MAGNUM EQUITY BROKING LTD., MUMBAI v. ACIT - 4(3), MUMBAI

ITA 5503/MUM/2018 | 2006-2007
Pronouncement Date: 17-03-2021 | Result: Partly Allowed

Appeal Details

RSA Number 550319914 RSA 2018
Assessee PAN AAACM5661N
Bench Mumbai
Appeal Number ITA 5503/MUM/2018
Duration Of Justice 2 year(s) 5 month(s) 18 day(s)
Appellant MAGNUM EQUITY BROKING LTD., MUMBAI
Respondent ACIT - 4(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-03-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 17-03-2021
Last Hearing Date 08-10-2020
First Hearing Date 09-12-2020
Assessment Year 2006-2007
Appeal Filed On 28-09-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI BEFORE SHRI M. BALAGANESH ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE JUDICIAL MEMBER ITA NO. 5503/MUM/2018 (A.Y: 2006-07) M/S MAGNUM EQUITY BROKING LTD. D-30 EMPIRE MAHAL 806 DR. B A ROAD KHODADAD MUMBAI - 400014 / VS. THE ACIT CIRCLE 4 (3) ROOM NO. 638 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400023 ./ ./ PAN/GIR NO. : AAACM5661N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI NISHIT GANDHI AR / RESPONDENT BY : SHRI BHARAT ANDHLE DR / DATE OF HEARING 15/02/2021 / DATE OF PRONOUNCEMENT 17/03/2021 / O R D E R PER PAVAN KUMAR GADALE JM: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 9 ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 2 - MUMBAI PASSED U/S. 143 (3) R.W.S 147 AND 250 OF TH E INCOME TAX ACT 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 9. MUMBAI ['THE CIT(A)'] ERRED IN CONFI RMING THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOM E TAX - 4 (3) MUMBAI ['THE AO'] U/S 143 (3) R.W.S. 147 OF THE INCOME TAX ACT. 1961 ['THE ACT' FOR SHORT] IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE SINCE THE SAME IS PASSED IN IGNORANCE OF THE RELEVANT AND MATERIAL CONSIDERATIONS AND EVIDENCES AS FURNISHED BY THE AP PELLANT. ON JURISDICTION : 2.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT ORDER PASSED BY THE AO U/S 143( 3) R.W.S. 147 OF THE ACT AND AS AFFIRMED BY THE CIT(A) IS HAD IN LAW AND VOID FOR WANT OF JURISDICTION AND THEREF ORE DESERVES TO BE QUASHED. 2.2 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE RE-ASSESSMENT ORDER PASSED BY THE LD. AO U/S 14 3(3) R.W.S. 147 OF THE ACT IS HAD IN LAW SINCE NONE OF T HE NECESSARY PRE-CONDITIONS FOR INITIATION AS WELL AS COMPLETION OF A REASSESSMENT AS CONTEMPLATED U/S 14 7 / 148 OF THE ACT ARE FULFILLED IN THE PRESENT CASE. 2.3 FURTHER WHILE AFFIRMING THE ORDER OF THE AO TH E LD. CIT (A) ERRED IN: ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 3 - (A) REFUSING TO CONSIDER THE OBJECTIONS RAISED BEFO RE HIM. AS TO THE LEGALITY AND VALIDITY OF THE ORDER PASSED BY THE AO. ON FRIVOLOUS GROUNDS: (B) NOT APPRECIATING THE FACT THAT. THERE WAS NO IN COME ESCAPING ASSESSMENT IN THE PRESENT CASE SINCE (I) T HE RENT INCOME OF RS.600 000/- NOW ADDED WAS ALREADY OFFERE D TO TAX BY THE APPELLANT; AND (II) THE REBATE U/S 88E DOES NOT FALL IN THE PURVIEW OF 'INCOME' SO AS TO ESCAPE ASSESSMENT; AND; (C) UPHOLDING THE RE-ASSESSMENT ORDER DESPITE ACCEP TING THE FACT THAT THE NOTICE U/S 148 AS WELL AS THE PR OCEEDINGS U/S 147 WERE INITIATED MERELY OIL BASIS OF AN AUDIT OBJECTION AND WITHOUT ANY INDEPENDENT APPLICATION OF MIND TO THE FACTS OF THE CASE AND WITHOUT OBTAINING THE NECESSARY AND JUDICIOUS SANCTION AS CONTEMPLATED U/S 151 OF THE ACT. 2.4 IN VIEW OF THE ABOVE THE ORDER PASSED BY THE A O AND AS AFFIRMED BY THE CIT(A) DESERVES TO BE QUASHED. ON MERITS: 3.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.4 20 000/- (GROSS: RS.600 000 LESS: 30% STANDARD DEDUCTION) UN DER THE HEAD INCOME FROM HOUSE PROPERTY DESPITE THE FACT TH AT THE SAME HAS ALREADY BEEN TAKEN INTO CONSIDERATION BY T HE APPELLANT WHILE COMPUTING ITS TAXABLE INCOME UNDER THE ACT. 3.2 WHILE DOING SO THE LD. CIT(A) FAILED TO APPREC IATE THAT: (A) THE SAID RENT INCOME OF RS. (600 000/- HAS ALRE ADY BEEN OFFERED TO TAX UNDER THE HEAD PROFITS AND GAIN S OF BUSINESS AND PROFESSION WHILE COMPUTING THE TAXABLE INCOME OF THE APPELLANT; (B) ADDING THE SAID AMOUNT AGAIN WOULD LEAD TO DOUB LE TAXATION OF THE SAME INCOME AND; (C) IN ANY CASE THE BUSINESS INCOME OF THE APPELLA NT WOULD HAVE TO BE REDUCED BY AN AMOUNT OF RS. 600 00 0/- ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 4 - PURSUANT TO THE RE-ASSESSMENT ORDER WHICH WOULD IN FACT REDUCE THE TAXABLE INCOME OF THE APPELLANT. 4.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT ALLOWING THE ENTIRE REB ATE OF RS.5 50 884/- U/S 88E OF THE ACT AS CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME. 4.2 FURTHER WHILE DOING SO THE LD. CIT(A) FAILED TO APPRECIATE THAT: (A) THE ELIGIBLE REBATE U/S 88E WAS RIGHTLY CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME: AND: (B) THE SAID CLAIM SIMILARLY MADE IN THE EARLIER YE AR HAS ALSO BEEN ACCEPTED BY THE DEPARTMENT. 5. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER DELETE OR MODIFY ALL OR ANY THE ABOVE GROUNDS AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF SHARE AND STOCK BROKING SERVICES AND FILED THE RETURN OF INCO ME ON 07.11.2006 WITH THE TOTAL INCOME OF RS. 1 61 20 974/-.THE RETURN OF INCOME WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER THE CASS AND NOTICE U/S 143 (2) AND 142 (1) OF THE ACT ARE ISSUED. IN RESPO NSE TO NOTICE THE LD. AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND SUBMITTED THE DETAILS AND THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT ON 26.08.2008 DETERMINING T HE TOTAL INCOME OF RS. 1 76 69 390/-. SUBSEQUENTLY TH E AO HAS REASON TO BELIEF THAT THE INCOME HAS ESCAPED ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 5 - AS THE ASSESSEE COMPANY HAS CLAIMED TDS CREDIT ON RENT RECEIVED BUT THE RENTAL INCOME WAS NOT REFLECT ED IN THE RETURN OF INCOME AND FURTHER THE ASSESSEE COMPANY HAS CLAIMED HIGHER CREDIT OF SECURITY TRANSACTION TAX (STT) REBATE U/S 88E OF THE ACT. THEREFORE THE NOTICE U/S 148 OF THE ACT WAS ISSU ED. IN COMPLIANCE THE ASSESSEE FILED THE RETURN OF INC OME ON 22.03.2013 WITH THE TOTAL INCOME OF RS. RS.1 61 20 974/- AND THE ASSESSEE REQUESTED FOR PROVIDING REASONS FOR REOPENING OF ASSESSMENT. THE ASSESSEE HAS RAISED OBJECTIONS ON THE REASONS AND T HE A.O. HAS DISPOSED OF THE OBJECTIONS ON 16.12.2013. FURTHER THE A.O. HAS DEALT ON THE ALLOWABILITY OF REBATE U/S 88E OF THE ACT AND THE ASSESSEE HAS FILE D DETAILED EXPLANATIONS VIDE LETTER DATED 23.11.2013 REFERRED AT PARA 4 OF THE ASSESSMENT ORDER. SIMILAR LY THE ASSESSEE HAS FILED EXPLANATIONS ON THE RENTAL INCOME AND ITS SET OFF AGAINST THE RENT PAYABLE. BU T THE A.O. FOUND THE EXPLANATIONS ARE NOT SATISFACT ORY AND MADE ADDITION OF RENT AFTER ALLOWING DEDUCTION @30% U/SEC24 OF THE ACT AND ALSO MADE DISALLOWANCE U/S 14A OF THE ACT OF RS. 4 20 000/- AND ASSESSED ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 6 - THE TOTAL INCOME OF RS. 1 8089 390/- AND PASSED THE ORDER U/S 143 (3) R.W.S. 147 OF THE DATED 28.02.201 4. 4. AGGRIEVED BY THE ORDER THE ASSESSEE HAS FILED T HE APPEAL WITH THE CIT(A). WHEREAS THE LD.CIT(A) CONSIDERED THE GROUNDS OF APPEAL SUBMISSIONS OF TH E ASSESSEE FINDINGS OF THE AO AND UPHELD THE VALID ITY OF RE-ASSESSMENT PROCEEDINGS AND ADDITION OF RENTA L INCOME. IN RESPECT OF CLAIM OF REBATE U/S 88E OF TH E ACT THE LD.CIT (A) HAS CONSIDERED THE EXPLANATIONS AND DETAILS AT PARA 6.2.1 OF THE ORDER AND ALLOCATI ON OF EXPENSES AND GRANTED REBATE ELIGIBLE U/S 88E OF TH E ACT OF RS3 80 420/-AS AGAINST OF RS. 2 37 265/- ALLOWED BY THE AO AND PARTLY ALLOWED THE ASSESSEES APPEAL. 5. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE COMPANY HAS FILED AN APPEAL BEFORE THE HONBLE TRIBUNAL. AT THE TIME OF HEARING THE LD.AR OF THE ASSESSEE MADE SUBMISSIONS ON THE LEGAL GROUND THAT THE NOTICE ISSUED U/S 148 OF THE ACT IS AFTER LAPSE OF 4 YEARS FROM THE END OF ASSESSMENT YEAR. EARLIER THE ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT ON 26.08.2008. WHEREAS ALL MATERIAL INFORMATION WAS ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 7 - FILED IN THE ORIGINAL SCRUTINY PROCEEDINGS AND NO NEW INFORMATION HAS BEEN FOUND OR IDENTIFIED BY THE AO TO MAKE RE-ASSESSMENT PROCEEDINGS VALID AND IT IS ONL Y A MERE CHANGE OF OPINION AND RELIED ON THE JUDICIA L DECISIONS AND WRITTEN SUBMISSIONS AND PRAYED FOR ALLOWING GROUNDS OF APPEAL OF THE ASSESSEE. CONTRA THE LD.DR RELIED ON THE ORDER OF THE A.O. AND SUBMITTED THAT RE-ASSESSMENT PROCEEDINGS ARE VALID. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. AR ARGUED ON VALID ITY OF ISSUE OF THE NOTICE U/SEC148 OF THE ACT. THEREFO RE WE CONSIDERED IT APPROPRIATE TO FIRST TO DEAL ON TH E VALIDITY OF REASSESSMENT. THE LD.AR EMPHASIZED TH AT THE AO HAS ISSUED NOTICE ON THE SAME SET OF FACTS WHICH ARE AVAILABLE ON THE RECORD IN THE ORIGINAL ASSESSMENT AND NO NEW MATERIAL IS AVAILABLE FOR RE - ASSESSMENT AND IT IS ONLY MERE CHANGE OF OPINION. W E FIND THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND T HE BOOKS OF ACCOUNTS ARE AUDITED UNDER THE PROVISIONS OF COMPANIES ACT AND THE INCOME TAX ACT. THE LD. AR OF THE ASSESSEE HAS DEMONSTRATED WITH THE REASONS F OR REOPENING OF THE ASSESSMENT AT PAGE 66 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT THE ORIGINAL ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 8 - ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT WER E THE ASSESSEE HAS PRODUCED AND SUBMITTED ALL THE MATERIAL INFORMATION AND THE A.O. HAS VERIFIED AND FALLOWED SCRUTINY GUIDELINES AND ORDER WAS PASSE D ON 26.08.2008.WE CONSIDERED IT APPROPRIATE TO REFER TO THE PROVISIONS OF SEC. 147 OF THE ACT FIRST PROVISO WHICH IS READ AS UNDER: PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB- SECTI ON (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR UNLESS AN Y INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO NOTICE ISSUED U NDER SUB-SECTION(1) OF SEC. 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT Y EAR. PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRS T PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. 7. WE FIND THE AO HAS ISSUED NOTICE U/S 148 OF THE ACT DATED 22.03.2013 FOR REOPENING OF ASSESSMENT WHEREAS THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT DETERMINING THE TOTAL INCOME OF RS. 1 76 69 390/- ON 26.08.2008. WE OBSERVE THAT THE AO HAS RECORDED THE REASONS WITHOUT INTANGIBLE ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 9 - INFORMATION EXCEPT RETREATING THAT THE ASSESSEE HAS NOT DISCLOSED THE RENTAL INCOME FROM THE PROPERTY BUT TDS CREDIT IS CLAIMED AND ALSO HIGHER REBATE U/ S 88E HAS BEEN AVAILED. WHEREAS THE LD. AR SUBMITTED THAT THE SAID INFORMATION WAS FILED IN THE ORIGINAL ASSESSMENT AND REFERRED TO PAGE 48 TO 56 OF THE PAP ER BOOK. FURTHER THE AO ON VERIFYING THE FACTS AND THE EXPLANATIONS FILED HAS PASSED THE ASSESSMENT ORDER U/SEC143(3) OF THE ACT. THEREFORE THE REOPENING OF ASSESSMENT ON THE SAME SET OF FACTS IS ONLY A MER E CHANGE OF OPINION AND RELIED ON THE JUDICIAL DECISIONS. WE PRIMA FACIE CONSIDERING THE FACTS CIRCUMSTANCES AND THE EVIDENCES FILED ARE OF THE VIEW THAT THE NOTICE ISS UED BY THE A.O. FALLS BEYOND THE PERIOD OF TIME LIMIT. ACCORDINGLY WE TREAT THE NOTICE ISSUED AS BAD IN L AW AND QUASH THE ASSESSMENT U/S 143(3) R.W.S 147 OF TH E ACT AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 8. SINCE WE HAVE DEALT ON THE LEGAL GROUND AND TH E REASSESSMENT PROCEEDINGS ARE ANNULLED. THEREFORE AGAIN ADJUDICATING ON THE MERITS BECOME ACADEMIC AND ARE LEFT OPEN. ITA NO . 5503/MUM/2018 MAGNUM EQUITY BROKING LTD. - 10 - 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.03.2021. SD/- SD/- (M. BALAGANESH) (PAVAN KUMAR GA DALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 17.03.2021 AK PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !'!#$ % / THE CIT(A) 4. % ( ) / CONCERNED CIT 5. ()* ++#$ #$ / DR ITAT MUMBAI 6. *-. / / GUARD FILE. / BY ORDER ( + //TRUE COPY// 1. / ( ASST. REGISTRAR) / ITAT MUMBAI