DCIT, CHENNAI V. Neyveli lignite corporation ltd., Neyveli

ITA 253/CHNY/2015

• Counselvise Citation: 25321714 RSA 2015
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 09-09-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 29-01-2015
• Court: TRIBUNAL
• Department Lawyers: M N MAURYA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Rectification of order; Opportunity of being heard; Revenue expenditure
• Section: 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NO. 253/MDS/2015 / ASSESSMENT YEAR : 2001-02 THE DEPUTY COMMISSIONER OF INCOME-TAX, LARGE TAXPAYER UNIT-II, CHENNAI- 600 101. ( /APPELLANT) VS M/S. NEYVELI LIGNITE CORPORATION LTD., (F & AB) INCOME-TAX SECTION, CORPORATE OFFICE, NEYVELI 607 801. PAN AAACN1121C ( /RESPONDENT) / APPELLANT BY : SHRI M.N.MAURYA, CIT / RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 09.09.2015 ! / DATE OF PRONOUNCEMENT : 20.11.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEALS BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DA TED 14.11.2014 FOR THE ASSESSMENT YEAR 2001-02. - - ITA 25 3/15 2 2. THE GRIEVANCE OF THE REVENUE IS THAT THE RECTIFI CATION ORDER U/S.154 WAS NOT BARRED BY LIMITATION IN VIEW OF THE PROVISIONS OF SEC.154(7) OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY IS ENGAGED IN THE BUSINESS OF POWER GENERATION AND COA L MINING. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESS MENT YEAR 2001-02 ON 22.10.2001 ADMITTING THE TOTAL INCOME OF ` 818.25 CRORES. THE RETURN WAS PROCESSED U/S.143(1). THE ASSESSMENT WAS COMPLETED U/S.143(3) ON 28.3.2003. REVISIONARY ASSESSMENT U/S.263 WAS COMPLETED ON 25.11.2003 BY C IT. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED AND THE S AME WAS CONCLUDED AS PER ORDER PASSED U/S.143(3) R.W.S.147 DATED 26.12.2007. A RECTIFICATION ORDER U/S.154 WAS PASS ED BY THE AO ON 8.1.2008 FOR CONSIDERING THE OMISSION OF GRANTIN G INTEREST U/S.244A. THE AO PASSED ANOTHER ORDER U/S.154 ON 2 1.6.2013 TO ADOPT THE CORRECT VALUE OF LOOSE TOOLS CONSUMED DURING THE YEAR AND TO CAPITALIZE THE OPENING WDV OF LOOSE TOO LS WHICH WAS CLAIMED AS REVENUE EXPENDITURE. AO HAS ALSO PASSED AN ORDER DATED 14.12.2012 TO GIVE EFFECT TO THE TRIBUNALS O RDER DATED 18.7.2012. AGGRIEVED BY THE RECTIFICATION ORDER PA SSED BY THE - - ITA 25 3/15 3 AO DATED 21.6.2013, THE ASSESSEE WENT IN APPEAL BEF ORE THE COMMISSIONER OF INCOME-TAX(APPEALS). 4. BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS), THE LD. AR HAS OBJECTED FOR RECTIFICATION OF THE ORDER DATE D 26.12.2007 IN 21.6.2013, WHICH IS BEYOND FOUR YEARS AND NOT VA LID IN THE EYES OF LAW. FURTHER, THE LD. AR SUBMITTED BEFORE THE CIT(A) THAT THE AO HAS NOT RECTIFIED THE ORDER DATED 14.12.2012 , WHICH WAS ONLY TO GIVE EFFECT TO THE ORDER OF THE TRIBUNAL AN D THE MISTAKE APPARENT FROM RECORD WAS NOT EMANATING FROM THIS OR DER. THE LD. AR FURTHER SUBMITTED THAT THE MISTAKES FINALLY RECTIFIED ARE NOT APPARENT FROM RECORDS EVEN AS PER THE ORDER DATED 2 6.12.2007. ACCORDING TO THE CIT(APPEALS), IN VIEW OF THE PROVI SIONS OF SEC.154, THE MISTAKE SHOULD BE APPARENT FROM RECORD AND THE SAME NEEDS TO BE RECTIFIED AFTER GIVING AN OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. WITH REGARD TO TIME LIMIT, THE PROVISIONS OF SEC.154(7) STATE AS UNDER: 7) SAVE AS OTHERWISE PROVIDED IN SECTION 155 OR SUB-SECTION (4) OF SECTION 186 NO AMENDMENT UNDER THIS SECTION SHALL BE MADE AFTER THE EXPIRY OF FOUR YEARS [FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED.] 4.1 THE CIT(APPEALS) OBSERVED THAT SO FAR AS THE MI STAKE - - ITA 25 3/15 4 APPARENT FROM RECORDS IS CONCERNED, THE RECTIFICATI ON WAS MADE TO INCLUDE THE CORRECT VALUE OF LOOSE TOOLS OF ` 3,59,16,461/- INSTEAD OF ` 2,07,94,939/- AS SUBMITTED BY THE ASSESSEE IN ITS LETTER DATED 6.3.2003 AND CAPITALIZING OF OPENING W RITTEN DOWN VALUE OF LOOSE TOOLS OF ` 7,04,27,803/ WHICH WERE NOT CONSIDERED IN THE ORDER PASSED U/S.143(3) R.W.S. 147 DATED 26. 12.2007. ACCORDING TO CIT(APPEALS), THESE ARE MISTAKES APPAR ENT FROM RECORDS. HOWEVER, THE CIT(APPEALS) OBSERVED THAT O NCE THESE MISTAKES ARE CURED IT WILL HAVE AN IMPACT ON THE OR DERS PASSED ON 14.12.2012 VIDE GIVING EFFECT TO THE TRIBUNALS ORDER. AS PER SECOND CONDITION, THE AO HAS OFFERED AN OPPORTUNITY OF BEING HEARD BEFORE PASSING HIS RECTIFICATION ORDER DATED 21.6.2013. FURTHER, THE CIT(APPEALS) OBSERVED THAT WHILE PASSI NG THIS RECTIFICATION ORDER, THE AO HAS VIOLATED THE PROVIS IONS OF SEC.154(7) OF THE ACT REPRODUCED ABOVE. ACCORDING TO HIM, AS GATHERED FROM THE FACTS, THE ORDER WHICH THE AO HAS RECTIFIED IN UNDOUBTEDLY THE ORDER PASSED U/S.143(3) R.W.S.147 D ATED 26.12.2007. FURTHER, THE CIT(APPEALS) OBSERVED TH AT IT IS IMMATERIAL WHETHER IT HAS A CASCADING EFFECT ON THE GIVING EFFECT ORDER DATED 14.12.2012. ACCORDING TO THE CIT(AP PEALS), THE - - ITA 25 3/15 5 AOS ARGUMENT THAT HE HAS RECTIFIED THE ORDER DATED 14.12.2012 IS NOT CORRECT SINCE THERE IS NO MISTAKE EMANATING FROM THIS ORDER. THE ACTUAL ORDER FROM WHICH THE MISTAKE APP ARENT FROM RECORD IS ORDER DATED 26.12.2007. THE CIT(APPEALS ) FURTHER OBSERVED THAT IN THE LIGHT OF THE SEC.154(7) WILL H IT THE ACTION OF THE AO WITH REGARD TO TIME LIMIT. THE LANGUAGE OF THE SEC.154(7) IS VERY CLEAR THAT THE RECTIFICATION ORDER HAS TO B E PASSED WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. ACCORDING TO THE CIT(APPEALS), THE TIME LIMIT IN THIS CASE SHOULD BE COUNTED FROM 31.3.12008 SINCE THIS IS THE ORDER WHICH THE AO SOU GHT TO BE AMENDED. FOUR YEARS TIME LIMIT WILL BE OVER BY 31. 3.2012. ACCORDINGLY, THE CIT(APPEALS) HELD THAT THE RECTIFI CATION ORDER DATED 21.6.2013 PASSED BY THE AO IS BEYOND THE PRES CRIBED TIME LIMIT AND ALLOWED THIS GROUND OF APPEAL. AGAI NST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR SUBMITTED THAT T HE CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSESSING OFFICER HAS RECTIFIED THE O RDER DATED 14.12.2012 AND THE ORDER PASSED U/S 154 WAS WELL WI THIN THE PERIOD OF 4 YEARS FROM THE END OF THE FINANCIAL YE AR AS PER THE - - ITA 25 3/15 6 PROVISION OF SEC. 154(7) OF I . T . ACT , 1961 . FURTHER, THE LD. DR SUBMITTED THAT T HE CIT(A) ALSO ERRED IN NOT FOLLOWING DECISION OF SUPREME COURT OF INDIA IN THE . CASE OF HIND WIRE INDUSTRIES LTD. (212 ITR 639), WHEREIN IT WAS HELD THAT EXPRESSION 'FROM DATE OF THE ORDER SOUGHT TO BE AMENDED' INCLUDES AMENDED OR RECTIFIED ORDER . FURTHER, THE LD. DR SUBMITTED THAT T HE ID. CIT(A) HAS NOT FOLLOWED THE DECISION OF HIGH COURT OF DELHI IN TH E CASE OF CIT VS . TONY ELECTRONICS LTD. (185 TAXMAN 121), WHERE UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE HIGH COURT H AS HELD THAT WHEN RECTIFICATION ORDER U/S 154 IS PASSED, IT WOUL D MEAN THAT APPEAL EFFECT ORDER IS RECTIFIED AND LIMITATION U/S .154(7) WOULD BE CALCULATED WITH REFERENCE TO DATE OF APPEAL EFFECT ORDER ONLY. 6. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT T HE ASSESSEE HAS OBJECTED TO THE RECTIFICATION ORDER PA SSED U/S 154 ON 21 . 06 . 2013 . THE ARGUMENTS PUT FORTH BEFORE US ARE AS UNDER : (I) IT IS UNDISPUTED THAT THE M I STAKE WAS FOUND IN THE ORDER DATED 26 . 12 . 2007. (II) IT IS APPARENT THAT THE ORDER U/S 154 WAS PASS ED AFTER 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORD ER SOUGHT TO BE RECTIFIED WAS PASSED . (I I I) THE AO WENT AGAINST THE PROVISIONS OF SUB-SECTIO N (7) OF 154 AND PASSED ORDER U/S 154 ON 21.6 . 2013 AFTER THE EXPIRY OF 4 - - ITA 25 3/15 7 YEARS FROM THE END OF THE FINANCIAL YEAR (4 YEARS F ROM END OF MARCH 2008) IN WHICH THE ORDER SOUGHT TO BE RECTIFI ED WAS PASSED. (IV) THE AO NOTED THAT THE APPARENT MISTAKE FOUND O N THE ORDER DATED 26 . 12 . 2007 HAS A CONSEQUENTIAL EFFECT IN THE SUBSEQUENT ORDER PASSED ON 14.12 . 2012 . (V) RELIANCE WAS PLACED ON THE DECISION OF JURISDI CTIONAL HIGH COURT IN THE CASE OF METTUR CHEMICAL & INDUSTRIAL C ORPORATION LTD V . CIT (110 ITR 822), WHEREIN IT WAS HELD THAT THOUGH PROCEEDINGS FOR REASSESSMENT HAVE BEEN COMPLETED U/ S 147 IT CANNOT BE SAID THAT THE ENT I RE ORDER PASSED ORIGINALLY CEASED TO EXIST AND THAT ONLY THE REASSESSMENT ORDER EXISTS . THEY HELD THAT LIMITATION FOR THE RECTIFICATION PROCEEDINGS SHOULD BE RECKONED FROM THE ORIGINAL ASSESSMENT ORDER . (VI) RECTIFIED ERRORS ARE NOT APPARENTLY FOUND IN T HE ORDER DATED 14 . 12 . 2012 SOUGHT TO BE RECTIFIED . THE AO CLEARLY NOTED THAT THE ORDER DATED 14 . 12 . 2012 HAD MERELY AN EFFECT OF THE MISTAKE FOUND IN THE ORDER DATED 26 . 12.2007 . (VII) THE AO DOES NOT HAVE A VALID JURISDICTION U/S 154 TO RECTIFY THE MISTAKE AS THE MISTAKE SOUGHT TO BE RECTIFIED I S NOT OBVIOUS AND PATENT MISTAKE FOUND IN THE ORDER DATED 14 . 12.2012 . (VIII) RELIANCE IS ALSO PLACED ON THE DEC I SION OF THE SUPREME COURT IN THE CASE OF ITA V . VOLKART BROS (82 ITR 50). 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. IN THIS CASE, ORIGINAL ASSESSMENT WAS P ASSED ON 28.3.2003. REVISIONARY ORDER U/S.263 OF THE ACT W AS PASSED ON 25.11.2003. LATER, THIS ASSESSMENT WAS SUBJECT TO REASSESSMENT AND THE SAME WAS COMPLETED U/S.143(3) R.W.S.147 OF THE ACT ON 26.12.2007. THIS RECTIFICATION ORD ER WAS PASSED - - ITA 25 3/15 8 U/S.154 OF THE ACT FOR CONSIDERING THE OMISSION OF GRANTING THE INTEREST U/S.244A OF THE ACT. THE AO PASSED THE P RESENT ORDER U/S.154 ON 21.6.2013 TO ADOPT THE CORRECT VALUE OF LOOSE TOOLS DURING THE YEAR AND TO CAPITALIZE THE OPENING WRITT EN DOWN VALUE OF LOOSE TOOLS, WHICH IS FRAMED AS REVENUE EXPENDIT URE. THE AO ALSO PASSED AN ORDER U/S.14.12.2012 TO GIVE EFFECT TO THE TRIBUNALS ORDER DATED 18.7.2012. ACCORDING TO TH E ASSESSEES COUNSEL, THE ORDER DATED 21.6.2013 U/S.154 WAS BARR ED BY LIMITATION. ON THE CONTRARY, THE LD. DR, SUBMITTED THAT THERE WAS MISTAKE IN THE ORDER DATED 26.12.2007 AND IT WAS RE CTIFIED VIDE ORDER DATED 21.6.2013. FOR PROPER UNDERSTANDING O F THE ISSUE, WE HAVE TO GO THROUGH THE PROVISIONS OF SEC.154, S UBSEQUENTLY, SEC.(7) OF THE ACT, WHICH IS REPRODUCED BELOW: 154 (1) WITH A VIEW TO RECTIFYING ANY MISTAKE APPA RENT FROM THE RECORD, AN INCOME-TAX AUTHORITY REFERRED T O IN SECTION 116 MAY,-- (A) AMEND ANY ORDER PASSED BY IT UNDER THE PROVISIONS OF THIS ACT ; (B) AMEND ANY INTIMATION OR DEEMED INTIMATION UNDER SUB-SECTION (1) OF SECTION 143. (1A) WHERE ANY MATTER HAS BEEN CONSIDERED AND DECIDED IN ANY PROCEEDING BY WAY OF APPEAL OR REVISION RELATING TO AN ORDER REFERRED TO IN SUB-SE CTION - - ITA 25 3/15 9 (1), THE AUTHORITY PASSING SUCH ORDER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY LAW FOR T HE TIME BEING IN FORCE, AMEND THE ORDER UNDER THAT SUB - SECTION IN RELATION TO ANY MATTER OTHER THAN THE MA TTER WHICH HAS BEEN SO CONSIDERED AND DECIDED. (2) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION , THE AUTHORITY CONCERNED-- (A) MAY MAKE AN AMENDMENT UNDER SUB-SECTION (1) OF ITS OWN MOTION, AND (B) SHALL MAKE SUCH AMENDMENT FOR RECTIFYING ANY SUCH MISTAKE WHICH HAS BEEN BROUGHT TO ITS NOTICE BY THE ASSESSEE, AND WHERE THE AUTHORITY CONCERNED IS THE COMMISSIONER (APPEALS), BY THE ASSESSING OFFICER ALSO. (3) AN AMENDMENT, WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SECTION UNLESS THE AUTHORITY CONCERNED HAS GIVEN NOTICE TO THE ASSESSEE OF ITS INTENTION SO TO DO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. (4) WHERE AN AMENDMENT IS MADE UNDER THIS SECTION, AN ORDER SHALL BE PASSED IN WRITING BY THE INCOME-T AX AUTHORITY CONCERNED. (5) SUBJECT TO THE PROVISIONS OF SECTION 241, WHERE ANY SUCH AMENDMENT HAS THE EFFECT OF REDUCING THE ASSESSMENT, THE ASSESSING OFFICER SHALL MAKE ANY REFUND WHICH MAY BE DUE TO SUCH ASSESSEE. - - ITA 25 3/15 10 (6) WHERE ANY SUCH AMENDMENT HAS THE EFFECT OF ENHANCING THE ASSESSMENT OR REDUCING A REFUND ALREADY MADE, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE SUM PAYABLE, AND SUCH NOTICE OF DEMAND SHALL BE DEEMED TO BE ISSUED UNDER SECTION 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. (7) SAVE AS OTHERWISE PROVIDED IN SECTION 155 OR SU B- SECTION (4) OF SECTION 186 NO AMENDMENT UNDER THIS SECTION SHALL BE MADE AFTER THE EXPIRY OF FOUR YEAR S [FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED.] 8.1 THE ISSUE FOR OUR CONSIDERATION IS WITH REGARD TO INTERPRETATION OF EXPRESSION FROM THE DATE OF THE ORDER SOUGHT TO BE AMENDED IN SUB-SEC.(7) OF SEC.154 AS IT STOOD. AS OBSERVED BY THE SUPREME COURT IN THE CASE OF HIND WIRE INDUS TRIES LTD. V. CIT (212 ITR 639), THE WORD ORDER HAS NOT BEING Q UALIFIED IN ANY WAY AND IT IS NOT NECESSARILY MEAN THE ORIGINAL ORDER. IT COULD BE ANY ORDER INCLUDING THE AMENDED OR RECTIFI ED ORDER. IN THE PRESENT CASE, WHAT WAS SOUGHT TO BE RECTIFIED W AS THE ORDER PASSED ON 14.12.2012, WHICH WAS GIVING EFFECT TO TH E TRIBUNALS ORDER. AFTER SUCH RECTIFICATION, ALL EARLIER ORDER S WERE NO LONGER IN - - ITA 25 3/15 11 FORCE AND IT WAS NOT THE ORDER DATED 26.12.2007 SOU GHT TO BE RECTIFIED AS ALLEGED BY THE LD. AR. IT IS ADMITTED THAT THE EARLIER ORDER DATED 26.12.2007 WAS PASSED U/S.154 WITHIN TI ME LIMIT AND THERE IS NO DOUBT THAT RECTIFICATION ORDER DATED 14 .12.2012 IS ALSO ANY ORDER WHICH CAN BE RECTIFIED U/S.154 OF THE A CT. WE ARE OF THE OPINION THAT THE WORD ANY IN THE EXPRESSION ORDER SOUGHT TO BE AMENDED WOULD MEAN EVEN THE RECTIFIED ORDER AND BEING SO, THE COMMISSIONER OF INCOME-TAX(APPEALS) IS WRONG IN SETTING ASIDE THE ASSESSMENT ORDER, AS THE IMPUGNED ORDER P ASSED U/S.154 OF THE ACT, IS TO BE CONSIDERED AS NOT TIME BARRED. THIS VIEW OF OURS IS FORTIFIED BY THE JUDGMENT OF THE SU PREME COURT IN THE CASE OF HIND WIRE INDUSTRIES LTD. V. CIT (SUPRA ). ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED. ORDER PRONOUNCED ON FRIDAY, THE 20 TH OF NOV., 2015 AT CHENNAI. SD/- SD/- ( '# $%& ' ) ( ' & ( ) ) *+,-..-/-01234-54-6-37 *+,-234-5889-4 :7 % '; /JUDICIAL MEMBER ';<=>>8?2@-2@A1BC14 '% /CHENNAI, D' /DATED, THE 20 TH NOV., 2015. MPO* - - ITA 25 3/15 12 'E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I*7 /CIT(A) 4. I /CIT 5. GJ$ K /DR 6. $LM /GF.