M/S RAPID CARE TRANSCRIPTION PRIVATE LIMITED, Chennai V. INCOME TAX OFFICER CORPORATE WARD 5 (4), Chennai

ITA 440/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2804 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SASI KUMAR
• Keywords: Reopening of assessment; Period of limitation; Deemed dividend
• Section: 143(3); 10B; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.440/CHNY/2018 ( )( / ASSESSMENT YEAR : 2009-10 M/S RAPID CARE TRANSCRIPTION PRIVATE LIMITED, C/O M/S RAMESH & RAMACHANDRAN CHARTERED ACCOUNTANTS, NEW NO.39, OLD NO.29/3, VISWANATHAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI - 600 024. PAN : AABCR 3254 M V. THE INCOME TAX OFFICER, CORPORATE WARD 5(4), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI Y. SRIDHAR, CA -.+, / 0 / RESPONDENT BY : SHRI A. SASIKUMAR, JCIT 1 / 2% / DATE OF HEARING : 05.07.2018 3') / 2% / DATE OF PRONOUNCEMENT : 28.08.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3, CHENNAI, D ATED 27.10.2017 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.440/CHNY/18 2. SHRI Y. SRIDHAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSMENT WAS INITIALLY COMPLET ED BY AN ORDER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T 'THE ACT') ON 30.12.2011. ACCORDING TO THE LD. REPRESENTATIVE, T HE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SALE PROCEEDS WERE NOT BROUGHT TO INDIA IN FOREIGN EXCHA NGE, THEREFORE, THE CLAIM IS DOUBTFUL. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) BY AN ORDER DATED 12.12.2013, FOUND THAT THE ENTIRE CONSI DERATION WAS BROUGHT TO INDIA IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR, THEREFORE, HE AL LOWED THE CLAIM OF THE ASSESSEE. A COPY OF THE ORDER OF THE CIT(APPEALS) IS AVAILABLE AT PAGE 159 OF THE PAPER-BOOK. IN FACT, ACCORDING TO THE L D. REPRESENTATIVE, THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO GRAN T EXEMPTION UNDER SECTION 10B OF THE ACT AT PARA 5.4 OF HIS ORDER. 3. SHRI Y. SRIDHAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, FURTHER SUBMITTED THAT IN RESPECT OF DIVIDEND, ETC., THE CI T(APPEALS) FOUND THAT THE DIVIDEND HAS TO BE ASSESSED ONLY IN THE HANDS O F THE SHAREHOLDER OF THE LENDER COMPANY AND NOT IN THE HANDS OF THE PERS ON OTHER THAN SHAREHOLDER. ACCORDING TO THE LD. REPRESENTATIVE, AGAINST THIS ORDER OF THE CIT(APPEALS), THE REVENUE FILED APPEAL BEFORE T HIS TRIBUNAL. WHILE FILING THE APPEAL, ACCORDING TO THE LD. REPRESENTAT IVE, THE DEPARTMENT ACCEPTED THE ORDER OF THE CIT(APPEALS) WITH REGARD TO CLAIM OF EXEMPTION 3 I.T.A. NO.440/CHNY/18 UNDER SECTION 10B OF THE ACT. THE APPEAL WAS FILED ONLY IN RESPECT OF THE DEEMED DIVIDEND ISSUE UNDER SECTION 2(22)(E) OF THE ACT. ACCORDING TO THE LD. REPRESENTATIVE, THIS TRIBUNAL BY AN ORDER D ATED 11.09.2015, CONFIRMED THE ORDER OF THE CIT(APPEALS) AND DISMISS ED THE DEPARTMENTS APPEAL. THUS, ACCORDING TO THE LD. REPRESENTATIVE, THE ISSUE WITH REGARD TO EXEMPTION UNDER SECTION 10B OF THE ACT ATTAINED FINALITY BY AN ORDER OF THE CIT(APPEALS) DATED 12.12.2013. 4. THE LD. REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT NOW THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTI ON 148 OF THE ACT FOR REOPENING THE ASSESSMENT ON THE GROUND THAT THE RET URN WAS NOT FILED WITHIN THE PERIOD OF LIMITATION. ACCORDING TO THE LD. REPRESENTATIVE, ONCE THE CLAIM OF EXEMPTION UNDER SECTION 10B OF THE ACT IS MERGED WITH THE ORDER OF THE CIT(APPEALS), THE ASSESSING OFFICER HA S NO AUTHORITY TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE RETURN WAS NOT FILED WITHIN THE PERIOD OF LIMITATION. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) IS NOT CORRECT IN CONFIRMING THE O RDER OF THE ASSESSING OFFICER. 5. ON THE CONTRARY, SHRI A. SASIKUMAR, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ISSUE OF LIMITAT ION FOR FILING THE RETURN OF INCOME FOR THE PURPOSE OF CLAIMING EXEMPTION UND ER SECTION 10B OF THE ACT WAS NOT CONSIDERED BY THE ASSESSING OFFICER AT THE TIME OF 4 I.T.A. NO.440/CHNY/18 ORIGINAL ASSESSMENT. ACCORDING TO THE LD. D.R., TH E CIT(APPEALS) ALSO FOUND THAT THE SALE PROCEEDS WERE BROUGHT TO INDIA WITHIN SIX MONTHS IN CONVERTIBLE FOREIGN EXCHANGE. THE ISSUE OF LIMITAT ION FOR FILING RETURN OF INCOME WAS ALSO NOT CONSIDERED BY THE CIT(APPEALS). THIS BEING THE NEW ISSUE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER REOPENED THE ASSESSMENT. ON A QUERY FROM THE BENCH HOW COULD TH E ASSESSING OFFICER OVERTURN THE ORDER OF THE CIT(APPEALS) WHER EIN HE GRANTED EXEMPTION UNDER SECTION 10B OF THE ACT? THE LD. D. R. SUBMITTED THAT THE ISSUE OF LIMITATION WAS NOT CONSIDERED BY THE A SSESSING OFFICER, THEREFORE, THE ASSESSING OFFICER HAS EVERY RIGHT TO REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSING OFFICER BY AN ORDER DATED 30.12.2011 UNDER SECTION 143(3) OF THE ACT DISALLOWED THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 10B OF THE ACT AND ALSO ASSESSED DEEMED DIV IDEND UNDER SECTION 2(22)(E) OF THE ACT. THE ASSESSEE FILED AP PEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) FOUND THAT THE ASSE SSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10B OF THE ACT SINCE THE SA LE PROCEEDS WERE BROUGHT TO INDIA WITHIN A PERIOD OF SIX MONTHS IN C ONVERTIBLE FOREIGN EXCHANGE. THE CIT(APPEALS) ALSO FOUND THAT THE DEE MED DIVIDEND CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. I N FACT, THE 5 I.T.A. NO.440/CHNY/18 CIT(APPEALS) HAS OBSERVED AT PARA 5.4 OF HIS ORDER DATED 12.12.2013, AS FOLLOWS:- 5.4 I HAVE GONE THROUGH THE ANNEXURE 1 & 2 FILED ALON G WITH DATE OF REALIZATION FROM THE BANK STATEMENTS F ILED FROM 06.05.2008 TO 23.03.2009 WHICH ARE TOTALLING TO 6,11,46,043/- WHICH ARE ALL RECEIVED WELL BEFORE THE DUE DATE I.E. 30.09.2009. THE AR OF THE APPELLANT HAS ALSO FIL ED DATE-WISE STATEMENTS RECEIVED FROM CITI BANK IN THE FORM OF CERTIFICATE OF FOREIGN INWARD REMITTANCES STARTI NG FROM 07.05.2008 ONWARDS TILL 25.03.2009 WHICH ARE TOTALLING TO 6,11,46,043/-. SIMILARLY, AS PER ANNEXURE -2 DETAILS OF FIRC INWARD REMITTANCES FILED FROM 06.06.2008 TO 11.03.2009 TOTALLING TO 5,17,85,585/-. THE APPELLANT HAS ALSO FILED DEBTORS OUTSTANDING AS ON 31.03.2009 AMOUNTING TO 1,54,44,806/- AS PER ANNEXURE-3 & 4. THUS AS PER THE BANK STATEMENTS FILED THE TOTAL FOREIGN REMITTANCES RECEIVED TALLIES WITH THE TOTAL AMOUNT CLAIMED AS E XPORT RECEIPTS U/S 10B WORKS OUT TO 12,83,76,435/-. AS THE AMOUNT RECEIVED HAS CONSIDERATION IN CONVERTIBLE FO REIGN EXCHANGE EXPORTS AT 12,83,76,435/- WHICH HAS BROUGHT INTO INDIA WITHIN A PERIOD OF 6 MONTHS FROM THE END OF THE PREVIOUS YEAR, THE APPELLANT HAS CLAIMED 10B EXEMPTION AT 1,08,35,961/- HENCE, THE ASSESSING OFFICER IS DIRECTED ALLOW THE CLAIM OF THE APPELLANT. THE APPELLANT SU CCEEDS ON THIS GROUND OF APPEAL. 7. AGAINST THIS ORDER OF THE CIT(APPEALS), THE REVE NUE FILED APPEAL BEFORE THIS TRIBUNAL IN RESPECT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT ALONE. AS FAR AS EXEMPTION UNDER SECTIO N 10B OF THE ACT IS CONCERNED, THE REVENUE ACCEPTED THE ORDER OF THE CI T(APPEALS) AND NO APPEAL WAS FILED BEFORE THIS TRIBUNAL. THEREFORE, AS RIGHTLY SUBMITTED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE, THE ORDER OF THE CIT(APPEALS) IN 6 I.T.A. NO.440/CHNY/18 RESPECT OF EXEMPTION UNDER SECTION 10B OF THE ACT A TTAINED FINALITY. THE ORDER OF THE ASSESSING OFFICER MERGED WITH THE ORDE R OF THE CIT(APPEALS), THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE ASSESSING OFFICER CANNOT OVERTURN THE ORDER OF THE CIT(APPEAL S) BY REOPENING THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME WITHIN THE TIME LIMIT. 8. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE FINALITY ATTAINED IN A JUDICIAL ORDER OR IN THE ORDER OF EXECUTIVE OF FICER BY WHOM THE ORDER WAS PASSED IN A JUDICIAL PROCEEDING, CANNOT BE SO L IGHTLY DISTURBED BY THE SUBORDINATE OFFICERS. IF THE ASSESSING OFFICER IS ALLOWED TO REOPEN THE ASSESSMENT AFTER THE ORDER OF THE CIT(APPEALS), THE N THE TAX PAYERS MAY NOT HAVE CONFIDENCE ON THE JUDICIAL SYSTEM OF THIS COUNTRY. THE POWER TO DETERMINE OR ADJUDICATE AN ISSUE, EVEN THOUGH TECHN ICALLY FLOWS FROM INCOME-TAX ACT, 1961, ACTUALLY FLOWS FROM CONFIDENC E REPOSED BY THE PEOPLE IN THE SYSTEM. PEOPLE MAY LOSE THEIR CONFID ENCE IN THE SYSTEM IF THE POWER TECHNICALLY CONFERRED ON THE ASSESSING OF FICER AND THE CIT(APPEALS) UNDER INCOME-TAX ACT IS MISUSED BY THE M. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT TO RETAIN THE CONFID ENCE OF PEOPLE IN THE JUDICIAL SYSTEM, THE ASSESSING OFFICER IS EXPECTED TO OBEY THE ORDERS OF THE CIT(APPEALS) AND OTHER HIGHER FORUMS. WHATEVER MAY BE THE REASON, WHEN THE CIT(APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY DIRECTING THE ASSESSING OFFICER TO GRANT EXEMPTION UNDER SECTION 10B OF 7 I.T.A. NO.440/CHNY/18 THE ACT, IF THE ASSESSING OFFICER FEELS THAT THE OR DER OF THE CIT(APPEALS) IS NOT CORRECT, IT IS OPEN TO HIM TO TAKE THE MATTER B EFORE THE HIGHER FORUM. IN FACT, IN THIS CASE, AN APPEAL WAS FILED BEFORE T HIS TRIBUNAL AGAINST THE VERY SAME ORDER OF THE CIT(APPEALS). BUT THE ASSES SING OFFICER ACCEPTED THE DECISION OF THE CIT(APPEALS) IN RESPEC T OF THE CLAIM OF EXEMPTION UNDER SECTION 10B OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT REOPENING OF ASSESSMENT BY THE ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 148 WOULD A MOUNT TO OVERTURNING OR DISTURBING THE ORDER OF THE CIT(APPEALS) WHICH A TTAINED FINALITY. THIS ACT CANNOT BE ALLOWED BY THIS TRIBUNAL. THEREFORE, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE CONSEQUENTI AL ORDER PASSED BY THE ASSESSING OFFICER IS QUASHED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 28 TH AUGUST, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 28 TH AUGUST, 2018. KRI. 8 I.T.A. NO.440/CHNY/18 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-3, CHENNAI 4. PRINCIPAL CIT-5, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.