DCIT, Circle-8(1), Kolkata, Kolkata V. M/s Gujrat NRE Coke Ltd., Kolkata

ITA 1789/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5322 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 08-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: RAVI TULSIYAN LD
• Keywords: Reopening of assessment; Depreciation
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI P.M JAGTAP, AM & SHRI S.S. G ODARA, JM] I.T.A NO. 1789/KOL/20 16 ASSESSMENT YEAR : 2006- 07 DCIT, CIRCLE-8(1), KOLKATA -VS- M/S GUJRAT NRE COKE LTD. [PAN: AABCG 6225 H] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ROBIN C HOWDHURY, ADDL. CIT FOR THE RESPONDENT : SHRI RAVI TULSIYAN, LD. AR DATE OF HEARING : 17.09.2018 DATE OF PRONOUNCEMENT : 12.10.2018 ORDER PER S.S. GODARA, JM 1. THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2006-0 7 ARISES AGAINST THE CIT(A)-4, KOLKATAS ORDER DATED 20.06.2016 PASSED IN CASE NO. 1265/CIT(A)-4/CIRCLE- 12/KOL/2014-15 QUESTION OF REOPENING/ REASSESSMENT IN ISSUE INVOLVING PROCEEDING U/S 147 / 251 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. BOTH THE PARTIES TAKE US TO THE CIT(A)S FINDING S UNDER CHALLENGE HOLDING THE IMPUGNED REOPENING / REASSESSMENT TO BE INVALID AS WITH THE FOLLOWING DETAILED DISCUSSION: 2 ITA NO.1789/KOL/2016 M/S GUJRAT NRE COKE LTD. A.YR. 2006-07 2 3.2. THIS GROUND IS DIRECTED AGAINST THE ACTION OF THE AO IN REOPENING THE ASSESSMENT OF THE ASSESSEE, WHICH WAS COMPLETED U/S 143(3) OF THE ACT, U/S 147 OF THE ACT AND THEREAFTER COMPLETING THE ASSESSMENT U/S 143(3). IN THIS REGARD, THE RELEVANT PORTION OF THE ARS SUBMISSION DURING THE APPELLATE PROCEEDING IS REPLICATED AS FOLLOWS: 'THE ABOVE-MENTIONED APPEAL IS AGAINST THE RE-ASSES SMENT ORDER PASSED BY THE LD. AO. U/S 147/251/143(3) OF THE I. T. ACT DATED 2 4.03.2014 RELATING TO ASSTT. YEAR 2006- 07. THE APPELLANT HAS TAKEN ONLY TWO EFF ECTIVE GROUNDS IN THIS APPEAL. BY A LETTER DATED 09.06.2016 SUBMITTED IN T HE OFFICE OF THE LD. CIT(A) (COPY ENCL), IT HAS PRAYED FOR ADMISSION OF AN ADDI TIONAL GROUND. BEFORE DISCUSSING THE GROUNDS OF APPEAL. THE BRIEF FACTS O F THE CASE ARE DISCUSSED BELOW. THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF LOW ASH METALLURGICAL COKE. FOR ASSTT. YEAR 2006-07 ITS ASSESSMENT WAS COMPLETED BY A SCRUTINY ASSESSMENT ORDER ON 31.12.2 009 ON A TOTAL INCOME OF RS. 117,25,23,307. THE ASSESSEE FILED AN APPEAL AGA INST THE SAID ASSESSMENT ORDER AND THE LD. CIT(A)-XII KOL PARTLY ALLOWED THE APPEAL. THEREAFTER, THE LD. A 0. ISSUED A NOTICE U/S 148 OF THE I. T. ACT ON 27 .02.2013 REOPENING ITS ASSESSMENT FOR THE SAID ASSTT. YEAR. HE HAS PASSED A RE-ASSESSMENT ORDER U/S 147/251/143(3) ON 24.03.2014 IN WHICH HE HAS MADE T WO DISALLOWANCES OF RS.2,34,33,610 AND RS.80,00,000/-. THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE AFORESAID TWO DISALLOWANCES. 2. IN A LETTER DATED 09.06.2016 (COPY ENCLOSED) FIL ED BEFORE THE LD. CIT(A) WITH A COPY TO THE LD. A.O THE ASSESSEE HAS PRAYED FOR AD MISSION OF AN ADDITIONAL GROUND. IN THIS ADDITIONAL GROUND, IT HAS BEEN SUBM ITTED THAT THE LD. A. O. REOPENED THE ASSESSMENT OF ASSTT. YEAR 2006-07 BY A NOTICE U/S 148 DATED 27.02.2013 WHICH WAS ISSUED AFTER FOUR YEARS FROM T HE END OF THE SAID ASSESSMENT YEAR. AS PER 1 ST PROVISO TO SEC. 147, AN ASSESSMENT WHICH WAS COMPLETED U/S 143(3) CAN BE REOPENED ONLY WHEN THE ESCAPEMENT OF INCOME WAS ON ACCOUNT OF THE FAILURE OF THE ASSESSEE TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. FROM THE REASON RECORDED BY THE LD. A O. BEFORE ISSUING THE NOTICE ULS148 DATED 27.02.2013 W HICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER ITSELF, IT MAY KINDLY BE SEEN THAT HE HAS NOWHERE ALLEGED THAT THE ESCAPEMENT OF INCOME WAS ON ACCOUNT OF FAI LURE OF THE ASSESSEE TO DISCLOSE A/L MATERIAL FACTS. FOR THIS REASON ALONE, THE REOPENING OF ASSESSMENT IS CONSIDERED BAD IN LAW AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTHAN LEVER LTD. -VS.- WADKAR REPORTED IN 268- ITR-339. A COPY OF THIS ORDER IS ENCLOSED. IT IS THEREFORE PRAYED THAT THE REOPENING OF THE ASSESSMENT OF THE ASSESSEE FOR ASSTT. YEAR 2006-07 MAY KINDLY BE CANCELLED AND CONSEQUENTLY THE REASSESSMENT ORDER PASSED BY THE LD. AO FOR THE ASTT. YEAR 2006-07 MAY KINDLY BE ANNULLED. 3.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT AND TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS OF THE ISSUE AT HAND TO DETERMINE THE VALIDITY OF THE IMPUGNED ORDER PASSED BY THE AO. I FIND THAT THE AO HAD ISSUED NOTICE U/S 148 'OF THE ACT DATED 27. 02.2013 AFTER A LAPSE OF MORE 3 ITA NO.1789/KOL/2016 M/S GUJRAT NRE COKE LTD. A.YR. 2006-07 3 THAN FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR I .E. AY 2006-07 IN THE ABSENCE OF ANY FINDING RECORDED BY HIM THAT THERE W AS A FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERI AL FACTS IN THE RETURN OF INCOME FILED WITH THE DEPARTMENT IN TUNE WITH THE PROVISIO NS OF SECTION 147 OF THE ACT. ON THIS COUNT, I FIND THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS IN THE RETURN OF INCOME FILED BEFORE THE AO WHICH WOULD WARRANT REOPENING OF THE CASE U/S 147 OF THE ACT. FOR THIS REASON ALONE, THE REOPENING OF ASSESSMENT IS CONSIDERED BAD IN LA W AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTHAN LEVER L TD. VS. WADKAR REPORTED IN 268-ITR-339. THE RELEVANT PORTION OF THE RULING IS REPLICATED AS FOLLOWS: 'WHILE DECIDING WRIT. PETN. NO. 1505 OF 2003, THE I MPUGNED NOTICE ISSUED UNDER S. 148 OF THE ACT DATED. 5 TH NOV., 2002, FOR REOPENING ASSESSMENT OF THE ASST. YR. 1996-97 WAS QUASHED AND SET ASIDE BY US HOLDING THAT THE SAID NOTICE WAS WITHOUT JURISDICTI ON AS THE AO DID NOT RECORD IN THE REASONS THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT FOR THAT ASSESSMENT YEAR. WHILE DISPOSING OFF THAT PETI TION WE EMPHASIZED THE NECESSITY OF RECORDING REASONS AND QUALITY THEREOF AND HELD THAT UNLESS THE REASONS DISCLOSE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THAT ASSESSMENT YEAR, IT IS NOT OPEN FOR THE AO TO REOPEN THE CONCLUDED ASSESSMENT AFTER EXPIRY OF FOU R YEARS. 3.4. GOING BY FACTS AND LAW ON THE ISSUE AT HAND, I FIND THAT THE ACTION OF THE AO IN REOPENING OF THE CASE OF THE APPELLANT ON EXTRAN EOUS FACTORS WHICH ARE ALSO FOUND TO BE ANTITHETICAL TO THE PROVISIONS OF SECTI ON 147 OF THE ACT, WILL NOT HOLD GOOD IN ANY MANNER IN VIEW OF THE FACTS OF THE MATT ER AS DISCUSSED IN THE FOREGOING. UNDER SUCH CIRCUMSTANCES AND FACTS OF TH E CASE AS WELL AS CONSIDERING THE JUDICIAL PRECEDENCE AS CITED (SUPRA ), I AM OF THE CONSIDERED OPINION THAT ON BOTH FACTS AND LAW, THE AO HAS NOT MADE OUT HIS CASE WITH ANY CONVINCING COUNTER MATERIAL THAT THE REOPENING OF A SSESSMENT WAS ON VALID GROUND. IN THE CIRCUMSTANCES, THE IMPUGNED ASSESSME NT CANNOT BE ENDORSED IN ANY MANNER AS A VALID ORDER SINCE THE PROCEEDING U /S 147 OF THE ACT IS CONSIDERED AS TIME BARRED AND FOR WHICH ANY SUBSEQ UENT PROCEEDING PURSUANT THERETO ALSO BECOMES A NULLITY. CONSEQUENTLY, THE O RDER PASSED PURSUANT TO THE IMPUGNED PROCEEDING U/S 147 OF THE ACT CAN ONLY BE HELD TO BE NUGATORY IN NATURE AND HENCE ANNULLED. IN VIEW OF THIS, THE REM AINING GROUNDS IN THIS APPEAL NO LONGER HAVE ANY RELEVANCE WHICH CAN ONLY BE PASS ED OFF AS INFRUCTUOUS AND , HENCE NOT DEALT WITH. THE ADDITIONAL GROUND IS ALLO WED. 3. IT IS VEHEMENTLY CONTENDED AT THE REVENUES BEHE ST THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN ANNULLING THE IMPUGNED ASSES SMENT AFTER HOLDING THAT THERE WAS NO 4 ITA NO.1789/KOL/2016 M/S GUJRAT NRE COKE LTD. A.YR. 2006-07 4 FAILURE ON THE TAXPAYERS PART TO DISCLOSE FULLY A ND TRULY ALL NECESSARY FACTS IN ITS RETURN OF INCOME. LEARNED DEPARTMENTAL REPRESENTATI VES CASE IS THAT THE ASSESSEE HAD WRONGLY INCLUDED LAND COST IN ITS WINDMILL DEPRECIA TION CLAIM AND THEREFORE, ITS DISCLOSURE MADE IN ASSESSMENT PROCEEDINGS DOES NOT SATISFY THE LATTER LINES OF TRULY IN SECTION 147 1 ST PROVISO IN THE ACT. THERE IS NO DISPUTE FIRST OF ALL THAT THE ASSESSING OFFICERS REOPENING REASONS DID NOT SPECIFICALLY IN DICATE THE ASSESSEES FAILURE IN NOT HAVING DISCLOSED ALL THE RELEVANT FACTS FULLY AND TRULY AT THE FIRST INSTANCE. HONBLE BOMBAY HIGH COURTS DECISION (SUPRA) HOLDS THAT SUC H AN OMISSION ON PART OF AN ASSESSING OFFICER IS FATAL TO VALIDITY OF THE REOPE NING IN ISSUE. WE FURTHER FIND AS PER ASSESSEES PARTICULARS OF DEPRECIATION ALLOWABLE IN RESPECT OF BLOCK OF ASSETS IN THE RELEVANT PREVIOUS YEAR THAT IT HAD NOWHERE INCLUDED LAND COST OF RS. 20,000,000/- FOR THE PURPOSE OF THE RELIEF IN ISSUE. THIS CLINCHING FACT HAS GONE UNREBUTTED AT THE REVENUES BEHEST DURING THE COURSE OF HEARING. WE T HEREFORE AFFIRM THE CIT(A)S FINDINGS HOLDING THE IMPUGNED REOPENING TO BE NOT S USTAINABLE IN THE EYES OF LAW. THE REVENUE FAILS IN ITS SOLE LEGAL GROUND. 4. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 12.10.2018 SD/- S D/- [P.M JAGTAP ] [ S.S.GODARA ] ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 12.10.2018 SB, SR. PS 5 ITA NO.1789/KOL/2016 M/S GUJRAT NRE COKE LTD. A.YR. 2006-07 5 COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-8(1), KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069. 2. M/S GUJRAT NRE COKE LTD., 4, 22, CAMMAC STREET, BLOCK-C, 5 TH FLOOR, KOLKATA-70001 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S