GAIL (India) Ltd., New Delhi V. DCIT, New Delhi

ITA 5083/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3971 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 26-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIBHU AGGARWAL
• Keywords: Depreciation; Rectification of order; Opportunity of being heard; Right to appeal
• Section: 13; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.5083/DEL/2016 ASSESSMENT YEAR: 2008-2009 GAIL (INDIA) LTD., 16, BHIKAJI CAMA PLACE, NEW DELHI. VS. DY. COMMISSIONER OF INCOME TAX, LTU, NBCC PLAZA, PUSHP VIHAR, NEW DELHI. TAN/PAN: AAACG1209J (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ROHIT JAIN, ADV., MS. DEEPASHREE RAO, ADV. & MR. VIBHU AGGARWAL, CA RESPONDENT BY: SHRI SUNITA SINGH, CIT-D.R. DATE OF HEARING: 13 07 2020 DATE OF PRONOUNCEMENT: 09 10 2020 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 25.07.2016, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXII, IN RELAT ION TO THE ORDER PASSED U/S.154 FOR THE ASSESSMENT YEAR 2008-0 9. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] ERRED IN DISMISSING IN LIMINE, THE APPEAL FILED BY THE AP PELLANT AGAINST THE ORDER DATED 28.07.2015 READ ALONG WITH ORDER I.T.A. NO.5083/DEL/2016 2 DATED 19.02.2015, BOTH PASSED UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 (THE ACT). 1.1 THAT THE CIT(A) ERRED IN DISMISSING THE APPEAL HOLDING THAT THE GROUNDS OF APPEAL RAISED BY THE APPELLANT DID NOT PERTAIN TO/ARISE FROM THE RECTIFICATION ORDER DATED 28.07.2015, WHICH WAS UNDER CHALLENGE, THAT TOO, WITHOUT AFFO RDING ANY OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 1.2 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN N OT APPRECIATING THAT RECTIFICATION ORDER DATED 19.02.2 015 STOOD MERGED WITH THE SUBSEQUENT ORDER DATED 28.07.2015 A ND THEREBY APPEAL FILED BY THE APPELLANT WAS SUSTAINAB LE AND OUGHT TO HAVE BEEN ADMITTED AND DECIDED ON MERITS. ON MERITS 2. WITHOUT PREJUDICE, THAT THE CIT(A) ERRED ON FACT S AND IN LAW IN NOT DELETING DISALLOWANCE OF PRIOR PERIOD EX PENDITURE OF RS.25,76,38,511 MADE IN THE IMPUGNED RECTIFICATION ORDER(S) PASSED UNDER SECTION 154 OF THE ACT. 2.1 THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW I N NOT APPRECIATING THAT THE ISSUE OF ALLOWABILITY OF PRIO R PERIOD EXPENSE, WAS, IN ANY CASE, A DEBATABLE ISSUE, AND N OT A MISTAKE APPARENT FROM RECORD RECTIFIABLE UNDER SE CTION 154 OF THE ACT. 2. THE ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKIN G, ENGAGED IN THE BUSINESS OF PRODUCTION OF LIQUIFIED PETROLEUM GAS AND OTHER NATURAL GASES, PROCESSING, TRANSMISSI ON, FRACTIONATION AND SALES/DISTRIBUTION. THE RETURN OF INCOME WAS FILED ELECTRONICALLY ON 29.09.2008 AT RS.3513,0 1,83,570/- I.T.A. NO.5083/DEL/2016 3 AND THE ORDER WAS PASSED U/S.143(3) VIDE ORDER DATE D 24.12.2010 ASSESSING THE INCOME AT RS.3779,17,08,54 2/-. SUBSEQUENTLY, THE ASSESSING OFFICER PASSED AN ORDER U/S.154 DATED 19.02.2015 REVISING THE INCOME TO RS.3827,81, 08,542/- AFTER MAKING DISALLOWANCE OF PRIOR PERIOD EXPENDITU RE OF RS.28.64 CRORE. LATER, ON THE APPLICATION OF THE AS SESSEE U/S 154 INCOME WAS FURTHER RECTIFIED AND REVISED TO RS.3824,93,47,053/- VIDE ORDER DATED 28 TH JULY, 2015. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS OF FERED TO TAX, PRIOR PERIOD INCOME OF RS.21.75 CRORES, WHICH WAS NET OF THE PRIOR PERIOD INCOME OF RS.50.39 CRORE AND PRIOR PERIOD EXPENDITURE OF RS.28.64 CRORE. THIS AMOUNT OF RS.28 .64 CRORES WAS DISALLOWED BY ASSESSING OFFICER VIDE ORD ER DATED 09.02.2015. THEREAFTER, ASSESSEE HAS FILED AN APPLI CATION DATED 04.03.2015 POINTING OUT THAT AMOUNT OF DISALL OWANCE OF RS.28,64,00,000/- INCLUDES AMOUNT OF RS.2,87,61,489 /- WHICH WAS THE AMOUNT OF PRIOR PERIOD DEPRECIATION D ISALLOWED BY THE ASSESSEE SUO MOTU . LD. ASSESSING OFFICER BESIDES OTHER POINTS HAS ACCEPTED THE ASSESSEES CONTENTION AND H E REDUCED THE INCOME OF THE ASSESSEE BY AN AMOUNT OF RS.2,87, 61,489/-. 3. IN THE APPEAL BEFORE THE LD. CIT (A), THE ASS ESSEE CHALLENGED THE ENTIRE DISALLOWANCE OF PRIOR PERIOD EXPENDITURE OF RS.25,76,38,511/-. THIS ADDITION WAS BASICALLY A RISING OUT OF RECTIFICATION ORDER DATED 09.02.2015, WHEREIN TH E ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS.28,64,00,000/- WHICH THOUGH WAS FURTHER REDUCED TO THE EXTENT OF RS.2,87 ,61,489/- IN THE IMPUGNED RECTIFICATION ORDER DATED 28.07.201 5. I.T.A. NO.5083/DEL/2016 4 LD. CIT (A) HELD THAT THE PRESENT APPEAL FILE D BY THE ASSESSEE IS AGAINST THE ORDER U/S.154 PASSED ON 28. 07.2015, HOWEVER, THE ISSUE OF DISALLOWANCE AND GROUNDS OF A PPEAL RAISED PERTAIN TO GRIEVANCE ARISING FROM THE ORDER U/S.154 DATED 19.02.2015 WHEREIN THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE PRIOR PAID EXPENDITURE. IN TH E PRESENT RECTIFICATION ORDER U/S.154 DATED 28.07.2015 ONLY A RELIEF OF RS.287,61,489/- WAS REQUESTED WHICH HAS BEEN ALLOWE D BY THE ASSESSING OFFICER. HE HELD THAT SINCE THE GROUN DS OF APPEAL RAISED DO NOT PERTAIN TO THE ORDER UNDER APP EAL, HE THUS, DISMISSED THE APPEAL. HOWEVER, HE CLARIFIED T HAT THIS ORDER SHALL NOT PREJUDICE ANY LEGAL RIGHT TO THE APP EAL PERTAINING TO THE ORDER DATED 19.02.2015 IF OTHERWI SE AVAILABLE UNDER THE LAW. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE THOU GH MADE A VERY DETAILED SUBMISSION, HOWEVER IN SUM AND SUBS TANCE, HE SUBMITTED THAT EARLIER ORDER U/S.154 GOT MERGED WITH THE SUBSEQUENT ORDER U/S.154, AND THEREFORE, THE DISALL OWANCE MADE BY THE ASSESSING OFFICER IN THE ORIGINAL RECTI FICATION ORDER CAN BE CHALLENGED IN THE PRESENT PROCEEDINGS. HE SUBMITTED THAT IF THE APPEAL WAS DEFECTIVE, THEN TH E LD. CIT (A) SHOULD HAVE GRANTED OPPORTUNITY FOR REMOVING THE DE FECT OR OTHERWISE THERE WAS ANY TECHNICAL DEFECT THEN NOTIC E SHOULD HAVE BEEN ISSUED. HE SUBMITTED THAT ASSESSEE HAS A RIGHT FOR REMEDY AND RIGHT TO APPEAL IF THERE IS A WRONG LEVY OF TAX OR DISALLOWANCE HAVE BEEN MADE WHICH OTHERWISE COULD N OT HAVE BEEN MADE ON THE FACTS AND IN LAW AND THERE WAS A C LEAR CUT I.T.A. NO.5083/DEL/2016 5 MISTAKE APPARENT FROM THE RECORD, THEREFORE, THIS I SSUE OF DISALLOWANCE OF RS.25,76,38,511/- SHOULD BE DECIDED IN THE PRESENT PROCEEDINGS ITSELF. 5. ON THE OTHER HAND, LD. DR SUBMITTED THAT HERE IN THIS CASE THE ASSESSEE HAD A GRIEVANCE ON ACCOUNT OF DIS ALLOWANCE OF PRIOR PAID EXPENDITURE MADE IN THE FIRST RECTIFI CATION ORDER DATED 19.02.2015 FOR WHICH THERE WAS A SEPARATE LEG AL REMEDY. IT WAS ON ASSESSEES APPLICATION U/S.154 RE QUESTING THE ASSESSING OFFICER TO GRANT RELIEF OF RS.2,87,61 ,489/- WHICH HAS ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER, THERE WAS NO GRIEVANCE OF THE ASSESSEE AGAINST THE ORDER U/S. 154, THEREFORE, THE LD. CIT(A) HAS RIGHTLY DISMISSED THE APPEAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE GROUNDS OF APP EAL RAISED BEFORE US, THE ASSESSEE HAS CHALLENGED THE DISALLOW ANCE OF PRIOR PAID EXPENDITURE OF RS.25,26,38,511/-. THIS DISALLOWANCE WAS MADE IN THE FIRST RECTIFICATION OR DER DATED 19.02.2015 WHEREIN THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF PRIOR PAID EXPENDITURE OF RS.28,64, 00,000/-. THEREAFTER, ASSESSEE HAS MADE AN APPLICATION ON 04. 03.2015 POINTING OUT VARIOUS MISTAKES AND ONE OF SUCH MISTA KE WAS THAT THE AMOUNT OF DISALLOWANCE OF RS.28,64,00,000/ - INCLUDES THE AMOUNT OF RS.287,61,489/- WHICH WAS ON ACCOUNT OF PRIOR PAID DEPRECIATION SUO MOTU DISALLOWED BY THE ASSESSEE, THEREFORE, SAME SHOULD BE RECTIFIED. THE ASSESSING OFFICER ACCEPTED THE ASSESSEES APPLICATION AND RED UCED THE I.T.A. NO.5083/DEL/2016 6 SAID AMOUNT. NOW BEFORE THE LD. CIT (A) AND BEFORE US, THE LD. COUNSEL IS AGITATING THAT THE ENTIRE DISALLOWANCE O F EXPENDITURE IN FACT COULD NOT HAVE BEEN MADE ON MER ITS. THOUGH, NO FAULT CAN BE FOUND IN THE ORDER OF THE L D. CIT (A), BECAUSE IN SO FAR AS SECOND RECTIFICATION ORDER DAT ED 28.07.2015, NO DISALLOWANCE HAS BEEN MADE; AND IN F ACT WHATEVER RELIEF WAS SOUGHT BY THE ASSESSEE IN ITS A PPLICATION HAS BEEN ALLOWED. LD. COUNSEL HAS ALSO INFORMED THA T ASSESSEE HAS EVEN FILED SECOND SET OF RECTIFICATION APPLICATION BEFORE THE ASSESSING OFFICER AGAINST ORDER DATED 09 .02.2015, WHEREIN IT HAS CHALLENGED THE ENTIRE DISALLOWANCE O F PRIOR PERIOD EXPENDITURE WHICH HAS NOT BEEN DISPOSED OFF; AND SECONDLY, IT HAS ALSO BEEN PRAYED BEFORE US THAT LI BERTY SHOULD BE GIVEN TO FILE THE APPEAL BEFORE THE FIRST APPELL ATE AUTHORITY AGAINST THE FIRST RECTIFICATION ORDER PASSED U/S.15 4 DATED 19.02.2015. THESE PLEAS HAVE BEEN TAKEN ONLY BY WAY OF ALTERNATIVE CONTENTION, OTHERWISE THE MAIN CONTENTI ON OF THE LD. COUNSEL IS THAT THE FIRST RECTIFICATION ORDER H AS BEEN MERGED WITH THE SECOND RECTIFICATION ORDER, AND THE REFORE, ALL THESE ISSUES ARISING IN THE FIRST RECTIFICATION ORD ER ARE OPEN AND CAN BE CHALLENGED BY THE ASSESSEE. HOWEVER, WE ARE UNABLE TO ACCEPT THIS CONTENTION OF THE LD. COUNSEL , BECAUSE THE RIGHT COURSE OF REMEDY WOULD HAVE BEEN THAT ASS ESSEE SHOULD HAVE FILED THE APPEAL BEFORE THE APPELLATE F ORUM AGAINST THE FIRST RECTIFICATION ORDER DATED 19.02.2 015 AND/ OR HAD FILED AN APPLICATION FOR RECTIFICATION AGAINST THE SAID ORDER. SINCE RIGHT TO APPEAL IS A SUBSTANTIAL RIGHT AND IF ANY I.T.A. NO.5083/DEL/2016 7 DISALLOWANCE HAS BEEN MADE WHICH OTHERWISE IS NOT SUSTAINABLE IN LAW AND ON FACTS, THEN SUCH A LEGAL REMEDY IS ALWAYS AVAILABLE TO THE ASSESSEE IN THE INTEREST OF SUBSTANTIAL JUSTICE. 7. ACCORDINGLY, ON THE FACTS OF THE PRESENT CASE , WE ARE GRANTING LIBERTY TO THE ASSESSEE TO FILE APPEAL BEF ORE THE FIRST APPELLATE AUTHORITY AGAINST THE FIRST RECTIFICATION ORDER DATED 19.02.2015 ALONG WITH PETITION FOR CONDONATION OF D ELAY WHERE IT CAN CHALLENGE SUCH DISALLOWANCE IN THE SAID APPE AL. FURTHER, ASSESSING OFFICER IS ALSO DIRECTED TO DISP OSE OF THE RECTIFICATION APPLICATION IF THE ASSESSEE HAS FILED SUCH AN APPLICATION AGAINST FIRST RECTIFICATION ORDER DATED 19.02.2015 EXPEDITIOUSLY; AND WHATEVER MAY THE OUTCOME OF SUCH RECTIFICATION, THE ASSESSEE CAN EXPLORE THE LEGAL R EMEDY OF APPEAL FOR REDRESSING ITS GRIEVANCE. WITH THIS DIRE CTION, THOUGH TECHNICALLY APPEAL OF THE ASSESSEE IS TREATE D AS DISMISSED BUT SUBJECT TO OUR AFORESAID DIRECTION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER, 2020. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 09/10/2020 PKK: