DCIT, corporate Circle-3(2), Chennai V. UVW Apparels Pvt Ltd, Chennai

ITA 175/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7450 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 12-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Keywords: Wrong claim; Reason to believe
• Section: 143(3); 148; 154; 15

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL, A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 175/CHNY/2018 / ASSESSMENT YEAR : 2003-04 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2) CHENNAI. VS. M/S. UVW APPARELS (P) LTD, FLAT NO.10, PENTHOUSE, 12, JAGADEESWARAR STREET, T. NAGAR, CHENNAI 600 017. [PAN AAACU 1434B] ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /RESPONDENT BY : NONE. /DATE OF HEARING : 26-06-2018 !' /DATE OF PRONOUNCEMENT : 03-07-2018 % / O R D E R IN THIS APPEAL FILED BY THE DEPARTMENT, WHICH IS D IRECTED AGAINST AN ORDER DATED 20.10.2017 OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS)-11, CHENNAI, IT IS AGGRIEVED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED A DISALLOWANCE OF DEDU CTION OF A2,10,754/- CLAIMED BY THE ASSESSEE U/S.80HHC OF TH E INCOME TAX ACT, 1961 (IN SHORT THE ACT). ITA NO.175/CHNY/2018 :- 2 -: 2. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASS ESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPOR TING OF GARMENTS HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YE AR DISCLOSING INCOME OF A5,64,470/-. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, ASSESSEE HAD PREFERRED A WRONG CLAIM OF A2,10,754/- U/S.80HHC OF THE ACT AND THIS WAS ALLOWED BY MISTAKE. AS PER THE L D. DEPARTMENTAL REPRESENTATIVE, THE CLAIM BEING NOT ALLOWABLE, THE ASSESSMENT WAS RECTIFIED THROUGH AN ORDER PASSED UNDER SECTION 15 4 OF THE ACT ON 24.04.2007. HOWEVER, AS PER THE LD. DEPARTMENTAL R EPRESENTATIVE, ASSESSEE CARRIED THE MATTER BEFORE THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) AND LATER THIS TRIBUNAL AND THE APPE LLATE AUTHORITIES HELD THE RECTIFICATION U/S.154 OF THE ACT TO BE VOI D CITING A REASON THAT CLAIM U/S.80HHC OF THE ACT INVOLVED LEGAL ISSUES. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, THEREAFTER LD. ASSESSI NG OFFICER HAD INVOKED SECTION 148 OF THE ACT AND ISSUED NOTICE ON 02.09.2009. FURTHER, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE , ASSESSMENT WAS LATER COMPLETED U/S.147 R.W.S. 143(3) OF THE ACT ON 16.12.2010, DISALLOWING THE CLAIM OF A2,10,754/- MADE BY THE AS SESSEE U/S.80HHC OF THE ACT. SUBMISSION OF THE LD. DEPARTMENTAL REP RESENTATIVE WAS THAT, LD. COMMISSIONER OF INCOME TAX (APPEALS) ON ASSESSEES APPEAL DELETED SUCH DISALLOWANCE HOLDING THAT THERE COULD BE NO PARALLEL PROCEEDINGS U/S.147 AND 154 ON THE SAME ISSUE. AS PER THE LD. ITA NO.175/CHNY/2018 :- 3 -: DEPARTMENTAL REPRESENTATIVE, BY VIRTUE OF JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. INDIA SEA FOODS, (2011) 322 ITR 424, PROCEEDINGS INITIATED U/S.154 OF THE ACT ONCE DROPPED, COULD NOT BE A REASON FOR HOLDING THAT A RE-ASSESSMENT PROCEE DINGS INITIATED FOR THE SAME ISSUE WAS INVALID. 3. DESPITE NOTICE, NONE APPEARED ON BEHALF OF THE ASSE SSEE. 4. I HAVE PERUSED THE ORDERS AND HEARD THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE. IT IS NOT DISPUTE D THAT DISALLOWANCE OF A2,10,754/- CLAIMED BY THE ASSESSEE U/S.80HHC OF THE ACT, WAS FIRST ATTEMPTED BY THE REVENUE THROUGH A RECTIFICATION O RDER DATED 24.04.2007. IT IS ALSO NOT DISPUTED THAT THE RECTI FICATION DONE BY THE REVENUE WAS SET ASIDE BY THE APPELLATE AUTHORITIES, CITING THE REASON THAT IT INVOLVED LEGAL ISSUES. THUS, ADMITTEDLY, TH ERE WERE PARALLEL PROCEEDINGS BOTH U/S.154 AS WELL AS 147 OF THE ACT. IT MIGHT BE TRUE THAT ORDER PASSED U/S.154 OF THE ACT WAS OVERTURNED BY THE APPELLATE AUTHORITIES. HOWEVER, THERE WERE TWO DIFFERENT PRO CEEDINGS U/S.147 AND 154 OF THE ACT ON THE SAME ISSUE AND THIS HAS N OT BEEN DISPUTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. LD. COMMISS IONER OF INCOME TAX (APPEALS) WHILE HOLDING IN FAVOUR OF THE ASSES SEE HAD RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. ITA NO.175/CHNY/2018 :- 4 -: E.I.D PARRY LIMITED, (1995) 216 ITR 489. WHAT WAS HELD BY THEIR LORDSHIPS IN THIS JUDGMENT IS REPRODUCED HEREUNDER: - THE CRUCIAL EXPRESSIONS FOR THE EXERCISE OF TWO JURISDICTIONS, ONE FOR THE REOPENING OF THE ASSESSM ENT UNDER SECTION 147(B) AND THE OTHER FOR RECTIFYING A NY MISTAKE APPARENT FROM THE RECORDS UNDER SECTION 154 OF THE ACT, ARE, FOR THE FORMER, THE ITO HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT, AND, FOR THE LATTER, ANY MISTAKE APPARE NT FROM THE RECORD. THUS, THE EXISTENCE OF THE INFORM ATION FOR THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS THE SINE QUA NON FOR REOPENIN G THE ASSESSMENT UNDER SECTION 147(B) AND DISCOVERY O F AN ERROR APPARENT ON THE RECORD IS THE SINE QUA NON FOR RECTIFICATION UNDER SECTION 154 OF THE ACT. THE PROVISIONS FOR RECTIFICATION OF ERROR APPARENT ON T HE RECORD AND FOR TAKING PROCEEDINGS REGARDING ESCAPEMENT ARE COMMON FEATURES IN THE TAX LAWS AND THEY ARE TO BE INVOKED IN DIFFERENT CIRCUMSTANCES. THE ITO CAN HAVE RECOURSE TO ONE OR THE OTHER, BUT HE M UST HAVE RECOURSE TO THE APPROPRIATE PROVISION HAVING REGARD TO THE FACTS AND CIRCUMSTANCES IN EACH CASE. IN CASES WHERE THE TWO APPEAR TO OVERLAP, THE ITO MUST CHOOSE ONE IN PREFERENCE TO THE OTHER AND PROCEED. HE SHOULD NOT TAKE ONE AS THE APPROPRIATE PROCEEDING A ND GIVE IT UP AT A LATER STAGE TO HAVE RECOURSE TO THE OTHER, SINCE SUCH PROCEEDINGS ARE QUASI-JUDICIAL AND ADJUDICATION AFTER NOTICE IS INTENDED FOR THE SAME PURPOSE. IN SUCH A CASE OF OVERLAPPING, CONSTRUCTIV E RES JUDICATA AND NOT THE STATUTORY INHIBITION, SHOULD M AKE THE ITO DESIST FROM USING ONE PROCEEDING AFTER THE OTHER INSTEAD OF USING ONE OF THE TWO WITH DUE CARE AND CAUTION . IT MIGHT BE TRUE THAT HONBLE KERALA HIGH COURT IN THE CASE OF INDIA SEA FOODS (SUPRA) HAD HELD OTHERWISE. HOWEVER, HONBLE MADRAS HIGH COURT BEING THE JURISDICTIONAL HIGH COURT FOR THIS TRIBUNAL, I AM BOUND ITA NO.175/CHNY/2018 :- 5 -: BY ITS JUDGMENTS. IN THE CIRCUMSTANCES, I AM OF TH E OPINION THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE RELYING ON THE JUDGMENT OF HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF E.I.D. PARRY LIMITED (SUPRA ). I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS). 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISS ED. ORDER PRONOUNCED ON TUESDAY, THE 3 RD DAY OF JULY, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:3RD JULY, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF