Meghmani Organics Limited, Ahmedabad V. The ACIT.,Cent.Circle-1(1), Ahmedabad

ITA 2648/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80458 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KULSHRESTHA
• Keywords: Reopening of assessment; Recovery proceedings; Depreciation; Opportunity of being heard; Additional depreciation; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 147; 246; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2648/AHD/2013 ( / ASSESSMENT YEAR : 2006-07) MEGHMANI ORGANICS LTD. MEGHMANI HOUSE SHRINIVAS SOCIETY VIKAS GRUH ROAD AHMEDABAD-7 / VS. THE ACIT CENTRAL CIRCLE-1(1) AHMEDABAD ' ./ ./ PAN/GIR NO. : AABCM 0644 E ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '%( / APPELLANT BY : SHRI S.N.SOPARKAR WITH MS.URVASHI SHODHAN, ARS &''%)( / RESPONDENT BY : SHRI B.KULSHRESTHA, SR.DR *) / DATE OF HEARING 11/09/2014 +,-.) / DATE OF PRONOUNCEMENT 30/10/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD CIT(A) IN SHORT) DATED 16/08/2013 PERTAINING TO ASSESSMENT Y EAR (AY) 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO IN REOPENING OF ASSESSMENT U/S.147 OF THE ACT BEYOND T HE PERIOD OF FOUR YEARS FROM END OF THE RELEVANT ASSESSMENT YEAR WITHOUT POINTING OUT ANY FAILURE ON THE PART OF THE APPELLA NT TO DISCLOSE FULLY ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 2 - & TRULY ALL MATERIAL FACTS. UNDER THE FACTS AND CI RCUMSTANCES OF THE CASE THE REOPENING BASED ON CHANGE OF OPINION IS WI THOUT JURISDICTION NOT PERMISSIBLE EITHER IN LAW OR ON FA CTS. THE PRESENT PROCEEDINGS DESERVE TO BE QUASHED. IT BE SO HELD N OW. 2. LD.CIT(A) GRAVELY ERRED IN LAW AND ON FACTS IN CONF IRMING REOPENING OF THE ASSESSMENT IN ABSENCE OF SPEAKING ORDER BY AO DEALING WITH OBJECTIONS RAISED BY THE APPELLANT. L D.CIT(A) ERRED IN NOT TAKING COGNIZANCE OF THE SUBMISSIONS AS WELL JU RISDICTIONAL HIGH COURT JUDGMENT RELIED UPON BY THE APPELLANT HOLDING THAT AO OUGHT TO DISPOSE OF THE OBJECTIONS BY A SEPARATE ORDER AN D NOT IN A COMPOSITE ORDER OF ASSESSMENT. THE ORDER OF LD.CIT (A) FAILING TO ADJUDICATE ABOVE PROPOSITION BEING ERRONEOUS AND PR EJUDICIAL OUGHT TO BE SET ASIDE AND REASSESSMENT BE HELD AS ILLEGAL & VOID AB INITIO. 3. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING R EASSESSMENT IGNORING THE SUBMISSIONS THAT ORDER SOUGHT TO BE RE OPENED BY AO NO LONGER EXISTED. LD.CIT(A) FAILED TO APPRECIATE THAT ORDER DATED 31. 12.2008 QUASHED BY HONBLE ITAT LEFT NO BASIS FOR REASONS TO BELIEV E ESCAPEMENT OF INCOME TO INITIATE PROCEEDINGS U/S.147 OF THE ACT. IT BE SO HELD NOW. 4. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING P ROCEEDINGS INITIATED BEYOND A PERIOD OF FOUR YEARS NOT BARRED BY TIME. LD.CIT(A) ERRONEOUSLY CONVERTED/PRESUMED REASSESSME NT PROCEEDINGS AS VALID INITIATED WITHIN SIX YEARS OF QUASHING OF ASSESSMENT ORDER BY HONBLE ITAT. LD.CIT(A) FAILED TO APPRECIATE THAT NO POWER VESTED WITH APPELLATE AUTHORITY FOR S UCH CONVERSION/PRESUMPTION OF ASSESSMENT OR REASSESSMEN T. THE ORDER OF LD.CIT(A) AGAINST PROPOSITION OF LAW OUGHT TO BE QUASHED. IT BE SO HELD NOW. 5. LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT QUASHING OF ORIGINAL ASSESSMENT ORDER SURVIVED BY 143(1) INTIMA TION PERMITTED REASSESSMENT BY AO AS THERE WAS NO FORMATION OF OPI NION. LD.CIT(A) FAILED TO APPRECIATE LEGAL PROVISIONS THA T REQUIREMENT OF REASON TO BELIEVE AND PROPER SANCTION ARE CONDITI ONS PRECEDENT TO INITIATE REASSESSMENT EVEN IN ABSENCE OF SCRUTINY P ROCEEDINGS. THE ORDER OF LD.CIT(A) DESERVES TO BE SET ASIDE. 6. WITHOUT PREJUDICE TO CHALLENGING VALIDITY OF REASSE SSMENT PROCEEDINGS, THE LD.CIT(A) ERRED IN LAW AND ON FACT S IN CONFIRMING DISALLOWANCE BY AO OF RS.68,84,921/- ADDITIONAL DEP RECIATION CLAIMED U/S.32(1)(IIA) OF THE ACT. LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT ADDITIONAL DEPRECIATION AS CLAIMED WAS ALLOWABLE ON CAPTIVE POWER PLANT. IT BE SO HELD NO W. ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 3 - 7. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING A CTION OF AO ADOPTING INCOME AT RS.19,96,66,450/- AS PER ORDER D ATED 31.12.2008 ALREADY QUASHED BY THE HONBLE ITAT AT T HE TIME OF FRAMING REASSESSMENT BY AO. LD.CIT(A) ERRED IN HOL DING THAT AO CORRECTLY ADOPTED INCOME ASSESSED IN ORIGINAL ORDER BY DISALLOWING EXCESS CLAIM OF EXEMPTION U/S.10B OF THE ACT LD.CI T(A) OUGHT TO HAVE DELETED ADDITION OF RS.19,96,66,450/- MADE ON THE BASIS OF THE ORDER ALREADY QUASHED BY HONBLE ITAT. IT BE SO HE LD NOW. 8. LD.CIT(A) ERRED IN LAW AND ON FACTS IN JUSTIFYING A CTION OF AO IN ADOPTING INCOME OF THE APPELLANT AT RETURNED INCOME AS INCREASED BY DISALLOWANCE OF RS.2,29,68,915/- CLAIMED AS EXEM PTION U/S.10B OF THE ACT. LD.CIT(A) ERRED IN ADJUDICATING ON ISS UES ON WHICH NO ADDITION IS MADE BY AO IN THE REASSESSMENT PROCEEDI NGS. THE ORDER OF LD.CIT(A) TRAVERSING BEYOND THE ORDER OF AO AGAI NST THE LEGAL PRINCIPLES DESERVES TO BE SET ASIDE. 9. LD.CIT(A) ERRED IN DISMISSING GROUND CHALLENGING CH ARGING OF INTEREST U/S.234A/234B/234C & 234D OF THE ACT. 10. LD.CIT(A) ERRED IN DISMISSING GROUND CHALLENGING IN ITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS REOPENED BY ISSUING NOTICE U/S.148 OF THE ACT ON 30/03/2012. IN RESPONSE TO THE NOTICE, ASSESSEE FILED RETURN OF INCOME ON 30/04/20 12 AND ALSO RAISED CERTAIN OBJECTIONS AGAINST REOPENING OF THE ASSESSM ENT. THE AO REJECTED THE OBJECTIONS OF THE ASSESSEE AND FRAMED ASSESSMEN T U/S.143(3) R.W.S.147 OF THE ACT, THEREBY THE AO ASSESSED THE INCOME AT R S.20,65,51,371/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. HOWEVER, THE GROUNDS RAISED BY THE ASSESSEE AGAINST THE REOPENING OF THE ASSESSMENT AND THE RE-ASSESSMENT BEING TIME-BARRED IS REJECTED BY THE LD.CIT(A). NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 4 - 3. GROUND NOS.1 TO 5 ARE LEGAL AND ARE INTER-RELATE D, THEREFORE THESE ARE BEING DISPOSED OF TOGETHER. THE LD.COUNSEL FO R THE ASSESSEE SHRI S.N.SOPARKAR SUBMITTED THAT THE LD.CIT(A) HAS NOT C ONSIDERED THE SUBMISSIONS OF THE ASSESSEE. A SPECIFIC SUBMISSION WAS MADE THAT THE MANDATORY PROVISIONS OF SECTIONS 147 AND 151 ARE NO T COMPLIED WITH BEFORE INITIATING THE PROCEEDINGS OF RE-ASSESSMENT. HE FURTHER SUBMITTED THAT IN THE SUBMISSION RECORDED BY THE LD.CIT(A), I T WAS SPECIFICALLY SUBMITTED THAT THE AO GROSSLY ERRED IN DISPOSING OF THE OBJECTIONS IN A COMPOSITE ORDER OF ASSESSMENT WITHOUT SPEAKING AND SEPARATE ORDER THAT GOES AGAINST THE RATIO LAID DOWN BY THE HONBLE APE X COURT RENDERED IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER & O RS. REPORTED AT (2003) 259 ITR 19 (SC) AND THE HONBLE JURISDICTION AL HIGH COURT RENDERED IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. VS. DY.CIT (2012) 210 TAXMAN 20 (GUJ.) HE SUBMITTED THAT UNDE R THE IDENTICAL FACTS, THE COORDINATE BENCH (ITAT B BENCH AHMEDAB AD) RENDERED IN THE CASE OF M/S.BHARUCH ENVIRO VS. DY.CIT IN ITA N OS.731 & 732/AHD/2007 FOR AYS 2001-01 & 2001-02 DATED 05/08/ 2014 SET ASIDE THE ASSESSEMENT ORDER FOLLOWING THE JUDGEMENT OF HO NBLE GUJARAT HIGH COURT. 4. ON THE CONTRARY, LD.SR.DR SHRI B.KULSHRESTHA SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW ON THESE ISSUES. HE SUBMI TTED THAT THERE IS NO ILLEGALITY IN THE ORDER OF THE LD.CIT(A) AND SAME R EQUIRES TO BE AFFIRMED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 5 - AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. THE UNDISPUTED FACT IS THAT BEFORE THE LD.CIT(A), T HE ASSESSEE IN GROUND NOS.1, 2, 3, 4 & 7 CHALLENGED THE REOPENING OF THE ASSESSMENT ON THE BASIS THAT THE ASSESSMENT HAD BEEN REOPENED AFTER F OUR YEARS AND THERE IS NO DEFAULT OR FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY MATERIAL FACTS AS ENVISAGED IN THE FIRST PROVISO TO SECTION 147 OF THE ACT. IT WAS FURTHER URGED BEFORE THE LD.CIT(A) THAT THE MANDATORY PROVISIONS OF SECTIONS 147 & 151 OF THE ACT ARE NOT COMPLIED W ITH. IT WAS ALSO SUBMITTED BEFORE THE LD.CIT(A) THAT THE ASSESSMENT ORDER IS NOT A SPEAKING ORDER AND SUCH ORDER IS ILLEGAL AND VOID AB INITIO . IT WAS ALSO SUBMITTED BEFORE THE LD.CIT(A) THAT RE-ASSESSMENT O RDER PASSED BY THE AO IS ILLEGAL AND BARRED BY TIME. IT WAS SUBMITT ED BEFORE THE LD.CIT(A) THAT THE SUBMISSION AND EXPLANATION FURNISHED TO TH E AO WAS NOT CONSIDERED. IT IS ALSO NOT IN DISPUTE THAT THE AS SESSEE RAISED OBJECTIONS BEFORE THE ASSESSING OFFICER AGAINST REOPENING OF A SSESSMENT. THE AO REJECTED THE OBJECTIONS SO RAISED. 6. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT B EFORE THE LD.CIT(A) A SPECIFIC SUBMISSION WAS MADE THAT THE AO HAS FAIL ED TO TAKE NOTE OF THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT RENDERE D IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. VS. DY.CIT (2012) 210 TAXMAN 20 (GUJ.), WHEREBY THE HONBLE HIGH COURT HAS HELD THAT IT IS NOT OPEN TO THE AO TO DECIDE THE OBJECTIONS IN THE COMPOSITE ORDER OF ASS ESSMENT. THEREFORE, THE ASSESSMENT SO FRAMED IS LIABLE TO BE QUASHED. W E FIND THAT THE LD.CIT(A) IN PARAS-4 TO 4.6 HAVE DECIDED THE GROUND S RAISED BEFORE HIM AS UNDER:- ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 6 - 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. I HAVE ALSO CALLED FOR THE ASSESSMENT RECORDS AND EXAMINED THE SAME. IT IS SEEN THAT IN THIS CASE THE ASSESSMENT MADE U/S. 143(3) OF THE I.T. ACT HAS BEEN QUASHED BY THE ITAT, AHMED ABAD. THUS, THE ONLY SURVIVING ORDER IS THE ORDER U/S. 143(1) OF THE I.T . ACT. IN ORDER TO REOPEN THE ASSESSMENT WHICH HAS ONLY BEEN COMPLETED ASSESSMENT U/S.143(1) OF THE I.T. ACT THEN IT IS NOT NECESSARY TO ESTABLISH THAT THE ESCAPEMENT OF INCOME HAS BEEN CAUSED BY ANY DEFAULT ON THE PART OF THE ASSES SEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN CASE THERE IS AN EXTRA CLAIM OF ANY ALLOWANCE WHICH IS OTHERWISE NOT ADMIS SIBLE AS PER SECTION 147 OF THE I.T.ACT, THE SAME HAS TO BE DEEMED TO BE INC OME ESCAPING ASSESSMENT. 4.1 FURTHER, ONCE THE ASSESSING OFFICER IS SATISFIE D THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT U/S.143(1) OF THE I.T. A CT THEN THE SAME CAN BE REOPENED. 4.2 THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF RAJESH JHAVERI REPORTED IN 161 TAXMAN 316 (SC) (2007) WHER EIN IT HAS BEEN HELD THAT WHEN AN ORDER U/S.143(1) OF THE I.T. ACT THERE IS NO OPINION IS EXPRESSED BY THE ASSESSING OFFICER HENCE FOR THE PURPOSES OF SECTION 147 OF THE I.T. ACT THERE CANNOT BE A CHANGE OF OPINION. HON'BLE SUPREM E COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. REP ORTED IN 291 ITR 500 (SC) HAS HELD THAT IN AN ORDER ISSUED U/S. 143(1) N O OPINION OF EXPRESSED BY THE AO. IN THAT CASE THE HON'BLE SUPREME COURT EXAM INED IN DETAIL THE PROVISIONS OF SECTION 143(1) AND IT OBSERVED AS UND ER: 'IT IS TO BE NOTED THAT SUBSTANTIAL CHANGES HAVE BE EN MADE TO SECTION 143(1) WITH EFFECT FROM JUNE 1,1999. UP TO MARCH 31,1989, AFTER A RETURN OF INCOME WAS FILED THE ASSESSING OFFICER COULD MAKE AN ASSES SMENT UNDER SECTION 143(1) WITHOUT REQUIRING THE PRESENCE OF THE ASSESS EE OR THE PRODUCTION BY HIM OF ANY EVIDENCE IN SUPPORT OF THE RETURN. WHERE THE ASSESSEE OBJECTED TO SUCH AN ASSESSMENT OR WHERE THE OFFICER WAS OF THE OPINION THAT THE ASSESSMENT WAS INCORRECT OR INCOMPLETE OR THE OFFIC ER DID NOT COMPLETE THE ASSESSMENT UNDER SECTION 143(1), BUT WANTED TO MAKE AN INQUIRY, A NOTICE UNDER SECTION 143(2) WAS REQUIRED TO BE ISSUED TO T HE ASSESSEE REQUIRING HIM TO PRODUCE EVIDENCE IN SUPPORT OF HIS RETURN. AFTER CONSIDERING THE MATERIAL AND EVIDENCE PRODUCED AND AFTER MAKING NECESSARY IN QUIRIES, THE OFFICER HAD POWER TO MAKE ASSESSMENT UNDER SECTION 143(3). WITH EFFECT FROM APRIL 1,1989, THE PROVISIONS UNDERWENT SUBSTANTIAL AND MA TERIAL CHANGES. A NEW SCHEME WAS INTRODUCED AND IN THE NEW SUBSTITUTED SE CTION 143(1) PRIOR TO THE SUBSEQUENT SUBSTITUTION WITH EFFECT FROM JUNE 1,199 9, IN CLAUSE (A), A PROVISION WAS MADE THAT WHERE A RETURN WAS FILED UN DER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SECTION 142(1), AND ANY TAX OR REFUND WAS FOUND DUE ON THE BASIS OF SUCH RETURN AFTER ADJUSTMENT OF TAX DEDUCTED AT SOURCE, ANY ADVANCE TAX OR ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST, AN INTIMATION WAS TO BE SPENT, WITHOUT PREJUDICE TO TH E PROVISIONS OF SECTION 143(2), TO THE ASSESSEE SPECIFYING THE SUM SO PAYAB LE AND SUCH INTIMATION ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 7 - WAS DEEMED TO BE A NOTICE OF DEMAND ISSUED UNDER SE CTION 156. THE FIRST PROVISO TO SECTION 143(1)(A) ALLOWED THE DEPARTMENT TO MAKE CERTAIN ADJUSTMENTS IN THE INCOME OR LOSS DECLARED IN THE R ETURN. THEY WERE AS FOLLOWS: (A) ANY ARITHMETICAL ERRORS IN THE RETURN, ACCOUN TS AND DOCUMENTS ACCOMPANYING IT WERE TO BE RECTIFIED ; (B) ANY LOSS CARRIED FORWARD, DEDUCTION, ALLOWANCE OR RELIEF WHICH ON THE BASIS OF THE INFORMATION IN SUCH RETURN, ACCOUNTS OR DOCU MENTS, WAS PRIMA FACIE ADMISSIBLE, BUT WHICH WAS NOT CLAIMED IN THE RETURN WAS TO BE ALLOWED; (C) ANY LOSS CARRIED FORWARD, RELIEF CLAIMED IN TH E RETURN WHICH ON THE BASIS OF THE INFORMATION AS AVAILABLE IN SUCH RETURN ACCOUNT S OR DOCUMENTS WAS PRIMA FACIE INADMISSIBLE WAS TO BE DISALLOWED. WHAT WERE PERMISSIBLE UNDER THE FIRST PROVISO TO SE CTION 143(1) (A) TO BE ADJUSTED WERE, (I) ONLY APPARENT ARITHMETICAL ERROR S IN THE RETURN, ACCOUNTS OR DOCUMENTS ACCOMPANYING THE RETURN, (IF) LOSS CAR RIED FORWARD, DEDUCTION, ALLOWANCE OR RELIEF, WHICH WAS PRIMA FACIE ADMISSIB LE ON THE BASIS OF INFORMATION AVAILABLE IN THE RETURN BUT NOT CLAIMED IN THE RETURN AND SIMILARLY (III) THOSE CLAIMS -WHICH WERE ON THE BA SIS OF THE INFORMATION AVAILABLE IN THE RETURN, PRIMA FACIE INADMISSIBLE, WERE TO BE RECTIFIED/ALLOWED/DISALLOWED. WHAT, WAS PERMISSIBLE WAS CORRECTION OF ERRORS APPARENT ON THE BASIS OF THE DOCUMENTS ACCOMPANYING THE RETURN. THE ASSESSING OFFICER HAD NO AUTHORITY TO MAKE ADJUSTME NTS OR ADJUDICATE UPON ANY DEBATABLE ISSUES. IN OTHER WORDS, THE ASSESSING OFFICER HAD NO POWER TO GO BEHIND THE RETURN, ACCOUNTS OR DOCUMENTS, EITHER IN ALLOWING OR IN DISALLOWING DEDUCTIONS, ALLOWANCE OR RELIEF. ONE THING FURTHER TO BE NOTICED IS THAT INTIMATION UNDER SECTION 143(L)(A) IS GIVEN WITHOUT PREJUDICE TO THE PROVISIONS OF SECTIO N 143(2). THOUGH TECHNICALLY THE INTIMATION ISSUED WAS DEEMED TO BE A DEMAND NOTICE ISSUED UNDER SECTION 156, THAT DID NOT PER SE PRECLUDE THE RIGHT OF THE ASSESSING OFFICER TO PROCEED UNDER SECTION 143(2). THAT RIGHT IS PRESERVED AND IS NOT TAKEN AWAY. BETWEEN THE PERIOD FROM APRIL 1,1989, A ND MARCH, 31,1989, THE SECOND PROVISO TO SECTION 143(1) (A), REQUIRED THAT WHERE ADJUSTMENTS WERE MADE UNDER THE FIRST PROVISO TO SECTION 143(1) (A), AN INTIMATION HAD TO BE SENT TO THE ASSESSEE NOTWITHSTANDING THAT NO TAX FR OM APRIL, 1,1998, THE SECOND PROVISO TO SECTION 143(1) (A) WAS SUBSTITUTE D BY THE FINANCE ACT, 1997, WHICH WAS OPERATIVE TILL JUNE, 1,1999. THE RE QUIREMENT WAS THAT INTIMATION WAS TO BE SENT TO THE ASSESSEE WHETHER O R NOT ANY ADJUSTMENT HAD BEEN MADE UNDER THE FIRST PROVISO TO SECTION 143(1) AND NOTWITHSTANDING THAT NO TAX OR INTEREST WAS FOUND DUE FROM THE ASSESSEE CONCERNED. BETWEEN APRIL 1, 1998, AND MAY 31,1999, SENDING OF AN INTIMATION UNDER SECTION 143(1)(A) WAS MANDATORY. THUS, SUBSTITUTED FOR 'ASSESSMENT' T HAT TWO DIFFERENT CONCEPTS EMERGED. WHILE MAKING AN ASSESSMENT, THE A SSESSING OFFICER IS FREE TO MAKE ANY ADDITION AFTER GRANT OF OPPORTUNITY TO THE ASSESSEE. BY MAKING ADJUSTMENTS UNDER THE FIRST PROVISO TO SECTION 143( 1)(A), NO ADDITION WHICH IS IMPERMISSIBLE BY THE INFORMATION GIVEN IN THE RETUR N COULD BE MADE BY THE ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 8 - ASSESSING OFFICER. THE REASON IS THAT UNDER SECTION 143(1)(A) NO OPPORTUNITY IS GRANTED TO THE ASSESSEE AND THE ASSESSING OFFICE R PROCEEDS ON HIS OPINION ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE. T HE VERY FACT THAT NO OPPORTUNITY OF BEING HEARD IS GIVEN UNDER SECTION 1 43(1)(A) INDICATES THAT THE ASSESSING OFFICER HAS TO PROCEED ACCEPTING THE RETU RN AND MAKING THE PERMISSIBLE ADJUSTMENTS ONLY. AS A RESULT OF INSERT ION OF THE EXPLANATION TO SECTION 143 BY THE FINANCE ( NO.2) ACT OF 1991 WITH EFFECT FROM OCTOBER 1, 1991, AND SUBSEQUENTLY WITH EFFECT FROM JUNE 1,1994 , BY THE FINANCE ACT, 1994, AND ULTIMATELY OMITTED WITH EFFECT FROM JUNE 1, 1999, BY THE EXPLANATION AS INTRODUCED BY THE FINANCE (NO.2) ACT OF 1991 AN INTIMATION SENT TO THE ASSESSEE UNDER SECTION 143(1) (A) WAS D EEMED TO BE AN ORDER FOR THE PURPOSES OF SECTION 246 BETWEEN JUNE 1, 1994 AN D MAY 31, 1999, AND UNDER SECTION 264 BETWEEN OCTOBER 1,1991 AND MAY 31 , 1999. IT IS TO BE NOTED THAT THE EXPRESSIONS 'INTIMATION' AND 'ASSESS MENT ORDER' HAVE BEEN USED AT DIFFERENT PLACES. THE CONTEXTUAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS HAS TO BE UNDERSTOOD IN THE CONTEXT THE EXPRESSIONS ARE USED. ASSESSMENT IS USED AS MEANING SOMETIMES 'THE COMPUT ATION OF INCOME', SOMETIMES THE DETERMINATION OF THE AMOUNT OF TAX PA YABLE' AND SOMETIMES 'THE WHOLE PROCEDURE LAID DOWN IN THE ACT FOR IMPOS ING LIABILITY UPON THE TAX PAYER'. IN THE SCHEME OF THINGS, AS NOTED ABOVE, TH E INTIMATION UNDER SECTION 143(L)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSES SMENT. THE DISTINCTION IS ALSO WELL BROUGHT OUT BY THE STATUTORY PROVISIONS A S THEY STOOD AT DIFFERENT POINTS OF TIME. UNDER SECTION 143(L)(A) AS IT STOOD PRIOR TO APRIL 1, 1989, THE ASSESSING OFFICER HAD TO PASS AN ASSESSMENT ORDER I F HE DECIDED TO ACCEPT THE RETURN, BUT UNDER THE AMENDED PROVISION, THE REQUIR EMENT OF PASSING OF AN ASSESSMENT ORDER HAS BEEN DISPENSED WITH AND INSTEA D AN INTIMATION IS REQUIRED TO BE SENT. VARIOUS CIRCULARS SENT BY THE CENTRAL BOARD OF DIRECT TAXES SPELL OUT THE INTENT OF THE LEGISLATURE, I.E. TO MINIMIZE THE DEPARTMENTAL WORK TO SCRUTINIZE EACH AND EVERY RETU RN AND TO CONCENTRATE ON SELECTIVE SCRUTINY OF RETURNS. THESE ASPECTS WERE H IGHLIGHTED BY ONE OF US (D.K.JAIN J.) IN APOGGE INTERNATIONAL LIMITED V. UN ION OF INDIA [1996] 220 ITR 248 (DELHI). IT MAY BE NOTED ABOVE THAT UNDER T HE FIRST PROVISO TO THE NEWLY SUBSTITUTED SECTION 143(1), WITH EFFECT FROM JUNE 1,1999, EXCEPT AS PROVIDED IN THE PROVISION ITSELF, THE ACKNOWLEDGMEN T OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER SECTION 143(1) WHE RE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B) NO REFUND IS DUE TO HIM. IT IS SIGNIFICANT THAT THE ACKNOWLEDGMENT IS NOT DONE BY ANY ASSESSING OFF ICER, BUT MOSTLY BY MINISTERIAL STAFF. CAN IT BE SAID THAT ANY 'ASSESSM ENT' IS DONE BY THEM? THE REPLY IS AN EMPHATIC 'NO'. THE INTIMATION UNDER SEC TION 143(1) (A) WAS DEEMED TO BE A NOTICE OF DEMAND UNDER SECTION 156, FOR THE APPARENT PURPOSE OF MAKING MACHINERY PROVISIONS .RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDIC ATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. AND NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISION. THEREFORE, THERE BEING NO ASSESS MENT UNDER SECTION 143(L)(A), THE QUESTION OF CHANGE OF OPINION, AS CO NTENDED, DOES NOT ARISE ' 4.3 IN VIEW OF THE ABOVE IT IS CLEAR THAT NO OPINIO N WAS EXPRESSED BY THE AO DURING THE A.Y. 2006-07. WHILE REOPENING SUCH CASES WHAT IS REQUIRED IS THE ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 9 - SATISFACTION ON THE PART OF THE ASSESSING OFFICER T HAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. 4.4 A PERUSAL OF THE REASON RECORDED IN THIS CASE CLEARLY SHOWS THAT APPLICATION OF MIND IN ORDER TO ARRIVE THE CON CLUSION THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. 4.5 AS FAR AS THE CONTENTION OF THE A.R. OF THE APP ELLANT THAT SINCE THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE IN FURNISHIN G TRULY AND FULLY PARTICULARS OF INCOME, THE ASSESSMENT CANNOT HAVE BEEN REOPENED BEYOND FOUR YEARS IS CONCERNED, AS NARRATED ABOVE, SINCE THE ONLY SURVIV ING ASSESSMENT IN THIS CASE IS ORDER U/S.143(1) OF THE I.T. ACT HENCE, IN ORDER TO REOPEN SUCH CASE WHAT IS REQUIRED IS ONLY THE SATISFACTION ON PART OF THE IN COME THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE CONDITION THAT I NCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BECAUSE OF DEFAULT ON THE PA RT OF THE ASSESSEE TO TRULY AND FULLY DISCLOSED MATERIAL FACTS NECESSARY FOR AS SESSMENT DOES NOT APPLY. 4.6. IN VIEW OF THE ABOVE, THE CONTENTIONS OF THE A .R. OF THE APPELLANT HAVE NO MERITS. THESE GROUNDS ARE HENCE DISMISSED. THE REOPENING OF ASSESSMENT IS HENCE UPHELD. 6.1. FROM THE ORDER OF LD.CIT(A), IT IS EVIDENT THA T HE DID NOT ADVERT TO ALL THE GROUNDS RAISED BEFORE HIM. IT WAS SPECIFIC ALLY URGED BEFORE HIM THAT THE PROVISIONS OF SECTIONS 147 AND 151 OF THE ACT WERE NOT COMPLIED WITH. WE FIND NO WHISPER IN THE ORDER QUA THIS SUB MISSION. IT WAS ALSO SUBMITTED THAT PROCEEDINGS WERE INITIATED AFTER LAP SE OF FOUR YEARS AND SAME IS BARRED BY TIME. THE ASSESSEE HAD ALSO POIN TED OUT THAT THE OBJECTION AGAINST REOPENING WERE DISPOSED BY COMPOS ITE ASSESSMENT ORDER, BUT NOT BY WAY OF SEPARATE ORDER. SUCH ACT IS NOT PERMISSIBLE IN VIEW OF THE JUDGEMENT OF HONBLE HIGH COURT IN THE CASE OF GENERAL MOTOR (I) LTD. (SUPRA). NONE OF THOSE SUBMISSIONS IS CONSIDERED AND DECIDED IN THE IMPUGNED ORDER. NON-CONSIDERATION O F SAME IS NOT JUSTIFIED AND SMACKS ARBITRARINESS. IT IS NOT CON TROVERTED BY THE REVENUE THAT THE OBJECTION OF THE ASSESSEE IN RESPECT OF T HE REOPENING OF THE ASSESSMENT WAS NOT DISPOSED OF BY WAY OF A CONSOLID ATED ORDER, ON THE ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 10 - CONTRARY, THE OBJECTIONS WERE REJECTED IN A COMPOSI TE ORDER OF ASSESSMENT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENE RAL MOTORS INDIA (P) LTD. VS. DY.CIT REPORTED AT (2013) 354 ITR 244 (GUJ .) HAS HELD AS UNDER:- 2.4.. WE HOLD THAT IT WAS NOT OPEN TO THE ASSES SING OFFICER TO DECIDE THE OBJECTION TO NOTICE UNDER SECTION 148 BY A COMP OSITE ASSESSMENT ORDER. THE ASSESSING OFFICER WAS REQUIRED TO, FIRS T DECIDE THE OBJECTION OF THE ASSESSEE FILED UNDER SECTION 148 AND SERVE A COPY OF THE ORDER ON THE ASSESSEE. AND AFTER GIVING SOME REASONABLE TIM E TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS A N ASSESSMENT ORDER. THIS WAS NOT DONE BY THE ASSESSING OFFICER, THEREFO RE, THE ORDER ON THE OBJECTION TO THE NOTICE UNDER SECTION 148 AND THE A SSESSMENT ORDER PASSED UNDER THE ACT DESERVES TO BE QUASHED. 6.2. IN VIEW OF THE ABOVE BINDING PRECEDENT, WE ARE OF THE CONSIDERED VIEW THAT THE OBJECTIONS DISMISSED BY THE AO IN A C OMPOSITE ORDER IS NOT PROPER, THEREFORE THE ASSESSMENT SO FRAMED VIDE ORD ER DATED 18/01/2013 DESERVES TO BE QUASHED ON THIS GROUND ALONE. MOREO VER, WE FIND THAT THE LD.CIT(A) HAS NOT DECIDED THE SPECIFIC GROUND IN RE SPECT OF ASSESSMENT BEING TIME BARRED, NON-COMPLIANCE OF THE MANDATORY PROVISIONS OF SECTIONS 147 & 151 OF THE ACT. UNDER THESE FACTS, WITHOUT GOING TO THE MERIT OF THE CASE, WE CANNOT CONFIRM THE ASSESSMENT MADE BY THE AO AND, ACCORDINGLY, THE ASSESSMENT ORDER SO PASSED IS QUASHED FOLLOWING THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT REN DERED IN THE CASE OF GENERAL MOTORS INDIA P.LTD. VS. DEPUTY COMMISSIONER OF INCOME- TAX(SUPRA). THUS, THE GROUND NOS.1 TO 5 OF ASSESSE ES APPEAL ARE ALLOWED. 7. REST OF THE GROUNDS, I.E. GROUND NOS.6,7,8, 9 & 10 WHICH ARE ON MERIT ARE NOT BEING ADJUDICATED SINCE THE ASSESSEE HAS SUCCEEDED ON LEGAL GROUNDS. ITA NO.2648/AHD /2013 MEGHMANI ORGANICS LTD. VS. ACIT ASST.YEAR 2006-07 - 11 - 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS I NDICATED HEREINABOVE. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/10/2014 2..,.../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-I, AHMEDABAD 5. 78& 45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<* / GUARD FILE. / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 14.10.14 (DICTATION-PAD 10 - PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.10.14 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BA CK TO THE SR.P.S./P.S.30.10.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.10.14 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER