DCIT, New Delhi v. M/s Samcor Glass Ltd.,, New Delhi

ITA 3767/DEL/2009 | 2000-2001
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 376720114 RSA 2009
Assessee PAN AAACS2730C
Bench Delhi
Appeal Number ITA 3767/DEL/2009
Duration Of Justice 1 year(s) 10 month(s) 24 day(s)
Appellant DCIT, New Delhi
Respondent M/s Samcor Glass Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 29-07-2011
Date Of Final Hearing 19-07-2011
Next Hearing Date 19-07-2011
Assessment Year 2000-2001
Appeal Filed On 04-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA HONBLE VICE PRESI DENT & SHRI I.P. BANSAL JUDICIAL MEMBER ITA NO. 3767/DEL/2009 ASSESSMENT YEARS: 2000-01 DCIT VS. SAMCOR GLASS LTD. CIRCLE 7(1) PLOT NO. 7 6 TH FLOOR TDI CENTRE ROOM NO. 312 3 RD FLOOR JASOLA DISTRICT COMPLEX C.R. BUILDING I.P. ESTATE NEW DELHI. NEW DELHI. AAACS2730C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SURJANI MOHANTY SR. DR RESPONDENT BY : SH. AJAY VOHRA ADV. & SH. SACHIT JOLLY AR ORDER PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A) DATED 03.06.2009 FOR A.Y . 2000-01. GROUNDS OF APPEAL READ AS UNDER: - 1. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT RE-OPENI NG OF THE ASSESSMENT WAS INCORRECT AND INVALID. 2. LD. CIT(A) ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 84 60 834/- MADE BY THE AO ON ACCOUNT OF PRIOR PERIOD EXPENSES. 3. THE APPELLANT CRAVES TO AMEND MODIFY ALTER ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. ITA NO. 3767/D/2009 2 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALES OF GLASS SHELLS FUNNELS AND PANELS. ORIGINALLY ASSESSMENT WAS COMPLETED VIDE ORDER DATED 28.2.03 U /S 143(3) OF THE ACT AT A LOSS OF RS. 37 18 75 440/- AGAINST WHICH T HE ASSESSEE HAD FILED AN APPEAL AND AN ORDER GIVING APPEAL EFFECT WAS PAS SED ON 14.6.2005 U/S 250/154/143(3) OF THE INCOME TAX ACT 1961 WHE REIN INCOME WAS COMPUTING U/S 115JA AT BOOK PROFIT OF RS. 10 26 001 /-. IN PURSUANCE OF AUDIT OBJECTION THE AO INITIATED REASSESSMENT PROCE EDINGS BY RECORDING THE FOLLOWING REASONS: - 29.3.2007- THE ASSESSMENT IN THE ABOVE SAID CASE WAS COMPLETED U/S 143(3) AT A LOSS OF RS. 37 18 75 440/-. FROM THE PERUSAL OF THE ASSESSMENT RECORD IT IS FOUND THAT THE ASSESSEE HAS DEBITED T O THE PROFIT AND LOSS ACCOUNT PRIOR PERIOD EXPENSES OF RS . 84 60 834/-. SINCE THE ASSESSEE IS FOLLOWING MERCA NTILE SYSTEM OF ACCOUNTING PRIOR PERIOD EXPENSES IS AN INADMISSIBLE EXPENSES WHICH SHOULD HAVE BEEN DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THIS HAS RESULTED IN AN ESCAPEMENT OF AN INCOME OF RS. 84 60 834/-. I THEREFORE HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSED. 3. THE AO MADE THE ADDITION OF RS. 84 60 834/- TO T HE INCOME OF THE ASSESSEE AND HAS COMPUTED LOSS TO BE CARRIED FORWAR D OF RS. 27 07 49 289/- UNDER THE NORMAL PROVISIONS OF THE A CT AND BOOK PROFIT HAS BEEN COMPUTED AT THE SIMILAR FIGURE OF RS. 10 2 6 001/-. ITA NO. 3767/D/2009 3 4. IN THE STATEMENT OF FACTS FILED BEFORE CIT(A) T HE FACTS STATED WERE AS UNDER: - THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALES OF GLASS SHELLS FUNNELS AND PANELS. THE ASSESSING OFFICE FRAMED THE ORIGINAL ASSESSMENT VIDE ORDER U/S 143(3) DATED 28.2.2003 AT A LOSS OF RS. 371875440 AFTER MAKING CERTAIN DISALLOWANCES. THE SAID ASSESSMENT IS REOPENED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS VIDE NOTICE U/S 148 DATED 29.3.2007 ALLEGING INCORRECT ALLOWANCE OF PRIOR PERIOD EXPENSES IN THE ORIGINAL ASSESSMENT. THE APPELLANT COMPANY IN THE FOLLOWING GROUNDS OF APPEAL GROSSLY DISPUTES THE ENTIRE SUCH TOTAL ACTION OF THE AO IN REOPENING ALREADY CONCLUDED ASSESSMENT. 1. JURISDICTION - GR. NO. 1 & 2 IN THE PROFIT AND LOSS ACCOUNT THE APPELLANT COMPANY HAS CHARGED EXPENDITURE AGGREGATING TO RS. 8460834 COMPRISING OF LEGAL & PROFESSIONAL DISCOUNTS AND INTEREST EXPENSE PERTAINING TO EARLIER YEARS YET CRYSTALLIZED DURING THE PREVIOUS YEAR. A DETAILED DISCLOSURE TO THIS EFFECT IS CONTAINED IN NOTE NO. 11 OF SCHEDULE 20 TO THE BALANCE SHEET & PROFIT AND LOSS ACCOUNT IN THE ANNUAL REPORT ANNEXED TO THE RETURN OF INCOME. IN THE PARALLEL THE TAX AUDIT REPORT ALSO CONTAIN DETAILS THEREOF AT CLAUSE 22(B) IN FORM 3CD FOLLOWED BY DETAILS IN ANNEXURE XIII TO SUCH REPORT. THE AO HOWEVER CHOSE TO REOPEN THE SUBJECT MATTER OF ALLOWANCE OF SUCH PRIOR EXPENSES SOLELY ON THE BASIS OF RECEIPT OF AUDIT OBJECTION O F ITA NO. 3767/D/2009 4 REVENUE AUDIT PARTY ALLEGING AS INCORRECT SUCH ALLOWANCE OF DEDUCTION IN THE ORIGINAL ASSESSMENT. THE AO TO THE CONTRARY DID NOT RECORD HER OWN SATISFACTION AND HAS NOT EVEN DETAILED OUT ANY FACT OF ESCAPEMENT OF INCOME BY REASON OF THE FAILURE ON THE PART OF THE APPELLANT COMPANY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. 5. SO AS IT CAN BE SEEN FROM THE AFOREMENTIONED STA TEMENT OF FACTS AND GROUNDS THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT INITIATION OF REASSESSMENT PROCEEDINGS ITSELF IS BAD. IT WAS ALS O SUBMITTED BY THE ASSESSEE BEFORE CIT(A) THAT AO DURING THE COURSE O F ORIGINAL ASSESSMENT PROCEEDINGS HAD ENQUIRED ABOUT THE ALLO WABILITY OF PRIOR PERIOD EXPENSES AGAINST WHICH A DETAILED REPLY WAS SUBMITTED AND AFTER CONSIDERING THE SAID REPLY THE AO DID NOT MAKE ANY ADDITION THEREFORE THE INITIATION OF REASSESSMENT PROCEEDING IS BASED ON CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN LAW. SIMILARLY IT WAS PLEADED THAT THERE BEING NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE ALL THE MATERIAL FACTS REQUIRED FOR ASSESSMENT OF THE ASSESSEE THE ASSESS MENT COULD NOT HAVE BEEN REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AS PER PROVISO TO SEC.147. OTHERWISE IT WAS PLEADED THAT AS PER METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE THE PRIOR PERIOD EXPENSES WERE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION HENCE THEY ARE ALLOWABLE ON MERITS. LD. CIT(A) HAS ACCEPTED ALL THESE SUBMISSIONS OF THE ASSESSEE AND HAS ALLOWED THE ITA NO. 3767/D/2009 5 APPEAL FILED BY THE ASSESSEE. THE REVENUE IS AGGRI EVED HENCE HAS RAISED AFOREMENTIONED GROUNDS OF APPEAL. 6. IN THE PAPER BOOK THE ASSESSEE HAS FILED COPY O F THE QUESTIONNAIRE ISSUED BY THE AO DATED 13.12.2002 DUR ING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND VIDE ITEM NO. 2 0 THE FOLLOWING QUERY WAS RAISED BY THE AO WITH REGARD TO IMPUGNED DISALLOWANCE: - 20. GIVE REASON AS TO WHY EXPENSES PERTAINING TO EARLIER YEARS (RS. 84 60 834/- FOR 1999-2000 AND RS . 16 71 194/- FOR 1998-99) SHOULD BE ALLOWED DURING T HE YEAR. 7. THE APPEAL PARTLY WAS HEARD ON 19.07.2011 WHEN L D. COUNSEL OF THE ASSESSEE WAS REQUIRED TO SUBMIT COPY OF THE REP LY FILED BY THE ASSESSEE IN RESPONSE TO AFOREMENTIONED QUERY. THE APPEAL WAS ADJOURNED TO 21.07.2011. ON 21.07.2011 THE ASSESSE E HAS SUBMITTED FOLLOWING REPLY TO THE AFOREMENTIONED QUERY OF AO: - 27.02.2003 THE DY. COMMISSIONER OF INCOME TAX CIRCLE 7(1) C.R. BUILDING NEW DELHI. SIR SUBJECT: ASSESSMENT PROCEEDINGS FOR AY 2000-01 IN THE CASE OF SAMCOR GLASS LTD. PLEASE REFER TO THE PROCEEDINGS IN THE CAPTIONED CA SE. THE DESIRED INFORMATION IS FURNISHED AS UNDER. EXPIRED PERTAINING TO EARLIER YEARS IN REGARD TO YOUR HONOURS REFERENCE TO THE AMOUNT OF RS. 8460834 DEBITED UNDER VARIOUS HEADS IT IS RESPECTFULLY SUBMITTED THAT THE LIABILITY IN EACH O F SUCH ITA NO. 3767/D/2009 6 CASE IS CRYSTALLIZED DURING THE PREVIOUS YEAR EITHE R ON ACCOUNT OF RECEIPT AND ACCEPTANCE OF DEBIT NOTE SUBSEQUENT TO THE DATE OF PREPARATION OF ACCOUNTS F OR THE IMMEDIATE PRECEDING PREVIOUS YEAR OR FOR SUCH LIABILITY ARISING UPON REACHING FINAL SETTLEMENT WI TH THE VENDOR. IN THIS CONNECTION WE ENCLOSE HEREWITH A COPY OF DE BIT NOTE DATED 15.05.1999 AND COPY OF CORRESPONDENCE FOR FINAL SETTLEMENT MADE DURING THE PREVIOUS YEAR FOR INTEREST TO SUPPLIERS. IN THE SIMILAR SET OF CIRCUMSTANCES IN THE CASE OF CIT V. GOWAR SONS PUBLICATIONS (P) LTD. (116TAX393) THE ASSESSEE USED TO ENTER DEBIT NOTES RECEIVED FROM TH E SUPPLIERS/VENDORS IN THE YEAR OF RECEIPT. THE DELH I HIGH COURT AFFIRMED THE ACTION OF THE TRIBUNAL IN ALLOWING DEDUCTION FOR LIABILITY HAVING ARISEN ON R ECEIPT OF DEBIT NOTES DURING THE PREVIOUS YEAR. ANY OTHER INFORMATION THAT YOUR HONOUR SHALL CONSID ER NECESSARY WILL BE FURNISHED GLADLY. 8. ON THESE FACTS PRESENT APPEAL WAS HEARD. IT IS THE MAIN CASE OF THE LD. AR THAT PROVISO TO SEC. 147 DEBARS THE INIT IATION OF REASSESSMENT PROCEEDING AS THERE IS NO ALLEGATION BY THE REVENUE THAT THE AFOREMENTIONED DISALLOWANCE HAS ESCAPED DUE TO THE REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE SECOND CONTENTIO N OF LD. AR IS THAT THE INITIATION OF REASSESSMENT PROCEEDING IS BAD IN LAW AS IT IS BASED ON CHANGE OF OPINION AS THE SAID ISSUE WAS ENQUIRED IN TO BY THE AO AND A REPLY WAS SUBMITTED AND AO HAD ACCEPTED THE CLAIM O F THE ASSESSEE AND SUCH ACCEPTANCE OF CLAIM CANNOT SAID TO BE AN IMPOS SIBLE VIEW ADOPTED BY THE AO AS THE PRIOR PERIOD EXPENSES WERE CLAIMED ONLY ON THE CRYSTALLIZATION THEREOF. FOR SUPPORTING SUCH CONTE NTION LD. AR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF CIT VS. ITA NO. 3767/D/2009 7 KELVINATOR OF INDIA LTD. 320 ITR 561 WHEREIN IT HA S BEEN HELD THAT MERE CHANGE OF OPINION CANNOT PER SE BE THE REASON TO RE OPEN. 9. ON THE OTHER HAND RELYING UPON THE ASSESSMENT O RDER IT WAS PLEADED BY LD. DR THAT THE INCOME HAD ESCAPED ASSES SMENT AND THEREFORE THE AO WAS RIGHT IN EXERCISING HIS POWER TO MAKE REASSESSMENT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE ASSESSMENT YEAR INV OLVED IN THE PRESENT CASE IS A.Y. 2000-01. SECTION 147 EMPOWERS THE DEP ARTMENT TO INITIATE REASSESSMENT PROCEEDINGS IN THE CASE OF INCOME ESCA PING ASSESSMENT. PROVISO RAISES AN EXCEPTION TO THE MAIN PROVISION O F SEC. 147. PROVISO READ AS UNDER: - PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SEC. 143 OR THIS SECTION HAS BEEN MA DE FOR THE RELEVANT ASSESSMENT YEAR NO ACTION SHALL B E TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 O R IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SEC. 142 OR SEC. 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR TH AT ASSESSMENT YEAR; ITA NO. 3767/D/2009 8 11. THEREFORE IT HAS TO BE SEEN THAT WHETHER THE C ASE OF THE ASSESSEE FALLS UNDER EXCEPTION LAID DOWN IN AFOREME NTIONED PROVISO. FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WILL END AS ON 31.3.2005 AND NOTICE IN THE PRESENT CASE U/S 148 HA S BEEN ISSUED ON 29.3.2007 WHICH FALLS BEYOND THE FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR. NOW IT HAS TO BE EXAMINED THAT WH ETHER THERE IS FAILURE OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH THE NOTICE ISSUED SUB-SECTION (1) OR SEC. 148. THERE IS NO SUCH ALLEGATION EITHER BY THE AO OR BY THE DEPARTMENT. THEREFORE THE ONLY THING WHICH IS TO BE EXAMINED IS THAT WHETHER THERE IS A FAILURE OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. THERE IS ALSO NO SUCH ALLEGATION BY THE DEPA RTMENT. ALL THE FACTS WERE DULY DISCLOSED AND IT IS ONLY FROM THE PERUSAL OF ASSESSMENT RECORD THE AO HAS REVEALED THE SO CALLED ESCAPEMENT OF INC OME. THE REASONS HAVE ALREADY BEEN REPRODUCED IN WHICH IT HAS BEEN C LEARLY WRITTEN BY THE AO FROM THE PERUSAL OF THE ASSESSMENT RECORD IT I S FOUND THAT ASSESSEE HAS DEBITED TO THE PROFIT AND LOSS ACCOUNT PRIOR PE RIOD EXPENSES OF RS. 84 60 834/- WHICH ACCORDING TO AO SHOULD HAVE BEEN DISALLOWED AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM. ALL THES E FACTS WERE ALREADY FOUND FROM THE RECORD. NOT ONLY ALL THESE FACTS WE RE AVAILABLE ON THE RECORD BUT AO ALSO HAD MADE ENQUIRY ABOUT THIS CLAI M OF THE ASSESSEE AND REPLY WAS ALSO FILED WHICH CLARIFIES THAT ALL T HE MATERIAL WAS MADE AVAILABLE TO THE AO WITH REGARD TO IMPUGNED AMOUNT. THUS IT CANNOT BE INFERRED THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ITA NO. 3767/D/2009 9 FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT OF THE ASSESSEE. THEREFORE IT CAN BE HELD THAT LD. CIT( A) WAS RIGHT IN HOLDING THAT INITIATION OF REASSESSMENT PROCEEDING WAS BARR ED BY THE PROVISO TO SEC. 147. THE REASSESSMENT IS ALSO BASED ON CHANGE OF OPINION AS EARLIER THE AO HAD FORMED AN OPINION BECAUSE THE AS SESSEE WAS REQUIRED TO EXPLAIN ABOUT THE ALLOWABILITY OF THESE EXPENDITURES AND EXPLANATION WAS FURNISHED BY THE ASSESSEE. THEREFO RE ALSO THE INITIATION OF REASSESSMENT PROCEEDING IS BAD IN LAW. AS WE HA VE HELD THAT INITIATION OF REASSESSMENT PROCEEDING IN ITSELF IS BAD IN LAW THEREFORE QUESTION OF ADDITION OF THE IMPUGNED AMOUNT DOES NO T ARISE. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). THE SAME IS CONF IRMED. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY 2011. SD/- SD/- (G.E. VEERABHADRAPPA) (I.P. BANSAL ) VICE PRESIDENT JUDICIAL MEMBER DATED: 29.7.11 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR