DCIT, Hyderabad V. M/s Prefab Gratings Limited, Hyderabad

ITA 423/HYD/2010

• Counselvise Citation: 42322514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-02-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 19-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Audit objection; Reassessment proceedings
• Section: 147; 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMB ER ITA NO.423/HYD/2010: ASST. YEAR: 2001-02 DCIT, CIR-16(3), HYDERABAD. VS M/S. PREFAB GRATINGS LIMITED, BEGUMPET, HYDERABAD. (PAN: AABCP 4240 P) (APPELLANT) (RESPONDENT) C.O. NO.18/HYD/2010 : ASST. YEAR 2001-02 (IN ITA NO.423/HYD/2010) M/S. PREFAB GRATINGS LIMITED, DCI T, CIR-16(3), BEGUMPET, HYDERABAD. HYDE RABAD. (PAN: AABCP 4240 P) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SMT. NIVEDITA BISWAS ASSESSEE BY : SHRI V. RAGHAVENDRA RAO O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJECT ION FILED BY THE ASSESSEE ARE DIRECTED AGAINST ORDER OF CIT ( A)-V, HYDERABAD DATED 7-1-2010 AND THEY PERTAINS TO THE ASSESSMENT YEAR 2001-02. ITA NO. 423/HYD/20 10 & CO 18/HYD/2010 PREFAB GRATINGS LIMITED, HYD. ================ ====== 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MECHANICAL WORK CONTRACTS AND FILED ITS R ETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 24-10-2001 ADMITTING TOTAL INCOME OF RS.40,31,130/-. THE ASSESSING OFFICER COMP LETED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF TH E ACT BY DETERMINING THE TOTAL INCOME AT RS.91,22,752/-. AGGRI EVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEA L BEFORE THE CIT (A). ON APPEAL, THE CIT (A) HELD THAT THE ASSESSI NG OFFICER HAS NO WHERE POINTED OUT THAT THERE IS ANY OMISSION OR FAILUR E ON THE PART OF THE ASSESSEE TO EITHER FILE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS. IT WAS ALSO HELD THAT ONCE THE ENTIRE INFORMATION IS PRODUCED BEFORE THE ASSESSING OFFICER, THEN ON THE BASIS O F THE SAME INFORMATION REASSESSMENT PROCEEDINGS COULD NOT BE STARTED. THE CIT (A) FOLLOWED THE CASE OF HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF DURICHAND SINGHANIAN VS. ACIT (269 ITR 192) WHE REIN IT WAS HELD THAT THE ASSESSING OFFICER MUST PROVIDE A CLEAR FINDI NG THAT THE INCOME HAS ESCAPED DUE TO THE FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR A SSESSMENT PROCEEDINGS. THE CIT [A], AFTER ELABORATE DISCUSSIONS IN HIS ORDER, CONCLUDED THAT THE REOPENED PROCEEDINGS ARE AB INITIO VOID AND THE REASSESSMENT IS LEGALLY INVALID. ACCORDINGLY, HE ALLOWED T HE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE CIT [A], THE R EVENUE IS IN APPEAL BEFORE US. THE ASSESSEE ALSO FILED CROSS OBJECTIONS I N SUPPORT OF THE ORDER OF THE CIT [A]. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT (A) IS NOT JUSTIFIED IN FACTS AND IN LAW IN IGNORIN G THE MATERIAL FACT THAT ONE OF THE MAIN REASONS FOR INITIATION OF PROCEED INGS UNDER SECTION ITA NO. 423/HYD/20 10 & CO 18/HYD/2010 PREFAB GRATINGS LIMITED, HYD. ================ ====== 3 147 OF THE ACT, IN THE CASE UNDER CONSIDERATION, WAS THE NON DISCLOSURE OF INTEREST BY THE ASSESSEE ON THE FIXED DEPOSIT OF RS.6,0 0,000/- WITH STATE BANK OF INDIA, BALANAGAR BRANCH. IT IS FURTHER SUBMITTED THAT THE FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN IGNORIN G THAT AS AGAINST THE ACTUAL GROSS RECEIPTS OF RS.5.03 CRORES, THE ASSESSEE HAD DISCLO SED GROSS RECEIPTS IN THE PROFIT AND LOSS ACCOUNT ONLY, RS.4.54 CROR ES WITHOUT FURNISHING ANY RECONCILIATION STATEMENT AND WITHOUT GIV ING ANY REASONS FOR SUCH VARIATION IN THE AUDIT REPORT AND THIS FAILU RE IS TANTAMOUNT TO FAILURE TO DISCLOSE TRULY AND FULLY THE MATERIAL FACT S WITHIN THE MEANING OF PROVISO TO SECTION 147 OF THE ACT AND THEREFORE THE INI TIATION OF PROCEEDINGS UNDER SECTION 147 WAS LEGALLY VALID AND JUSTI FIED IN THE GIVEN SET OF FACTS AND THE CIRCUMSTANCES. 4. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE WHILE RELYING ON THE ORDER OF THE CIT (A) SUBMITTED THAT THE REASONS RECORDED MUST SHOW THAT THE ESCAPEMENT RESULTED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L THE MATERIAL FACTS. IT IS FURTHER SUBMITTED THAT THE REASSESSMENT PROCEE DINGS VIRTUALLY FOR INCLUDING THE SAME INCOME FOR WHICH RECTIF ICATION PROCEEDINGS WERE INITIATED AND DROPPED IS NOT VALID. REOPENING IS NOT JUSTIFIED WHERE ASSESSMENT WAS ORIGINALLY COMPUTED UNDER SE CTION 143(3) ONLY BECAUSE ASSESSING OFFICER DID NOT APPLY HIS MI ND TO SPECIFIC ITEMS OF INCOME. HE RELIED ON CATENA OF DECISIONS IN SUPPO RT OF HIS ARGUMENTS. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVAL PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND TH AT IT IS THE CASE, WHERE THE ASSESSMENT HAD BEEN COMPLETED UNDER SECTION 143 (3) OF THE ITA NO. 423/HYD/20 10 & CO 18/HYD/2010 PREFAB GRATINGS LIMITED, HYD. ================ ====== 4 ACT AND PROCEEDINGS UNDER SECTION 147 WERE INITIATED AF TER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. F OR THE REASONS RECORDED, THERE IS NO WHISPER OF AN ALLEGATION WITH RE GARD TO THE ESCAPEMENT OF INCOME WHICH HAD OCCURRED BY REASON OF FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. WE ALSO NOTICED FROM THE ORDER OF THE CIT (A) THAT ONLY AFTER THE AUDIT OBJECTION, A NOTI CE UNDER SECTION 148 WAS ISSUED. WE FIND FROM THE ORDER OF THE CIT (A) THAT THAT THE ASSESSING OFFICER HAS NO WHERE POINTED OUT THAT THERE IS A NY OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO EITHER FILE A RE TURN OR TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS. IN OUR CONSID ERED VIEW, ONCE THE ENTIRE INFORMATION IS PRODUCED BEFORE THE ASSESSING OFFI CER THEN ON THE BASIS OF THE SAME INFORMATION, REASSESSMENT PROCEEDINGS CAN N OT BE STARTED. THE CIT (A) RIGHTLY FOLLOWED THE CASE OF HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DURICHAND SINGHANIAN V S. ACIT [SUPRA] WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER MUST PROVIDE A CLEAR FINDING THAT THE INCOME HAS ESCAPED DUE TO THE FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT PROCEEDINGS. AFTER CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, WE FULLY AGREE WITH THE FINDING S OF THE CIT (A) ON THIS ISSUE AND NO INTERFERENCE IS CALLED FOR. HENCE , WE UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. IN VIEW OF THE ABOVE, THE CROSS OBJECTION, WHICH MERELY SUP PORTS THE ORDER AND THE FINDINGS OF THE FIRST APPELLATE AUTHORITY, IS ACCORDINGLY ALLOWED. ITA NO. 423/HYD/20 10 & CO 18/HYD/2010 PREFAB GRATINGS LIMITED, HYD. ================ ====== 5 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05-8-2011. SD/- SD/- (G.C. GUPTA) (AKBER BASHA) VICE PRESIDENT. ACCOUNTANT MEMBER. DT/-5-8-2011. COPY FORWARDED TO: 1. DCIT, CIR-16(3), AAYAKAR BHAVAN, HYDERABAD. 2. 3. 4 5. JMR* M/S. PREFAB GRATINGS LIMITED,6-3-1218/6/5, UMANAGAR, BEGUMPET, HYDERABAD. CIT (A)-V, HYDERABAD. CIT, AP, HYDERABAD. THE DR, ITAT, HYDERABAD. ITA NO. 423/HYD/20 10 & CO 18/HYD/2010 PREFAB GRATINGS LIMITED, HYD. ================ ====== 6