The ITO, Ward-8(1), Ahmedabad V. M/s. Samyak Infotech Pvt. Ltd., Ahmedabad

ITA 1432/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6029 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: SANJAY R SHAH DATES OF HEARING
• Keywords: Reopening of assessment; Invalid notice; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 10B; 148

Judgement Text

ITA NO. 1432/AHD/2015 ITO VS. SAMYAK INFOTECH PVT LTD ASSESSMENT YEAR: 2008-09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 1432/AHD/2015 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER .................... .APPELLANT WARD 4(1)(1), AHMEDABAD VS SAMYAK INFOTECH PVT LTD ............. RESPONDENT 905-908, ABHIJEET, NR. MITHAKHALI SIX ROADS, ELLISBRIDGE, AHMEDABAD-380 006 [PAN : AADCS 0313 A] APPEARANCES BY VK SINGH FOR THE APPELLANT SANJAY R SHAH FOR THE RESPONDENT DATES OF HEARING OF THE APPEAL : FEBRUARY 08, 2018 DATE OF PRONOUNCING THIS ORDER : FEBRUARY 13, 2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 13 TH MARCH 2015, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 19 61, FOR THE ASSESSMENT YEAR 2008- 09. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OFF ICER HAS RAISED THE FOLLOWING GRIEVANCE:- WHETHER THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S) IS RIGHT IN LAW AND ON FACTS IN HOLDING THAT THE NOTICE U/S 148 OF THE ACT ISSUED BY AO IS INVALID AND QUASHING THE REASSESSMENT ORDER U/S 147 OF THE ACT. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT. THE ORIGI NAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 24.11.2010. THE REASSESSME NT PROCEEDINGS WERE, THEREAFTER, INITIATED ON 14.03.2013, I.E. WELL WITH IN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. LEARNED CIT(A) NEVERTHELE SS QUASHED THE REASSESSMENT PROCEEDINGS BY OBSERVING AS FOLLOWS:- ITA NO. 1432/AHD/2015 ITO VS. SAMYAK INFOTECH PVT LTD ASSESSMENT YEAR: 2008-09 PAGE 2 OF 5 2.2 IN THIS CASE, ASSESSMENT WAS COMPLETED U/S.143 (3) OF IT ACT ON 24/11/2010. THIS ASSESSMENT WAS REOPENED VIDE NOTIC E U/S.148 DATED 14/03/2013. THE ASSESSMENT U/S.143(3) R.W.S. 147 WA S COMPLETED VIDE ASSESSMENT ORDER DATED 21/01/2014, WHEREIN TOTAL IN COME WAS ASSESSED AT RS.43,23,238/- BY DISALLOWING EXEMPTION U/S.10B OF RS.52,93,042/- ALLOWED IN THE ASSESSMENT ORDER PASSED U/S. 143(3) OF IT ACT. 2.3 SINCE, THE APPELLANT HAS SPECIFICALLY CHALLENGE D THE REOPENING OF ASSESSMENT, IT WILL BE APPROPRIATE TO DISCUSS THE P ROVISIONS OF SECTION 147 IN DETAIL. UNAMBIGUOUS READING OF SECTION 147 REVEALS THAT REQUIREMENTS OF SECTION ARE ASUNDER: (1) THE ASSESSING OFFICER HAS REASON TO BELIEVE; (2) THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT; (3) IF FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASST YEAR, THEN SUCH ESCAPEMENT WAS DUE TO FAILURE ON THE PART OF T HE ASSESSEE (I) TO FILE A RETURN U/S.139; (II) TO FILE RETURN IN RESPONSE TO NOTICE U/S.142(1 ) OR SECTION 148; (III) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT S NECESSARY FOR THE ASSESSMENT. ALL THESE ASPECTS MUST COME IN THE REASONINGS RECOR DED BY THE A.O. THE REASONS RECORDED BY THE AO SHOULD REFLECT (I) ASSESSEE IN RESPECT OF WHOM ASSESSMENT IS SOUGH T TO BE REOPENED (II) ASSESSMENT YEAR AS SOUGHT TO BE REOPENED; (III) AMOUNT OF INCOME WHICH HAS ESCAPED ASSESSMENT ; (IV) HOW THE ORIGINAL ASSESSMENT HAS BEEN DONE WHET HER U/S.143(1) OR U/S.143(3) OR SEC.147/148 (V) WHAT IS THE REASON OF ESCAPEMENT OF ASSESSMENT; (VI) WHETHER THERE IS ANY FAILURE AS MENTIONED IN T HE PROVISO IF ASSESSMENT IS SOUGHT TO BE REOPENED AFTER FOUR YEAR S FROM THE END OF THE RELEVANT ASST. YEAR; (VII) IN PARTICULAR, WHETHER THERE IS ANY THE FAILU RE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY NECESSARY F OR THE ASSESSMENT FOR THAT ASSESSMENT YEAR (VIII) IF ASSESSMENT IS DONE U/S.143(1), THEN WH ETHER THE PROVISION OF SECTION 149 ARE APPLICABLE.' 2.4 IT IS CLEARLY HELD BY HON'BLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT V/S. PRADESHIYA INDUSTRIAL AND INVESTMENT CORPORATION OF UTTAR PRADESH LTD. (2011) 332 ITR 324 THAT IF REASONS RECORDED DID NOT REFLECT THE ABOVE MENTIONED INGREDIENTS, THEN REOPENING CANNOT BE SUS TAINED. 2.5 THE ABOVE DISCUSSION MAKES IT VERY CLEAR THAT F OR VALID REOPENING OF ASSESSMENT, WHICH IS COVERED WITH PROVISO TO SECTIO N 147, A.O. HAS TO SPECIFICALLY MENTION THE FAILURE OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THE INSTANT CASE, REASONS ITA NO. 1432/AHD/2015 ITO VS. SAMYAK INFOTECH PVT LTD ASSESSMENT YEAR: 2008-09 PAGE 3 OF 5 RECORDED AS MENTIONED IN PARA NO.2.2 ABOVE, I DO NO T FIND ANY REFERENCE TO SUCH FAILURE ON THE PART OF THE APPELLANT TO DISCLO SE ANY MATERIAL FACTS NECESSARY FOR ASSESSMENT AND IN FACT NARRATION GIVE N IN THE REASONS DO NOT SHOW ANY SUCH FAILURE WHICH COULD BE INFERRED EVEN IF NOT SO MENTIONED SPECIFICALLY IN THE REASONS. PERUSAL OF ASSESSMENT ORDER DATED 21/01/2014 REVEALS THAT THE A.O. HAD DISALLOWED EXEMPTION U/S. 10B TO THE APPELLANT. IT IS ALSO A MATTER OF FACT THAT THE APPELLANT HAD CLAIME D EXEMPTION U/S.10B AND THE SAME WAS ALLOWED IN THE A.O. PASSED U/S:143(3) OF I .T. ACT. THIS WAY I AM OF THE CONSIDERED VIEW THAT MATERIAL FACT IN RESPECT O F THE DISALLOWANCE MADE BY THE A.O. WAS VERY MUCH ON RECORD. IN VIEW OF ABOVE, I AM OF THE FIRM VIEW THAT THE APPELLANT HAD ALREADY FILED MATERIAL FACT DURIN G THE ASSESSMENT PROCEEDINGS AND THE A.O. HAD NOT MENTIONED ANYTHING ABOUT NON FILING OF MATERIAL FACT BY THE APPELLANT. ACCORDINGLY, IN VIE W OF ABOVE DISCUSSIONS, I HOLD THAT THE ASSESSMENT HAS NOT BEEN REOPENED VALI DLY. 2.6 NOTICE U/S.148 IS NOT TENABLE ON ANOTHER ACCOU NT ALSO. IT IS AN ESTABLISHED FACT THAT THE ASSESSEE'S RESPONSIBILITY IS ONLY OF DISCLOSING PRIMARY FACTS. ONCE HE HAS DISCLOSED ALL PRIMARY FACTS HIS DUTY ENDS AND IT IS FOR THE ASSESSING AUTHORITY TO DRAW PROPER CONCLUSION FROM IT. EVEN IF A WRONG CONCLUSION IS DRAWN, THEN THE A.O. CANNOT REOPEN TH E CASE BY ISSUANCE OF NOTICE U/S.148. RELIANCE IN THIS REGARD IS PLACED ON CALCUTTA DISCOUNT CO. LTD. VS ITO, 46 ITR 191 (SUPREME COURT) AND ITO VS LAKHMANI MEVALDAS, 103 ITR 437 (S.C.). IN THE INSTANT CASE THE APPELL ANT HAS DISCLOSED MATERIAL FACT OF CLAIMING EXEMPTION U/S.10B . ON THE BASIS OF SAID RETURN OF INCOME, THE A.O. HAS AFTER DUE VERIFICATION OF APPELLANT'S CLAIM FOR EXEMPTION U/S10B, HAS FINALIZED THE ASSESSMENT VIDE ORDER U/S.143(3) OF I.T. ACT DTD.24-11-2010. THUS THE MATERIAL FACT IN RESPECT OF EXEMPTION U/S. 108 WAS AVAILABLE BEFORE THE A.O. IN THE FORM OF RETURN OF INCOME DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. IN THE LIGHT OF THESE FACTS THE A.O. W AS REQUIRED TO TAKE AN APPROPRIATE DECISION. APPARENTLY THE A.O. WAS SATIS FIED WITH THE SUBMISSIONS OF THE APPELLANT AND ACCORDINGLY, ACCEPTED THE EXEM PTION U/S.10B. AS DISCUSSED ABOVE, EVEN IF THE DECISION OF ACCEPTING THE DEDUCTION U/S.10B WAS WRONG, THE A.O. CANNOT REVISIT THIS DECISION AND RE OPEN THE ASSESSMENT U/S.147 OF THE I.T. ACT. IT IS ALSO HELD IN THE CAS E OF CIT VS KELVINATOR OF INDIA (2002) 256 ITR 1 THAT THE ASSESSING OFFICER IS NOT ALLOWED TO CHANGE OF OPINION FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S.147 OF THE I.T. ACT. APPELLANT ALSO SUBMITTED THAT IT HAD BEEN CLAIMING DEDUCTION U/S.10B FROM A.Y. STARTING FROM 1999-2000 AND THE SAME HAD BEEN ALLOWED IN ASSESSMENT. APPELLANT RELIED ON THE DECISION OF SAURASHTRA CEME NT & CHEMICAL IND. LTD. V/S CLT ITR 669) (GUJ) IN SUPPORT OF ITS CONTENTION . THE ABOVE FACTS INDICATE THAT THE ASSESSING OFFICER WHILE ISSUING NOTICE U/S 148 DATED 14/03/2013 HAS CHANGED HIS OPINION AS MADE AT THE TIME OF ORIGINAL ASSESSMENT U/S 143(3) DATED 24/11/2010. THIS ACTION OF THE AO IS AGAINST THE PROPOSITION OF LAW AS MANIFESTED IN THE CASE OF KELVINATOR OF INDIA (SUPR A). 2.7 IN VIEW OF THE ABOVE FACTS, I HOLD THAT NOTICE /S 148 DATED 14/3/2013 IS INVALID. THE RE-ASSESSMENT ORDER DATED 21/01/2014 COMPLETED IN PURSUANCE TO AN INVALID NOTICE U/S 148 DATED 14/3/2013 IS ALS O INVALID AND THE SAME IS REQUIRED TO BE QUASHED. ITA NO. 1432/AHD/2015 ITO VS. SAMYAK INFOTECH PVT LTD ASSESSMENT YEAR: 2008-09 PAGE 4 OF 5 4. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APP EAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACTU AL POSITION, AS VERY WELL DOCUMENTED IN THE ORDERS OF THE AUTHORITIES BELOW, THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED ON 14.03.2013 WHICH WAS WELL WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND IT WAS THUS NOT REAL LY REQUIRED OF THE ASSESSING OFFICER TO DEMONSTRATE ASSESSEES FAILURE IN TRUE A ND FULL DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE CIT(A) WAS THUS CLEARLY SWAYED BY IRRELEVANT CONSIDERATIONS. WE, THEREFORE, VACATE THE CONCLUSI ONS ARRIVED AT BY THE CIT(A) ON THIS POINT. 7. IN THE RESULT, GROUND NO.1 IS ALLOWED. 8. IN GROUND NO.2, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE:- WHETHER THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S) IS RIGHT IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS ENTITLED F OR CLAIM OF DEDUCTION U/S 10B OF THE ACT. 9. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS I SSUE IS COVERED, IN FAVOUR OF THE ASSESSEE, BY A SERIES OF BINDING JUDICIAL PRECEDENT S INCLUDING BY HONBLE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE O F PCIT VS. ZEALOUS WEB TECHNOLOGIES [(2016) 68 TAXMANN.COM 379 (GUJ.)] AND BY AHMEDABAD C BENCH DECISION IN THE CASE OF ITO VS. MEDNAUTIX OUTSOURCI NG PVT LTD AND VICE VERSA (ITA NOS. 617-619/AHD/2015; CO NOS. 65-67/AHD/2015; ORDE R DATED 05.09.2017). ONCE IT IS NOT IN DISPUTE, AS THE POSITION IS BEFORE US, TH AT CONCLUSIONS ARRIVED AT BY THE CIT(A) ARE IN HARMONY WITH THE BINDING JUDICIAL PRE CEDENTS, WE SEE NO REASONS TO INTERFERE IN THE MATTER. THE ORDER OF THE CIT(A), GRANTING RELIEF ON MERITS, IS CONFIRMED AND APPROVED. IN EFFECT THUS OUR REVERSI NG THE ORDER OF THE CIT(A) ON THE REOPENING ISSUE IS OF NO PRACTICAL USE TO THE APPEL LANT, AND THE SUCCESS ON THAT POINT ENDS UP BEING A HOLLOW SUCCESS. THE RELIEF GRANTED TO THE ASSESSEE ON MERITS WAS JUSTIFIED. 10. GROUND NO. 2 IS THUS DISMISSED. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 13 TH DAY OF FEBRUARY, 2018. SD/- SD/- S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 13 TH DAY OF FEBRUARY, 2018 **BT ITA NO. 1432/AHD/2015 ITO VS. SAMYAK INFOTECH PVT LTD ASSESSMENT YEAR: 2008-09 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION:.....ORDER PREPARED AS PER FIV E PAGES MANUSCRIPT OF HONBLE AM, WHICH IS ATTACHED HEREWITH....13.02.2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ... 13.02.2018........ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 13.02.2018. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: ... . 13.02.2018.... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 13.02.2018.... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 8. DATE OF DESPATCH OF THE ORDER