DCIT, Mangalore V. M/s. HML Agencies Pvt. Ltd, Mangalore

MA 103/BANG/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6002 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 08-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SESHACHALA
• Assessee Lawyers: S VENKATESAN
• Section: 143(3); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER M.P. NO.103/BANG/2010 (IN ITA NO. 1209/BANG/2009) ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MANGALORE. : APPLICANT VS. M/S. HML AGENCIES (P) LTD., NO.201, VEEKAY TOWERS, KULUR BANGRA ROAD, KULUR, MANGALORE. : RESPONDENT APPLICANT BY : SHRI SESHACHALA, STANDING COUNSEL RESPONDENT BY : SHRI S. VENKATESAN, C.A. O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS MISCELLANEOUS PETITION IS PREFERRED BY THE RE VENUE AGAINST THE ORDER OF THE TRIBUNAL IN ITA NO.1209/BANG/2009 FOR THE ASSESSMENT YEAR 2005-06 DATED 30.6.2010. 2. THE CRUX OF THE ISSUE RAISED BY THE REVENUE IN I TS ORIGINAL APPEAL WAS THAT :- M.P. NO.103/BANG/10 PAGE 2 OF 8 THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF EXCESS PAYMENT TO LABOURERS AS INCENTIVE /SPEED MONEY AMOUNTING TO RS.33,20,886/-, BY RELYING ON THE DECI SION OF THE HON. KARNATAKA HIGH COURT IN THE CASE OF CIT V. KO NKAN MARINE AGENCIES [313 ITR 308], EVEN THOUGH THE ASSESSEE HA D FAILED TO PROVE THAT THE ENTIRE PAYMENT WAS MADE OUT OF BUSIN ESS EXPEDIENCY. 3. THE REVENUE HAD INSTITUTED THIS APPEAL AND RAISE D THE ABOVE MENTIONED ISSUE IN PURSUANCE OF THE ORIGINAL ASSESS MENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR THE A.Y. 2005-0 6 DATED 12.12.2007 AND THE SUBSEQUENT ORDER OF THE CIT(A) IN ITA NO.76/MNG /CIT(A) MNG/2007- 08 DATED 19.10.2009. AFTER HEARING BOTH THE PARTI ES, THE TRIBUNAL HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY CONFIRMING THE D ECISION OF THE LD. CIT(A) WHICH WAS IN CONFORMITY WITH THE RULING OF THE HON BLE JURISDICTIONAL HIGH COURT CITED SUPRA. 4. IN THIS MISCELLANEOUS PETITION, IT WAS SUBMITTED BY THE REVENUE THAT A SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSES SEE ON 17.1.2008 U/S. 132 OF THE ACT. SUBSEQUENTLY, NOTICE U/S. 153A OF THE ACT WAS ISSUED ON 23.9.2008 AND, ACCORDINGLY, ASSESSMENT WAS CONCLUDE D ON 4.12.2009. THIS FACT WAS, INADVERTENTLY, NOT BROUGHT TO THE NO TICE OF THE TRIBUNAL BY BOTH THE PARTIES AT THE TIME OF THE EARLIER HEARING [ITA NO. 1209/BANG/2009]. IN THE PROCEEDINGS U/S. 153A OF THE ACT, ALL THE IS SUES WHICH WERE SUBJECT MATTER OF THE EARLIER ASSESSMENT PROCEEDINGS U/S. 1 43(3) OF THE ACT WERE ALSO INCORPORATED. THE LD. STANDING COUNSEL, SHRI SESHACHALA, PRAYED THAT IN VIEW OF THE SPECIFIC PROVISIONS OF S.153A OF THE ACT AND THE RELATED ASSESSMENT ORDER DATED 4.12.09 WHICH STRIKES AT THE ROOT OF THE ISSUE OF JURISDICTION WITH RESPECT TO APPELLATE PROCEEDINGS OF THE ORDER PASSED U/S. M.P. NO.103/BANG/10 PAGE 3 OF 8 143(3) OF THE ACT DATED 12.12.2007. THE LD. STANDI NG COUNSEL, SHRI SESHACHALA, PRAYED THAT IN VIEW OF THE ABOVE MENTIO NED FACTS THERE WAS AN ERROR APPARENT ON THE FACE OF THE ORDER PASSED BY T HE TRIBUNAL DATED 3.6.2010, AND THE SAME SHOULD BE RECTIFIED AND NOT PERMITTED TO BE CONTINUED ON RECORD. TO DRIVE HOME HIS POINTS, THE LD. DR HAD PLACED STRONG RELIANCE ON THE FOLLOWING CASE-LAWS: (I) KANHAIYALAL LOHIA (DECD) BY LRS V. CIT (1962) 44 I TR 405 (SC) (II) V. JAGMOHAN RAO & ORS. V. CIT (1969) 75 ITR 37 3 (SC) (III) CIT V. SUN ENGINEERING WORKS (P) LTD. (1992) 198 ITR 297 (SC) (IV) JYOTSNA SURI V. INCOME TAX APPELLATE TRIBUNAL (2003) 179 CTR (SC) 265 (V) HONDA SIEL POWER PRODUCTS V. CIT (2007) 295 IT R 466 (SC) (VI) ACIT V. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (2008) 305 ITR 227. FURTHER, THE LD. STANDING COUNSEL CITED THE DECISIO N RENDERED BY THE HONBLE APEX COURT IN THE CASE OF SREE AYYANAR SPIN NING & WEAVING MILLS LTD. V. CIT (2008) 301 ITR 434 AND DREW OUR ATTENTI ON TO THE FOLLOWING PORTION OF THE ORDER (PAPER BOOK PAGE 60): 37. IN OUR JUDGMENT, THEREFORE, A PATENT, MANIFEST AND SELF- EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISC USSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT, CAN BE SAID T O BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRE CTED WHILE EXERCISING CERTIORARI JURISDICTION. AN ERROR CANNO T BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TR AVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMENT IS CORRECT OR NO T. AN ERROR APPARENT ON THE FACE OF THE RECORD MEANS AN ERROR W HICH STRIKES ON MERE LOOKING AND DOES NOT NEED LONG-DRAWN-OUT PR OCESS OF REASONING ON POINTS WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. SUCH ERROR SHOULD NOT REQUIRE ANY EXTRAN EOUS MATTER TO SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE O RIGINAL JUDGMENT IS ONE OF THE POSSIBLE VIEWS, THE CASE CAN NOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. M.P. NO.103/BANG/10 PAGE 4 OF 8 5. ON THE OTHER HAND, THE LD. AR ARGUED THAT THERE IS NO MISTAKE APPARENT ON THE FACE OF THE RECORD AND THERE IS NO REASON TO CORRECT OR MODIFY THE ORDER OF THE TRIBUNAL DATED 30.6.2010. RELIANCE WAS PLACED ON THE DECISION OF THE CASE ANIL KUMAR BHATIA V. ACIT (2010) 1 ITR (TRIB) 484 (DELHI). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS MINUTELY ON RECORD. FOR REFERENCE, WE HAVE REPRODU CED HEREINBELOW S. 153A OF THE ACT: 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 1 39, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN T HE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF A CCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER T HE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURN ISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF IN COME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B ), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESC RIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRES CRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APP LY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESS MENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING T O ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATION OF TH E SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE . (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APPEAL O R ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSME NT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE CO MMISSIONER: PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF S UCH ORDER OF ANNULMENT IS SET ASIDE.] EXPLANATION .FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, M.P. NO.103/BANG/10 PAGE 5 OF 8 ( I ) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTI ON 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; ( II ) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. THE SECOND PROVISO HIGHLIGHTED ABOVE CLEARLY SPECIF IES THAT ONLY THE ASSESSMENT OR REASSESSMENT PENDING RELATING TO THE SPECIFIC PERIOD OF SIX YEARS AS THE CASE MAY BE SHALL ABATE. THE ACT IS S ILENT WITH RESPECT TO APPELLATE PROCEEDINGS. THEREFORE, THE QUESTION OF ABATEMENT DOES NOT ARISE WITH RESPECT TO APPELLATE PROCEEDINGS. IN THI S CASE, THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) WAS PASSED ON 12.12.20 07 AND THE ASSESSMENT ORDER U/S. 153A WAS PASSED ON 4.12.2009. THE PROCEEDINGS U/S.153A WAS INSTITUTED ON 23.9.2008 I.E., MUCH LAT ER AFTER THE ORDER U/S. 143(3) DATED 12.12.2007 WAS PASSED. THEREFORE, IN T HIS CASE THE QUESTION OF ABATEMENT DOES NOT ARISE EVEN IN ASSESSMENT/RE-A SSESSMENT PROCEEDINGS. CONSIDERING THE FACTS OF THE CASE AND THE LEGAL PROPOSITIONS INVOLVED, WE ARE OF THE FIRM VIEW THAT THERE IS NO MISTAKE APPARENT ON THE ORDER PASSED BY THE TRIBUNAL DATED 30.6.2010 IRRESP ECTIVE OF THE FACT THAT NOTICE WAS ISSUED U/S. 153A OF THE ACT, PURSUANT TO WHICH AN ASSESSMENT ORDER WAS PASSED AT THE TIME OF ADJUDICATION BY THE TRIBUNAL OF THE ORDER PASSED U/S. 143(3)/250 OF THE ACT. HOWEVER NOW A PE CULIAR SITUATION HAS ARISEN DUE TO THE EXISTENCE OF TWO LIVE ORDERS - (I ) U/S. 143(3) AND THE OTHER (II) U/S. 153A OF THE ACT - ON THE ASSESSEE ON THE SAME ISSUE AND WITH RESPECT TO THE SAME ASSESSMENT YEAR. SINCE SECTION 153A IS PROVIDED WITH THE CLAUSE NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, IN THE CASE OF A M.P. NO.103/BANG/10 PAGE 6 OF 8 PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 13 2 THERE CAN BE LEGAL SANITY ONLY FOR THE ORDER PASSED U/S. 153A OF THE ACT. IN REGARD TO THE STATUTORY PROCESS OF APPELLATE PROCEEDINGS WITH RES PECT TO THE ORDER PASSED U/S. 143(3) OF THE ACT DATED 12.12.2007, IT APPEARS THERE TO BE A MISCHIEF IN THE ACT BECAUSE THE ACT DOES NOT PROVIDE AS HOW THE APPELLATE PROCEEDINGS ARE TO BE DEALT WITH IN SUCH CIRCUMSTANCE. THIS MIS CHIEF OF THE ACT CAN BE REMEDIED ONLY BY THE HONBLE HIGHER JUDICIARY OR BY AMENDING THE ACT. WE DO NOT HAVE THE POWERS UNDER THE ACT TO EFFACE ANY ORDER PASSED BY US AS PRAYED BY THE LD. STANDING COUNSEL. MORE OVER, THE ESSENCE OF MISCELLANEOUS PETITION IS THAT WE DO NOT HAVE THE J URISDICTION TO DECIDE THE APPEAL (ITA NO.1209/09), SINCE THE SUBJECT MATTER O F THE APPEAL WAS ALREADY CONSIDERED IN THE ASSESSMENT COMPLETED U/S. 153A PURSUANT TO SEARCH U/S. 132. THE RELEVANT GROUNDS (NO.3 & 4) IN THE M.P. READ AS UNDER: 3. THE ADJUDICATION BY THE APPELLATE AUTHORITIES O F THE ORDER PASSED U/S. 143(3) DATED 12.12.2007 IN VIEW OF THE SPECIFIC PROVISION OF SECTION 153A OF THE ACT AND THE SUBSEQ UENT SEARCH AND ASSESSMENT ORDER U/S. 153A OF THE ACT, IS AN ERROR WHICH IS APPARENT ON THE FACE OF THE RECORD AND THE SAME SHO ULD BE RECTIFIED AND NOT PERMITTED TO BE CONTINUED ON RECORD. 4. THE NON-CONSIDERATION OF THE SUBSEQUENT SEARCH D ATED 17.01.2008 AND THE ORDER U/S. 153A OF THE ACT DATED 04.12.2009 WOULD STRIKE AT THE ROOT OF THE MATTER WHICH IS A J URISDICTIONAL ISSUE AND THERE IS A MISTAKE APPARENT ON THE RECORD ESPEC IALLY WHEN THE M.P. NO.103/BANG/10 PAGE 7 OF 8 ORDER DATED 12.12.2007 PASSED U/S. 143(3) OF THE AC T CANNOT BE ACTED UPON IN VIEW OF SEARCH DATED 17.01.2008 AND T HE ORDER DATED 04.12.2009 PASSED U/S. 153A OF THE ACT. IF THE ABOVE PLEA OF THE REVENUE IS ACCEPTED, THE C IT(A)S ORDER WHICH IS IN FAVOUR OF ASSESSEE IS UNTOUCHED. FOR THIS REASON A LSO, THIS MISCELLANEOUS PETITION FILED BY THE REVENUE BECOMES AN EMPTY FORM ALITY AND THE SAME CANNOT BE ENTERTAINED. FURTHER, WHEN AN ORDER IS P ASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT, UNLESS AND OTHERWIS E BARRED BY LAW, THE APPELLATE PROCEEDINGS ARE SET INTO MOTION BY VIRTUE OF THE ACT, IF ONE OF THE PARTY OR EITHER PARTY PREFERS AN APPEAL. LIMITATIO NS SPECIFIED UNDER THE ACT ALSO COME INTO PLAY. IN SUCH CIRCUMSTANCES, TRIBUN AL IS DUTY BOUND TO ADJUDICATE THE CASE BEFORE IT ASSUMING JURISDICTION . 7. IT IS PERTINENT TO NOTE THE CIRCULAR NO.7 OF 200 3 ISSUED BY THE CBDT DATED 5.9.2003 REPORTED IN 263 ITR 107 PARA 65.5 WH ICH FORTIFIES OUR AFORESAID VIEW AND IS HEREBELOW REPRODUCED FOR REFE RENCE: 65. THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. ASSE SSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YE AR FALLING WITH THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE D ATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUI SITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. IT IS CLARIFIED THAT THE APPEAL, REVISION OR RECTIFICATION PROCEEDINGS P ENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION SHALL NOT ABATE. SAVE AS OTHERWISE PROVIDED THE PROPOSED SECTION 153A, SECTION 153B AND SECTION 153 C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMEN T OR REASSESSMENT MADE UNDER SECTION 153A. IT IS ALSO C LARIFIED THAT ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A SHALL BE SUBJECT TO INTEREST, PENALTY AND PROSECUTION, IF AP PLICABLE. IN THE ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN AS SESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABL E AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. M.P. NO.103/BANG/10 PAGE 8 OF 8 8. LAST BUT NOT THE LEAST, WE APPRECIATE THE SINCER E EFFORTS PUT IN BY THE LD. STANDING COUNSEL, MR. SESHACHALA AND MR. S. VEN KATESAN, THE LD. AR FOR THE EXTENSIVE ARGUMENTS PUT FORTH. 9. IN THE RESULT, THE MISCELLANEOUS PETITION OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF JANUARY, 2011. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 7 TH JANUARY, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.