DCIT 5(2), MUMBAI V. NEXT MEDIA WORKS LTD, MUMBAI

ITA 30/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4014 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Reopening of assessment; Business income; Wrong claim; Bad and doubtful debts; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND AMARJIT SINGH, JM ./ I.T.A. NO . 30 / MUM/ 201 4 ( / ASSESSMENT YEA R : 20 0 5 - 06 ) DY. COMMISSION ER OF INCOME TAX 5 (2), ROOM NO.571, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S NEXT MEDIA WORKS LTD., PENINSULA CENTRE, DR. S S RAO ROAD, PAREL, MUMBAI - 400012 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAACM7512 L / REVENUE BY SHRI S K MISHRA / ASSESSEE BY SHRI SANJAY R PARIKH / DATE OF HEARING : 30. 12. 201 5 / DATE O F PRONOUNCEMENT: 12. 2 . 201 6 / O R D E R P ER B R BASKARAN, AM : THIS IS AN APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER DATED 24.10.2013 PASSED BY THE LD.CIT(A) - 9 AND IT RELATES TO THE ASSESSMENT YEAR 2005 - 06. THE REVENUE IS ASSAILING T HE DECISION OF LD CIT(A) IN HOLDING THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW. 2. THE FACTS RELATING TO THE ISSUE UNDER CONSIDERATION ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2005 - 06 ON 29 - 10 - 2005 DISCLOSING A TOTAL INCOME OF RS.8. 63 CRORES. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 23.10.2007. THEREAFTER THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 ON 30.03.2012, I.E., AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR FOR I.T.A. NO. 30 / MUM/ 201 4 2 DISALLOWING THE F OLLOWING CLAIMS THAT WERE ALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS: - (A) BAD DEBTS CLAIM OF RS.348 LAKHS (B) LOSS FROM FOREIGN CURRENCY TRANSACTIONS RS.29.74 LAKHS THE AO COMPLETED THE REASSESSMENT BY DISALLOWING BOTH THE ITEMS CITED ABOVE. 3. BEFORE LD CIT(A), THE ASSESSEE CONTESTED THE VALIDITY OF REOPENING OF ASSESSMENT. THE ASSESSEE DEMONSTRATED THAT THE ASSESSING OFFICER HAD RAISED SPECIFIC QUERIES IN RESPECT OF THE ABOVE SAID TWO ITEMS IN HIS LETTER DATED 14.12.2007 AND THE ASSESSEE H AD ALSO DULY REPLIED THE SAME. THE SPECIFIC QUERY RAISED BY THE ASSESSING OFFICER HAS BEEN EXTRACTED IN THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE LD CIT(A) AND THE SAME IS EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE: - 2.3 ON 14TH DECEMBER, 2007, THE L D. AO, IN ADDITION TO THE NOTICE DATED 14TH JUNE, 2007, ISSUED AND SERVED ANOTHER NOTICE ON THE APPELLANT COMPANY TO FILE DETAILS AND TENDER ITS SUBMISSION ON CERTAIN ISSUES. AMONG THE ISSUES RAISED IN THE SAID NOTICE, THE APPELLANT COMPANY WISHES TO HIGH LIGHT ISSUE NO. 2 AND 7 RAISED BY THE LD. AO AND REPRODUCES THE SAME AD VERBATIM HEREIN BELOW: 2) AS PER DIRECTORS REPORT, YOU HAVE CLAIMED ONE TIME WRITE OFF OF DOUBTFUL DEBTS OF RS.3,71,03,347/ - IN THE OUTDOOR BUSINESS. YOU ARE REQUIRED TO FILE JUSTIFI CATION FOR THE SAME WITH EVIDENCES INCLUDING YEAR IN WHICH BUSINESS INCOME DECLARED 7) EXPLAIN WHY GAIN ON FOREIGN CURRENCY TRANSACTIONS OF RS.29,74,120/ - SHOULD NOT BE ADDED AS INCOME FOR THE YEAR. 2.4 IN RESPONSE TO THE AFORESAID NOTICE, THE APPELLAN T COMPANY SUBMITTED ITS EXPLANATION AND FILED THE NECESSARY DETAILS ON ALL THE ISSUES RAISED IN THE NOTICE DATED 14TH DECEMBER, 2013 FOR THE LD. AO'S EXAMINATION AND SCRUTINY ON 20TH DECEMBER, 20 07 I.T.A. NO. 30 / MUM/ 201 4 3 ACCORDINGLY IT WAS CONTENDED THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH ALL THE MATERIAL INFORMATION RELATING TO THE ABOVE SAID ADDITIONS TRULY AND FULLY AND HENCE THE REOPENING OF THE ASSESSMENT WAS BAD IN LAW. THE ASSESSEE, IN THIS REGARD, HAS TAKEN SUPPORT OF THE FIRST PROVISO TO SEC. 147 OF THE ACT. THE LD CIT(A) AGREED WITH THE SAID CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY QUASHED THE REASSESSMENT ORDER. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE UNDISPUTED FA CTS ARE THAT THE ORIGINAL ASSESSMENT, IN THE INSTANT CASE, WAS COMPLETED U/S 143(3) OF THE ACT. FURTHER, THE ASSESSEE HAS DEMONSTRATED BEFORE THE AO THAT THE ASSESSING OFFICER DID RAISE SPECIFIC QUERIES WITH REGARD TO THE TWO DISALLOWANCES REFERRED ABOVE. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. HENCE, IT IS MANDATORY TO SEE WHETHER THE FIRST PROVISO TO SEC. 147, WHICH READS AS UNDER, IS SATISFIED OR NOT. 147.... PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 92 , UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB - SE CTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. SINCE THE ASSESSING OFFICER HAS RAISED SPECIFIC QUERIES ON THE TWO ISSUES CITED ABOVE AND THE ASSESSEE HAS FURNISHED REPLIES, IT CANNOT BE SAID THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. HENCE WE ARE OF THE VIEW THAT THE AO HAS NOT SHOWN THAT THE FIRST PROVISO TO SEC. 147 OF THE ACT IS I.T.A. NO. 30 / MUM/ 201 4 4 SATISFIED, MEANING THEREBY THE REOPENING HAS BEEN DONE ON CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE. 5. WE NOTICE THAT THE LD CIT(A) HAS ADDRESSED THIS ISSUE IN PROPER PERSPECTIVE AND FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE DECISION RENDERED BY LD CIT(A). 5. DECISION: 5.1 I HAVE CAREFULLY AND DISPA SSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, STATEMENT OF FACTS, RELEVANT ASSESSMENT ORDER, RELIED UPON CASE LAWS BY THE LAR, WRITTEN SUBMISSION AND THE ARGUMENTS MADE BY THE LAR BEFORE THE UNDERSIGNED. AFTER CONSIDERING THE RIVAL SUBMISS IONS, I AGREE WITH THE CONTENTION OF THE APPELLANT THAT RE - ASSESSMENT PROCEEDINGS U/ S.148 IN ITS CASE ARE BARRED BY LIMITATION DUE TO THE PROVISO OF SEC.147 OF I . T . ACT. IT IS NOTED THAT THOUGH THE AO HAS CLAIMED THAT THE INCOME HAS ESCAPED ASSESSMENT DURIN G THE YEAR ON ACCOUNT OF WRONG CLAIM OF BAD DEBT AND FOREIGN EXCHANGE GAIN, BUT IT IS WORTH NOTING THAT DURING THE ORIGINAL ASSESSMENT THE THEN A.O. HAS SPECIFICALLY RAISED BOTH THE ISSUES IN QUESTION IN THE NOTICE DATED 14.12.2007 AND IN COMPLIANCE OF THE SAID NOTICE IN THIS REGARD, VIDE LETTER DTD. 20/12/2007 DETAILS/CLARIFICATION ON BOTH THE ISSUES WERE PROVIDED TO THE AO BY THE APPELLANT. THEREFORE, UNDER THESE CIRCUMSTANCES IT CANNOT BE HELD THAT IN THE ORIGINAL ASSESSMENT THE A.O HAS NOT APPLIED HIS M IND AND HE HAS NOT TAKEN A CONSCIOUS DECISION ON THIS PARTICULAR MATTER. IN THE INSTANT CASE IT IS NOTED THAT BOTH THE ISSUES WERE CONSIDERED BY THE A.O. IN THE ORIGINAL ASSESSMENT. THEREFORE, UNDER THESE CIRCUMSTANCES IT APPEARS THAT THERE HAS BEEN NO OMI SSION/ FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE ANY MATERIAL FACT. IN THE REASONS RECORDED BY THE A.O. ALSO IT IS NOT MENTIONED THAT THE APPELLANT HAS NOT DISCLOSED ANY MATERIAL FACTS. IT IS A SETTLED PRINCIPLE OF LAW REPEATED BY VARIOUS HIGH COUR TS AND HONBLE APEX COURT THAT IN SUCH A SCENARIO THE AO CANNOT REOPEN THE ASSESSMENT. UNDER THESE CIRCUMSTANCES, THE REOPENING OF THE ASSESSMENT AFTER THE LAPS OF FOUR YEAR S FROM THE END OF ASSESSMENT YEAR DOES NOT APPEARS TO BE JUSTIFIED . 5.2 IN VIE W OF MY DECISION OF QUASHING THE REASSESSMENT PROCEEDINGS IN PARA ABOVE THE GROUND RELATING TO THE ADDITIONS BECOMES INFRUCTUOUS . I.T.A. NO. 30 / MUM/ 201 4 5 6. IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FINE ANY INFIRMITY IN THE DECISION RENDERED BY LD CIT(A) AND ACCORD INGLY UPHOLD THE SAME. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 12 TH FEB , 2 01 6 . 12 TH FEB 2 01 6 SD SD (AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 12 TH FEB , 2 01 6 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI