Varun Finance Pvt. Ltd.C-3/3, Gillander House, Kolkata V. Income Tax Officer, Ward - 5(4), Kolkata, Kolkata

MA 59/KOL/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1642 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 25-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 148; 11

Judgement Text

M.A. NO. 59/KOL./2013 (IN ITA NO. 436/KOL./2009) ASSESSMENT YEAR : 2000-01 PAGE 1 TO 4 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) AND SHRI GEORGE MATHAN (JUDICIAL MEMB ER) M.A. NO. 59/KOL./2013 (ARISING OUT OF I.T.A. NO. 436/KOL./ 2009) ASSESSMENT YEAR : 2000-2001 VARUN FINANCE PVT. LTD.,........................... .......APPLICANT C-3/3, GILLANDER HOUSE, 8, N.S. ROAD, KOLKATA-700 001 [PAN : AABCV 0302 L] -VS.- INCOME TAX OFFICER................................, ..................RESPONDENT WARD-5(4), KOLKATA APPEARANCES BY: SHRI DEV KUMAR KOTHARI, A.R., FOR THE APPLICANT/ASS ESSEE SHRI VIVEK VERMA, JCIT (SR. D.R.), FOR THE DEPARTME NT DATE OF CONCLUDING THE HEARING : FEBRUARY 21, 2014 DATE OF PRONOUNCING THE ORDER : MARCH 04, 2014 O R D E R PER ABRAHAM P. GEORGE: 1. THROUGH THIS MISCELLANEOUS PETITION, ASSESSEE ST ATES THAT THERE WAS INADVERTENT MISTAKE APPEARED IN THE ORDER OF TRIBUN AL, WHICH REQUIRED RECTIFICATION. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER BY THE TRIBUNAL WAS PASSED IN A PROCEEDINGS THAT HAD C OME UP SECOND TIME. AS PER LD. AR, ORIGINALLY TRIBUNAL HAD SET ASIDE TH E ISSUE REGARDING LEGALITY OF THE PROCEEDINGS UNDER SECTION 148 OF TH E ACT BACK TO THE FILE OF ASSESSING OFFICER FOR CONSIDERATION AFRESH. TRIBUNA L HAD ALSO DIRECTED THE LD. CIT(APPEALS) TO CONSIDER THE DECISION OF COORDI NATE BENCH IN THE CASE OF VISHNU SUGAR MILLS LTD. (ITA NO. 2131, 2133/KOL/ 2004, 193 & M.A. NO. 59/KOL./2013 (IN ITA NO. 436/KOL./2009) ASSESSMENT YEAR : 2000-01 PAGE 1 TO 4 2 774/KOL/2005 AND 918/KOL/2002 ORDER DATED 17/08/200 5) HOWEVER, AS PER LD. A.R., LD. CIT(APPEALS) HAD NOT CONSIDERED T HE ISSUE AS PER THE DIRECTIONS OF THE TRIBUNAL. THEREFORE, ASSESSEE ONC E AGAIN WENT TO THE TRIBUNAL. IN THE ORDER DATED 05.11.2009 THE TRIBUNA L THOUGH IT REPRODUCED ALL THE GROUNDS RAISED BY THE ASSESSEE H AD NOT ADJUDICATED ON GROUND NO. 1. 3. PER CONTRA, LD. DR SUBMITTED THAT THERE WAS NO M ISTAKE APPARENT IN THE ORDER OF TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. THIS MISCEL LANEOUS APPLICATION HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 05.11.2009 OF THIS TRIBUNAL IN ITA NO. 436/KOL/2009 . MAJOR PART OF THE GRIEVANCES RAISED BY THE ASSESSEE IS CONNECTED TO T HE ORIGINAL PROCEEDINGS IN ITA NO. 327/KOL/2005 IN WHICH MATTER WAS SET ASI DE TO THE LD. CIT(APPEALS). IN THE SECOND ROUND OF PROCEEDINGS, T RIBUNAL VIDE ITS ORDER DATED 05.11.2009 (SUPRA) HAD AT PARA 2 REPRODUCED A LL THE GROUNDS RAISED BY THE ASSESSEE. THEREAFTER IT WAS HELD AS UNDER :- 7. AFTER HEARING THE RIVAL S UB MISSIO N S A ND ON CAREF U L PER U SAL OF THE MATERIALS AVAILABLE ON RECORD, IT IS OBSERVE D TH AT W HEN TH E MAT T ER WAS SET ASIDE BY THE TRIBUNAL BEFORE THE LD. CIT(A) FOR FRESH ADJ UDICA T I ON , T H E LD . CIT(A) CONFIRMED THE ACTION OF THE AO. THE RE L EVANT OBSERVAT I ONS OF T H E L D. C I T(A) ARE AS UN DER: REGARDING INITIATION OF PROCEEDINGS UND E R S ECTION 148 'I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE A S ABOVE . HOWEVER , I DO NOT AGREE WITH THE CONTENTION OF THE APPELLANT. THE A.O . HAD INITIATED THE REOPENING PROCEEDINGS WHEN HE FOUND T H AT THE PROFIT AND LOSS ACCOUNTS DRAWN IN COMP L IANCE WITH THE COMPANIES ACT FI L ED ALONG WITH THE RETURNS OF INCOME REVEALED THAT THE ASSESSEE HAD DURING THE RELEVANT FINANCIAL YEAR DERIVED A NET PROFIT AMOUNTING TO RS.8 , 80,08 71 - WHICH WAS INCLUSIVE OF PROFIT ON SALE OF INVESTMENTS AMOUNTING TO R S.12, 38, 203 1 - . SUCH PROFIT WAS FOUND TO HAVE BEEN ADJUSTED UNDER THE INCOME TAX ACT 1 96 1 AND A TOTAL LOSS OF RS. 7 , 56,456 1 - WAS DETERMINED AND IN THE RETURNS OF INCOME SUCH LOSS A LONE WAS DECLARED . NO TAX WAS COMPUTED OR PAID UNDER SECTION 1 1 5JA OF THE I T ACT. THE A.O . THEN INIT I A T ED THE REOPE NI NG PROCEEDINGS ULS 147 WHEN HE FOUND THAT HE COULD NOT HAVE MADE ANY ADJUSTMENT IN THE I NCOME OF THE ASSESSEE AS PER THE LAW . SO , IT IS NOT A CASE OF CHANGE OF OPINION ON THE PART O F THE M.A. NO. 59/KOL./2013 (IN ITA NO. 436/KOL./2009) ASSESSMENT YEAR : 2000-01 PAGE 1 TO 4 3 ASSESSING OFFICER, FIRSTLY , AS NO REGULAR ASSESSMENT WAS MADE; SECONDLY, THE ASSESSING OFFICER HAD NO POWER TO MA K E ADJUSTME NT TO THE RETURNED INCOME. THE ASSESSING OFFICER HAD TO COMPUTE TAX ON THE RET URNED INCOME AND TO DETERMINE TAX PAYABLE OR AMOUNT REFUNDABLE. THE DEE MING FICTION PROVIDED BY EXPLANATION 2 OF SECTION 147 IMPARTS AN ADDED OBLIG ATION IN THE MATTER OF BELIEVING ESCAPEMENT OF INCOME. ACCORDING TO THE AF ORESAID EXPLANATION CLAUSE (C) EVEN WHERE AN ASSESSME N T IS MADE, BUT INCOME C H ARGEA BL E TO TAX HAS BEEN UNDER ASSESSED, IT HAS TO BE DEEMED THAT SUCH INCOM E HAS ESCAPED ASSESSMENT AND AFTER NOTICING THAT INCOME CHARGEABLE TO TAX WA S UNDER ASSESSED, IT WAS OBLIGATORY ON THE PART OF THE AO TO REOPEN THE CASE . ' THE PROVISION S OF SECTION 14 7 REQUIRE THAT THE AO SHOULD HAV E R E ASON T O BELI EVE THAT ANY INCOME CHARG E ABLE TO TAX HAS E S CAP E D ASSES S M E NT . THE WO R D 'R E A SO N ' I N TH E PHRA SE ' REA S ON TO BELIEVE ' WOULD MEAN CAUSE OR JUSTIFICATI O N . IF T H E AO HAS CA U SE OR JUSTIFICATION TO THINK OR S UPPO S E THAT INCOM E HAD E SCAP E D ASSESS M E NT , H E CA N B E S AID TO HAVE A REA S ON TO B E LIE V E THAT S UCH INCOM E H A D ESC AP E D ASS ESS M ENT. THE WORD S TO 'REA S ON TO BELI EVE' C ANNOT M E AN THAT TH E A O S HOULD HAV E F I NALL Y A S CERTAINED TH E FACT S B Y LEGAL EV ID E NC E . TH EY ONL Y M E AN TH AT H E FO RM S A B E L IEF FRO M TH E EX AMINATION H E MAK ES AND IF H E LIK ES FROM A N Y IN FORM ATI O N TH A T H E R ECE IV ES. IF H E DISCOVER S OR FI N DS O R S ATI S FI ES HIM SE LF THAT TH E TA X ABL E IN C OM E HA S E SCAPED A SS ESSMENT , IT WOULD AMOUNT TO SAYING THAT HE HAD R E ASON TO BELI E V E THAT S UCH INCOME HAD E SCAPED ASS E SSM E NT . TH E JUSTIFICATION FO R HI S B E LI E F IS NOT T O B E JUDG E D FROM THE STANDARD S OF PROOF R E QUIR E D FOR COMIN G T O A FIN A L D EC I S ION . A B E LIEF THOUGH JUSTIFIED FOR TH E PURPO SE OF INITIATION OF T H E PR OCEE DIN GS U / S .1 47, MA Y ULTIMAT E L Y S TAND ALT E R E D AFT E R TH E H EA R I N G A ND W H I L E R EAC HIN G THE FIN A L CO N C LU S ION ON THE BA SIS OF TH E I NT E RV E NIN G E NQU IRY. AT T H E S T AGE W H E RE H E F IND S A CAUSE OR JUSTIFICATION TO B E LI E V E THAT S UCH INCOM E H AS ESC AP E D ASS ESS M E NT , THE A O IS NOT REQUIR E D TO BA SE HI S B E LI EF O N AN Y FI N A L ADJUDI C ATION OF TH E MATTER . RELIANCE IS PLA CE D ON TH E D EC I S ION S IN ITO V . S E L EC T ED DALURBAND COAL C O. PVT. LTD (1996) 21 7 ITR 59 7 (SC) , RAYMOND WOOL E N MILL S LTD V . ITO (1999) 236 ITR 34 (SC) , MAHANAGAR TELEPHONE NIGAM LTD VS CBDT 246ITR 1 7 3 .' REGARDING MERITS , THE LD . CIT(A) CONFIRMED THE ACTION OF THE AO B Y OBSER V IN G THAT THE DECISION OF VISHNU SUGAR MILLS CANNOT BE A PPLIED IN THE PRESENT ' CAS E AND IT IS HELD THAT THE AO RIGHTL Y IN V OKED THE PRO V ISIONS OF SECTION 115LA. 7 . 1. WE HAVE PERU S ED THE WRITTEN SUBMISSIONS WHICH A RE AVAILABLE AT PAGE NOS . A T O D OF THE PAP E R BOOK , THE PROFIT & LOSS AL C. WHICH WAS PLACED AT PA G E NO . 14 OF THE P A P E R BOOK AND TH E ORDERS OF THE RE V ENUE AUTHORITIES A S W ELL AS THE ORDER O F THE ITA T IN TH E C A SE OF VISHNU SUGARS. KEEPING IN V IEW OF THE FACT THAT THE LD. COUNSEL COULD NOT POIN T OUT HO W TH E FACTS O F TH E PRESENT CASE IS IDENTICAL W ITH THAT OF THE ONE IN THE CAS E O F VISHNU SUGARS , WE FIND NO INFIRMIT Y IN THE ORDERS OF THE LD . CIT(A). AT THE SAME TIME , IT IS OBSERVED THAT THE ASSESSEE HAS SHOWN THE NET PROFIT IN THE PROFIT & LOSS A / C . AT RS . 8 , 80 , 087 / - WHICH WAS DULY APPROVED BY THE BOARD OF DIRECTORS A S WELL A S THE STATUTOR Y AUDITORS . IN V I EW OF THIS , IN OUR CONSIDERED OPINION , THE CA S E O F THE ASSESS EE FALL S SQUAREL Y UNDER TH E DECISION OF THE HON ' BLE SUPREME COURT IN THE CASE OF APOLO T Y R E S REPORTED IN 255 ITR 273 WHEREIN IT WAS HELD THAT ONCE THE PROFIT & LOSS HAS BEEN APPROVED BY THE AUDITORS , THE REVENUE AUTHORITIES HAS NO RIGHT TO ALTER M.A. NO. 59/KOL./2013 (IN ITA NO. 436/KOL./2009) ASSESSMENT YEAR : 2000-01 PAGE 1 TO 4 4 THE SAME . KEEPIN G IN VIEW OF THIS OBSERVATION , WE OBSERVE THAT THE ASSESSEE ALSO CANNOT MAKE AN Y ADJUSTMENT OTHER THAN THE ONE PRESCRIBED UNDER SE CTION 115JA. THEREFORE, WE DISMISS THE APPEAL OF THE ASSE SSEE. IT IS, THEREFORE, CLEAR TO US THAT THE ISSUES WITH REGARD REOPENING OF ASSESSMENT AS WELL AS MERITS WITH REGARD TO RELEVAN CE OF COORDINATE BENCH DECISION IN VISHNU SUGAR MILLS LTD. CASE (ITA NO. 2131, 2133/KOL/2004, 193 & 774/KOL/2005 AND 918/KOL/2002 DATED 17/08/2005) WERE ALSO CONSIDERED. WHAT THE ASSESSEE IS SEEKING NOW IS ONLY A REVIEW OF THE ORDER OF TRIBUNAL. POWERS UNDE R SECTION 254(2) OF THE INCOME TAX ACT IS LIMITED TO RECTIFICATION OF A MISTAKE. TRIBUNAL IS HAVING NO POWERS UNDER THE ACT TO DO A REVIEW. IN V IEW OF THE ABOVE, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE T RIBUNAL, WHICH IS AMENABLE TO A RECTIFICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT. HENCE, WE DO NOT FIND ANY MERIT IN THE MISCELLANEOU S APPLICATION OF ASSESSEE. 5. IN THE RESULT, MISCELLANEOUS APPLICATION STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH DAY OF MARCH, 2014. SD/- SD/- GEORGE MATHAN ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 04 TH DAY OF MARCH, 2014 COPIES TO : (1) VARUN FINANCE PVT. LTD., C-3/3, GILLANDER HOUSE, 8, N.S. ROAD, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-5(4), KOLKATA (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.