DCIT, CC-VIII, KOLKATA, Kolkata V. M/s Castle Commodities Pvt. Ltd., Kolkata

ITA 824/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0841 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: V N PUROHIT
• Keywords: Rule of consistency

Judgement Text

1 ITA NO.815, 817, 819, 820, 824 & 830KOL/2014 M/S.JAHANGIRABAD FINANCE CO.PVT. LTD. & ORS. AY 201 0-11 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE .., /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M.BALAGANESH, AM] I.T.A. NO. 815/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. JAHANGIRABAD FINANCE CO. PVT. LTD. (PAN: AABCJ 1460 H) 2, CLIVE GHAT STREET, KOLKATA-700 001. APPELLANT RESPONDENT & I.T.A. NO. 817/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. SWITO FINANCE & ESTATE PVT. LTD. (PAN: AABCS 0508 H) 71, PARK STREET, KOLKATA-700 016 APPELLANT RESPONDENT & I.T.A. NO. 819/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. MANI MARKETING & HOLDINGS PVT. LTD. (PAN: AABCM7440C) 8, CANNING STREET, KOLKATA-700 001. APPELLANT RESPONDENT & I.T.A. NO. 820/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. MULTIPLIER ENTERPRISES PVT. LTD. (PAN: AABCM 7023 R) 8, CANNING STREET, KOLKATA-700 001. APPELLANT RESPONDENT & 2 ITA NO.815, 817, 819, 820, 824 & 830KOL/2014 M/S.JAHANGIRABAD FINANCE CO.PVT. LTD. & ORS. AY 201 0-11 I.T.A. NO. 824/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. CASTLE COMMODITIES PVT. LTD. (PAN: AABCC2788H) 8, CANNING STREET, KOLKATA-700 001. APPELLANT RESPONDENT & I.T.A. NO. 830/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. MAHAVIR FINANCE LTD. (PAN: AACCM3074D) 71, PARK STREET, KOLKATA-700 016. APPELLANT RESPONDENT DATE OF HEARING 25.10.2017 DATE OF PRONOUNCEMENT 06.12.2017 FOR THE APPELLANT SHRI KALYAN NATH, SR. DR FOR THE RESPONDENT SHRI V.N.PUROHIT, AR ORDER PER BENCH THESE SIX APPEALS I.E. ITA NOS. 815, 817, 819, 820 , 824 AND 830/KOL/2014 ARE FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF LD. C IT(A)-CENTRAL-I, KOLKATA DATED 19.02.2014, 21.02.2014, 20.02.2014, 20.02.2014, 21. 02.2014 AND 20.02.2014 RESPECTIVELY FOR AY 2010-11. BOTH THE SIDES AGREED THAT THE ASS ESSEES IN THESE APPEALS ARE NON-BANKING FINANCIAL COMPANIES (NBFC) AND THE ISSUE IN THESE A PPEALS IS SIMILAR/ IDENTICAL, THEREFORE, ALL THE SIX APPEALS CAN BE DISPOSED OF BY A COMMON ORDER. HENCE, WE TREAT ITA NO. 815/KOL/2014 (M/S. JAHANGIRABAD FINANCE CO. PVT. L TD.) AS THE LEAD CASE AND THE RESULT OF THE ADJUDICATION WILL BE FOLLOWED IN THE OTHER FIVE CASES. 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 08.11.2010 FOR THE RE LEVANT ASSESSMENT YEAR 2010-11. THE AO DID NOT RECOGNIZE THE ASSESSEE AS AN ASSESSEE UNDER THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT ) ACT. ACCORDING TO THE AO, THE ASSESSEE WAS A BOGUS ENTITY AND HE DID NOT ACCEPT 3 ITA NO.815, 817, 819, 820, 824 & 830KOL/2014 M/S.JAHANGIRABAD FINANCE CO.PVT. LTD. & ORS. AY 201 0-11 THE RETURN FILED BY THE ASSESSEE. RESULTANTLY HE DI D NOT RAISE ANY DEMAND AGAINST THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO ALLOW THE APPEAL AND DIRECTED THE AO TO ACCEPT THE RETURN OF INCOME FILED BY THE ASSESSEE. AGGRIEVED BY THE DECISION OF THE LD. CIT( A) THE REVENUE IS IN APPEAL BEFORE US. 3. WE NOTE THAT THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSEE IS A NBFC, WHICH MEANS THAT HALF YEARLY FINANCIAL NEED TO BE DULY FI LED WITH THE RESERVE BANK OF INDIA. ACCORDING TO THE LD. AR, THE RETURN OF INCOME FOR T HE SUBSEQUENT ASSESSMENT YEARS UP TO A.Y.2016-17 HAS BEEN ACCEPTED BY THE AO AND EVEN RE FUNDS HAVE BEEN GIVEN TO THE ASSESSEE. IN ORDER TO BUTTRESS THIS FACT THE LD. AR DREW OUR ATTENTION TO PAGE 2 OF THE PAPER BOOK WHEREIN A CHART IS GIVEN WHICH IS REPRODUCED AS UNDER :- 4. FROM A PERUSAL OF THE ABOVE CHART IT IS EVIDE NT THAT THE AO HAS ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE A.Y.2011-12 TO A.Y.201 6-17; AND THAT ASSESSEE EVEN RECEIVED REFUND OF RS.10,22,110/- FOR A.Y.2014-15 AND RS.75,92,120 /- FOR A.Y.2016-17. IN THE LIGHT 4 ITA NO.815, 817, 819, 820, 824 & 830KOL/2014 M/S.JAHANGIRABAD FINANCE CO.PVT. LTD. & ORS. AY 201 0-11 OF THE AFORESAID FACTS EMERGING FROM THE PAPER BOOK FILED BY THE ASSESSEE, THE LD. AR WANTED THE DEPARTMENT TO TAKE A CONSISTENT VIEW AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RADHASOMY SATSANG VS CIT 193 ITR 321 (SC) WHEREI N IT WAS HELD THAT WHEN THE FACTS AND THE LAW PERMEATING IN THE EARLIER YEARS ARE THE SAME, THEN A DIVERGENT VIEW SHOULD NOT BE TAKEN AND CONSISTENCY MUST BE FOLLOWED. WE FIND FOR CE IN THE SAID ARGUMENTS OF THE LD. AR, WHEN THE FACT REMAINS SAME, UNLESS THE FACTS AND LA W APPLICABLE IN THIS RELEVANT A.Y. IS DIFFERENT, THE AOS ACTION FOR EARLIER YEARS AND SU BSEQUENT YEARS MUST BE THE SAME IN LINE WITH THE DOCTRINE OF CONSISTENCY. 5. THE HONBLE APEX COURT IN THE CASE OF RADHOS AMY SATSANG VS CIT(SUPRA) HELD THAT THOUGH THE PRINCIPLES OF RES JUDICATA DO NOT APPLY TO THE INCOME TAX PROCEEDINGS, PARTICULARLY WHEN EACH ASSESSMENT YEAR IS AN INDEPE NDENT UNIT, WHEN A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS H AS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITI ON TO BE CHANGED IN A SUBSEQUENT YEAR. 6. THE PRINCIPLE TO FOLLOW THE CONSISTENCY WAS EXPLAINED BY THE FULL BENCH IN THE CASE OF HOYSTEAD VS COMMISSIONER OF TAXATION [1926] AC 155 (PC). SPEAKING FOR THE JUDICIAL COMMITTEE, LORD SHIPS HAD STATED AT PAGE 165 AS UND ER :- 'PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO NS BECAUSE OF NEW VIEWS THEY MAY ENTERTAIN OF THE LAW OF THE CASE, OR NEW VERSIONS WHICH THEY PRE SENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHE R OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERTAIN CIRCUMSTANCES. IF THIS WERE PERMI TTED LITIGATION WOULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT IS A PRINCIPL E OF LAW THAT THIS CANNOT BE PERMITTED, AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCI PLE. THIRDLY, THE SAME PRINCIPLE-NAMELY, THAT OF A SETTING TO REST RIGHTS OF LITIGANTS, APPLIES T O THE CASE WHERE A POINT, FUNDAMENTAL TO THE DECISION, TAKEN OR ASSUMED BY THE PLAINTIFF AND TRA VERSABLE BY THE DEFENDANT, HAS NOT BEEN TRAVERSED. IN THAT CASE ALSO A DEFENDANT IS BOUND B Y THE JUDGMENT, ALTHOUGH IT MAY BE TRUE ENOUGH THAT SUBSEQUENT LIGHT OR INGENUITY MIGHT SUG GEST SOME TRAVERSE WHICH HAD NOT BEEN TAKEN.' THESE OBSERVATIONS WERE MADE IN A CASE WHERE TAXATI ON WAS IN ISSUE. THIS COURT IN PARASHURAM POTTERY WORKS CO.LTD. V. I TO [1077] 106 ITR 1 AT P.10 STATED : AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT, STALE ISSU ES SHOULD NOT BE REACTIVATE BEYOND PARTICULAR STAGE AND THAT LAPSE OF TIME MUST BE REACTIVATED BE YOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICI AL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 5 ITA NO.815, 817, 819, 820, 824 & 830KOL/2014 M/S.JAHANGIRABAD FINANCE CO.PVT. LTD. & ORS. AY 201 0-11 7. HOWEVER, WE NOTE THAT THIS ASPECT OF THE MAT TER HAS NOT BEEN DWELT INTO BY THE AO AND THIS ASPECT NEED TO BE EXAMINED AS TO WHY THE AO TR EATED THE ASSESSEE COMPANY DIFFERENTLY ONLY IN THIS ASSESSMENT YEAR NEED TO BE EXAMINED. SINCE IN THE EARLIER ASSESSMENT YEARS AND SUBSEQUENT ASSESSMENT YEAR THE ASSESSEES RETURN OF INCOME HAS BEEN ACCEPTED AND EVEN REFUNDS HAVE BEEN ALLOWED, TREATING THE ASSESSEE AN NBFC COMPANY AS BOGUS NEED TO BE SUPPORTED BY MATERIAL/EVIDENCE WHICH THE AO HAS NOT SPELT OUT. THE LD. CIT(A) HAS CATEGORICALLY HELD THAT THERE IS NO MATERIAL ON THE BASIS OF WHICH IT CAN BE CONCLUDED THAT THE ASSESSEE IS FAKE AND BOGUS. IN THE LIGHT OF SUCH A FINDING OF LD. CIT(A), AND THE SUBSEQUENT ACTION OF THE AO ACCEPTING THE RETURN OF INCOME OF THE ASSESSEE UP TO A.Y.2016-17 AND IN THE LIGHT OF RULE OF CONSISTENCY AS EXPOUNDED BY VA RIOUS CASE LAWS (SUPRA) WE THEREFORE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND R EMAND THE MATTER BACK TO THE FILE OF THE AO FOR DENOVO ADJUDICATION. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 6TH DECEMB ER, 2017 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6TH DECEMBER, 2017 RG.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CENTRAL CIRCLE-VIII KOLKATA 2 RESPONDENT . ALL ASSESSEES. (JAHANGIRABAD FINAN CE CO. PVT. LTD., SWITO FINANCE & ESTATE PVT. LTD., MANI MARKETING & HOLDIN G PVT. LTD., MULTIPLIER ENTERPRISES PVT. LTD., CASTLE COMMODITIE S PVT. LTD. & MAHAVIR FINANCE LTD. 3. THE CIT(A) , KOLKATA. 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY