The Commissioner Of Income Tax, Chennai v. M/S.arvind Healthcare Pvt. Ltd.,Chennai-17

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 20.6.2019 CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMAND THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.382 of 2019 The Commissioner of Income Tax, Chennai. -Vs- ...Appellant M/s.Arvind Healthcare Pvt. Ltd.,Chennai-17. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961against the order dated 20.12.2018 in ITA No.2032/Chny/2018 onthe file of the Income Tax Appellate Tribunal Chennai 'D' Benchfor the assessment year 2003-04 against the order of theCommissioner of Income Tax, (Appeals) 4, Chennai 34, dated20.02.18 ITA No.5/2011-12 Y 2003-04/CIT (A)-4 against the orderdated 30.12.2010 PA No.AADCA 9269 M passed by Income TaxOfficer, Company Ward (1) Chennai for the Assessment Year 2003-04. For Appellant : Mrs.R.HemalathaFor Respondent: Mr.A.S.SriramanJudgment was delivered by T.S.SIVAGNANAM,J This appeal, filed by the Revenue under Section 260A of theIncome Tax Act, 1961 (for short, the Act), is directed againstthe order dated 20.12.2018 passed by the Income Tax AppellateTribunal, Chennai 'D' Bench (for brevity, the Tribunal) in ITANo.2032/Chny/2018 for the assessment year 2003-04. 2. The Revenue has filed this appeal by raising thefollowing substantial questions of law : “i. Whether, on the facts andcircumstances of the case, the Tribunal wascorrect in holding that the reopening ofassessment made under Section 147 of theIncome Tax Act, 1961 was invalid ? https://hcservices.ecourts.gov.in/hcservices/ ii. Whether the Tribunal ought to haveapplied the decision of the Apex Court inthe case of Zuari Estate Development andInvestment Company Ltd. [reported in 373 ITR681] and that of Rajesh Jhaveri StockBrokers P. Ltd. [reported in 291 ITR 500],which clearly held that intimation passedunder Section 143(1) was not an assessmentorder and therefore, applying First Provisoto Section 147 of the Income Tax Act doesnot apply ? And iii. Whether the reasoning and findingof the Tribunal is proper in holding thatsince interest income had been taxed, theinterest paid must be allowed as anexpenditure without taking cognizant of thefact that the assessee has not establishedany nexus between the expenditure and theincome earned to allow such deduction underSection 37 of the Income Tax Act ?” 3. We have heard Mrs.R.Hemalatha, learned Senior StandingCounsel appearing for the appellant and Mr.A.S.Sriraman, learnedcounsel accepting notice for the respondent. With consent, themain appeal itself is taken up for final disposal. 4. The point canvassed before us by the Revenue is that theTribunal erred in reversing the order passed by the Commissionerof Income Tax (Appeals) [for short, the CIT(A)] to sustain thereopening made by the Assessing Officer on the ground that therehad been no assessment in the case of the assessee, as, only anintimation was issued under Section 143(1) of the Act and thatthe question of re-assessment does not arise. In support of hercontention, the learned Senior Standing Counsel has placedreliance on the decisions of the Hon'ble Supreme Court in thecase of ACIT Vs. Rajesh Jhaveri Stock Brokers P. Ltd. [reportedin (2007) 291 ITR 500] and in the case of DCIT Vs. Zuari EstateDevelopment and Investment Company Ltd. [reported in (2015) 373ITR 681]. 5. Mr.A.S.Sriraman, learned counsel appearing for therespondent would submit that there are several decisions infavour of the assessee and that it can be clearly brought outthat reopening of assessment was a clear case of change ofopinion. 6. In order to test the correctness of the submissions madeon either side, we have carefully perused the assessment orderdated 30.12.2010 and the order passed by the CIT(A) dated20.2.2018 and we find from the assessment order that the notice https://hcservices.ecourts.gov.in/hcservices/ 5. Mr.A.S.Sriraman, learned counsel appearing for therespondent would submit that there are several decisions infavour of the assessee and that it can be clearly brought outthat reopening of assessment was a clear case of change ofopinion. 6. In order to test the correctness of the submissions madeon either side, we have carefully perused the assessment orderdated 30.12.2010 and the order passed by the CIT(A) dated20.2.2018 and we find from the assessment order that the notice https://hcservices.ecourts.gov.in/hcservices/ sent was not responded by the assessee and consequently, theAssessing Officer completed the assessment. Further, there was agross delay in filing the appeal before the CIT(A) and a faintplea was raised by the assessee before the CIT(A) objecting tothe issuance of notice for reopening. However, there was nofinding rendered by the CIT(A) as to the validity of thereopening except by observing that such a contention was notraised before the Assessing Officer and that the contentioncould not be entertained at the appellate stage. 7. In our considered view, the CIT(A), being the FirstAppellate Authority, is entitled to examine the entire facts andthe validity of reopening of assessment being a mixed questionof law and fact, the same can very well be entertained by theCIT(A). Even before the Tribunal, we find that therespondent/assessee did not specifically contest the reopeningproceedings by placing decisions nor there was any contest withregard to the stand taken by the Revenue that only intimationunder Section 143(1) of the Act was issued and that noassessment order was passed under Section 143(3) of the Act.Considering the facts of the case, we are of the view that theassessee should be granted an opportunity to contest thereopening of the assessment, for which purpose, we deem itappropriate to remand the matter to the CIT(A) for a freshconsideration. 8. In the light of the above, the appeal filed by theRevenue is allowed, the orders passed by both the Tribunal aswell as the CIT(A) are set aside and the matter is remanded tothe CIT(A) for a fresh consideration. It is open to the assesseeas well as the Revenue to canvass all the points, which shall bedecided on merits and in accordance with law. No costs. Rs Sd/-Assistant Registrar //True Copy// Sub Assistant Registrar To 1. The Income Tax Appellate Tribunal, Chennai 'D' Bench Chennai 'D' Bench 2. The Commissioner of Income Tax, (Appeals)-4, Room No.229,2[nd] Floor, Main Building, Income Tax Office, 121, Mahatma Gandhi Road, Chennai - 34. 3. The Income Tax Officer, Company Ward I (1), Company Ward I (1), Income Tax Office, 121, Mahatma Gandhi Road, Chennai - 34. Chennai - 34. +1cc to Mr.T.Ravi Kumar, Advocate, SR.No.50657/19 +1cc to Mr.S.Sridhar, Advocate, SR.No.50666 TCA.No.382 of 2019 Kak(25/07/2019)