CRESCENT INTERNATIONAL, MUMBAI V. ITO 19(2)-1, MUMBAI

ITA 6557/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48751 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S S RANE
• Keywords: Question of law; Block assessment
• Section: 143(3); 142(1); 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY J. SUDHAKAR REDDY (AM) AND (AM) AND (AM) AND (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) SMT. ASHA VIJAYARAGHAVAN (JM) SMT. ASHA VIJAYARAGHAVAN (JM) SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 6557/MUM/2009 ASSESSMENT YEAR- 2006-07 M/S. CRESCENT INTERNATIONAL, 201, WINDSOR, 2 ND FLOOR, CST ROAD, KALINA, SANTACRUZ (E), MUMBAI-400 098 PAN-AAAFC 2984K VS. THE ITO - 19(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H.N. MOTIWALLA SHRI PIYUSH CHHAJED RESPONDENT BY: SHRI S.S. RANE O R D E R O R D E R O R D E R O R D E R PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.11.2009 PASSED BY THE LD. CIT(A)- 30 F OR THE ASSESSMENT YEAR 2006-07. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE F IRM WAS ENGAGED IN THE ACTIVITY OF IMPORTING AND TRADING IN CHEMICALS AND POLYMER PRODUCTS. WHILE COMPLETING THE ASSESSMENT U/S. 14 3(3) FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER ADDED A SUM OF `. 7,51,685/- TO THE TOTAL INCOME OF THE ASSESSEE FIRM. F URTHER THE AO HAD TAKEN THE FIGURE OF `. 7,51,685 INSTEAD OF `. 6, 94,322/- DEBITED TO THE PROFIT AND LOSS ACCOUNT. ITA NO. 6557/M/09 2 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT( A). THE LD. CIT(A) UPHELD THE ORDER OF THE AO CONFIRMING THE AD DITION OF `. 6,84,383/-. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE US. THE ASSESSEE HAS FILED THE FOLLOWING ADDITIONAL GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A)-30 ERRED IN CONFIRMING THE ORDER OF THE AO IN RESPECT OF DISALLOWANCE OF `. 7,51,685/- AS A PRIOR PERIOD EXPENSES PARTICULARLY WHEN THE ASSESSMENT IS BAD IN LAW ILLEGAL AND AB INITIO VOID AS THE APPELL ANT HAD FILED THE RETURN OF INCOME FOR THE A.Y. 2006-07 ON 30.10.2006 AND NOTICE U/S. 143(2) WAS ISSUED ON 21.8.2008 AND NOTICE U/S. 142(1) WAS ISSUED ON 18.7.2008. 2. FURTHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE SAID ASSESSMENT IS ALSO BAD IN LAW ON THE BASIS OF THE DECISION OF THE HONBLE SUPREME COURT IN CASE BLUE MOON, 321 ITR 362 AND FOLLOWED BY HON. MUMBAI TRIBUNAL IN CASE OF ANJAN CHHATERJEE APPEAL BEARING NO. IT(SS) NO. 34/MUM/2004. 5. THE ADDITIONAL GROUND IS ADMITTED RELYING ON THE DECISION IN THE CASE OF NATIONAL THERMAL POWER CO. LTD., VS CIT IN WHICH IT HAS BEEN HELD AS UNDER: THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDER ING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMM ISSIONER (APPEALS) IS TOO NARROW A VIEW TO TAKE OF THE POWER S OF THE TRIBUNAL. UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALL OW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRI BUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISI NG FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWE D TO BE ITA NO. 6557/M/09 3 RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUEST ION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSE E. THE TRIBUNAL HAD JURISDICTION TO EXAMINE A QUESTIO N OF LAW WHICH AROSE FROM THE FACTS AS FOUND BY THE INCOME-T AX AUTHORITIES AND HAVING A BEARING ON THE TAX LIABILI TY OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. WE FIND THAT THE RETURN OF INCO ME WAS FILED ON 30.10.2006 DISCLOSING THEREIN THE TOTAL INCOME AT `. 83,550/-. NOTICE U/S. 143(2) WAS ISSUED ON 21.8.2008 AND SERVED ON THE ASSE SSEE ON 25.8.2008. NOTICE U/S. 143(1) WAS ISSUED ON 18.7.2008 AND SERVED ON THE ASSESSEE ON 25.7.2008. 7. THE LD. COUNSEL FOR THE ASSESSEE SHRI H.N. MOTIWALLA RELIED ON THE ORDER OF ACIT VS HOTEL BLUE MOON 321 ITR 362 ( SC) AND THE CO ORDINATE BENCH OF THE MUMBAI ITAT B BENCH IN THE CASE OF DCIT CEN CIR-8 VS SHRI ANJAN CHATTERJEE. 8. THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS H OTEL BLUE MOON REPORTED IN 321 ITR 362 (SC) HELD AS FOLLOWS: IF THE AO, FOR ANY REASON, REPUDIATES THE RETURN FIL ED BY AN ASSESSEE IN RESPONSE TO NOTICE U/S. 158BC(A) OF THE I.T. ACT, 1961 RELATING TO A BLOCK ASSESSMENT, THE AO MUST NECESSARILY ISSUE NOTICE U/S. 143(2) OF THE ACT WITHIN T HE TIME PRESCRIBED IN THE PROVISO TO SEC. 143(2). BY MAKING THE ISSUE OF NOTICE MANDATORY, SEC. 158BC DEALING WITH BLOCK ASSESSMENTS, MAKES SUCH NOTICE THE VERY FOUNDATION FOR JURISDICTION. SUCH NOTICE IS REQ UIRED TO BE SERVED ON THE PERSON WHO IS FOUND TO HAVE UNDISCLOSED INCOME. SECTION 158BC PROVIDES FOR ENQUIRY AND ASSESSMENT. AFTE R THE RETURN IS FILED, CLAUSE (B) OF SEC. 158BC PROVIDE S THAT THE AO SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCO ME ITA NO. 6557/M/09 4 OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SEC. 158BB AND THE PROVISIONS OF SEC. 142, SUB-SEC. (@) AND (3) OF SEC. 143, SEC. 144 AND SEC. 145 SHALL, SO FAR AS MAY B E APPLY. THIS INDICATES THAT THIS CLAUSE ENABLES THE AO, AFTER THE RETURN IS FILED, TO COMPLETE THE ASSESSMENT U/ S. 143(2) BY FOLLOWING THE PROCEDURE LIKE ISSUE OF NOTIC E U/S. 143(2)/142. THIS DOES NOT PROVIDE ACCEPTING THE RETU RN AS PROVIDED U/S. 143(1)9A), THE OFFICER HAS TO COMPLETE THE ASSESSMENT U/S. 143(3) ONLY. IF AN ASSESSMENT IS TO BE COMPLETED U/S. 143(3) R.W.S. 158BC, NOTICE U/S. 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATES OF FILI NG OF THE BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE U/S. 143(2) CANNOT BE A PROC EDURAL IRREGULARITY AND IS NOT CURABLE. THEREFORE, THE REQ UIREMENT OF NOTICE U/S. 143(2) CANNOT BE DISPENSED WITH. RESPECTFULLY FOLLOWING THE JUDGEMENTS OF THE HONBLE SUPREME COURT WE HAVE TO NECESSARILY HOLD THAT THE ASSE SSMENT IN QUESTION IS BAD IN LAW AND HENCE HAS TO BE QUASHED. 9. FOLLOWING THE ABOVE DECISION, WE ALLOW THE ASSESSEES APPEAL. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS .DAY OF MAY, 2011 (J. SUDHAKAR REDDY) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED .. MAY, 2011 RJ ORDER PRONOUNCED ON THIS 6 TH DAY OF MAY, 2011 SD/- SD/- (T.R. SOOD) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 6 TH MAY, 2011 RJ ITA NO. 6557/M/09 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 6557/M/09 6 DATE INITIALS 1 DRAFT DICTATED ON: 3 .0 5 .2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 3 .0 5 .2011 ______ SR. PS/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/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______