ACIT, Trivandrum V. Somatheeram Ayurvedic Beach Resorts(P) Ltd, Trivandrum

ITA 602/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58356 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2010
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: K I JOHN
• Keywords: Assessment record; Reason to believe
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 602/COCH/2010 ASSESSMENT YEAR : 2004-05 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, TRIVANDRUM M/S. SOMATHEERAM AYURVEDIC BEACH RESORT (P) LTD., CHOWARA, P.O., BALARAMAPURAM, TRIVANDRUM-695 501. [PAN: AAECS 5975R] (REVENUE -APPELLANT) (ASSESSEE - RESPONDENT) ASSESSEE BY SHRI K.I. JOHN, FCA REVENUE BY SMT. VIJAYAPRABHA, JR. DR DATE OF HEARING 22/03/2012 DATE OF PRONOUNCEMENT 29/03/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 31-08-2010 PASSED BY THE LD. CIT(A)-III, KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. IN THIS APPEAL, THE REVENUE IS ASSAILING THE DEC ISION OF THE LD. CIT(A) IN HOLDING THAT THE RE-OPENING OF THE ASSESSMENT MADE U/S. 148 OF THE ACT IS BAD IN LAW. 3. BEFORE ADDRESSING THE ISSUE, IT IS NECESSARY TO NARRATE THE CHEQUERED HISTORY OF THE CASE, WHICH HAS BEEN EXPLAINED LUCIDLY BY THE LD. C IT(A) AS UNDER:- 3. IN ORDER TO HAVE A CLEAR PICTURE OF THE CASE, I T IS NECESSARY TO NARRATE HERE IN BRIEF ITS BACKGROUND. THE FACTS OF THE CASE ARE THAT THE ORIGINAL SCRUTINY ASSESSMENT IN THIS CASE WAS COMPLETED ON 26-12-2006 DETERMINING THE TOTAL ITA NO. 602/COCH/ 2010 2 INCOME AT RS. 51,31,952/-. HOWEVER, SUBSEQUENTLY A NOTICE U/S. 147 R.W.S. 148 WAS ISSUED ON 27-03-2009. AS PER THE ASSESSME NT ORDER DTD. 15-12- 2009 THE SAID NOTICE WAS ISSUED AFTER RECORDING OF THE REASONS FOR RE- OPENING OF ASSESSMENT. IN RESPONSE TO THE NOTICE T HE ASSESSEE FILED A LETTER DTD. 25-04-2009 REQUESTING TO TREAT THE RETURN FILE D ORIGINALLY AS THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148. ALONG WITH T HIS LETTER THE APPELLANT ASSESSEE ALSO REQUESTED THAT A COPY OF THE REASONS RECORDED FOR RE-OPENING AND ISSUING NOTICE U/S. 148 IN VIEW OF APEX COURT J UDGMENT IN 259 ITR 19 MAY BE PROVIDED TO IT. HOWEVER, SUBSEQUENTLY A NOTI CE U/S. 143(2) WAS ISSUED ON 05- 08-2009. IN RESPONSE TO WHICH THE AR APPEARED AND THE CASE WAS HEARD BY THE ASSESSING OFFICER. AFTER DISCUSSI ON WITH THE ASSESSEES REPRESENTATIVE THE ASSESSMENT WAS COMPLETED ON AN INCOME OF RS. 1,26,10,330/- AND A DEMAND OF RS. 56,16,196/- WAS R AISED. THE DEMAND NOTICE WAS DULY SERVED UPON THE APPELLANT. 4. IN THE MEANWHILE INSTEAD OF PREFERRING AN APPEA L BEFORE INCOME-TAX APPELLATE AUTHORITY AGAINST THE SAID ORDER, THE ASS ESSEE WENT IN A WRIT PETITION IN WP(C) NOS. 3461/2010, 5064/2010 & 5977/ 2010 CHALLENGING THE IMPUGNED ASSESSMENT ORDER. THE MAIN GROUND TAK EN BY THE ASSESSEE BEFORE THE HONBLE HIGH COURT WAS THAT WHILE COMPL ETING THE RE- ASSESSMENT PROCEEDINGS U/S 147/148 THE ASSESSING OF FICER HAS NOT FOLLOWED THE CLEAR MANDATE GIVEN BY THE HONBLE APEX COURT I N ITS DECISION IN THE CASE OF GKN DRIVE SHAFTS VS. ITO & OTHERS (259 ITR 19). FOR SAKE OF CLARITY THE ORDER OF THE HONBLE HIGH COURT IS REPR ODUCED AS UNDER:- THE PETITIONERS IN THESE CASES ARE CHALLENGING EXT .P4 ASSESSMENT ORDERS PASSED BY THE FIRST RESPONDENT U/S. 143(3), READ WI TH SECTION 147 OF THE INCOME TAX ACT. THE MAIN GROUND OF CHALLENGE IS T HAT THE PROCEEDINGS HAVE BEEN FINALISED BY THE SAID RESPONDENT WITHOUT ANY REGARD TO THE CLEAR MANDATE GIVEN BY THE APEX COURT AS PER THE DECISION IN GKN DRIVE SHAFTS V. INCOME TAX OFFICER & OTHERS (259 ITR 19) WHEREBY IT HAS BEEN HELD THAT, WHEN A NOTICE U/S.148 IS ISSUED, IT IS F OR THE ADDRESSEE TO FILE A RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR IS SUING THE NOTICE; THAT THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHI N A REASONABLE TIME; ON RECEIPT OF WHICH, THE ADDRESSEE IS ENTITLED TO F ILE OBJECTIONS AND THAT THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAMEBY PASSING A SPEAKING ORDER, WHICH COURSE IS STATED AS NOT FOLLOWED BY T HE FIRST RESPONDENT. THE LEARNED STANDING COUNSEL APPEARING FOR THE DEPA RTMENT SUBMITS THAT THE AVERMENTS AND ALLEGATIONS RAISED IN THE WRIT PE TITION ARE DEVOID OF ANY MERIT OR BONAFIDES. THE ASSESSEE, ON RECEIPT O F NOTICE U/S. 148, REQUESTED TO TREAT THE RETURN FILED ORIGINALLY, AS THE RETURN IN RESPONSE TO THE NOTICE U/S. 148 AND SOUGHT FOR REASONS FOR REOP ENING THE ASSESSMENT. SUBSEQUENTLY, NOTICE U/S. 143(2) WAS ISSUED, WHEREU PON, THE AUTHORISED ITA NO. 602/COCH/ 2010 3 REPRESENTATIVE OF THE PETITIONER/ASSESSEE TURNED UP BEFORE THE CONCERNED AUTHORITY AND THERE WAS A DETAILED DISCUSSION DURI NG THE COURSE OF WHICH, THE REASONS WERE LET KNOWN TO THE ASSESSEE, PURSUAN T TO WHICH, A DETAILED OBJECTION WAS ALSO FILED. IT WAS, THEREAFTER ,THAT THE ASSESSMENT WAS FINALISED AS PER EXT. P4 AND SINCE THERE IS SUBSTAN TIAL COMPLIANCE WITH THE DIRECTION GIVEN BY THE APEX COURT, NO INTERFERENCE IS WARRANTED IN THESE WRIT PETITIONS, SUBMITS THE LEARNED STANDING COUNSE L. ON GOING THROUGH EXT. P4, ASSESSMENT ORDER, THE FAC TUAL POSITION AS TO THE SEQUENCE OF EVENTS, AS NARRATED FROM THE PART OF TH E RESPONDENTS IN THE STATEMENT FILED IN W.P.(C) NO. 3461 OF 2010 IS NOT SEEN TO REFERRED TO. IT IS NOT DISCERNIBLE FROM EXT. P4 WHETHER THE COURSE STATED AS PURSUED BY THE DEPARTMENTAL AUTHORITIES SUBSTANTIALLY COMPLYIN G WITH THE MANDATE GIVEN BY THE APEX COURT IS SATISFIED OR NOT; WHICH CAN BE ASCERTAINED ONLY FROM THE CONTENTS OF THE RELEVANT FILE. THIS COURT FINDS THAT THE MATTER CAN BE CAUSED TO BE CONSIDERED BY THE APPELLATE AUT HORITY; PARTICULARLY WHEN THE PETITIONERS ARE HAVING AN EFFECTIVE ALTERN ATE REMEDY, BY WAY OF APPEAL. IN THE ABOVE CIRCUMSTANCES, THE PETITIONERS ARE PER MITTED TO PURSUE THE ALTERNATE REMEDY BY WAY OF APPEAL, ALONGWITH INTERL OCUTORY APPLICATIONS FOR SAY AND IF THE PETITIONERS FILE THE PROCEEDINGS AS ABOVE WITHIN TWO WEEKS; THE SAME SHALL BE TREATED AS VALID APPEALS F ILED ON TIME. THE APPELLATE AUTHORITY SHALL CONSIDER THE LAS IF ANY, TAKING NOTE OF THE SPECIFIC CONTENTIONS AND APPROPRIATE ORDERS SHALL BE PASSED THEREON, IN ACCORDANCE WITH LAW PARTICULARLY LAW DECLARED BY TH E APEX COURT IN THE DECISION CITED SUPRA, WHICH SHALL BE DONE AFTER HEA RING THE PETITIONERS, AS EXPEDITIOUSLY AS POSSIBLE AT ANY RATE WITHIN SIX W EEKS FROM THE DATE OF RECEIPT OF A COPY OF THIS JUDGMENT. IT IS MADE CLE AR THAT, TILL APPROPRIATE ORDERS ARE PASSED ON THE INTERLOCUTORY APPLICATIONS FOR STAY, ALL FURTHER COERCIVE PROCEEDINGS SHALL BE KEPT IN ABEYANCE. IT IS OPEN FOR THE APPELLATE AUTHORITY TO CONSIDER THE APPEALS THEMSEL VES ON MERITS, WITHIN THE TIME AS SPECIFIED ABOVE. THE WRIT PETITIONS ARE DISPOSED OF. IN VIEW OF THE ABOVE DIRECTIONS OF THE HONBLE HIGH COURT THE APPELLANT ASSESSEE FILED THIS APPEAL ON 23.04.2010 WHICH IS A CCORDINGLY ADMITTED FOR CONSIDERATION. AS PER THE ABOVE ORDER THE HONBLE H IGH COURT HAS GIVEN DIRECTIONS TO THE APPELLATE AUTHORITY AS CONTAINED IN PARA 3 OF THE ORDER. TO BE ASCERTAINED FROM THE CONTENTS OF THE RELEVANT FI LE AS TO WHETHER THE ASSESSING OFFICER HAS FOLLOWED THE PROCEDURE LAID D OWN AND THE MANDATE GIVEN BY THE HONBLE APEX COURT WHILE FRAMING THE R E-ASSESSMENT ORDER. HENCE THIS ORDER IS RESTRICTED AND CONFINED TO VERI FY THE APPELLANTS ITA NO. 602/COCH/ 2010 4 CONTENTION VIZ. A VIZ. THE ASSESSMENT RECORD AS DIR ECTED CLEARLY BY THE HONBLE HIGH COURT. 4 . THE LD. CIT(A) FINALLY HELD THAT THE PROCEEDINGS IN ITIATED U/S. 147 R.W.S. 148 OF THE ACT IS BAD IN LAW, AS THE AO HAS FAILED TO SUPPLY T HE REASONS TO THE ASSESSEE AND ACCORDINGLY, HE DID NOT CHOOSE TO DISPOSE OF THE AD DITIONS ON MERITS. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE ASSESSING OFFICER, BY ACCEPTING THE ORDER OF THE LD. CIT(A) CITED ABOVE, HAS ISSUED A FRESH NOTICE U/S. 148 OF THE ACT ON 15 -12-2010 AND SUBSEQUENTLY COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT O N 09-12-2011. ACCORDINGLY, THE LD. COUNSEL SUBMITTED THAT THE PRESENT APPEAL FILED BY THE ASSESSING OFFICER IS MAINTAINABLE, AS THERE IS NO GRIEVANCE ON HIS PART, AS HE HAS CHO SEN TO RE-OPEN THE ASSESSMENT AGAIN BY ACCEPTING THE ORDER OF LD CIT(A). 6. WE FIND FORCE IN THE SAID CONTENTIONS OF THE ASS ESSEE. WE HAVE NOTICED THAT THE LD. CIT(A) PASSED THE ORDER ON 31-08-2010, WHICH WAS S ERVED UPON THE ASSESSING OFFICER ON 24-09-2010. THEREAFTER, THE A.O. HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL ON 18-11-2010. WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT OF THE INSTANT YEAR BY ISSU ING NOTICE U/S. 148 OF THE ACT ON 15.12.2010. SUBSEQUENTLY, THE ASSESSMENT WAS COMPL ETED ON 09-12-2011 AFTER HEARING THE ASSESSEE. IN THE SAID ASSESSMENT ORDER, THE A SSESSING OFFICER HAS MADE FOLLOWING OBSERVATIONS WHICH AMPLY SHOW THAT THE AO WAS NOT A GGRIEVED BY THE ORDER OF LD CIT(A). HOWEVER, THE CIT(A) KOCHI HAS ANNULLED THE RE-ASSE SSMENT IN HIS ORDER DATED 31/08/2010 DUE TO NON-COMMUNICATION OF REASO N RECORDED FOR RE- OPENING OF THE ASSESSMENT TO THE ASSESSEE BUT WIT HOUT GOING INTO THE MERITS OF THE ISSUES DEALT WITH IN RE-ASSESSMENT. BUT, THERE WAS A FAILURE ON THE PART OF THE ASSESSE E TO FURNISH A TRUE AND FULL DISCLOSURE OF INCOME IN THE RETURN OF INCOME OR ST ATEMENT OF TOTAL INCOME AS ITA NO. 602/COCH/ 2010 5 REQUIRED IN THE INCOME TAX ACT AND TAXABLE INCOME CHARGEABLE TO INCOME TAX. THERE IS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HENCE, AFTER RECORDING REASONS FOR TH E ESCAPEMENT OF INCOME, THE ASSESSMENT WAS ONCE AGAIN REOPENED U/S. 147 BY ISS UING A NOTICE U/S. 148 ON 15/12/2010. ON THE REQUEST OF THE ASSESSEE THE RE ASON FOR RE-OPENING THE ASSESSMENT WERE COMMUNICATED TO THE ASSESSEE ON 03 /02/2011 . THE ASSESSEE HAS NOT OBJECTED TO THE RE-OPENING THE ASSESSMENT. SUBSEQUENTLY, A NOTICE U/S. 143(2) WAS SERVED ON 26/09/2011. 7. ON A CAREFUL PERUSAL OF THE ABOVE SAID OBSERVATIONS MADE BY THE AO, WE NOTICE THAT THE ASSESSING OFFICER HAS RE-OPENED THE ASSESS MENT BY FULLY ACCEPTING THE ORDER DATED 31-08-2010 PASSED BY THE LD, CIT(A). IT APPE ARS THAT THE AO CHOSE TO RE-OPEN THE ASSESSMENT, SINCE THE EARLIER ASSESSMENT ORDER WAS ANNULLED BY LD CIT(A) ON TECHNICAL GROUNDS WITHOUT GOING INTO THE MERITS OF VARIOUS AD DITIONS. HENCE, IN OUR VIEW, THERE IS NO NECESSITY FOR THE DEPARTMENT TO PURSUE THE PRESE NT APPEAL, MORE PARTICULARLY IN VIEW OF THE FACT THAT THE ASSESSEE HAS ALSO NOT OBJECTED TO THE SAID RE-OPENING. 8. IN THESE CIRCUMSTANCES, IT WOULD ONLY BE AN ACAD EMIC EXERCISE ON THE PART OF THE TRIBUNAL TO CONSIDER THE IMPUGNED ORDER OF LD CIT(A ) AND NO PURPOSE WILL BE SERVED BY IT. ACCORDINGLY, WE DECLINE TO INTERVENE IN THE APP EAL FILED BY THE REVENUE AND ACCORDINGLY, DISMISS THE SAME. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED ACCORDINGLY ON 29-03-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 29TH MARCH, 2012 GJ COPY TO: 1. M/S. SOMATHEERAM AYURVEDIC BEACH RESORT (P) LTD. , CHOWARA, P.O., BALARAMAPURAM, TRIVANDRUM-695 501. ITA NO. 602/COCH/ 2010 6 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTR AL CIRCLE-1, TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, KO CHI. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN