ACIT (OSD) CIT 3(1), MUMBAI V. HAWKINS COOKERS LTD, MUMBAI

ITA 7405/MUM/2012

• Counselvise Citation: 740519914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: BHAVIN SHAH; VAIBHAVI PATEL
• Keywords: Capital asset; Business income; Audit objection; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 143(3); 234B; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, M UMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND B.R.BHASKARAN (AM ) . . , . . , ./I.T.A. NO.7405/MUM/2012 ( / ASSESSMENT YEAR : 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX, 3(1), ROOM NO.607, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 / VS. M/S HAWKINS COOKERS LTD, F-101, MAKER TOWER, CUFF PARADE, COLABA, MUMBAI-400005 ( % / APPELLANT) .. ( &% / RESPONDENT) ./ ./PAN/GIR NO. : AAACH1784M % / APPELLANT BY : SHRI SURENDRA KUMAR &% * /RESPONDENT BY : SHRI BHAVIN SHAH AND MS.VAIBHAVI PATEL * - / DATE OF HEARING : 25.2.2014 * - /DATE OF PRONOUNCEMENT : 28.2.2014 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2004-05 AGAINST THE ORDER OF LD. CIT(A) DATED 17.8.2012 ON THE FOLLOWIN G GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ANNULLING THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT, BY PLACING RELIANCE ON THE HONBLE APEX COURT DECISION IN THE CASE OF KELVINATOR OF INDIA LTD (320 ITR 561) WITHOUT APPRE CIATING THE FACT THAT THERE WAS NO CHANGE OF OPINION IN THIS CASE AND THERE I S ONLY ONE OPINION POSSIBLE ON AVAILABLE FACTS, THAT THE ASSESSEES CLAIM OF SETT ING OFF LONG TERM CAPITAL LOSS OF AY 2002-03, AGAINST THE SHORT TERM CAPITAL GAIN ON SALE OF DEPRECIABLE ASSETS OF AY 2004-05, IS LAWFULLY NOT ALLOWABLE AS PER THE PR OVISIONS OF THE IT ACT, 1961, 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT REOPENING OF T HE ASSESSMENT WAS NOT DONE IN VIEW OF THE REVENUE AUDIT OBJECTION PER SE BUT I N VIEW OF THE CLEAR POSITION OF LAW REGARDING THE TAXABILITY OF CAPITAL GAIN ON SAL E OF DEPRECIABLE ASSETS; I.T.A. NO.7405/MUM/2012 2 3. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRE CIATE THAT REOPENING OF THE ASSESSMENT WAS DONE FOR THE PURPOSES OF TAKING REME DIAL ACTION IN ACCORDANCE WITH THE INSTRUCTIONS LAID DOWN BY THE CBDT INSTR UCTION NO.9/2006 DATED 7.11.2006 2. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE OBSERVE THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME OF RS.20,69,310/- AS PER PROVISIONS OF SECTION 115JB O F THE INCOME TAX ACT, 1961(THE ACT). ASSESSMENT WAS MADE U/S 143(3) OF THE ACT ON 6.12. 2006 ASSESSING TOTAL INCOME AT RS.20,69,558/- AS UNDER : A. BUSINESS INCOME LESS : SET OFF OF UNABSORBED BUSINESS LOSS TOTAL BUSINESS INCOME B. CAPITAL GAIN ON SALE OF DEPRECIABLE ASSETS LESS: BROUGHT FORWARD LONG TERM CAPITAL LOSS TOTAL INCOME ASSESSED RS.1,07,13,073 RS.1,07,13,073 NIL RS.30,65,000 RS.9,95,442 RS.20,69,558 THE LD. CIT(A) VIDE ORDER DATED 4.9.2008 REVISED T OTAL INCOME OF THE ASSESSEE AT RS.1,02,45,178/- AND THE SAME WAS SET OFF AGAINST T HE BROUGHT FORWARD UNABSORBED BUSINESS LOSS OF EQUAL AMOUNT RESULTING INTO NIL B USINESS INCOME. IN FURTHER APPEAL TO THE TRIBUNAL, THE ITAT VIDE ITS ORDER DATED 23. 4.2010 REVISED BUSINESS INCOME AT RS.97,11,174/- AND THE SAME WAS SET OFF AGAINST BOU GHT FORWARD BUSINESS LOSS OF EQUAL AMOUNT RESULTING INTO NIL BUSINESS INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. SUBSEQUENTLY, AO INITIATED RE-ASSESS MENT PROCEEDINGS AND ISSUED NOTICE U/S 148 OF THE ACT ON 28.3.2011 AFTER RECORDING F OLLOWING REASONS: ON PERUSAL OF THE RECORDS, IT IS OBSERVED THAT IN THE CASE OF THE ASSESSEE, ACCORDING TO SECTION 70(3) OF THE IT ACT, 1961, L OSS RELATING TO LONG TERM CAPITAL ASSETS WAS TO BE SET OFF ONLY AGAINST LONG TERM CAP ITAL GAIN FROM ANY OF THE LONG TERM CAPITAL ASSETS IN THE SAME ASSESSMENT YEAR. A CCORDING TO SECTION 74(1)(B) OF THE IT ACT EFFECTIVE FROM 2002-04 ONWARDS, UNAB SORBED LOSS RELATING TO LONG TERM CAPITAL GAIN AND NOT AGAINST STCG. FURTHER, IT WAS OBSERVED, THAT CAPITAL LOSS PERTAIN ING TO AY 2002-03 WAS SET OFF AGAINST THE STCG OF AY-2004-05) AS FOLLOWS : CAPITAL GAIN ON SALE OF DEPRECIABLE ASSET RS.30,65,000/- LESS : BROUGHT FORWARD LONG TERM CAPITAL LOSS OF ASSESSMENT YEAR 2002-03 RS.9,95,442/- TAXABLE INCOME RS.20,69,558/- I.T.A. NO.7405/MUM/2012 3 THE LONG TERM CAPITAL LOSS OF AY 2002-03 WAS INCOR RECTLY SET OFF AGAINST THE STCG OF THE AY 2004-05, WHICH HAD RESULTED INTO UND ER STATEMENT OF INCOME OF RS.9,95,442/- AND SHORT LEVY OF RS,.4,75,758/- INCL UDING INTEREST U/S 234B OF THE IT ACT THUS, I HAVE A REASON TO BELIEVE THAT THE ASSESSEE HAD NOT MADE A FULL AND TRUE DISCLOSER IN THE RETURN OF INCOME. AS SUCH I HAVE REASON TO BELIEVE THAT THE INCOME OF RS.9,95,442/- CHARGEABLE TO TAX UNDER TH E PROVISIONS OF THE ITACT, 1961 HAD ESCAPED ASSESSMENT FOR AY 2004-05 AO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S.147 O F THE ACT ON 26.8.2011. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST A PPELLATE AUTHORITY DISPUTING THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS . LD. CIT(A) ANNULLED THE ASSESSMENT AFTER OBSERVING THAT THE REASONS ENUMERA TED BY AO FOR HIS ACTION OF RE- OPENING OF ASSESSMENT ARE NOT TENABLE AND JUSTIFIE D IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S ICICI HOME FINANCE CO.LTD V/S ACIT IN WRIT PETITION NO.430/2012 AND ALSO THE JU DGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT V/S KELVINATOR (INDIA) LTD (320 IT R 561). HENCE, DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. DR RELIED ON THE ORD ER OF AO AND WHEREAS THE LD AR SUPPORTED THE ORDER OF LD. CIT(A) AND ALSO SUBMITT ED THAT INITIATION OF REASSESSMENT PROCEEDINGS IS BARRED BY LIMITATION IN VIEW OF PRO VISO TO SECTION 147 OF THE ACT AS THE ASSESSMENT PROCEEDINGS HAS BEEN INITIATED AFTER EXP IRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE SUBMITTED THAT THE AO HAS RELIED ON HIS OWN RECORD AND STATED THAT THERE WAS FAILURE ON THE PART OF THE AS SESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL WHICH IS NOT FACTUALLY CORRECT. 4. ON PERUSAL OF THE REASONS RECORDED BY AO (SUPRA ) AND ALSO THE FACTS THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE VERY SAME ISSU E HAS BEEN CONSIDERED BY AO AS WELL AS BY LD. CIT(A) AND THE TRIBUNAL WHEN THE AS SESSMENT WAS MADE U/S 143(3) OF THE ACT. WE AGREE WITH THE LD. AR THAT THE AO HA S INITIATED RE-ASSESSMENT PROCEEDINGS ON THE BASIS OF THE SAME FACTS WHICH HAS BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THERE IS NO NEW FACTS WHI CH HAS COME TO THE KNOWLEDGE OF AO FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS. MO REOVER, RE-ASSESSMENT PROCEEDINGS HAS BEEN INITIATED AFTER EXPIRY OF MORE THAN FOUR Y EARS, AS IS EVIDENT FROM THE NOTICE ISSUED U/S 148 DATED 28.3.2011, WHICH IS ADMITTEDLY AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERA TION. HENCE, WE AGREE WITH THE LD. CIT(A) THAT THE ACTION OF AO WAS NOT JUSTIFIED. THEREFORE, WE UPHOLD THE ORDER OF LD. I.T.A. NO.7405/MUM/2012 4 CIT(A) IN ANNULLING THE ASSESSMENT BY REJECTING THE GROUND OF APPEAL TAKEN BY DEPARTMENT. 5. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28TH FEBRUARY, 2014 . 1 2 28TH FEBRUARY, 2014 * SD SD ( . . / B.R. BASKARAN ) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 28TH DAY OF FEBRARY,2014 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &% / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- CONCERNED 4. 8 / CIT CONCERNED 5. 9 &: , - : , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) - : , /ITAT, MUMBAI