The Villupuram District Co-op. Bank Limited, Villupuram V. DCIT, Villupuram

ITA 772/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4244 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 29-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M N MAURYA
• Assessee Lawyers: K RAVI
• Keywords: Opportunity of being heard; Difference of opinion; Change of opinion
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , ! , ! & BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.767, 768 TO 772/MDS/2017 /ASSESSMENT YEARS: 2008-09, 2008-09 TO 2012-13 THE VILLUPURAM DISTRICT CENTRAL CO- OPERATIVE BANK LTD., NO.2, HOSPITAL ROAD, VILLUPURAM-605 602. [PAN: AAAJV 0332 Q] VS. THE DY. COMMISSIONER OF INCOME TAX, VILLUPURAM CIRCLE, VILUPURAM. ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.K.RAVI, ADV. )*( + /RESPONDENT BY : MR.M.N.MAURYA, CIT + /DATE OF HEARING : 19.06.2017 + /DATE OF PRONOUNCEMENT : 19.06.2017 / O R D E R PER BENCH : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), PUDUCHERRY, I N ITA NO.187/CIT(A)-PDY/2013-14 & ITA NOS.39 TO 43/CIT(A) -PDY/2015-16 DATED 20.03.2017 FOR THE AYS 2008-09, 2008-09 TO 20 12-13. ITA NOS.767, 768 TO 772/MDS/2017 :- 2 -: 2. SHRI M.N.MAURYA, CIT, REPRESENTED ON BEHALF OF T HE RESPONDENT AND SHRI K.RAVI, ADV., REPRESENTED ON BEHALF OF THE APP ELLANT. 3. ITA NO.768/MDS/2017 IS AN APPEAL FILED BY THE A SSESSEE FOR THE AY 2008-09 AGAINST THE ORDER OF THE LD.CIT(A), PUDUCHE RRY, IN RESPECT OF ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT. ITA NO.767/MDS/2017 IS AN APPEAL FILED BY THE ASSESSEE FOR THE AY 2008-09 AGAINST THE ORDER OF THE LD.CIT(A), PUDUCHERRY, IN RESPECT OF ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147. IT WAS SUBMITTED BY THE LD.A R IN RESPECT OF THE ITA NO.767/MDS/2017, THE ASSESSEE HAD FILED RETURN OF I NCOME FOR THE RELEVANT AY ON 29.09.2008 AND THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S.143(3) ON 28.12.2010 WHEREIN THE AO HAD MADE CE RTAIN DISALLOWANCES IN RESPECT OF DEDUCTION U/S.36(1)(VIIA) OF THE ACT. IT WAS A SUBMISSION THAT THE SAID ASSESSMENT ORDER WAS RE-OPENED BY ISS UANCE OF NOTICE U/S.148 ON 20.03.2014. THE LD.AR DREW OUR ATTENTION TO THE ASSESSMENT ORDER DATED 26.03.2015 AT PAGE NO.2 WHEREIN THE REA SONS HAVE BEEN EXTRACTED FOR THE PURPOSE OF RE-OPENING. IT WAS A SUBMISSION THAT RE- OPENING HAVING BEEN DONE BY ISSUANCE OF NOTICE U/S. 148 ON 20.03.2014 AND THE SAME WAS BEYOND THE PERIOD OF FOUR YEARS. I T WAS A SUBMISSION THAT A PERUSAL OF THE REASONS RECORDED CLEARLY SHOW ED THAT WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) ON 28. 10.2010, THE AO HAD CONSIDERED THE DEDUCTION U/S.36(1)(VIIA) OF THE ACT AND THE RE-OPENING WAS DONE ONLY FOR THE PURPOSE OF ENHANCING THE DISA LLOWANCE ON A CHANGE OF OPINION. IT WAS A SUBMISSION THAT THERE WAS NO FRESH INFORMATION ITA NOS.767, 768 TO 772/MDS/2017 :- 3 -: AVAILABLE WITH THE AO FOR THE PURPOSE OF RE-OPENING AND EVEN A PERUSAL OF THE RE-OPENING, REASONS RECORDED DID NOT SHOW THAT THERE WAS ANYTHING TO SHOW THAT THE ASSESSEE HAD NOT FULLY AND TRULY DISC LOSED ALL THE FACTS NECESSARY FOR THE COMPLETION OF HIS ASSESSMENT. IT WAS A SUBMISSION THAT THE REASONS RECORDED AND THE RE-OPENING BEING ONLY ON A CHANGE OF OPINION THAT TOO BEYOND THE PERIOD OF FOUR YEARS FR OM THE END OF THE AY, THE RE-OPENING WAS BAD IN LAW AND LIABLE TO BE QUAS HED. 4. IN REPLY, THE LD.DR SUBMITTED THAT THE AO HAS GI VEN THE REASONS FOR THE RE-OPENING. IT WAS A SUBMISSION THAT COMPUTATI ON OF THE DISALLOWANCES HAD BEEN WRONGLY DONE BY THE AO IN TH E ASSESSMENT ORIGINALLY U/S.143(3) ON 28.08.2012. IT WAS A FURT HER SUBMISSION THAT THE ASSESSEE HAS ALSO NOT RAISED ANY OBJECTION ON THE R EASONS RECORDED BUT HAD PARTICIPATED IN THE RE-ASSESSMENT PROCEEDINGS. IT WAS A SUBMISSION THAT THE ASSESSEE HAVING NOT FURNISHED ANY OBJECTIO NS ON THE REASONS RECORDED SPECIFICALLY, IT IS CLEAR THAT THE ASSESSE E HAD AGREED TO THE JURISDICTION AND THE RE-OPENING. IT WAS A SUBMISSI ON THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE REASONS RECORDED BY THE AO FOR THE PURPOSE OF RE-OPENING OF THE ASSESSMENT CLEARLY SHOWS THAT RE-OPENING HAS BEEN DONE BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT AY. IN SUCH CAS ES, IT IS ABSOLUTELY REQUIRED THAT FOR THE PURPOSE OF RE-OPENING, THERE MUST BE SOME FRESH ITA NOS.767, 768 TO 772/MDS/2017 :- 4 -: EVIDENCE OR INFORMATION AVAILABLE WITH THE AO, WHIC H IS THE FOUNDATION FOR THE FORMATION OF OPINION THAT THE INCOME OF THE ASS ESSEE HAS ESCAPED ASSESSMENT. THIS SHOULD BE COUPLED ALONG WITH THE REQUIREMENT THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY OF MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN TH E PRESENT CASE, FOR THE AY 2008-09, A PERUSAL OF THE REASONS RECORDED SHOWS THAT NEITHER FRESH INFORMATION WAS IN THE POSSESSION OF THE AO NOR THE AO HAS RECORDED ANYWHERE THAT THE INCOME OF THE ASSESSEE ESCAPED AS SESSMENT BY STATING THE REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY OF MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT AY. THIS BEING SO, WE ARE OF THE VIEW THAT THE RE-OPENING BY THE AO UP HELD BY THE LD.CIT(A) IS UNSUSTAINABLE AND THE RE-OPENING HAS BEEN DONE O NLY ON THE BASIS OF A CHANGE OF OPINION, WHICH IS IMPERMISSIBLE. IN THES E CIRCUMSTANCES, THE RE- OPENING OF THE ASSESSMENT IS HELD TO BE BAD IN LAW AND CONSEQUENTLY QUASHED. CONSEQUENTLY, THE ASSESSMENT ORDER U/S.14 3(3) DATED 26.03.2015 STANDS QUASHED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE AY 2008-09 IS STANDS ALLOWED. ITA NO.768/MDS/2017 FOR THE AY 2008-09 : 7. THIS APPEAL RELATES TO THE AY 2008-09 AGAINST TH E ORDER OF THE LD.CIT(A) IN CONFIRMING THE DISALLOWANCE OF THE DED UCTION U/S.36(1)(VIIA) ITA NOS.767, 768 TO 772/MDS/2017 :- 5 -: OF THE ACT AND ENHANCE BY RESTRICTING THE DEDUCTION U/S.36(1)(VIIA) BY THE LD.CIT(A). IT WAS SUBMITTED BY THE AR THAT LD.CIT( A) HAD NOT CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSEE IN RESPECT OF THE ENHANCEMENT PROPOSED BY THE LD.CIT(A) BY RESTRICTING THE DEDUCT ION U/S.36(1)(VIIA) OF THE ACT. IT WAS A SUBMISSION THAT ON MERITS THE WH OLE ISSUE OF DEDUCTION U/S.36(1)(VIIA) ITSELF HAS NOT BEEN CONSIDERED IN I TS RIGHT PERSPECTIVE. IT WAS A SUBMISSION THAT LD.CIT(A) HAS BLINDLY APPLIED THE RATIO OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF M/S.LAKSHMI VILAS BANK LTD. VS. ACIT WITHOUT CONSIDERING THE FACT OF THE ASSESSEES CASE . IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE IN RESPECT OF THE DEDUCTION U/S.36(1)(VIIA) COULD BE RESTORED TO THE FILE OF THE LD.CIT(A) FOR RE-ADJUDICATION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS WORTHWHILE TO MENTION HERE THAT IN THE EARLIER PORTION OF THIS OR DER IN ITA NO.767/MDS/2017, WE HAVE ALREADY QUASHED THE RE-OPE NING OF THE ASSESSMENT FOR THE AY 2008-09 FOR THE PURPOSE OF RE STRICTING THE DEDUCTION U/S.36(1)(VIIA) OF THE ACT. A PERUSAL OF THE ORDER OF THE LD.CIT(A), IN THE PRESENT APPEAL CLEARLY SHOWS THAT THE LD.CIT(A) HAS ONLY CONFIRMED THE ORDER OF THE AO IN THE REGULAR ASSESS MENT AND HAS ALSO CONFIRMED HIS PROPOSAL FOR ENHANCEMENT BY RESTRICTI NG DEDUCTION LIABLE U/S.36(1)(VIIA) OF THE ACT WITHOUT DEALING WITH THE OBJECTIONS RAISED BY THE ASSESSEE. THIS BEING SO, IN THE INTEREST OF NATURA L JUSTICE, THE ENTIRE GAMUT OF THE CLAIM OF DEDUCTION U/S.36(1)(VIIA) IS RESTORED TO THE FILE OF ITA NOS.767, 768 TO 772/MDS/2017 :- 6 -: THE LD.CIT(A) FOR RE-ADJUDICATION DE NOVO AFTER GRA NTING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE AY 2008-09 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.769/MDS/2017 FOR THE AY 2009-10: 10. THIS APPEAL RELATES TO THE AY 2009-10. IT WAS SUBMITTED BY THE LD.AR THAT FOR THE RELEVANT AY, THE ASSESSEE HAD FI LED HIS RETURN OF INCOME AND THE SAME WAS U/S.143(3) ON 28.10.2010. IT WAS A SUBMISSION THAT IN THE CASE OF THE ORIGINAL ASSESSMENT THE ASSESSEES CLAIM OF DEDUCTION U/S.36(1)(VIIA) OF THE ACT HAD BEEN RESTRICTED. IT WAS A SUBMISSION THAT THE ASSESSMENT WAS RE-OPENED BY ISSUANCE OF NOTICE U/S.148 ON 20.03.2014. IT WAS A SUBMISSION THAT THE RE-OPENING WAS DONE FOR THE PURPOSE OF RE-WORKING THE DEDUCTION U/S.36(1)(VIIA) OF THE ACT. IT WAS A SUBMISSION THAT THE RE-OPENING WAS DONE ON A CHANGE OF OPINION AND THE SAME WAS LIABLE TO BE ANNULLED. 11. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE OR DER OF THE AO & THE LD.CIT(A). IT WAS SUBMITTED BY THE LD.DR THAT IN T HE PRESENT CASE, THE RE- OPENING WAS WITHIN THE PERIOD OF FOUR YEARS AND CON SEQUENTLY THE RE- OPENING WAS VALID. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FOR THE AY 2009-10 BEING THE YEAR UNDER APPEAL THE NOTICE U/S.148 HAS BEEN ISSUED ON 28.03.2014 AND CONSEQUENTLY THE SAME IS WITHIN THE PERIOD OF FOUR YEARS. ITA NOS.767, 768 TO 772/MDS/2017 :- 7 -: A PERUSAL OF THE REASONS RECORDED FOR THE PURPOSE O F RE-OPENING CLEARLY SHOWS THAT THERE HAS BEEN AN ERROR IN THE COMPUTATI ON OF THE DEDUCTION U/S.36(1)(VIIA). ADMITTEDLY, THE RE-OPENING FOR TH E PURPOSE OF RESTRICTING THE ALLOWANCE WHICH HAS BEEN GRANTED IN EXCESS HAS RESULTED IN INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. IN VIEW OF THE EXPLANATION-1 AND ALSO EXPLANATION-2(C) TO SEC.147, THE RE-OPENING HA S BEEN DONE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT AY, WE ARE OF THE VIEW THAT THE RE- OPENING IS VALID. 13. IT WAS FURTHER SUBMITTED BY THE LD.AR THAT THE NOTICE ISSUED U/S.143(2) REFERRED TO THE RETURN FILED BY THE ASSE SSEE ON 28.09.2009 AND THE NOTICE HAVING BEEN ISSUED ON 15.09.2014, THE N OTICE WAS BARRED BY LIMITATION AND THE CONSEQUENT ASSESSMENT WAS LIABLE TO BE ANNULLED. 14. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE OR DERS OF THE AO AND THE LD.CIT(A). 15. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSEE HAS FILED HIS ORIGINAL RETURN OF INCOME ON 28.09.20 09. WHEN THE ASSESSEE WAS SERVED WITH THE NOTICE U/S.148, THE ASSESSEE HA D RESPONDED VIDE A LETTER DATED 17.04.2014 REQUESTING TO TREAT THE RET URN ALREADY FILED ON 28.09.2009 AS RETURN FILED IN RESPONSE TO THE NOTIC E ISSUED U/S.148 OF THE ACT. THIS BEING SO, THE ASSESSEE VIDE HIS LETTER D ATED 17.04.2014 HAD REQUESTED FOR THE TREATMENT OF THE RETURN DATED 28. 09.2009 AS A RETURN TO THE RESPONSE TO THE NOTICE ISSUED U/S.148 OF THE AC T. ONLY AFTER THAT THE ITA NOS.767, 768 TO 772/MDS/2017 :- 8 -: AO HAS ISSUED THE NOTICE U/S.143(2) ON 15.09.2014. IN THE SAID NOTICE, AS THE RETURN WAS DATED 28.09.2009, HE HAD REFERRED TO THE SAID DATE. IN FACT THE SAID RETURN DATED 28.09.2009 IS THE RETURN WHICH IS TO BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT AS THE SAM E HAS BEEN TREATED AS THE RETURN IN RESPONSE TO THE NOTICE U/S.148 BY THE ASSESSE BY THE ISSUANCE OF LETTER DATED 17.04.2014. THIS BEING SO , WE ARE OF THE VIEW THAT THE NOTICE ISSUED U/S.143(2) IS NOT BARRED BY LIMITATION. 16. IT WAS FURTHER SUBMITTED BY THE LD.AR THAT ON M ERITS IN RESPECT OF DEDUCTION U/S.36(1)(VIIA) OF THE ACT THE SUBMISSION IN RESPECT OF ITA NO.768/MDS/2017 MAY BE CONSIDERED. 17. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE OR DERS OF THE AO & THE LD.CIT(A). 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN I TA NO.768/MDS/2017 ON MERITS WE HAVE RESTORED THE ISSUE OF THE COMPUTA TION OF THE DEDUCTION ADMISSIBLE U/S.36(1)(VIIA) TO THE FILE OF THE LD.CI T(A) FOR DE NOVO RE- ADJUDICATION. ON SIMILAR LINES, THE ISSUE IN RESPE CT OF THIS AY IS ALSO RESTORED TO THE FILE OF THE LD.CIT(A) FOR DE NOVO R E-ADJUDICATION AFTER GRANTING THE ASSESSE ADEQUATE OPPORTUNITY OF BEING HEARD. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE AY 2009-10 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.767, 768 TO 772/MDS/2017 :- 9 -: ITA NOS.770 & 771/MDS/2017 FOR AY 2010-11 & 2011-12 : 20. ITA NO.770/MDS/2017 IS AN APPEAL FILED BY THE A SSESSE FOR THE AY 2010-12 AND ITA NO.771/MDS/2017 IS AN APPEAL FILED BY THE ASSESSE FOR THE AY 2011-12. IT WAS FAIRLY AGREED BY BOTH THE S IDES THAT THE SUBMISSION IN REGARD TO THE AY 2009-10 IN ITA NO.75 9/MDS/2017 WOULD APPLY TO BOTH ITA NOS.770 & 771/MDS/2017. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN R ESPECT OF THE RE- OPENING OF THE ASSESSMENT AS ALSO THE ISSUANCE OF N OTICE U/S.143(2) FOR BOTH THE AYS 2010-11 & 2011-12 IN ITA NOS.770 & 771 /MDS/2017, THE SAME STANDS UPHELD. FOR THE REASONS SPECIFIED IN O UR ORDER IN ITA NO.769/MDS/2017 ON MERITS, THE ISSUE OF THE DEDUCTI ON U/S.36(1)(VIIA) IS RESTORED TO THE FILE OF THE LD.CIT(A) FOR RE-ADJUDI CATION DE NOVO. 22. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E FOR THE AYS 2010-11 & 2011-12 ARE PARTLY ALLOWED FOR STATISTICAL PURPOS ES. ITA NO.772/MDS/2017 FOR THE AY 2012-13: 23. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ONLY ISSUE WAS THE CONFIRMATION OF THE ORDER OF THE AO AND ENHANCEMENT DONE BY THE LD.CIT(A) IN RESPECT OF THE CLAIM OF DEDUCTION U/S. 36(1)(VIIA) OF THE ACT. IT WAS FAIRLY AGREED THAT IN LINE WITH THE FINDING ON MERITS FOR THE AY 2009- 10 IN ITA NO.769/2017, THE ISSUE ON MERITS WAS TO B E RESTORED TO THE FILE OF THE LD.CIT(A) FOR RE-ADJUDICATION. ITA NOS.767, 768 TO 772/MDS/2017 :- 10 -: 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS T HE ISSUE OF DEDUCTION U/S.36(1)(VIIA) OF THE ACT HAS BEEN RESTORED TO THE FILE OF THE LD.CIT(A) FOR DE NOVO ADJUDICATION IN ITA NO.769/MDS/2017, ON SIM ILAR LINES, THIS ISSUE IS RESTORED TO THE FILE OF THE LD.CIT(A) FOR RE-ADJ UDICATION DE NOVO. 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE AY 2012-13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 26. IN THE RESULT, ITA NO.767/MDS/2017 STANDS ALLOW ED, ITA NOS.768 TO 772/MDS/2017 ARE STANDS PARTLY ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 19, 201 7, AT CHENNAI. SD/- SD/- ( ) ( S. JAYARAMAN ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 2 /DATED: JUNE 19, 2017. TLN + )34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 ) /DR 3. 6 ( ) /CIT(A) 6. /GF