M/s. Marubeni India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4963/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58487 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Reopening of assessment; Depreciation; Reason to believe
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.4963/DEL/2011 4963/DEL/2011 4963/DEL/2011 4963/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2003 2003 2003 2003- -- -04 0404 04 M/S MARUBENI INDIA PRIVATE M/S MARUBENI INDIA PRIVATE M/S MARUBENI INDIA PRIVATE M/S MARUBENI INDIA PRIVATE LIMITED, LIMITED, LIMITED, LIMITED, 5 55 5 TH THTH TH FLOOR, LOTUS TOWER FLOOR, LOTUS TOWER FLOOR, LOTUS TOWER FLOOR, LOTUS TOWER, ,, , COMMUNITY CENTRE, COMMUNITY CENTRE, COMMUNITY CENTRE, COMMUNITY CENTRE, NEW FRIENDS COLONY, NEW FRIENDS COLONY, NEW FRIENDS COLONY, NEW FRIENDS COLONY, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAACM6413A. PAN : AAACM6413A. PAN : AAACM6413A. PAN : AAACM6413A. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -6(1), 6(1), 6(1), 6(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH MALHOTRA, CA. RESPONDENT BY : SHRI R.S.NEGI, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A) DATED 10 TH AUGUST, 2011 FOR THE ASSESSMENT YEAR 2003- 04. 2. THE FIRST GROUND OF THE ASSESSEES APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW HAVE ERRED IN REOPENING THE CASE U/S 147/148 OF THE INCOME TAX ACT, 1961. THE ACTION OF THE AUTHORITIES BELOW IS UNJUSTIFIED, WRONG AND BAD AT LAW. THEREFORE ORDER PASSED U/S 147/143(3) SHOULD BE QUASHED. 3. AT THE TIME OF HEARING BEFORE US, IT WAS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSMENT YEAR U NDER CONSIDERATION IS AY 2003-04. IN THIS CASE, ORIGINAL ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) ON 17 TH MARCH, 2006. THE ASSESSMENT WAS REOPENED ITA-4963/DEL/2011 2 VIDE NOTICE UNDER SECTION 148 DATED 22 ND MARCH, 2010. THUS, THE ASSESSMENT WAS ADMITTEDLY REOPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE COPY OF THE REAS ONS RECORDED IS AT PAGE 56 OF THE ASSESSEES PAPER BOOK, FROM WHICH, I T WOULD BE EVIDENT THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESS EE TO PRODUCE ANY MATERIAL EVIDENCE WHICH HAS CAUSED ESCAPEMENT OF IN COME. ON THE OTHER HAND, IT IS CLEAR THAT THE OPINION FOR ESCAPE MENT OF INCOME IS FORMED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD . WHEN THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AS PER PROVISO TO SECTION 147, THE A SSESSMENT CANNOT BE REOPENED AFTER FOUR YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR. HE, THEREFORE, SUBMITTED THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW. THE SAME SHOULD BE QUASHED AND CONSEQU ENTLY, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO SUCH REOPEN ING SHOULD ALSO BE QUASHED. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE ASSESSING OFF ICER HAS DULY RECORDED THE REASONS FOR ESCAPEMENT OF INCOME. THE CORRECTNESS OF THE REASONS RECORDED HAS NOT BEEN DISPUTED BY THE A SSESSEE. THEREFORE, WHEN ESCAPEMENT OF INCOME IS EVIDENT, TH E REOPENING OF ASSESSMENT SHOULD BE UPHELD. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SECTION 147 OF THE IT ACT, 1961 READS AS UNDER:- 147. 147. 147. 147. IF THE ASSESSING OFFICER HAS REASON TO BELI EVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISI ONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE LOSS OR THE DEPRECIATION ITA-4963/DEL/2011 3 ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY B E, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SE CTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEV ANT ASSESSMENT YEAR) : PROVIDED PROVIDED PROVIDED PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESS MENT YEAR. 6. FROM THE PROVISO TO SECTION 147, IT IS EVIDENT T HAT WHERE AN ASSESSMENT WAS COMPLETED UNDER SECTION 143(3), NO A CTION SHALL BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO (I) FURNISH THE RETURN OF INCOME AND, (II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT. 7. IN THE CASE OF THE ASSESSEE, IT IS UNDISPUTED TH AT ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3). THE ASSESSMENT YEAR INVOLVED IN THIS CASE IS AY 2003-04. THUS, FO UR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WILL EXPIRE ON 31 ST MARCH, 2008. THE ASSESSMENT WAS REOPENED VIDE NOTICE DATED 22 ND MARCH, 2010. THUS, THE ASSESSMENT WAS REOPENED AFTER MORE THAN FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE ORIGINAL A SSESSMENT ORDER DATED 17 TH MARCH, 2006, THE ASSESSING OFFICER HAS MENTIONED T HAT RETURN OF INCOME WAS FILED ON 2 ND DECEMBER, 2003. THUS, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE RETURN OF INCOME. NOW, IN SUCH CIRCUMSTANCES, AS PER PROVISO TO SECTI ON 147, THE ASSESSMENT CAN BE REOPENED ONLY IF THERE IS FAILURE ON THE PART OF THE ITA-4963/DEL/2011 4 ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT. TO ASCERTAIN THIS, IT WOULD BE RELEVAN T TO EXAMINE THE REASONS RECORDED UNDER SECTION 147 BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT. COPY OF REASONS RECORDED IS GIVEN AT PAGE 56 OF THE ASSESSEES PAPER BOOK. THE SAME READS AS UNDER:- FROM THE RECORDS IT HAS BEEN FOUND THAT THE ASSESS EE, HAD DEBITED RS.12,00,000/-, TO PROFIT & LOSS ACCOUNT ON ACCOUNT OF WARRANTIES. FROM THE BALANCE SHEET IT IS REVEAL ED THAT THE AMOUNT DEBITED TO P & L ACCOUNT IS MERELY A PRO VISION FOR WARRANTIES AND NOT AN ASCERTAINED LIABILITY. T HUS, THE ASSESSEE SHOULD NOT HAVE CLAIMED THIS AMOUNT. FROM THE RECORDS IT HAS ALSO BEEN FOUND THAT THE ASSESSEE IN ITS COMPUTATION OF INCOME FROM BUSINESS & PROFESSION DEDUCTED RS.22,59,030/-, ON ACCOUNT OF G RATUITY FOR PREVIOUS YEARS PAID IN FINANCIAL YEAR 2003-04. AS THE EXPENDITURE WAS INCURRED IN THE PREVIOUS YEAR RELEV ANT TO THE ASSESSMENT YEAR 2004-05, THE DEDUCTION CLAIMED IN ASSESSMENT YEAR 2003-04 SHOULD HAVE BEEN DISALLOWED BY THE ASSESSEE ON ITS OWN. AS PER 3CD REPORT ALSO TH ERE WAS NO SUCH LIABILITY INCURRED OR PAID DURING THE AY 20 03-04. THUS, THE DEDUCTION WAS WRONGLY CLAIMED. I, THEREFORE, HAVE REASON TO BELIEVE THAT THE INCO ME OF RS.34,59,030/-, HAS ESCAPED ASSESSMENT WITHIN TH E MEANING OF SECTION 147 OF THE I.T.ACT, 1961, DUE TO OMISSION ON THE PART OF THE ASSESSEE TO INCLUDE THI S SUM INTO ITS INCOME FOR THE RELEVANT PREVIOUS YEAR. 8. FROM THE PERUSAL OF THE ABOVE REASONS RECORDED, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS FORMED THE BELIEF OF ESCAPEMENT OF INCOME ONLY ON THE BASIS OF MATERIAL AVAILABLE ON R ECORD. IN FACT, IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS MENTION ED FROM THE RECORDS IT HAS BEEN FOUND . IN THE REASONS RECORDED, THERE IS NO MENTION ABOUT THE FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSE ANY MATERIAL FACTS. ON THE OTHER HAND, THE ASSESSING O FFICER HIMSELF HAS MENTIONED THAT THE INFORMATION ON THE BASIS OF WHIC H HE IS FORMING OPINION OF ESCAPEMENT OF INCOME IS AVAILABLE ON REC ORD. THEREFORE, WE HAVE NO HESITATION TO HOLD THAT THERE WAS NO FAILUR E ON THE PART OF THE ITA-4963/DEL/2011 5 ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. IN VIEW OF THE ABOVE, REOPENING OF ASS ESSMENT AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS BAD IN LAW AND THE SAME IS QUASHED. ONCE THE REOPENING OF ASSESSM ENT ITSELF HAS BEEN QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUA NCE THERETO IS ALSO QUASHED AND THE ORIGINAL ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) IS RESTORED. 9. GROUND NO.2 OF THE ASSESSEES APPEAL IS AGAINST THE DISALLOWANCE OF ` 12 LAKHS SUSTAINED BY THE LEARNED CIT(A). HOWEVER, AS WE HAVE QUASHED THE IMPUGNED ASSESSMENT ORDER ITSELF, THIS GROUND OF THE ASSESSEES APPEAL WILL NOT SURVIVE FOR ADJUDICATION AT THIS STAGE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY, 2012. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 13.01.2012 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR