DCIT CIR 3(2)(1), MUMBAI V. J.M. FINANCIAL INSTITUTIONAL SECURITIES LTD, MUMBAI

ITA 3662/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6043 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Reopening of assessment; Opportunity of being heard; Difference of opinion; Change of opinion
• Section: 142(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM I.T.A. NO. 3662/MUM/2016 ( ASSESSMENT YEAR: 2006 - 07 ) DY. CIT 3(2)(1), R. NO. 608, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 VS. M/S. J. M. FINANCIAL INSTITUTIONAL SECURITIES LTD. (FORMERLY KNOWN AS J. M. FINANCIAL CONSULTANTS PVT. LTD.) 7 TH FLOOR, CNERGY, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI - 400 025 PAN/GIR NO. AAACM 7079 C ( APPELLANT ) : ( RESPONDENT ) APPELLA NT BY : SHRI V. VIDHYADHAR RESPONDENT BY : DR. K . SHIVARAM DATE OF HEARING : 06.06.2018 DATE OF PRONOUNCEMENT : 02.07 .2018 O R D E R PER S HAMIM YAHYA, A. M.: T HIS APPEAL BY THE R EVENUE ARISE S OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.02.2016 AND PERTAIN TO ASSESSMENT YEAR 2006 - 07. 2. THE GROUNDS OF APPEAL RAISED IN R EVENUE S APPEAL READ AS UNDER : 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LD. CIT(A) IS RIGHT IN HOLDING THAT THE REOPENING OF A SSESSMENT U/S. 147 WAS INVALID AND BAD IN LAW AND QUASHING THE SAME. ?' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LD. CIT(A) IS RIGHT IN HOLDING THE REOPENING OF ASSESSMENT U/S. 147 AS INVALID AND BAD IN LAW WITHOUT APPRECIATING THE FACT THAT THE REOPENING OF ASSESSMENT WAS NOT ON THE BASIS OF 2 ITA NO. 3662/MUM/2016 M/S. J. M. FINANCIAL INSTITUTIONAL SECURITIES LTD. CHANGE OF OPINION SINCE THE ISSUES ON WHICH REOPENING WAS MADE WERE NOT VERIFIED IN THE ORIGINAL ASSESSMENT.?' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LD. CIT(A) IS RIGHT IN HOLD ING THE REOPENING OF ASSESSMENT U/S. 147 AS INVALID AND BAD IN LAW WITHOUT FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF KALYANJI MAVJI & CO. V. CIT [1976] 102ITR 287 (SC), WHICH WAS SUBSEQUENTLY CONFIRMED IN INDIAN & EAST ERN NEWSPAPER SOCIETY V. CIT [1 979] 11 9ITR 996 (SC) AND A.L.A, FIRM V. CIT [1 991] 1 89 ITR 285 (SC). ?' 4. 'ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 9 TO 11 OF THEIR APPEAL REG ARDING ADDITION OF RS. 63,65,638/ - ON MERIT AND THEREFORE IT IS HUMBLY PRAYED THAT THE LD. CIT(A) MAY BE DIRECTED TO DECIDE THE ISSUES CONTAINED IN GROUND NO. 9 TO 11 ON MERIT ?' 5. 'THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 3. T HE GROUNDS RAISED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES READ AS UNDER : 1. THE LEARNED CIT(A) AND ASSESSING OFFICER FAILED TO APPRECIATE THAT THE REASSESSMENT ORDER IS BAD IN LAW AS THE S TATUTORY NOTICE U/S. 143(2) / 142(1) OF THE INCOME TAX ACT WAS NEVER ISSUED AND SERVED ON THE ASSESSEE. 2. THE LEARNED CIT(A) AND ASSESSING OFFICER FAILED TO APPRECIATE THAT THE REASSESSMENT ORDER IS BAD IN LAW AS THE REASONS FOR REOPENING THE ASSESSMENT A S ASKED FOR BY THE ASSESSEE WERE NEVER COMMUNICATED TO THE ASSESSEE. 2. THE LEARNED CIT(A) FAILED TO ADJUDICATE ON MERITS ON THE GROUNDS TAKEN UP BY THE ASSESSE WITH REGARDS TO THE ADDITION MADE BY THE ASSESSING OFFICER DURING RE - ASSESSMENT PROCEEDINGS. 4 . WE FIRST TAKE UP ON ASSESSEE'S GROUNDS RAISED UNDER RULE 27 OF I TAT: IN THIS CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS QUASHED THE REASSESSMENT BY HOLDING THE SAME TO BE INVALID DUE TO CHANGE OF OPINION BY THE ASSESSING OFFICER. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE GROUND RAISED ON MERITS THEREFORE DO NOT ARISE. NOW BY WAY OF THIS APPLICATION UNDER RULE 27 OF THE ITAT R ULES , THE ASSESSEE IS AGGRIEVED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT A DJUDICATED OTHER LIMBS OF ITS CHALLENGE BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE A SSESSEE HAS DULY RAISED GROUND BEFORE THE LD. COMMISSIONER 3 ITA NO. 3662/MUM/2016 M/S. J. M. FINANCIAL INSTITUTIONAL SECURITIES LTD. OF INCOME TAX (APPEALS) THAT THE STATUTORY NOTICE WAS NEVER RAISED ON THE ASSESSEE . THAT REASON FOR REOPENING OF ASSESSMENT AS ASKED BY THE ASSESSEE WERE NEVER COMMUNICATED. THE ASSESSEE HAS ALSO RAISED GROUND AGAINST THE MERITS OF THE ADDITI ON, BU T THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ADJUDICATED THOSE ISSUES. THE R EVENUE IN ITS GROUNDS OF APPEAL HA S ALSO RAISED THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT ADJUDICATING THE MERITS OF THE ADDITION. 5. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS , WE ARE OF THE OPINION THAT IF A DECISION IS CHALLE NGED BEFORE THE FIRST APPELLATE AUTHORITY BOTH ON THE ISSUE OF VALIDITY OF JURISDICTION AS WELL AS MERITS OF THE CASE, THE ADJUDICATION ON THE ISSUE OF MERITS CAN BY NO STRETCH OF IMAGINATION BE LIABLE FOR REJECTION ON THE GROUND THAT THE ASSESSMENT HAS BE EN QUASHED DUE TO CHANGE OF OPINION. FURTHERMORE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT ADJUDICATED UPON OTHER LIMBS OF ASSESSEE'S CHALLENGE TO THE VALIDITY OF REOPENING , NAMELY LACK OF COMMUNICATION OF REASON OF REOPENING AND NO N SERVICE OF A STATUTORY NOTICE. 6. NOW THE ASSESSEE IS AGGRIEVED BY SUCH AN ACTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HAS RAISED THE OBJECTION UNDER RULE 27 BEFORE THE ITAT. THE R EVENUE HAS ALSO CHALLENGED THE NON - ADJUDICATION ON MERITS. 7. W E FIND THAT THE HONBLE M ADRAS HIGH COURT IN THE CASE OF CIT VS RAMDAS PHARMACY [1970] 77 ITR 276 (MAD) HAD EXPOUNDED THAT AN APPELLATE AUTHORITY CANNOT DECIDE ONLY ONE ISSUE ARISING OUT OF MANY ISSUES AND DECLINE TO GO INTO THE OTHER ISSUES 4 ITA NO. 3662/MUM/2016 M/S. J. M. FINANCIAL INSTITUTIONAL SECURITIES LTD. RAISED BEFORE IT ON THE GROUND THAT FURTHER ISSUES WILL NOT ARISE IN VIEW OF THE FINDING ON THE ISSUE DECIDED BY IT. IT WAS EXPOUNDED THAT IF THE APP ELLATE AUTHORITY DECLINES TO CONSIDER AND DECIDE THE OTHER ISSUES , IT COULD ONLY PROTRACT AND DELAY THE PROCEEDINGS FOR THE ASS ESSEE HAS TO GET THE DECISION OF THE APPELLATE AUTHORITY ON THE INITIAL POINT SET ASIDE BY APPROACHING A HIGHER APPELLATE AUTHORITY AND THEREAFTER AGAIN GO BEFORE THE APP ELLATE AUTHORITY FOR THE DECISION ON THE OTHER ISSUES LEFT UNDECIDED BY IT EARLIER. IT WAS HELD THAT THIS WILL AMOUNT TO MULTIP LICATION PROCEEDINGS UNDER THE A CT. I T WAS FURTHER EXPOUNDED THAT THE SUBORDINATE COURTS AND TRIBUNAL'S SHOULD AS FAR AS POSSIBLE GIVE THEIR VIEWS ON ALL THE POINTS RAISED BEFORE THEM SO THAT THE HIGHER COURTS WILL HAVE THE BENEFIT OF THE DECISION ON OTHER POINTS ALSO , IF THE NECESSITY ARISES. 8. EXAMINING THE PRESENT ISSUE ON THE TOUCHSTONE OF ABOVE SAID CASE LAW, WE FIND THAT THE ORDER OF THE LD. CIT(A) H ERE DIRECTLY FALLS UNDER THE AMBIT OF HONBLE HIGH COURT'S O RDER AS ABOVE. THE LD. CIT(A) HAS DECIDED ONE ISSUE AND HAS LEFT UNDECIDED ANOTHER ISSUES DULY RAISED BEFORE HIM. HENCE , WE ARE OF THE CONSIDERED OPINION THAT THESE ISSUES WERE DULY RAISED , WHICH HAVE BEEN LEFT UNDECIDED BY THE LD. CIT(A) AND NEEDS TO BE R EMITTED TO THE FILE OF THE LD. CIT(A) . THE LD. CIT(A) IS DIRECTED TO COMPLETE HIS APP ELLATE ORDER BY DECIDING ON THESE ISSUES WHICH W ERE DULY RAISED BEFORE HIM BY THE ASSESSEE. NEEDLESS TO ADD THAT T HE LD. C IT( A) IN HIS ORDER SHALL ALSO REFER TO THE EARLIER ADJUDICATION BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , WHICH WE HAVE NOT ADJUDICATED IN VIEW OF OUR REMAND HERE. AFTER THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS 5 ITA NO. 3662/MUM/2016 M/S. J. M. FINANCIAL INSTITUTIONAL SECURITIES LTD. COMPLETE , UPON ADJUDICATION OF TH ESE ISSUES, BOTH THE PARTIES WILL BE AT LIBERTY TO FIL E NECESSARY APPEALS AS AND IF NECESSARY. 9. ACCORDINGLY , THE ISSUES NOT ADJUDICATED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ARE REMITTED TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SHAL L DECIDE THE SAME AFRESH AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. IN VIEW OF OUR ORDER REMITTING THE AFORESAID ISSUES TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SO AS TO COMPLETE HIS ORDER, THE OTHER ISSUES RAISED IN TH ESE APPEALS ARE NOT BEING ADJUDICATED. 10. BOTH THE COUNSEL FAIRLY AGREED TO THE ABOVE PROPOSITION. 11. IN THE RESULT , TH IS APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 02.07.2018 SD/ - SD/ - ( SANDEEP GOSAIN ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 02.07.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI