DCIT, New Delhi V. M/s. Sunair Hotels Ltd., New Delhi

ITA 4396/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7047 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 22-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT KHAN
• Keywords: Depreciation; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-3 NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-4396/DEL/2014 (ASSESSMENT YEAR-20 05-06) DCIT, CIRCLE-9(1), NEW DELHI (APPELLANT) VS SUNA I R HOTEL LTD., A-7, GEETANJALI ENCLAVE, NEW DELHI PAN-AAACS1463L (RESPONDENT) APPELLANT BY SH. FARHAT KHAN, SR.DR. RESPONDENT BY SH. VINOD BINDAL, CA ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 05.05.2014 OF CIT(A)-XII, NEW DE LHI PERTAINING TO 200506 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANN ULLING THE PROCEEDINGS INITIATED U/S 147/148 BY THE AO THEREBY ALLOWING CONSEQUENTIAL RELIEF. 2. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD O R FORGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE LD. SR. DR RELYING UPON THE ASSESSMENT ORDER DATED 21.03.2013 U/S 147/143(3) OF THE ACT SUBMITTED THAT THE RE-OPENING HAS BEEN NECESSITATED AS THE RATE OF DEPRECIATION QUOTED BY THE ASSESSEE HAS BEE N BLINDLY ACCEPTED BY THE AO BY HIS ORDER U/S 143(3). IT WAS HIS SUBMISSION THAT I N TERMS OF EXPLANATION TO SECTION 147, INCOME HAS ESCAPED ASSESSMENT AND SINCE THE WR ONG RATE OF DEPRECIATION WAS QUOTED BY THE ASSESSEE, IT IS A CASE WHERE FULL AND TRUE DISCLOSURE HAS NOT BEEN MADE BY THE ASSESSEE AND THE OBJECTION OF THE ASSES SEE AND THE RE-JOINDER TO THE DATE OF HEARING 22.06.2016 DATE OF PRONOUNCEMENT 21.09.2016 I.T.A .NO.-4396/DEL/2014 PAGE 2 OF 6 REJECTION OF THE OBJECTIONS, BOTH HAVE BEEN DEALT WITH BY THE AO BY WAY OF A SPEAKING ORDER. ACCORDINGLY ON ACCOUNT OF THE FAIL URE OF THE ASSESSEE BY QUOTING A WRONG RATE OF DEPRECIATION THE RE-OPENING ON FACTS IT WAS ARGUED WAS JUSTIFIED. HEAVY RELIANCE WAS PLACED UPON THE ASSESSMENT ORDER . 3. THE LD.AR SUBMITTED THAT THE ORDER DATED 29.12.2 016 IS AN ORDER PASSED U/S 143(3) BY THE AO AND IS A SPEAKING ORDER. THE AO TABULATING THE CALCULATION OF THE DEPRECIATION ON THE BASIS OF THE BLOCK ASSESSME NT ORDER U/S 158BC DATED 29.11.2002 HAS NOT ACCEPTED THE SAME AND RE-WORKED/ CALCULATED IN THE YEAR UNDER CONSIDERATION AS PER THE ANNEXURE TO THE ASSESSMENT ORDER PLACED AT PAPER BOOK PAGE 4. ACCORDINGLY IT WAS ARGUED THAT BY NO CIRCU MSTANCES, IT CAN BE SAID TO BE A CASE OF LACK OF INQUIRY OR A CASE WHERE FULL AND TR UE DISCLOSURE WAS NOT MADE. 3.1. INVITING ATTENTION TO PAPER BOOK PAGE 5 IT WAS HIS SUBMISSION THAT THE AO ALSO CONTEMPLATED RECTIFICATION PROCEEDINGS U/S 15 4 ON THE VERY SAME ISSUE AS AN UNDATED COPY OF THE SAID NOTICE IS PLACED AT PAPER BOOK PAGE 5. IT WAS SUBMITTED THAT WHATEVER THE REASONS MAY HAVE BEEN ULTIMATELY HE CHOSE TO DROP THE SAME AND THEREAFTER IN THESE CIRCUMSTANCES THE PROCEEDIN GS ARE RE-OPENED AFTER 4 YEARS ON THE ISSUES WHICH HAVE ALREADY BEEN CONSIDERED IN THE ORIGINAL ROUND, IT WAS SUBMITTED IS AN ABUSE OF THE PROVISIONS. REFERRING TO PARA 3 OF THE ORDER U/S 147/143(3) IT WAS HIS SUBMISSION THAT THE SOLE REAS ON FOR RE-OPENING IS WHAT HAS BEEN ALREADY CONSIDERED BY THE AO IN HIS ORDER U/S 143(3) AND WHAT HAS BEEN THE SUBJECT MATTER OF ISSUANCE OF NOTICE U/S 154. 3.2. APART FROM THAT IT WAS ALSO SUBMITTED THERE IS NOTHING IN THE ORDER WHICH SHOWS WHAT IS THE FAILURE ON THE PART OF THE ASSESS EE AS THE CALCULATION HAS BEEN I.T.A .NO.-4396/DEL/2014 PAGE 3 OF 6 DONE BY THE AO HIMSELF. THUS RELYING UPON THE PRIN CIPLE LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS USHA INTERNATIONAL LTD. (PAGE 57 & 59) ORDER DATED 21.09.2012, IT WAS SUBMITTED THAT THE DEPARTMENTAL APPEAL BE DI SMISSED. SPECIFIC ATTENTION WAS INVITED TO THE OBSERVATION M ADE IN PARA 13 OF THE SAID ORDER AT PAGE 62 AND PARAS 23 AND 24 AT PAGE 76 OF THE PA PER BOOK FILED. 4. RELIANCE WAS ALSO PLACED UPON NAWANY CORP. (I) LTD. VS ITO [2012] 21 TAXMANN.COM 217 (MUM.) [D.O.D.-20.04.2012] AT PAGES 1 TO 6 IN THE SUPPLEMENTARY CASE LAW PAPER BOOK FILED FOR THE PRO POSITION THAT WHEN RECTIFICATION PROCEEDINGS UNDER SECTION 154 HAVE BE EN INITIATED, ON THE VERY SAME REASONS NOTICE FOR REASSESSMENT CANNOT BE ISSUED. 5.1. ATTENTION WAS ALSO INVITED TO THE CASE OF SHIVALIK BIMETAL CONTROLS LTD. VS ITO 2013-TIOL-75-HC-DEL-IT (DOD-24.01.2013) COPY PLACED AT PAPER BOOK PAGE 13 TO 16. FOR THE PROPOSITION THAT THE REASONS REC ORDED MUST REFER TO WHAT IS THE FAILURE ON THE PART OF THE ASSESSEE. 5.2. INVITING ATTENTION TO THE ORDER OF THE ITAT AH MEDABAD BENCH IN THE CASE OF NATIONAL DAIRY DEVELOPMENT BOARD VS ACIT 2013-TIOL- 732-ITAT-AHM [D.O.D- 26.07.2013]. SPECIFIC ATTENTION WAS INVITED TO PARA 4 OF THE SA ME SO AS TO CANVASS THAT NO NEW MATERIAL WAS AVAILABLE BEFORE THE AO. R ELIANCE WAS ALSO PLACED UPON THE LATEST DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF HCL TECHNOLOGIES LTD. VS DCIT IN W.P.(C) 7948/2013 & CM 16840/2013 [DOD:16.07.2015]. I.T.A .NO.-4396/DEL/2014 PAGE 4 OF 6 5.3. IT WAS SUBMITTED THAT ALL THESE FACTS HAVE BEE N TAKEN INTO CONSIDERATION BY THE CIT(A) AND IN THE ABSENCE OF ANY REBUTTAL ON TH ESE FACTS, THE CLAIM OF THE REVENUE SHOULD BE DISMISSED. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE FACTS ARE CONCERNED THEY ARE NOT IN DISPUTE AS ADMITTEDLY THE ISSUE SOUGHT TO BE ADDRESSED BY THE AO U/S 154 WHIC H WAS GIVEN UP IS THE SAME ISSUE WHICH WAS SUBSEQUENTLY PICKED UP BY HIM FOR R E-OPENING. ADMITTEDLY THE ASSESSMENT ORIGINALLY WAS MADE U/S 143(3) AND THE I SSUE HAS BEEN ENQUIRED INTO AND EXAMINED BY THE AO HIMSELF AS THE CALCULATION O F THE DEPRECIATION ALLOWABLE WAS DONE BY THE AO HIMSELF. IN THESE FACTS, I FIND THE RELIANCE PLACED BY THE LD.AR ON PARAS 13, 23 AND 24 IN THE CASE OF CIT VS USHA INTERNATIONAL LTD. (CITED SUPRA) IS JUSTIFIED. FOR READY-REFERENCE, THESE SP ECIFIC PARAS ARE EXTRACTED HEREUNDER:- 13. IT IS THEREFORE CLEAR FROM THE AFORESAID POSIT ION THAT: (1) REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIAT ED IN CASE RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1) AND NO SCR UTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES THERE IS NO CHANGE OF OPI NION; (2) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND IS DEC IDED IN FAVOUR OF THE ASSESSEE. REASSESSMENT PROCEEDINGS IN THE SAID CASE S WILL BE HIT BY PRINCIPLE OF A CHANGE OF OPINION. (3) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E AN ISSUE OR QUERY IS RAISED AND ANSWERED BY THE ASSESSEE IN ORI GINAL ASSESSMENT PROCEEDINGS BUT THEREAFTER THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN THE ASSESSMENT ORDER. IN S UCH SITUATIONS IT SHOULD BE ACCEPTED THAT THE ISSUE WAS EXAMINED B UT THE ASSESSING OFFICER DID NOT FIND ANY GROUND OR REASON TO MAKE. .. 23. ON THE FIRST QUESTION REFERRED TO THIS FULL BE NCH AS TO THE MEANING OF THE TERM A CHANGE OF OPINIONA , I HAVE NOTHING TO A DD TO THE DRAFT PROPOSED. AS TO THE FIRST PART OF THE SECOND QUESTION MY ANSW ER WOULD BE THAT THE ASSESSMENT PROCEEDINGS CANNOT BE VALIDLY REOPENED U NDER SECTION 147 OF THE ACT EVEN WITHIN FOUR YEARS, IF AN ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT, IF THE ORIGINAL ASSESSMENT WAS MADE I.T.A .NO.-4396/DEL/2014 PAGE 5 OF 6 U/S 143(3). MY ANSWER TO THE SECOND PART OF THE SEC OND QUESTION IS THAT THE ISSUE IS CONCLUDED BY THE JUDGMENT OF THE FULL BENCH OF THIS COURT IN KELVINATOR (SUPRA). 24. MY ANSWER TO THE THIRD QUESTION IS THIS. SO LON G AS THE ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS FRAMED UNDER SEC TION 143(3) OF THE ACT, IT MATTERS LITTLE THAT THE ASSESSING OFFICER DID NO T ASK ANY QUESTION OR QUERY WITH RESPECT TO ONE ENTRY OR NOTE BUT HAD RAISED QU ERIES AND QUESTIONS ON OTHER ASPECTS. AGAIN THE ANSWER TO THIS QUESTION ST ANDS CONCLUDED BY THE JUDGMENT OF THE FULL BENCH OF THIS COURT IN KELVINA TOR (SUPRA). (EMPHASIS PROVIDED) 6.1. SIMILARLY FOLLOWING THE RATIO OF THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS OR CIT [2010] 322 ITR 369 (CAL.) FOLLOWED BY THE ITAT IN THE CASE OF NAWANY CORP. (I) LTD. (CITED SUPRA). I FIND THAT RE-OPENING IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE BY THE AO IN THE ABSENCE OF ANY NEW MATERIAL JUSTIFYING THE RE-OPENING AND ON THE V ERY SAME FACTS TANTAMOUNTS TO ABUSE OF HIS POWER. IN THE PECULIAR FACTS AND CIRC UMSTANCES OF THE CASE IN THE ABSENCE OF ANY REBUTTAL ON FACTS AND LAW, I FIND T HAT THE FOLLOWING CONCLUSION OF THE CIT(A) CANNOT BE FAULTED WITH:- 1.14. SINCE THERE WAS NO FAILURE ON THE PART OF TH E APPELLANT TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR IT S ASSESSMENT, THE CONDITIONS LAID DOWN IN THE PROVISO TO SECTION 147 TO REOPEN THE ASSESSMENT WERE NOT MET BEFORE EXERCISING THE JURIS DICTION U/S 148. THIS IS A NECESSARY PRE-CONDITION CONDITION FOR EXERCISI NG JURISDICTION U/S 148 OF THE ACT. SINCE THIS STATUTORY CONDITION WAS NOT FU LFILLED, THE PROCEEDINGS INITIATED U/S 148 ARE INVALID AND THE ASSESSMENT IS HEREBY ANNULLED. THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 6.2. BEING SATISFIED BY THE REASONING AND THE CONCL USION, THE DEPARTMENTAL APPEAL IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER 2016. SD/- (DIVA SINGH ) JUDICIAL ME MBER *AMIT KUMAR* I.T.A .NO.-4396/DEL/2014 PAGE 6 OF 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI