Richa Knitwears, New Delhi V. ACIT, New Delhi

ITA 2056/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52585 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 04-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: DR S NARAYANAN
• Keywords: Depreciation; Reason to believe
• Section: 80HHC; 148; 139

Judgement Text

ITA NO. 2056/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2056/DEL/2010 A.Y. : 2001-02 M/S RICHA KNITWEARS, A-41, MAYAPURI INDUSTRIAL AREA, PHASE-I, NEW DELHI 110 064 (PAN/GIR NO. : AAAFR0101P) VS. A CIT, CIRCLE 27(1) NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : DR. S. NARAYANAN, ADV. DEPARTMENT BY : SMT. ANUSHA KHURANA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 25.3.2 010 PERTAINING TO ASSESSMENT YEAR 2001-02. 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE ASSE SSING OFFICER WHICH WAS PASSED U/S. 147/143(3) OF THE IT ACT AS THE SAM E IS BAD IN LAW. 3. IN THIS CASE ASSESSMENT FOR THE A.Y. 2001-02 WAS COMPLETED UNDER SCRUTINY IN MARCH, 2004 AT AN INCOME OF ` 1.2 1 CRORES. ASSESSEE HAD EARNED AN INCOME OF ` 30.23 LACS FROM QUOTA SA LE WHICH WAS INCLUDED IN EXPORT INCENTIVE. THE ASSESSEE WAS ALLO WED FULL AMOUNT OF ` 536.87 LACS EXPORT INCENTIVES INCLUDING QUOTA SALE OF ` 30.23 LACS FOR CLAIMING DEDUCTION U/S 80HHC. ASSESSING OFFICER F URTHER HELD THAT AS ITA NO. 2056/DEL/2010 2 PROFIT ON SALE OF LICENSE (QUOTA SALE) IS NOT ELIGI BLE FOR DEDUCTION U/S 80HHC, IT SHOULD HAVE BEEN EXCLUDED FROM EXPORT INC ENTIVES WHILE CALCULATING THE DEDUCTION U/S 80HHC. SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED ON 19.6.2007 FOR THIS PURPOSE AND ASSESS MENT WAS FRAMED ACCORDINGLY. 4. ASSESSEE APPEALED AGAINST THE VALIDITY OF THE R EASSESSMENT TO THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WHO DI SMISSED THE ASSESSEES PLEA. 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPE AL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. IT HAS BEEN CONTENDED BY THE LD. COUNSEL OF THE ASSESSEE THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO SUBMIT AND D ISCLOSE ALL THE RELEVANT FACTS AND FIGURES WITH REGARD TO QUOTA SA LE DURING THE COURSE OF REGULAR ASSESSMENT. HE CLAIMED THAT ASSESSING OFFICER HAS SPECIFICALLY ASKED FOR THE INFORMATION IN THIS REGAR D AND VIDE LETTER DATED 19.12.2002 ASSESSEE HAS SUBMITTED DETAILS OF EXPORT INCENTIVES OF ` 53687172/-. IN THE DETAILS IT IS CLEARLY MENT IONED THAT THE SAME INCLUDES QUOTA INCOME OF ` 3023456/-. 6.1 WE FIND THAT REASONS FOR REOPENING INCORPORATES AS UNDER:- IN CASE ASSESSMENT FOR A.Y. 2001-02 WAS COMPLETED UN DER SCRUTINY IN MARCH, 2004 AT AN INCOME OF ` 1.21 CRORE S. ASSESSEE HAD EARNED AN INCOME OF ` 30.23 LACS FROM QUOTA SALE WHICH WAS INCLUDED IN EXPORT INCENTIVES. ASSESSEE HAS BEEN A LLOWED FULL AMOUNT OF ` 536.87 LACS EXPORT INCENTIVES INCLUDING QUOTA SALE OF ` 30.23 LACS FOR CLAIMING DEDUCTION U/S. 80HHC. AS PROFIT ON SALE OF LICENSE (QUOTA SALE) IS NOT ELIGIBLE FOR DEDUCTI ON U/S 80HHC IT ITA NO. 2056/DEL/2010 3 SHOULD HAVE BEEN EXCLUDED FROM EXPORT INCENTIVES WHI LE CALCULATING THE DEDUCTION U/S 80HHC. THE INCOME ES CAPED ASSESSMENT COMES TO ` 22,92,469/- HENCE, ON THE BASI S OF FACTS CITED ABOVE I HAVE REASON TO BELIEVE THAT INCOME OF ` 22,92,469/- HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2001 -02. 6.2 FROM THE ABOVE, IT IS CLEAR THAT REOPENING WAS DO NE TO EXCLUDE QUOTA SALE OF ` 30.23 LACS FROM THE EXPORT INCENTIVE S. THIS ASPECT WAS DULY ENQUIRED BY THE ASSESSING OFFICER IN THE REG ULAR ASSESSMENT AND ASSESSEE HAS FURNISHED THE REPLY THEREOF. HENCE , THE PROVISO 147 WILL COME INTO PLAY. THE SAME READS AS UNDER:- INCOME ESCAPING ASSESSMENT - 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THI S SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASS ESSMENT YEAR). PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER T HE EXPIRY OF FOUR YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR ITA NO. 2056/DEL/2010 4 BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION(1) OF SECTION 142 OR SECTION 148 OR TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FO R THAT ASSESSMENT YEAR.' 6.3 FROM THE ABOVE PROVISO IT IS CLEAR THAT NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE OR DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IN THIS CASE, WE FIND THAT DETAILS PERTAIN ING TO QUOTA SALE WAS ASKED BY THE ASSESSING OFFICER AND THE DETAILS WER E DULY SUPPLIED. THERE WAS NO FAILURE ON THE PART OF ASSESSEE TO DIS CLOSE FULLY AND TRULY THE NECESSARY FACTS IN THIS REGARD. HENCE, REOPENI NG AFTER EXPIRY 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN THIS CASE IS NOT SUSTAINABLE. HENCE, WE FIND THAT THE ASSESSMENT IN THIS CASE IS BAD IN LAW. ACCORDINGLY, WE QUASH THE REASSESSMENT AS INVAL ID. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/8/2011. SD/- SD/- [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 17/8/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ITA NO. 2056/DEL/2010 5 ASSISTANT REGISTRAR, ITAT, DELHI BENCHES