ITO WD 18(2)(4), MUMBAI V. THE SHIRT COMPANY, MUMBAI

ITA 3450/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1381 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 27-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K KESHKAMAT
• Keywords: Reopening of assessment
• Section: 143(3); 292BB; 143(2); 147; 148; 144; 139

Judgement Text

ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, (VICE PRESIDENT) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO. 3450/MUM/2009 ASSESSMENT YEAR 2001-02 DATE OF HEARING : 17.6.2010 INCOME TAX OFFICER, WARD 18(2)(4) ...... APPELLANT PIRAMAL CHAMBERS, MUMBAI VS. THE SHIRT COMPANY .. RESPONDENT 2, BRADY GLADYS, INDUSTRIAL PLAZA 1/447, SENAPATI BAPAT MARG LOWER PAREL, MUMBAI 400 013 PAN AAAFT0101F APPELLANT BY : SHRI S.K. KESHKAMAT RESPONDENT BY : SHRI PIYUSH CHATURVEDI O R D E R PER PRAMOD KUMAR: 1. IN THIS APPEAL FILED BY THE ASSESSING OFFICER, W HICH IS DIRECTED AGAINST THE ORDER DATED 26 TH MARCH 2009, PASSED BY THE LD. CIT(A), FOR ASSESSME NT YEAR 2001-02, FOLLOWING GRIEVANCES HAVE BEEN RAISED:- ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 2 OF 7 THE LD. CIT(A) IS ERRED IN ANNULLING THE ASSESSMEN T ORDER U/S 143(3) / 147 IGNORING THE PROVISIONS OF SECTION 292 OF THE I.T. ACT, 1961, AS THE NOTICE U/S 143(2) WAS ISSUED WITHIN ST ATUTORY PERIOD ON 21.8.2007 TO ASSESS THE INCOME ON THE BASIS OF R ETURN FILED ON 6.7.2007, IN RESPONSE TO NOTICE U/S 148 DT. 25.6.20 07 AND THE ASSESSEE NEVER OBJECTED FOR SERVICE OF NOTICE IN TH EIR LETTER DTD. 14.12.2008 AND 26.12.2008 DURING THE ASSESSMENT PRO CEEDINGS. 2. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF FAC TS. IT IS A CASE OF RE- OPENING ASSESSMENT U/S 147. IT IS ALSO AN ADMITTED POSITION THAT PURSUANT TO RE-OPENING OF THE ASSESSMENT U/S 147, NO NOTICE U/S 143(2) HAS BEEN SERVED ON THE ASSESSEE. AS EVIDENT FROM THE STATEMENT OF F ACTS BEFORE THE LD. CIT(A), THE ASSESSEE DID ASK FOR THE REASONS RECORDED FOR R E-OPENING THE ASSESSMENT AND OBJECTED AGAINST RE-OPENING OF THE ASSESSMENT. HOWEVER, THE ASSESSING OFFICER DID NOT DEAL WITH THE OBJECTIONS SO RAISED BY THE ASSESSEE AND PROCEEDED TO CONFIRM THE ASSESSMENT U/S 143(3) R/W SECTION 147. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) AND IT WAS POINTED OUT BY THE ASSESSEE THAT NO NOTICE U/S 143(2) HAS BEEN SER VED UPON THE ASSESSEE AND, AS SUCH, THE ASSESSING OFFICER IS DENUDED OF T HE POWERS TO FRAME ASSESSMENT U/S 143(3), THE LD. CIT(A) CALLED FOR RE MAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICERS STAND WA S THAT IN VIEW OF THE AMENDED PROVISIONS OF SECTION 292BB, WHICH CAME INT O EFFECT FROM 1 ST APRIL 2008, AND BEARING IN MIND THE FACT THAT THE ASSESSE E DID PARTICIPATE IN THE RE- ASSESSMENT PROCEEDINGS, IT WAS NOT OPEN TO THE ASSE SSEE TO RAISE THE SAID OBJECTIONS AT THIS STAGE. THE LD. CIT(A) OBJECTED T HE STAND OF THE ASSESSING OFFICER AND OBSERVED THAT AS HELD BY THE SPECIAL BE NCH IN THE CASE OF KUBER TOBACCO PRODUCTS VS DCIT, 117 ITD (SB) 273, AMENDME NT TO SECTION 292BB IS ONLY PROSPECTIVE AND WOULD NOT APPLY TO THE FACT S OF THIS CASE. THE LD. CIT(A) FURTHER OBSERVED THAT, IN ANY EVENT, SINCE T HE ASSESSEE HAD RAISED OBJECTION AT THE TIME OF ASSESSMENT PROCEEDINGS ITS ELF, SECTION 292BB DOES ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 3 OF 7 NOT COME INTO PLAY AT ALL. THE LD. CIT(A) NOTED THA T, ADMITTEDLY, THE ASSESSING OFFICER FAILED TO SERVE THE NOTICE U/S 143(2) WITHI N THE PRESCRIBED PERIOD OF TWELVE MONTHS AND, THEREFORE, THE ASSESSING OFFICER DID NOT HAVE JURISDICTION TO FRAME THE IMPUGNED ASSESSMENT U/S 143(3) R/W SEC TION 47. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GIVEN BY THE LD. CIT(A) AND IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. WE HAVE NOTED THAT AS FAR AS APPLICATION U/S 292BB IS CONCERNED, IT DOES NOT COME INTO PLAY FOR MORE REASONS THAN ONE. IN THE FIRST PLACE, THE AMENDMENT IN SECTION 292BB, AS WAS HELD BY THE SPEC IAL BENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS (SUP RA), IS ONLY PROSPECTIVE IN NATURE AND WILL, THEREFORE, HAVE APPLICATION FRO M THE YEAR 2008-09 ONWARDS. THE CASE BEFORE US PERTAINS TO ASSESSMENT YEAR 2001-02 AND FOR THIS SHORT REASON, SECTION 292BB WILL HAVE NO APPLI CATION IN THE MATTER. SECONDLY, WE HAVE ALSO NOTED THAT THE ASSESSEE DID RAISE ITS OBJECTION IN RE- ASSESSMENT PROCEEDINGS AND, THEREFORE, SECTION 292B B WILL ALSO NOT HAVE APPLICATION, THE SAID SECTION COMES INTO PLAY ONLY WHEN THE ASSESSEE HAS APPEARED IN ANY PROCEEDINGS AND CO-OPERATED IN ANY INQUIRY RELATED TO AN ASSESSMENT OR RE-ASSESSMENT WHEN THE ASSESSEE DOES NOT RAISE OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR RE-ASSE SSMENT. WE, THUS, SEE NO INFIRMITY IN THE REASONING ADOPTED BY THE LD. CIT(A ). 5. LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO SUBMITTED THAT THE ASSESSMENT IS FRAMED U/S 147 AND, THEREFORE, THE AS SUMPTION OF JURISDICTION ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 4 OF 7 BY THE ASSESSING OFFICER IS BY VIRTUE OF ISSUANCE O F NOTICE U/S 147 AND THE ASSESSING OFFICER DOES NOT NEED ANY FURTHER ISSUANC E OF NOTICE U/S 143(2) TO ASSUME THE JURISDICTION. 6. WE ARE UNABLE TO SEE ANY LEGALLY SUSTAINABLE MERITS IN THIS STAND ALSO. A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF S. KUMAR ENTERPRISES SYNFAB LTD. VS JCIT, 4 SOT 412, HAD AN OCCASION TO DEAL WITH THIS PLEA AND WHILE REJECTING THE SAID PLEA, THE CO-ORDINATE BENC H SPEAKING THROUGH ONE OF US (I.E., ACCOUNTANT MEMBER), INTER-ALIA, OBSERVED AS FOLLOWS:- WE ARE OF THE CONSIDERED VIEW THAT THE RETURN FILE D PURSUANT TO THE NOTICE UNDER S. 148 OF THE ACT MUST BE ASSUMED AND TREATED TO BE A RETURN FILED UNDER S. 139 OF THE ACT AND THE A SSESSMENT MUST THEREAFTER BE MADE UNDER S. 143 OR 144 OF THE ACT A FTER COMPLYING WITH ALL THE MANDATORY PROVISIONS' AND THAT 'ACCORD INGLY, IT IS INCUMBENT UPON THE ASSESSING AUTHORITY TO ISSUE NOT ICE UNDER S. 143(2) OF THE ACT WITHIN THE PERIOD STIPULATED IN T HE PROVISO THEREUNDER'. THE WHOLE THEORY OF ASSESSMENT UNDER S . 147 PER SE HAS BEEN CATEGORICALLY REJECTED BY THE SPECIAL BENC H OF THE TRIBUNAL AND IT HAS BEEN OBSERVED THAT 'S. 148 DOES NOT PROVIDE ANY METHODOLOGY FOR COMPUTING THE INCOME ON REASSES SMENT OR ASSESSMENT. ON THE CONTRARY, IT CREATES A LEGAL FIC TION THAT SUCH RETURN WILL BE TREATED AS ONE MADE UNDER S. 139'. T HE SAID DECISION FURTHER ADDS, AND WHAT HAS BEEN THEN ADDED IS VERY IMPORTANT IN THE CONTEXT OF ISSUE BEFORE US, THAT ' BY THE CREATION OF SUCH LEGAL FICTION, ALL THE PROCEDURES PRESCRIBE D IN, AND SUBSEQUENT TO, S. 139 WILL APPLY IN TOTO'. THAT MEA NS AS A RESULT OF SUCCESSFUL REOPENING OF AN ASSESSMENT, THE AO ONLY GETS BACK TO THE POINT OF TIME WHEN THE TIME FOR STARTING THE NO RMAL ASSESSMENT PROCEEDINGS WAS AVAILABLE TO HIM. TO THA T EXTENT, THE CLOCK IS SET BACK FOR HIM. HOWEVER, IF EVEN AFTER T HIS ADVANTAGE, HE DOES NOT COMPLETE THE ASSESSMENT IN ACCORDANCE WITH THE LAW AND WITHIN THE TIME LIMITS AVAILABLE TO HIM UNDER THESE PROCEDURES, HE MISSES THE BUS AGAIN. THE MAIN EFFECT OF THE REOPEN ING OF AN ASSESSMENT, IN OUR HUMBLE UNDERSTANDING, IS THAT DE SPITE THE FACT THAT THE AO DOES NOT HAVE THE JURISDICTION TO TAKE UP THE ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 5 OF 7 ASSESSMENT PROCEEDINGS BECAUSE OF THE FACT THAT THE TIME FRAME ALLOWED TO THE ASSESSEE TO INITIATE AND COMPLETE TH E ASSESSMENT BY SCRUTINIZING THE RETURN HAS EXPIRED, THE AO BY T HE VIRTUE OF A LEGALLY VALID REOPENING OF ASSESSMENT, CAN STILL IN ITIATE AND FRAME THE ASSESSMENT. THE PROCEDURE UNDER S. 142, 143 OR 144, AS THE CASE MAY BE, IS, HOWEVER, TO BE FOLLOWED. IT IS ALS O NOT NECESSARY THAT IN EACH OF THE CASE OF SUCCESSFUL REOPENING OF ASSESSMENT, THE ASSESSMENT OF THE RETURN FILED IN RESPONSE TO NOTIC E IS TO BE DONE ONLY UNDER S. 143(3). THERE CAN BE SITUATIONS WHEN AN ASSESSMENT UNDER S. 143(3) MAY NOT BE NECESSARY AND THE SUMMAR Y ASSESSMENT COULD BE PERFECTLY JUSTIFIED AND DESIRAB LE. TAKE FOR EXAMPLE A CASE IN WHICH AN ASSESSMENT IS REOPENED B ECAUSE AN ASSESSEE HAS NOT OFFERED A PARTICULAR INCOME WHICH IS CLEARLY TAXABLE IN VIEW OF THE CURRENT LEGAL POSITION. IN T HE RETURN FILED IN RESPONSE TO NOTICE UNDER S. 147, THE ASSESSEE OFFER S THAT INCOME TO TAX AND PAYS THE DUE TAXES THEREON. IN SUCH A SITUA TION, THE AO MAY AS WELL CONCLUDE THAT SCRUTINY ASSESSMENT IS NO T NECESSARY. THERE CAN BE OTHER SITUATION IN WHICH THE ASSESSEE OFFERS AN INCOME TO TAX BY WAY OF BELATED RETURN AND THE ONLY WAY TO REGULARIZE IT IS ISSUANCE OF A REASSESSMENT NOTICE UNDER S. 147. WHAT COULD NOT HAVE BEEN DONE UNDER S. 143 BECAUSE THE TIME LIMIT FOR FRAMING THE NORMAL ASSESSMENT HAVING EXPI RED, CAN BE DONE UNDER S. 143 R/W S. 147 UPON THE SUCCESSFUL RE OPENING OF THE ASSESSMENT. IN THAT SENSE IT SETS THE CLOCK BACK BU T THEN THERE IS NO ESCAPE FROM THE PROCEDURES LAID DOWN UNDER SS. 1 42, 143 AND 144. IN SOME OF THE OLD AMNESTY SCHEMES, THE NOTICE S UNDER S. 147 WERE ROUTINELY ISSUED BUT THE ASSESSMENTS WERE STIL L COMPLETED UNDER S. 143(1)(A) BECAUSE THE AO ANYWAY COULD NOT HAVE QUESTIONED THE IT RETURNS FILED UNDER THE AMNESTY S CHEME. THERE IS NOTHING LIKE AN ASSESSMENT UNDER S. 147 PER SE. A REGULAR ASSESSMENT UNDER S. 143(3) AND A REOPENED ASSESSMEN T UNDER S. 143(3) R/W S. 147 HAVE TO FOLLOW THE SAME PROCEDURE AND ARE TWO SPECIES BELONGING TO THE SAME GENUS. WHAT THUS FOLL OWS IS THAT S. 147 OR NO S. 147, THE REGULAR ASSESSMENT PROCEDURE UNDER S. 143 OR 144, AS THE CASE MAY BE, IS TO BE FOLLOWED. 7. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEW SO EXP RESSED BY THE CO- ORDINATE BENCH AND WE, ACCORDINGLY, REJECT THE THEO RY THAT IN THE CASE OF RE- OPENING ASSESSMENT U/S 147, THE ASSUMPTION OF JURIS DICTION TO FRAME ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 6 OF 7 ASSESSMENT U/S 143(3) IS ASSUMED BY ISSUANCE OF NOT ICE U/S 147 ITSELF AND THAT THERE IS NO FURTHER REQUIREMENT TO ISSUE NOTIC E U/S 143(2) IN SUCH CASE. IN VIEW OF THE ABOVE DISCUSSION. WE APPROVE THE CON CLUSION SO ARRIVED AT BY THE LD. CIT(A) AND DECLINE TO INTERFERE. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONO UNCED IN THE OPEN COURT TODAY ON THIS 30 TH DAY OF JUNE 2010. SD/XX SD/XX (D. MANMOHAN) (PRAMOD KUMAR) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF JUNE 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, E BENCH, ITAT, MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR PRADEEP J. CHOWDHURY INCOME TAX APPELLATE TRIBUNAL SR. PRIVATE SECRETARY MUMBAI BENCHES, MUMBAI ITA NO. 3450/MUM/2009 ASSESSMENT YEAR : 2001-02 PAGE 7 OF 7 DATE INITIAL 1. DRAFT DICTATED ON 21.6.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 22.6.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 22.6.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 22.6.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22.6.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 30.6.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 30.6.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER