A.C.I.T ,AKOLA CIRCLE, Akola V. M/S LEBEN LABORATORIES PVT..LTD, Akola

ITA 235/NAG/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9229 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K BARAL
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 80IB; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 459 /NAG /201 3 / ASSESSMENT YEAR : 20 0 3 - 04 M/S. LEBEN LABORATORIES PVT. LTD., PLOT NO. L - 4, PHASE III, MIDC, AKOLA 444104 PAN : AAACL2524M ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, AKOLA CIRCLE, AKOLA / RESPONDENT . / ITA NO.235/NAG/2015 / ASSESSMENT YEAR : 2011 - 12 THE ASSISTANT COMMISSIONER OF INCOME TAX, AKOLA CIRCLE, AKOLA ....... / APPELLANT / V/S. M/S. LEBEN LABORATORIES PVT. LTD., PLOT NO. L - 4, PHASE III, MIDC, AKOLA 444104 PAN : AAACL2524M / RESPONDENT 2 ITA NO S.459/NAG/2013 & 235/NAG/2015 ASSESSEE BY : S /S HRI C.J. THAKAR & S.C. THAKAR REVENUE BY : SHRI R.K. BARAL / DATE OF HEARING : 2 7 - 03 - 2019 / DATE OF PRONOUNCEMENT : 29 - 03 - 201 9 / ORDER PER VIKAS AWASTHY, JM : ITA NO. 459/NAG/2013 BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 16, MUMBAI, CAMP : NAGPUR DATED 05 - 08 - 2013 FOR THE ASSESSMENT YEAR 200 3 - 04. IN ITA NO. 235/NAG/2015 THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - I, NAGPUR DATED 21 - 04 - 2015 FOR THE ASSESSMENT YEAR 2011 - 12. ITA NO. 459/NAG/2013 (A.Y. 2003 - 04) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF PHARMACEUTICALS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 01 - 12 - 2003 DECLARING TOTAL INCOME OF RS.33,85,472/ - . THE ASSESSMENT ORDER U/S. 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS PASSED FOR ASSESSMENT YEAR 2003 - 04 ON 27 - 03 - 2006 ASSESSING THE 3 ITA NO S.459/NAG/2013 & 235/NAG/2015 INCOME AT RS.51,92,320/ - . THEREAFTER, THE ASSESSMENT FOR ASSESSMENT YEAR 2003 - 04 WAS REOPENED AND NOTICE U/S. 148 OF THE A CT WAS ISSUED ON 28 - 03 - 2008. IN REASSESSMENT PROCEEDINGS THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IB OF THE ACT IN RES PECT OF UNIT NOS. III, IV AND V WERE DENIED. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 26 - 12 - 2008 PASSED U/S. 143(3) R.W.S. 14 7 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ASSAILING THE ADDITION ON MERITS AS WELL AS CHALLENGING THE REOPENING U/S. 147 R.W.S. 148 OF THE ACT. THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING REOPENING AS WELL AS DISALLOWANCE OF DEDUCTION U/S. 80IB WERE DISMISSED. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DISALLOWING ASSESSEES CLAIM OF DEDUCTION U/S. 80IB. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEAL CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. 3. SHRI C.J. THAKAR AND SHRI S.C. THAKAR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFF ICER HAS ERRED IN REOPENING THE 4 ITA NO S.459/NAG/2013 & 235/NAG/2015 ASSESSMENT TO DISALLOW ASSESSEES CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. THE LD. AR SUBMITTED THAT THE ASSESSEES CLAIM OF DEDUCTION U/S. 80IB WAS CONSIDERED AND ALLOWED BY THE ASSESSING OFFICER IN ASSESSMENT ORDER PASSED U/S. 143(3) ON 27 - 03 - 2006. T HE LD. AR POINTED THAT IN ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS MADE A DETAILED DISCUSSION WITH RESPECT TO ASSESSEES CLAIM OF DEDUCTION U/S. 80IB. THE ASSESSEE CLAIMED DEDUCTION OF RS.20,29,798/ - IN THE R ETURN OF INCOME , T HE ASSESSING OFFICER RESTRICTED THE ASSESSEES CLAIM TO RS.5,12,429/ - . THE ASSESSING OFFICER BEFORE COMPUTING THE DEDUCTION HAD THOROUGHLY DISCUSSED THE ISSUE IN THE ASSESSMENT ORDER. THE LD. AR REFERRED TO THE ASSESSMENT ORDER DATED 27 - 03 - 2006 PASSED U/S. 143(3) OF THE ACT AT PAGES 1 TO 20 OF THE P APER B OOK - I. THE LD. AR CONTENDED THAT ONCE HAVING CONSIDERED THE ASSESSEES CLAIM IN ASSESSMENT PROCEEDINGS U/S. 143(3) THE REOPENING HAS BEEN MADE MERELY ON CHANGE OF OPINION. THE REOPEN ING OF ASSESSMENT TO IMPOSE CHANGE OF OPINION IS NOT PERMISSIBLE. IN SUPPORT OF HIS CONTENTIONS THE LD. AR PLACED RELIANCE ON FOLLOWING DECISIONS : I . CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC); II . DIRECT INFORMATION (P) LTD. VS. ITO, 349 ITR 150 (BOM); III . SIEMENS INFORMATION SYSTEM LTD. VS. ACIT, 295 ITR 333(BOM); IV . CIT VS. DINSHAW FROZEN FOOD LTD. DECIDED BY HONBLE BOMBAY HIGH COURT NAGPUR BENCH IN INCOME TAX APPEAL NO. 32 OF 2003 ON 29 - 09 - 2007. 5 ITA NO S.459/NAG/2013 & 235/NAG/2015 4. ON THE OTHER HAND SHRI R.K. BARAL REPRESENTING THE DEPA RTMENT VEHEMENTLY DEFENDED THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS WRONGLY CLAIMED DEDUCTION U/S. 80IB OF THE ACT. THUS, THE CLAIM OF ASSESSEE HAS BEEN RIGHTLY REJECTED BY THE ASSESSING OFFI CER IN REASSESSMENT PROCEEDINGS. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN APPEAL HAS RAISED ADDITIONAL GROUNDS CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. THE ASSESSEE IN ITS RETURN OF INCOME HAS CLAIMED DEDUCTION OF RS.20,29,798/ - U/S. 80IB IN RESPECT OF UNIT NOS. II I , IV, AND V. A PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003 - 04 DATED 27 - 03 - 2006 PASSED U/S. 143(3) REVEALS THAT THE ASSESSING OFFICER AFTER DETAILED EXAMINATION OF ASSESSEES CLAIM OF DEDUCTION U/S. 80IB RESTRICTED THE CLAIM TO RS.5,12,429/ - . THUS, IT IS EVIDENT THAT THE ASSESSING OFFICER COMPUTED ASSESSEES CLAIM OF DEDUCTION U/S. 80IB AFTER THOROUGHLY VERIFYING ALL THE FACETS OF ASSESSEES CLAIM . 6. IT IS A WELL SETTLED LAW THAT THE ASSESSING OFFICER CANNOT REOPEN ASSESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION . THE ASSESSING OFFICER IS VESTED WITH THE POWER S OF REOPENING U/S. 147 ONLY WHERE THE 6 ITA NO S.459/NAG/2013 & 235/NAG/2015 ASSESSING OFFICER HAS REASON TO BELIEVE THAT AN INCOME CHARGEABLE TO TAX THAT HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER DOES NOT HAVE UNFETTERED POWER S TO INVOKE THE PROVISIONS OF SECTION 147 AT WILL TO SUBSTITUTE HIS EARLIER OPINION. THE ASSESSING OFFICER CANNOT INVOKE THE PROVISIONS OF SECTION 147 MERELY TO THRUST UPON HIS CHANGE OF OPINION . 7 . THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) EXPLAINING THE SCOPE OF SECTION 147 AND CIRCUMSTANCES UNDER WHICH THE ASSESSING OFFICER CAN INVOKE T HE JURISDICTION UNDER THE SAID SECTION HELD AS UNDER : 4. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1987 , RE - OPENING COULD BE DONE UNDER ABOVE TWO CONDITIONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT [WITH EFFECT FROM 1 - 4 - 1989], THEY ARE GIVEN A GO - BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO RE - OPEN THE ASSESSMENT. THEREFORE, POST 1 - 4 - 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE - OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DI FFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE - ASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE - CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVE D, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE - OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 - 4 - 1 989, ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT 7 ITA NO S.459/NAG/2013 & 235/NAG/2015 THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. 8 . THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF DIRECT INFORMATION (P) LTD. VS. ITO (SUPRA) HAS HELD : 15. THE POWER OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT UNDER SECTION 148 IS EVEN WITHIN A PERIOD OF FOUR YEARS CONDITIONED BY THE REQUIREMENT THAT THERE MUST BE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER CANNOT IN THE GUISE OF FORMULATING A REASON TO BELIEVE EXERCISE A JURISDICTION TO REVIEW AN EARLIER DETERMINATION. THE POWER TO REOPEN AN ASSESSMENT IS NOT A POWER TO REVIEW AN ASSESSMENT A LREADY MADE, BUT A POWER TO REOPEN WHERE THERE IS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. CONSEQUENTLY, UNLESS THE ASSESSING OFFICER HAS TANGIBLE MATERIAL BEFORE HIM ON THE BASIS OF WHICH HE COMES TO THAT CONCLUSION, THE REOPENING OF AN ASSES SMENT CANNOT BE PERMITTED MERELY ON THE GROUND THAT THERE IS A CHANGE IN THE VIEW OF THE ASSESSING OFFICER AND HE SUBSEQUENTLY BELIEVES THAT THE EARLIER VIEW WAS INCORRECT. IF THAT WERE TO BE PERMITTED, THE ASSESSING OFFICER WOULD EXERCISE THE POWER TO REO PEN ASSESSMENTS ARBITRARILY. THAT THE LAW DOES NOT COUNTENANCE. THUS, IN VIEW OF LAW PROPOUNDED BY THE HONBLE APEX COURT AND THE HONBLE BOMBAY HIGH COURT IN VARIOUS JUDGMENTS, WE ARE OF CONSIDERED VIEW THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS EXCEEDED HIS JURISDICTION IN INVOKING THE PROVISIONS OF SECTION 147 TO THRUST UPON HIS CHANGE OF OPINION TO REJECT ASSESSEES CLA IM OF DEDUCTION U/S. 80IB OF THE ACT. THUS, IN VIEW OF FACTS OF THE CASE AND THE WELL SETTLED LAW , WE HOLD THAT REOPENING IN THE INSTANT CASE IS BAD IN LAW. CONSEQUENTLY, REASSESSMENT PROCEEDINGS 8 ITA NO S.459/NAG/2013 & 235/NAG/2015 ARE SET ASIDE AND THE ADDITIONAL GROUNDS NOS. 1 TO 3 RAISE D IN THE APPEAL BY THE ASSESSEE ARE ALLOWED. 9 . AS REGARDS GROUND NOS. 1 TO 3 RAISED ON MERITS OF THE ADDITION, THEY HAVE BECOME ACADEMIC AS THE ASSESSEE HAS BEEN GRANTED RELIEF ON LEGAL GROUNDS OF JURISDICTION. 1 0 . IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 235 /NAG/201 5 (A.Y. 20 11 - 12 ) 1 1 . THIS APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S. 80IB(4) OF THE ACT. 1 2 . THE LD. AR SUBMITTED THAT THE IN ASSESSMENT YEARS 2005 - 06, 2006 - 07, 2007 - 08, 200 8 - 09, 2009 - 10 AND 2010 - 11 THE ASSESSEES CLAIM OF DEDUCTION U/S. 80IB OF THE ACT WAS DENIED BY THE REVENUE. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 30 - 04 - 2013 COMMON FOR THE ASSESSMENT YEARS 2005 - 06, 2 006 - 07 AND 2007 - 08 ALLOWED ASSESSEE S CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. 9 ITA NO S.459/NAG/2013 & 235/NAG/2015 SIMILARLY, FOR ASSESSMENT YEAR 2009 - 10 IN ITA NO. 226/NAG/2014 AND FOR ASSESSMENT YEAR 2010 - 11 IN ITA NO. 227/NAG/2014 THE ASSESSEES CLAIM OF DEDUCTION U/S. 80IB WAS ALLOWED BY THE TRIBUNAL. THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE ORDER OF TRIBUNAL IN THE EARLIER ASSESSMENT YEARS HAS GRANTED RELIEF TO THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2011 - 12. 1 3 . ON THE OTHER HAND THE LD. DR VEHEMENTLY DEFENDED THE ORDER OF ASSESSING OFFICER AND PRAYED FOR REVERSING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 1 4 . BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERUSED. THE ASSESSEES CLAIM OF DEDUCTION U/S. 80IB HAS BEEN ALLOWED BY THE TRIBUNAL IN THE EARLIER ASSESSMENT YEARS. THE ASSESSING OFFICER DENIED BENEFIT OF DEDUCTION U/S. 80IB TO THE ASSESSEE IN RESPECT OF UNIT NO. V IN THE IMPUGNED ASSESSMENT YEAR. THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE ORDER OF TRIBUNA L FOR EARLIER ASSESSMENT YEARS HAS GRANTED RELIEF TO THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER IN GRANTING BENEFIT OF DEDUCTION U/S. 80IB TO THE ASSESSEE. THE APPEAL OF REVENUE IS DEVOID OF ANY MERIT , THE SAME IS DISMISSED, ACCORDI NGLY. 10 ITA NO S.459/NAG/2013 & 235/NAG/2015 15. TO SUM UP, THE APPEAL OF ASSESSEE IS ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF MARCH, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / NAGPUR ; / DATED : 29 TH MARCH, 2019. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) 4. / THE CIT 5. , , , / DR, ITAT, NAGPUR BENCH, NAGPUR . 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, NAGPUR