ITO, Ward-1(3)(3), Ahmedabad V. M/S. KGMS Broking & Research Pvt.Ltd., Ahmedabad

ITA 3300/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6336 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 27-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH HEARING CONCLUDED
• Keywords: Period of limitation; Time period of passing order
• Section: 11

Judgement Text

ITA NO.3300/AHD/2015 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO.3300/AHD/2015 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER. WARD 1(3)(3), AHMEDABAD. .....................APPELLANT VS. KGMS BROKING & RESEARCH PVT. LTD., ...... ........... RESPONDENT 606, WALL STREET-II, OPP. ORIENT CLUB, ELLISBRIDGE, AHMEDABAD. [PAN: AABCK 4489 K] APPEARANCES BY MUDIT NAGPAL FOR THE APPELLANT D.K. PARIKH FOR THE RESPONDENT HEARING CONCLUDED ON: 02.01.2018 ORDER PRONOUNCED ON : 05.01.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER APP ELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 15.09.2015 PASSED BY THE LEARNED CIT(A), IN THE MATTER OF REOPENED ASSESSMENT UNDER SECTION 115WE(3) READ WITH SECTION 115W OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2008- 09 2. GRIEVANCE RAISED BY THE APPELLANT IS AS FOLLOWS :- THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.90,00,000/- MADE BY AO ON ACCOUNT OF ISSUE OF SWEAT EQUITY SHARES AT A DISCOUNT OF RS.90/- PER SHARE WITHIN THE MEANING OF PROVISIONS OF SECTION 115WB(1)(D) OF THE ACT WITHOUT TAKING ACCOUNT OF TH E FACT THAT NOTICE U/S.115WE(1) OF THE ACT HAS ISSUED ON 01.03.2014 AN D THE ASSESSMENT ORDER U/S.115WE(3) R.W.S. 115WG WAS PASSED BY AO ON 28.03 .2014 AS PER STIPULATED TIME ALLOWED U/S.153(1B) OF THE ACT. ITA NO.3300/AHD/2015 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 4 ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER TO THE EXTENT MENTIONED ABOVE SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME/BOOK PROFIT. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 3. TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT AND THE NOTICE UND ER SECTION 115WH(1) WAS ISSUED ON 24.05.2012 AND SERVED ON THE ASSESSEE BY SPEED P OST. THEREAFTER, NOTICE UNDER SECTION 115WE(2) WAS ISSUED ON 08.07.2013 AND A NOT ICE UNDER SECTION 115WE(1) WAS ISSUED ON 01.03.2014. THE ASSESSMENT WAS FINALIZED ON 28.03.2014. IN APPEAL BEFORE THE LEARNED CIT(A), THE ASSESSEE CONTENDED THAT ORD ER PASSED BY THE LD. CIT(A) IS TIME BARRED INASMUCH AS, IN TERMS OF THE PROVISIONS OF S ECTION 153(1B) THE ASSESSMENT OR REASSESSMENT UNDER SECTION 115WG HAS TO BE NECESSAR ILY CONCLUDED WITHIN NINE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE NOTICE UNDER SECTION 115WH WAS SERVED. THE LD. CIT(A) UPHELD THE PLEA OF THE ASSE SSEE AND QUASHED THE IMPUGNED REASSESSMENT ORDER. WHILE DOING SO, THE LD. CIT(A) HAS OBSERVED AS FOLLOWS :- 7. I HAVE CAREFULLY CONSIDERED THE REASSESSMENT OR DER PASSED BY THE A.O. AND THE FACTS OF THE CASE AND THE SUBMISSIONS OF TH E APPELLANT. SINCE THE LEGAL GROUND RAISED CHALLENGING THE REASSESSMENT ORDER UN DER SECTION 115WG AS BARRED BY LIMITATION GOES TO THE ROOT OF THE MATTER AND BEING PURELY A LEGAL GROUND FOR WHICH THE RELEVANT FACTS ARE ON RECORD OF THE A SSESSMENT ORDER, THE SAME IS ADMITTED AND ADJUDICATED CONSIDERING THE JUDGMENTS RELIED UPON BY THE APPELLANT. 8. I FIND THAT THE NOTICE UNDER SECTION 115WH(1) FO R MAKING REASSESSMENT OF FRINGE BENEFIT WAS ISSUED ON 24.05.2012 AS STATED I N PARA 2 OF THE ASSESSMENT ORDER PASSED BY THE AO. THE SAME WAS SERVED BY SPE ED POST ON THE APPELLANT ON 30.05.2015. THE APPELLANT FILED RETURN IN RESPO NSE TO THE SAID NOTICE ON 28.06.2012 BY ACK RECEIPT NO.2782806120 16250. THU S, IT IS CLEAR THAT THE NOTICE WAS SERVED IN THE FINANCIAL YEAR 2012-13, WH ICH ENDED ON 31 ST MARCH, 2013. THE LIMITATION PERIOD FOR PASSING AN ORDER O F REASSESSMENT OF FRINGE BENEFITS IS PRESCRIBED IN SECTION 153(1B) WHICH REA DS AS UNDER: 153(1B). NO ORDER OF ASSESSMENT OR REASSESSMENT S HALL BE MADE UNDER SECTION 115WG AFTER THE EXPIRY OF NINE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE NOTICE UNDER SECTION 11 5WH WAS SERVED. IN VIEW OF ABOVE CLEAR PROVISIONS, THE REASSESSMENT ORDER U/S.115WG WAS REQUIRED TO BE PASSED ON OR BEFORE 31 ST DECEMBER 2013 (WITHIN NINE MONTHS FROM 31 ST MARCH 2013). HOWEVER, THE REASSESSMENT ORDER IS P ASSED ON 28.03.2014 WHICH IS BEYOND THE PERIOD OF LIMITATION. ITA NO.3300/AHD/2015 ASSESSMENT YEAR: 2008-09 PAGE 3 OF 4 9. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION, I HAVE NO ALTERNATIVE BUT TO HOLD THAT THE REASSESSMENT ORDER DATED 28.03.2014 P ASSED BY THE AO UNDER SECTION 115WE(3) READ WITH SECTION 115WG IS BARRED BY TIME AS PRESCRIBED IN SECTION 153(1B) HENCE INVALID, NULL AND VOID AND IS THEREFORE ANNULLED. THE GROUND REGARDING LEGALITY OF ORDER IS THUS ALLOWED AND THE ORDER DATED 28.03.2014 IS ANNULLED. 10. THOUGH THE LD. AR HAS ARGUED ON MERITS OF THE J USTIFICATION OF REASSESSMENT AND ALSO ON MERITS OF THE ADDITION, AS I HAVE DECIDED THE LEGAL GROUND BY HOLDING THAT THE ORDER PASSED BEYOND LIMI TATION PERIOD IS NOT VALID AND NULL AND VOID AND IS THEREFORE ANNULLED, I DO NOT F IND IT NECESSARY TO ADJUDICATE THE SAID GROUNDS ON MERITS AS THE SAME WOULD BE OF NO C ONSEQUENCES AND WILL BE LIABLE TO BE IGNORED BEING ONLY ACADEMIC AS PER SET TLED JUDICIAL PRINCIPLES. 11. IN THE RESULT, THE APPEAL IS ALLOWED. 4. THE ASSESSING OFFICER IS AGGRIEVED BY THE RELIEF SO GRANTED BY THE LD. CIT(A) AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. WE HAVE NOTED THAT THE LD. DEPARTMENTAL REPRESEN TATIVE DOES NOT DISPUTE THE FACT THAT NOTICE UNDER SECTION 115WH WAS ISSUED TO THE ASSESSEE ON 24.05.2012. THIS FACT IS SET OUT AT PAGE NO.1 OF THE ASSESSMENT ORDE R AS WELL. IT IS, THEREFORE, REASONABLE TO ASSUME THAT THE NOTICE UNDER SECTION 115WH WAS S ERVED ON THE ASSESSEE WITHIN FINANCIAL YEAR ENDING 31.03.2013. ACCORDINGLY, THE RE CANNOT ALSO BE ANY DISPUTE THAT IN TERMS OF THE CLEAR PROVISIONS OF SECTION 153(1B), THE ASSESSMENT UNDER SECTION 115WG WAS REQUIRED TO BE COMPLETED WITHIN NINE MONTHS FRO M THE END OF THE FINANCIAL YEAR IN WHICH NOTICE UNDER SECTION 115WH WAS SERVED. THAT HAS NOT BEEN DONE IN THE PRESENT CASE. BEYOND ANY DISPUTE OR CONTROVERSY THE ASSESS MENT WAS FINALIZED ON 28.03.2014 WHEREAS THE NINE MONTHS PERIOD FROM THE END OF THE FINANCIAL YEAR 2012-13 ENDED ON 31.12.2013. SECTION 153(1B) AS IT STOOD AT THE REL EVANT POINT OF TIME CLEARLY PROVIDES THAT NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE MADE UNDER SECTION 115WG AFTER EXPIRY OF NINE MONTHS FROM THE END OF THE FIN ANCIAL YEAR IN WHICH NOTICE UNDER SECTION 115WH WAS SERVED ITA NO.3300/AHD/2015 ASSESSMENT YEAR: 2008-09 PAGE 4 OF 4 7. ON THESE FACTS WHICH ARE NOT CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE, WE SEE NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE APPROVE THE SAME. 8. AS OBSERVED IN THE GROUND OF APPEAL THAT A NOTIC E UNDER SECTION 115WE(1) WAS ISSUED, ON 01.03.2014, NEITHER ANY EVIDENCE OF THE SAME HAS BEEN PRODUCED BEFORE US NOR ANY CASE HAS BEEN DISPUTED THAT THE FIRST NOTIC E UNDER SECTION 115WE WAS ISSUED ON 24.05.2012. NOTHING THEREFORE TURNS ON THIS OBS ERVATION ON THE GRIEVANCE RAISED BY THE ASSESSING OFFICER. 9. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND ENTIRETY OF THE CASE, CONCLUSION ARRIVED AT BY THE LD. CIT(A) IS JUSTIFIED. 10 IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JANUARY, 2018. SD/- SD/- S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) DATED: 5 TH JANUARY, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD