The ACIT, 3(1), V. M/s Mittal Appliance Ltd.,

ITA 67/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1524 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 08-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: M C MEHTA; HITESH CHIMNANI CAS
• Keywords: Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AABCM1903A I.T.A.NO. 67/IND/2008 A.Y. : 2001-02 ACIT M/S.MITTAL APPLIANCES LIMITED 3(1), VS 338, SHIVAJI NAGAR, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.K.SINGH, CIT DR RESPONDENT BY : SHRI M. C.MEHTA, AND SHRI HITESH CHIMNANI, CAS DATE OF HEARING : 09.10.2009 O R D E R PER GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF THE LD. CIT(A) DATED 29.11.2007 FOR ASSESSMENT YEAR 2001-02 . 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE DEC ISION OF LD. CIT(A) IN QUASHING THE ASSESSMENT FRAMED U/S 147/14 3(3) OF THE ACT. 4. THE FACTS, IN BRIEF, ARE THAT THE ORIGINAL ASSESSME NT WAS MADE U/S 143(1)(A) OF THE ACT, ON 20-.12.2002. SUBSEQUENTLY, NOTICE U/S 148 WAS SERVED ON THE ASSESSEE ON 26.8.2005. ON 26.9.2005, THE ASSESSEE PAGE 2 OF 10 REQUESTED THE A.O. TO FURNISH THE REASONS FOR REOPE NING THE ASSESSMENT, WHICH WERE COMMUNICATED ON 21.2.2006. THE ASSESSEE RAISED OBJECTIONS ON 15.5.2006 IN REGARD TO ISSUE OF NOTICE U/S 148. THE ASSESSEE AGAIN REQUESTED THE A.O., ON 13.10.2006, TO DISPOSE OF TH E OBJECTIONS RAISED BY THE ASSESSEE PRIOR TO PROCEEDING WITH RE-ASSESSMENT . HOWEVER, THE A.O. DID NOT CARE TO DISPOSE OF THE OBJECTIONS AND PROCE EDED WITH THE REASSESSMENT. THE A.O. HAD REOPENED THE ASSESSMENT FOR THE REASON THAT THE ASSESSEE HAD CONCEALED SALES, IF THE FACT OF EX CISE DUTY PAID BY THE ASSESSEE WAS TAKEN INTO CONSIDERATION, HOWEVER, IN THE COURSE OF RE- ASSESSMENT PROCEEDINGS APART FROM MAKING AN ADDITIO N ON THIS ACCOUNT, THE A.O. ALSO MADE VARIOUS OTHER ADDITIONS. AGGRIEV ED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN THE FACTS CHALLENGING THE VALIDITY OF REOPENING WERE NA RRATED AND IT WAS EMPHATICALLY ARGUED THAT THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER WAS NULL AND VOID IN VIEW OF THE FACT THAT THE A.O. HAD NOT COMPLIED WITH THE DIRECTIONS OF THE HON'BLE APEX CO URT IN THE CASE OF G.K.N. DRIVE SHAFT (INDIA) LIMITED, AS REPORTED IN 259 ITR 19. THE ASSESSEE ALSO PLEADED THAT EVEN OTHERWISE THE REASS ESSMENT PROCEEDINGS NOT VALID FOR THE REASON THAT BASIC CONDITIONS OF V ALID REOPENING WERE NOT MET. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELI ED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F SICA EDUCATIONAL TRUST VS. UNION OF INDIA, AS REPORTED IN 10 ITJ 105 , (MP) AND ON THE PAGE 3 OF 10 DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F ALLANA COLD STORAGE LIMITED VS. ITO AND OTHERS REPORTED IN 287 ITR 1 FOR THE PROPOSITION THAT WITHOUT PASSING A SPEAKING ORDER O N THE OBJECTIONS RAISED BY THE ASSESSEE AS REGARDS TO VALIDITY OF REOPENING , THE A.O. COULD NOT MAKE AN ASSESSMENT. THE LD. CIT(A) HELD THAT SINCE THE A.O. FAILED TO FOLLOW PROCEDURE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF G.K.N. DRIVE SHAFT (INDIA) LIMITED, (SUPRA) AND EVE N ON MERITS ALSO, THERE WAS NO SUFFICIENT MATERIAL ON RECORD TO FORM A REASON TO BELIEVE THAT THERE WAS CONCEALMENT OF SALES. HENCE, HE ANNULLED THE IMPUGNED ASSESSMENT ORDER. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED THAT OBJECTION SHOULD BE REAL AND SUBSTANTIAL, WHEREAS, IN THE PRESENT CASE, THE ASSESSEE ACTUALLY DID NOT RAISE OBJECTIONS IN THAT SENSE AND ONLY CLARIFIED ITS POSITION, WHICH COULD BE DONE ONLY IN THE COURS E OF RE-ASSESSMENT PROCEEDINGS. HENCE, THERE WAS NO LAPSE ON THE PART OF THE A.O. IN REGARD TO NON-DISPOSAL OF ASSESSEES OBJECTION BEFORE PROC EEDING TO MAKE THE ASSESSMENT. IT WAS ALSO CONTENDED THAT IT WAS NO WH ERE PROVIDED THAT THE A.O. SHOULD PASS TWO ORDERS I.E. ,FIRSTLY, HE SHOUL D DISPOSE OF THE OBJECTIONS, IF ANY, RAISED BY THE ASSESSEE, BY PASS ING A SPEAKING ORDER AND, A SEPARATE ASSESSMENT ORDER SHOULD BE FRAMED THEREA FTER. THE LD. CIT DR THEREAFTER REFERRED TO THE VARIOUS DETAILS FILED BY THE ASSESSEE ALONGWITH THE RETURN OF INCOME AND PRESENTATION OF EXCISE DUT Y/MODVAT IN THE PAGE 4 OF 10 PROFIT AND LOSS ACCOUNT AS WELL AS IN THE BALANCE S HEET. HE FURTHER SUBMITTED THAT ANNEXURE-5 HAD NOT BEEN SUBMITTED BY THE ASSESSEE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS, REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES, BESIDES SUBMITTING THAT THE ASSESSEE HAD RAISED SPECIFIC OB JECTIONS IN REGARD TO THE REOPENING AFTER COMPLYING WITH THE REQUIREMENTS OF NOTICE ISSUED U/S 148, WHILE FILING THE RETURN IN RESPONSE THERETO. HENCE, THE A.O. WAS BOUND TO DISPOSE OF THE OBJECTIONS BEFORE MAKING ASSESSMENT AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF G.K.N.DRIVE SHAFT (INDIA) LIMITED, (SUPRA), WHICH WAS NOT DONE AND, THEREFORE, THE AS SESSMENT ORDER U/S 143(3) READ WITH SECTION 147 WAS NULL AND VOID. HE ALSO CONTENDED THAT IT WAS NOT A CASE OF CLARIFICATION BEING GIVEN BY THE ASSESSEE IN THE COURSE OF RE-ASSESSMENT PROCEEDINGS AS CONTENDED BY THE LD. C IT DR AND TO SUBSTANTIATE ITS SUCH CLAIM. HE REFERRED TO PAGES 4 & 5 OF THE PAPER BOOK, WHEREIN THE ASSESSEE HAD RAISED SPECIFIC OBJECTIONS AGAINST THE REASONS FOR REOPENING AND HAD ALSO REQUESTED TO DROP THE PROCEE DINGS BY GIVING NECESSARY DETAILS OF ITS CLAIM OF EXCISE DUTY/MODVA T TO ENABLE THE A.O. TO SEE THAT THERE WERE NO CONCEALED SALES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSMENT COU LD NOT BE REOPENED, MERELY ON THE GROUND OF SUSPICION OR DOUBT OR TO MA KE FISHING ENQUIRIES. ON A SPECIFIC QUERY FORM THE BENCH, THE LEARNED COU NSEL SUBMITTED THAT THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF SICA PAGE 5 OF 10 EDUCATIONAL TRUST ( REGISTERED ) VS. UNION OF INDIA AND OTHERS, AS REPORTED IN (2008) 10 ITJ 05 (MP) WAS ALSO CITED BE FORE THE LD. CIT(A), WHEREIN THE HON'BLE COURT HAD THAT IT WAS INCUMBENT UPON THE A.O. TO DISPOSE OF THE ASSESSEES OBJECTION BEFORE PASSING AN ORDER OF RE- ASSESSMENT. THE LEARNED COUNSEL SUBMITTED THAT IN T HIS CASE, THE HON'BLE JURISDICTIONAL HIGH COURT HAD RELIED ON THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALLANA COLD STORAG E LIMITED VS. ITO AND OTHERS, AS REPORTED IN 287 ITR 1. THE LEARNED C OUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE LD. CIT(A) HAD ALSO HELD THAT EVEN ON MERITS THE REOPENING WAS NOT VALID. THE LEARNED COU NSEL FOR THE ASSESSEE, THEREAFTER, CONTENDED THAT THE A.O. DID NOT RESTRIC T ITSELF TO THE ADDITION ON ACCOUNT OF CONCEALED SALES, (WHICH TOO HAD BEEN MAD E IN A VERY CRYPTIC MANNER.) HENCE, THE OTHER ADDITIONS MADE BY THE ASS ESSING OFFICER WERE ALSO WITHOUT JURISDICTION. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. THE PRESENT CONTROVERSY CENTERS AROUND THE PASSING OF THE RE- ASSESSMENT ORDER WITHOUT DISPOSING OF THE OBJECTION S RAISED BY THE ASSESSEE IN REGARD TO THE VALIDITY OF REOPENING. TH E REVENUE HAS VEHEMENTLY CONTENDED THAT THE ASSESSEE DID NOT RAIS E THE OBJECTIONS IN REAL/SUBSTANTIVE MANNER WHICH PLEA MAKES IT IMPERAT IVE FOR US TO REPRODUCE THE IMPUGNED LETTER PAGES 4 TO 6. PAGE 6 OF 10 THE ACIT 3(1), INDORE. DEAR SIR, RE : M/S. MITTAL APPLIANCES LIMITED, 338, SHIVAJI NAGAR, INDORE. ASSESSMENT YEAR : 2001-02. WITH REGARD TO THE RE-ASSESSMENT PROCEEDING IN THE CASE OF THE ABOVE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02, WE HAVE BEEN DIRECTED BY THE ASSESSEE TO SUBMIT AS UNDER :- 1.1J THAT NOTICE U/S 148 DATED 22.08.2005 OF THE IN COME- TAX ACT, 1961, WAS SERVED ON THE ASSESSEE ON 26.08.2005. 1.2J THAT IN RESPONSE TO THE SAID NOTICE THE ASSESS EE HAD FILED RETURN OF TOTAL INCOME ON 15.09.05. 0.2.J THAT REASONS FOR RE-OPENING OF THE CASE WERE ACTUALLY COMMUNICAT4ED TO THE ASSESSEE ON 231.02.2006. ON PERUSAL OF THE REASON FOR RE-OPENING OF THE CASE, O UR POINT WISE OBJECTIONS ARE AS UNDER :- AJ. THAT AS PER THE REASON RECORDED FOR REOPENING O F THE CASE, IT IS STATED THAT EXCISE DUTY ACTUALLY PAID/A DJUSTED AS PER EXCISE REGISTER WERE OF RS. 7743268. HOWEVER , IN THE FINANCIAL BOOK AN AMOUNT OF RS. 7512187/- ON LY WAS ACCOUNTED FOR. THUS, EXCISE DUTY OF RS. 2,31,081/- ( 7743268 7512187 ) ACTUALLY PAID/ADJUSTED AS PER EXCISE REGISTER REMAINED TO BE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND THEREBY T HE ASSESSEE HAS CONCEALED ITS TURNOVER BY RS. 5160039. BJ. IN THIS RESPECT IT IS CLARIFIED THAT THE ASSESS EE HAD DULY ACCOUNTED FOR ENTIRE AMOUNT OF SALES IN ITS BOOKS O F ACCOUNT AND THERE WAS NO SUPPRESSION OF ANY SALE AS PER EXCISE RECORD ALSO. A RECONCILIATION STATEMENT OF EXCISE DUTY PAID/ADJUSTED THROUGH EXCISE RECORD AS COMPARED TO THE FINANCIAL STATEMENT ARE ENCLOSED. O N PAGE 7 OF 10 PERUSAL OF THE SAID RECONCILIATION STATEMENT, IT IS CLEAR THAT THE ASSESSEE HAS PROPERLY ACCOUNTED FOR THE AMOUNT OF EXCISE DUTY PAID/ADJUSTED AND ITS TURNOVE R. HENCE, CASE OF THE ASSESSEE COMPANY AS REOPENED U/S 147 OF THE INCOME-TAX ACT, 1961, ON MERE PRESUMPTION OF SUPPRESSION OF SALES IS WRONG AND UNCALLED FOR. THE SAME NOW REQUIRES TO BE DROPPED. 3J. THAT HERE WE WOULD ALSO LIKE TO SUBMIT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY ARE DULY AUDITED . THAT STATEMENT ON WHICH RELIANCE WAS PLACED FOR REOPENING OF THE CASE WERE ALSO CHECKED BY THE CHARTERED ACCOUNTANT DURING HIS AUDIT. HENCE, THE SAID STATEMENT IS DULY RECONCILED WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THUS, ON MERE PRESUMPTION THE CASE AS REOPENED U/S 147 OF THE INCOME-TAX ACT, 1961, IS WRONG AND UNCALLED FOR. TH E SAME NOW REQUIRES TO BE DROPPED. 4J. IT IS ALSO SETTLED POSITION OF LAW THAT FOR MER E CHANGE OF OPINION AND PRESUMPTION NO CASE IS TO BE REOPENE D U/S 147 OF THE INCOME-TAX ACT, 1961,.THUS, CASE AS NOW REOPENED U/S 147 OF THE INCOME-TAX ACT, 1961, I S WRONG AND UNCALLED FOR. THE SAME NOW REQUIRES TO BE DROPPED. THIS LETTER IS WRITTEN IN VIEW OF THE DIRECT DECI SION OF HON'BLE APEX COURT IN THE CASE OF G.K.N. DRIVE SHAFTS (INDI A) LIMITED VS. ITO REPORTED IN 259 ITR 19. HENCE, YOU ARE REQUESTED TO DISPOSE OFF OUR OBJECTION PARAWISE AT THE EARLIEST. THANKING YOU, YOURS FAITHFULLY, SD/- PAGE 8 OF 10 MITTAL APPLIANCES LIMITED RECONCILIATION STATEMENT OF EXCISE DUTY PAID PARTIC ULARS MODVAT RG PT IIA MODVAT RG23 PT II PROFIT AND LOSS ACCOUNT TOTAL OPENING BALANCE 1061721.72 15360.00 252795.04 1329 876.76 DEPOSIT/TAKEN DURING THE YEAR 8229785.00 198393.00 370000.00 8798178.00 TOTAL 9291506.72 213753.000 622795.04 10128054.76 PAYMENT DURING THE YEAR 7639917.00 103351.00 430531.00 8173799.00 CLOSING BALANCE 1651589.72 110402.00 192264.04 105 4255.76 TOTAL EXCISE PAYMENT DURING THE YEAR 8173799.00 LESS: EXCISE DUTY ADJUSTED TOWARDS SALE OF OLD STOCK. - 661612.05 7512186.95 PROVISION OF C.E.D. ON FINSIHED GOODS OPENING BALANCE 733279.89 ADD: MADE DURING THE YEAR 119521.77 TOTAL 852801.66 LESS: EXCISE DUTY ADJUSTED TOWARDS SALES OF OLD STOCK 661612.05 190189.61 PAGE 9 OF 10 9. FROM THE PERUSAL OF THE ABOVE, IT IS ABUNDANTLY CLE AR THAT THE ASSESSEE HAS REQUESTED THE A.O. IN A SPECIFIC MANNE R TO DISPOSE OF THE OBJECTIONS RAISED BY THE ASSESSEE AT THE FIRST INST ANCE. IN OUR OPINION, THE LD. CIT DR CONTENTIONS ARE INFLUENCED BY THE OBSERV ATIONS OF THE A.O. IN THE ASSESSMENT ORDER AT PAGES 20 & 21, WHEREIN THE A.O. HAS REPRODUCED THE CLARIFICATIONS GIVEN BY THE ASSESSEE VIDE ITS L ETTER DATED 4.12.2006 AND THE ASSESSEES IMPUGNED LETTER DATED 15.5.2006 DOES NOT FIND ANY MENTION/WHISPER IN THE ASSESSMENT ORDER. THUS, THE RELEVANT CONTENTION OF THE LD. CIT DR IS REJECTED. 10. HAVING STATED SO, NOW IN VIEW OF THE DECISION OF TH E HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SICA EDUCA TIONAL TRUST ( REGISTERED ) VS. UNION OF INDIA AND OTHERS, (SUPRA) , THIS MATTER IS TO GO BACK TO THE FILE OF A.O. TO FIRSTLY DISPOSE OF THE ASSESSEES OBJECTION BY PASSING A SPEAKING ORDER AND, THEN, TO PROCEED WITH THE RE-ASSESSMENT PROCEEDINGS. THUS, THE ORDER OF THE LD. CIT(A) ANNU LLING THE RE- ASSESSMENT PROCEEDINGS FOR NON-DISPOSAL OF ASSESSEE S OBJECTIONS BY THE ASSESSING OFFICER BY PASSING A SPEAKING ORDER IS NO T CORRECT IN LAW. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF A .O. AND DIRECT HIM TO PASS A SPEAKING ORDER DISPOSING OF THE OBJECTIONS R AISED BY THE ASSESSEE IN REGARD TO REOPENING. BEFORE PARTING WITH THE ORDER, WE MAY ADD THAT THOUGH THE LD. CIT(A) HAS OBSERVED THAT REOPENING W AS NOT VALID OTHERWISE ALSO, BUT WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS HELD HIS VIEW THAT THE ASSESSMENT ORDER WAS NULL AND VOID MA INLY FOR THE REASON PAGE 10 OF 10 THAT DIRECTIONS OF THE HON'BLE APEX COURT IN THE CA SE OF G.K.N.DRIVE SHAFT (INDIA) LIMITED, (SUPRA) HAD NOT BEEN COMPLIE D, WHICH IS A CURABLE DEFECT. HENCE, FIRSTLY, IN OUR OPINION, THIS DEFECT IS TO BE CURED, AND, ONLY THEREAFTER OTHER PARAMETERS OF A VALID REOPENING CA N BE EXAMINED. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. CIT DR THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE LD. CIT(A), B ECAUSE IT IS THE OBLIGATION OF THE A.O. TO DISPOSE OF THE OBJECTIONS AND THAT BEING A POSITION, THE MATTER HAS TO GO BACK TO THE A.O. ONL Y FOR REMOVAL OF SUCH DEFECT. WE ALSO CLARIFY THAT SINCE THE MATTER HAS B EEN RESTORED BACK TO THE FILE OF A.O. ON THIS PRELIMINARY GROUND ONLY, HENCE , WE DO NOT CONSIDER IT NECESSARY TO EXPRESS ANY OPINION ON THE OTHER CONTE NTIONS RAISED BY BOTH THE PARTIES ON THE MERITS OF VARIOUS ADDITIONS. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STA NDS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH OCTOBER, 2009. CPU* 12D19