M/s Khera Motors Finance Pvt. Ltd., Kolkata V. CIT, KOLKATA-1, Kolkata

ITA 422/KOL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1512 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 142(1); 133(6); 147; 68; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM ] I.T.A NO.422/KOL/2015 ASSESSMENT YEAR : 2008-0 9 M/S. KHERA MOTORS FINANCE PVT. LTD. -VS- C.I.T,, KOL-1, KOLKATA KOLKATA [PAN : AAAFK 8628 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : NONE FOR THE RESPONDENT : SHRI G.MALLIKARJUNA, CI T(DR) DATE OF HEARING : 26.07.2017. DATE OF PRONOUNCEMENT : 31.07.2017. ORDER PER N.V.VASUDEVAN, JM THROUGH THIS APPEAL, THE ASSESSEE ASSAILS THE CORRE CTNESS OF ORDER DT.18.02.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX (CIT) U/S 263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE CAPTIONED ASSESSMENT YEAR. 2. NOTICE OF HEARING FOR 26.07.2017 WAS SENT BY REGISTERED POST TO THE ASSESSEE AT THE ADDRESS GIVEN BY IT IN FORM NO.36 FOR SERVICE OF NO TICES. THE SAID NOTICE HAS NOT BEEN RETURNED UNSERVED. TODAY, WHEN THIS APPEAL WAS CAL LED UP FOR HEARING, NEITHER THERE WAS ANY ADJOURNMENT APPLICATION NOR ANY BODY PUT IN APP EARANCE AT ALL WE ALSO FIND THAT THE ISSUES RAISED IN THIS APPEAL IS SQUARELY COVERED AG AINST THE ASSESSEE BY SEVERAL ORDERS PASSED BY THIS BENCH INCLUDING SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (INFRA) . UNDER THESE CIRCUMSTANCES, WE ARE TAKING UP THIS APPEAL F OR DISPOSAL ON MERITS EX PARTE QUA THE ASSESSEE. 2 ITA NO.422/KOL/2015 M/S. KHERA MOTORS FINANCE PVT. LTD. A.YR.2008-09 2 3. BRIEFLY STATED THE FACTS OF THE CASE OF THE A SSESSE IS SIMILAR TO THE GROUP OF CASES ALREADY DECIDED BY THE TRIBUNAL REFERRED TO IN THE EARLIER PARAGRAPH. THE MODUS OPERANDI OF THE ASSESSEE WAS THAT THE ASSESSEE WITH MEAGRE I NCOME WOULD FILE RETURNS OF INCOME SHOWING RECEIPT OF HUGE SHARE CAPITAL AND HUGE SHAR E PREMIUM WITHOUT ANY FINANCIAL JUSTIFICATION. INTIMATION WAS ISSUED U/S 143(1); T HEREAFTER NOTICES U/S 148 WAS ISSUED EITHER AT THE INSTANCE OF SUCH COMPANIES DIVULGING A PALTRY ESCAPEMENT OF INCOME OR OTHERWISE ; ASSESSMENT ORDER WAS PASSED U/S 143(3) READ WITH SECTION 147 AFTER MAKING NOMINAL ADDITIONS AND THE AOS, DURING THE COURSE OF SUCH ASSESSMENT PROCEEDINGS, WOULD MAKE SOME FORMAL ENQUIRIES ABOUT SHARES ISSUE D BY SUCH COMPANIES AT HUGE PREMIUM BY ISSUING NOTICES U/S 133(6) TO SOME OF TH E SHAREHOLDERS AND GETTING SATISFIED WITHOUT ANY FURTHER INVESTIGATION. THE JURISDICTION AL CITS HAVE PASSED ORDERS U/S 263 IN ALL SUCH CASES, WHICH HAVE BEEN ASSAILED BEFORE THE TRIBUNAL. 4. WE HAVE PERUSED THE RELEVANT MATERIAL ON RECOR D. IT IS RELEVANT TO MENTION THAT WE HAVE DISPOSED OF MORE THAN 500 CASES INVOLVING SAME ISSUE THROUGH CERTAIN ORDERS WITH THE MAIN ORDER HAVING BEEN PASSED IN A GROUP OF CAS ES LED BY SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (ITA NO.1104/KOL/2014) DATED 30.7.2015 FOR THE A.Y. 2009-10. THE GROUNDS OF CHALLENGE TO THE ORDER U/S 263 OF THE AC T ARE ALSO IDENTICAL TO SOME OF THE GROUNDS RAISED IN THE GROUP OF APPEALS REFERRED TO IN PARA-2 OF THIS ORDER. THE GROUNDS OF APPEAL OF THE ASSESSEE READ AS FOLLOWS :- 1)FOR HAT THE ORDER OF THE LD. CIT IS ARBITRARY, I LLEGAL AND BAD IN LAW. 2)FOR THAT THE SHOW CAUSE NOTICE ISSUED BY LD. CIT U/S 263 IS BARRED BY LIMITATION. 3) FOR THAT THE ORDER OF LD. CIT HAVING BEEN SERVE D ON THE ASSESSEE THROUGH AO ON 20.02.2015 IS BARED BY LIMITATION. 4) FOR THAT THE LD C.I.T ERRED IN INVOKING THE PROV ISIONS OF SECTION 263 ON THE GROUND THAT HE ORDER PASSED U/S 147/143(3) WAS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WHEN THE ASSESSMENT U/S 148 WAS REOPENED ON THE SPECIFIC ISSUE AND THE ASSESSMENT COMPLETED U/S 147 WAS NOT ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3 ITA NO.422/KOL/2015 M/S. KHERA MOTORS FINANCE PVT. LTD. A.YR.2008-09 3 5) FOR THAT THE LD. C.I.T ERRED IN APPLYING THE PRO VISIONS OF SEC. 263 WHEN THE ORDER PASSED BY THE AO WAS NOT ERRONEOUS AND THEREF ORE NOT PREJUDICIAL TO THE INTEREST OF REVENUE, THE ASSESSMENT ORDER HAVING BE EN PASSED AFTER MAKING PROPER ENQUIRY IN ACCORDANCE WITH LAW. 6) FOR THAT THE LD. C.I.T ERRED IN APPLYING THE PRO VISIONS OF SEC. 263 WHEN THERE WAS NOTHING ON RECORD THAT NO ENQUIRY WAS MADE WITH REGARD TO THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS WHEN ALL THE S HAREHOLDERS WERE ASSESSED TO TAX, THEIR PAN WERE SUBMITTED AND THERE WAS NOTHING ON RECORD TO DOUBT THE IDENTITY AND CREDITWORTHINESS OF THE SAID APPLICANT S. 7) FOR THAT THE DIRECTION OF THE LD. CIT TO THE AO TO VERIFY VARIOUS LAYERS IS BAD IN LAW SINCE THE AO HAS NO POWER TO SEEK DETAILS OF SO URCE OF SOURCE SINCE THE ASSESSEE HAS NOTHING TO DO WITH THE SOURCE OF SOURC E. 8) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT IS MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYE D FOR. 9) FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 5. WE FIND THAT FACTS AND CIRCUMSTANCES OF THE C ASES UNDER CONSIDERATION ARE MUTATIS MUTANDIS SIMILAR TO THOSE DECIDED EARLIER. IN OUR AFORESAID ORDER IN SUBHLAKSHMI VANIJYA PVT. LTD., VS. CIT (ITA NO. 1104/KOL/2014 A.Y. 2009-10), WE HAVE DRAWN THE FOLLOWING CONCLUSIONS: - A. CONTENTION OF THE ASSESSEE THAT SINCE THE AO OF TH E ASSESSEE-COMPANY WAS NOT EMPOWERED TO EXAMINE OR MAKE ANY ADDITION ON ACCOUN T OF RECEIPT OF SHARE CAPITAL WITH OR WITHOUT PREMIUM BEFORE AMENDMENT TO SECTION 68 BY THE FINANCE ACT, 2012 W.E.F. A.Y. 2013-14 AND HENCE THE CIT BY MEANS OF IMPUGNED ORDER U/S 263 COULD NOT HAVE DIRECTED THE AO TO DO SO, IS UNSUSTAINABLE. B. FAILURE OF THE AO TO GIVE A LOGICAL CONCLUSION TO THE ENQUIRY CONDUCTED BY HIM GIVES POWER TO THE CIT TO REVISE SUCH ASSESSMEN T ORDER, BY HOLDING THAT :- I) THE ENQUIRY CONDUCTED BY THE AO IN SUCH CASES CA NT BE CONSTRUED AS A PROPER ENQUIRY; II) CIT U/S 263 CAN SET ASIDE THE ASSESSMENT ORDER AND DIRECT THE AO TO CONDUCT A THOROUGH ENQUIRY, NOTWITHSTANDING THE JUR ISDICTION OF THE AO IN MAKING ENQUIRIES ON THE ISSUES OR MATTERS AS HE CON SIDERS FIT IN TERMS OF SECTION 142(1) AND 143(2) OF THE ACT, WHICH IS RELE VANT ONLY UP TO THE COMPLETION OF ASSESSMENT ; 4 ITA NO.422/KOL/2015 M/S. KHERA MOTORS FINANCE PVT. LTD. A.YR.2008-09 4 III) INADEQUATE INQUIRY CONDUCTED BY THE AO IN THE GIVEN CIRCUMSTANCES IS AS GOOD AS NO ENQUIRY AND AS SUCH, THE CIT WAS EMP OWERED TO REVISE THE ASSESSMENT ORDER ; IV) THE ORDER OF THE CIT IS NOT BASED ON IRRELEVANT CONSIDERATIONS AND FURTHER IN THE PRESENT CIRCUMSTANCES, HE WAS NOT OB LIGED TO POSITIVELY INDICATE THE DEFICIENCIES IN THE ASSESSMENT ORDER O N MERITS ON THE QUESTION OF ISSUE OF SHARE CAPITAL AT A HUGE PREMIUM ; AND V) THE AO IN THE GIVEN CIRCUMSTANCES CANT BE SAID TO HAVE TAKEN A POSSIBLE VIEW AS THE REVISION IS SOUGHT TO BE DONE ON THE PREMISE THAT THE AO DID NOT MAKE ENQUIRY THEREBY RENDERING THE ASSES SMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON THAT SCORE ITSELF. C. IN THE GIVEN FACTS AND CIRCUMSTANCES OF ALL SUCH CASES, THE NOTICES U/S 263 WERE PROPERLY SERVED THROUGH AFFIXTURE OR OTHERWIS E. FURTHER THE LAW DOES NOT REQUIRE THE SERVICE OF NOTICE U/S 263 STRICTLY AS P ER THE TERMS OF SECTION 282 OF THE ACT. THE ONLY REQUIREMENT ENSHRINED IN THE PROVISIO N IS TO GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE, WHICH HAS BEEN COMPLIED WI TH IN ALL SUCH CASES. D. LIMITATION PERIOD FOR PASSING ORDER IS TO BE COUNT ED FROM THE DATE OF PASSING THE ORDER U/S 147 READ WITH SEC. 143(3) AND NOT THE DATE OF INTIMATION ISSUED U/S 143(1) OF THE ACT, WHICH IS NOT AN ORDER FOR THE PU RPOSES OF SECTION 263. IN ALL THE CASES, THE ORDERS HAVE BEEN PASSED WITHIN THE T IME LIMIT. E. THE CIT HAVING JURISDICTION OVER THE AO WHO PASSED ORDER U/S 147 READ WITH SECTION 143(3), HAS THE TERRITORIAL JURISDICTION TO PASS THE ORDER U/S 263 ANDNOT OTHER CIT. F. ADDITION IN THE HANDS OF A COMPANY CAN BE MADE U/S 68 IN ITS FIRST YEAR OF INCORPORATION. G. AFTER AMALGAMATION, NO ORDER CAN BE PASSED U/S 263 IN THE NAME OF THE AMALGAMATING COMPANY. BUT, WHERE THE INTENTION OF T HE ASSESSEE IS TO DEFRAUD THE REVENUE BY EITHER FILING RETURNS, AFTER AMALGAMATIO N, IN THE OLD NAME OR OTHERWISE, THEN THE ORDER PASSED IN THE OLD NAME IS VALID. H. ORDER PASSED U/S 263 ON A NON-WORKING DAY DOES NOT BECOME INVALID, WHEN THE PROCEEDINGS INVOLVING THE PARTICIPATION OF THE ASSESSEE WERE COMPLETED ON AN EARLIER WORKING DAY. I. ORDER U/S 263 CANNOT BE DECLARED AS A NULLITY FOR THE NOTICE HAVING NOT BEEN SIGNED BY THE CIT, WHEN OPPORTUNITY OF HEARING WAS OTHERWISE GIVEN BY THE CIT. J. REFUSAL BY THE REVENUE TO ACCEPT THE WRITTEN SUBMIS SIONS OF THE ASSESSEE SENT AFTER THE CONCLUSION OF HEARING CANNOT RENDER THE O RDER VOID AB INITIO . AT ANY RATE, IT IS AN IRREGULARITY. K. SEARCH PROCEEDINGS DO NOT DEBAR THE CIT FROM REVI SING ORDER U/S PASSED U/S 147 OF THE ACT. 5 ITA NO.422/KOL/2015 M/S. KHERA MOTORS FINANCE PVT. LTD. A.YR.2008-09 5 6. IT IS NOTICED THAT ALL OR SOME OF THE ABOVE CO NCLUSIONS ARE APPLICABLE TO THIS APPEAL ALSO . IN VIEW OF THE FOREGOING DISCUSSION AND FOLL OWING THE VIEW TAKEN IN SUBHLAKSHMI VANIJYA PVT. LTD. (SUPRA) , WE UPHOLD THE IMPUGNED ORDER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 31.07.2017. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31.07.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. KHERA MOTORS FINANCE PVT. LTD., RAJESH MOHAN & ASSOCIATES, CHARTERED ACCOUNTANTS, UNIT NO.18, 5 TH FLOOR, 34, GANESH CHANDRA AVENUE, KOLKATA-700013. 2. C.I.T., KOLKATA-1, KOLKATA. 3..CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR. PRI VATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT KOLKATA BENCHES 6 ITA NO.422/KOL/2015 M/S. KHERA MOTORS FINANCE PVT. LTD. A.YR.2008-09 6