M/s. I.S. Leather, Kolkata v. ACIT, Circle - 52, Kolkata, Kolkata

CO 69/KOL/2011 | 2005-2006
Pronouncement Date: 31-07-2012

Appeal Details

RSA Number 6923523 RSA 2011
Assessee PAN AABFI1937M
Bench Kolkata
Appeal Number CO 69/KOL/2011
Duration Of Justice 7 month(s) 19 day(s)
Appellant M/s. I.S. Leather, Kolkata
Respondent ACIT, Circle - 52, Kolkata, Kolkata
Appeal Type Cross Objection
Pronouncement Date 31-07-2012
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 31-07-2012
Assessment Year 2005-2006
Appeal Filed On 12-12-2011
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ) BEFORE /AND . . ! ) [BEFORE SHRI MAHAVIR SINGH JM & SHRI C. D. RAO AM ] ' / I.T.A NO.1553/KOL/2011 ASSESSMENT YEAR: 2005-06 ASSISTANT COMMISSIONER OF INCOME-TAX VS. M/S. I. S. LEATHER CIRCLE-52 KOLKATA. (PAN: AABFI1937M) ($% /APPELLANT ) (&'$%/ RESPONDENT ) & C. O. NO.69/KOL/2011 IN ' / I.T.A NO.1553/KOL/2011 ASSESSMENT YEAR: 2005-06 M/S. I. S. LEATHER VS. ASSISTANT COMMISSIONER O F INCOME-TAX CIRCLE-52 KOLKATA. ( CROSS OBJECTOR ) (&'$%/ RESPONDENT ) FOR THE REVENUE: SHRI A. K. PRANANICK FOR THE CROSS OBJECTOR: S/SHRI R. S. GHOSAL & V. NATH DATTA DATE OF HEARING : 16.07.2012 DATE OF PRONOUNCEMENT: 31.07.2012 ) / ORDER PER BENCH: THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSES SEE ARE ARISING OUT OF ORDER OF CIT(A)-XXXIII KOLKATA IN APPEAL NO. 408/CIT(A)-XXX III/CIR-52/KOL/09-10 DATED 30.08.2011. ASSESSMENT WAS FRAMED BY ACIT CIRCLE- 52 KOLKATA U/S. 143(3)/147 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS T HE ACT) FOR ASSESSMENT YEARS 2005-06 VIDE HIS ORDER DATED 24.12.2009. 2. FIRST WE TAKE UP CO NO.69/K/2011. THE ONLY LEG AL ISSUE RAISED IN THIS CO OF THE ASSESEE IS THAT NO NOTICE U/S. 143(2) OF THE ACT WA S SERVED ON ASSESSEE DURING THE PENDENCY OF REASSESSMENT PROCEEDINGS U/S. 148 R.W.S 147 OF THE ACT. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: FOR THAT IN SPITE OF NO NOTICE U/S. 143(2) OF THE ACT SERVED UPON THE ASSESSEE SUSTAINING OF THE REASSESSMENT PROCEEDINGS U/S. 147/147 OF THE ACT BY THE CIT(A) IS OPPOSED TO 2 ITA 1553/K/2011 & CO NO.69/K/2011 I. S. LEATHER AY 05-06 REQUIREMENT OF LAW INVALID BAD IN LAW AND THE WHO LE REASSESSMENT IS LIABLE TO BE CANCELLED OR ANNULLED. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT ORIGINAL RETURN OF INCO ME WAS FILED BY THE ASSESSEE ON 29.10.2005 WHICH WAS PROCESSED U/S. 143(1) OF THE ACT ON 28.02 .2007. THEREAFTER THE REVENUE ISSUED NOTICE U/S. 143(2) OF THE ACT DATED 30.01.2008 I.E . BEYOND 12 MONTHS FROM THE DATE OF FILING OF RETURN AND I.E. ON 29. 10. 2005. SUBSEQU ENTLY THE NOTICE WAS WITHDRAWN BY A O ISSUING LETTER DATED 25.08.2008 STATING THAT THIS NOTICE WAS ISSUED INADVERTENTLY. HOWEVER THE AO IN SAME DAY I.E. 25.08.2008 ISSUED NOTICE U/ S. 148 OF THE ACT AND ASSESSEE IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT FILED RE TURN OF INCOME ON 20.10.2008. THESE ARE ADMITTED AND UNDISPUTED FACTS. SUBSEQUENTLY WE FIN D FROM THE ORDERS OF THE LOWER AUTHORITIES AND EVEN CONCEDED BY LD. DR THAT NO NO TICE U/S. 143(2) OF THE ACT ISSUED IN THIS CASE WHEREAS ONLY NOTICE U/S. 143(2)(1) OF THE ACT WAS ISSUED. WE FIND THAT THIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE BY COORDINATE BENCH DECISION IN THE CASE OF SHEELA CHOPRA VS. IT O ITA NO.84/KOL/2012 AY 2005-06 DATED 21.06.2012 WHEREIN THE TRIBUNAL HAS HELD AS U NDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL WE FIND FROM THE ASSESSMENT ORDE R THAT AO HAS CONSIDERED THE REPLY DATED 22.04.2008 AND WHEREBY ASSESSEE VIDE POINT NO.4 HAS STATED AS UNDER :- 4. THAT MY ORIGINAL RETURN FILED ON 28/03/2006 WHI CH WAS REVISED BY COMPUTATION RS.575 000/- MAY KINDLY BE TREATED AS R ETURN FILED DISCLOSING INCOME RA. 575 000/- IN COMPLIANCE TO YOUR NOTICE U /S. 148 OFTHE ACT. HOWEVER YOUR HONOUR IS REQUESTED TO GIVE THE REASO NS RECORDED WHICH PROMPTED YOU FOR ISSUING THE NOTICE U/S 148 AT YOUR EARLIEST. FROM THE ASSESSMENT ORDER IT IS CLEAR THAT AO HAS ACTED UPON THE REVISED COMPUTATION AS FILED IN THE RETURN OF INCOME ALONG WITH LETTER DAT ED 22.04.2008 AND PASSED ASSESSMENT ORDER ACCORDINGLY. ONCE AO HAS ACTED UPON THE RETUR N FILED BY ASSESSEE HE HAS ACTUALLY CONDONED THE DELAY IN FILING OF RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT WHICH STIPULATES THE TIME LIMIT OF 30 DAYS AND EVEN THE R EPLY IS BEYOND THAT PERIOD. ONCE AO HAS ACTED UPON THE RETURN THERE IS NO OPTION EXCEPT TO ISSUE NOTICE U/S 143(2) OF THE ACT FOR FRAMING ASSESSMENT EVEN THOUGH THIS IS A RE-ASSESSM ENT U/S 147 R.W.S. 148 OF THE ACT. WE FIND THAT IN THE CASE OF VIPAN KHANNA VS CIT (2002) 255 ITR 220 THE HONBLE PUNJAB AND HARYANA HIGH COURT HAS EXPLAINED THE IMPORTANT PRIN CIPLE OF LAW IN RELATION TO POWERS OF AO U/S 147 OF THE ACT AND TIME LIMIT SET OUT THEREI N AS WELL AS U/S 143(2) OF THE ACT. THE HONBLE HIGH COURT HAS TAKEN NOTE THAT NOTICE FOR SC RUTINY U/S 143(2) OF THE ACT HAS TO BE ISSUED WITHIN 12 MONTHS FROM THE END OF THE MONTH I N WHICH RETURN IS FILED AND IF IT IS NOT SO ISSUED THE AO CANNOT NO DOUBT EXERCISE HIS POWER U/S 147 OF THE ACT. BUT IT CANNOT BE DONE MERELY FOR SCRUTINIZING THE RETURN. WHERE THE AO HA S ISSUED NOTICE U/S 147 OF THE ACT ACCOMPANIED BY LETTER INDICATING THAT HE WANTS TO VERIFY THE CLAIM OF CARRIAGE EXPENSES AND INCOME IN EACH OF THE TRUCK BESIDES CHECKING OF OV ERDRAFT ACCOUNT APART FROM SUCH OTHER DETAILS THERE WAS NO ABSOLUTE INFERENCE OF ANY ESC APEMENT OF INCOME. IN SUCH CASE NOTICE HAS TO BE ISSUED ONLY U/S 143(2) OF THE ACT AND SEC TION 147 IS NOT AN EXTENSION OF RIGHT TO FRAME ASSESSMENT U/S 143(3) OF THE ACT AS OTHERWISE PROVIDED THAT THERE WOULD HAVE BEEN NO PURPOSE IN LAYING DOING THE TIME LIMIT OF ONE YE AR. EVEN THE HONBLE HIGH COURT HAS 3 ITA 1553/K/2011 & CO NO.69/K/2011 I. S. LEATHER AY 05-06 CONSIDERED THE BOARD CIRCULAR NO.549 OF 31.10.1989 REPORTED IN [1990] 182 ITR STATUTE 1 EXPLAINING THE NEW PROCEDURE W.E.F. 1.4.1989 WHERE IN THE BOARD HAS IN UNMISTAKABLE TERMS ADVISED ITS OFFICERS THAT IF THE ASSESSEE HAS NOT BEEN SERVED WITH A NOTICE U/S 143(2) OF THE ACT WITHIN THE STIPULATED TIME HE CAN TAKE IT THAT HIS RETURN OF INCOME HAS BECOME FINAL AND NO SCRUTINY PROCEEDINGS CAN BE STARTED AFTER THAT. IN RESPONSE TO THE PROCEDURE FOR COMPLIANCE OF ASSESSMENT U/S 143(3) OF THE ACT R.W. S. 147 OF THE ACT WE FIND HONBLE SUPREME COURT IN THE CASE OF ACIT VS HOTEL BLUE MOO N (2010) 321 ITR 362 (SC) HAS HELD THAT THE PROCEDURE OF ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS MANDATORY AND HAS TO BE FOLLOWED FOR FRAMING THE ASSESSMENT. THE HONBLE AP EX COURT HAS EMPHASIZED AS UNDER :- (I) WHILE NOTICE U/S 143 (2) IS NOR NECESSARY IF THE AO ACCEPTS THE RETURN AS FILED THE NOTICE WITHIN THE PRESCRIBED TIME IS MAN DATORY IF THE AO PROPOSES TO MAKE AN ASSESSMENT U/S 158BC R. W. S. 143 (3). O MISSION TO ISSUE NOTICE U/S 143(2) IS NOT A PROCEDURAL IRREGULARIIY AND THE SAME IS NOT CURABLE AND THE REQUIREMENT OF NOTICE U/S 143(2) CANNOT BE DISP ENSED WITH. IF THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PRO VISIONS OF S. 143(2). THE LEGISLATURE WOULD HAVE INDICATED THAT. (II) IN CIRCULAR NO. 71 7 DATED 14. 8.1995 THE CBDT HAS DIRECTED THAT THE AO SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD AND THE PROVISIONS OF S. 142. SUB-S (2) AND (3) OF S. 1 43 AND S. 144 SHALL APPLY ACCORDINGLY. THIS CIRCULAR CLARIFIES THE REQUIREME NT OF LAW IN RESPECT OFSERVICE OFNOTICE U/S 143 (2). THE CIRCULAR IS BIN DING ON THE DEPARTMENT THOUGH NOT ON THE COURT. (III) A SEARCH IS THE SINE QUA NON FOR A BLOCK ASSESSMENT UNDER CH. XIV-B. A BLOCK ASSESSMENT IS IN ADDITION TO REGULAR ASSESSMENTS PR OCEEDINGS AND NOT IN SUBSTITUTION THEREOF. THE SCOPE AND AMBIT OF A BLOC K ASSESSMENT IS LIMITED TO MATERIALS UNEARTHED DURING SEARCH AND CAN ONLY BE D ONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION . 5. 1. FURTHER THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS C. PALANIAPPAN (2006) 284 ITR 257 (MAD) WHILE CONSIDERING THE REOPENING OF AS SESSMENT U/S 147 R.W.S. 148 OF THE ACT QUA THE ISSUANCE OF NOTICE U/S 143(2) THE ACT HAS HELD AS UNDER :- WE HEARD LEARNED COUNSELFOR THE PARTIES. LEARNED C OUNSEL APPEARING FOR THE REVENUE SUBMITTED THAT THE APPELLATE TRIBUNAL FAILE D TO APPRECIATE THE FACT THAT THE ASSESSMENT WAS COMPLETED ONLY UNDER SECTION 143 (1) OF THE ACT AND HENCE THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF TH E ACT TO CONSIDER THE CORRECT QUANTUM OF INTEREST ALLOWABLE AS DEDUCTION IN COMPUTING THE INCOME FROM HOUSE PROPERTY WAS CORRECT AS THE ASSESSEE HAD NOR FURNISHED RELEVANT FACTS AND EVIDENCE ALONG WITH THE RETURN. LEARNED C OUNSEL FURTHER SUBMITTED THAT THE APPELLATE TRIBUNAL ERRED IN ITS CONCLUSION THAT IN THE CASE OF REOPENED ASSESSMENT ISSUE OF NOTICE UNDER SECTION 143 (2) O F THE ACT WITHIN 12 MONTHS IS STATUTORY AND THE TRIBUNAL WAS ALSO WRONG IN DELETI NG THE ISSUE ON TECHNICAL GROUNDS WITHOUT GOING INTO THE MERITS OF THE CASE IN RESPECT OF QUESTION NO. 1 WE FIND THAT ON A SIM ILAR ISSUE WHICH CAME UP FOR CONSIDERATION IN CIT V. M CHELLAPPAN [2006] 281 ITR 444 A DIVISION BENCH OFLHIS COURT IN WHICH ONE OF US WAS A PARTY (P. D. DINAKARAN J.) APPLYING THE RATIO LAID DOWN BY THE PUNJAB AND HARYANA HIGH COUR T IN VIPAN KHANNA V. CIT [2002] 255 ITR 220 (P & H) HELD AS FOLLOWS (PA GE 445): ADMITTEDLY NO NOTICES UNDER SECTION 143(2) OF T HE ACT WERE SERVED ON THE ASSESSEES WITHIN THE STIPULATED PERIOD OF TWELVE MO NTHS AND THEREFORE THE 4 ITA 1553/K/2011 & CO NO.69/K/2011 I. S. LEATHER AY 05-06 PROCEEDINGS UNDER SECTION 143 OF THE ACT COME TO AN END AND THE MATTER BECOMES FINAL IN VIEW OF THE ABOVE THE FIRST QUESTION NOW RAISED THEREFORE STANDS CONCLUDED IN FAVOUR OF THE ASSESSEE. 5.2. IN VIEW OF THE ABOVE ADMITTED FACTS AS WELL AS RATIO LAID IN THE CASE OF ACIT VS HOTEL BLUE MOON (SUPRA) AND CIT VS C.PALANIAPPAN (SUPRA) THAT NO NOTICE U!S 143(2) OF THE ACT WAS ISSUED IN THE PRESENT CASE DURING THE PROCEEDINGS P ENDING U/S 148 OF THE ACT WE ARE OF THE CONSIDERED VIEW THAT RE-ASSESSMENT FRAMED WITHOUT I SSUANCE OF NOTICE U/S 143(2) OF THE ACT IS WITHOUT JURISDICTION AND HENCE QUASHED. SINCE ISSUE IS COVERED BY THE AFORESAID DECISION CI TED SUPRA WE QUASH THE REASSESSMENT PROCEEDINGS. ASSESSEES CO IS ALLOWED. 4. SINCE WE HAVE ALLOWED THE CROSS OBJECTION OF ASS ESSEE THE REVENUES APPEAL REQUIRES NO ADJUDICATION AND IS DISMISSED AS INFRUCTUOUS. 5. IN THE RESULT CO OF ASSESSEE IS ALLOWED AND APP EAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2012 SD/- SD/- . . ! (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ! ! ! !) )) ) DATED : 31ST JULY 2012 *+ -. / JD.(SR.P.S.) ) 0 &1 2 134- COPY OF THE ORDER FORWARDED TO: 1 . $% / APPELLANT ACIT CIRCLE-52 KOLKATA. 2 &'$% / RESPONDENT M/S. I. S. LEATHER 15/10A CHOUBHAG A ROAD KOLKATA- 700 039. . 3 . ) ( )/ THE CIT(A) KOLKATA 4. 5. ) / CIT KOLKATA 1:; & / DR KOLKATA BENCHES KOLKATA '1 &/ TRUE COPY )