Finolex Industries Ltd., Pune V. Asstt.CIT,Circle 9, Pune, Pune

ITA 1276/PUN/2004

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49809 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1999-2000
• Appeal Filed On: 25-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: D P BAPAT
• Keywords: Opportunity of being heard; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C.SUDHIR, JM AND SHRI D. KARUNAKARA RAO, AM ITA NO. 1276/PN/2004 (ASSTT. YEAR 1999-00) FINOLEX INDUSTRIES LTD., D-1/10, M.I.D.C., CHINCHWAD, PUNE 411019 PAN AAACF2634A APPELLANT VS. ACIT, CIR.9, PUNE . RESPONDENT APPELLANTS BY : SHRI D.P.BAPAT, C.A. RESPONDENT BY : SHRI HARESHWAR SHARMA, CIT DR ORDER PER I.C.SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED IN UPHOLDING THE INITIATION OF PROCEEDINGS U/S. 147 AND THE VALIDITY OF NOTICE ISSUED U/S. 148 AND IN NOT ACCEPTING YOUR APPELLANTS CONTENTIONS THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S. 148 BE ANNULLED. 2. WITHOUT PREJUDICE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DENYING THE SET-OFF OF BROUGHT- FORWARD LOSS OF RS.12,27,39,796/- IN TERMS OF EXPLANATION (III) TO SECTION 115JA OF THE ACT. ITA NO. 1276/PN/2004 (ASSTT. YEAR 1999-00) FINOLEX INDUSTRIES LTD., 2 2. BESIDES THE ABOVE, THE ASSESSEE HAS ALSO RAISED FOLLOWING ADDITIONAL GROUNDS WITH THIS SUBMISSIONS THAT THESE ARE ACTUAL BY ARISING OUT OF GROUND NO.1 ONLY BUT TO BE MORE SPEC IFIC THESE HAVE BEEN RAISED AS AN ALTERNATIVE GROUNDS. 1. THE RECORDED REASONS ARE BASED ON INCORRECT APPRECIATION OF THE FACTS. 2. THE PROCEEDINGS ARE BASED ON CHANGE OF OPINION 3. THE AO HAD INITIATED PROCEEDINGS UNDER SECTION 154 ON THE SAME GROUNDS AND THE SAID PROCEEDINGS WERE DROPPED AND FOLLOWED BY THE INITIATION OF REASSESSMENT PROCEEDINGS. ON THESE FACTS REASSESSMENT IS INVALID IN LAW. 3. HE SUBMITTED THAT FOR ADJUDICATION OF THE ABOVE ADDITIONAL GROUNDS NO FRESH MATERIAL OUTSIDE THE RECORD IS AVA ILABLE AND THE ISSUES RAISED THEREIN ARE LEGAL IN NATURE. 4. THE LEARNED DR ON THE OTHER HAND OBJECTED THE RE QUEST OF THE LEARNED AR FOR PERMISSION TO RAISE THE ABOVE STATED GROUNDS FOR ADJUDICATION BEFORE THE TRIBUNAL. HE SUBMITTED TH AT THE ISSUES RAISED THEREIN WERE NEVER RAISED BEFORE THE AUTHORITIES BE LOW, HENCE SAME CANNOT BE ENTERTAINED AT THIS STAGE. 5. CONSIDERING THE ABOVE SUBMISSION ESPECIALLY THAT ISSUES RAISED IN THE ABOVE STATED ADDITIONAL GROUNDS ARE LEGAL IN NA TURE FOR CONSIDERATION OF WHICH NO FRESH MATERIAL OUTSIDE TH E RECORD IS REQUIRED TO BE LOOKED INTO, WE ALLOW THE REQUEST OF THE LEAR NED AR FOR ADJUDICATION OF ABOVE STATED ADDITIONAL GROUNDS. ITA NO. 1276/PN/2004 (ASSTT. YEAR 1999-00) FINOLEX INDUSTRIES LTD., 3 6. SINCE ISSUES RAISED IN THE ABOVE STATED ADDITION AL GROUNDS ARE LEGAL IN NATURE WHICH GO TO THE ROOT OF THE MATTER WE PREFERRED TO PROCEED THEREWITH FIRST. IN SUPPORT OF THE ADDITIO NAL GROUNDS LEARNED AR SUBMITTED THAT ON SIMILAR ISSUE WHICH REMAINED T HE REASON FOR INITIALIZATION OF REOPENING PROCEEDING U/S.147 OF T HE ACT, PROCEEDINGS U/S. 154 WERE INITIATED ON EARLIER OCCASION. THE A SSESSEE FILED ITS REPLY TO THE SAID SHOW CAUSE NOTICE ISSUED U/S.154 AND BE ING SATISFIED THEREWITH THE A.O. DROPPED THE PROCEEDINGS INITIAT ED U/S.154 OF THE ACT. HE HOWEVER INITIATED REOPENING PROCEEDINGS O N THE SAME REASON BY ISSUING NOTICE U/S. 148 OF THE ACT AND FRAMING A SSESSMENT U/S.147 READ WITH SECTION 143(3) OF THE ACT. HE SUBMITTED THAT ON EARLIER OCCASION BEFORE THE ISSUANCE OF NOTICE U/S.154 OF T HE ACT THE A.O. HAD FRAMED ORIGINAL ASSESSMENT U/S.143(3) OF THE ACT. IN THE SAID ORIGINAL ASSESSMENT THE ISSUE OF SETOFF OF BROUGHT FORWARD L OSS CLAIMED BY THE ASSESSEE WAS CONSIDERED AND ALLOWED. THUS INITIAL IZATION OF REOPENING PROCEEDINGS U/S.147 OF THE ACT WAS NOTHING BUT MERE CHANGE OF OPINION OF THE A.O. ON THE ISSUE, WHICH IS NOT PERM ITTED BY THE PROVISIONS U/S.147 OF THE ACT. HE REFERRED PAGE NO. 1 TO 3 OF THE PAPERBOOK I.E. PROCEEDINGS INITIATED U/S.154 OF T HE ACT; PAGE NO. 6 TO 9 OF THE PAPERBOOK I.E. REPLY OF THE ASSESSEE TO TH E SHOW CAUSE NOTICE U/S. 154 OF THE ACT. HE ALSO REFERRED PAGE NO.10 OF THE PAPERBOOK I.E. COPY OF THE ORDER U/S.154 OF THE ACT DATED 12/ 09/2002 WHEREBY IT WAS INFORMED BY THE DEPARTMENT THAT PROCEEDINGS INI TIATED U/S.154 DATED 12/08/2002 ARE HEREBY DROPPED. LEARNED AR ALS O SUBMITTED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCE EDING U/S 143 (3) THE ASSESSES HAD DISCLOSED ALL THE NECESSARY INFORM ATION REGARDING THE CLAIMED SET OFF BROUGHT FORWARD LOSS. IN SUPPORT H E REFERRED PAGE NO.1 OF THE PAPERBOOK I.E. COMPUTATION OF INCOME U/S.115 JA AS RETURNED, PAGE NO. 2&3 I.E. EXTRACT OF RELEVANT NOTE ANNEXED TO THE COMPUTATION OF INCOME AND PAGE NO. 4 TO 9 I.E. ORIGINAL ASSESSM ENT YEAR REMAINED U/S. 143(3). HE PLACED RELIANCE ON THE FOLLOWING DE CISIONS WESTERN OUTDOOR INTERACTIVE P. LTD. VS. ITO (2006) -286 IT R 620 (BOM.), BERGER PAINTS INDIA LTD., ACIT (2010) 322 ITR 369 (CALCUTTA), IDEA CELLULAR LTD. VS. DCIT (2008)301 ITR 407 (BOM.) AND RAMBEN C.PATEL VS. ACIT, 245 ITR 774 (GUJ.) ITA NO. 1276/PN/2004 (ASSTT. YEAR 1999-00) FINOLEX INDUSTRIES LTD., 4 7. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ABOVE CITED DECISIONS BY THE LEARNED AR ARE HAVING DISTINGUISH ABLE FACTS HENCE THOSE ARE NOT HELPFUL TO THE ASSESSEE IN THE PRESEN T CASE. HE ON THE OTHER HAND PLACED RELIANCE ON THE DECISION OF HONB LE KERALA HIGH COURT IN THE CASE OF CIT VS. M/S. INDIA SEA FOODS, ITA NO. 128/PN/2010 DATED 17/01/2011 HOLDING THAT IF AN ASS ESSMENT HAPPENS TO BE AN UNDER ASSESSMENT OR MISTAKEN ORDER , THE COURSE OPEN TO THE ASSESSING OFFICER IS EITHER TO RECTIFY THE ASSESSMENT IF IT IS A MISTAKE FALLING U/S. 154 OF THE ACT OR TO MAKE IN COME ESCAPING ASSESSMENT U/S.147. BOTH THESE PROVISIONS ARE SELF CONTAINED PROVISIONS, WHEREIN CONDITIONS FOR INVOKING THE POW ERS AND THE PROCEDURE TO BE FOLLOWED AND THE TIME LIMIT WITHIN WHICH ORDERS ARE TO BE PASS ARE MENTIONED. 8. CONSIDERING THE ABOVE SUBMISSIONS WE FIND THAT T HE ISSUE RAISED IN THE ADDITIONAL GROUNDS QUESTIONING VALIDITY OF R EOPENING PROCEEDINGS AFTER DROPPING OF PROCEEDING U/S.154 ON THE SAME B ASIS WAS NOT RAISED BEFORE THE AUTHORITIES BELOW. ADJUDICATION OF THE ISSUES RAISED IN THE ADDITIONAL GROUNDS ALSO REQUIRE VERIFICATION OF MATERIAL ON RECORD. WE, THEREFORE, REMAND THE MATTER TO THE F ILES OF LEARNED CIT(A) TO ADJUDICATE THE ISSUES RAISED IN THE ADDIT IONAL GROUNDS STATED HEREIN ABOVE, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE PARTIES, IN VIEW OF THE MATERIAL ON RECORD AND THE ABOVE CITED DECISIONS BY THEM. THE ADDITIONAL GROUNDS ARE THOSE ALLOWE D FOR STATISTICAL PURPOSES. 9. THE GRIEVANCE OF THE ASSESSEE AGAINST DENIAL OF SET OFF OF BROUGHT FORWARD LOSS OF RS.12,27,39,796/- IN TERMS OF EXPLANATION III OF SECTION 115JA OF THE ACT HAS BEEN RAISED IN GROUND NO.2 AS AN ALTERNATIVE GROUND. SINCE NO ARGUMENT WAS ADVANCED IN SUPPORT OF THE ALTERNATIVE GROUND BY LEARNED AR, THE SAME IS N OT BEING ADJUDICATED UPON AND IS TREATED AS NOT PRESSED. ITA NO. 1276/PN/2004 (ASSTT. YEAR 1999-00) FINOLEX INDUSTRIES LTD., 5 10. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 31 ST DAY OF MAY, 2011. SD/- SD/- (D.KARUNAKARA RAO) (I.C.SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 31 ST MAY, 2011 ASHWINI COPY OF THE ORDER IS FORWARDED TO : 1. TWO ASSESSEES AS MENTIONED IN THE CAUSE TITLE 2. ACIT, CIR.9, PUNE 3. CIT (A)-III, PUNE. 4. CIT V, PUNE 5. D.R. ITAT A BENCH, PUNE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE