Income Tax Appellate Tribunal - Delhi
Tv Today Network Ltd., New Delhi vs Assessee on 1 March, 2016
ITA NOS. 3658-3659/Del/2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "H", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
I.T.A. Nos. 3658 & 3659/Del/2013
A.Yrs. : 2004-05 & 2007-08
M/s TV Today Network Limited, Vs. ACIT, Circle 16(1),
F-26, Connaught Circus, New Delhi
New Delhi - 110 001
(PAN: AABCT0424B)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. Salil Agarwal, Adv. & Sh. Shailesh
Gupta, Adv.
Department by : Sh. V.R. Sonbhadra, Sr. DR
Date of Hearing : 01-
01-02-2016
2016
Date of Order : 01-
01-03-
03-2016
2016
ORDER
PER H.S. SIDHU, JM
Assessee has filed these appeals against the separate Orders passed by the Ld. Commissioner of Income Tax (Appeals), New Delhi pertaining to assessment years 2004-05 & 2007-08. Since the issues involved in these appeals are common and identical, we are therefore, proceeding to dispose of these appeals by passing the consolidated order, by dealing with the ITA No. 3658/Del/2013 (A.Y. 2004-05) for the sake of convenience.
2. The brief facts of the case are that the original assessment in this case was completed on 03.12.2006 at an income of Rs. 51,38,51,000/-. The case of the assessee company was reopened u/s. 147 after recording the reasons, gist of which is reproduced as under:-
1ITA NOS. 3658-3659/Del/2013 "In this case assessment for the assessment year 2004-05 was completed after scrutiny in December, 2006 determining an income of Rs. 5138.51 lacs. Further reassessment was done u/s. 154 in December, 2007. It has come to the notice that expenditure A/c of repair and maintenance of Rs. 72.30 lacs shown on 31st January, 2004, Rs. 12.30 lacs pertains to Provisions, as the Provision made was not an ascertained liabilities as such amount shown in P&L A/c worth Rs. 12.30 lacs should have been disallowed and added back to income of the assessee. This has resulted in under assessment of Rs. 12,30,127/-."
2.1 After recording reasons to believe, the AO issued notice u/s. 148 of the I.T. Act to the assessee on 25.3.2011 and served upon the assessee company.
The reasons for reopening were intimated to the assessee on 24.8.2011 and case was fixed on various occasions for 5.9.2011, 20.9.2011 & 4.11.2011 and on 4.11.2011 Assessee's AR attended the hearing. Thereafter, the AO disallowed the Provision made under the head repair and maintenance amounting to Rs. 12,30,127/- and added back to the return income of the assessee company treating the same as ascertained liability and thereafter completed the re-
assessment at a total income of Rs. 51,50,81,127/- u/s. 143(3)/154/148 of the I.T. Act, 1961 vide his order dated 12.12.2011.
2ITA NOS. 3658-3659/Del/2013
3. Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 30.3.2013 has partly allowed the appeal of the assessee.
4. Aggrieved with the order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
5. At the time of hearing, Ld. Counsel of the assessee stated that AO issued Notice dated 25.3.2011 u/s. 148 of the I.T. Act, 1961 to the assessee by stating that he has reason to believe that the income of the assessee is chargeable to tax for the assessment year in dispute has escaped assessment within the meaning of section 147 of the I.T. Act. He directed the assessee to file its return within 15 days from the service of the notice. He also draw our attention towards Page No. 1 of the small Paper Book containing pages 1 to 28 in which he has attached this notice for our perusal. He further stated that in response to the notice dated 25.3.2011 assessee vide his letter dated 1.4.2011 requested the AO to provide the copy of the reasons recorded for reopening of the case. In response to the same AO has provided the reasons recorded u/s. 147 of the I.T. Act, 1961 vide letter dated 24.8.2011. Ld. Counsel of the assessee further draw our attention towards Page No. 24 of the Paper Book and stated that the AO has also issued the notice u/s. 154/155 of the I.T. Act for the assessment year 2004-05 dated 25.5.2010 and in response to the same the Assessee has filed its reply dated 29.6.2010 which he has attached at Page No. 24 of the Paper Book. He stated that after receiving the reply of the assessee the AO dropped the Notice u/s. 154/155 of the I.T. Act meaning thereby that AO has accepted the version of the assessee and found no mistake in the assessment order. The Ld. Counsel of the assessee has not filed the copy of the order dropping the Notice dated 25.5.2010 for our perusal. Ld. Counsel of the assessee further 3 ITA NOS. 3658-3659/Del/2013 stated that this is a change of opinion because the original assessment has been framed in the case of the assessee u/s. 143(3) of the I.T. Act on 3.12.2006, after making detailed enquiry and the AO has accepted the version of the assessee. He further stated that the Notice u/s. 148 has been issued to the assessee after recording the reasons u/s. 147 of the I.T. Act without any tangible material. He also draw our attention towards the reasons recorded which is at page No. 4 of the Paper Book. He requested that reassessment framed may be quashed. In support of his contention he relied upon the following case laws:-
a) CIT vs. Usha International Ltd. [348 ITR 485] (Full Bench) -
Delhi High Court.
b) ACIT & Ors. Vs. ICICI Securities Primary Dealership Ltd. [2012] 348 ITR 299 (SC)
c) Techman Buildwell P. Ltd. vs. ACIT [317 ITR 771] - Delhi High Court.
6. On the other hand, Ld. DR relied upon the order of the Ld. CIT(A) and stated that the Ld. CIT(A) has passed a well reasoned order on the basis of the documentary evidence filed by the assessee as well as prevailing law. He further stated that Notice u/s. 148 has been issued after adopting the prescribed procedure under the law and with tangible material. Therefore, the question of quashing the reassessment does not arise. Accordingly, he requested that the Appeal filed by the Assessee may be dismissed.
7. We have heard both the parties and perused the records especially the orders of the Revenue authorities alongwith the Small Paper Book filed by the assessee containing pages 1 to 28 in which he has attached the copy of Return of income filed on 18.10.2004; copy of notice under section 148 dated 25.3.2011;
4ITA NOS. 3658-3659/Del/2013 copy of the Reply to the AO dated 1.4.2011; Copy of reasons recorded supplied by AO; copy of reply to AO dated 5.9.2011; copy of written submission filed before the CIT(A) and copy of Written submission filed before the Ld. CIT(A). We have also perused the case laws cited by the Ld. Counsel of the Assessee and the Notice issued u/s. 148 by the AO as well as the Reply filed by the Assessee at Pages 1 & 2 of the Paper Book. We have also perused the reasons recorded by the AO which is at page no. 4 of the Paper Book. For the sake of clarity, we are reproducing the contents of the Notice dated 25.3.2011 issued u/s. 148; Reply dated 1.4.2011 of the Assessee to the Notice dated 25.3.2011 u/s. 148 and the reasons recorded supplied by the AO as under:-
"NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 PAN I GIR NO.AABCT0424B Office of the Dy. Commissioner of Income Tax, Room No.221, C.R. Building, Circle-16(1), New Delhi.
Dated: 25.03.2011 To The Principal Officer, MIs T V Today Network Ltd.
E-1, Videocon Tower, 8th Floor, Jhandewalan Extension, New Delhi.
Whereas I have reasons to believe that your income chargeable to tax for the Assessment Year 2004-05 has escaped assessment within in the meaning of section 147 of the income tax Act, 1961.5
ITA NOS. 3658-3659/Del/2013 I, therefore, propose to assess/re-assess the income for the said assessment year and I hereby require you to deliver to me within 15 days from the date of service of the notice, a return in the prescribed form of your income for the said assessment year.
This notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income tax, Delhi VI, New Delhi.
Sd/-
(JEETENDERA KUMAR) Dy. Commissioner of Income Tax, Central Circle-16(1), New Delhi."
REPLY TO NOTICE DATED 1.4.2011 01.4.2011 Dy. Commissioner of Income Tax, Circle 16(1), CR Building New Delhi Sub:- Notice u/s. 148 for the assessment year 2004-05 In response to your notice issued u/s. 148 of I.T. Act, 1961 we would like to point out that we had already filed our Return of Income u/s. 139 for the Assessment year 2004-05 on 1.11.2004 vide acknowledgement no. 01111042347. We hereby request to please treat this Return of Income as Return of Income filed in response to notice issued u/s. 148 of the Act.
Further we would like to request your honor to please provide us the reasons, so recorded for reopening the case, which you have to believe that our income chargeable to tax for the assessment year 2004-05 has escaped assessment.
Thanking you, Yours faithfully, For TV Today Network Limited 6 ITA NOS. 3658-3659/Del/2013 Sd/-
Aroon Puri Managing Director"
"OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 6(1), NEW DELHI.
Room No.221, 2nd Floor, Central Reveriue Building', I.P.-Estate, New Delhi.11~002.
F.No. ACIT/Circle 16(1)/2011-2012 Date 24th August, 2011 NOTICE UNDER SUB-SECTION(1) OF SECTION 142 OF THE INCOME-TAX ACT, 1961 File No,225 PAN! GIR No,AABCT04248 To The Principal Officer, M/s TV Today Network Limited E-1, Videocon Tower, 8th Floor, Jhandewalan Extension, New Delhi-110 055 Sir/I Madam, Sub: Re-opening u/s 147/148 of the LT. Act, 1961, in the case of MIs TV Today Network Limited, for the A.Y. 2004-05-regarding- Please refer to tile above mentioned subject.7
ITA NOS. 3658-3659/Del/2013 In the connection, the scrutiny assessment of M/s TV Today Network Limited for the AY, 2004-05 was completed after scrutiny in December, 2006 determining an income of RS.5138.51 lakhs. Further reassessment was done u/s 154 in December, 2007. The reasons recorded u/s'147 of the I.T, Act, 1961 is as enclosed as annexure-'A'.
You are hereby requested for furnish your reply to the same with documentary evidence in support of your reply u/s. 142(1) of the I.T. Act, 1961. Room No. 221, 2nd floor, CR Building, IP Estate, New Delhi 110002 on or before 5.9.2011 at 12.30 PM.
Thanking you,
Yours faithfully,
Encl: Annexure A Sd/-
(Monika Singh)
Asstt. Commissioner of Income tax,
Circle 16(1), New Delhi
ANNEXURE 'A'
Name & address of the assessee M/s T,V. Today Network Ltd.
E-1, Videocon Tower, 8th Floor.
Jhandewalan Extension, New Delhi-
110055
PAN: AABCT04248
Status COMPANY
Assessment Year 2004-05
Reasons recorded u/s 147 of the I.T. Act, 1961 The Income Tax Act, 1961, provides that a provision made in the accounts for an accrued or know liability is an admissible deduction, while other provisions made do not qualify for deduction. It has been judicially held that for a loss to be 8 ITA NOS. 3658-3659/Del/2013 deductible, it must have actually arisen and incurred and not merely anticipated as certain to occur in future.
In this case assessment for the assessment year 2004-05 was completed after scrutiny in December, 2006 determining an income of Rs.5138.51 Lac. Further reassessment was done u/s 154 in Dec, 2007. It has come to the notice that expenditure A/c of repair and maintenance of Rs. 72.30 lacs shown on 31st January, 2004, Rs. 12.30 lacs pertains to provisions, as the Provision made was not an ascertained liabilities as such amount shown in P&L account worth Rs. 12.30 lacs should have been disallowed and added back to income of the assessee. This has resulted in under assessment of Rs. 12,30,127/-.
Therefore, I have reason to believe that the income of Rs. 12,30,127/- has escaped assessment on account of the assessee not disclosing fully and truly all material facts necessary for the assessment proceedings at the time of assessment u/s. 143(3). Hence, the assessment proceedings need to be reopened u/s. 147 of the I.T. Act. Approval of Commissioner of Income Tax, New Delhi is solicited hereby u/s. 151(2) of the I.T. Act.
Sd/-
(Jeetendra Kumar) Dated: 21/03/2011 Dy. Commissioner of Income Tax Circle-16(1) New Delhi "
8. As regards issue of reopening is concerned, we find that all the questions / reasons recorded by the AO. The assessee had made full and true disclosure during the original assessment proceedings. We are of the view that reopening had been done merely on change of opinion in as much as that in the original assessment made u/s. 143(3) of the I.T. Act, the AO had apparently applied his mind and had raised queries with regard to the items which have been identified by the AO in this notice u/s. 147/148 of the Income Tax Act. We also find that AO has no fresh material to form his opinion regarding escapement of assessment and he has also not found any tangible material to record the reasons for reopening of the assessment of the assessee. It is merely a change of opinion which is not permissible under the law as well as according to the 9 ITA NOS. 3658-3659/Del/2013 various decisions including the decision of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Usha International Ltd. [2012] 348 ITR 485 (Delhi) [Full Bench] the reassessment is invalid on the part of the AO and also on confirming the same on the part of the Ld. CIT(A). Our view is supported by the following decisions, which the Ld. Counsel has referred in his arguments.
a) ACIT & Ors. Vs. ICICI Securities Primary Dealership Ltd. [2012] 348 ITR 299 (SC) wherein the Hon'ble Supreme Court of India has affirmed the decision of the High Court, that rejection of the objections of the assessee to the reopening of the assessment by the AO was clearly a change of opinion and the order reopening the assessment was not sustainable.
b) Techman Buildwell P. Ltd. vs. ACIT [317 ITR 771] - Delhi High Court. In this case the Hon'ble High Court while allowing the petition, held that the "reasons to believe" nowhere high- lighted what, if at all, was the material which the Assessing Officer came upon or became aware of subsequent to the original assessment. In other words, what triggered the Assessing Officer's curiosity to impel him to re-examine the files and documents pertaining to a completed assessment was unknown. Nor did the materials placed in the assessment show that the aseessee had unjustifiably suppressed valid or relevant information which was otherwise available. The advertence to the disallowance of a provision for an unascertained liability points to the Assessing Officer indulging in what amounted to nothing but a masked review.
10ITA NOS. 3658-3659/Del/2013 What appeared to have excited the Assessing Officer's mind was that the original aseessment order was not framed properly as it overlooked certain materials which led to loss of revenue. The Assessing Officer in the first instance did not perform his job properly for which the assessee could not be faulted. The Assessing Officer's omission was the sole basis for issuing the reassessment notice and, consequently, proceeding to make the demand. Therefore, the notice and the demands arising consequent to the notice were quashed.
9. In view of the aforesaid facts and circumstances, as explained above and respectfully following the precedents of Full Bench of the Hon'ble High Court of Delhi as well as other decisions as cited above, we are of the view that both the authorities below have gone wrong in deciding the reopening as valid. However, in view of the aforesaid discussions and the precedents relied upon, as aforesaid it is established that that in the present case the issue reopening of assessment is incorrect and invalid. Therefore, we quash the orders of the authorities below on this legal issue and decide the same in favor of the assessee.
9.1 Since we have already quashed the reassessment proceedings, as aforesaid raised in the Assessee's Appeal, in our considered opinion, there is no need to adjudicate the issues on merits.
10. The similar legal issue in dispute in the another appeal No. 3659/Del/2013 (AY 2007-08) is identical to ITA No. 3658/2013 (AY 2004-
05), as admitted by both the parties. Since we have decided the issue in dispute i.e. relating to issuance of notice u/s. 148 of the I.T. Act in favor of the assessee and quashed the reassessment, in ITA No. 3658/Del/2013 (A.Y. 11 ITA NOS. 3658-3659/Del/2013 2004-05), following the same reasoning as aforesaid, we also quash the reassessment in another Appeal i.e. ITA No. 3659/Del/2013 (AY. 2007-08) and decide the issue relating issuance of notice u/s. 148 in favor of the assessee and against the Revenue.
11. In the result, both the Appeals filed by the Assessee stand allowed.
Order pronounced in the Open Court on 01/03/2016.
Sd/- Sd/-
[L.P. SAHU]
SAHU] [H.S. SIDHU]
SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 01/3/2016
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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