Balaji Railroad Systems Limited, Hyderabad V. Asst.CIT., Circle-1(3), Hyderabad, Hyderabad

ITA 1811/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5970 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Section: 143(3); 147; 148; 263; 63; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1811/HYD/2014 ASSESSMENT YEAR 2006-2007 BALAJI RAILROAD SYSTEMS LIMITED, HYDERABAD-004. PAN AAACB9739Q VS. A CIT, CIRCLE 1(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. MOHD. AFZAL FOR REVENUE : MR. M. SITARAM DATE OF HEARING : 23.02.2016 DATE OF PRONOUNCEMENT : 04 . 0 3 .2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2006-07. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE OR DER OF THE LD. CIT(A) IN CONFIRMING THE VALIDITY OF THE AS SESSMENT UNDER SECTION 147 OF THE I.T. ACT, EVEN THOUGH ALL THE RELEVANT FACTS NECESSARY FOR ASSESSMENT OF THE INCO ME OF THE ASSESSEE WERE CONSIDERED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WI TH SECTION 263 OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF ENGINEE RING AND DESIGNING IN RAILWAY TRANSPORT MATTERS, FILED I TS 2 ITA.NO.1811/HYD/2014 BALAJI RAILROAD SYSTEMS LIMITED, SECUNDERABAD . RETURN OF INCOME UNDER SECTION 139 OF THE I.T. ACT ON 23.11.2006 DECLARING INCOME OF RS.4,20,045 FOR THE A.Y. 2006-07. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE I.T. ACT BY MAKING VARIOUS DISALLOWAN CE UNDER SECTION 40(A)(IA) AND COMMON EXPENSES RELATIN G TO EXPORT UNIT. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS.23,85,520. 3. THEREAFTER, THE LD. CIT UNDER SECTION 263 OF THE I.T. ACT, OBSERVED THAT THE ASSESSMENT ORDER WA S ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AS THE A.O. HAS GRANTED EXCESS DEDUCTION UNDER SECT ION 10A TO THE EXTENT OF RS.36.13 LAKHS BY WRONGLY CONSIDERING THE SUM OF RS.1.51 CRORES AS EXPORT TUR NOVER INSTEAD OF RS.65.23 LAKHS. A SHOW CAUSE NOTICE FOR THE PROCEEDINGS UNDER SECTION 263 OF THE ACT WAS ISSUED AND AFTER CONSIDERING THE ASSESSEES CONTENTIONS, THE ASSESSMENT ORDER WAS SET ASIDE WITH A DIRECTION TO RE-DO THE ASSESSMENT AFTER GIVING THE ASSESSEE AN OPPORTU NITY TO PRODUCE THE GOVERNMENT APPROVAL FROM THE RBI FOR TH E RECEIPT OF FOREIGN EXCHANGE BELATEDLY. WHILE GIVIN G EFFECT TO THE ORDER OF THE LD. CIT UNDER SECTION 263, THE A.O. CONSIDERED THE SUBMISSIONS FILED BY THE ASSESSEE BE FORE HIM AND AFTER TAKING NOTE OF THE LETTER OF THE STAT E BANK OF MYSORE EXTENDING TIME UPTO 31.03.2011 FOR RECEIPT O F THE FOREIGN EXCHANGE, HE COMPLETED THE ASSESSMENT UNDER SECTION 143(3) BY DETERMINING THE TAXABLE INCOME OF RS.16,42,881. THE ORDER UNDER SECTION 143(3) READ W ITH SECTION 263 IS DATED 25.10.2011. 3 ITA.NO.1811/HYD/2014 BALAJI RAILROAD SYSTEMS LIMITED, SECUNDERABAD . 4. THEREAFTER, THE A.O. HAS ISSUED A NOTICE UNDER SECTION 148 DATED 19.03.2013 FOR REOPENING OF THE ASSESSMENT HOLDING THAT THE INCOME CHARGEABLE TO TA X FOR A.Y. 2006-07 HAS ESCAPED ASSESSMENT WITHIN THE MEAN ING OF SECTION 147 OF THE I.T. ACT. DURING THE RE-ASSES SMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, THE A.O. OBSERVED THAT THE ASSESSMENT ORDE R UNDER SECTION 143(3) READ WITH SECTION 263 OF THE I .T. ACT WAS PASSED ON 25.10.2011 ALLOWING THE DEDUCTION UND ER SECTION 10A IN FULL AS CLAIMED BY THE ASSESSEE WITH A NOTE THAT PERMISSION IS OBTAINED FROM COMPETENT AUTHORIT Y SEEKING EXTENSION OF TIME. HE OBSERVED THAT IN FACT , THE ASSESSEE COMPANY HAD NOT RECEIVED THE ENTIRE EXPORT SALE CONSIDERATION IN CONVERTIBLE FOREIGN EXCHANGE WITHI N THE STIPULATED PERIOD AND THEREFORE, ALLOWING THE FULL DEDUCTION UNDER SECTION 10A, HAS RESULTED IN ESCAPE MENT OF INCOME. HE, THEREAFTER, HELD THAT THOUGH THE COM PETENT AUTHORITY HAS EXTENDED TIME FOR RECEIPT OF EXPORT S ALE PROCEEDS, THE SAME WAS NOT RECEIVED BY THE ASSESSEE COMPANY WITHIN THE EXTENDED TIME AND HE ACCORDINGLY , RESTRICTED THE DEDUCTION ONLY TO THE SUM RECEIVED W ITHIN THE EXTENDED TIME. HE ACCORDINGLY, ASSESSED THE TAX ABLE INCOME AT RS.74,65,321. AGAINST THE RE-ASSESSMENT O RDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE UNDER SECTION 148 OF THE I.T. ACT H AS BEEN 4 ITA.NO.1811/HYD/2014 BALAJI RAILROAD SYSTEMS LIMITED, SECUNDERABAD . ISSUED TO THE ASSESSEE AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THEREFORE, THE PROVISO TO SECTION 147 OF THE I.T. ACT IS ATTRACTED ACCORDI NG TO WHICH AN ASSESSMENT CANNOT BE REOPENED UNDER SECTIO N 147 OF THE ACT, UNTIL AND UNLESS THE INCOME COMPUTE D UNDER SECTION 143(3) OF THE ACT HAS ESCAPED ASSESSM ENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FO R ASSESSMENT. HE SUBMITTED THAT IN THE ASSESSEES CAS E, THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 2 63 WAS COMPLETED CONSEQUENT TO A REVISION ORDER AND AL L THE RELEVANT FACTS WERE PART OF THE RECORD. HE SUBMITTE D THAT NO NEW MATERIAL HAS TO COME TO THE KNOWLEDGE OF THE A.O. TO COME TO THE CONCLUSION THAT INCOME OF THE ASSESS EE HAS ESCAPED ASSESSMENT. THUS, ACCORDING TO HIM, THE RE- ASSESSMENT ORDER IS VOID AND HAS TO BE ACCORDINGLY QUASHED. 4. THE LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ORIG INAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 24.12.2008. THE RELEVANT ASSESSMENT YEAR I.E., A .Y. 2006-07 ENDED ON 31.03.2007 AND THE PERIOD OF ONE Y EAR THEREFROM ENDED ON 31.03.2008. NOTICE UNDER SECTIO N 148 OF THE ACT IS DATED 19.03.2013 I.E., CLEARLY BE YOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT 5 ITA.NO.1811/HYD/2014 BALAJI RAILROAD SYSTEMS LIMITED, SECUNDERABAD . YEAR. THEREFORE, THE FIRST PROVISO TO SECTION 147 O F THE I.T. ACT IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTIO N 10A OF THE ACT WITH REGARD TO THE EXPORT PROCEEDS RECEIVED BY THE ASSESSEE BEYOND THE STIPULATED PERIOD HAS BEEN CONSIDERED BY THE LD. CIT UNDER SECTION 263 AND WAS ALSO EXAMINED BY THE A.O. DURING THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WI TH SECTION 263 OF THE I.T. ACT. THEREFORE, IT IS CLEAR THAT ALL THE RELEVANT FACTS RELATING TO THE RECEIPT FROM RECEIPT OF EXPORT PROCEEDS WERE BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT. WHEN THERE IS NO FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL NECESSARY FACTS FOR THE ASSESSMENT OF HIS INCOME, THE A.O. IS PRECLUDED FROM REOPENING THE ASSESSMENT AS THE CONDITIONS FOR REOP ENING OF THE ASSESSMENT UNDER THE FIRST PROVISO TO SECTIO N 147 OF THE I.T. ACT ARE NOT FULFILLED. THEREFORE, WE SET A SIDE THE ORDER OF THE LD. CIT(A) AS WELL AS THE A.O. UNDER S ECTION 147 READ WITH SECTION 143(3) OF THE I.T. ACT HOLDIN G IT TO BE VOID AB-INITIO . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04.03.2016 SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 04 TH MARCH, 2016 VBP/- 6 ITA.NO.1811/HYD/2014 BALAJI RAILROAD SYSTEMS LIMITED, SECUNDERABAD . COPY TO 1. BALAJI RAILROAD SYSTEMS LIMITED, SECUNDERABAD. C/O. MR. MOHD. AFZAL, ADVOCATE, 11-5-465, SHERSONS RESIDENCY, FLAT NO.402, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD 500 004. 2. THE ACIT, CIRCLE - 1(3), AAYAKA R BHAVAN, HYDERABAD. 3. CIT(A) - 2 , HYDERABAD. 4. CIT - 1 , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD 6. GUARD FILE.