NARANGS INTERNATIONAL HOTELS P.LTD, MUMBAI v. DCIT 1(2), MUMBAI

ITA 2242/MUM/2010 | 2002-2003
Pronouncement Date: 04-11-2011 | Result: Allowed

Appeal Details

RSA Number 224219914 RSA 2010
Assessee PAN AAACN2084L
Bench Mumbai
Appeal Number ITA 2242/MUM/2010
Duration Of Justice 1 year(s) 7 month(s) 12 day(s)
Appellant NARANGS INTERNATIONAL HOTELS P.LTD, MUMBAI
Respondent DCIT 1(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 04-11-2011
Date Of Final Hearing 18-11-2010
Next Hearing Date 18-11-2010
Assessment Year 2002-2003
Appeal Filed On 22-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI T.R.SOOD(A.M ) ITA NO.2242/MUM/2010(A.Y. 2002-03) NARANG INTERNATIONAL HOTELS PVT. LTD. AMBASSADOR HOTEL MUMBAI 400 020. PAN:AAACN 2084L (APPELLANT VS. DY.COMMISSIONER OF I.T. 1(2) AAYAKAR BHAVAN ROOM NO.535 M.K.ROAD MUMBAI 400 020. (RESPONDENT) ORDER UNDER SECTION 255(4) OF THE ACT ----- THERE WAS A DIFFERENCE OF OPINION BETWEEN THE MEMB ERS WHO HEARD THE ABOVE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF T HE CIT(A) CONFIRMING THE ORDER OF THE AO IMPOSING PENALTY ON THE ASSESSEE U/S.271(1)( C) OF THE ACT. THE FOLLOWING QUESTION WAS REFERRED TO THE HONBLE THIRD MEMBER B Y THE HONBLE PRESIDENT. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY U/S.271(1)(C) WAS LEVIABLE? THE HONBLE THIRD MEMBER VIDE ORDER DATED 7.4.2011 HAS AGREED WITH THE VIEW THAT PENALTY U/S.271(1)(C) IS NOT LEVIABLE. 2. THE CASE WAS FIXED FOR PASSING CONFIRMATORY ORD ER ON 29.04.2011. THE LEARNED D.R. SOUGHT TIME ON THE GROUND THAT THE REVENUE HAS FILED MISCELLANEOUS APPLICATION AGAINST THE ORDER OF THE THIRD MEMBER NOMINATED TO HEAR THE CASE. THE CASE WAS ACCORDINGLY ADJOURNED FROM TIME TO TIME. TO-DAY TH E LEARNED COUNSEL FOR THE ASSESSEE FILED BEFORE US A COPY OF THE ORDER DATED 21.10.2011 WHEREBY THE HONBLE THIRD MEMBER HAS DISMISSED THE MISCELLANEOUS APPLIC ATION FILED BY THE REVENUE. 3. THE LEARNED D.R. HOWEVER SUBMITTED THAT THE REV ENUE INTENDS TO FILE A WRIT PETITION AGAINST THE ORDER OF THE THIRD MEMBER REJECTING THE MISCELLANEOUS APPLICATION OF THE REVENUE AND THAT THE CONFIRMATORY ORDER U/S.255(4) OF THE ACT SHOULD NOT BE PASSED. ITA NO.2242/MUM/2010(A.Y. 2002-03) 2 THE LEARNED D.R. IN THIS REGARD RELIED ON THE DECIS ION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS LTD. VS. DCIT 296 ITR 90(BOM) WHEREIN IT WAS HELD BY THE BOMBAY HIGH COURT THAT WHEN VALIDITY OF INIT IATION OF REASSESSMENT PROCEEDINGS ARE CHALLENGED BEFORE AN AO AND THE SAM E IS REJECTED BY THE AO THE AO SHOULD NOT PROCEED TO PASS AN ORDER OF RE-ASSESS MENT IMMEDIATELY (WITHIN A SHORT TIME) WITHOUT ALLOWING ASSESSEE TIME TO SEEK REMEDY AGAINST REJECTION OF ASSESSEES CLAIM REGARDING INVALIDITY OF INITIATION OF REASSES SMENT PROCEEDINGS. HE ALSO RELIED ON A DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SURENDRA GULABCHAND MODI 140 ITR 517 (GUJ). IN THE SAID CAS E THE ASSESSEE THE ASSESSMENT OF THE ASSESSEE FOR AY 1958-59 DEPENDED ON THE QUESTION WHETHER HUF B WAS DISRUPTED OR NOT IN AY 56-57 AND 57-58 WH ICH WAS PENDING BEFORE THE HONBLE SUPREME COURT. THE ASSESSMENT OF THE ASSES SEE WAS MADE ON A PROTECTIVE BASIS BY THE REVENUE FOR AY 58-59 AND IN AN APPEAL AGAINST SUCH ASSESSMENT BEFORE THE TRIBUNAL THE ASSESSEE PRAYED THAT THE A PPEAL SHOULD BE KEPT PENDING TO AWAIT THE DECISION OF THE HONBLE SUPREME COURT IN THE APPEAL BY THE HUF B. THE TRIBUNAL DID NOT ACCEPT THE REQUEST. ON A REFERENC E THE HONBLE GUJARAT HIGH COURT HELD THAT TO AVOID MULTIPLICITY OF PROCEEDINGS IT W AS LEGAL AND PROPER AS ALSO PRAGMATIC TO GRANT THE REQUEST TO BLOCK THE PROCEEDINGS AND T O ADJOURN THE MATTER AWAITING DECISION OF THE HONBLE SUPREME COURT. 4. WE HAVE CONSIDERED THE SUBMISSION OF THE LEARNE D D.R. AND ARE OF THE VIEW THAT THE SAME ARE WITHOUT ANY MERIT. FIRSTLY U/S.255(4 ) OF THE ACT IF THE MEMBERS OF A BENCH DIFFER IN OPINION ON ANY POINT THE POINT SHA LL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY IF THERE IS A MAJORITY BU T IS THE MEMBERS ARE EQUALLY DIVIDED THEY SHALL STATE THE POINT OR POINTS ON WHICH THEY DIFFER AND THE CASE SHALL BE REFERRED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL FOR HEAR ING ON SUCH POINT OR POINTS BY ONE OR MORE OF THE OTHER MEMBERS OF THE APPELLATE TRIBU NAL AND SUCH POINT OR POINTS SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MA JORITY OF THE MEMBERS OF THE APPELLATE TRIBUNAL WHO HAVE HEARD THE CASE INCLUDI NG THOSE WHO FIRST HEARD IT. THEREFORE WE HAVE NO OTHER OPTION BUT TO PASS AN OR DER IN ACCORDANCE WITH THE OPINION OF THE MAJORITY OF MEMBERS. SECONDLY THE HONBLE THIRD MEMBER IN THE ITA NO.2242/MUM/2010(A.Y. 2002-03) 3 MISCELLANEOUS APPLICATION FILED BY THE REVENUE AGAI NST HIS ORDER HAS HELD THAT AN APPLICATION FOR RECTIFICATION OF MISTAKE APPARENT F ROM THE RECORD LIES U/S.254(2) OF THE ACT ONLY AGAINST AN ORDER PASSED U/S.254(1) OF THE ACT AND THAT THE ORDER OF THE THIRD MEMBER IS NOT AN ORDER PASSED U/S.254(1) OF THE ACT AND THEREFORE THE MISCELLANEOUS APPLICATION AGAINST THE ORDER OF THE THIRD MEMBER W ILL NOT LIE. IT WAS FURTHER HELD BY THE HONBLE THIRD MEMBER THAT THE DECISION RENDERED BY THE THIRD MEMBER IS ONE WHICH DOES NOT FINALLY DISPOSE OF THE APPEAL TILL T HE POINT OR POINTS ARE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY OF THE MEM BERS FOR WHICH ANOTHER ORDER IS TO BE PASSD BY THE TRIBUNAL AND IT IS THIS ORDER WHICH FINALLY DISPOSES OF THE APPEAL. AN APPLICATION UNDER SEC.254(2) WOULD LIE ONLY WHEN TH AT ORDER IS PASSED AND NOT BEFORE. THEREFORE THE GRIEVANCE OF THE REVENUE THA T IT HAS NO REMEDY IN THE GIVEN SITUATION IS WITHOUT ANY BASIS. THIRDLY WHILE PAS SING AN ORDER U/S.255(4) OF THE ACT IT IS OPEN TO THE PARTIES TO ARGUE ON THE MERITS OF TH E DECISION. THE HEARING IS CONFINED ONLY TO GIVE EFFECT TO THE ORDER OF THE MAJORITY OP INION AND THE MERITS OF THE CASE CANNOT BE AGITATED BY THE PARTIES. 5. THE DECISION RELIED UPON BY THE LEARNED D.R. BE FORE US WERE RENDERED IN TOTALLY DIFFERENT CONTEXT AND ARE NOT OF ANY RELEVANCE TO THE PLEA PUT FORTH BY THE LEARNED D.R. BEFORE US. THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PAINTS (SUPRA) WAS BASED ON THE PREMISE THAT THE AS SESSEE WILL LOOSE ITS RIGHT TO CHALLENGE THE VALIDITY OF REASSESSMENT PROCEEDINGS. IN THE PRESENT CASE THE REVENUE HAS STILL A RIGHT TO CHALLENGE THE OPINION OF THE MAJORITY IN A MANNER KNOWN TO LAW. THE DECISION IN THE CASE OF CIT VS. SURENDRA GULABCHAND MODI (SUPRA) IS AGAIN A CASE OF PROTECTIVE AND SUBSTANTIVE ASSESSMENT WH ICH STAND ON A TOTALLY DIFFERENT FOOTING FROM THE FACTS OF THE PRESENT CASE. WE ARE THEREFORE UNABLE TO ACCEPT THE STAND OF THE LEARNED D.R. BEFORE US. 6. IN ACCORDANCE WITH THE OPINION OF THE MAJORITY OF MEMBERS WE HOLD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE PENALTY U/S.271 (1)( C) OF THE ACT IS NOT LEVIABLE. THE APPEAL OF THE ASSESSEE STAND ALLOWED AND THE OR DERS OF THE REVENUE AUTHORITIES ITA NO.2242/MUM/2010(A.Y. 2002-03) 4 IMPOSING PENALTY ON THE ASSESSEE ARE CANCELLED. TH E APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS THE 4 TH DAY OF NOVEMBER 2011. SD/- S D/- (T.R.SOOD) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 4 TH NOVEMBER 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RB BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. ITA NO.2242/MUM/2010(A.Y. 2002-03) 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER