DCIT RG 8(2), MUMBAI V. PLASTIBLENDS INDIA LTD, MUMBAI

ITA 6206/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9423 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-11-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Assessment record; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 6206/MUM/2011 (ASSESSMENT YEAR: 2000-01) DY CIT -8(2), R NO 216-A, AAYAKAR BHAVAN, M. K. ROAD MUMBAI -400 020 VS M/S. PLASTIBLENDS INDIA PVT. LTD., B-45, VEERA INDUSTRIAL ESTATE, NEW LINK ROAD, ANDHEIR (W) MUMBAI -400 053 PAN AAACP 6287 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJARSHI DWIVEDY RESPONDENT BY : SHRI NITESH JOSHI DATE OF HEARING: 08.11.2012 DATE OF PRONOUNCEMENT: 21.11.2012 O R D E R PER VIVEK VARMA, JM: THE APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) 17, MUMBAI, DATED 24.06.2011. 2. THE SOLITARY ISSUE IS WITH REGARD TO CANCELLING THE REAS SESSMENT PROCEEDINGS BY THE CIT(A). 3. THE FACTS ARE THAT REGULAR ASSESSMENT U/S 143(3) WAS FRAMED ON 25.03.2003. THEREAFTER, THE AO, AFTER RECORDING THE REASON S AND SEEKING APPROVAL OF THE CIT INITIATED REASSESSMENT PROCEE DINGS BY THE ISSUE OF NOTICE U/S 148 DATED 29.03.2007 AND GOT IT SERVE D ON THE ASSESSEE ON 30.03.2007. THE ASSESSEE VIDE ITS LETTER DATE D 23.04.2007 REQUESTED THE AO TO TREAT ITS ORIGINAL RETURN TO BE IN R ESPONSE TO THE NOTICE U/S 148. THEREAFTER, THE NORMAL PROCESS OF ASKING A ND GETTING THE REASONS AND THE PROSECUTION OF ASSESSMENT PROCEED INGS WAS TAKEN M/S. PLASTIBLENDS INDIA PVT. LTD. ITA 6206/MUM/2011 2 UP AND THE ASSESSMENT WAS FINALLY FRAMED U/S 143(3) READ WITH SEC 147 ON 30.11.2007. IN THESE PROCEEDINGS, THE ASSESSEE OB JECTED TO THE REOPENING, WHEREIN IT CONTENDED THAT THERE WAS NO INCOM E WHICH HAS ESCAPED ASSESSMENT AND THE NOTICE WAS ISSUED WITHOUT J URISDICTION AND WITH A VIEW TO MAKE FISHING INQUIRIES. 4. AGAINST THE REOPENING AND ON MERITS, THE ASSESSEE AP PROACHED THE CIT(A), BEFORE WHOM THE ASSESSEE AGITATED THAT REOPE NING OF THE ASSESSMENT WAS BAD IN LAW AS THERE WAS NO OMISSION OR FA ILURE ON THE PART OF THE ASSESSEE IN MATTERS OF DISCLOSURE FOR MAKING ASSESSMENT. THE AO HAS NOT POINTED OUT ANY OMISSION OR FAILURE, WHICH IS REQUIRED FOR REOPENING THE ASSESSMENT BEYOND FOUR YEARS, WHICH IS THE CASE IN THE PRESENT CASE. 5. THE CIT(A) EXAMINED THE RECORDS AND AFTER TAKING INTO ACCOUNT ALL THE FACTS, REFERRED TO THE DECISIONS OF GERMAN REMEDIES LTD VS. DCIT, REPORTED IN 287 ITR 494 (BOM) AND CIT VS. FORAMER FRANCE 264 ITR 566 (SC), HELD, NOW THERE IS NO DOUBT THAT THE CASE HAS BEEN RE-OPE NED AFTER A GAP OF FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR AND THEREFORE, THE PROVISO TO 147 WOULD APPLY. IT I S THEREFORE, A STATUTORY CONDITION THAT THERE SHOULD HAVE BEEN A F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MA TERIAL FACTS DURING THE COURSE OF ORIGINAL ASSESSMENT. FROM THE PERUSAL OF THE ABOVE RECORDED REASONS, IT IS APPARENT THAT THE A.O. HAS NOT MADE ANY OBSERVATIONS REGARDING THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR COMPLETION OF ORIGINAL ASSESSMENT. THE BOMBAY H IGH COURT IN HINDUSTAN LEVER LTD (268 ITR 332) HAS HELD THAT IT IS INCUMBENT UPON THE A.O. TO MENTION THE FACTS OF FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE THE TRUE FACTS SO AS TO ESTABL ISH A LINK BETWEEN THE REASONS AND EVIDENCE, IF THE A.O. FAILS TO DO SO, THE IMPUGNED NOTICE U/S. 148 IS LIABLE TO THE QUASHED A ND SET ASIDE. SIMILARLY, THE MUMBAI TRIBUNAL IN THE CASE OF M/S. MILTON PLASTICS LTD, IN (TA NO. 4457/MUM/2005, DATED 26-03 -2008, HAS HELD THAT 147 PROCEEDINGS ARE LIABLE TO BE QUAS HED MERELY FOR THE REASON THAT THE A.O. HAS NOT MENTIONED THE FACT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIA L AND TRUE FACTS. IN VIEW OF THE ABOVE FACTS AND JUDICIAL PRON OUNCEMENTS, THE REASSESSMENT PROCEEDINGS ARE LIABLE TO BE CANCE LLED ON THIS GROUND ITSELF AS THE REASONS RECORDED IN THIS YEAR ALSO DO NOT MENTION THE FAILURE ON THE PART OF THE ASSESSEE. TH E OTHER ISSUES RAISED BY THE APPELLANT, WITH REGARD TO THIS GROUND , ARE THEREFORE M/S. PLASTIBLENDS INDIA PVT. LTD. ITA 6206/MUM/2011 3 NOT BEEN ADJUDICATED. FURTHER, I FIND THAT THE AS SESSEE HAS MADE AMPLE DISCLOSURE IN RESPECT OF IMPUGNED ISSUES IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IN FACT THE AO HAS RECORDED HIS REASONS ON THE BASIS OF THE EXISTING ASSESSMENT RECORD BEFORE HIM. KEEPING IN VIEW THE ABOVE FACTS, I AM O F THE VIEW THAT THE A.O FAILED TO POINT OUT ANY LAPSE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT. IN THE CIRCUMSTANCES, THE ASSES SMENT WAS TIME BARRED AFTER FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR I.E. 31-03-2006. THE ISSUE OF NOTIC E U/S. 148 IS, THEREFORE, WITHOUT JURISDICTION AND IS, LIABLE TO BE CANCELLED. 6. THE CIT(A), THUS CANCELLED THE REASSESSMENT PROCEEDINGS ON THE TECHNICAL GROUNDS AS PER DETAILED REASONING GIVEN IN PARAS 3.7 AND 3.8 OF THE IMPUGNED ORDER. HE HELD, THE ASSESSEE HAD MADE AM PLE DISCLOSURES RELEVANT TO THE ISSUES RAISED IN THE REASSESS MENT. HE, THEREFORE, ANNULLED THE ASSESSMENT ORDER. 7. AGAINST THIS ORDER, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 8. BEFORE US, THE DR STRONGLY RELIED ON THE ORDER OF THE AO, WHEREAS THE AR RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORIT IES AND WE FIND THAT THE AO INITIATED REASSESSMENT PROCEEDINGS FOR SH ORT LEVY OF TAX OF RS. 22,21,777, RELATING TO DEFECTS ON METHOD OF STOCK VALUATION. IN THIS REGARD, THE CIT(A) HAS HELD THAT THE ASSESSEE H AD MADE AMPLE DISCLOSURE IN RESPECT OF THE IMPUGNED ISSUE DURING THE ORIG INAL ASSESSMENT PROCEEDINGS. THE CIT(A) IN FACT GOES FURTHER IN OBSERVING THAT AO HAS RECORDED HIS REASONS ON THE BASIS OF THE E XISTING ASSESSMENT RECORDS BEFORE HIM. DURING THE PROCEEDINGS BE FORE US, THE DR COULD NOT DEMONSTRATE ANY OMISSION OR FAILURE OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ANY RELEVANT FACTS DURING THE MAK ING OF THE ORIGINAL ASSESSMENT. IT IS A TRIATE LAW THAT THE ONUS IS ON THE REVENUE IN SUCH MATTERS. IT IS A FACT THAT THE AO INITIATED PROCE EDINGS BASED ON THE INFORMATION ALREADY AVAILABLE ON THE ASSESSMENT RECORD S. THEREFORE, ASSESSEE IS NOT TO BE DEFAULTED IN MATTER DISCLO SURE OF M/S. PLASTIBLENDS INDIA PVT. LTD. ITA 6206/MUM/2011 4 PARTICULARS NECESSARY FOR MAKING ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961, AND THUS, WE AGREE WITH THE CIT(A). 10. AFTER TAKING INTO ACCOUNT THESE FACTUAL FINDINGS OF THE CIT(A) AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS, WE DO N OT FIND ANY REASON TO DISTURB THESE FACTUAL FINDINGS OR TAKE ANY DIVERGENT VIEW. 11. WE, THEREFORE, SUSTAIN THE ORDER OF CIT(A) AND REJECT THE APPEAL FILED BY THE DEPARTMENT. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- (D. KARUNAKARA RAO) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 17 MUMBAI. 4) THE CIT 8 MUMBAI, 5) THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN