Shah Silk Corporation, Surat V. The Dy.CIT, Circle-3, Surat

ITA 1006/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2166 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 143(3); 234B

Judgement Text

SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 1 OF 7 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./I.T.A NO.1006/AHD/2015/SRT /ASSESSMENT YEAR : 2006-07 SHAH SILK CORPORATION, 91, GIDC, BEHIND SUB.JAIN, KHATODARA, RING ROAD, SURAT 395 002. [PAN: AAJFS 8665 C] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, SURAT. APPELLANT /RESPONDENT /ASSESSEE BY SHRI HIREN R. VEPARI CA /REVENUE BY SHRI O.P.MEENA SR.DR / DATE OF HEARING: 31 .0 8 .2018 /PRONOUNCEMENT ON 28 .0 9 . 2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT(IN SHORT THE CIT (A)) DATED 09.01.2015 PERTAINING TO ASSESSMENT YEAR 2006-07, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, SURAT (IN SHORT SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 2 OF 7 THE AO) DATED 28.11.2008 UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. GROUNDS RAISED BY THE ASSESSEE READS AS UNDER : (I) REOPENING OF ASSESSMENT: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT REOPENING OF THE ASSESSMENT WAS TIME BARRED. (2) THE APPELLANT FURTHER SUBMITS THAT THE REOPENING IS ALSO BAD IN LAW AS THE NECESSARY CONDITIONS FOR REOPENING WERE NOT SATISFIED. (II) DISALLOWANCE OF RS.6,63,371: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF RS.6,63,371 OF PARTNERS REMUNERATION (III) MISCELLANEOUS: (1) THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE DELETED INTEREST U/S.234A, 234B AND 234C. (2) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY ANY OF THE GROUNDS OF APPEAL. 3. GROUND NO.1 RELATES TO REOPENING OF ASSESSMENT WHICH WAS TIME BARRED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT FOR A.Y. 2006-07 WAS COMPLETED U/S.143(3) ON 28.11.2008. THE NOTICE U/S.148 WAS ISSUED ON 04.12.2012 WHICH IS SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 3 OF 7 BEYOND FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IN WHICH INCOME HAS ESCAPED ASSESSMENT. THE LD.COUNSEL CONTENDED THAT NOTICE U/S.148 AFTER EXPIRY OF FOUR YEARS CAN BE ISSUED WHEN THERE IS FAILURE ON THE PART OF THE ASSESSEE TO MAKE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE LD.COUNSEL REFERRING THE COPY OF REASONS FOR RE-OPENING PLACED AT PB, PAGE NO.11 SUBMITTED THAT THE REASONS DO NOT STATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. EVEN THE ASSESSMENT ORDER ALSO MAKES NO MENTION OF SUCH FAILURE ON THE PART OF THE ASSESSEE. NOTICE OUGHT TO HAVE BEEN ISSUED WITHIN THE FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR I.E. 31.03.2011, BUT IT WAS ISSUED ON 04.10.2012, HENCE, THE ASSESSMENT IS TIME BARRED. THE LD.COUNSEL PLACING RELIANCE ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SADBHAV ENGINEERING LTD. 333 ITR 483 (GUJ) SUBMITTED THAT IN ABSENCE OF ANY AVERMENT THAT THE ASSESSMENTS ARE SOUGHT TO BE RE-OPENED BY REASON OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, THE SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 4 OF 7 VERY INITIATION OF PROCEEDINGS U/S .147 BY ISSUANCE OF NOTICE U/S.148 AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IS BAD AND CANNOT BE SUSTAINED. THE LD.COUNSEL FURTHER SUBMITTED THAT THERE WAS NO NEW INFORMATION CAME IN THE POSITION OF THE AO AS IT IS MENTIONED IN PARA 2 OF THE ASSESSMENT ORDER THAT ON VERIFICATION OF THE CASE RECORDS, IT IS REVEALED THAT THE ASSESSEE HAD PAID REMUNERATION OF RS.7,13,371/-. FROM THE READING OF THIS OBSERVATION OF THE AO IT IS CLEAR THAT NO NEW INFORMATION WAS RECEIVED FOR RE-OPENING PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF MERE CHANGE OF OPINION WHICH IS NOT ALLOWED. IT WAS FURTHER SUBMITTED THAT THE APPEAL WAS FILED AGAINST THE ABOVE ORDER AND IN THE APPELLATE ORDER (PB 36 TO 40), THE CIT(A) DIRECTED THE AO TO RE-CALCULATE THE REMUNERATION PAYABLE TO PARTNERS AS PER THE PROVISIONS OF SECTION 40(B)(V) OF THE ACT. THUS, ASSESSMENT ORDER HAD MERGED IN THE ORDER OF CIT(A) ON THE ISSUE ON WHICH THE ASSESSMENT WAS RE-OPENED. SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 5 OF 7 5. PER CONTRA, THE LD.DR SUPPORTED THE ORDER OF THE AO AND CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD, WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSMENT HAS BEEN RE-OPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. IT IS SEEN THAT THE ASSESSMENT WAS COMPLETED U/S.143(3) AND THE RE-OPENING OF ASSESSMENT HAS BEEN MADE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND THERE IS NO INDICATION IN THE REASONS RECORDED FOR RE-OPENING THAT THERE WAS NEW INFORMATION CAME INTO POSSESSION SUBSEQUENTLY. THE PERUSAL OF THE REASONS RECORDED FOR RE-OPENING SHOWS THAT THE AO HAS NOT MENTIONED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. EVEN THE ASSESSMENT ORDER ALSO MAKES NO MENTION OF SUCH FAILURE ON THE PART OF THE ASSESSMENT. IT IS ALSO NOTICED THAT ASSESSEE HAS FILED OBJECTION VIDE LETTER DATED 21.01.2013, BUT THESE OBJECTION HAS NOT BEEN DISPOSED BY AO AT ALL EXCEPT MAKING SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 6 OF 7 MENTION THEREON IN THE ASSESSMENT ORDER. THE AO WAS REQUIRED TO DISPOSE OFF OBJECTION, LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF G.K.N.DRIVE SHAFTS LTD. AND GUJARAT HIGH COURT IN CASE OF 259 ITR 19 AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF GARDEN FINANCE LTD. 268 ITR 48 (SC). THE AO IS BOUND TO DISPOSE OFF OBJECTION FILED BY THE ASSESSEE. WE FURTHER FIND THAT THE AO HAS NOT ALLEGED THAT THERE WAS A FAILURE ON THE PART OF ASSESSEE WHEN THE INFORMATION WAS ALREADY AVAILABLE ON RECORD. THEREFORE, BY APPLYING RATIO LAID DOWN BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SADBHAV ENGINEERING LTD. VS. DCIT (2011) 33 ITR 483 IN WHICH IT WAS LAID DOWN THAT IN ABSENCE OF ANY AVERMENT THAT THE ASSESSMENTS ARE SOUGHT TO BE RE-OPENED BY REASON OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, THE VERY INITIATION OF PROCEEDINGS U/S .147 BY ISSUANCE OF NOTICE U/S.148 AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IS BAD AND CANNOT BE SUSTAINED. SHAH SILK CORPORATION VS. DCIT, CIRCLE-3, SURAT/I.T.A. NO.1006/AHD/2015/SRT/A.Y.:2006-07 PAGE 7 OF 7 7. IN THE LIGHT OF ABOVE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE RE-OPENING AMOUNTS TO CHANGE OF OPINION AND THERE WAS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE ALL NECESSARY FOR MAKING ASSESSMENT, HENCE, THE SAME IS BAD IN LAW, AND THEREFORE QUASHED. ACCORDINGLY, THIS LEGAL GROUND OF THE ASSESSEE IS ALLOWED. 8. SINCE WE HAVE QUASHED THE RE-ASSESSMENT PROCEEDINGS ON THE LEGAL GROUND IN THE EARLIER PART OF THIS ORDER, THEREFORE, THE OTHER GROUNDS RELATING TO DISALLOWANCE OF PARTNERS REMUNERATION OF RS.6,63,371/- IS NOT BEING ADJUDICATED AS SAME HAVE BECOME INFRUCTUOUS. 9. IN THE RESULT, APPEAL OF THE ASSESSEE ALLOWED ON LEGAL GROUND. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28-09-2018. SD/- SD/- ( . . /C.M. GARG) ( . . / O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / SURAT, DATED : 28 TH SEP , 2018/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT