M/s. Ranutrol Industries Ltd., New Delhi V. ITO, New Delhi

ITA 6125/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7428 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 25-05-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN D GEORGE SENIOR
• Keywords: Reopening of assessment
• Section: 147; 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH F FF F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 2332/DEL/2011 & 6125/DEL/2013 2332/DEL/2011 & 6125/DEL/2013 2332/DEL/2011 & 6125/DEL/2013 2332/DEL/2011 & 6125/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2002 2002 2002 2002 - -- - 03 0303 03 M/S RANUTROL INDUSTRIES M/S RANUTROL INDUSTRIES M/S RANUTROL INDUSTRIES M/S RANUTROL INDUSTRIES LIMITED, LIMITED, LIMITED, LIMITED, 414, NEW DELHI HOUSE, 414, NEW DELHI HOUSE, 414, NEW DELHI HOUSE, 414, NEW DELHI HOUSE, 27, BARAKHAMBA ROAD, 27, BARAKHAMBA ROAD, 27, BARAKHAMBA ROAD, 27, BARAKHAMBA ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACR1597C. PAN : AAACR1597C. PAN : AAACR1597C. PAN : AAACR1597C. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -15(2), 15(2), 15(2), 15(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL AGGARWAL, ADVOCATE AND SHRI SHAILESH GUPTA, CA. RESPONDENT BY : MS. SUSAN D. GEORGE, SENIOR DR. DATE OF HEARING : 25.05.2016 25.05.2016 25.05.2016 25.05.2016 DATE OF PRONOUNCEMENT : 31.05.2016 31.05.2016 31.05.2016 31.05.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - ITA NO.2332/DEL/2011 : ITA NO.2332/DEL/2011 : ITA NO.2332/DEL/2011 : ITA NO.2332/DEL/2011 :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2002-03 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XVIII, NEW DELHI DATED 28 TH FEBRUARY, 2011. 2. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THIS APPEAL WAS ORIGINALLY DECIDED AGA INST THE ASSESSEE VIDE ORDER DATED 18 TH MAY, 2012. THE ASSESSEE FILED THE MISCELLANEOUS APPLICATION WHEREIN THE DISSENTING JUDGMENT WAS PAS SED BY THE LEARNED MEMBERS CONSTITUTING THE BENCH. THEREFORE, THE MATTER WAS REFERRED TO THE THIRD MEMBER. THE THIRD MEMBER, IN HIS ORDER DATED 25 TH JULY, 2014, AGREED WITH THE LEARNED ACCOUNTANT MEM BER THAT THE APPEAL NEEDS TO BE RECALLED AND REFIXED FOR HEARING AFRESH. ITA-2332/D/2011 & 6125/D/2013 2 ACCORDINGLY, THIS APPEAL IS FIXED FOR HEARING. HE STATED THAT DURING THE COURSE OF ORIGINAL PROCEEDINGS, THE ASSESSEE HAS ME NTIONED THAT HE WILL NOT BE PRESSING THE GROUNDS RELATING TO VALIDITY OF REOPENING OF ASSESSMENT. HOWEVER, NOW, THE ASSESSEE WANTS TO PR ESS THIS GROUND AS THIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. SPLS SIDDHARTHA LTD. [2012] 345 ITR 223 (DELHI). HE S TATED THAT THE ASSESSMENT WAS REOPENED BEYOND THE PERIOD OF FOUR Y EARS AND SINCE THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S 143(1) , THE REOPENING BY THE ITO CAN BE MADE ONLY WITH THE PREVIOUS APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX. THAT IN THIS CASE, THE APPROVAL IS GIVEN BY THE COMMISSIONER OF INCOME TAX AND, THEREFORE, T HE SAME IS NOT VALID. 3. LEARNED DR, ON THE OTHER HAND, STATED THAT ONCE THE ASSESSEE HAS NOT PRESSED THE ISSUE OF REOPENING OF ASSESSMEN T IN THE ORIGINAL PROCEEDINGS BEFORE THE ITAT, HE CANNOT NOW PRESS TH E GROUND RELATING TO REOPENING OF ASSESSMENT. SHE STATED THAT IN THE MISCELLANEOUS APPLICATION, THE ORIGINAL ORDER OF THE ITAT WAS CHA LLENGED RELATING TO FINDING OF THE ITAT ON MERITS WHEREIN THE ADDITION OF `13 LAKHS WAS SUSTAINED. THEREFORE, IN THE PRESENT APPEAL, THE A SSESSEE CAN ONLY CONTEST THE GROUND RELATING TO ADDITION OF `13 LAKH S AND NOT THE GROUND RELATING TO THE VALIDITY OF REOPENING OF ASSESSMENT . 4. IN THE REJOINDER, LEARNED COUNSEL REFERRED TO TH E ORDER OF THE LEARNED ACCOUNTANT MEMBER WHEREIN THE LEARNED ACCOU NTANT MEMBER HAS CONCLUDED THAT THE IMPUGNED ORDER OF THE ITAT H AS TO BE RECALLED. THE THIRD MEMBER AGREED WITH THE LEARNED ACCOUNTANT MEMBER AND HAS DIRECTED FOR THE DISPOSAL OF THE APPEAL AFRESH AFTER CONSIDERING THE LEGAL AND FACTUAL ASPECT. IN THE ORDER OF THE DIVI SION BENCH GIVING EFFECT TO THE ORDER OF THE THIRD MEMBER, THE ITAT H ELD IN ACCORDANCE WITH THE VIEW OF THE MAJORITY, THE MISCELLANEOUS AP PLICATION FILED BY THE ITA-2332/D/2011 & 6125/D/2013 3 ASSESSEE U/S 254(2) IS ALLOWED. THE REGISTRY IS DI RECTED TO FIX THE CASE FOR FRESH HEARING IN DUE COURSE. HE, THEREFORE, S UBMITTED THAT IN VIEW OF THE ORDER OF THE LEARNED ACCOUNTANT MEMBER, THIR D MEMBER AND THE ORDER OF THE DIVISION BENCH WHICH IS PASSED IN ACCO RDANCE WITH THE MAJORITY VIEW, THE EARLIER ORDER OF THE ITAT HAS BE EN RECALLED AND THE APPEAL HAS BEEN FIXED FOR HEARING AFRESH. IF THE R EVENUE IS AGGRIEVED WITH THE ORDER OF THE ITAT IN THE MISCELLANEOUS APP LICATION, IT COULD HAVE CHALLENGED THE SAME, BUT, ONCE THE ORDER OF TH E ITAT IN MISCELLANEOUS APPLICATION HAS BECOME FINAL, THE FUL L EFFECT IS TO BE GIVEN TO THE SAME MEANING THEREBY THAT THE ENTIRE A PPEAL IS TO BE HEARD AFRESH. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT WHILE DISPOSING OF THE MISCELLANEOUS APPLICATION, LEARNED JUDICIAL MEMBER, VIDE ORDER DATED 17 TH OCTOBER, 2013, DISMISSED THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE. LEARNED ACCOUNT ANT MEMBER, VIDE ORDER DATED 2 ND DECEMBER, 2013, HELD HENCE, THE IMPUGNED ORDER OF THE ITAT HAS TO BE RECALLED AND REGISTRY IS DIRECTE D TO POST THE CASE FOR HEARING IN DUE COURSE. FROM A PLAIN READING OF TH E ABOVE FINDING OF LEARNED ACCOUNTANT MEMBER, IT IS EVIDENT THAT THE E NTIRE ORDER OF THE ITAT WAS PROPOSED TO BE RECALLED. THE THIRD MEMBER , VIDE HIS ORDER DATED 25 TH JULY, 2014, HELD BEFORE PARTING, I MAY OBSERVE TH AT IT IS FOR THE DIVISION BENCH, AFTER RECALLING OF THE ORDER , TO CONSIDER THE LEGAL AND FACTUAL ASPECTS AS IT MAY DEEM FIT AND FAIR, TO DISPOSE OF THE APPEAL AFRESH. THUS, AS PER THIRD MEMBER ALSO, TH E ENTIRE ORDER IS TO BE RECALLED AND THE APPEAL IS TO BE DISPOSED OF AFR ESH. AFTER THE ORDER OF THE THIRD MEMBER, THE DIVISION BENCH PASSED THE ORDER DATED 3 RD NOVEMBER, 2014 AS PER MAJORITY VIEW READING AS UNDE R:- 4. IN ACCORDANCE WITH THE VIEW OF THE MAJORITY, TH E MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE U/S 254(2) OF THE ACT IS ALLOWED. ITA-2332/D/2011 & 6125/D/2013 4 5. THE REGISTRY IS DIRECTED TO FIX THE CASE FOR FRE SH HEARING IN DUE COURSE. 6. THUS, FROM THE ORDER OF THE THIRD MEMBER AS WELL AS THE ORDER PASSED AS PER MAJORITY VIEW, THE ENTIRE ORDER OF TH E ITAT IS RECALLED AND FIXED FOR HEARING AFRESH. ADMITTEDLY, THE ORDER OF THE THIRD MEMBER AND THE ORDER DISPOSING OF THE MISCELLANEOUS APPLIC ATION BY MAJORITY VIEW HAS NOT BEEN CHALLENGED BY THE REVENUE AND THE SAME HAS BECOME FINAL. THEREFORE, WE AGREE WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ENTIRE APPEAL IS TO BE CONSIDERED BY THE ITAT. 7. GROUND NOS.1 TO 3 OF THE ASSESSEES APPEAL ARE W ITH REGARD TO VALIDITY OF REOPENING OF ASSESSMENT U/S 147. THE C ASE HAS BEEN REOPENED BY THE ITO VIDE NOTICE U/S 148 DATED 27 TH MARCH, 2009 (COPY OF WHICH IS PLACED AT PAGE 2 OF THE ASSESSEES PAPE R BOOK). FROM THE NOTICE, IT IS EVIDENT THAT THE REOPENING HAS BEEN M ADE AFTER OBTAINING THE APPROVAL OF THE COMMISSIONER OF INCOME TAX, DEL HI-V. THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2002-03. SO , ADMITTEDLY, THE ASSESSMENT IS REOPENED BEYOND THE PERIOD OF FOUR YE ARS. SECTION 151, AS IT STOOD AT THE RELEVANT TIME, READS AS UNDER:- 151. SANCTION FOR ISSUE OF NOTICE. (1) IN CASE WHERE AN ASSESSMENT UNDER SUB-SECTION ( 3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW T HE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER, U NLESS THE JOINT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONE R IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS FIT CASE FOR THE ISSUE OF SUC H NOTICE. ITA-2332/D/2011 & 6125/D/2013 5 (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE IS SUE OF SUCH NOTICE. 8. FROM SECTION 151(2), IT IS EVIDENT THAT NO NOTIC E U/S 148 CAN BE ISSUED BY AN ASSESSING OFFICER WHO IS BELOW THE RAN K OF JOINT COMMISSIONER OF INCOME TAX AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS JOINT CO MMISSIONER IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER. ADMITTEDLY, NOTICE U/S 148 WAS ISSUED BY THE ITO. THEREFORE, T HE NECESSARY PERMISSION HAS TO BE OBTAINED BY THE JOINT COMMISSI ONER OF INCOME TAX WHICH IS OBTAINED FROM THE COMMISSIONER OF INCO ME TAX. HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED THE IDENTI CAL ISSUE IN THE CASE OF SPLS SIDDHARTHA LTD. (SUPRA) WHEREIN THEIR LORD SHIPS HELD AS UNDER:- HELD, THAT UNDER SECTION 151 OF THE ACT, IT WAS ON LY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROVAL FOR ISSUE OF NOTICE UNDER SECTIO N 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIO NER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF INCO ME- TAX. THIS WAS NOT AN IRREGULARITY CURABLE UNDER SE CTION 292B. THE NOTICE WAS NOT VALID. 9. THE RATIO OF THE ABOVE DECISION WOULD BE SQUAREL Y APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE QUASH THE NOTIC E U/S 148. CONSEQUENTLY, THE ASSESSMENT ORDER PASSED IN PURSUA NCE TO SUCH NOTICE IS ALSO QUASHED. 10. ONCE THE ASSESSMENT ORDER IS QUASHED, THE OTHER GROUNDS IN ASSESSEES APPEAL DO NOT SURVIVE FOR ADJUDICATION. ITA-2332/D/2011 & 6125/D/2013 6 ITA NO.6125/DEL/2013 : ITA NO.6125/DEL/2013 : ITA NO.6125/DEL/2013 : ITA NO.6125/DEL/2013 :- -- - 11. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPE AL RELATE TO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. ON CE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE PENALTY WHICH WA S LEVIED ON THE BASIS OF SUCH ASSESSMENT ORDER DO NOT SURVIVE. THE SAME IS DELETED. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 31.05.2016 . SD/- SD/- (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG (CHANDRA MOHAN GARG ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S RANUTROL INDUSTRIES LIMITED, M/S RANUTROL INDUSTRIES LIMITED, M/S RANUTROL INDUSTRIES LIMITED, M/S RANUTROL INDUSTRIES LIMITED, 414, NEW DELHI HOUSE, 414, NEW DELHI HOUSE, 414, NEW DELHI HOUSE, 414, NEW DELHI HOUSE, 27, BA 27, BA 27, BA 27, BARAKHAMBA ROAD, RAKHAMBA ROAD, RAKHAMBA ROAD, RAKHAMBA ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. RESPONDENT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -15(2), NEW DELHI. 15(2), NEW DELHI. 15(2), NEW DELHI. 15(2), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR