RITE DEVELOPERS PRIVATE LIMITED , MUMBAI v. DCIT 13(3) (1), MUMBAI

ITA 5849/MUM/2019 | 2016-2017
Pronouncement Date: 31-08-2021 | Result: Allowed

Appeal Details

RSA Number 584919914 RSA 2019
Assessee PAN AACCR2173G
Bench Mumbai
Appeal Number ITA 5849/MUM/2019
Duration Of Justice 1 year(s) 11 month(s) 19 day(s)
Appellant RITE DEVELOPERS PRIVATE LIMITED , MUMBAI
Respondent DCIT 13(3) (1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 31-08-2021
Last Hearing Date 13-04-2021
First Hearing Date 13-04-2021
Assessment Year 2016-2017
Appeal Filed On 11-09-2019
Judgment Text
INTHEINCOMETAX APPELLATETRIBUNAL MUMBAI BENCHDMUMBAI BEFORE SHRI C.N.PRASAD(JUDICIAL MEMBER)AND SHRI S. RIFAURRAHMAN(ACCOUNTANT MEMBER) ITANO.5849/MUM/2019 ASSESSMENT YEAR:2016-17 RITEDEVELOPERS ROOMNO. 202 2 ND FLOOR S.S. HOUSE CSL OPP. ADARSH PETROL PUMP NEHRU ROAD VILEPARLE(E) MUMBAI - 400057. VS. DCIT-13(3)(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020. PANNO. AACCR 2173 G APPELLANT RESPONDENT ASSESSEEBY : MR. SATISHMODY AR REVENUEBY : MR. BHARAT ANDHALE DR DATE OF HEARING : 08 /06/2021 DATE OF PRONOUNCEMENT : 31/08/2021 ORDER PER S. RIFAURRAHMAN A.M. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-21 MUMBAI [IN SHORT CIT(A)] FOR THE ASSESSMENT YEAR 2016-17 DATED 18.07.2019 AND ARISES OUT OF ASSESSMENT COMPLETEDU/S143(3)OF THE INCOMETAXACT 1961(IN SHORTTHE ACT). 2. BRIEF FACTS OF THE CASE ARE THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2016-17 DECLARING TOTAL INCOME OF RS.1 55 73 780/- ON RITEDEVELOPERS ITANO. 5849/M/2019 2 17.10.2016.THECASEWASSELECTEDFORCOMPLETESCRUTINYUNDERCASSANDNOTICE U/S143(2)AND142(1) WERE ISSUEDAND SERVEDON THEASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS OF VARIOUS PROPERTIES. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE RECEIVED SHARE OF PROFIT FROM PARTNERSHIP FIRM OF RS.26 162/- WHICH IT CLAIMED EXEMPT FROM TAX. ACCORDINGLY HE INVOKED PROVISIONS OF SECTION 14A R.W.R. 8D MADE DISALLOWANCE OF RS.6 68 250/- AND HE ALSOMADE14ADISALLOWANCE THEADJUSTMENTONTHEBOOKPROFITU/S115JBOFTHE ACT. 3. AGGRIEVED WITH THE ABOVEORDER THEASSESSEE PREFERREDANAPPEAL BEFORE THE LD. CIT(A) AND RAISED GROUND OF APPEAL AND OBJECTION BEFORE LD. CIT(A) AS BELOW: THEAPPELLANT HAS FILED FOLLOWINGGROUNDS OF APPEAL :- 1 THE LEARNED ASSESSING OFFICER HAS ERRED IN SERVICING A NOTICE U/S. 143(2) ON 10.08.2018. IT IS SUBMITTED THAT NOTICE U/S 143(2) SHOULD HAVE BEEN SERVED ON OR BEFORE 30.09.2017. 2 THE LEARNED ASSESSING OFFICER HAS NOT TAKEN INTO ACCOUNT THE OBJECTIONS RAISED BY YOUR PETITIONER VICE ALETTERDATED13.08.2018. 3 WITHOUT PREJUDICE TO THE ABOVE THE LD. ASSESSING OFFICER HAS ERRED IN ADDING AN AMOUNT OF RS.668 250/- U/S 14A OFTHEINCOME TAXACT 1961. 4 THE ORDER APPEALED AGAINST IS BAD IN LAW AND IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 5 THEORDER APPEALED AGAINST IS BASEDONCONJECTURES AND ASSUMPTIONS. 4. AFTERCONSIDERINGTHEDETAILEDSUBMISSIONSOFTHEASSESSEE THELD.CIT(A) DISMISSEDTHE APPEAL OFTHE ASSESSEE WITH THEFOLLOWINGOBSERVATIONS: RITEDEVELOPERS ITANO. 5849/M/2019 3 4. DECISION: I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BY THE APPELLANT. THEAPPELLANTHASREQUESTEDTODELETETHEIMPUGNEDASSESSMENTORDERU/S143(3) OF THE ACT AND SUBMITTED DETAILED SUBMISSION. THE APPELLANTS MAIN CONTENTIONS ARETHATTHENOTICEU/S143(2)WASREQUIREDTOBESERVEDONORBEFORE30.09.2017 BUT THE SAME WAS SERVED ON 10.08.2018 BY THE AO WHICH WAS TIME BARRED AS PER THEINCOMETAXACT.THEAPPELLANTHASPLACEDITSRELIANCEONTHEHONBLEBOMBAY HIGH COURT IN THE CASE OF PRIME SECURITIES LTD VS ASSISTANT CIT 2009 317 ITR 27 (BOM.) THECONTENTIONS OF THE APPELLANT ARECONSIDERED CAREFULLY. 4.2 I HAVE GONE THROUGH THE DETAILS AVAILABLE ON RECORD IT IS FOUND THAT THE APPELLANT HAD FILED ORIGINAL RETURN OF INCOME FOR AY 2016-17 ON 17.10.2016 DECLARING TOTAL INCOME AT RS.1 55 73 780/-. THE SAID RETURN OF INCOME WAS DECLARED AS DEFECTIVE RETURN BY THE CPC BANGALORE VIDE ITS ORDER DATED 28.08.2017 WHEREIN THE APPELLANT WAS REQUIRED TO RECTIFY THE DEFECTS. ACCORDINGLY THE SAID DEFECTS WERE RECTIFIED/COMPLIED BY THE APPELLANT ON 04.10.2017 AND HENCE THE SAID RETURN WAS TREATED AS VALID ONLY ON 04.10.2017. SINCE THE DEFECTS WERE COMPLIED ON 04.10.2017. THE TIME LIMIT TO ISSUE NOTICE U/S 143(2) OF THE IT ACT IS TO BE CONSIDERED UPTO 30.09.2016 AS PER THE PROVISIONS OF SECTION 143(2)OFTHEACT READ ASUNDER: 'PROVIDED THAT NO NOTICE UNDER THIS SUB SECTION SHALL BE SERVED ON THE ASSESSES AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR INWHICH THERETURNIS FURNISHED. 4.3 AS THE ORIGINAL RETURN FILED BY THE APPELLANT IS CONSIDERED AS VALID ONLY ON 04.10.2017 THE LIME LIMIT TO ISSUE STATUTORY NONCE U/S 143(2) OF THE ACT IS TO BE CONSIDERED UPTO 30.09.2018 AS DISCUSSED ABOVE THE NOTICE U/S 143(2) ISSUED ON 10.08.2018 WHICH WAS DULY SERVED ON THE APPELLANT IS WELL WITHIN THE TIME RITEDEVELOPERS ITANO. 5849/M/2019 4 ALLOWED UNDER THE ACT. FURTHER THE CASE LAW RELIED ON BY THE APPELLANT IS NOT RELEVANTTOTHEFACTS OF THE CASE. 4.4 IT IS EVIDENT THAT THE NOTICE WAS SERVED WITHIN THE TIME LIMIT AS PER THE PROVISIONS OF THE ACT AS DISCUSSED ABOVE IN VIEW OF THE ABOVE FACTS AND JUDICIAL PRONOUNCEMENT NOFAULTCANBEFOUNDWITHTHEACTIONOFTHEAOBYISSUINGNOTICE U/S 143(2) OF THE ACT. THEREFORE THE CONTENTIONS OF THE APPELLANT ARE REJECTED ANDGROUNDNOS 1 2 4& 5RAISEDIN APPEAL ARE DISMISSED. WITHREGARDTOMERITSOFTHECASETHELD.CIT(A)PARTLYALLOWEDTHEAPPEAL BY RESTRICTING DISALLOWANCE U/S 14A TO THE EXTENT OF EXEMPT INCOME EARNED BY THEASSESSEE. 5. AGGRIEVEDWITHTHEABOVEORDERTHEASSESSEEISINAPPEALBEFOREUSRAISING FOLLOWINGGROUNDSOFAPPEAL : 1 THE LD. CIT(A) HAS ERRED IN AND HOLDING THAT THE RETURN OF INCOME FILED BY THE ASSESSEE-COMPANY ON 17 TH OCTOBER 2016WAS NOT AVALIDRETURN. 2 THE LD. CIT(A) HAS FURTHER ERRED IN AND HOLDING THAT VALID INCOME TAX RETURN WAS FILEDBYTHE ASSESSEE ONLY ON 4 TH OCTOBER2017WHENTHE DEFECTS/DEFICIENCYPOINTED OUT BY THE DEPARTMENT U/S 139(9) WERE REMEDIED BY THE ASSESSEE ON 4 TH OCTOBER 2017. 3 THELD.CIT(A)HASERREDINNOTTAKINGINTOACCOUNTTHEFACTTHATTHEORIGINALRETURN FILED BY THE ASSESSEE ON 17 TH OCTOBER 2016 WAS ACCEPTED BY THE INCOME TAX DEPARTMENTU/S 143(1) BYAN ORDERDATED 09.11.2017. 4 THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF TIME SECURITIES LTD. V. ASST. COMMISSIONER OF INCOME TAX AND ANOTHER(REPORTEDIN 371ITR 27(BOM). RITEDEVELOPERS ITANO. 5849/M/2019 5 5 YOUR PETITIONER SUBMITS THAT ORIGINAL RETURN ONCE REMEDIED IN RESPECT OF DEFECTS POINTED OUT U/S 139(9) SHOULD BE HELD VALID WITH THE ORIGINAL DATE ON WHICH THE RETURNWAS FILED. 6 YOUR PETITIONER SUBMITS THAT THE NOTICE ISSUED U/S 143(2) DATED 10.08.2018 AND SERVEDUPONTHEASSESSEEON21.08.2018ISILLEGALANDBEYONDTIME. YOURPETITIONER SUBMITS THAT NOTICE U/S 143(2) SHOULDHAVEBEEN SERVEDON ORBEFORE30.09.2017. 7 THE ORDER APPEALED AGAINST IS BAD IN LAW AND IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 6. AT THE TIME OF HEARING THE LD. AR SUBMITTED THAT THE NOTICE U/S 143(2) ISSUED BEYOND THE PERIOD OF SIX MONTHS FROM THE DATE OF FILING OF THE RETURN OF INCOME. HE SUBMITTED THAT DEFECTIVE RETURN U/S 139(9) WAS ISSUED AND TIME PERIOD TO ISSUE THE NOTICE U/S 143(2) WAS EXPIRED. IN RESPONSE OF THE ABOVE CONTENTION HEFILEDTHECHRONOLOGYOFEVENTSANDHIGHLIGHTEDTHEIMPORTEDDATE. HE SUBMITTED THAT THISISSUE IS COVEREDAND RELIED ON KUNALSTRUCTURE (422 ITR 482)ANDTIME SECURITIES(371ITR 27). 7. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDERS PASSED BY THE LD. CIT(A) INPAGE 4-7OF THEORDER. 8. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE OBSERVE FROM THE INFORMATION SUBMITTED BEFORE US THAT THE ASSESSEE HAD FILED ROI ON 17.10.2016FORTHEAY2016-17.THISCASEWASSELECTEDFORSCRUTINYUNDERCASS. AS PER THE PROVISIONS THE AO HAS TO ISSUE NOTICE AND SERVE ON THE ASSESSEE BEFORE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FILED. THAT MEANS U/S 143(2) NOTICE CANNOT BE ISSUED FOR THE AY 2016-17 BEYOND 30.09.2016. SINCE THIS CASE WAS SELECTED UNDER CASS IT IS THE DUTYOF THE AOTO ISSUE THE NOTICE BEFORE30.09.2016. RITEDEVELOPERS ITANO. 5849/M/2019 6 8.1 INTHISCASE THEROIWASFILEDON17.10.2016BUTITWASFOUNDTHATROIFILED BY THE ASSESSEE IS DEFECTIVE AFTER PROCESSING THE RETURN U/S 143(1) OF THE ACT. THEASSESSEEWASGIVENTIMETORECTIFYTHESAMEBUTASSESSEERECTIFIEDTHESAME ONLYON04.10.2017.CONSIDERINGTHEDATEOFRECTIFICATIONASTHEDATEOFFILINGTHE ROI U/S 139(1) OF THE ACT THE AO ISSUED THE NOTICE U/S 143(2) ON 10.08.2018 ANDCOMPLETEDTHE ASSESSMENT ACCORDINGLYU/S143(3)OFTHE ACT. THE ASSESSEE AGITATED BEFORE CIT(A) BY RELYING ON THE CASE PRIME SECURITIES LTD. V. ACIT (2009) 317 ITR 27 (BOM.). THE LD. CIT(A) REJECTED THE ASSESSEES CONTENTION AND OBSERVED THAT THE PROVISO TO SECTION 143(2) ALLOWS THE AO TO ISSUE THE NOTICE BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. HE INTERPRETED THE WORDS END OF FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED TO MEAN THAT THE LIMITATION PERIOD GIVEN IN THE ACT WILL EXTEND FROM THE DATE OF ACTUAL FILING THE ROI. HE INTERPRETED THE PROVISION TO MEAN THE LIMITATION PERIOD COMMENCES FROM THE DATE OFTHEACTUAL FILINGOF ROIORRECTIFIEDROI. THE ASSESSMENT PROCEDURE LAID DOWN IN THE ACT ARE BASED ON THE RESPECTIVE FINANCIAL YEARANDASSESSMENT YEAR. THE RESPONSIBILITIES OF ASSESSEE AS WELL AS AO ARE CLEARLY SPECIFIED IN THE ACT SO THAT THE ASSESSMENT CAN BE COMPLETEDFORTHERESPECTIVEAYSASPERTHETIMEFRAMEGIVENINSECTION153(1). THEWORDSUSEDINSECTION153(1)AREANYTIMEAFTEREXPIRYOF21MONTHSFROM THEENDOFTHE AY INWHICH THE INCOME WASFIRSTASSESSABLE. 8.2 IN CASE IF WE ACCEPT THE PROPOSITION OF LD. CIT(A) THEN THERE WILL NOT BE ANY FINALITY TO THE ASSESSMENTS SELECTED FOR SCRUTINY UNDER CASS OR ANY OTHER METHODOFSELECTION.ITWILLDEFEATTHEMETHODSPECIFIEDINTHEACT.ITISIRRELEVANT RITEDEVELOPERS ITANO. 5849/M/2019 7 WHEN THE DEFECT IS CURED BY THE ASSESSEE BUT WHAT IS RELEVANT IS THE RESPONSIBILITY OF THE AO TO FOLLOW THE DUE PROCEDURE SET OUT IN THE ACT. IT IS HIS DUTYTOISSUETHENOTICEU/S143(2)WITHINTHEPRESCRIBEDTIMELIMIT.THECOURTS HAVEHELDTHATONCETHEAOMISSESTHEABOVETIMEFRAME TOISSUETHENOTICE THE ASSESSMENT WILLBE BADIN LAW. 9. WITH REGARD TO RECTIFICATION OF DEFECT IN THE ROI FILED U/S 139(1) AND LIMITATIONPERIODTOISSUENOTICEU/S143(2)OFTHEACT THEHONBLEJURISDICTIONAL HIGH COURT HELD IN THE CASE OF KUNAL STRUCTURE (INDIA) PRIVATE LIMITED V. DCIT [2020]422ITR482(GUJ) ASBELOW: A STUDY OF THE PROVISIONS OF SECTION 139 OF THE INCOME TAX ACT 1961 SHOWS THAT UNDER SUB-SECTION (1) THEREOF AN ASSESSEE IS REQUIRED TO FILE RETURN ON OR BEFORE THE DUE DATE. IF ONE LOOKS AT THE LANGUAGE EMPLOYED IN SUB-SECTIONS (1) (3) AND (5) OF SECTION 139 A COMMON THREAD IN ALL THE SUB-SECTIONS IS THAT THE ASSESSEE IS REQUIRED TO FILE A RETURN OF INCOME UNDER THOSE SUB-SECTIONS. HOWEVER FROM THE LANGUAGE EMPLOYED IN SUB-SECTION (9)OFSECTION139OFTHEACT ITDOESNOTREQUIREANYRETURNTOBEFILEDBYTHEASSESSEE.ALL THATTHESECTIONSAYSISTHATTHEASSESSEEISREQUIREDTOBEGIVENANOPPORTUNITYTORECTIFY THE DEFECT IN THE RETURN FILED BY HIM WITHIN THE TIME PROVIDED FAILING WHICH SUCH RETURN WOULD BE TREATED AS AN INVALID RETURN. UNLIKE SUB-SECTION (5) OF SECTION 139 OF THE ACT WHICH REQUIRES AN ASSESSEE TO FILE A REVISED RETURN OF INCOME IN CASE OF ANY OMISSION OR WRONGSTATEMENTINTHERETURNOFINCOMEFILEDUNDERSUB-SECTION(1)THEREOF SUB-SECTION (9)OFSECTION139OFTHEACTDOESNOT REQUIREANASSESSEETOFILEAFRESHRETURNOFINCOME BUT REQUIRES THE ASSESSEE TO REMOVE THE DEFECTS IN THE ORIGINAL RETURN OF INCOME FILED BY HIM WITHIN THE TIME PROVIDED THEREIN. ONCE THE DEFECTS IN THE ORIGINAL RETURN OF INCOME AREREMOVED SUCHRETURNWOULDBEPROCESSEDFURTHERUNDERTHEACT.INCASESUCHDEFECTS ARE NOT REMOVEDWITHINTHETIMEALLOWED SUCH RETURN OF INCOMEWOULDBE TREATED AS AN INVALIDRETURN. RITEDEVELOPERS ITANO. 5849/M/2019 8 THERE IS A CLEAR DISTINCTION BETWEEN A REVISED RETURN AND A CORRECTION OF RETURN. ONCE A REVISED RETURN IS FILED THE ORIGINAL RETURN MUST BE TAKEN TO HAVE BEEN WITHDRAWN AND SUBSTITUTED BY A FRESH RETURN FOR THE PURPOSE OF ASSESSMENT. THERE IS NO CONCEPT OF CORRECTED RETURN OF INCOME UNDER THE ACT. THEREFORE IN EFFECT AND SUBSTANCE WHAT THE NOTICE UNDER SUB-SECTION (9) OF SECTION 139 DOES IS TO CALL UPON THE ASSESSEE TO REMOVE THE DEFECTS POINTED OUT THEREIN. THEREFORE MERE REFERENCE TO THE EXPRESSION CORRECTED INCOMEINTHE NOTICEUNDERSUB-SECTION(9)OFSECTION139OFTHEACTDOES NOTMEANTHAT A FRESH RETURN OF INCOME HAS BEENFILED UNDER THAT SUB-SECTION. THE ACTION OF REMOVAL OF THE DEFECTS WOULD RELATE BACK TO THE FILING OF THE ORIGINAL RETURN OF INCOME AND ACCORDINGLY IT IS THE DATE OF FILING OF THE ORIGINAL RETURN WHICH HAS TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE PERIOD OF LIMITATION UNDER SUB-SECTION (2) OF SECTION 143 OFTHEACT AND NOT THE DATEONWHICH THEDEFECTS ACTUALLY CAMETOBEREMOVED. DHAMPURSUGAR MILLS LTD. V. CIT [1973] 90ITR 236(ALL) RELIEDON. HELD ACCORDINGLY THAT THE ASSESSEE FILED ITS RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 ON 10TH SEPTEMBER 2016. SINCE THE RETURN WAS DEFECTIVE THE ASSESSEE WAS CALLEDUPONTOREMOVESUCHDEFECTS WHICHCAMETOBEREMOVEDON7THJULY 2017 THATIS WITHIN THE TIME ALLOWED BY THE A.O. THEREFORE UPON SUCH DEFECTS BEING REMOVED THE RETURN WOULD RELATE BACK TO THE DATE OF FILING OF THE ORIGINAL RETURN THAT IS 10TH SEPTEMBER 2016 AND CONSEQUENTLY THE LIMITATION FOR ISSUANCE OF NOTICE UNDER SUB- SECTION(2)OFSECTION143OFTHEACTWOULDBE30THSEPTEMBER 2017 VIZ. SIXMONTHSFROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN UNDER SUB-SECTION (1) OF SECTION 139 WAS FILED. THE NOTICE UNDER SUB-SECTION (2) OF SECTION 143 OF THE ACT HAD BEEN ISSUED ON 9TH AUGUST 2018 WHICH WAS MUCH BEYOND THE PERIOD OF LIMITATION FOR ISSUANCE OF SUCH NOTICE AS ENVISAGED UNDER THAT SUB-SECTION. THE NOTICE THEREFORE WAS BARRED BY LIMITATIONAND COULDNOT BESUSTAINED. RITEDEVELOPERS ITANO. 5849/M/2019 9 RESPECTFULLYFOLLOWINGTHEABOVEDECISION WEAREINCLINEDTOSETASIDETHE ORDERPASSEDBYTHELD.CIT(A)ANDTHEORDERPASSEDU/S143(3)ISDEFECTIVEAND BADINLAW. ACCORDINGLY GROUNDSRAISEDBY THE ASSESSEE ISALLOWED. 10. IN THE RESULT THE APPEALFILEDBYTHE ASSESSEEISALLOWED. ORDER PRONOUNCEDINTHEOPENCOURTON 31/08/2021. SD/- SD/- (C.N.PRASAD) ( S. RIFAURRAHMAN ) JUDICIALMEMBER ACCOUNTANTMEMBER MUMBAI; DATED:31/08/2021. RAHUL SHARMA SR. P.S. COPYOFTHEORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR ITAT MUMBAI 6. GUARDFILE. BY ORDER //TRUE COPY// (DY./ASSISTANTREGISTRAR) ITAT MUMBAI