M/s Roy & Co., Kolkata V. I.T.O Wd - 28(2),kolkata., Kolkata

ITA 166/KOL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83120 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 01-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2013
• Court: TRIBUNAL
• Department Lawyers: MD GAYALUDDIN ANSARI JCITSR
• Assessee Lawyers: K M ROY
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH S MC, KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM ] ITA NO.166/KOL/2013 ASSESSMENT YEAR : 2005-06 ( APPELLANT ) (RESPONDENT) M/S. ROY & CO. . -VERSUS- I.T.O., WARD-28(2), KOLKATA KOLKATA (PAN:AADFR 2985 G) FOR THE APPELLANT: SHRI K.M.ROY, FCA FOR THE RESPONDENT: MD.GAYALUDDIN ANSARI, JCIT(SR.DR) DATE OF HEARING : 18.08.2014. DATE OF PRONOUNCEMENT : 05.09.2014. ORDER THIS APPEAL OF ASSESSEE IS ARISING OUT OF O RDER OF CIT(A)-XIV, KOLKATA IN APPEAL NO.500/CIT(A)-XIV/07-08 DATED 21.11.2012. ASSESSMEN T WAS FRAMED BY I.T.O. WARD-28 (2), KOLKATA U/S 143(3) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR A.Y. 2005-06 VIDE ITS ORDER DATED 24.2.2007. 2. AT THE OUTSET, LD. COUNSEL FOR ASSESSEE STATED THAT THE INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT BY ISSUANCE OF NOTIC E U/S 148 OF THE ACT IS BAD IN LAW FOR THE REASON THAT THE TIME FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT WAS VERY MUCH AVAILABLE AT THE TIME OF INITIATION OF RE-ASSESSMEN T PROCEEDINGS FOR THE REASON THAT VALIDLY FILED RETURN OF INCOME IS PENDING ASSESSMEN T AND PROCEEDINGS HAVE NOT BEEN TERMINATED OR COME TO AN END. FOR THIS LD. COUNSEL FOR ASSESSEE FILED COPY OF JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS QUATALYS SOFTWARE TECHNOLOGIES LTD. [2008] 208 ITR 249 (MAD). WHEN THIS IS CONFRON TED TO THE SR. DR HE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE RELEVANT ASSESSMENT YEAR INVOLVED IS 2005-06 ITA NO.166/KOL/2013 M/S.ROY & CO. A.YR.2005-06 2 AND ASSESSEE HAS FILED ITS RETURN OF INCOME FOR A.Y R.2005-06 ON 06.10.2005 WITHIN THE TIME PRESCRIBED U/S 139(1) OF THE ACT. THE AO ISSUE D NOTICE U/S 148 OF THE ACT DATED 24.07.2006. ADMITTEDLY THERE IS TIME LEFT FOR ISSUA NCE OF NOTICE U/S 143(2) OF THE ACT I.E. 12 MONTHS FROM THE DATE OF FILING OF RETURN OF INCOME AND IN THE PRESENT CASE THE RETURN WAS FILED ON 06.10.2005 AND NOTICE U/S 143(2 ) OF THE ACT CAN BE ISSUED BY THE REVENUE UPTO 31.10.2006. IN VIEW OF THE ABOVE FACTS I FIND THAT THE ISSUE IS FULLY COVERED BY THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS QATALYS SOFTWARE TECHNOLOGIES LTD (SUPRA) WHEREIN I T IS HELD AS UNDER :- THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWAR E EXPORT. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE-COMPANY HAS FILED ITS RETURN OF INCOME ON NOVEMBER 13, 2003, ADMITTING A TOTAL INCOME OF RS. 2,34,810 AFTER CLAIMING DEDUCTION UNDER SECTION 10A IN A SUM OF RS. 3,09,38 2. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) ON DECEMBER 20, 2003 . THEREAFTER, NOTICE UNDER SECTION 148 WAS ISSUED ON OCTOBER 5, 2004. THE ASSE SSMENT WAS REOPENED UNDER SECTION 147 AS THE ASSESSING OFFICER WAS OF THE VIE W THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AS THE ASSESSEE HAS INCLUDED INTEREST RECEIPT FROM BANK IN A SUM OF RS. 17,09,661 IN THE PROFITS OF BUSINESS ELI GIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 143(2) AND AFTER CALLING, FOR FURTHER DETAILS AND C LARIFICATIONS, HAS COMPLETED THE ASSESSMENT ON DECEMBER 23, 2005, WHEREBY HE HAS COM PUTED THE BUSINESS LOSS AT RS. 3,46,544 IN RESPECT OF THE UNIT ELIGIBLE FOR DE DUCTION UNDER SECTION 10A AND BROUGHT TO TAX THE INTEREST INCOME MENTIONED ABOVE AS 'INCOME FROM OTHER SOURCES'. THE APPEAL AGAINST THE ORDER AT THE INSTANCE OF THE ASSESSEE TO THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT SUCCESSFUL, THOUGH THE POINT OF REOPENING OF ASSESSMENT HAS BEEN TAKEN BEFORE HIM. THE ASSESSEE CARRIED THE MATTER ON FURTHER APPEAL TO THE TRIBUNAL. THE TRIBUNAL HAS TAKEN THE ISSUE AS TO WHETHER THE ASSESSING OFFICER CAN TAKE ACTION UNDER SECTION 148 WHEN THE TIME FOR ISSUING NOTICE UNDER SECTION 143(2) HAS NOT EXPIRED. AFTER HEARING THE P ARTIES, THE TRIBUNAL HELD IN FAVOUR OF THE ASSESSEE ON THE ISSUE OF REOPENING OF THE AS SESSMENT WHEN THE TIME FOR ISSUING NOTICE UNDER SECTION 143(2) HAD NOT EXPIRED, BY FOL LOWING THE DECISION OF THIS COURT IN THE CASE OF CIT VS. K.M. PACHAYAPPAN [2008] 304 ITR 264 (MAD) IN T.C.A. NO. 870 OF 2007, DATED JULY 4, 2007, WHEREIN THIS COURT HAS HELD THAT NO REASSESSMENT PROCEEDING COULD BE INITIATED SO LONG AS THE ASSESS MENT PROCEEDINGS PENDING ON THE BASIS OF THE RETURN ALREADY FILED ARE NOT TERMINATE D. THE REVENUE, AGGRIEVED OVER THAT PORTION OF THE ORDER, FILED THE PRESENT APPEAL BY FORMULATING THE FOLLOWING QUESTIONS OF LAW: '1. WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT REASSESSMENT PROCEEDINGS ARE NOT VALID SINCE THE ASSESSING OFFICER IS BARRED IN INITIATING THE PROCEEDINGS UNDER SECTION 148 WHEN THE TIME FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) HAD NOT EXPIRED? 2. WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE APPEAL BY THE REVENUE IS INFRUCTUO US?' ITA NO.166/KOL/2013 M/S.ROY & CO. A.YR.2005-06 3 WE HAVE HEARD THE ARGUMENT OF THE LEARNED COUNSEL F OR THE REVENUE, WHO SUBMITTED THAT THE ISSUE HAS ALREADY BEEN DECIDED AGAINST THE REVENUE BY THE ABOVE CITED JUDGMENT OF THE DIVISION BENCH OF THIS COURT. WE HAVE ALSO PERUSED THE ABOVE REFERRED JUDGMENT OF THE DIVISION BENCH OF THIS COURT DATED JULY 4, 2007, WHEREIN IT IS HELD AS FOL LOWS: 'APPLYING THE PRINCIPLES ENUNCIATED IN THE JUDGMENT S OF THE SUPREME COURT AS WELL AS THE DELHI HIGH COURT, CITED SUPRA, THE TRIBUNAL IS RIGHT IN COMING TO A CONCLUSION THAT NO ACTION COULD BE INITIATED UNDER SECTION 147 OF THE ACT, WHEN THERE IS A PENDENCY OF THE RETURN BEFORE THE ASSESSING OFFICER . THE REASONS GIVEN BY THE TRIBUNAL ARE BASED ON VALID MATERIALS AND EVIDENCE AND WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE TRIBUNAL SO AS TO WA RRANT INTERFERENCE.' 4. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THE HONBLE MADRAS HIGH COURT, I FIND NO REASON TO DEVI ATE FROM THE SAME. REVENUE COULD NOT BRING ANY ADVERSE JUDGMENT. HENCE THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.09.2014. SD/- [ MAHAVIR SINGH ] JUDICIAL MEMBER DATE: 5 TH SEPTEMBER,2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S. ROY & CO., 124A, CIRCULAR GARDEN REACH ROAD, K OLKATA-700023. 2 THE I.T.O.-WARD-28 (2), KOLKATA. 3. THE CIT, 4. THE CIT(A)-XIV, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES