Precambrian Surveys Private Limited , Bellary V. Income Tax Officer Ward-1, Bellary

ITA 351/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3464 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMAMEENAKSHI J
• Assessee Lawyers: L BHARATH
• Keywords: Rectification of order
• Section: 143(3); 234B; 263; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, B ENGALURU BEFORE S HRI N.V.VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I TA NO. 351 / BANG/2 0 1 7 (ASSESSMENT YEAR: 2011 - 12 ) M/S.PRECAMBRIAN SURVEYS PVT. LTD, SURVEY HOUSE , 2 ND FLOO R, 18A/121, 2 ND CROSS, NEHRU COLONY, BELLARY - 583103. PAN:AAFCP 4430 M VS. APPELLANT INCOME - TAX OFFICER, WARD 1, BELLARY. RESPONDENT APPELLANT BY : SHRI L.BHARATH, CA. RESPONDENT BY : SMT.PADMAMEENAKSHI, JCIT(DR) DATE OF HEA RING : 05/07/2018 DATE OF PRONOUNCEMENT : 24 /08/2018 O R D E R PER JASON P BOAZ , AM : THIS APPEAL BY THE ASSESSE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) [CIT(A)], GULBARGA, DATED 16/12/2016 FOR ASSESSMENT YEAR 2011 - 12. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: - 2.1 THE ASSESSEE COMPANY, ENGAGED IN BUSINESS AS AGENTS UNDERTAKING AND EXECUTING MINING PROJECTS, FILED ITS RETURN FOR ASSESSMENT YEAR 2011 - 12 ON 29/09/2011 DECLA RING INCOME OF RS.2,31,00,500/ - FROM BUSINESS AND INCOME FROM OTHER SOURCES. A SEARCH U/S 132 OF THE INCOME - TAX ACT,1961 [IN SHORT THE ACT ] WAS ITA NO . 351 /BANG/20 17 PAGE 2 OF 9 CONDUCTED ON 10/12/2010 AT THE PREMISES BELONGING TO THE LAXMINARAYANA MINING COMPANY GROUP OF CASES, OF WH ICH THE ASSESSE E WAS A PART. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS CONCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 31/12/2012 WHEREIN THE INCOME WAS ACCEPTED AS RETURNED BY THE ASSESSEE AT RS.2,31,00,500/ - . THE TAX PAYABLE BY THE ASSE SSEE WAS DETERMINED AT RS.4,08,431/ - MAINLY ON ACCOUNT OF INTEREST CHARGED U/S 234B AND 234C OF THE ACT IN VIEW OF THE ASSESSING OFFICER (AO) CONSIDERING THE DATE OF PAYMENT OF TAX TO BE 29/09/2011 (I.E. THE DATE OF FILING THE RETURN OF INCOME FOR ASSESSME NT YEAR 2011 - 12) INSTEAD OF 01/01/2011 (I.E. THE DATE OF LETTER BY WHICH THE ASSESSEE REQUESTED THE DEPARTMENT THAT TAX LIABILITY BE ADJUSTED FROM OUT OF FIXED DEPOSITS HELD BY THE GROUP CONCERNS) WHEN THE TAX LIABILITY OF THE ASSESSEE IS CLAIMED TO BE D ISCHARGED. IN THESE CIRCUMSTANCES, THE ASSESSEE FILED A LETTER ON 15/01/2013 BEFORE THE AO SEEKING RECTIFICATION OF THE ORDER OF ASSESSMENT DATED 29/09/2011 ON THIS COUNT. THE AO PASSED AN ORDER U/S 154 OF THE ACT ON 09/05/20013 ACKNOWLEDGING THAT THE DA TE OF TAX COLLECTION IS TO BE CONSIDERED AS 01/01/2011, THE DATE OF PD ADJUSTMENT AS CLAIMED BY THE ASSESSEE AND THEREBY DETERMINED THAT THE ASSESSEE WAS ELIGIBLE FOR A REFUND OF RS.2,70,809/ - . 2.2 SUBSEQUENTLY, AFTER DECENTRALISATION OF THE CASE , THE NEW AO, SUOMOTO WITHOUT PUTTING THE ASSESSEE ON NOTICE, PASSED AN ORDER U/S 154 OF THE ACT DATED 28/07/2014 AND WITHOUT ASSIGNING ANY REASON, DETERMINED THAT DEMAND OF RS.4,08,440/ - WAS PAYABLE BY THE ASSESSEE. LATER, VIDE ANOTHER ORDER U/S 154 OF T HE ACT DATED 27/02/2015 THE VERY SAME AO , AFTER PUTTING THE ASSESSEE ON NOTICE, REWORKED THE TAX PAYABLE BY THE ASSESSEE AT RS.4,08,437/ - ON THE GROUND THAT THE EARLIER ORDER US/ 154 OF THE ACT DATED 9/5/2013 WAS PASSED ON A MISINTERPRETATION OF EXPLANATI ON 2 TO SECTION 132B INSERTED BY FINANCE ACT,2013. 3 AGGRIEVED BY THE AFORESAID ORDER U/S 154 OF THE ACT DATED 28/2/2015 FOR ASSESSMENT YEAR 2011 - 12, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), GULBARGA, WHO DISPOSED OFF THE ASSESSEE S ITA NO . 351 /BANG/20 17 PAGE 3 OF 9 APPEAL, HOLDING AS UNDER AT PARA 4.3 OF THE IMPUGNED ORDER DATED 16/12/2016: - 4.1 THE ASSESSEE, BEING AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A), GULBARLGA, DATED 16/12/2016, HAS FILED THIS APPEAL, WHEREIN IT HAS RAISED VARIOUS GROUNDS CHALLENGING THE ACTI ON OF THE AUTHORITIES BELOW IN PASSING AND UPHOLDING THE RECTIFICATION ORDER U/S 154 DATED 27/2/2015. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE EXTRACTED HEREUNDER: - ITA NO . 351 /BANG/20 17 PAGE 4 OF 9 ITA NO . 351 /BANG/20 17 PAGE 5 OF 9 4.2 THE LD.AR FOR THE ASSESSEE WAS HEARD ON THE GROUNDS RAISED (SUPRA) AND IN THIS REGARD PUT FORTH THE FOLLOWING WRITTEN SUBMISSIONS: ITA NO . 351 /BANG/20 17 PAGE 6 OF 9 ITA NO . 351 /BANG/20 17 PAGE 7 OF 9 4.3 PER CONTRA, THE LD DR SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND SUBMISSIONS AND PE RUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. THE FACTS OF THE CASE AS NARRATED IN PARA 2.1 AND 2.2 OF THIS ORDER ARE NOT IN DISPUTE. THE SUM AND SUBSTANCE OF THE ASSESSEE S CO NTENTIONS ARE THAT THE ORDERS US/ 154 OF THE ACT DATED 28/7/2014 AND 27/2/2015 FOR ASSESSMENT YEAR 2011 - 12 ARE BAD IN LAW AND ARE TO BE QUASHED SINCE THE AO HAS EXERCISED HIS POWERS U/S 154 OF THE ACT ON A DEBATABLE ISSUE AND THEREBY EFFECTIVELY SAT IN JUD GMENT AND REVIEWED THE EARLIER REC TIFICATION ORDER DATED 9/5/2013 PASSED BY HIS PREDECESSOR; WHICH ACTION IS NOT IN ACCORDANCE WITH LAW. IN SUPPORT OF THIS PROPOSITION, THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF T.S.BALARA M , ITO VS. VOLKART BROTHERS (82 ITR 50)(SC) AND THE DECISION OF THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF ADDL. CIT VS. CHEMICAL LIMES (149 ITR 325)(RAJ) WHICH IS STATED TO BE SQUARELY APPLICABLE TO THE FACTS OF THE CASE ON HAND. 4.4 .2 ON A CAREFUL EXAMINATION OF THE FACTS ON RECORD, AS LAID OUT IN PARA 2.1 AND 2.2 OF THIS ORDER (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ON ITA NO . 351 /BANG/20 17 PAGE 8 OF 9 HAND ARE VERY SIMILAR TO THE FACT SITUATION PREVAILING IN THE CA SE OF ADDL. CIT VS. CHEMICAL LIMES (SUPRA). IN THAT CASE, WHILE COMPLETING THE ASSESSMENT, THE AO HAD CHARGED INTEREST U/S 139(8) OF THE ACT, WHEREUPON THE ASSESSEE FILED AN APPLICATION U/S 154 FOR WAIVING THE INTEREST CHARGED U/S 139(8) OF THE ACT. TH E AO ACCEPTED THE ASSESSEE S CLAIM AND PASSED AN ORDER U/S 154 OF THE ACT ON 10/12/1970 CANCELLING THE INTEREST CHARGED U/S 139(8). SUBSEQUENTLY, THE SUCCESSOR ITO ISSUED A NOTICE PROPOSING TO REVERSE THE EARLIER ORDER U/S 154 OF THE ACT DATED 10/12/1970 WHICH CANCELL ED THE INTEREST CHARGED US/ 139(8). THIS AO THEN REJECTED THE ASSESSEE S SUBMISSION SUPPORTING THE ORDER DATED 10/12/1970 AND ACCORDINGLY RESTORED THE ORIGINAL ORDER CHARGING INTEREST U/S 139(8) OF THE ACT. ON APPEAL, THE FIRST APPELLATE AUT HORITY HELD THAT THE SUCCESSOR ITO COULD NOT HAVE EXERCISED POWERS U/S 154 IN SETTING ASIDE THE ORDER DATED 10/12/1970 . ON APPEAL BY REVENUE, THE TRIBUNAL UPHELD THE ORDER OF THE FIRST APPELLATE AUTHORITY. ON FURTHER APPEAL BY REVENUE, THE HON BLE RAJAST HAN HIGH COURT HELD THAT WHEN THE ITO EXERCISED HIS JURISDICTION U/S 154 OF THE ACT AND RECTIFIED THE ORDER OF ASSESSMENT VIDE ORDER DATED 10/12/1970, THE SUCCESSOR ITO COULD NOT HAVE SAT IN APPEAL OVER THAT ORDER AND CANCELLED THE SAME BY EXERCISING POWER S AGAIN U/S 154 OF THE ACT. THE HON BLE COURT OBSERVED THAT IN ANY CASE, THE QUESTION WHETHER THE SUCCESSOR ITO COULD HAVE EXERCISED HIS POWERS U/S 154 OF THE ACT IN THOSE CIRCUMSTANCES OR NOT WAS A DEBATABLE ISSUE AND IT WAS NOT OPEN TO HIM TO LATER SAY THAT THE EARLIER ITO WAS WRONG IN TAKING THAT VIEW, BECAUSE HE WAS NOT EXERCISING ANY APPELLATE OR REVISIONAL POWERS IN RESPECT OF THE ORDER OF HIS PREDECESSOR AND THAT SUCH A POWER COULD HAVE BEEN EXERCISED ONLY BY THE CIT U/S 263 OF THE ACT. IN COMING T O THIS DECISION, THE HON BLE COURT REFERRED TO THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF T.S.BALARAM, ITO VS. VOLKART BROS. (SUPRA) . WE FIND THAT THE FACTUAL AND LEGAL MATRIX OF THE DECISION OF THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF ADDL.CIT VS. CHEMICAL LIMES (SUPRA) IS SQUARELY APPLICABLE TO THE F A CTS AND CIRCUMSTANCES OF THE CASE ON HAND. NO CONTRARY DECISION IN THE MATTER OF THE JURISDICTIONAL HIGH COURT OR HON BLE APEX COURT ITA NO . 351 /BANG/20 17 PAGE 9 OF 9 WAS BROUGHT TO OUR NOTICE. IN THAT VIEW OF THE MATTER , WE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF ADDL.CIT VS. CHEMICAL LIMES (SUPRA) SET ASIDE THE FINDING OF THE LD.CIT(A) IN THE IMPUGNED ORDER; AS ALSO THE ORDERS U/S 154 OF THE ACT DATED 28/07/2014 AND 27/02/2015 PASSED BY THE AO. CONSEQUENTLY, THE ASSESSEE S APPEAL IS ALLOWED AS INDICATED ABOVE. 5. IN THE RESULT, THE ASSESSEE S APPEAL FOR ASSESSMENT YEAR 2011 - 12 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2018 SD/ - SD/ - ( N.V.VASUDEVAN ) ( JASON P BO AZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 24 / 0 8 /201 8 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPON DENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRI BUNAL BANGALORE