The Erode District Co-operative Milk Producers' Union Ltd., Erode V. ACIT, Erode

ITA 2563/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7859 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-02-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 09-10-2014
• Court: TRIBUNAL
• Department Lawyers: MRA B KOLIJCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Block assessment; Revised return; Reason to believe; Reassessment proceedings
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2563 /MDS./2014 ( / ASSESSMENT YEAR :2002-03) THE ERODE CO-OPERATIVE MILK PRODUCERS UNION LTD ., VASAVI COLLEGE POST, ERODE 638 316. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-II, ERODE. PAN AAAAE 0560 A ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) / APPELLANT BY : MR.S.SRIDHAR, ADVOCATE / RESPONDENT BY : MRA.B.KOLI,JCIT, D.R / DATE OF HEARING : 03.02.2016 ! /DATE OF PRONOUNCEMENT : 04.03.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- I, COIMBATORE DATED 22.08.2014 PERTAINING TO THE ASSESSMENT YEAR 2002-03. ITA NO.2563/MDS/2014 2 2. THE FIRST AND SECOND GROUND IS GENERAL IN NATUR E AND DOES NOT REQUIRE ADJUDICATION. ACCORDINGLY, THESE TWO GROUND S STAND DISMISSED. 3. THE NEXT GROUND IS WITH REGARD TO CONFIRM THE R EOPENING OF ASSESSMENT U/S.147 OF THE ACT. 4.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 ON 31. 10.2002 ADMITTING TOTAL LOSS OF RS.3,09,08,077/-. THEREAFTE R FILED A REVISED RETURN OF INCOME ON 31.03.2003 AND 02.04.2003 ADMIT TING TOTAL LOSS OF ` 2,46,51,021/- AND ` 2,10,39,983/- RESPECTIVELY. ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002- 03 WAS IN RECEIPT OF WAYS AND MEANS ADVANCE FROM THE GOVERNMENT OF TA MILNADU. THE ASSESSEE HAD ALSO SHOWN INTEREST ACCRUED ON THE ABO VE ADVANCE RECEIVED. SUBSEQUENTLY, THE TAMILNADU GOVERNMENT C ONVERTED THE ABOVE WAYS AND MEANS ADVANCE INTO SUBSIDY. ON CESS ATION OF THE ADVANCE RECEIVED, THE ASSESSEE HAS NOT DISCLOSED TH E SAME ALONG WITH THE INTEREST AS REVENUE RECEIPTS. AS THERE WA S A REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT, A NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 04. 11.2011 AND ITA NO.2563/MDS/2014 3 SERVED ON ASSESSEE ON 09.11.2011. IN RESPONSE, THE ASSESSEE CALLED FOR THE REASON FOR REOPENING, WHICH WAS DISPOSED ON 09.01.2013. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSMENT WA S REOPENED AS PER THE FINDINGS BY THE TRIBUNAL AND IT FALLS UN DER THE PROVISIONS OF THE SECTION 150(1) OF THE ACT AND HE CONFIRMED THE REOPENING OF THE ASSESSMENT . AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 5.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IT IS SEEN FROM THE ABOVE THAT THE ASSESSME NT FOR THE YEAR 2002-03 WAS REOPENED ON THE BASIS OF THE FINDINGS O F THE TRIBUNAL IN ITA NO.759/MDS/2011 DATED 9.8.2011 FAY 2003-04. IN ORDER TO GIVE EFFECT TO THE FINDINGS OF THE TRIBUNAL, THE ASSESSI NG OFFICER INITIATED PROCEEDINGS U/S.147 OF THE ACT BY DULY ISSUING NOTI CE U/S.148 OF THE ACT ON 04.11.2011 AND SERVED ON ASSESSEE ON 09.11.2 011. THE SEC.149 OF THE ACT PRESCRIBES TIME LIMIT FOR ISSUE OF NOTICE U/S.148 OF THE ACT. THIS SECTION WAS AMENDED BY THE FINANCE A CT, 2001 W.E.F. 1.6.2001 DESCRIBING DIFFERENT TIME LIMITS THAN THOS E PRESCRIBED PRIOR TO THE SAID DATE. DIFFERENT TIME LIMITS HAVE BEEN PRE SCRIBED DEPENDING UPON THE AMOUNT; INCOME CHARGEABLE TO TAX THAT HAS ESCAPED ITA NO.2563/MDS/2014 4 ASSESSMENT. SEC.150 MAKES PROVISION FOR CASES WHERE AN ASSESSMENT MADE IN PURSUANCE OF AN ORDER ON APPEAL, REFERENCE OR REVISION OR AN ORDER OF A COURT IN ANY PROCEEDING U NDER ANY OTHER LAW. SUB-SEC.(1) OF SEC.150 SAYS THAT THE TIME LIMITS PR ESCRIBED IN S.149 WILL NOT APPLY, WHICH MEANS THAT A NOTICE U/S.148 M AY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFEC T TO ANY FINDING OR DIRECTION CONTAINED IN ANY ORDER PASSED UNDER THE A CT BY WAY OF APPEAL, REFERENCE OR REVISION OR BY A COURT IN ANY PROCEEDINGS UNDER ANY OTHER LAW. HAVING THUS REMOVED THE TIME LIMITS FOR ISSUING NOTICE U/S.148 IN SUCH CASES, SUB-SEC.(2) OF SEC.150 HASTE NS TO ADD THAT WHERE ANY APPEAL, REFERENCE OR REVISION OR AN ORDER OF A COURT IN ANY PROCEEDINGS UNDER ANY OTHER LAW IS SOUGHT TO BE MAD E IN RESPECT OF AN ASSESSMENT YEAR WHERE SUCH AN ORDER OF ASSESSMEN T, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN M ADE AT THE TIME THE ORDER, WHICH WAS THE SUBJECT MATTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE TAKEN, THEN NO NOTICE U/S.148 ITA NO.2563/MDS/2014 5 CAN BE ISSUED. THE RATIONAL BEHIND THIS PROVISION IS NOT TO CONFER UPON THE AO THE JURISDICTION TO REOPEN AN ASSESSMEN T WHICH THE ACT DID NOT OTHERWISE POSSESS. IT SAYS THAT WHERE THE REASSESSMENT PROCEEDINGS WOULD HAVE BEEN BARRED BY TIME EVEN AT THE POINT OF TIME WHEN THE ORDER WHICH BECAME SUBJECT MATTER OF THE APPEAL, REVISION ETC., WAS PASSED, RESORT CANNOT BE MADE TO SUB-SEC.(1) OF SEC.150. 5.2 AN EXAMPLE MAY MAKE THE POSITION CLEAR. SUPPO SING FOR THE ASSESSMENT YEAR 1999-2000 THE AO INCLUDES AN ITEM O F INCOME WHICH ON APPEAL IS HELD TO RELATE TO THE ASSESSMENT YEAR 1998-99. THIS FINDING ON APPEAL CAN BE UTILIZED TO REOPEN TH E ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 WITHOUT ANY TIME LIMIT BY VIRTUE OF THE PROVISIONS OF SEC.150(1), THE REASON BEING THAT HAD THE AO BEEN AWARE EVEN WHEN HE COMPLETED THE ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000 THAT THE INCOME WAS ASSESSABLE IN TH E ASSESSMENT YEAR 1998-99, HE WOULD AND COULD HAVE INCLUDED THE INCOME IN THAT ASSESSMENT YEAR ITSELF. THIS IN TURN POSTULATES TH AT AN ASSESSMENT OR REASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 WOULD HAVE BEEN ITA NO.2563/MDS/2014 6 PERMISSIBLE AT THE POINT OF TIME WHEN THE ASSESSMEN T ORDER FOR THE ASSESSMENT YEAR 1999-2000 WAS PASSED. THAT IS THE REASON WHY SUB-SEC.(2) OF SEC.150 PROVIDES THAT THE ENLARGEMEN T OF TIME PROVIDED IN SUB-SEC.(1) WILL NOT BE AVAILABLE WHERE, EVEN ON THE DATE WHEN THE ASSESSMENT WAS COMPLETED, AN ASSESSMENT OR REASSESS MENT OF THE INCOME FOR THE ASSESSMENT YEAR 1998-99 (IN THIS EXA MPLE) WOULD HAVE BEEN BARRED BY TIME. 5.3. KEEPING IN VIEW OF THE ABOVE, LET US EXAMINE T HE FACTS OF THE PRESENT CASE. THE ASSESSMENT FOR THE ASSESSMENT YE AR 2003-04 WAS COMPLETED U/S.143(3) R.W.S.147 OF THE ACT ON 29.07. 2008. THE ABOVE ASSESSMENT FOR ASSESSMENT YEAR 2003-04 WAS SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL IN ITS ORDER IN ITA NO.754/MDS./2011 DATED 09.08.2011 OBSERVED AS FOLL OWS:- THUS, IT IS CLEARLY ESTABLISHED THAT THIS AMOUNT HA S TO BE ASSESSED IN THE HANDS OF THE ASSESSEE-UNION IN ASSESSMENT 2002-03 A ND NOT IN ASSESSMENT YEAR 2003-04. CONSEQUENTLY, BY FOLLOWIN G THE TRIBUNAL ORDER (SUPRA) AS WELL AS IN VIEW OF OUR FOREGOING DISCUSS ION, THIS AMOUNT CANNOT BE ASSESSED DURING THE YEAR UNDER CONSIDERATION. TH E AO IS AT LIBERTY TO ASSESS THIS AMOUNT IN THE PROPER ASSESSMENT YEAR AS DISCUSSED ABOVE. THEREFORE, WE SET ASIDE THE FINDING OF THE LD.CIT(A ) AND DELETE THE ENTIRE ADDITION FROM THE HANDS OF THE ASSESSEE. ITA NO.2563/MDS/2014 7 5.4. BEING SO, WHEN THE TRIBUNAL DELETED THE ADDIT ION IN THE BLOCK ASSESSMENT PERIOD AND OBSERVED THAT IT CANNOT BE ADDED IN A.Y.2003-04, THE AO HAS RIGHTLY BROUGHT TO TAX T HE SAME IN THE ASSESSMENT YEAR 2002-03. THIS VIEW OF OUR IS SUPPO RTED BY THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE O F DY CIT VS. SPENCES HOTEL (P) LTD. (208 CTR 224), WHEREIN IT WA S HELD THAT NOTICE UNDER S. 148 FOR ASST. YEAR 1976-77 ISSUED O N 17 TH NOV., 1998, ON THE BASIS OF THE FINDING OF THE TRIBUNAL I N ITS ORDER FOR ASST. YEAR 1980-81 THAT CERTAIN INCOME WAS ASSESSA BLE IN ASST. YEAR 1976-77 WAS NOT BARRED BY LIMITATION UNDER S. 149 IN VIEW OF OVERRIDING PROVISIONS OF S. 150(1). IT WAS OBSERVED : THE TRIBUNAL IN ITS ORDER DT. 26 TH JUNE, 1998 HELD THAT THE ESCAPED TAX SHALL BE ASSESSED FOR THE YEAR 1976-77. THAT ORDER HAS BECOME FINAL AND THE SAME WAS WITHIN THE KNOWLEDGE OF THE APPELLANT. ON THE BASIS OF THI S FINDING OF THE TRIBUNAL IN ITS ORDER REGARDING ESCA PED INCOME OF THE ASSESSE, NOTICE UNDER S. 148 WAS ISSU ED ON 17 TH NOV., 1998. THE PROVISION OF S. 150(1) BEGINS WITH THE WORDS NOTWITHSTANDING ANYTHING CONTAINED IN S. 149 AND IT STATES THAT NOTICE MAY BE ISSUED AT AN Y TIME TO GIVE EFFECT TO ANY FINDING CONTAINED IN ANY ORDE R PASSED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THE ACT. THE NOTICE ISSUED TO THE ASSESSE WAS PURSUANT TO TH E FINDING OF THE TRIBUNAL REFERRED TO SUPRA REGARDING THE ESCAPED INCOME FOR ASSESSMENT OF INCOME-TAX. THEREFORE, THE SINGLE JUDGE COMMITTED AN ERROR IN L AW BY QUASHING THE SAME, AS THE SAME IS CONTRARY TO THE ITA NO.2563/MDS/2014 8 FINDING RECORDED BY THE TRIBUNAL WITH REGARD TO THE ESCAPED TAXABLE INCOME DERIVED BY THE ASSESSE. THE LEGAL SUBMISSION MADE BY THE COUNSEL PLACING RELIAN CE UPON S. 150(2) IN JUSTIFICATION OF THE ORDER OF THE SINGLE JUDGE IS MISPLACED FOR THE REASON THAT THE ABOVE PROVISION IS NOT APPLICABLE TO THE CASE ON HAND. THUS, IN OUR OPINION, WHEN BY AN ORDER OF THE TRIBU NAL, THE INCOME IS EXCLUDED FROM THE TOTAL INCOME OF THE ASS ESSEE FOR THE BLOCK ASSESSMENT, THEN THE ASSESSMENT OF SUCH INCOM E FOR THE ASSESSMENT YEAR2003-04 SHALL BE DEEMED TO BE ONE MA DE IN CONSEQUENCE OF, OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION IN THAT ORDER (IN APPEAL) FOR THE PURPOSE OF LIFTING T HE BAN OF LIMITATION UNDER EXPLANATION 2 TO SEC.153(3). RELI ANCE IS PLACED ON THE FOLLOWING JUDGMENTS : (I) KAMLAPATH MOTILAL VS. CIT (SC) 193 ITR 338 (II) MAHADEO PRASAD RAIS (DECD. BY LRS.) VS. ITO (S C) 192 ITR 402 (III) ASHWANI DHINGRA V. CCIT (ALL.) 141 TAXMAN 651 ). IN VIEW OF THE ABOVE, IN OUR OPINION, THE PROVISION S OF SEC.150(1) ARE APPLICABLE. THUS, GROUND OF THE ASSESSEE IN ITS AP PEAL IS DISMISSED. ITA NO.2563/MDS/2014 9 6. ON MERIT, THE ASSESSEE CHALLENGED THE ADDITION OF RS.4 CRORES WHICH REPRESENTS THE AMOUNT TAKEN AS LOAN FROM THE GOVERNMENT OF TAMILNADU UNDER THE NAME WAYS AND MEANS ADVANCE OF INTEREST TOTALLING TO ` 4 CRORES, WHICH WAS SUBSEQUENTLY CONVERTED INTO SUB SIDY. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE COME FOR CONSIDERATION BEFOR E THIS TRIBUNAL IN ITA NO.759/MDS./2011 VIDE ITS ORDER DATED 09.08.201 1 GIVEN A CATEGORICAL FINDING AS FOLLOWS:- 7. AFTER GOING THROUGH THESE GOVERNMENT ORDERS CARE FULLY, WE FIND THAT THE WAYS AND MEANS ADVANCE GIVEN TO THE ASSE SSEE-UNION WAS CONVERTED INTO SUBSIDY VIDE G.O.NO.162 DATED 2.11 .2001 AND THE G.O.NO.84 DATED 28.8.2002 STARTS WITH THE OPENING W ORDS TO RATIFY THE EARILER ORDER ISSUED TO COMPENSATE THE LOSS INC URRED BY THE DAIRY FARMERS ATTACHED TO TAMILNADU COOPERATIVE MILK PROD UCERS FEDERATION LTD. AND DISTRICT MILK PRODUCERS UNION, BY ADVANCING A SUM OF- 2 CRORES WAS SANCTIONED EARLIER. LATER TH E SAID SANCTIONED AMOUNT WAS CONVERTED INTO SUBSIDY. THIS LATTER ORD ER NO.84 DATED 28.8..2002 IS WITH REFERENCE TO G.O. NO.162 DATED 2 .11.2001 WHICH IS CLEARLY EVIDENCED FROM THE ABOVE EXTRACTED ORDERS. THE LATTER G.O HAS NOT SUPERSESSED THE EARLIER G.O.NC.162 DATED 2. 11.2001, BUT IT ITA NO.2563/MDS/2014 10 HAS ONLY RATIFIED THE EARLIER ONE. THEREFORE, IT IS AMPLY CLEAR FROM THE BARE PERUSAL OF THESE TWO ORDERS THAT THE ADVANCE G IVEN TO THE ASSESSEE WAS CONVERTED INTO SUBSIDY VIDE ORDER DATE D 2.11.2001. HENCE, IT IS THE RELEVANT YEAR IN WHICH THIS AMOUNT OF SUBSIDY CAN BE TAXED IN THE HANDS OF THE ASSESSEE. SINCE THE FIGUR E OF 28 CRORES HAS BEEN MENTIONED IN THE GO AND TO RELATE THE SAME, WE HAVE FOUND THAT IT IS THE TOTAL AMOUNT WHICH WAS GIVEN TO FOUR UNIONS INCLUDING .THE ASSESSEE-UNION. THUS, IT IS CLEARLY ESTABLISHE D THAT THIS AMOUNT HAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE-UNI ON IN ASSESSMENT YEAR 2002-02 AND NOT IN ASSESSMENT YEAR 2003-04. 8. IN THE CASE OF IDENTICALLY PLACED CO-OPERATIVE S OCIETY, M/S SALEM DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LTD., WH ICH IS ONE OF THE FOUR UNIONS/SOCIETIES, THE TRIBUNAL HAS TAKEN SIMIL AR VIEW VIDE ITS ORDER DATED 23.5.2011 IN I.T.A.NO. 423/MDS/2011, FO R ASSESSMENT YEAR 2003-04, A COPY OF WHICH PLACED ON RECORD IN W HICH IT HAS BEEN HELD, UNDER IDENTICAL FACTS, THAT THIS SUBSIDY DOE S NOT RELATE TO ASSESSMENT YEAR 2003-04. CONSEQUENTLY, BY FOLLOWING THE TRIBUNAL ORDER (SUPRA) AS WELL AS IN VIEW OF OUR FOREGOING D ISCUSSION, THIS AMOUNT CANNOT BE ASSESSED DURING THE YEAR UNDER CON SIDERATION. THE ASSESSING OFFICER AT LIBERTY TO ASSESS THIS AMO UNT IN THE PROPER ASSESSMENT YEAR AS DISCUSSED ABOVE. THEREFORE, WE S ET ASIDE THE ITA NO.2563/MDS/2014 11 FINDING OF THE ID. CIT(A) AND DELETE THE ENTIRE ADD ITION FROM THE HANDS OF THE ASSESSEE. BEING SO, THE LOWER AUTHORITIES FOLLOW THE ABOVE OR DER TO SUSTAIN THE ADDITION AND WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LOWER AUTHORITIES. HENCE, THIS GROUND RAISED BY THE ASSE SSEE IS REJECTED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON FRIDAY, THE 4 TH OF MARCH, 2016 AT CHENNAI. SD/- SD/- ' # $ . % &' ( ( DUVVURU RL REDDY ) ) ( ( ) * + , ) ) ' CHANDRA POOJARI (- JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 4 TH MARCH,2016 . K S SUNDARAM. ./-- 01-21 /COPY TO: - 1. /APPELLANT 2. /RESPONDENT 3. - 3-'( /CIT(A) 4. - 3 /CIT 5. 145- 6 /DR 6. 5'-7 /GF