Arambagh Hatcheries Ltd., Hooghly V. D.C.I.T. C.C - XXIV,Kol, Kolkata

ITA 1738/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83168 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIBREWAL
• Assessee Lawyers: ANIL KUMAR PANDE
• Keywords: Reopening of assessment; Business income; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 153A; 80IB; 147; 148; 154; 139

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA ( ) BEFORE , /AND , ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA , AM ] / I.T.A NO. 865 /KOL/20 1 1 / ASSESSMENT YEAR : 200 5 - 0 6 ASSISTANT COMMISSIONER OF INCOME - TAX, VS. M/S. ARAMBAGH HATCHERIES LTD., CENTRAL CIRCLE - XXIV, KOLKATA. (PAN: AACCA4791P) ( /APPELLANT ) ( / RESPONDENT ) & / I.T.A NO S . 1738 & 1 73 9 /KOL/20 1 2 / ASSESSMENT YEAR S : 200 6 - 07 & 2007 - 08 M/S. ARAMBAGH HATCHERIES LTD., VS. DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - XXIV, KOLKATA. ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 0 5 . 1 1 .201 4 DATE OF PRONOUNCEMENT: 13 . 1 1 .201 4 FOR THE A PPELLANT : SHRI ANIL KUMAR PANDE, JCIT, SR. DR FOR THE R ESPONDENT : SHRI A. K. TIBREWAL, FCA / ORDER PER SHRI MAHAVIR SINGH, JM : A PPEAL BY REVENUE IS ARISING OUT OF ORDER OF CIT (A) , CENTRAL - III , KOLKATA IN APPEAL NO . 154/CC - XXIV /CIT(A) C - II I /09 - 10 DATED 2 5 .0 3 .201 1 . ASSESSMENT W AS FRAMED BY DCIT, CC - XXIV, KOLKATA FOR A Y 200 5 - 0 6 U/S. 147 R.W.S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 3 1 .12.20 09. APPEALS OF ASSESSEE ARE ARISING OUT OF COMMON ORDER OF CIT(A), CENTRAL - III, KOLKATA IN APPEAL NO S. 276 & 277/CC - XXIV/CIT(A)C - III/11 - 12/KOL DATED 06.09.2012. ASSESSMENTS WERE FRAMED SEPARATELY BY DCIT, CC - XXIV, KOLKATA FOR AYS 2006 - 07 AND 2007 - 08 U/S. 143(3) OF THE ACT VIDE HIS ORDERS DATED 12.11.2008 AND 31.12.2009 RESPECTIVELY. 2. FIRST, WE WILL TAKE UP ITA NO.865/K/2011 (REVENUE S APPEAL). THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) QUAS HING THE REASSESSMENT PROCEEDINGS 2 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 INITIATED BY AO BY INVOKING PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO. 1: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) H AS ERRED IN ANNULLING THE ASSESSMENT ORDER BY HOLDING THAT CONDITIONS LAID DOWN IN 1 ST PROVISO BELOW SECTION 147 OF THE ACT WERE NOT SATISFIED. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CHICKS, F EED AND PROCESSING OF MEAT. THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB OF THE ACT IN RESPECT OF PROFIT FROM ITS ILAMBAZAR MEAT PLANT AND FEED PLANT SITUATED IN THE BACKWARD ARE OF BIRBHUM DISTRICT, WEST BENGAL. DURING THE ORIGINAL ASSESSMENT PROCEEDING S , BY ISSUING NOTICE U/S. 143(2) AND 142(1) OF THE ACT AND BY FRAMING ASSESSMENT U/S. 143(3) OF THE ACT DATED 29.12.2006 , THE AO ALLOWED THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. SUBSEQUENTLY, THE AO ISSUED NOTICE U/S. 148 OF THE ACT ON 27.01.2009 FOR ESCAPEMENT OF INCOME AND REOPENED THE ASSESSMENT U/S. 147 OF THE ACT. THEREAFTER, THE REASSESSMENT WAS COMPLETED U/S. 147 READ WITH SECTION 143(3) OF THE ACT ON 31.12.2009 IN WHICH THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT WAS DISALLOWED. AGGRIEVED, AS SESSEE PREFERRED APPEAL BEFORE CIT(A), WHO QUASHED THE REASSESSMENT PROCEEDINGS INITIATED U/S. 147 OF THE ACT FOR CHANGE OF OPINION. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANC ES OF THE CASE. WE FIND FROM THE RECORDS THAT THE AO BY AN ORDER OF REASSESSMENT DATED 31. 12. 2009 U/S. 14 7 READ WITH SEC.143(3) OF THE A CT FOR ASSESSMENT YEAR 2005 - 06 HAS WITHDRAWN DEDUCTION U/ S.80 - IB IN RESPECT OF THE ASSESSEE S FEED PLANT AND MEAT PLANT , WHICH HAD BEEN ALLOWED IN THE ASSESSMENT U/S. 143(3), MADE AFTER SEARCH U/ S. 132(1) ON 30.11. 20 04. IN THE PRESENT APPEAL, THE ASSESSEE CHALLENGED THE VALIDI T Y OF INITIAT ION REASSESSMENT PROCEEDING BY ISSUANCE OF NOTICE U/S 148 READ WITH SECTION 14 7 OF THE ACT AND ALSO CHALLENGE D WITHDRAWAL OF DEDUCTION U/ S. 80 - IB ON MERITS . UNDISPUTED FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING ACTIVITIES AND THE RELEVANT FACTS ARE AS UNDER: (A) IN THE PREVIOUS YEAR RELEVA NT TO THE ASSESSMENT YEAR 2 001 - 0 2, THE ASSESSEE ESTABLISHED T WO NEW INDUSTRIAL UNDERTAKINGS IN THE BACKWARD AREA OF BIRBHUM, WEST BENGAL. ONE UNDERTAKING WAS A FEED PLANT AND THE OTHER WAS A MEAT PLANT . (B) THE FUNCTIONING OF THE FEED PLANT IS LIKE THIS. IT PRODUCES POULTRY AN D ANIMAL FEEDS. THE MANUFACTURING ACTIVI T Y INVOLVED IN SUCH PRODUCTION IS TO CONVERT RAW MAIZE, SOYA FISH ETC. TO A MIXTURE, TO WHICH IS ADDED VITAMINS, MINERALS, SALT AND OTHER CHEMICALS ETC. WHICH ARE STEAMED AT HIGH PRESSURE FOR OBTAINING FINELY BALANCED PELLET OR CRUMBLE PIECES OF FOOD. THE FEED THUS PRODUCED IS QUITE DIFFERENT FR OM THE RAW MATERIALS USED IN PRODUCTION. IN 3 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 OTHER WORDS, THE RAW MATERIALS LOSE THEIR INDIVIDUAL CHARACTERS OR PROPERTIES IN THE FINAL PRODUCT. (C) SUCH MANUFACTURING AC TIVI T Y FALLS UNDER THE NATIONAL INDUSTRIAL CLASSIFICATION AS CLASS 1553 AND SUB - CLASSES 155331, 155332 AND 155339. FOR ESTABLISHING THE FEE D MANUFACTURING UNIT, THE ASSESSEE HA D TO TAKE APPROVAL OF THE MINISTRY OF INDUSTRY , GOVT. OF INDIA, THROUGH THE A CKNOWLEDGEMENT NO. 2134/S IA/IMO /2001 DATED 24.09.2001. FOR SETTING UP OF THE PLANT, PERMISSION HAD ALSO BEEN TAKEN FROM THE DIRECTORATE OF INDUSTRIES , GOVT. OF WEST BENGAL, VIDE CERTIFICATE OF REGISTRATION NO. DI/2000/203(C)/126(6)/1999 DATED 06.02.2002. LASTLY, CLEARANCE FROM POLLUTION CONTROL BOARD HAD TO BE TAKEN FOR SETTING - UP THE PLANT. (D) FOR CARRYING OUT SUCH MANUFACTURE, HEAVY MACHINERIES INCLUDING LARGE BROILERS ARE USED. (E) THE FUNC T IONING OF THE MEAT PLANT MAY BE NOTED AS FOLLOWS. LIKE FEED MANUFACTURING, MEAT MANUFACTURING ALSO FALLS UNDER NATIONAL INDUS T RIAL CLASSIFICATION AS CLASS - 15114. FOR THE MEAT MANUFACTURING UNIT ALSO, THE ASSESSEE HAD TO TAKE APPROVAL OR REGISTRATION FROM VARIOUS AUTHORI T IES OF THE GOVT. OF I NDIA AND THE GOVT. OF WEST BENGAL, THE DETAILS OF WHICH WERE CONSIDERED WHILE PASSING THE IMPUGNED REASSESSMENT ORDER DATED 31.12.2009. PRODUCTION OF MEAT INVOLVES CONVERS ION OF LIVE BIRDS TO RAW MUSCLE, WHICH ARE THEN DRESSED THROUGH COMPLEX PROCESSES LIKE STUNNING, SCALDING, DE - F E ATHERING, CLEANING WITH WATER ETC. SUCH RAW MEAT IS THEN CUT INTO VARIOUS SIZES AND SHAPES ACCORDING TO REQUIREMENTS AND THEN P ASTEURIZED AND CHILLED BEFORE BE ING PACKED INTO SCIENTIFIC CONTAINERS. F ) THE AFORESAID MANUFACTURING ACTIVITIES OF PLANTS WERE EXPLAINED TO THE ASSESSING OFFICER ALL ALONG THE ASSESSMENT PROCEEDING IN ITIATED U/S. 143(2) IN THE YEAR, WHICH IS VERIFIED FROM THE ASSESSMENT RECORDS. (G) AFTER APPRECIATION OF THE EVI D ENCES BROUGHT ON RECORD AND HEARING THE EXPLANATIONS OFFERED BY THE AS S ESSEE AS ABOVE, THE ASSESSING OFFICER ALLOW ED DEDUCTION U/S.80 - IB IN THE ORIGINAL AS SESSMENT U/ S. 143(3) OF THE ACT. 5 . IN VIEW OF THE ABOVE FACTS , ASSESSMENT WAS COMPLETED BY THE AO U/S. 143(3) OF THE ACT ORIGINALLY AND THE FACT RELATING TO MANUF ACTURING ACTIVITY CARRIED ON BY THE ASSESSEE WAS AVAILABLE BEFORE THE AO. BUT THE AO REOPENED THE ASSESSMENT U/S. 147 OF THE ACT BY ISSUING NOTICE U/S. 148 DATED 27.01.2009 AND FOR THAT HE RECORDED THE FOLLOWING REASONS: IT IS SEEN FROM THE RECORDS THAT THE ASSESSEE CLAIMED DEDUCTION U/ S. 8OIB FOR RS. 12, 18, 967/ - FOR THE ASSESSMENT YEAR 2005 - 06 IN RESPECT OF PROFIT FROM ILLAMBAZAR MEAT PROCESSING PLANT INDUSTRIAL UNDERTAKING SITUATED IN BACKWARD AREA OF BIRBHUM DISTRICT, WEST BENGAL ESTABLISHED IN THE ASSESSMENT YEAR 2001 - 02. THE BENEFIT OF SECTION 801B IS AVAILABLE WHEN A NEW INDUSTRIAL UN DERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES. BUT MEAT PROCESSING DOES NOT INVO LVE ANY MANUFA CTURING ACTIVITY. S PER JUDICIAL PRONOUNCEMENT HELD IN C IT VS. JB. KHARWAR & SONS (1987) 163 ITR 390 (GU J) THE MOMENT THERE IS A TRANSFORMATION OF A PRODUCT INTO A NEW COMMODI T Y HAVING ITS OWN CHARACTER USE AND NAME WHETHER IT BE THE RESULT OF ONE PROCESS OR SEVERAL PROCESSES, MANUFACTURE TAKES PLACE THE ACTIVI T Y OF MEAT PROCESSING DOES NOT RESULT IN THE FORMATION OF OTHER DISTINCT COMMODI T Y, THERE IS NO ESSENTIAL D IF FERENCE BETWEEN RAW MEAT AND PROCESSED MEAT OR FROZEN MEAT. JUDICIAL PRONOUNCEMENT HELD IN CIT VS. RELISH FOOD (199) 237 ITR 59 REGARDING PROCESSING OF SHRIMPS COULD BE CITED IN SUPPORT OF THIS. HENCE THE ASSESSEE WAS NOT ENTITLED 4 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 TO AVAIL DEDUCTION U/S. 801B. AS SUCH THERE WAS UNDER - ASSESSMENT OF RS. 12, 18, 967/ - FOR THE ASSESSMENT YE AR 2005 - 06 CONSEQUENTLY THERE WAS UNDER - CHARGE TAX OF RS.4,41,878/ - FOR THE A SSESSMENT YEAR 2005 - 06. 6. ANOTHER ASPECT WHICH IS VERY PERTINENT TO THE ISSUE IS THAT, BEFORE REOPENING THE ASSESSMENT U /S. 147 OF THE ACT WAS THAT THE AO ISSUED NOTICE U /S. 154 OF THE ACT ON 14.11.2007 TO RECTIFY THE M ISTAKE IN ALLOWING DEDUC TION U /S.8 0 I B OF THE ACT . SUBSEQUENTLY, SUCH NOTICE OF RECTIFICATION PROCEEDING S U /S. 154 OF THE ACT WITHDRAWN . THIS CREATES DOUBT ABOUT THE ISSUE OF REOPENING FOR THE REASON THAT THE AO HAD FORMED AN OPINION THAT IT INVOLVES MANUFACTURING ON THE BASIS OF WHICH HE HAS ALLOWED THE DEDUCTION. ON THE SA M E SETS OF FACTS THE LATER AO HAS FORMED A DIFFERENT OPINION BY DRAWING ANALOGY WITH THE FACTS OF TWO JUDICIA1 PRONOUNCEMENTS WHICH WERE DELIVERED ON CO MPLETELY DIFFERENT SETS OF FACTS. IN SUCH CIRCUMSTANCES WHETHER THE REOPENING IS VALID OR NOT IS TO BE EXAMINED. 7. WE FIND THAT THE AO HAS PUT RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. RELISH FOOD 237 ITR 59 (SC) FOR RECOR DING REASONS FOR REOPENING OF ASSESSMENT. WE HAVE GONE THROUGH THE JUDGMENT OF HON BLE SUPREME COURT AND FIND THAT HON BLE COURT WAS CONCERNED WITH THE PROCESSING OF SHRIMPS AND NOT MEAT, AS IN THE PRESENT CASE. THE AO HAS WRONGLY CONCEIVED THAT THE MANU FACTURING PROCESS AND THE MEAT PLANT STARTS FROM RAW MUSCLES, WHICH IS A WRONG NOTION. FROM THE ASSESSMENT ORDER IT IS FOUND THAT THE AO HIMSELF HAS NOTED THAT THE MANUFACTURING ACTIVITY AT THE MEAT PLANT STARTS FROM CONVERSION OF LIVE BIRDS TO RAW MUSCLE S, WHICH INVOLVES A NUMBER OF COMPLEX PROCESSES LIKE STUNNING, SLAUGHTERING, REMOVING BLOOD, SCALDING, DE FEATHERING, EVISCERATION AND FINALLY CLEANING THE STUFF BY WATER WASHING. FROM THE ABOVE PROCESSES IT IS CLEAR THAT THE RAW MUSCLES OR RAW MEAT OBTAI NED IS QUITE DIFFERENT FROM LIVE BIRDS, WHICH CAN ALSO BE USED FOR PRODUCING EGGS AND HATCHING THE SAME INTO CHICKS. THE RAW MUSCLES THUS OBTAINED ARE CHILLED, PASTEURIZED AND FINALLY PRESERVED THROUGH SCIENTIFIC PACKING. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE S PROCESS COMPLETES THE MANUFACTURING ACTIVITY FOR MANUFACTURING OF MEAT. 8. WE FURTHER FIND THAT THE ASSESSEE IS CLAIMING DEDUCTION U/S. 80IB SINCE VERY INCEPTION I.E. FOR AND FROM AY 2001 - 02 AND REVENUE WHILE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT R.W.S. 153A OF THE ACT ALLOWED THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT AS UNDER: FROM THE AY 2001 - 02 ONWARDS, ASSESSEE HAS ALSO CLAIMED DEDUCTION U/S. 80IB FOR ITS ILLAMBAZAR MEAT & FEED PLANT FOR WHICH THE ASSESSEE SUBMITTED CERTIFICATION OF REGISTRATION ISSUED BY THE DIRECTORATE OF INDUSTRIES, GOVT. OF WEST BENGAL. THESE CLAIM OF DEDUCTION BY THE ASSESSEE IS EXAMINED AND VERIFIED. FURTHER THE AO ALLOWED THE DEDUCTION AS UNDER: 5 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 LESS: DEDUCTION UNDER CHAPTER VIA I) .. II) . III) U/S . 80IB FOR ILLAMBAZAR FEED PLANT RS.1,19,53,868/ - FOR ILLAMBAZAR MEAT PLANT RS.2,46,71,341/ - SIMILARLY FOR THE AY 2002 - 03 ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 153A OF THE ACT AND CLAIM OF DEDUCTION U/S. 80IB OF THE ACT ON THE VERY SAME ISSUE WAS ALLOWED BY THE AO HIMSELF AND SUBSEQUENTLY ALSO FOR ALL THE ASSESSMENT YEARS. CONSISTENTLY REVENUE IS ALLOWING DEDUCTION U/S. 80IB OF THE ACT ON THIS ISSUE. 9. NOW THE QUESTION ARISES, WHETHER IN SUCH CIRCUMSTANCES THE REOPENING IS POSSIBLE OR NOT, AS THE ISSUE HAS ALREADY BEEN DISCUSSED ON MERITS ALSO. FOR THE ABOVE REASONS, IT IS CLEAR THAT NOTHI NG NEW TANGIBLE MATERIAL WAS AVAILABLE BEFORE THE AO FOR REOPENING THE ASSESSMENT AND CONSEQUENTLY, THE AO ACTED ON THE SAME MATERIAL, WHICH WAS AVAILABLE BEFORE HIM AT THE TIME OF ORIGINAL ASSESSMENT. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE BY THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. (2010) 310 ITR 561 (SC), WHEREIN NEWLY SUBSTITUTED PROVISION OF SECTION 147 OF THE ACT WITH EFFECT FROM 01.04.1989 IS INTERPRETED BY OBSERVING, THAT SECTION 147 OF THE ACT, AS SUBSTITUTED W.E.F. 01.04.1989 DOES NOT POSTULATES CONFERMENT OF POWER UPON THE AO TO INITIATE REASSESSMENT PROCEEDING UPON HIS MERE CHANGE OF OPINION. FURTHER, IF REASON TO BELIEVE OF THE AO IS FOUNDED ON AN IN FORMATION WHICH MIGHT HAVE BEEN RECEIVED BY THE AO AFTER THE COMPLETION OF ASSESSMENT, IT MAY BE A SOUND FOUNDATION FOR EXERCISING THE POWER UNDER SECTION 147 R.W.S. 148 OF THE ACT. IT CANNOT BE ACCEPTED THAT ONLY BECAUSE IN THE ASSESSMENT ORDER, DETAILED REASONS HAVE NOT BEEN RECORDED, AN ANALYSIS OF THE MATERIALS ON THE RECORD BY ITSELF MAY BE JUSTIFYING THE AO TO INITIATE A PROCEEDING U/S. 147 OF THE ACT. WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF SECTION 143(3) OF THE ACT, A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUMPTION CAN ALSO BE RAISED TO THE EFFECT THAT IN TERMS OF SECTION 114(E) OF THE INDIAN EVIDENCE ACT, 1872, JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD THAT AN ORDER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSELF CONFER JURISDICTION UPON THE AO TO REOPEN THE PROCEEDING WITHOUT ANY THING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN WRONG. 6 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 10. SIMILARLY, HON BLE SUPREME COURT IN THE CASE OF CIT VS. FORAMER FRANCE (2003) 264 ITR 566 (SC) AFFIRMED THE JUDGMENT OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF FORAMER VS. CIT (2001) 247 ITR 436 (ALL), WHEREIN HON BLE ALLAHABAD HIGH COURT HELD AS UNDER: HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE VIEW THAT THESE PETITIONS DESERVE TO BE ALLOWED. IT MAY BE MENTIONED THAT A NEW SECTION SUBSTITUTED SECTION 147 OF THE INCOME - TAX ACT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, WITH EFFECT FROM APRIL 1, 1989. THE RELEVANT PART OF THE NEW SECTION 147 IS AS FOLLOWS: 147. IF THE ASSESSING OFFICER, HA S REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECI - ATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS - MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDE R THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAI - LURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESS - MENT FOR THAT ASSESSMENT YEAR. THIS NEW SECTION HAS MADE A RADICAL DEPARTURE F ROM THE ORIGINAL SECTION 147 INASMUCH AS CLAUSES (A) AND (B) OF THE ORIGINAL SECTION 147 HAVE BEEN DELETED AND A NEW PROVISO ADDED TO SECTION 147. IN RAKESH AGGARWAL V. ASST. CIT [1997] 225 ITR 496, THE DELHI HIGH COURT HELD THAT IN VIEW OF THE PROVISO TO SECTION 147 NOTICE FOR REASSESS - MENT UNDER SECTION 147/148 SHOULD ONLY BE ISSUED IN ACCORDANCE WITH THE NEW SECTION 147, AND WHERE THE ORIGINAL ASSESSMENT HAD BEEN MADE UNDER SECTION 143(3) THEN IN VIEW OF THE PROVISO TO SECTION 147, THE NOTICE UNDE R SECTION 148 WOULD BE ILLEGAL IF ISSUED MORE THAN FOUR YEARS AFTER THE END OF THE RELEVANT ASSESSMENT YEAR. THE SAME VIEW WAS TAKEN BY THE GUJARAT HIGH COURT IN SHREE THARAD JAIN YUVAK MANDAL V. ITO [2000] 242 ITR 612. IN OUR OPINION, WE HAVE TO SEE TH E LAW PREVAILING ON THE DATE OF ISSUE OF THE NOTICE UNDER SECTION 148, I.E., NOVEMBER 20, 1998. ADMITTEDLY, BY THAT DATE, THE NEW SECTION 147 HAS COME INTO FORCE AND, HENCE, IN OUR OPINION, IT IS THE NEW SECTION 147 WHICH WILL APPLY TO THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, THERE WAS ADMITTEDLY NO FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. HENCE, THE PROVISO TO THE NEW SECTION 147 SQUARELY APPLIES, AND THE IMPUGNED NOTICES WERE BARRED BY LIMITATION MENTIONED IN THE PROVISO. 7 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 LEARNED DEPARTMENTAL COUNSEL RELIED ON SECTION 153(3)(II) OF THE INCOME - TAX ACT AND SUBMITTED THAT THERE WAS NO BAR OF LIMITATION IN VIEW OF THE SAID PROVISION. WE DO NOT AGRE E. SECTION 153 RELATES TO PASSING OF AN ORDER OF ASSESSMENT AND IT DOES NOT RELATE TO ISSUING OF NOTICE UNDER SECTION 147/ 148. MOREOVER, THIS IS NOT A CASE WHERE REASSESSMENT IS SOUGHT TO BE MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIR ECTION CONTAINED IN THE ORDER OF THE TRIBUNAL IN BOUDIER CHRISTIAN S CASE. AS ALREADY STATED ABOVE, BOUDIER CHRISTIAN S CASE RELATED TO THE EMPLOYEES OF THE COMPANY, WHEREAS THE IMPUGNED NOTICE HAS BEEN ISSUED TO THE COMPANY. HENCE, IT CANNOT BE SAID T HAT THE PROPOSED REASSESSMENT IN CONSEQUENCE OF THE IMPUGNED NOTICE WOULD BE IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FIND - INGS OF THE TRIBUNAL IN BOUDIER CHRISTIAN S CASE. A DIRECTION OR FINDING AS CONTEMPLATED BY SECTION 153(3)(II) MUST BE A FINDIN G NECESSARY FOR THE DISPOSAL OF A PARTICULAR CASE, THAT IS TO SAY, IN RESPECT OF THE PARTICULAR ASSESSEE AND IN RELEVANCE TO A PARTICULAR ASSESS - MENT YEAR. TO BE A NECESSARY FINDING IT MUST BE DIRECTLY INVOLVED IN THE DISPOSAL OF THE CASE. TO BE A DIREC TION AS CONTEMPLATED BY SECTION 153(3)(II) IT MUST BE AN EXPRESS DIRECTION NECESSARY FOR THE DISPOSAL OF THE CASE BEFORE THE AUTHORITY OR COURT VIDE RAJINDER NATH V. CIT [1979] 120 ITR 14 (SC) ; GUPTA TRADERS V. CIT [1982] 135 ITR 504 (ALL) ; CIT V. TAR AJAN TEA CO. (P.) LTD. [1999] 236 ITR 477 (SC) AND CIT V. GOEL BROS. [1982] 135 ITR 511 (ALL), ETC. THE CASE OF AN EXPATRIATE EMPLOYEE WAS TO BE DECIDED ON THE BASIS OF THE PROVISIONS OF ARTICLE XIV OF THE TREATY, WHEREAS CORPORATE INCOME WAS TO BE DEC IDED ON THE BASIS OF EITHER ARTICLE III OR ARTICLE XVI OF THE TREATY OR SECTION 44BB OF THE ACT. HENCE, THE OBSERVATIONS OF THE TRIBU - NAL IN BOUDIER CHRISTIAN S CASE WAS NOT A DIRECTION NECESSARY FOR THE DIS - POSAL OF THE APPEAL RELATING TO THE PETITIONE R. THE EXIGIBILITY OF INCOME OF THE PETITIONER FROM MANNING AND MANAGEMENT CONTRACTS WAS NEVER AN ISSUE DIRECTLY OR INDIRECTLY INVOLVED IN THE CASE OF BOUDIER CHRISTIAN. MOREOVER, THE TRIBUNAL IN THE APPEAL RELATING TO THE ASSESSMENT OF THE PETITIONER S OWN CASE, VIDE DEPUTY CIT V. ONGC [1999] 70 ITD 468 (DELHI) HAS CONSIDERED THE DECISION OF THE TRIBUNAL IN BOUDIER CHRISTIAN S CASE. IT IS SETTLED LAW THAT AN APPEAL IS A CONTINUATION OF THE ORIGINAL PROCEEDINGS AND HENCE WHEN THE TRIBUNAL I N THE APPEAL RELATING TO THE PETITIONER HAS CONSIDERED THE DECISION OF THE TRIBUNAL IN BOUDIER CHRISTIAN S CASE, THE IMPUGNED NOTICE UNDER SECTION 147/148 WOULD OBVIOUSLY BE ON THE BASIS OF A MERE CHANGE OF OPINION BY THE INCOME - TAX AUTHORITIES, WHICH W OULD NOT BE VALID AS HELD BY THE SUPREME COURT IN INDIAN AND EASTERN NEWS - PAPER SOCIETY V. CIT [1979] 119 ITR 996 ; GEMINI LEATHER STORES V. ITO [1975] 100 ITR 1 (S C) AND JINDAL PHOTO FILMS LTD. V. DEPUTY CIT [1998] 234 ITR 170 (DELHI), ETC. IN THE DE CISION OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE, DEPUTY CIT V. ONGC [1999] 70 ITD 468 (DELHI) IT HAS BEEN HELD THAT THE INCOME FROM THE CONTRACT BETWEEN THE PARTIES WAS BUSINESS INCOME AND NOT FEE FOR TECHNI - CAL SERVICES. ALTHOUGH WE ARE OF THE OPINI ON THAT THE LAW EXISTING ON THE DATE OF THE IMPUGNED NOTICE UNDER SECTION 147/148 HAS TO BE SEEN, YET EVEN IN THE ALTERNATIVE EVEN IF WE ASSUME THAT THE LAW PRIOR TO THE INSERTION OF THE NEW SECTION 147 WILL APPLY EVEN THEN IT WILL MAKE NO DIFFERENCE SI NCE EVEN UNDER THE ORIGINAL SECTION 147 NOTICE FOR REASSESSMENT COULD NOT BE GIVEN 8 ITA NOS. 865/K/2011 & 1738 - 1739/K/2012 ARAMBAGH HATCHERIES LTD. AY 2005 - 06, 2006 - 07& 2007 - 08 ON THE MERE CHANGE OF OPINION AS HELD IN NUMEROUS CASES OF THE SUPREME COURT, SOME OF WHICH HAVE BEEN MENTIONED ABOVE. SINCE THE TRIBUNAL IN THE APPEAL RELATING TO THE A SSESSEE - COMPANY HAD CONSIDERED THE TRIBUNAL S EARLIER DECISION IN BOUDIER CHRISTIAN S CASE, IT WILL OBVIOUSLY AMOUNT TO MERE CHANGE OF OPINION, AND HENCE THE NOTICE UNDER SECTION 147/148 WOULD BE ILLEGAL. 11. FROM THE ABOVE FACTS OF THE CASE AND LEGAL POSITION AS ENUNCIATED BY HON BLE SUPREME COURT IN THE ABOVE TWO CASE LAWS, WE ARE OF THE CONSIDERED VIEW THAT THE REOPENING U/S. 147 R.W.S. 148 OF THE ACT IS BAD IN LAW. HENCE, REOPENING IS QUASHED. 12. AS WE HAVE ALREADY QUASHED THE REOPENING AND AL SO DISCUSSED THE MERITS OF THE CASE WHEREBY WE HAVE RECORDED THE FACTS AND FOUND THAT THE ISSUE ON MERITS IS ALSO IN FAVOUR OF ASSESSEE. SINCE WE HAVE QUASHED THE REOPENING, WE NEED NOT ELABORATE THE MERITS OF THE CASE. 13. AS WE HAVE ALREADY ADJUDICATED THE ISSUE ON REOPENING AND ALSO ON MERITS IN REVENUE S APPEAL FOR AY 2005 - 06, THE FACTS IN AY 2006 - 07 AND 2007 - 08 BEING EXACTLY IDENTICAL, HENCE TAKING A CONSISTENT VIEW, WE ALLOW THESE TWO APPEALS OF ASSESSEE ALSO. 14 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED AND THAT OF ASSESSEE ARE ALLOWED . 1 5 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 3 / 1 1 / 2 0 1 4 S D / - S D / - , , ( SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 3 T H NOVEMBER , 201 4 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT DCIT/ACIT, CENTRAL CIRCLE - XXIV, KOLKATA. 2 / RESPONDENT M/S. ARAMBAGH HATCHERIES LTD., ARAMBAGH, HOOGHLY . 3 . ( )/ THE CIT(A), KOLKATA 4. 5. / CIT KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .