Bharatiya Reserve Bank Note Mudran Private Ltd, Bangalore v. DCIT, Bangalore

ITA 1123/BANG/2010 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 112321114 RSA 2010
Bench Bangalore
Appeal Number ITA 1123/BANG/2010
Duration Of Justice 9 month(s) 15 day(s)
Appellant Bharatiya Reserve Bank Note Mudran Private Ltd, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 15-07-2011
Date Of Final Hearing 12-07-2011
Next Hearing Date 12-07-2011
Assessment Year 2005-2006
Appeal Filed On 30-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N BARADHVAJA SANKAR VICE PRESIDENT AND SMT. P MADHAVI DEVI JUDICIAL MEMBER ITA NO .1123/BANG/2010 (ASS T. YEAR 2005-06) BHARATIYA RESERVE BANK NOTE MUDRAN PVT. LTD. NO.3 & 4 BTM LAYOUT NEAR JAL BHAVAN 1 ST STAGE 1 ST PHASE BANNERGHATTA ROAD BANGALORE-560 029. . APPELLANT PAN NO.AAACB8111E VS. THE DY. COMMISSIONER OF INCOME-TAX LARGE TAX PAYERS UNIT BANGALORE. . RESPONDENT APPELLANT BY : SHRI S RAMASUBRAMANIYAN RESPONDENT BY : SHRI ETWA M O R D E R PER SMT. P MADHAVI DEVI JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELE VANT ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTE D AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) LTU A T BANGALORE ITA NO.1123/B/10 2 DATED 3.8.2010. THE APPEAL ARISES OUT OF THE ASSESS MENT COMPLETED U/S 143(3) R.W.S 147 OF THE INCOME-TAX ACT 1961. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED AROUND S IX GROUNDS OF APPEAL OUT OF WHICH GROUND NO.1 IS GENERAL IN NAT URE AND NEEDS NO ADJUDICATION. GROUND NO.2 RELATES TO THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE INCOME-TAX ON THE GROUND THAT THE PROCEEDINGS WERE INITIATED ON A MERE CHANGE OF OPIN ION. GROUND 3 NO. RELATES TO THE CIT(A) CONFIRMING THE DISALLOWANCE O F DEDUCTION TOWARDS PREMIUM WRITTEN OFF AND GROUNDS NO.4 TO 6 R ELATE TO LEVY OF INTEREST U/S 234D OF THE INCOME-TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY WHICH FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 DECLARING A TOTAL INCOME OF RS.62 48 47 843/-. AN INTIMATION U/S 143(1) WAS PASSED GRANTING REFUND OF TAX OF RS.24 71 38 850/-. LATER ON THE ASSESSMENT U/S 143(3) WAS PASSED ON 27.7.20 07 ACCEPTING THE RETURNED INCOME. IN THE RETURN OF INCOME THE ASSE SSEE HAD FILED AN ANNEXURE SHOWING THE PREMIUM AT WHICH THE GOVERNME NT SECURITIES WERE PURCHASED WHICH IS SET OFF AGAINST THE INTERES T INCOME EARNED ON THESE GOVERNMENT SECURITIES. DURING THE YEAR ENDE D 31.3.2005 THE ITA NO.1123/B/10 3 ASSESSEE WROTE OFF PREMIUM OF RS.3 84 40 542/- AGAI NST THE INTEREST INCOME OF RS.8 75 99 696/-. THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 OF THE ACT ON THE GROUND THAT THE PREMIUM WRITT EN OFF CANNOT BE CLAIMED AS DEDUCTION U/S 57 OF THE ACT. THE ASSESS EE FILED ITS REPLY OBJECTING TO THE RE-OPENING OF THE ASSESSMENT. HOW EVER THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) READ WITH SEC. 147 DISALLOWING THE PREMIUM WRITTEN OFF RS.3 84 40 542/- AND ALSO WITHDREW THE REFUND AND THE INTEREST ON REFUND. HE ALSO LEVIED INTEREST U/S 234D ON THE AMOUNT OF INTEREST U/S 244A. 4. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO AND THE AS SESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITE RATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORI TIES BELOW SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ALONG WITH THE ANNEXURE CLEARLY STATING THE NATURE OF THE CLAI M OF DEDUCTION AND THE ASSESSING OFFICER AFTER CONSIDERING THE SAME HA S ALLOWED THE DEDUCTION AND PASSED THE ASSESSMENT ORDER U/S 143(3 ) OF THE INCOME- TAX ACT. HE SUBMITTED THAT THE ASSESSMENT HAS BEEN SOUGHT TO BE ITA NO.1123/B/10 4 REOPENED WITHIN A PERIOD OF 4 YEARS FROM THE END OF RELEVANT FINANCIAL YEAR BUT IT IS ON THE SAME SET OF MATERIALS AND ON MERE CHANGE OF OPINION WHICH IS NOT PERMISSIBLE. FOR THIS PURPOSE THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO VARIOUS JUDGMENTS OF THE HONBLE SUPREME COURT AND OTHER HIGH COURTS TO DEMONSTRATE THAT ON MERE CHANGE OF OPINION THE RE-ASSESSMENT CANNOT BE DONE. THE DECISIONS ON WHICH HE PLACED RELIANCE UPON ARE AS FOLLOWS : 1. CIT(A) VS. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC) 2) ALA FIRM VS. CIT 189 ITR 285 (SC) 3) CIT VS. KELVINATOR OF INDIA 256 ITR 1 (DEL) 4) HONDA SIEL POWER PRODUCTS LTD. 333 ITR 547 (D EL) 5) GODREJ AGRO E LTD. VS. DCIT 323 ITR 471 (BOM) 6) ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. VS. A CIT 325 ITR 471 (BOM) 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE CIT(A) HAD PLACED RELIANCE UPON THE DECISION OF GUJ ARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL VS. ACIT 236 ITR 832 GRUH FINANCE LTD. VS. JCIT 243 ITR 482 AND DELHI HIGH C OURT JUDGMENT IN THE CASE OF CONSOLIDATED PHOTO & FINVEST LTD. V S. ACIT 281 ITR 394 FOR HOLDING THAT UNLESS THE ORDER U/S 143(3) OF THE SPECIFICALLY ITA NO.1123/B/10 5 DISCUSSES THE ISSUE IT CANNOT BE SAID THAT AN OPIN ION HAS BEEN FORMED BY THE AO AND CONSEQUENTLY THE CHANGE OF OPINION ON SUCH ISSUE DOES NOT ARISE. 7. HE ALSO SUBMITTED THAT THE HONBLE DELHI HIGH CO URT IN THE CASE OF KELVINATOR OF INDIA CITED SUPRA HAS DISSENTED W ITH THE OBSERVATION OF THE GUJARAT HIGH COURT IN PRAFUL CHUNILALS CA SE CITED SUPRA AND HELD THAT THE ASSESSMENT CAN BE SAID TO HAVE BEEN P ASSED ONLY AFTER CONSIDERATION OF ALL MATERIALS. 8. HE FURTHER SUBMITTED THAT HONBLE GUJARAT HIGH C OURT HAS NOT CONSIDERED THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF ALA FIRM CITED SUPRA AND THAT BY CONFIRMING THE DE CISION OF THE DELHI HIGH COURT IN THE CASE OF KEVINATAOR INDIA T HE HONBLE SUPREME COURT IN KELVINATOR INDIAS CASE CITED SUPR A HAS IMPLIEDLY OVERRULED THE DECISION OF CHUNILAL PRAFULS CASE CI TED SUPRA. 9. SIMILARLY AS REGARDS THE OTHER TWO DECISIONS R ELIED UPON BY THE LEARNED CIT(A) THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT THEY HAVE NOT CONSIDERED THE DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF ALA FIRM AND THEREFORE THEY CANNOT BE SAID TO HAVE ITA NO.1123/B/10 6 BEEN LAYING DOWN THE CORRECT LAW. THUS ACCORDING TO HIM THE RE- OPENING OF THE ASSESSMENT HAS TO BE HELD TO BE INVA LID AND ACCORDINGLY QUASHED. 10. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO PLACED RELIANCE UPON THE DECISIONS REFERRED TO BY THE CIT(A). IN ADDITION THERETO HE ALSO PLA CED RELIANCE UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF YURAJ VS. UNION OF INDIA AND ANOTHER REPORTED IN 315 ITR 84 F OR THE PROPOSITION THAT FOR THE ISSUANCE OF NOTICE U/S 148 ONLY PRI ME FACIE SATISFACTION OF THE REVENUE IS NECESSARY AND THAT THE PETITIONER IS NOT REMEDILESS AND ALL THE OPPORTUNITIES WHICH ARE AVAILABLE TO T HE PETITIONER IN LAW COULD BE UTILIZED BY THE ASSESSEE. HE THUS SUBMITT ED THAT THE ASSESSEE HAS BEEN GIVEN THE OPPORTUNITY TO PRESENT HIS CASE AND THEREFORE IT CANNOT BE SAID THAT THE RE-OPENING OF THE ASSESSMEN T IS BAD IN LAW. 11. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS WE FIND THAT THE ASSESSEE HAS FILED TH E RETURN OF INCOME ALONG WITH THE ANNEXURE SHOWING THE CALCULATION OF INTEREST RECEIVED ON INVESTMENTS AFTER ADJUSTING OF PREMIUM PAID ON G OVERNMENT SECURITIES. THIS CAN BE SAID TO BE PART OF THE RET URN OF INCOME. THE ITA NO.1123/B/10 7 ASSESSING OFFICER HAD INITIALLY ISSUED INTIMATION U /S 143(1) AND THEREAFTER COMPLETED THE ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT. THE RETURN OF INCOME DOES NOT CONTAIN A LARGE NUMBER OF DOCUMENTS EXCEPT FOR THE PROFIT AND LOSS ACCOUNT AN D THE BALANCE SHEET AND ALSO THE ANNEXURE THERETO. IN SUCH A CASE IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND AND HAS NOT TAKEN A CONSCIOUS DECISION WITH REGARD TO THE CLAIM OF THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF HARI IRON T RADING COMPANY REPORTED IN 294 ITR 310 DELHI HAS HELD THAT GENERAL LY THE ISSUES WHICH ARE ACCEPTED BY THE ASSESSING OFFICER DO NOT FIND M ENTION IN THE ASSESSMENT ORDER IN SUCH A CASE AND IT CANNOT BE SA ID THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND AND IT C ANNOT ALSO BE SAID THAT THE ASSESSING OFFICER HAD FAILED TO MAKE ANY E NQUIRY BECAUSE NO FURTHER ENQUIRY WAS NECESSARY AND ALL THE FACTS WER E BEFORE THE ASSESSING OFFICER. THIS DECISION WAS FURTHER RELIE D ON BY THE HONBLE DELHI HIGH COURT IN THE CASE OF HONDA SIEL POWER P RODUCTS CITED SUPRA. THE HONBLE SUPREME COURT IN THE CASE OF AL A FIRM HAS ALSO HELD THAT IT IS OPPOSED TO NORMAL HUMAN CONDUCT THA T AN OFFICER WOULD COMPLETE THE ASSESSMENT WITHOUT LOOKING AT THE MATE RIAL PLACED BEFORE HIM AND THAT THE MORE REASONABLE VIEW TO TAKE WOUL D BE THAT THE INCOME-TAX OFFICER LOOKED AT THE FACTS AND ACCEPTED THE ASSESSEES ITA NO.1123/B/10 8 CONTENTIONS. THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR INDIA LTD. CITED SUPRA HAS HELD THAT MERE CHANGE O F OPINION PER SE IS NOT A REASON TO REOPEN U/S 147 OF THE INCOME-TAX AC T. IT WAS HELD THAT THE ASSESSING OFFICER HAS NO POWER TO REVIEW BUT HA S THE POWER TO RE- ASSESS BUT THE RE-ASSESSMENT HAS TO BE BASED ON FUL FILLMENT OF CERTAIN PRE CONDITIONS AND IF THE CONCEPT OF CHANGE OF OPIN ION IS REMOVED THEN IN THE GARB OF REOPENING THE ASSESSMENT REVIE W WOULD TAKE PLACE. IT WAS FURTHER HELD THAT ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER AND HENCE AFTER 1.4.1989 THE ASSESSING OFF ICER HAS POWER TO RE-OPEN PROVIDED THERE IS TANGIBLE MATERIAL TO COM E TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND THE REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF BELIEF. 12. COMING TO THE FACTS OF THE CASE BEFORE US ALL THE MATERIALS NECESSARY FOR ARRIVING AT THE CORRECT INCOME OF THE ASSESSEE HAS BEEN DISCLOSED BY THE ASSESSEE AND THE ASSESSING OFFICER HAD AN OCCASION TO GO THROUGH THE SAME IN THE ASSESSMENT U/S 143(3) O F THE INCOME-TAX ACT. ONLY BECAUSE THERE IS NO DISCUSSION IN THE ASS ESSMENT ORDER WITH REGARD TO SAID ALLOWABILITY OF THE SAID DEDUCTION IT CANNOT BE SAID THAT THERE IS NO APPLICATION OF MIND BY THE ASSESSING AU THORITY. IN SUCH A ITA NO.1123/B/10 9 CASE REOPENING OF THE ASSESSMENT ON THE VERY SAME M ATERIAL WHICH HAS ALREALDY BEEN CONSIDERED BY THE ASSESSING AUTHORITY U/S 143(3) WOULD DEFINITELY AMOUNT TO REOPENING OF THE ASSESSMENT ON CHANGE OF OPINION WHICH IS NOT PERMITTED BY LAW. IN VIEW OF THE SAME WE HAVE TO HOLD THAT THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AND THEREFORE HAS TO BE QUASHED. 13. THE LEARNED COUNSEL FOR THE ASSESSEE HAD ALSO A DVANCED ARGUMENTS ON THE MERIT OF THE GROUNDS NO. 3 4 5 AND 6. HOWEVER SINCE THE RE-OPENING OF THE ASSESSMENT ITSELF IS HE LD TO BE BAD IN LAW WE DO NOT SEE ANY REASON TO ADJUDICATE THESE GROUND S AS IT WOULD BE ONLY AN ACADEMIC EXERCISE. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH JUL 2011. SD/- SD/- (N BARADHVAJA SANKAR) (P MADHAVI DEVI) VICE PRESIDENT JUDICIAL MEMBER VMS. BANGALORE DATED : 15/07/2011 ITA NO.1123/B/10 10 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR I TAT BANGALORE.