M/s.N.K.Mohammed Ali & Bros, Calicut v. ACIT, Calicut

ITA 165/COCH/2013 | 2004-2005
Pronouncement Date: 31-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 16521914 RSA 2013
Assessee PAN AACFN9210H
Bench Cochin
Appeal Number ITA 165/COCH/2013
Duration Of Justice 3 month(s) 28 day(s)
Appellant M/s.N.K.Mohammed Ali & Bros, Calicut
Respondent ACIT, Calicut
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 31-07-2013
Date Of Final Hearing 17-06-2013
Next Hearing Date 17-06-2013
Assessment Year 2004-2005
Appeal Filed On 02-04-2013
Judgment Text
ITA NO S . 165 &H 138/ COCH/ 2013 1 IN THE INCOME TAX APELALTER TIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S. GANESAN JM & B. R. S BASKARAN AM ITA NO. 165 /COCH/ 2013 & ITA NO.138/COCH/2013 (ASST YEAR 2004 - 05 ) M/S N K MOHAMMED ALI & BROS 6/1183 KUNHIPARI BUILDINGS CHEROOTY ROAD KOZHIKOD E VS THE ASST COMMR OF INCOME TAX CIRCLE 1(1) KOZHIKODE ( APPELLANT /RESPONDENT ) (RESPONDENT /APPELLANT ) PAN NO. AA CFN 9210H ASSESSEE BY SHRI A S NARAYANAMOORTHY REVENUE BY SMT S VIJAYAPRABHA JR - DR DATE OF HEARING 17 TH JUNE 1013 DATE OF PRONOU NCEMENT 31 ST JULY 2013 OREER PER B.R. BASKARAN AM: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 0 4. 0 1.2013 PASSED BY THE LD CIT(A) KOZHIKODE AND THEY RELATE TO ASSESSMENT YEAR 2004 - 05. 2 THE REVENUE IS CHALLENGING THE DECISION OF THE LD CIT(A) IN CANCELLING THE ASSESSMENT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE I T ACT. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE LD CIT(A) IN NOT DISPOSING THE GROUND RAISED BY IT CHALLENGING THE VALIDITY OF THE REOPENING OF THE ASSESSMENT. 3 T HE FACTS RELATING T O THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM. THE ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED U/S ITA NO S . 165 &H 138/ COCH/ 2013 2 143(3) OF THE ACT ON 27 - 03 - 2006. SUBSEQUENTLY THE AO NOTICED THAT THE AS SESSEE HAS RECEIVED FUNDS FROM THE FOLLOWING CONCERNS: A) PARRISONS ROLLER FLOUR MILLS P LTD B) KODANDARAM ROLLER FLOUR MILLS P LTD THE AO FURTHER NOTICED THAT THE PARTNERS OF THE ASSESSEE FIRM W ERE VOTING RIGHTS OF NOT LESS THAN 10% OF THE TOTAL VOTING RIGHTS AND HENCE THE AO HELD THAT THE FUNDS RECEIVED FROM THE ABOVE SAID TWO COMPANIES RESTRICTED TO THE EXTENT OF ACCUMULATED PROFITS AVAILABLE WITH RESPECTIVE COMPANIES ARE ASSESSABLE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT IN THE HANDS OF THE ASSES SEE FIRM. HENCE THE AO RE - OPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT ON 19 - 11 - 201 - . IN THE REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASSESSED A SUM OF RS.5 60 57 835/ - AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. 4. THE ASSESS EE CHALLENGED THE ASSESSMENT ORDER BY FILING APPEAL BEFORE THE LD CIT(A) BY URGING FOLLOWING ISSUES: - (A) V ALIDITY OF THE REOPENING OF THE ASSESSMENT PROCEEDINGS . (B) VALIDITY OF ASSESSMENT OF DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE FIRM WHEN IT DO ES NOT HOLD THE SHARES IN THE TWO COMPANIES REFERRED ABOVE. 5. THE LD CIT(A) NOTICED THAT AN IDENTICAL ISSUE WAS CONSIDERED IN THE ASSESSEE S OWN CASE BY THE COCHIN BENCH OF THE TRIBUNAL IN ITA NO.653/COCH/2010 RELATING TO THE AY 2006 - 07 AND THE TRIBU NAL HAD SET ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE CERTAIN FACTUAL ASPECTS AND TAKE DECISION AS PER THE DECISION OF THE MUMBAI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS BHAUMIK COLOUR LABORATORIES P LTD REPORTED IN 313 ITR (AT) 146. HENCE T HE LD CIT(A) HELD THAT THE ASSESSMENT U/S 2(22)(E) OF THE ACT CANNOT BE MADE IN THE HANDS OF THE ITA NO S . 165 &H 138/ COCH/ 2013 3 ASSESSEE FIRM. SINCE T HE LD CIT(A) DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE HE DID NOT CHOOSE TO ADJUDICATE O THE R GROUND RELATING TO VALIDITY OF THE REOPENING OF THE ASSESSMENT. AGGRIEVED BY THE ORDER OF THE LD CIT(A) BOTH THE PARTIES HAVE COME ON APPEAL BEFORE US. 6. ACCORDING TO THE L D AR OF THE ASSESSEE THE REOPENING OF THE ASSESSMENT U/S 147 IS NOT VALID IN ACCORDANCE WITH THE MANDATE OF PROVISIONS OF SEC. 147 OF TH E ACT SINCE THE AO HAS REOPENED THE ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE INSTANT ASSESSMENT YEAR WITHOUT PROVING THAT THE INCOME HAS ESCAPED THE ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. HE FURTHER SUBMITTED THAT THE AO HAS REOPENED THE ASSESSMENT ON MERE CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN LAW. WITH REGARD TO THE MERITS THE LD A.R SUBMITTED THA T THE LD CIT(A) HAS FOLLOWED THE DECISION OF THIS BENCH OF TRIBUNAL ONLY. 7 . THE LD D.R SUBMITTED THAT THE LOAN RECEIVED FROM THE COMPANIES IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED IS ASSESSABLE IN THE HANDS OF THE ASSESSEE FIRM HEREIN EVEN I F THE SHARE CAPITAL OF THOSE COMPANIES ARE HELD BY THE PARTNERS OF THE ASSESSEE FIRM. 8 . WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE RECORD. ADMITTEDLY THE LD CIT(A) DID NOT ADJUDICATE THE ISSUE RELATING TO VALIDITY OF REOPENING OF ASSESSMENT . THERE SHOULD NOT BE ANY DOUBT THE ISSUE OF VALIDITY OF REOPENING OF ASSESSMENT IS A LEGAL ISSUE AND IT GOES TO THE ROOT OF THE CASE AND ACCORDINGLY IN OUR CONSIDERED VIEW THE SAME SHOULD HAVE BEEN ADJUDICATED BY THE LD CIT(A) BEFORE CONSIDERING THE ISSUES URGED ON MERITS . ITA NO S . 165 &H 138/ COCH/ 2013 4 9 . WITH REGARD TO THE ASSESSMENT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT WE NOTICE FROM THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN 653/COCH/2010 (REFERRED SUPRA) THAT THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE FI LE OF THE AO WITH A DIRECTION TO VERIFY CERTAIN FACTUAL ASPECTS. HOWEVER IN THE INSTANT CASE THE LD CIT(A) HAS DELETED THE ASSESSMENT OF DEEMED DIVIDEND WITH THE PRESUMPTION THAT THE TRIBUNAL HAS ALSO DELETED THE ASSESSMENT IN AN ANOTHER YEAR. THE SAID PRESUMPTION ENTERTAINED BY LD CIT(A) IS NOT CORRECT AND HENCE IN OUR VIEW HIS ORDER GETS VITIATED. IN OUR VIEW THE FIRST APPELLATE AUTHORITY SHOULD HAVE TAKEN DECISION AFTER CONSIDERING THE FACTS RELATING TO THE IMPUGNED ISSUE AS DISCUSSED IN THE ORD ER OF THE TRIBUNAL . HENCE IN OUR VIEW THIS ISSUE ALSO REQUIRES ADJUDICATION AT THE END OF THE LD CIT(A). 10 . ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD CIT(A) AND RESTORE THEM TO HIS FILE WITH THE DIRECTION TO EXAMINE THE APPEAL FILED BY THE A SSESSEE AFRESH AND ADJUDICATE ALL THE ISSUES URGED RAISED BY THE ASSESSEE BY PASSING A SPEAKING ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11 . IN THE RESULT THE APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY 2013. SD/ - SD/ - (N.R.S. GANESAN) ( B.R. BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 31 ST J ULY 2013 RAJ* ITA NO S . 165 &H 138/ COCH/ 2013 5 COPY TO: 1. APPELLANT 2. RES PONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT COCHIN