ACIT, CHENNAI v. M/s. Caress Beauty Care Products (P) Ltd., CHENNAI

ITA 1431/CHNY/2011 | 2003-2004
Pronouncement Date: 23-11-2011 | Result: Dismissed

Appeal Details

RSA Number 143121714 RSA 2011
Assessee PAN AAACC2016N
Bench Chennai
Appeal Number ITA 1431/CHNY/2011
Duration Of Justice 3 month(s) 12 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. Caress Beauty Care Products (P) Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 23-11-2011
Assessment Year 2003-2004
Appeal Filed On 11-08-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENN AI BEFORE DR.O.K.NARAYANAN VICE PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER .. ITA NO.1431/MDS./2011 ASSESSMENT Y EAR:2003-04 ACIT COMPANY CIRCLE-1(3) CHENNAI. VS. M/S.CARESS BEAUTY CARE PRODUCTS (P) LTD. NO.3 4 TH FLOOR GOKUL ARCADE NO.2 SARDAR PATEL ROAD ADYAR CHENNAI 600 020. PAN AAACC 2016 N (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI A.C.JOSEPH DR ASSESSEE BY : SHRI T.BANUSEKAR C.A. DATE OF HEARING : 17.11.11 DATE OF PRONOUNCEMENT : 23.11. 11 O R D E R PER HARI OM MARATHA JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2 003- 04 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONE R OF INCOME TAX(A) DATED 16.05.2011. THE FACTS LEADING TO THIS APPEAL ARE THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINES S OF MANUFACTURE OF SHAMPOOS AND COLD CREAMS. THE COMPA NY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2003 -04 ON PAGE OF 9 ITA. 1431/MDS/11 2 30.10.03 DECLARING TOTAL INCOME OF RS.53 24 680/-. THIS RETURN WAS PROCESSED U/S.143(1). SUBSEQUENTLY THE REASSE SSMENT PROCEEDINGS U/S.147 R.W.S. 148 WAS INITIATED ON 18. 07.06 AFTER RECORDING REQUISITE REASONS AND REASSESSMENT WAS CO MPLETED ON 26.12.07. THE REASONS FOR REOPENING WAS THAT TH E ASSESSEE HAS CLAIMED WRONG DEDUCTION OF RS.22 85 01 2/- U/S.80 IB OF THE ACT AS IT DOES NOT FALL UNDER THE DEFINITION OF SMALL SCALE INDUSTRY. BUT WHEN THE REASSESSMENT WAS MADE THIS WAS NOT FOUND TO BE CORRECT REASON FOR REOPENI NG AND NO ADDITION WAS MADE IN RESPECT OF THE ABOVE SAID REAS ON. ACCORDINGLY THE LD. COMMISSIONER OF INCOME TAX(A) HAS HELD THE REASSESSMENT ITSELF AS INVALID AND HAS QUASHED THE SAME. NOW THE REVENUE IS IN APPEAL BY RAISING THE FOLLOW ING GROUNDS:- 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN HOLDING THAT REASSESSMENT MADE U/S.147 IS NOT VALID IN LAW; 2.1. THE LEARNED COMMISSIONER OF INCOME TAX(A) OUGH T TO HAVE APPRECIATED THE FACT THAT SEC.147 CONFERS SPECIFIC POWERS ON THE PART OF THE ASSESSING OFFICE R TO PAGE OF 9 ITA. 1431/MDS/11 3 ASSESS OR RE ASSESS THE INCOME CHARGEABLE TO TAX TH AT HAS ESCAPED ASSESSMENT; 2.2. IT IS FURTHER SUBMITTED THAT THE ASSESSMENT OR RE-ASSESSMENT MAD EU/S.147 NEED NOT NECESSARILY RES ULT IN ADDITION ON ACCOUNT OF INCOME THAT WAS ORIGINALL Y BELIEVED TO HAVE ESCAPED ASSESSMENT; 2.3. THE LEARNED COMMISSIONER OF INCOME TAX(A) OUGH T TO HAVE APPRECIATED THE FACT THAT IF THE CLAIM OF T HE ASSESSEE WAS VERIFIED AND FOUND TO BE IN ORDER ON T HE ISSUE IN WHICH THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT THAT TANTAMOUNT TO AN ASSESSMENT AND ANY OTHER ISSUE WHI CH COMES TO THE NOTICE OF THE ASSESSING OFFICER CAN AL SO BE CONSIDERED DURING THE REASSESSMENT PROCEEDINGS; 2.4. IT IS SUBMITTED THAT ANALOGY CAN BE DRAWN EVE N TO THE A REGULAR ASSESSMENT TAKEN UP FOR SCRUTINY WHIC H MAY NOT RESULT IN ANY ADDITION BUT THE INCOME RETUR NED BY THE ASSESSEE HAS BEEN ACCEPTED AND IT IS A VALID ASSESSMENT UNDER THE LAW; 2.5. THE LEARNED COMMISSIONER OF INCOME TAX(A) OUG HT TO HAVE APPRECIATED THE FACT THAT THE RATIO OF THE DECISION OF THE BOMBAY HIGH COURT RENDERED IN THE CASE OF PAGE OF 9 ITA. 1431/MDS/11 4 COMMISSIONER OF INCOME TAX VS. M/S.JET AIRWAYS I LT D. RELIED UPON BY THE LEARNED COMMISSIONER OF INCOME TAX(A) DOES NOT EXPOUND THE LAW IN THE RIGHT PERSPE CTIVE FOR THE REASON THAT THE STATUTE HAS CONFERRED THE R IGHT TO CONSIDER ANY OTHER MATTER DURING THE COURSE OF RE- ASSESSMENT PROCEEDINGS AND BROUGHT THE SAME TO TAX; THIS VIEW IS REITERATED BY THE AMENDMENT TO FINANCE ACT 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.1989 WHIC H ALSO REAFFIRMS THE PROVISIONS OF SEC.147(1). 2.6. IT IS FURTHER SUBMITTED THAT THE VIEWS EXPRES SED IN THE DECISION CITED SUPRA THAT IF THE ISSUE FOR WHIC H THE PROCEEDINGS WERE REOPENED DID NOT RESULT IN ESCAPEMENT OF INCOME THE ASSESSING OFFICER HAS TO REOPEN THE ISSUE INDEPENDENTLY U/S.148 IS CONTRARY TO LAW AS THAT WOULD RESULT IN MULTIPLICITY OF ASSESSM ENT PROCEEDINGS 2. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREF ULLY EXAMINED THE ENTIRE RECORD. THE UNDISPUTED FACTS O F THIS CASE ARE THAT NO ADDITION HAS BEEN MADE IN RESPECT OF TH E REASONS FOR WHICH THE REASSESSMENT PROCEEDINGS WERE INITIAT ED. THE LD. COMMISSIONER OF INCOME TAX (A) HAS TAKEN HIS VI EW BY PAGE OF 9 ITA. 1431/MDS/11 5 FOLLOWING THE DECISION OF THE HONBLE MUMBAI HIGH C OURT AND BY RELYING ON OTHER DECISIONS IN WHICH IT HAS BEEN HELD THAT ONCE REASSESSMENT PROCEEDING IS INITIATED BUT THE REASON RECORDED WAS NOT FOUND TO EXIST THE ASSUMPTION OF T HE JURISDICTION U/S.148 R.W.S.147 IS RENDERED INVALID AND CONSEQUENTLY THE REASSESSMENT ORDER ITSELF BECOMES NULL AND VOID. THE HONBLE BOMBAY HIGH COURT IN THE CASE O F C.I.T. VS. JET AIRWAYS (I) LTD. REPORTED IN [2011] 331 ITR 236 (BOM.) HAS HELD THUS :- EXPLANATION 3 TO SECTION 147 OF THE INCOME TAX ACT 1961 WAS INSERTED BY THE FINANCE (NO.2) ACT OF 2 009 WITH EFFECT FROM APRIL 1 1989. THE EFFECT OF THE EXPLANATION IS THAT EVEN THOUGH THE NOTICE THAT HAS BEEN ISSUED U/S.148 CONTAINING THE REASONS FOR REOPENING THE ASSESSMENT DOES NOT CONTAIN A REFERENCE TO A PARTIC ULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSMENT THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH H AS ESCAPED ASSESSMENT WHEN SUCH ISSUE COMES IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS. PARLIAMENT HAVING U SED THE WORDS ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT THE WORDS AND ALSO CANNOT BE READ AS PAGE OF 9 ITA. 1431/MDS/11 6 BEING IN THE ALTERNATIVE. ON THE CONTRARY THE COR RECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BE ING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGNIFIC ANCE THAT PARLIAMENT HAS NOT USED THE WORD OR. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING TH E WORD AND. THE WORDS AND AS WELL AS ALSO HAVE BEEN USED TOGETHER AND IN CONJUNCTION. EVIDENTLY WHAT PARLI AMENT INTENDS BY USE OF THE WORDS AND ALSO IS THAT THE ASSESSING OFFICER UPON THE FORMATION OF A REASON T O BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOT ICE U/S.148(2) MUST ASSESS OR REASSESS: (I) SUCH INCOME ; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WH ICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTIC E SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDE R THE SECTION. EXPLANATION 3 DOES NOT AND CANNOT OVER RIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONT ENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME (SUCH INCOME) WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO HE CAN ALSO ASSESS OR REA SSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVER IF AFTER ISSUING A NOTICE U/ S.148 HE ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLD S THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REA SON TO PAGE OF 9 ITA. 1431/MDS/11 7 BELIEVE HAD ESCAPED ASSESSMENT HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO A NOTICE U/S.148 WOULD BE NECESSA RY IN ANY EVENT OF CHALLENGE BY THE ASSESSEE. THE FACTS OF THE HONBLE BOMBAY HIGH COURT AND OTH ER DECISIONS RELIED ON BEFORE US NAMELY THE DECISION O F HONBLE RAJASTHAN HIGH COURT IN THE CASE OF C.I.T. VS. DR.D EVENDRA GUPTA [2011] 336 ITR 59 (RAJ.) AND OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD. VS. C.I.T. [2011] 336 ITR 136 DEL) INTER ALIA ARE AKIN TO THE FACTS IN HAND. THEREFORE THE DECISION OF THE LD. COMMISS IONER OF INCOME TAX(A) WHO HAS FOLLOWED THE ABOVE-NAMED DEC ISIONS IS IN LINE WITH THE RATIO OF THE ABOVE JUDGMENTS. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE CONCLUSION REACHED BY LD. C.I.T.(A). IN THAT VIEW OF THE MATTER THE REVENUE CANNOT SUCCEED IN THIS APPEAL. THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD. (SUPRA) A LSO EXTENSIVELY DEALS WITH EXPLANATION 3 APPENDED TO SE CTION 147 OF THE INCOME TAX ACT WHICH WAS INSERTED WITH EFFE CT FROM APRIL 1 1989 SO THE CONTENTION OF THE LD. DR WIT H RESPECT TO GROUNDS OF APPEAL THAT THIS EXPLANATION HAS NOT BEE N CORRECTLY CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IS ACTU ALLY PAGE OF 9 ITA. 1431/MDS/11 8 UNWARRANTED AND OUTSIDE THE SCOPE OF APPEAL BEFORE THE TRIBUNAL. BE THAT AS IT MAY HOWEVER NO PARTY BEF ORE US ACTUALLY ARGUED REGARDING REASSESSMENT PROCEEDINGS WITH REFERENCE TO THE DEFINITION IN SEC.147 UNDER WHICH THE ASSESSING OFFICER HAS POWER TO ASSESS OR REASSES S ANY ESCAPED INCOME AND THAT TOO WHEN THE RETURN HAS ONL Y BEEN PROCESSED U/S.143(1) OF THE ACT WHICH SUBJECT HAS B EEN SUCCINCTLY DEALT WITH IN THE DECISION OF HONBLE SU PREME COURT RENDERED IN THE CASE OF ACIT VS.RAJESH JHAVERI STOC K BROKERS P LTD. [2007] 291 ITR 500 (SC). THEREFORE WE ARE L EFT WITH NO OPTION BUT TO CONFIRM THE IMPUGNED ORDER. ACCORDING LY THIS APPEAL STANDS DISMISSED. 3. IN RESULT THE APPEAL OF REVENUE STANDS DISMISS ED. ORDER PRONOUNCED ON 23 RD NOVEMBER 2011. SD/- SD/- (DR.O.K.NARAYANAN ) ( HARI OM MARATHA ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI DATED THE 23 RD NOVEMBER 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 9 ITA. 1431/MDS/11 9 DATE INITIALS 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHORITY 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER