DCIT, CC-VIII, KOLKATA, Kolkata V. M/s Fortune Vyapaar Pvt Ltd., Kolkata

ITA 825/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0844 (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.821, 823, 825 & 829KOL/2014 M/S.KARVA AUTOMART.PVT. LTD. & ORS. AY 2010-11 , 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. 821/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. KARVA AUTOMART PVT. LTD. (PAN: AABCK9553C) 33/1, N. S. ROAD, KOLKATA-700 001. APPELLANT RESPONDENT & I.T.A. NO. 823/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. CARAVAN VYAPAAR PVT. LTD. (PAN: AACCC6766A) 33/1, N. S. ROAD, KOLKATA-700 001. APPELLANT RESPONDENT & I.T.A. NO. 825/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. FORTUNE VYAPAAR PVT. LTD. (PAN: AAACF9202A) 2, CLIVE GHAT STREET, KOLKATA-700 001. APPELLANT RESPONDENT & I.T.A. NO. 829/KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. MISSION VYAPAAR PVT. LTD. (PAN: AAECM4087E) 33/1, N. S. ROAD, KOLKATA-700 001. APPELLANT RESPONDENT DATE OF HEARING 25.10.2017 DATE OF PRONOUNCEMENT 06.12.2017 2 ITA NO.821, 823, 825 & 829KOL/2014 M/S.KARVA AUTOMART.PVT. LTD. & ORS. AY 2010-11 FOR THE APPELLANT SHRI KALYAN NATH, SR. DR FOR THE RESPONDENT SHRI V.N.PUROHIT, AR ORDER PER BENCH THESE FOUR APPEALS I.E. ITA NOS. 821, 823, 825 & 829/KOL/2014 ARE FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-C ENTRAL-I, KOLKATA DATED 21.02.2014, 19.02.2014, 19.02.2014 AND 19.02.2014 RESPECTIVELY FOR AY 2010-11. BOTH THE SIDES AGREED THAT THE ASSESSEES IN THESE APPEALS ARE PRI VATE LIMITED COMPANIES AND THE ISSUE IN THESE APPEALS IS SIMILAR/ IDENTICAL, THEREFORE, ALL THE FOUR APPEALS CAN BE DISPOSED OF BY A COMMON ORDER. HENCE, WE TREAT ITA NO. 821/KOL/2014 (M/S. KARVA AUTOMART PVT. LTD.) AS THE LEAD CASE AND THE RESULT OF THE ADJUDICATION WI LL BE FOLLOWED IN THE OTHER THREE 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 ) . ACCORDING TO THE AO, THE ASSESSEE WAS A BOGUS ENTITY AND HE DID NOT ACCEPT THE RETURN FILED BY THE ASSESSEE. RESULTANTLY, HE DID N OT RAISE ANY DEMAND AGAINST THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL 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 REV ENUE IS IN APPEAL BEFORE US. 3. WE NOTE THAT THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, AND HAS FILED ITS RETURN OF INCOME , WHICH WAS NOT ACCEPTED BY THE AO ON THE FINDING THAT IT IS BOGUS COMPANY. ACCORDING TO THE LD. AR, SUBSEQUENT TO THIS ASSESSMENT YEAR, THE RETURN OF INCOME FOR THE SUBSE QUENT ASSESSMENT YEARS UP TO A.Y.2016- 17 HAS BEEN ACCEPTED BY THE AO. IN ORDER TO BUTTRES S THIS FACT THE LD. AR DREW OUR ATTENTION TO PAGE 2 OF THE PAPER BOOK WHEREIN A CHART IS GIV EN WHICH IS REPRODUCED AS UNDER :- 3 ITA NO.821, 823, 825 & 829KOL/2014 M/S.KARVA AUTOMART.PVT. LTD. & ORS. AY 2010-11 4. FROM A PERUSAL OF THE ABOVE CHART IT IS EVIDE NT THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME AND ACCORDING TO THE LD. AR, THE AO HAS ACCE PTED THE RETURN FILED FORM A.Y.2011-12 TO A.Y.2016-17 AND DREW OUR ATTENTION TO THE FACT T HAT FOR ASSESSMENT YEAR 2014-15 THE ASSESSEE IN FACT RECEIVED REFUND OF RS.20,770/-; AND CONTENDED THAT THE IMPUGNED ACT ION OF THE AO IN NOT TREATING THE ASSESSEE AS AN ASSESSEE/ BOGUS ENTITY, WAS CONFINED TO THIS RELEVANT ASSESSMENT YEAR ONLY. IN THE LIGHT OF THE AFORESAID FACTS EMERGING FROM THE PAPER BOOK FILED BY THE ASSESSEE, THE LD. AR WANTED THE D EPARTMENT TO TAKE A CONSISTENT VIEW AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RA DHASOMY SATSANG VS CIT 193 ITR 321 (SC) WHEREIN IT WAS HELD THAT WHEN THE FACTS AND TH E LAW PERMEATING IN THE EARLIER YEARS ARE THE SAME, THEN A DIVERGENT VIEW SHOULD NOT BE TAKEN AND CONSISTENCY MUST BE FOLLOWED. WE FIND FORCE IN THE SAID ARGUMENTS OF THE LD. AR, WHE N THE FACT REMAINS SAME, THEN UNLESS THE FACTS AND LAW APPLICABLE IN THIS RELEVANT A.Y. IS D IFFERENT, THE AOS ACTION FOR EARLIER YEARS AND SUBSEQUENT YEARS MUST BE THE SAME AND IN LINE W ITH THE DOCTRINE OF CONSISTENCY. 5. THE HONBLE APEX COURT IN THE CASE OF RADHO SAMY SATSANG VS CIT(SUPRA) HELD THOUGH THE PRINCIPLES OF RES JUDICATA DO NOT APPLY TO THE INCOME TAX PROCEEDINGS, 4 ITA NO.821, 823, 825 & 829KOL/2014 M/S.KARVA AUTOMART.PVT. LTD. & ORS. AY 2010-11 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. 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 WH EN THE FACT REMAINS THAT IN SUBSEQUENT ASSESSMENT YEARS (I.E. A.Y.2011-12 TO 2016-17) THE RETURN OF INCOME OF THE ASSESSEE COMPANY HAS BEEN ACCEPTED BY THE AO AND EVEN REFUND HAS BEEN GIVEN TO ASSESSEE IN AY 2014-15, THE VIEW TAKEN BY AO IN THIS RELEVANT ASSE SSMENT YEAR BEFORE US NEED TO BE RE- EXAMINED. IF THE COMPANY NEEDS TO BE HELD AS BOGUS COMPANY, THERE SHOULD BE MATERIAL/EVIDENCE TO MAKE SUCH A FINDING WHICH THE AO HAS TO SPELL OUT IN THE ORDER. THE LD. CIT(A) HAS CATEGORICALLY HELD THAT THERE IS NO MATE RIAL ON THE BASIS OF WHICH THE AO COULD HAVE CONCLUDED THAT THE ASSESSEE COMPANY IS FAKE A ND BOGUS. IN THE LIGHT OF SUCH A FINDING 5 ITA NO.821, 823, 825 & 829KOL/2014 M/S.KARVA AUTOMART.PVT. LTD. & ORS. AY 2010-11 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 VARIOUS CASE LAWS (SUPRA), WE THEREFORE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE AO FOR DENOVO AD JUDICATION. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.12.2017 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. M/S. KARVA AUTOMART PVT. LTD., M/S. CARAVAN VYAPAAR PVT. LTD., M/S. FORTUNE VYAPAAR PVT . LTD. & M/S. MISSION VYAPAAR PVT. LTD. 3. THE CIT(A) , KOLKATA. 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY