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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S. Viswanethra Ravi
For the Appellant : Shri C.J. Singh, JCIT, Sr. DR For the Respondent : Shri Manish Tiwari, FCA Date of hearing : 07.02.2019 Date of pronouncement : 03.05.2019 ORDER PER Shri S.S. Viswanethra Ravi, JM:
All these three appeals above by the assessee against the separate orders dated 12.01.2016, 19.01.2016 & 18.01.2016 passed by the Commissioner of Income Tax (Appeals)-23, Kolkata [‘CIT(A)’] for Assessment Years 2002-03, 2003-04 & 2004-05.
Since the issues raised on similar, identical facts in all the appeals above and with the consent of both the parties, we proceed to hear all the appeals together and pass a consolidated order for the sake of brevity.
First we shall take up for Assessment Year 2002-03. ,616 & 617/Kol/2016 M/s Globsyn Technologies Ltd. Assessment Year: 2002-03, 2003-04 & 2004-05 4. Heard both parties and perused the materials available on record. The Assessing Officer completed the assessment u/s 143(3) of the Act vide its order dated 31.03.2006 at a total loss of Rs.1,88,78,736/-, thereafter, the Assessing Officer issued a notice dated 10.01.06 u/s 154/155 of the Act and rectified the mistake alleged to have been occurred in the original assessment proceedings wherein he added the prior period expenses and late payments of employees/employer’s contribution towards PF to an extent of Rs.1,37,69,813/- and 32,73,866/- respectively vide its order dated 31.03.06.
5. In challenge before the CIT(A), the assessee contended that the Assessing Officer could not have initiated the proceedings u/s 154 and adding certain amounts on account of prior period expenses and late payment of PF to the total income of the assessee as it is a debatable issue. Further it is contended that the proceedings u/s 154 of the Act is available to the Assessing Officer only to rectify mistake apparent on the record. Taking into consideration the submissions of the assessee by placing reliance in the case of Volkart Bros [82 ITR 50] of Hon’ble Apex Court, the CIT(A) quashed the rectification order passed u/s 154 of the Act.
Before us, the Revenue without challenging the action of the CIT(A) in quashing proceedings u/s 154 raised an issued on merits. Having failed to raise issue challenging quashing of rectification order u/s 154, we have no option to proceed further in dismissing the appeal for failure to raise ground questioning the order of CIT(A) involving the root of the case. Therefore, the appeal of the Revenue is dismissed.
I.T.A Nos.615,616 & 617/Kol/2016 M/s Globsyn Technologies Ltd. Assessment Year: 2002-03, 2003-04 & 2004-05 7. Now we shall take up for Assessment Year 2003-04.
Heard both parties and perused the materials available on record. The only issue is to be decided is as to whether the CIT(A) is justified in deleting the additions made by the Assessing Officer on account of miscellaneous expenditure in the fact and circumstances of the case. It is noted that the miscellaneous expenses including the preliminary expenses and pre-operative expenses, deferred revenue expenses and portal website development expenses. These expenses relate to earlier years which have been written off in accordance with statutory provisions. The CIT(A) examined the record and by referring to the practice being followed on a regular basis from year to year by the assessee deleted the addition made by the Assessing Officer. The relevant portion of CIT(A) is reproduced hereinbelow:
(i) Amortization of preliminary expenses: - preliminary expenses is being written off as prescribed in section 35D of Income Tax Act. (ii) Portal website development expenses: - The company had incurred the aforesaid cost in earlier years. This sum was spent on development and commissioning of its educational & training portal, which is generating revenue to the company. The said cost is treated as deferred development cost to be written off over a period of 10 years, on pro-rata basis. The amount written off is relatable to the revenues earned by the company for the relevant assessment year. (iii) Deferred revenue expenditure (other than portal): - in view of the benefits likely to be derived over the years, expenditure on marketing and brand building are treated as deferred revenue expenditure and written off over a period of 5 years."
Therefore, after examining the matter and the reply of the AO, I find that the Assessing Officer has drawn certain adverse inferences where there was, according to the AO non-compliance / non-satisfactory compliance to his show- cause letter. I have also carefully considered the submissions of the A.R. I find that the AO has made the disallowance without recording any specific finding, and therefore the basis for such disallowance is not supported. In so far as the claim for writing off deferred expenditure on portal development, I agree with the contention that this practice is being followed on a regular basis from year to year, and has also been accepted.”
,616 & 617/Kol/2016 M/s Globsyn Technologies Ltd. Assessment Year: 2002-03, 2003-04 & 2004-05
In view of the reasons recorded by the CIT(A) in his order at Page No.5 as mentioned hereinabove, we find no infirmity in the order of the CIT(A) and it is justified. Ground No.1 raised by the Revenue is dismissed.
Now we shall take up for Assessment Year 2004-05.
Heard both parties and perused the materials available on record. We find that assessee filed application under Rule 27 of the Income Tax (Appellate Tribunal) Rule 1963 and raised following ground:
1. That on the facts and in the circumstances of the case, the notice u/s 143(2) of the Act is not served within the stipulated time prescribed in the Act resulting in the reassessment order is without jurisdiction, opposed to requirement of law and bad in law.
12. With the consent of both the parties, we proceeded to hear the ground raised by the assessee under Rule 27 of the Income Tax (Appellate Tribunal) Rule 1963. It is the contention of the ld. AR is that no notice u/s 143(2) of the Act was served within the stipulated time prescribed in the Act and the reassessment order was without jurisdiction and prayed to dismiss the appeal filed by the revenue. Further he submitted that the issue was raised before the CIT(A) but the CIT(A) without giving any reasons dismissed the said ground. The ld. DR relied on the order of the CIT(A). We find that the assessee raised an issue of non-receipt of the notice u/s 143(2) within time was raised before the CIT(A) and the CIT(A) having examined the matter held that the contentions of the assessee are not tenable without assigning any reasons for not accepting the submissions of the assessee. The ld. AR submitted that the return of income was ,616 & 617/Kol/2016 M/s Globsyn Technologies Ltd. Assessment Year: 2002-03, 2003-04 & 2004-05 filed on 30.10.2004 and the notice u/s 143(2) is required to be served on or before 30.09.2005. But the Revenue issued notice dated 15.06.2006 which is beyond the prescribed time limit and contested the same before the CIT(A) but without giving any reasons, dismissed the said ground. It is noted that the contention of the ld. AR is that notice dated 15.06.06 was issued to the assessee but however no such notice was ever filed before us to show that the notice issued beyond the prescribed time limit as required u/s 143(2) of the Act. Therefore, without bringing on record the relevant evidence to show that was issued beyond time limit, we cannot give any finding on such bald submissions but however in the interest of justice, we deem it proper to remand the matter to the file of CIT(A) for his fresh consideration and pass order by giving reasons thereon. Therefore, ground raised under Rule 27 of the Income Tax (Appellate Tribunal) Rule 1963 by the assessee is allowed for statistical purposes and in view of the decision taken by us in ground raised by the assessee under Rule 27, grounds raised by the Revenue in the main appeal becomes academic and requires no adjudication at this point of time.
In the result, the appeals of the Revenue are partly allowed for statistical purposes.
Order pronounced in the open court on 03.05.2019.