COMMISSIONER OF INCOME TAX-II JALANDHAR V. M/S UPKAR INTERNKATIONAL BASANT NAGAR PHAGWARA

ITA/330/2011

AI Insights

The case involves two appeals by the Commissioner of Income Tax, Jalandhar-II against M/s Upkar International concerning the reassessment of income tax for the assessment years 2001-02 and 2002-03. The primary issues revolved around the deductions claimed under Sections 80HHC and 80IB of the Income Tax Act, and whether the reassessment was justified after a significant time lapse. The Tribunal and CIT(A) had previously ruled in favor of the assessee, finding no concealment of income and that the reassessment was based on a change of opinion rather than new facts. The High Court's decision affirmed these rulings, emphasizing that the conditions for reopening an assessment after four years were not met.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 680186 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 04-04-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: J S BHASIN
• Assessee Lawyers: VIVEK SETHI
• Keywords: Change of opinion; Export Incentives; Interest on FDR; Jurisdiction; Manufacturing activity; Reassessment
• Section: 147; 148; 143(3); 80HHC; 80IB; 260A; 80IA(9); 80IB(13)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: April 4, 2012 1. ITA No. 330 of 2011 (O&M)[Assessment Year 2002-03] Commissioner of Income Tax, Jalandhar-II …Appellant Versus M/s Upkar International, Phagwara …Respondent 2. ITA No. 332 of 2011 (O&M)[Assessment Year 2001-02] Commissioner of Income Tax, Jalandhar-II …Appellant Versus M/s Upkar International, Phagwara …Respondent CORAM: CORAM: CORAM: CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE HON’BLE MR. JUSTICE HON’BLE MR. JUSTICE HON’BLE MR. JUSTICE ALOK SINGH ALOK SINGH ALOK SINGH ALOK SINGH Present: Mr. Vivek Sethi, Advocate, for the appellant-revenue. Mr. J.S. Bhasin, Advocate, for the respondent-assessee. 1. To be referred to the Reporters or not? 2. Whether the Judgment should be reported in the Digest M.M. KUMAR, J. M.M. KUMAR, J. M.M. KUMAR, J. M.M. KUMAR, J. 1. This order shall dispose of I.T.A. Nos. 330 and 332 of 2011, which have been filed by the revenue under Section 260A of the Income Tax Act, 1961 (for brevity, ‘the Act’), against the common order dated 13.6.2011 rendered by the Amritsar Bench of the Income tax Appellate Tribunal (for brevity, ‘the Tribunal’) dismissing the appeals preferred by the revenue and upholding the view of the CIT(A). The Tribunal has held that the there was no failure on the part of the assessee in making full and true disclosure ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) 2 in respect of export incentives and interest on FDR and the conditions of the first proviso to Section 147 of the Act are not satisfied for reopening the assessment after the expiry of four years from the end of the relevant assessment year. With regard to the manufacturing activity at the Rajkot Branch office by the assessee, it has been specifically observed that it is only a change of opinion by the Assessing Officer on the same set of facts. Therefore, notice under Section 147 of the Act could not have been issued by the Assessing Officer and he has exceeded jurisdiction in passing the re-assessment orders. 2. Facts of the case may first be noticed, which are being referred from ITA No. 332 of 2011. On 31.10.2001, the assessee- respondent filed its return for the Assessment Year 2001-02 declaring income of `21,48,377/- after claiming deduction of `85,34,789/- under Section 80HHC of the Act. On 24.6.2002, the assessee-respondent revised the return declaring Nil income after claiming deduction of `85,34,789/- under Section 80HHC and deduction of `21,48,370/- under Section 80IB of the Act. 3. On 30.12.2003, the Assessing Officer passed an order under Section 143(3) of the Act, determining the income of the assessee-respondent at `21,84,220/-, after allowing deduction of `85,34,789/- under Section 80HHC of the Act and no deduction under Section 80IB was allowed in view of the provisions of Section 80IB(13) read with Section 80IA(9) as well as keeping in view of the fact that the machinery of the assessee-respondent was found to have been used previously for some other purpose. ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) 3 4. Feeling aggrieved, the assessee-respondent filed an appeal before the CIT(A), Jalandhar. On 8.7.2004, the CIT(A) allowed the appeal holding that deduction under Section 80IB of the Act is admissible to the assessee-respondent. On 11.10.2004, an order under Section 154/250(6) of the Act was passed and the income of the assessee-respondent was re-computed at Nil after allowing deduction of `21,84,220/- under Section 80IB of the Act. 5. Against the order passed by the CIT(A), the revenue preferred an appeal before the Tribunal, which was dismissed on 20.9.2006 and no further appeal was filed before this Court. In other words, the order passed by the Tribunal attained finality. 6. However, the Assessing Officer initiated proceedings under Section 147/148 of the Act and a notice, dated 19.3.2008, under Section 148 was issued to the assessee-respondent. On 10.4.2008, the assessee-respondent responded to the said notice by stating that the return of income filed on 31.10.2001 with income of `21,48,377/-, which was later on revised on 24.6.2002 declaring nil income may be treated as compliance of the notice. 7. On 17.12.2008, the Assessing Officer recomputed the income of the assessee-respondent at `21,08,391/-. The reason assigned by him is that the assessee’s income had escaped assessment since it had caimed deduction under Section 80IB in respect of export incentives, which were not allowable as per the decision of the Jurisdictional High Court and further deduction under Section 80HHC was not allowable in respect of interest of FDRs. He has also contended that there was no manufacturing activity at the ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) 4 Rajkot Branch of the assessee-respondent for which deduction under Section 80IB has been claimed (A-1). 8. The assessee-respondent again filed an appeal before the CIT (A), challenging order dated 17.12.2008. On 25.2.2010, the CIT(A) allowed the appeal and quashed the reassessment proceedings (A-2). The order dated 25.2.2010, passed by the CIT(A) was challenged by the revenue before the Tribunal. On 13.6.2011, the Tribunal dismissed the appeal of the revenue after extracting and upholding the view taken by the CIT(A) in paras 2.5 to 2.7 of his order dated 25.2.2010. 9. We have heard learned counsel for the parties at length and are of the view that there is no legal infirmity in the view taken by the CIT(A), which has been upheld by the Tribunal. A categorical finding has been recorded by the CIT(A) that there was no concealment on the part of the assessee-respondent in disclosing the facts to the Assessing Officer, therefore, it was not open to the Assessing Officer to invoke the provisions of Section 148 of the Act for the purposes of reassessment. It has also been held by the authorities below that it is a case of change of opinion on the same facts, which cannot constitute basis for exercise of jurisdiction under Section 147/148 of the Act. From a bare reading of the order dated 17.12.2008 (A-1), passed by the Assessing Officer, it is evident that he has sought to change his opinion by placing reliance on various judgments rendered by Hon’ble the Supreme Court and the Jurisdictional High Court. Therefore, it is a clear case of change of opinion and not of concealment. Accordingly, we are of the considered view that no question of law much less a ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) ITA Nos. 330 and 332 of 2011 (O&M) 5 substantial question of law would arise for determination of this Court. These appeals are devoid of merit and do not warrant admission. 10. As a sequel to the above discussion, these appeals fail and the same are accordingly dismissed. 11. A photocopy of this order be placed on the file of connected appeal. (M.M. KUMAR) (M.M. KUMAR) (M.M. KUMAR) (M.M. KUMAR) JUDGE JUDGE JUDGE JUDGE ( ( ( (ALOK SINGH ALOK SINGH ALOK SINGH ALOK SINGH) ) ) ) April 4 April 4 April 4 April 4, 201 , 201 , 201 , 2012 2 2 2 JUDGE JUDGE JUDGE JUDGE PKapoor "