ASST CIT 4(3), MUMBAI V. LATIN MANHARLAL SECURITIES P. LTD, MUMBAI

ITA 5822/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3330 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment
• Section: 143(3); 115JB; 148; 139

Judgement Text

M/S LATIN MANHARLAL SECURITIES P LTD. ITA NO. 5822 /M U M /201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMB ER ITA NO. : 5 822 /MUM/20 1 3 (ASSESSMENT YEAR: 200 7 - 08 ) ASST. CIT 4(3) , 6 TH FLOOR, R. NO.649, AAYAKAR BHAVAN, MUMBAI - 400 0 2 0 VS M/S LATIN MANHAR LA L SECURITIES P LTD. , 4 TH FLOOR, JANMABHOOMI BHAVAN , FORT, MUMB AI - 400 0 0 1 .: PAN: A A A C L 2767 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANDEEP GOEL RESPONDENT BY : NONE /DATE OF HEARING : 08 - 0 3 - 201 6 / DATE OF PRONOUNCEMENT : 16 - 03 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : THE AFORESAID APPEAL HA S BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED , 11 .0 7 .201 3 PASSED BY LD. CIT(A) - 8 MUMBAI, FOR THE QUANTU M OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 200 7 - 08 . IN THE GROUNDS OF APPEAL, REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1 . O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE AC TION INI T I A T E D U/S.147 OF THE INCOME TAX ACT, 1961 BY THE ASSESSING OFFICER IN THE INTEREST OF PROTECTING REVENUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DI RECTING THE AO TO ALLOW TO THE ASSESSEE THE REBATE U/S 88E WHEN TAX LIABILITY WAS DETERMINED U/S 115JB OF THE INCOME TAX ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND CONS EQUENTLY MERITS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. M/S LATIN MANHARLAL SECURITIES P LTD. ITA NO. 5822 /M U M /201 3 2 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT LETTER W AS FILED , HENCE WE PROCEED TO DECIDE THE APPEAL EX - PARTE QUA THE ASSESSEE ON MERITS AFTER HEARING LD. DR. 3. THE BRIEF FACTS ARE THAT, THE ASSESSEE HAS FILED ITS RETURN OF INCOME UNDER SECTION 139(1) ON 27.10.2007 DECLARING TOTAL INCOME OF RS. 16,11,71,435/ - . THE SAID RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND ORDER UNDER SECT ION 143(3) WAS PASSED VIDE ORDER DATED 23.04.2009 , ASSESSING THE TOTAL INCOME AT RS.16,13,39,460/ - AND THE TOTAL TAX PAYABLE WORKED OUT AT RS.82,09,792/ - AFTER GIVING REBATE UNDER SECTION 88E OF RS.4,63,93,67 9/ - . AFTER HAVING COMPLET ED THE ASSESSMENT IN THE AFORESAID MANNER, THE ASSESSEES CASE W AS SOUGHT TO BE REOPEN E D UNDER SECTION 14 7 , VIDE ISSUANCE OF NOTICE DATED 06.09.201 2 UNDER SECTION 148 AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSM ENT YEAR , ON FOLLOWING REASONS RECORDED : UNDER THE INCOME TAX ACT AS PER SECTION 115JB, WHERE IN THE CASE OF AN ASSESSEE BEING A COMPANY, THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IS LESS THAN TEN PER CENT OF ITS BOOK PROFIT , SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME TAX AT THE RATE OF TEN PER CENT. THE ASSESSEE COMPANY IS THEREFORE LIABLE TO PAY TAX OF RS.84 ,49,453/ - . FAILURE TO DO SO HAS RESULTED IN INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. THE AO FURTHER HELD THAT, ASSESSEE HAD PAID RS. 22,53,155/ - UNDER THE NORMAL PROVISIONS OF THE ACT , W HEREAS , UNDER SECTION 115JB, THE TAX PAYABLE WAS MORE. T HE ASS ESSEE S CONTENTION BEFORE THE AO WAS THAT , IT HAS REDUCED THE REBATE UNDER SECTION 88E WHILE CALCULATING THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB. THUS, ON TOTAL TAXABLE INCOME OF RS.16,13,39,460/ - TAX OF RS.4,84,01,838/ - WAS CALCULATE D AND FROM THAT AMOUNT OF RS.4,63,93,679/ - WAS REDUCED ON ACCOUNT OF REBATE UNDER SECTION 88E , RESULTING INTO NET TAX LIABILITY OF RS.22,55,185/ - WHICH M/S LATIN MANHARLAL SECURITIES P LTD. ITA NO. 5822 /M U M /201 3 3 WAS OFFERED IN THE ROI. NOT ONLY THAT, S UCH A TAX CALCULATION WAS DULY ACCEPTED BY TH E AO UNDER SECTION 143(3) AND, THEREFORE, SUCH A REOPENING IS BAD IN LAW. HOWEVER, THE LD. AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT N O REBATE CAN BE ALLOWED WHILE COMPUTING ANY TAX LIABILITY UNDER SECTION 115JB. 4. IN THE FIRST APPELLATE PROCEEDINGS, T HE LD. CIT(A), HELD THAT SUCH A REOPENING OF ASSESSMENT UNDER SECTION 148 IS BAD IN LAW, ON THE GROUND THAT ALL THE MATERIAL FACTS FOR COMPUTING THE TAXABL E INCOME WAS THERE ON RECORDS AND THERE IS NO FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR T HE ASSESSMENT. ONCE AN ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) , THEN NO ACTION UNDER SECTION 147 CAN BE TAKEN AFTER THE EXPIRY OF 4 YEARS , UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT OWING TO THE FAILURE ON THE PART OF THE ASSESSEE AS MENTIONED IN PROVISO TO SECTION 147. HERE IN THIS CASE, THERE IS NO SUCH FAILURE AND ACCORDINGLY , SUCH A REOPENING IS BAD IN LAW. APART FROM THAT, ON MERITS ALSO, HE HAS DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE , AFTER FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS HORIZON CAPITAL LTD, REPORTED IN [2011] 245 CTR 601. 5. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE I MPUGNED ORDER AND AFTER HEARING LD. DR, WE FIND THAT THE SOLE REASON FOR WHICH THE ASSESSMENT COMPLETED UNDER SECTION 143(3) HAS BEEN SOUGHT TO BE REOPENED IS THAT, TAX LIABILITY UNDER SECTION 115JB IS MORE THAN THE NORMAL PROVISION OF THE ACT AND FURTHER, ASSESSEE IS NOT LIABLE FOR DED UCTION OF REBATE UNDER SECTION 88E WHILE DETERMINING THE TAX LIABILITY UNDER SECTION 115JB. DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, ALL THESE DETAILS OF RETURN OF INCOME UNDER THE NORMAL PROVISIONS AND UNDER THE BOOK PROFIT UNDER SECTION 115JB WAS THERE BEFORE THE AO AND AO AFTER COMPLETING THE ASSESSMENT UNDER SECTION 143( 3 ) HAS COMPUTED THE TAX LIABILITY. NOW AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE M/S LATIN MANHARLAL SECURITIES P LTD. ITA NO. 5822 /M U M /201 3 4 RELEVANT ASSESSMENT YEAR, THE SAID ASSESSMENT HAS BEEN SOUGHT TO BE REOPENED IN U T T E R VIOLATION OF STATUTORY LIMITATION AS GIVEN IN THE PROVISO TO SECTION 147. CONDITIONS PRECEDENT FOR LIFTING THE BAN OF 4 YEARS TIME LIMIT UNDER PROVISO TO SECTION 147 IS THAT, IF THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) THEN REOPENING OF T HE ASSESSMENT CAN BE DONE ONLY WHEN THERE IS FAILURE ON THE PART OF THE ASSESSEE FILED A RETURN UNDER SECTION 139 OR THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. SUCH A FAILURE OF THE ASSESSEE HAS TO BE ASCRIBED AND DEMONSTRATED BY THE AO IN THE REASONS RECORDED ITSELF. HERE IN THIS CASE, IT IS AN ADMITTED POSITION THAT, THERE IS NEITHER ANY FAILURE ON THE PART OF THE ASSESSEE EITHER TO FURNISH THE RETURN OF INCOME UNDER SECTION 139(1) N OR ANY FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT WHICH IS EVIDENT FROM THE BARE PERUSAL OF THE REASONS RECORDED AND EVEN FROM THE ASSESSMENT ORDER. THE ASSESSEE HAS DULY SHOWN THE TAX LIABILITY UNDER THE NORMAL PROVISIONS AND ALSO AS PER UNDER SECTION 115JB. THE AO WHILE COMPUTING THE INCOME IN THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) HAS TAKEN NOTE OF THIS FACT. SO NOW, THE AO CANNOT HOLD THAT SUCH A TAX LIABILITY COMPUTED BY THE AO IS ERRONEOUS OR TH ERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THUS, THE CONCLUSION OF THE CIT(A) FOR HOLDING THAT, REOPENING OF THE ASSESSMENT IS BAD IN LAW IS THUS AFFIRMED. ACCORDINGLY, W E ALSO DIRECT THAT SUCH AN ACTION INITIATED UNDER SECTION 148 SHOULD BE QUASHED. 6. HOWEVER, WITHOUT PREJUDICE ON MERITS ALSO, WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS HORIZ ON CAPITAL LTD ( SUPRA ) , WHEREIN IT HAS BEEN HELD THAT, THE ASSESSEE IS ENTITLED TO REBATE UNDER SECTION 88E OF THE ACT IN RESPECT OF STT PAID WHERE THE INCOME IS ASSESSED UNDER SECTION 115JB. WITHOUT THERE BEING ANY CONTRARY DECISION BROUGHT M/S LATIN MANHARLAL SECURITIES P LTD. ITA NO. 5822 /M U M /201 3 5 TO OU R NOTICE, WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH A FINDING OF THE CIT(A). ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE STANDS DISMISSED. 7 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH , 2016 . SD/ - S D/ - ( ) ( ) ( RAJE NDRA ) ( AMIT SHUKLA ) ACCOU NTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 16 TH MARCH , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 8 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME - 4 , MUMBAI . 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS