Solar Capitals Limited, Nagpur V. Asstt.Comm.of Income Tax,Circle-4, Nagpur

ITA 134/NAG/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3871 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M BHUSARI
• Assessee Lawyers: KRISH DESAI
• Keywords: Depreciation; Bonafide belief; Retrospective amendment; Block assessment; Capital receipt; Reassessment proceedings
• Section: 143(3); 234B; 80IB; 147; 148; 2

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI D.KARUNAKAR RAO , A M ITA NO S . 128 TO 134 / N AG / 20 10 ( ASSESSMENT YEAR S : 200 2 - 03 , 20 03 - 04, 20 04 - 05, 20 05 - 06, 2006 - 07 & 2007 - 08 ) M/S SOLAR CAPITALS LIMITED, 11, ZAFE LAY - OUT, BHARAT NAGAR, NAGPUR - 440 033 VS. ACIT, CIRCLE - 4 , NAGPUR . PAN/GIR NO. : A A BCS 8191 C ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. KRISH DESAI /REVENUE BY : DR. M. BHUSARI DATE OF HEARING : 8 TH M ARCH ., 201 3 DATE OF PRONOUNCEMENT : 0 3 /04/ 201 3 O R D E R P ER BENCH : THESE SEVEN APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAIN ST THE ORDER OF LEANED CIT(A) - I I , NAGPUR (MAHARASHTRA) RELATING TO THE ASSESSMENT YEARS 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07 & 2007 - 08 , RESPECTIVELY, WHICH HAVE BEEN HEARD THROUGH E - COURT, MUMBAI. \ 2 . SINCE COMMON ISSUES ARE INVOLVED IN ALL THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE , THESE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . FIRST WE WILL DISCUSS THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 128/NAG/2010 FOR ASSESSMENT YEAR 2002 - 03 AND THE OUTCOME OF THE SAME WILL APPLY IN CASE OF OTHER YEARS, WHERE THE ISSUE IS CO MMON . ITA NO. 128 TO 134 /20 1 0 2 4 . GROUNDS NO. 1, 2, 4 & 5 RAISED BY THE ASSESSEE IN ITS APPEAL FOR THE ASSESSMENT YEAR 2002 - 03 HAVE NOT BEEN PRESSED, WHICH ARE AGAINST JURISDICTION FOR REASSESSMENT, VALIDITY OF REASSESSMENT, NON - CONSIDERATION OF ASSESSEES OBJECTION , PRINCIPLE OF N ATURAL JUSTICE AND LACK OF OPPORTUNITY, RESPECTIVELY. THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 5 . GROUND NO.3 IS IN RESPECT TO VALIDITY OF REASSESSMENT IN THE ABSENCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 5.1 THIS ISSUE HAS BEEN DISCUS SED BY THE LEARNED CIT(A) AT PAGE 5 ONWARDS IN HIS ORDER. IT WAS SUBMITTED BEFORE THE CIT(A) THAT NO NOTICE UNDER SECTI O N 143(2) WAS ISSUED TO THE ASSESSEE, THEREFORE, THE AO HAS NOT ASSUMED VALID JURISDICTION. IT WAS SUBMITTED THAT THE ISSUANCE OF NOTICE UNDER SECTION 143(2) IS MANDATORY AS IT CLEAR FROM THE PROVISION OF LAW. IT WAS ALSO SUBMITTED THAT EVEN THE PROVISION S OF SECTION 292BB ARE NOT APPLICABLE FOR THIS ASSESSMENT YEAR AS THIS APPLICABLE FROM ASSESSMENT YEAR 2008 - 09 . THE REMAND REPORT WAS SOUG HT FROM THE AO IN THIS RESPECT. IN THE REMAND REPORT, IT HAS BEEN MENTIONED BY THE AO THAT NOTICES UNDER SECTION 143(2) WERE ISSUED ON 15 - 10 - 2008, FOR ASSESSMENT YEAR 2002 - 03 TO 2004 - 05 AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 28 - 11 - 2008 FOR ASSESSMEN T YEAR 2005 - 06. IT HAS ALSO BEEN MENTIONED THAT NOTICE UNDER SECTION 148 WAS ISSUED AND SUBSEQUENTLY THE REASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE UNDER SECTION 143(2) AND 14 2 ( 1 ) AND SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE REGARDING PRO POSED ADDITIONS. IT WAS ITA NO. 128 TO 134 /20 1 0 3 ALSO SUBMITTED IN THE REMAND REPORT THAT THE ASSESSEE WAS AWARE ABOUT THE REASSESSMENT PROCEEDING AS THE COUNSEL OF THE ASSESSEE APPEARED FROM TIME TO TIME AND DISCUSSED THE PROPOSED ADDITIONS DURING REASSESSMENT PROCEEDING. IT WAS ALSO SUBMITTED IN THE REMAND REPORT THAT THE ASSESSEE HAS MADE REQUEST TO MAKE CERTAIN CLAIM FOR DEPRECIATION WHICH WAS CONSIDERED. THEREFORE, THE STAND OF THE ASSESSEE THAT THE ASSESSMENT IS INVALID DUE TO NON - SERVICE OF THE NOTICE UNDER SECTION 143(2) IS NOT CORRECT AND IT APPEARS TO BE A MERE AFTERTHOUGHT. 5.2 REGARDING CONTENTION OF THE ASSESSEE THAT PROVISION OF SECTION 292BB ARE APPLICABLE FROM ASSESSMENT YEAR 2008 - 09 ONWARDS AND NOT APPLICABLE FOR THE ABOVE YEAR , IS NOT CORRECT AND THE RELEVANT EXTR ACT FROM CIRCULAR NO. 1/2009 OF CBDT DATED 27 - 3 - 2009 WAS BROUGHT TO THE KNOWLEDGE OF THE LEARNED CIT(A). 5.3 AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) REJECTED THIS CONTENTION OF THE ASSESSEE. IT WAS NOTICED BY T HE LEARNED CIT(A) THAT NOTICE S UNDER SECTION 148 WERE ISSUED BY THE AO FOR ALL THE ASSESSMENT YEARS AND COPY OF REASONS FOR INITIATION OF PROCEEDING S UNDER SECTION 147 OF THE ACT WERE ALSO GIVEN IN RESPONSE TO WRITTEN REQUEST OF THE ASSESSEE. IT WAS ALSO O BSERVED BY THE CIT(A) THAT THE AR OF THE ASSESSEE NEVER OBJECTED TO THE VALIDITY OF THE ASSESSMENT PROCEEDINGS BY ADDUCING A GROUND THAT NOTICES UNDER SECTION 143(2) WERE NEVER SERVED BEFORE THE AO. THEREFORE, THE AO WAS UNDER THE BONAFIDE BELIEF THAT THE ASSESSEE WAS COOPERATING IN THE ITA NO. 128 TO 134 /20 1 0 4 ASSESSMENT PROCEEDINGS AND EVEN MAKING REQUEST FOR ADMISSION OF CERTAIN CLAIMS SUCH AS DEPRECIATION WHICH WERE OMITTED TO BE MADE IN THE RETURNS OF INCOME FILED. ACCORDINGLY, HE HELD THAT IT HAS TO BE PRESUMED THAT NOTICES U NDER SECTION 143(2) WERE SERVED AS THE ASSESSEE PAR TICIPATED IN THE ASSESSMENT PROCEEDING S . 5. 4 REGARDING THE ISSUE OF APPLICABILITY OF SECTION 292BB, LEARNED CIT(A) WAS ALSO NOT IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE AS IN HIS VIEW THE PROVISIO N OF SECTION 292BB IS APPLICABLE WITH RETROSPECTIVE EFFECT AND WILL BE APPLICABLE ON THE PENDING PROCEEDING I.E. ON 1 ST APRIL 2008 AS THE PROVISION OF SECTION 292BB BROUGHT ON THE STATUTE W.E.F 1 - 4 - 2008. THE FINDING OF THE LEARNED CIT(A) HAS BEEN RECORDED IN THIS RESPECT IN PARA 6.7 TO 6.15 AT PAGES 8 TO 12 OF HIS ORDER. ACCORDINGLY, BY HOLDING THAT PROVISION OF SECTION 292BB ARE APPLICABLE ON THE FACTS OF THE PRESENT CASE THEREFORE, THE CONTENTION OF THE ASSESSEE WAS REJECTED. 5. 5 LEARNED COUNSEL OF THE A SSESSEE, WHO APPEARED BEFORE THE TRIBUNAL STATED THAT THIS ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VIRENDRA KUMAR AGARWAL, PASSED IN ITA NO.2429/2009, VIDE ORDER DATED 7 - 1 - 2010 AND THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. VS. DCIT, REPORTED IN 117 ITD 273 (DELHI)(SB) , IN THE CASE OF ARUN LAL VS. SUPREME APPAR & ASSOCIATES, REPORTED IN 30 DTR (MUM) (TRIB) 229 , IN CASE OF DCIT VS. SHRIKANT RA THI, REPORTED IN 50 SOT 133 (IND.)(URO) AND IN THE ITA NO. 128 TO 134 /20 1 0 5 CASE OF ITO VS. NASEMAN FARMS (P) LTD., REPORTED IN 45 SOT 99 (DELHI)(URO) . IT WAS FURTHER SUBMITTED THAT THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. CEBON INDIA LIMITED, REPORTED IN 3 47 ITR 583 (P&H) , HAS HELD THAT THE ABSENCE OF NOTICE UNDER SECTION 143(2) WAS NOT CURABLE UNDER SECTION 292BB OF THE ACT AND THE ASSESSMENT WAS INVALID. IT WAS FURTHER SUBMITTED THAT IN THE CASE OF MANISH PRAKASH GUPTA VS. CIT, REPORTED IN 68 DTR (ALL) 11 2 , THE HONBLE ALLAHABAD HIGH COURT HAS HELD THAT SINCE THE NOTICE UNDER SECTION 143(2) NOT HAVING BEEN ISSUED TO ASSESSEE, THE ASSESSING AUTHORITY DID NOT HAVE JURISDICTION TO PROCEED FURTHER AND MAKE BLOCK ASSESSMENT; NON CONSIDERATION OF SECTION 292BB W HICH IS RULE OF EVIDENCE AND A DEEMING PROVISION TO VALID NOTICE IN CERTAIN CIRCUMSTANCES, DID NOT HAVE ANY EFFECT. ACCORDINGLY, IT WAS SUBMITTED THAT SINCE NO NOTICE HAS BEEN SERVED ON THE ASSESSEE, THEREFORE, THERE WAS NO VALID JURISDICTION TO THE ASSESS ING OFFICER TO START ASSESSMENT PROCEEDING. ACCORDINGLY, THE ASSESSMENT COMPLETED, IS WITHOUT JURISDICTION AND, THEREFORE, THE SAME IS LIABLE TO BE QUASHED. 5. 6 PER CONTRA , LEARNED DR PLACED RELIANCE ON THE ORDER OF AO AND CIT(A) . ON A QUERY FROM THE BEN CH, LEARNED CITDR FAIRLY STATED THAT OF COURSE IN THE ORDER OF THE AO AS WELL AS IN THE ORDER OF THE CIT(A) , SERVICE OF NOTICE IS NOT MENTIONED, HOWEVER, IT IS A FACT THAT THE ASSESSEE HAS PARTICIPATED IN REASSESSMENT PROCEEDING, THEREFORE, THE PROVISION O F SECTION 292BB SHOULD BE TAKEN INTO CONSIDERATION. IT WAS FURTHER SUBMITTED THAT THOUGH PROVISION OF SECTION 292BB WAS BROUGHT ITA NO. 128 TO 134 /20 1 0 6 ON THE STATUTE W.E.F . 1 - 4 - 2008 BUT AS ON DATE THE SAME WILL BE APPLICABLE IN PENDING MATTERS. SINCE THE APPEAL S OF THE ASSESSEE ARE PENDING, THEREFORE, THE PROVISION OF SECTION 292BB WILL BE APPLICABLE. 5. 7 WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THIS ISSUE IS SQUARELY COVE RED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF KUBER TOBACCO PRODUCTS PVT. LTD. (SUPRA) . THE SPECIAL BENCH AT PAGE 276 HAS OBSERVED THAT HAVING ARRIVED AT THE CONCLUSION THAT SECTION 292BB HAS NO RETROSPECTIVE EFFECT AND IS TO BE CONSTRUED PROSPE CTIVELY, IT WAS TO BE HELD THAT PRIOR TO 1 - 4 - 2008 I.E. UPTO 31 - 3 - 2008, AS PER SECTI O N 292BB , THE ASSESSEE WAS NOT PRECLUDED FROM TAKING ANY OBJECTION REGARDING INVALIDITY OF THE ASSESSMENT/REASSESSMENT ON THE GROUND OF IMPROPER/INVALID ISSUANCE/SERVICE OF A NOTICE UNDER SECTION 143(2) . IT HAS BEEN VIEWED FURTHER AS UNDER : - (I) SECTION 292BB EVEN IF IT IS PROCEDURAL CREATES A NEW DISABILITY AS IT PRECLUDES THE ASSESSEE FROM TAKING A PLEA WHICH COULD BE TAKEN AS A RIGHT, CANNOT BE CONSTRUED RETROSPECTIVELY AS THE SAME HAS BEEN MADE APPLICABLE BY THE STATUTE WITH EFFECT FROM 1 - 4 - 2008. (II) SECTION 292BB IS APPLICABLE TO THE ASSESSMENT YEAR 2008 - 09 AND THE SUBSEQUENT ASSESSMENT YEARS. [PARA 45] 5. 8 WE FURTHER NOTED THAT THIS ISSUE HAS BEEN EXAMINED BY THE H ON BLE JURISDICTIONAL HIGH COURT ALSO IN THE CASE OF VIRENDRA KUMAR AGARWAL (SUPRA) . COPY OF THE ORDER OF THE HON BLE HIGH COURT IS PLACED AT PAGES 516 TO 518 OF THE PAPER BOOK. THE HON BLE HIGH COURT IN PARA 3 HAS HELD THAT : - ITA NO. 128 TO 134 /20 1 0 7 3. ON THE SECOND QUESTION, THE REVENUE HAS RELIED UPON THE PROVISIONS OF SECTION 292BB IN ORDER TO CONTEND THAT WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR HAS CO - OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THE ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM HAS BEEN DULY SERVED. IN SUCH A CASE THE ASSESSEE IS PRECLUDED FROM TAKING AN OBJECTION THAT THE NOTICE WAS NOT SERVED UPON HIM IN TIME. THE PROVISIONS OF SECTION 292BB WERE INSERTED BY FINANCE ACT OF 2008, WITH EFFECT FROM 1 ST APRIL, 2008. IN THE CIRCUMSTANCES, THE PROVISIONS OF SECTION 292BB WILL HAVE NO APPLICATION TO THE ASSESSMENT YEAR IN QUESTION VIZ. 2000 - 2001. IN THESE CIRCUMSTANCES, THERE IS NO MERIT IN THE SECOND SUBMISSION IN THE FACTS OF THIS CASE. 5. 8 (I) SIMILARLY, THE TRIBUNAL IN THE CASE OF SHRIKANT RATHI, REPORTED IN [2012] 50 SOT 133 (INDORE) , HAS HELD THAT THE PROVISIONS OF SECTION 292BB ARE PROSPECTIVE IN NATURE AND ARE NOT APPLICABLE IN THE EARLIER YEAR. IT HAS BEEN HELD TH AT SERVICE OF NOTICE UNDER SECTION 143(2 ) IS MANDATORY AND FOR ASSUMING VALID JURISDICTION, THE NOTICE HAS TO BE SERVED. 5. 8 (I I ) SIMILAR VIEW HAS BEEN EXPRESSED IN THE CASE OF NASEMAN FARMS (P) LTD., REPORTED IN [2011] 45 SOT 99 (DELHI)(URO) , WHEREIN IT HAS BEEN HELD THAT PROVISION S OF SECTION 292BB ARE PROSPECTIVE AND NOT APPLICABLE BEFORE 1 - 4 - 2008 . ACCORDINGLY, WITHOUT ISSUING NOTICE UNDER SECTION 143(2) , ASSESSMENT WAS QUASHED. 5. 8 (I II ) THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CEBON INDIA LIMITED, REPORTED IN [2012] 347 ITR 583 (P&H) , HAS ALSO HELD THAT SERVICE OF NOTICE UNDER SECTION 143(2) IS MANDATORY AND THEY ARE NOT CURABLE EVEN UNDER SECTION 292BB. COPY OF THIS JUDGMENT IS ALSO PLACED IN COMPILATION. ITA NO. 128 TO 134 /20 1 0 8 5. 8 (I V ) THE HON BLE ALLAHA BAD HIGH COURT IN THE CASE OF MANISH PRAKASH GUPTA, REPORTED IN 68 DTR (ALL) 112 , HAS HELD THAT NOTICE UNDER SECTION 143(2 ) NOT HAVING BEEN ISSUED TO ASSESSEE, THE ASSESSING AUTHORITY DID NOT HAVE JURISDICTION TO PROCEED FURTHER AND MAKE BLOCK ASSESSMENT; NON CONSIDERATION OF SECTION 292BB WHICH IS RULE OF EVIDENCE AND A DEEMING PROVISION TO VALID NOTICE IN CERTAIN CIRCUMSTANCES, DID NOT HAVE ANY EFFECT. 5. 8 (V ) WE FURTHER NOTED THAT IN CASE OF SALMAN KHAN PASSED IN ITA NO. 2362/2009 , IT HAS BEEN HELD BY THE HON BLE BOMBAY HIGH COURT THAT PROVISIONS OF SECTION 292BB WERE AMENDED W.E.F. 1 - 4 - 2008 AND ARE NOT APPLICABLE RETROSPECTIVELY AND MANDATORY NOTICE UNDER SECTION 143(2) HAS TO BE ISSUED IN THIS CASE WITHIN THE TIME PRESCRIBED UNDER THE ACT. 5. 9 IN FA CT, THE ABOVE MENTIONED QUESTIONS WAS REFERRED TO THE HON BLE HIGH COURT BY THE DEPARTMENT AND THE HON BLE BOMBAY HIGH COURT IN PARA 4 HAS MENTIONED THAT , SO FAR AS SECOND QUESTION IS CONCERNED, IT RELATES TO THE OPERATION OF SECTION 292B AND 292BB WHICH WERE AMENDED W.E.F. 1 - 4 - 2008 AND WAS CAME INTO OPERATION PROSPECTIVELY . ACCORDINGLY, IT WAS OBSERVED THAT THE SECOND QUESTION CAN HARDLY SURVIVE. ACCORDINGLY, THE ORDER OF TRIBUNAL WAS CONFIRMED. 5. 10 WHETHER NOTICE UNDER SECTION 143(3) IS NOT SERVED ON THE ASSESSEE, THE HON BLE DELHI HIGH COURT IN THE CASE OF LUNAR DIAMONDS LIMITED, REPORTED IN 281 ITR 1 , HAS HELD THAT WITHOUT SERVICE OF NOTICE, ASSESSMENT COMPLETED, IS NULL AND VOID . IN THAT CASE, ITA NO. 128 TO 134 /20 1 0 9 BEFORE THE CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT IT HAD NOT RECEIVED ANY NOTICE UNDER SECTION 143( 2 ) OF THE ACT BY REGISTERED POST OR OTHERWISE. AN AFFIDAVIT TO THIS EFFECT WAS FILED. IT WAS CONTENDED THAT THE RECEIPT ISSUED BY THE POST OFFICE DID NOT BEAR THE ADDRESS OF THE ASSESSE E BUT ONLY ITS NAME. IT WAS, THEREFORE, SUBMITTED THAT THERE WAS A POSSIBILITY THAT THE CORRECT ADDRESS OF THE ASSESSE E MIGHT NOT HAVE BEEN WRITTEN ON THE ENVELOPE AND, THEREFORE, THE QUESTION OF SERVICE OF NOTICE ON THE ASSESSE E DID NOT ARISE. THE CONTENTION OF THE ASSESSE E W AS ACCEPTED BY THE CIT (A) AND IT WAS HELD THAT THERE WAS NO VALID SERVICE OF NOTICE ON THE ASSESSE E AND, THEREFORE, THE ASSESSMENT FRAMED WAS INVALID. THEREAFTER THE ORDER OF THE CIT(A) WAS UPHELD BY THE TRIBUNAL. ON APPEAL , THE HON BLE HIGH COURT DISMISS ED THE APPEAL BY HOLDING THAT THE ASSESSEE FILED AN AFFIDAVIT STATING THAT IT HAD NOT RECEIVED THE NOTICE AND THE TRIBUNAL RIGHTLY HELD THAT UNDER THESE CIRCUMSTANCES, THE BURDEN ON THE DEPARTMENT TO PROVE THAT NOTICE WAS SERVED UPON THE ASSESSEE WITHIN TH E PRESCRIBED TIME. THE DEPARTMENT HAD FAILED TO PROVE ITS CASE IN THIS REGARD. 5.11 SIMILAR FACTS ARE INVOLVED IN THE PRESENT CASE AS BEFORE THE CIT(A) THE ASSESSEE STATED THAT IT HAD NOT RECEIVED ANY NOTICE UNDER SECTION 143(2). AN AFFIDAVIT TO THIS EFF ECT WAS ALSO FILED BY THE DIRECTOR OF THE COMPANY AS WELL AS CHARTERED ACCOUNTANT OF THE COMPANY. HOWEVER, LEARNED CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND, THEREFORE, IN VIEW OF THE PROVISION OF SECTION 292BB, ITA NO. 128 TO 134 /20 1 0 10 THE DEFECT WAS CURABLE AND ASSESSMENT FRAMED WAS VALID. THERE IS NO DISPUTE THAT NOTICE UNDER SECTION 143 (2) IS NOT SERVED ON THE ASSESSEE AND THE DEPARTMENT HAS FAILED TO PROVE ITS CASE THAT NOTICE UNDER SECTION 143( 2 ) IS SERVED, HOWEVER, DEPARTMENT HAS CONTENDED THAT THIS DEFECT IS CURABLE IN VIEW OF PROVISION OF SECTION 292BB. WE HAVE ALREADY DISCUSSED THAT PROVISION OF SECTION 292BB IS APPLICABLE PROSPECTIVELY AND NOT RETROSPECTIVELY. 5. 1 2 T AKING INTO CONSIDER ATION ALL THE CASES, INCLUDING DECISION OF THE HON BLE BOMBAY HIGH COURT AS WELL AS THE DECISION OF THE SPECIAL BENCH (SUPRA), WE FOUND THAT SINCE THERE IS NO EVIDENCE ON RECORD IN RESPECT TO SERV ICE OF THE NOTICE UNDER SECTION 143(2) , THEREFORE, THE JURIS DICTION ASSUMED BY THE AO WAS INCORRECT . I N FACT WITHOUT SERVICE OF NOTICE UNDER SECTION 143(2) , THE AO WAS HAVING NO JURISDICTION TO PROCEED FURTHER FOR COMPLETION OF THE REASSESSMENT PROCEEDING. THE PROVISION OF SECTION 292BB HAS HELD BY SPECIAL BENCH AN D THE HON BLE HIGH COURT , THAT THEY ARE APPLICABLE PROSPECTIVELY AND NOT RETROSPECTIVELY. THE YEARS UNDER CONSIDERATION ARE FOR ASSESSMENT YEARS 2002 - 03 TO 2005 - 06, THEREFORE, THEY ARE NOT APPLICABLE FOR THESE YEARS AND WE HAVE NO HESITATION IN QUASHING TH E ASSESSMENT FOR THESE YEARS. 5. 13 SINCE WE HAVE DISCUSSED THE FACT FOR ASSESSMENT YEAR 2002 - 03, THEREFORE, WE QUASH THE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03 AND FOR REMAINING YEARS, WE WILL FOLLOW THIS ORDER FOR THE SUBSEQUENT YEARS, WHICH WILL BE DISC USSED LATER ON. GROUND NO. 3 IS ALLOWED . ITA NO. 128 TO 134 /20 1 0 11 6. REMAINING GROUND I.E. GROUND NO. 6 IS IN RESPECT TO REDUCTION IN CLAIM FOR DEDUCTION UNDER SECTION 80IB . 6.1 LEARNED COUNSEL OF THE ASSESSEE HAS FAIRLY STATED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SYNCO INDUSTRIES LIMITED , REPORTED IN 299 ITR 444 . 6.2 CONSIDERING THE SUBMISSIONS OF THE COUNSEL OF THE ASSESSEE, WE OBSERVED THAT THE AFORESAID GROUND IS COVERED BY THE DECISION OF THE H O N BLE SUPR EME COURT IN THE CASE OF SYNCO INDUSTRIES LIMITED (SUPRA) . THEREFORE, THIS GROUND OF THE ASSESSEE IS DISMISSED. 7. IN APPEAL I.E. ITA NO. 129/NAG/2010 FOR ASSESSMENT YEAR 2003 - 04, GROUNDS NO. 1, 2, 4, & 5 WERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS N OT PRESSED. 8 . GROUND NO. 3 RELATES TO VALIDITY OF REASSESSMENT IN THE ABSENCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 8.1 THIS GROUND WAS INVOLVED IN THE APPEAL FILED FOR ASSESSMENT YEAR 2002 - 03 (ITA NO. 128/NAG/2010) , WHERE WE HAVE ALLOWED THE ISSUE IN FAVOUR OF THE AS SESSEE BY HOLDING THAT WITHOUT SERVICE OF NOTICE UNDER SECTION 143(2) , THE AO HAS NOT ASSUMED JURISDICTION. ACCORDINGLY, THE ASSESSMENT SO COMPLETED HAS BEEN QUASHED. ON THE SAME REASONING, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION I. E. FOR ASSESSMENT YEAR 2003 - 04 IS ALSO HEREBY QUASHED. 9 . GROUND NO. 6, WHICH IS AGAINST REDUCTION IN CLAIM FOR DEDUCTION UNDER SECTION 8 0 IB . ITA NO. 128 TO 134 /20 1 0 12 9.1 THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE C ASE OF SYNCO INDUSTRIES LIMITED (SUPRA) . ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 10 . IN APPEAL I.E. ITA NO. 130 /NAG/2010 FOR ASSESSMENT YEAR 2004 - 0 5 , GROUNDS NO.1, 2, 4, & 5 WERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 1 1 . GROU ND NO.3 RELATES TO VALIDITY OF REASSESSMENT IN THE ABSENCE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 11. 1 THIS GROUND WAS INVOLVED IN THE APPEAL FILED FOR ASSESSMENT YEAR 2002 - 03 (ITA NO.128/NAG/2010), WHERE WE HAVE ALLOWED THE ISSUE IN FAVOUR OF THE ASS ESSEE BY HOLDING THAT WITHOUT SERVICE OF NOTICE UNDER SECTION 143(2), THE AO HAS NOT ASSUMED JURISDICTION. ACCORDINGLY, THE ASSESSMENT SO COMPLETED HAS BEEN QUASHED. ON THE SAME REASONING, THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. FOR ASSESSMENT YEAR 20 0 4 - 0 5 IS ALSO HEREBY QUASHED. 12 . GROUND NO.6, WHICH IS AGAINST REDUCTION IN CLAIM FOR DEDUCTION UNDER SECTION 80IB. 12 .1 THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SYNCO INDUSTRIES LIMITED (SUPRA) . ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 13 . GROUND NO. 7 IS AGAINST LEVY OF INTEREST UNDER SECTIONS 234B, 234C AND 234D OF THE ACT. ITA NO. 128 TO 134 /20 1 0 13 13.1 THIS GROUND OF THE AS SESSEE IS CONSEQUENCE IN NATURE, WHICH DOES NOT REQUIRE ANY ADJUDICAT ION UPON. 14 . IN APPEAL I.E. ITA NO. 13 4 /NAG/2010 FOR ASSESSMENT YEAR 200 5 - 0 6 , GROUNDS NO.1, 2, 4, 5 & 6 WERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 1 5 . GROUND NO.3 RELATES TO VALIDITY OF REASSESSMENT IN THE ABSENCE OF NOTICE UNDER SEC TION 143(2) OF THE ACT. 1 5 . 1 THIS GROUND WAS INVOLVED IN THE APPEAL FILED FOR ASSESSMENT YEAR 2002 - 03 (ITA NO.128/NAG/2010), WHERE WE HAVE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT WITHOUT SERVICE OF NOTICE UNDER SECTION 143(2), THE AO H AS NOT ASSUMED JURISDICTION. ACCORDINGLY, THE ASSESSMENT SO COMPLETED HAS BEEN QUASHED. ON THE SAME REASONING, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION I.E. FOR ASSESSMENT YEAR 200 5 - 0 6 IS ALSO HEREBY QUASHED. 1 6 . GROUND NO. 7 , WHICH IS AGAINST REDUC TION IN CLAIM FOR DEDUCTION UNDER SECTION 80IB. 1 6 .1 THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SYNCO INDUSTRIES LIMITED (SUPRA) . ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 17 . GROUND NO. 8 IS AGAINST CARRY FORWARD AND SET OFF OF LOSSES. 17.1 LEARNED COUNSEL OF THE ASSESSEE STATED THAT THIS GROUND IS CONSEQUENTIAL GROUND, THEREFORE, CONSEQUENTIAL EFFECT HAS TO BE GIVEN. ITA NO. 128 TO 134 /20 1 0 14 17.2 SINCE THIS GROUND IS CONSEQUENTIAL IN NATURE, THEREF ORE, THE AO WILL MAKE A CONSEQUENTIAL RELIEF TO THE ASSESSEE. 18 . GROUND NO. 9 IS AGAINST DEFE R RED SALES TAX LIABILITY. 18.1 THE AO DISALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT TO DEFERRED SALES TAX LIABILITY OF AN AMOUNT OF RS. 10,69,365/ - , BEING A RECE IPT UNDER DEFERRED SALES TAX SCHEME. 18.2 LEARNED COUNSEL OF THE ASSESSEE STATED THAT THIS ISSUE IS NOW COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF S ULZER INDIA LTD VS DCIT , REPORTED IN 134 TTJ 385 . 18.3 ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF LEARNED CIT(A) . 18.4 AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN SULZER INDIA LIMITED (SUPRA) . AFTER CONSIDERING VARIOUS DECISION OF VARIOUS COURTS, THE SPECIAL BENCH HAS HELD THAT , DEFERRED SALES TAX LIABILITY, BEI NG THE DIFFERENCE PAYMENT OF NPV AGAINST THE FUTURE LIABILITY CRE DITED BY THE ASSESSEE UNDER THE CAPITAL RESERVE ACCOUNT IN ITS BOOKS O F ACCOUNT , IS A CAPITAL RECEIPT AND CANNOT BE TERMED AS REMISSION/CESSATION OF LIABILITY IN TERMS OF SECTION 41 (I) AS THE Y ARE NOT REVENUE RECEIPT . ACCORDINGLY , WE DIRECT THE AO TO ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SULZER INDIA LIMITED (SUPRA) . 19 . GROUND NO. 10 IS IN REGARD TO LEVY OF INTEREST UNDER SECTION 234B, 234C & 234D OF THE ACT. ITA NO. 128 TO 134 /20 1 0 15 19.1 THIS GROUND IS CONSEQUENTIAL IN NATURE , WHICH DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 20 . IN APPEAL I.E. ITA NO. 13 1 /NAG/2010 FOR ASSESSMENT YEAR 200 5 - 0 6 , GROUNDS NO.1 & 2 WERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 21 . GROUND NO.3 WHICH IS AGAINST REDUCTION IN CLAIM FOR DEDUCTION UNDER SECTION 80IB. 2 1 .1 THIS ISSUE HAS BEE N DECIDED AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SYNCO INDUSTRIES LIMITED (SUPRA) . ACCORDINGLY, THIS GROUND OF ASSESSEE IS ALSO DISMISSED. 2 2. GROUND NO. 4 IS IN REGARD TO DEFERRED SALES TAX LIABILITY. 22.1 SIMILAR ISSUE WAS INVOLVED IN APPEAL OF THE SAME YEAR LISTED UNDER ITA NO. 134/NAG/2010 FOR ASSESSMENT YEAR 2005 - 06 , WHICH WE HAVE DECIDED IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SULZER INDIA LIMITED, 134 TTJ 385 . HENCE, ON THE SA ME REASONING, THE AO IS DIRECTED TO DECIDE THIS GROUND ACCORDINGLY. 2 3 . IN APPEAL I.E. ITA NO. 13 2 /NAG/2010 FOR ASSESSMENT YEAR 200 6 - 0 7 , GROUNDS NO.1 IS IN REGARD TO DEFERRED SALES TAX LIABILITY OF RS. 59,93,156/ - . 2 3.1 SIMILAR ISSUE WAS INVOLVED IN APPEAL LISTED UNDER ITA NO. 131 /NAG/2010 FOR ASSESSMENT YEAR 2005 - 06, WHICH WE HAVE DECIDED IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ITA NO. 128 TO 134 /20 1 0 16 SULZER INDIA LIMITED, 134 TTJ 385 . HENCE, ON THE SAME REASONING, THE AO IS DIRECTED TO DECIDE THIS GROUND A CCORDINGLY . 2 4. GROUND NO. 2 IS IN REGARD TO SET OFF OF BROUGHT FORWARD LOSSES. 24.1 LEARNED COUNSEL OF THE ASSESSEE STATED THAT THIS IS A CONSEQUENTIAL GROUND TO GROUND NO. 1, THEREFORE, CONSEQUENTIAL EFFECT BE GIVEN. 2 4 . 2 SINCE THIS IS A CONSEQUENTIAL G ROUND, THEREFORE, THE AO IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE. 25. GROUND NO. 3 IS IN REGARD TO LEVY OF INTEREST UNDER SECTION 234B, & 234C OF THE ACT. 2 5 .1 THIS GROUND IS CONSEQUENTIAL IN NATURE , WHICH DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 2 6 . IN APPEAL I.E. ITA NO. 13 3 /NAG/2010 FOR ASSESSMENT YEAR 200 7 - 0 8 , GROUNDS NO.1 IS IN REGARD TO DEFERRED SALES TAX LIABILITY OF RS.59,93,156/ - . 2 6 .1 SIMILAR ISSUE WAS INVOLVED IN APPEAL LISTED UNDER ITA NO.131/NAG/2010 FOR ASSESSMENT YEAR 2005 - 06, WHICH WE HAVE DECIDED IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SULZER INDIA LIMITED, 134 TTJ 385 . HENCE, ON THE SAME REASONING, THE AO IS DIRECTED TO DECIDE THIS GROUND ACCORDINGLY. 27 . GROUND NO.2 IS IN REGARD TO LEVY OF I NTEREST UNDER SECTION S 234A, 234B & 234C OF THE ACT. ITA NO. 128 TO 134 /20 1 0 17 2 7 .1 THIS GROUND IS CONSEQUENTIAL IN NATURE , WHICH DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 28 . RESULTANTLY , APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR S 2002 - 03 , 2003 - 04, 2004 - 05 AND 2005 - 06, LISTE D UNDER ITA NO S . 128 TO 130 & 134 / NAG/ 10 , ARE ALLOWED SINCE WE HAVE QUASHED THE ASSESSMENT, WHEREAS APPEAL FOR ASSESSMENT YEAR S 2005 - 06 & 2006 - 07, LISTED UNDER ITA NOS. 131 & 132/NAG/10 ARE PARTLY ALLOWED AND APPEAL FOR THE ASSESSMENT YEAR 2007 - 08, LISTED UN DER ITA NO. 133/NAG/2010 IS HEREBY DISMISSED . (I.E.ITA NOS.128 TO 130 & 134/NAG/10) 2002 - 03, 2003 - 04, 2004 - 05 AND 2005 - 06 2005 - 06 & 2006 - 07 ITA NOS.131 & 132/NAG/10 2007 - 08 ITA NO.133/NAG/2010 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF APR. 201 3 . 201 3 SD/ - SD/ - ( ) ( D.KARUNAKAR RAO ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 3 / 04 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI