ROHIT PULP & PAPER MILLS LTD( NOW KNOWN AS CITABEL REALTY & DEVELOPERS LTD), MUMBAI V. ASST CIT (OSD) 2(3), MUMBAI

ITA 3370/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3125 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: R MURLIDHAR
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAJESH KUMAR , AM ITA NO . 3370 /MUM/201 2 (A.Y: 2004 - 05 ) M/S. ROHIT PULP & PAPER MILLS LTD., (NOW KNOWN AS CITADEL REALTY & DEVELOPERS LTD.), MARATHON NEXTGEN GANAPAT RAO KADAM MARG, LOWER PAREL, MUMBAI 400 013 PAN: AAACR 5066 J VS. THE ASST. COMMISSIONER OF INCOME TAX (OSD) 2 (3), ROOM NO.555, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI 400 020 APPELLANT .. RESPONDENT APPELLANT BY .. SHRI R. MURLIDHAR, AR RESPO NDENT BY .. SHRI B. S. BIST, DR DATE OF HEARING .. 15 - 09 - 2016 DATE OF PRONOUNCEMENT .. 15 - 09 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDER OF CIT ( A) - 6 , MUMBAI IN AP PEAL NO. CIT (A) - 6/IT - 231/2009 - 10 D ATED 16 - 03 - 2012. ASSESSMENT WAS FRAMED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) FOR THE ASSESSMENT YEAR 2004 - 05 BY THE ACIT (OSD) 2(3), MUMBAI VIDE HIS ORDER DATED 21 - 12 - 2009 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF THE CIT ( A) CONFIR MING REOPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 (HEREAFTER THE ACT) MADE BY THE AO. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1: - 1. THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT U/S 147 MADE BY THE ASSESSING OFFICER. YOUR APPELLANTS SUBMIT THAT NO INCOME HAS ESCAPED ASSESSMENT. THE REOPENING OF THE ASSESSMENT IS ON ACCOUNT OF A MERE CHANGE OF OPINION. THE SAME IS ILL EGAL, BAD - IN - LAW AND VOID. YOUR APPELLANTS, THEREFORE, SUBMIT THAT THE ORDER PASSED U/S. 143(3) READ WITH SECTION 148 BE QUASHED. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MA NUFACTURING PAPER AN D PAPER PULP . ORIGINALLY, THE ITA NO. 3370 /MUM/20 1 2 2 RETURN OF INCOME WAS FILED ON 28 - 10 - 2004 AND THE SAME WAS PROCESSED U/S 143(1) OF THE ACT ON 31 - 03 - 2006. SUBSEQUENTLY, A NOTICE WAS ISSUED AFTER RECORDING REASONS FOR REOPENING ON 20 - 03 - 2009. THE LEARNED COUNSEL FOR THE ASSESS EE DREW OUR ATTENTION TO THE REASONS RECORDED, WHICH ARE ENCLOSED IN THE ASSESSEES PAPER BOOK AT PAGE 3 AND THE SAME READS AS UNDER: - REASONS FOR RE - OPENING U/S 48 OF THE IT ACT, 1961 IN CONNECTION WITH THE ASSESSMENT FOR AY 2004 - 05 REOPENED U/S 148, VID E YOUR LETTER DATED 31.08.2009 , YOU HAVE SOUGHT FOR THE REASONS FOR REOPENING THE ASSESSMENT AS COMMUNICATED TO YOU. ACCORDINGLY, YOUR ARE COMMUNICATED THE REASONS FOR REOPENING YOUR ASSESSMENT FOR THE A. Y. 2004 - 05, WHICH ARE AS UNDER: ON PERUSAL OF THE RECORDS FOR AY 2004 - 05, IN THIS CASE THE ASSESSEE, IT IS OBSERVED THAT M/S. JALDHARA BILCON, VADODARA/ JALDHARA BILCON AND RE - ROLLING SCRAP, VADODARA HAD GIVEN AN AMOUNT OF RS.25 LAKHS IN CASH TO THE ASSESSEE FOR PURCHASE OF SCRAP. FURTHER, I THIS REGARD I T HAS CAME TO THE NOTICE THAT CIVIL SUITS BEARING NO.436/04 AND 540/04 WERE FILED IN CIVIL COURTS AT VADODARA BY M/S. JALDHARA BILCON (THROUGH ITS PARTNERS SHRI DWARKESH S. BHAMBAROLIA) AND SHRI KUMAR G. KRISHNANI. BUT HOWEVER, THE SAID RECEIPT OF RS.25 LA KHS IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS/RETURN OF INCOME OF THE ASSESSEE FOR AY 2004 - 05. HENCE, THE INCOME OF RS.25 LAKHS NEEDS TO BE BROUGHT TO TAX. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.25 LAKHS CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF THE PROVISION OF SEC. 147 OF THE I. T. ACT. BASED ON THE SAME, NOTICE U/S. 148 OF THE IT ACT IS ISSUED. HENCE, BASED ON THE SAME NOTICE U/S.148 OF THE IT ACT IS ISSUED TO THE ASSESSEE. 4. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, FOR REOPENING OF ASSESSMENT, THE REASON RECORDED WAS THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.25 LACS IN CASH FROM M/S. JALDHARA BUIL CON, VADODARA AND JALDHARA BILCON AND RE - ROLLING SCRAP, VADODARA FOR PURC HASE OF SCRAPS. THIS FACT WAS NOTED BY THE AO FROM THE CIVIL SUIT BEARING NO.436/2004 AND 540/2004 FILED IN THE CIVIL COURT AT VADODARA BY M/S. JALDHARA BUIL CON AND JALDHARA BILCON AND RE - ROLLING SCRAP, VADODARA THROUGH ITS PARTNER S , SHRI DWARKESH S. BHA MBAROLIA AND SHRI KUMAR G. KRISHNANI . THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE LETTER DATED 19 - 05 - 2004 WHEREIN M/S. JALDHARA BUIL CON AND RE - ROLLING SCRAPS LTD. HAS GIVEN A PROPOSAL FOR PURCHASE OF LAND. HE THEN REFERRED TO THE LETTER DATED 24 - 08 - 2004 REGARDING OBTAINING A NO OBJECTION CERTIFICATE FROM THE CONSORTIUM OF BANK ITA NO. 3370 /MUM/20 1 2 3 WHICH IS ENCLOSED AT PAGE 15 TO 18 OF THE ASSESSEES PAPER BOOK. THE LEARNED COUNSEL FOR THE ASSESSEE THEN DREW OUR ATTENTION TO CIVIL SUIT NO.436/2004 FILED WITH CIVIL J UDGE (SD), VADODARA BY M/S. JALDHARA BUIL ING CONSTRUCTIONS AGAINST THE ASSESSEE DATED 02 - 09 - 2004 WHEREIN M/S. JALDHARA BUILDING CONSTRUCTIONS HAS ALLEGED THAT M/S. JALDHARA BUILDING CONSTRUCTIONS HAS PAID A SUM OF RS.25 LAC S AND THE RELEVANT CLAUSE 6 AT P A GE 23 AND 24 OF THE ASSESSEES PAPER BOOK READS AS UNDER: - 6. ABOVE SETTLEMENT WAS ACCEPTED BY THE DEFENDANT. AS PER THE AGREEMENT, BETWEEN THE DEFENDANT, THE PLAINTIFF HAS PAID RS.25,00,000/ - AND THE PLAINTIFF WAS READY TO PAY THE REST OF THE AMOUNT BEFO RE THE 31/08/04 AND THE SAID AMOUNT WAS ALSO READY, BUT AS PER THE AGREED UNDER MUT U AL TERMS AND CONDITIONS, THE DEFENDANT WAS TO BRING THE ALL THE DECIDED FACTS IN WRITING AND FOR THAT A ESCROW AGREEMENT WAS PREPARED AND THE SAID AGREEMENT WAS TO BE SIG NED BY THE DEFENDANT, INSPITE OF THE SEVERAL DEMAND FROM THE PLAINTIFF, TO SIGN THE ABOVE AGREEMENT THE DEFENDANT WAS GIVING THE FALSE PROMISES AND BY THIS HE WAS ALLOWING THE TIME TO BE PASSED. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO REJOI NDER FILED BY THE ASSESSEE VIDE LETTER DATED 15 - 09 - 2004 WHEREIN IT IS DENIED THAT M/S. JALDHARA BUIL CON HAS PAID A SUM OF RS.25 LACS AND THE RELEVANT DENIAL IN THE REJOINDER / REPLY AT PARA 8 OF THE ASSESSEES PAPER BOOK AT PAGE 93 READS AS UNDER: - IT IS ABSOLUTELY WRONG TO SAY THAT THE PLAINTIFF HAS PAID RS.25 LACS OR ANY AMOUNT TO THE DEFENDANT TOWARDS CONSIDERATION OR ANY AMOUNT TOWARDS ANYTHING, AS ALLEGED. THERE IS NO QUESTION OF ANY PAYMENT BY WAY OF CONSIDERATION OR OTHERWISE, AS ALLEGED, SINCE N O CONTRACT HAS COME IN EXISTENCE. IT IS NOT CORRECT TO SAY THAT THE PLAINTIFF WAS READY TO PAY AMOUNT BEFORE 31.08.2004 AND THAT THE SUIT AMOUNT WAS TO BE PAID AS PER MUTUAL TERMS AND CONDITIONS, AS ALLEGED BY THE PLAINTIFF. IT IS NOT CORRECT TO SAY THAT E SCROW AGREEMENT WAS TO BE SIGNED AS A TERM OF CONTRACT. FINALLY, THIS CL AIM FILED BY M/S. JALDHARA BUIL CON WAS WITHDRAWN VIDE LETTER DATED 13 - 06 - 2005 AND THE RELEVANT ORDER IN SUIT NO.436/2004 COPY OF WHICH IS ENCLOSED AT PAGE 37 AND 38 OF THE ASSESSEE S PAPER BOOK) READS AS UNDER: - KUMARBHAI GANUMAL KRISHNANI VERSUS (1) ROHIT PULP & PAPER COMPANY PVT. LTD. AND OTHERS. WITHDRAW SUPPLEMENTARY FOR THE PLAINTIFF OF THE SAID PROCEEDINGS HAD FILED A CASE AGAINST THE DEFENDANTS AS THE SETTLEMENT HAS DONE BETWE EN I THE PLAINTIFF AND THE ITA NO. 3370 /MUM/20 1 2 4 DEFENDANTS AND MUTUAL UNDERSTANDING OUT OF T HE COURT AND NOW ON ACCOUNT OF SETTLEMENT HAS DONE BETWEEN OUR BOTH THE PARTIES ARE NOT WILLING TO RUN THIS CASE AHEAD THEREFORE TODAY WE ARE WITHDRAWING THE SAID CASE WITHOUT AND TERM S AND CONSIDERATION VOLUNTARILY8 AND OUR FREE WILL HENCE I DO HEREBY DECLARE THAT THIS SUPPLEMENTARY. SIMILARLY, THE CIVIL SUIT NO.540/2004 FILED IN THE CIVIL COURT AT VADODARA BY M/S. JAL DHARA BILCON AND RE - ROLLING SCRAP, VADODARA THROUGH ITS PARTNERS, SHRI KUMAR G. KRISHNANI WAS ALSO WITHDRAWN AND THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE 58 OF THE ASSESSEES PAPER BOOK THE ORDER OF ADDL. SR. CIVIL JUDGE, VADODARA DATED 13 - 06 - 2005, WHICH READS AS UNDER: - ORDER BELOW EXH. 102 IN SP ECIAL CIVIL SUIT NO.540/2004 1. THE PURSISH IS PRESENTED BY THE PLAINTIFF TOGETHER WITH ENDORSEMENT OF LD. ADVOCATES FOR THE DEFENDANTS. OTHER SIDE I.E. ALL THE DEFENDANTS HAVE NO OBJECTION IF THE PLAINTIFF MAY BE PERMITTED TO WITHDRAW THE SUIT. CONSIDERING THE CONTENTS OF THE PURSISH AND SUBMISSION MADE BY THE PARTIES, IT APPEARS THAT THE SUBJECT MATTER OF THE SUIT HAS BEEN WHOLLY SATISFIED AND AS THERE IS NO REASON FOR THE COURT TO PROCEED FURTHER, AS A RESULT OF WHICH, THE PLAINTIFF IS HEREBY PERMITTED TO WITHDRAW THE SUIT UNCONDITIONALLY. NO ORDER AS TO COSTS. COURT FEE REFUND CERTIFICATE TO BE ISSUED IN THE NAME OF THE PLAINTIFF OR HIS ADVOCATE. SIGNED AND PRONOUNCED IN OPEN COURT TODAY THIS 13 TH DAY OF JUNE, 2005. DATE: 13/06/2005 SD/ - D.K.TRIVED I VADODARA 4 TH ADD. SR. CIVIL JUDGE VADODARA . IN VIEW OF THE ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT T HE VERY REASON DOES NOT SURVIVE BECAUSE THERE IS NO PAY MENT MADE BY M/S. JALDHARA BUIL CON & RE - ROLLI NG SCRAPS OR M/S. JALDH ARA BUIL CON TO THE ASSESSEE FOR PURCHASE OF SCRAPS. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT THERE IS NO MENTION OF ANY DATE ON WHICH PAYMENT OF RS.25 LACS WAS MADE AND THIS CLAIM WAS MADE BY THE PLAINTIFF M/S. JALDHARA BUIL CON & RE - ROLLI NG SCRA PS OR M/S. JALDHARA BUIL CON ONLY ON 02 - 09 - 2004. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE CIVIL SUITS NO.436/2004 AND 540/2004 WERE WITHDRAWN AND THERE WAS NO SUCH PAYMENT RECEIVED BY THE ASSESSEE AND HENCE, THERE IS NO QUESTION OF ACCOUNTING FOR IN ITS BOOKS OF ACCOUNT. ON THE OTHER HAND, THE LEARNED SR. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. ITA NO. 3370 /MUM/20 1 2 5 5 . AFTER HEARING THE RIVAL CONTENTIONS AND GOING THROUGH THE FACTS OF THE CASE, WE FIND THAT THE REASON RECORDED DOES NOT INDICATE IN WHICH YEAR THE AMOUNT OF RS.25 LACS WAS RECEIVED BY THE ASSESSEE. BUT, THE ASSESSEE HAS FACTUALLY PROVED THAT THIS AMOUNT WAS NEVER RECEIVED BY THE ASSESSEE AND MERE ALLEGATION WAS MADE BY M/S. JALD HARA BUILCON AND M/S. JALDHARA BUILCON & RE - ROLLING SCRAPS IN C IVIL SUIT NO.436/2004 AND 540/2004 FILED IN THE CIVIL COURT AT VADODARA AND SUBSEQUENTLY THE SAME WERE WITHDRAWN. THESE PLAINTS WERE FILED ON 02 - 09 - 2004 AND 05 - 12 - 2004. WE FIND THAT , IF AT ALL , ANY REOPENING IS REQUIRED , THAT CAN BE REOPENED FOR ASSESSMENT YEAR 2005 - 06 AND NOT FOR ASSESSMENT YEAR 2004 - 05. BUT, HERE WE ARE NOT CONCERNED FOR REOPENING FOR ASSESSMENT YEAR 2005 - 06. BUT, IN THE PRESENT ASSESSMENT YEAR 2004 - 05, NO REOPENING IS POSSIBLE. ACCORDINGLY, WE QUASH THE REOPENING AND ALLOW THE APPEAL OF THE ASSESSEE. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15 - 09 - 2016 . BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI SD/ - (RAJESH KUMAR ) ACCO NTANT MEMBER MUMBAI, DATED: 15 - 09 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// ITA NO. 3370 /MUM/20 1 2 6 SR.NO. PARTICULARS DATE INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 15 /09/16 LK D EKA JM 2 DRAFT PLACED BEFORE AUTHOR 16/09/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER