DCIT 7(3), MUMBAI V. VOLTAS LTD, MUMBAI

ITA 7323/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3265 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 12-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Keywords: Depreciation; Period of limitation; Unabsorbed depreciation
• Section: 143(3); 14A; 115JB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. 7047/MUM/2013 (ASSESSMENT YEAR : 2006-07) VOLTAS LIMITED, VOLTAS HOUSE A, DR.BABASAHEB AMBEDKAR ROAD, CHINCHPOKLI,MUMBAI 400 033. PAN:AAACV 2809D ... APPELLANT VS. THE ACIT, RANGE 7(3), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 .... RESPONDENT ITA NO. 7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) THE DCIT, RANGE 7(3), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 .... APPELLANT VS. VOLTAS LIMITED, VOLTAS HOUSE A, DR.BABASAHEB AMBEDKAR ROAD, CHINCHPOKLI,MUMBAI 400 033. PAN:AAACV 2809D .... RESPONDENT ASSESSEE BY : SHRI NITESH JOSHI REVENUE BY : SHRI JAYANT KUMAR DATE OF HEARING : 06/06/2016 DATE OF PRONOUNCEMENT : 08/06/2016 2 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) ORDER PER G.S. PANNU,AM: THE CAPTIONED CROSS-APPEALS FILED BY THE ASSESSEE AND REVENUE PERTAINING TO A.Y. 2006-07 ARE DIRECTED AGAINST AN ORDER PASSED BY LD. CIT(A)-13, MUMBAI DATED 26/09/2013, WHICH IN TURN A RISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 17/04/2012. 2. THE CAPTIONED CROSS APPEALS PERTAIN TO THE A SSESSMENT YEAR 2006-07, AND THE RESPECTIVE GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE AND THE REVENUE ARISE OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 147/148 OF TH E ACT. IN THIS CASE, THE RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 WA S FILED BY THE ASSESSEE ON 27/11/2006 DECLARING A TOTAL INCOME OF NIL UNDER THE NORMAL PROVISIONS OF THE ACT AND RS.77,12,71,507/- UNDER SECTION 115JB OF THE ACT. THIS RETURN WAS PROCESSED UNDER SECTIO N 143(1) OF THE ACT ON 29/03/2008. NO FURTHER SCRUTINY ASSESSMENT WAS MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3)OF THE ACT, H OWEVER, SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT DATED 25/03/2011, WHICH WAS SERVED ON THE A SSESSEE ON 31/03/2011. IN TERMS OF THE AFORESAID NOTICE, THE ASSESSING OFFICER REOPENED THE ASSESSMENT, AFTER RECORDING THE REASON S REQUIRED IN TERMS OF SECTION 147 OF THE ACT, AND SUCH REASONS HAVE BE EN REPRODUCED BY THE ASSESSING OFFICER IN PARA-2 OF THE ORDER. PRIM ARILY, THE REASONS RECORDED BY THE ASSESSING OFFICER REFLECT THAT, BAS ED ON THE FACT THAT THERE WAS NO SCRUTINY ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT FOR THE INSTANT YEAR AND FURTHER THAT FOR THE EARLI ER ASSESSMENT YEAR OF 3 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) 2005-06 VARIOUS ADDITIONS/DISALLOWANCES HAVE BEEN M ADE, THE ASSESSING OFFICER FORMED A BELIEF ABOUT ESCAPEMENT OF INCOME. IN THE ENSUING ASSESSMENT FINALIZED UNDER SECTION 143(3) R .W.S. 147 OF THE ACT DATED 17/04/2012, THE ASSESSING OFFICER HAS COMPUTE D THE TOTAL INCOME AT RS.35,41,32,128/- AFTER MAKING CERTAIN DISALLOWA NCES/ADDITIONS. THE ASSESSMENT SO FRAMED WAS CARRIED IN APPEAL BY THE A SSESSEE BEFORE THE CIT(APPEALS) BY RAISING POINTS OF LAW AND FACTS. O N THE POINTS OF LAW, AND, ONE OF THE PERTINENT POINT RAISED WAS THAT THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 147 /148 OF THE ACT WAS BAD IN LAW; AND, SECONDLY, THAT THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 17/04/2012 WAS BEYOND THE PERI OD STIPULATED IN LAW. OTHER GROUNDS RAISED BY THE ASSESSEE RELATED TO THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR TRADE GUARANTEES, PAYMENT TO CLUBS, DISALLOWANCE UN DER SECTION 14A OF THE ACT AND DENIAL OF SET-OFF OF UNABSORBED DEPRECI ATION, ETC. THE CIT(APPEALS) HAS DISAGREED WITH THE ASSESSEE ON THE ISSUE OF VALIDITY OF THE PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE UND ER SECTION 147/148 OF THE ACT, AS WELL AS ON THE ISSUE OF LIMITATION FOR PASSING THE ASSESSMENT ORDER. IN SO FAR AS THE VARIOUS ADDITIO NS CHALLENGED, THE CIT(APPEALS) ACCEPTED THE PLEAS OF THE ASSESSEE ON THE DISALLOWANCES MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT AND ALSO ON SET-OFF OF UNABSORBED DEPRECIATION. 3. PRESENTLY, THE REVENUE HAS COME IN APPEAL CHALLE NGING THE ORDER OF THE CIT(APPEALS) ALLOWING RELIEF WITH RESPECT TO THE DISALLOWANCES MADE UNDER SECTION 14A OF THE ACT AND ON SET-OFF OF UNABSORBED DEPRECIATION. THE ASSESSEE IN ITS CROSS APPEAL, HA S ASSAILED THE DECISION 4 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) OF THE CIT(APPEALS) ON THE ASPECT OF THE VALIDITY OF THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT AS WE LL AS THE LIMITATION FOR PASSING OF THE IMPUGNED ASSESSMENT ORDER. 4. IN THIS BACKGROUND, THE PRELIMINARY PLEA OF THE ASSESSEE, WHICH CANVASSES THAT THE IMPUGNED ASSESSMENT ORDER HAS BE EN PASSED AFTER COMPLETION OF THE STIPULATED PERIOD PRESCRIBED IN L AW, WAS HEARD AT THE OUTSET, BEING AN ISSUE WHICH GOES TO THE ROOT OF TH E MATTER. SUCH GRIEVANCE IS ARTICULATED BY THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.2 IN THE CONCISE GROUNDS OF APPEAL, WHICH READ A S UNDER:- GROUND NO.2: RE-ASSESSMENT ORDER PASSED AFTER COMPLETION OF STIPULATED PERIOD. WHETHER THE ASSESSMENT ORDER DATED APRIL 17,2012 PA SSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE INC OME TAX ACT, 1961 IS BARRED BY LIMITATION, HENCE ILLEGAL AN D BAD IN LAW. 5. IN ORDER TO APPRECIATE THE AFORESAID GRIEVANCE O F THE ASSESSEE, THE FOLLOWING FACT-SITUATION IS RELEVANT. IN THIS CASE, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE AC T DATED 25/03/2011 AFTER RECORDING REASONS OF EVEN DATE, COPIES OF WH ICH HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 21-22. THE AFORESAID FACT-SITUATION HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER IN PARA-2 OF TH E ASSESSMENT ORDER. THE AFORESAID NOTICE WAS SERVED ON THE ASSESSEE ON 31/03/2011. ON THE BASIS OF THE AFORESAID FACTS, THE CASE SET-UP B Y THE ASSESSEE IS THAT THE ENSUING ASSESSMENT ORDER WAS REQUIRED TO BE PAS SED WITHIN A PERIOD OF NINE MONTHS FROM 31/03/2011 I.E. UPTO 31/ 12/2011. THE AFORESAID POSITION IS CANVASSED ON THE BASIS OF SEC TION 153(2) OF ACT R.W 2 ND PROVISO THEREOF, WHICH READ AS UNDER:- (2) NO ORDER OF ASSESSMENT, REASSESSMENT OR RECOMP UTATION SHALL BE MADE UNDER SECTION 147 AFTER THE EXPIRY OF [ONE YEAR] FROM THE 5 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) END OF THE FINANCIAL YEAR IN WHICH THE NOTICE UNDER SECTION 148 WAS SERVED; ................................................... ................................................... .. [PROVIDED FURTHER THAT WHERE THE NOTICE UNDER SECTI ON 148 WAS SERVED ON OR AFTER THE 1 ST DAY OF APRIL, 2005[BUT BEFORE THE 1 ST DAY OF APRIL, 2011], THE PROVISIONS OF THIS SUB-SECTION SH ALL HAVE EFFECT AS IF FOR THE WORDS ONE YEAR, THE WORDS NINE MONTHS H AD BEEN SUBSTITUTED:] 6. ON THE AFORESAID ASPECT, THERE IS NO DISPUTE THO UGH IN PARA 4 - 4.1 OF THE IMPUGNED ORDER, THE CIT(APPEALS) HAS OBSERVE D THAT THE ENSUING ASSESSMENT ORDER COULD BE PASSED UPTO 31/3/2012. O STENSIBLY, THE AFORESAID INFERENCE OF THE CIT(APPEALS) IS MISPLAC ED AND IS MERELY BASED ON THE CONTENTS OF SUB-SECTION (2) OF SECTION 153 OF THE ACT WITHOUT NOTICING THE 2 ND PROVISO (REPRODUCED ABOVE), WHICH IS APPLICABLE IN THE INSTANT CASE. EVEN BEFORE US, THE LD. CIT-D R, APPEARING FOR THE REVENUE HAS NOT CONTROVERTED THE AFORESAID LEGAL PO SITION, WHICH IS CLEARLY EMERGING FROM THE PROVISIONS OF THE STATUT E. THUS, WE PROCEED FURTHER ON THE PREMISE THAT THE TIME-LIMIT TO PASS THE ASSESSMENT ORDER WAS 31/12/2011 AND NOT 31/03/2012, NOTED BY THE CIT (APPEALS). 7. AT THIS JUNCTURE, IT IS ALSO TO BE NOTED THAT ON 8/12/2011, ASSESSEE FILED A WRIT PETITION BEFORE THE HONBLE BOMBAY HIG H COURT AGAINST THE INTERIM ORDER PASSED BY THE ASSESSING OFFICER ON 15 /11/2011 DISPOSING THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE I SSUE OF NOTICE U/S.148 OF THE ACT. THE HONBLE BOMBAY HIGH COURT PASSED A N ORDER IN WRIT PETITION (L)/2675/ OF 2011 DATED 13/12/2011 GRANTIN G AD-INTERIM STAY. SUBSEQUENTLY, THE ASSESSEE COMPANY WITHDREW THE SAI D WRIT PETITION AND AN ORDER TO THAT EFFECT WAS PASSED BY THE HONB LE HIGH COURT ON 12/02/2012. COPIES OF SUCH ORDERS PASSED BY THE HO NBLE BOMBAY HIGH 6 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) COURT HAVE BEEN PLACED ON RECORD. THE ASSESSING OF FICER HAS PASSED REASSESSMENT ORDER U/S. 143(3) R.W.S. 147 OF THE AC T ON 17/04/2012. 8. IN COMPUTING THE PERIOD OF LIMITATION PRESCRIBED IN SECTION 153(2) OF THE ACT R.W 2 ND PROVISO THEREOF, CLAUSE(II) OF EXPLANATION-1 BELOW SECTION 153(4) OF THE ACT PRESCRIBES THAT THE PERIO D DURING WHICH THE ASSESSMENT PROCEEDINGS IS STAYED BY AN ORDER OR AN AD-INTERIM INDENTURE OF ANY COURT SHALL BE EXCLUDED. THE AFOR ESAID PERIOD IN THE INSTANT CASE PERTAINS TO THE PERIOD BETWEEN 13/12/2 011 AND 15/02/2012. FURTHER, THE FIRST PROVISO TO SECTION 153(4) OF THE ACT, WHICH READS AS UNDER:- [ PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB- SECTIONS (1), (1A), (1B), (2), (2A) AND (4) AVAILAB LE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESS MENT OR RECOMPUTATION, AS THE CASE MAY BE, IS LESS THAN SIX TY DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AN D THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY: PRESCRIBES THAT IF THE PERIOD AVAILABLE TO THE A SSESSING OFFICER AFTER EXCLUSION OF THE PERIOD OF STAY IS LESS THAN 60 DAY S, SUCH REMAINING PERIOD SHALL BE EXTENDED TO 60 DAYS AND THE STIPULA TED PERIOD OF LIMITATION SHOULD BE DEEMED TO BE EXTENDED ACCORDIN GLY. 9. IN THIS BACKGROUND, THE CASE SET UP BY THE ASSES SEE IS THAT THE ASSESSING OFFICER OUGHT TO HAVE PASSED THE REASSESS MENT ORDER WITHIN 60 DAYS FROM 15/02/2012, I.E. UPTO 14/04/2012, SINC E THE TIME AVAILABLE WITH THE ASSESSING OFFICER BEFORE FILING OF THE WRI T PETITION WAS LESS THAN 60 DAYS. FACTUALLY SPEAKING, THE AFORESAID PERIOD OF LIMITATION, I.E. 14/4/2012 HAS NOT BEEN ADHERED TO BY THE ASSESSING OFFICER AS THE ASSESSMENT ORDER IS DATED 17/04/2012. 7 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) 10. THE AFORESAID FACTUAL MATRIX WAS NOT DISPUTED B Y THE LD. DEPARTMENTAL REPRESENTATIVE THOUGH IT WAS SOUGHT TO BE CANVASSED THAT IN THE PRESENT CASE THERE ARE PECULIAR CIRCUMS TANCES, WHEREBY THE MATTER WAS CARRIED BY THE ASSESSEE BY WAY OF WRIT P ETITION TO THE HONBLE HIGH COURT AND THE ASSESSING OFFICER HAS EVEN CONSIDERED THE SUBMISSIONS FURNISHED BY THE ASSESSEE VIDE COMMUNIC ATION DATED 16/04/2012. IN OUR CONSIDERED OPINION, IN VIEW OF THE CLEAR PROVISIONS OF LAW, THE REASSESSMENT ORDER DATED 17/04/2012 IS BEYOND THE PERIOD STIPULATED IN LAW AND, THEREFORE, THE SAME IS LIABL E TO BE CONSIDERED AS INVALID AND LACKING IN JURISDICTION. WE HOLD SO. CONSEQUENTLY, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS SET-ASIDE BEING BAD IN LAW. 11. SINCE THE ASSESSMENT ORDER ITSELF HAS BEEN HELD TO BE BAD IN LAW, THE OTHER GROUNDS RAISED BY THE ASSESSEE ON THE VAL IDITY OF INITIATION OF PROCEEDINGS U/S. 147/148 AS WELL AS THE GROUNDS RAI SED BY THE REVENUE IN ITS CROSS APPEAL ON CERTAIN ADDITIONS MADE BY TH E ASSESSING OFFICER ARE RENDERED ACADEMIC AND BECOME INFRUCTUOUS. 12. RESULTANTLY, WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE, THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/06/201 6 SD/- SD/- (SANJAY GARG) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 08/06/2016 VM , SR. PS 8 ITA NO. 7047&7323/MUM/2013 (ASSESSMENT YEAR : 2006-07) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI