BANK OF AMERICAL N.A., MUMBAI V. ASST. DIT (IT) CIR 3(2), MUMBAI

ITA 7100/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8431 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 11-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 14-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P J PARDIWALLA
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI L BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI R S SYAL, AM & SHRI VIJAY PAL RAO, JM ITA NO. 7100/MUM/2010 (ASST YEAR 2006-07 ) BANK OF AMERICA NA GROUND FLOOR, EXPRESS TOWERS NARIMAN POINT MUMBAI 21 VS THE ASST DIRECTOR OF INCOME TAX(IT) CIR 3(2), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACB1537G ASSESSEE BY SHRI P J PARDIWALLA REVENUE BY SH NARENDRA KUMAR DT.OF HEARING 11 TH OCT 2012 DT OF PRONOUNCEMENT 30 TH , OCT 2012 PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ASSESSMENT ORDER DATED 20.8.2010 PASSED U/S 144C(143) R.W.S 143(3) IN PURS UANT TO THE DIRECTIONS OF THE DRP U/S 144C(5) OF THE I T COME DATED 13 TH JULY 2010 FOR THE ASSESSMENT YEAR 2006-07. 2 THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS A PPEAL. HOWEVER, FIRST WE WILL TAKE UP THE ISSUE OF VALIDITY AND MAINTAINABILITY O F THE ASSESSMENT ORDER DATED 20 TH AUG 2010 AS RAISED IN THE GROUND NO.1 OF THE ASSESS EES APPEAL. 3 WE HAVE HEARD THE LD SR COUNSEL SHRI P J PARIDIWA LA AS WELL AS THE LD DR SHRI NARENDRA KUMAR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. LD SR COUNSEL SHRI PARIDIWALA HAS NARRATED THE FACTS OF THE CASE AND S UBMITTED THAT THE DRAFT ORDER IN THIS CASE WAS PASSED BY THE ASSESSING OFFICER ON 29 TH DEC 2009 WHICH WAS SERVED ON THE ASSESSEE ON 30 TH DEC 2009. THE ASSESSEE FILED ITS OBJECTIONS TO TH E DRAFT ORDER ITA NO. 7100/M/2010 BANK OF AMERICA NA 2 BEFORE THE DRP ON25TH JAN 2010. SUBSEQUENT TO THE FILING THE OBJECTION, THE ASSESSEE CAME TO KNOW ABOUT THE CBDT CIRCULAR DATED 20 TH JAN 2010 WHEREBY IT WAS CLARIFIED THAT THE ASSESSEE HAS THE OPTION TO EITHE R FILE OBJECTIONS BEFORE THE DRP OR TO CHALLENGE THE ASSESSMENT FRAMED AS PER THE NORMA L APPELLATE CHANNEL. THE LD SR COUNSEL HAS REFERRED PARA 4 OF THE SAID CLARIFIC ATION AT PAGE 33 OF THE PAPER BOOK AND SUBMITTED THAT PRIOR TO THIS NOTIFICATION, THIS POSITION WAS NOT CLEAR TO THE TAX PAYERS. 3.1 CONSEQUENTLY, THE ASSESSEE DECIDED TO OPT THE N ORMAL APPELLATE CHANNEL AND ACCORDINGLY FILED A LETTER DATED 29.1.2010 BEFO RE THE DRP WITHDRAWING ITS OBJECTIONS FILED ON 25.1.2010. THUS, THE LD SR COUN SEL HAS SUBMITTED THAT THE ASSESSEE MADE IT CLEAR THAT IN VIEW OF THE CLARIFICATIONS OF THE CBDT, THE ASSESSEE DESIRED TO EXERCISE THE OPTION OF FILING AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE ASSESSMENT ORDER INSTEAD OF F ILLING OBJECTIONS BEFORE THE DRP. 3.2 THE ASSESSEE HAS ALSO FILED A LETTER DATED 29.1 .2010 WITH THE ASSESSING OFFICER ON THAT VERY DATE INFORMING HIM ABOUT THE OBJECTION S FILED BEFORE THE DRP HAVE BEEN WITHDRAWN AND REQUESTING HIM TO PASS AN ASSES SMENT ORDER WITHIN THE PRESCRIBED TIME. THE ASSESSING OFFICER PASSED AN O RDER DATED 10.2.2010 U/S 144C(3) R.W.S 143(3), WHICH WAS SERVED ON THE ASSESSEE ON 1 6.2.2010. THE LD SR COUNSEL HAS POINTED OUT THAT THE ASSESSING OFFICER HAS ALSO RAI SED A TAX DEMAND OF ` 36,34,74,134/- AS PER THE ORDER DATED 10.2.2010 AT PAGE 63 OF THE PAPER BOOK. AFTER ADJUSTING THE REFUND, THE ASSESSEE PAID THE BALANCE TAX DEMAND OF ` 1,23,45,994/- VIDE CHALLAN DATED 26.3.2010. ITA NO. 7100/M/2010 BANK OF AMERICA NA 3 3.4 THE ASSESSEE FILED APPEAL AGAINST THE ASSESSMEN T ORDER DATED 10.2.2010 BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) WHIC H WAS PENDING FOR DISPOSAL. IN THE MEANTIME, THE ASSESSEE RECEIVED A LETTER DAT ED 20.4.2010 FROM THE DRP FOR FIXING THE HEARING ON 28.4.2010. IN RESPONSE TO TH E SAID LETTER, THE ASSESSEE SUBMITTED A LETTER DATED 23.4.2010 TO THE DRP INFORMING THEM ABOUT THE WITHDRAWAL OF THE APPLICATION/OBJECTIONS AND FILING OF APPEAL TO THE COMMISSIONER OF INCOME TAX(APPEALS). THE ASSESSEE HAS ALSO FILED A DETAIL ED NOTE BEFORE THE DRP EXPLAINING ALL THE FACTS AND SUBMITTED THAT IN VIEW OF THE CLA RIFICATION ISSUED BY THE CBDT, THE ASSESSEE WITHDRAWN ITS OBJECTIONS FILED BEFORE THE DRP AND ALSO REQUESTED THE ASSESSING OFFICER TO PASS AN ORDER AS PER THE PROVI SIONS OF SEC. 144C(3), WHICH WAS PASSED BY THE ASSESSING OFFICER WITHIN THE PRESCRIB ED PERIOD AND THE ASSESSEE HAS ALREADY FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AGAINST THE SAID ASSESSMENT ORDER. THEREAFTER, THE DRP HAS PASSED THE DIRECTIONS DATED 13.7.2010 WHEREBY THE OBJECTIONS FILED BEFORE THE D RP HAVE BEEN DISMISSED AS WITHDRAWN AND THE ASSESSING OFFICER WAS DIRECTED TO COMPLETE THE ASSESSMENT AS PROPOSED IN THE DRAFT ORDER. 3.5 THE LD SR COUNSEL HAS SUBMITTED THAT WHEN THE ASSESSING OFFICER HAS ALREADY PASSED THE ORDER U/S 144C(3) R.W.S 143(3) AFTER THE CLARIFICATION ISSUED BY THE CBDT, THEN THE APPLICATION/OBJECTION BEFORE THE DRP IS TO BE TREATED AS NON-EST AND THE DRP BECAME FUNCTUS OFFICO. HE HAS FURTHER SUBMITTED THAT THE OBJECTIONS WERE WITHDRAWN BY THE ASSESSEE PRIOR TO THE ISSUE OF NOT ICE OF HEARING IN THE MATTER AND ALSO PRIOR TO THE EXPIRY OF 30 DAYS FROM THE DATE O F RECEIPT OF THE DRAFT ORDER FROM THE ASSESSING OFFICER. THEREFORE, NO DIRECTION OUGHT TO HAVE BEEN ISSUED BY THE DRP. ITA NO. 7100/M/2010 BANK OF AMERICA NA 4 3.6 THE LD SR COUNSEL HAS FURTHER SUBMITTED THAT TH E ASSESSING OFFICER HAS AGAIN PASSED AN ORDER DATED 20.8.2010 IN PURSUANT TO THE DIRECTIONS OF THE DRP, WHICH IS BAD IN LAW IN VIEW OF THE FACTS THAT THE OBJECTIONS FILED BEFORE THE DRP STANDS INFRUCUTUOUS AND WITHDRAWN AS WELL AS THE SUBSEQUE NT ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SEC. 144C(3) AND WITHIN THE PERMISSIBLE TIME LIMIT AS PRESCRIBED U/S 144C(4). FURTHER, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AGAI NST THE ASSESSMENT ORDER DATED 10.2.2010. THUS, LD SR COUNSEL HAS SUBMITTED THAT THE DIRECTIONS PASSED BY THE DRP AS WELL AS THE ASSESSMENT ORDER DATED 20.8.2010 PASSED IN PURSUANT TO THE DIRECTIONS ARE BAD IN LAW AND LIABLE TO BE QUASHED. 3.7 ON THE OTHER HAND, THE LD DR HAS FAIRLY ACCEPTE D THE FACTUAL POSITION THAT THERE ARE TWO ASSESSMENT ORDERS PASSED IN THIS CASE , ONE U/S 144C(3) AND ANOTHER ONE U/S 144C(13) OF THE I T ACT AND ACCORDINGLY, T HE SECOND ASSESSMENT ORDER MAY BE QUASHED. 3.8 THE LD SR COUNSEL HAS POINTED OUT THAT THE COMM ISSIONER OF INCOME TAX(APPEALS) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE BY TAKING NOTE OF THE FACT THAT THE DRP HAS ALREADY PASSED THE DIRECTIONS ; THEREFORE, THE DIRECTIONS MAY BE ISSUED FOR REVIVING OF THE APPEAL OF THE ASSESSE E BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS). 4 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CAREF ULLY PERUSAL OF THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFF ICER HAS PASSED TWO ORDERS IN THIS CASE ONE U/S 144C(3) DT 10.2.2010 AND ANOTHER U/S 1 44C(13) DT 20.8.2010. BOTH THESE ORDERS ARE IDENTICAL AND WITH SAME DEMAND OF TAX. THERE IS NO DISPUTE ABOUT THE ITA NO. 7100/M/2010 BANK OF AMERICA NA 5 FACT AS EXPLAINED BY THE LD SR COUNSEL THAT AGAINST THE DRAFT ORDER DT 29.12.2009 PASSED U/S 144C(1), THE ASSESSEE FILED ITS OBJECTIO N DT 25.1.2010 BEFORE THE DRP. HOWEVER, IN THE MEANTIME, THE CBDT ISSUED A CLARIFI CATION DT 20.1.2010 REGARDING THE OPTION OF AN ASSESSEE EITHER TO GO BEFORE THE DRP O R TO PREFER THE NORMAL APPELLATE CHANNEL. IT WAS FURTHER CLARIFIED BY THE CBDT THA T IT IS THE CHOICE OF THE ASSESSEE WHETHER TO FILE AN OBJECTION BEFORE THE DRP AGAINST THE DRAFT ASSESSMENT ORDER OR TO EXERCISE THE OPTION AND FILE AN APPEAL LATER BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AGAINST THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. WHEN THE CLARIFICATION CAME TO THE KNOWLEDGE OF THE ASSE SSEE IT HAD IMMEDIATELY FILED A LETTER DATED 29.1.2010 BEFORE THE DRP FOR EXPRESSIN G THE EXERCISE OF THE OPTION OF FILING AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AND WITHDRAWING THE OBJECTIONS FILED U/S 144C(2). 4.1 THOUGH, THE ASSESSEE HAD AN OPTION TO EXERCISE EITHER TO FILE THE OBJECTION BEFORE THE DRP AGAINST THE PROPOSED DRAFT ASSESSMEN T ORDER OR TO OPT FOR AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AGAI NST THE ASSESSMENT ORDER PASSED U/S 144C(3). HOWEVER, ONCE THE ASSESSEE HAS FILED THE OBJECTION BEFORE THE DRP, EVEN THOUGH THE ASSESSEE HAS LIBERTY TO WITHDR AW THE SAME, THE PROCEEDINGS BEFORE THE DRP WOULD NOT AUTOMATICALLY CLOSE BECAUS E THE DRP IS HAVING THE POWERS OF ENHANCEMENT OF THE VARIATION AS PROPOSED IN THE DRAFT ORDER. THEREFORE, WITHOUT PERMISSION OF THE DRP, THE APPLICATION/OBJE CTION, ONCE FILED, CANNOT BE WITHDRAWN BY THE PARTY IN VIEW OF SUB. SEC. 7 & 8 O F SECTION 144C OF THE I T ACT WHICH READ AS UNDER: 7. THE DISPUTE RESOLUTION PANEL MAY, BEFORE ISSUING ANY DIRECTIONS REFERRED TO IN SUB. SECTION (5)- A) MAKE SUCH FURTHER ENQUIRY, AS IT THINKS FIT; OR B) CAUSE ANY FURHTER ENQUIRY TO BE MADE BY ANY INCOME TAX AUTHORITY AND REPORT THE RESULT OF THE SAME TO IT. ITA NO. 7100/M/2010 BANK OF AMERICA NA 6 8) THE DISPUTE RESOLUTION PANEL MAY CONFIRM, REDUCE OR ENHANCE THE VARIOUS PROPOSED IN THE DRAFT ORDER SO, HOWEVER, THAT IT SHAL L NOT SET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIRECTION UNDER SUB SECTION (5) FOR FURTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER. 4.2 SINCE IN THE CASE IN HAND, THE DRP AFTER TAKING NOTE OF THE FACT THAT THE ASSESSEE DESIRES TO EXERCISE THE OPTION TO FILE THE APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AGAINST THE ASSESSMENT ORDER, A CCEPTED THE REQUEST OF THE ASSESSEE FOR WITHDRAWAL OF THE OBJECTION WHILE PASS ING THE ORDER DT 13.7.2010 AND THEREFORE, NO DIRECTION PER-SE WERE PASSED BY THE D RP AS PER SUB. SEC. 5 OF SEC 144C OF THE ACT. WE QUOTE THE ORDER OF THE DRP AS UNDE R: IN THIS CASE, DRAFT ASSESSMENT ORDER DATED 29.12.2009 WAS ISSUED BY THE ASSESING OFFICER AGAINST WHICH THE ASSESSEE HAS FILE D FOLLOWING OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL VIDE ITS LETTER DATED 25.1.2010. . . SUBSEQUENTLY, VIDE LETTER DATED 29TH JANUARY, 2010, T HE ASSESSEE MADE A REQUEST FOR WITHDRAWAL OF THE OBJECTIONS FILED BEFORE THE DRP MENTIONING THAT THEY INTEND TO OPT TO PROCEED TO THE NORMAL APPELLA TE AUTHORITY I.E. THE CJT(A). ASSESSEE WAS GIVEN OPPORTUNITY OF BEING HEA RD AND SHRI VIRENDRA A. MITTAL, PARTNER DELOITTE HARKINS & SELLS, THE AUTHO RIZED REPRESENTATIVE AND MR. SAURABH DOSHI, ASST. VICE PRESIDENT, COUNTRY TAX & F INANCE BANK OF AMERICA NA ATTENDED THE PROCEEDINGS ON 28.4.2010. ASSESSEE C ONFIRMED ITS REQUEST FOR WITHDRAWAL OF OBJECTION. IN VIEW OF THE REQUEST OF T HE ASSESSEE, THE OBJECTIONS FILED BEFORE THE PANEL ARE DISMISSED AS WITHDRAWN. TH E ASSESSING OFFICER IS DIRECTED TO COMPLETE ASSESSMENT AS PROPOSED IN THE DRAFT ORDER. 5 EVEN OTHERWISE, WHEN THE OBJECTIONS FILED BY THE ASSESSEE WERE ALLOWED TO BE WITHDRAWN ON THE GROUND THAT THE ASSESSEE INTEND TO EXERCISE THE OPTION TO PROCEED TO FILE APPEAL BEFORE THE COMMISSIONER OF INCOME T AX(APPEALS), THEN THERE CANNOT BE ANY DIRECTION UNDER SUB.SEC.5 IN THE ABSENCE OF ANY OBJECTION AS REQUIRED UNDER SUB. SEC. (2) OF SEC. 144C OF THE ACT. IT IS CLEA R FROM THE ORDER DATED 13.7.2010 OF THE DRP THAT THE DRP HAS NOT ISSUED ANY DIRECTION ON M ERITS OF THE PROPOSED DRAFT ITA NO. 7100/M/2010 BANK OF AMERICA NA 7 ASSESSMENT ORDER; THEREFORE, THE ASSESSING OFFICER GOT NO JURISDICTION TO PASS ANY ORDER U/S 144C(13). HENCE, THE ORDER DATED 20.8.20 10 PASSED U/S 144C(13) R.W.S 143(3) BY THE ASSESSING OFFICER IS WITHOUT JURISDIC TION AND ACCORDINGLY IS NOT SUSTAINABLE. 5.1 EVEN OTHERWISE, WHEN THE ASSESSING OFFICER HAS ALREADY PASSED AN ASSESSMENT ORDER DT 10.2.2010 U/S 144C(3), THEN THE SECOND OR DER WOULD RESULT MULTIPLICITY OF LITIGATION. 6 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE HOLD THAT THE ORDER DATED 20.8.2010 IS INVALID FOR WANT OF JURISDICTION AND ACCORDINGLY THE SAME IS QUASHED. SINCE THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) WHEREBY THE APPEAL OF THE ASSESSEE AGAINST THE ASSESSMENT ORDER DT 10.2.2010 WAS ALLEGEDLY DISMISSED IS NOT A SUBJECT MATTER BEFORE US IN THE PRESENT PROCEEDINGS; THEREFORE, WE DO NOT PROPOSE TO PASS ANY DIRECTION IN THAT RESPEC T. HOWEVER, THE ASSESSEE OTHERWISE IS AT LIBERTY TO TAKE LEGAL REMEDY AS PER LAW. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH ,DAY OF OCT 2012. SD/- SD/- ( R S SYAL ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH OCT 2012 RAJ* ITA NO. 7100/M/2010 BANK OF AMERICA NA 8 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI