CREATIVE TEXTILE MILLS P.LTD, MUMBAI V. ASST CIT CIR 6(2), MUMBAI

ITA 7480/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2884 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7480/MUM/2013 ASSESSMENT YEAR: 2005-06 CREATIVE TEXTILE MILLS PVT. LTD., 211, CAMA INDUSTRIAL ESTATE, SUN MILL COMPOUND, LOWER PAREL, MUMBAI-400013 PAN: AACCC0812F VS. ACIT- CIRCLE 6(2), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI DHARMESH SHAH REVENUE BY : SHRI SATYAPAL KUMAR (D R) DATE OF HEARING : 19.08.2015 DATE OF PRONOUNCEMENT : 28.10.2015 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-12 MUMBAI DATED 01.11.2013 IN RESPECT OF ASSESSMENT YEAR (AY) 2005-06 ON THE FOLLOWING GROUNDS OF APPEAL: 1'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE PRESENT ORDER PASSED U/S 154 IS BAD IN LAW, VOID AB INITIO AND IM PERMISSIBLE IN THE LAW. 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT APPEALS LEGALLY ERRED IN UPHOLDING THE ASSESSIN G OFFICER (AO) 2 ITA NO. 7480/M/13 CREATIVE TEXTILE MILLS PVT. LTD FOR SETTING- OFF OF THE LONG TERM CAPITAL GAIN WITH THE BUSINESS LOSS DETERMINED FOR THE RELEVANT ASSESSMENT YEAR AS PER THE ORDER PASSED U/S 250 OF THE INCOME TAX ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D THE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, W HO IS ENGAGED IN THE BUSINESS OF PROCESSING, MANUFACTURES AND EXPORT OF READYMADE GARMENTS & FABRIC, FILED ITS RETURN OF INCOME ON 30.10.2005 DECLARING TOTAL LOSS OF RS . 4,37,23,576/-. THE RETURN OF ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER GIV ING AN OPPORTUNITY OF HEARING, THE ASSESSMENT ORDER WAS PASSED ON 31.12.2007 DECLARING TOTAL LOSS OF ` . 2,29,98,454/-. 3. HOWEVER, THE AO MADE A RECTIFICATION OF THE ASS ESSMENT ORDER U/S 154 OF THE I.T. ACT IN ITS ORDER DATED 29.03.2012 ON THE PRETE XT THAT COMPUTATION OF LOSS HAS NOT BEEN ADJUSTED AGAINST THE CAPITAL GAIN AND THAT EXCESS LOSS HAS BEEN ALLOWED TO THE ASSESSEE AND THUS A SUM OF ` . 1,82,,65,501/- WAS ADDED ON ACCOUNT OF LTCG, AGAINST WHICH AN APPEAL WAS FILED BEFORE THE CIT(A ) ON THE GROUND, THE ORDER U/S 154 WAS BAD IN LAW, VOID, AB-INITIO AND WAS IMPERMI SSIBLE UNDER THE LAW. 4. HOWEVER, THE LD. CIT(A) UPHELD THE ORDER OF AO A ND DISMISSED THE APPEAL OF THE ASSESSEE IN THE IMPUGNED ORDER DATED 24.04.2012 AGAINST WHICH THE PRESENT APPEAL IS FILED. 5. WE HAVE HEARD THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AS WELL AS DEPARTMENTAL REPRESENTATIVE (DR) OF THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. DR OF THE REVENUE SUPPORTE D THE ORDER OF AUTHORITIES BELOW, THE LD. AR OF THE ASSESSEE RELIED UPON THE J UDGMENT REPORTED IN 82 ITR 50 (SC) TITLED AS T.S.BALARAM, ITO VS VOKART BROTHERS & OTHERS WHEREIN IT WAS HELD THAT MISTAKE APPARENT FROM THE RECORD MUST BE AN O BVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DR AWN PROCESS AND OF REASONING 3 ITA NO. 7480/M/13 CREATIVE TEXTILE MILLS PVT. LTD ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPI NIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FR OM THE RECORD. THE LD AR FURTHER RELIED UPON THE CASES OF CIT VS. VICTORIA M ILLS LTD. [153 ITR 733], CIT VS. BRITISH INSULATED CALENDERS LTD. [202 ITR 354], AD DL. SECOND ITO VS. C.J. SHAH [10 ITD 151 (TM) AND DCIT VS. SHRI HARSHAVARDAN HIMATSI NGKA [ITA NO. 1333 TO 1335/KOL/2012] (BOM. HIGH COURT). 6. IN DCIT (KOL.) VS. HARSHAVARDAN HIMATSINGKA , IT WAS HELD THAT THE ORDER PASSED BY THE AO U/S 154 OF THE ACT ADJUSTING THE B USINESS LOSS AGAINST CAPITAL GAIN IN TERMS OF PROVISIONS OF SECTION 71(1) OF THE ACT, WHEREIN ASSESSEE IS ENTITLED TO CARRY FORWARD THE BUSINESS LOSS WITHOUT ADJUSTING T HE SAME FROM CAPITAL GAIN OR THE SAME IS MANDATORY REQUIRED TO BE ADJUSTED. IT WAS FURTHER HELD BY CO-ORDINATE BENCH THAT THIS ASPECT OF PROVISION OF SECTION 71(1 ) OF THE ACT IS ALSO A SUBJECT MATTER OF DISPUTE AND THERE ARE CASE LAW BOTH IN FA VOUR AND AGAINST THE SAID PROPOSITION AS CONVASED. HENCE ISSUE IS DEBATABLE C ANNOT BE SAID THAT THERE WAS A MISTAKE APPARENT ON RECORD WHICH COULD BE RECTIFIED U/S 154 OF THE ACT, HENCE THE ORDER PASSED BY AO U/S 154 OF THE ACT IS NOT SUSTAI NABLE. 7. WE RESPECTFULLY FOLLOWING THE JUDGMENT OF CO-ORD INATE BENCH, WE HOLD THAT THE ORDER PASSED BY THE AO, WHICH WAS AFFIRMED BY T HE CIT(A) WHICH IS NOT SUSTAINABLE UNDER THE LAW AS THERE WAS APPARENT ERR OR ON THE FACE OF ORDER PASSED BY AO ON 31.12.2007. 8. WE HAVE FURTHER SEEN THAT IN THE REGULAR ASSESSM ENT, CERTAIN DISALLOWANCE/ADDITIONS WERE MADE BY THE AO WHICH WA S DELETED BY LD. CIT(A) IN FURTHER APPEAL AND THE APPEAL FILED BY THE DEPARTME NT AGAINST THE ORDER OF CIT(A) 4 ITA NO. 7480/M/13 CREATIVE TEXTILE MILLS PVT. LTD HAS ALSO BEEN DISMISSED BY THE TRIBUNAL AND THE CAS E HAD ALREADY TRAVELLED UP TO THE ITAT TILL THEN NO SUCH INTERFERENCE WAS DRAWN A T THE TIME OF REGULAR ASSESSMENT OR DURING THE APPELLATE STAGE. 9. IN VIEW OF THE ABOVE, WE HOLD THAT THE ORDER PAS SED BY THE AO U/S 154 WHICH WAS SUBSEQUENTLY UPHELD BY CIT(A) IS VOID, AB-INITI O AND THE SAME IS LIABLE TO BE SET-ASIDE AND IS NOT PERMISSIBLE UNDER THE LAW. 10. IN THE ABOVE, DISCUSSION, THE APPEAL FILED BY T HE ASSESSEE IS ACCEPTED. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 28 TH OF OCTOBER, 2015. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28.10.2015 SHARWAN P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.