ACIT, Chennai V. M/s Midland Latex Products Ltd, Chennai

ITA 1834/CHNY/2003

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58307 (ITAT-COCHIN)
• Duration Of Justice: 8 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 01-10-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: P VENUGOPAL
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Revised return; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

1 ITA 1834-MDS-2003 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 1834/COCH/2003 (ASSESSMENT YEAR 1998-99) THE ASSIST.COMMISSIONER OF INCOME-TAX VS M/S MIDLA ND LATEX PRODUCTS LTD COMPANY CIRCLE IV(3) 64, (OLD NO.20) CHENNAI 600 034 RUKMANI LAKSHMIPATHI SALAI EGMORE, CHENNAI-8 PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) APPELLANT BY : MS. VIJAYAPRABHA RESPONDENT BY : SHRI P VENUGOPAL DATE OF HEARING : 16-02-2012 DATE OF PRONOUNCEMENT : 09-03-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A)-V, CHENNAI DATED 07-07-2 003 AND PERTAINS TO ASSESSMENT YEAR 1998-99. 2. THIS APPEAL WAS ORIGINALLY FILED BEFORE THE CHEN NAI BENCH OF THIS TRIBUNAL. SUBSEQUENTLY, BY THE ORDER OF THE PRESIDENT, INCOME -TAX APPELLATE TRIBUNAL DATED 25-05-2009, THE APPEAL WAS TRANSFERRED TO COCHIN BENC H. ACCORDINGLY THE SAME WAS POSTED FOR FINAL DISPOSAL. 2 ITA 1834-MDS-2003 3. SMT. VIJAYAPRABHA, THE LD.DR SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS REOPENING OF THE ASSESSMENT U/S 14 7 OF THE INCOME-TAX ACT. THE LD.DR SUBMITTED THAT WHILE PASSING THE ORIGINAL ASS ESSMENT ORDER, THE ASSESSING OFFICER HAS GIVEN EXCESS RELIEF U/S 10A OF THE ACT. WHEN THE EXCESS RELIEF WAS GIVEN, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSE SSING OFFICER IS ENTITLED TO REOPEN THE ASSESSMENT WITHIN THE PERIOD OF FOUR YEA RS. THE COMMISSIONER OF INCOME-TAX(A), HOWEVER, FOUND THAT THE ASSESSING OFF ICER HAS REOPENED THE ASSESSMENT DUE TO CHANGE OF OPINION. IN THIS CASE, ACCORDING TO THE LD.DR, THERE IS NO QUESTION OF ANY CHANGE OF OPINION SINCE THE A SSESSEE WAS GIVEN EXCESS RELIEF. THEREFORE, THE ASSESSING OFFICER HAS RIGHT LY REOPENED THE ASSESSMENT WITHIN THE PERIOD OF FOUR YEARS. 4. ON THE CONTRARY, SHRI P VENUGOPAL, THE LD.REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INC OME ON 06-11-1998. SUBSEQUENTLY A REVISED RETURN WAS FILED ON 22-06-1999 CLAIMING EXEMPTION U/S 10A OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE , AFTER AMENDMENT OF SECTION 10A THE ACT ASSESSEE WAS ENTITLED TO CLAIM DEDUCTIO N U/S 10A FOR A PERIOD OF 10 YEARS IN RESPECT OF UNITS IN FREE TRADE ZONE AS AGA INST 5 OUT OF 8 YEARS PRIOR TO AMENDMENT. THE ASSESSING OFFICER CONSIDERED THE RE VISED RETURN FOR SCRUTINY AND COMPLETED THE ASSESSMENT AND GRANTED EXEMPTION U/S 10A OF THE ACT. REFERRING TO THE ASSESSMENT ORDER, MORE PARTICULARLY, PAGE 2, THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER, AFTER EXAMINI NG THE AMENDED PROVISIONS OF SECTION 10A FOUND THAT THE TAX HOLIDAY HAS BEEN EXT ENDED FROM 5 YEARS TO 10 YEARS, HENCE THE ASSESSEE CAN CLAIM EXEMPTION U/S 1 0A FOR THE ASSESSMENT YEAR 1998-99 ALSO. HAVING HELD SO, THE ASSESSING OFFICER SUBSEQUENTLY REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. A CCORDING TO THE LD.REPRESENTATIVE, FOR REOPENING THE ASSESSMENT, TH ERE SHOULD BE SOME FRESH 3 ITA 1834-MDS-2003 INFORMATION AVAILABLE WITH THE ASSESSING OFFICER. FROM THE ORDER OF ASSESSMENT IT CAN BE SEEN THAT NOWHERE THE ASSESSING OFFICER MENT IONED ABOUT THE FRESH INFORMATION THAT WAS AVAILABLE WITH HIM SUBSEQUENT TO PASSING OF ORDER U/S 143(3) OF THE ACT. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE REOPENING OF ASSESSMENT IS ONLY DUE TO CHANGE OF OPINION. THE L D.REPRESENTATIVE HAS PLACED RELIANCE ON FOLLOWING CASE LAWS: SITA WORLD TRAVEL (INDIA) LTD VS COMMISSIONER OF I NCOME-TAX (2004) 140 TAXMAN 381 (DELHI) SIRPUR PAPER MILLS LTD VS ITO (1978) 114 ITR 404 ( AP) CENTRY ENKA LTD VS ITO (1983) 143 ITR 629 (CAL) COMMISSIONER OF INCOME-TAX VS ELGI ULTRA INDUSTRIES LTD 296 ITR 573 (MAD) COMMISSIONER OF INCOME-TAX VS CHAKIAT AGENCIES PRIVA TE LTD 134 ITR 200 (MAD) COMMISSIONER OF INCOME-TAX VS TVS MOTOR CO LTD 319 ITR 192 (MAD) CARLTON OVERSEAS (P) LTD VS ITO & ORS 318 ITR 296 (DEL) 5. WE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SI DE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE REVI SED RETURN FILED BY THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COM PLETED U/S 143(3) BY AN ORDER DATED 30-01-2001. SUBSEQUENTLY, THE ASSESSING OFFICER FOUND THAT EXCESSIVE DEDUCTION WAS GRANTED TO THE ASSESSEE U/S 10A OF TH E ACT. ACCORDING TO THE LD.REPRESENTATIVE, THE AMENDMENT OF SECTION 10A OF THE ACT WAS EFFECTIVE FROM 01-04-1999 APPLICABLE FROM THE ASSESSMENT YEAR 1999-20 00. SECTION 10A(3) PROHIBITS THE EXTENSION OF PERIOD OF 5 YEARS AFTER THE EXPIRY OF 8 YEARS. THE MEMORANDUM WAS OPERATIVE ONLY FROM 01-04-1999. THER EFORE, THE ASSESSING 4 ITA 1834-MDS-2003 OFFICER FOUND THAT THE AMENDED PROVISIONS OF SECTIO N 10A ARE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT FOUND THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 10A WHETHER THE REOPENING OF THE ASSE SSMENT ON THE GROUND THAT EXCESS DEDUCTION U/S 10A WAS ALLOWED WAS DUE TO CHA NGE OF OPINION OR NOT? 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 147 OF THE INCOME-TAX ACT. SECTION 147 CLEARLY SAYS THAT IF TH E ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT, HE MAY ASSESS OR RE-ASSESS SUCH INCOME OR RECOMPUTE THE LOS S OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS THE CASE MAY BE FOR THE A SSESSMENT YEAR CONCERNED. HOWEVER, WHERE AN ORDER WAS PASSED U/S 143(3) FOR T HE RELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER SECTION 147 AFTER EXP IRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF THE ASSESS EE TO FURNISH ALL THE MATERIAL FACTS NECESSARY FOR COMPLETING THE ASSESSMENT. EXP LANATION 2(C)(III) CLEARLY SAYS THAT INCOME WAS ALSO DEEMED TO BE ESCAPED ASSESSMEN T WHEN THE INCOME HAS BEEN MADE SUBJECT TO EXCESSIVE RELIEF UNDER THE ACT . THEREFORE, WHEN THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT EXCESS IVE RELIEF WAS GIVEN U/S 10A OF THE ACT THIS WOULD AMOUNT TO ESCAPEMENT OF INCOME F ROM ASSESSMENT PROVIDED FOUR YEARS PERIOD FROM THE END OF THE RELEVANT ASS ESSMENT YEAR IS NOT EXPIRED. IN THIS CASE, ADMITTEDLY, FOUR YEARS PERIOD FROM THE END OF THE RELEVANT ASSESSMENT YEAR HAS NOT BEEN EXPIRED. 7. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 10A OF THE ACT. PROVISO TO SECTION 10A(3) AS IT STOOD AT THE RELEVA NT POINT OF TIME READS AS FOLLOWS: 5 ITA 1834-MDS-2003 PROVIDED THAT NOTHING IN THIS SUB SECTION SHALL BE CONSTRUED TO EXTEND THE AFORESAID FIVE ASSESSMENT YEARS TO COVER ANY PERIOD AFTER EXPIRY OF THE SAID PERIOD OF EIGHT YEARS. IN THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER A LLOWED THE CLAIM OF THE ASSESSEE WITHOUT EXAMINING THE PROVISO TO SECTION 10A OF THE ACT. IN FACT, THE ASSESSING OFFICER HAS SIMPLY TAKEN THE AMENDMENT WHICH EXTENDE D THE PERIOD OF FIVE YEARS TO 10 YEARS WITHOUT ANY REFERENCE TO PROVISO TO SEC TION 10A(3) OF THE ACT. THEREFORE, THE ASSESSING OFFICER HAS NOT EXPRESSED ANY OPINION WITH REGARD TO PROVISO TO SECTION 10A(3) OF THE ACT. SUBSEQUENTLY , THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 10A OF THE ACT BEYOND THE PERIOD OF EIGHT YEARS IN VIEW OF PROVISO TO SECTION 10A(3) OF THE ACT. THEREFORE, IT IS NOT A CASE OF CHANGE OF OPINION. DUE TO NON EXA MINATION OF SECTION 10A(3) THE ASSESSEE WAS ALLOWED DEDUCTION U/S 10A OF THE ACT. THEREFORE, THE ASSESSING OFFICER WAS WELL WITHIN HIS RIGHT TO REOPEN THE ASS ESSMENT WITHIN THE PERIOD OF FOUR YEARS. IT IS NOT THE CASE OF THE ASSESSEE THA T THE PERIOD OF FOUR YEARS HAS BEEN EXPIRED. THEREFORE, IT CANNOT BE SAID THAT TH E ASSESSMENT WAS REOPENED DUE TO CHANGE OF OPINION. 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF ELGI ULTRA INDUSTRIES LTD (SUP RA). IN THE CASE BEFORE THE MADRAS HIGH COURT, THE ASSESSMENT WAS REOPENED AFTE R A PERIOD FOUR YEARS. THEREFORE, THE HIGH COURT FOUND THAT WHEN THERE WAS NO FAILURE TO DISCLOSE MATERIAL FACT NECESSARY FOR ASSESSMENT, NOTICE FOR RE-OPENING THE ASSESSMENT U/S 148 BEYOND THE PERIOD OF FOUR YEARS IS BARRED BY LI MITATION. IN THIS CASE, ASSESSMENT IS REOPENED WITHIN THE PERIOD OF FOUR YE ARS. THEREFORE, THIS JUDGMENT 6 ITA 1834-MDS-2003 OF MADRAS HIGH COURT IN ELGI ULTRA INDUSTRIES LTD ( SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 9. WE HAVE ALSO GONE THROUGH THE JUDGMENT OF THE MA DRAS HIGH COURT IN THE CASE OF CHAKIAT AGENCIES PRIVATE LTD (SUPRA). THE M ADRAS HIGH COURT FOUND THAT ORIGINALLY DEDUCTION WAS GRANTED U/S 80-O OF THE ACT AND IN THE ABSENCE OF ANY MATERIAL OR IN THE ABSENCE OF ANY ALLEGATION, THE A SSESSEE HAS DISCLOSED TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT. IN THIS CASE, BEFORE THE MA DRAS HIGH COURT, THE ASSESSING OFFICER HAS EXAMINED THE PROVISIONS OF SECTION 80-O OF THE ACT. HOWEVER, IN THE CASE BEFORE US, PROVISIONS OF SECTION 10A(3) OF THE ACT WAS NOT EXAMINED BY THE ASSESSING OFFICER AT THE ORIGINAL STAGE, THEREFORE, THIS JUDGMENT OF THE MADRAS HIGH COURT IS ALSO NOT APPLICABLE TO THE FACTS OF T HE PRESENT CASE. 10. WE HAVE ALSO CAREFULLY GONE THROUGH OTHER JUDGM ENTS RELIED UPON BY THE ASSESSEE. IN ALL THESE CASES, EITHER THE ASSESSING OFFICER HAS EXAMINED THE ENTIRE FACTS AND THE CASE LAWS ON THE SUBJECT AND TAKEN A P ARTICULAR VIEW. IN SOME CASES, THE REOPENING WAS MADE AFTER THE EXPIRY OF FOUR YEA RS. THE FACTS OF THE PRESENT CASE, IN OUR OPINION, ARE ENTIRELY ON DIFFERENT FOO TING. THE ASSESSMENT WAS ADMITTEDLY REOPENED WITHIN THE PERIOD OF FOUR YEARS AND THE PROVISIONS OF SECTION 10A(3) WAS NOT EXAMINED AT THE TIME OF ORIGINAL ASS ESSMENT. THEREFORE, IN VIEW OF EXPLANATION 2(C)(III) TO SECTION 147 OF THE ACT, THE INCOME WAS DEEMED TO BE ESCAPED ASSESSMENT IN RESPECT OF DEDUCTION GRANTED U/S 10A OF THE ACT. SINCE THE ASSESSING OFFICER HAS NOT EXAMINED THE PROVISO TO SECTION 10A(3) AS IT STOOD AT THE RELEVANT POINT OF TIME, IT CANNOT BE SAID THAT THERE IS A CHANGE OF OPINION. IT IS A CASE OF NON CONSIDERATION OF RELEVANT PROVISIONS OF LAW WHICH WAS IN EXISTENCE AT THE RELEVANT POINT OF TIME. HENCE, THIS TRIBUNA L IS OF THE OPINION THAT THE 7 ITA 1834-MDS-2003 ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSME NT WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. 11. IN VIEW OF THE ABOVE DISCUSSION, WE ARE UNABLE TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A). ACCORDINGLY, THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE. SINCE THE COMMISSIONER OF INCOME-TAX(A) HAS NOT DECIDED THE ISSUE ON MERIT, THE MATTER NOW STANDS R ESTORED ON THE FILE OF THE COMMISSIONER OF INCOME-TAX(A). THE COMMISSIONER OF INCOME-TAX(A) SHALL DISPOSE OF THE APPEAL ON MERIT AFTER GIVING REASONA BLE OPPORTUNITY TO THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF MARCH, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 09 TH MARCH, 2012 PK/- COPY TO: 1. THE A.C.I.T., COMPANY CIRCLE IV(3), CHENNAI 600 034 2. M/S MIDLAND LATEX PRODUCTS LTD, 64, (OLD NO.20), RU KMANI LAKSHMIPATHI SALAI, EGMORE, CHENNAI-8 3. THE COMMISSIONER OF INCOME-TAX(A)-V, CHENNAI 4. THE COMMISSIONER OF INCOME-TAX-III, CHENNAI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH