The ACIT, Vapi Circle, Vapi V. M/s. Mitsu Ltd., Vapi

ITA 2444/AHD/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9209 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-07-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 07-06-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y K BATRA
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Reopening of assessment; Opportunity of being heard; Validity of assessment; Set aside
• Section: 80HHC; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER & SHRI P.K.BANSAL, ACCOUNTANT MEMBER ITA NO. 2444/AHD/2007 ASSESSMENT YEAR: 2001-02 ACIT, VAPI CIRCLE, VS M/S MISTU LIMITED, VAPI VAPU PAN NO./GIR NO. AACCM2764Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.K. BATRA, CIT RESPONDENT BY : SHRI MEHUL K. PATEL, AR ORDER PER T.K.SHARMA, J.M. THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER DAT ED 13.2.2007 OF CIT(A) VALSAD FOR THE ASSESSMENT YEAR 2001-02. 2. THE GROUNDS OF APPEAL RAISED ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE DEDUCT IONS U/S 80HHC AND 80IB SHOULD BE GRANTED SIMULTANEOUSLY ON THE GROSS TOTAL INCOME WHICH IS IN CONTRADICTION OF PROVISIONS OF SECTION 80IA(9) R.W.S. 80IB(13) OF TH E ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE INCOME FROM EXPORT INCENTIVES IN FORM OF DEPB WILL BE ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT EVEN THO UGH THE SALES OF DEPB IS HELD TO BE EXPORT INCENTIVE AN D WITHOUT CONSIDERING THE FACT THAT IT WAS NOT DERIV ED FROM MANUFACTURING ACTIVITY OF THE ASSESSEE. 3. IT IS, THEREFORE, PRAYED THAT THE DECISION OF T HE LEARNED CIT(A) MAY BE SET ASIDE AND ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 2 3. THE ASSESSEE VIDE LETTER DATED 10.7.2009 THE ASS ESSEE RAISED THE FOLLOWING ADDITIONAL GROUNDS:- I. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND LAW THE LEARNED CIT(A) HAS ERRED IN NOT AD JUDICATING THE FOLLOWING GROUNDS RAISED BEFORE HIM. 01. ON APPRECIATION OF FACTS AND CIRCUMSTANCES OF T HE CASE AND LAW THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX HAS ERRED IN REOPENING THE CASE FOR ASSESSMENT BY ISSUING NOTICE U/S 148 R.W. SECTION 1 47 OF THE INCOME TAX ACT. THE ACTION OF THE LEARNED ASSIS TANT COMMISSIONER OF INCOME TAX IN ISSUING NOTICE FOR REOPENING THE ASSESSMENT U/S 148 R.W.S. 147 IS BAD AND DESERVES TO BE QUASHED. II. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LEARNED CIT(A) OUGHT TO HAVE QUAS HED THE ORDER OF THE LEARNED ASSESSING OFFICER FRAMED U/S 1 43(3) R.W.S. 147 OF THE ACT IN THE GIVEN FACTS OF THE CASE. 4. AT THE TIME OF HEARING ON BEHALF OF THE ASSESSEE SHRI MAHUL K.PATEL APPEARED AND CONTENDED THAT BEFORE LEARNED CIT(A) T HE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT VIDE GROUND NO.3 WHICH IS AS UNDER:- ON APPRECIATION OF FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX HAS ERRED IN REOPENING THE CASE FOR ASSESSMENT BY ISSUING NOTICE U/S 148 R.W. SECTION 1 47 OF THE INCOME TAX ACT. THE ACTION OF THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX IN ISSUING NOTICE FOR REOPENING THE ASSESSMENT U/S 148 R.W.S. 147 IS BAD AND DESERVES TO BE QUASHED. 5. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT A FORESAID GROUND NO. 3 WAS ALSO ARGUED BEFORE THE LEARNED CIT(A) AS STATED BY HIM IN PARA 7.1 AT PAGE 4 OF THE IMPUGNED ORDER . BEFORE THE LEARNED CIT(A) IT WAS CONTENDED THAT ASSESSEE COMPANY HAD DISCLOSED ALL THE PARTICU LARS AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS WHICH HAVE BEEN EXTENSIVELY DEALT WITH BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER . THE ORIGINAL ASSESSMENT 3 HAS BEEN REOPENED BY FALSELY RECORDING A STATEMENT THAT INCOME HAS ESCAPED ASSESSMENT OWING TO NON DISCLOSURE OF FACT BY THE A SSESSEE COMPANY. IT WAS CONTENDED THAT ASSESSING OFFICER HAS NO POWER TO RE OPEN ASSESSMENT U/S 147 READ WITH SECTION 148 IN THE GIVEN FACTS OF THE CASE, THEREFORE, ASSESSMENT ORDER DESERVES TO BE QUASHED IN TOTO FOR LACK OF JURISDICTION. 6. IN THE IMPUGNED ORDER THE LEARNED CIT(A) REFUSED TO DECIDE THE AFORESAID GROUND FOR THE REASONS GIVEN IN PARA 7.2 AT PAGE 4 WHICH ARE AS UNDER:- I HAVE PERUSED THE FACTS OF THE CASE. THIS GROUND OF APPEAL RAISED BY THE APPELLANT COMPANY IS IN REGARD TO THE JURISDICTION OF THE ASSESSING OFFICER TO REO PEN THE ASSESSMENT AFTER A PERIOD OF 4 YEARS FORM THE E ND OF THE RELEVANT ASSESSMENT YEAR U/S 147 R.W.S. 148 OF THE ACT. SINCE I AM ADJUDICATING THE GROUND NOS 5, 6,7 & 8 AFTER CONSIDERING THE MERITS OF THE CASE, I AM NOT ADJUDICATING THIS GROUND SEPARATELY BEING ONLY CONSEQUENTIAL IN NATURE. 7. CONTINUING HIS ARGUMENTS THE LEARNED COUNSEL FO R THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAS FILED A CROSS OBJ ECTION NO. 208/A/2007. THE CROSS OBJECTION (C.O.) IS REQUIRED TO DISPOSED OFF LIKE AN APPEAL. HOWEVER, THE TRIBUNAL WHILE DECIDING THE C.O. IGNORED THAT C .O. AND APPEAL WERE REQUIRED TO BE ADJUDICATED SIMULTANEOUSLY AS HELD B Y THE HONBLE SUPREME COURT IN THE CASE OF CST VS VIJAI INT UDYOG (1985) 152 ITR 111 (SC). IN THAT JUDGMENT, HON'BLE SUPREME COURT DIRECTED THE TRIBUN AL TO HEAR BOTH THE APPEALS AFRESH ON THE SAME DAY AND DISPOSE OF BY CO MMON JUDGMENT. SINCE THE TRIBUNAL COMMITTED A MISTAKE, IT MAY SUO MOTO R ECALL THE ORDER IN THE CROSS OBJECTION, ADMIT THE ADDITIONAL GROUND AND DE CIDE THE APPEAL AND CROSS OBJECTION AFRESH IN ACCORDANCE WITH LAW. ALTERNATI VELY, COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS CASE MAY KINDLY BE ADJ OURNED TO SOME OTHER 4 DATE SO THAT ASSESSEE MAY MAKE A REQUEST TO RECALL THE ORDER IN CROSS OBJECTION. 8. WITHOUT PREJUDICE TO AFORESAID CONTENTION, THE C OUNSEL OF THE ASSESSEE SUBMITTED THAT POSITION OF THE TRIBUNAL IS SAME AS A COURT OF APPEAL UNDER THE CIVIL PROCEDURE CODE AND ITS POWERS ARE IDENTICAL W ITH THAT OF AN APPELLATE COURT UNDER THE CIVIL PROCEDURE CODE AS HELD BY BO MBAY HIGH COURT IN THE CASE OF NEW INDIA LIFE INSURANCE COMPANY LTD VS CI T [1983] 143 ITR 69 AND CIT VS RAJ NARAIN TIWARI [1978] 113 ITR 163 (A LL.). IT WAS SUBMITTED THAT IT IS A BASIC DUTY OF THE CIT(A) TO DECIDE ALL THE GROUNDS OF APPEAL. HE CANNOT REFUSE TO DECIDE ANY GROUND OF APPEAL RAISED BEFORE HIM PARTICULARLY THE GROUND CHALLENGING THE JURISDICTION OF ASSESSING OF FICER TO REOPEN AND FRAME THE ALREADY COMPLETED ASSESSMENT U/S 143(3). WHEN A PRELIMINARY POINT IS RAISED AS POINTED OUT EARLIER, THE TRIBUNAL BEING A COURT CAN ACCEPT THE SAME AND REMAND THE MATTER AS HELD BY HON'BLE SUPREME CO URT IN THE CASE OF BHAVNA CHEMICAL LTD VS CIT 231 ITR 507 (SC). FOLL OWING THIS PRINCIPLE, WHEN THE LEARNED CIT(A) COMMITTED A MISTAKE IN NOT ADJUDICATING THE GROUND CHALLENGING THE RE-OPENING OF THE ASSESSMENT, IN T HAT EVENT, ON A PLEA RAISED BY RESPONDENT ASSESSEE, TRIBUNAL CAN SET ASIDE THE ORDER OF LEARNED CIT(A) AND ASK HIM TO FIRST DECIDE THE GROUND CHALLENGING THE JURISDICTION U/S 147 R.W.S. 148 AND THEREAFTER, IF REQUIRED, ADJUDICATE OTHER GROUNDS OF APPEAL. COUNSEL OF THE ASSESSEE ACCORDINGLY SUBMITTED THAT EVEN WITHOUT ADMITTING THE ADDITIONAL GROUND UNDER RULE 27 OF THE INCOME T AX RULES, (APPELLATE TRIBUNAL) RULES, 1963 , THE RESPONDENT CAN SUPPORT THE ORDER ON GROUND DECIDED AGAINST IT EVEN WHEN IT MIGHT NOT HAVE FILE D AN APPEAL. IN THIS VIEW OF THE MATTER, COUNSEL OF THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER OF LEARNED CIT(A) BE SET ASIDE, HE BE DIRECTED TO DECI DE THE APPEAL OF THE 5 ASSESSEE AFRESH, INCLUDING GROUND NO.3 WHICH HE RE FUSED TO ADJUDICATE IN THE IMPUGNED ORDER. 9. ON THE OTHER HAND, LEARNED COUNSEL FOR THE REVE NUE SHRI BATRA CONTENDED THAT IN THIS CASE THE ASSESSEE FILED THE CROSS OBJECTION WHICH HAVE BEEN DISMISSED. THEREFORE, IN THE REVENUES APPEAL THE ASSESSEE HAS NO LOCUS STANDI TO RAISE ADDITIONAL GROUND, THEREFORE, ITS ADDITIONAL GROUND NOW RAISED CANNOT BE ADMITTED. WITH REGARD TO RULE 27 O F THE I.T. RULES (APPELLATE TRIBUNAL RULES) 1963, LEARNED DR POINTED OUT THAT SAID RULE HAS NO ROLE TO PLAY BECAUSE THE ASSESSEE HAS FILED THE CROSS OBJEC TION WHEREIN NO SUCH GROUND WAS TAKEN. ON MERIT ALSO, LEARNED DR ARGUED AT LENGTH. 10. IN REPLY, COUNSEL OF THE ASSESSEE SUBMITTED THA T THERE IS NOT NECESSITY TO DECIDE THE TWO GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ON MERIT UNLESS GROUND CHALLENGING THE VALIDITY OF ASSESSMENT FRAME D U/S 147 R.W.S. 148 IS ADJUDICATED. HE ACCORDINGLY SUGGESTED THAT EITHER T HE TRIBUNAL DECIDE THE ADDITIONAL GROUNDS OR THE IMPUGNED ORDER OF LEARNE D CIT(A) BE SET ASIDE AND HE BE ASKED TO FIRST DECIDE THE GROUND NO.3 CHALLEN GING THE VALIDITY OF ASSESSMENT AND THEREAFTER IF NECESSARY HE MAY ADJUD ICATE OTHER GROUNDS OF APPEAL IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUN ITY OF BEING HEARD TO BOTH THE SIDES. 11. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDER OF THE AUTHORITIES BELOW. RIVAL SUBMISSIONS WERE A LSO CONSIDERED. IT IS PERTINENT TO NOTE THAT BEFORE LEARNED CIT(A) ASSESS EE SPECIFICALLY CHALLENGED THE REOPENING OF ASSESSMENT U/S 147 R.W.S. 148 OF T HE ACT VIDE GROUND NO. 3 WHICH IS REPRODUCED BY US HEREIN ABOVE. THE LEARNE D CIT(A) REFUSED TO ADJUDICATE THE SAID GROUND ON THE GROUND THAT HE HA S ADJUDICATED GROUND NOS 6 5, 6, 7 & 8 AFTER CONSIDERING THE MERITS OF THE CAS E, THEREFORE, THE GROUND CHALLENGING REOPENING OF THE ASSESSMENT U/S 147 R.W .S 148 IS NOT ADJUDICATED BECAUSE THIS GROUND IS ONLY CONSEQUENTIAL IN NATURE . IT IS WELL SETTLED LAW THAT A GROUND CHALLENGING THE REOPENING OF ASSESSMENT PE RTAINING TO JURISDICTION OF THE ASSESSING OFFICER TO MAKE THE ORDER, IT GOES TO ROOT OF MATTER, THEREFORE, IT CAN NEVER BE CONSEQUENTIAL. IT IS NOT PROPER FOR LD CIT(A) TO BY PASS THAT GROUND OF APPEAL, TAKING SHELTER THAT THIS BEING CO NSEQUENTIAL IN NATURE. AS A MATTER OF FACT, BEFORE ADJUDICATING THE REMAINING G ROUNDS OF APPEAL, IT WAS THE DUTY OF THE LEARNED CIT(A) FIRST TO ADJUDICATED THE GROUND NO. 3 CHALLENGING THE REOPENING OF ASSESSMENT U/S 147 R.W.S. 148 AND THEREAFTER IF NECESSARY TO ADJUDICATE THE REMAINING GROUND OF APPEAL. WE FOUN D CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE AND THEREFORE, PRELIMINARY OBJECTION RAISED BY HIM IS REQUIRED TO BE ACCEPTED. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT(A) WITH THE DIRECTION THAT HE SHOULD FIRST ADJUDICATE THE GROUND NO.3 CHA LLENGING THE REOPENING OF ASSESSMENT U/S 147 R.W.S 148. AFTER ADJUDICATING T HE SAID GROUND, IF REQUIRED, HE WILL ADJUDICATE THE REMAINING GROUNDS OF APPEAL AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES AND IN ACCORDANCE WIT H LAW. 12. IN THE RESULT FOR STATISTICAL PURPOSES, THE APP EAL OF THE REVENUE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.9.2009. SD/- SD/- (P.K.BANSAL) (T.K.SHARMA) ACCOUNTNT MEMBER JUDICIAL MEMBER DATED: 04TH SEPT 2009 RKK COPY FORWARDED TO :- 7 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A). 4. THE CIT 5. DR 6. GUARD FILE BY ORDER TRUE COPY DY./ASSTT. REGISTRAR, ITAT, AHMEDABAD.