 2007-08 : RS. 78,42,071 LESS: CARRY-FORWARD LOSS OF PREVIOUS YEARS : RS. 50 ,18,763 ACTUAL LOSS FOR AY 2007-08 : RS. 28,23,308 ADD: DISALLOWANCE : RS. 41,37,336 TAXABLE INCOME : RS 13,14,028 TAX @30%+EDN.CESS : RS. 4,06,035 2.1 THE ASSESSING OFFICER EXAMINED THE ABOVE FACTS AND FOUND THAT THERE WAS A MISTAKE IN THE ORDER PASSED UNDER SECTION 143 (3) R.W.S. 147 ON 31.12.2011 FOR THE ASSESSMENT YEAR 2007-08 AND ACC ORDINGLY ISSUED A NOTICE U/S 154/ 155 DT 20.11.2013 TO THE ASSESSEE INTIM ATING THAT 1. THE ASSESSMENT/REFUND ORDER UNDER SECTION 143(3 ) R.W.S. 147 OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2007-06 MADE ON 31.12.2011 REQUIRES TO BE AMENDED AS THERE IS A MISTAKE APPARE NT FROM THE RECORD WITHIN THE MEANING OF SECTION 154/155 OF THE INCOME TAX ACT, 19 61. THE RECTIFICATION OF THE MISTAKE, AS PER PARTICULARS GIVEN BELOW, WILL HAVE THE EFFECT OF ENHANCING THE ASSESSMENT/REDUCING THE REFUND/INCREASING YOUR LIABI LITY. 2. IF YOU WISH TO BE HEARD, YOU ARE REQUESTED TO A PPEAR IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE IN MY OFFICE ON 05/12/20 13 AT 11.00 A.M/P.M. ALTERNATIVELY YOU MAY SEND A WRITTEN REPLY SO AS TO REACH ME ON OR BEFORE THE DATE MENTIONED ABOVE. PARTICULARS OF MISTAKE(S) PROPOSED TO BE RECTIFIED: CARRY FORWARD OF LOSS OF RS.50,18,763/- RELATING TO P.Y. 2006-07 TO BE DISALLOWED. :- 4 -: ITA NO.2822/CHNY/2016 2.2 ON FURTHER FOLLOW UP, THE ASSESSEE FILED A REPL Y BY ITS LETTER DT 09.10.2014 WHEREIN IT IS MENTIONED THAT WE ARE IN RECEIPT OF THE ABOVE MENTIONED NOTICE U/S. 154 BY YOUR GOODSELVES ON 30. 09.2014. SINCE DUE TO CHANGE IN AUDITOR, KINDLY GIVE US 15 DAYS SO THAT T HE NECESSARY DOCUMENTS COULD BE ARRANGED. WE REQUEST YOU TO KINDLY ADJOUR N THE HEARING AROUND 15 DAYS. KINDLY DO THE NEEDFUL AND OBLIGE. ULTIMATEL Y, THE AO PASSED AN ORDER U/S 154 DT 17.10.2014 RECTIFYING THE ABOVE MISTAKE IN WHICH HE, INADVERTENTLY,MADE A REFERENCE TO THE INTIMATION U/S 143 (1) DATED 23.03.2009, INSTEAD OF THE ORDER UNDER SECTION 143( 3) R.W.S. 147 DATED 31.12.2011 AS MENTIONED IN THE RECTIFICATION NOTICE GIVEN TO THE ASSESSEE DT 20.11.2013, EXTRACTED SUPRA. 2.3 THE LD. DR SUBMITTED THAT THE LD. CIT(A) FAILED TO CONSIDER ALL THESE FACTS AND WRONGLY DECIDED THE APPEAL. THE IMPUGNED ORDER IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH AND ACCORDING TO THE INTENT AND PURPOSES OF THE INCOME TAX ACT, 1961 WITHIN THE SCOPE OF SECTION 29 2 B OF THE ACT. PER CONTRA, THE LD AR FULLY SUPPORTED THE ORDER OF THE LD CIT(A ). 2.4 IN THE REJOINDER, THE LD DR SUBMITTED THAT THE ASSESSEE FAILED TO DISCLOSE CORRECT FACTS BEFORE THE LD. CIT(A). WHERE AN ASSESSMENT IS COMPLETED, IT IS AN ESTABLISHED PROCEDURE THAT THE AO CANT INVOKE FURTHER JURISDICTION UNLESS DUE PROCEEDINGS ARE INITIATED B Y A NOTICE UNDER APPROPRIATE PROVISIONS. IN THIS CASE, THE PROCEEDINGS ARE INITI ATED U/S 154/155 BY A LETTER :- 5 -: ITA NO.2822/CHNY/2016 DT 20.11.2013 AND WAS COMPLETED U/S 154 DT 17.10.20 14, WHICH IS UNDER DISPUTE. INVITING OUR ATTENTION TO THE RELEVANT COP IES, THE LD DR SUBMITTED THAT THE ASSESSEE WAS FULLY AWARE THAT THE ORDER SOUGHT TO BE RECTIFIED WAS AN ORDER PASSED U/S.143(3) R.W.S 147 FOR THE AY 2007-08 MADE ON 31.12.2011. WHEN THE ASSESSEE DID NOT RESPOND TO THAT NOTICE, ANOTHE R LETTER WAS ALSO ISSUED TO ASSESSEE ENCLOSING COPY OF THE ABOVE NOTICE TO WHIC H THE ASSESSEE VIDE LETTER DATED 9/10/2014 REQUESTED FOR 15 DAYS TIME FOR FI LING REPLY. THEREAFTER ONLY THE A O PASSED THE IMPUGNED ORDER. THIS CLEARLY PR OVES THAT THE ASSESSEE, BY AN AFTERTHOUGHT, FILED AN APPEAL ON A DIFFERENT SET OF FACTS AND UNFORTUNATELY THE LD. CIT(A) FAILED TO REQUIRE THE ASSESSEE TO ESTABLISH ITS CASE, BY FURNISHING THE NOTICE, IF ANY, ISSUED U/S 154 FOR RECTIFYING THE MISTAKE IN THE INTIMATION U/S 143 (1) DATED 23.03.2009 ETC BEFOR E DECIDING THE APPEAL. THUS, IT IS CLEAR THAT THE AO HAS NOT INITIATED AN Y PROCEEDINGS FOR RECTIFYING THE MISTAKE IN THE INTIMATION U/S 143 (1) DATED 23.03.2009 , NOR THE ASSESSEE HAS PLACED ANY PROOF EVEN BEFORE THIS TRIB UNAL TO SAY THAT THE IMPUGNED ORDER WAS PASSED BASED ON THE NOTICE OF RE CTIFICATION ISSUED BY THE AO ON THE INTIMATION U/S 143 (1) DATED 23.03.2009 . HENCE, THE LD DR PLEADED THAT THE IMPUGNED ORDER PASSED IN PURSUANC E OF THE NOTICE ISSUED BY THE AO DT 20.11.2013 IS VALID AND IS WITHIN THE SCO PE OF SECTION 292B. THE TRIBUNAL ON THE ABOVE FACTS MAY RENDER DUE JUSTICE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE L D DRS SUBMISSIONS THAT IN VIEW OF SECTION 292B OF THE ACT, MENTIONING OF THE WRONG SECTION AND :- 6 -: ITA NO.2822/CHNY/2016 DATE VIZ THE INTIMATION U/S 143 (1) DATED 23.03.2 009 IN THE IMPUGNED ORDER DT 17.10.2014 IS OF LITTLE CONSEQUENCE, IN VIEW OF THE FACT THAT THE ASSESSEE WAS FULLY AWARE THAT THE ORDER SOUGHT TO BE RECTIFI ED WAS AN ORDER PASSED U/S.143(3) R.W.S 147 FOR THE AY 2007-08 MADE ON 31. 12.2011 AND IT PARTICIPATED IN THE RECTIFICATION PROCEEDINGS BY S EEKING ADJOURNMENT ETC. FURTHER, THE ASSESSEE HAS NOT PLACED ANY MATERIAL T O PROVE THAT THERE WAS A PROCEEDING PENDING IN RESPECT OF THE INTIMATION U/ S 143 (1) DATED 23.03.2009 AS ON THE DATE OF PASSING THE IMPUGNED ORDER DT 17. 10.2014 TO SAY THAT THE IMPUGNED ORDER PASSED DT 17.10.2014 IS IN CONSEQUE NCE OF IT. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE FACTS AND CIRCUMSTANCES BROUGHT ON RECORD WAS NOT DISPUTED BY THE ASSESSEE. NO MATERIAL WAS PLACED BEFORE US TO SHOW THAT THE ASSESSEE WAS MISLED IN A NY MANNER BUT FOR AN INADVERTENT MENTIONING OF THE SECTION AND DATE. S ECTION 292B OF THE ACT PROVIDES THAT NO RETURN OF INCOME, ASSESSMENT, NOTI CE, SUMMONS OR OTHER PROCEEDINGS, FURNISHED OR MADE OR ISSUED OR TAKEN O R PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE O F ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF I NCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOM E, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFF ECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. T HE COURTS HAVE HELD THAT SECTION 292B HAS BEEN ENACTED WITH A VIEW TO OVERCO ME PURELY TECHNICAL OBJECTION COMING IN THE WAY OF VALIDITY OF ASSESSME NT PROCEEDINGS ETC. IT DEALS :- 7 -: ITA NO.2822/CHNY/2016 WITH CURABLE DEFECTS IN THE PROCEEDINGS. THE IDEA I S THAT WHEN SUBSTANTIAL JUSTICE IS PITTED AGAINST TECHNICALITY, CAUSE OF J USTICE SHOULD PREVAIL. NO PARTY CAN CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING D ONE BECAUSE OF SOME SLIP OF PEN, OR OMISSION CAUSING NO PREJUDICE TO ANYONE. TH E SECTION IS INTENDED TO ENSURE THAT AN INCONSEQUENTIAL TECHNICALITY DOES NO T DEFEAT JUSTICE. NATURE OF MISTAKE WILL DETERMINE WHETHER A RETURN, ORDER OR P ROCEEDING IS VITIATED OR NOT. IN THE LIGHT OF THE ABOVE POSITION, IF WE EXAMINE THIS CASE, THE ONLY DEFECT WHICH COULD BE POINTED OUT IS THAT WRONG MENTIONIN G OF SECTION AND DATE IN THE ORDER PASSED BY THE ASSESSING OFFICER DT 17.10 .2014. THE ASSESSEE HAS NOT PLACED RELEVANT MATERIALS TO SHOW THAT A RECTIF ICATION PROCEEDINGS FOR THE INTIMATION U/S 143 (1) DATED 23.03.2009 WAS PENDI NG BEFORE THE AO AND HENCE IT WAS MISLED BY IMPUGNED ORDER DT 17.10.2014 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IN OUR CONSIDERED VIEW, SE CTION 292 B IS FULLY ATTRACTED ON THE FACTS AND CIRCUMSTANCES OF THIS CA SE AND HENCE WE ALLOW THE REVENUES APPEAL. 4. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 26 TH OCTOBER, 2018 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER :- 8 -: ITA NO.2822/CHNY/2016 /CHENNAI, ) /DATED: 26 TH OCTOBER, 2018 JPV $*+,-, /COPY TO: 1. / /APPELLANT 2. *0/ /RESPONDENT 3. 1 ) (/CIT(A) 4. 1 /CIT 5. ,* /DR 6. 4 /GF