M/s. Shivam Art-Processors Pvt.Ltd., Surat V. The ACIT.,Circle-4, Surat

ITA 1940/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5683 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-05-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 26-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Assessee Lawyers: DEEPAK U BHATIA
• Keywords: Depreciation; Difference of opinion; Change of opinion; Set aside
• Section: 143(3); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL , A.M.) I.T.A. NO. 1940/AHD./2008 ASSESSMENT YEAR : 2002-2003 SHIVAM ART PROCESSORS PVT. LTD., SURAT -VS.- ASSISTANT COMMISSIONER OF INCOME TAX, (PAN : AADCS 3047 F) CIRCLE-4, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPAK U. BHATIA RESPONDENT BY : SHRI H.P. MEENA, SR. D .R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 10.03.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT FOR TH E ASSESSMENT YEAR 2002-03. 2. GROUND NO. 1 OF THIS APPEAL READS AS UNDER :- THAT THE HON'BLE CIT(A.) HAS ERRED IN SUSTAINING T HE RE-ASSESSMENT PROCEEDINGS U/S. 147/ 148 WHICH IS WRONG AND BAD-IN -LAW. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THE AFORESAID GROUND OF APPEAL ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROC ESSING OF MAN-MADE FABRICS. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN O F INCOME ON 26.03.2003 DECLARING TOTAL LOSS OF RS.19,25,909/-. THIS RETURN WAS ACCEPTED UNDER SECT ION 143(1) ON 27.03.2003. THEREAFTER THE ASSESSING OFFICER ISSUED A NOTICE ON 12.05.2005 UND ER SECTION 148 READ WITH SECTION 147 OF THE ACT. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESS ING OFFICER UNDER SECTION 148, THE ASSESSEE VIDE LETTER DATED 07.06.2005 INTIMATED THAT THE RET URN SO FILED ON 26.03.2003 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTIO N 148 OF THE INCOME TAX ACT, 1961. SUBSEQUENTLY, THE ASSESSING OFFICER FRAMED THE ASSE SSMENT UNDER SECTION 143(3) READ WITH SECTION 147 ON 29.09.2006, WHEREIN HE MADE THE FOLL OWING TWO ADDITIONS :- (I) ON ACCOUNT OF DEPRECIATION ON PLANT & MACHINE RY - RS.14,47,689/- (II) ON ACCOUNT OF INTEREST PAID ON SHARE APPLICA TION MONEY - RS. 3,72,713/- 2 ITA NO. 1940/AHD/2008 4. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS), THE ASSESSEE CONTENDED THAT RE-OPENING OF ASSESSMENT UNDER SECTION 147/ 148 OF THE ACT IS BAD-IN-LAW. IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) REJ ECTED THIS GROUND FOR THE DETAILED REASONS GIVEN IN PARA 2.3, WHICH READS AS UNDER :- 2.3. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND OBSERVATION OF THE A.O. THIS IS A CASE WHERE THE RE TURN WAS PROCESSED U/S. 143(1). THE ASSESSMENT PROCEEDINGS WERE NEVER INITIATED EARLIER AND HENCE NONE OF THE ISSUES WAS EVER EXAMINED BY THE A .O. DURING THE COURSE OF ANY PROCEEDINGS. HENCE, THIS CANNOT BE TH E CASE OF CHANGE OF OPINION. AS PER THE SETTLED POSITION OF LAW THE HON 'BLE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD. [198 ITR 297] HAS REITERATED THAT ONCE AN ASSESSMENT IS REOPENED, THE PREVIOUS A SSESSMENT IS SET ASIDE AND THE WHOLE ASSESSMENT PROCEEDINGS ARE STAR TED AFRESH. WHAT HAS ASSUMED FINALITY IT WAS HELD, COULD NOT BE DIST URBED IN A REASSESSMENT. HOWEVER, WHERE THE ISSUE HAD BEEN CON SIDERED AND DECIDED, THERE WOULD BE A LIMITATION IN RESPECT OF SUCH ISSUE AND NOT OTHERWISE. THIS CLEARLY SHOWS THAT THOSE ISSUES WHI CH HAVE NOT BECOME FINAL CAN BE THE SUBJECT MATTER OF REASSESSMENT. IN THE PRESENT CASE, THE A.O. CAME TO KNOW THAT THE ASSESSEES BUSINESS WAS CLOSED FULLY AND THEREFORE, THE DEPRECIATION CANNOT BE ALLOWED. IT W AS NOT A CASE OF LULL IN THE BUSINESS BUT A CASE OF COMPLETE CLOSURE OF BUSI NESS. HENCE, THE REOPENING WAS CORRECT. THERE WAS NO CHANGE OF OPINI ON. FURTHER, THE REASONS FOR REOPENING SUPPLIED BY WAY OF LETTER OR COPY AMOUNTS TO FOLLOWING THE PROCEDURE AS LAID DOWN BY THE HON'BLE COURT. HENCE, THE ARGUMENTS OF THE APPELLANT ARE REJECTED AND THESE G ROUNDS OF APPEAL ARE DISMISSED. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, SHRI DEEPAK U. BHATIA, LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICE R HAS NOT SUPPLIED THE REASONS RECORDED BEFORE ISSUING NOTICE UNDER SECTION 148. HE CONTENDED THAT THE ASSESSING OFFICER MERELY GIVEN THE GIST OF REASONS RECORDED VIDE LETTER DATED 28.06.2005. T HE LD. COUNSEL OF THE ASSESSEE RELYING ON THE JUDGMENT DATED 22.02.2010 OF THE HON'BLE BOMBAY HIG H COURT IN THE CASE OF PRASHANT S. JOSHI VS.- ITO [291 ITR 500] HELD THAT EVEN IF THERE IS N O ASSESSMENT UNDER SECTION 143(3), RE-OPENING UNDER SECTION 147 IS BAD-IN-LAW IF THERE ARE NO PRO PER REASONS TO BELIEVE. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT REOPENING OF ASSESS MENT IS BAD-IN-LAW FOR WHICH RELIANCE CAN BE PLACED ON THE FOLLOWING DECISIONS :- 3 ITA NO. 1940/AHD/2008 (I) SARADBHAI M. LAKHANI VS.- ITO (1998) 231 ITR 779 (GUJ.); (II) CIT VS.- KELVINATOR OF INDIA LTD. [256 ITR 1 (DEL.)(FB). ON MERIT ALSO, THE LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION, ON WHICH HE RELIED ON THE FOLLOWING D ECISIONS :- (I) CIT VS.- NAHAR EXPORTS LTFD. (2008) 296 ITR 419 (P &H); (II) CIT VS.- SWARUP VEGETABLE PRODUCT INDIA LTD. (2005 ) 277 ITR 60 (ALL.); (III) CIT VS.- YAMAHA MOTOR INDIA P. LTD. (2009) 226 CTR 304 (DEL.); (IV) CIT VS.- INSILCO LTD. (2010) 320 ITR 322 (DEL.); (V) CIT VS.- PREMIER IND. (INDIA) LTD. (2008)170 TAXMA N 407 (MP); (VI) CIT VS.- REFRIGERATION & ALLIED INDUSTRIES LTD. (2 001) 247 ITR 12 (DEL.). 6. ON THE OTHER HAND, SHRI H.P. MEENA, SR. D.R. APP EARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT VIDE LETTER DAT ED 28.06.2005, THE ASSESSING OFFICER INFORMED THE ASSESSEE THE REASONS RECORDED BUT NOT MADE AVAILABL E THE COMPLETE REASONS RECORDED. THIS LETTER, IN OUR OPINION, IS NOT ENOUGH FOR THE ASSESSEE TO F ILE APPROPRIATE OBJECTION AGAINST THE NOTICE UNDER SECTION 147 READ WITH SECTION 148 OF THE INCO ME TAX ACT, 1961. WE, THEREFORE, SET ASIDE THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT A SSESSING OFFICER SHALL SUPPLY THE COPY OF REASONS RECORDED TO THE ASSESSEE. THEREAFTER THE AS SESSEE MAY FURNISH THE OBJECTION. THE ASSESSING OFFICER WILL DISPOSE OF THOSE OBJECTIONS IN ACCORDANCE WITH THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESTAFT S INDIA LTD. VS.- ITO [259 ITR 19 (SC)] AND THEREAFTER, IF REQUIRES, REFRAME THE ASSESSMENT IN ACCORDANCE WITH LAW. 8. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 02.07.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02/ 07 / 2010 4 ITA NO. 1940/AHD/2008 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S.