Poshak Industries, CHENNAI V. ACIT, CHENNAI

ITA 332/CHNY/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7671 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-01-2016
• Assessment Year: 1999-2000
• Appeal Filed On: 22-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI IRS
• Assessee Lawyers: M P SENTHIL KUMAR
• Keywords: Rectification of order; Principle of natural justice; Revised return; Reason to believe
• Section: 143(3); 153A; 234B; 54; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 332/MDS/2013 ' $ %$ / ASSESSMENT YEAR : 1999-2000 M/S. POSHAK INDUSTRIES, NO.15, RACE COURSE ROAD, GUINDY, CHENNAI 600 032. [PAN AAAFP 3600K ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE IV, CHENNAI. ( / APPELLANT) ( /RESPONDENT) &' ( ) / APPELLANT BY : SHRI. M.P. SENTHIL KUMAR, ADV. *+&' ( ) /RESPONDENT BY : SHRI. A.B. KOLI, IRS, JCIT. ( , / DATE OF HEARING : 06-01-2016 -.% ( , / DATE OF PRONOUNCEMENT : 31-03-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, C HENNAI IN ITA NO.09/09-10(A)- VIII, DT. 26.11.2012 FOR THE ASSESS MENT YEAR 1999- ITA NO. 332/MDS/2013. :- 2 -: 2000 PASSED U/S.154 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IS OPPOSED TO LAW AND CONTRARY TO THE FACTS OF THE CAS E. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ER RED IN REMANDING THE MATTER BACK TO THE ASSESSING OFFICER IN THE GUISE OF GIVING ONE MORE OPPORTUNITY, WHICH IS IN V IOLATION TO THE PROVISIONS OF SECTION 251(1) (A). 3. LIMITATION:- 3.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ORDER U/ S. 154 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX IS BARRED BY LIMITATION SINCE FOUR YEARS HAVE EXPIRED FROM THE END OF THE FINANC IAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED AS PER SECTION 154(7). 4. JURISDICTION:- 4.1. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING OFFICER HAS NO JURI SIDICITON FOR RECTIFICATION OF MISTAKE OF PREVIOUS ORDERS, WHILE PASSING AN ORDER OF REVISION FOR GIVING EFFECT TO THE ORDER OF THE INCO ME TAX APPELLATE TRIBUNAL 4.2.. THE COMMISSIONER OF INCOME TAX (APPEALS) OUG HT TO HAVE APPRECIATED THAT WHILE GIVING EFFECT TO THE T RIBUNAL'S ORDER, THE ASSESSING OFFICER CANNOT RECTIFY AN ALL EGED MISTAKE COMMITTED BY HIM AND ALSO ADMITTED BY HIM T HAT NEITHER IN THE ORIGINAL ORDER NOR IN THE GIVING EFF ECT TO CIT(A)'S ORDER, HE CHARGED INTEREST U/ S. 234B FOR THE PERIOD BEYOND 28 MONTHS I.E. TILL THE DATE OF INTIMATION U/S.143(1). 5. MERITS:- 5.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT WHEN THE ASSESSEE WAS IN APPEAL B EFORE TRIBUNAL, IT CANNOT BE WORSE OFF BY BEING IN APPEA L BEFORE THE TRIBUNAL, SINCE THE ASSESSING OFFICER IS TAKING AD VANTAGE OF RECTIFYING A MISTAKE PREJUDICIAL TO THE INTEREST O F THE ASSESSEE WHO WAS IN APPEAL BEFORE TRIBUNAL IN THE GUISE OF ITA NO. 332/MDS/2013. :- 3 -: GIVING EFFECT TO ORDER OF THE INCOME TAX APPELLATE TRIBUNAL. 5.2. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO H AVE APPRECIATED THAT THE TRIBUNAL HAS NO POWER OF ENHAN CEMENT AND THEREFORE THE DIRECTION OF THE TRIBUNAL, IF ANY , CANNOT BE INTERPRETED TO LEVY INTEREST FOR A PERIOD OF 70 MON THS AGAINST THE ORIGINALLY CHARGED 28 MONTHS. 5.3. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO H AVE HELD THAT THE ORIGINAL ORDER PASSED BY THE ASSESSIN G OFFICER LEVYING INTEREST U/ S. 2348 FOR A PERIOD OF 28 MONT HS WAS CORRECTLY CHARGED AND THERE WAS NO MISTAKE WARRANTI NG RECTIFICATION OF THE SAME. 6. THE APPELLANT CONTESTS ALL THE FINDINGS OF FACT AND LAW MADE BY THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE APPELLANT. 7 . THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GRO UNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXP ORT OF READYMADE GARMENTS AND FILED RETURN OF INCOME ADMITTING NIL I NCOME ON 10.12.1999. SUBSEQUENTLY, THE RETURN WAS PROCESSED U/S.143(1)(A) OF THE ACT ON 22.10.2002 AND REFUND WAS DETERMINED ;10 ,91,584/- INCLUDING INTEREST U/S.244A OF THE ACT ;2,64,612/- . THE ASSESSING HAS REASON TO BELIEVE ON ESCAPEMENT OF INCOME AND ISSUE D NOTICE U/S.148 OF THE ACT ON 12.11.2003 AND ASSESSMENT WAS FINALIZ ED AND COMPLETED ON 28.02.2005. IN THE RE-ASSESSMENT ORDER, THE AS SESSING OFFICER DETERMINED TAX DEMAND OF ;30,94,798/- INCLUDING INT EREST U/S.234A AND 234B OF THE ACT. THE ASSESSING OFFICER CALCULA TED INTEREST ITA NO. 332/MDS/2013. :- 4 -: U/S.234B FROM 22.10.2002 TO 28.02.2005 I.E. (INTERE ST CALCULATED FROM DATE OF PROCESSING OF RETURN U/S.143(1)(A) OF THE A CT TO DATE OF ASSESSMENT ORDER U/S.143(3) R.W.S 147 OF THE ACT FO R 28 MONTHS). AGGRIEVED BY THE RE-ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND WAS PARTLY ALLOWED. THE LD. ASSESSING OFFICER PASSED CONSEQUE NTIAL ORDER GIVING EFFECT TO THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER ON 30.11.2005 AND DETERMINED TAX PAYABLE ;30,89,057/- INCLUDING INTEREST U/S.234A AND 234B OF THE ACT AND CALCULATE D INTEREST U/S.234B OF THE ACT FOR A PERIOD OF 28 MONTHS AS IN EARLIER ORDER. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE AND DEPARTMENT HAS FILED CROSS-APPEAL WITH THE TRIBUNAL AND ORDER WAS PASSED ON 10.08.2007 AND FURTHER THE ASSESSING OFF ICER PASSED CONSEQUENTIAL ORDER DATED 20.08.2008 GIVING EFFECT TO THE TRIBUNAL ORDER DATED 10.08.2007 AND DETERMINED TAX PAYABLE O N THE ASSESSED INCOME ;35,93,705/- INCLUDING INTEREST U/S.234A AND 234B OF THE ACT. THE MAIN DISPUTE ARISES ON CHARGING INTEREST FOR 70 MONTHS U/S.234B BY ASSESSING OFFICER FROM 1.4.1999 TO 28.02.2005 AS AGAINST PERIOD OF 28 MONTHS CALCULATED EARLIER IN RE-ASSESSMENT ORDER U/S.143(3) R.W.S 147 OF THE ACT DT.28.02.2005 AND CONSEQUENTIAL ORD ER DATED 30.11.2005 FROM 22.10.2002 TO 28.2.2005. THE ASSESS ING OFFICER IN THE RE-ASSESSMENT ORDER AND CONSEQUENTIAL ORDER OF COMM ISSIONER OF ITA NO. 332/MDS/2013. :- 5 -: INCOME TAX (APPEALS) CHARGED INTEREST U/S.234B FOR A PERIOD OF 28 MONTHS. BUT WHILE GIVING EFFECT TO THE ITAT ORDER CHARGED INTEREST FOR 71 MONTHS. THE ASSESSEE FILED PETITION U/SEC. 154 O F THE ACT AND WAS REJECTED ON 17.06.2009 BY MENTIONING THAT MISTAKE W AS COMMITTED EARLIER IN CHARGING INTEREST U/S.234B OF THE ACT AND SUBSEQUENTLY, RECTIFIED IN REVISION ORDER DATED 20.08.2008. AGGR IEVED BY THE ORDER OF REJECTION U/S.154 OF THE ACT DATED 17.06.2009, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED AND REITERA TED THE SUBMISSIONS MADE IN THE ASSESSMENT PROCEEDINGS EAR LIER APPELLATE AND ITAT PROCEEDINGS AND ALSO EXPLAINED THE CIRCUM STANCES OF CHARGING OF INTEREST U/S.234B OF THE ACT. THE COMMI SSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS DIRECTED A SSESSING OFFICER THROUGH LETTER DATED 16.12.2009 TO PROVIDE AN OPPOR TUNITY TO THE APPELLANT ON PRINCIPLES OF NATURAL JUSTICE AND COM PLY WITH THE REPORT BEFORE 29.01.2010. THE LD. ASSESSING OFFICER FILED REPLY DATED 29.12.2009 COMMUNICATING THAT THE REVISION ORDER W AS MADE CONSEQUENT TO THE ORDER OF ITAT AND THE QUESTION OF ISSUE OF NOTICE FOR PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE DOES NOT ARISE. SUBSEQUENTLY, THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) CONSIDERED THE FINDINGS OF THE RE-ASSESSMENT ORDER, REVISION ORDER, ITA NO. 332/MDS/2013. :- 6 -: GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS AND DIREC TED THE ASSESSING OFFICER TO PROVIDE ONE MORE OPPORTUNITY BEFORE CALC ULATING THE INTEREST U/S.234B OF THE ACT TO THE ASSESSEE AND ALLOWED THE APPEAL FOR STATISTICAL PURPOSE. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE ASSAILED AN APPE AL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITER ATED THE SUBMISSIONS MADE IN THE RE-ASSESSMENT PROCEEDINGS A ND APPELLATE PROCEEDINGS. THE LD. AUTHORISED REPRESENTATIVE CHAL LENGED THE VALIDALITY AND LIMITATION OF PASSING ORDER U/SEC. 1 54 OF THE ACT BY THE ASSESSING OFFICER AND THE ASSESSEE CANNOT BE PUT IN A WORST POSITION THAN BEFORE, AS IN THE PRESENT CASE ON THE GUISE OF REVISION ORDER GIVING EFFECT TO ITAT ORDER, THE LD. ASSESSING OFFI CER HAS ENHANCED THE LIABILITY BY CALCULATING INTEREST U/S.234B OF THE A CT FOR A PERIOD OF 70 MONTHS AS AGAINST ORIGINALLY 28 MONTHS. THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT ORIGI NAL ORDER U/SEC. 143(3) R.W.S 147 PASSED BY THE ASSESSING OFFICER IS CORRECT AND THERE IS NO MISTAKE FOR RECTIFICATION AND SUPPORTED HIS A RGUMENTS WITH THE SYNOPSIS LIST OF DATES, CHART AND PAPER BOOK EVIDEN CING THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S. 147 OF THE ACT DT. 2 8.02.2005 AND REVISION ORDER DATED 30.11.2005 WERE THE ASSESSING OFFICER CALCULATED THE INTEREST U/S.234B OF THE ACT FOR A PERIOD OF 2 8 MONTHS. THE LD. ITA NO. 332/MDS/2013. :- 7 -: AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO THE ORDER DATED 20.08.2008 PASSED BY THE ASSESSING OFFICER GIVING E FFECT TO THE ITAT ORDER CHARGED INTEREST U/S.234B FOR 70 MONTHS ;17,0 1,779/- REFERRED AT PAGE 11 OF PAPER BOOK. FURTHER ON COMPARISON WIT H THE REVISION ORDER, DATED 20.08.2008 WERE INTEREST CHARGED U/S.2 34B IS ;17,01,779/- AS AGAINST EARLIER REVISION ORDER DATE D 30.11.2005 ;8,97,165/-. THE LD. AUTHORISED REPRESENTATIVE RE LIED ON THE DECISION OF VIJAYA KUMAR SABOO (HUF) AND ANOTHER VS. ACIT 340 ITR 382 (KAR) WERE HELD THAT AFTER DETERMINATION OF TAX UNDER S EC. 143(1)(A) OF THE ACT IN REGULAR ASSESSMENT, AND INCOME DECLARED BY THE ASSESSEE WAS ACCEPTED BY THE DEPARTMENT, THEREAFTER, PROCEEDINGS WERE INITIATED UNDER SEC. 147 OF THE ACT AND REVISED RETURN WAS FI LED DECLARING ENHANCED INCOME AND INTEREST U/S.234B OF THE ACT SHALL BE CALCULATED FROM THE SAID DATE OF TAX DETERMINED U/S.143(1)(A) OF THE ACT AND NOT FROM THE DATE OF FIRST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR AND PRAYED FOR ALLOWING THE GROUND. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE ASSESSING OFFICER. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. AUTHOR ISED REPRESENTATIVE ONLY DISPUTE WITH RESPECT TO CHARGING OF INTEREST U/S.234B OF THE ACT. ITA NO. 332/MDS/2013. :- 8 -: IN RE-ASSESSMENT PROCEEDINGS, INTEREST WAS CHARGED FOR 28 MONTHS AND ALSO IN REVISION ORDER GIVING EFFECT TO ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS) INTEREST WAS CHARGED FOR 28 MO NTHS BY THE ASSESSING OFFICER WHICH IS NOT DISPUTED. BUT THE A SSESSING OFFICER HAS CHARGED INTEREST U/S.234B FROM 01.04.1999 TO 28.02. 2005 FOR A PERIOD OF 70 MONTHS WHILE GIVING EFFECT TO ITAT ORDER AND MENTION THAT EARLIER ORDERS WERE PASSED WITH THE MISTAKE OF TH E INCOME TAX DEPARTMENT. ON THE LIMITATION ISSUE, THE ORDER U/ SEC. 154 OF THE ACT CANNOT BE THE FINALITY AS THERE IS NO INCREASE, ENH ANCEMENT OR REDUCTION OF TOTAL INCOME. ON PERUSAL OF PROVISIO NS OF SEC.234B(3) OF THE ACT BEFORE AMENDMENT WHERE, AS A RESULT OF A N ORDER OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 OR SECTION 153A, THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB-SECT ION (1) IS INCREASED, THE ASSESSEE SHALL BE LIABLE TO PAY SI MPLE INTEREST AT THE RATE OF ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY FOLLOWING THE DAT E OF DETERMINATION OF TOTAL INCOME UNDER SUB-SECTION (1) OF SEC. 143 AND WHERE A REGULAR ASSESSMENT IS MADE AS IS REFERRED T O IN SUB-SECTION (1) FOLLOWING THE DATE OF SUCH REGULAR ASSESSMENT A ND ENDING ON THE DATE OF THE REASSESSMENT OR RECOMPUTATION UNDER SEC TION 147 OR SECTION 153A, ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERMINED ON THE BASIS OF THE REASSESSMENT OR RECO MPUTATION ITA NO. 332/MDS/2013. :- 9 -: EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED UNDE R SUB-SECTION (1) OF SECTION 143 OR ON THE BASIS OF THE REGULAR ASSES SMENT AFORESAID AND SUBSTITUTED AMENDED PROVISION EFFECTIVE FROM 0 1.06.2015 WHERE, AS A RESULT OF AN ORDER OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 OR SECTION 153A, TH E AMOUNT ON WHICH INTEREST WAS PAYABLE IN RESPECT OF SHORTFALL IN PAYMENT OF ADVANCE TAX FOR ANY FINANCI AL YEAR UNDER SUB-SECTION(1) IS INCREASED, THE ASSESSEE SHA LL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 70 [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR AND ENDING ON THE DATE OF THE REASSE SSMENT OR RECOMPUTATION UNDER SEC 147 TO SECTION 153A, ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERMI NED ON THE BASIS OF THE REASSESSMENT OR RECOMPUTATION EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED UND ER SUB-SECTION (1) OF SECTION 143 OR ON THE BASIS OF T HE REGULAR ASSESSMENT AS REFERRED TO IN SUB-SECTION (1 ), AS THE CASE MAY BE. PRIME FACIE THE AMENDMENT IS PROSPECTIVE ON COMBINE D READING OF BOTH THE PROVISIONS THERE IS CHANGE IN THE INTERES T CALCULATION U/S.234B OF THE ACT. IN THE CASE OF RE-ASSESSMENT AND RE- COMPUTATION INTEREST U/S.234B HAS TO BE CHARGED C OMMENCING ON THE DAY FOLLOWING THE DATE OF DETERMINATION OF TOTAL IN COME U/S.143(1) OF THE ACT. ON COMPARISON WITH THE POST AMENDMENT PRO VISO INTEREST TO BE CHARGED COMMENCING ON 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR AND ENDING ON THE DATE OF RE-ASSESSMENT OR RE- COMPUTATION U/SEC.147 OR SEC. 153A OF THE ACT. CONS IDERING THE APPARENT FACTS, PROVISIONS OF LAW AND AMENDMENTS AN D JUDICIAL DECISION VIJAY KUMAR SABOO & ANR. (SUPRA), WE ARE OF THE OPINION THAT ITA NO. 332/MDS/2013. :- 10 -: THE ASSESSMENT YEAR OF THE ASSESSEE IS PRIOR TO THE AMENDMENT AND THE RECTIFICATION OF MISTAKE BY THE DEPARTMENT ON T HE GUISE OF GIVING EFFECT TO THE ITAT ORDER IS NOT IN ORDER. THEREFOR E, WE REMIT THE ENTIRE FILE TO THE COMMISSIONER OF INCOME TAX (APPEALS) TO CONSIDER THE POST AND PRE AMENDMENT PROVISIONS AND SHALL PROVIDE ADEQ UATE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING THE ORDER . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 31ST DAY OF MARCH, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 3 / DATED:31.03.2016 KV 4 ( *',56 76%, / COPY TO: 1 . &' / APPELLANT 3. 8, () / CIT(A) 5. 69: *',' / DR 2. *+&' / RESPONDENT 4. 8, / CIT 6. :;$ < / GF