M/s Rites Ltd., Gurgaon V. ACIT, New Delhi

ITA 799/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53003 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-09-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 09-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Revised return
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.799/DEL/2011 ASSESSMENT YEAR : 1998-99 M/S RITES LTD., ACIT, PLOT NO.1, RITES BHAWAN, LTU, NBCC BLDG., SECTORT-29, GURGAON. V. SAKET, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACR AAACR AAACR AAACR- -- -0830 0830 0830 0830- -- -Q QQ Q APPELLANT BY : SHRI R.S. SINGHVI, C.A. RESPONDENT BY : SHRI SALIL MISHRA, SR. DR. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) LTU, NEW DELHI DATED 10.12.2010 FOR ASSESSMENT YEAR 19 98-99 ON AN ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE ACT. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE C IT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE CLAIM OF PAYMENT OF ARREARS OF SALARY ON THE BASIS OF RECOMMENDATION OF 5 TH PAY COMMISSION AND NOTIFICATION OF GOVT. OF INDIA DATED 4.3.1998. 2. THAT CLAIM BEING A GENUINE LIABILITY AND PERMISSIBLE DEDUCTION UNDER THE LAW AND AS SUCH THE CLAIM IS REQUIRED TO BE ALLOWED UNDER THE PROVISIONS OF ACT. ITA NO799/DEL/2011 2 3. THAT CLAIM IS ALSO IN CONFORMITY WITH OBSERVATION OF A SSESSING OFFICER AND CIT(A) FOR ASSESSMENT YEAR 1997-98 AND AS SUC H ADMISSIBILITY OF THE CLAIM IS NOT IN DISPUTE. 4. THAT THERE IS NO EVIDENCE OR FINDING THAT CLAIM IS OF DEBATABLE NATURE OR IN RESPECT OF WHICH TWO OPINIONS ARE POSSIBL E AND AS SUCH CLAIM IS PERMISSIBLE DEDUCTION UNDER THE PROVISIONS OF SEC. 154 OF THE INCOME TAX ACT, 1961. 5. THAT CLAIM IS SUPPORTED ON THE BASIS OF EVIDENCE ON REC ORD AND MERCANTILE SYSTEM BEING REGULARLY FOLLOWED, THERE IS N O BASIS FOR DISALLOWANCE AND REFERENCE TO VARIOUS CASE LAWS ARE IR RELEVANT AND OUT OF CONTEXT. 2. THAT THE ORDERS OF THE LOWER AUTHORITIES ARE NOT J USTIFIED ON FACTS AND SAME ARE BAD IN LAW. 2. IN THIS CASE, ASSESSMENT U/S 143(3) WAS COMPLETED ON 14. ,3.2001 AT A TOTAL INCOME OF `.23,95,62,720/-. IN THE SAID A SSESSMENT ORDER NEITHER THERE IS ANY DISCUSSION NOR ANY DISALLOWANCE ON ACCOUNT OF PROVISION ON ACCOUNT OF REVISION OF PAY AS PER 5 TH PAY COMMISSION RECOMMENDATIONS. THE ASSESSEE, THEREAFTER, FILED AN APP LICATION U/S 154 OF THE ACT ON 26.8.2009 WHEREIN IT WAS CONTENDED THAT IN VIEW OF LD CIT(A) XVI, NEW DELHIS ORDER IN APPEAL NO.121 O F 2000-01 DATED 20.2.2001 FOR ASSESSMENT YEAR 1997-98, THERE WAS A MISTAK E IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1998-99 IN SO FAR AS THE PROVISION OF `.2.50 CRORES ON ACCOUNT OF REVISION OF P AY AS PER 5 TH PAY COMMISSION RECOMMENDATIONS WAS NOT ALLOWED AS A DEDUCTIO N. FOLLOWING PORTION OF THE LD CIT(A)S ORDER FOR ASSESSME NT YEAR 19997- 98 WAS RELIED ON:- ITA NO799/DEL/2011 3 I HAVE CAREFULLY CONSIDERED THE PROS AND CONS RELATI NG TO THE ISSUE IN QUESTION AND I FIND THE ASSESSING OFFICERS INTER PRETATION OF THE FACTS TO BE CORRECT. THE PERIOD RELEVANT TO T HE INSTANT ASSESSMENT YEAR IS FINANCIAL YEAR 1996-97 WHEREAS THE NOTIFICATION OF THE GOVT. OF INDIA WITH REGARD TO T HE FIFTH PAY COMMISSION IS DATED 4.3.1998. AS MENTIONED BY THE ASSESSI NG OFFICER IN THE IMPUGNED ORDER, THE REVISED PAY REVISI ON HAS TO BE MADE ON THE BASIS OF DEPARTMENT OF PUBLIC ENTERPRISES O M DATED 24.10.97, VIDE WHICH GOVT.S DECISION OF PAY REVISION OF PUBLIC SECTOR EMPLOYEES WAS COMMUNICATED. ACCORDINGLY, THE CL AIM OF THE APPELLANT IS IN THE NATURE OF A CONTINENT LIABIL ITY. THE LIABILITY HAD NOT CRYSTALLIZED IN THE PERIOD RELEVANT TO THE I NSTANT ASSESSMENT YEAR 1997-98, SINCE THE APPELLANT HAD BEEN MAINTAINING THE BOOKS OF ACCOUNTS ON MERCANTILE BASIS. ACCORDINGLY, THE ASSESSING OFFICERS ACTION OF ADDING B ACK THE AFORE CITED SUM OF `.2.50 CRORES IS HEREBY CONFIRMED. AS REGARDS THE APPELLANTS CONTENTION THAT THE CLAIM MAY BE ALL OWED IN RESPECT OF ASSESSMENT YEAR 1998-99, IT IS TO BE STATED TH AT INSTANT APPEAL RELATES TO THE ASSESSMENT YEAR 1997-98. TH E ISSUE IN QUESTION CAN BE CONSIDERED BY THE ASSESSING OFFICER OR APPEALED AUTHORITIES ONLY IN RESPECT OF RELEVANT ASSESSME NT YEAR AND THAT TOO ALSO AFTER THE RECTIFICATION OF FACTS AN D AS SUCH NO DIRECTIONS CAN BE ISSUED WITH REFERENCE TO A SUBSEQUENT ASSESSMENT YEAR IN THE MATTER. ACCORDINGLY, THIS GROUND OF APPEAL IS HEREBY REJECTED. 3. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AS ACCORDING TO HIM ON THE BASIS OF LD CIT(A)S OR DER IT COULD NOT BE SAID THAT THERE WAS AN OBVIOUS AND PATENT MISTAK E WHICH COULD BE RECTIFIED U/S 154 OF THE ACT. A POINT ON WHICH TH ERE WAS NEITHER ANY ITA NO799/DEL/2011 4 EXAMINATION OF FACT NOR EXAMINATION ON LAW COULD NO T GIVE RISE TO A MISTAKE APPARENT FROM RECORD. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. CIT V. HERO CYCLES (P) LTD. 228 ITR 463 (SC). 2. T.S. BALRAMA ITO V. VOLKAT BROTHERS & OTHERS 82 ITR 5 0 (SC). 4. THE ASSESSING OFFICER, THEREFORE, REJECTED THE RECTI FICATION APPLICATION OF THE ASSESSEE VIDE HIS ORDER U/S 154 OF THE ACT DATED 21.10.2009. 5. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD C IT(A). 6. BEFORE THE LD CIT(A), IT WAS CONTENDED BY THE ASSESSE E THAT THERE WAS NO DISPUTE REGARDING GENUINENESS OF THE CLAIM AND BOTH THE ASSESSING OFFICER AND THE LD CIT(A) HAD OBSERVED THAT TH E CLAIM WAS RELEVANT FOR CONSIDERATION IN ASSESSMENT YEAR 1998-99 IN VIEW OF NOTIFICATION DATED 4.3.1998. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER MERELY ON TECHNICAL GROUND. THE C ASE LAWS REFERRED BY THE ASSESSING OFFICER IN FACT SUPPORTED THE CASE OF THE APPELLANT. EVEN OTHERWISE, THE ASSESSING OFFICER WAS UND ER LEGAL OBLIGATION TO APPLY RELEVANT PROVISIONS OF LAW AND DE TERMINE THE CORRECT ASSESSABLE INCOME. RELIANCE WAS PLACED ON THE AP EX COURTS DECISION IN THE CASE OF CIT V. MAHALAXMI SUGAR MILLS CO. LTD. 160 ITR 920. 7. IT WAS FURTHER CONTENDED THAT THE CLAIM WAS PERMISSI BLE DEDUCTION UNDER THE LAW AND THE SAME WAS IN THE NATUR E OF WAGE ARREARS AS PER NOTIFICATION OF GOVT. OF INDIA AND FA CTUAL AND LEGAL POSITION TO THE ABOVE EFFECT WAS NOT DISPUTED EVEN BY THE ASSESSING ITA NO799/DEL/2011 5 OFFICER. IN THE ABOVE FACTS, IT WAS CONTENDED THAT T HE ASSESSEE WAS ENTITLED TO THE RELIEF IN VIEW OF THE FOLLOWING CASE LAWS:- 1. KEDARNATH JUTE MFG. CO. LTD. V. CIT 82 ITR 363 (SC ). 2. MAHARANA MILLS PVT. LTD. V. ITO 36 ITR 350. 3. MAHINDRA MILLS LTD. V. AAC. 99 ITR 135 (SC). 4. UPASANA HOSPITAL & NURSING HOME V. CIT 120 TAXMAN 545 . 8. THE ASSESSEE ALSO PLACED RELIANCE ON CIRCULAR NO.14 O F CBDT DATED 11.4.1955 WHEREIN IT WAS STATED THAT THE ASSESSING OFFICER WAS REQUIRED TO GUIDE THE ASSESSEE IN RELATION TO ADMISSIBLE CLAIM. THE ASSESSING OFFICER WAS REQUIRED TO ASSESS THE CORRECT INCOME TO TAX. IF THE ASSESSEE WAS FOLLOWING A PARTICULAR METHOD OF ACCOUN TING AND OMITTED TO CLAIM THE DEDUCTION OR EXEMPTION WHICH H E WAS OTHERWISE ENTITLED TO, THE BOARD HAD EMPHASIZED THAT THE ASSESSIN G OFFICER SHOULD GUIDE THE ASSESSEE AS PER THE PROVISIONS OF THE ACT. EVEN THOUGH IN THE PRESENT CASE, THE ASSESSEE DID NOT REVISE TH E RETURN OF INCOME IN ACCORDANCE WITH THE PROVISION OF SECTION 13 9(5) OF THE ACT, THE CLAIM MADE BY IT THROUGH A LETTER WAS A PERFECTL Y LEGAL CLAIM SUPPORTED BY THE METHOD OF ACCOUNTING FOLLOWED BY TH E ASSESSEE. THUS, IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD W RONGLY REJECTED THE PETITION U/S 154 OF THE ACT. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) OPINED THAT IN THE APPEAL FOR ASSESSMENT YEAR 1997-98, THE THEN LD CIT(A) OBSERVED THAT THE ISSUE IN QUESTION COULD BE CONSIDERED BY THE ASSESSING OFFICER AND THE APPELLATE AUTHORITY ONLY IN RESPECT OF THE RELEVANT ASSESSMENT YEAR AND THAT ALSO AFTER DUE VERIFIC ATION OF FACTS. THUS, EVEN THE FACTS REQUIRED VERIFICATION. THE ASSESSEE COULD HAVE MADE THE SAID CLAIM BY FILING A REVISED RETURN. HOWE VER, THIS WAS NOT ITA NO799/DEL/2011 6 DONE. IN ANY CASE, THERE WAS NO MISTAKE APPARENT FRO M RECORD AS POINTED OUT BY THE ASSESSEE. IT WAS OPINED BY THE LD CIT (A) THAT THE OBSERVATION OF THE ASSESSING OFFICER THAT ALLOWABILITY O F THE PROVISION WOULD REQUIRE EXAMINATION OF FACT AND THEREFORE THE SAME CANNOT BE RECTIFIED U/S 154 OF THE ACT WAS CORRECT. RELIANCE WAS PLACED BY HIM ON THE DECISION OF THE ITAT CHENNAI BENCH IN THE CASE OF ACIT V. SUPER SPG. MILLS LTD. IN I.T.A. NO. 768/MDS/2008. FURTHER RELIANCE AS PLACED BY HIM ON THE HON'BLE PUNJAB & HARYANA HIGH COURTS DECISION IN THE CASE OF CIT V. RBL BANARSI DASS & CO. LTD. IN I.T.A. NO . 603/2006. 10. IT WAS FURTHER OPINED BY THE LD CIT(A) THAT AS TH E ASSESSEE DID NOT MAKE SUCH A CLAIM BY FILING A REVISED RETURN, TH E ASSESSEE WAS NOT ENTITLED TO SUCH A DEDUCTION AS PER THE HON'BLE SUPRE ME COURTS JUDGMENT IN THE CASE OF GOETZ INDIA LTD. REPORTED IN 284 ITR 323. THE LD CIT(A), THEREFORE, UPHELD THE ORDER U/S 154 OF TH E ACT PASSED BY THE ASSESSING OFFICER. 11. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE TRI BUNAL. 12. BEFORE US, LD AR FOR THE ASSESSEE IN ADDITION TO REI TERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW SUBMITTED T HAT THE APPELLATE ORDER OF THE LD CIT(A) FOR ASSESSMENT YEAR 19 97-98 WAS ACCEPTED BY THE ASSESSEE AND NO FURTHER APPEAL WAS FILE D BEFORE THE TRIBUNAL. IN THE FACTS OBTAINED IN THE PRESENT CASE, IT WAS CONTENDED BY HIM THAT THE ASSESSEE WAS ENTITLED TO THE RELIEF AS P ER THE RATIO OF THE FOLLOWING CASE LAWS:- 1. UPASANA HOSPITAL & NURSING HOME V. CIT 253 ITR 507 (K ER.). 2. SHAHBAD COOPERATIVE SUGAR MILLS LTD. V. DCIT 336 ITR 222 (P&H). 3. SONIA MAGGO V. CIT 336 ITR 227. ITA NO799/DEL/2011 7 13. THE LD DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 14. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE OBSERVE THAT THE LD CIT(A) XVI, NEW DELHI PASSED THE APPELLA TE ORDER FOR ASSESSMENT YEAR 1997-98 ON 20.2.2001 WHEREAS THE ASSESSMENT FOR ASSESSMENT YEAR 1998-99 WAS COMPLETED BY THE ASSESSING OFFIC ER ON 14.3.2001. THUS, THE ASSESSEE COULD HAVE MADE A CLAIM O F THE ARREARS OF WAGES DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YE AR 1998-99. IT DID NOT DO SO. AFTER MORE THAN 8 YEAR S, THE ASSESSEE MOVED A RECTIFICATION PETITION ON 26.8.2009. THIS FA CTUAL ASPECT OF THE CASE HAS NOT BEEN DEALT WITH BY THE AUTHORITIES BELOW. THE RECTIFICATION PETITION MOVED BY THE APPELLANT IS HOP ELESSLY TIME BARRED AND THE SAME COULD NOT HAVE BEEN ADJUDICATED UPON BY THE ASSESSING OFFICER. EVEN OTHERWISE IT IS QUITE OBVIOUS THAT A CL AIM WHICH HAS NOT BEEN MADE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMEN T PROCEEDINGS CANNOT GIVE RISE TO A MISTAKE APPARENT FRO M THE RECORD. IN THE ABOVE VIEW OF THE MATTER, WE FIND NO MERIT IN T HE APPEAL FILED BY THE ASSESSEE. WE REJECT ALL THE GROUNDS RAISED BY THE ASSE SSEE. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON THE 21ST D AY OF OCTOBER, 2011. SD/- SD/- (U.B.S. BEDI) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 21.10.2011. HMS ITA NO799/DEL/2011 8 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 29.9.2011 DATE OF DICTATION 18.10.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. 21.10.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH 21.10.2011 ITA NO799/DEL/2011 9