Crew Bos Products Ltd., Gurgaon V. CIT (C), Gurgaon

ITA 3088/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5128 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Proportionate interest; Assessment record; Time period of passing order
• Section: 143(3); 153A; 10B; 263; 132; 10; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO .3088 /DE L/ 2015 ASSESSMENT YEAR: 2005 - 06 M/S. CREW BOS PRODUCTS LTD., 37, SECTOR - 4, IMT MANESAR, GURGAON. VS. CIT(C), GURGAON PAN : AAACC3222F) (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, A . M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 12/03/2015 PASSED BY THE LD. COMMISSIONER OF I NCOME - TAX (CENTRAL), GURGAON [IN SHORT THE LD. CIT ] FOR ASSESSMENT YEAR 2005 - 06 SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER BEING ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE R EVENUE. THE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL), GURGAON IS BAD BOTH ON LAW AND FACTS. APPELLANT BY SH. V. RAJA KUMAR, ADV. RESPONDENT BY MS. RACHNA SINGH, CIT(DR) DATE OF HEARING 11.09.2018 DATE OF PRONOUNCEMENT 23.10.2018 2 ITA NO.3088/DEL/2015 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL), GURGAON ERRED IN ARBITRARILY INITIATING THE IMPUGNED PROCEEDINGS UNDER SECTION 263 OF THE I NCOME TAX ACT, 196. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL), GURGAON HAD NO JURISDICTION, WHATSOEVER, TO INITIATE THE IMPUGNED PROCEEDINGS UNDER SECTION 263 OF THE ACT AND/ OR TO PASSED THE IMPUGNED ORDER 12/03/2015. 4. THAT WITHOUT PREJUD ICE TO THE ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THAT THE CONDITIONS PRECEDENT FOR INITIATION OF THE IMPUGNED PROCEEDINGS U/S 263 OF THE ACT, WERE NEITHER PRESENT NOR SATISFIED. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX E RRED IN ARBITRARILY ALLEGING AND/ OR HOLDING THAT THE ASSESSMENT ORDER DATED 28/02/2013 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I, FARIDABAD U/S 153 A OF THE INCOME TAX ACT WAS ERRONEOUS IN LAW AND PREJUDICIAL TO THE INTEREST OF T HE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE INCOME TAX ACT. 6. THAT THE PROCEEDINGS U/S 263 OF THE ACT WERE WRONGLY INITIATED INCOMPLETE DISREGARDS OF THE FACT THAT THE IMPUGNED ORDER, ALLEGED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE, IS PASSED WITH PRIOR APPROVAL OF ADDITIONAL CIT (CENTRAL), AS IS STATUTORILY REQUIRED TO BE SO OBTAINED AS PER THE PROVISIONS OF THE SECTION 153D OF THE ACT 7. THAT THE APPELLANT CRAVES LEAVE AND PRAYS THAT THE RELIEF CLAIMED ABOVE OR ANY OTHE R RELIEF, TO WHICH THE APPELLANT IS ENTITLED, MAY ] 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT SUBSEQUENT TO THE SEARCH ACTION UNDER SECTION 132 OF THE INCOME - TAX A CT, 1961 (IN SHORT THE ACT) , THE ASSESSMENT UNDER SECTION 153A R EAD WITH SECTION 143(3) OF THE A CT WAS C OMPLETED ON 28/02/2013. THE LD. COMMISSIONER OF INCOME - TAX ( IN SHORT THE CIT ) CALLED FOR AND EXAMINED THE ASSESSMENT RECORD. HE FORMED THE OPINION THAT THE ORDER DATED 28/02/2013 PASSED BY ASSESSING OFFICER WAS 3 ITA NO.3088/DEL/2015 ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE R EVENUE AND ACCORDINGLY , HE ISSUED NOTICE UNDER SECTION 263 OF THE A CT. IN RESPONSE, THE ASSESSEE OBJECTED THE PROCEEDINGS UNDER SECTION 263 OF THE A CT ON THE GROUND THAT THE CIT WAS NOT EMPOWERED TO REVISE THE ASSESSMENT ORDER WHICH WAS PASSED BY THE ASSESSING OFFICER WITH PRIOR APPROVAL OF THE A DDITIONAL COMMISSIONER OF INCOME T AX. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE LD. CIT AND HE FOUND THAT THE ASSESSING OFFICER DID NOT C ARRY OUT EN QUIRY ON THE TWO ISSUES. THE FIRST I SSUE BEING OF DISALLOWANCE OF INTEREST PROPORTIONATE TO THE BORROWED FUND NOT UTILIZED FOR THE PURPOSE OF BUSINESS. THE SECOND ISSUE , BEING NOT EXAMINATION OF V ARIOUS CONDITIONS OF SECTION 10B OF THE A CT WHILE ALLOWING T HE SAID DEDUCTION. THE LD. CIT AFTER TAKING INTO CONSIDERATION SUBMISSION OF THE ASSESSEE, PASSED THE IMPUGNED ORDER UNDER SECTION 263 OF THE A CT SETTING ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER AND DIRECTED HIM TO PASS A DE NOVO ASSESSMENT ORDER. 2.1 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE ADDRESSING THE GROUNDS RAISED , SUBMITTED THAT THE ORDER PASSED BY THE CIT WAS BEYOND THE LIM ITATION PERIOD P ROVIDED IN THE A CT AND , THEREFORE , IT IS A NULL AND VOID ORDER. THE LD. COUNSEL SUBMITTED A CHART OF CHRONOLOGICAL EVENTS WHICH IS REPRODUCED AS UNDER: CHRONOLOGY OF EVENTS 1. 28.12.2007 ASSESSMENT ORDER PASSED U/S 143(3) 2. 16.06.2009 CIT(A) DISMISSES APPEAL OF COMPANY 3. 27.10.2009 ITAT CONFIRMS CIT(A) S ORDER 4 ITA NO.3088/DEL/2015 4. 31.03.2010 LIMITATION FOR THE PURPOSE OF SECTION 263 SUPERVENED 5. 12.04.2010 ASSESSEE SUBJECTED TO SEARCH ACTION U/S 132 6. 16.07.2010 MA ORDER STATED TO BE PASSED BY ITAT 7. 04.02.2011 PROCEEDINGS U/S 153A( 1) (A) INITIATED 8. 28.02.2013 ASSESSMENT U/S 153A( 1) (B) CONCLUDED 9. 17.01.2014 SHOW CAUSE U/S 263 ISSUED 10. 12.03.2015 ORDER U/S 263 PASSED. INTEREST AND SECTION 10B DEDUCTION NOT SUBJECT MATTER OF SECTION 153A( 1) (B) ORDER 4. I N VIEW OF ABOVE, THE LD. COUNSEL SUBMITTED THAT THE ORIGINAL ASSESSMENT UNDER SECT ION 143(3) OF THE ACT WAS PASSED ON 28/12/2007 AND, THEREFORE , LIMITATION FOR THE PURPO SE OF SECTION 263 EXPIRED ON 31 /03/2010 AND THUS THE PRESENT ORDER PASSED BY THE LD. CIT IS BEYOND LIMITATION PERIOD. 5. FURTHER, T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE DECI SION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA , 380 ITR 573 , IN THE ASSESSM ENT COMPLETED UNDER SECTION 153A OF THE A CT, THE JURISDICTION OF THE ASSESSING OFFICER WAS LIMITED TO MAKE ADDITION IN RESPECT OF INCRIMINATING MATERIALS FOUND ONLY . HE FURTHER SUBMITTED THAT LD. CIT IN HIS IMPUGNED ORDER HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUI RY ON TWO ISSUES. THE F IRST ISSUE BEING DISALLOWANCE OF PROPORTIONATE INTEREST PAID IN RELATION TO BORROWED FUNDS FOR FUNDS DIVERTED FOR NON - BUSINESS PURPOSES. THE SECOND ISSUE RELATE S TO DEDUCTION UNDER SECTION 10 B OF THE A CT. THE LD. COUNSEL POINTED OUT THAT NO INCRIMINATING MATERIAL OR DOCUMENT WAS FOUND DURING THE COURSE OF THE SEARCH IN RELATION TO THE ABOVE TWO ISSUES. HE SUBMITTED THAT IN VIEW OF THE DECISION OF THE 5 ITA NO.3088/DEL/2015 HON BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) NO ADDITION COULD BE MAD E IN PROCEEDING UNDER SECTION 15 3A OF THE ACT WITHOUT ANY INCRIMINATING MATERIAL, WHERE THE ASSESSMENT PROCEEDINGS ARE NOT ABATED. IN VIEW OF THE ABOVE, THE LD. COUNSEL SUBMITTED THAT THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER IN NOT MAKING ENQUIRY ON ABOVE TWO ISSUES. ON THE MERIT OF THE ADDITIONS, THE LD. COUNSEL SUBMITTED THAT THE LD. CIT HAS NOT POINTED OUT ANY ERROR OR ESTABLISH ED ANY PREJUDICE ON THE ISSUE OF DISALLOWANCE OF PROPORTIONATE INTEREST PAID TOWARDS BORROWED FUNDS. HE ALSO SU BMITTED THAT ON THE ISSU E OF DEDUCTION UNDER SECTION 10B OF THE A CT , THE AO DULY EXAMINED THE APPORTIONMENT OF EXPENSES FOR ELIGIBLE AND NON - ELIGIBLE UNIT, AND THUS IT CANNOT BE SAID THAT NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER. ACCORDINGLY , HE SUBMIT TED THAT THE ORDER OF THE LD. CIT MIGHT BE SET - ASIDE. 6. ON THE CONTRARY, THE LD. DR ON THE ISSUE THAT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) , THE PROCEEDINGS U/S 263 OF THE ACT COULD NOT BE INVOKED , SUBMITTED THAT THIS ISSUE WAS NOT RAISED IN THE GROUNDS OF THE APPEAL AND THUS SHOULD NOT BE ALLOWED TO BE RAISED IN ORAL SUBMISSIONS BEFORE THE T RIBUNAL. SHE ALSO SUBMITTED THAT THE PROVISIONS OF SECTION 153 A OF THE A CT ARE CLEAR AND DO NOT TALK OF NECE SSITY OF INCRIMINATING MATERIAL. SHE FURTHER SUBMITTED THAT DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) HAS NOT ATTAINED FINALITY AS THE R EVENUE IS IN APPEAL AGAINST THE SAID ORDER AND , THEREFORE , IT WAS NOT FAIR TO APPLY A BOVE DECISION WHILE INVOKING REVISIONARY POWERS BY THE CIT. SHE ALSO POINTED OUT THAT THERE ARE NUMBER OF DECISIONS OF THE OTHER HIGH COURTS WHEREIN THE ASSESSING OFFICER IS EMPOWERED 6 ITA NO.3088/DEL/2015 TO ASSESS THE TOTAL INCOME INCLUDING UNDISCLOSED INCOME AND , THEREFORE , THE CIT WAS JUSTIFIED IN HOLDING THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER A S ERRONEOUS INSOFAR AS PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. 7. ON THE ISSUE OF ALLEGATION OF ORDER BEING BEYOND THE LIMITATION PERIOD, THE LD. DR SUBMITTED THAT A RGUMENTS OF THE LD. COUNSEL ARE ON THE WRONG PREMISE THAT THE ORDER SUBJECTED TO REVISION UNDER SECTION 263 WAS ORDER UNDER SECTION 143(3) DATED 28/12/2007. WHEREAS, THE LD. CIT HAS REVISED THE ORDER DATED 28/02/2015 PASSED BY THE ASSE SSING OFFICER UNDER S ECTION 15 3A. ACCORDING TO HER THE SHOW CAUSE NOTICE FOR 263 HAS BEEN ISSUED ON 17/01/2004 AND THUS IT WAS WELL WITHIN THE LIMITS PROVIDED UNDER THE SECTION OF 263 THE A CT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS FAR AS CONTENTION OF THE LD. COUNSEL THAT ORDER PASSED BY THE CIT WAS BARRED BY LIMITATION, WE FIND THAT IN THE CHART OF CHRONOLOGICAL EVENTS, THE LD. COUNSEL HAS COMPUTED THE LIMITATION IN RESPECT OF ORDER PASS ED UNDER SECTION 143(3) OF THE A CT. BUT T HE SAID ORDER WAS NOT SUBJECTED TO REVISION. ACTUALLY , THE CIT PROPOSED TO REVISE THE ORDER PASSED BY THE ASSE SSING OFFICER UNDER SECTION 15 3A DATED 28/02/2013 . THE SHOW CAUSE NOTICE WAS ISSUED ON 17/01/2014 AND THE ORDER UNDER SECTION 263 HAS BEEN PASSED ON 12/03/2015. UNDER SECTION 263(2) OF THE A CT, THE TIME LIMIT FOR PASSING ORDER UNDER SECTION 263 HAS BEE N PROVIDED AS BEFORE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. SINCE THE IMPUGNED ORDER DATED 12/03/2015 PASSED BY THE CIT UNDER SECTION 263 OF THE A CT IS WITHIN THE PERIOD OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE 7 ITA NO.3088/DEL/2015 ORDER UNDER SECTION 153 A WA S PASSED, I.E. , 31/ 03/2015, WE DO NOT FIND ANY FORCE IN THE ARGUMENTS OF THE LD. COUNSEL ON THIS ISSUE AND ACCORDINGLY WE REJECT THE SAME. 9. THE ANOTHER ISSUE IS WHETHER THE CIT COULD INVOK E THE PROVISIONS OF 263 OF THE A CT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) AND THUS WHETHER ANY FURTHER VERIFICATION/ENQUIRY WAS REQUIRED TO BE MADE BY THE ASSESSING OFFICER IN A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH . ON THIS ISSUE, WE DO NOT AGREE WI TH THE ARGUMENTS MADE BY THE LD. DR. FIRST OF ALL, AS FAR AS LEGAL GROUNDS ARE CONCERNED , THE ASSESSEE CAN MAKE ANY ARGUMENTS IN SUPPORT THEREOF AND THERE IS NO BAR TO MAKE THE ARGUMENT SUPPORTING THE GROUND . SECONDLY, THE DELHI BENCHES OF THE T RIBUNAL ARE WITHIN THE JURISDICTION OF THE HON BLE DELHI HIGH COURT AND BOUND TO FOLLOW THE DECISION OF THE HON BLE HIGH COURT UNLESS IT IS REVERSED BY THE HON BLE SUPREME COURT. AS FAR AS OUR INFORMATION , THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE O F KABUL CHAWLA (SUPRA) HAS NOT BEEN REVERSED BY THE HON BLE SUPREME COURT. THUS IN VIEW OF THE ABOVE JUDICIAL POSITION, THE ASSESSING OFFICER IS NOT REQUIRED TO MAKE ANY ADDITI ON UNDER SECTION 153A OF THE A CT IN CASE OF COMPLETED ASSESSMENTS , WHERE NO INCR IMINATING MATERIAL IS FOUND. SINCE IN THE INSTANT CASE ORIGINALLY , THE ASSESSME NT UNDER SECTION 143(3) OF THE A CT WAS ALREADY COMPLETED AND IN THE PROCEEDINGS UNDER SECTION 153 A OF THE A CT , THERE IS NO MENTION OF ANY INCRIMINATING MATERIAL PARTICULARLY ON THE ISSUES ON WHICH THE LD. CIT HAS HELD THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRIES. IF AS PER THE LAW LAID DOWN BY THE HON BLE DELHI HIGH COURT, THE ASSESSING OFFICER IS NOT EMPOWERED TO MAKE ANY ADDITION, THEN HE IS NOT 8 ITA NO.3088/DEL/2015 REQUIRED TO CARRY OUT A NY ENQUIRY OR VERIFICATION IN RESPECT OF TH OSE ISSUE S . IN SUCH A SCENARIO, THE ORDER PASSED BY THE ASS ESSING OFFICER CANNOT BE HELD AS ERRONEOUS INSOFAR AS PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. IN VIEW OF THE AFORESAID DISCUSSION, WE ARE OF THE OPINI ON THAT LD. CIT HAS EXCEEDED HIS JURISDICTION PROVIDED UNDER SECTION 263 OF THE A CT AND ACCORDINGLY, WE SET - ASIDE THE ORDER PASSED BY THE LD. C IT UNDER SECTION 263 OF THE A CT. SINCE WE HAVE ALREADY HELD THAT THE LD. CIT WAS NOT CORRECT IN REVISING THE ASSE SSMENT ORDER IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH CO URT IN THE CASE OF KABUL CHAWLA (SUPRA) , WE ARE NOT ADJUDICATING TO THE ISSUE WHETHER ANY ENQUIRY OR VERIFICATION WAS MADE BY THE ASSESSING OFFICER ON THE ABOVE ISSUES DURING THE PROCEE DINGS UNDER SECTION 153 A OF THE A CT. THE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT , THE APP EAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUN CED IN THE OPEN COURT ON 2 3 R D OCTOBER, 201 8 . S D / - S D / - AMIT SHUKLA O.P. KANT JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 R D OCTOBER , 201 8 . RK / - (D.T.D . ) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI