NAHIRA COSMETIC ENTERPRISES P.LTD, MUMBAI v. DCIT CIR 7(1), MUMBAI

ITA 7791/MUM/2012 | 1996-1997
Pronouncement Date: 19-10-2016 | Result: Allowed

Appeal Details

RSA Number 779119914 RSA 2012
Assessee PAN AAACN0267D
Bench Mumbai
Appeal Number ITA 7791/MUM/2012
Duration Of Justice 3 year(s) 9 month(s) 18 day(s)
Appellant NAHIRA COSMETIC ENTERPRISES P.LTD, MUMBAI
Respondent DCIT CIR 7(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 19-10-2016
Date Of Final Hearing 28-04-2015
Next Hearing Date 28-04-2015
Assessment Year 1996-1997
Appeal Filed On 31-12-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH JUDICIAL MEMBER ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) NAHIRA COSMETIC ENTERPRISES PVT. LTD. 7 LALWANI INDL. ESTATE 14 KATRAK ROAD P.O.BOX 7117 WADALA MUMBAI 400 020 PAN: AAACN 0267D ...... APPEL LANT VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 7(1) AAYKAR BHAVAN M.K.ROAD MUMBAI 400020 .... RESPONDE NT ASSESSEE BY : SHRI SHEKHAR GUPTA REVENUE BY : SHRI B.SATYANARAYANA RAJU DATE OF HEARING : 13/10/2016 DATE OF PRONOUNCEMENT : 19/10/2016 ORDER PER G.S.PANNU A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAI NING TO ASSESSMENT YEAR 1996-97 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-12 MUMBAI DATED 12/11/2012 WHICH IN TURN ARISES OUT OF AN ORDER PA SSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE I NCOME TAX ACT 1961 (IN SHORT THE ACT) DATED 26/03/2004. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 2 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) 1. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER REOPE NING THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND O N THE FACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER DISAL LOWING RS.6 75 000/- PAID TO TRIVENI INTERNATIONAL PRODUCTIONS PVT. LTD. ON ACCOUNT OF A DVERTISING AND SALES PROMOTION EXPENDITURE. 3. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING INTEREST FOR RS.3 933/- PAID TO TRIVENI INTERNATIONAL PRODUCTIONS PVT. LTD.. 4. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING SALES COMMISSIONS EXPENSES RS.4 31 978/- PAID TO BAHARI & CO. PVT. LT D. 5. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING CONDUCTING CHARGES RS.4 61 230/- PAID TO PRAHALAD MOHAN. 6. THE ASSESSEE COMPANY CRAVES LEAVE TO ADD ALTER OR AMEND THE ABOVE GROUNDS OF APPEAL. 3. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUND S OF APPEAL BUT THE FIRST AND FOREMOST GRIEVANCE IS WITH REGARD TO THE VALIDITY OF THE PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE UNDER SECTION 147/1 48 OF THE ACT. THE BRIEF FACTS IN RELATION TO THE SAID ISSUE ARE SUMMARIZED AS FOLLOWS. THE APPELLANT BEFORE US IS A COMPANY INCORPORATED UNDER THE PROV ISIONS OF THE COMPANIES ACT 1956 AND FOR ASSESSMENT YEAR 1996-97 IT FILED A RETURN OF INCOME ON 28/11/1996 DECLARING AN INCOME OF RS.26 240/-. SUB SEQUENTLY ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 25 /5/1998 ASSESSING THE TOTAL INCOME AT RS.5 59 166/- WHEREIN THE ONLY ADD ITION MADE WAS ON ACCOUNT OF DISALLOWANCE OF SALES TAX OF EARLIER YEARS OF RS .5 30 922/-. SUBSEQUENTLY A NOTICE UNDER SECTION 148 WAS ISSUED ON 23/03/2003 R EOPENING THE ASSESSMENT ON THE GROUND THAT CERTAIN INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IN THE ENSURING ASSESSMENT FINALIZED UNDER SECTION 143(3) R.W.S. 148 OF THE ACT 3 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) DATED 26/3/2004 THE TOTAL INCOME HAS BEEN DETERMIN ED AT RS.22 28 191/- AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES. APAR T FROM CHALLENGING THE ADDITIONS BEFORE THE CIT(A) ASSESSEE HAD RAISED AN ADDITIONAL GROUND OF APPEAL CONTENDING THAT THE CASE OF THE ASSESSEE COU LD NOT BE REOPENED UNDER SECTION 147/148 OF THE ACT AND THAT THE ASSESSING O FFICER ERRED IN REOPENING THE ASSESSMENT ON THE BASIS OF LOOSE PAPERS WHICH WERE IN-FACT FOUND IN THE COURSE OF A SEARCH PROCEEDINGS IN THE CASE OF A SIS TER CONCERN I.E. MAGNA PUBLISHING CO. LTD. IN THIS CONTEXT RELEVANT FA CTS ARE THAT A SEARCH AND SEIZURE ACTION WAS UNDERTAKEN BY THE DEPARTMENT UNDER SECTI ON 132(1) OF THE ACT ON 11/2/2000 IN THE CASE OF MAGNA PUBLISHING CO. LTD. A SISTER CONCERN OF THE ASSESSEE COMPANY WHEREAS THE CASE OF THE ASSESSEE WAS COVERED BY A SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT SIMULTANEOU SLY ON 11/2/2000. THE ORDER OF THE CIT(A) REVEALS THAT THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT WAS SOUGHT TO BE CHALLENGED BY T HE ASSESSEE AS AN ADDITIONAL GROUND OF APPEAL ON VARIOUS POINTS. THE CIT(A) HAS DISCUSSED THE ISSUE IN DETAIL FROM PARAS 2.2 TO 3.4 OF HIS ORDER AND IT IS CONCLUDED THAT THE ADDITIONAL GROUND OF APPEAL BEING RAISED BY THE ASS ESSEE WAS AN AFTERTHOUGHT AND IT HAS BEEN FURTHER HELD THAT THE ASSESSEE COULD NOT ESTABLISH THE CASE AT ALL. IN THIS BACKGROUND ASSESSEE IS IN FURTHER AP PEAL BEFORE US. 4. BEFORE US THE LD. REPRESENTATIVE FOR THE ASSESS EE HAS MADE VARIED SUBMISSIONS ON THE ASPECT OF THE VALIDITY OF PROCEE DINGS INITIATED UNDER SECTION 147/148 OF THE ACT. ONE PERTINENT POINT RAISED BY THE ASSESSEE IS THAT THE REASSESSMENT IN THE PRESENT CASE HAS BEEN SOUGHT T O BE MADE BY ISSUANCE OF A NOTICE UNDER SECTION 148 OF THE ACT BEYOND A PERIOD FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND IN THAT VIEW OF THE MATTER THE CONDITIONS PRESCRIBED IN THE FIRST PROVISO TO SECTION 147 OF T HE ACT ARE REQUIRED TO BE 4 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) COMPLIED WITH; AND THAT IN THE PRESENT CASE THE R EASONS RECORDED BY THE ASSESSING OFFICER DO NOT CONTAIN ANY AVERMENT THAT THE CONDITIONS PRESCRIBED IN THE FIRST PROVISO TO SECTION 147 OF THE ACT ARE FULFILLED. IN SUPPORT RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF DIL LTD. VS. ACIT 343 ITR 296(BOM). 4.1 IN ORDER TO APPRECIATE THE AFORESAID PLEA WE M AY REFER TO THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH ARE PLACED AT PAGE 24 OF THE PAPER BOOK AND WHICH READ AS UNDER:- A SURVEY U/S. 133A WAS CONDUCTED ON THE ASSESSEES OFFICE PREMISES ON11.2.2000. DURING THE COURSE OF SURVEY EVIDENCE WAS FOUND THA T THE PAYMENT OF RS.6.75 LAKHS TO M/S. TRIVENI INTERNATIONAL PRODUCTIONS P. LTD. FOR MAKING OF CORPORATE FILM WAS BOGUS. THEREFORE THE INCOME HAS BEEN UNDER ASSESS ED BY RS.6.75 LAKHS. 4.2 ADMITTEDLY IN THE PRESENT CASE THE REOPENING OF ASSESSMENT IS BY WAY OF A NOTICE UNDER SECTION 148 OF THE ACT DATED 23/0 3/2003 WHICH IS BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. IT IS ALSO EMERGING FROM RECORD THAT THE ORIGINAL RETURN OF IN COME FILED BY THE ASSESSEE WAS SUBJECT TO SCRUTINY ASSESSMENT UNDER SECTION 14 3(3) OF THE ACT DATED 25/5/1998 WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED AT RS. RS.5 59 166/- THE FIRST PROVISO TO SECTION 147 OF THE ACT PROVIDES THAT IN CASE THE REOPENING OF ASSESSMENT IS BEYOND A PERIOD OF 4 YEARS THE PROCEEDINGS CAN BE VALIDLY REOPENED ONLY INCASE THE INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSE SSMENT. IN THE PRESENT CASE THE PLEA OF THE ASSESSEE IS THAT THE REASONS RECORD ED DO NOT CONTAIN ANY STATEMENT TO THE EFFECT THAT ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE AFORE SAID PLEA OF THE ASSESSEE IS QUITE POTENT CONSIDERING THE REASONS RECORDED WHIC H HAVE BEEN REPRODUCED 5 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) ABOVE AND ALSO IN THE LIGHT OF THE JUDGMENT OF HON' BLE BOMBAY HIGH COURT IN THE CASE OF DIL LTD.(SUPRA). 5. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED TH AT THE PLEA OF INVALIDITY OF THE REASSESSMENT PROCEEDINGS HAS BEEN BELATEDLY RAISED BY THE ASSESSEE BEFORE THE CIT(A) AT A STAGE WHEN ASSESSEE S PETITION WAS DISMISSED BY THE INCOME TAX SETTLEMENT COMMISSION ALSO. 6. WE HAVE CAREFULLY CONSIDERED THE OBJECTION RAISE D BY THE LD. DEPARTMENTAL REPRESENTATIVE ON THE BELATED RAISING OF SUCH GROUND BEFORE THE CIT(A). IN FACT THE CIT(A) HAS ALSO TAKEN NOTE OF THE SAME AND ACCORDINGLY TO HIM RAISING OF THE GROUND CHALLENGING THE VALID ITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT WAS AN AFTERTHOUGH T AND THUS HE DID NOT ADMIT THE SAME. THE AFORESAID OBJECTION OF THE REV ENUE IN OUR VIEW IS QUITE MISPLACED. OSTENSIBLY THE PLEA RAISED BY THE ASSE SSEE CHALLENGING THE VALIDITY OF THE INITIATION OF PROCEEDINGS UNDER SECTION 147/ 148 OF THE ACT INVOLVES A POINT OF LAW AND IT IS ALSO CLEAR THAT THE FACTS RE LEVANT TO DECIDE THE SAME ARE EMERGING FROM RECORD. IT IS A WELL SETTLED LEGAL P ROPOSITION THAT AN ASSESSEE IS ENTITLED TO RAISE A FRESH PLEA IN APPEAL PROCEEDING S SO LONG AS SUCH FRESH CLAIM IS BONAFIDE AND INVOLVE A POINT OF LAW ON WHICH NO FRESH FACTS ARE REQUIRED TO BE INVESTIGATED. IN THE CONTEXT OF THE SAID PROPOS ITION THE LD. REPRESENTATIVE FOR THE ASSESSEE HAD RELIED UPON THE FOLLOWING DECI SIONS:- (1) NIRMALA L. MEHTA VS. CIT 269 ITR 2(BOM) (2) SMT. RAJ RANI GULATI VS. CIT 346 ITR 543 (ALL) (3) CIT VS. ST. MARYS MALANKARA SEMINARY 348 ITR 69 (KER) (4) CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS P. LTD . 349 ITR 336 (BOM) 6 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) 6.1 THE ONLY OBJECTION RAISED BY THE REVENUE IS THA T THE OMISSION TO RAISE SUCH A PLEA BEFORE THE ASSESSING OFFICER AND EVEN A T THE TIME OF INITIAL FILING OF APPEAL BEFORE THE CIT(A) WAS DELIBERATE AND THAT IT WAS RAISED IN THE COURSE OF PROCEEDINGS BEFORE THE CIT(A) AS AN AFTERTHOUGHT. THE CIT(A) FURTHER NOTES THAT ASSESSEE HAD APPROACHED THE SETTLEMENT COMMISS ION ADMITTING THE CONCEALMENT OF INCOME FOR THE INSTANT ASSESSMENT YE AR BUT THE PLEA OF THE ASSESSEE WAS REJECTED AND ONLY AFTER THAT THE ASSES SEE RAISED THE ISSUE OF THE VALIDITY OF PROCEEDINGS UNDER SECTION 147/148 OF TH E ACT BEFORE THE CIT(A). IN OUR CONSIDERED OPINION THE CASE OF THE ASSESSEE CA NNOT BE SHUT OUT MERELY BECAUSE FRESH PLEA HAS BEEN RAISED IN THE COURSE O F PROCEEDINGS BEFORE THE CIT(A) AND NOT AT THE TIME OF FILING THE APPEAL BEF ORE THE CIT(A). QUITE CLEARLY THE PLEA OF THE ASSESSEE IS BASED ON THE VALIDITY O F THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH WERE RECORDED BY THE ASSES SING OFFICER BEFORE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. Q UITE CLEARLY THE FACTUM OF THE ASSESSEES APPLICATION BEING REJECTED BY THE SE TTLEMENT COMMISSION OR THAT THE GROUND WAS NOT RAISED AT THE TIME OF FILI NG OF APPEAL BEFORE THE CIT(A) DO NOT TURN MUCH SO FAR AS THE VALIDITY OF THE REA SONS RECORDED FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT ARE CONCERNED. THERE IS NEITHER ANY MATERIAL AND NOR IT HAS BEEN ESTABLISHED BY REVENUE THAT OMISSION TO RAISE SUCH A GROUND EARLIER WAS DELIBERATE OR MALAFIDE. UNDER THESE CIRCUMSTANCES IN OUR VIEW THE POINT BEING RAISED BY THE ASSESSEE REGARDING THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT DESERVES TO BE ADMITTED FOR ADJUDICATION. IN THE COURSE OF HEARIN G THE AFORESAID WAS PUT ACROSS TO THE LD. DEPARTMENTAL REPRESENTATIVE AND I T WAS SPECIFICALLY REQUIRED FROM HIM TO JUSTIFY THE INITIATION OF PROCEEDINGS U NDER SECTION 147/148 OF THE ACT IN THE PRESENT CASE IN THE LIGHT OF THE JUDGMEN T OF THE HON'BLE BOMBAY 7 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) HIGH COURT IN THE CASE OF DIL LTD. (SUPRA). NO SPE CIFIC CREDIBLE ARGUMENT HAS BEEN RAISED IN THIS REGARD. 6.2 IN OUR CONSIDERED OPINION IN THE PRESENT CASE THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DO NOT CONTAIN ANY CHARGE AGAINST THE ASSESSEE THAT THERE HAS BEEN ANY FAILURE ON ITS PART TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE AFORESAID IS A PRIMARY REQUIREMENT CONTAINED IN THE FIRST PROVISO TO SECTION 147 OF TH E ACT AND SINCE THE SAME HAS NOT BEEN FULFILLED THE BASIS ON WHICH THE REOPENIN G OF ASSESSMENT WAS SOUGHT TO BE EFFECTED BY THE ASSESSING OFFICER DESERVES T O BE TREATED AS UNTENABLE IN THE EYES OF LAW CONSIDERING THE JUDGMENT OF HON'BL E BOMBAY HIGH COURT IN THE CASE OF DIL(SUPRA). 6.3 IN VIEW OF THE AFORESAID DISCUSSION WE HOLD TH AT THE PROCEEDING INITIATED BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 23/3/2003 IS CONTRARY TO LAW AND IS HEREBY SET-ASIDE. AS A CONS EQUENCE THE ASSESSMENT FRAMED THEREAFTER IS LIABLE TO BE QUASHED WE HOLD SO. 6.4 SINCE WE HAVE QUASHED THE ASSESSMENT BASED ON T HE ABOVE PLEA OF THE ASSESSEE THE OTHER ARGUMENTS RAISED BY THE ASSESSE E IN RELATION TO THE MERITS OF THE ADDITIONS ARE RENDERED ACADEMIC AND ARE NOT BEING ADDRESSED. 7. RESULTANTLY THE APPEAL OF THE ASSESSEE IS ALLOW ED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI DATED 19/10/2016 VM SR. PS 8 ITA NO.7791/MUM/2012 (ASSESSMENT YEAR 1996-97) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI