Mandovi Distilleries & Breweries Pvt Ltd., Pondicherry V. DCIT Pondicherry Circle , Pondicherry

ITA 2839/CHNY/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0228 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G CHANDRABABU
• Assessee Lawyers: D ANAND
• Keywords: Bad and doubtful debts; Difference of opinion; Change of opinion
• Section: 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . , . , BEFORE SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2839/CHNY/2018 /ASSESSMENT YEAR: 2009-10 M/S. MANDOVI DISTILLERIES & BREWERIES PVT. LTD., 16, ZAMINDAR GARDEN, PONDICHERRY-605 001. V. THE DY. COMMISSIONER OF INCOME TAX, PONDICHERRY CIRCLE, PONDICHERRY. [PAN: AACCM 9070 D] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.D.ANAND, ADV. /RESPONDENT BY : MR.G. CHANDRABABU, SR.DR /DATE OF HEARING : 10.12.2020 /DT. OF PRONOUNCEMENT : 22.12.2020 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS), PUDUCHERRY, IN ITA NO.11/C IT(A)-PDY/2016-17 DATED 28.06.2018 FOR THE AY 2009-10. 2. M/S.MANDOVI DISTILLERIES & BREWERIES PVT. LTD., THE ASSESSEE, IS ENGAGED IN MANUFACTURING AND SALE OF IMFL AND GENER ATION OF WIND POWER. THE ASSESSEES ASSESSMENT FOR THE AY 2009-10 WAS SC RUTINIZED AND THE ASSESSMENT WAS COMPLETED U/S.143(3) ON 27.12.2009. SUBSEQUENTLY, THE AO NOTICED THAT THE ASSESSEE PAID RS.20,23,972/- ON BEHALF OF ITS PRINCIPAL, ITA NO.2839/CHNY/2018 :- 2 -: M/S.UNITED SPIRITS LTD., AND HAD DEBITED IT AS BAD DEBTS ADVANCE. SINCE THIS DEBT IS RELATED TO THE ASSESSEES PRINCIPAL AND THE ASSESSEE IS STILL DOING MAJOR BUSINESS WITH ITS PRINCIPAL, THE AO CONSIDERE D THAT THE ADVANCE PAYMENT WAS NOT DIRECTLY RELATED TO THE ASSESSEES BUSINESS. THEREFORE, THE AO ISSUED NOTICE U/S.148 ON 05.12.2014 AND COMPLETE D THE RE-ASSESSMENT BY MAKING A DISALLOWANCE OF BAD DEBTS WRITTEN OFF. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED TH IS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEOCONFERENCING. T HE LD.AR SUBMITTED THAT IT IS CLEAR FROM THE RE-ASSESSMENT ORDER DATED 31.03.2016 THAT THE NOTICE U/S.148 DATED 05.12.2014 WAS ISSUED TO THE A SSESSEE FOR RE-OPENING THE ASSESSMENT OF AY 2009-10, WHICH WAS CONCLUDED U /S.143 DATED 27.12.2019. THUS, THE LD.AR SUBMITTED THAT THE AO ISSUED NOTICE U/S.148 FOR THE AY 2009-10 ON 05.12.2014, WHICH IS BEYOND F OUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2009-10. INVITING OUR ATTEN TION TO PARA NO.2 OF THE RE-ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 DAT ED 31.03.2016, THE LD.AR SUBMITTED THAT THE AO RE-OPENED THE ASSESSMEN T BASED ON THE P&L A/C SUBMITTED BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT. THE AO EXAMINED ON THE SAME INFORMATION AND DETAILS SUBMIT TED BY THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND ON D UE SATISFACTION COMPLETED THE ORIGINAL ASSESSMENT. SINCE, THERE IS NO FRESH INFORMATION/MATERIAL IN POSSESSION OF THE AO WHICH COULD LEAD HIM TO TAKE A DIFFERENT CONCLUSION, THE LD.AR SUBMITTED THAT TH E RE-ASSESSMENT IS INVALID ITA NO.2839/CHNY/2018 :- 3 -: AS IT IS INITIATED MERELY ON A CHANGE OF OPINION. THE LD.AR SUBMITTED THAT THOUGH THE JURISDICTIONAL ISSUE WAS CHALLENGED BEFO RE THE LD.CIT(A), THE LD.CIT(A) FAILED TO NOTE THE FACT CORRECTLY AND WRO NGLY HELD THAT THE RE- ASSESSMENT WAS INITIATED WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT ORDER. THEREFORE, THE LD.CIT(A) ERRED IN DISMISSIN G THE APPEAL AND RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA REPORTED IN [2010] 320 ITR 561 (SC). PER CONTRA, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIALS. THE RE-ASSESSMENT MADE IS RELATED TO TH E AY 2009-10. THE AO COMPLETED THE ORIGINAL ASSESSMENT U/S.143(3) FOR TH IS ASSESSMENT YEAR ON 27.12.2011. FOR MAKING THE RE-ASSESSMENT, THE AO IS SUED A NOTICE U/S.148 DATED 05.12.2014, WHICH IS CLEARLY BEYOND FOUR YEAR S FROM THE END OF THE AY 2009-10. THEREFORE, IN THIS CASE, AS PER THE FI RST PROVISO OF SEC.147, NO ACTION SHALL BE TAKEN U/S.147, UNLESS ANY INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THAT ASSESSMENT YEAR. IT IS CLEAR FROM THE PARA NO.2 OF THE RE-ASSESSMENT ORDER DATED 31.03.2016 THAT THE AO RE-OPENED THE AS SESSMENT U/S.147 BASED ON THE P&L A/C FILED BY THE ASSESSEE BEFORE T HE AO DURING THE ORIGINAL ASSESSMENT ONLY. THEREFORE, THE ASSESSEE HAS DIS CLOSED THE MATERIAL FACTS ETC., BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSM ENT ITSELF AND ON DUE SATISFACTION, THE AO HAS COMPLETED THE ORIGINAL ASS ESSMENT U/S.143(3). ITA NO.2839/CHNY/2018 :- 4 -: SINCE, THE AO HAS NOT RECORDED HIS SATISFACTION TO THE EFFECT THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, A CONDITION WHICH IS SINE QUA NONE FOR REOPE NING AN ASSESSMENT MADE U/S.143(3) AFTER FOUR YEARS FROM THE END OF THE REL EVANT ASSESSMENT YEAR, IT IS CLEAR THAT THE RE-ASSESSMENT IS INITIATED BY A CHANGE OF OPINION, WHICH IS INVALID IN LAW, AS CANVASSED BY THE ASSESSEE, SU PRA, AND HENCE, THE RE- ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 DATED 31.03.2016 IS QUASHED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 22 ND DAY OF DECEMBER, 2020, IN CHENNAI. SD/- SD/- ( . . ) (DUVVURU R.L. REDDY) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 22 ND DECEMBER, 2020. TLN /COPY TO: 1. /APPELLANT 4. ' /CIT 2. /RESPONDENT 5. /DR 3. ' ( ) /CIT(A) 6. /GF