HOMELAND NETWORKS (INDIA) P. LTD, MUMBAI V. ITO 8(2)4, MUMBAI

ITA 6066/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3076 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 26-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 142(1); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI BEFORE SHRI R.C. SHARMA, AM AND SHRI SANDEEP GOSAIN , JM ./ I.T.A. NO. 6066/MUM/2011 ( / ASSESSMENT YEAR: 2000-01) HOMELAND NETWORKS (INDIA) P. LTD. 318, VAISHALI APARTMENTS, 3 RD FLOOR, 12/14 PAREKH STREET PRARTHANA SAMAJ MUMBAI / VS. INCOME TAX OFFICER WARD 8(2)(4), AAYAKAR BHAWAN. ./ ./PAN/GIR NO. AAACH 7363N ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. AASIFA KHAN / RESPONDENT BY : SHRI ABHISHEK SHARMA / DATE OF HEARING : 26/07/2016 !'# / DATE OF PRONOUNCEMENT : 21/09/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-17, M UMBAI DATED 30.05.2010 FOR A.Y. 2000-01 ON THE GROUNDS OF APPEA L MENTIONED HEREINBELOW. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 17 ERRED IN 2 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 148 OF THE ACT AND ISSUING NOTICE UNDER THE SAID SE CTION AND COMPLETING THE ASSESSMENT U/S. 144 R.W.S. 147 OF TH E ACT ASSESSING TOTAL INCOME AT RS. 28,20,350/- 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 17 ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE REM ITTANCES OF RS. 28,20,350/- RECEIVED ON 27/3/2000 FROM HOMELAND NETWORKS USA BEING SHARE APPLICATION MONEY AS INCOM E OF THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THE COUR SE OF PROCEEDINGS U/S.143(3) FOR A.Y. 2001-02, THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS.28,20,350/- ON ACCOUNT OF UNEXPLAINE D FOREIGN REMITTANCE. THE ASSESSING OFFICER HAD REJECTED THE ASSESSEES CONTENTIONS THAT THE IMPUGNED AMOUNT WAS SHARE APPL ICATION MONEY RECEIVED FROM M/S. HOME LAND NETWORKS, U.S.A. ON TH E GROUNDS THAT THE CERTIFICATE ISSUED BY THE BANK, WHERE REMITTANC E WERE DEPOSITED, HAD MENTIONED THAT THE AMOUNT WAS RECEIVED AS OPER ATION EXPENSES. SUBSEQUENTLY, THE ASESSSEE FILED APPEAL AGAINST THE ORDER OF CIT(A) FOR A.Y.2001-02 AND THE CIT(A) VIDE HIS O RDER DATED 13.12.2004 HAD GIVEN RELIEF TO THE ASSESSEE. SINCE THE FOREIGN REMITTANCE HAS BEEN RECEIVED ON 27.03.2000, THEREFO RE, THE SAME CANNOT BE A SUBJECT MATTER FOR A.Y.2001-02. THE CIT (A) ALSO PASSING 3 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 THE ORDER BY OBSERVING THAT THE AO IS LIBERTY TO EXAMINE ITS GENUINENESS IN THE A.Y.2000-01, FOR WHICH HE STILL HAS TIME TO TAKE NECESSARY REMEDIAL MEASURES. 2.1 AFTER THE DECISION BY CIT(A), THE ASSESSING OFF ICER REOPENED THE ASSESSMENT U/S.147 OF THE INCOME TAX, 1961 AS H E FOUND THAT THERE WAS REASONS TO BELIEVE THAT SUM OF RS.28,20,3 50/- CHARGEABLE TO TAX FOR ASSESSMENT YEAR 2000-01 HAS ESCAPED ASSESSM ENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT, 1961. SUBSEQU ENTLY, THE ASSESSING OFFICER PASSED THE ORDER AFTER SERVING A NOTICE, THEREBY MAKING ADDITIONS OF RS.28,20,350/-. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREFE RRED AN APPEAL BEFORE CIT(A) AND THE CIT(A) AFTER CONSIDERING BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE F ILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN AB OVE. 4 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 5. DURING THE PENDENCY OF THE PRESENT APPEAL, THE A SSESSEE MOVED AN APPLICATION FOR ADDITIONAL GROUND OF APPEAL ON T HE GROUND THAT THE ASSESSMENT ORDER PASSED U/S.144 R.W.S. 147 OF THE I NCOME TAX ACT DATED 27.02.2005 IS BAD IN LAW AS BEFORE ANY HEARIN G COULD TAKE PLACE, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER ON 27.09.2005 WHEREAS THE DATE FIXED FOR HEARING OF TH E MATTER WAS AFTER THE DATE OF PASSING THE ASSESSMENT ORDER. 6. THE LEARNED AR SUBMITTED THAT NO OPPORTUNITY AT ALL WAS GIVEN TO THE ASSESSEE BEFORE PASSING THE ORDER OF RE-ASSE SSMENT U/S.144 R.W.S. 147 OF THE INCOME TAX ACT AND NO REASONS WER E RECORDED BEFORE ISSUING THE NOTICE U/S.148. LEARNED AR FURTH ER SUBMITTED THAT INADVERTENTLY THOSE LEGAL GROUNDS COULD NOT BE TAKE N IN THE MEMO OF APPEAL BECAUSE OF OVER SIGHTED NEXT. LEARNED AR NEX T SUBMITTED THAT ADDITIONAL GROUND RAISED BY THE ASSESSEE IS PURELY LEGAL IN NATURE AND FACTS RELEVANT FOR ARGUING THE ADDITIONAL GROUND, A RE ON RECORD. 5 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 7. ON THE OTHER HAND, LEARNED DR CONTESTED THE APPL ICATION MOVED BY THE ASSESSEE FOR ADMISSION OF ADDITIONAL GROUNDS . 8. WE HEARD THE COUNSEL FOR THE PARTIES AND PERUSED MATERIAL ON RECORD. WE OBSERVED THAT THE ADDITIONAL GROUNDS OF APPEAL NOW RAISED BY THE ASSESSEE ARE LEGAL IN NATURE AND GOES TO THE ROOTS OF THE CASE AND IN CASE THE ASSESSEE IS NOT PERMITTED TO RAISE ADDITIONAL GROUND THEN INADVERTENTLY THE RIGHTS OF THE ASSESSEE WOULD BE PREJUDICE. WE DERIVE OUR STRENGTH FROM THE JUDGMENT OF HONBLE SU PREME COURT IN THE CASE OF NTPC VS/ CIT, 229 ITR 383 (SC), WHEREIN THE HONBLE SUPREME COURT HAS CATEGORICALLY HELD THAT LEGAL POI NTS CAN ALWAYS BE TAKEN ON ANY STAGE AND SINCE THE GROUNDS NOW RAISED BY ASSESSEE BY WAY OF ADDITIONAL GROUNDS OF APPEAL ARE PURELY LEGA L IN NATURE, THEREFORE, WE ALLOW THE APPLICATION OF THE ASSESSEE FOR RAISING ADDITIONAL GROUND OF APPEAL. 8.1 SINCE, THE ADDITIONAL GROUND NOW RAISED BEFORE US ARE PURELY LEGAL IN NATURE, THEREFORE, WE THINK IT FIT TO DECI DE THESE GROUNDS FIRST. THE ADDITIONAL GROUNDS ARE REPRODUCED BELOW: 6 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 ADDITIONAL GROUNDS OF APPEAL 1. BEST JUDGMENT ASSESSMENT U/S. 144 R.W.S. 147 OF THE ACT: 1.1 THE ID. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN FRAMING THE BEST JUDGMENT ASSESSMENT BY INVOKING TH E PROVISIONS OF SECTION 144 R.W.S. 147 OF THE ACT [THE ACT']. 1.2 WHILE DOING SO, THE ID. CIT (A) FAILED TO APPRE CIATE THAT: (I) THE NECESSARY CONDITIONS FOR INVOKING THE PROVI SIONS OF SECTION 144 OF THE ACT WERE NOT FULFILLED; (II) NO OPPORTUNITY AT ALL WAS PROVIDED TO THE APPE LLANT AT THE REASSESSMENT STAGE AS THE ASSESSMENT ORDER WAS PASSED MUCH PRIOR TO THE DATE WHEN THE HEARING WAS FIXED BY THE ASSESSING OFFICER. (III) IN ANY CASE, THAT THE APPELLANT WAS PREVENTED BY THE REASONS BEYOND ITS CONTROL TO REPRESENT ITS CASE PROPERLY AND FULLY BE FORE THE ASSESSING OFFICER. 2. RE-OPENING INVALID: 1.1 THE ASSESSING OFFICER ERRED IN FRAMING THE ASSE SSMENT UNDER SECTION 144 READ WITH SECTION 147 OF THE ACT ONLY ON THE BASIS OF THE OBSERVATION MADE BY THE CIT(A) WHILE PASSING THE ORDER FOR THE A.Y.2001-02. 1.2 THE ASSESSING OFFICER FAILED TO APPRECIATE THAT (I)THE NECESSARY PRE-CONDITIONS WERE NOT FULFILLED BEFORE INITIATING AS WELL AS BEFORE THE FRAMING THE REASSESSMENT. (II) THE REASONS FOR RE-OPENING HAS NOT BEEN RECORD ED BEFORE ISSUING THE NOTICE UNDER SECTION 148 OF THE ACT. 1.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIR CUMSTANCES OF THE CASE, AND IN LAW, THE REASSESSMENT BE HELD IS BAD, ILLEGAL AND VOID. 9. ADDITIONAL GROUND NO.1 LEARNED AR APPEARING ON BEHALF OF THE ASSESSEE DRA WN OUR ATTENTION TO THE ORDER PASSED BY AO U/S.144 R.W.S. 147 OF THE INCOME 7 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 TAX ACT, 1961. THE OPERATIVE PORTION OF THE ORDER I S REPRODUCED BELOW: DURING SCRUTINY PROCEEDINGS, NOTICE U/S.143(2) OF THE IT ACT WAS ISSUED TO ASSESSEE ON 1.9.2005. ANOTHER NOTICES U/S.143(2)/142(1) DTD. 12.09.2005 FIXING HEARING ON 20.10.2005 WERE SERVED ON 29.09.2005. IN RESPONSE T O THIS NOBODY ATTENDED NOR THEY FILED ANY REPLY OR LETTER OF ADJOURNMENT. ANOTHER NOTICE U/S.142(1) DTD. 13.12.2005 CALLING U PON THE ASSESSEE TO SHOW CAUSE ON 19.12.2005. ANOTHER NOTICES U/S.143(2)/142(1) DTD. 12.09.2005 WERE SERVED ON 29.09.2005. IN RESPONSE TO THIS NOBODY ATTENDED NOR THEY FILED ANY REPLY OR LETTER OF ADJOURNMENT. ANOTHER NOTICE U/S.142(1) DTD. 13.12.2005 CALLING U PON THE ASSESSEE TO SHOW CAUSE ON 19.12.2005 AT 12.00 NOON, WHY THE ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF MY JUDGMENT. IN RESPONSE TO THIS NEITHER ANYBODY ATTEN DED NOR THEY FILED ANY REPLY IN WRITING. UNDER SUCH CIRCUMSTANCES, I AM COMPELLED TO COMPLET E THE ASSESSMENT TO THE BEST OF MY JUDGMENT. 10. FROM A BARE PERUSAL OF THE ASSESSMENT ORDER IN COLUMN NO.12 IN THE DATE OF ORDER IS MENTIONED AS 27.09.2005 WHE REAS IN THE BODY OF ASSESSMENT ORDER, THE DATE FIXED FOR HEARING IN NOTICE ISSUED U/S.143(2)/143(1) IS MENTIONED AS 20.10.2005 WHICH GOES TO SHOW THAT THE ASSESSMENT ORDER WAS ALREADY PASSED ON 27. 09.2005 U/S. 144 R.W.S. 147 OF INCOME TAX ACT, 1961 WHEREAS THE HEAR ING TO THE ASSESSEE WAS FIXED ON 20.10.2005 WHICH ON THE FACE OF IT, IS ILLEGAL AND BAD IN LAW. MOREOVER, IT HAS ALSO BEEN MENTIONE D IN THE ASSESSMENT ORDER THAT ANOTHER U/S. 142(1) DATED 13. 12.2005 CALLING 8 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 UPON THE ASSESSEE TO SHOW CAUSE ON 19.12.2005 AT 12 .00 NOON HAS ALSO BEEN ISSUED WHICH ALSO GOES TO SHOW THAT ALL T HOSE NOTICES WERE ISSUED AFTER PASSING OF ASSESSMENT ORDER, THEREFORE , IN THESE CIRCUMSTANCES IN OUR CONSIDERED VIEW THE ASSESSMENT ORDER PASSED BY AO U/S.143(3) R.W.S. 147 HAS BEEN PASSED WITHOUT PR OVIDING PROPER/SUFFICIENT OPPORTUNITY OF HEARING TO THE ASS ESSEE, THEREFORE, THE SAME IS BAD IN LAW AND NOT MAINTAINABLE. CONSIDERIN G THE FACTS OF THE PRESENT CASE AS WELL AS TAKING INTO ACCOUNT THE PRI NCIPLES OF NATURAL JUSTICE, EQUITY AND FAIR PLAY, WE SET ASIDE THE ORD ER OF THE CIT(A) AND ASSESSMENT ORDER PASSED U/S.143(3) R.W.S. 147 OF TH E INCOME TAX ACT AND ALSO ORDER OF CIT(A) UPHOLDING THE SAID ORDER O F ASSESSMENT AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRE CTION TO PASS AFRESH ORDER OF ASSESSMENT AFTER GIVING PROPER AND SUFFICI ENT OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE WOULD BE AT L IBERTY TO TAKE ALL ITS CONTENTIONS BEFORE THE AO. 11. SINCE, WE HAVE ALREADY DECIDED THE PRELIMINARY ISSUE THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MAT TER BACK TO THE FILE 9 ITA NO. 6066/MUM/2011 (A.Y. 2000-01) HOMELAND NETWORKS (INDIA) PVT. LTD. VS. ITO 8(2)4 OF THE ASSESSING OFFICER, THEREFORE, IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, THERE DOES NOT REQUIRE ANY ADJUDICATIO N FOR OTHER GROUNDS RAISED BY THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016 SD/- SD/- (R.C. SHARMA) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :21.09.2016 P.K.K., SR.P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI