M/s. MERCK LTD., MUMBAI V. DCIT CIR. 6(3), MUMBAI

ITA 7459/MUM/2004

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9455 (ITAT-MUMBAI)
• Duration Of Justice: 10 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-03-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 15-10-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Reassessment proceedings
• Section: 143(3); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER I .T.A. NO S . 7459 & 7460/MUM/2004 ( / ASSESSMENT YEAR S : 1998 - 99 & 1999 - 2000 M/S. MERCK LTD., (FORMERLY KNOWN AS E. MERCK (I) LTD., SHIV SAGARESTATE, A BLOCK, DR. A.B. ROAD, WORLI, MUMBAI - 400 018 / VS. THE DCIT, CIRCLE 6(3), MUMBAI ./ ./ PAN/GIR NO. : AAACE 2616F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SMT. AARATI VISSANJI SHRI AJIT C. SHAH / RESPONDENT BY : SHRI JEETENDRA KUMAR / DATE OF HEARING : 16 . 0 3 .2015 / DATE OF PRONOUNCEMENT : 20 .03 .2015 / O R D E R PER BENCH : THESE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A) - XXVI, MUMBAI DT. 9.8.2004 FOR ASSESSMENT YEAR S 1998 - 99 & 1999 - 2000. IN B OTH THESE APPEALS THE ASSESSEE HAS TAKEN COMMON GROUNDS OF APPEAL , THEREFORE, THEY WERE HEARD ITA. NO S . 7459 & 7460/M/04 2 TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE S AKE OF CONVENIENCE AND BREVITY. 2. BY THE FIRST GROUND FOR BOTH THE YEARS, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE OFFICER FOR REOPENING OF THE ASSESSMENT. 3. IT IS BROUGHT TO OUR NOTICE THAT VIDE NOTICE DT. 13.3.2003 ISSUED U/S. 148 OF TH E ACT, THE ASSESSING OFFICER SOUGHT TO REOPEN THE ASSESSMENT FOR A.Y. 1998 - 99. THE NOTICE IS AT PAGE - 81 OF THE PAPER BOOK. IN THIS CASE, THE ORIGINAL ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT VIDE ORDER DT. 8.2.2001. IN PURSUANCE OF THE NOTICE ISSUED U /S. 148 OF THE ACT, THE ASSESSEE VIDE LETTER DT. 28.3.2003 BROUGHT TO THE KNOWLEDGE OF THE AO THAT HE HAS NOT MENTIONED THE REASONS FOR REOPENING THE ASSESSMENT. THE ASSESSEE ALSO STATED THAT THE RETURN ALREADY FILED MAY BE CONSIDERED AS RETURN FILED IN P URSUANCE OF THE NOTICE U/S. 148 OF THE ACT. THE REASSESSMENT PROCEEDINGS WERE INITIATED AND THE REASSESSMENT ORDER WAS PASSED ON 26.2.2004. THE ASSESSEE WAS NEVER GIVEN THE REASONS FOR REOPENING OF THE ASSESSMENT. 3.1. THE ASSESSEE CHALLENGED THE VALIDI TY OF THE ASSESSMENT BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THE REASONS FOR REOPENING OF THE ASSESSMENT WERE NEITHER RECORDED BY THE AO NOR PROVIDED TO THE ASSESSEE DESPITE SUCH REQUEST MADE. THE LD. CIT(A) AT PARA - 3. 6 OF HIS ORDER DREW SUPPORT FROM THE FINDINGS OF EARLIER ASSESSMENT YEARS I.E. A.Y. 1996 - 97 AND 1997 - 98 WHEREIN THE FIRST APPELLATE AUTHORITY HAS DECIDED AGAINST THE ASSESSEE ON THE QUESTION OF LEGALITY AS WELL AS VALIDITY OF THE AOS ACTION FOR REOPENING THE ASSESSMENT. ITA. NO S . 7459 & 7460/M/04 3 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CLAIM AND IN PARTICULAR, THE LD. COUNSEL STRONGLY RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF FOMENTO RESORTS & HOT ELS LTD. , IN SLP NO. CC 5711/2007 BY WHICH THE HONBLE SUPREME COURT DISMISSED THE SLP FROM THE JUDGEMENT VIDE AN ORDER DT. 27.11.2006 IN I.T APPEAL NO. 71/2006 OF THE HIGH COURT OF BOMBAY AT PANAJI. THE HONBLE HIGH COURT HAD CONFIRMED THE ORDER OF THE TRIBUNAL IN ITA NOS. 1 & 5/PN/2001. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN ITA NO. 7626/M/04 IN THE CASE OF VIDESH SANCHAR NIGAM LTD. VS JCIT WHEREIN THE TRIBUNAL HAD THE OCCASION TO CONSIDER WHETHER THE SUPPLY OF THE REASONS TO THE ASSESSEE BY THE AO AFTER THE COMPLETION OF THE ASSESSMENT MAKES THE ASSESSMENT BAD IN LAW AND THE REASSESSMENT IS TO BE HELD AS INVALID. THE TRIBUNALS OBSERVATIONS AT PARA - 1 4.7 IS WORT H MENTIONING. COMING TO THE RELIANCE PLACED BY THE LD. DR IN THE CASE OF GUNNDER KAUR 102 ITD 189 (DEL). WE FIND THAT THE LEARNED SENIOR ADVOCATE, SHRI DINESH VYAS HAS RIGHTLY BROUGHT OUT THE LEGAL POSITION. IN THE CASE OF S. NARAYANANAPPA (SUPRA, THE HONBLE SUPREME COURT WAS CONSIDERING A SITUATION WHERE REASONS WERE SOUGHT AT THE TIME OF INITIATION OF PROCEEDINGS. UPTO THE STAGE OF INITIATION OF PROCEEDINGS, IT IS AN ADMINISTRATIVE ACT AND THE HONBLE SUPREME COURT HELD THAT PRIOR TO ISSUAL OF NOTI CE, THE AO IS NOT BOUND TO COMMUNICATE THE REASONS FOR REOPENING. ONCE THE ASSESSMENT PROCEEDINGS START BECOMES A QUASI JUDICIAL PROCEEDINGS AND IN SUCH SITUATION, THE AO IS BOUND TO ISSUE THE REASONS FOR REOPENING SHRI DINESH VYAS RIGHTLY RELIED ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF NEW BANK OF INDIA LTD. 236 ITR 679 WHEREIN IT IS HELD THAT THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF S. NARAYANAPPA IS NOT IN CONFLICT WITH THE PRINCIPLES LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (SUPRA). SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF K.M. BANSAL VS CIT 195 ITR 247 AT PAGE 261. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BIMAL PRASAD JAIN 23 4 ITR 435 AT PAGE 442 ITA. NO S . 7459 & 7460/M/04 4 (P&H) AS WELL AS IN THE CASE OF MITHESH KUMAR TRIPATHI 280 ITR 16 (ALL.). THUS, THE DECISION IN THE CASE OF GUNNDER KAUR IS NOT IN CONSONANCE WITH THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT AND HENCE WE ARE BOUND TO FOLLOW THE DE LHI HIGH COURT JUDGEMENT ON THE ISSUE. 5. THE TRIBUNAL AT PARA - 14.9 HAS FOLLOWED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF FORMENTO RESORTS & HOTES (SUPRA). 6. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUBMITTED THAT COMPLETING THE REASSESSMENT WITHOUT SUPPLYING THE REASONS FOR THE REOPENING OF THE ASSESSMENT HAS MADE THE REASSESSMENT ORDER WITHOUT JURISDICTION AND THE SAME NEED TO BE QUASHED. IN SUPPORT OF THE ORDER OF THE REVENUE AUTHORITIES, THE LD. DR DREW OUR ATTENTION TO THE LETTER DT. 16.7.2003 WRITTEN BY THE AO TO THE PRINCIPAL OFFICER OF THE ASSESSEE. 7. WE HAVE CAREFULLY PERUSED THE CONTENTS OF THIS LETTER WHICH IS PLACED AT PAGE - 3 OF THE PAPER BOOK. WE FIND THAT THIS LETTER IS NOTHING BUT A QUESTIONNAIRE SERVED UPON THE ASSESSEE. BY ANY STRETCH OF IMAGINATION, A QUESTIONNAIRE CANNOT REPLACE OR SUPPLEMENT THE SUPPLY OF REASONS TO THE ASSESSEE WHICH IN THE LIGHT OF THE JUDICIAL DECISIONS DISCUSSED HE REINABOVE IS SINE - QUA - NON FOR REASSESSMENT. FURTHER, THE LD. DR COULD NOT ADDUCE ANY EVIDENCE WHICH COULD SUGGEST THAT THE REASONS WERE ACTUALLY SUPPLIED TO THE ASSESSEE. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE JUDICIAL DECISIONS REFERRED TO HEREINABOVE, WE SET ASIDE THE ASSESSMENT ORDER FOR WANT OF JURISDICTION AND QUASH THE REASSESSMENT ORDER FOR BOTH THE YEARS UNDER CONSIDERATION. 7.1. AS WE HAVE QUASHED THE ASSESSMENT ORDERS FOR BOTH THE YEARS, WE DO NOT FIND IT NECESSARY TO GO INTO THE MERIT OF THE CASE. ITA. NO S . 7459 & 7460/M/04 5 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 20 TH MARCH, 2015 SD/ - SD/ - ( VIJAY PAL RAO ) (N.K. BILLAIYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 20 TH MARCH, 2015 . . ./ RJ , SR. PS / 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