The DCIT, Central Circle-1, Baroda V. Swiss Glass Coat Equipments Ltd., Anand

ITA 2428/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85773 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 26-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: URVASHI SHODHAN A R
• Section: 143(3); 153A; 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NOS. 2427 & 2428/AHD/2011 / ASSESSMENT YEAR: 2004-05 & 2005-06 DCIT CENTRAL CIRCLE-1, BARODA VS. SWISS GLASSCOAT EQUIPMENTS LTD, H-106, GIDC, VITHAL UDHYOGNAGAR, ANAND PAN : AACCS 6297 G / // / (APPELLANT) / // / (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV, SR.DR ASSESSEE(S) BY : MISS URVASHI SHODHAN, AR !' # $%&/ // / DATE OF HEARING : 18/03/2015 '( # $%& / // / DATE OF PRONOUNCEMENT: 19/03/2015 )* )* )* )*/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THESE ARE THE APPEALS FILED BY THE REVENUE AND ARE DIRECTED AGAINST A COMMON ORDER OF THE LD. COMMISSIONER OF INCOME-TAX( APPEALS)-IV, AHMEDABAD DATED 29.07.2011 FOR ASSESSMENT YEARS 200 4-05 AND 2005-06. 2. THE FIRST COMMON GROUND IN BOTH THE REVENUES AP PEAL READS AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THE PROCEEDINGS U/S 147 AS AB-INITIO INVALID 3. THE FACTS OF THE CASE ARE THAT ASSESSMENT YEARS UNDER CONSIDERATION ARE ASSESSMENT YEARS 2004-05 AND 2005-06. THE ORIGINAL ASSESSMENT FOR BOTH THE YEARS WERE COMPLETED U/S 143(3) R.W.S. 153A VIDE OR DER DATED 31.12.2007. THE ASSESSMENT WAS REOPENED U/S 148 VIDE NOTICE DAT ED 15.10.2010. THUS, THE ASSESSMENT WAS REOPENED AFTER MORE THAN 4 YEARS FROM THE END OF BOTH ITA NOS. 2427 & 2428/AHD/2011 DCIT VS. SWISS GLASS COAT EQUIPMENTS LTD FOR AYS 2004-05 & 05-06 2 THE ASSESSMENT YEARS UNDER CONSIDERATION. THE CIT(A ) CANCELLED THE REOPENING OF THE ASSESSMENT. HENCE, THIS APPEAL BY THE REVENUE. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE RELEVANT FINDING OF THE CIT(A) IN T HIS REGARD READS AS UNDER:- 6.5 IT IS SEEN THAT ASSESSMENTS U/S. 143(3) R .W.S. 153A HAVE BEEN MADE IN ALL THE AYS. 2003-04, 2004-05 AND 2005-06 ON THE SA ME DATE I.E. 31-12-2007. ALL THE MATERIAL/FACTS WERE ALREADY AVAILABLE BEFOR E THE ASSESSING OFFICER ON THE DATE OF FINALIZING THE ABOVE ASSESSMENTS. NO NE W FACTS HAS COME TO THE NOTICE OF THE AO SUBSEQUENT TO THE FINALIZATION OF THE ORIGINAL ASSESSMENT PROCEEDINGS. 6.6 DURING THE ASSESSMENT PROCEEDINGS FOR A.YS. 200 3-04 AND 2004-05 SUBSEQUENT TO THE SURVEY ON 19-1-2006, ADDITION ON ACCOUNT OF EXCESS UNDISCLOSED STOCK WAS MADE BASED ON THE SEIZED PAPE R CONTAINING THE DETAILS OF FINISHED GOODS/SEMI-FINISHED GOODS ETC AS ON 31. 03.2003 AND 31.03.2004 RESPECTIVELY. AT THE TIME OF ORIGINAL ASSESSMENT, T HIS FACT WAS CLEAR TO THE ASSESSING OFFICER THAT THE ABOVE UNDISCLOSED EXCESS STOCK HAS NOT BEEN SHOWN AS SALES OR AS CLOSING STOCK DURING THE SUCCEEDING YEARS. 6.7 FROM THE ABOVE SEQUENCE OF EVENTS, IT IS QUITE CLEAR THAT ONCE THE ASSESSING OFFICER WAS AWARE OF THE UNDISCLOSED EXCE SS STOCK FOR WHICH ADDITION WAS MADE IN THE RELEVANT ASSESSMENT YEAR, THE NON-DISCLOSURE OF ALLEGED SALES IN THE BOOKS OF ASSESSEE IN RESPECT O F SUCH EXCESS STOCK WAS ALSO IN THE KNOWLEDGE OF ASSESSING OFFICER AT THE TIME O F ORIGINAL PROCEEDINGS ITSELF. SINCE THE SURVEY HAD TAKEN PLACE ON 19-1-20 06, THE ABOVE EXCESS STOCK WAS NEVER CAPITALIZED OR SHOWN AS CLOSING STOCK IN SUBSEQUENT YEAR WAS ALSO QUITE CLEAR. NO ADDITIONAL INFORMATION/MATERIAL WAS REQUIRED TO COME TO A CONCLUSION AT THE TIME OF ORIGINAL ASSESSMENT ITSEL F THAT THERE WAS AN ESCAPEMENT OF INCOME IN RELATION TO THE PROFIT ELEM ENT IN RESPECT OF EXCESS STOCK WHICH COULD HAVE BEEN SOLD OUTSIDE BOOKS. 6.8 ONCE THE PRIMARY FACTS ARE BEFORE THE ASSESSING OFFICER, IT CANNOT BE A CASE WHERE THE ESCAPEMENT OF INCOME CAN BE ATTRIBUT ED TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS. THE APPELLANT'S CASE IS ALSO COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT CARBON AND INDUSTRIES LTD. V S. JCIT 307 ITR 271 WHERE IN SIMILAR ISSUE WAS DEALT IN AND IT WAS HELD THAT THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT OF NON-DISCLOSURE ONCE THE ASSESSING OFFICER WAS AWARE OF THE ENTIRE FACTS AT THE ORIGINAL STAGE ITS ELF. ITA NOS. 2427 & 2428/AHD/2011 DCIT VS. SWISS GLASS COAT EQUIPMENTS LTD FOR AYS 2004-05 & 05-06 3 6.9 MOREOVER, IT IS NOT A CASE COVERED BY EXPLANATI ON-1 BECAUSE THE RELEVANT FACTS WERE ALREADY AVAILABLE WITH ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. THE INFORMATION AV AILABLE WAS SUCH THAT IT DID NOT REQUIRE ANY DILIGENCE ON THE PART OF THE A. O. TO COME TO THE CONCLUSION OF ESCAPEMENT BY REASON OF FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FATS WITHIN T HE MEANING OF THE PROVISO TO SECTION 147. 6.10 IN VIEW OF THE ABOVE, THE PROCEEDINGS U/S.147 ARE HELD TO BE AB-INITIO INVALID. THE GROUND OF APPEAL RELATING TO ASSUMPTIO N OF JURISDICTION IS, THEREFORE, ALLOWED. 5. AFTER CONSIDERING ARGUMENTS OF BOTH THE SIDES AN D FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ABOVE FINDINGS OF THE CIT(A). ADMITTEDLY, THE ASSESSMENT WAS REOPENED AFTER MORE THAN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ORIGINAL A SSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT. THEREFORE, AS P ER PROVISO TO SECTION 147, THE ASSESSMENT COULD NOT HAVE BEEN REOPENED UNLESS THERE WAS ESCAPEMENT OF INCOME ON ACCOUNT OF FAILURE OF THE ASSESSEE TO PRODUCE ALL MATERIAL FACTS. IN THE CASE OF THE ASSESSEE, SEARCH HAS TAKEN PLACE AND AFTER ISSUING THE NOTICE U/S 153A, ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 153A OF THE INCOME-TAX ACT. ON THE BASIS OF CERTAIN DOCU MENTS SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS, THE ADDITION WAS MADE FOR UNDISCLOSED INVESTMENT IN STOCK. NOW, ON THE BASIS OF SAME DOCU MENTS, THE ASSESSMENT HAS BEEN REOPENED SO AS TO MAKE THE ADDITION FOR TH E GROSS PROFIT ON SUCH UNDISCLOSED STOCK. WHEN THE SEIZED PAPER WAS ALREAD Y AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, IT CANNOT BE SA ID THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE DURING THE COUR SE OF ORIGINAL ASSESSMENT PROCEEDINGS WHICH LAID TO THE ESCAPEMENT OF INCOME IN ORIGINAL ASSESSMENT PROCEEDINGS. THE REVENUE WAS NOT ABLE TO POINT OUT THAT THERE WAS ANY OTHER MATERIAL WITH THE REVENUE, EXCEPT THE MATERIA L WHICH WAS ALREADY AVAILABLE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. IN VIEW OF ABOVE, IN OUR OPINION, THE PROVISO TO SECTION 147 I S SQUARELY APPLICABLE IN ITA NOS. 2427 & 2428/AHD/2011 DCIT VS. SWISS GLASS COAT EQUIPMENTS LTD FOR AYS 2004-05 & 05-06 4 THIS CASE; AND ON THE FACTS OF THE ASSESSEES CASE, THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT CA RBON AND INDUSTRIES LTD. VS. JCIT, 307 ITR 271, WOULD BE SQUARELY APPLICABLE AND THE LD. CIT(A), RIGHTLY RELYING UPON THE SAID DECISION, QUASHED THE RE-OPENING OF ASSESSMENT. WE, THEREFORE, UPHOLD THE ORDER OF CIT( A) AND REJECT THE GROUND NO.1 OF THE REVENUES APPEAL. 6. ONCE REOPENING OF THE ASSESSMENT IS QUASHED, CON SEQUENTIALLY, THE ASSESSMENT ORDER COMPLETED IN PURSUANCE TO SUCH NOT ICE IS ALSO QUASHED. SINCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE ADDITION MADE IN SUCH ASSESSMENT ORDER ALSO DOES NOT SURVIVE AND THE REFORE, THE GROUND NO.2 OF THE REVENUES APPEAL HAS BECOME INFRUCTUOUS. AC CORDINGLY, REVENUES APPEALS ARE REJECTED. 7. IN THE RESULT, REVENUES APPEALS FOR BOTH THE AS SESSMENT YEARS UNDER CONSIDERATION ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER G.D. AGRAWAL VICE-PRESIDENT AHMEDABAD; DATED 19/03/2015 BIJU T., PS )* # $+ ,)+$ )* # $+ ,)+$ )* # $+ ,)+$ )* # $+ ,)+$/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ !- / CONCERNED CIT 4. !- ( ) / THE CIT(A) - I V , AHMEDABAD 5. +01 $ , , / DR, ITAT, AHMEDABAD 6. 13 4' / GUARD FILE . )*! )*! )*! )*! / BY ORDER, TRUE COPY 5 55 5/ // / 6 6 6 6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD