Vivimed Labs Limited, Hyderabad, Hyderabad V. DCIT, Circle-3(3), Hyderabad, Hyderabad

ITA 339/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6591 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 26-08-2021
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Bogus purchase; Reason to believe
• Section: 143(3); 147; 148; 132

Judgement Text

ITA NO 339 OF 2017 VIVIMED LABS LTD HYDERABAD PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.339/HYD/2017 ASSESSMENT YEAR: 2006-07 M/S.VIVIMED LABS LTD HYDERABAD PAN:AAACV6060A VS. DY. CIT CIRCLE 3(3) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHAN RAO REVENUE BY : SRI Y.V.S.T. SAI, DR DATE OF HEARING: 26/08/2021 DATE OF PRONOUNCEMENT: 08/09/2021 ORDER PER S. S. GODARA, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2006-07 AGAIN ST THE ORDER OF THE CIT (A)-5, HYDERABAD, DATED 29.11. 2016. 2. HEARD BOTH THE PARTIES AND THE CASE FILES PERUSE D. 3. COMING TO THE FIRST AND FOREMOST LEGAL ISSUE OF CORRECTNESS OF BOTH THE LEARNED LOWER AUTHORITIES A CTION TAKING RECOURSE TO SECTION 148/147 MECHANISM, WE FIND THAT THE ASSESSING OFFICER HAD RECORDED HIS FOLLOWING REASON (S) WHILE FORMING THE OPINION THAT THIS TAXPAYERS TAXABLE IN COME HAD ESCAPED ASSESSMENT: REASONS FOR REOPENING OF THE ASSESSMENT: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SPECIALITY CHEMICALS. IN THIS CASE , ASSESSMENT WAS COMPLETED U/S 143(3) ON 31.12.2008, DETERMINING THE TOTAL INCOME AT RS.6,26,78,380/- AS AGAINST THE RETURNED INCOME OF RS.6,10,66,421/-. ITA NO 339 OF 2017 VIVIMED LABS LTD HYDERABAD PAGE 2 OF 3 AS PER THE INFORMATION RECEIVED FROM THE DY.CIT, CE NTRAL CIRCLE-3 MUMBAI, VIDE HIS LETTER DATED 08.01.2013 (RECEIVED ON 23.01.2013), SEARCH OPERATIONS U/S 132 OF THE I.T. ACT WERE CARRIED OUT IN THE CASE OF SRI PARAG MEHTA AND OTHE RS (SHRI SANGITA MEHTA, SHRI SANJAY SONAWANI AND M/S.WACHINGTON SOFT WARE LTD) ON 22.03.2011. IN THE COURSE OF SEARCH OPERATIONS, IT WAS REVEALED THAT THE AFORESAID GROUP CASES ENGAGED IN FRAUDULEN T BILLING ACTIVITIES AND IN THE BUSINESS OF PROVIDING BOGUS B ILLS FOR SOFTWARE AND HAD BEEN CONTINUING THIS BUSINESS FOR MANY YEAR S. THE ASSESSEE COMPANY M/S. VIVIMED LABS LTD., IS ONE OF THE CLIENTS FOUND TO BE INVOLVED IN SUCH TRANSACTIONS AND THE D ETAILS OF BOGUS PURCHASE PROVIDED ARE AS UNDER: S.NO INVOICE NO. INVOICE DATE AMOUNT IN (RS.) 1 WSL/INV/31/2005- 06 24.10.2005 15,00,000 2 - DO - - DO - 15,00,000 3 - DO - - 7.12.2005 15,00,000 THUS, BOGUS PURCHASES AMOUNTING TO RS.45,00,000/- N EEDS TO BE DISALLOWED. HENCE, I HAVE REASON TO BELIEVE THAT IN COME CHARGEABLE TO TAX FOR THE A.Y 2006-07 HAS ESCAPED A SSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT AND IT IS THEREFORE, THIS CASE IS BEING REOPENED U/S 147. 4. THE CLINCHING FACT THAT EMERGES DURING THE COURS E OF HEARING IS THAT WE ARE IN A.Y 2006-07 WHEREIN THE A SSESSING OFFICER INTERALIA FRAMED HIS SECTION 143(3) REGULAR ASSESSMENT ON 31.3.2008 FOLLOWED BY ISSUANCE OF HIS SECTION 148 N OTICE TO THE ASSESSEE ON 12.2.2013 I.E, WELL BEYOND THE PRESCRIB ED PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN LIGHT OF SECTION 147 1 ST PROVISO IN THE ACT. 5. LEARNED CIT (DR) FAILS TO DISPUTE THAT THE ASSES SING OFFICERS REOPENING REASONS HAD NOWHERE RECORDED TH AT ASSESSEES TAXABLE INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF ITS FAILURE IN DISCLOSING THE CORRESPONDING PARTICULARS FULLY AND TRULY. HON'BLE BOMBAY HIGH COURTS DECISION IN HINDUSTAN L IVER LTD VS. R.B WADKAR, 268 ITR 332 HOLDS THAT AN ASSESSING OFF ICERS REOPENING REASON HAVE TO BE READ ON STANDALONE BASI S WITHOUT HAVING ANY SCOPE OF ADDITION, DELETION OR SUBSTITUT ION AT A LATER ITA NO 339 OF 2017 VIVIMED LABS LTD HYDERABAD PAGE 3 OF 3 STAGE; AS THE CASE MAY BE. AND THAT SUCH REOPENING REASONS SHOULD NOT BE ALLOWED TO BE IMPROVED BY DISCOVERY O F NEW FACTS LATER ON. WE THEREFORE INVOKE SECTION 147 FIRST PRO VISO TO HELD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND IN FACTS IN INITIATING THE IMPUGNED REOPENING AGAINST THE ASSES SEE. THE SAME STANDS QUASHED. ALL OTHER PLEADING ON MERITS ARE RE NDERED ACADEMIC. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED IN A BOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER,2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER HYDERABAD, DATED 8 TH SEPTEMBER, 2021. VINODAN/SPS COPY TO: S.NO AD DRESS ES 1 M/S. VIVIMED LAB S LTD, C/O P. MURALI & CO. CAS, 6 - 3 - 655/2/3 SOMAJIGUDA, HYDERABAD 500082 2 DY.CIT CIRCLE 3(3) HYDERABAD 3 CIT (A)-5, HYDERABAD 4 PR. CIT - 5, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER