Income Tax Officer, Ward-6(1)(2), Bangalore V. M/s. shastha pharma Laboratories Pvt Ltd , Bangalore

MA 380/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0069 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 13-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H ANIL KUMAR
• Section: 143(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER M.P. NOS. 380/BANG/2018 & 05/BANG/2019 (IN ITA NO. 1862/BANG/2017) ASSESSMENT YEAR : 1999 - 2000 THE INCOME TAX OFFICER, WARD 6 (1) (2), BANGALORE. VS. M/S. SHASTHA PHARMA LABORATORIES (P) LTD., NO. 16/2, O.V.R. ROAD, BASAVANGUDI, BANGALORE 560 004. PAN: AAFCS6484C APPELLANT RESPONDENT ASSESSEE BY : SHRI H. ANIL KUMAR, CA R EVENUE BY : SHRI R.N. SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 15 .0 3 .2019 DATE OF PRONOUNCEMENT : 29 .0 3 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. DR OF REVENUE THAT THE IDENTICAL M.PS. FILED BY THE REVENUE AGAINST THE SAME TRIBUNAL ORDER IN ITA NO. 1862/BANG/2017 DATED 22.06.2018 ARE REGISTERED TWICE AS M.P. NO. 5/BANG/2019 AND M.P. NO. 380/BANG/2018 AND HENCE, ONE M.P. OUT OF THESE TWO M.PS. SHOULD BE DISMISSED AS INFRUCTUOUS. 2. WE FIND THAT IN THE ORDER SHEET ENTRY IN RESPECT OF M.P. NO. 380/BANG/2018, A DEFECT IS NOTED BY THE REGISTRY THAT M.P. IS NOT FILED IN TRIPLICATE. IT IS ALSO NOTED THAT A NOTE WAS MOVED BY THE REGISTRY ON 06.02.2019 THAT IN REPLY TO THE DEFECT MEMO ISSUED BY THE REGISTRY OF THE TRIBUNAL ON FILING OF EARLIER M.P. BEING M.P. NO. 380/BANG/2018, THE REVENUE HAS FILED THREE COPIES OF THE M.P. VIDE COVERING LETTER DATED 31.12.2018 AND THE REGISTRY HAS REGISTERED THE SAID COPIES FILED FOR RECTIFICATION PURPOSE AS FRESH M.P. WITH M.P. NO. 05/BANG/2019 ON 01.01.2019. IT WAS ALSO PROPOSED THAT THE M.P. NOS. 380/BANG/2018 & 05/BANG/2019 (IN ITA NO. 1862/BANG/2017) PAGE 2 OF 5 COPIES OF M.P. FILED BY THE REVENUE ON 01.01.2019 MAY BE TREATED AS INFRUCTUOUS. BUT NO ORDER WAS PASSED IN THIS REGARD. HENCE, WE HOLD THAT M.P. NO. 05/BANG/2019 IS INFRUCTUOUS. 3. REGARDING M.P. 380/BANG/2018, IT WAS SUBMITTED BY LD. DR OF REVENUE THAT AS PER PARA 7 OF THE IMPUGNED TRIBUNAL ORDER, THIS IS THE BASIS OF THE TRIBUNAL DECISION THAT THE AO CANNOT EXERCISE POWERS U/S. 154 OF IT ACT TO AMEND AN INTIMATION U/S. 143(1) WITH REGARD TO A MATTER WHICH HE CANNOT DO WHILE PROCESSING U/S. 143(1) OF THE ACT ITSELF. HE SUBMITTED AS PER THE PRESENT ORDER PASSED BY THE AO U/S. 154 ON 24.12.2002, THE AO HAS MADE THREE ADDITIONS OVER AND ABOVE THE EARLIER INCOME FINALIZED U/S. 154 DATED 08.07.2002 AT RS. 5,96,410/-. HE POINTED OUT THAT THESE THREE ADDITIONS ARE AS UNDER:- I) RS. 1,85,210/- BEING INTEREST ON FD WRONGLY CLAIMED AS DEDUCTION II) INTEREST PAID ON BORROWING TAX REFUND DEPOSIT TO TENANT WRONGLY CLAIMED OF RS. 6,71,275/- AND III) LONG TERM CAPITAL GAIN (LTCG) WRONGLY DELETED IN ORDER PASSED U/S. 154 OF RS. 2,79,95,136/-. 4. HE SUBMITTED THAT ALTHOUGH THIS IS THE CASE OF THE REVENUE THAT THE ENTIRE ORDER PASSED BY THE AO U/S. 154 ON 24.12.2002 SHOULD BE UPHELD BUT EVEN IF THE SAME IS NOT UPHELD IN ITS ENTIRETY, THE ADDITION MADE BY THE AO OF RS. 2,79,95,136/- ON ACCOUNT OF LONG TERM CAPITAL GAIN WRONGLY DELETED IN EARLIER ORDER PASSED U/S. 154 ON 26.06.2002 SHOULD BE UPHELD BECAUSE IF THE ADDITION OF THIS AMOUNT IS NOT PROPER IN THE PRESENT ORDER THEN DELETION ALSO OF THE SAME AMOUNT IN EARLIER ORDER DATED 26.06.2002 U/S. 154 IS NOT PROPER AND SINCE, THIS AMOUNT WAS DECLARED BY ASSESSEE ITSELF IN ITS RETURN OF INCOME, THE SAME SHOULD FORM PART OF THE TAXABLE INCOME. THE LD. AR OF ASSESSEE ALSO AGREED TO THIS PROPOSITION PUT FORWARD BY THE LD. DR OF REVENUE. M.P. NOS. 380/BANG/2018 & 05/BANG/2019 (IN ITA NO. 1862/BANG/2017) PAGE 3 OF 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND FORCE IN THE SUBMISSIONS OF LD. DR OF REVENUE BECAUSE AS PER THE INTIMATION PASSED BY THE AO U/S. 143(1) ON 20.03.2001, THE INCOME ASSESSED WAS RS. 5,64,885/- BEING NORMAL INCOME AND RS. 2,79,95,136/- BEING LONG TERM CAPITAL GAINS (LTCG). THE DEMAND OF TAX WAS ALSO RAISED TO THE EXTENT OF RS. 1,97,710/- IN RESPECT OF NORMAL INCOME AND RS. 55,99,027/- IN RESPECT OF LTCG. HENCE IT IS SEEN THAT THIS AMOUNT OF LTCG OF RS. 2,79,95,136/- IS VERY MUCH INCLUDABLE IN THE TAXABLE INCOME OF THE ASSESSEE EVEN AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE ON 30.11.2000 AND THE ORIGINAL INTIMATION ISSUED BY THE AO ON 20.03.2001. AS PER THE FIRST ORDER PASSED BY THE AO U/S. 154 ON 26.06.2002, THE AO HAS REDUCED THIS LONG TERM GAIN OF RS. 2,79,95,136/- ON THIS BASIS THAT THIS LONG TERM GAIN IS ALREADY CONSIDERED IN ASSESSMENT YEAR 1998-99. HENCE BY THIS LOGIC GIVEN BY THE TRIBUNAL IN PARA 7 OF THE IMPUGNED TRIBUNAL ORDER THAT ONLY THOSE ADDITIONS IN THE PRESENT ORDER PASSED BY THE AO U/S. 154 CAN BE SAID TO BE VALID WHICH COULD HAVE BEEN DONE BY THE AO IN THE INTIMATION U/S. 143(1) OF IT ACT, THE AMOUNT OF LTCG DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME HAS TO FORM PART OF THE TAXABLE INCOME OF THE ASSESSEE AND IT CANNOT BE EXCLUDED IN THE INTIMATION U/S 143 (1) OR IN THE ORDER U/S 254. IN THE PRESENT CASE, THIS STANDS INCLUDED IN THE TAXABLE INCOME AS PER INTIMATION U/S 143 (1) AND THEREFORE, ITS INCLUSION IN THE ORDER PASSED BY THE AO U/S 154 ON 26.06.2002 IS ALSO PROPER. WE HAVE SEEN THAT IN THE INTIMATION ISSUED BY THE AO U/S. 143(1) DATED 20.03.2001, THIS AMOUNT OF CAPITAL GAIN OF RS. 2,79,95,136/- WAS VERY MUCH MADE PART OF THE TAXABLE INCOME ON THE BASIS OF THE RETURN OF INCOME FILED BY THE ASSESSEE ON 30.11.2000 AND THE AO HAS NO POWER TO MAKE ADDITION OR DELETION U/S 143 (1) AND AS A CONSEQUENCE U/S 154 ON THIS BASIS THAT ANY INCOME IS TAXED IN SOME OTHER YEAR. THEREFORE AS PER THIS LOGIC GIVEN BY THE TRIBUNAL IN PARA 7 OF THE IMPUGNED TRIBUNAL ORDER, THE ADDITION OF THE SAME AMOUNT OF CAPITAL GAIN TO REMOVE ITS EARLIER DEDUCTION AS PER EARLIER ORDER U/S. 154 DATED 26.06.2002 IS NOT HIT BY THIS LOGIC OF THE TRIBUNAL THAT THE AO CANNOT EXERCISE POWERS U/S. 154 OF IT ACT TO AMEND AN M.P. NOS. 380/BANG/2018 & 05/BANG/2019 (IN ITA NO. 1862/BANG/2017) PAGE 4 OF 5 INTIMATION U/S. 143(1) WITH REGARD TO A MATTER WHICH HE CANNOT DO WHILE PROCESSING U/S. 143(1) OF IT ACT ITSELF. FOR READY REFERENCE, WE REPRODUCE PARA 7 OF THE IMPUGNED TRIBUNAL ORDER. THE SAME IS AS UNDER. 7. RELIANCE WAS ALSO PLACED ON A DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF PACKERS (INDIA) VS. ITO AS REPORTED IN (2006) 99 ITD 383. WE FIND THAT THIS TRIBUNAL ORDER IS OF A DIVISION BENCH OF AHMEDABAD BENCH AND IN THIS CASE ALSO, THE TRIBUNAL HAS CONSIDERED THE AMENDED PROVISIONS OF SECTION 143(1) AND HELD THAT W.E.F. 01.06.1999, THE AMENDED PROVISIONS OF SECTION 143(1) HAS TO BE APPLIED IRRESPECTIVE OF ASSESSMENT YEAR INVOLVED. THE TRIBUNAL HAS REFERRED TO SEVERAL JUDGEMENTS OF VARIOUS HIGH COURTS AND THEREAFTER, IT WAS HELD THAT THE AO CANNOT EXERCISE POWERS UNDER SECTION 154 OF IT ACT TO AMEND AN INTIMATION UNDER SECTION 143(1) WITH REGARD TO A MATTER WHICH HE CANNOT DO WHILE PROCESSING UNDER SECTION 143(1) OF THE ACT ITSELF. HENCE RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER RENDERED IN THE CASE OF PACKERS (INDIA) VS. ITO (SUPRA), WE HOLD THAT THE ORDER PASSED BY THE AO U/S. 154 IS NOT VALID BECAUSE THE AO HAS NO POWERS TO DO SO U/S. 143(1) AND THEREFORE, THE SAME CANNOT BE DONE U/S. 154 OF IT ACT. 6. IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT THERE IS ONE APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER AS PER WHICH THE TRIBUNAL HAS HELD THAT THE ENTIRE ORDER PASSED BY THE AO U/S. 154 ON 24.12.2002 IS INVALID BECAUSE WE HAVE SEEN THAT AS PER ABOVE DISCUSSION, THE ADDITION MADE BY THE AO IN THIS ORDER U/S. 154 ON 24.12.2002 OF LONG TERM CAPITAL GAIN OF RS. 2,79,95,136/- IS VERY MUCH IN ORDER BECAUSE THE SAME WAS ACTUALLY TAKEN INTO TAXABLE INCOME BY THE ASSESSEE IN THE RETURN OF INCOME FILED ON 30.11.2000 AND BY THE AO IN THE ORIGINAL INTIMATION ISSUED BY THE AO U/S. 143(1) ON 20.03.2001. HENCE, WE RECTIFY THE IMPUGNED TRIBUNAL ORDER TO THIS EXTENT AND HOLD THAT THE ADDITION MADE BY THE AO OF RS. 1,85,210/- AND RS. 6,71,275/- IN THE ORDER PASSED BY THE AO U/S. 154 ON 24.12.2002 STANDS DELETED BECAUSE THESE ADDITIONS COULD NOT HAVE BEEN MADE BY THE AO IN THE INTIMATION ISSUED BY THE AO U/S. 143(1) BUT WE UPHOLD THE ADDITION MADE BY THE AO OF RS. 2,79,95,136/- IN RESPECT OF LONG TERM CAPITAL GAIN. M.P. NOS. 380/BANG/2018 & 05/BANG/2019 (IN ITA NO. 1862/BANG/2017) PAGE 5 OF 5 7. IN THE RESULT, THE M.P. FILED BY THE REVENUE IN M.P. NO. 380/BANG/2018 IS PARTLY ALLOWED AND THE M.P. FILED BY THE REVENUE IN M.P. NO. 05/BANG/2019 IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 29 TH MARCH, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.