Assistant Commissioner of Income-tax, Satara Circle, Satara V. Pratapgad Sahakari Sakhar Karkhana Ltd, Satara

ITA 1438/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8139 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 22-01-2020
• Assessment Year: 2005-2006
• Appeal Filed On: 27-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT DEORAJ SH E G AONKAR
• Keywords: Revision of order; Depreciation; Difference of opinion; Competent authority; Change of opinion
• Section: 143(3); 43; 13; 148; 263; 63; 6

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.1438/PUN/2019 / ASSESSMENT YEAR : 2005-06 THE ASST. COMMISSIONER OF INCOME - TAX, SATARA CIRCLE, SATARA. . / APPELLANT V/S PRATAPGAD SAHAKARI SAKHAR KARKHANA LTD., AT/POST SANGAON KARANDOSHI, TAL JAOLI, DIST. SATARA 415514. PAN : AAAAP1669D. . / RESPONDENT ASSESSEE BY : NONE. REVENUE BY : SHRI BHARAT DEORAJ SHEGAONKAR. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 13, PUNE DATED 27.06 .2019 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINE SS OF MANUFACTURING OF SUGAR AND RUNNING PETROL PUMP. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 30.10.2005 DECLARING T OTAL LOSS / DATE OF HEARING : 22.01.2020 / DATE OF PRONOUNCEMENT: 23.01.2020 2 OF RS.6,11,13,286/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER D ATED 08.08.2007 AND THE TOTAL LOSS WAS DETERMINED AT RS.6,11,13 ,286/-. THEREAFTER, NOTICE U/S 148 OF THE ACT WAS ISSUED ON 22.03 .2010 WHICH WAS SERVED ON THE ASSESSEE. TO WHICH ASSESSEE INTER-A LIA SUBMITTED THAT THE RETURN OF INCOME FILED BY THE ASSESSEE ON 30.10.2 005 BE TREATED AS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/ S 148 OF THE ACT. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AN D CONSEQUENTLY, ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VID E ORDER DATED 03.12.2010 AND THE TOTAL LOSS WAS DETERMINED AT RS.15,70,893/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 27.06.2019 (IN APPEAL NO.PN/CIT(A)-13/DCIT SATARA CIRCLE, SATARA/203/2010-11) H ELD THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE AC T TO BE BAD-IN- LAW AND THEREFORE, DIRECTED THE AO TO CANCEL IT. THE RE LEVANT OBSERVATIONS AND FINDINGS OF LD.CIT(A) ARE AS UNDER : 2 . 4 I HAVE C ONSIDER E D TH E FACTS OF TH E CASE. IN THIS CAS E , A N ASS E SSM E NT OR D E R U/S 14 3 (3) W A S PASSED ON 08.08 . 2007 DETERMINING THE APP E LL A NT 'S TOTA L L O SS A T R S ( - ) 6 ,11,13 ,2 8 6 /- WH E R E IN DEPRECIA T ION LOSS OF R S.5 , 95, 42, 393/- W A S ALLOW E D . TH E R EA FT E R , A NOTICE U/S 263 W A S S ER VE D U PO N T H E A PP E LL A NT B Y TH E CIT- 3, PUN E O N TH E GR O UND TH A T THE A SSESSM E NT O RD ER D ATED 08 . 0 8.2 00 7 WA S E RR O N EO U S A ND PR E JUDICIAL TO TH E I NTER E ST OF T H E REVE NU E. IN R E SPONS E T O SU C H NOTIC E, T H E A PP E LL A NT MADE WRITT E N SUBMISSI ON BE F O R E T H E LD CIT -3, PUN E WH E R EI N T H E AP P E LL A NT SUBMITT ED T H AT DURIN G THE YEAR UND E R CONSIDERATION , THE APPELLANT COULD NOT CRUSH SUG A RC A NE BECAUS E O F TH E NON-AVAIL A BILITY OF THE SAME. HOWEV E R, ITS FACTORY/UNIT WAS WORKING THROUGHOUT OF YEAR INCURR I NG ALL ITS ROUTINE EXPENSES . FURTHER, THE APPELLANT RELI E D UPON VARIOUS CASE LAWS TO SUBSTANTIATE THE FACT THAT A PPELL A NT ' S CLAIM FOR DEPRECIATION CANNOT BE DISALLOWED MERELY ON THE BAS IS TH AT IT DID NOT CARRY OUT MANUFACTURING ACTIVITY DURING THE YEAR. T HE APPELLANT THEN STATED THAT THE SAME WAS BROUGHT TO THE NOTICE OF I TS ASSESSING OFFICER WHO HAD G IVEN DUE CONSIDERATION TO THIS ISSUE AND ASSESSED T HE APPELLANT ' S INCOME THEREOF . THE APPELLANT'S THESE ARGUMENTS WERE ACCEPTED B Y TH E LD CIT-3 , PUN E, WHO, IN TURN, HELD THAT THE GIVEN CASE WA S NOT FIT FOR C A NC E LLATION/ RECTIFICATION. THE RELEVANT PARA OF SAID O RDER U/S 263 DTD 2 2.0 2 .2010 IS REPRODUCED AS HEREUNDER: 3 '7. IN VIEW OF THE ABOVE, IT CANNOT BE SAID THAT TH ERE WERE NO E NQUIRIES I N THI S REGARD CONDUCED BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF TH E A SSES SM E NT ORD E R DT. 08. 08 . 2007 IS R E PRODUC E D AS UND E R: ' CON S IDERING THE FACT THAT THERE WAS NO S UGAR CANE CRUSHING DU R ING TH E Y E AR WH IC H IS THE DOMINANT ACTIVITY OF A SUGAR FACTORY AND TH E RE WAS INC OM E DE C LAR E D FROM THE SALE OF THE STORED SUGAR OF A. Y . 2004-05 AND SMALL QUANTIT Y O F MOLAS SE S AND BAGGASE BESIDES SMALL SAL E IN PETROL PUMP , T HE L OSS D EC LAR ED IN TH E RE TURN OF I N CO M E OF RS . 6 , 11 , 13 , 2 861- I S ASSES S E D F O R T HI S Y EAR . ' 8 . IN VIEW OF THE ABOV E AND CON SI DERING TOTALITY OF FA C T S A N D CI R C UM S TANC E S I T IS H E L D THAT T HI S I S N O T A FIT C A SE FO R CA N CE LLIN G / RECT IFY ING T HE ASSESS M E NT ORD E R U /S 2 6 3 O F I.T. ACT, 1 96 1 .' 2.5 S U BSE QU E N T L Y, TH E AP P E LL A NT WA S I SS U ED NO T ICE U/ S 14 8 O N 22.03.20 1 0 WH I CH WAS FOL L OWE D BY R EASS E S SM E N T PRO CEE DIN G S W H E R EI N TH E A PP E LL ANT WAS ASSE S SE D U /S 1 43 (3) RWS 147 OF T H E ACT D ISA LL O WIN G THE A PP E LL A NT ' S C L AIM FOR DEPREC I ATION LO SS. N OW, AS IT IS C L EAR FR O M T H E A BO VE T H AT O N CE A N O RD ER U /S 263 WAS P AS S ED W H E R E IN IT WAS C L EAR L Y S T A T E D T H AT T H E GIVE N CASE WA S N OT F IT FOR CANCE LL A TIO N / R EC TI F IC A TI O N , T H E N , T H ERE WAS N O Q U E STI O N O F ISSUING NOTICE U / S 148 OF T H E A P PE L LANT . THUS , I AM O F T H E O PIN I ON T H A T BY ISS UIN G NO TICE U/S 148 I N THE ABOVE C I RC UMST A N CE S IS N OT H I N G BUT 'C H ANGE OF O P I N ION' AS HE L D BY T H E H ON'B L E BO MBA Y HI G H C O U RT IN TH E CASE OF SANGHVI SWISS REFILLS PVT LTD VS ACIT (2008) 300 ITR 276 (BOM) A ND H ON'B L E S UPR EME CO U RT IN T H E CASE OF CIT VS KELVINATOR OF INDIA LTD (2010) 320 ITR 561 . T H E R EFO R E, I H O LD TH A T TH E A SS E SSM E NT O RD E R PASSED U/ S 14 3 ( 3 ) R WS 147 IS BA D IN LAW A ND TH ERE F O R E LD AO IS DIR E CT E D T O C ANCEL IT. ACCORDINGLY, I AGREE WITH THE APPELLANT AND ALLOW THIS GROUND OF APPEAL . SINCE THE REOPENING HAS BEEN QUASHED AND DECIDED IN FAVOUR OF THE APPELLANT, ALL THE OTHER GROUNDS OF APPEAL HAVE BECOME ACADEMIC AND HENCE NEED NOT BE ADJUDICATED UPON. 3. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESSEE'S GROUND REGARDING C HANGE OF OPINION, IGNORING THE FACT THAT THE ASSESSMENT HAS BEEN RE-O PENED AFTER OBTAINING THE NECESSARY APPROVAL FROM THE COMPETENT AUTHORITY WHO HAD ALSO RECORDED HIS SATISFACTION BEFORE RE-OPENING TH E ASSESSMENT, AND THEREFORE IT IS A CASE OF FORMATION OF OPINION AND NOT THE MATTER OF CHANGE OF OPINION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN NOT DECIDING ON MERITS OF INADMISSIBILITY OF CLAIM OF DEPRECIATION FOR NOT CARRYING OUT ANY MANUFACTURING ACTIVITY FOR BUSINESS PURPOSE WHEN THE ASSESSEE ITSELF ADMITTED IN THE WRITTEN SU BMISSION DATED 29/11/2009 FURNISHED BEFORE THE A.O. AS DISCUSSED I N PARA 5 OF THE SUBJECT ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF T HE ACT DATED 03/12/2010. 4 3. FOR THESE AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED DESPITE SERVICE OF NOTICE. I THEREFORE PROCEED TO DECIDE THE PRESENT APPEAL BASED O N THE MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. D.R. 5. BEFORE ME, LD. D.R. TOOK US THROUGH THE ORDER OF AO AN D SUPPORTED HIS ORDER. 6. I HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL A VAILABLE ON RECORD. I HAVE FIND THAT LD.CIT(A) AFTER RELYING ON THE D ECISIONS OF HONBLE APEX COURT AND HONBLE BOMBAY HIGH COURT CITED IN HIS ORDER HAS HELD THAT THE ISSUANCE OF NOTICE U/S 148 OF THE ACT WAS CHANGE OF OPINION AND THEREFORE HE HELD THE ASSESSMENT ORDER PASS ED U/S 143(3) R.W.S. 147 OF THE ACT TO BE BAD-IN-LAW. BEFORE ME, REVENUE COULD NOT POINT OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). I THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 23 RD DAY OF JANUARY, 2020. SD /- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 23 RD JANUARY, 2020. YAMINI 5 #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-13, PUNE. PR. CIT-3, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.