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Outstanding decision of ITAT Mumbai

Started by brett_lee38, September 18, 2014, 12:39:04 PM

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Recently I have read a very good decision of the Mumbai Bench of the ITAT in the case of Veena developers wherein the Hon'ble Bench has observed as under:-
++we deem it necessary to point out here that once an issue is adjudicated and settled by the higher judicial authority, it is not open to the lower income tax authorities to reopen, make assessment or reassessment on the basis of same facts and circumstances and in the absence any incriminating or new material, information or evidence or of a contrary decision of superior judicial authority in order of hierarchy. If the Revenue officials choose to do so, then it is to be treated as not only the misuse but also abuse of their authority and in such an event defenses like protecting the interest of Revenue, keeping the issue alive etc. will not be sufficient to absolve them of the likely penal consequences against them. It reminds us of another case titled as "ITO V/s M/s. Deepa Restaurant & Bar P. Ltd.," ITA No.1336/M/2012 decided on 05.02.2014. In the said case the assessee had disputed the legality of the notice issued by the AO u/s 143(2) of the act. The Tribunal had upheld the order of the CIT(A) vide which he had annulled the assessment made by the AO u/s 143(3) by holding that the notice issued by the AO under section 143(2) was not in time. However, the AO thereafter observed that since the assessment in this case had been annulled on the legality of notice under section 143(2) of the Act and the case had not been heard on merits at any of the stage including appellate proceedings, hence, there was a reason to believe that the income assessed in this case had escaped and therefore he reopened the assessment u/s 147 of the Act. The matter again travelled to the Tribunal. The Tribunal while adjudicating the issue in para 5 of the said order observed as under:
++ In the facts of the present case, if such an act of making additions u/s 153A on the alleged ground of maintaining consistency in the stand of the Revenue and for keeping the issue alive, is allowed or not condemned, it may lead continuous harassment of assessee and never ending litigation on the same issue, such as, if the said additions are deleted by the higher judicial authorities even up to the level of Apex Court, the AO still would reopen the assessment and make additions on the same issue and on the basis of same facts u/s 147 of the Act. If the further appeals also meet the same fate of setting aside of such additions, then the ld. Commissioner would step into to make the same additions on the same issue again, by way of invoking the provisions of section 263 of the Act and so on. In such circumstances, there will not be any end to litigation on the same issue in the case and also to the harassment, loss and agony of the assessee.
++Coming back to the merits of the present case, we hold that in the facts and circumstances of the case, there is no infirmity in the order of the CIT(A) in deleting the additions made by the AO u/s 153A. We hold accordingly. However before parting with the order, we direct the registry to send a copy of the order to the Chairman of the CBDT so that the necessary instructions may be issued to the Income Tax officers/Commissioners in this regard and in future due care be taken, not to disrespect or disobey the orders of the higher judicial authorities and also not to file frivolous appeals

For the first time in my carrier I have seen such a dynamic decision of the ITAT hats off to these members. This type of approach is required to built the faith of a poor assessee.


I appreciate the judgement.  Before the lower authorities, the ITAT decision does not carry any wieght by itself.


Poor assesses : whether the word is true ? how many of are showing their real income and paying taxes ? do we advise our clients to be honest in their financial results for the devlopment of the country ? We have more four vehicles owners that the income tax payee.
Don,t as professional we have responsibility of guiding and asking our clients to pay correct taxes ? why every lectuer is for the government ? Are we not citizen of this country ?
It is my sincere request to all the members of this group,kindly change your attitude .


Dear Pawanji, with due respect, let me counter your argument by stating that even if all assessees pay taxes regularly, the situation is not going to be changed because department has no barometer to differentiate between a real tax payer and a tax evador. Another point is do you think all income tax officials pay proper taxxes on their income? so where is the difference? So one side correction is not going to solve the problem. Well, i think we all have been fixed in a vicious circle where it is difficult to conclude whether tax mechanism is so dull and emotionless on account of large scale tax evasion or tax evasion is there on account of such kind of tax mechanism. Kindly note that tax system in our country is a two way matter and not a one way trafic. So correction should also be two way.

But it is true that frivolous orders and appeals by the department frustrate the assessees at large becasue department has nothing to lose in lititgation whereas the assessees have to bear tension and cost even if they win. So unless, the courts and tribunals come with such serious decisions putting a break on frivolous litigations, there will be gross injustice to the assessees and this situation holds good even if assessees are not paying tax properly.