The National Co-op Sugar Mills Ltd., Madurai V. ACIT, Madurai

CO 155/CHNY/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7630 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-08-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 17-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SHUKLA
• Assessee Lawyers: G BASKAR
• Keywords: Audit objection; Wrong claim; Difference of opinion; Assessment record; Change of opinion
• Section: 43B; 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1552/MDS/2011 (ASSESSMENT YEAR : 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, INCOME TAX BUILDINGS, MADURAI-625 002. (APPELLANT) V. M/S THE NATIONAL CO-OPERATIVE SUGAR MILLS LTD., METTUPATTI POST, ALANGANALLUR (VIA) MADURAI 625 502. PAN : AAAAT3284E (RESPONDENT) C.O. NO. 155/MDS/2011 (IN I.T.A. NO. 1552/MDS/2011) (ASSESSMENT YEAR : 2004-05) M/S THE NATIONAL CO-OPERATIVE SUGAR MILLS LTD., METTUPATTI POST, ALANGANALLUR(VIA) MADURAI 625 502. (CROSS-OBJECTOR) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, INCOME TAX BUILDINGS, MADURAI-625 002. (RESPONDENT) REVENUE BY : SMT. ANUPAMA SHUKLA, CIT ASSESSEE BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 30.08.2012 DATE OF PRONOUNCEMENT : 30.08.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEAL AND CROSS-OBJECTION OF REVENUE AN D ASSESSEE RESPECTIVELY, DIRECTED AGAINST AN ORDER DATED 13.6. 2011 OF COMMISSIONER OF INCOME TAX (APPEALS)-I, MADURAI, FOR THE IMPUGNE D ASSESSMENT YEAR. 2 I.T.A. NO. 1552/MDS/11 C.O. NO. 155/MDS/11 2. GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT C IT(APPEALS) HELD THE RE-ASSESSMENT PROCEEDINGS TO BE INVALID. 3. FACTS APROPOS ARE THAT ASSESSEE, A CO-OPERATIVE SOCIETY MANUFACTURING SUGAR AND MOLASSES, HAD FILED ITS RET URN ON 1.11.2004, DECLARING LOSS OF ` 11,62,88,150/-. ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 21.9.2006 INTER ALIA ACCEPTING TH E RETURNED LOSS. THEREAFTER ON 27.3.2009, A NOTICE UNDER SECTION 148 WAS ISSUED SEEKING TO REOPEN THE ASSESSMENT. IN THE REOPENED ASSESSME NT, ASSESSING OFFICER MADE A DISALLOWANCE OF ` 5,10,46,203/- CLAIMED AS INTEREST, FOR A REASON THAT SUCH INTEREST WAS NOT PAID BEFORE THE D UE DATE OF FILING THE RETURN, THEREBY ATTRACTING THE RIGOURS OF SECTION 4 3B OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. ASSESSEE MOVED IN APPEAL BEFORE CIT(APPEALS), WH ERE, IN ADDITION TO ASSAILING THE MERITS OF THE DISALLOWANCE, IT ALS O CHALLENGED THE VALIDITY OF THE REOPENING. AS PER THE ASSESSEE, REOPENING W AS DONE BASED ON AN AUDIT OBJECTION. LD. CIT(APPEALS) CALLED FOR TH E ASSESSMENT RECORDS AND AFTER VERIFICATION THEREOF CONCLUDED THAT BASIS FOR REOPENING OF THE ASSESSMENT WAS AUDIT OBJECTION. HE WAS OF THE OPIN ION THAT AUDIT OBJECTION CANNOT BE A REASON FOR REOPENING WHERE OR IGINAL ASSESSMENT WAS DONE UNDER SCRUTINY. HE RELIED ON THE DECISION OF HONBLE APEX 3 I.T.A. NO. 1552/MDS/11 C.O. NO. 155/MDS/11 COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER S OCIETY V. CIT (119 ITR 996) AND ALSO A DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF TITANOR COMPONENTS LTD. V. ACIT (2011) 60 DTR 27 3. HE THUS HELD THE REOPENING TO BE INVALID. HOWEVER, ON MERITS, H E HELD AGAINST THE ASSESSEE. 5. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT THE REOPENING WAS RESO RTED TO WITHIN FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR AND THEREFORE, PROVISO TO SECTION 147 COULD NOT BE APPLIED. ACCOR DING TO HER, EVEN THOUGH THE REOPENING WAS DONE BASED ON AUDIT OBJECT ION, IT COULD NOT BE DENIED THAT THE ASSESSEE HAD MADE A WRONG CLAIM FOR DEDUCTION OF INTEREST DESPITE SUCH INTEREST WHICH WAS DUE TO A P UBLIC FINANCIAL INSTITUTION BEING NOT PAID BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME. THEREFORE, ACCORDING TO HER, REOPENING WA S VALIDLY DONE AND IT WAS NOT ON A CHANGE OF OPINION. 6. PER CONTRA, LEARNED A.R. STRONGLY ASSAILED THE O RDER OF CIT(APPEALS) WITH REGARD TO THE ISSUE OF REOPENING. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT REOPENING WAS RESORTED TO WITHIN FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR. THEREFORE , PROVISO TO 4 I.T.A. NO. 1552/MDS/11 C.O. NO. 155/MDS/11 SECTION 147 WILL NOT APPLY AS MENTIONED BY LEARNED D.R. NEVERTHELESS, THERE IS NOTHING ON RECORD TO SHOW THAT THE REOPENI NG WAS BASED ON ANY NEW MATERIAL OR TANGIBLE EVIDENCE COMING TO THE REV ENUE AFTER COMPLETION OF SCRUTINY ASSESSMENT. AUDIT OBJECTION CANNOT BE A BASIS TO REOPENING AN ASSESSMENT UNLESS SUCH AUDIT OBJECTION , WAS BASED ON SOME MATERIALS OR SOME EVIDENCE COMING TO THE NOTIC E OF REVENUE AFTER THE ORIGINAL ASSESSMENT, WHICH WOULD SHOW THAT A CL AIM WAS NOT APPROPRIATELY OR LEGITIMATELY MADE BY THE ASSESSEE. HERE, OBVIOUSLY, THE CLAIM WAS ALLOWED IN THE ORIGINAL ASSESSMENT. THE QUESTION WHETHER NATIONAL CO-OPERATIVE DEVELOPMENT CORPORATION WAS A PUBLIC FINANCIAL INSTITUTION COMING WITHIN THE AMBIT OF SECTION 43B OF THE ACT WOULD HAVE BEEN IN CONTEMPLATION OF THE ASSESSING OFFICER AT T HE TIME OF COMPLETION OF SUCH ASSESSMENT. IT IS A SETTLED POSITION THAT A REOPENING CANNOT BE DONE BASED ON A CHANGE OF OPINION AS HELD BY HONBL E APEX COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. (320 ITR 56 1). WE ARE, THEREFORE, OF THE OPINION THAT CIT(APPEALS) WAS JUSTIFIED IN H OLDING THE REOPENING TO BE INVALID. NO INTERFERENCE IS REQUIRED. 8. COMING TO THE CROSS-OBJECTION OF THE ASSESSEE, S INCE WE HAVE UPHELD THE ORDER OF CIT(APPEALS) THAT RE-ASSESSMENT WAS INVALID, SUCH CROSS-OBJECTION HAS BECOME INFRUCTUOUS. 5 I.T.A. NO. 1552/MDS/11 C.O. NO. 155/MDS/11 9. IN THE RESULT, BOTH APPEAL OF THE REVENUE AS WEL L AS CROSS- OBJECTION OF THE ASSESSEE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 30 TH OF AUGUST, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH AUGUST, 2012. KRI. COPY TO: (1) ASSESSEE (2) ASSESSING OFFICER (3) CIT(A)-I, MADURAI (4) CIT-I, MADURAI (5) D.R. (6) GUARD FILE