The ITO, Ward-4(2), Surat V. M/s. Sahajanand Life Science Pvt.Ltd., Surat

ITA 173/AHD/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6129 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 173/AHD/2012 / ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, WARD-4(2), SURAT VS M/S. SAHAJANAND LIFE SCIENCE PVT LTD (FORMERLY KNOWN AS SAHAJANAND BIO-TECH PVT LTD), SAHAJANAND HOUSE, PARSI STREET, SAIYEDPURA, SURAT 395 003 PAN : AAFCS 8803 D / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI K. MADHUSUDAN, SR DR ASSESSEE BY : NONE / DATE OF HEARING : 18/04/2017 / DATE OF PRONOUNCEMENT: 19/04/2017 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SURAT DATE D 14.09.2011 FOR ASSESSMENT YEAR 2005-06. 2. THE SOLITARY GROUND RAISED BY THE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 74,60,661/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTM ENT. 3. AT THE TIME OF HEARING, NONE APPEARED FOR THE AS SESSEE. HOWEVER, THE FACTS AND PROPOSITION OF THE ASSESSEE ARE CLEAR FRO M THE RECORD; THEREFORE, THE APPEAL IS BEING DECIDED EX-PARTE QUA THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY, ENGAGED IN THE BUSINESS OF MEDICINE AND BIOTECHNOLOGY FOR T HE DISEASES LIKE CANCER, ITA NO. 173/AHD/2012 ITO VS. SAHAJANAND LIFE SCIENCE PVT LTD AY : 2005-06 2 HIV, AIDS ETC. WITH R&D EFFORTS. ASSESSEE FILED RE TURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31.03.2006, DECLARING L OSS OF RS.9,67,248/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON THE INCOME RETURNED ON 31.12.2 007. SUBSEQUENTLY, THE CASE WAS REOPENED BY ISSUING NOTICE UNDER SECTI ON 148 OF THE ACT ON 05.01.2010. DURING THE COURSE OF REASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER STATED THAT THE ASSESSEE-COMPANY HAD CONSTR UCTED ONE BUILDING AT DABHOLI, SURAT. HOWEVER, CIVIL WORK WAS COMPLETED O N 31.03.2005 AT RS.77,35,094/-. THE ASSESSEE HAS SHOWN ONLY RS.2,7 4,433/- AS SALES AND STOCK OF RS.4,26,951/- AND ON THE BALANCE SHEET OF THE ASSESSEE, THE TOTAL VALUE OF SUCH CIVIL WORK WAS RECORDED AT RS.45,90,0 00/-. THE ASSESSING OFFICER OBSERVED THAT, AS THIS WAS THE FIRST YEAR, THE ENTIRE SALES OF RS.77,35,094/- SHOULD HAVE DECLARED AS SALES AND PR OFIT. THUS, HE WAS OF THE OPINION THAT THE INCOME OF RS.74,60,661/- (RS.77,35 ,094 RS.2,74,433) WAS NOT OFFERED FOR TAXATION. THEREFORE, RS.74,60,661/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE TH E LD. CIT(A) WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE RE- OPENING WAS MADE ON THE BASIS OF CHANGE OF OPINION BY THE ASSESSING OFFICER AND ALL THE INFORMATION WAS AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT MA DE BY THE ASSESSING OFFICER. THE RELEVANT OBSERVATIONS OF THE LD. CIT( A) IN THIS REGARD ARE REPRODUCED HERE UNDER:- 2.1 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE EVIDENCES PRODUCED. THE REASONS RECORDED FOR REOPENING WERE THAT THE ASSESSEE COMPANY HAD CONSTRUCTED BUILDING AT DABHOLI, SURAT WITH CIVIL W ORK OF RS.77,35,094/- REFLECTING ON THE ASSET SIDE AND AGAINST THIS RS.45 ,90,000/- HAD ALREADY BEEN RECEIVED BUT SALES HAD NOT BEEN OFFERED: THAT THE E NTIRE SALES OF RS.77,35,094/- SHOULD HAVE BEEN DECLARED AS SALES & PROFIT; AND HE NCE INCOME HAD ESCAPED ASSESSMENT. IT IS SEEN FROM THE NOTICE DATED 13.08 .2007 ISSUED BY THE A.O. ITA NO. 173/AHD/2012 ITO VS. SAHAJANAND LIFE SCIENCE PVT LTD AY : 2005-06 3 AND THE REPLIES OF THE APPELLANT ON 17.08.2007 AND 26.1 1.2007 (ALL DURING ORIGINAL PROCEEDINGS) THAT THIS ISSUE HAD BEEN QUES TIONED BY THE AO AND EXPLAINED TO HIM BY THE APPELLANT, IT HAS TO BE HEL D THAT THE A.O. HAD CONSIDERED IT AND FORMED AN OPINION. NO ADDITIONS W ERE MADE IN THE ORIGINAL ASSESSMENT ON ACCOUNT OF THIS TRANSACTION AND THERE FORE REOPENING ON THE SAME ISSUE WOULD BE CLEARLY A CHANGE OF OPINION WHI CH IS NOT PERMITTED EVEN AFTER THE AMENDED PROVISIONS AND EVEN WITHIN FOUR Y EARS IN VIEW OF THE OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THEIR DECISION IN THE CASE OF KELVINATOR OF INDIA LTD WHERE IT WAS HELD THAT THE A.O. DOES NOT HAVE POWER OF REVIEW AND THAT TAR CONCEPT OF CHANGE OF OPINION IS AN INBUILT TEST TO CHECK ABUSE OF POWER BY THE AO. IT IS THEREFORE HELD THAT REOPENING WHICH WAS ON THE BASIS OF CHANGE OF OPINION WAS BAD IN LAW AND T HEREFORE THE PROCEEDINGS ARE QUASHED. THESE GROUNDS ARE ALLOWED. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE OBSERVE THAT THE FACTS NARRATED BY THE LD. CIT(A) A RE CORRECT AS ALL THE INFORMATION ON THE BASIS OF WHICH THE REOPENING WAS MADE BY THE ASSESSING OFFICER WAS AVAILABLE WITH THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT MADE IN THE CASE OF ASSESSEE. WE, THEREF ORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER AHMEDABAD; DATED 19/04/2017 *BIJU T. ITA NO. 173/AHD/2012 ITO VS. SAHAJANAND LIFE SCIENCE PVT LTD AY : 2005-06 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD