ITO 6(1)(3), MUMBAI V. INTERACTIVE MARKETING P.LTD, MUMBAI

ITA 6959/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83562 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 20-08-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 19-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOPAK KUMAR
• Keywords: Audit objection; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

, INCOME TAX APPELLATE TRIBUNALMUMBAI BENCH ES I MUMBAI , , ! BEFORE S.SH.VIJAY PAL RAO,JUDICIAL MEMBER AND RAJEN DRA,ACCOUNTANT MEMBER ./ ITA NO.6959/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2003-04 ( $% / APPELLANT) ( &'$% / RESPONDENT) ( ) / REVENUE BY : SHRI ROOPAK KUMAR '*+ '*+ '*+ '*+ ) ) ) ) / ASSESSEE BY : SHRI ANIL SATHE ' ' ' ' ( (( ( +, +, +, +, / DATE OF HEARING : 20/08/2014 -.# ( +, / DATE OF PRONOUNCEMENT : 20/08/2014 PER RAJENDRA,AM ' ' ' ' : CHALLENGING THE ORDER DT.29.08.2012 OF THE CIT(A)-1 4,MUMBAI, ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,13,7,046/- AND RS. 60,11,835/-. 2.1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)ERRED IN QUASHING/ANNULLING THE ASSESSMENT ORDER PASSED U/S. . (143)R.W.S.147 OF THE I. T. ACT DESPITE THE FACT THAT THE AO HAD OBTAINED THE SANCTION U/S.151(2) OF THE I. T. ACT, 1961. 2.2.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE DID NOT DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS, AND THEREFORE THIS WAS FIT CASE FOR REOPENING UNDER PROVISO TO SECTION 147 OF THE I. T. ACT. 2.3.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT ASSESSEE DID NOT FURNISH MATERIAL FACTS EVEN DURING THE COURSE OF REASSESSMENT PROCEEDINGS. 2.4.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT REASONS OF REOPENING SHOULD HAVE BEEN SUPPLIED ALON G WITH NOTICE U/S. 148 AND NOT APPRECIATING THAT THIS IS NOT THE REQUIREMENT OF LAW, AS LAID DO WN IN HONBLE SUPREME COURT ORDER IN THE CASE OF G.K.N. DRIVE SHAFF. THE CIT(A) FAILED TO TAKE NOTE OF THE FACT THAT ASSESSEE NEVER ASKED FOR THE REASONS FOR ISSUING NOTICE U/S. 148 OF THE ACT. 3.THE ASSESSEE PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4.THE ASSESSEE CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF DISTRIB UTION OF BANKING AND TELECOM PRODUCTS, FILED ITS RETURN OF INCOME ON 28.11.2003 DECLARING TOTAL INCOME AT RS.12,58,710/-.THE REGULAR ASSESSMENT U/S.143(3) WAS COMPLETED ON 11.10.2005 A SSESSING THE TOTAL INCOME AT RS.13,18,460/. SUBSEQUENTLY,THE CASE WAS RE-OPENED BY THE AO VIDE ISSUE OF NOTICE U/S.148 DATED 19.02.2010 ON THE GROUND THAT HE HAD REASONS TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT. IN RESPONSE TO NOTICE U/S.148,THE ASSESSEE FURNISHED REPLY REQUEST ING THE AO TO TREAT THE ORIGINAL RETURN OF INCOME ITO 6(1)(3), R.NO. 508, 5TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS M/S INTERACTIVE MA RKETING PVT. LTD. 4-174, IRANI BUILDING, DR. A.B.ROAD, DADAR, MUMBAI-400014 2 ITA NO. 6959/MUM/2012 M/S INTERACTIVE MARKETING PVT . LTD. AS RETURN IN RESPONSE TO SAID NOTICE.DURING THE COU RSE OF REASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICES UNDER SECTIONS 143(2) AND 142(1) OF THE ACT AND CALLED FOR THE ASSESSEES REPLY IN THIS REGARD AS WELL AS OTHER RELEVANT DETAILS. AFTER CON SIDERING THE SAME THE AO HAD PASSED THE ORDER U/S.143(3)R.W.S.147, ON 14.12.2010,ASSESSING THE TO TAL INCOME OF THE ASSESSEE,AT RS.1,85,77, 590/- BY MAKING THE TWO ADDITIONS NAMELY I) RS.1,13,07,04 6/- BEING THE DIFFERENCE BETWEEN INCOME AS PER TDS CERTIFICATES (AT RS. 2,19,99,985/-) AND THE INCOME AS PER PROFIT & LOSS ACCOUNT (AT RS.1,06,92,939/-) AND II) DISALLOWING THE EXPENSES OF RS.60, 11,835/- BY TREATING THE SAME TO BE EXCESSIVE EXPENDITURE AND HOLDING THAT THE ASSESSEE HAD CLAIMED DOUBLE DEDUCTION IN RESPECT OF THE SAID EXPENSES. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) CHALLENGING THE REOPENING OF THE AS SESSMENT AND THE ADDITIONS MADE BY THE AO. BEFORE HIM,THE ASSESSEE SUBMITTED THAT THE ACTION O F THE AO IN REOPENING //THE ASSESSMENT WAS ILLEGAL AS WELL AS BAD IN LAW AND HENCE THE ASSESSM ENT ORDER PASSED U/S. 147 R.W.S. 143(3) DESERVED TO BE QUASHED AND CANCELLED,THAT THE AO HAD ACTED B EYOND HIS JURISDICTION IN NOT FOLLOWING THE PROVISIONS OF SECTION 147 OF THE ACT BECAUSE THE AS SESSMENT HAD BEEN REOPENED BEYOND 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR,THAT T HE AO HAD NOT DEMONSTRATED THAT THE INCOME HAD ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THE RELEVANT AY., THAT THE NOTICE UNDER SECTION 148,HAD BEEN ISSUED BY THE ASSESSING OFFICER WHO WA S BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER,THAT IT HAD NOT BEEN ISSUED WITH THE PRIOR SATISFACTION AND APPROVAL OF THE JOINT COMMISSIONER ON THE BASIS OF THE REASONS RECO RDED BY THE AO,THAT SINCE THE ASSESSMENT WAS RE-OPEND AFTER 4 YEARS FROM THE END OF THE RELEVANT AY. AND THE ORIGINAL ASSESSMENT HAD BEEN MADE UNDER SECTION 143(3) OF THE ACT, PRIOR APPROVA L OF THE CHIEF COMMISSIONER OR COMMISSIONER WAS ALSO NECESSARY FOR THE REOPENING OF THE ASSESSM ENT, THAT THE PROVISIONS OF SECTION 151(1) HAD NOT BEEN FOLLOWED. 3.1. AS CERTAIN FACTUAL ILLEGALITIES WERE ALLEGED BY THE ASSESSEE IN REOPENING OF THE ASSESSMENT AND ON THAT GROUND IT HAD CHALLENGED THE VALIDITY OF TH E REASSESSMENT PROCEEDINGS/REASSESSMENT ORDER, THE FAA DIRECTED THE AO TO SEND HIS COMMENTS ON THE CLAIM OF THE ASSESSEE VIDE HIS OFFICE LETTER DATED 12.01.2012. COPIES OF THE SUBMISSIONS OF THE ASSESSEE, STATEMENT OF FACTS (REVISED) AS WELL AS THAT OF THE GROUNDS OF APPEAL WERE ALSO SENT TO THE AO.BUT,THE AO DID NOT SEND HIS COMMENTS BY THE DUE DATE,SO A REMINDER DATED 12.06.2012 WAS ISSUED BY THE FAA TO FURNISH HIS COMMENTS. THE AO WAS INFORMED THAT IF HIS COMMENTS WERE NOT R ECEIVED BY THE DUE DATE, IT WOULD BE PRESUMED THAT HE HAD NOTHING TO SAY ON THE MATTER A ND THE APPEAL WOULD BE DISPOSED OFF ON MERITS.EVEN THEN,NO COMMENTS WERE RECEIVED FROM THE AO BY 22.06.2012.THE FAA GAVE A FINAL 3 ITA NO. 6959/MUM/2012 M/S INTERACTIVE MARKETING PVT . LTD. CHANCE TO THE AO AND SENT ANOTHER REMINDER,VIDE HIS OFFICE LETTER DATED 06.07.2012 AND THE AO WAS DIRECTED TO SEND HIS REPORT POSITIVELY BY 16.07 .2012.SINCE THE AO HAD KEPT SILENT IN THE MATTER AND NO REPORT/COMMENTS WERE RECEIVED FROM HIM BY TH E FAA SO,HE DECIDED TO PROCEED FURTHER ON THE BASIS OF THE SUBMISSIONS FILED BY THE ASSESSEE. 3.2. ALLOWING THE APPEAL OF THE ASSESSEE,THE FAA HELD TH AT THE NOTICE U/S. 148 WAS ISSUED ON 19.02.2010-BEYOND THE NORMAL PERIOD OF FOUR YEARS A ND IN THE EXTENDED PERIOD OF SIX YEARS.AS PER THE PROVISIONS OF SECTION 147, THE AO WAS REQUIRED TO DEMONSTRATE THAT THE INCOME HAD ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT,THAT THE AO HAD NOT MENTIONED AS HOW THE ASSESSEE HAD FAILED ON BOTH THE COUNTS,THAT AS PER THE PROVISIONS OF SE CTION 151(1), NO NOTICE UNDER SECTION 148 COULD BE ISSUED BY AN AO, BELOW THE RANK OF ASSISTANT COM MISSIONER OR DEPUTY COMMISSIONER WITHOUT THE PRIOR SATISFACTION AND APPROVAL OF THE JOINT CO MMISSIONER ON THE BASIS OF THE REASONS RECORDED BY THE AO,THAT IN THE CASE UNDER CONSIDERATION NO SUCH PRIOR APPROVAL/SATISFACTION OF THE JOINT COMMISSIONER HAD BEEN REPORTED BY THE AO,THAT THE R EOPENING ON BOTH THOSE GROUNDS WA LIABLE TO BE HELD INVALID,THAT AS PER PROVISO TO SECTION 151( 1) OF THE ACT, IN A CASE WHERE AN ASSESSMENT UNDER SECTION 143(3) OR 147 HAD BEEN MADE, NO NOTIC E CAN BE ISSUED AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE SATISFACTIO N/APPROVAL OF THE CHIEF COMMISSIONER OR COMMISSIONER HAD BEEN OBTAINED ON THE BASIS OF THE REASONS RECORDED FOR THIS PURPOSE,THAT THE AO HAD NOT REPORTED ANY SUCH SATISFACTION/APPROVAL OF THE CHIEF COMMISSIONER OR COMMISSIONER,THAT ON THAT GROUND ALSO, THE REOPENING WAS LIABLE TO BE HELD INVALID.FINALLY HE HELD THAT THE REOPENING OF THE ASSESSMENT AS WELL AS THE ORDER PASSED BY TH E AO, BOTH WERE INVALID,THAT THE ISSUANCE OF NOTICE U/S. 148 OF THE ACT AND THE CONSEQUENT REASS ESSMENT ORDER WERE BAD IN LAW AND COULD NOT BE SUSTAINED,THAT SAME WERE TO BE QUASHED/ ANNULLED. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE (DR) SUPP ORTED THE ORDER OF THE AO AND STATED THAT PRIOR APPROVAL WAS OBTAINED FROM THE CIT BEFORE ISS UING THE NOTICE U/S.148 OF ACT,THAT ALL LEGAL FORMALITIES WERE COMPLETED.AUTHORISED REPRESENTATIV E(AR) STATED THAT THE REOPENING WAS BASED ON AN AUDIT OBJECTION,THAT THE AO HAD NOT DEMONSTRA TED THAT THERE WAS ANY FAILURE ON PART OF THE ASSESSEE AND HENCE HE HAD INITIATED REASSESSMENT PR OCEEDINGS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.BEFORE PROCEEDINGS FURTHER WE WOULD LIKE TO REPRODUCE THE REASONS RECO RDED BY THE AO FOR ISSUING NOTICE U/S.148 OF THE ACT AND SAME READ AS UNDER: THE ASSESSEE CREDITED AN AMOUNT OF RS. 1,06,92,939 /- INCLUSIVE OF SALES COMMISSION AND OTHER INCOME WHILE THE GROSS RECEIPTS AS PER THE TDS CERT IFICATE IS OF RS. 2,19,99,985/-. THEREFORE THE INCOME TO THE TUNE OF RS.1,13,07,046/-(RS.2,19,99,9 85/- LESS RS. 1,13, 07, 046/-)I.E. THE DIFFERENCE AS PER THE P&L ACCOUNT AND THE TDS CERTIFICATES HAV E ESCAPED TAX. HENCE THERE IS UNDER 4 ITA NO. 6959/MUM/2012 M/S INTERACTIVE MARKETING PVT . LTD. ASSESSMENT OF INCOME. THE ASSESSEE IN THE P&L ACCOUNT HAD CLAIMED THE EXP ENDITURE ON ACCOUNT OF OFFICE RENT RS. 3,99,000/-, PRINTING AND STATIONARY RS. 1,07,180/-, TELEPHONE EXPENSES RS. 9,58,612/-, ELECTRICITY CHARGES RS. 1,99,177/-, RECRUITMENT COST OF RS. 16, 588/-, STAFF WELFARE EXPENDITURE OF RS. 11,80,088/- AND SALARY RS. 40,63,920/-. WHEREAS, AS PER THE AGREEMENT WITH THE LCLCL AND SB!, ALL EXPENDITURES ARE REIMBURSED BY THE BANK APART FROM THAT, AS PER THE ASSESSEES REPLY DATED 20.09.2005, THE ASSESSEE RECEIVED MANAGEMENT FEES F OR 400-500 COMPANY EMPLOYEES FOR THE ICICI AND SBI JOB AND 50 EMPLOYEES FOR HUTCH JOB. HENCE, ALL THE EXPENDITURES CLAIMED BY THE ASSESSEE HAVE BEEN RECEIVED BY WAY OF REIMBURSEMENT AND HAD ALSO CLAIMED THE SAME IN THE P&L ACCOUNT. THUS IT IS CLEAR THAT THESE EXPENDITURES HAVE BEEN ALLOWED TWICE TO TH E ASSESSEE. FROM THE ABOVE REASONS IT IS CLEAR THAT THE AO HAS NOT ALLEGED THE FAILURE OF THE ASSESSEE TO DISCLOSE THE NECESSARY MATERIAL AND RELEVANT FACTS FOR COMPLETING THE ASSESSMENT THAT LED TO ESCAPEMENT OF INCOME.IT IS SAID THAT IN ORDER TO AS SUME JURISDICTION TO REASSESS UNDER THE PROVISO TO SECTION 147 OF THE ACT,TWO CONDITIONS HAVE TO BE FULFILLED. THERE HAS TO BE UNDERASSESSMENT ACCORDING TO THE BELIEF OF THE AO AND SUCH BELIEF M UST BE FORMED ON THE BASIS OF NON-DISCLOSURE OF THE MATERIAL FACTS ON THE PART OF THE ASSESSEE. ONC E BOTH THESE CONDITIONS CO-EXIST, THE AO WOULD HAVE JURISDICTION TO INITIATE PROCEEDINGS BEYOND TH E PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT IS ESSENTIAL FOR THE A SSESSEE TO REVEAL THE PRIMARY FACTS TRULY AND FULLY BUT NOT THE INFERENTIAL FACTS AS DRAWING THE INFERE NCES WOULD BE THE DOMAIN OF THE AO. WE WOULD LIKE TO REFER TO THE JUDGMENT OF THE HONB LE JURISDICTIONAL HIGH COURT DELIVERED IN THE CASE OF DYNACRAFT AIR CONTROLS (356ITR102) WHEREIN IT HAS BEEN HELD: UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT, HE MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. UNDER THE PROVISO TO SECTION 147, WHERE AN AS SESSMENT HAS BEEN MADE UNDER SECTION 143(3), NO ACTION SHALL BE TAKEN UNDER THAT SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR. THIS IS A JURISDICTIONAL REQUIREMENT WHICH MUS T BE FULFILLED WHERE AN ASSESSMENT IS SOUGHT TO BE RE OPENED BEYOND A PERIOD OF FOUR YEARS. THE EXISTENCE OF THE JURISDICTIONAL CONDITION MUST BE INDICATED I N THE REASONS WHICH ARE FURNISHED TO THE ASSESSEE. THE FULFILMENT OF THE CONDITION IS A PRE-REQUISITE AND IF IT IS ABSENT, AN ASSESSMENT CANNOT BE REOPEN ED BEYOND FOUR YEARS. THE ASSESSING OFFICER CANNOT IMP ROVE UPON THE REASONS FOR REOPENING THE ASSESSMENT OR BRIDGE THE LACUNAE LATER. IF THE REAS ONS DISCLOSED DO NOT INDICATE THE FULFILMENT OF THE JURISDICTIONAL REQUIREMENT, THE REOPENING IS INVALI D. IN THE CASE OF TECUMSEH PRODUCTS INDIA PVT. LTD.(36 1ITR429),THE HONBLE AP HIGH COURT HAS HELD AS UNDER: BEFORE ANY NOTICE IS ISSUED AFTER THE EXPIRY OF FOUR YEARS , THE OFFICER CONCERNED MUST BE SATISFIED THAT THERE HAS BEEN AN ESCAPEMENT IN ASSESSMENT OF INCOME, WHICH IS CHARGEAB LE TO TAX AND THAT THIS IS BECAUSE OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OF THE INCOME-TAX ACT, 1961, OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 FOR NOT DISCLOSING THE MATERIAL FACTS. THESE CONDITIONS MUST BE REFLECTED IN THE NOTICE ITSELF. IN T HE ABSENCE OF THE CONDITIONS, EXERCISE OF JURISDICTION IN ISSUANCE OF THE NOTICE UNDER THE PROVISION IS PATENTLY ILLEG AL. IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. A REA SSESSMENT NOTICE WAS ISSUE AFTER FOUR YEARS AND 5 ITA NO. 6959/MUM/2012 M/S INTERACTIVE MARKETING PVT . LTD. SAME WAS CHALLENGED BEFORE THE HONBLE GUJARAT HIGH COURT IN A WRIT PETITION.ALLOWING THE WRIT FILED BY THE ASSESSEE,HONBLE COURT(360ITR527)HELD AS FOLLOWING THAT THERE WAS NOT EVEN A WHISPER TO THE EFFECT TH AT INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR I TS ASSESSMENT. EVEN WHILE CONSIDERING THE OBJECTIONS R AISED BY THE ASSESSEE AND REPLYING TO THE ASSESSEE, THERE WAS NO SUCH CASE STATED ON BEHALF O F THE REVENUE. EVEN IN THE AFFIDAVIT-IN-REPLY FILED BY THE DEPARTMENT, THERE WAS NO ALLEGATION OF ANY SUCH FAILURE ON THE PART OF THE ASSESSEE. THE DEPARTMENT WAS NOT IN A POSITION TO SATISFY THE COURT WITH RESPECT TO COMPLIANCE/SATISFACTION OF THE REQUIREMENT OF THE PROVISO TO SECTION 147. THUS , THE REQUIREMENT OF THE PROVISO TO SECTION 147 WAS NOT SATISFIED. FURTHER, IN THE ABSENCE OF ANY S ATISFACTION HAVING BEEN RECORDED BY THE ASSESSING OFFICER THAT THE INCOME HAD ESCAPED BY RE ASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSUMPTION OF JURISDICTION UND ER SECTION 147 WAS NOT VALID AND, THEREFORE, NOTICE UNDER SECTION 148 COULD NOT BE SUSTAINED. FROM THE ABOVE IT IS CLEAR THAT PROVISIONS OF THE P ROVISO TO THE SECTION 147 OF THE ACT CANNOT BE INVOKED IN A ROUTINE MATTER.THE AO HAS TO PROVE THA T CERTAIN PRE-CONDITIONS FOR INITIATING REASSESSMENT PROCEEDINSGS,WERE EXISTING,IF HE DESIR ES TO ISSUE A NOTICE U/S.148.ONCE AN ASSESSMENT IS COMPLETED U/S.143 OF THE ACT,AFTER SC RUTINISING THE FACTS OF THE CASE,GENERALLY IT SHOULD NOT BE DISTURBED UNTIL AND UNLESS IT IS NOT PROVED THAT BECAUSE OF THE FAILURE OF THE ASSESSEE A PORTION OF THE INCOME REMAINED TO BE TAXED IN THA T PARTICULAR AY.AO.S ARE NOT ALLOWED TO PLAY A SECOND INNINGS IF THERE IS NO FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE MATERIAL FACTS.IN THE CASE UNDER CONSIDERATION THERE IS NO PROVERBIAL WHI SPER,IN THE REASONS RECORDED BY THE AO,THAT BECAUSE OF THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS INCOME HAS ESCAPED ASSESSMENT.THUS,THERE IS LACK OF BASIC JURI SDICTION.AO.S ARE EMPOWERED TO ISSUE NOTICE U/S.148 TO REASSESS THE INCOME,BUT THEIR POWER IS N OT UNFETTERED-ALONGWITH THE POWERS THEY ARE DUTY BOUND TO FOLLOW THE MANDATE OF THE PROVISIONS OF THE ACT.SECTION 147,ESPECIALLY THE PROVISO IS MANDATORY-IT DOES NOT DEPEND UPON THE DISCRETION OF THE AO.HE HAS TO FOLLOW IT AND FOLLOW IT TO THE HILT.ANY SMALLEST DEVIATION WOULD RESULT IN ABS ENCE OF JURISDICTION AND ANY ORDER PASSED WITHOUT JURISDICTION IS NO ORDER AT ALL. NOW,WE WOULD LIKE TO MENTION THE FACTS OF THE CASE. FROM THE LETTER ISSUE BY THE AO TO THE ASSESSEE ON 31.01.2008(PG.3OF THE PAPER BOOK)BECAUS E OF AN AUDIT OBJECTION THE AO WANTED TO SEND A PROPOSAL TO THE CIT FOR INITIATING PROCEEDIN GS U/S.263 OF THE ACT.IN THAT LETTER THE ISSUES WERE SAME THAT ARE PART OF THE RE-ASSESSMENT NOTICE .THUS,IT IT CLEAR THAT THE TRIGGER POINT WAS AN AUDIT OBJECTION.WE DO NOT WANT TO COMMENT UPON THE ROLE OF AUDIT PARTIES AND THEIR OPINIONS,BUT IT IS CLEAR THAT BECAUSE OF THEIR OBJECTION THE AO DECIDED TO DISTURB THE FINALITY OF THE ASSESSMENT THAT WAS FINALISED BEFORE FOUR YEARS.FROM THE RECO RDS IT IS NOT CLEAR THAT WHY THE AO DROPPED THE IDEA OF SENDING PROPOSAL U/S.263 OF THE ACT AND DEC IDED TO ISSUE NOTICE U/S.148 OF THE ACT,BUT IT IS DEFINITE THAT REASSESSMENT NOTICE WAS NOT ISSUED BE CAUSE OF FAILURE OF THE ASSESSEE. 6 ITA NO. 6959/MUM/2012 M/S INTERACTIVE MARKETING PVT . LTD. WE FIND THAT THE FAA HAD NOTICED CERTAIN DISCREPANC IES IN THE REASSESSMENT PROCEEDINGS,SO,HE HAD DIRECTED THE AO TO SEND HIS COMMENTS.BUT,THE AO DID NOT COMPLY WITH HIS DIRECTIONS AND INSPITE OF GETTING MORE THAN ONE OPPORTUNITY HE DID NOT SUB MIT HIS COMMENTS TO THE FAA,SO,THAT HE COULD TAKE AN INFORMED DECISION.IN THESE CIRCUMSTANCES,TH E FAA WAS LEFT WITH NO ALTERNATIVE BUT TO DECIDE THE MATTER ON MERITS.FROM JANUARY TO JULY 20 12,THE AO DID NOT SEND HIS REPORT TO A JUDICIAL AUTHORITY FOR THE REASONS BEST KNOWN TO HIM ONLY.FA A IS VERY SENIOR OFFICER OF THE DEPARTMENT AND ENTRUSTED WITH A RESPONSIBILITY OF CARRYING OUT JUD ICIAL WORK.NON COOPERATION WITH HIM IS NOT ONLY BEYOND OUR COMPREHENSION BUT ALSO AGAINST THE DEPAR TMENTAL DISCIPLINE.THE MATTER DOES NOT END HERE ONLY.WHEN THE FAA DECIDES THE APPEAL ON MERITS THE SAME AO CHALLENGES IT ALLEGING THAT THE FAA HAS ERRED.THE CHRONOLOGY OF EVENTS PROVE IN U NEQUIVOCAL TERMS THAT IF SOMEBODY HAD ERRED IT WAS THE AO AND NOT THE FAA.GROUND OF APPEAL NO.2 .3 IS A FEEBLE ATTEMPT OF THE AO TO COVER HIS LAPSE IN ISSUING THE NOTICE U/S.148.HE HAS TRIED TO IMPROVE UPON HIS CASE LATELY IN FORM OF GROUNDS OF APPEAL FILED BEFORE US.IN OUR OPINION,IN SUCH CA SE ORDER OF THE FAA SHOULD HAVE BEEN ACCEPTED GRACEFULLY AND THE ADMINISTRATIVE APPROVAL SHOULD N OT HAVE BEEN GIVEN TO FILE THE SECOND APPEAL. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE ,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIR MITY.THEREFORE,CONFIRMING HIS ORDER WE DECIDE GROUNDS NO.1 TO 2.4 AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMIS SED. /+0 '*+ , 1 2 ( 3 '4 ( + 56 . ORDER PRONOUNCED IN T HE OPEN COURT ON 20TH AUGUST, 2014 . 7 ( -.# 8 9' 20.08. 201 4 . ( 3 : SD/- SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 9' / DATE: 20.08.2014 S.K. 7 7 7 7 ( (( ( &+ &+ &+ &+ ;#+ ;#+ ;#+ ;#+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR I BENCH, ITAT, MUMBAI / >3 &+' , . . . 6. GUARD FILE/ 3 / '+ '+ '+ '+ &+ &+&+ &+ //TRUE COPY// 7' / BY ORDER, ? / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI