Anu Cashews, Kollam V. ACIT, Kollam

CO 24/COCH/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6859 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-12-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 22-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMURTHY
• Keywords: Reopening of assessment
• Section: 143(3); 147; 148

Judgement Text

1 ITA NO.242/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T.A. NO. 242/COCH/2009 (ASSESSMENT YEAR 2002-03) ASSIST.COMMISSIONER OF INCOME-TAX, VS M/S ANU CASH EWS CIRCLE.1, KOLLAM PARAMESHWAR NAGAR KOLLAM PAN : AADFA7642K (APPELLANT) (RESPONDENT) C.O. NO.24/COCH/2009 (ARISING OUT OF I.T.A. NO. 242/COCH/2009) (ASSESSMENT YEAR 2002-03) M/S ANU CASHEWS VS THE ASSIST.COMMISSIONER OF IN COME-TAX KOLLAM CIRCLE.1, KOLLAM (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI MS VIJAYAPRABHA ASSESSEE BY : SHRI A.S. NARAYANAMURTHY DATE OF HEARING : 21-12-2011 DATE OF PRONOUNCEMENT : 20-01-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-IV, KOCHI DATED 11-02-2009 AND PERTAI NS TO ASSESSMENT YEAR 2002-03. THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE VERY SAME ORDER OF THE CIT(A). THEREFORE, BOTH THE APPEAL OF THE REVENUE AND THE C ROSS OBJECTION BY THE ASSESSEE ARE DISPOSED OF BY THIS COMMON ORDER. 2 ITA NO.242/COCH/2009 2. SINCE THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT IN THE CROSS OBJECTION WHICH GOES TO THE ROOT OF THE MATTER, LET US TAKE THE CROSS OBJECTION FIRST. 3. SHRI A.S. NARAYANANMURTHY, THE LD.COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 30-03-2006. THE ASSESSING OFFICER REOPENED THE ASSESSMENT TO EXCLUDE 90% OF THE GROSS PROCESSI NG CHARGES FROM THE EXPORT PROFIT BY ISSUING A NOTICE U/S 148 ON 17-03-2008. ACCORDING TO THE LD.RPERESENTATIVE, ONCE THE ASSESSMENT WAS COMPLETED U/S 143(3), THE ASSESSMENT CAN BE REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE YEAR ONLY IN CASE TH ERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. IN THIS CASE, ACCORDING TO THE LD.REPRESENTATIVE, THE CASE WAS REOPENED ON THE BASIS OF THE APEX COURT JUDGMENT IN RAVINDRAN NAIR VS COMMISSION ER OF INCOME-TAX 295 ITR 228 (SC) TO EXCLUDE 90% OF THE GROSS PROCESSING CHARGES. AC CORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS FURNISHED ALL THE DETAILS FOR COMPLETI NG THE ASSESSMENT. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE. THE SUBSEQUEN T JUDGMENT OF THE APEX COURT HOLDING THAT OF THE GROSS PROCESSING CHARGES IS TO BE INCLU DED IN THE TOTAL TURNOVER AND 90% OF THE SAME HAS TO BE DEDUCTED FROM THE BUSINESS PROFI T CANNOT BE A REASON TO REOPEN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. THE LD .REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISION OF THIS TRIBUNAL IN ITA NOS,97, 98, & 99/COCH/2010 IN DY.CIT VS M/S KERALA NUT FOOD CO ORDER DATED 24-08-2011. 4. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD.DR SUB MITTED THAT THE GROSS PROCESSING CHARGES HAS TO BE INCLUDED IN THE TOTAL TURNOVER AN D 90% OF THE SAME HAS ALSO TO BE DEDUCTED FROM THE BUSINESS PROFIT AS IT HAD NO DIRE CT NEXUS WITH EXPORT TURNOVER. ACCORDING TO THE LD.REPRESENTATIVE, IN THIS CASE, T HE ASSESSEE HAS DEDUCTED 90% OF THE NET PROCESSING CHARGES. THEREFORE, ACCORDING TO TH E LD.REPRESENTATIVE, IT CANNOT BE SAID THAT THERE WAS NO NEGLIGENCE ON THE PART OF THE ASS ESSEE IN DISCLOSING THE TRUE MATERIAL FACTS FOR COMPLETION OF THE ASSESSMENT. REFERRING TO EXPLANATION 1 TO SECTION 147, THE LD.REPRESENTATIVE SUBMITTED THAT MERE PRODUCTION OF ACCOUNTS OR OTHER EVIDENCE FROM 3 ITA NO.242/COCH/2009 WHICH THE ASSESSING OFFICER COULD HAVE DISCOVERED T HE NECESSARY INFORMATION WOULD NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF SECTION 147 OF THE ACT. IN VIEW OF EXPLANATION 1 TO SECTION 147 ACCORDING TO THE LD . DR, THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS DEDUCTED 90% OF THE NET PROCESSING CHARGES FROM THE BUSINESS PROFIT . IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN COMMISSIONER OF INCOME-TAX VS K RAVIN DRAN NAIR (SUPRA), THE ASSESSEE HAS TO NECESSARILY DEDUCT 90% OF THE GROSS PROCESSING C HARGES. THEREFORE, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE BASIS OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF C.I.T. VS K RAVINDRAN NAIR (SUPRA). TH E FACT REMAINS I THAT THE DETAILS WITH REGARD TO PROCESSING CHARGES ARE AVAILABLE ON RECOR D. THE ASSESSING OFFICER CAN VERY WELL ASCERTAIN THE GROSS PROCESSING CHARGES FROM THE MAT ERIAL AVAILABLE ON RECORD. MERELY BECAUSE THE JUDGMENT OF THE APEX COURT IN THE CASE OF C.I.T. VS K RAVINDRAN NAIR (SUPRA) REQUIRES THE ASSEESSEE TO DEDUCT GROSS PROCESSING C HARGES, THE ASSESSING OFFICER REOPENED THE ASSESSMENT. THE QUESTION REMAINS IS T HAT WHETHER THERE WAS A NEGLIGENCE ON THE PART OF THE ASSESSEE IN DISCLOSING THE MATER IAL FACT NECESSARY FOR COMPLETION OF THE ASSESSMENT. THIS ISSUE WAS EXAMINED BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL TO WHICH, ONE OF US, THE ACCOUNTANT MEMBER IS A PARTY. ON IDENTICAL CIRCUMSTANCES, THIS TRIBUNAL IN ITA NOS.97, 98 & 99/COCH/2010 BY AN ORD ER DATED 24-08-2011 FOUND THAT THERE WAS NO NEGLIGENCE ON THE PART OF THE ASSESSEE IN DISCLOSING THE MATERIAL NECESSARY FOR COMPLETION OF ASSESSMENT. THEREFORE, THE REOPE NING OF ASSESSMENT, AFTER EXPIRY OF FOUR YEARS IS INVALID IN LAW. IN THIS CASE ALSO AD MITTEDLY, THE ASSESSMENT WAS REOPENED AFTER EXPIRY OF FOUR YEARS. IN VIEW OF THE ABOVE, IN OUR OPINION, THE WAS NO NEGLIGENCE ON THE PART OF THE ASSESSEE IN DISCLOSING FULL MATERIA L WHICH IS RELEVANT FOR COMPLETING THE ASSESSMENT. THEREFORE, IN VIEW OF PROVISO TO SECTI ON 147, THE REOPENING OF ASSESSMENT AFTER FOUR YEARS IS INVALID IN LAW. ACCORDINGLY WE HOLD THAT THE REOPENING OF ASSESSMENT 4 ITA NO.242/COCH/2009 IS INVALID. CONSEQUENTLY THE REASSESSMENT PROCEEDI NGS HAS NO LEG TO STAND. ACCORDINGLY WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME-TAX(A ) FOR THE REASONS STATED ABOVE. 6. IN VIEW O THE ABOVE, IT IS NOT NECESSARY FOR THE TRIBUNAL TO GO INTO THE MERIT OF THE APPEAL FILED BY THE DEPARTMENT. ACCORDINGLY, T HE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2012. SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 20 TH JANUARY, 2012 PK/- COPY TO: 1. ASSIST.COMMISSIONER OF INCOME-TAX, CIR.1, KOLLAM 2. M/S ANU CASHEWS, PARAMESWAR NAGAR, KOLLAM 3. THE COMMISSIONER OF INCOME-TAX(A)-IV, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH