ACIT, New Delhi V. M/s Su-kam Power Systems Ltd., New Delhi

ITA 3710/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1232 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-02-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 17-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKHVEER CHOUDHARY
• Keywords: Assessment record; Revenue expenditure
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.3710/DEL/2012 3710/DEL/2012 3710/DEL/2012 3710/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004- -- -05 0505 05 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -9(1), 9(1), 9(1), 9(1), ROOM NO. ROOM NO. ROOM NO. ROOM NO.163, C.R.BUILDING, 163, C.R.BUILDING, 163, C.R.BUILDING, 163, C.R.BUILDING, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S SU M/S SU M/S SU M/S SU- -- -KAM POWER SYSTEM LTD., KAM POWER SYSTEM LTD., KAM POWER SYSTEM LTD., KAM POWER SYSTEM LTD., 306, KIRTI DEEP BUILDING, 306, KIRTI DEEP BUILDING, 306, KIRTI DEEP BUILDING, 306, KIRTI DEEP BUILDING, NAGAL RAYA, NAGAL RAYA, NAGAL RAYA, NAGAL RAYA, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAFCS0019P. PAN : AAFCS0019P. PAN : AAFCS0019P. PAN : AAFCS0019P. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUKHVEER CHOUDHARY, DR. RESPONDENT BY : NONE. ORDER ORDER ORDER ORDER PER G PER G PER G PER G. .. .D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XII, NEW DELHI DATED 30 TH APRIL, 2012 FOR THE AY 2004-05. 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE- RESPONDENT. NOTICE OF HEARING FOR 12 TH FEBRUARY, 2013 WAS SENT TO THE ASSESSEE WELL IN ADVANCE. THERE IS NO REQUEST FOR ADJOURNMENT. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL OF THE REVE NUE EX PARTE QUA THE ASSESSEE AFTER HEARING THE ARGUMENTS OF LEARNED DR. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS BEF ORE US :- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN HOLDING THAT THE ASSESSING OFFICER HAS NOWHERE STAT ED IN THE REASONS RECORDED THAT THE ASSESSEE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT PROCEEDINGS. IN ANNEXURE A OF LETTER DATED ITA-3710/DEL/2012 2 04.03.2011 FOR SEEKING APPROVAL TO ISSUE NOTICE U/S 148, IT WAS CLEARLY MENTIONED THAT THE ESCAPEMENT OF INCOME HAS BEEN ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. 2. THE LD.CIT(A) HAS ERRED IN RELYING ON THE ASSESS EES MERE OBSERVATION IN HIS OBJECTION THAT ALL DETAILS WITH REGARD TO ADVERTISEMENT EXPENDITURE HAD BEEN SUBMIT TED DURING THE COURSE OF REGULAR ASSESSMENT U/S 143(3), WHEREAS THE ASSESSMENT RECORDS REVEAL THAT THIS ASP ECT WAS NEVER EXAMINED OR ACCEPTED DURING THE PROCEEDIN GS U/S 143(3). THE ORDER OF THE LD.CIT(A), THEREFORE, SUFFERS FROM THE VICE OF PERVERSITY. 4. WE HAVE HEARD THE ARGUMENTS OF LEARNED DR AND PE RUSED THE MATERIAL PLACED BEFORE US. THE FACTS OF THE CASE A RE THAT ASSESSMENT YEAR UNDER CONSIDERATION IS 2004-05. ORIGINAL ASSE SSMENT WAS COMPLETED UNDER SECTION 143(3) ON 22 ND DECEMBER, 2006. REOPENING WAS MADE BY ISSUE OF NOTICE UNDER SECTION 148 DATED 23 RD MARCH, 2011. THUS, ON THESE FACTS, PROVISO TO SECTION 147 WOULD BE APPLICABLE WHICH READS AS UNDER:- PROVIDED PROVIDED PROVIDED PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR. 5. AS PER THE ABOVE PROVISO, WHEN ORIGINAL ASSESSME NT IS COMPLETED UNDER SECTION 143(3), THE ASSESSMENT CANNOT BE REOP ENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ESCAPEMENT OF INCOME IS ON ACCOUNT OF FAILURE ON TH E PART OF THE ITA-3710/DEL/2012 3 ASSESSEE TO FURNISH A RETURN OF INCOME OR TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ADMITTEDL Y, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE RETURN OF INCOME. ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) AND REOPENING IS MADE AFTER MORE THAN FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, LET US EXAMIN E WHETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS. THE REASONS RECORDED FOR REOPE NING OF ASSESSMENT ARE REPRODUCED AT PAGE 1 OF THE ASSESSMENT ORDER AN D FOR THE SAKE OF READY REFERENCE, WE REPRODUCE THE SAME HEREUNDER:- DURING THE YEAR, THE ASSESSEE HAS CLAIMED A DEDUCT ION OF ` 2,01,47,417/- ON ACCOUNT OF ADVERTISEMENT EXPENDITU RE CAPITALIZED BUT CLAIMED IN THE INCOME TAX RETURN FO R THE A.Y. 2004-05 WHILE COMPUTING THE TAXABLE INCOME. A S THE ASSESSEE ITSELF ADMITTED THAT THE EXPENDITURE WAS I N THE NATURE OF CAPITAL, THE SAME WAS NOT ALLOWABLE WHILE COMPUTING THE INCOME. AS THE EXPENDITURE GIVES END URING BENEFIT TO THE ASSESSEE, THE SAME IS IN THE NATURE OF CAPITAL AND TO BE ADDED TO THE INCOME OF THE ASSESSEE. 6. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAS DISCLOSED ALL THE RELEVANT FACTS IN THE ORIGINAL ASSESSMENT ITSEL F. THE ADVERTISEMENT EXPENSES WHICH WERE CAPITALIZED IN THE BOOKS OF ACC OUNT WERE CLAIMED AS REVENUE EXPENDITURE IN THE RETURN OF INCOME. TH EREFORE, THE ASSESSEE MADE A LEGAL CLAIM IN THE RETURN OF INCOME WHICH WAS ACCEPTED BY THE ASSESSING OFFICER IN THE ORIGINAL R ETURN. FROM THE ABOVE REASONS RECORDED, IT IS EVIDENT THAT THERE WA S NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS. ON THESE FACTS, IN OUR OPINION, PROVISO TO SECTION 147 WOULD BE SQUARELY APPLICABLE. WE ALSO FIND THAT THE LEARNED CIT(A) H AS ALLOWED THE RELIEF TO THE ASSESSEE FOLLOWING THE DECISION OF HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF ATMA RAM PROPERTIES PVT.LTD. V S. DCIT 343 ITR ITA-3710/DEL/2012 4 141 (DELHI). THE RELEVANT OBSERVATION OF THE LEARN ED CIT(A) IN THIS REGARD READS AS UNDER:- IN THE CASE OF ATMA RAM PROPERTIES PVT.LTD. VS. DC IT [2012] 343 ITR 141 (DELHI) THE DELHI HIGH COURT HAS STATED AS UNDER:- .IN ORDER TO INITIATE PROCEEDINGS FOR REASSESSME NT AFTER FOUR YEARS, THERE SHOULD HAVE BEEN A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY F OR ASSESSMENT. IF THE ASSESSING OFFICER HAD FAILED TO APPLY LEGAL PROVISIONS/SECTION OF THE INCOME-TAX ACT, 196 1, THE FAULT CANNOT BE ATTRIBUTED TO THE ASSESSEE. THE REQUIREMENT IS THAT THE ASSESSEE SHOULD HAVE FAILED OR OMITTED TO MAKE FULL AND TRUE DISCLOSURE OF MATERIA L FACTS. THE ASSESSEE IS NOT REQUIRED TO DISCLOSE, STATE OR EXPLAIN THE LAW IN VIEW OF THE ABOVE FACTS AND CASE LAWS CITED ABOV E, THE RE-ASSESSMENT PROCEEDINGS U/S 147/148 ARE HEREBY QUASHED. HENCE, THERE IS NO NEED TO GO INTO THE ME RITS OF THE CASE. 7. CONSIDERING THE FACTS OF THE CASE WHICH ARE ALRE ADY DISCUSSED HEREINABOVE, THE ABOVE DECISION OF HON'BLE JURISDIC TIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE AND THE LEARNED CIT(A) , RIGHTLY RELYING UPON THE SAME, HAS QUASHED THE REASSESSMENT PROCEED INGS. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(A) AN D DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2013. SD/- SD/- ( (( (I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 15.02.2013 VK. ITA-3710/DEL/2012 5 COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX , ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -9(1), ROOM 9(1), ROOM 9(1), ROOM 9(1), ROOM NO.163, C.R.BUILDING, NEW DELHI. NO.163, C.R.BUILDING, NEW DELHI. NO.163, C.R.BUILDING, NEW DELHI. NO.163, C.R.BUILDING, NEW DELHI. 2. RESPONDENT : M/S SU M/S SU M/S SU M/S SU- -- -KAM POWER SYSTEM LTD., KAM POWER SYSTEM LTD., KAM POWER SYSTEM LTD., KAM POWER SYSTEM LTD., 306, KIRTI DEEP BUILDING, NAGAL RAYA, NEW DELHI. 306, KIRTI DEEP BUILDING, NAGAL RAYA, NEW DELHI. 306, KIRTI DEEP BUILDING, NAGAL RAYA, NEW DELHI. 306, KIRTI DEEP BUILDING, NAGAL RAYA, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR