ACIT, CHENNAI V. M/s. Consolidated Civil Construction India Ltd., CHENNAI

ITA 518/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51968 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-10-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 22-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Revised return
• Section: 143(3); 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 518/MDS/2011 (ASSESSMENT YEAR : 2000-01) THE A.C.I.T CIRCLE I(3) CHENNAI (APPELLANT) VS. M/S CONSOLIDATED CIVIL CONSTRUCTION INDIA LTD W 360, NORTH MAIN ROAD ANNA NAGAR [WEST] CHENNAI PAN NO. AAACC 1370 Q (RESPONDENT) ASSESSEE BY : SHRI D. ANAND, ADVOC ATE DEPARTMENT BY : SHRI SHA JI P. JACOB, SR. DR. DATE OF HEARING : 19.10.2011 DATE OF PRONOUNCEMENT : O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY DEPARTMENT FOR THE ASSE SSMENT YEAR 2000-01 AGAINST THE ORDER DATED 15.12.2010 OF COMMI SSIONER OF INCOME TAX [A]-III, CHENNAI. I.T.A. NO. 518/MDS/2011 2 2. THE REVENUE HAS RAISED THREE GROUNDS OF APPEAL A ND THE ONLY ISSUE INVOLVED IN ALL THE GROUNDS OF APPEAL IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 OF RS. 13,14,400/- ON DISALLOWANCE OF RS . 34,14,161/- CLAIMED UNDER THE HEAD LEASE EQUALIZATION CHARGES ON THE GROUND THAT THE ASSESSMENT ORDER U/S 147 R.W.S 143(3) OF T HE ACT DATED 31.3.2003 WAS SET ASIDE BY THE LD. CIT, CHENNAI I VIDE REVISION ORDER U/S 263 DATED 30.3.2005. 3. THE FACTS AS NARRATED BY THE ASSESSING OFFICER I N THE ASSESSMENT ORDER PASSED U/S 147 R.W.S 143(3) OF THE ACT ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.11.2000 A DMITTING TOTAL INCOME OF RS. 61,82,441/-. THE RETURN WAS PROCESS ED U/S 143(1) OF THE ACT. NO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED. LATER ON, IT WAS FOUND THAT AS PER ITEM NO. 11(C) OF FORM 3CB REPORT ANNEXED TO THE RETURN, PROFIT AND L OSS ACCOUNT OF THE YEAR HAD BEEN EXCESSIVELY DEBITED BY RS. 34,14 ,161/- ON ACCOUNT OF LEASE RENTALS TOWARDS LEASE ADJUSTMENT A CCOUNT. THEREFORE, THE NOTICE U/S 148 WAS ISSUED TO THE ASS ESSEE AND THE I.T.A. NO. 518/MDS/2011 3 ASSESSEE, IN RESPONSE THERETO, FILED RETURN OF INCO ME ON 11.3.2002 DECLARING INCOME OF RS. 1,06,61,886/- IN PLACE OF RS. 61,82,440/- ADMITTED IN THE ORIGINAL RETURN. THE DIFFERENCE WA S ON ACCOUNT OF LEASE EQUALIZATION RESERVE OF RS. 34,14,161/- WAS ADDED BACK BY THE ASSESSEE TO THE INCOME OF THE ASSESSEE AND SET OFF IN RESPECT OF THE BROUGHT FORWARD LOSSES OF RS. 52,29,765/- WAS CLAIMED AS AGAINST RS. 69.95 LAKHS CLAIMED EARLIER. THE ASSE SSMENT WAS COMPLETED AT AN INCOME OF RS. 1,12,94,157/-. THER EAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S 271(1)(C) OF TH E ACT ON 31.3.2003 TO THE ASSESSEE FOR FURNISHING INACCURATE PARTICULA RS OF INCOME. 4. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FUR NISHED THE FOLLOWING REPLY: IN THE ABOVE CITED ORDER DATED 31.3.2003 FOR THE AS SESSMENT YEAR 2000-01 THE ASSESSMENT U/S 147 R.W.S. 143(3) WA S MADE BASED ON THE RETURN FILED BY US IN RESPONSE TO NOTICE U/S 148 IN THIS RETURN. WE HAVE ADDED BACK AS INCOME RS. 34,14,161/-. BEING THE AMOUNT SHOWN UNDER LEASE EQUALIZATION REVERSE. THIS WAS ALREADY DISCUSSED IN THE TAX AUDIT REPORT [ITEM 11(C) FORM 3CB FILED ALONGWITH TH E ORIGINAL RETURN. I.T.A. NO. 518/MDS/2011 4 THIS WAS OMITTED TO BE INCLUDED IN THE COMPUTATION OF INCOME FILED ALONGWITH THE ORIGINAL RETURN. THIS OMISSION WAS CORRECTED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. HENCE WE REQUEST THE ASSESSING OFFICER NOT TO TREAT THIS AS DELIBERATE CONCEALMENT OR WILLFUL ATTEMPT TO FURNISH AN INACCURATE PARTICULARS AND DROP THE PENALTY PROCEEDI NGS INITIATED. 5. THE ASSESSING OFFICER, AFTER CONSIDERING THE ABO VE REPLY OF THE ASSESSEE TO THE SHOW CAUSE NOTICE RELYING ON THE DE CISION OF VARIOUS COURTS, NAMELY, M. SAJJANRAJ NAHAR VS. CIT [2006] 2 83 ITR 230 [MAD], ASHOK KUMAR GUPTA VS. CIT [2006] 287 ITR 376 [P&H] AND KESAVAN NAIR VS. CIT [2006] 287 ITR 276 [KAR] WHERE IN IT WAS HELD THAT ACCEPTANCE OF A REVISED RETURN ITSELF CANNOT B E A BAR TO INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AGAINST THE ASSESSEE FOR CONCEALMENT OF INCOME AND THAT IN VIEW OF THE DELETION OF THE WORD DELIBERATELY BY THE AMENDMENT ACT, TH E JURISDICTION OF THE REVENUE TO INITIATE PENALTY PROCEEDINGS FOR THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS B Y THE ASSESSEE HAS BECOME MORE STRINGENT LEVIED PENALTY OF RS. 13,14, 400/- BEING I.T.A. NO. 518/MDS/2011 5 100% OF THE TAX SOUGHT TO HAVE BEEN EVADED FOR FURN ISHING INACCURATE PARTICULARS OF INCOME. 6. BEING AGGRIEVED BY THE SAID ORDER OF THE ASSESSI NG OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE ARGUED THAT THE ASSESSMENT ORDER PASSED BY THE ASSE SSING OFFICER ON 31.3.2003 WAS SET ASIDE BY THE LD. CIT(A), CHENNAI I U/S 263 OF THE ACT ON 31.3.2005. ASSESSEE RELIED ON PAGE 6 PARA 6 OF THE SAID ORDER IN SUPPORT OF ITS SUBMISSION. THEREAFTER, IT WAS SUBMITTED THAT THE PENALTY ORDER DATED 29.3.2007 WAS PASSED O N ACCOUNT OF PENALTY PROCEEDINGS INITIATED IN THE ASSESSMENT ORD ER DATED 31.3.2003 AND AS THE ASSESSMENT ORDER WAS SET ASIDE BY THE ORDER OF THE LD. CIT(A) DATED 30.3.2005, THE PENALTY ORDER D ID NOT HAVE LEGS TO STAND ON. IT WAS ALSO ARGUED THAT THE PENALTY O RDER WAS BARRED BY LIMITATION AS IT WAS PASSED ALMOST AFTER FOUR YE ARS. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD RELIED ON A NON EXISTING ASSESSMENT ORDER DATED 31.3.2003 FOR THE PURPOSE OF LEVY OF PENALTY. I.T.A. NO. 518/MDS/2011 6 7. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE LD. A.R. OF THE ASSESSEE, DELETED THE LEVY OF PENALTY B Y OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AN D THE MATERIAL ON RECORD. I HAVE GONE THROUGH THE ASSESS MENT ORDER U/S 147 R.W.S 143(3) OF THE ACT DATED 31.3.200 3, PENALTY ORDER U/S 271(1)(C) OF THE ACT DATED 29.3.20 07 AND THE ORDER OF THE LD. CIT U/S 263 DATED 30.3.2005. T HE LD. CIT HAS PASSED REVISION ORDER U/S 263 OF THE ACT IN C NO . 218/CIT- I/04-05 DATED 30.3.2005 FOR THE ASSESSMENT YEARS 19 95-96 TO 2000-01 WHEREIN IT WAS HELD AS UNDER: TO SUM UP, ASSESSMENTS OF ASSESSMENT YEAR 1995-96 T O 2000-01 ARE SET ASIDE FOR DETERMINING OF ACCESSIBIL ITY OF RETENTION MONEY AND ASSESSMENTS OF ASSESSMENT YEAR 1995-96, 1997-98, 1999-2000 AND 2000-01 ARE SET ASI DE FOR FRESH ASSESSMENTS WITH REGARD TO CLAIM OF BAD DEBT. AS THE ASSESSMENT ORDER U/S 147 R.W.S. 143(3) DATED 31.3.2003 WAS SET ASIDE BY THE LD. CIT, CHENNAI-I VIDE THE AB OVE REVISION ORDER U/S 263, THERE IS NO VALID ASSESSMENT ORDER FO R LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE LEVY OF PENAL TY U/S 271(1)(C) OF THE ACT ON THE BASIS OF NON EXISTENT A SSESSMENT ORDER IS NOT VALID. I.T.A. NO. 518/MDS/2011 7 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE ORIGINALLY FILED RETURN OF INCOME ON 30.11.2000 SHOWING TOTAL INCOME OF RS. 61,82,441/- WHICH WAS PROCESSED U/S 143(1) OF THE A CT AND NO NOTICE U/S 143(2) WAS ISSUED. THEREAFTER, THE ASSE SSING OFFICER OBSERVED THAT THE ASSESSEE HAD DEBITED RS. 34,14,1 61/- ON ACCOUNT OF LEASE EQUALIZATION RESERVE WHICH WAS NOT AN ALLO WABLE DEDUCTION TO THE ASSESSEE. HE, THEREFORE ISSUED NOTICE U/S 1 48 OF THE ACT TO THE ASSESSEE AND, IN RESPONSE TO THE SAME, THE ASSE SSEE FILED RETURN OF INCOME ON 11.3.2002 IN WHICH LEASE EQUALIZATION RESERVE OF RS. 34,14,161/- WAS ADDED BACK TO THE INCOME WHICH WAS ASSESSED TO THE INCOME OF THE ASSESSEE U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 31.3.2003. THE LD. CIT, CHENNAI-I VIDE ORDER DATED 30.3.2005 PASSED U/S 263 OF THE ACT HELD THE ORDER PASSED U/S 147 R.W.S 143(3) OF THE ACT BY THE ASSESSING OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS IN HI S OPINION, THE ASSESSING OFFICER HAD NOT CONSIDERED AND DECIDED TH E ISSUE OF ALLOWABILITY OF BAD DEBT PROPERLY. THEREFORE, HE R ESTORED THE ISSUE I.T.A. NO. 518/MDS/2011 8 OF ALLOWABILITY OF BAD DEBT BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH BY SETTING ASIDE THE ORDER DATED 31.3.2003 PASSED U/S 147 R.W.S. 143(3) OF THE ACT. THEREAFTER THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT OF RS. 13,14,400/- BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE AS SESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE IN RESPECT OF LEASE EQUALIZATION RESERVE. ON APPEAL, THE LD. CIT(A) DELETED THE PENALTY FOR THE REASON THAT AS THE LD. CIT-I, CHENNAI HAS SET ASIDE THE REASSESSMENT ORDER, THEREFORE, THERE IS NO VALID REASSESSMENT ORDER FOR LEVY OF PENALTY. 9. THE LD. D.R. HAS SUBMITTED THAT THE ENTIRE ORDER OF REASSESSMENT WAS NOT SET ASIDE BY THE LD. CIT-I, CH ENNAI BUT WAS SET ASIDE TO THE ASSESSING OFFICER FOR READJUDICATING T HE ISSUE OF CLAIM OF BAD DEBT AND THEREFORE,, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY BY OBSERVING THAT AS THERE WAS NO VALID REASSESSMENT ORDER FOR LEVY OF PENALTY. I.T.A. NO. 518/MDS/2011 9 10. THE LD. A.R. COULD NOT CONTROVERT THIS SUBMISSI ON OF THE LD. D.R. BY BRINGING ANY MATERIAL ON RECORD. WE, THERE FORE, SET ASIDE THE FINDING OF THE LD. CIT(A) ON THIS GROUND. 11. BEFORE US, THE LD. A.R. OF THE ASSESSEE SUBMITT ED THAT THE ASSESSEE RAISED GROUND OF LIMITATION OF PASSING PEN ALTY ORDER BEFORE THE LD. CIT(A) AND POINTED OUT THAT THE IMPUGNED PE NALTY ORDER WAS PASSED ON 29.3.2007 WHEREAS THE RELEVANT ASSESSMENT ORDER WAS PASSED ON 31.3.2003. FURTHER, HE ALSO POINTED OUT THAT THE MERITS OF THE PENALTY WAS ALSO NOT DECIDED BY THE LD. CIT( A). WE FIND THAT THE ASSESSEE RAISED THE ISSUE OF TIME LIMIT BEFORE THE LD. CIT(A) WHICH WAS NOT DECIDED BY THE LD. CIT(A) AS WELL AS WE ALSO FIND THAT THE LD. CIT(A) HAS NOT RECORDED ANY FINDING ON THE MERITS OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THESE CIRCUMS TANCES, IN OUR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) FOR D ECIDING ALL THE CONTENTIONS RAISED BY THE ASSESSEE BY PASSING A SPE AKING ORDER AS PER LAW. NEEDLESS TO MENTION THAT THE LD. CIT(A) S HALL ALLOW REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTI ES BEFORE I.T.A. NO. 518/MDS/2011 10 READJUDICATING THE ISSUE AFRESH. THUS THE GROUNDS OF APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF HEAR ING IN THE PRESENCE OF THE PARTIES ON 19 TH OCTOBER, 2011. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 19 TH OCTOBER, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), CHENNAI (4) CIT, CHENNAI (5) D.R. (6) GUARD FILE