DCIT, New Delhi V. M/s Central Electronics Ltd., New Delhi

ITA 484/DEL/2011

• Counselvise Citation: 48420114 RSA 2011
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-09-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Search and seizure; Difference of opinion; Reason to believe; Change of opinion; Capital expenditure
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULBHARAT, JUDICIAL MEMBER I.T.A .NO.- 484/DEL/2011 (ASSESSMENT YEAR-2002-03) DCIT VS. CENTRAL ELECTRONICS LTD. CIRCLE 3(1), 781, DESH BANDHU GUPTA ROAD, NEW DELHI. KAROL BAGH, NEW DELHI PAN-AAACC1261G (A PPELLANT) (RESPONDENT ) APPELLANT BY: SH. R.S.SINGHVI, CA RESPONDENT BY: SH. AROOP KR. SINHA, SR. DR APPEAL HEARD ON-04.09.2012 ORDER PRONOUNCED ON-14.09.2012 ORDER PER KULBHARAT, JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 31.11.2010 OF LD. CIT(A)-VI, NEW DELHI. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF THE APPEAL:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN AN NULLING THE ORDER U/S 143(3)/147 OF THE I.T.ACT WHILE HOLDI NG INVALID THE REOPENING U/S 147 IGNORING THAT WHERE TRANSACTION ITSELF, ON THE BASIS OF SUBSEQUENT INFO RMATION IS FOUND TO BE BOGUS TRANSACTION, MERE DISCLOSURE OF T HAT TRANSACTION AT TIME OF ORIGINAL ASSESSMENT PROCEEDI NGS CANNOT BE SAID TO BE A DISCLOSURE OF THE TRUE AND FULL I.T.A .NO.- 484/DEL/2011 2 FACTS IN THE CASE AND ITO WOULD HAVE JURISDICTION T O REOPEN CONCLUDED ASSESSMENT IN SUCH A CASE. RELIANCE IS P LACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN PHO OL CHAND BAJRANG LAL VS ITO (1993) 203 ITR 456 (SC); BAWA ABHAI SINGH VS DCIT 253 ITR 83 (DEL); 142 CTE (DELHI) 272 & 225 ITR 496; RAM PRASAD VS ITO (1995) 82 TAXMAN 199 (ALL.). 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST THE ANNULLING THE ORDER U/S 143(3)/147 OF THE INCOME TAX ACT, 1961 . THE FACTS IN BRIEF ARE THAT THE SCRUTINY ASSESSMENT WAS COMPLETED ON 25.01 .2005 AT AN ASSESSED LOSS OF RS. 25,73,517/-. SUBSEQUENTLY, FROM THE PE RUSAL OF RECORDS, THE ASSESSING OFFICER OBSERVED THAT IN THE PROFIT & LOS S ACCOUNT UNDER THE HEAD PROVISIONS AND WRITE OFF THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 17,42,426/- AS CAPITAL EXPENDITURE WHICH IS NOT ALLOWABLE. SIMILARLY, A PROVISIONS OF RS. 3,82,976/- FOR NON/SLOW MOVING AS SETS, STORES AND SPARES HAS ALSO BEEN CLAIMED WHICH AGAIN IS NOT AN ALLOWAB LE DEDUCTION. THIS HAS RESULTED IN ESCAPEMENT OF INCOME AS OVER ASSESSMENT OF LOSS OF RS. 21,25,402/-. UNDER THESE FACTS AND CIRCUMSTANCES, THE CASE WAS REOPENED AND A NOTICE WAS SERVED UPON THE ASSESSEE COMPANY. 4. THE ASSESSING OFFICER AFTER CONSIDERING VARIOUS CASE LAWS MADE ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT WHEREBY THE AMOUNT I.T.A .NO.- 484/DEL/2011 3 OF RS. 21,25,402/- WAS ADDED BACK TO THE INCOME OF THE ASSESSEE COMPANY. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE L D. CIT(A), INTER ALIA, CHALLENGING THE REOPENING OF THE CASE U/S 147/148 OF THE ACT. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND EXAMIN ING JUDICIAL PRONOUNCEMENTS, CAME TO CONCLUSION THAT THE REOPENI NG OF ASSESSMENT BEYOND THE PERIOD OF 4 YEARS, WITHOUT ESTABLISHING THE ASSESSEES FAILURE TO DISCLOSE THE MATERIAL FACTS AND BY MERELY USING THE SAME MATERIAL WHICH WAS AVAILABLE ON RECORD AND WAS SUBJECT MATTER OF SCRUT INY ASSESSMENT, IS BEYOND THE SCOPE OF SECTION 147. HENCE, THE REOPENING IN THIS CASE WAS HELD TO BE INVALID. AGAINST THIS FINDING, THE REVENUE IS IN A PPEAL BEFORE THIS TRIBUNAL. 5. LD. DR STRONGLY RELIED ON THE ORDER OF ASSESSING OFFICER AND THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF P HOOL CHAND BAJRANG LAL VS ITO (1993) 203 ITR 456 (SC); BAWA ABHAI SINGH VS DCIT 253 ITR 83 (DEL); RAM PRASAD VS ITO (1995) 82 TAXMAN 199 (ALL. ). ON THE CONTRARY, LD. AR SUBMITTED THAT REOPENING OF THE ASSESSMENT W AS BAD IN LAW AND THE ENTIRE MATERIAL WAS AVAILABLE DURING THE ORIGINAL A SSESSMENT. HE SUBMITTED THAT THE REOPENING OF ASSESSMENT WAS MADE AFTER 4 Y EARS AND SUCH REOPENING WAS MADE WITHOUT ESTABLISHING THE ASSESSEES FAILUR E TO DISCLOSE THE MATERIAL FACTS. HE SUBMITTED THAT THE CASE IS SQUARELY COVE RED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT AS WELL AS THE HON'BLE APE X COURT RENDERED IN THE I.T.A .NO.- 484/DEL/2011 4 CASE OF SATNAM OVERSEAS LTD. VS ADDL. CIT 188 TAXMA N 172 AND CIT VS KELVINATOR OF INDIA LTD. 187 TAXMAN 312. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED MATE RIAL AVAILABLE ON RECORD AND THE JUDGEMENT CITED. WE FIND THAT THE LD . CIT(A) HAS RELIED UPON THE JUDGEMENT OF THE HON'BLE SUPREME COURT AND IN T HE CASE OF CIT VS KELVINATOR OF INDIA LTD. (SUPRA) WHEREIN HON'BLE SU PREME COURT HAS OBSERVED AS UNDER :- ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO TH E WORDS REASON TO BELIEVE FAILING WHICH, WE ARE AFRAID, S ECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICE R TO REOPEN ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION , WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KE EP IN MIND THE CONCEPTIONAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE-ASSESS. THE ASSESSING OFFICER HAS NO POWER T O REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITION AND IF THE CON CEPT OF CHANGE OF OPINION IS REMOVED, AS CONTENDED ON BEHALF OF T HE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSE SSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEP T OF CHANGE OF OPINION AS AN IN-BUILT TEST TO CHECK ABUSE OF P OWER OF THE ASSESSING OFFICER. 7. LD. CIT(A) HAS TAKEN NOTE OF THE DECISION OF THE HO N'BLE DELHI HIGH COURT RENDERED IN THE CASE OF SATNAM OVERSEAS LTD. VS. ADDL. CIT (SUPRA), WHEREIN IT HAS BEEN HELD BY THE HON'BLE DELHI HIGH COURT THAT SINCE REASONS GIVEN FOR REOPENING ASSESSMENT SIMPLY RELIED UPON R ECORD WHICH WAS AVAILABLE FOR ASSESSING OFFICER WHILE COMPLETING TH E ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THERE WAS NO SCO PE FOR REASSESSMENT I.T.A .NO.- 484/DEL/2011 5 PROCEEDINGS AND, THEREFORE, THE IMPUGNED NOTICES WE RE LIABLE TO BE QUASHED. IN THE CASE IN HAND ALSO UNDISPUTED FACTS ARE THAT THE REOPENING OF THE ASSESSMENT IS BEYOND THE PERIOD OF 4 YEARS AND THE ASSESSING OFFICER HAS NOT ESTABLISHED THE ASSESSEES FAILURE TO DISCLOSE THE MATERIAL FACTS. THE ENTIRE FACTS WERE AVAILABLE DURING THE SCRUTINY ASSESSMENT . HENCE, IN OUR CONSIDERED OPINION, THE CASE LAWS AS RELIED BY THE REVENUE, ARE NOT APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 8. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF LD. CIT(A), HENCE THIS GROUND OF THE REVENUES APPE AL IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON14.09.2012. SD/- SD/- (S.V.MEHROTRA) (KULBHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A .NO.- 484/DEL/2011 6