DCIT 2(3), MUMBAI V. DENA BANK, MUMBAI

ITA 3130/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5041 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 07-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S ANATHAN; MRS LALITHA RAMESHWARAN
• Keywords: Depreciation; Reason to believe
• Section: 143(3); 142(1); 115JB; 147; 148

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. . .. . , !' !' !' !' # # # # $%&' $%&' $%&' $%&' , % % % % () () () () BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJENDR A,ACCOUNTANT MEMBER ./ ././ ./ ITA NO.3130/MUM/2012 , + + + +/ // / ASSESSMENT YEAR-2005-06 DCIT 2(3), R.NO. 552, 5TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD.MUMBAI- 400 020 VS. DENA BANK , DENA BANK BUILDING, ACCOUNTS DEPARTMENT, 2 ND FLOOR, 17-B, HORNIMAN CIRCLE, FORT MUMBAI- 400001 PAN: AAACD4249D ( ,- / // / APPELLANT ) ( ./,- / RESPONDENT ) ,- ,- ,- ,- 0 0 0 0 % %% % / APPELLANT BY : SHRI SANTOSH KUMAR. ./,- 1 0 % / RESPONDENT BY : SHRI S. ANATHAN & MRS. LALITHA RAMESHWARAN 1 11 1 2 2 2 2 / DATE OF HEARING : 05/09/2013 3+ 1 2 / DATE OF PRONOUNCEMENT : 13/09/2013 , 1961 1 11 1 254(1) % %% % &242 &242 &242 &242 (%5 (%5 (%5 (%5 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M: CHALLENGING THE ORDER DATED 08.02.2012 OF CIT(A)-6 MUMBAI, ASSESSING OFFICER (A) HAS FILED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN HOLDING THAT REOPENING OF THE CASE IS NOT VALID IGNORING THE FACT BECAUSE THE RE WAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT DUE TO INCORRECT COMPUTATION OF INCOME BY THE ASSESSEE U/S.115JB. 2.FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. ASSESSEE-BANK,HAD FILED ITS RETURN OF INCOME ON 29. 10.2005 DECLARING A LOSS OF RS. 5,32,56,18, 196/- UNDER THE NORMAL PROVISIONS OF THE ACT AND LO S OF RS. 1,63,80,17,897/- U/S. 115JB OF THE ACT.AO FINALISED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 28.12.2007 DETERMINING THE LOSSES AT RS. 178.94 CRORES UNDER THE NORMAL PROVISIONS OF TH E ACT. SUBSEQUENT TO IN PURSUANCE OF ORDER DATED 29.03.2010 OF THE CIT(A)-2,FRESH ASSESSMENT O RDER U/S.143(3) R.W.S.263 WAS PASSED BY THE AO ON 19.11.2010.MEANWHILE THE AO ISSUED A NOTICE U /S. 148 ON 06.10.2010 THAT WAS SERVED ON THE ASSESSEE ON 09.10.2010.VIDE ITS LETTER DATED 19 .11.2010 REQUESTED THE AO TO CONSIDER THE RETURN OF INCOME FILED U/S. 139(1) ON 29.10.2005 TO BE THE RETURN IN RESPONSE TO NOTICE ISSUE U/S. 148 OF THE ACT.IN THE REASONS RECORDED FOR RE-OPENI NG THE ASSESSMENT AO MENTIONED THAT THE OMISSION OF THE ASSESSEE TO CARRY OUT SPECIFIED ADJ USTMENT HAD RESULTED IN SHORT COMPUTATION OF BOOK PROFIT BY RS. 26.45 CRORES. HE HELD THAT THERE WAS REASON TO BELIEVE THAT INCOME OF RS. 15.93 CRORES ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION.AO ISSUED A NOTICE U/S. 142(1) OF THE ACT ASKING THE ASSESSEE AS TO WHY THE NET PR OFIT AS PER PROFIT & LOSS ACCOUNT FOR THE YEAR SHOULD NOT BE INCREASED BY RS. 10.15 CRORES TOWARDS PROVISION OF AMORTISATION OF PREMIUM ON INVESTMENT AND BY RS. 15.93 CRORES TOWARDS THE PROV ISION FOR STANDARD ASSETS FOR THE PURPOSE OF COMPUTING THE BOOK PROFIT U/S. 115JB OF THE ACT. AS SESSEE VIDE ITS LETTER DATED 09.12.2010 SUBMITTED THAT ORIGINAL ASSESSMENT U/S. 143(3) OF T HE ACT WAS COMPLETED ON 28.12.2007, THAT PROVISO TO SECTION 147 OF THE ACT WAS APPLICABLE IN THE CASE UNDER CONSIDERATION, THAT THE NOTICE U/S. 147 COULD BE ISSUED BEYOND THE PERIOD OF 4 YEA RS FROM THE END OF THE AYS IF, THERE WAS MISTAKE ON PART OF THE ASSESSEE, THAT AO HAD NOT PO INTED OUT ANY MISTAKE COMMITTED BY THE ASSESSEE, HAT THE ASSESSEE, A NATIONALIZED BANK WAS REQUIRED TO PREPARE ITS ANNUAL ACCOUNT AS PER 2 ITA NO. 3130/MUM/2012(AY-2005-06) DENA BANK THE REQUIREMENTS AND PROVISIONS OF THE BANKING REGU LATION ACT, THAT THE BANKING COMPANY WAS EXEMPTED FROM PREPARING ITS BOOKS OF ACCOUNTS IN TE RMS OF REQUIREMENTS OF SCHEDULE VI OF THE COMPANIES ACT,THAT THE PROVISIONS OF SECTION 115JB OF THE ACT DID NOT APPLY TO THE ASSESSEE. ASSESSEE RELIED UPON THE ORDER OF THE ITAT,MUMBAI D ELIVERED IN THE CASE OF KRUNG THAI BANK PCL(ITA NO. 3390/MUM/2009).AFTER CONSIDERING THE SU BMISSION OF THE ASSESSEE, AO HELD THAT ORDER OF THE ITAT, MUMBAI HAD NOT ACCEPTED BY THE D EPARTMENT, THAT SAME COULD NOT BE APPLIED IN THE CASE UNDER CONSIDERATION, THAT PROVISION FOR STANDARD ASSETS (RS. 15.93 CRORES) HAD NOT BEEN ADDED WHILE PASSING THE ORDER U/S.143(3) OF TH E ACT.HE FURTHER HELD THAT ASSESSEE HAD NOT CONTESTED ABOVE ADDITIONS BEFORE THE FAA, THAT THOS E ADDITIONS WERE NOT CONTESTED BY IT WHILE PREPARING APPEAL BEFORE THE ITAT.FINALLY, HE HELD T HAT THE OMISSION TO CARRY OUT ABOVE SPECIFIED ADJUSTMENTS HAD RESULTED IN SHORT COMPUTATION OF BO OK PROFIT THAT THERE WERE REASONS TO BELIEVE THAT INCOME AMOUNTING TO RS. 15.93 CRORES HAD ESCAP ED ASSESSMENT.AO RE-CALCULATED THE BOOK PROFIT U/S. 115JB OF THE ACT AND MADE AN ADDITION O F RS. 15.93 CRORES UNDER THE HEAD PROVISION FOR STANDARD ASSETS. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,HE HELD THAT THE AS SESSMENT YEAR IN QUESTION IS 2005-06 AND FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR EXPIRED O N 31.03.2010,THAT NOTICE U/S.148 WAS ISSUED ON 6.10.2010 AS MENTIONED BY AO AT PARA 5 OF HIS OR DER DATED 10.12.2010,THAT THE ASSESSEE HAD DISCLOSED THE MATERIAL FACT FULLY AND TRULY REGARDI NG CLAIM OF DEDUCTION OR PROVISION FOR STANDARD ASSETS AMOUNTING TO RS.15.94 CRORES IN THE P & L A/C AS MENTIONED BY THE AO IN THE ORDER U/S 143(3) DATED 28.12. 2007AT PAGE 2.HE ALLO WED THE APPEAL FILED BY THE ASSESSEE,HOLDING THAT NOTICE ISSUED U/S.147 WAS NOT AS PER THE PROVI SIONS OF LAW. 2.2 .BEFORE US, DEPARTMENTAL REPRESENTATIVE(DR) RELIED UPON THE ORDER OF THE AO.AUTHORISED REPRESENTATIVE(AR) SUBMITTED THAT THERE WAS NO FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY, THAT NOTICE WAS ISS UED AFTER 4 YEARS FROM THE END OF THE ASSESSMENT YEAR IN QUESTION, THAT AO HAS NOWHERE ALLEGED THAT BECAUSE OF THE FAILURE OF THE ASSESSEE INCOME ESCAPED ASSESSMENT.HE RELIED UPON THE CASES OF HIN DUSTAN PETROLEUM CORPORATION LTD.(328ITR 534),SOUND CASTING PVT.LTD.(2012(4)TMI248(HC) DELIV ERED BY THE BOMBAY HIGH COURT. 2.3 .WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US. THE UNDISPUTED FACTS IN THE CASE UNDER CONSIDERATION ARE AS UNDER: I.ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF T HE ACT, II.NOTICE U/S.148 WAS ISSUED AFTER FOUR YEAR FROM T HE END OF THE ASSESSMENT YEAR CONCERNED, III.IN THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT THERE IS NO MENTION OF FAILURE OF THE ASSESSEE TO DISCLOSE MATERIAL FACT. IN OUR OPINION MANDATE OF PROVISO TO SECTION 147 OF THE ACT IS VERY CLEAR.IT REQUIRES THE AO TO CLEARLY MENTION AND PROVE THAT BECAUSE OF THE FAILU RE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS TRULY AND FULLY TAXABLE INCOME HAD ESCAPED ASSESSME NT. PROVISO WAS INCORPORATED IN THE ACT TO PREVENT MISUSE OF RE-OPENING THE ASSESSMENTS BY THE AOS AFTER PERIOD OF FOUR YEARS. PROVISION OF SAID SECTION CAST ONUS ON THE AO TO PROVE FAILURE O F THE ASSESSEE.IF THE AO FAILS TO DO SO,THEN ASSESSMENT PASSED BY HIM IN PURSUANCE OF RE-OPENING NOTICE, LOOSES LEGAL VALIDITY AND SANCTITY. AFTER GOING THROUGH THE ORDER OF THE AO AND THE FAA , WE ARE OPINION THAT THERE WAS NO FAULT ON THE PART OF THE ASSESSEE, THEREFORE UPHOLDING THE O RDER OF THE FAA WE DISMISSING THE EFFECTIVE GROUND OF APPEAL FILED BY THE AO. WE FURTHER FIND T HAT FAA HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE CONSIDERING THE PROVISO TO SECTION 147 OF THE ACT. HE DID NOT CONSIDER THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN WHICH IT WAS MEN TIONED THAT PROVISIONS OF SECTION 115JB WERE NOT APPLICABLE IN ITS CASE.WE FIND THAT SAID ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE BY A SERIES OF DECISIONS OF THE TRIBUNAL.IN THESE CIRCUM STANCES,APPEAL FILED BY THE AO,IS ALSO LIABLE TO BE DISMISSED.RESPECTFULLY FOLLOWING THE ABOVE REFE RRED DECISIONS OF THE JURISDICTIONAL HIGH COURT,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY THE AO STAND REJECTED. 3 ITA NO. 3130/MUM/2012(AY-2005-06) DENA BANK 6 )7 62 8 ( 9 6$ 1 $ 2 :. ORDER PRONOUNCED IN THE O PEN COURT ON 13 TH SEPTEMBER, 2013 (%5 1 3+ % & ; <( 13, 2 2013 1 4 = SD/- SD/- ( . / D. MANMOHAN ) ( $%&' $%&' $%&' $%&' / RAJENDRA) !' !' !' !' / VICE-PRESIDENT % % % % () () () () /ACCOUNTANT MEMBER / MUMBAI, <( /DATE: 13.09 . 2013 SK (%5 (%5 (%5 (%5 1 11 1 .2> .2> .2> .2> ?%>+2 ?%>+2 ?%>+2 ?%>+2 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / ,- 2. RESPONDENT / ./,- 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR D BENCH, ITAT, MUMBAI / >B 4 .2 . , . . & . 6. GUARD FILE/ 4 C / >2 .2 //TRUE COPY// (%5 / BY ORDER, / $ DY./ASST. REGISTRAR , /ITAT, MUMBAI