Assistant Commissioner of Income-tax, V. Kirloskar Oil Engines Ltd., Pune

ITA 1853/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9463 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: C H NANAWADEKAR
• Keywords: Tangible material; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! ' $!%& ! ' BEFORE SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWAST HY, JM / ITA NO. 1853/PUN/2014 &( ) *) / ASSESSMENT YEAR : 2007-08 ASST. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. .. APPELLANT VS. M/S.KIRLOSKAR OIL ENGINES LTD, 13, LAXMANRAO KIRLOSKAR ROAD, KHADKI, PUNE 411 003. PAN: AADCK5714H .. RESPONDENT ASSESSEE BY : SHRI C.H.NANAWADEKAR DEPARTMENT BY : SHRI S.P.WALIMBE DATE OF HEARING : 17-05-2017 DATE OF PRONOUNCEMENT : 19-05-2017 + / ORDER PER D.KARAUNAKARA RAO, AM : THIS IS THE APPEAL BY THE REVENUE AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS)-5 DATED 14/07/2014 FOR THE ASSE SSMENT YEAR 2007-08. 2 ITA NO.1853/PUN/2014, A.Y: 2007-08 OF M/S.KIRLOSKAR OIL ENGINES LTD, PUNE. 2. IN HIS ORDER, THE COMMISSIONER OF INCOME TAX (APPEALS) EX AMINED THE VALIDITY OF THE REOPENING OF THE ASSESSMENT AND HELD THAT THE SAME IS INVALID. THEREFORE, THE REVENUE IS AGGRIEVED WITH THE SAM E AND RAISED THE LEGAL ISSUE BEFORE US. 3. ON THIS ISSUE, LD.COUNSEL FOR THE ASSESSEE BRIEFLY EXPLA INED THE BACKGROUND FACTS LEADING TO THE REASSESSMENT OF THE ASS ESSMENT. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTU RE AND SALE OF INTERNAL COMBUSTION ENGINES, GENERATING SETS, BI-METAL STR IPS & BEARINGS, ENGINE VALVES ETC. THE ASSESSEE FILED RETURN OF INCOME FOR A.Y.2007-08 ON 27.10.2007 DECLARING TOTAL INCOME OF RS.155,61,71,330/-. THE S CRUTINY ASSESSMENT WAS COMPLETED BY PASSING ORDER U/S. 143(3) ON 30.12.2009 AT AN ASSESSED INCOME OF RS.165,82,98,187/-. SUBSEQUENTLY, TH E AO RE- OPENED THE ASSESSMENT. FURTHER, LD.COUNSEL MENTIONED, O UT OF THE THREE(3) REASONS RECORDED FOR REOPENING OF THE ASSESSME NT, THE ISSUE RELATING TO PROVISION OF WARRANTY IS THE SOLE ISSUE WHERE THE ADDITION WAS ACTUALLY MADE IN THE REASSESSMENT. REFERRING TO THE SAID ISSUE, LD.COUNSEL SUBMITTED THAT THE SAID ISSUE WAS ALREADY CONSIDERED BY THE ASSESSING OFFICER DURING THE REGULAR ASSESSMENT VIDE THE ORDER OF AS SESSMENT DATED 30/12/2009 PASSED U/S.143(3) OF THE ACT. IN THIS REGARD, LD.COUNSEL BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 12 (ON P AGE 19) OF THE REGULAR ASSESSMENT ORDER(SUPRA). HERE, THE FACT RELATING TO MAKING DISALLOWANCE RS.15,16,613/- OUT OF THE TOTAL CLAIM OF RS.107.02 LAKHS ON A CCOUNT OF PROVISION FOR WARRANTY WAS DISCUSSED. FURTHER, LD.AUTHORIS ED 3 ITA NO.1853/PUN/2014, A.Y: 2007-08 OF M/S.KIRLOSKAR OIL ENGINES LTD, PUNE. REPRESENTATIVE ALSO DEMONSTRATED THE FACT OF ALLOWING RS.91 .86 LAKHS, THE AMOUNT WHICH WAS ACTUALLY UTILIZED DURING THE YEAR OUT O F THE SAID AMOUNT OF ` 107.02 LAKHS. CONSIDERING THE ABOVE, IT IS THE SUBMISSION O F THE LD.COUNSEL FOR THE ASSESSEE, THE SAID ISSUE RELATING TO PR OVISION FOR WARRANTIES ON SALE OF SMALL, MEDIUM AND LARGE ENGINES WAS ALR EADY EXAMINED BY THE ASSESSING OFFICER AND AN OPINION WAS FORMED DURING THE REGULAR ASSESSMENT PROCEEDINGS. IN SUCH FACTUAL CIRCUMST ANCES, THE ASSESSING OFFICER IS PREVENTED FROM ASSUMING JURISDICTION U/S 147 OF THE ACT. AS SUCH ALL THE FACTS RELEVANT FOR MAKING THE ASSES SMENT WAS ALSO AVAILABLE ON RECORD. NO TANGIBLE MATERIAL IS RELIED UPON BY THE ASSESSING OFFICER FOR MAKING OUT IN FRESH FACTS NECESSARY FOR MAKING TH E ASSESSMENT. LD.COUNSEL, FURTHER, SUBMITTED THAT THERE IS NO FAILURE OF DISC LOSURE OF FACTS ON PART OF THE ASSESSEE NECESSARY FOR MAKING AN ASSESSMENT. I N THIS REGARD, LD.AUTHORISED REPRESENTATIVE REFERRED TO THE PROVISIONS O F PROVISO TO SECTION 147 OF THE ACT. 4. ON THE OTHER HAND, LD.DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE R ELATING TO THE VALIDITY OF THE REASSESSMENT PROCEEDINGS. WE HAVE ALSO PE RUSED THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOM E TAX (APPEALS). IT IS AN UNDISPUTED FACT THAT THE ISSUE OF PROVIS ION FOR WARRANTY IS THE ONLY GROUND ON WHICH ADDITION IS MADE OUT OF THE THREE(3) REASONS MENTIONED IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT . THIS IS 4 ITA NO.1853/PUN/2014, A.Y: 2007-08 OF M/S.KIRLOSKAR OIL ENGINES LTD, PUNE. THE CASE OF REOPENING OF THE ASSESSMENT BEYOND FOUR(4) YE ARS. THE FAILURE OF DISCLOSURE OF RELEVANT FACTS TRULY AND FULLY IS THE CONDIT ION TO BE MET BY THE ASSESSING OFFICER BEFORE ASSUMING THE JURISDICTION. IT I S EVIDENT FROM THE RECORDS THAT NO SUCH OMISSION IS MADE OUT BY THE A SSESSING OFFICER. REASONS RECORDED SUGGESTS THAT THE ASSESSMENT RECOR DS IS THE BASIS FOR REOPENING THE CONCLUDED SCRUTINY ASSESSMENT. OTHERWISE, NO TANGIBLE MATERIAL AND THAT WORKS A LIVE WIRE WAS MADE OUT BY TH E ASSESSING OFFICER FOR ASSUMPTION OF THE JURISDICTION VALIDITY. A PERUSAL OF THE ASSESSMENT ORDER(SUPRA), WE FIND THE SAID ORDER DATED 30/12/2009 CLEA RLY SUPPORTS THE ASSESSEES CONTENTION RELATING TO FORMATION OF AN OPINION O N THIS ISSUE DURING THE REGULAR ASSESSMENT PROCEEDINGS. IT IS UNDISPU TED THAT THE ISSUE OF PROVISION FOR WARRANTY WAS THE SUBJECT MATTER OF ADDIT ION DURING THE REGULAR ASSESSMENT PROCEEDINGS. PARA 13 OF THE SAID ORD ER IMPARTS THE SAME. CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT THE CONCLUSIONS GIVEN BY THE COMMISSIONER OF INCOME TAX(APPEALS) IN PARA 7 DOES NOT CALL FOR ANY INTERFERENCE. FOR THE SAKE OF COMPLETENESS OF TH IS ORDER SAID PARA 7 IS EXTRACTED BELOW:- 7. AFTER GOING THE ABOVE ORDER, IT IS CLEARLY SEEN TH AT THE ISSUE HAS BEEN DISCUSSED IN DETAIL IN PARA 12 OF THE ASSESSMEN T ORDER, PASSED ORIGINALLY AND THEREFORE REVISITING THE ISSUE BY THE ASSESSING OFFICER U/S.147 OF THE INCOME-TAX ACT BY ISSUING NOTICE U/S. 148 OF T HE INCOME- TAX ACT. ACCORDINGLY, IT IS HELD THAT THE ASSESSING O FFICER WAS NOT JUSTIFIED IN ISSUING NOTICE U/S. 148 OF INCOME-TAX A CT. THUS, THE GROUND IS ALLOWED. 5 ITA NO.1853/PUN/2014, A.Y: 2007-08 OF M/S.KIRLOSKAR OIL ENGINES LTD, PUNE. 6. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) ON THIS LEGAL ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. 7. REGARDING OTHER ISSUES RAISED RELATING TO MERITS RAISED IN OTHER GROUNDS OF THE APPEAL, CONSIDERING OUR DECISION ON THE LEG AL ISSUE ADJUDICATION OF THESE ISSUE BECOMES AN ACADEMIC EXERCISE . THEREFORE, RELEVANT GROUNDS ON MERITS ARE DISMISSED AS ACADEMIC. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 19 TH DAY OF MAY, 2017. SD/- SD/- ,$!% /VIKAS AWASTHY) , /D.KARUNAKARA RAO) & !- JUDICIAL MEMBER !- ACCOUNTANT MEMBER / PUNE; / DATED : 19 TH MAY, 2017 S S G G R R +./&01$2$*0 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)-V, PUNE 4. / THE CIT-V, PUNE 5. , ! , ' '#$ , / DR, ITAT, B BENCH, PUNE. 6. %& '( / GUARD FILE. ) * / BY ORDER, / / TRUE COPY / / *+ , / ASSISTANT REGISTRAR, ! , / ITAT, PUNE