IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : B : NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI A.D. JAIN, JUDICIAL MEMBER
ITA No.5362/Del/2013
Assessment Year : 2005-06
Vs. Digital Radio (Kol) Broadcasting
DCIT, Ltd.,
Circle 10 (1), 401, Dakha House,
New Delhi. 18/17, WEA, Karol Bagh,
New Delhi.
PAN : AABCR7863G
ITA No.5363/Del/2013
Assessment Year : 2005-06
DCIT, Vs. Digital Radio (Del) Broadcasting
Circle 10 (1), Ltd.,
New Delhi. 401, Dakha House,
18/17, WEA, Karol Bagh,
New Delhi.
PAN : AABCR7864B
(Appellant) (Respondent)
Assessee By : Shri O.P. Sapra, Advocate
Department By : Smt. Nidhi Srivastava, Sr. DR
ORDER
PER A.D. JAIN, JUDICIAL MEMBER:
These are Department's appeals for Assessment Year 2005-06 in the
case of two independent assesses, against the orders dated 30.07.2013
passed by the CIT (A)-V, New Delhi. The facts in both these cases being,
ITA Nos.5362 & 5363/Del/2013
mutatis mutandis exactly similar, both these appeals are being disposed of
by this composite order. The facts, for facility, are being taken from ITA
No.5362/Del/2013.
2. The assessee has taken the following grounds:-
"i) Whether the CIT(A) under the facts and circumstances of the case
and in law was justified in cancelling the assessment framed u/ s
147/148 of the Income Tax Act,1961?
ii) Whether under the facts and circumstances of the case, the CIT(A)
was correct in law in holding that very basis of issuance of notice u/ s
148 was absent and there was no escapement of income, provision of
Section 147 was not applicable, without considering that the assessee
had itself admitted wrong claim in the return on account of license fee
and had filed application u/ s 154 of the Act to withdraw the claim?
iii) Whether under the facts and circumstances of the case and in law,
the CIT(A) was correct in holding that filing of rectification application
u/ s 154 of the I.T.Act, 1961 makes the very basis of issuance of notice
u/ s 148 non-existent, even though the mistake does not come in the
ambit of section 154 of the I.T.Act,1961?
iv) Whether under the facts and circumstances of the case and in law,
the CIT(A) was correct in equating the facts, of the present case where
the assessee had only filed application u/ s 154 of the Act with the
facts of Digital Radio(Mumbai), Broadcasting Ltd, whether order u/ s
143(3) was passed, while deciding the validity of proceedings u/ s 147
of the Act initiated in this case?"
3. The return of the assessee for the year under consideration was
processed u/s 143 (1) of the Act. Subsequently, it was noticed that the
assessee had claimed deduction as revenue expenditure by making a debit
entry in the Profit & Loss Account under the head `Licence fee'. The
Assessing Officer observed that the licence fee was required to be
proportionately allowed over the period of the licence in accordance with the
provisions of Section 35ABB of the IT Act and this had not been done and
thereby excess allowance of expenditure towards licence fee had resulted in
over-assessment of loss. It was in accordance with these observations, that
the assessment of the assessee for both the years was sought to be
reopened by issuing notices u/s 148 of the Act. The assessee responded by
submitting that it had voluntarily filed rectification application u/s 154,
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ITA Nos.5362 & 5363/Del/2013
whereby, the licence fee as originally claimed as deduction, was offered to
be reduced , resulting in reduction of losses as assessed; that the application
had not been rejected; and that the assessee had, thus, voluntarily got
reduced the loss proposed to be reduced vide the said rectification
application.
4. The Assessing Officer, however, did not find the reply of the assessee
to be acceptable. It was held that as per `GKN Drive Shafts India vs. ITO', 259
ITR 19 (SC), the assessee can only file objection after filing the return and
after obtaining the reasons recorded, whereas in the present case, the
assessee had filed the objections without filing the return, rendering the
objection raised by the assessee untenable in law. It was observed that the
provisions of Section 154 of the Act come into play only when there is a
mistake apparent from record, which was not so in the present cases.
5. By virtue of the impugned orders, the Ld. CIT (A) cancelled the
assessment orders made in consequence of the reopening notices, holding
such reopening to be invalid in both the cases.
6. The Ld. DR has contended that the Ld. CIT (A) has erred in cancelling
the assessment correctly framed u/s 147/148 of the Act; that the Ld. CIT (A)
has erred in holding that the very basis of issuance of notice u/s 148 was
absent and there was no escapement of income and that so, the provisions
of Section 147 of the Act were not applicable, that while doing so, the Ld. CIT
(A) has failed to consider the patent fact that the assesse had itself admitted
that the wrong claims having been made in the return on account of licence
fee and that application u/s 154 of the Act had been filed to withdraw the
claims; that the Ld. CIT (A) went wrong in holding that the factum of the filing
of the rectification application made the very basis of issuance of notices u/s
148 of the Act non-existent; that while doing so, the Ld. CIT (A) failed to
consider that such `mistake' does not fall under the provisions of Section 154
of the Act; that the Ld. CIT (A) erred in drawing parity of the present cases
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ITA Nos.5362 & 5363/Del/2013
with the facts of `Digital Radio (Mumbai) Broadcasting Ltd.; and that
therefore, the orders passed by the Ld. CIT (A) in both the cases be set
aside/quashed by allowing the appeals filed by the department.
7. The ld. Counsel for the assessee, on the other hand, has placed strong
reliance on the impugned orders, contending that the very fact that the
assesses had filed the rectification applications before the filing of the
returns of income showed the bona fides of the assessees; that by virtue of
these applications, the assessee had themselves voluntarily reduced the loss
sought to be reduced by reopening the assessments; that the rectification
applications have not hitherto been rejected till date; that the Ld. CIT (A) has
duly taken into consideration all these facts while rightly deciding this matter
in favour of the assessee, holding the reopening in both the cases as invalid
and cancelling the assessment orders passed in consequence thereof.
8. It remains undisputed, even as per the assessment order, that the loss
sought to be reduced by reopening the assessments of both the assesses,
was voluntarily reduced by them by filing the rectification application. Now,
as per the provisions of Section 155 (8) of the Act, an Income-tax Authority
must pass an order on a rectification application within a period of six
months from the end of the month in which such application is received by it.
In case it is not so done, the amendment sought through the rectification
application shall be deemed to have been made.
9. Then, the Assessing Officer went entirely wrong in observing in the
assessment orders that the assesses could not have filed the rectification
applications before filing the returns of income. `GKN Drive Shafts' (supra),
which the Assessing Officer sought to rely on, nowhere lays down any such
proposition. As rightly noted by the Ld. CIT (A) u/s 154 (7) of the Act, the
assessees were entitled to move such rectification applications, which were
filed well within the limitation prescribed. In fact, the assesses, by filing the
rectification applications, themselves voluntarily reduced the loss proposed
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ITA Nos.5362 & 5363/Del/2013
to be reduced by reopening the assessments and this being the only reason
recorded for reopening the completed assessments, after such reduction of
loss, there remained nothing to validate the reopening. The applications, it is
pertinent were filed prior to the issuance of notices u/s 148 of the Act. In the
assessment orders the Assessing Officer himself acknowledged the factum of
such applications having been filed.
10. The Ld. CIT (A) has duly taken into consideration all the above facts
and we do not find any error in his action of holding the reopening in both
the cases to be invalid and cancelling the assessments made in consequence
thereof. While doing so, the Ld. CIT (A) has correctly appreciated that in the
case of `Digital Radio (Mumbai) Broadcasting Ltd.', the above position had
been taken into consideration by the Assessing Officer.
11. In view of the above, the grievance sought to be raised by the
department in both these cases is rejected being shorn of merits, upholding
the well reasoned order passed by the Ld. CIT (A).
12. In the result, both the appeals filed by the department are dismissed.
The order pronounced in the open court on 04.04.2014.
Sd/- Sd/-
[G.D. AGRAWAL] [A.D. JAIN]
VICE PRESIDENT JUDICIAL MEMBER
Dated, 4th April, 2014.
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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