DEVELOPMENT CONSTRUCTION AND ALLIED SERVICES(INDIA) PVT.LTD., MUMBAI v. I T O 6(2), MUMBAI

ITA 6690/MUM/2008 | 2006-2007
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 669019914 RSA 2008
Assessee PAN AAACD5512F
Bench Mumbai
Appeal Number ITA 6690/MUM/2008
Duration Of Justice 2 year(s) 4 month(s) 6 day(s)
Appellant DEVELOPMENT CONSTRUCTION AND ALLIED SERVICES(INDIA) PVT.LTD., MUMBAI
Respondent I T O 6(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 25-03-2011
Date Of Final Hearing 10-03-2011
Next Hearing Date 10-03-2011
Assessment Year 2006-2007
Appeal Filed On 19-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI J. SUDHAKA R REDDY (A.M.) ITA NO. 6690/MUM /2008 ASSESSMENT YEAR : 2006-07 M/S DEVELOPMENT CONSTRUCTION AND ALLIED SERVICES (INDIA) PVT. LTD. 166 SAMUEL STREET OFFICE NO. 1 IST FLOOR MUMBAI 400 009. PAN : AAACD 5512 F VS. I.T.O. 6(2) - 2 507 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KESHAV BHUJLE RESPONDENT BY : SHRI RAJEEV AGARWAL O R D E R PER D.K. AGARWAL J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.9.2008 PASSED BY THE LD. CIT U/S 263 OF THE INCO ME TAX ACT 1961 (THE ACT) FOR THE A.Y. 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROJECT DEVELOPER AND ALLIED SERVIC ES. THE RETURN WAS FILED DECLARING TOTAL INCOME OF ` 72 400/. THE A.O. AFTER EXAMINING THE RELEVANT I SSUES MADE CERTAIN ADDITIONS AND COMPLETED THE ASSESSMENT AT AN INCOME OF ` 1 05 970/- VIDE ORDER DATED 8.4.2008 PASSED U/S 143(3) OF THE ACT. SUBSEQUENTLY THE LD. CIT IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT OBSERV ED THAT THE A.O. WHILE COMPLETING THE ASSESSMENT HAS NOT OBTAINED AND VERI FIED THE DETAILS OF PAYMENTS RECEIVED FROM M/S AGA KHAN FOUNDATION (INDIA) IN RE SPECT OF VARIOUS PROJECTS AND ITA NO. 66 90/MUM/2008 M/S DEVEL OPMENT CONSTRUCTION & ALLIED SERVICES (INDIA) PVT. LTD. 2 PAYMENT OF THE SAME PROJECT-WISE TO INDEPENDENT C ONTRACTORS. HE WAS OF THE VIEW THAT THE A.O. HAS COMPLETED THE ASSESSMENT WITHOUT MAKING NECESSARY AND ADEQUATE ENQUIRIES AND ACCORDINGLY HE INITIATED PRO CEEDINGS U/S 263 VIDE NOTICE DATED 11.06.2008. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED WRITTEN SUBMISSIONS DATED 15.9.2008 INTER ALIA CONTENDED TH AT ASSESSMENT HAS BEEN MADE AFTER REASONABLE ENQUIRY COVERING ISSUES REFERRED T O IN THE NOTICE U/S 263 OF THE ACT THEREFORE THE ASSESSMENT CANNOT BE CONSIDERED TO HAVE BEEN MADE WITHOUT PROPER ENQUIRY AND VERIFICATION. THE ASSESSEE AFTE R RELYING CERTAIN DECISIONS SUBMITTED THAT THE PROCEEDING INITIATED U/S 263 OF THE ACT BE DROPPED. HOWEVER THE LD. CIT DID NOT ACCEPT THE ASSESSEES SUBMISSIO NS AND HELD THAT THE A.O. HAS COMPLETED THE ASSESSMENT WITHOUT MAKING ADEQUATE EN QUIRIES AND HENCE HE SET ASIDE THE ASSESSMENT WITH CERTAIN DIRECTIONS. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE INITIATION OF THE PROCEEDING U/S 263 AND SETTING ASIDE THE ASSESSMENT. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITS THAT THE A.O.IN THE LIGHT OF THE DIRECTIONS GIVEN B Y THE LD. CIT HAS COMPLETED THE ASSESSMENT VIDE ORDER DATED 14.12.2009 PASSED U/S 1 43(3) OF THE ACT ON THE SAME INCOME I.E. AT ` 1 05 970/- WHICH WAS ASSESSED ORIGINALLY THEREFOR E THE ORDER PASSED BY THE LD. CIT U/S 263 IS LIABLE TO BE CANCE LLED. 5. ON THE OTHER HAND THE LD. D.R. SUPPORTS THE ORD ER OF THE LD. CIT PASSED U/S 263 OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT WHILE ITA NO. 66 90/MUM/2008 M/S DEVEL OPMENT CONSTRUCTION & ALLIED SERVICES (INDIA) PVT. LTD. 3 EXAMINING THE RECORD IN EXERCISE OF HIS POWER U/S 2 63 ISSUED NOTICE U/S 263(1) BY OBSERVING THAT I WAS OF THE OPINION THAT THE ASSE SSING OFFICER HAS COMPLETED THE ASSESSMENT WITHOUT MAKING NECESSARY AND ADEQUATE EN QUIRIES. WE FURTHER FIND THAT THE LD. CIT AFTER CONSIDERING THE ASSESSEES E XPLANATION HAS HELD THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT WITH OUT MAKING NECESSARY AND ADEQUATE ENQUIRIES AND SET ASIDE THE ASSESSMENT WI TH CERTAIN DIRECTIONS TO THE A.O. 7. IN JEWEL OF INDIA V. ACIT [2010] 325 ITR 92 (BO M) IT HAS BEEN OBSERVED (PAGE 94): SECTION 263 OF THE INCOME TAX ACT 1961 HAS ALREADY BEEN INTERPRETED BY THE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [ 2000] 243 ITR 83 WHEREIN THE APEX COURT HELD THAT A BARE READING OF SECTION 263 OF TH E INCOME TAX ACT 1961 MAKES IT CLEAR THAT THE PRE-REQUISITE FOR THE EXERCISE OF JURISDIC TION BY THE COMMISSIONER SUO MOTO UNDER IT IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED THE FOLLOWING CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING O FFICER SOUGHT TO BE REVISED IS ERRONEOUS AND (II) IT IS PREJUDICIAL TO THE INTERE STS OF THE REVENUE. IF ONE OF THEM IS ABSENT THE ORDER OF THE INCOME-TAX OFFICER IS ERRON EOUS BUT IT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUE RECOURSE CANNOT BE HAD NO SECTION 263(1) OF THE INCOME-TAX ACT. THEIR LORDSHIPS AFTER CONSIDERING THE DECISION IN T HE CASE OF CIT VS. MAX INDIA LTD. (2007) 295 ITR 282 (SC) WHEREIN THE HONBLE AP EX COURT HAS EXPLAINED ITS EARLIER DECISION IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (SUPRA) HAVE FURTHER OBSERVED THAT (PAGE NO. 95) :- BEARING IN MIND THE INTERPRETATION OF THE APEX COU RT AS PER PROVISIONS U/S 263 OF THE ACT IF ONE TURNS TO THE ORDER OF THE COMMISSIONER OF INCOME-TAX 18 MUMBAI REVISIONAL ORDER PASSED U/S 263 OF THE INCOME TAX ACT 1961 I T WOULD BE CLEAR THAT NO FINDING IS RECORDED BY THE REVISIONAL AUTHORITY THAT THE ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE TENOR OF THE AFORESAID PARAGRAPHS ONL Y LEAD TO THE CONCLUSION THAT THE ORDER WAS FOUND TO BE ERRONEOUS BY THE REVISIONAL AUTHORI TY HOWEVER NOWHERE THE FINDING IS RECORDED THAT THE IMPUGNED ORDER PASSED BY THE A.O. IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO. 66 90/MUM/2008 M/S DEVEL OPMENT CONSTRUCTION & ALLIED SERVICES (INDIA) PVT. LTD. 4 IT HAS BEEN HELD (PAGE 95):- IN THE ABSENCE OF A POSITIVE FINDING THAT THE ORD ER WAS NOT IN THE INTERESTS OF THE REVENUE IT WAS NOT OPEN FOR THE REVISIONAL AUTHORI TY TO ASSUME JURISDICTION. IN THIS VIEW OF THE MATTER THE IMPUGNED ORDER INVOKING UNDER SE CTION 263 OF THE INCOME-TAX ACT WAS ERRONEOUS. CONSEQUENTLY THE REVISIONAL AUTHORITY WAS NOT JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER......... 8. IN THIS CONNECTION IT IS ALSO USEFUL TO THE ANA LOGOUS PROVISION CONTAINED IN THE CENTRAL EXCISE AND SALT ACT (1 OF 1944). THE H ONBLE SUPREME COURT WHILE CONSIDERING THE ABOVE SAID PROVISION HELD THAT THE AUTHORITY WHILE EXERCISING SUCH POWER CANNOT DIRECT THE LOWER AUTHORITY TO COMPLETE THE ASSESSMENT IN PARTICULAR MANNER. THE OBSERVATION OF THE HONBLE APEX COURT IN THE CASE OF UNION OF INDIA VS . TATA ENGINEERING AND LOCOMOTIVES CO. LTD. REPO RTED IN AIR 1998 SC 287 IS AS FOLLOWS (PAGE 288): IN OUR VIEW THIS WRIT PETITION SHOULD NOT HAVE BE EN ENTERTAINED BY THE HIGH COURT AT ALL. THE ASSISTANT COLLECTOR IS ENTITLED TO COMPLETE THE ASSESSMENT AS HE THINKS FIT IN EXERCISE OF THE JUDGMENT AND ACCORDING TO HIS UNDERSTANDING OF THE LAW AND FACTS. FOR THIS PURPOSE HE CAN CALL FOR AND EXAMINE WHATEVER DOCUMENTS HE C ONSIDERS RELEVANT. IF THE ASSISTANT COLLECTOR FAILS TO FOLLOW ANY JUDGMENT OF THE HIGH COURT OR THIS COURT THE ASSESSEE HAD ADEQUATE STATUTORY REMEDIES BY WAY OF AN APPEAL AND REVISION AGAINST THE ASSESSMENT ORDER. THE COURT SHOULD NOT TRY TO CONTROL THE MOD E AND MANNER IN WHICH AN ASSESSMENT SHOULD BE MADE. IF THE ASSISTANT COLLECTOR IS OF T HE VIEW THAT ENQUIRIES ARE NECESSARY TO BE MADE AS TO THE PRICE AT WHICH TRUCKS WERE SOLD A T THE REGIONAL SALES OFFICE THE COURT CANNOT STOP HIM FROM MAKING SUCH ENQUIRIES A READING OF THE ABOVE SAID JUDGMENT WOULD CLEARLY SHOW THAT WHILE REMANDING THE MATTER THE COMMISSIONER OF INCOME TAX OUGHT NO T TO HAVE GIVEN A SPECIFIC DIRECTION TO COMPLETE THE ASSESSMENT IN A PARTICULA R MANNER. 9. APPLYING THE RATIO OF THE ABOVE DECISIONS TO THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT IN THE ABSENCE OF A POSITIV E FINDING OF APPLICATION OF TWIN CONDITIONS THAT THE ORDER SOUGHT TO BE REVISED IS E RRONEOUS AND IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE IT WAS NOT OPEN FOR T HE LD. CIT TO ASSUME JURISDICTION. ITA NO. 66 90/MUM/2008 M/S DEVEL OPMENT CONSTRUCTION & ALLIED SERVICES (INDIA) PVT. LTD. 5 FURTHER THE LD. CIT WHILE SETTING ASIDE THE ASSESS MENT OUGHT NOT TO HAVE GIVEN SPECIFIC DIRECTIONS TO THE A.O. TO COMPLETE THE ASS ESSMENT IN A PARTICULAR MANNER. FURTHERMORE EVEN AFTER THE SETTING ASIDE ASSESSMENT THE A.O. HAVING FOLLOWED ALL THE DIRECTIONS HAS COMPLETED THE ASSESSMENT AT THE SAME ORIGINAL AMOUNT I.E. ` 1 05 970/- (SUPRA). IN THIS VIEW OF THE MATTER WE HOLD THAT THE ORDER PASSED BY THE LD. CIT U/S 263 SQUARELY FALLS OUTSIDE THE PURVIEW OF SECTION 263 OF THE ACT AND ACCORDINGLY THE SAME IS CANCELLED. THE GROUNDS TAK EN BY THE ASSESSEE ARE THEREFORE ALLOWED. 10. IN THE RESULT ASSESSEES APPEAL STANDS ALLOWED . ORDER PRONOUNCED ON THIS 25 TH OF MARCH 2011. SD/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI DATED 25 TH MARCH 2011. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX VI MUMBAI 4. ADDL. COMMISSIONER OF INCOME TAX 6(2) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH F MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO. 66 90/MUM/2008 M/S DEVEL OPMENT CONSTRUCTION & ALLIED SERVICES (INDIA) PVT. LTD. 6 1 DRAF T DICTATED ON 11 .3.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 14.3.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS