ITO WD 25(2)(4), MUMBAI V. VINAY ENTERPRISES, MUMBAI

ITA 6441/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78894 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 24-12-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Reassessment proceedings
• Section: 143(3); 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI . . , , . . !' # , $ BEFORE SHRII P BANSAL, JUDICIAL MEMBER & SHRI N K B ILLAIYA, AM ./ ITA NO.6441/MUM/2011 % &% / ASSESSMENT YEAR 2003-04 THE ITO WD 25(2)(4) , MUMBAI. VS. VINAY ENTERPRISES, 501 HARIKURPA, OPP ST. ANNIES SCHOOL, L T ROAD, BORIVALI (W) MUMBAI- 400 092. PAN: AABFV4564H ( '( /APPELLANT) ( )*'( /RESPONDENT) APPELLANTS BY : SHRI RAVI PRAKASH RESPONDENT BY : S/SHRI K GOPAL & JITENDRA SINGH + ,-# / DATE OF HEARING :13.05.2014. ./& + ,-# / DATE OF PRONOUNCEMENT : 16.05.2014 0 0 0 0 / O R D E R PER N K BILLAIYA, AM: WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE CT(A)-35, MUMBAI, DATED 13.07.2011 PERTAINING T O A.Y. 2003-04. THE GRIEVANCES OF THE REVENUE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THE REASSESSMENT PROCEEDING S AS INVALID AND CANCELLING ASSESSMENT PROCEEDINGS AND THE ORDER PAS SED BY THE ASSESSING OFFICER UNDER SECTION 144 R.W.S. 147 OF T HE INCOME TAX ACT, 1961 DATED 31.12.2010 WHEREIN THE DEDUCTION UNDER S ECTION 80IB(10) OF THE INCOME TAX ACT, 1961 CLAIMED BY THE ASSESSEE AT RS.35,03,447/- WAS DISALLOWED BY THE ASSESSING OFFI CER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THE REASSESSMENT PR OCEEDINGS AS ITA NO.6441/MUM/2011 2 INVALID AND CANCELLING ASSESSMENT PROCEEDINGS WITHO UT APPRECIATING THE FACT THAT THE ASSESSEE HAS ALSO NOT RAISED THIS ISSUE BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS NOR IN THE GROUND OF APPEAL BEFORE CIT(A). 2. IN THIS CASE THE ORIGINAL RETURN OF INCOME WAS F ILED ON 25.11.2003 DECLARING TOTAL INCOME AT NIL. DEDUCTION U/S. 80IB(10) WAS CLAIMED AT RS.35,03,447/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND WAS COMPLETED U/S. 143(3) OF THE ACT ON 28.03.2005 DETERMINING THE TOTAL INCOME AT R S.15,150/-. 3. INFORMATION WAS RECEIVED FROM THE DCIT, CIRCLE-4 , MUMBAI, THAT THE ASSESSEE FIRM HAS CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT FOR A.Y. 2002-03. AS PER THE INFORMATION , THE REVENUE AUDIT HAS RAISED THE OBJE CTION REGARDING THE CLAIM OF DEDUCTION U/S. 80IB(10) BY THE ASSESSEE. IT WAS FU RTHER STATED IN THE INFORMATION THAT THE CLAIM HAS TO BE DENIED BECAUSE THE ASSESSE E DOES NOT FULFILL THE MANDATORY CONDITIONS FOR CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT. 4. IN VIEW OF THESE FACTS, THE ASSESSMENT WAS RE-OP ENED AFTER RECORDING THE REASONS AND OBTAINING PRIOR APPROVAL OF THE ADDITIO NAL/JT. CIT -25(2), MUMBAI. STATUTORY NOTICES U/S. 148 WAS ISSUED ON 24.03.2010 . THE ASSESSEE WAS ASKED TO FILE A RETURN. HOWEVER, NO RETURN WAS FILED IN RES PONSE TO THE NOTICE U/S. 148 OF THE ACT. AS THE ASSESSMENT WAS GETTING BARRED BY LIMIT ATION, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT ON THE BASIS OF THE MATERIA L AVAILABLE ON RECORD. 5. AFTER PERUSING FORM NO.10CCB AND CIDCO ORDER DAT ED 10.12.1999, THE AO NOTICED THAT THE SIZE OF THE PLOT OF LAND OF THE PR OJECT IS LESS THAN ONE ACRE. THE AO WAS OF THE FIRM BELIEF THAT THE MANDATORY CONDITION OF SECTION 80IB(10) CLAUSE (B) HAS NOT BEEN FULFILLED BY THE ASSESSEE, THE ASSESSE E IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10). THE ASSESSMENT WAS COMPLETED BY WITHDRAW ING THE DEDUCTION ALLOWED IN THE ORIGINAL RETURN ASSESSED. AGGRIEVED BY THIS TH E ASSESSEE CARRIED THE MATTER BEFORE HE CIT(A). 6. BEFORE THE CIT(A) IT WAS STRONGLY CONTENDED THAT THE ASSESSMENT WAS ALREADY COMPLETED U/S. 143(3) ON 28.03.05 THEREFORE, IF THE AO WANTED TO REOPEN THE ASSESSMENT AFTER FOUR YEARS FROM THE END OF THE ASS ESSMENT YEAR, HE OUGHT TO HAVE OBTAINED THE APPROVAL OF THE CIT OR THE CCIT AS PER THE PROVISO TO SECTION 151(1) OF ITA NO.6441/MUM/2011 3 THE ACT. IT WAS POINTED OUT THAT THE ASSESSMENT HA D BEEN REOPENED WITH THE APPROVAL OF THE ADDITIONAL CIT RANGE 25(2), MUMBAI. THEREFORE, THE REASSESSMENT PROCEEDINGS ARE INVALID. AFTER CAREFULLY CONSIDERI NG THE FACTS AND THE SUBMISSIONS AND ALSO AFTER PERUSING THE RECORDS , CIT(A) OBSERV ED AS UNDER:- IT IS FURTHER SEEN FROM THE RECORDS THAT THE A.O . SUBMITTED PROPOSAL DT. 22.3.2010 TO THE JT. CIT 25(2) AND HE ACCORDED AP PROVAL ON 24.3.2010. THE LETTER ISSUED BY JT. CIT-RG.25(2) READS AS UNDE R:- TO, THE ITO-25(2)(4), MUMBAI. SUB: APPROVAL U/S. 151(2) OF THE I.T ACT, 1961 FOR ISSUE OF NOTICE U/S. 148 IN THE CASE OF M/S. VINAY ENTERPRI SES FOR A.Y. 2003-04- REG. REF : YOUR LETTER NO.ITO-25(2)(1)/REOPENING/2009- 10 DT. 22.3.2010 ******** THIS HAS REFERENCE TO THE ABOVE. 2. THE UNDERSIGNED IS SATISFIED WITH THE REASONS RE CORDED BY YOU THAT IT IS A FIT CASE FOR ISSUE OF A NOTICE U/S. 14 8. ACCORDINGLY, YOUR PROPOSAL FOR APPROVAL U/S. 151(2) OF THE INCOME TAX ACT, 1961 FOR ISSUE OF NOTICE U/S. 148 IN THE ABOVE MENTIONED CAS E FOR A.Y. 2003-04 IS HEREBY APPROVED WITH A DIRECTION TO ISSUE NOTICE U/S. 148. SD/- (DR.SANDEEP GOEL) JT.COMMISSIONER OF INCOME TAX, RANGE 25(2 ), MUMBAI. THE CIT(A) WAS CONVINCED THAT AS PER THE PROVISO TO SECTION 151(1), THE AO OUGHT TO HAVE OBTAINED THE APPROVAL OF THE CCIT OR THE CI T BEFORE ISSUE OF NOTICE U/S. 148 OF THE ACT. SINCE THE NOTICE WAS ISSUED AFTER OBTA INING THE APPROVAL OF JT CIT RANGE 25(2), MUMBAI, THE AO DID NOT FOLLOW THE PROCEDURE LAID DOWN IN PROVISO TO SECTION 151(1) OF THE ACT WHILE REOPENING THE ASSESSMENT , THE CIT(A) HELD THAT THE ENTIRE REASSESSMENT PROCEEDINGS ARE AB INITIO VOID AND INV ALID AND, THEREFORE, THE REASSESSMENT PROCEEDINGS ARE CANCELLED. THE CIT(A) FURTHER PROCEEDED TO HOLD THAT THE REOPENING PROCEEDINGS U/S. 148 WAS NOT JUSTIFIE D AND THERE WAS NO FAILURE ON ITA NO.6441/MUM/2011 4 THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL F ACTS FULLY AND TRULY. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 7. THE DR COULD NOT BRING ANY EVIDENCE IN SUPPORT O F THE GRIEVANCE OF THE REVENUE TO SHOW THAT THE APPROVAL WAS TAKEN FROM TH E CCIT/CIT BEFORE ISSUE OF NOTICE U/S 148 OF THE ACT. AS NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BEFORE US, AFTER CAREFULLY PERUSING THE ASSESSMENT ORDER A ND THE ORDER OF THE CIT(A), WE FIND THAT THE NOTICE ISSUED WAS UNDISPUTEDLY WITH T HE APPROVAL OF THE JOINT CIT RANGE 25(2), MUMBAI. SECTION 151(1) READ AS UNDER: IN A CASE WHERE AN ASSESSMENT UNDER SUB- SECTION ( 3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSES SMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 [BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER [OR THE DEPUTY COMMISSIONER] UNLESS THE [JOINT] COMMISSIONER IS SA TISFIED 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 I SSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID , THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. FACTS OF THE CASE CLEARLY SHOW THAT THE ASSESSMENT WAS RE-OPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WHICH MEANS THAT THE AO OUGHT TO HAVE TAKEN THE APPROVAL OF THE CCIT/CIT. THE AO HA S GROSSLY FAILED TO DO SO IN THE INSTANT CASE. 8. CONSIDERING THE FACTS IN THE LIGHT OF THE PROVIS IONS OF SECTION 151(1) READ WITH PROVISO, WE DO NOT FIND ANY REASON TO INTERFERE WIT H THE FINDINGS OF THE CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF MAY, 2014. SD/- SD/- (I P BANSAL) (N K BILLAIYA) /JUDICIAL MEMBER # # # # / ACCOUNTANT MEMBER MUMBAI; 1 DATED : 16 TH MAY, 2014. ITA NO.6441/MUM/2011 5 SA 0 0 0 0 + ++ + ), ), ), ), 2 &, 2 &, 2 &, 2 &, / COPY OF THE ORDER FORWARDED TO : 1. '( /THE APPELLANTS. 2. )*'( / THE RESPONDENT. 3. 3 ( ) / THE CIT(A), MUMBAI. 4. 3 / CIT 5. 45 ), , , / DR, F BENCH, ITAT, MUMBAI 0 / BY ORDER, * , ), //TRUE COPY// / 6 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI