The ITO, Ward-3(3), Ahmedabad V. M/s. Vallabhnagar Cement Products, Ahmedabad

MA 55/AHD/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7433 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1991-1992
• Appeal Filed On: 26-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Retrospective amendment; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , . .!'#$, % & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER MA NO.55/AHD/2011 (IN I.T.A. NO.1267/AHD/2007) ( ' ( ' ( ' ( ' ( / / / / ASSESSMENT YEAR : 1991-92) THE INCOME TAX OFFICER WARD-3(3) AHMEDABAD (ORIGINAL RESPONDENT) ' ' ' ' / VS. M/S.VALLABHNAGAR CEMENT PRODUCTS 24, PALMBEACH BUNGALOWS 282/1, THALTEJ HEBATPUR ROAD, AHMEDABAD (ORIGINAL APPELLANT) * % ./+, ./ PAN/GIR NO. : AAEFV 9311 P ( APPLICANT ) .. ( RESPONDENT ) APPLICANT BY : SHRI B.L. YADAV, D.R. RESPONDENT BY : SHRI RAJESH C.SHAH, A.R. '- . /% / / / / DATE OF HEARING : 25/11/2011 0'( . /% / DATE OF PRONOUNCEMENT : 19-1-2012 1 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS MISCELLANEOUS PETITION HAS BEEN FILED BY THE R EVENUE DATED 26/04/2011 ARISING FROM THE ORDER OF THE TRIBUNAL D ATED 31/12/2010. THROUGH THIS MISCELLANEOUS PETITION, THE REVENUE H AS RAISED A LEGAL GROUND THAT THE AMENDED PROVISIONS OF SECTION 143(2 ) HAVE BEEN OVERLOOKED, RELEVANT PORTION IS REPRODUCED BELOW:- MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 2 - IT IS HUMBLY STATED THAT WHILE DECIDING THE ABOVE ISSUE THE AMENDMENT MADE TO SECTION 143(2) VIDE FINANCE BILL 2006 WITH RETROSPECTIVE EFFECT FROM 01/10/1991 HAS BEEN OVERL OOKED. SECTION 147 IS MERELY A MACHINERY SECTION. IF NOTICE IS SE RVED UNDER SECTION 148, ASSESSMENT/REASSESSMENT HAS TO BE COMP LETED EITHER UNDER SECTION 143(1) OR 143(3) OR 144. CONSEQUENTL Y, IF THE ASSESSING OFFICER WANTS TO COMPLETE ASSESSMENT/REAS SESSMENT UNDER SCRUTINY UNDER SECTION 143(3), HE WILL HAVE T O ISSUE A NOTICE UNDER SECTION 143(2). SUCH NOTICE CAN BE ISSUED WI THIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN IN RE SPONSE TO NOTICE UNDER SECTION 148 WAS SUBMITTED. IF HOWEVER, SUCH RETURN WAS SUBMITTED DURING OCTOBER 1, 1991 AND SEPTEMBER 20,2 005, SCRUTINY NOTICE CAN BE ISSUED EVEN AFTER THE EXPIRY OF 12 MONTHS BUT IT CANNOT BE ISSUED AFTER THE EXPIRY OF TIME-LIMIT FOR COMPLETION OF REASSESSMENT UNDER SECTION 153(2). 2. FROM THE SIDE OF THE REVENUE, LD.DRS MR.SHELLEY JINDAL & MR.B.L.YADAV APPEARED AND STATED THAT A MISTAKE WA S COMMITTED BY THE TRIBUNAL BY HOLDING THAT THE NOTICE U/S.143(2) WAS ISSUED BEYOND THE TIME PRESCRIBED. HE HAS ALSO MENTIONED THAT THE RELIA NCE PLACED ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF RAJ KU MAR CHAWLA & OTHERS VS. ITO 92 TTJ 1245 (DELHI)[SB] HAVE ALSO BEEN WRON GLY PLACED BECAUSE THAT DECISION WAS ON DIFFERENT CONTEXT AND THE AMEN DED PROVISIONS HAVE NOT BEEN CONSIDERED BY THE RESPECTED SPECIAL BENCH. 3. ON THE OTHER HAND, FROM THE SIDE OF THE ASSESSEE , LD.AR MR.RAJESH C.SHAH APPEARED AND MENTIONED THAT WHILE PRONOUNCING THE IMPUGNED JUDGEMENT; THE TRIBUNAL HAS SIMPLY FOLLOWE D THE OBSERVATION OF THE TRIBUNAL EARLIER GIVEN VIDE AN ORDER DATED 2 2/03/2005. VIDE PARA-3 THE TRIBUNAL HAS SPECIFICALLY STATED THAT THE IMPUG NED DECISION WAS CONFINED TO THE DIRECTIONS OF THE TRIBUNAL EARLIER GIVEN IN ASSESSEES OWN MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 3 - CASE VIDE ORDER DATED 25/03/2005. IN THE LIGHT O F THE SAID OBSERVATION, THE PRESENT APPEAL WAS DECIDED AND IT WAS HELD THAT THE NOTICE U/S.143(2) WAS BEYOND THE PRESCRIBED TIME, THEREFORE COVERED B Y THE DECISION OF THE SPECIAL BENCH IN THE CASE OF RAJ KUMAR CHAWLA & OTH ERS(SUPRA). HE HAS PLEADED THAT NO MISTAKE WAS COMMITTED WHICH COU LD BE RECTIFIED AS SUGGESTED BY THE REVENUE. 4. WE HAVE HEARD BOTH THE SIDES. ADMITTEDLY, AN AMENDMENT TOOK PLACE IN SECTION 143(2) OF IT ACT AND THE RELEVANT PORTION IS AS UNDER:- SECTION 143(2) OF THE I.T.ACT SEC.143(2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 13 9, OR IN RESPONSE TO A NOTICE UNDER SUB- SECTION (1) O F SECTION 142, THE ASSESSING OFFICER SHALL, (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LO SS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN T HE RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOTICE SPE CIFYING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMPTION, DEDUC TION, ALLOWANCE OR RELIEF AND REQUIRE HIM, ON A DATE TO B E SPECIFIED THEREIN TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EV IDENCE OR PARTICULARS SPECIFIED THEREIN OR ON WHICH THE ASSES SEE MAY RELY, IN SUPPORT OF SUCH CLAIM : [PROVIDED THAT NO NOTICE UNDER THIS CLAUSE SHALL BE SERVED O N THE ASSESSEE ON OR AFTER THE 1ST DAY OF JUNE, 2003;] (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I), I F HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDER-STATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE T AX IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRING HI M, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR TO MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 4 - PRODUCE, OR CAUSE TO BE PRODUCED THERE, ANY EVIDENC E ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETUR N: (III) [ PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED O N THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM TH E END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED .] 4.1. FOR THE SAKE OF CLARITY AND COMPLETENESS, WE HAVE REPRODUCED SUB- SECTION 2 OF SECTION 143 WHICH WAS BASICALLY RELIED UPON BY THE TRIBUNAL IN THE IMPUGNED ORDER DATED 31.12.2010 NOW CHALLENG ED BEFORE US. THE PROVISO ANNEXED TO SUB-CLAUSE (II) OF SUB-SECTION 2 OF SECTION 143 HAD UNDERGONE AN AMENDMENT WITH EFFECT FROM 01/04/2008 AND THE PERIOD OF SERVICE OF NOTICE HAS BEEN CURTAILED FROM 12 MONTHS TO 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FU RNISHED. 4.2. BUT THE GRIEVANCE OF THE REVENUE DO NO CONFINE TO THE SAID PROVISO TO SECTION 143(2) OF IT ACT. THE GRIEVANCE OF THE REVENUE IS THAT BY RELYING UPON THE SAID PROVISO THE TRIBUNAL HAD COMM ITTED AN ERROR. THIS IS THE GRIEVANCE THAT A WRONG PROVISION OF THE IT A CT WAS MADE THE BASIS OF DECIDING THE APPEAL, HENCE THE MISTAKE IS APPARE NT AND RECTIFIABLE U/S.254(2) OF IT ACT. 4.3. WE FIND FORCE IN THE MISCELLANEOUS PETITION OF THE REVENUE. AS FAR AS THE PROVISIONS OF SECTION 143(2) ARE CONCERNED, A NOTICE IS REQUIRED TO BE ISSUED BY THE AO BEFORE FINALIZATION OF ASSESSME NT WHERE A SCRUTINY OR INVESTIGATION IS REQUIRED FOR COMPLETION OF AN ASSE SSMENT. HOWEVER, THE PRESENT ASSESSMENT IS NOT ONLY AN ASSESSMENT U/S.14 3(3) BUT AN ASSESSMENT WHEN THE CASE WAS RE-OPENED AND A NOTICE U/S.148 WAS ISSUED. MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 5 - IT APPEARS THAT THE TRIBUNAL HAS LOST THE SIGHT OF THE FACT THAT THIS IS THE CASE OF REASSESSMENT SINCE UNDISPUTEDLY A NOTICE U/ S.148 WAS ISSUED AND SERVED ON 29/02/1996. THE SETTLED LAW IS THAT RE- ASSESSMENT HAS ALSO TO FOLLOW THE SAME PROCEDURE AS TO BE APPLIED FOR COMP LETION OF A REGULAR ASSESSMENT. LAW SUBSCRIBES A SIMILAR NOTICE U/S.1 43(2) REQUIRED TO BE ISSUED EVEN FOR RE-ASSESSMENT. THE TRIBUNAL HAS TH EREFORE CONFINED TO THE PROVISO ANNEXED TO SECTION 143(2)(II) OF IT ACT AND UNDER THAT IMPRESSION HAS HELD THAT THE RE-ASSESSMENT PROCEEDI NGS, AS WELL, WERE TO BE INITIATED WITHIN ONE YEAR FROM THE END OF THE FI NANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. THAT IS WHY THE DECISION OF THE TRIBUNAL REMAINED CONFINED TO ONLY TWO DATES; I.E. DATE OF F ILING OF THE RETURN SAID TO BE 4/4/1996 AND THE DATE OF ISSUANCE OF NOTICE U /S.143(2) SAID TO BE 16/02/1998. BUT THEN, THE STATUTE HAS TAKEN THE NOTE OF THE CI RCUMSTANCES IN WHICH DELAYED RETURNS HAVE BEEN FILED OR THAT THE R E-ASSESSMENT PROCEEDINGS REQUIRE MORE TIME OF COMPLETION WITH MO RE SINCERITY. A HARDSHIP HAS ALSO BEEN FACED BY THE REVENUE DEPARTM ENT DUE TO THE JUDGEMENTS OF SEVERAL COURTS IN WHICH IT WAS HELD T HAT THE REASSESSMENTS BEING MADE IN PURSUANCE OF A NOTICE U/S.143(2) OF I T ACT AND THOSE NOTICES WERE NOT WITHIN THE TIME PRESCRIBED HENCE T HOSE PROCEEDINGS WERE HELD INVALID. THEREUPON, TO OVERCOME THE SAID DIF FICULTY AND TO REMEDY THE PROBLEM A RETROSPECTIVE AMENDMENT HAD BEEN MAD E BY INSERTION OF A PROVISO BY THE FINANCE ACT, 2006 IN SECTION 148 BY INSERTING 2 ND PROVISO, SO AS TO VALIDATE SUCH NOTICES ISSUED BETWEEN 1/10/ 1991 TO 30/09/2006. FOR THE SAKE OF CLARITY AND COMPLETENESS RELEVANT P ROVISIONS OF THE IT ACT ARE REPRODUCED BELOW: MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 6 - SEC. 148 - ISSUE OF NOTICE WHERE INCOME HAS ESCAPE D ASSESSMENT. 148. [(1)] BEFORE MAKING THE ASSESSMENT, REASSESSM ENT OR RECOMPUTATION UNDER SECTION 147, THE ASSESSING OFFICER SHALL SERVE ON T HE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, [* * *], AS MAY BE S PECIFIED IN THE NOTICE, A RETURN OF HIS INCOME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED; AND THE PROVISION S OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETU RN REQUIRED TO BE FURNISHED UNDER SECTION 139:] [ PROVIDED THAT IN A CASE (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE P ERIOD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SU B-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO SUB-SECTION (2) OF SECTION 143, AS IT STOOD IMMEDIATELY BEFORE THE AME NDMENT OF SAID SUB-SECTION BY THE FINANCE ACT, 2002 (20 OF 2002) BUT BEFORE TH E EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUT ATION AS SPECIFIED IN SUB- SECTION (2) OF SECTION 153, EVERY SUCH NOTICE REFER RED TO IN THIS CLAUSE SHALL BE DEEMED TO BE A VALID NOTICE: PROVIDED FURTHER THAT IN A CASE (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE P ERIOD COMMENCING ON THE 1ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30TH DAY OF SEPTEMBER, 2005, IN RESPONSE TO A NOTICE SERVED UNDER THIS SEC TION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CL AUSE (II) OF SUB-SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTH S SPECIFIED IN THE PROVISO TO CLAUSE (II) OF SUB-SECTION (2) OF SECTIO N 143, BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SE CTION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEE MED TO BE A VALID NOTICE.] [EXPLANATION : FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT NOTHING CONTAINED IN THE FIRST PROVISO OR THE SECOND PROVISO SHALL AP PLY TO ANY RETURN WHICH HAS BEEN FURNISHED ON OR AFTER THE 1ST DAY OF OCTOBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION.] MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 7 - [(2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING AN Y NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO.] 4.4. ON ACCOUNT OF THE SAID AMENDMENT, AS LONG AS A NOTICE U/S.143(2) IS ISSUED BEFORE THE EXPIRY OF THE TIME LIMIT AS PR ESCRIBED IN 2 ND PROVISO(B) FOR MAKING THE RE-ASSESSMENT, EVEN IF H AD BEEN ISSUED BEYOND THE ONE YEAR TIME LIMIT FROM THE DATE OF THE FILING OF THE RETURN, THE EFFECT OF THIS AMENDMENT IS TO VALIDATE ALL THOSE NOTICES. IN THE RESULT, SINCE THESE PROVISOS RETROSPECTIVELY MADE WITH EFFECT FRO M 1/10/1999 THAT WOULD INDICATE THAT THE PROVISOS ARE TRANSITIONAL I N CHARACTER MERELY VALIDATING THOSE NOTICES IN RESPECT OF RE-ASSESSMEN T PROCEEDINGS BUT OTHERWISE NOT DISTURBING THE LAW BEING LIMITED UPTO 30/09/2005 BUT NOTHING TO APPLY A RETURN FURNISHED ON OR AFTER 1 ST DAY OF OCTOBER-2005. 5. IN VIEW OF THE ABOVE DISCUSSION, WE CAN HOLD THAT A CORRECT LAW HAS TO BE APPLIED TO ARRIVE AT THE CORRECT DECISION WITHIN THE FOUR CORNERS OF LAW AND AN OMISSION OF THE CORRECT APPLICATION O F LAW CAN BE SAID TO BE AN APPARENT MISTAKE SO AS TO RECTIFY U/S.254(2) OF THE IT ACT. WE ALSO FIND NO FORCE IN THE ARGUMENT FROM THE SIDE OF THE RESPO NDENT-ASSESSEE THAT WHILE DECIDING THIS APPEAL THE TRIBUNAL HAD ONLY LI MITED SCOPE AND OUGHT TO REMAIN CONFINED TO THE OBSERVATION OF THE TRIBUN AL AS EXPRESSED VIDE AN EARLIER ORDER DATED 22/03/2005. FIRSTLY, THOSE DIRECTIONS WERE MEANT FOR THE A.O. AND SECONDLY, THE APPLICABLE PROVISION S OF SECTION 148 WERE NOT EITHER REFERRED OR CONSIDERED HENCE TANTAMOUNT TO PER INCURIAM IN NATURE. WE THEREFORE RE-CALL OUR ORDER DATED 31/1 2/2010 SO THAT THE RELEVANT DATES OF ISSUANCE OF NOTICE U/S.148 AND TH E RETURNS FILED IN MA NO.55/AHD/2011 (IN ITA NO.1267/AHD/2007) ITO VS. M/S.VALLABHNAGAR CEMENT ASST.YEAR - 1991-92 - 8 - COMPLIANCE OF THE SAID NOTICE BE EXAMINED IN THE LI GHT OF THE 2 ND PROVISO TO SECTION 148(1) OF THE ACT. THE ORDER IS RECALL ED AND THE REGISTRY IS DIRECTED TO FIX THE APPEAL FOR HEARING IN DUE COURS E AS PER LAW. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS ALLOWED. SD/- SD/- ( . .!'#$ ) ( ) % ( A.K. GARODIA ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/ 01 /2012 2/..', .'../ T.C. NAIR, SR. PS 1 . 34 5 4( 1 . 34 5 4( 1 . 34 5 4( 1 . 34 5 4(/ COPY OF THE ORDER FORWARDED TO : 1. *6 / THE APPELLANT 2. 37*6 / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-VII, AHMEDABAD 5. 4;! 3' , , / DR, ITAT, AHMEDABAD 6. !$ <- / GUARD FILE. 1' 1' 1' 1' / BY ORDER, 74 3 //TRUE COPY// = == =/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..9.1.2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.1.2012 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S19.1.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 19.1.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER