The Parbhani District Central Co.op. Bank Ltd., V. Assistant Commissioner of Income-tax,

ITA 805/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2927 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDYA SAGAR R PATIL
• Keywords: Revised return
• Section: 143(3); 139(5); 148; 139

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.805/PN/2014 ASSESSMENT YEAR : 2007-08 THE PARBHANI DIST. CENTRAL CO-OP. BANK LTD., JAWAHARLAL NEHRU ROAD, PARBHANI 431 401. PAN : AAAAT6996R . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD. . RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI VIDYASAGAR R. PATIL, JCIT / DATE OF HEARING : 12.01.2016 / DATE OF PRONOUNCEMENT: 27.01.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS AGA INST THE ORDER OF CIT(A), AURANGABAD DATED 28.03.2014 RELATING TO ASS ESSMENT YEAR 2007-08 PASSED UNDER SECTION 143(3) R.W.S. 147 & 144A OF TH E INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 01. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S), AURANGABAD HAS ERRED IN FACTS AND ON LAW BY NOT DIRECTING THE LEARNED AS SESSING OFFICER TO ASSESS THE INCOME OF THE ASSESSEE BANK AT LOSS OF RS.5,41,23,9 10/-. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD AS WELL AS THE LEARNED ASSESSING OFFICER HAS AGREED THAT THE AMOUNT OF RS.8,16,57,000/- IS TAXED TWICE BUT IF THIS AMOUNT OF RS.8,16,57,000/- IS REDUCED FROM TAXABLE INCOME, SO AS TO AVOID THE EFFECT OF DOUBLE TAXATION, IT IS RESULTING IN ASSESSMENT OF INCOME A T LOSS OF RS.5,41,23,910/-, HENCE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURAN GABAD HAS ERRED IN TREATING THE REASSESSMENT U/S 147 AS BAD IN LAW. 02. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ), AURANGABAD HAS AGREED THAT THE RESULT OF REASSESSMENT U/S 147 IS A SSESSING INCOME AT LOSS OF 2 ITA NO.805/PN/2014 RS.5,41,23,910/-. BUT HE ERRED IN TREATING THE REA SSESSMENT U/S 147 AS BAD IN LAW MERELY BECAUSE IT WAS RESULTING IN LOSS OF RS.5,41, 23,910/-. 03. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ), AURANGABAD WHILE DECIDING THE APPEAL HAS AGREED THAT RS.8,16,57,000/ - IS TAXED TWICE. BUT IF THE AMOUNT OF RS.8,16,57,000/- IS REDUCED FROM THE TAXA BLE INCOME ASSESSED BY THE LEARNED ASSESSING OFFICER IN ORDER U/S 147 R.W.S. 1 43(3), IT IS RESULTING IN TO ASSESSING INCOME AT LOSS OF RS.5,41,23,910/-. HENCE, IN HIS ORDER THE COMMISSIONER OF INCOME TAX (APPEALS) MERELY STATED THAT AS THE GROUND NO. 1 IS ALLOWED AND NOTICE U/S 148 OF THE ASSESSMENT U/S 147 HAS BEEN HELD TO BE BAD I N LAW, THE DECISION IN RESPECT OF GROUND NO.2 ON MERITS CANNOT BE CONSIDERED WHILE GI VING EFFECT TO THIS APPEAL ORDER, WHICH IS WRONG & HENCE THE LEARNED ASSESSIN G OFFICER MAY BE DIRECTED TO ALLOW THE DEDUCTION OF RS.8,16,57,000/- & ASSESS TH E INCOME AT LOSS OF RS.5,41,23,910/-. 04. SUCH OTHER ORDERS BE PASSED AS MAY BE DEEMED FI T AND PROPER. 05. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER VARY AND / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED, THE RELEVANT FACTS OF THE CASE A RE THAT THE ASSESSEE IS A CO- OPERATIVE BANK ENGAGED IN THE BANKING BUSINESS. AS PER THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS FILED ITS RETURN OF INCOM E DECLARING A TOTAL INCOME OF RS.37,79,910/-. THEREAFTER, A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 15.03.2012 ON THE PREMISE THAT ASSESSEE HAS WRON GLY CLAIMED DEDUCTION UNDER SECTION 80P OF THE ACT AT RS.14,91,05,442/- W HICH IS NOT AVAILABLE TO THE CO-OPERATIVE BANK FROM ASSESSMENT YEAR 2007-08. TH E ASSESSING OFFICER ALSO ALLEGED THAT THE INCOME OF THE ASSESSEE HAS BEEN UN DER-REPORTED BY RS.5,02,547/- ON ACCOUNT OF INCOME-TAX AND RS.1,63, 043/- ON ACCOUNT OF LOSS ON SALE OF ASSET WRONGLY CLAIMED AS EXPENSES. ACCO RDINGLY, HE QUANTIFIED THE ESCAPED ASSESSMENT TO THE EXTENT OF RS.10,43,91,032 /-. THE ASSESSEE BANK FILED RETURN OF INCOME IN RESPONSE TO AFORESAID NOTICE UN DER SECTION 148 ON 22.10.2012 DECLARING A TOTAL INCOME OF RS.2,57,59,8 38/-. IN THE AFORESAID RETURN, IN RESPONSE TO NOTICE UNDER SECTION 148(2) OF THE ACT, THE ASSESSEE BANK MADE A FRESH CLAIM OF DEDUCTION UNDER SECTION 36(1) (VIIA) OF RS.12,70,52,000/- AND WITHDRAWN THE DEDUCTION UNDER SECTION 80P OF TH E ACT CLAIMED EARLIER. THEREAFTER, THE ASSESSEE ONCE AGAIN FILED YET ANOTH ER REVISED RETURN OF INCOME ON 09.11.2012 CLAIMING NET LOSS OF RS.5,41,51,778/- . IN THE AFORESAID REVISED RETURN OF INCOME CLAIMING LOSS, THE ASSESSEE CLAIME D THAT IT REALIZED THAT IT HAD ALREADY OFFERED INTEREST OF RS.8,16,57,000/- AS INC OME FOR TAXATION IN THE YEAR IN WHICH IT WAS ACCRUED. HOWEVER, THE SAME INCOM E WAS ALSO OFFERED AGAIN 3 ITA NO.805/PN/2014 DURING THE YEAR UNDER ASSESSMENT ON RECEIPT BASIS . IN ORDER TO RECTIFY THIS MISTAKE WHICH RESULTED IN DOUBLE TAXATION TO THE EX TENT OF RS.8,16,57,000/-, THE ASSESSEE BANK REVISED ITS RETURN EARLIER FURNISHED ITS RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT ON 09.11.2012 AND DECLARED L OSS OF RS.5,41,23,910/-. THE ASSESSING OFFICER REFUSED TO CONSIDER THE ASSES SEE CLAIM BASED ON THIS REVISED RETURN ON THE PREMISE THAT RE-ASSESSMENT UN DER SECTION 147 OF THE ACT CANNOT BE DETRIMENTAL TO REVENUE. IN SHORT, IT WAS THE CASE OF THE ASSESSEE THAT IT WAS A MISTAKE OF THE ASSESSEE TO OFFER THE INTER EST OF RS.8,16,57,000/- BOTH ON RECEIPT AND ACCRUAL BASIS AND AS THE SAME CANNOT BE TAXED AGAIN. HENCE, THE ASSESSEE CLAIM SHOULD BE CONSIDERED AS PER THE REVI SED RETURN OF INCOME. THE ASSESSING OFFICER DECLINED TO ACCEPT THE REVISED RE TURN AND PROCEEDED TO MAKE THE ASSESSMENT ON THE BASIS OF RETURN FILED DATED 2 2.10.2012 DECLARING A TOTAL INCOME OF RS.2,57,59,838/- IN RESPONSE TO NOTICE UN DER SECTION 148 OF THE ACT FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT. LTD. (1992) 198 ITR 297 (SC). HE ACCORDINGLY ASSESSED THE INCOME UNDER SECTION 143(3) R.W.S. 147 AT RS.2,75,05,225/- AFTER MAKING CERTAIN ADDITIONS TO THE INCOME OFFERED IN T HE RETURN DATED 22.10.2012. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) NEGATED TH E FINDINGS OF THE ASSESSING OFFICER THAT REVISED RETURN FILED BY THE ASSESSEE ON 09.11.2012 IS INVALID FOLLOWING THE RATIO LAID DOWN BY THE TRIBUN AL IN THE CASE OF NCE (P) LTD. VS. ACIT, (1998) 65 ITD 214 (CALCUTTA). THE R ELEVANT PARA OF THE ORDER OF THE CIT(A) IN THIS REGARD IS REPRODUCED AS UNDER :- 5.5.4 THE A.O. HAS TREATED THE REVISED RETURN FIL ED BY THE APPELLANT ON 09/11/2012 AS INVALID RETURN AND HELD THAT THOUGH V ALID RETURN FILED BY THE APPELLANT ON 22/10/2012 IN RESPONSE TO NOTICE U/S 148 IS ONLY TO BE CONSIDERED. ON THE OTHER HAND, THE APPELLANT HAS CLAIMED THAT AS PER PROVISI ONS OF SECTION 148, THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 IS TO BE TREATE D AS IF SUCH RETURN WAS REQUIRED TO BE FURNISHED U/S 139 AND THE PROVISIONS OF THIS ACT SHALL BE APPLICABLE. IN THIS REGARD, IT HAS BEEN NOTICED THAT RETURN FILED U/S 1 39(4) CANNOT BE REVISED U/S 139(5) OF THE ACT. HOWEVER, NO SUCH PROVISION IS THERE IN RESPECT OF RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. IN RESPECT OF THE AB OVE ISSUE, THE RATIO LAID DOWN IN THE CASE OF NCE (P) LTD. VS. ACIT (1998) 65 ITD 214 (CA LCUTTA) IS RELEVANT. IN THIS CASE, IT HAS BEEN HELD THAT NO REVISED RETURN U/S 1 39(5) CAN BE FILED WHERE ORIGINAL RETURN WAS FILED U/S 139(4), HOWEVER, IN SUCH A CAS E REVISED RETURN SO FILED MAY BE TREATED AS SECOND RETURN OR LATEST RETURN U/S 139(4 ) OF THE ACT. THE HONBLE ITAT WHILE DECIDING AS ABOVE HAS FOLLOWED THE DECISION I N THE CASE OF KUMAR 4 ITA NO.805/PN/2014 JAGDISHCHANDRA SINHA VS. CIT (1996) 220 ITR 67 (SC) . IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT TH E RETURN FILED BY THE APPELLANT AFTER NOTING MISTAKE IN THE FIRST RETURN FILED IN R ESPONSE TO NOTICE U/S 148 IS TO BE CONSIDERED AS CORRECTED SECOND LATEST RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. 5. THE CIT(A) ALSO HELD THAT CLAIM OF THE ASSESSEE THAT INTEREST HAS BEEN OFFERED TWICE WHICH HAS RESULTED IN DOUBLE TAXATION OF INCOME TO THE TUNE OF RS.8,16,57,000/- DESERVES TO BE ENTERTAINED. THE C IT(A) ALSO NOTED THAT AS PER REMAND REPORT OF ASSESSING OFFICER, THE ASSESSING O FFICER HAS FAIRLY ACCEPTED ON FACTS THAT THE AFORESAID AMOUNT OF INTEREST HAS ALREADY BEEN TAXED IN THE EARLIER YEARS AND HENCE TAXING THE SAME IN THE YEAR ONCE AGAIN UNDER APPEAL WOULD AMOUNT TO DOUBLE TAXATION. 6. THE CIT(A) FINALLY CONCLUDED AS A RESULT OF AFOR ESAID OBSERVATIONS THAT INSPITE OF WITHDRAWAL OF DEDUCTION UNDER SECTION 80 P(2)(A)(I) OF THE ACT AMOUNTING TO RS.14,91,05,442/-, THE DEDUCTION ADMIT TED UNDER SECTION 36(1)(VIIA) OF THE ACT AMOUNTING TO RS.12,70,52,000 /- COUPLED WITH WRONG TAXATION OF INCOME ON ACCOUNT OF INTEREST RS.8,16,5 7,000/- EXCEEDS THE ALLEGED ESCAPEMENT OF THE INCOME UNDER SECTION 147 OF THE A CT. THEREFORE, THE NET EFFECT OF SUCH OMISSIONS AND COMMISSIONS DOES NOT L EAD TO ANY RESULTANT ESCAPEMENT PER SE . THEREFORE, NOTICE UNDER SECTION 148 OF THE ACT A ND RE- ASSESSMENT UNDER SECTION 147 OF THE ACT IS A NULLIT Y AND BAD IN LAW AND REQUIRES TO BE QUASHED. THE OPERATIVE PARA OF THE CIT(A) FINDINGS ARE REPRODUCED HEREUNDER :- 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED THAT THE A. O. HAS INADVERTENTLY MENTIONED REASON RECORDED FOR REOPENING THE ASSESSMENT OF A.Y . 2008-09 INSTEAD OF THE REASON RECORDED BY THE A.O. FOR A.Y. 2007-08. THE ABOVE F ACT HAS BEEN POINTED OUT TO THE LD. AR OF THE APPELLANT WHO HAS ACCEPTED THE SAME V IDE LETTER DATED 28/01/2014 STATING THAT IN RESPONSE TO NOTICE U/S 148 ISSUED T HE CORRECT REASONS HAVE BEEN PROVIDED BY THE A.O. IT IS UNDISPUTED FACT THAT IN THE ORIGINAL RETURN FILED ON 31/10/2007, THE APPELLANT BANK HAS CLAIMED DEDUCTIO N U/S 80P(2)(A)(I) WHICH IS NOT ALLOWABLE TO THE APPELLANT BANK FOR A.Y.2007-08 IN VIEW OF AMENDMENT TO SECTION 80P(2)(A)(I) OF THE ACT. THE APPELLANT HAS INCORRE CTLY CLAIMED THE SAID DEDUCTION U/S 80P(2)(A)(I) AT RS.14,91,05,442/-. HOWEVER, ON PERUSAL OF THE SECOND RETURN FILED BY T HE APPELLANT IN RESPONSE TO NOTICE U/S 148 OF THE ACT, THE CONTENTION OF THE APPELLANT THAT WHILE FILING FIRST RETURN IN RESPONSE TO NOTICE U/S 148, THE AMOUNT OF RS.8,16,57,000/- WAS REMAINED TO BE DEDUCTED IN COMPUTATION OF INCOME AS THE SAME HA VE ALREADY BEEN TAXED IS FOUND 5 ITA NO.805/PN/2014 TO BE CORRECT. THE A.O. HAS ALSO FAIRLY ACCEPTED T HE ABOVE FACT IN HIS REPORT FILED DURING APPELLATE PROCEEDINGS. THEREFORE, WHILE DEC IDING GROUND NO.2 ON MERITS, IT HAS BEEN HELD THAT THE AMOUNT OF RS.8,16,57,000/- H AS BEEN TAXED TWICE. THEREFORE, IT HAS BEEN NOTICED THAT IF CORRECT INCO ME OF THE APPELLANT BANK IS CONSIDERED THEN THERE WILL BE NO ESCAPEMENT OF INCO ME AS THE INCOME OF THE APPELLANT SHALL RESULT INTO SUBSTANTIAL LOSS AS AGA INST THE INCOME RETURNED BY THE APPELLANT AT RS.NIL. THEREFORE, THE A.O. IS NOT JU STIFIED IN ISSUING NOTICE U/S 148 OF THE ACT. THE APPELLANT HAS INCORRECTLY CLAIMED DED UCTION U/S 80P(2)(A)(I) AT RS.14.91 CRORES IN ORIGINAL RETURN FILED, HOWEVER, IN THE SAID RETURN, THE APPELLANT HAS INCORRECTLY NOT CLAIMED DEDUCTION U/S 36(1)(VII A) AND HAS TAXED THE AMOUNT OF RS.8,16,57,000/- WHICH HAS ALREADY BEEN TAXED IN EA RLIER YEARS AND HAS ALSO MADE OTHER MISTAKES AS ARE EVIDENT FROM THE SECOND RETUR N FILED BY THE APPELLANT IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THE NET RES ULT OF THE SAID MISTAKES RESULTED INTO LOSS AND HENCE NO INCOME HAS EFFECTIVELY ESCAP ED ASSESSMENT. THE A.O. IS, THEREFORE, NOT JUSTIFIED IN ISSUING NOTICE U/S 148 OF THE ACT. THE REASSESSMENT U/S 147 IS, THEREFORE, BAD-IN-LAW AND HENCE THE SAME IS TO BE QUASHED. THE A.O. IS DIRECTED ACCORDINGLY. GROUND NO.1 IS ALLOWED. 7. ACCORDINGLY, THE CIT(A) SET-ASIDE AND QUASHED TH E RE-ASSESSMENT ORDER. AS A CONSEQUENCE, THE ORIGINAL RETURN DATED 13.11.2 007 ONLY SURVIVED AND LOSS CLAIMED AS PER REVISED RETURN WAS NOT ACCEPTED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN FURTHER APPEAL BEFORE US. 9. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE FAIRLY ACCEPTED BEFORE US THAT THE ISSUE IS SQUARELY COVERED AGAINS T THE ASSESSEE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SUN ENGINEERING WORKS PVT. LTD. (SUPRA). THE LD. DEPARTMENTAL REPRESENTA TIVE FOR THE REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHO RITIES BELOW. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND OURSELVES IN COMPLETE AGREEMENT WITH THE OBSERVATIONS MADE BY TH E CIT(A) AS NOTED ABOVE. IT IS SETTLED POSITION OF LAW THAT THE PROVISIONS O F SECTION 147/148 OF THE ACT ARE AVAILABLE ONLY FOR THE BENEFIT OF THE REVENUE. THE REOPENING CANNOT GIVE RISE TO REDUCTION IN TAX LIABILITY OF THE ASSESSEE. THE ASSESSEE CANNOT CLAIM RE- COMPUTATION OF INCOME OR REDOING OF AN ASSESSMENT A ND BE ALLOWED A CLAIM WHICH HE EITHER FAILED TO MAKE OR WHICH WAS OTHERWI SE REJECTED AT THE TIME OF ORIGINAL ASSESSMENT. IN VIEW OF THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS PVT. LTD. (SUPRA) , THE RETURN FILED IN 6 ITA NO.805/PN/2014 RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT AND CONSEQUENT REVISION THEREOF RESULTING IN DECLARATION OF INCOME AT A LES SER FIGURE THEN WHAT WAS FILED IN THE ORIGINAL RETURN IS NOT TENABLE IN LAW. WE F IND THAT IN THE ABSENCE OF ANY RESULTANT ESCAPEMENT OF INCOME, THE CIT(A) HAS RIGH TLY HELD THAT THE NOTICE UNDER SECTION 148 OF THE ACT AND CONSEQUENT RE-ASSE SSMENT IS A NULLITY AND BAD IN LAW. THUS, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND THEREFORE NO INTERFERENCE IS CALLED FOR. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF JANUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH JANUARY, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE