M/s Rico Auto Industries Ltd., Ludhiana v. Addl. CIT, Ludhiana

ITA 547/CHANDI/2011 | 2005-2006
Pronouncement Date: 21-09-2011 | Result: Dismissed

Appeal Details

RSA Number 54721514 RSA 2011
Bench Chandigarh
Appeal Number ITA 547/CHANDI/2011
Duration Of Justice 3 month(s) 29 day(s)
Appellant M/s Rico Auto Industries Ltd., Ludhiana
Respondent Addl. CIT, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 21-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-09-2011
Date Of Final Hearing 05-09-2011
Next Hearing Date 05-09-2011
Assessment Year 2005-2006
Appeal Filed On 23-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 547/CHD/2011 ASSESSMENT YEAR: 2005-06 M/S RICO AUTO INDUSTRIES LTD. V ADDL.CIT R-1 B-26 FOCAL POINT LUDHIANA. LUDHIANA. PAN: AAAACR-8724-R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUBHASH AGGARWAL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 06.09.2011 DATE OF PRONOUNCEMENT : ORDER PER MEHAR SINGH AM THE ASSESSEE APPELLANT FILED APPEAL AGAINST THE ORD ER DATED 23.03.2011 FOR THE ASSESSMENT YEAR 2005-06 PA SSED U/S 263 OF THE INCOME-TAX ACT 1961 BY THE CIT-I L UDHIANA. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE INITIATION OF PROCEEDINGS U/S 263 BY CIT-1 ARE AGAINST THE FACTS AND BAD IN LAW. 2. THAT THE LD. CIT-1 HAS FAILED TO POINT OUT HOW THE ORDER PASSED BY THE DCIT IS ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THAT THE OBSERVATIONS OF THE CIT IN SETTING ASIDE THE ORDER WITH THE DIRECTIONS TO BE DONE DENOVO AS PER SECTION 14A READ WITH RULE 8D ARE AGAINST THE PROVISIONS OF LAW. 4. THAT IT HAS BEEN IGNORED THAT THE ADDL.CIT PASSED THE ORDER AFTER DUE APPLICATION OF MIND. 2 5. THAT IN ANY CASE THE ORDER OF THE CIT-1 PASSED U/S 263 IS AGAINST THE LAW AND DESERVES TO BE QUASHED. 6. THAT THE APPELLANT CRAVES LEAVE FOR PERMISSION TO ADD AMEND OR ALTER ANY GROUND OF APPEAL AT THE TIME OF HEARING. 2. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL FROM SR .NO. 1 TO 5 REVEALS THAT SUCH GROUNDS OF APPEAL REVOLVE A ROUND AND ARE AGAINST THE ORDER PASSED BY THE CIT U/S 263 OF THE INCOME-TAX ACT 1961. 3. GROUND NO. 6 IS GENERAL IN NATURE. 4. LD. AR CONTENDED THAT THE AO HAS PASSED THE ASSESSMENT ORDER DATED 30.12.2008 U/S 143(3) OF T HE ACT AFTER APPLICATION OF MIND. LD. AR REFERRED TO PAGE 15 OF THE PAPER BOOK FILED BY THE ASSESSEE AND PARTICULARLY D REW OUR ATTENTION TO PARA 19 OF THE SAME. HE STATED THAT NE CESSARY SUBMISSION WAS FILED ON THE ISSUE OF DISALLOWANCE U /S 14A OF THE ACT BEFORE THE CIT DURING THE COURSE OF REVISIO NARY PROCEEDINGS VIDE LETTER DATED 03.11.2008. THE LD. AR PLACED RELIANCE ON THE DECISIONS IN THE CASE OF HARI IRON TRADING CO. V CIT 263 ITR 437 CIT V ASHISH RAJPAL 320 ITR 674 MRS. KHATIZA S.OOMERBHOY V ITO 100 ITD 173. 5. THE LD. DR ON THE OTHER HAND VEHEMENTLY CONT ENDED THAT THE AO DID NOT EVEN CONCEIVE THE ISSUE DEALT W ITH BY THE CIT IN THE IMPUGNED ORDER PASSED U/S 263 OF THE AC T. IN VIEW OF THIS THE QUESTION OF APPLICATION OF HIS MIND TO THE ISSUE IN QUESTION DOES NOT ARISE. HE FURTHER POINTED OUT T HAT THE 3 PROVISIONS OF SECTION 14A OF THE ACT EXISTED ON THE STATUTE AND ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE . HE STATED THAT ADMINISTRATIVE AND MANAGERIAL EXPENSES IN SUCH FACT SITUATION OF THE CASE ARE COVERED BY THE SAID PROVI SION. HE FURTHER ARGUED THAT THE AO NEVER RAISED THIS QUEST ION IN THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE THE QU ESTION OF HIS CONSIDERATION AND ADJUDICATION OF THIS ISSUE DO ES NOT ARISE. HE REFERRED TO PARA 5 AT PAGE 5 OF THE IM PUGNED ORDER PASSED BY THE CIT INDICATING INDIRECT EXPENDITURE ON H.O. AND ADMINISTRATIVE EXPENDITURE CONSIDERED BY THE CI T. THE LD. DR ASSERTED THAT THE ORDER OF THE CIT AND THE RELEVANT PROVISIONS DISCUSSED THEREIN SHOULD BE CONSIDERED I N THEIR PROPER PERSPECTIVE. LD. DR PLACED RELIANCE ON TH E FOLLOWING DECISIONS : 1. MALABAR INDUSTRIAL CO.LTD. V CIT 243 ITR 83 (S. C) 2. CIT V PUSHPA DEVI 173 ITR 445 (PATNA) 3. ADDL.CIT V MUKUR CORPORATION 111 ITR 312 (GUJ) 4. SWARUP VEGETABLE PRODUCTS IND.LTD. V CIT 187 ITR 412 (ALL) 5. THALIBAI F.JAIN & OTHERS V ITO & ANR 101 ITR 1 (KAR) 6. TEJINDER SINGH MAKKAR V ACIT 61 ITD 57 (ITAT MUM-TM) 7. RAMPYARI DEVI SAROOGI V CIT 67 ITR 84 (S.C) 8. CIT V MACMILLAN & CO. 33 ITR 182 (S.C) 9. LAJJA WATI SINGHAL V CIT 226 ITR 527 (ALL) 10. D&H SECHERON ELECTRODES LTD. V DCIT 70 ITD 214 (ITAT INDORE) 11. JAI BHARAT TANNERS V CIT 264 ITR 673 (MAD) 12. ASHOK LEYLAND LTD. V CIT 260 ITR 599 (MAD) 4 13. ARVEE INTERNATIONAL V ADDL.CIT 101 ITD 495 (ITA T MUM) 14. COLORCRAFT KASHMIRA CERAMIC COMPOUND V ITO 105 ITD 599 (ITAT MUM). 6. WE HAVE CAREFULLY PERUSED THE FACT-SITUATION OF THE CASE RIVAL SUBMISSIONS INCLUDING THE CASE LAWS AND THE R ELEVANT ASSESSMENT ORDER AS ALSO THE ORDER PASSED BY THE CI T U/S 263 OF THE ACT. A BARE PERUSAL OF THE ASSESSMENT ORDER DATED 30.12.2008 PASSED U/S 143(3) OF THE ACT CLEARLY RE VEALS THAT THE AO NEVER CONCEIVED THE ISSUE IN QUESTION DEAL T WITH BY THE CIT IN THE IMPUGNED ORDER PASSED U/S 263 OF TH E ACT. THE WHOLE ASSESSMENT ORDER PASSED BY THE AO IS ON A N ENTIRELY DIFFERENT SUBJECT I.E. DETERMINATION OF A RMS LENGTH PRICE. THERE IS NOT EVEN A WHISPERING OF THE ISSUE PERTAINING TO THE APPLICABILITY OF PROVISIONS OF SECTION 14A O F THE ACT. 7. A SPECIFIC QUERY WAS RAISED IN THE COURSE OF PRE SENT APPELLATE PROCEEDINGS REQUIRING THE LD. AR TO FI LE EVIDENCE WHEREIN THE QUERY PERTAINING TO THE APPLICABILITY O F SECTION 14A OF THE ACT HAD BEEN RAISED BY THE AO IN THE QUESTIONNAIRE OR STATUTORY NOTICES ISSUED TO THE A SSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS. LD. AR FAI LED TO ADDUCE SUCH EVIDENCE. 8. LD. CIT IN THE IMPUGNED ORDER ISSUED A SHOW CAUS E NOTICE TO THE ASSESSEE U/S 263 OF THE ACT INDICATI NG THAT THE ISSUE NEVER CAME TO THE MIND OF THE AO. CONSEQUENTL Y THE AO FAILED TO APPLY HIS MIND AND ACCORDINGLY DID NOT MAKE ANY ENQUIRY IN THE MATTER. 5 9. THE LD. AR PLACED RELIANCE ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V ASHISH RAJPAL (SUPR A). A PERUSAL OF THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT REVEALS THAT THE FACT SITUATION OF THE CASE R ELIED UPON BY THE LD. AR IS MATERIALLY DIFFERENT AND DISTINGUI SHABLE. IN THE CASE RELIED UPON THE ISSUE INVOLVED WAS VIOLAT ION OF NATURAL JUSTICE BY THE REVISIONARY AUTHORITY. NO S UCH ISSUE IS INVOLVED IN THE PRESENT CASE. CONSEQUENTLY THE RE LIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT BY THE LD. AR IS MISPLACED. 10. LD. AR PLACED RELIANCE ON THE DECISION OF BOMB AY TRIBUNAL IN THE CASE OF MRS. KHATIZA S.OOMERBHOY V ITO 100 ITD 173 (MUM). IN THE CASE RELIED UPON BY THE ASSE SSEE THE AO HAS RAISED THE RELEVANT QUERIES ON THE ISSUE INV OLVED THEREIN AND THE ASSESSEE SUBMITTED REPLY THERETO. I N SUCH A FACT SITUATION THE AO HAD CONSIDERED THE ISSUE INV OLVED IN THE CASE RELIED UPON BY THE ASSESSEE. IN THE PRESE NT CASE THE AO EVEN FAILED TO CONCEIVE THE ISSUE RAISED BY THE CIT IN THE IMPUGNED REVISIONARY ORDER. IN VIEW OF THIS T HE RELIANCE PLACED BY THE ASSESSEE ON THE DECISION OF THE BOMBA Y TRIBUNAL IS MISPLACED. 11. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECIS ION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF HARI IRON TRADING CO. V CIT 263 ITR 437. IN THE CASE RELIED UPON BY THE ASSESSEE THERE IS NO SEMBLANCE OF RESEMBLANCE TO THE FACT SI TUATION OF THE CASE ON HAND. IN THE CASE RELIED UPON BY THE A SSESSEE THE AO DEALT WITH THE SURRENDER OF CASH IN THE OFFI CE-NOTE AND 6 PASSED THE ASSESSMENT ORDER WITH THE APPROVAL OF TH E COMMISSIONER. THE HON'BLE JURISDICTIONAL HIGH COUR T HELD THAT THE SUCCESSOR COMMISSIONER IS NOT COMPETENT TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT. THE FACT S OF THE PRESENT CASE ARE MATERIALLY DIFFERENT AND DISTINGUI SHABLE. HENCE THE CASE RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO THE PRESENT CASE. 12. THE LD. CIT IN THE IMPUGNED REVISIONARY ORDER RAISED THE ISSUE OF APPLICABILITY OF THE PROVISIONS OF SEC TION 14A OF THE ACT AND AFTER APPRECIATION OF THE SUBMISSIONS F ILED BY THE ASSESSEE HELD THAT THE IMPUGNED ASSESSMENT ORDER FA LLS UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. CONSEQUENTLY THE IMPUGNED ASSESSMENT ORDER WAS SET ASIDE BY THE CIT WITH THE DIRECTION TO MAKE FRESH ASSESSM ENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14A OF TH E ACT AND RULES LAID DOWN THEREUNDER. 13. THE AO FROM THE FIRST STEP OF FRAMING THE ASS ESSMENT BY WAY OF ISSUE OF REQUISITE STATUTORY NOTICES TO T HE ULTIMATE STEP OF SIGNING THE ASSESSMENT ORDER DID NOT CONCE IVE THE ISSUE OF APPLICABILITY OF THE PROVISIONS OF SECTION 14A OF THE ACT. THE AO HAS NOT ISSUED ANY QUESTIONNAIRE EVIDE NCING THE DISCERNIBILITY OF THE ISSUE OF APPLICABILITY OF THE PROVISIONS OF SECTION 14A OF THE ACT RAISED BY HIM. IN FACT TH E AO WAS IN COMPLETE IGNORANCE ON THE ISSUE IN QUESTION. THERE FORE IN SUCH A FACT SITUATION OF THE CASE APPLICATION OF M IND BY THE AO DOES NOT ARISE. CONSEQUENTLY IT WAS NOT FEASIB LE FOR THE AO TO MAKE ANY ENQUIRY ON THE ISSUE IN QUESTION. N ON- 7 APPLICATION OF MIND AND NON-MAKING OF ENQUIRY SQUAR ELY FALLS UNDER THE PROVISIONS OF SECTION 263 OF THE ACT AS H ELD BY THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO.LTD. V CIT (2000) 243 ITR 83 (S.C). IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSION THE APPEAL FILED BY T HE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER 2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST SEPT. 2011 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE D.R INCOME-TAX DEPARTMENT CHANDIGARH ASSISTANT REGISTRAR ITAT CHANDIGARH