Appeal details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 8511 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 2 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-01-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2005-2006
Appeal Filed On
05-11-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA.NO.6001/DEL./2014 ASSESSMENT YEAR 2005-2006 M/S. ALCATEL LUCENT INDIA LTD., 14 TH & 15 TH FLOOR, TOWER-C, DLF CYBER GREEN, GURGAON-122002. PAN AACCA8667N VS., THE ACIT, CIRCLE 1 (1), NEW DELHI. (APP E L L ANT) (RESPONDENT) FOR ASSESSEE : SHRI SALIL KAPOOR, ADVOCATE MS. SOUMYA SINGH, ADVOCATE AND MS. ANANYA KAPOOR,ADVOCATE FOR REVENUE : MS. RAKHI VIMAL, SR. DR DATE OF HEARING : 15 .0 1 .20 20 DATE OF PRONOUNCEMENT : 21 .0 1 .20 20 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-IV, NEW DELHI, DATED 01.08.2014, FOR THE A.Y. 2005-2006, CHALLENGING THE 2 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE I.T. ACT, 1961. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN FOR ASSESSMENT YEAR 2005-06 WAS FILED BY THE ASSESSEE ON 28.10.2005 DECLARING LOSS OF RS.41.72 CRORES. THEREAFTER, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 15.12.2008 WHEREIN THE LOSS WAS ASSESSED AT RS.40.29 CRORES. LATER ON, NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED TO THE ASSESSEE ON 27.03.2012 REQUIRING THE ASSESSEE TO FILE ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL. IN RESPONSE TO THE NOTICE, THE ASSESSEE STATED THAT THE ORIGINAL RETURN FILED MAY BE TREATED AS RETURN HAVING BEEN FILED IN COMPLIANCE TO NOTICE ISSUED UNDER SECTION 148 OF THE I.T. ACT. THE A.O. RAISED THE ISSUE OF LOSS OF SALE ON FIXED ASSETS. THE ASSESSEE STATED BEFORE THE A.O. THAT THERE IS ERROR AND AGREED FOR ADDITION. THE A.O, THEREFORE, MADE ADDITION OF RS.2,45,35,280/- ON ACCOUNT OF LOSS ON SALE OF FIXED ASSETS. 2.1. THE A.O. FURTHER CONSIDERED THE ISSUE OF CLAIM OF FOREIGN EXCHANGE LOSS OF RS.2,81,48,000/- AND AFTER 3 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. DISCUSSION MADE THE SIMILAR ADDITION. INCOME FROM THIS COMPUTED AT LOSS OF RS.(-)35.02 CRORES VIDE RE-ASSESSMENT ORDER UNDER SECTION 147/143(3) DATED 15.03.2013. 3. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT BEFORE THE LD. CIT(A). THE LD. CIT(A) NOTED THAT AUDIT PARTY HAS POINTED- OUT FACTUAL MISTAKE WITH REGARD TO ADDITION ON ACCOUNT OF SALE OF FIXED ASSETS AMOUNTING TO RS.2,45,35,280/-. ASSESSEE HAS AGREED FOR THE ADDITION, THEREFORE, THIS ADDITION WAS MAINTAINED AND REOPENING OF THE ASSESSMENT WAS UPHELD. THE LD. CIT(A), HOWEVER, AS REGARDS ADDITION OF RS.2,81,48,000/- ON ACCOUNT OF FOREIGN EXCHANGE LOSS DELETED THE ADDITION. APPEAL OF ASSESSEE WAS PARTLY ALLOWED. 4. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENGED THE REOPENING OF THE ASSESSMENT ONLY. LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE REASONS FOR REOPENING OF THE ASSESSMENT AT PAGE-9 OF THE PB. HE HAS STATED THAT LD. CIT(A) HAS ALLOWED THE APPEAL OF ASSESSEE ON POINT NO.2 AND THAT THERE IS NO FRESH TANGIBLE MATERIAL BROUGHT ON RECORD FOR REOPENING OF THE ASSESSMENT. THE 4 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. REASONS ARE RECORDED FOR REOPENING OF THE ASSESSMENT BASED ON MATERIAL ALREADY ON RECORD. HE HAS SUBMITTED THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND CORRECTLY ALL MATERIAL FACTS, THEREFORE, PROVISO TO SECTION 147 WILL APPLY. THE A.O. HAS NOT POINTED-OUT AS TO WHERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND CORRECTLY ALL MATERIAL FACTS. IN SUPPORT OF THE CONTENTION, HE HAS RELIED UPON FOLLOWING DECISIONS : 1. ASIAN PAINTS LTD., VS., DCIT [2009] 348 ITR 452 (BOM.) 2. INDU LATA RANGWALA VS., DCIT [2016] 384 ITR 337 (DEL.) 3. CIT VS., CENTRAL WAREHOUSING CORPORATION [2015] 371 ITR 81 (DEL.) 4. PALA MARKETING COOPERATIVE SOCIETY LTD., VS., STATE OF KERALA [1999] 236 ITR 604 (KERALA) 5. DCIT VS., PALA MARKETING COOPERATIVE SOCIETY LTD., [2000] 243 ITR 499 (KERALA) 6. HINDUSTAN LEVER LTD., VS. R.B. WADKAR [2004] 268 ITR 332 (BOM.) 4.1. HE HAS FURTHER SUBMITTED THAT A.O. WAS EMPOWERED BY PROVISO UNDER SECTION 154 OF THE I.T. ACT TO CORRECT MISTAKE ON RECORD INSTEAD OF INITIATING THE RE- 5 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. ASSESSMENT PROCEEDINGS. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER LTD., VS., DCIT [2010] 325 ITR 102 (BOM.) IN WHICH IT WAS HELD THAT POWER TO RECTIFY AN ORDER OF ASSESSMENT UNDER SECTION 154(1) IS ADEQUATE TO MEET A MISTAKE OR ERROR IN ORDER OF ASSESSMENT. THE A.O. MUST TAKE RECOURSE TO THAT POWER AS OPPOSED TO THE WIDER POWER TO REOPEN THE ASSESSMENT. 5. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT REOPENING HAVE BEEN DONE ON THE BASIS OF AUDIT REPORT POINTING-OUT FACTUAL MISTAKE IN THE ASSESSMENT, WHICH ASSESSEE HAS ULTIMATELY AGREED BEFORE A.O. THEREFORE, REOPENING OF THE ASSESSMENT IS JUSTIFIED. THE LD. D.R. RELIED UPON THE FOLLOWING DECISIONS : 1. NEW DELHI TELEVISION LTD., VS., DCIT [2017] 84 TAXMANN.COM 136 (DEL.) (HC) 2. CIT VS., P.V.S. BEEDIES (P.) LTD., [1999] 237 ITR 13 (SC) 3. CIT VS., KIRANBHAI JAMNADAS SHETY HUF [2014] 221 TAXMAN 19 (GUJARAT). 4. DISHMAN PHARMACEUTICALS & CHEMICALS LTD., VS., CIT [2012] 346 ITR 228 (GUJ.). 6 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS WELL SETTLED LAW THAT VALIDITY OF RE-ASSESSMENT PROCEEDINGS IS TO BE DETERMINED WITH REFERENCE TO THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. THE ASSESSEE HAS FILED COPY OF THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT AT PAGE-9 OF THE PB WHICH IS ALSO REPRODUCED IN THE ASSESSMENT ORDER AND THE SAME READS AS UNDER : REASONS RECORDED U/S.148(2) FOR ISSUE OF NOTICE U/S.148(1) OF THE I.T. ACT, 1961. NAME OF THE ASSESSEE : M/S. ALCATEL SOUTH ASIA LTD., 1 ST FLOOR, 5 SIKANDRA ROAD, NEW DELHI. PAN AACCA8667 ASSESSMENT YEAR : 2005-06 PREVIOUS YEAR : 2004-05. THE SCRUTINY ASSESSMENT OF M/S ALCATEL SOUTH ASIA LTD FOR THE ASSESSMENT YEAR 2005-06 WAS 7 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. COMPLETED IN DECEMBER,2008 AT A LOSS OF RS 40,29,18,340/- _ON PERUSAL OF RECORD IT WAS OBSERVED THAT AS PER P&L ACCOUNT, THE ASSESSEE HAD CLAIMED AND WAS ALLOWED THE FOLLOWING DEDUCTIONS. I) DEDUCTION OF RS 1,22,67,640/- ON ACCOUNT OF LOSS ON SALE OF FIXED ASSETS THIS ITEM BEING CAPITAL IN NATURE WAS REQUIRED TO BE ADDED BACK TO THE INCOME OF THE ASSESSEE HOWEVER, INSTEAD OF ADDING BACK TO THE BUSINESS INCOME OF THE ASSESSEE, THIS AMOUNT WAS REDUCED FROM THE TOTAL INCOME IN THE COMPUTATION SHEET HENCE, THE OMISSION RESULTED IN UNDERASSESSMENT OF INCOME BY RS.2,45,35,280/-. II) DEDUCTION OF RS 2,81,48,000 /- ON ACCOUNT OF FORE I GN EXCHANGE LOSS AS PER NOTES TO THE FINANCIAL STATEMENT MONETARY FOREIGN CURRENCY ASSETS AND LIABILITIES ARE TRANSLATED INTO RUPEES AT THE RATES OF EXCHANGE PREVAILING ON THE BALANCE SHEET DATE AS THESE LOSSES ORE NOT BASED ON ACTUAL REMITTANCES 8 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. BUT MERELY RESTATEMENT OF ASSETS AND LIABILITIES WERE REQUIRED TO BE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. SINCE THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE A.Y. 2005-06. THEREFORE AN INCOME OF RS.5,26,83,280/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE A.Y. 2005-06. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THAT AN INCOME OF RS.5,26,83,280/- HAS ESCAPED ASSESSMENT FOR THE A.Y. 2005-2006. SD/- DR. PRASHANT KHAMBRA DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), NEW DELHI. 6.1. THE ABOVE REASONS CLEARLY REVEAL THAT ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 15.12.2008 AT THE LOSS OF RS.40.29 CRORES. THE A.O. ON PERUSAL OF THE RECORDS OBSERVED THAT AS PER P & L A/C, ASSESSEE HAD CLAIMED AND WAS ALLOWED TWO DEDUCTIONS, OUT OF WHICH, ONE ADDITION HAVE 9 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. BEEN DELETED BY THE LD. CIT(A) ON ACCOUNT OF FOREIGN EXCHANGE LOSS. THUS, NO NEW FACTUAL MATERIAL WAS FOUND AT THE TIME OF INITIATING THE RE-ASSESSMENT PROCEEDINGS OR RECORDING THE REASONS FOR REOPENING OF THE ASSESSMENT. THE A.O. ON THE BASIS OF THE MATERIAL ALREADY AVAILABLE ON RECORD RECORDED THE REASONS FOR REOPENING OF THE ASSESSMENT. THUS, ASSESSEE DECLARED ALL PRIMARY FACTS AT THE STAGE OF ORIGINAL ASSESSMENT WHEN ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. THE HONBLE SUPREME COURT IN THE CASE OF INDIAN OIL CORPORATION VS., ITO [1986] 159 ITR 956 (SC) HELD THAT NO CASE UNDER SECTION 148 IS MADE-OUT WHEN THE FACTS WERE KNOWN ALL ALONG WITH TO THE REVENUE WHILE MAKING THE ORIGINAL ASSESSMENT. THE HONBLE SUPREME COURT IN THE CASE OF ASSOCIATED STONE INDUSTRIES LTD., VS., CIT [1997] 224 ITR 560 (SC) HELD THAT ASSESSEE SHALL HAVE TO DISCLOSE ONLY THE PRIMARY FACTS. IT IS, THUS, CLEAR THAT THE ASSESSEE DISCLOSED ALL THE PRIMARY FACTS AT THE ORIGINAL ASSESSMENT WHICH HAVE BEEN CONSIDERED BY THE A.O. AND ASSESSMENT UNDER SECTION 143(3) HAVE BEEN FRAMED. THERE IS, THUS, NO FAILURE ON THE PART OF THE ASSESSEE TO 10 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. DISCLOSE ALL PRIMARY FACTS. THE A.O. HAS NOT SPECIFIED AS TO IN WHICH MANNER THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, PROVISO TO SECTION 147 OF THE I.T. ACT WOULD APPLY IN FAVOUR OF THE ASSESSEE. IT, THEREFORE, APPEARS THAT THE A.O. WANTED TO CORRECT THE ERROR IN THE ORIGINAL ASSESSMENT ORDER PASSED BY THE A.O. WHILE RECORDING REASONS FOR REOPENING OF THE ASSESSMENT. THE A.O, THUS, ONLY ON THE BASIS OF PERUSAL OF THE RECORD AND P & L A/C ON RECORD FOUND THAT ASSESSEE HAD CLAIMED THE ABOVE DEDUCTION ON ACCOUNT OF LOSS ON SALE OF FIXED ASSETS WHICH HAVE BEEN WRONGLY ALLOWED BY THE A.O, IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LIMITED VS., ACIT [2012] 343 ITR 183 (BOM.) HELD THAT RE-ASSESSMENT TO CORRECT ERROR IN ASSESSMENT IS NOT VALID. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS., ATUL KUMAR SWAMY [2014] 362 ITR 693 (DEL.) HELD THAT NOTE ALREADY FILED WITH RETURN DECLARING NATURE OF CAPITAL RECEIPT, NO OTHER FACTUAL MATERIAL FOUND, 11 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. THEREFORE, PROCEEDINGS UNDER SECTION 148 WAS QUASHED. SIMILAR VIEW HAVE BEEN TAKEN BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF KANPUR TEXEL PVT. LTD., DCIT & ANOTHER [2018] 406 ITR 353 (ALL.). THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF VARDHAMAN INDUSTRIES [2014] 363 ITR 625 (RAJ.) HELD THAT REASONS MUST BE BASED ON NEW AND TANGIBLE MATERIAL. NOTICE BASED ON DOCUMENTS ALREADY ON RECORD, NOT VALID. THE HONBLE DELHI HIGH COURT IN THE CASE OF TECHMAN BUILDWELL P. LTD., VS., ACIT [2015] 370 ITR 771 (DEL.) HELD THAT ASSESSING OFFICERS OMISSION WAS THE SOLE BASIS OF NOTICE UNDER SECTION 148. NOTICE UNDER SECTION 148 NOT VALID. SINCE IN THE PRESENT CASE, THE NOTICE UNDER SECTION 148 HAVE BEEN ISSUED AFTER 04 YEARS AND NO NEW AND TANGIBLE MATERIAL HAS BEEN BROUGHT ON RECORD AT THE TIME OF REOPENING OF THE ASSESSMENT AND THE A.O. WANTED TO CORRECT THE ERROR IN THE ORIGINAL ASSESSMENT ORDER PASSED BY THE A.O. WHILE INITIATING THE RE-ASSESSMENT PROCEEDINGS, WE ARE OF THE VIEW THAT REOPENING OF THE ASSESSMENT IS NOT VALID IN THE FACTS AND CIRCUMSTANCES OF THE CASE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT 12 ITA.NO.6001/DEL./2014 M/S. ALCATEL LUCENT INDIA LTD., GURGAON. FIND ANY JUSTIFICATION TO SUSTAIN THE REOPENING OF THE ASSESSMENT. WE HOLD THAT REOPENING OF THE ASSESSMENT IS INVALID AND BAD IN LAW, AS SUCH, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE REOPENING OF THE ASSESSMENT. 7. IN THE RESULT, APPEAL OF ASSESSEE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 21 ST JANUARY, 2020 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT E BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR, ITAT, DELHI BENCHES, DELHI.
