The Income Tax Officer Ward-3, Akola V. The Akola Ginning and Pressing Factory Limited, Akola

ITA 166/NAG/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1953 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 14-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K DAHARIA
• Assessee Lawyers: RAJESH V LOYA
• Keywords: Audit objection
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 166/NAG/2011 / ASSESSMENT YEAR 2003-04 THE INCOME TAX OFFICER, WARD-3, AKOLA. VS. THE AKOT GINNING & PRESSING FACTORY LTD., ANJANGAON ROAD, AKOT. PAN: AAAAT 0874 G ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY : SHRI A.K. DAHARIA ASSESSEE BY : SHRI RAJESH V. LOYA ! ' #$% / DATE OF HEARING : 23-01-2013 &' ' #$% / DATE OF PRONOUNCEMENT : 23-01-2013 () / O R D E R PER RAJENDRA, AM THE ASSESSING OFFICER (AO) HAS FILED THIS APPEAL AG AINST THE ORDER DT. 07-09-2011 OF THE CIT(A)-I, NAGPUR RAISING FOL LOWING GROUNDS OF APPEAL: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A), RELYING UPON THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF I NDIAN EASTERN NEWSPAPER SOCIETY VS.CIT 119 ITR 996, ERRED IN HOLDING THAT T HE REOPENING U/S.147 WAS DEFECTIVE AND BAD IN LAW. THE LD. CIT(A) HAS NOT AP PRECIATED THE FACT THAT THE HONBLE SUPREME COURT JUDGMENT NOT APPLICABLE TO TH E AMENDED PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, 1961. 2.THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE REASONS RECORDED BY THE AO HAD NO ADVERSE IMPACT ON THE OUTCOME OF THE ASSE SSMENT. 3.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO THE DEDUC TION U/S.80P(2)(E) OF THE INCOME TAX ACT, 1961 IN RESPECT OF THE ALLEGED RENTAL INCO ME COMPUTED @ 50% IN RESPECT OF GINNING & PRESSING CHARGES RECEIVED / EARNED BY THE ASSESSEE DURING THE YEAR. ITA NO. 166/NAG/2011 THE AKOT GINNING & PRESSING FACTORY LTD., 2 ANY OTHER GROUND OF APPEAL WHICH MAY BE TAKEN AT A LATER STAGE AND OR DURING THE COURSE OF THE HEARING. 2. ASSESSEE, A CO-OPERATIVE SOCIETY, ENGAGED IN THE BU SINESS OF GINNING AND PRESSING OF COTTON, FILED ITS RETURN OF INCOME FOR THE AY 2003-04 ON 31-10-2003 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING EX EMPTION U/S. 80P(2) OF THE INCOME TAX ACT, 1961 (ACT). ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT DETERMINING TOTAL TAXABLE INCOME AT RS. NIL ON 28-02-2005.LATER ON IT WAS NOTICED BY THE AO THAT THE DEDUCTION AMOUNTING TO RS. 47.95 LAKHS I.E., 50 % OF GINNING AND PRESSING CHARGES CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE AS THERE WAS NO SPECIFIC PROVISION IN SECTION 80P(2)(E) REGARDING DEDUCTION OF GINNING AN D PRESSING CHARGES. ASSESSING OFFICER (AO) WAS THE OPINION THAT THERE WERE REASON S TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 47.95 LAKHS HAD ESCAPED ASSESSMENT. HE ISSUED A NOTICE U/S. 148 OF THE ACT ON 19-03-2008 IN RESPONS E TO THE SAID NOTICE, ASSESSEE VIDE ITS LETTER DT. 23-09-2008 SUBMITTED THAT RETURN FIL ED ON 31-10-2003 SHOULD BE TREATED AS RETURN FILED IN RESPONSE TO THE RE-ASSESSMENT NOTIC E. AO FINALISED THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT ON 29-12-2008 DETERMIN ING INCOME OF THE ASSESSEE AT RS. 12.66 LAKHS. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, FAA HELD THAT RE-OPENING OF THE MATTER WAS NOT VALID. AS PER THE FAA, AUTHORISED REPRESENTATIVE (AR) OF THE APPELLANT HAD TAKEN INSPECTION OF THE R ECORD FROM THE ITO WARD-3, AKOLA, THAT IT CAME TO THE LIGHT OF THE AR THAT AUDIT OBJE CTION-WITH REGARD TO AVAILABILITY OF DEDUCTION U/S. 80P(2)(E) WAS RAISED BY THE REVENUE AUDIT PARTY (RAP), THAT AO HAD NOT ACCEPTED THE AUDIT OBJECTION, THAT NOTICE U/S. 148 OF THE ACT WAS ISSUED ON SUBSEQU -ENT DIRECTION FROM THE HIGHER AUTHORITIES. FAA PE RUSED THE RECORDS OF THE CASE AND FOUND THAT OBJECTION WAS RAISED BY THE RAP ON 17-10 -2006 AND THAT AO HAD NOT ACCEPTED THE AUDIT OBJECTIONS RAISED BY RAP. RELYI NG UPON THE JUDGMENTS OF EASTERN NEWSPAPER SOCIETY (119 ITR 996), ADANI EXPORTS DELI VERED BY THE (240 ITR 224); TRANSWORLD INTERNATIONAL (273 ITR 242); INVESTMENT MANAGERS LTD., (298 ITR 32) AND PURITY TEXTILES (P) LTD (325 ITR 459) DELIVERED BY THE HONBLE SUPREME COURT, HONBLE HIGH COURTS OF GUJRAT, DELHI AND BOMBAY RES PECTIVELY, FAA HELD THAT REOPENING WAS NOT PERMISSIBLE, IF A NOTICE UNDER 14 8 WAS BASED SOLELY ON AN AUDIT OBJECTION. HE FURTHER HELD THAT AO HAD PROCEEDED O N MIS-CONCEPTION THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF 50% GINNING AND PRESSING C HARGES, THAT ASSESSEE HAD CLAIMED DEDUCTION U/S. 80P(2)(E) OF THE ACT ON GODO WN-RENT, THAT THE SAID CLAIM WAS BASED ON THE ORDER DT.14-02-1994 OF THE CIT(A) FOR THE AY 1991-92. 4. DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE OR DER OF THE AO. AR SUBMITTED THAT ORDER OF THE CIT(A) OF 1991-92 HAD B ECOME FINAL, THAT DEPARTMENT HAD NOT CHALLENGED THE SAID ORDER BEFORE THE ITAT, THAT ORDER OF THE FAA HAD BEEN FOLLOWED REGULARLY BY THE ASSESSEE AND THE DEPARTME NT IN SUBSEQUENT AYS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATTER. IT IS A FACT THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF TH E ACT ON 28.02.2005 AND RE-OPENING WAS DONE WITHIN A PERIOD OF FOUR YEARS. SO, THE ISSUE TO BE DECIDED BEFORE US AS WHETHER THE REOPENING WAS AS PER THE PROVISIO NS OF LAW? WE ARE OF THE CONSIDERED VIEW THAT RE-OPENING OF A COMPLETED ASSE SSMENT SHOULD NOT BE UNDERTAKEN ONLY ON THE BASIS OF OBJECTION RAISED BY AUDIT PART IES. THE CLEAR MANDATE TO THE AUDIT ITA NO. 166/NAG/2011 THE AKOT GINNING & PRESSING FACTORY LTD., 3 PARTIES IS TO POINT OUT THE ARITHMETICAL MISTAKES I N AN ASSESSMENT ORDER. INTERPRETATION OF LEGAL PROVISIONS IS BEYOND THE PURVIEW OF THE AU DIT PARTIES. IN THE CASE UNDER CONSIDERATION, IT IS FOUND THAT AO HAD NOT ACCEPTED THE AUDIT OBJECTION RAISED BY THE AUDIT PARTY AND HAD RE-OPENED THE ASSESSMENT ONLY A FTER GETTING INSTRUCTIONS FROM THE HIGHER AUTHORITIES. AS PER OUR STANDING, AO IS THE ONLY AUTHORITY TO DECIDE THE TAX LIABILITY OF AN ASSESSEE ON THE BASIS OF MATERIAL A VAILABLE TO HIM. IF ON THE DIRECTION OF THE HIGHER AUTHORITIES, HE DECIDES THE ISSUE IN A P ARTICULAR MANNER NON-APPLICATION OF MIND ON THE PART OF THE AO BECOMES EVIDENT. COURTS ARE OF THE OPINION THAT FIRST AND FOREMOST THING IN FASTENING TAX LIABILITY IS APPLIC ATION OF MIND BY THE AO. IN THE CASE UNDER CONSIDERATION, WE FIND THAT RE-ASSESSMENT WAS RESULT OF AN AUDIT OBJECTION RAISED BY THE RAP. IN OUR OPINION, IT WAS NOT A FIT CASE WHERE IT CAN BE HELD THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT.FAA IN HIS ORDE R HAS RELIED UPON FIVE CASES, INCLUDING TWO CASES OF THE JURISDICTIONAL HIGH COUR T (INVESTMENT MANAGERS LTD., (298 ITR 32) AND PURITY TEXTILES (P) LTD (325 ITR 459) W HICH DEAL WITH THE ISSUE UNDER CONSIDERATION. FAA HAS NOT ONLY RELIED UPON THE O RDER OF THE HONBLE SUPREME COURT, AS ALLEGED IN THE GROUNDS OF APPEAL, LATER C ASE LAWS DEALING WITH THE ISSUE IN QUESTION HAVE ALSO BEEN DISCUSSED AND RELIED UPON. THEREFORE, CONFIRMING THE ORDER OF THE AO, WE HOLD THAT RE-OPENING WAS BAD IN LAW. GROUND NO.1 IS DECIDED AGAINST THE AO. 6. GROUND NO.3 IS ABOUT DEDUCTION ALLOWED U/S. 80P(2) (E) OF THE ACT IN RESPECT OF ALLEGED RENTAL INCOME. FAA HAS STATED THAT ISSUE O F ENTITLEMENT OF 80P DEDUCTION @50% HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE THEN FAA FOR THE AY 1991-92FAA HAS CLEARLY MENTIONED THAT ORDER OF T HE THEN FAA WAS NOT CHALLENGED BEFORE THE TRIBUNAL AND THAT DEPARTMENT WAS FOLLOWING THE SAME IN THE SUBSEQUENT AYS. IN OUR OPINION, CONSIDERING THESE FACTS, ORDER OF THE AO IS AS PER THE PROVISIONS OF THE LAW AND NEEDS NO INTERFERENCE FRO M OUR SIDE. GROUND NO.3 IS DECIDED AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISS ED ON MERITS ALSO. * +, - -$ / (01 ' ! + 23 ' # 45. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 23 RD DAY OF JANUARY, 2013 +7! 0,# ! - 789 / 23 $ 2013 ' () &':# ; . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) (, / JUDICIAL MEMBER % (, / ACCOUNTANT MEMBER +7! MUMBAI, ;( DATE: 23 RD JANUARY, 2013 TNMM ITA NO. 166/NAG/2011 THE AKOT GINNING & PRESSING FACTORY LTD., 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE :# # //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT