DCIT 1(3), MUMBAI V. STANDARD CHARTERED FINANCE LTD, MUMBAI

ITA 4360/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2154 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D CHANDA
• Assessee Lawyers: DINESH VYAS
• Keywords: Invalid notice; Transfer pricing
• Section: 143(3); 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4360/MUM/2014 (ASSESSMENT YEAR 2008-09) THE DCIT 1( 3), R.NO.564, 5 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 ...... APP ELLANT VS. M/S. STANDARD CHARTERED FINANCE LTD. STANDARD CHARTERED TOWER, 3 RD FLOOR, 201-B/1, WESTERN EXPRESS HIGHWAY, GOREGAON (E), MUMBAI 400 063 PAN: AAACE 4113F .... RESPONDENT APPELLANT BY : SHRI D.CHANDA RESPONDENT BY : SHRI DINESH VYAS DATE OF HEARING : 09/09/2016 DATE OF PRONOUNCEMENT : 09/11/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAIN ING TO ASSESSMENT YEAR 2003-04 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-11, MUMBAI DATED 31/03/2014, WHICH IN TURN, ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 24/01/2012. 2 ITA NO.4360/MUM/2014 (ASSESSMENT YEAR 2008-09) 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS:- 1. WHETHER ON THE, FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ANNULLING THE ORDER OF ASSESSMENT P ASSED U/S. 143(3) R.W.S. 144C(1) OF THE ACT ON THE GROUND THAT THE ASSESSEE ITSELF AFTE R PUTTING IN THE OBJECTION VIDE HIS LETTER FILLED BEFORE A.O. ON 13/12/2011, DID NOT OB JECT TO THE DRAFT ORDER AND EVEN CONSENTED TO FINAL ORDER OF ASSESSMENT U/S. 143(3) VIDE HIS LETTER FILED BEFORE A.O. ON 16/01/2012, THEREBY NULLIFYING THE OBJECTION CONTAI NED IN LETTER DATED 13/12/2011 AND THUS MAKING SECTION 292BB APPLICABLE ON THE FAC TS OF THE CASE.' 3. IN THIS APPEAL, THE SHORT GRIEVANCE OF THE ASSES SEE IS THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER DATED 24/01/2012 WAS NON-EST IN THE EYES OF LAW. 4. IN BRIEF, THE FACTS RELEVANT TO APPRECIATE THE C ONTROVERSY IN THIS APPEAL CAN BE SUMMARIZED AS FOLLOWS. THE RESPONDENT ASSES SEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS INTER-ALIA ENGAGED IN THE BUSINESS OF PROVIDING MARKETING SERV ICES IN RESPECT OF FINANCIAL PRODUCTS OFFERED BY THE STANDARD CHARTERED BANK IN INDIA AND ALSO PROVIDING BACK OFFICE TRANSACTION PROCESSING SERVICES FOR THE INDIAN BRANCHES OF STANDARD CHARTED BANK. FOR THE ASSESSMENT YEAR 2008-09, ASS ESSEE COMPANY FILED A RETURN OF INCOME ON 30/09/2008 DECLARING A TOTAL IN COME OF RS.26,10,08,955/-. IN PARA-2 OF THE ASSESSMENT ORDER, IT IS NOTED BY T HE ASSESSING OFFICER THAT THE CASE WAS SELECTED FOR SCRUTINY AND A NOTICE UNDER S ECTION 143(2) OF THE ACT DATED 23/08/2010 WAS ISSUED AND SERVED ON THE ASSES SEE. THE ASSESSING OFFICER COMPLETED THE ENSUING ASSESSMENT ON 24/1/20 12 UNDER SECTION 143(3) R.W.S. 144C(1) OF THE ACT DETERMINING THE TOTAL IN COME AT RS.59,21,42,960/- AFTER MAKING AN ADDITION OF RS.33,11,34,000/- ON A CCOUNT OF DETERMINATION OF ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTI ONS ENTERED WITH THE ASSOCIATED ENTERPRISES. THE AFORESAID ASSESSMENT W AS CARRIED IN APPEAL BEFORE THE CIT(A) RAISING VARIOUS GROUNDS ON FACTS AND IN LAW. A PRELIMINARY POINT WAS 3 ITA NO.4360/MUM/2014 (ASSESSMENT YEAR 2008-09) RAISED TO THE EFFECT THAT THE ASSESSMENT ORDER DAT ED 24/1/2012 WAS INVALID AS THE NOTICE ISSUED UNDER SECTION 143(2) ON 23/08/201 0 WAS BEYOND THE PERIOD STIPULATED IN LAW. ON THIS PRELIMINARY ASPECT, CIT (A) HAS FOUND IT FACTUALLY CORRECT THAT THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BEYOND THE PERIOD PRESCRIBED AND, THEREFORE, THE CONSEQUENT AS SESSMENT ORDER DATED 24/01/2012 WAS BAD IN LAW. 5. BEFORE US, THE LD.CIT-DR APPEARING FOR THE REVEN UE HAS NOT CONTROVERTED ANY OF THE FACTUAL MATRIX BROUGHT OUT BY THE CIT(A), BUT SUBMITTED THAT HAVING REGARD TO SECTION 292BB OF TH E ACT, THE OBJECTIONS OF THE ASSESSEE THAT NOTICE UNDER SECTION 143(2) OF TH E ACT WAS NOT SERVED IN TIME COULD NOT HAVE BEEN ENTERTAINED AS ASSESSEE DID NOT OBJECT TO THE PASSING OF THE DRAFT ASSESSMENT ORDER. ACCORDING TO THE LD. C IT-DR, ASSESSEE HAD APPEARED IN THE ASSESSMENT PROCEEDINGS AND, THEREFO RE, IT WAS PRECLUDED FROM TAKING OBJECTION WITH REGARD TO THE VALIDITY OF SUC H PROCEEDINGS THEREAFTER. 6. ON THE OTHER HAND, LD. REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT ASSESSEE HAD APPEARED BEFORE THE TRANSFER PRICING O FFICER AS WELL AS BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS , SO HOWEVER, VIDE LETTER DATED 12/12/2011, FILED BEFORE THE ASSESSING OFFICE R ON 13/12/2011 ASSESSEE HAD CLEARLY BROUGHT OUT THAT THE NOTICE UNDER SECTI ON 143(2) OF THE ACT DATED 23/08/2010 WAS INVALID INASMUCH AS, IT WAS ISSUED A FTER THE STIPULATED PERIOD AND, THEREFORE, THE ASSESSMENT WAS BARRED BY LIMITA TION. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT TH E AFORESAID ASPECT HAS BEEN CLEARLY APPRECIATED BY THE CIT(A) AND THEREAFTER IT HAS BEEN HELD THAT HAVING REGARD TO THE PROVISO TO SECTION 292BB OF THE ACT, THE VALIDITY OF THE IMPUGNED 4 ITA NO.4360/MUM/2014 (ASSESSMENT YEAR 2008-09) ASSESSMENT COULD NOT BE SAVED AS NOTICE UNDER SE CTION 143(2) OF THE ACT WAS BELATEDLY. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. ON FACTS, THERE IS NO DISPUTE AND THE SAME LIE IN A NARROW COMPASS. IN T HIS CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30/09/2008 AND, THEREFORE, HAVING REGARD TO THE THEN EXISTING PROVISIONS OF SECTION 143(2) O F THE ACT, NO NOTICE UNDER SECTION 143(2) COULD HAVE BEEN ISSUED AFTER EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME WAS FILED BY THE ASSESSEE. THEREFORE, IN THE FACTS OF THE PRESENT CASE, THE PE RIOD AVAILABLE FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS ON OR B EFORE 30 TH SEPTEMBER, 2009, WHEREAS IT HAS ACTUALLY BEEN ISSUED ON 23/08/2010, AS RECORDED BY THE ASSESSING OFFICER IN PARA -2 OF THE ASSESSMENT ORDE R. IN THIS BACKGROUND OF THE MATTER, THERE CAN BE NO DISPUTE TO THE INFERENCE DR AWN BY THE CIT(A) THAT THE ENSUING ASSESSMENT, BEING PASSED ON AN INVALID NOTI CE, WAS NON-EST IN LAW. 7.1 HOWEVER, THE DEFENCE OF THE REVENUE IS BASED ON THE PROVISIONS OF SECTION 292BB OF THE ACT, WHICH PROVIDES THAT WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDINGS OR CO-OPERATED IN ANY ENQUIRY RE LATING TO ASSESSMENT OR RE- ASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE WHIC H WAS REQUIRED TO BE SERVED WAS INDEED SERVED AND ASSESSEE WOULD BE PREC LUDED FROM OBJECTING THEREAFTER THAT THE NOTICE WAS NOT SERVED OR WAS SE RVED UPON HIM IN AN IMPROPER MANNER OR NOT SERVED UPON HIM IN TIME. I N THE INSTANT CASE, IT IS SEEN THAT VIDE LETTER DATED 12/12/2011, ASSESSEE BR OUGHT TO THE NOTICE OF THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS ITSELF THAT THE NOTICE UNDER SECTION 143(2) OF THE ACT DATED 23/08/2010 WA S BEYOND THE PERIOD SPECIFIED IN LAW AND, THEREFORE, THE ASSESSMENT WAS TIME BARRED. THE PLEA OF 5 ITA NO.4360/MUM/2014 (ASSESSMENT YEAR 2008-09) THE REVENUE IS THAT INSPITE OF SAID ASSERTION MADE BY THE ASSESSEE, THE ASSESSEE CONTINUED TO APPEAR IN THE ASSESSMENT PROC EEDINGS AND, THEREFORE, THE PROVISIONS OF SECTION 292BB OF THE ACT COME I NTO OPERATION AND DISENTITLE THE ASSESSEE FROM RAISING THE OBJECTION OF INVALID NOTICE BEFORE THE CIT(A). 7.2 IN OUR CONSIDERED OPINION, THE STAND OF THE REV ENUE IS COMPLETELY MISCONCEIVED . OSTENSIBLY, ASSESSEE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THE INVALIDITY OF THE PROCEEDINGS AND MEREL Y BECAUSE IT CONTINUED TO APPEAR AND CO-OPERATED IN THE ONGOING ASSESSMENT PR OCEEDINGS WOULD NOT VALIDATE AN OTHERWISE UNAUTHORIZED ACTION OF THE A SSESSING AUTHORITY. MOREOVER, PROVISO TO SECTION 292BB OF THE ACT PROVI DES THAT THE ESTOPPELS AGAINST THE ASSESSEE PRESCRIBED IN THE MAIN SECTION WOULD NOT OPERATE IF THE ASSESSEE HAD RAISED THE OBJECTION BEFORE THE COMP LETION OF THE ASSESSMENT OR REASSESSMENT. IN THE PRESENT CASE, IT IS QUITE CLEAR THAT BEFORE COMPLETION OF ASSESSMENT, ASSESSEE HAD DULY RAISED THE POINT OF INVALIDITY OF THE NOTICE ISSUED UNDER SECTION 143(2) OF THE ACT AND THEREFO RE, IN OUR VIEW THE PLEA OF THE REVENUE IS COMPLETELY UNFOUNDED. AS A CONSEQUE NCE, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN HOLDING THAT THE ASSESSM ENT ORDER WAS NON-EST IN THE EYES OF LAW AS IT WAS BASED ON A NOTICE ISSUED UNDE R SECTION 143(2) OF , WHICH WAS TIME BARRED. ACCORDINGLY, WE HEREBY AFFIRM THE ORDER OF THE CIT(A) AND REVENUE FAILS. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 9/11/2016 SD/- SD/- ( RAVISH SOOD) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 09/11/2016 VM , SR. PS 6 ITA NO.4360/MUM/2014 (ASSESSMENT YEAR 2008-09) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI