M/s. Green World Corporation, Delhi V. ITO, New Delhi

CO 231/DEL/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9559 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: SACHIN GARG
• Keywords: Reopening of assessment; Reason to believe; Reassessment proceedings
• Section: 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR ITA NO. 246/DEL/2013 ASSTT. YR: 2004-05 INCOME-TAX OFFICER, VS. M/S GREEN WORLD CORPORAT ION, WARD 19(3), NEW DELHI. SHOP NO. 2157, BASEMENT, DESH BANDHU GUPTA ROAD, PAHAR GANJ, DELHI. PAN: AAAFG 6719 Q AND C.O. NO. 231/DEL/2013 ( IN ITA NO. 246/DEL/2013) ASSTT. YR: 2004-05 M/S GREEN WORLD CORPORATION, VS. INCOME-TAX OFFICE R, WARD 19(3), NEW DELHI. APPELLANT ) ( RESPONDENT ) REVENUE BY : SHRI SATPAL SINGH SR. DR ASSESSEE BY : SHRI SACHIN GARG FCA & SHRI ACHIN GARG DATE OF HEARING: 9-4-2014. DATE OF ORDER : 09-04-2014. O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AND ASSESSEES CROSS OBJEC TIONS AGAINST THE ORDER OF CIT(A)-XI, NEW DELHI DATED 31-10-2012 IN A PPEAL NO. 49/11-12 RELATING TO A.Y. 2004-05. BOTH THESE ARE HEARD TOGE THER AND DISPOSED OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS ARE: THE ASSESSEES ASSESSMENT WAS R EOPENED AND FRAMED U/S 147/143(3), REJECTING THE ASSESSEES CONTENTION THAT REOPENING WAS BAD IN LAW. BESIDES, THE ASSESSING OFFICER MADE QUANTUM AD DITIONS. 2 3. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHERE CIT(A) UPHELD THE REOPENING OF ASSESSMENT PROCEEDINGS, HOWEVER, DELET ED THE ADDITIONS ON MERITS BY FOLLOWING OBSERVATIONS: I FIND THAT THE AO HAS BASED HIS CONCLUSIONS ON A SSUMPTIONS AND SURMISES. THE MOST IMPORTANT FACT IS THAT NO OP PORTUNITY WAS GIVEN TO THE APPELLANT TO GIVE ITS SUBMISSIONS ON THE ADVERSE CONCLUSIONS DRAWN AGAINST THE APPELLANT. I DO NOT FIND ANY SOUND REASONING IN THE ORDER TO SUSTAIN THE ADD ITIONS. THE ADDITION OF RS. 9,26,113/- IS THEREFORE DELETED. TH E DEDUCTIONS U/S 80IB MAY BE ALLOWED TO THE APPELLANT AFTER VERI FICATION AND AS PER LAW. THE GROUND OF APPEAL IS RULED IN FAVOUR OF THE APPELLANT. 4. AGGRIEVED, AGAINST CIT(A)S ORDER THE REVENUE IS NOW IN APPEAL ON MERITS AND THE ASSESSEE HAS AGITATED THE UPHOLDING OF 148 ASSESSMENT ON VARIOUS ISSUES, LIKE, INVALID SERVICE OF NOTICE; NO N-RECORDING OF PROPER REASONS TO BELIEVE; THE BASIS OF RECORDING OF REASO NS BEING NON-EXISTENT THE CIT(A) ERRED IN HOLDING THAT THE REASONS RECORDED T O BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, THE REASSESSMENT IS BAD IN LAW. 5. SINCE THE ASSESSEES CROSS-OBJECTION GOES TO THE ROOT OF THE MATTER, THE SAME WAS PROPOSED TO BE HEARD FIRST. 6. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE R EASONS FOR REOPENING THE ASSESSMENT AS RECORDED BY AO IN ASSESSMENT ORDE R ARE AS UNDER: I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS. 8,95,086/- HAS ESCAPED ASSESSMENT ON ACCOUNT OF FALSE AND FRAUDULENT CLAIM OF DEDUCTION U/S 80IB MA DE BY THE ASSESSEE IN ITS RETURN. THE REASON FOR THE FORMATIO N OF THIS BELIEF ARE THE DETAILED ORDERS UNDER SECTION 263 DATED 13- 3-2009 PASSED BY THE CIT DELHI VII IN THE CASE OF THE SUBJ ECT ASSESSEE FOR THE ASSESSMENT YEARS 2001-02, 2002-03 & 2003-04 . IN THESE ORDERS, WHICH MAY BE READ AS AN ANNEXURE TO THESE R EASONS, THE 3 CIT HAS ON THE BASIS OF DETAILED FACTS AND EVIDENCE S HELD THAT THE ASSESSEE WAS CLAIMING WRONG DEDUCTION U/S 80IB IN RESPECT OF BOGUS INDUSTRIAL UNDERTAKING AT PARWANOO KNOWN A S UNIT-III. THE SUBJECT ASSESSMENT YEAR IS THE FOURTH YEAR FOR WHICH THE ASSESSEE CLAIMED THE FRAUDULENT DEDUCTION U/S 80IB IN RESPECT OF THE ABOVE MENTIONED UNIT-III. 7. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT IN EA RLIER THREE YEARS, THE DEDUCTION U/S 80IB WAS ALLOWED TO THE ASSESSEE IN 1 48 PROCEEDINGS AFTER REOPENING THE ORIGINAL ASSESSMENTS. AGAINST THE A LLOWABILITY OF CLAIM U/S 80IB IN REOPENED ASSESSMENT THE CIT EXERCISING REVI SIONAL POWERS U/S 263 VIDE ORDER DATED 13-3-2009 HELD THAT ASSESSEE IS NO T ALLOWABLE FOR DEDUCTION U/S 80IB WHICH WAS ALLOWED DURING THE COURSE OF RE ASSESSMENT PROCEEDINGS IN THESE THREE YEARS. 8. THE ASSESSEE CHALLENGED THE ACTION U/S 263 FOR T HESE THREE YEARS BEFORE THE ITAT, WHICH QUASHED THE ORDER OF LD. CIT PASSE D U/S 263 IN ALL THE THREE YEARS AS UNDER: A.Y. 2001-02 VIDE ORDER DATED 14-5-2010 IN ITA NO. 1746/DEL/2009. A.Y. 2002-03 VIDE ORDER DATED 13-11-2009 IN ITA NO. 1854/DEL/2009 A.Y. 2003-04 VIDE ORDER DATED 22-10-2010 IN ITA NO. 1958/DEL/2009 9. THE REVENUE DID NOT FILED ANY APPEAL AGAINST TRI BUNALS ORDER FOR A.Y. 2003-04. HOWEVER, TRIBUNALS ORDERS FOR A.Y. 2 001-02 & 2002-03 WERE CHALLENGED BEFORE THE HONBLE HIGH COURT WHICH ALSO DISMISSED THE REVENUES APPEALS FOR A.Y. 2001-02 ON 1-2-2011 AND FOR A.Y. 2002-03 ON 30-11-2010. 10. IT IS PLEADED THAT THE VERY BASIS OF REOPENING THE ASSESSMENT I.E. 263 ORDER OF THE CIT HAVING BEEN QUASHED BY THE TRIBUNA L AND THE HIGH COURT, WHICH GOES TO THE ROOT OF THE MATTER FOR REOPENING AND THE REASONS FOR REOPENING FOR THE CURRENT YEAR I.E. A.Y. 2004-05 BE ING ONLY BASED ON 263 4 ACTION WHICH HAS BEEN HELD TO BE BAD IN LAW, THE RE ASONS RECORDED ITSELF BECOMES BAD IN LAW. RELIANCE IS PLACED ON HONBLE D ELHI HIGH COURT JUDGMENT IN THE CASE OF SILVER OAK LABORATORIES PVT . LTD. VS. DCIT WP NO. 17719/2006 DATED 18-12-2008, HOLDING THAT WHEN THE VERY BASIS FOR RECORDING THE REASONS FOR ESCAPEMENT OF INCOME DO N OT SURVIVE, THE REOPENING OF ASSESSMENT IS BAD IN LAW. 11. LD. DR IS HEARD. 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTIONS OF THE ASSESSEE HAVE NOT BE EN DISPUTED. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT IN THIS YEAR IS SOLELY ON THE BASIS THAT EARLIER YEARS ASSESSMENTS HAVE BEEN REVISED U/S 263 BY THE CIT. 13. IT EMERGES FROM RECORD THAT IN EARLIER THREE YE ARS THE ITAT HAS QUASHED THE 263 PROCEEDINGS FOR A.Y. 2003-04. DEPA RTMENT DID NOT PREFER ANY APPEAL TO THE HIGH COURT AND FOR REMAINING TWO YEARS REVENUES APPEAL AGAINST QUASHING OF 263 ORDER HAS BEEN DISMISSED BY THE HONBLE HIGH COURT. THUS, THE 263 ORDER BEING BAD IN LAW STANDS CONFIRMED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, SINCE THE VERY BASIS FOR REOPENING OF REASONS AND REOPENING THE ASSESSMENT FOR THE IMPUGNED YEAR I.E. 2004-05 DOES NOT EXIST, THE REASONS RECORDED ARE HELD TO BE BAD IN L AW AND ARE ACCORDINGLY QUASHED. OUR VIEW IS FURTHER SUPPORTED BY THE HONB LE DELHI HIGH COURT IN THE CASE OF SILVER OAK LABORATORIES PVT. LTD. (SUPR A). IN VIEW THEREOF WE ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE AND QUASH THE REASSESSMENT PROCEEDINGS. 5 14. SINCE WE HAVE QUASHED THE REASSESSMENT PROCEEDI NGS AS BAD IN LAW, THE REVENUES APPEAL IS DISMISSED CONSEQUENTLY. 15. IN THE RESULT REVENUES APPEAL IS DISMISSED AND ASSESSEES CROSS- OBJECTION IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09-04-2014. SD/- SD/- ( T.S. KAPOOR) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09-04-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR