SHASHIKALA M. PAWAR, MUMBAI V. ITO WD 18(2)(3), MUMBAI

ITA 4821/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83616 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-05-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R I CHOKSEY
• Keywords: Procedural lapse; Block assessment
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI . . , , BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ! ./ I.T.A. NO. 4821/MUM/2011 ( / ASSESSMENT YEAR: 2001-02) SMT. SHASHIKALA M. PAWAR R. I. CHOKSEY & CO., S-7, ANKITA APARTMENTS, 53, NEHRU ROAD, VILE PARLE (E), MUMBAI-400 057 / VS. ITO WARD 18(2)(3), PIRAWAL CHAMBERS, MUMBAI # ./$ ./PAN/GIR NO. ACZPP 1403 H ( ! #% /APPELLANT ) : ( &'#% / RESPONDENT ) ! #% ( ) / APPELLANT BY : SHRI R. I. CHOKSEY &'#% ( ) / RESPONDENT BY : SHRI KISHOR DHULE * +, ( -. / DATE OF HEARING : 13.08.2014 /012 ( -. / DATE OF PRONOUNCEMENT : 27.08.2014 3 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-29, MUMBAI (C IT(A) FOR SHORT) DATED 21.03.2011. THE ASSESSEE HAS RAISED AS MANY AS FOUR GROUNDS OF APPEAL. THROUGH THE FIRST GROUND, THE ASSESSEE HAS AGITATED THE REOPENING OF THE ASSESSMENT U/S.147 OF THE ACT ON THE GROUND OF NON-ISSUANCE OF NOTICE U/S.143(2) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). 2 ITA NO. 4821/MUM/2011 (A.Y. 2001-02) SMT. SHASHIKANT M. PAWAR VS. ITO VIDE GROUND NO. 2, THE ASSESSEE HAS RAISED THE ISSU E THAT THE ASSESSING OFFICER (A.O.) DID NOT DISPOSE OFF THE OBJECTIONS FILED BY THE ASSESSEE AGAINST THE SECTION 147 PROCEEDINGS. VIDE GROUND NO. 3, THE ASSESSEE HAS AGITATED THAT T HE REOPENING WAS MADE AFTER A PERIOD OF FOUR YEARS AND THAT FULL DETAILS WERE DIS CLOSED BY THE ASSESSEE AND THERE WAS NO FAULT ATTRIBUTABLE ON THE PART OF THE ASSESSEE RESU LTING IN ESCAPEMENT OF ANY INCOME. LASTLY, VIDE HER FOURTH GROUND OF APPEAL, THE ASSES SEE HAS AGITATED THE QUANTUM ADDITION OF RS.27.26 LACS ON ACCOUNT OF ENHANCED CO MPENSATION RECEIVED BY THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE ES LAND WAS ACQUIRED BY THE GOVERNMENT AND THE ASSESSEE RECEIVED COMPENSATION I N LIEU THEREOF. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING CAPITAL GAINS. THEREAFTE R IN CERTAIN LITIGATION FOR ENHANCEMENT OF COMPENSATION, THE ASSESSEE, ON THE INTERIM DIREC TIONS OF THE COURT, RECEIVED SOME COMPENSATION, AGAINST WHICH THE BANK GUARANTEE @ 10 0% WAS GIVEN BY THE ASSESSEE. THE ASSESSEE DID NOT OFFER THE SAID COMPENSATION FOR TA XATION, ON THE GROUND THAT THE SAID COMPENSATION WAS RECEIVED ON THE INTERIM DIRECTION OF THE HONBLE SUPREME COURT ON SUBMITTING OF BANK GUARANTEE AS A SECURITY FOR THE RELEASE OF THE SAID ENHANCED COMPENSATION. THE SAID COMPENSATION HAS NOT BEEN FI NALLY DETERMINED BY THE COURT AND THERE WAS LIKELIHOOD IN THE APPEAL, SUCH AMOUNT MAY BE TAKEN AWAY OR REDUCED. HOWEVER, THE A.O. OBSERVED THAT THE ASSESSEE WAS LIABLE TO P AY TAX ON THE ENHANCED COMPENSATION RECEIVED, WHICH SHE DID NOT PAY. HENCE, HE WAS OF T HE VIEW THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. HE, ACCORDINGLY, R EOPENED THE ASSESSMENT U/S.147 OF THE ACT AND CONFIRMED THE ADDITIONS ON ACCOUNT OF E NHANCED COMPENSATION RECEIVED BY THE ASSESSEE. THE LD. CIT(A) UPHELD THE ADDITIONS M ADE BY THE A.O. THE ASSESSEE IS, THUS, IN APPEAL BEFORE US. 3. IN THE FIRST GROUND OF APPEAL OF THE ASSESSEE HA S RAISED THE CONTENTION THAT NO NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE UNDER THE REO PENED ASSESSMENT PROCEEDINGS U/S.147 R.W.S. 143(3) OF THE ACT. THE LD. AUTHORIZED REPRES ENTATIVE (AR) HAS SUBMITTED THAT THE ISSUANCE OF NOTICE BEFORE REOPENING OF THE ASSESSME NT WAS MANDATORY. HE HAS RELIED UPON 3 ITA NO. 4821/MUM/2011 (A.Y. 2001-02) SMT. SHASHIKANT M. PAWAR VS. ITO A DECISION OF HON'BLE SUPREME COURT STYLED AS CIT & ANOTHER VS. HOTEL BLUE MOON (2010) 229 CTR (SC) 362, WHEREIN HON'BLE SUPREME CO URT, WHILE ADJUDICATING UPON THE CASE OF BLOCK ASSESSMENT UNDER THE INCOME TAX ACT, HAS OBSERVED THAT IF THE A.O., FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSE SSEE IN RESPONSE TO A NOTICE UNDER SECTION 158BC(A), HE MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2); OMISSI ON ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE SAID TO BE A MERE PROCEDURAL IRREGULARITY AND, THAT THE SAME IS NOT CURABLE. 4. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED THAT VIDE FINANCE ACT 2008, W.E.F. 1.4.2008 SECTION 292-BB IN THE INCOME TAX ACT HAS B EEN INSERTED. HE HAS FURTHER SUBMITTED THAT ANY RIGHT WHICH HAS BEEN ACCRUING TO THE ASSESSEE FOR NON-SERVICE OF NOTICE U/S. 143(2) OF THE INCOME TAX ACT HAS BEEN TAKEN AW AY WITH THE INSERTION OF SECTION 292BB IN THE I.T. ACT. 5. WE MAY OBSERVE THAT THE ISSUE RELATING TO THE IN TRODUCTION AND OPERATION OF SECTION 292BB CAME INTO CONSIDERATION BEFORE THE SPECIAL BE NCH OF THE TRIBUNAL AT DELHI IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. VS. DCIT IN IT(SS)A NO. 261/DEL/2001. THE SPECIAL BENCH OF THE HONBLE DELHI TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. (SUPRA) HAS SUMMARIZED THE LEGAL POSITION AS U NDER: (I) SECTION 292-BB EVEN IF IT IS PROCEDURAL IT IS CREATING A NEW DISABILITY AS IT PRECLUDES THE ASSESSEE FROM TAKING A PLEA WHI CH COULD BE TAKEN A RIGHT, CANNOT BE CONSTRUED RETROSPECTIVELY AS THE SAME IS MADE APPLICABLE BY THE STATUTE W.E.F 1.4.2008. (II) SECTION 292-BB IS APPLICABLE TO THE ASSESSMEN T YEAR 2008-09 AND SUBSEQUENT ASSESSMENT YEARS. FURTHER, THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. MR. SALMAN KHAN IN INCOME TAX APPEAL (L) NO. 2362 OF 2009 DATED 1.12.2009 HAS CATEGORICALLY HELD THAT SECTIONS 292-BB & 292-B OF THE INCOME TAX ACT HAVE BEEN AMENDED FROM 1.4.2008 AND THUS HAVE COME INTO OPERA TION PROSPECTIVELY FOR THE A.Y. 2009-10. FURTHER, THIS VIEW HAS BEEN AGAIN REITERAT ED BY HONBLE BOMBAY HIGH COURT IN 4 ITA NO. 4821/MUM/2011 (A.Y. 2001-02) SMT. SHASHIKANT M. PAWAR VS. ITO ANOTHER CASE STYLED AS CIT VS. VIRENDRA KUMAR AGAR WAL INCOME TAX APPEAL NO. 2429 OF 2009 DATED 7.1.2010. SINCE THE ASSESSMENT YEAR INVOLVED IN THIS CASE IS 2001-02, HENCE, THE NEWLY INSERTED PROVISION OF SECTION 292BB IS NOT APPLICAB LE TO THIS YEAR. IN VIEW OF THE SAID LEGAL POSITION AS DISCUSSED ABOVE, THE ASSESSMENT P ROCEEDINGS IN CONSEQUENCE OF REOPENING U/S.147 WERE BAD IN LAW AND CANNOT BE SUS TAINED AND ARE ACCORDINGLY SET ASIDE. SINCE, WHILE DECIDING THE ABOVE GROUND NO. 1, WE HA VE SET ASIDE THE REOPENED ASSESSMENT PROCEEDINGS ITSELF, HENCE, THE CONSEQUENTIAL OTHER GROUNDS OF APPEAL HAVE BECOME INFRUCTUOUS AND RENDERED ACADEMIC IN NATURE AND AS SUCH DO NOT REQUIRE ANY ADJUDICATION AT THIS STAGE. IN VIEW OF OUR ABOVE FINDINGS, THE A DDITIONS MADE/CONFIRMED BY THE LOWER AUTHORITIES ARE ACCORDINGLY SET ASIDE. 6. IN THE RESULT, THE ASSESSEES APPEAL IS HEREBY A LLOWED. !42-5 64- ( ! + 7 - ( - 8 ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 27, 20 14 SD/- SD/- (N. K. BILLAIYA) (SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER * , MUMBAI; 9 DATED : 27.08.2014 +.../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. * :- ( ! ) / THE CIT(A) 4. * :- / CIT - CONCERNED 5. =+> &-?6 , ! . ?62 , * , / DR, ITAT, MUMBAI 6. @ A, / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , * , / ITAT, MUMBAI