The ITO, Ward-4(4), Baroda V. M/s. Tonira Pharma Ltd., Baroda

ITA 2488/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9723 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Wrong claim; Reason to believe; Unabsorbed depreciation
• Section: 143(3); 142(1); 10B; 148; 139

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.2488/AHD/2011 /BLOCK ASSTT. YEAR: 2003-2004 ITO, WARD - 4(4) BARODA. VS M/S.TONIRA PHARMA LTD. PLOT NO.23-24 GIDC ESTATE, NANDESARI BARODA 390 001. PAN: AABCT 0638 F %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR REVENUE BY : SHRI J.P. JANGID / DATE OF HEARING : 08/07/2015 / DATE OF PRONOUNCEMENT: 17/07/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A) DATED 5.7.2011. 2. GROUND NO.1 IS SOLITARY SUBSTANTIAL GROUND OF AP PEAL, OUT OF THREE GROUNDS TAKEN BY THE ASSESSEE. IT EXHIBITS THE GRI EVANCE OF THE REVENUE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THELD.CIT(A) HAS ERRED IN QUASHING THE ORDER U/S.14 3(3) R.W.S. 147 OF THE ACT, OVERLOOKING THE FACT THAT THE ASSES SEE HAD MADE WRONG CLAIM OF DEDUCTION U/S.10B (100% INSTEAD OF 9 0% OF TOTAL INCOME) AND ALSO WITHOUT SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION. ITA NO.2448/AHD/2011 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN MANUFACTURING AND EXPORTING OF BULK DRUGS, DRUG INTERMEDIATES AND FINE CHEMICALS. IT HAS FILED ITS RETURN OF INCOME ON 29.9.2003, DECLARING TOTAL INCOME AT NIL, AFTER CLA IMING EXEMPTION OF RS.2,63,37,459/- UNDER SECTION 10B OF THE INCOME TA X ACT. THIS DEDUCTION WAS COMPUTED AT 100% OF PROFITS CLAIMED T O HAVE BEEN DERIVED FROM ITS EXPORT ORIENTED UNIT (EOU). THE L EARNED AO HAS PASSED ASSESSMENT ORDER UNDER SECTION 143(3) ON 31.10.2007 WHEREBY HE DISALLOWED EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 10B. THE ASSESSEE CARRIED THE APPEAL BEFORE CIT(A), WHO HAD PARTLY ALLOWED THE APPEAL OF THE ASSESSEE, VIDE ORDER DATED 29.8.2008. 4. THE AO THEREAFTER ISSUED NOTICE UNDER SECTION 14 8 ON 31.8.2009. HE REOPENED THE ASSESSMENT BY RECORDING FOLLOWING R EASONS: ON PERUSAL OF COMPUTATION OF INCOME IT IS SEEN THA T THE ASSESSEE HAD CARRIED FORWARD DEPRECIATION LOSS OF RS.69,20,3 06/- IN AGGREGATE. HOWEVER, WITHOUT CLAIMING SET OFF OF TH E SAME, THE ASSESSEE HAD WRONGLY CLAIMED EXEMPTION U/S.10B TO T HE TUNE OF RS.2,63,37,459/-. IN THIS CASE, ORDER U/S.143(3) R.W.S. 147 OF THE I .T.ACT WAS PASSED ON 31.10.2007. WHILE FINALIZING THE ASSESSMENT, TH E THEN AO HAD NOT CONSIDERED THE ABOVE FACTS. THEREFORE LIKELY E SCAPEMENT OF INCOME WOULD BE MORE THAN RS.ONE LAKH. DATE : 11.08.2009 SD/- (RAJEEV CHHABRA) INCOME TAX OFFICER, WD-4(4) BARODA. 5. THE LEARNED AO HAS PASSED THE ASSESSMENT ORDER U NDER SECTION 143(3) R.W.S. SECTION 147 ON 22.12.2010. 6. DISSATISFIED BY THE REOPENING OF THE ASSESSMENT, THE ASSESSEE CARRIED THE MATTER IN APPEAL AND SUBMITTED THAT THE RE IS NO FAILURE IN ITA NO.2448/AHD/2011 3 DISCLOSING THE MATERIAL FACTS FULLY AND TRULY AT TH E END OF THE ASSESSEE, AND THEREFORE, THE AO CANNOT REOPEN THE ASSESSMENT AFTER FOUR YEARS OF END OF THE ASSESSMENT YEAR. THE LD. FIRST APPELLA TE AUTHORITY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND CONC URRED WITH THE CONTENTIONS OF THE ASSESSEE. THE FINDING RECORDED BY THE LD. FIRST APPELLATE AUTHORITY IS WORTH TO NOTE. IT READS AS UNDER: 9. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY TH E APPELLANT, ORDER OF THE A.O. DISPOSING THE OBJECTIO N OF THE APPELLANT AGAINST THE ISSUE OF NOTICE U/S 148 AND A LSO THE ASSESSMENT ORDER. FROM THE COMPUTATION OF INCOME FI LED BY THE ASSESSEE IN ITS ORIGINAL RETURN FOR A.Y. 2003-04, I T IS SEEN THAT ASSESSEE HAD PROVIDED COMPLETE DETAILS OF DEPRECIAT ION OF ITS GENERAL UNIT AS WELL AS THE EXPORT ORIENTED UNIT. A LSO, IN THE COMPUTATION, THE DEPRECIATION OF THE GENERAL UNIT H AD NOT BEEN SET OFF AGAINST THE PROFIT OF THE EOU FOR THE PURPO SE OF COMPUTATION OF EXEMPTION U/S 10B. FROM THE COMPUTAT ION OF INCOME IT IS SEEN THAT THE ASSESSEE HAD CLAIMED THE ENTIRE DEPRECIATION ON ACCOUNT OF EOU AGAINST THE PROFIT O F THIS UNIT. SIMILARLY, THE DEPRECIATION OF THE GENERAL UNIT HAD BEEN CLAIMED AGAINST THE PROFIT OF THIS UNIT AND THE UNABSORBED DEPRECIATION OF THE CURRENT YEAR AS WELL AS PAST YEARS HAD BEEN CLA IMED TO HAVE BEEN CARRIED FORWARD. THUS, ALL THE DETAILS RELEVAN T FOR THE ASSESSMENT HAD BEEN DISCLOSED IN THE COMPUTATION OF INCOME. SINCE THE NOTICE U/S 148 HAS BEEN ISSUED BEYOND 4 Y EARS FROM THE END OF THE A.Y.2003-04, HENCE, IT WAS MANDATORY ON THE PART OF THE A.O. TO ESTABLISH THAT THE INCOME HAS ESCAPED A SSESSMENT ON ACCOUNT OF NON-DISCLOSURE OF ALL MATERIAL FACTS NEC ESSARY FOR THE ASSESSMENT, FULLY AND TRULY. THE A.O., IN THE ORDER DISPOSING OFF THE OBJECTION OF THE ASSESSEE, HAS HIMSELF STATED T HAT FOR THE PURPOSE OF REOPENING, THE INFORMATION AVAILABLE ON RECORD WHICH HAS ESCAPED ATTENTION DURING THE COURSE OF ASSESSME NT PROCEEDINGS, AS ALSO WHILE GIVING EFFECT TO THE ORD ER OF THE APPELLATE AUTHORITIES, HAVE BEEN UTILIZED. 10. IN SUCH CIRCUMSTANCES, THE NOTICE U/S 148 CANNO T BE SAID TO HAVE ADHERED TO THE LAW LAID DOWN BY FIRST PROVISIO TO SECTION 147. IN SUCH CIRCUMSTANCES, THE REASSESSMENT CANNOT BE H ELD TO BE VALID. ACCORDINGLY, IT IS HELD THAT NOTICE U/S 148 WAS NOT VALIDLY ISSUED AND AS A CONSEQUENCE, THE ORDER U/S 143(3) R .W.S. 147 PASSED IN THIS CASE IS QUASHED. 7. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV E, WE HAVE GONE THROUGH THE MATERIAL ON RECORD. ITA NO.2448/AHD/2011 4 8. SECTION 147 OF THE INCOME TAX ACT PROVIDES THAT IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISIONS OF SECTION 148 TO SECTION 153, ASSESS OR REASSESS S UCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TAX WHICH HAS ESCAPED T HE ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE L OSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED. THUS, IF AO HAS RE ASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THEN SUBJECT TO CONDITIONS ENUMERA TED IN SECTIONS 148 TO 153, HE CAN REOPEN AN ASSESSMENT. HOWEVER, INTE RDICTION PROVIDED IN THE PROVISO , APPENDED TO THIS SECTION PUTS AN EMBARGO UPON THE POWERS OF THE AO. IT CONTEMPLATES THAT IF AN ASSES SMENT UNDER SECTION 143(3) OR SECTION 147 HAS BEEN MADE FOR THE RELEVAN T ASSESSMENT YEAR, THEN NO ACTION SHALL BE TAKEN UNDER THIS SECTION AF TER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR, BY REASON OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO NOTICE UNDER SECTION 142(1) OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. IN OTHER WOR DS, IF AN ASSESSEE HAS FILED A RETURN, THE LEARNED AO HAS PASSED ASSES SMENT ORDER UNDER SECTION 143(3) OR UNDER SECTION 147 AND FOUR YEARS HAVE BEEN EXPIRED FROM THE END OF THAT ASSESSMENT YEAR, THEN THE AO H AS BEEN PRECLUDED TO REOPEN THAT ASSESSMENT YEAR UNLESS IT IS PROVED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY NECESSA RY FOR HIS ASSESSMENT FOR THAT YEAR. WE HAVE EXTRACTED THE REASONS RECOR DED BY THE AO. THE LEARNED AO HAS NOWHERE ALLEGED, WHICH PARTICULAR FA CT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY. ADMITTEDLY, FO UR YEARS HAVE ALREADY ITA NO.2448/AHD/2011 5 BEEN EXPIRED BEFORE THE ISSUANCE OF NOTICE UNDER SE CTION 148. THE NOTICE UNDER SECTION 148 WAS ISSUED ON 31.8.2009 AN D THE ASSESSMENT YEAR INVOLVED IS ASSTT.YEAR 2003-04. THE AO NOWHER E DEMONSTRATED THAT THE INCOME WAS ESCAPED ASSESSMENT ON ACCOUNT O F FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND T RULY. HE HAS ALSO NOT RECORDED ANY INFORMATION WHICH COULD GOAD HIM TO OB SERVE THAT A PARTICULAR FACT DISCLOSED BY THE ASSESSEE WAS FACTU ALLY INCORRECT. THE LEARNED FIRST APPELLATE AUTHORITY TOOK INTO CONSIDE RATION THIS ASPECT, AND THEREAFTER, QUASHED THE REASSESSMENT. IN OUR OPINI ON, THE LEARNED FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS AND C IRCUMSTANCES IN RIGHT PERSPECTIVE, AND WE DO NOT SEE ANY REASON TO INTERF ERE IN THE ORDER OF THE LD.CIT(A). CONSEQUENTLY, THE APPEAL OF THE REV ENUE IS DEVOID OF ANY MERIT, AND ACCORDINGLY DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 17 TH JULY, 2015 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER