ACIT, CHENNAI V. M/s. TNK Govindaraju Chetty & Co. Pvt.Ltd., CHENNAI

ITA 652/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64676 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-12-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.652/MDS/2012 (ASSESSMENT YEAR: 2003-04) ASSISTANT COMMISSIONER OF INCOME TAX, MEDIA CIRCLE-II, CHENNAI-600 034 VS. M/S. TNK GOVINDARAJU CHETTY & CO. PVT.LTD., TNK HOUSE, 48, ANNA SALAI, CHENNAI-600 002. PAN: AAACT1818Q (APPELLANT) (RESPONDENT) APPELLANT BY : MR. GURU BASHYAM, JCIT RESPONDENT BY : MR. VIKRAM VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 6 TH DECEMBER, 2012 DATE OF PRONOUNCEMENT : 19 TH DECEMBER, 2012 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE REVENUE ASSAILI NG THE ORDER OF THE CIT(A) VI, CHENNAI DATED 19.12.20 11 RELEVANT TO THE ASSESSMENT YEAR 2003-04. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN THE BUSINESS OF EXHIBITION OF CINE FILMS. THE ASSES SEE FILED ITS RETURN OF INCOME RELEVANT TO THE ASSESSMENT YEAR 20 03-04 ON 27.11.2003 DECLARING AN INCOME OF ` 1,51,96,330/-. THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED VIDE ITA NO.652/MDS/2012 2 ASSESSMENT ORDER DATED 20.03.2006. SUBSEQUENTLY, T HE ASSESSMENT WAS REOPENED UNDER SECTION 147 . A NOTIC E WAS ISSUED TO THE ASSESSEE ON 12.03.2010. THE GROUND FO R REOPENING THE ASSESSMENT WAS GIVEN AS; THE LANDS TH AT WERE SOLD BY THE ASSESSEE WERE ACQUIRED BY THE ASSESSEE COMPANY ON 1.4.2001 BY VIRTUE OF MERGER OF TWO OTH ER COMPANIES WITH THE ASSESSEE . ON THE DATE OF SALE O F LANDS THREE YEARS HOLDING PERIOD AS REQUIRED UNDER THE A CT TO CLAIM THE BENEFIT UNDER SECTION 54EC WAS NOT COMPLETED. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD WRONGL Y CLAIMED EXEMPTION UNDER SECTION 54EC OF THE ACT. IN THE REASSESSMENT PROCEEDINGS THE EXEMPTION ALLOWED UNDE R SECTION 54EC WAS WITHDRAWN. AGGRIEVED AGAINST THE ASSESSMENT ORDER UNDER SECTI ON 143(3) READ WITH SECTION 147 OF THE ACT DATED 24.1 2.2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT PROCEEDINGS UNDER SECTION 147 WERE INITIA TED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, THEREFORE, THE FIRST PROVISO TO SECTION 147 IS ATTRACTED. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. AGG RIEVED ITA NO.652/MDS/2012 3 AGAINST THE ORDER OF THE CIT(A) DATED 19.12.2011, T HE REVENUE HAS COME IN SECOND APPEAL BEFORE THE TRIBUN AL. 3. MR. GURU BASHYAM APPEARING ON BEHALF OF THE REVE NUE SUBMITTED THAT DURING THE RELEVANT YEAR, THE ASSESS EE HAD SOLD UNDIVIDED SHARE OF TWO PARCELS OF LAND ONE ORIGINALLY BELONGING TO M/S. DEVI FILMS PVT.LTD., AND ANOTHER LAND BELONGING TO M/S. EAST INDIA INDUSTRIES (MADRAS) PV T. LTD. BOTH THE COMPANIES WERE LATER ON MERGED WITH THE ASSESSE E COMPANY WITH EFFECT FROM 1.4.2001 VIDE ORDER DATED 23.8.2002 PASSED BY THE HONBLE HIGH COURT. THE A SSESSEE HAS OFFERED THE CAPITAL GAINS FROM SALE OF LAND AS LONG TERM CAPITAL GAINS AND CLAIMED EXEMPTION UNDER SECTION 5 4EC OF THE ACT. THE AFORESAID LANDS BECAME ASSET OF THE CO MPANY WITH EFFECT FROM 1.4.2001 I.E. THE EFFECTIVE DATE O F MERGER. THEREFORE, THE LAND SOLD BY THE ASSESSEE COMPANY WA S LESS THAN 36 MONTHS OLD IN THE HANDS OF THE ASSESSEE. TH US, THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION UNDER SECTI ON 54EC OF THE ACT. THE DR ASSAILING THE ORDER OF THE CIT( A) STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ST ATED THAT THIS ISSUE WAS NOT CONSIDERED DURING THE ORIGINAL A SSESSMENT. ITA NO.652/MDS/2012 4 THEREFORE, THE ASSESSING OFFICER WAS RIGHT IN REOPE NING THE ASSESSMENT AS THE ORIGINAL ASSESSMENT ORDER WAS ERR ONEOUS AND DETRIMENTAL TO THE INTEREST OF THE REVENUE. TH E DR FURTHER SUBMITTED THAT THE ASSESSEE COMPANY DID NOT DISCLOSE FULL AND TRUE MATERIAL NECESSARY FOR ASSESSING ITS INCOME. HE CONTENDED THAT MERE PRODUCTION OF DETAILS FROM WHIC H MATERIAL EVIDENCE WOULD HAVE BEEN DISCOVERED WITH DUE DILIGE NCE WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE PRO VISIONS OF SECTION 147 OF THE ACT. 4. ON THE OTHER HAND, MR. VIKARAM VIJAYARAGHAVAN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT REOPENING IS BEYOND THE PERIOD OF FOUR YEARS. THE COUNSEL SUB MITTED THAT ORIGINAL ASSESSMENT ORDER UNDER SECTION 143(3) WAS PASSED ON 20.03.2006. NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 12.03.2010. THE ISSUE RAISED IN REOPENI NG PROCEEDINGS WERE ALREADY CONSIDERED BY THE ASSESSIN G OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. THE COU NSEL REFERRED TO PAGE 4 TO 6 OF THE PAPER BOOK WHEREIN LETTER DATED 26 TH DECEMBER, 2005 ADDRESSED TO DEPUTY COMMISSIONER O F INCOME TAX IS PLACED ON RECORD. THE LEARNED COUN SEL ITA NO.652/MDS/2012 5 SUBMITTED THAT THE ASSESSEE HAD GIVEN REPLY TO THE NOTICE UNDER SECTION 142 DATED 28.11.2005, WHEREIN THE ASS ESSEE HAS CATEGORICALLY STATED ABOUT THE SALE OF UNDIVIDE D SHARE OF LAND SITUATED AT T.NAGAR AS WELL AS TONDIARPET ORI GINALLY BELONGING TO M/S.DEVI FILMS PVT.LTD. AND EAST INDIA INDUSTRIES (MADRAS) PVT.LTD. RESPECTIVELY. THE COUNSEL POINTE D OUT THAT THE ORIGINAL ASSESSMENT ORDER WAS PASSED BY THE ASS ESSING OFFICER AFTER TAKING INTO CONSIDERATION THE ISSUE W HICH HAS BEEN AGAIN RAISED IN REOPENING PROCEEDINGS. THE COU NSEL FURTHER SUBMITTED THAT THE CIT(A) ,AFTER CONSIDERIN G THE FACT THAT THE ISSUE WAS ALREADY DISCUSSED WITH THE ASSES SING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT, ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE NOTICE ISSUED UND ER SECTION 147 IS INVALID. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RESPEC TIVE PARTIES AND HAVE ALSO PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE DOCUMENTS REFERRED TO. A PERUSAL OF THE REPLY DATED 26.12.2005 TO THE NOTICE UNDER SECT ION 142 WHICH IS AT PAGE 4 TO 6 OF THE PAPER BOOK FILED BY THE ASSESSEE CLEARLY SHOWS THE ISSUE OF SALE OF UNDIVI DED SHARE ITA NO.652/MDS/2012 6 OF LAND RAISED IN THE REOPENING PROCEEDINGS WAS CO NSIDERED BY THE ASSESSING OFFICER AT THE TIME OF ORIGINAL AS SESSMENT. THE LAND SITUATED AT T.NAGAR, CHENNAI ORIGINALLY BE LONGING TO M/S.DEVI FILMS PVT.LTD. AND AT TONDIARPET, CHENNAI BELONGING TO M/S. EAST INDIA (MADRAS) PVT. LTD. WERE SOLD BY THE ASSESSEE AFTER BOTH THE AFORESAID COMPANIES WERE ME RGED INTO ASSESSEE COMPANY. ALL THE ASSETS AND LIABILIT IES OF THE AMALGAMATING COMPANIES WERE TAKEN OVER BY THE ASSES SEE COMPANY (AMALGAMATED COMPANY) VIDE ORDER DATED 23.08.2002 PASSED BY THE HONBLE HIGH COURT WITH EFFECT FROM 1.4.2001. A QUESTION WHETHER THE ASSESSEE ACQ UIRED LAND FROM THE EFFECTIVE DATE OF AMALGAMATION OR CON TINUES TO HOLD THE ASSET OF AMALGAMATING COMPANIES FROM THE A CTUAL DATE OF ACQUISITION OF ASSET (LAND) HAS ARISEN OUT OF CHANGE OF OPINION RESULTING INTO REOPENING OF ASSESSMENT PROC EEDINGS. IT IS A WELL SETTLED LAW THAT MERELY ON CHANGE OF OPIN ION ASSESSMENT PROCEEDINGS CANNOT BE REOPENED. MOREOVE R NOTICE UNDER SECTION 148 WAS ISSUED ON 12.03.2010 I .E. AFTER THE ELAPSE OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR. IN OUR VIEW, THERE IS NO INFIRMI TY IN THE ITA NO.652/MDS/2012 7 ORDER OF THE CIT(A) AND THEREFORE, WE UPHOLD THE SA ME. THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, TH E 19 TH DAY OF DECEMBER, 2012 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 19 TH DECEMBER, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.