GODFREY PHILIPS INDIA LTD., MUMBAI v. DCIT 8(1), MUMBAI

ITA 408/MUM/2009 | 2002-2003
Pronouncement Date: 28-09-2011 | Result: Allowed

Appeal Details

RSA Number 40819914 RSA 2009
Assessee PAN AABCG4768K
Bench Mumbai
Appeal Number ITA 408/MUM/2009
Duration Of Justice 2 year(s) 8 month(s) 8 day(s)
Appellant GODFREY PHILIPS INDIA LTD., MUMBAI
Respondent DCIT 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 28-09-2011
Date Of Final Hearing 14-09-2011
Next Hearing Date 14-09-2011
Assessment Year 2002-2003
Appeal Filed On 19-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.408/MUM/2009 (ASSESSMENT YEAR: 2002-03) GODFREY PHILIPS INDIA LTD. SAHAR ROAD CHAKALA ANDHERI (E) MUMBAI -400 099 ....... APPELLANT VS DCIT -8(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI ..... RESPONDENT ITA NO.641/MUM/2009 (ASSESSMENT YEAR: 2002-03) ACIT -8(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 ....... APPELLANT VS GODFREY PHILIPS INDIA LTD. SAHAR ROAD CHAKALA ANDHERI (E) MUMBAI -400 099 ..... RESPONDENT PAN: AABCG 4768 K APPELLANT-ASSESSEE BY: SHRI YOGESH THAR RESPONDENT-REVENUE BY: SHRI PAVAN VED DATE OF HEARING: DATE OF PRONOUNCEMENT: 14.09.2011 28.09.2011 O R D E R PER R.S. PADVEKAR JM: THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND ANO THER BY THE REVENUE PERTAIN TO THE A.Y. 2002-03 IN WHICH THE IM PUGNED ORDER OF ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 2 THE LD. CIT (A)-VIII MUMBAI DATED 17.11.2008 IS CHA LLENGED. 2. WE FIRST TAKE THE ASSESSEES APPEAL BEING ITA NO .408/M/2009 FOR DISPOSAL AS THE ASSESSEE HAS CHALLENGED THE LEG ALITY AND VALIDITY OF THE REOPENING OF THE PRESENT ASSESSMENT U/S.147 OF THE I.T. ACT. 3. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. IN THIS CASE THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS CO MPLETED U/S.143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 3 1.12.2004. SUBSEQUENTLY THE A.O. INITIATED REASSESSMENT PROCE EDINGS WITHIN 4 YEARS FROM THE END OF THE ASSESSMENT YEAR 2002-03 A ND THE BENEFIT OF THE PROVISO TO SEC.147 IS NOT AVAILABLE TO THE ASSE SSEE. 4. THE ASSESSEE IS INVOLVED IN MANUFACTURING AND TR ADING OF TOBACCO PRODUCTS AND TEA. THE ASSESSEE FILED ITS R EGULAR RETURN OF INCOME U/S.139 FOR THE A.Y. 2002-03 ON 30.10.2002 D ECLARING INCOME OF ` 69 47 89 320/-. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 31.12.2004 IN WHICH THE TOTAL INCOME WAS DET ERMINED AT ` 72 65 25 780/-. SUBSEQUENTLY THE A.O. ISSUED THE NOTICE U/S.148 OF THE ACT DATED 28.03.2007 AND THE REASON FOR REOPENI NG ARE AS UNDER:- THE RETURN OF INCOME DECLARING TOTAL INCOME OF ` 69 47 89 320/- WAS FILE BY THE ASSESSEE ON 31.10.2002 AND THE ASSE SSMENT U/S.143(3) OF THE I.T. ACT WAS COMPLETED ON 31.12.2 004. IT IS SEEN FROM THE PROFIT AND LOSS ACCOUNT THAT TH E ASSESSEE HAS SHOWN INCOME UNDER SUNDRIES AMOUNTING TO ` 251. 05 LAKHS AND THE DETAILS OF THE SAME ARE NOT FILED BY THE ASSESS EE. HOWEVER IT IS SEEN FROM THE TDS CERTIFICATE SUBMITTED BY THE A SSESSEE THAT THE ASSESSEE HAS RECEIVED BROKERAGE COMMISSION AND HAS ALSO INCOME UNDER THE HEAD WINNING FROM LOTTERIES. HOWE VER THE ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 3 AMOUNT OF ` 251.05 LAKHS HAS NOT BEEN CONSIDERED AS OTHER INCOME WHILE COMPUTING DEDUCTION U/S.80HHC. FURTHER IT IS SEEN THAT SALES OF ` 1 45 25 831/- HAS NOT BEEN CONSIDERED WHILE ADOPTING THE FIGURE OF TOTAL TURNO VER. THE TOTAL TURNOVER SHOULD HAVE BEEN ` 9 45 47 65 543/- AS AGAINST ` 9 44 02 39 712/- ADOPTED BY THE ASSESSING OFFICER. IT IS ALSO NOTED THAT INDIRECT-EXPENSES HAVE NOT BE EN APPORTIONED CORRECTLY. THE EXPENDITURE RELATING TO EXPORT DIVI SION HAS ONLY TAKEN INTO ACCOUNT AND HEAD OFFICE EXPENSES HAVE NO T BEEN CONSIDERED ACCORDINGLY WHILE APPORTIONING THE INDIR ECT EXPENSES ATTRIBUTABLE TO TRADING GOODS WHICH IS WORKED OUT TO ` 28.92 LAKHS. THEREFORE I HAVE REASON TO BELIEVE THAT THERE IS A N EXCESS OF ALLOWANCE DEDUCTION TO THE TUNE OF ` 19 90 000 AND THEREFORE THE CASE IS BEING REOPENED BY ISSUE OF NOTICE U/S.148 O F THE I.T. ACT. 5. IN SUM AND SUBSTANCE ONLY REASON GIVEN BY THE A .O. FOR REOPENING OF THE ASSESSMENT THAT EXCESS DEDUCTION U/S.80HHC TO THE TUNE OF ` 90 90 000/- HAS BEEN ALLOWED WHILE COMPLETING THE ASSESSMENT U/S.143(3). THE ASSESSEE RESISTED THE A CTION OF THE A.O. BUT WITHOUT ANY SUCCESS. THE A.O. PASSED THE ASSES SMENT ORDER U/S.143(3) R.W.S. 147 DATED 20.12.2007 RESTRICTING THE DEDUCTION U/S.80HHC TO ` 45 69 543/- AS AGAINST ` 67 55 856/- ALLOWED IN THE ORIGINAL ASSESSMENT ORDER. IN THE OPINION OF THE A .O. THE RE- COMPUTATION OF THE DEDUCTION U/S.80HHC WAS NECESSAR Y FOR THE FOLLOWING REASONS:- (I) WHILE COMPUTING THE TOTAL TURNOVER THE ASSESSEE DI D NOT INCLUDE SALES-TAX AMOUNT WHICH PARTAKES THE CHARAC TER OF ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 4 THE TRADING RECEIPT AND HENCE THE SAME WAS REQUIRED TO BE ADDED TO THE TOTAL TURNOVER. (II) IN COMPUTING PROFIT FROM TRADING EXPORT THE ASSESS EE HAS TAKEN INDIRECT EXPENSES AT ` 27 227/- FOR THE EXPORT TURNOVER ON TRADING GOODS OF ` 1 59 99 004/- AND THE SAME WAS UNDERSTATED COMPARED TO THE EXPORT TURNOVE R TAKEN AT ` 10 99 01 907/-. THE ASSESSEE HAD ADDED THE HEAD OFFICE EXPENSES TO THE INDIRECT EXPENSES AND T HEN TOTAL INDIRECT EXPENSES WERE CONSIDERED WHILE COMPU TING THE PROFIT FROM THE TRADING EXPORT. (III) WHILE COMPUTING THE PROFITS OF THE BUSINESS 90% OF THE INCOMES / RECEIPT OF FOLLOWING ITEMS WERE NOT EXCLU DED :- DETAILS ` IN LAKH A) SALE OF SCRAP STEM BITS & OFFAL ETC. 44.84 B) DISCOUNT RECEIVED 32.55 C) COST OF DAMAGES/ LOSSES CLAIMED FROM CARRIERS / INSURANCE COMPANIES 25.88 D) MISC. RECEIPTS INCLUDING PENALTIES LEVIED ON TRANSPORTERS UNCLAIMED LIABILITIES WRITTEN BACK SALES-TAX REFUND PREMIUM ON SALES OF LICENSES ETC. 147.78 ------------- 251.05 ======== 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE LD. COUNSEL SUBMITS THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH ANY PARTICULARS NOR THE ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS. HE TAKES US THROUGH THE ORIGINAL ASSESSMENT ORDER PASSED U/S.143(3) ON 31.1 2.2004 AND SUBMITS THAT SO FAR AS QUANTUM OF DEDUCTION U/S.80H HC IS ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 5 CONCERNED THE A.O. HAS GONE INTO THE DETAILS AND H AS COMPUTED THE ALLOWABLE DEDUCTION AND SAME IS VERY CLEAR FROM THE ANNEXURE-A TO THE ASSESSMENT ORDER. HE SUBMITS THAT EVEN IF THE REOPENING IS INITIATED WITH A PERIOD OF THE FOUR YEARS BUT IF T HE BASIC MANDATE THAT THE SAME CANNOT BE DONE ON THE BASIS OF CHANGE OF O PINION IS APPLICABLE. THE LD. COUNSEL TOOK US THROUGH THE P AGE NO.32 I.E. REPLY FILED BY THE ASSESSEE AND SUBMITS THAT EACH AND EVE RY QUERY WAS MADE AND HENCE THE PRESUMPTION GOES AGAINST THE A. O. THAT THE REOPENING IS MERELY ON THE CHANGE OF THE OPINION. THE LD. COUNSEL RELIED ON THE FOLLOWING PRECEDENTS:- (I) CIT VS. FORMER FRANCE -264 ITR 566(SC) (II) CIT VS. RAO THAKUR NARAYAN SINGH -56 ITR 23 4(SC) (III) CIT VS. BHANJI LAVJI -79 ITR 582(SC) (IV) ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR -97 ITR 239(SC) (V) CIT VS. MAHARASHTRA SUGAR MILLS LTD -263 ITR 1 80 (VI) CIT VS. KELVINATOR OF INDIA LTD. -320 ITR 56 1(SC) (VII) GARDEN SILK MILLS LTD. VS. DCIT -222 ITR 68 (GUJ) 7. PER CONTRA THE LD. D.R. VEHEMENTLY ARGUES THAT AS RE- ASSESSMENT PROCEEDINGS ARE INITIATED WITHIN THE PER IOD OF 4 YEARS THE ASSESSEE CANNOT TAKE SHELTER OF NON-FURNISHING OF T HE PARTICULARS. THE LD. DR SUPPORTS THE ORDER OF THE A.O. ON THE ISSUE OF RE-ASSESSMENT BY STATING THAT THE A.O. INITIATED THE PROCEEDINGS WITHIN THE FOUR CORNERS OF THE LEGAL PARAMETERS. 8. IN THIS CASE THERE IS NO DISPUTE ABOUT THE BASI C FACT THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. AS PER THE REASONS ON RECORD WE FIND THAT THE ONLY REASON FOR INITIATING THE RE- ASSESSMENT PROCEEDINGS U/S.147 IS THE QUANTUM OF DE DUCTION ALLOWED TO THE ASSESSEE U/S.80HHC WHILE COMPLETING THE ORIG INAL ASSESSMENT. ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 6 9. ON THE PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT THE A.O. HAS CONSIDERED ALL THE ASPECTS IN DETAILS WHILE CON SIDERING WHETHER AND TO WHAT EXTENT THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEDUCTION U/S.80HHC. NOTHING IS THERE ON RECORD TO SUGGEST T HAT THE A.O. HAS COME ACROSS OR GATHERED ANY NEW MATERIAL WHICH COMP ELLED HIM TO GIVE ANOTHER THOUGHT TO THE ISSUE OF DEDUCTION UNDE R SEC. 80HHC FOR RECONSIDERATION. 10. WE HAVE PERUSED THE PAPER-BOOK MORE PARTICULAR LY THE REPLIES FILED BY THE ASSESSEE AND THE QUERIES MADE BY THE A .O. IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND WE FIND THAT THE A.O. HA S APPLIED HIS MIND WHILE CONSIDERING THE ALLOWABILITY OF DEDUCTIO N U/S.80HHC IN THE ORIGINAL ASSESSMENT ORDER. SECTION 147 HAS UND ERGONE SUBSTANTIAL CHANGE W.E.F. 1.4.1989 BUT THE BASIC MANDATE THAT REOPENING CANNOT BE INITIATED MERELY ON THE CHANGE OF THE OPINION IS STILL UNDISTURBED AND THE SAME PRINCIPALS HAVE REIT ERATED BY THE HONBLE SUPREME COURT IN THE CASE OF FORMER FRANCE (SUPRA) IN WHICH THEIR LORDSHIPS HAVE CONSIDERED THAT WHETHER EVEN A FTER THE AMENDMENT W.E.F. 1.04.1989 TO SEC. 147 WHETHER BAS IC MANDATE OF NO RE-ASSESSMENT ON MERE CHANGE OF THE OPINION IS STIL L THERE OR NOT HAS BEEN EXAMINED. 11. IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) THE HONBLE SUPREME COURT HAS CONSIDERED THE AMENDMENT TO SEC. 147 OF THE ACT POST 1ST APRIL 1989 AND HAS HELD AS UNDER:- THEREFORE POST-1 ST APRIL 1989 POWER TO RE-OPEN IS MUCH WIDER. HOWEVER ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATI ON TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH WE ARE AFR AID SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OF FICER TO RE- OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OP INION' WHICH CANNOT BE PER SE REASON TO RE-OPEN. WE MUST A LSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REV IEW AND ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 7 POWER TO RE-ASSESS. THE ASSESSING OFFICER HAS NO PO WER TO REVIEW; HE HAS THE POWER TO RE-ASSESS. BUT RE-ASSES SMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITIONS A ND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED AS CONTENDED ON BEHALF OF THE DEPARTMENT THEN IN THE GARB OF RE-OPENING THE ASS ESSMENT REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWE R BY THE ASSESSING OFFICER. HENCE AFTER 1ST APRIL 1989 AS SESSING OFFICER HAS POWER TO RE-OPEN PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. 12. ON THE TOTALITY OF THE FACTS AND RECORD BEFORE US AND CONSIDERING THE REASONS GIVEN BY THE A.O. FOR REOPENING WE ARE OF THE OPINION THAT THE A.O. MADE ALL THE REQUIRED ENQUIRES AT THE TIME OF ORIGINAL ASSESSMENT AND IT IS CLEAR FROM THE ANNEXURE-A TO T HE ASSESSMENT. MOREOVER NOTHING IS THERE ON RECORD WHICH SUGGESTS THAT THE A.O. HAS GATHERED NEW MATERIAL ASPECT AFTER THE COMPLETION O F THE ORIGINAL ASSESSMENT ORDER. WE ARE THEREFORE OF THE OPINION T HAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE A.O. ARE BAD IN LAW BUT WE HAVE NO OPTION BUT TO QUASH THE SAME. WE ACCORDING LY QUASH NOTICE ISSUED U/S.148 AND CANCEL THE REASSESSMENT MADE BY THE A.O. ACCORDINGLY ASSESSEES GROUNDS ARE ALLOWED. 13. NOW WE TAKE-UP REVENUES APPEAL BEING ITA 641 OF 2009. 14. THIS IS A CROSS APPEAL WHICH IS ALSO ARISING OU T OF THE REASSESSMENT ORDER PASSED BY THE A.O. U/S.143(3) R. W.S. 147. AS WE HAVE QUASHED THE REASSESSMENT PROCEEDINGS AND CANCE L THE REASSESSMENT ORDER THE REVENUES APPEAL ALSO DOES NOT SURVIVE AND ACCORDINGLY THE SAME HAS TO BE DISMISSED. ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 8 15. IN THE RESULT ASSESSEES APPEAL IS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 8TH SEPTEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATED : 28TH SEPTEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) VIII MUMBAI. 4) THE CIT- VIII MUMBAI. 5) THE D.R. G BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITAS 408 AND 641/MUM/2009 GODFREY PHILIPS INDIA LTD. 9 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 15/16.09.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 16.09.2011 SR.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 FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER