MULTIPLE IMAGES, MUMBAI V. ITO 18(1)(3), MUMBAI

ITA 958/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4507 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: K GOPAL A R MS NEHA PARANJ
• Keywords: Reopening of assessment; Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.958/M/2016 ASSESSMENT YEAR: 2009-10 M/S. MULTIPLE IMAGES, 10-A, DHANRAJ INDUSTSRIAL ESTATE, S.J. MARG, LOWER PAREL (E), MUMBAI 400 013 PAN: AABFM 0372N VS. THE INCOME TAX OFFICER 18(1)(3), PIRAMAL CHAMBERS, LOWER PAREL, MUMBAI - 400012 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI K. GOPAL, A.R. MS. NEHA PARANJ, A.R. REVENUE BY : SHRI SUMAN KUMAR, D.R. DATE OF HEARING : 28.05.2018 DATE OF PRONOUNCEMENT : 02.08.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 01.01.2016 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE VARIOUS GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER: 1. (I) COMMISSIONER OF INCOME TAX (A) FAILED TO AP PRECIATE FOLLOWING FACTS; THE ASSESSING OFFICER FAILED TO PROVIDE INSPECTION OF DOCUMENTS HELD / RELIED UPON FOR RE-OPENING ASSESSMENT U/S. 147/148 AND ALS O FAILED TO ADDRESS OBJECTIONS RAISED BY THE APPELLANT COMPANY FOR RE-O PENING THE ASSESSMENT. (II) THE ASSESSING OFFICER FAILED TO OBTAIN PRIOR P ERMISSION OF CIT BEFORE ISSUING NOTICE U/S. 147 / 148. ITA NO.958/M/2016 M/S. MULTIPLE IMAGES 2 IN VIEW OF THE ABOVE ORDER PASSED BY ASSESSING OFFI CER U/S. 143(3) R.W.S. 147 MAY BE CONSIDERED AS BAD-IN-LAW AND VOID. 2. COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMI NG ADDITION OF RS. 11,03,027/- OUT OF ALLEGED BOGUS PURCHASES OF RS. 4 4,12,110/- BEING ADDITIONS MADE BY 4.0. WHILE PASSING ORDER U/S. 143 (3) R.W.S. 147. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE A CTION OF THE AO OF NOT PROVIDING INSPECTION OF DOCUMENTS H ELD/RELIED UPON FOR REOPENING ASSESSMENT UNDER SECTION 147/148 AND ALSO FAILED TO ADDRESS THE OBJECTIONS RAISED BY THE ASSESSEE FOR REOPENING THE ASSESSMENT. 4. THE FACTS IN BRIEF ARE THAT RETURN WAS FILED ON 12.09.2009 DECLARING INCOME OF RS.8,89,240/- FOLLOWED BY SCRUTINY PROCEEDINGS WHICH CULMINATED IN PASSING OF ASSESSME NT ORDER UNDER SECTION 143(3) OF THE ACT ON 14.10.2011 DETERMI NING THE TOTAL INCOME AT RS.9,07,230/-. THEREAFTER, THE C ASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION R ECEIVED FROM DGIT(INV.) VIDE LETTER DATED 26.12.2013 THAT ASSE SSEE IS THE BENEFICIARY OF A HAWALA RACKET OPERATING IN THE MARKET AND ACCORDINGLY AFTER ISSUING A NOTICE UNDER SECTION 14 8 OF THE ACT ON 28.01.2014. THE SAID NOTICE WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 04.02.2014 SUBMITTING THAT THE JUR ISDICTION RESTS WITH THE ITO 18(1)(3) AND ALSO POINTING OUT V ARIOUS OTHER DEFECTS IN THE SAID NOTICE. IT IS ALSO SUBMITTED T HAT SUBJECT TO THE OBJECTIONS RAISED BY THE ASSESSEE IN THE SAID L ETTER THE RETURN FILED UNDER SECTION 139(1) ON 12.09.2009 MAY B E TREATED AS RETURN FILED IN RESPONSE TO THIS NOTICE. THEREAFTER, AGAIN THE INTIMATION WAS SENT TO THE PRESENT ITO AN D HE AGAIN ISSUED NOTICE UNDER SECTION 148. THEREAFTER, THE ASS ESSEE VIDE LETTER DATED 09.04.2014 REQUESTED THE AO TO SUPP LY ITA NO.958/M/2016 M/S. MULTIPLE IMAGES 3 REASON FOR REOPENING. THEREAFTER, THE ASSESSEE FILE D OBJECTIONS ON 28.04.2014 AFTER RECEIVING THE REASON RECORDED FOR REOPENING THE ASSESSMENT AND ALSO NOTICE UNDER SECTION 143(2) OF THE ACT. ACCORDING TO THE ASSESSEE, THE A O HAS NOT DISPOSED OF THE OBJECTIONS FILED BY THE ASSESSEE AG AINST REASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 14 8 OF THE ACT. 5. IN THE APPELLATE PROCEEDINGS BEFORE THE LD CIT(A ), THE ASSESSEE CHALLENGED THE NON DISPOSAL OF OBJECTIONS BY THE AO BEFORE FRAMING THE ASSESSMENT BY WAY OF SPEAKING OR DER. HOWEVER, THE LD. CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE BY HOLDING THAT THE OBJECTIONS AGAINST RE - ASSESSMENT PROCEEDINGS ARE INVALID HAVING CONSIDER ED THE VARIOUS CONTENTIONS AND THE SUBMISSIONS AS MADE DUR ING THE APPELLATE PROCEEDINGS. 6. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT A O SUPPLIED THE COPY OF REASONS ALONG WITH NOTICE UNDE R SECTION 143(2) OF THE ACT FOR WHICH THE ASSESSEE FILED OBJE CTIONS ON 28.04.2014. THE LD. A.R. SUBMITTED BEFORE US THAT IT IS WRONG ON THE PART OF THE AO TO HOLD THAT ASSESSEE HAS RAI SED OBJECTIONS AFTER THE RECEIPT OF NOTICE UNDER SECTIO N 143(2) OF THE ACT AND NOT FOR THE NOTICE ISSUED UNDER SECTION 148 REOPENING THE ASSESSMENT PROCEEDINGS. THE LD. A.R. SUBMITTED THAT THE NON DISPOSAL OF OBJECTIONS FILED BY THE ASSESSEE AGAINST REOPENING OF ASSESSMENT PROCEEDING S GOES TO THE ROUTE OF THE JURISDICTION OF THE AO BY RELYING UPON THE DECISION OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO & OTHERS (2003) 259 ITR 19 (SC). THE LD. A.R. FURTHER RELIED ON THE ITA NO.958/M/2016 M/S. MULTIPLE IMAGES 4 DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F BAYER MATERIAL SCIENCE PVT. LTD. VS. DCIT (2016) 382 ITR 33 3 (BOM.) AND SUBMITTED BEFORE THE BENCH THAT THE REASSESSMEN T PROCEEDINGS WERE BEING WITHOUT JURISDICTION AND SHO ULD BE QUASHED. 7. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDE R OF AUTHORITIES BELOW AND SUBMITTED THAT THE CASE OF TH E ASSESSEE WAS REOPENED BY THE AO AFTER FOLLOWING THE DUE PROC ESS LAID DOWN UNDER THE ACT AND THEREFORE THE FIRST APPELLAT E AUTHORITY HAS RIGHTLY DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND OF JURISDICTION. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND PURSING THE MATERIAL ON RECORD INCLUDING THE DECISIONS RELIED U PON BY THE ASSESSEE, WE FIND THAT THE ORDER OF THE AO THAT A SSESSEE HAS FILED OBJECTIONS TO THE INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTION 148 OF THE ACT WHICH WERE NOT DISPOSE D OF BY THE AO BEFORE FRAMING THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. IN OUR OPINION, T HE DISPOSAL OF OBJECTIONS IS OF PARAMOUNT IMPORTANCE AND GOES T O THE ROOT OF THE ASSESSMENT. THE NON DISPOSAL OF OBJECTIONS BY THE AO IS A SERIOUS DEFECT WHICH IS INCURABLE AND THE ASSE SSMENT WILL HAVE GO IN THAT EVENT. IN THE CASE OF GKN DRIVESHAF TS (INDIA) LTD. VS. ITO & OTHERS (SUPRA) THE HONBLE SUPREME COU RT HAS HELD THAT THE AO HAS TO DISPOSE OF THE OBJECTIONS I F FILED BY THE ASSESSEE BY WAY OF SPEAKING ORDER BEFORE PROCEEDING WITH THE ASSESSMENT. HOWEVER, IN THE PRESENT CASE THERE HAS B EEN NO DISPOSAL OF OBJECTIONS FILED BY THE ASSESSEE. THE C ASE OF THE ASSESSEE IS FURTHER FORTIFIED BY THE DECISION OF TH E HONBLE ITA NO.958/M/2016 M/S. MULTIPLE IMAGES 5 BOMBAY HIGH COURT IN THE CASE OF BAYER MATERIAL SCI ENCE PVT. LTD. VS. DCIT (SUPRA) WHEREIN THE HONBLE COURT HAS H ELD THAT PASSING A DRAFT ASSESSMENT ORDER WITHOUT HAVING DIS POSAL OF OBJECTIONS FILED BY THE ASSESSEE TO THE REASONS REC ORDED IN SUPPORT OF THE NOTICE THE DRAFT ASSESSMENT ORDER WA S NOT SUSTAINABLE BEING WITHOUT JURISDICTION. SIMILAR RAT IO HAS BEEN LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF KSS PETRO PVT. LTD. VS. ACIT IN ITA NO.224 OF 2014 (B OM. HC), CIT VS. TUPPERWARE INDIA PVT. LTD. (2016) 234 TAX MAN 494 (DEL.) AND DCIT VS. NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT IN ITA NO.4964/M/2014 DATED 28.10.2 016. CONSIDERING THE FACTS OF THE ASSESSEES CASE IN THE LIGHT OF THE RATIO LAID DOWN BY THE DECISIONS OF APEX COURT, JURI SDICTIONAL COURT AND OTHER JUDICIAL FORUM, WE ARE OF THE CONSID ERED VIEW THAT THE ASSESSMENT FRAMED BY THE AO IS WITHOUT JUR ISDICTION AND CANNOT BE SUSTAINED. WE ACCORDINGLY QUASH THE PROCEEDINGS U/S 147 OF THE ACT AND ALSO THE CONSEQU ENT ORDER. 9. SINCE WE HAVE ALLOWED THE APPEAL ON LEGAL ISSUE, THE GROUNDS RAISED ON MERITS NEED NOT TO BE ADJUDICATED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.08.2018. SD/- SD/- (PAWAN SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 02.08.2018. * KISHORE, SR. P.S. ITA NO.958/M/2016 M/S. MULTIPLE IMAGES 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.