ACIT RG. 10(3), MUMBAI v. INDIAN OIL TANKING LTD, MUMBAI

ITA 1520/MUM/2009 | 1998-1999
Pronouncement Date: 27-01-2010 | Result: Dismissed

Appeal Details

RSA Number 152019914 RSA 2009
Bench Mumbai
Appeal Number ITA 1520/MUM/2009
Duration Of Justice 10 month(s) 24 day(s)
Appellant ACIT RG. 10(3), MUMBAI
Respondent INDIAN OIL TANKING LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 27-01-2010
Date Of Final Hearing 20-01-2010
Next Hearing Date 20-01-2010
Assessment Year 1998-1999
Appeal Filed On 05-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I : MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ITA. NO. 1520/MUM/2009 ASSESSMENT YEAR 1998-1999 ACIT RANGE 10 (3) MUMBAI 400 020. VS. M/S. INDIAN OIL TANKING LTD. MUMBAI 400 076 PAN AAAC16794E (APPLICANT) (RESPONDENT) FOR APPELLANT : MRS. VANDANA SAGAR SR. A.R. FOR RESPONDENT : MR. P.J. PARDIWALA & MS. VASANT I PATEL ORDER PER SHRI D. MANMOHAN V.P. 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-X MUMBAI AND IT PERTAINS TO THE ASSESSM ENT YEAR 1998-99. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED CIT(A) ERRED IN CANCELING THE RE- ASSESSMENT U/S 147 FOR THE SAID ASSESSMENT YEAR WIT HOUT APPRECIATING THE FACT THAT MERE PRODUCTION OF AN EV IDENCE BEFORE THE ASSESSING OFFICER CANNOT BE SUFFICIENT T O SAY THAT THE ASSESSEE HAS DISCLOSED PROPER FACTS AS THE ASS ESSEE KNOWS ALL THE MATERIAL AND RELEVANT FACTS WHILE THE ASSESSING OFFICER MAY NOT. 2. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE WHICH IS ENGAGED IN THE BUSINE SS OF CARRYING OF CONSULTANCY SERVICES DECLARED A TOTAL INCOME OF RS .42 67 230/- BY FILING ITS RETURN OF INCOME ON 27-11-1998. THE SAID RETURN WAS PROCESSED 2 UNDER SECTION 143 (1) OF THE ACT AND THEREAFTER SE LECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF T HE ACT ON 29/12/2000 WHEREBY THE TAXABLE INCOME WAS DETERMINE D AT RS.58 67 230/-. 3. SUBSEQUENTLY BASED ON THE INFORMATION AVAILABL E ON RECORD THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE CLA IMED DEDUCTION OF PRE- OPERATIVE EXPENSES THOUGH THE ASSESSEES COMPANYS MAIN COMMERCIAL OPERATIONS HAVE NOT STARTED DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR 1998-99. UNDER THESE CIRCUMSTANCES HE WAS OF THE VIEW THAT INCOME ARISING PRIOR TO COMMENCEMENT OF B USINESS SHOULD BE TREATED AS INCOME FROM OTHER SOURCES IN WHICH EVENT DEDUCTION TOWARDS PRE-OPERATIVE EXPENSES IS NOT ADMISSIBLE. THEREFORE A NOTICE WAS ISSUED UNDER SECTION 148 OF THE ACT ON 15-2-05 ON THE GROU ND THAT HE HAS REASON TO BELIEVE THAT THE INCOME AMOUNTING TO RS.1 99 70 128/- HAD ESCAPED ASSESSMENT IN VIEW OF EXPLANATION 2 (C) (1) UNDER SECTION 147 OF THE I.T. ACT 1961. THE ASSESSEE RAISED A PRELIMINA RY OBJECTION THAT THE REOPENING OF THE ASSESSMENT IS BAD IN LAW SINCE THE NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE ON 16/2/2005 I.E. AFT ER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT WA S ALSO CONTENDED THAT ALL THE BASIC FACTS ARE ALREADY ON RECORD AND HENCE IT WAS NOT CORRECT ON THE PART OF THE ASSESSING OFFICER IN STATING THAT I T HAS NOT FULLY AND TRULY DISCLOSED ALL MATERIAL FACTS NECESSARY FOR ITS ASSE SSMENT. 4. THE ASSESSING OFFICER REJECTED THE CONTENTION O F THE ASSESSEE AND COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE ACT ON A TOTAL TAXABLE INCOME OF RS.1 99 70 128/-. 5. ON AN APPEAL FILED BY THE ASSESSEE LEARNED CIT (A) CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY PLACING RELIANCE UPON VARIOUS CASE LAW HE CONCLUDED THAT T HE REOPENING HAS BEEN MADE ON THE BASIS OF CHANGE OF OPINION APART F ROM THE FACT THAT IT 3 WAS BEYOND 4 YEARS AND NO FRESH MATERIAL WAS AVAILA BLE ON RECORD SINCE ALL THE BASIC FACTS WERE TRULY AND FULLY DISCLOSED BY THE ASSESSEE DURING THE COURSE OF REGULAR ASSESSMENT. SINCE THE ASSESSM ENT ORDER WAS ANNULLED ON THE GROUND THAT THE REOPENING IS BAD IN LAW THE LEARNED CIT(A) DID NOT GO INTO OTHER ISSUES RAISED ON MERIT S. 6. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) R EVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE LEARNED DR AS WELL AS LEARNED COUNSEL IN THIS REGARD AND CAREFULLY PERUSED THE RECORD. THE C ASE OF THE LEARNED DR IS THAT THE CERTIFICATE OF COMMENCEMENT OF BUSINESS (PAGE 32 OF THE PAPER BOOK) MERELY ENABLES THE ASSESSEE TO COMMENCE THE B USINESS AND THE SAME CANNOT BE RELIED UPON TO STATE THAT THE BUSINE SS HAD ALREADY COMMENCED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. SINCE THE ASSESSEE HAS NOT BRO UGHT TO THE NOTICE OF THE ASSESSING OFFICER STATING FACTS IN THE CORRECT PERSPECTIVE THE ASSESSING OFFICER WAS JUSTIFIED IN ISSUING A NOTICE UNDER SECTION 148 OF THE ACT EVEN AFTER LAPSE OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR. IN THIS REGARD LEARNED DR RELIED UPON THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF RURAL ELECTRIFICATION CORPN. L TD. VS. ACIT NEW DELHI (2009) 34 SOT 159 (DEL.). SHE THUS STRONGLY RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 8. ON THE OTHER HAND LEARNED SENIOR COUNSEL SUBMIT TED THAT THE CASE LAW RELIED UPON BY THE LEARNED D.R. IS DIS TINGUISHABLE ON FACTS INASMUCH AS THE BENCH WAS OF THE VIEW THAT THE ASSE SSEE DID NOT TRULY AND FULLY FURNISH DETAILS IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS WHEREAS IN THE INSTANT CASE PAGES 57 18 21 28 29 34 35 38 AND 39 OF THE PAPER BOOK CLEARLY REFLECT THE FACT THAT ALL THE DETAILS ARE AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER AT THE TIME OF MAKING THE ORIGINAL ASSESSMENT AND SPECIFIC QUERIES WERE RAISED BY THE ASSESSING OFFICER WITH 4 REGARD TO COMMENCEMENT OF BUSINESS AND APPROPRIATE REPLIES WERE TENDERED. IT IS THUS NOT A CASE OF NON-FURNISHING O F PARTICULARS OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. MER ELY BECAUSE THE ASSESSING OFFICER HAS TAKEN ONE VIEW ON THE SET OF FACTS DURING THE COURSE OF COMPLETION OF ASSESSMENT UNDER SECTION 143 (3) O F THE ACT BUT AT A LATER STAGE HOLDS A DIFFERENT VIEW IT CANNOT BE SA ID THAT THE ASSESSEE HAS FURNISHED INCORRECT PARTICULARS SO AS TO BRING THE CASE WITHIN EXPLANATION 2 (C) (1) OF SECTION 147 OF THE ACT. HE ALSO RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF HINDUSTAN LEVER LIMITED VS. ACIT AND OTHERS (2004) 268 ITR 3 32 IN SUPPORT OF HIS CONTENTION THAT IN ORDER TO REOPEN AN ASSESSMENT AF TER 4 YEARS IT HAS TO BE SHOWN THAT THE ASSESSEE HAS NOT DISCLOSED TRUE A ND CORRECT FACTS NECESSARY FOR MAKING AN ASSESSMENT AND IN THE ABSEN CE OF SUCH MATERIAL REOPENING IS NOT PERMISSIBLE BEYOND A PER IOD OF 4 YEARS. HE THUS STRONGLY SUPPORTED THE ORDER PASSED BY THE LE ARNED CIT(A). 9. IN OUR CONSIDERED OPINION THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR INTERFERENCE. AS RIGHTLY P OINTED OUT BY THE LEARNED COUNSEL ALL THE FACTS ARE ALREADY ON RECORD BEFORE THE ASSESSING OFFICER AND THE ASSESSMENT WAS SOUGHT TO BE REOPENED MERELY BY ANALYZING THE RECORD ALREADY AVAILABLE WITH THE ASSESSING OFFICER WHICH IMPLIES THAT NO FRESH MATERIAL HAS COME TO THE NOTICE OF THE ASSESS ING OFFICER DURING THE COURSE OF REOPENING OF ASSESSMENT. LEARNED CIT(A) H AS CONSIDERED THE ISSUE IN GREAT DETAIL AND HENCE IT IS NOT NECESSAR Y FOR US TO ELABORATE THE ISSUE FURTHER. FOR THE SAKE OF BREVITY SUFFICE TO SAY THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS BASED ON COGENT REASONS AN D HENCE IT DOES NOT CALL FOR INTERFERENCE. 10. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. 5 ITA. NO. 1520/MUM/2009 M/S. INDIAN OIL TANKING LTD. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF JANUARY 2010. SD/- SD/- (PRAMOD KUMAR) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 27 TH JANUARY 2010. VBP/- COPY TO 1. ACIT RANGE 10 (3) 451 AAYAKAR BHAVAN 4 TH FLOOR M.K. MARG MUMBAI 400 020. 2. M/S. INDIAN OIL TANKING LTD. 103 SPECTRA HIRAN ANDANI GARDENS POWAI MUMBAI 400 076. PAN AAAC16794E 4. CIT(A)-X MUMBAI. 5. CIT M.C.-X MUMBAI 6. D.R. I BENCH MUMBAI. 7. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI. SNO DATE INITIALS 1 DRAFT DICTATED ON 21-01-2010 SR.P.S 2. DRAFT PLACED BEFORE AUTHOR 22-01-2010 SR.P.S 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S 6. KEPT FOR PRONOUNCEMENT ON SR.P.S 7. FILE SENT TO THE BENCH CLERK SR.P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER