MEHTA SULFITES (I) LTD, MUMBAI V. ACIT 10(2), MUMBAI

ITA 4773/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2324 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-04-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 20-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Reopening of assessment; Depreciation
• Section: 143(3); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MU MBAI BEFORE SHRI JOGINDER SINGH, JM AND SHRI RAJESH KUMA R,AM ./ I.T.A. NO4773/MUM/2013 ( / ASSESSMENT YEAR:1999-2000) M/S MEHTA SULFITES (INDIA) LTD. C/O ATUL S. DESAI. A-302, GOLDENOAK, HIRANANDANI GARDENS, POWAI, MUMBAI-400 076 / VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE 10 (2) R. NO.474, AAYAKAR BHAVAN, MUMBAI -400 020 ./ ./PAN/GIR NO. AAACM3109R ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. SUBRAMANIAN / RESPONDENT BY : SHRI VIJAY KUMAR SONI / DATE OF HEARING : 27/10/2015 !'# / DATE OF PRONOUNCEMENT : 20/11/2015 / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 08-04-2013 OF COMMISSIONER OF INCOME TAX (APPEALS)22 , MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 1999-2000. THE ASSESSE E HAS RAISED FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN MAKING DISALLOWANCE OF DEPRECIATION ON PLANT AND MACHINERY AMOUNTING TO RS.8,29,134/- WITHOUT CONSID ERING OUR SUBMISSION PROPERLY. 2 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 2M/S MEHTA SULFITES (INDIA) LTD. VS. CIT 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN MAKING ADDITION U/S68 OF RS.73,35,0 00/- WITHOUT CONSIDERING OUR SUBMISSION PROPERLY. ADDITIONAL GROUNDS 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE PROCEEDING INITIATED BY ISSUANCE OF NOTICE DATED 13 -03-06 U/S 148 OF THE I.T. ACT, IS INVALID AND BAD IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ASSESSMENT ORDER PASSED U/S144 R.W.S. 147 OF THE I. T. ACT , IS INVALID AND BAD IN LAW. 2. AT THE OUTSET THE LD.AR DREW TO OUR ATTENTION TO APPLICATION DATED 26.10.2015 REQUESTED FOR ADMISSION OF ADDITIONAL GROUNDS OF A PPEAL BY SUBMITTING THAT SAME WERE INADVERTENTLY NOT RAISED IN THE APPEAL FILED EARL IER AND THE SAME INVOLVED LEGAL ISSUES WHICH GO TO THE ROOTS OF THE MATTER IN THE APPEAL. THE LD. COUNSEL PRAYED FOR THE ADMISSION OF THESE GROUNDS BY PLACING RELIANCE ON T HE DECISION OF THE HONBLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER LT D. VS CIT 229 ITR383(SC).THE LD DR OPPOSED THE ADMISSION OF SAME ON THE GROUND T HAT THE SAME WAS NOT RAISED EARLIER. AFTER HEARING THE COUNSELS FOR BOTH THE P ARTIES WE ARE OF THE VIEW THAT SINCE THE ISSUE RAISED BY THE COUNSEL OF THE ASSESSEE IN THE ADDITIONAL GROUNDS OF APPEAL ARE LEGAL ISSUES AND GO TO THE VERY BASIS OF THE CASE OF THE ASSESSEE AND THEREFORE, THE SAME ARE ADMITTED. 3 THE COMMON ISSUE RAISED IN THE ADDITIONAL GROUNDS BY THE LD. COUNSEL OF THE ASSESSEE IS THAT THE PROCEEDINGS INITIATED BY ISSUE OF NOTICE 148 WERE INVALID AND SO WERE THE ORDER OF RE-ASSESSMENT MADE AS A RESULT O F THESE PROCEEDINGS. 3 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 3M/S MEHTA SULFITES (INDIA) LTD. VS. CIT 4 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSME NT U/S144 OF THE I.T. ACT WAS FRAMED AT 25/03/2003 AT A TOTAL LOSS OF RS.2,83,55, 630/-. THEREAFTER U/S148 OF THE ACT WAS ISSUED ON 13/06/2006 AFTER OBTAINING APPROVAL O F CIT-M ON 09/03/2006. ASSESSEE DID NOT FILE RETURN IN RESPONSE TO THE NOTICE U/S14 7 OF THE ACT DATED 30/06/2006. HOWEVER THE ASSESSEE ADDRESSED A LETTER DATED 29.0 8.2006 TO THE LD. AO TO TREAT THE RETURN FILED ORIGINALLY ON 28/11/2000 AS RETURN IN RESPONSE TO NOTICE 148 OF THE ACT. THEREAFTER THE AO FRAMED THE ASSESSEMENT U/S 144 R. W.S 147 VIDE ORDER DATED 31/08/2006.THE SAID ORDER WAS APPEALED AGAINST BEF ORE THE FIRST APPELLATE AUTHORITIES RAISING THE VARIOUS GROUNDS. HOWEVER, THE FIRST APP ELLATE AUTHORITIES DISMISSED THE APPEAL BY CITING VARIOUS REASONS. 5 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE REASSESSMENT PROCEEDING U/S147 R.W.S 148 OF THE ACT AND CONSEQUE NT ASSESSMENT ORDER U/S144 R.W.S. 147 OF THE ACT DATED 31.08.2006 WERE INVALID AND VOID AD INITIO. THE LD. COUNSEL ARGUED THAT WHERE THE ASSESSMENT PROPOSED TO BE RE -OPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNDER SECTION 147 R.W.S. 148 OF THE ACT WHICH WAS FRAMED U/S 144 OF THE ACT , ISSUE OF NOTICE U/S 148 WERE TO BE SANCTIONED/APPROVED BY JOINT COMMISSIONER AND ON LY THEN THE RE-ASSESSMENT PROCEEDING COULD HAVE BEEN VALIDLY INITIATED. HOWE VER, IN THE INSTANT CASE THE RE- ASSESSMENT PROCEEDINGS U/S147 R.W.S. 148 WERE SANC TIONED CIT-M ON 09/03/06 WHICH IS AGAINST THE PROVISION OF THE ACT. THE LD. COUNS EL SUBMITTED THAT THE ORIGINAL ASSESSMENT IN THE CASE OF THE ASSESSEE WAS FRAMED U /S 144 R.W.S. 143 VIDE ORDER DATED 25.03.2003 AND THEREFORE, THE NOTICE FOR RE-ASSESS MENT COULD ONLY BE SANCTIONED U/S151(2) OF THE ACT BY THE JOINT COMMISSIONER AND WHEREAS AS A MATTER FACT IN THE PRESENT CASE THE AO OBTAINED THE SANCTION OF THE C OMMISSIONER U/S 151(1) OF THE ACT WHICH IS BAD AND THEREFORE THE RE-ASSESSEMNT PROCEE DINGS AND CONSEQUENTIAL ORDER 4 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 4M/S MEHTA SULFITES (INDIA) LTD. VS. CIT PASSED U/S 144 R.W.S. 147 DATED 31.08.2006 WERE ALS O IN VALID AND NON EST AND SHOULD BE QUASHED. THE LD. COUNSEL STRONGLY PLACED RELIANC E ON THE DECISIONS OF THE TRIBUNAL ITA NO. 2028/M/2008 DATED 29.05.2015 B BENCH AND ALSO THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GHANSHYAM KHABRANI V/S AS ST. CIT (2012) 346 ITR 443. THE LD. COUNSEL FINALLY PRAYED THAT THE RE-ASSESSME NT PROCEEDINGS U/S 147 R.W.S. 148 OF THE ACT AND ORDER PASSED U/S144 R.W.S 147 AS A R ESULT OF THE SAID PROCEEDINGS MAY KINDLY QUASHED ON THE GROUND THAT IN THE PRESENT CASE THE ISSUANCE OF NOTICE U/S 148 OF THE ACT WAS REQUIRED TO BE SANCTIONED U/S 151(2) OF THE ACT BY THE JOINT COMMISSIONER AND NOT U/S 151(1) OF THE ACT BY THE C OMMISSIONER OF INCOME TAX WHICH IS IN VIOLATION OF THE PROVISIONS OF SECTIO N 151(2) OF THE ACT. THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE REASSESSMENT PROC EEDING WERE INITIATED AFTER OF OBTAINING DUE SANCTION FROM THE CIT(M) U/S 151(1) AND THEREFORE, PRAYED FOR UPHOLDING THE ORDER OF CIT(A). 4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE C OUNSEL FOR THE ASSESSEE AS WELL AS THE LD. DEPARTMENTAL REPRESENTATIVE AND PE RUSED THE MATERIAL ON RECORD. WE NOTE THAT THE ASSESSEE FILED ITS RETURN OF INCOME O N 28.11.2000 BY DECLARING LOSS OF RS.3,34,76,100/-. THEREAFTER THE AO FRAMED THE ASSE SSMENT U/S 144 R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 25.03.2003 AT A LOSS OF R S.2,83,58,630. THE LD. AO ISSUE NOTICE U/S 148 OF THE ACT ON 13.03.2006 AFTER RECOR DING REASONS THE COPY OF WHICH IS FILED AS PAGE NO. 78 OF THE PAPER BOOK TO WITHDRAW THE DEPRECIATION ON PLANT AND MACHINERY. THE LD. AO MOVED A PROPOSAL FOR OBTAININ G SANCTION VIDE LETTER NO ACIT 10(2)/PROP/U/S.147/2005-06 DATED 03.03.2006 COPY OF WHICH IS FILED AS PAGE NO.79 OF THE PAPER BOOK. THE EXTRACTS OF THE SAID LETTER AR E REPRODUCED AS UNDER: NO.ACITL O(2)/PROP.ULS.117 12005906. OFFICE OF THE ASSTT. 5 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 5M/S MEHTA SULFITES (INDIA) LTD. VS. CIT COMMISSIONER OF INCOME TAX-I 0(2), R.NO. 432, 4TH FLOOR,AAYAKAR BHAVAN, M.K.ROAD, MURNBAI-400 020. DATED: 3RDMARCH,2006 THE COMMISSIONER OF INCOME-TAX-I 0 MUMBAI. SUB.: PROPOSAL FOR REOPENING OF ASSESSMENT IN THE C ASE OF M/S. MEHTA SULFITES PVT. LTD. -ASSTT.YEAR 1999- 2000 & 2000-01 ************ SIR, KINDLY REFER TO THE ABOVE. 2. I AM ENLCOSING HEREWITH PROPOSAL FOR REOPENING OF ASSESSMENT U/S. 147 OF THE I.T.ACT,1961 IN THE CASE OF M/S. MEHTA SULFI TES PVT. LTD. FOR ASSESSMENT YEARS 1999-2000 & 2000-01 IN THE PRESCRI BED PROFORMA FOR YOUR KIND ADMINISTRATIVE APPROVAL U/S.151(1) OF THE I.T. ACT, 1961. YOURS FAITHFULLY, (B.D. MITRA ) ASSISTANT COMMISSIONER OF INCOME-TAX 10(2), MUMBAI. ENCL..:AS ABOVE. 6 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 6M/S MEHTA SULFITES (INDIA) LTD. VS. CIT 5 IT IS CLEAR FROM THE ABOVE LETTER THAT THE SANCT ION FOR ISSUE OF NOTICE U/S 148 WAS ACCORDED BY CIT(M) ON 09.03.2006. NOW, THE LEGAL QU ESTIONS RAISED BY THE LD. COUNSEL OF THE ASSESSEE BEFORE US IS THAT THE REASS ESSMENT PROCEEDINGS ARE INVALID AND VOID AND SO IS THE CONSEQUENTLY ASSESSMENT ORDER. W E NOTE THAT THE ORIGINAL ASSESSMENT HAS BEEN FRAMED U/S 144 R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 25.03.2003 WHICH WAS PROPOSED TO BE RE-OPENED AND R E-ASSESSED BY ISSUE NOTICE U/S 148 OF THE ACT ON 13.03.2006 AFTER OBTAINING THE S ANCTION U/S 151 (1) OF THE ACT FROM THE CIT MUMBAI AND THE ASSESSMENT WAS FRAMED U/S 14 4 R.W.S. 147 AT RS.2,83,55,630 VIDE ORDER DATED 31.08.2006. FROM THE FACTS OF THE CASE IS CLEAR THAT THE ISSUE OF NOTICE 148 HAS BEEN SECTIONED BY CIT-M U/S 151(1) OF THE ACT HOWEVER WHERE THE ASSESSMENT FRAMED U/S 144 OF THE ACT IS PROPOSED T O BE REOPENED UNDER REASSESSMENT PROCEEDING U/S 148 OF ACT , THE ISSUE OF NOTICE U/S 148 HAS TO BE SANCTIONED BY JOINT COMMISSIONER OF INCOME TAX U/S 151(2) OF THE ACT WH EREAS IN THE PRESENT CASE THE ISSUANCE OF NOTICE HAD BEEN SANCTIONED AND APPROVED BY CIT U/S 151(1) IN VIOLATION OF PROVISIONS OF SECTION 151(2). THE LANGUAGE USE D IN THE SECTION 151 OF THE ACT IS REPRODUCED AS UNDER : (1) NO NOTICE SHALL BE ISSUED U/S 148 BY AN AO, AFT ER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIO NER OR PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE R EASONS RECORDED BY THE AO, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1) , NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSE SSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER , UNLESS THE J OINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH AO, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 7 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 7M/S MEHTA SULFITES (INDIA) LTD. VS. CIT THUS, FROM THE PERUSAL OF THE ABOVE PROVISIONS I T IS CLEAR THAT IN THE PRESENT CASE OF THE ASSSESSEE , THE SANCTION FOR ISSUE OF NOTICE U/ S 148 WAS TO BE GIVEN BY THE JOINT COMMISSIONER U/S151(2) AND NOT BY THE CIT U/S 151(1 ) WHICH IN OUR VIEW HAS WRONGLY BEEN GIVEN. IN THE CASE OF GHANSHYAM KHABRA NI V/S CIT (SUPRA) SIMILAR ISSUE WAS DECIDED BY THE HONBLE COURT BY HOLDING UNDER S UB-SECTION (2) OF SECTION 151 OF THE INCOME-TAX ACT, 1961, NO NOTICE CAN BE ISSUED U NDER SECTION 148 BY AN AO WHO IS BELOW THE RANK OF JOINT COMMISSIONER AFTER THE EXPI RY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE JOINT COMMI SSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE SUCH AO, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE EXPRESSION JOINT COMMISSIONER IS DEFINED IN SECTI ON 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME-TAX OR AN ADDITIONAL COMMISSIONER OF INCOME-TAX U/S 117(1). SECTION 151(2) MANDATES T HAT THE SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER OF INCOME TAX . THE EXPRESSI ON HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION IN SECTION 2(28C). THE COM MISSIONER OF INCOME-TAX IS NOT A JOINT COMMISSIONER WITHIN THE MEANING OF SECTION 2( 28C). THERE IS NO STATUTORY PROVISION UNDER WHICH POWER TO BE EXERCISED BY AN O FFICER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE STATUTE MANDATES THE SAT ISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOMETHING TO BE DONE IN A PARTICULAR MANNE R, IT HAS TO BE DONE IN THAT MANNER ONLY . WE THEREFORE, RESPECTFULLY FOLLOWING THE DE CISION OF THE JURISDICTIONAL HIGH COURT QUASH REASSESSMENT PROCEEDING AS BEING INVALI D. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. &#'( )*+& , -. / ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOV , 2015 8 I.T.A. NO.4773/MUM/2013 (A.Y.1996-97) 8M/S MEHTA SULFITES (INDIA) LTD. VS. CIT SD/- SD/- ( JOGINDER SINGH ) ( RAJESH KUMAR ) 0) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' MUMBAI; 2 DATED : 20.11.2015 ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 3 ( ) / THE CIT(A) 4. 3 / CIT - CONCERNED 5. 678 ))9* , 9*# , ' / DR, ITAT, MUMBAI 6. 8;+ < / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) $%, ' / ITAT, MUMBAI