ACIT, New Delhi V. M/s SMCC Construction India Ltd., New Delhi

ITA 3712/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1235 (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
• Assessee Lawyers: SAURABH SRIVASTAVA; G S SRIVASTAVA
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Revenue expenditure; Capital 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.3712/DEL/2012 3712/DEL/2012 3712/DEL/2012 3712/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 SMCC CONSTRUCTION INDIA LTD., M/S SMCC CONSTRUCTION INDIA LTD., M/S SMCC CONSTRUCTION INDIA LTD., M/S SMCC CONSTRUCTION INDIA LTD., 23, LOCAL SHOPPING CENTRE, 23, LOCAL SHOPPING CENTRE, 23, LOCAL SHOPPING CENTRE, 23, LOCAL SHOPPING CENTRE, MADANGIR, MADANGIR, MADANGIR, MADANGIR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 062. 110 062. 110 062. 110 062. PAN : AAACM7822P. PAN : AAACM7822P. PAN : AAACM7822P. PAN : AAACM7822P. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUKHVEER CHOUDHARY, DR. RESPONDENT BY : SHRI G.S.SRIVASTAVA AND SHRI SAURABH SRIVASTAVA, ADVOCATES. 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 O RDER OF LEARNED CIT(A)-XII, NEW DELHI DATED 30 TH APRIL, 2012 FOR THE AY 2004-05. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN HOLDING THAT THE ASSESSEE HAS DISCLOSED THE RELEVANT MATERIAL DURING THE ORIGINAL ASSESSMENT PROCEEDINGS UND ER SECTION 143(3). 2. THE LD.CIT(A) ERRED IN LAW STATING THAT THE CLAIM S OF DESIGNS AND DRAWING EXPENSES WERE EXAMINED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS ON 15/06/2006 WHEREAS THE FACTS EVIDENT FROM THE ORDER SHEET IS THAT NO DISCU SSION TOOK PLACE ON 15/06/2006 AND THE PROCEEDINGS WERE SIM PLY ADJOURNED. THE ORDER OF THE LD.CIT(A) SUFFERS FROM THE VICE OF PERVERSITY. ITA-3712/DEL/2012 2 3. THE LD.CIT(A) ERRED IN RELYING ON THE PROJECT AGREEMENTS FILED ON 15/06/2006, WHICH DO NOT EVEN CONTAIN THE PARTICULARS OF RELEVANT EXPENSES OF DRAWIN GS AND DESIGNS. THE CONSIDERATION OF IRRELEVANT MATERIAL , THEREFORE, VITIATES THE ORDER OF THE LD.CIT(A). 4. THE LD.CIT(A) ERRED IN HOLDING THAT THE ORDER PA SSED BY AO, DISPOSING OFF ASSESSEES OBJECTION, IS A NON- SPEAKING ORDER. ON THE CONTRARY, THE ORDER PASSED BY THE AO IS A DETAILED ORDER, WHERE ALL THE ISSUES HAVE BEEN CONSIDERED. 5. THE APPELLANT CRAVES TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR D URING THE HEARING OF THIS APPEAL. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT YEAR UND ER CONSIDERATION IS 2004-05. THE ASSESSEE HAS FILED THE RETU RN OF INCOME ON 29 TH OCTOBER, 2004. ORIGINAL ASSESSMENT WAS COMPLETED UNDE R SECTION 143(3) ON 13 TH DECEMBER, 2006. NOTICE UNDER SECTION 148 WAS ISSUED ON 25 TH MARCH, 2011 AND THEREAFTER, ASSESSMENT UNDER SECTION 147/143(3) WAS COMPLETED ON 30 TH DECEMBER, 2011. THE LEARNED CIT(A), VIDE ORDER DATED 30 TH APRIL, 2012, QUASHED THE REOPENING OF ASSESSMENT UNDER SECTION 147/148. THOUGH IN THE GROUND S OF APPEAL THE REVENUE HAS TAKEN AS MANY AS FIVE GROUNDS, HOWEVER, THEY ARE ALL AGAINST THE QUASHING OF REOPENING OF ASSESSMENT. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL PLACED BEFORE US. PROVISO TO SECTION 147 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 THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDE R THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE E ND 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 PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN ITA-3712/DEL/2012 3 RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SEC TION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. 5. THUS, WHEN THE ORIGINAL ASSESSMENT IS COMPLETED UNDER SECTION 143(3), REOPENING CANNOT BE MADE BEYOND FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THERE IS FAILURE ON TH E PART OF THE ASSESSEE TO FURNISH THE RETURN OF INCOME OR TO DISCLOSE TH E MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THIS CASE, ORIGINAL ASSESSM ENT WAS COMPLETED UNDER SECTION 143(3) AND REOPENING WAS MAD E BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE RE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE RETUR N OF INCOME. THEREFORE, ONLY POINT WHICH NEEDS TO BE EXAMINED IS W HETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE M ATERIAL FACTS FOR THE PURPOSE OF ASSESSMENT. IN THIS REGARD, IT WOULD BE RELEVANT TO REFER TO REASONS RECORDED FOR REOPENING OF ASSESSMENT WHI CH READ AS UNDER:- DURING THE YEAR, THE ASSESSEE HAS PURCHASED DESIGNS & DRAWINGS OF ` 1,71,43,046/- WHICH HAS BEEN CLAIMED AS REVENUE EXPENDITURE. THE EXPENDITURE INCURRED FOR PURCHASE OF DESIGNS & DRAWINGS WERE IN THE NATURE OF GIVING ENDURING BENEFIT TO THE ASSESSEE AND THEREFORE CAPITAL IN NATURE WHICH SHOULD HAVE BEEN DISALLOWED A ND ADDED TO THE INCOME OF THE ASSESSEE. 6. FROM THE ABOVE REASONS RECORDED, IT IS EVIDENT THAT IN THE ORIGINAL ASSESSMENT, THE ASSESSEE CLAIMED CERTAIN EXPENSES WH ICH ARE IN THE NATURE OF PURCHASE OF DESIGNS AND DRAWINGS TO BE REVENUE EXPENDITURE AND THE SAME WERE DISALLOWED AS SUCH. NOW, IN THE OPINION OF THE ASSESSING OFFICER, IT IS IN THE NATURE O F CAPITAL EXPENDITURE. THUS, AS PER THE ASSESSING OFFICER HIMSELF, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATER IAL FACT ITA-3712/DEL/2012 4 NECESSARY FOR ASSESSMENT. IT IS A CLEAR CASE OF CHANGE OF OPINION WHEREIN THE SUCCEEDING ASSESSING OFFICER IS OF THE OPINI ON THAT THE EXPENDITURE WHICH WAS ALLOWED IN THE ORIGINAL PROCEE DINGS AS REVENUE EXPENDITURE IS IN THE NATURE OF CAPITAL EXPENDITURE. HOWEVER, AS PER THE PROVISO TO SECTION 147, UNLESS THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT, THE ASSESSMENT CANNOT BE REOPENED. ON THESE FACTS, THE DECISION OF HON'BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF ATMA RAM PROPERTIES PVT.LTD. VS. DCIT 343 ITR 141 (DELHI), WHEREIN THEIR LORDSHIPS HELD AS UNDER, W OULD BE SQUARELY APPLICABLE:- IN ORDER TO INITIATE PROCEEDINGS FOR REASSESSMENT AFTER FOUR YEARS, THERE SHOULD HAVE BEEN A FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. IF THE ASSESSING OFFICER HAD FAILED TO APPLY LEGAL PROVISIONS/SECTION OF THE INCOME-TAX ACT, 1961, 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 MATERIAL FACTS. THE ASSESSEE IS NOT REQUIRED TO DISCLOSE, STATE OR EXPLAIN THE LAW. 7. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE ORD ER OF LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . 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-3712/DEL/2012 5 COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TA ASSISTANT COMMISSIONER OF INCOME TA ASSISTANT COMMISSIONER OF INCOME TA ASSISTANT COMMISSIONER OF INCOME TAX, X,X, X, CIRCLE CIRCLE CIRCLE CIRCLE- -- -9(1), ROOM NO.163, C.R. BUILDING, 9(1), ROOM NO.163, C.R. BUILDING, 9(1), ROOM NO.163, C.R. BUILDING, 9(1), ROOM NO.163, C.R. BUILDING, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 2. RESPONDENT : M/S SMCC CONSTRUCTION INDIA LTD., M/S SMCC CONSTRUCTION INDIA LTD., M/S SMCC CONSTRUCTION INDIA LTD., M/S SMCC CONSTRUCTION INDIA LTD., 23, LOCAL SHOPPING CENTRE, MADANGIR, 23, LOCAL SHOPPING CENTRE, MADANGIR, 23, LOCAL SHOPPING CENTRE, MADANGIR, 23, LOCAL SHOPPING CENTRE, MADANGIR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 062. 110 062. 110 062. 110 062. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR