DCIT 10(2), MUMBAI V. FIRSTCALL INDIA EQUITY ADVISORS P. LTD, MUMBAI

ITA 5894/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93267 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K DHONDIAL
• Keywords: Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 115JB; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE MS. SUSHMA CH O WLA , JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 5894/MUM/2013 ( / ASSESSMENT YEAR : 2008 - 09 THE DCIT - 10(2), AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. FIRSTCALL INDIA EQUITY ADVISORS PVT. LTD., 301,THE BUREAU CHAMBERS, DR. R.C. MARG, CHEMBUR, MUMBAI - 400 071 ./ ./ PAN/GIR NO. : AAACF 9196K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI A.K. DHONDIAL / RESPONDENT BY : NONE / DATE OF HEARING : 22 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 22 .0 7 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 21 , MUMBAI DT. 26.7.2013 PERTAINING TO ASSESSMENT YEAR 2008 - 09. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE GROUND OF CHANGE OF OPINION ITA. NO . 5894/M/2013 2 WITHOUT APP RECIATING THE FACT THAT THE ASSESSEE FAILED TO FURNISH THE COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT AS REQUIRED BY RULE 40B OF THE I.T. RULE, 1962. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEES RETURN OF INCOME WAS TAKEN UP FOR S CRUTINY ASSESSMENT AND ORDER U/S. 143(3) WAS PASSED ON 16.10.2010 ASSESSING TOTAL LOSS AT RS. 31,76,944/ - WHICH WAS ALSO THE RETURNED LOSS. THEREAFTER THE CASE WAS REOPENED AFTER TAKING NECESSARY APPROVAL AND ACCORDINGLY NOTICE U/S. 148 WAS ISSUED AND SERV ED UPON THE ASSESSEE. THE REASONS WERE PROVIDED TO THE ASSESSEE WHICH READ AS UNDER: UNDER THE PROVISIONS OF THE I.T. ACT, 1961, THE TAX LIABILITY PAYABLE UNDER NORMAL PROVISIONS OF THE ACT IN RESPECT OF CORPORATE ASSESSEE IS LESS THAN THE PERCENT OF T HE BOOK PROFIT PLUS SURCHARGE AND THREE PERCENT OF EDUCATION CESS CHARGEABLE UNDER THE ACT, THEIR THE BOOK PROFIT IS TAXABLE UNDER DEEMED PROVISIONS OF THE ACT. IN THE PRESENT CASE THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR A.Y.2008 - 09 ON 30.9.2 008 DECLARING LOSS OF RS. 31,76,944/ - . THE ASSESSEE COMPANY SOLD SHARES COSTING RS. 1,00,00,000 / - FOR A CONSIDERATION OF RS. 2,14,00,000/ - AND EARNED PROFIT OF RS. 1,14,00,000/ - . THE GAIN EARNED OF RS. 1,14,00,000/ - WAS CLAIMED AS EXEMPT U/S. 10(38). HO WEVER, THE PROFIT EARNED ON SALE OF SHARES WAS NOT ROUTED THROUGH PROFIT AND LOSS ACCOUNT. FAILURE TO DO SO HAS RESULTED IN UNDER VALUATION OF BOOK PROFIT OF RS. 79,54,825/ - (I.E. RS. 1,14,00,000 - RS. 34,45,175) LEADING TO ESCAPEMENT OF BOOK PROFIT OF A L IKE AMOUNT TO SHORT LEVY OF TAX INVOLVED IN RS. 9,01,281/ - (I.E. 11=33% OF RS. 79,54,825/ - ). AS PER SECTION 10(38) OF THE I.T. ACT, LONG TERM CAPITAL GAINS ARISING ON TRANSFER OF EQUITY SHARE OF A COMPANY OR UNITS OF AN EQUITY ORIENTED FUND ON OR AFTER 1. 10.2004 AND SUBJECT TO SECURITIES TRANSACTION TAX IS EXEMPT. HOWEVER, LONG TERM CAPITAL GAIN OF A COMPANY SHALL BE INCLUDED IN COMPUTING THE BOOK PROFIT FOR THE PURPOSES OF MAT U/S. 115JB.. ITA. NO . 5894/M/2013 3 3. THE ASSESSEE OBJECTED TO THE REOPENING OF THE ASSESSMENT. THE OBJECTIONS OF THE ASSESSEE WERE DISPOSED OF VIDE LETTER DT. 5.12.2012. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE MADE DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: BOOK PROFIT (AS SHOWN IN PROFIT & LOSS ACCOUNT RS. (34,45,175) ADD: LONG TERM CAPITAL GAIN ON SALE OF SHARES RS. 1,14,00,000 ADJUSTED BOOK PROFIT AS PER SEC. 115JB RS. 79,54,825 TAX AS PER MAT CALCULATION RS. 8,19,347/ - 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). DURING THE COURSE OF THE APPELLATE PROCEEDINGS, IT WAS STRONGLY CONTENDED THAT THE AO HAS REOPENED THE ASSESSMENT MERELY ON THE BASIS OF FACTS ALREADY AVAILABLE BEFORE HIM AT THE TIME OF ORIGINAL ASSESSM ENT PROCEEDINGS. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THERE IS NO EVIDENCE FROM THE REASONS RECORDED OR THE FACTS NARRATED IN THE IMPUGNED ORDER AS TO WHETHER OR NOT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. IT WAS STRONGLY CONTENDED THAT IT CANNOT BE SAID THAT THE ASSESSEE SUPPRESSED ANY MATERIAL FACTS. RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS CITY FINANCIAL CONSUMER FINANCE INDIA LTD. IN ITA NO. 1536/DEL/2011 AND ALSO ON THE DECISION OF CIT VS USHA INTERNATIONAL LTD. IN ITA NO. 2026 OF 2010. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF US HA INTERNATIONAL (SUPRA), THE LD. CIT(A) WAS CONVINCED THAT THE CASE OF THE ASSESSEE IS EXACTLY ITA. NO . 5894/M/2013 4 SIMILAR TO THE FACTS OF THE CASE CONSIDERED BY HONBLE DELHI HIGH COURT. THE LD. CIT(A) FINALLY HELD THAT THERE WAS NO NEW TANGIBLE MATERIAL WHICH WAS AVAILABL E WITH THE AO. THE LD. CIT(A) ACCORDINGLY QUASHED THE REASSESSMENT PROCEEDINGS. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE AO AND RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DR. AMINS PATHOLOGY LABORATORY VS JCIT 252 ITR 673. 7. AS NONE APPEARED BEFORE US ON BEHALF OF THE ASSESSEE, WE DECIDED TO PROCEED EX PARTE. 8. HAVING HEARD THE SUBMISSIONS MADE BY THE LD. DR, WE HAVE CAREFU LLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT WHICH WE HAVE MENTIONED ELSEWHERE. IN OUR CONSIDERED OPINION, THE BASIS FOR THE REOPENING OF THE ASSESSM ENT AS PER THE REASONS SHOW THAT THERE WAS NO NEW TANGIBLE MATERIAL AVAILABLE WITH THE OFFICER, WHATEVER HAS BEEN STATED WAS ALWAYS THERE DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THUS, IT IS A CASE OF CHANGE OF OPINION AND ACCORDINGLY THE RATIO OF THE DECISION OF THE FULL BENCH OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF KELVINATOR INDIA LTD 256 ITR 01 WHICH HAS BEEN AFFIRMED BY HONBLE SUPREME COURT IN 320 ITR 561 SQUARELY APPLY. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFER E WITH THE FINDINGS OF THE LD. CIT(A). ITA. NO . 5894/M/2013 5 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 22 ND JU LY , 2015 SD/ - SD/ - ( SUSHMA CH O WLA ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 22 ND JU LY , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI