DCIT 7(3), MUMBAI V. VIP INDUSTRIES LTD, MUMBAI

ITA 5412/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2601 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHINAY KANBHAR
• Keywords: Gift; Difference of opinion; Reason to believe; Change of opinion
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.5412/M/2013 ASSESSMENT YEAR: 2006-07 DY. COMMISSIONER OF INCOME - TAX-7(3), ROOM NO.615, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 VS. M/S. VIP INDUSTRIES LTD., DGP HOUSE, 88-C, OLD PRABHADEVI ROAD, MUMBAI 400 025 PAN: AAACV 0177G (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI J.P. BAIRAGRA, A.R. REVENUE BY : SHRI ABHINAY KANBHAR, D.R. DATE OF HEARING : 26.10.2015 DATE OF PRONOUNCEMENT : 30.10.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 20.05.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. THE SOLE ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS RELATING TO THE ACTION OF THE LD. CIT(A) IN HOLDING THAT THE REOPEN ING OF THE ASSESSMENT UNDER SECTION 115WG OF THE INCOME TAX ACT BY THE ASSESSIN G OFFICER (HEREINAFTER REFERRED TO AS THE AO) ON THE GROUND THAT THE FRING E BENEFITS CHARGEABLE TO TAX FOR THE YEAR UNDER CONSIDERATION HAD ESCAPED ASSESS MENT DURING THE ASSESSMENT OF FRINGE BENEFITS UNDER SECTION 115WE(3) OF THE AC T. THE AO REOPENED THE ASSESSMENT UNDER SECTION 115WG READ WITH SECTION 11 5WH OF THE ACT FORMING HIS REASONS TO BELIEVE THAT THE FRINGE BENEFITS LIA BLE TO BE TAXED UNDER THE ITA NO.5412/M/2013 M/S. VIP INDUSTRIES LTD. 2 RELEVANT PROVISIONS HAD ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION ON THE BASIS OF THE REPOT OF THE AUDIT PARTY. THE AO, THEREAFTER, RECORDED REASONS THAT ON PERUSAL OF RECORD IT HAS BEEN FOUND THAT UN DER THE HEAD SALE PRMOTION AS AGAINST THE VALUE OF FRINGE BENEFIT OF RS.17,71, 808/-, THE VALUE TAKEN WAS RS.13,26,233/-. SIMILARLY, UNDER THE HEAD GIFT V ALUE OF RS.84,988/- WAS TAKEN INSTEAD OF RS.24,44,368/-. HE, THEREFORE, WA S OF THE BELIEF THAT THERE WAS UNDERASSESSMENT ON FRINGE BENEFIT OF RS.28,04,945/- . HE, THEREFORE, HELD THAT IT WAS A FIT CASE OF MAKING REASSESSMENT UNDER SECTION 115WG OF THE ACT BY ISSUING NOTICE UNDER SECTION 115WH OF THE ACT. 3. WE MAY MENTION HERE THAT THE COPY OF THE REASONS RECORDED IS PLACED AT PAGE 11 OF THE PAPER BOOK. A PERUSAL OF THE SAME R EVEALS THAT THE AO HAS NOT PUT ANY DATE ON THE SAID DOCUMENT AND THEREFORE THE REASONS RECORDED ARE UNDATED. FURTHER, A PERUSAL OF THE ASSESSMENT ORDE R DECIDED BY THE AO UNDER SECTION 115WE(3) READ WITH SECTION 115WH OF THE ACT REVEALS THAT IT HAS BEEN MENTIONED THEREIN THAT THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 115WE(3) VIDE ORDER DATED 18.07.08. SUBSEQUENTLY, THE NOTICE UNDER SECTION 115WH OF THE ACT WAS ISSUED ON 28.03.12 WHICH WAS S ERVED ON THE ASSESSEE ON 02.04.12. HENCE, ADMITTEDLY THE REOPENING IN TH IS CASE WAS DONE AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. THE LD. CIT(A) VIDE IMPUGNED ORDER HAS QUASHED THE REASSESS MENT ON THE GROUND THAT IT WAS A CASE OF CHANGE OF OPINION BY THE AO. THE LD. CIT(A) HAS OBSERVED THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS UNDER S ECTION 115WE(3), THE AO CONSIDERED SCHEDULE VI OF THE P&L ACCOUNT AND THE D ETAILS SUBMITTED DURING THE COURSE OF THE ASSESSMENT WHICH REVEALED THAT TH E AO HAD CONSIDERED THE ASSESSEES CLAIM OF TREATING THE EXPENSES OTHER THA N DECLARED IN THE FRINGE BENEFIT TAX RETURN AS EXEMPT. THE AO HAD ALSO MADE DISCUSSION IN RESPECT OF ASSESSEES FESTIVAL BONANZA EXPENSES AND DISCOUNT T O EMPLOYEES. THE LD. CIT(A), AFTER CONSIDERING THE OVERALL FACTS AND CIR CUMSTANCES OF THE CASE, ITA NO.5412/M/2013 M/S. VIP INDUSTRIES LTD. 3 FURTHER OBSERVED THAT IN THIS CASE THE NOTICE UNDER SECTION 115WH WAS ISSUED AFTER LAPSE OF 4 YEARS FROM THE END OF ASSESSMENT Y EAR UNDER CONSIDERATION; THAT THE ASSESSEE HAD ALSO RAISED OBJECTIONS IN THI S RESPECT BUT THE SAME WERE DISMISSED BY THE AO. THE LD. CIT(A) THEREAFTER CON CLUDED THAT NO FRESH INFORMATION OR MATERIAL WAS AVAILABLE BEFORE THE AO UPON THE BASIS OF WHICH HE COULD HAVE REASON TO BELIEVE THAT THE FRINGE BEN EFITS FOR THE YEAR IN THE CASE OF ASSESSEE HAS ESCAPED ASSESSMENT. IT WAS JUST CH ANGE OF OPINION OF THE AO ON THE FACTS AND EVIDENCES WHICH WERE ALREADY BEFOR E THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE AO HAD THOR OUGHLY EXAMINED THE DETAILS SUBMITTED BY THE ASSESSEE. THERE WAS NO FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. THE LD. CIT(A), THEREFORE, HELD THAT SINCE THE REOP ENING IN THIS CASE WAS BASED MERELY ON THE BASIS OF CHANGE OF OPINION, HENCE THE SAME DESERVED TO BE QUASHED. HE ACCORDINGLY QUASHED THE REOPENING OF T HE ASSESSMENT MADE BY THE AO UNDER SECTION 115WG READ WITH SECTION 115WH OF T HE ACT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT O UR ATTENTION TO THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 115WE(3) DATE D 18.07.08. A PERUSAL OF THE SAME REVEALS THAT ALL THE DETAILS WERE FURNISHE D BY THE ASSESSEE BEFORE THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THE AO HAS GIVEN A CATEGORICAL OBSERVATION THAT A PERUSAL OF SCHEDULE VI TO P&L ACCOUNT AND THE DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT I T WAS SEEN THAT THE ASSESSEE HAD TREATED THE EXPENSES OTHER THAN DECLARED IN THE FRINGE BENEFIT TAX RETURN AS EXEMPT. THEREAFTER, THE AO HAS MENTIONED THAT THE DETAILS OF EXPENSES WERE VERIFIED AND THEN HE PROCEEDED TO ASSESS THE FRINGE BENEFITS UNDER THE DIFFERENT HEADS AS DETAILED IN THE SAID ASSESSMENT ORDER DATE D 18.07.08. HENCE, THE AO HAD FULLY APPLIED HIS MIND TO THE DETAILS SUBMITTED AND THEREAFTER THE FRINGE BENEFITS WERE ASSESSED. NO NEW MATERIAL HAS COME I NTO THE KNOWLEDGE OF THE ITA NO.5412/M/2013 M/S. VIP INDUSTRIES LTD. 4 AO ON THE BASIS OF WHICH HE HAD GOT ANY REASON TO B ELIEVE THAT THE FRINGE BENEFITS FOR THE YEAR HAD ESCAPED ASSESSMENT. REOP ENING MERELY ON THE BASIS OF CHANGE OF OPINION OR ON THE BASIS OF CERTAIN AUD IT REPORT IS NOT JUSTIFIED AND HENCE IS NOT SUSTAINABLE IN THE EYES OF LAW. MOREOVER, WE FIND FROM THE PERUSAL OF THE REASONS R ECORDED FOR REOPENING OF THE ASSESSMENT, COPY OF THE ORDER OF T HE AO DATED NIL REJECTING THE OBJECTIONS OF THE ASSESSEE AGAINST THE REOPENIN G (COPY PLACED AT PAGE 21 TO 31 OF THE PAPER BOOK) AND FROM THE REASSESSMENT ORD ER PASSED UNDER SECTION 115WH OF THE ACT THAT THE AO HAS NOT TAKEN THE NECE SSARY PERMISSION/SATISFACTION FROM THE CHIEF COMMISSIONER /COMMISSIONER ON THE REASONS RECORDED BY THE AO THAT IT WAS A FIT CASE F OR ISSUANCE OF NOTICE UNDER SECTION 115WH OF THE ACT. THERE IS NO MENTION IN A BOVE STATED ORDERS THAT THE AO HAD TAKEN SUCH A PERMISSION OR SATISFACTION FROM THE HIGHER OFFICERS UNDER SECTION 115WH(4) WHICH PROVIDES THAT NO NOTICE SHAL L BE ISSUED UNDER SUB SECTION (1) OF SECTION 115WH AFTER THE EXPIRY OF 4 YEARS FROM THE RELEVANT ASSESSMENT YEAR WITHOUT OBTAINING SUCH SATISFACTION /PERMISSION FROM THE CHIEF COMMISSIONER/COMMISSIONER. 5. FROM THE ABOVE FINDINGS, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LD. CIT(A) QUASHING THE REOPENING IN THIS CASE. TH ERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.10.2015. SD/- SD/- (B.R. BASKARAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.10.2015. * KISHORE, SR. P.S. ITA NO.5412/M/2013 M/S. VIP INDUSTRIES LTD. 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.