ACIT RG 3(3), MUMBAI V. SBI GLOBAL FACTORS P.LTD, MUMBAI

ITA 6426/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3767 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 22-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-10-2012
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Reopening of assessment; Audit objection; Bad and doubtful debts; Difference of opinion; Change of opinion
• Section: 143(3)

Judgement Text

, , E, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6426/MUM/2012 ASSESSMENT YEAR: 2006-07 AC IT 3 (3) R.NO.609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. RD. MUMBAI -400020 / VS. SBI GLOBAL FACTORS PVT. LTD. 17 TH FLOOR, 172, MAKER TOWERS, CUFFE PARADE, COLABA, MUMBAI-400005 (REVENUE) (RESPONDENT) P.A. NO. AAACS7915EF REVENUE BY SHRI LOVE KUMAR (DR) RESPONDENT BY SHRI K. GOPAL, & MS. NEHA PARANJPE (AR) / DATE OF HEARING : 14/01/2016 / DATE OF ORDER: 24/02/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7 , MUMBAI {(IN SHORT CIT(A)}, DATED 23.07.2012 FOR THE ASS ESSMENT YEAR 2006-07, PASSED AGAINST THE ASSESSMENT ORDER PASSED BY THE SBI GLOBAL FACTORS P. LTD. 2 ASSESSING OFFICER (IN SHORT AO) U/S 143(3) R.W.S. 147 OF THE ACT. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI K. GOPAL, & MS. NEHA PARANJPE, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE RESPONDENT AND BY SHRI LOVE KUMAR, DEPARTMENTAL REPRESENTATIVE (DR) ON BEH ALF OF THE REVENUE. 3. IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE ORD ER OF LD. CIT(A) WHEREIN IN REOPENING MADE BY THE AO U/S 147 WAS QUASHED. 3.1. DURING THE COURSE OF HEARING, LD. DR HAS RELIED UP ON THE ORDER OF THE AO. ON THE OTHER, LD. COUNSEL OF THE A SSESSEE HAS ARGUED IN DETAIL THAT THE REASONS RECORDED IN THI S CASE WERE FACTUALLY INCORRECT AND LEGALLY INVALID. FURTHER, O RIGINAL ASSESSMENT WAS DONE IN THIS CASE U/S 143(3), WHEREI N SIMILAR ISSUE HAS ALREADY BEEN DEALT BY THE AO AND ADDITION WAS MADE WHICH WERE CONTESTED BEFORE LD. CIT(A), WHEREIN THE ADDITIONS MADE WERE DELETED. THUS, ORIGINAL ASSESSMENT ORDER WAS MERGED WITH THE ORDER OF LD. CIT(A). IN VIEW OF THE SE FACTS, IT IS A CLEAR CASE OF CHANGE OF OPINION, WHICH IS NOT PER MITTED UNDER THE LAW. 3.2. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES, DOCUMENTARY EVIDENCES SUBMITTED BEFORE US AND SUBMI SSIONS MADE BY BOTH THE SIDES. IT IS NOTED FROM THE PERUSA L OF THE SBI GLOBAL FACTORS P. LTD. 3 ASSESSMENT ORDER THAT REASONS HAVE BEEN RECORDED ON THE GROUND THAT PROVISIONS FOR NON-PERFORMING ASSETS HA S BEEN MADE IN EXCESS OF THE RBI GUIDELINES BY AN AMOUNT OF RS.64,75,527/-. IT IS NOTED, WITH THE ASSISTANCE OF THE PARTIES THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS MADE U/ S 143(3) VIDE ASSESSMENT ORDER DATED 05.11.2008 A DISALLOWAN CE WAS MADE FOR AN AMOUNT TO RS.84,01,938/- ON ACCOUNT OF BAD DEBTS. THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT( A), WHEREIN THIS DISALLOWANCE WAS DELETED BY LD. CIT(A) VIDE IT S ORDER DATED 16.12.2008 BY RELYING UPON ORDER OF THE TRIBUNAL F OR A.Y.2002-03 IN ASSESSEES OWN CASE. IT HAS BEEN SHO WN TO US THAT IMPUGNED AMOUNT OF PROVISION OF RS.64,75,527/- IS INCLUDED IN THE TOTAL AMOUNT OF THE PROFIT DEBITED IN THE PROFIT AND LOSS ACCOUNT FOR RS.86,75,207/-. IT IS FURTHER NOTED THAT AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT WAS A DDED BACK IN THE COMPUTATION SHEET OF INCOME FILED ALONG WITH RETURN, AND CLAIM OF RS.84,01,938/- WAS MADE IN THE COMPUTA TION SHEET. THIS CLAIM WAS DISALLOWED BY THE AO IN THE O RIGINAL ASSESSMENT ORDER PASSED U/S 143(3), WHICH WAS SUBSE QUENTLY ALLOWED BY THE LD. CIT(A) IN THE APPELLATE ORDER. I N VIEW OF THESE FACTS, WE NOTED THAT REASONS RECORDED BY TH E AO ARE FACTUALLY INCORRECT IN AS MUCH AS IMPUGNED CLAIM HA S ALREADY BEEN ALLOWED BY THE LD. CIT(A). THUS, NO BELIEF OF ESCAPEMENT OF INCOME COULD HAVE BEEN FORMED ON THE BASIS OF IN CORRECT FACTS AND ANY SUCH BELIEF WOULD BE ERRONEOUS UNDER THE LAW. NO REOPENING CAN BE DONE U/S 147 IN ABSENCE OF BELI EF ABOUT ESCAPEMENT OF INCOME BASED UPON CORRECT FACTS AND L AW. IT IS FURTHER NOTED BY US THAT THIS ISSUE HAS ALREADY BEE N EXAMINED SBI GLOBAL FACTORS P. LTD. 4 IN DETAIL BY THE AO IN THE ORIGINAL ASSESSMENT PROC EEDINGS U/S 143(3) AS DISCUSSED ABOVE ALSO. THUS, IT IS A CLEAR CASE OF CHANGE OF OPINION BY THE AO AT THE TIME OF THE RECO RDING OF THE IMPUGNED REASONS FOR REOPENING OF THE IMPUGNED ASSE SSMENT OF THE ASSESSEE. WE FIND THAT LD. CIT(A) HAS RECORD ED CORRECT FINDINGS WHILE QUASHING THE IMPUGNED REASSESSMENT. THESE ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENC E: 4.3 I HAVE CONSIDERED THE AOS ORDER AS WELL AS A PPELLANT ARS SUBMISSIONS. HAVING CONSIDERED BOTH, AND ALSO AFTER TAKING NOTED OF THE REASON BY THE AO, I FIND THAT T HE REOPENING WAS NOT DONE ON ANY NEW INFORMATION OR BA SED ON ANY INCOME OR PARTICULARS WHICH WERE NOT DISCLOS ED BY THE APPELLANT COMPANY AT THE TIME OF FILING THE ORI GINAL RETURN OF INCOME BUT IT WAS DONE MERELY ON THE BASI S OF AUDIT OBJECTION AS STATED BY THE APPELLANT COMPANY IN PARA 2 OF ITS SUBMISSION AS DEPICTED ABOVE. TAKING NOT O F THE DECISIONS OF THE APEX COURT IN THE CASE OF INDIA AN D EASTERN NEWSPAPER SOCIETY V. CIT, NEW DELHI REPORTE D IN 119 ITR PAGE 996 AND ALSO THE DELHI HIGH COURT DECI SION IN THE CASE OF TRANSWORLD INTERNATIONAL INC. V. JCI T REPORTED IN 273 ITR PAGE 242 AND ALSO THE JURISDICT IONAL HIGH COURT DECISION THE CASE OF IL & FS INVESTMENT MANAGERS LTD. VS. ITO & ORS REPORTED IN 298 ITR PAG E 32, I CONSIDER IT PROPER AND APPROPRIATE TO HOLD THAT T HE AOS ACTION OF REOPENING OF ASSESSMENT BASED ON AUDIT OB JECTION WAS NOT JUSTIFIED. ACCORDINGLY, THE REOPENING OF TH E ASSESSMENT IS CANCELLED. 4.4. EVEN, I HAVE TAKEN NOTE OF THE APPELLANTS OTH ER GROUNDS OF APPEAL WITHOUT PREJUDICE WHEREIN THE AFO RESAID ADDITION OF RS.64,75,522/- HAS BEEN MADE BY THE AO THROUGH REOPENING OF ASSESSMENT. AFTER TAKING NOTED OF THE APPELLANTS SUBMISSION MADE THROUGH APPELLANT PROCEEDINGS, I FIND THAT THE SAID SUM WAS ALREADY F ORMING PART OF THE DISALLOWANCE ALREADY MADE BY THE APPELL ANT COMPANY THROUGH ITS COMPUTATION OF INCOME FILED THR OUGH ORIGINAL RETURN OF INCOME. THE APPELLANTS AR HAS A LSO FILED A DETAILED WRITTEN SUBMISSION TO THIS EFFECT IN THE APPELLATE SBI GLOBAL FACTORS P. LTD. 5 PROCEEDINGS WHICH CLEARLY SUGGESTS THAT THE SAID SU M OF RS.64,75,522/- WAS ALREADY ADDED BACK BY THE APPELL ANT COMPANY ITSELF. EVEN ON THIS BASIS ALSO, THE REOPEN ING OF ASSESSMENT WAS COMPLETELY MISCONCEIVED BY AO. ACCORDINGLY, EVEN ON FACTUAL BASIS ALSO THE REASSES SMENT MADE BY THE AO IS CANCELLED. THUS, IN VIEW OF THE DETAILED DISCUSSION MADE BY US AND AFORESAID FINDING OF LD. CIT(A), WE FIND NO FORCE I N THE GROUNDS RAISED BY THE REVENUE AND THEREFORE, WE UPHOLD THE ACTION OF LD. CIT(A) IN QUASHING THE REASSESSMENT ORDER. 4. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2016. SD/- (C.N. PRASAD ) SD/- (ASHWANI TANEJA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24/02/2016 CTX? P.S/. .. !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A)- , MUMBAI 5. #$% &' , &' ) , / DR, ITAT, MUMBAI 6. %*+ , / GUARD FILE. / BY ORDER, # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI SBI GLOBAL FACTORS P. LTD. 6 DATE INITIAL ORIGINAL ORDER DICTATED DIRECTLY ON COMPUTER 1. DRAFT DICTATED ON 15.1.16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15.1.16 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER