Madhya Gujarat Vij Company Ltd., Baroda V. The Addl.CIT,Range-4, Baroda

ITA 1268/AHD/2014

AI Insights

The case involves cross-appeals by Madhya Gujarat Vij Company Ltd. (the assessee) and the Assistant Commissioner of Income Tax (the revenue) against the order of the Commissioner of Income Tax (Appeals)-III, Baroda. The appeals pertain to the assessment years 2006-07 and involve issues related to the classification of income from staff loans and advances, and gains from the sale of fixed assets, as well as the legality of the reopening of assessments under section 147 of the Income Tax Act. The tribunal admitted additional grounds raised by the assessee regarding the invalidity of the reopening of assessments and found that the reopening was time-barred, leading to the quashing of the assessment under section 147.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136000 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 25-07-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2014
• Other Referred Cases: NTPCLtd. vs. 229ITR383
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

आयकरअपीलीयअधिकरण,अहमदाबादनायपीपINTHEINCOMETAXAPPELLATETRIBUNAL,‘’D’’BENCH,AHMEDABADBEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBERAndSHRISIDDHARTHANAUTIYAL,JUDICIALMEMBERआयकरअपीलसं./ITANo.1268/AHD/2014धििाधरणवरध/Asstt.Year:2006-2007MadhyaGujaratVijCompanyLtd.,SardarPatelVidyutBhavan,RaceCourseCircle,Baroda-390007.PAN:AADCM7439HVs.A.C.I.T.,Range-4,Baroda.Andआयकरअपीलसं./ITANo.1535/AHD/2014धििाधरणवरध/Asstt.Year:2006-2007A.C.I.T.,Circle-4,Baroda.Vs.MadhyaGujaratVijCompanyLtd.,SardarPatelVidyutBhavan,RaceCourseCircle,Baroda-390007.PAN:AADCM7439H(Applicant)(Respondent)Assesseeby:ShriM.K.PatelwithShriM.JShah,A.RsRevenueby:Dr.DarsiSumanRatnam,CIT.D.RwithShriAshokKumarSutharSr.D.Rसुनवाईकीतारीख/DateofHearing:26/07/2023घोषणाकीतारीख/DateofPronouncement:18/08/2023आदेश/ORDERPERWASEEMAHMED,ACCOUNTANTMEMBER:ThecaptionedcrossappealshavebeenfiledattheinstanceoftheAssesseeandtheRevenueagainsttheorderoftheLearnedCommissionerofIncomeTax(Appeals)-III,Baroda,dated05/02/2014arisinginthematterofassessmentITAnos.1268&1535/AHD/2014Asstt.Year2006-072orderpassedunders.143(3)r.w.s.254oftheIncomeTaxAct,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear2011-2012.ITANo.1268/Ahd/2014forAY2006-07,anappealbytheassessee.2.Theassesseehasraisedthefollowinggroundsofappeal:1.0ThelearnedCommissionerofIncomeTax(Appeals)haserredinlawandonfactsinconfirmingtheinterestincomefromstaffloans&advancesamountingto15,131,637/-asIncomefromOtherSourcesasagainsttheBusinessIncomeandtherebydisallowingtheclaimofsetoffofbusinesslossesofearlieryearsagainstthesaidincome.2.0ThelearnedCommissionerofIncomeTax(Appeals)haserredinlawandonfactsinsettingasidethematterofassessingtheincomefromGainonsaleoffixedassetamountingto7,68,523/-asincomefromothersourcesasagainsttheBusinessIncometoAssessingOfficerandtherebyallowingtheclaimofsetoffofBusinesslossesofearlieryearsagainstthesaidincome.3.0Theappellantcravesleavetoaddto,alter,deleteormodifyanyofthegroundsofappealeitherbeforeoratthetimeofhearingofthisappeal.2.1Theassesseevideletterdated24thofJuly2023hasalsofiledtheadditionalgroundsofappealwhicharere-producedasunder:1.ThatthelearnedCommissionerofIncome-tax(Appeals)hasgrievoulsyerredinlawandonfactsinnotholdingthatthere-openingofassessmentisinvalidandvoidab-initio.3.That,onfactsandinlawitoughttohavebeenheldthatsinceoriginalassessmentisframedu/s.143(3),re-openingbeyondfouryearsfromendofrelevantA.Yistime-barredandnotpermissibleinlaw.3.ThelearnedARfortheassessee,attheoutset,submittedthattheadditionalgroundraisedbytheassesseevideletterdated24-07-2023goestotherootofthematterandallthefactsrelatedtotheadditionalgroundareavailableontherecord.Therefore,thesameneedstobeadmittedinviewofthejudgmentoftheHon’bleSupremeCourtinthecaseofNTPCLtd.reportedin229ITR383whereitwasheldasunder:Undersection254,theTribunalmay,aftergivingboththepartiestotheappealanopportunityofbeingheard,passsuchordersthereonasitthinksfit.ThepoweroftheTribunalindealingwithappealsisthusexpressedinthewidestpossibleterms.Thepurposeoftheassessmentproceedingsbeforethetaxingauthoritiesistoassesscorrectlythetaxliabilityofanassesseeinaccordancewithlaw.If,forexample,asaresultofajudicialdecisiongivenwhiletheappealispendingbeforetheTribunal,itisfoundthataITAnos.1268&1535/AHD/2014Asstt.Year2006-073non-taxableitemistaxedorapermissibledeductionisdenied,thereisnoreasonwhytheassesseeshouldbepreventedfromraisingthatquestionbeforetheTribunalforthefirsttime,solongastherelevantfactsareonrecordinrespectofthatitem.ThereisnoreasontorestrictthepoweroftheTribunalundersection254onlytodecidethegroundswhicharisefromtheorderoftheCommissioner(Appeals).Boththeassesseeaswellasthedepartmenthavearighttofileanappeal/crossobjectionsbeforetheTribunal.Thereisnoreasonwhythe.Tribunalshouldbepreventedfromconsideringquestionsoflawarisinginassessmentproceedingsalthoughnotraisedearlier.TheviewthattheTribunalisconfinedonlytoissuesarisingoutoftheappealbeforetheCommissioner(Appeals)takestoonarrowaviewofthepowersoftheTribunal.Undoubtedly,theTribunalwillhavethediscretiontoallowornotallowanewgroundtoberaised.ButwheretheTribunalisonlyrequiredtoconsideraquestionoflawarisingfromthefactswhichareonrecordintheassessmentproceedingsthereisnoreasonwhysuchaquestionshouldnotbeallowedtoberaisedwhenitisnecessarytoconsiderthatquestioninordertocorrectlyassessthetaxliabilityofanassessee.Intheinstantcase,therefore,theTribunalhadjurisdictiontoexamineaquestionoflawwhicharosefromthefactsasfoundbythelowerauthoritiesandhavingabearingonthetaxliabilityoftheassessee.4.Ontheotherhand,thelearnedDRdidnotraiseanyobjectionontheadmissionoftheadditionalgroundofappealraisedbytheassessee.5.Heardtherivalcontentionsofthepartiesandperusedthematerialsavailableonrecord.TheadditionalgroundraisedbytheassesseeislegalinnatureandthereforethesamecanberaisedatanystageinpursuancetothejudgmentoftheHon’bleSupremeCourtinthecaseofNTPCLtd(supra).Hence,weadmittheadditionalgroundofappealraisedbytheassesseeandproceedtoadjudicatethesame.6.First,weproceedtoaddresstheissueraisedbytheassesseeintheadditionalgroundofappealwhereinvalidityoftheassessmentframedundersection143(3)readwithsection147oftheActwaschallengedonthegroundthatthesamewasbarredbythetime.7.ThelearnedAR,atthethreshold,beforeussubmittedthattheassessmentwasframedundersection143(3)oftheActdated18-12-2008.Thereafter,theproceedingsforreopeningoftheassessmentundersection147oftheActwereinitiatedafterrecordingthereasonstobelievefortheescapementofincomebyITAnos.1268&1535/AHD/2014Asstt.Year2006-074issuingnoticeundersection148oftheActdated1April2011.AsperthelearnedAR,thetimelimitforissuanceofnoticeundersection148oftheActwasexpiredason31March2011byvirtueoftheprovisotosection147oftheActandthereforetheassessmentframedinthepresentcaseisbadinlawandliabletobequashed.8.Ontheotherhand,thelearnedDRvideletterdated10August2023admittedthattheassessmentundersection143(3)oftheActwasfinalisedon18December2008andthenoticeundersection148oftheActwasissueddated1April2011aftertakingtheapprovalfromthecompetentauthority.However,accordingtothelearnedDR,noticeundersection148oftheActwasissuedwithinthetimeprovidedunderclause(b)tosection149(1)oftheAct.Thus,thelearnedDRsubmittedthattheassessmentframedinquestionundersection147readwithsection143(3)oftheActwaswellwithinthetimeprovidedundertheAct.9.Wehaveheardtherivalcontentionsofboththepartiesandperusedthematerialsavailableonrecord.Theprovisionofsection147oftheActprovidesbasisforreopeningofacompletedassessmentsubjecttocertainconditionsmentionedtherein.Oneofthecircumstancescoveredintheprovisotosection147oftheActisthatwhereoriginalassessmentiscompletedu/s143(3)oftheAct,thennoactionshallbetakenafterfouryearsfromtheexpiryoftheendoftherelevantassessmentyear.Theperiodof4yearsissubjecttotheconditionsthattheescapementofincomehasbeenbyreasonofthefailureonthepartoftheassessee(a)tomakeareturnu/s139oftheActorinresponsetonoticesissuedu/s142(1)/148oftheActor(b)todisclosefullyandtrulyallmaterialfactsnecessaryforhisassessmentforthatassessmentyear.9.1Admittedly,inthepresentcase,thenoticeundersection148oftheActhasbeenissuedbeyondtheperiodof4yearsandtheoriginalassessmentwasframedundersection143(3)oftheAct.Thus,wehavetoseewhetherthecaseoftheassesseefallsundertheexceptionasdiscussedabove.Forthispurpose,wehaveITAnos.1268&1535/AHD/2014Asstt.Year2006-075referredthereasonsrecordedforinitiatingtheproceedingsundersection147oftheAct.OnperusalofthereasonsrecordedbytheAO,wenotethattherewasnowhisperthattherewasfailureonthepartoftheassesseeeithertomakeareturnundersection139oftheActorinresponsetothenoticeissuedundersection142(1)/148oftheActortodisclosefullyandtrueallmaterialfactsnecessaryfortheassessment.Thus,intheabsenceofanyfailureonthepartoftheassessee,weareoftheviewthatproceedingsundersection147oftheActcannotbeinitiatedbeyondtheperiodof4yearsinthegivenfactsandcircumstances.Inviewoftheabove,weholdthatproceedingsinitiatedundersection147oftheActarenotsustainableandliabletobequashed.Accordingly,wequashtheassessmentframedundersection147oftheActasthenoticeundersection148oftheActwasissuedbeyondthetimeprescribedundertheprovisionsoflaw.9.2Beforeparting,theld.DRbeforeushascontendedthatnoticehasbeenissuedundersection148oftheActwithinthetimeprovidedunderclause(b)tosection149(1)oftheAct.Here,wedisagreewiththecontentionoftheld.DRonthereasoningthattheAObeforeinitiatingtheproceedingsforincomeescapingassessmenthastoacquirethevalidjurisdictionundersection147oftheAct.Oncethejurisdictionisinvalidundersection147oftheAct,therevenuecannottaketheshelteroftheprovisionsofsection149oftheAct.Accordingly,wedisagreewiththecontentionofthelearnedDRandthereforewedismissthesame.9.3Aswehavedecidedtheissueinfavouroftheassesseeonlegalityoftheassessmentframedundersection147oftheAct,werefrainourselvesfromgivinganyfindingontheissueraisedbytheassesseeonmerit.Assuchtheissuesraisedbytheassesseeonmeritbecomeinfructuous.Accordingly,wedismissthesame.9.4Intheresult,theappealoftheassesseeispartlyallowed.ITAnos.1268&1535/AHD/2014Asstt.Year2006-076ComingtoITANo.1535/AHD/2014,anappealbytheRevenue10.Aswehavedecidedtheissueinfavouroftheassesseeonlegalityoftheassessmentframedundersection147oftheAct,werefrainourselvesfromgivinganyfindingontheissueraisedbytheRevenueonmerit.Assuch,theissuesraisedbytheRevenueonmeritbecomeinfructuous.Accordingly,wedismissthesame.10.1Intheresult,theappealoftheRevenueisherebydismissed.11.Intheresult,theappealfiledbytheassesseeispartlyallowedwhereastheappealfiledbytherevenueisdismissed.OrderpronouncedintheCourton18/08/2023atAhmedabad.Sd/-Sd/-(SIDDHARTHANAUTIYAL(WASEEMAHMED)JUDICIALMEMBERACCOUNTANTMEMBERR(TrueCopy)Ahmedabad;Dated18/08/2023Manish