THE SOUTH EASTERN COAL FIELDS LTD., BILASPUR, BILASPUR(CG) V. THE DY. COMMISSIONER OF INCOME TAX,CIRCLE , 1(1)BILASPUR, BILASPUR(CG)

ITA 161/BIL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9482 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: AJIT KORDE SHRI VIVEK RUIA; ANKIT AGRAWAL A RS
• Keywords: Invalid notice; Business expenditure; Period of limitation; Time period of passing order; Reason to believe; Set aside
• Section: 143(3); 250; 119; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI N. K. CHOUDHRY, JUDICIAL MEMBER ./ I.T.A. NO. 161/RPR/2017) ( [ [ / ASSESSMENT YEAR : 2008-09) SOUTH EASTERN COALFIELDS LTD. DIRECTOR (FINANCE), S.E.C.L. SEEPAT ROAD, BILASPUR (CG), PIN: 495006 / VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), BILASPUR INCOME TAX OFFICE, MAHIMA COMPLEX, VYAPAR VIHAR, BILASPUR(CG) PIN: 495001 ./ ./PAN/GIR NO. : AADCS2066E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AJIT KORDE, SHRI VIVEK RUIA & SHRI ANKIT AGRAWAL, A.RS. / RESPONDENT BY : SHRI R. K. SINGH, CIT.DR / DATE OF HEARING 28/07/2021 / DATE OF PRONOUNCEMENT 30/07/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), BILASPUR (CIT(A) IN SHORT), DATED 13.02.2015 ARISING IN THE ASSESSMENT ORDER DATED 07.01.2015 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2008-09. ITA NO. 161/RPR/2017 (SECL VS. DCIT) A.Y. 2008-09 - 2 - 2. FEW FACTS REQUIRED TO BE NOTED TO ADDRESS THE POINT IN ISSUE. IT IS THE CASE OF THE ASSESSEE THAT NOTICE UNDER S.148 OF THE ACT WAS ISSUED ON 15 TH MARCH, 2014 FOR A.Y. 2008-09 IN QUESTION. THE NOTICE THUS HAS BEEN ISSUED AFTER 4 YEARS FROM THE END OF A.Y. 2008-09. THE ASSESSMENT WAS PREVIOUSLY COMPLETED UNDER S.143(3) OF THE ACT ON 31.12.2010. IT IS THUS THE CASE OF THE ASSESSEE THAT THE ACTION OF THE A.O. FOR ASSUMPTION OF JURISDICTION UNDER S.147 OF THE ACT REQUIRES TO BE TESTED ON THE TOUCHSTONE OF THE 1 ST PROVISO TO SECTION 147 OF THE ACT IN EQUAL MEASURE, IN ADDITION TO THE REQUIREMENT LAID DOWN IN THE MAIN PROVISION THEREOF. IT WAS POINTED OUT THAT THE LEGAL SUBMISSIONS MADE FOR LACK OF ASSUMPTION OF JURISDICTION IS IDENTICAL TO THE SUBMISSIONS MADE IN ITA NOS. 380, 381, 399 & 400/RPR/2014 CONCERNING A.YS. 2006-07 & 2007-08. IN THE ALTERNATIVE, IT WAS ALSO POINTED OUT THAT ON MERITS, THE ASSESSEE IS ENTITLED TO DEDUCTION TOWARDS PROVISION FOR LEAVE ENCASHMENT TO THE EXTENT OF ACTUAL PAYMENTS MADE IN THE SUBSEQUENT YEARS IN THE RESPECTIVE ASSESSMENT YEARS IN ACCORDANCE WITH LAW FOR WHICH SUITABLE DIRECTIONS MAY BE GIVEN TO AO IN CASE THE REOPENING IS FOUND TO BE JUSTIFIED BY THE TRIBUNAL FOR ANY REASON. 3. BEFORE WE PROCEED TO DEAL WITH THE CHALLENGE TO JURISDICTION UNDER S.147 OF THE ACT, IT WILL BE APT TO REPRODUCE REASONS RECORDED HEREUNDER FOR EASY REFERENCE:- REASONS RECORDED U/S 148(2) OF I.T. ACT, 1961 FOR ISSUE OF NOTICE U/S 148 OF I.T. ACT 1961 PERUSAL OF THE AUDITED ACCOUNT REVEALS THAT ASSESSEE HAS CLAIMED PROVISIONS FOR LEAVE ENCASHMENT AMOUNTING TO RS.2328.94 LAKHS FOR THE YEAR UNDER CONSIDERATION AS ADMISSIBLE BUSINESS EXPENDITURE. THE PROVISIONS OF SECTION 43B(F) IN THIS REGARD SPEAKS AS UNDER:- NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF ITA NO. 161/RPR/2017 (SECL VS. DCIT) A.Y. 2008-09 - 3 - (F) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDITS OF HIS EMPLOYEE, SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUM IS ACTUALLY PAID BY HIM . IN VIEW OF THE ABOVE PROVISION, ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF RS. 2328.94 LAKHS ON ACCOUNT OF PROVISION OF LEAVE ENCASHMENT. THUS I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX ON THE ACCOUNT OF RS. 2328.94 LAKHS HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISION OF SECTION 147 OF THE I.T. ACT, 1961. TO ASSESS THE ESCAPED INCOME, NOTICE U/S 148 IS REQUIRED TO BE ISSUED. 4. THE ISSUE BEING IDENTICAL TO THE APPEALS IN ITA NOS. 380, 381, 399 & 400/RPR/2014 CONCERNING A.YS. 2006-07 & 2007-08 ORDER DATED 29.07.2021, IT MAY BE APPROPRIATE TO REPRODUCE THE OPERATIVE PARA OF THE AFORESAID ORDER. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE REASONS RECORDED AND OTHER RELEVANT MATERIALS REFERRED BEFORE US. THE ASSESSEE HAS CHALLENGED THE JURISDICTION USURPED BY THE AO UNDER S.147 OF THE ACT INTER ALIA ON THE GROUND THAT THE EMBARGO PLACED BY THE 1ST PROVISO TO SECTION 147 OF THE ACT HAS NOT BEEN MET AND THEREFORE, THE ACTION TAKEN UNDER S.147 OF THE ACT IS BEYOND THE LIMITATION PERIOD PRESCRIBED. WE OBSERVE THAT RELEVANT ASSESSMENT YEAR IS 2006-07 AND THE ORIGINAL ASSESSMENT WAS DULY COMPLETED UNDER S.143(3) OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR PREVIOUSLY. WE FIND THAT THE NOTICE UNDER S.148 OF THE ACT WAS ISSUED ON 01.03.2013 I.E. AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THUS, THE ACTION OF THE AO UNDER S.147 OF THE ACT IS REQUIRED TO BE TESTED ON THE TOUCHSTONE OF STRINGENT CONDITIONS PLACED UNDER 1ST PROVISO TO SECTION 147 OF THE ACT IN ADDITION TO SHACKLES PLACED UNDER MAIN PROVISIONS THEREOF. IN THE AFORESAID FACTUAL BACKGROUND, WE PERUSED THE REASONS RECORDED BELOW. IT WILL BE APT TO REPRODUCE REASONS RECORDED HEREUNDER FOR EASY REFERENCE:- REASONS RECORDED U/S 148(2) OF I.T. ACT, 1961 FOR ISSUE OF NOTICE U/S 148 OF I.T. ACT 1961 PERUSAL OF THE AUDITED ACCOUNT REVEALS THAT ASSESSEE HAS CLAIMED PROVISIONS FOR LEAVE ENCASHMENT AMOUNTING TO RS.577.92 LAKHS FOR THE YEAR UNDER CONSIDERATION AS ADMISSIBLE BUSINESS EXPENDITURE. ITA NO. 161/RPR/2017 (SECL VS. DCIT) A.Y. 2008-09 - 4 - THE PROVISIONS OF SECTION 43B(F) IN THIS REGARD SPEAKS AS UNDER:- NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF (F) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDITS OF HIS EMPLOYEE, SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUM IS ACTUALLY PAID BY HIM . IN VIEW OF THE ABOVE PROVISION, ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF RS. 577.92 LAKHS ON ACCOUNT OF PROVISION OF LEAVE ENCASHMENT. THUS I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX ON THE AMOUNT OF RS. 577.92 LAKHS HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISION OF SECTION 147 OF THE I.T. ACT, 1961. TO ASSESS THE ESCAPED INCOME, NOTICE U/S 148 IS REQUIRED TO BE ISSUED. 7.1 ON A BARE PERUSAL, WE FIND CONSPICUOUS ABSENCE OF ANY ALLEGATION THAT ANY INCOME CHARGEABLE TO TAX AS ESCAPED ASSESSMENT BY THE REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THE ABSENCE OF SUCH ALLEGATIONS, THE JURISDICTION ASSUMED UNDER S.148 OF THE ACT TO REOPEN A COMPLETED ASSESSMENT IS CLEARLY VOID AB INITIO AND CONSEQUENTLY, ASSESSMENT ORDER IS BAD IN LAW. WE DRAW SUPPORT FOR THIS PROPOSITION FROM THE FOLLOWING DECISIONS: (A) CIT V/S. FORAMER FRANCE (264 ITR 566)(SC) (B) HINDUSTAN LEVER LIMITED V/S. R.B.WADKAR (268 ITR 332)(BOM) (C) MERCURY TRAVELS LIMITED . V/S. DY. CIT(258 ITR 533)(CAL) (D) JSRS UDYOG LIMITED & ORS .V/S ITO(313 ITR 321(DEL) (E) BOMBAY STOCK EXCHANGE LTD.V/S. DDIT(E)(361 ITR 160)(BOM) (F) GRINDWELL NORTON LTD V ACIT (2004) 267 ITR 673 (BOM) (G) SHRIRAM FOUNDRY V DCIT (2012) 350 ITR 115 (BOM) (H) SOUND CASTING PVT. LTD. V DCIT (2012) 250 CTR 119 (BOM) (I) VOLTAS LTD V ACIT (2012) 70 DTR 433 (BOM) 7.2 WE SIMULTANEOUSLY NOTICE THAT THERE IS NO AVERMENT TO THE EFFECT AS TO WHAT MATERIAL FACTS NECESSARY FOR ASSESSMENT WERE NOT DISCLOSED BY THE ASSESSEE IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS FULLY AS WELL AS TRULY. THE REASONS BEING JUSTICIABLE, THE AO IS EXPECTED TO RECORD A FINDING TO THIS EFFECT IN THE REASONS RECORDED ITSELF. THE AO HAS FAILED ON THIS SCORE. THUS, THE REASONS RECORDED WHEN SEEN ON STANDALONE BASIS DO NOT PASS THE TESTS OF BASIC REQUIREMENT FOR ASSUMPTION OF JURISDICTION UNDER S.147 OF THE ACT. THE NOTICE ISSUED FOR REOPENING A COMPLETED ASSESSMENT ON THE BASIS OF SUCH REASONS, IS THUS, TIME BARRED AND MERGE IN VOID. THE RE-ASSESSMENT ORDER FRAMED ON THE ITA NO. 161/RPR/2017 (SECL VS. DCIT) A.Y. 2008-09 - 5 - BASIS OF A TIME BARRED NOTICE, THUS, CANNOT BE COUNTENANCED IN LAW. HENCE, WE FIND MERIT IN THE GROUND RAISED BY THE ASSESSEE TOWARDS LACK OF JURISDICTION UNDER S.147 OF THE ACT. 7.3 CONSEQUENTLY, IN OUR CONSIDERED OPINION, THE AO HAS MIS- DIRECTED HIMSELF IN REOPENING THE COMPLETED ASSESSMENT WITHOUT LEGAL FOUNDATION. IN THIS VIEW OF THE MATTER, THE IMPUGNED ASSESSMENT UNDER S.143(3) R.W.S. 147 OF THE ACT IS LIABLE TO BE SET ASIDE AND CANCELLED. WE DO SO ACCORDINGLY. 7.4 AS WE HAVE HELD THAT NOTICE UNDER S.147/148 OF THE ACT IS NOT SUSTAINABLE IN LAW, WE DO NOT CONSIDER IT NECESSARY TO GO INTO ALL OTHER LEGAL GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL TO SUPPORT THE PLEA FOR LACK OF JURISDICTION AND ALSO OTHER GROUNDS ON MERITS. SIMILARLY, THE GROUNDS RAISED BY THE REVENUE ARISING FROM AN UN-SUSTAINABLE RE- ASSESSMENT ORDER ARE AUTOMATICALLY RENDERED INFRUCTUOUS AND ACADEMIC AND THEREFORE NOT ADJUDICATED UPON. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE AFORESAID ORDER, THE CO-ORDINATE BENCH HAS FOUND THAT THE ISSUE OF NOTICE UNDER S.148 OF THE ACT IS WITHOUT LEGAL FOUNDATION IN THE IDENTICAL FACTS AND CIRCUMSTANCES. THE PROCESS OF REASONING ADOPTED IN A.YS. 2006-07 & 2007-08 (SUPRA), SHALL THUS APPLY MUTATIS MUTANDIS TO THE INSTANT APPEAL CONCERNING A.Y. 2008-09. IN PARITY, THE NOTICE UNDER S.148 R.W.S. 147 OF THE ACT IS QUASHED AND THE CONSEQUENT RE-ASSESSMENT ORDER DATED 07.01.2015 PASSED WITH THE AID OF SECTION 147 OF THE ACT IS SET ASIDE AND CANCELLED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. SD/- SD/- (N. K. CHOUDHRY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAIPUR: DATED 30/07/2021 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE THIS ORDER PRONOUNCED IN OPEN COURT ON 30/07/2021 ITA NO. 161/RPR/2017 (SECL VS. DCIT) A.Y. 2008-09 - 6 - 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, RAIPUR 6. [ / GUARD FILE. BY ORDER , SR. PRIVATE SECRETARY ITAT , RAIPUR (ON TOUR)