TATA INTERNATIONAL LTD, MUMBAI V. DCIT 7(3), MUMBAI

ITA 3360/MUM/2009

• Counselvise Citation: 336019914 RSA 2009
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-06-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 21-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAY KUMAR
• Assessee Lawyers: DINESH VYAS
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 147; 148; 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENC H MUMBAI . . , ! , . BEFORE SHRI G E VEERABHADRAPPA , PRESIDENT & SHRI VIJAY PAL RAO, JM ./ I.T.A. NOS. 3359 TO 3361/MUM/2009 ( '# '# '# '# $ $ $ $ / ASSESSMENT YEARS :2001-01,01-02 AND 2002-03 ) TATA INTERNATIONAL LTD BLOCK A SHIVSAGAR ESTATES DR A B ROAD, WORLI MUMBAI 18 # # # # / VS. THE DY COMMR OF INCOME TAX 7(3), MUMBAI %& '( ./ ) ./ PAN/GIR NO . : ( &* / APPELLANT ) .. ( +,&* / RESPONDENT ) &* - ' / APPELLANT BY : SH DINESH VYAS +,&* . - ' / RESPONDENT BY : SH JAY KUMAR # . /( / DATE OF HEARING : 14 TH JUNE 2012 01$ . /( / DATE OF PRONOUNCEMENT : 29 TH ,JUNE 2012 2'3 / O R D E R PER : ! , . . / VIJAY PAL RAO, JM THESE 3 APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T 3 SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) ALL DATED 27. 2.2009 FOR THE ASSESSMENT YEARS 2000-01, 2001 02 AND 2002 03 RESPECTIVELY. 2 THE ASSESSEE HAS RAISED COMMON GROUNDS IN THESE A PPEALS; THEREFORE, THE CONCISE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2000 -01 ARE REPRODUCED AS UNDER: 1. THE LD COMMISSIONER OF INCOME TAX(APPEALS)) ERRED IN UPHOLDING THE VALIDITY OF (I) THE REOPENING, PURPORTEDLY UNDER SECTION 147,, TH E APPELLANTS ASSESSMENT U/S 1543(3) DATED 27 TH MARCH 2003 AN D (II) THE MAKING OF THE REASSESSMENT ORDER, TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 2 AND IN NOT ACCEPTING THE SEVERAL CHALLENGES TO THE RE ASSESSMENT PROCEEDINGS RAISED BEFORE HIM (AND MORE SPECIFICALLY REFERRED TO IN THE ORIGINAL GROUNDS OF APPEAL URGED BEFORE THIS HONBLE TRIBUNAL. 2.1. WITHOUT PREJUDICE TO THE ABOVE, THE [EARNED COMM ISSIONER(APPEA(S) ERRED IN UPHOLDING THE ASSESSING OFFICERS DISALLOW ANCE OF THE AGGREGATE COMMISSION OF RS 11,98,505. 2.2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COM MISSIONER(APPEAL(S) ERRED IN UPHOLDING THE ASSESSING OFFICERS INVOCATIO N OF, AND RELIANCE UPON, THE EXPLANATION TO SECTION 37(1) (IN DISALLOWING TH E AGGREGATE COMMISSION OF RS 11,98,505). 2.3. WITHOUT PREJUDICE TO THE ABOVE, THE (EARNED COM MISSIONER(APPEALS) ERRED IN REJECTING THE APPELLANTS GROUND 2.3 URGED B EFORE HIM TO THE EFFECT THAT, ASSUMING WHILST DENYING THAT THE ASSESSING OF FICERS INFERENCE TO THE EFFECT THAT THE SAID AGGREGATE COMMISSION REPRESENT ED ITF AND ASSF WAS CORRECT IN LAW, NO PART OF SUCH COMMISSION WAS DISAL LOWABLE FOR THE REASON ALSO THAT ALL THE COMMISSION PAYMENTS HAVING BEEN M ADE EXACTLY IN TERMS OF THE APPELLANTS AGENCY AGREEMENTS, SUCH COMMISSION WAS ALLOWABLE IN FULL, AND, THEREFORE, OUGHT TO HAVE BEEN SO ALLOWED. 3. WITHOUT PREJUDICE TO THE APPELLANTS SUBMISSION THAT THE REASSESSMENT IS BAD IN LAW AND ILLEGAL AND HENCE LIABLE TO BE ANNUL LED, THE LEARNED COMMISSIONER(APPEALS) ERRED IN HAVING PARTLY ALLOWED THE APPELLANTS GROUND 3 URGED BEFORE HIM TO THE EFFECT THAT THE ASS ESSING OFFICER ERRED (WHILE RECOMPUTING THE TOTAL INCOME) IN OMITTING TO GIVE EFFECT TO THE APPELLATE ORDER UNDER SECTION 250 OF THE (EARNED COMMI SSIONER(APPEALS) DATED 2ND JANUARY, 2006, MADE IN THE APPELLANTS APP EAL AGAINST THE ORIGINAL ASSESSMENT. THE APPELLANT SUBMITS THAT THE (EARNED COMMISSIONER(APPEALS) OUGHT TO HAVE ALLOWED THE SAID GROUND 3 BY DIRECTING THE ASSESSING OFFICER TO GIVE EFFECT TO TH E SAID APPELLATE ORDER. 4.1. THE LEARNED COMMISSIONER (APPEALS) ERRED IN UPHO LDING THE ASSESSING OFFICERS CHARGING OF INTEREST UNDER SECTION 234-D AMO UNTING TO RS 55,78,316. 4.2. WITHOUT PREJUDICE TO THE GENERALITY OF GROUND 4. 1, THE (EARNED COMMISSIONER(APPEALS) ERRED IN NOT FOLLOWING THE BIND ING ORDER OF THE SPECIAL BENCH OF THIS HONBLE TRIBUNAL IN ITO V EKTA PROMOTER S (P) LTD 12008] 113 LTD 719 (DEL)(SB), WHICH ORDER WAS NOT MERELY CITED BEFORE THE LEARNED COMMISSIONER(APPEALS) BY THE APPELLANT, BUT WHICH ORD ER THE LEARNED COMMISSIONER(APPEALS) WAS AWARE OF, AS WOULD BE EVID ENT FROM HIS REFERENCE TO THE APPELLANT HAVING RELIED ON SOME JUD GMENTS (IN PARAGRAPH 4.2 OF HIS APPELLATE ORDER). 3 GROUND NUMBER 1 REGARDING VALIDITY OF REOPENING A SSESSMENT: 3.1 THE ORIGINAL ASSESSMENT FOR ALL 3 YEARS WAS COM PLETED UNDER SECTION 143 (3). SUBSEQUENTLY, AS PER THE CBDT INFORMATION, THE ASSE SSING OFFICER NOTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SUPPLIED GOODS TO IRAQ UNDER THE SCHEME CALLED OIL FOR FOOD PROGRAMME OF THE UNO. THE NAM E OF THE ASSESSEE HAD TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 3 APPEARED AT SL. NO. 113 OF THE VOLCKER COMMITTEE RE PORT SUBMITTED ON 27.10. 2005 WHEREIN IT WAS MENTIONED THAT THE COMMISSION PAID W AS ILLEGAL. THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE I T ACT DATED 31.01.2007. IN RESPONSE TO THE NOTICE, THE ASSESSEE SUBMITTED A LE TTER DATED 8.3.2007 AND REQUESTED TO FURNISH THE REASONS FOR ISSUING THE SA ID NOTICE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN CASE OF GKN DRIVERSHAFTS ( INDIA) LTD VS ITO REPORTED IN 259 ITR 19. THEREAFTER, THE ASSESSING OFFICER ISSU ED A FRESH NOTICE UNDER SECTION 148 DATED 28.03. 2007 ALONG WITH A COVERING LETTER DATE D 28.3.2007 STATING THAT THE EARLIER NOTICE DATED 31.1.2007 MAY BE TREATED AS CA NCELLED FOR TECHNICAL . 3.2 IN RESPONSE TO THE NOTICE UNDER SECTION 148 DAT ED 28.03.2007, THE ASSESSEE AGAIN DEMANDED THE REASONS FOR ISSUING THE SAID NOT ICE VIDE LETTER DATED 25.04.2007. THE ASSESSING OFFICER, VIDE ITS LETTER DATED 28.6.2 007 SUPPLIED THE REASONS (GIST OF THE REASONS) FOR REOPENING OF ASSESSMENT. 3.3 THE ASSESSEE WAS NOT SATISFIED WITH THE REASONS SUPPLIED BY THE ASSESSING OFFICER BEING THE GIST OF REASONS AND THEREFORE AG AIN REQUESTED VIDE LETTER DATED 25.07.2007 FOR THE SUPPLY OF THE TRUE COPY OF THE R EASONS ACTUALLY RECORDED BY THE ASSESSING OFFICER IN TERMS OF SECTION 148 (2). 3.4 THE ASSESSING OFFICER, VIDE HIS LETTER DATED 27 .07.2007 REITERATED THAT THE REASONS FOR REOPENING HAS BEEN SUPPLIED VIDE LETTER DATED 28.06.2007. THE ASSESSEE, STILL NOT SATISFIED WITH THE RESPONSE OF THE ASSESS ING OFFICER AGAIN REQUESTED VIDE ITS LETTER DATED 13.8.2007 FOR THE SUPPLY OF THE REASON S ACTUALLY RECORDED. THE ASSESSING OFFICER PROCEED WITH THE RE-ASSESSMENT PROCEEDINGS AND PASSED THE ASSESSMENT ORDER UNDER SECTION 143 (3) READ WITH SECTION 147 O F IT ACT ON 31.12. 2007 WHEREBY DISALLOWED THE COMMISSION PAID BY THE ASSESSEE FOR THE SUPPLY OF GOODS TO THE IRAQ UNDER THE SCHEME OIL FOR FOOD PROGRAMME OF THE UNO . TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 4 4 THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND RAISED T HE ISSUE OF VALIDITY OF REOPENED ASSESSMENT. THE MAIN OBJECTION OF THE ASSESSEE AGA INST THE REOPENING OF ASSESSMENT IS ON THE GROUND THAT IT WAS NEITHER PRO VIDED WITH THE RECORDED IN ITS ENTIRETY NOR WAS GIVEN THE COPIES OF CERTAIN LETTER S RELIED UPON BY THE ASSESSING OFFICER. 4.1 THE COMMISSIONER OF INCOME TAX(APPEALS) WAS NO T IMPRESSED WITH THE CONTENTIONS AND THE OBJECTIONS RAISED BY THE ASSESS EE AND ACCORDINGLY, REJECTED THE OBJECTIONS RAISED AGAINST THE VALIDITY OF REOPE NING OF ASSESSMENT. 5 BEFORE US MR DINESH VYAS, THE LD SR. COUNSEL OF T HE ASSESSEE HAS SUBMITTED THAT THE ENTIRE PROCEDURE MANDATED BY LAW HAS BEEN VIOLA TED WHILE REOPENING OF ASSESSMENT. HE HAS REFERRED THE NOTICE UNDER SECTI ON 148 OF THE I T ACT DATED 31.1.2007 AND SUBMITTED THAT THE SAID NOTICE WAS IS SUED AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE H AS FURTHER SUBMITTED THAT THE SAID NOTICE WAS WITHDRAWN BY THE ASSESSING OFFICER AND A FRESH NOTICE UNDER SECTION 148 DATED 28.3.2007 WAS ISSUED. THE LD SR COUNSEL HAS S UBMITTED THAT THE ASSESSING OFFICER HAS NOT MENTIONED AS TO WHY THE EARLIER NOT ICE UNDER SECTION 148 WAS WITHDRAWN AND CANCELLED. HE HAS POINTED OUT THAT O NCE THE NOTICE DATED 31.1.2007 WAS WITHDRAWN, THE SECOND NOTICE DATED 28 .3.2007 IS NOT SUSTAINABLE IN THE ABSENCE OF THE REASONS RECORDED BY THE ASSESSING OF FICER. 5.1 HE HAS FURTHER CONTENDED THAT EVEN OTHERWISE TH E CASE FALLS UNDER THE PROVISO TO SECTION 147 OF THE I T ACT AND IT IS MANDATORY C ONDITION FOR REOPENING OF ASSESSMENT THAT ASSESSEE HAS FAILED TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HE HAS REFERRED THE REPLY OF THE ASSESSEE DATED 8.3.2007 TO THE NOTICE UNDER SECTION 148 DATED 31.1.2007 AND SU BMITTED THAT THE ASSESSEE HAD TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 5 SPECIFICALLY DEMANDED AND REQUESTED TO FURNISH THE REASONS FOR REOPENING. THE LD SR COUNSEL REFERRED THE ENTIRE CORRESPONDENCE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAS REPEATEDLY REQUESTED THE ASSESSING OFFICER TO SUPPLY THE REASONS ACTUALLY R ECORDED BY THE ASSESSING OFFICER IN TERMS OF SECTION 148 (2) OF THE I T ACT. THE SR CO UNSEL THEN REFERRED THE LETTER DATED 28.6.2007 OF THE ASSESSING OFFICER WHEREBY THE GIST OF THE REASONS WERE SUPPLIED TO THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE WAS NO T SUPPLIED FULL REASONS OF REOPENING OF THE ASSESSMENT AND THEREFORE, DESPITE THE REPEATED REQUESTS, THE ASSESSING OFFICER FAILED TO SUPPLY THE REASONS TIL L THE COMPLETION OF ASSESSMENT AND EVEN TILL DATE. 5.2 THE LD SR COUNSEL HAS REFERRED AND RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF COMMISSIONER O F INCOME-TAX V. VIDESH SANCHAR NIGAM LTD. REPORTED IN 340 ITR 66 AND SUBMITTED TH AT SUPPLY OF REASONS AFTER THE COMPLETION OF ASSESSMENT HAS NO EFFECT AND THE EXER CISE IS FUTILITY. SINCE THE REASONS ARE NOT FURNISHED, THE REASSESSMENT ORDER IS BAD IN LAW. THUS THE LD SR COUNSEL HAS SUBMITTED THAT GIST OF REASONS IS NO SUBSTITUTE OF REASONS RECORDED BY THE ASSESSING OFFICER AND THEREFORE, IN THE ABSENCE OF SUPPLY OF REASONS RECORDED BY THE ASSESSING OFFICER TO THE ASSESSEE, THE REASSESSMENT IS BAD IN LAW. IN SUPPORT OF HIS CONTENTION, THE LD SR COUNSEL HAS RELIED UPON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN CASE OF JASTI RAMA RAO VS ITO REPORTED IN130 TTJ 6 6 (UNREPORTED). 5.3 APART FROM THIS, THE LD SR COUNSEL HAS ALSO CON TENDED THAT DESPITE THE REQUEST OF THE ASSESSEE, THE SANCTION OF THE COMMISSIONER W AS NOT SUPPLIED AND THE SANCTION OF THE COMMISSIONER SHOULD NOT BE MECHANICAL; BUT A DUE APPLICATION OF MIND SHOULD REFLECT FROM THE SAME. THE LD SR. COUNSEL HA S ALSO CITED A SERIES OF DECISIONS OF HONBLE HIGH COURTS AS WELL AS THIS TRIBUNAL ON THE POINT THAT THE REASONS HAVE TO BE TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 6 RECORDED BEFORE ISSUE OF NOTICE UNDER SECTION 148 A ND IF THE ARE NOT SUPPLIED, IT CAN BE PRESUMED THAT REASONS WERE NOT RECORDED PRIOR TO ISSUE OF NOTICE UNDER SECTION 148. 5.5 ALTERNATIVELY, THE LD SR COUNSEL HAS SUBMITTED THAT EVEN IN THE REASONS RECORDED, THERE IS NO ALLEGATION THAT THE INCOME HA S ESCAPED ASSESSMENT DUE TO ASSESSEE'S FAILURE TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT AND AS SUCH, THE ABSENCE SUCH ALLEGA TIONS RENDERS THE REASSESSMENT PROCEEDINGS INVALID. HE HAS REITERATED THAT REASON S RECORDED CANNOT BE IMPROVED UPON SUBSEQUENTLY. 5.6 THE LD SR COUNSEL FOR THE ASSESSEE HAS ALSO RA ISED AN OBJECTION AGAINST RECORDING OF REASONS BY ONE OFFICER AND ISSUING NOT ICE UNDER SECTION 148 BY OTHER. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE D ECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF HYNOUP FOOD AND OIL INDUSTRIES LTD . V. ASSISTANT COMMISSIONER OF INCOME-TAX REPORTED IN 307 ITR 115. 5.7 ON THE OTHER HAND THE LD DR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS DULY RECORDED THE REASONS PRIOR TO ISSUE OF NOTICE UNDER SECTION 148. HE HAS FILED A COPY OF REASONS RECORDED ON 31.01.2007 FOR REOPENING OF THE ASSESSMENT AND SUBMITTED THAT IN THE GIST OF REASONS SUPPLIED TO THE ASSESSE E, NOTHING MATERIAL HAS BEEN LEFT. HE HAS FURTHER SUBMITTED THAT IT IS TO BE SEEN THAT WHAT MATERIAL PART OF REGIONS WAS LEFT OR ANY DEVIATION FROM THE REASONS ORIGINAL RE CORDED AND THOSE SUPPLIED TO THE ASSESSEE. THE LD DR HAS FURTHER SUBMITTED THAT THE ASSESSMENTS HAVE BEEN REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE CBDT. 5.8 THE LD DR HAS REFERRED THE DECISION OF HONBLE SUPR EME COURT IN CASE OF GKN DRIVESHAFT (INDIA) LTD VS ITO(SUPRA) WHEREIN THE H ONBLE APEX COURT HAS HELD THAT TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 7 THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME AND AFTER RECEIPT OF THE REASONS, THE ASSESSEE IS ENTITLED T O FILE OBJECTION OF ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF T HE SAME BY PASSING A SPEAKING ORDER. THUS THE LD DR HAS SUBMITTED THAT WHEN THE SUBSTANTIAL REASONS WERE FURNISHED BY THE ASSESSING OFFICER, THAN THE ASSESSEE CANNOT CHALLENGE THE REOPENING OF ASSESSMENT ON THE GROUND OF NON-FURNISHING OF REASO NS. HE HAS FURTHER SUBMITTED THAT IF PRIMA FACIE SOME MATERIAL IS THERE ON THE B ASIS OF WHICH THE ASSESSING OFFICER COULD FORM AN OPINION THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT, THAN THE REOPENING IS JUSTIFIED. IN THE CASE IN HAN D, THE ASSESSING OFFICER RECEIVED THE INFORMATION THROUGH CBDT ABOUT THE VOLCKER COM MITTEES REPORT AND CAME TO KNOW THAT THE COMMISSION WAS ILLEGALLY PAID BY THE ASSESSEE, THAN THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT TO THE EXT ENT THE DEDUCTION ALLOWED IN THE ORIGINAL ASSESSMENT ON ACCOUNT OF COMMISSION PA ID BY THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. V. INCOME-TAX OFFICER, R EPORTED IN 236 ITR 34. HE HAS FURTHER CONTENDED THAT THE REOPENING IS VALID, EVEN BASED ON INTERNAL AUDIT AND THEREFORE, THE REOPENING ON THE BASIS OF INFORMATIO N RECEIVED FROM CBDT IS VALID. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS P V S BEEDIES P LTD REPORTED IN REPORTED IN 103 TAXMANN 2 94. HE HAS ALSO RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5.10 IN REBUTTAL, THE LD SR COUNSEL FOR THE ASSESSE E HAS SUBMITTED THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE TRUE AND CORRECT FACTS NECESSARY FOR ASSESSMENT. THE ASSESSING OFFICER IS BOUND TO FURNI SH THE REASONS ACTUALLY RECORDED AND NOT THE GIST OF THE REASONS. THEREFORE, IN THE ABSENCE OF FURNISHING THE REASONS RECORDED BY THE ASSESSING OFFICER, THE REASSESSMENT IS ILLEGAL AND NOT SUSTAINABLE. TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 8 THE LD SR COUNSEL HAS ALSO ADVANCED THE ARGUMENT ON THE MERITS OF THE CASE AND ON THE POINT THAT THE VOLCKER COMMITTEES REPORT IS ONL Y AN INVESTIGATION AND NOT A JUDICIAL FINDING. IT CANNOT BE SAID THAT THE ASSES SEE HAS COMMITTED ANY ILLEGALITY ON THE BASIS OF THE COMMITTEE REPORT UNTIL AND UNLESS IT IS ESTABLISHED THAT THE ACT OF THE ASSESSEE IS AGAINST SOME STATUTE. HE HAS FURTHER S UBMITTED THAT NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PAYMENT OF COMMI SSION IS AGAINST ANY EXISTING LOW IN FORCE. BOTH THE LD SR COUNSEL AS WELL AS TH E LD DR HAVE REFERRED CERTAIN DECISIONS OF THIS TRIBUNAL ON THE MERITS OF THE ISS UE OF ADDITION ON THE BASIS OF VOLCKER COMMITTEE REPORT. 6 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY PERUSED THE VARIOUS DECISIONS RELIED UPON BY THE PARTIES. THOUGH THE ARGUMENTS FROM BOTH SIDES WERE ALSO ADDRESSED ON THE MERITS OF THE ISSUE; HOWEVER, AT THIS STAGE, WE CONFINED OURS ELVES TO THE ISSUE OF VALIDITY OF REOPENED ASSESSMENT. 6.1 AS WE HAVE NOTED ABOVE THAT INITIALLY THE ASSES SING OFFICER ISSUED A NOTICE UNDER SECTION 148 DATED 31.1.2007. THE SAID NOTICE WAS CANCELLED/WITHDRAWN AND A FRESH NOTICE UNDER SECTION 148 WAS ISSUED ON 28/03/ 2007. THE ASSESSING OFFICER HAS GIVEN THE REASONS OF TREATING THE SAID NOTICE DATED 31/01/2007 AS CANCELLED FOR TECHNICAL REASONS AND FRESH NOTICE WAS ISSUED TO RE CTIFY THE PROCEDURAL LACUNA IN THE EARLIER NOTICE DATED 31/01/2007. THOUGH NOTHING HA S BEEN ELABORATED EITHER IN THE COMMUNICATION DATED 28/03/2007 OR IN THE REASSESSME NT ORDER AS WHAT WAS THE TECHNICAL REASON AND A PROCEDURAL LACUNA IN THE EAR LIER NOTICE HOWEVER, IT APPEARS FROM THE RECORD THAT THE EARLIER NOTICE DATED 31/01 /2007 WAS ISSUED PRIOR TO THE APPROVAL OF THE COMMISSIONER OF INCOME TAX DATED 26 /03/2007 AND THEREFORE, THE EARLIER NOTICE WAS CANCELLED AND TREATED AS WITHDRA WN. THE ASSESSING OFFICER, THAN TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 9 OBTAINED THE APPROVAL OF THE COMMISSIONER OF INCOME TAX ON 26/03/2007 AND THEREAFTER ISSUED THE FRESH NOTICE DATED 28/03 2007 ON THE BASIS OF WHICH THE ASSESSING OFFICER, PROCEEDED WITH THE REASSESSMENT PROCEEDINGS. THUS, AFTER THE FRESH NOTICE 28/03/2007, THE NOTICE DATED 31/01/200 7 BECOMES NON-EST , IMMATERIAL AND IRRELEVANT FOR REASSESSMENT PROCEEDINGS AND THE REFORE, HAS NO CONSEQUENCE WHATSOEVER WITH REGARD TO THE VALIDITY OF REASSESSM ENT. 6.2 THE MAIN OBJECTION OF THE ASSESSEE AGAINST THE REASSESSMENT IS NON-SUPPLY OF THE REASONS RECORDED BY THE ASSESSING OFFICER FOR R EOPENING OF ASSESSMENT. THERE IS NO DOUBT THAT THE ASSESSING OFFICER RECORDED THE RE ASONS ON 31/01/2007 FOR REOPENING OF THE ASSESSMENT AND ACCORDINGLY ISSUED A NOTICE UNDER SECTION 148. THE REGIONS AS RECORDED BY THE ASSESSING OFFICER AR E AS UNDER: THIS CASE APPEARS IN THE LIST OF COMPANIES WHO HAD SUPPLIED GOODS TO IRA UNDER THE SCHEME OF OIL FOR FOOD PROGRAMME OF THE UNO . THE NAME OF THE ASSESSEE COMPANY APPEARS AT SR. NO. 113 OF THE VOIC KER COMMITTEE REPORT SUBMITTED ON 27/10/2005 WHEREIN THE MENTION OF ILLE GAL COMMISSION UNDER THE HEADS OF AASF & INLAND TRANSPORTATION FEES AMOUNTING TO US 370780 & 399361 RESPECTIVELY HAD BEEN PAID. DETAILS WERE CALLED FROM M/S. TATA INTERNATIONAL LTD A ND FROM THE DETAILS SUBMITTED IT IS SEEN THAT THESE PAYMENTS HAVE BEEN MADE DURING THE PERIOD RELEVANT TO A.Y. 2000-01 TO 2002-03. HENCE, IT IS CL EAR THAT BASED ON THE ADDITIONAL INFORMATION OF THE VOICKER COMMITTEE, THE COMMISSION PAYMENT HAS BEEN MADE BY THE ASSESSEE. AS PER THE INFORMATION GATHERED, IT CAN BE SEEN THAT C OMMISSION O RS.9,82,542/-,, RS.1.27,42,120/- AND RS.T,06,09,979 /- FOR A.Y. 2000-01. 2001-02 AND 2002-03 RESPECTIVELY HAS BEEN PAID. THE PAYMENT OF KICKS BACKS/BRIBE IS PROHIBITED BY LAW AND THEREFORE, SQUARELY THUS WITHI N THE AMBIT EXPLANATION TO SECTION 37(1) OF THE I.T. ACT, 1961 AND REQUIRES TO B E DISALLOWED. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME TO THAT EXTENT H AS ESCAPED ASSESSMENT. AS SUCH THE ASSESSMENT NEEDS TO BE REOPENED U/S 147 OF THE 1.T. ACT, 1961 TO TAX THE ESCAPED INCOME. THE CASE IS FIT FOR ISSUE O FT NOTICE UIS.148 OF THE 1.T. ACT, 1961. NOTICE U/S.J48 OF THE 1.T. ACT IS ISSUED TO THE ASS ESSEE FOR A.Y. 2C00 01, 2001-02 & 2002-03. TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 10 6.3 IN RESPONSE TO THE FRESH NOTICE UNDER SECTION 1 48 DATED 28/03/2007 THE ASSESSEE VIDE ITS LETTER DATED 25/04/2007 SPECIFICA LLY REQUESTED THE ASSESSING OFFICER TO FURNISH THE REASONS FOR ISSUING THE NOTICE UNDER SECTION 148. THE AVERMENTS MADE IN PARAGRAPH 3 OF THE SAID LETTER ARE AS UNDER: WE ALSO TAKE THIS OPPORTUNITY TO RENEW OUR REQUEST T O YOU TO FURNISH TO US THE REASON(S) FOR ISSUE BY YOU OF YOUR SAID NOTICE UNDER S ECTION 148 DATED 31 ST JAN 2007 AND OF THE FRESH NOTICE, IN ACCORDANCE WITH THE PROCEDURE LAID DOWN BY THE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD V IT O (2003)259 ITR 19(SC). 6.4 IN PURSUANT TO THE SAID REQUEST OF THE ASSESSEE THE ASSESSING OFFICER HAS SUPPLIED THE GIST OF THE REASONS OF REOPENING VI DE LETTER DATED 28/06/2007 AS UNDER: VIDE THE ABOVE REFERRED LETTER WHEREIN WE HAVE REQUEST ED THAT THE REASONS FOR ISSUE OF THE SAID NOTICE DATED 28.03.2007 BE FURN ISHED IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN THE CASE OF GKN DRIVESHAFTS (I) LTD. VS. ITO [2003] 259 ITR 19 (SC). THE GIST OF THE REASON FOR REOPENIN G IS AS UNDER DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COM PANY HAS SUPPLIED \ GOODS TO IRAQ UNDER THE SCHEME OIL FOR FO OD PROGRAMME OF THE UNO. THE NAME OF THE ASSESSEE COMPANY APPEARS AT SR.NO. 113 OF THE VOICKER COMMITTEE REPORT SUBMITTED ON 27.10.2005 WHEREIN MENTION OF THE ILLEGAL COMMISSION UNDER THE HEAD AA SF AND INLAND TRANSPORTATION FEES HAD BEEN PAID. THEREFORE, I HAVE RE ASONS TO BELIEVE THAT INCOME TO THAT EXTENT HAS ESCAPED ASSE SSMENT, 6.5 SINCE ONLY THE GIST OF THE REASONS WERE SUPPLIE D, THE ASSESSEE WAS NOT SATISFIED WITH THE REASONS AS SUPPLIED BY THE ASSESSING OFFIC ER AND REQUESTED VIDE ITS LETTER DATED 25/07/2007 AND DEMANDED THE TRUE COPY OF REAS ONS ACTUALLY RECORDED BY THE ASSESSING OFFICER IN TERMS OF SECTION 148 (2) O F THE INCOME TAX ACT INSTEAD OF THE GIST OF REASONS FOR REOPENING REPRODUCED IN THE LET TER DATED 28/0 6/2007. 6.6 IN RESPONSE TO THE ASSESSEES LETTER DATED 25/0 7/2007, THE ASSESSING OFFICER VIDE ITS LETTER DATED 27/07/2007 REITERATED THAT TH E REASONS FOR REOPENING WERE SUPPLIED VIDE LETTER DATED 28/06/2007. SINCE THE R EQUEST OF THE ASSESSEE FOR FURNISHING THE REASONS ACTUALLY RECORDED BY THE ASS ESSING OFFICER WAS NOT GIVEN TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 11 HEED; THEREFORE, THE ASSESSEE AGAIN DEMANDED THE RE ASONS AS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT VIDE ITS LETTER DATED 13/08 2007. DESPITE REPEATED REQUESTS AND DEMAND OF THE ASSESSE E THE ASSESSING OFFICER WAS ADAMANT ON HIS STAND FOR NOT SUPPLY OF THE REASONS ACTUALLY RECORDED FOR REOPENING OF THE ASSESSMENT AND INSISTED UPON THAT THE SAME H AVE BEEN SUPPLIED TO THE ASSESSEE VIDE LETTER DATED 28/06/2007. 7 AS HELD BY THE HONBLE SUPREME COURT IN CASE OF G KN DRIVESHAFTS (INDIA) LTD (SUPRA) THAT THE ASSESSING OFFICER IS BOUND TO FURN ISH REASONS WITHIN A REASONABLE TIME SO THAT THE ASSESSEE COULD FILE OBJECTION TO THE IS SUANCE OF THE NOTICE AND THE ASSESSING OFFICER, ACCORDINGLY, BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. THUS, THE SUPPLY OF REASONS IS TO FACILITAT E THE ASSESSEE TO PRESENT ITS DEFENCE AND OBJECTION AGAINST THE REOPENING OF THE ASSESSME NT. 7.1 EVEN OTHERWISE AS PER THE RULE OF NATURAL JUSTI CE, THE ASSESSEE IS ENTITLED TO KNOW THE REASONS ON THE BASIS OF WHICH THE ASSESSIN G OFFICER HAS BELIEVED AND FORMED AN OPINION THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS NOT UNDERSTANDABLE AS TO WHY THE ASSESSING OFFICER WAS SO RELUCTANT AND HESITANT TO FURNISH THE REASONS ACTUALLY RECORDED FOR REOPENING OF ASSESSMENT. WE SEE NO REASON AND RATHER JUSTIFIABLE REASONS FOR DEPRIVING THE ASSESSEE OF THE REASONS ACTUALLY RECORDED BY THE ASSESSING OFFICER FOR REOP ENING OF THE ASSESSMENT. 8 IN THE CASE OF CIT VS VIDESH SANCHAR NIGAM LTD, T HE HONBLE JURISDICTIONAL HIGH COURT HAS CONFIRMED THE ORDER OF THIS TRIBUNAL WHER EBY THE REASSESSMENT WAS HELD AS INVALID BECAUSE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WERE NOT FURNISHED DESPITE REPEATED REQUESTS AND FURNISHED O NLY AFTER COMPLETION OF ASSESSMENT. THE HONBLE HIGH COURT HAS OBSERVED IN PARA TO AS UNDER: TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 12 2 THE FINING OF FACT RECORDED BY THE INCOME TAX APP ELLATE TRIBUNAL IS THAT IN THE PRESENT CASE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT THROUGH REPEATEDLY ASKED BY THE ASSESSEE WERE FURNISH ED ONLY AFTER COMPLETION OF THE ASSESSMENT. THE TRIBUNAL FOLLOWING THE JUDGMENT OF THIS COURT IN THE CASE OF CIT VS FOMENTO RESORTS & HOTELS LTD, INCOME TAX APPEAL NO.71 OF 2006 DECIDED ON 27 TH NOVEMBER 2006 HAS HELD THAT THOUGH THE REOPENING OF THE ASSESSMENT IS WITHIN THREE YEARS FRO M THE END OF RELEVANT ASSESSMENT YEAR, SINCE THE REASONS RECORDED FOR REOPENI NG OF THE ASSESSMENT WERE NOT FURNISHED TO THE ASSESSEE TILL THE COMPLETIO N OF ASSESSMENT, THE REASSESSMENT ORDER CANNOT BE UPHELD. MOREOVER, SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE DECISION OF THIS COURT IN THE CASE OF FOMENTO RESORTS & HOTELS LTD HAS BEEN DISMISSED BY THE APEX COURT VIDE ORDER DATED 16 TH JULY 2007. 8.1 THUS THE REASONS ARE REQUIRED TO FURNISH WITHIN A REASONABLE PERIOD OF TIME SO THAT THE ASSESSEE CAN RAISE THE OBJECTIONS AT THE P RELIMINARY STAGE OF PROCEEDINGS. IF THE REASONS ARE NOT SUPPLIED DURING THE ASSESSMENT PROCEEDINGS, THAN FURNISHING THE REASONS SUBSEQUENT TO THE ASSESSMENT PROCEEDINGS WO ULD ACHIEVE NO PURPOSE AND TANTAMOUNT TO DEPRIVE AND DENY THE ASSESSEE OF ITS RIGHT TO RAISE THE OBJECTIONS AGAINST THE VALIDITY OF NOTICE ISSUED UNDER SECTION 148. 8.2 THUS REASSESSMENT COMPLETED WITHOUT FURNISHING THE REASONS ACTUALLY RECORDED BY THE A.O. FOR REOPENING OF ASSESSMENT IS NOT SUSTAINABLE IN LAW BECAUSE THE A.O. IS DUTY BOUND TO SUPPLY THE SAME WITHIN RE ASONABLE TIME AS HELD BY THE HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (I NDIA) LTD (SUPRA). THE SUBSEQUENT SUPPLY OF THE REASONS WOULD NOT MAKE GOO D OF THE ILLEGALITY SUFFERED BY THE REOPENING OF ASSESSMENT. A SIMILAR VIEW HAS BEE N TAKEN BY THIS TRIBUNAL IN CASE OF FOMENTO RESORTS & HOTELS LTD VS JCIT AND DECIDED A SIMILAR ISSUE IN PARA 7 AS U NDER: 7 WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH T HE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL ON REC ORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT FILED RETURN OF EXPENDITURE TAX IN THE NORMAL COURSE. THE ASSESSING OFFICER ISSUED NOTICE PURPORTEDLY U/S 1 1 BUT INADVERTENTLY ON THE NOTICE, U/S 8 WAS MENTIONED IN LIEU OF SEC. 11. IN THIS REGARD, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE LD COMMISSIONER O F INCOME TAX(APPEALS) THAT THIS MISTAKE WAS COVERED BY THE PROVISIONS OF SE E. 292B OF THE INCOME TAX ACT, THEREFORE, WE DO NOT FIND ANY MERIT IN THE CONTE NTIONS OF THE ASSESSEE IN THIS REGARD. AS FAR AS THE ISSUANCE OF NOTICE U/S 1 1 IS CONCERNED, THE PRELIMINARY CONDITION OF NOT FILING OF RETURN IS SATI SFIED. THEREFORE, IN SUCH A TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 13 SITUATION, NOTICE CAN BE ISSUED, PROVIDED THE SAME I S NOT BARRED BY LIMITATION. HOWEVER, AFTER ISSUE OF NOTICE, IF THE ASSESSEE ASK S FOR FURNISHING OF REASONS FOR ISSUANCE OF SUCH NOTICE, THE ASSESSING OFFICER IS BO UND TO FURNISH SUCH REASONS. THE ADHERENCE TO THIS PROCEDURE IS A NECESSITY BECAUS E AT THE PRELIMINARY STAGE ITSELF, IF THE PROCEEDINGS CAN BE COMPLETED IF THE ASSESSING OFFICER GETS SATISFIED WITH THE EXPLANATIONS GIVEN BY THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT THE ASSESSING OFFICER, IN THE PRESENT CA SE HAS NOT SUPPLIED REASONS TO THE ASSESSEE, THEREFORE, THE NOTICE ISSUED BY TH E ASSESSING OFFICER IS BAD IN LAW AND CONSEQUENTLY THE ASSESSMENT MADE IN PURSUAN CE OF SUCH NOTICE IS LIABLE TO BE QUASHED. IN THIS VIEW OF THE MATTER, W E CANCEL THE IMPUGNED ASSESSMENT. WE ORDER ACCORDINGLY. 9 THE ORDER OF THIS TRIBUNAL WAS UPHELD BY THE HON BLE JURISDICTIONAL HIGH COURT AS MENTIONED IN THE DECISION IN THE CASE OF VIDESH SANCHAR NIGAM LTD (SUPRA). EVEN THE SLP FILED BY THE REVENUE AGAINST THE DECISION O F HONBLE JURISDICTIONAL HIGH COURT HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COUR T VIDE ORDER DATED 16 JULY 2007. THUS, IT IS SETTLED PROPOSITION AS LAID DOW N BY THE HONBLE SUPREME COURT AS WELL AS HONBLE HIGH COURT THAT THE REASONS AS RECO RDED BY THE ASSESSING OFFICER ARE REQUIRED TO BE FURNISHED TO THE ASSESSEE AND THE RE ASONS RECORDED CANNOT BE IMPROVED UPON OR AMENDED BY ANY CORRESPONDENCE, LET TERS ETC. IT IS AN UNDISPUTED FACT THAT THE REASONS ACTUALLY RECORDED BY THE ASSE SSING OFFICER WERE NOT FURNISHED TO THE ASSESSEE TILL 14.06.20012 DESPITE REPEATED R EQUESTS AND DEMANDS AND THEREFORE, THE GIST OF REASONS AS FURNISHED VIDE LE TTER DATED 28 TH JUNE 2007 CANNOT BE TREATED AS REASONS ACTUALLY RECORDED BY THE ASSESSI NG OFFICER AS PER SECTION 148 (2) AND AS MANDATED BY THE HONBLE SUPREME COURT IN CAS E OF GKN DRIVESHAFTS (INDIA) LTD (SUPRA). THUS, THE ASSESSING OFFICER HAS FAIL ED TO FURNISH THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WITHIN THE REASONABLE T IME AND RATHER PRIOR TO THE COMPLETION OF ASSESSMENT, THAN THE REASSESSMENT ORD ER PASSED WITHOUT SUPPLY OF REASONS AS RECORDED FOR REOPENING OF THE ASSESSMENT , IS INVALID AND CANNOT SUSTAIN. ACCORDINGLY, WE SET ASIDE THE REASSESSMENTS FOR ALL 3 YEARS UNDER CONSIDERATION BEING INVALID. TATA INTERNATIONAL LTD 3359 TO 3361/MUM/2009 14 10 SINCE WE HAVE QUASHED THE REASSESSMENT BEING INV ALID; THEREFORE, WE DO NOT PROPOSE TO GO INTO THE MERITS OF THE ISSUE RAISED I N THESE APPEALS. 11 IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 6 /7 '# 6/ . 8 %/ 9 . / :; ORDER PRONOUNCED IN THE OPEN COURT ON 29.6.2012 . 2'3 . 1$ (' 8 <2#7 29.6.2012 1 . = SD/- SD/- ( . . , / G.E. VEERBHADRAPPA ) ( ! / VIJAY PAL RAO ) / PRESIDENT ) ' 2% / JUDICIAL MEMBER MUMBAI ; <2# DATED 29 /06/2012 RAJ@ COPY FORWARDED TO:69 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBA