Mangalam Timber Products Ltd, Cuttack V. CIT, Bhubaneswar

ITA 277/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4497 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 15-07-2010
• Court: TRIBUNAL
• Department Lawyers: A K MOHAPATRA
• Assessee Lawyers: S N SAHU
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 277/CTK/2010 / ASSESSMENT YEAR 2005 - 06 MANGALAM TIMBERPRODUCTS LTD., 278, CUTTACK ROAD.RUEHIKA MARKET, LAXMI SAGAR,BHUBANESWAR PAN: AABCM 5187 C - - - VERSUS - COMMISSIONER OF INCOME - TAX, BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.N.SAHU, AR / FOR THE RESPONDENT: / SHRI A.K.MOHAPATRA, DR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST ORDER DT.31.3.2010 OF THE COMMISSIONER OF INCOME - TAX PASSED U/S.263 OF THE INCOME - TAX ACT,1961 FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF MEDIUM DENSITY FIBER BOARDS AND FORMALDEHYDE. IT FILED ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 28.10.2005 DISCLOSING INCOME AT NIL. THE CASE WAS TAKEN U P FOR SCRUTINY AND THE ORDER OF ASSESSMENT WAS PASSED ON 24.12.2007 COMPUTING THE TOTAL INCOME OF THE ASSESSEE AT NIL AFTER ADJUSTMENT OF BROUGHT FORWARD LOSSES. THE LEARNED CIT FOUND THAT THE ASSESSEE IS LIABLE FOR PAYMENT OF MAT WITHIN THE MEANING OF SEC TION 115JB, WHICH HAS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER AT THE TIME OF MAKING ASSESSMENT. I.T.A.NO. 277/CTK/2010 2 THEREFORE, HE WAS OF THE VIEW THAT THE ASSESSMENT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDINGLY, SHOW - CAUSE NOTICE WAS ISSUED TO THE ASSESSEE. AFTER HEARING THE ASSESSEE AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT DIRECTED THE ASSESSING OFFICER FOR DETAIL EXAMINATION VIS - - VIS THE ORDER ISSUED BY THE BIFR AND PASS THE ASSESSMENT ORDER AFRESH IN ACCORDANCE WITH LAW. IT IS AGAINST THIS ORDER OF THE LEARNED CIT THAT THE ASSESSEE HAS FILED THE PRESENT APPEAL ON THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE ORDER U/S.263 OF THE I.T.ACT PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX IS ILLEGAL, ARBITRARY, UNCALLED FOR AND AGAINST THE FACTS ON RECORD. 2. THAT THE LEARNED COMMISSIONER OF INCOME - TAX IS NOT JUSTIFIED IN LAW IN RESTORING THE ASSESSMENT ORDER TO THE A.O. FOR RE - EXAMINATION WHICH WAS ALREADY EXAMINED BY HIM. 3. THAT THE FACT THAT THE APPELLANT COMPANY WAS A SIC K COMPANY AND HAS BEEN REVIVED UNDER THE BIFR ACT, WAS SEVERAL TIMES DISCUSSED BEFORE THE LEARNED A.O. AND THERE IS NO FRESH FACT FOR RE - EXAMINATION BY HIM. THE COMPANY SUBMITTED BEFORE THE CIT VIDE LETTER DT.341.3.2010 MAY PLEASE BE TREATED AS A PART OF T HESE GROUNDS OF APPEAL. 4. THAT HAVING SATISFIED AS PER PARAGRAPH OF HIS ORDER, THE LEARNED CIT IS NOT JUSTIFIED TO SET ASIDE THE ORDER OF A.O . 3. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THE LEARNED CIT IS NOT ABLE TO MAKE OUT ANY GROUN D FOR ISSUING THE IMPUGNED ORDER AS THERE IS LACK OF IMPORTANT INGREDIENTS AS REQUIRED U/S.263 OF THE I.T.ACT,161,NAMELY, PREJUDICIAL TO THE INTEREST OF REVENUE AS WELL AS ERRONEOUSNESS OF THE ASSESSING OFFICERS ASSESSMENT ORDER. HE FURTHER SUBMITTED THAT ALL THE DOCUMENTS ARE MADE AVAILABLE TO THE ASSESSING OFFICER. IT DISCLOSED EVEN THE ASPECT OF APPLICATION MADE BY THE ASSESSEE I.T.A.NO. 277/CTK/2010 3 UNDER BIFR. SO, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE IMPACT OF MAT IMPOSABLE U/S.115J OF THE ACT . IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE LEARNED CIT IS NOTHING BUT TO MAKE A ROVING ENQUIRY BY THE ASSESSING OFFICER. THE PROVISIONS CONTAINED IN CLAUSE (VII) OF THE EXPLANATION TO SECTION 115JB(2) OF THE ACT STATES THAT PROFITS OF SICK INDUS TRIAL COMPANY FOR THE ASSESSMENT YEAR COMMENCING ON AND FROM THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SAID COMPANY HAS BECOME A SICK INDUSTRIAL COMPANY UNDER SUB - SECTION (1) OF SECTION 17 OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROV ISIONS) ACT, 1985 (1 OF 1986) AND ENDING WITH THE ASSESSMENT YEAR DURING WHICH THE ENTIRE NET WORTH OF SUCH COMPANY BECOMES EQUAL TO OR EXCEEDS THE ACCUMULATED LOSSES. THEREFORE , EVEN THE ASSESSMENT ORDER MAY NOT SPEAK ABOUT THE BLACK AND WHITE ABOUT THIS PROVISION. THIS ASPECT OF THE ASSESSEE WAS DISCUSSED DURING THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER AND THEREAFTER ONLY THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER DT.24.1.2007.THE ASSESSEE HAS FILED THE RETURN ENCLOSING THEREWITH THE AUDITOR S REPORT DT.29.6.2005 WHEREIN THE ASPECT OF FILING OF APPLICATION BEFORE BIFR WAS REFERRED TO. THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS IN NO WAY ERRONEOUS. IN THAT VIEW OF THE MATTER, THE FINDING OF THE LEARNED CIT THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IS NOT AT ALL CORRECT. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALBAR INDUSTRIAL CO. LTD. V. CIT (2000) 243 ITR 83. 4. APART F ROM THE ABOVE, IT WAS FURTHER ARGUED BY THE LEARNED AR OF THE ASSESSEE THAT THE IMPUGNED ORDER OF THE LEARNED CIT IS INVALID FOR THE REASON THAT IN PARAGRAPH 7 OF THE IMPUGNED ORDER, IT CLEARLY SAYS THAT A NOTE TO THE I.T.A.NO. 277/CTK/2010 4 EXTENT THAT THE PROVISIONS OF SECTION1 15JB OF THE ACT HAVE NOT BEEN CONSIDERED APPLICABLE IN THE CASE OF THE ASSESSEE BASING ON CLAUSE (VII) OF EXPLANATION TO SECTION 115JB(2) OF THE ACT. THEREFORE, THE LEARNED CIT HIMSELF AGREED WITH THE CONTENTION OF THE ASSESSEE AS CORRECT. HAVING FOUND SO, ERRONEOUSNESS OF THE ASSESSMENT ORDER AS HELD BY THE LEARNED CIT IS NOT CORRECT. THIS IS NOTHING BUT AN ORDER REQUIRING THE ASSESSING OFFICER TO DO ROVING ENQUIRY. THUS, HE CONTENDED THAT THE IMPUGNED ORDER IS NOT AT ALL SUSTAINABLE FOR LEGAL SCRUTINY AND REQUIRES TO BE SET ASIDE. 5. CONTRARY TO THIS, THE LEARNED DR HAS SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT. 6. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDER IN THE LIGHT OF THE DICTUM OF HONBLE APEX COURT IN THE CASE OF MALBAR INDUSTRIAL CO. LTD. V. CIT (2000) 243 ITR 83 , RELIED ON BY THE ASSESSEE AND THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, IT IS FOUND THAT THE ASSESSEE HAS SPECIFICALLY NOTED WHILE COMPUTING THE TOTAL INCOME OF THE FACT THAT IN VIEW OF CLAUSE (VII) OF EXPLANATION TO SECTION 115JB( 2) OF THE ACT ARE NOT AT ALL APPLICABLE TO THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER HAS AGREED WITH THIS CONTENTION OF THE ASSESSEE ON CONSIDERATION OF THE AUDITORS REPORT AND THE PROVISIONS CONTAINED IN CLAUSE (VII) OF EXPLANATION TO SECTION 115JB (2) OF THE ACT WHILE PASSING THE ASSESSMENT ORDER. IN THIS VIEW OF THE MATTER IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT AT ALL CONSIDERED THE IMPACT OF THE SAID PROVISIONS WHILE MAKING THE ASSESSMENT. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF THE ASSESSING OFFICER IS NOT AT ALL ERRONEOUS WHICH IS ONE OF THE INGREDIENTS REQUIRED FOR INVOKING JURISDICTION BY THE LEARNED CIT U/S.263 OF THE ACT, AS PER THE DECISION OF HONBLE I.T.A.NO. 277/CTK/2010 5 SUPREME COURT IN THE CASE OF MALBAR INDUSTRIAL CO. LTD. , V. CIT (SUPRA).ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND THEREBY WE SET ASIDE THE SAME BY ALLOWING THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 4 TH APRIL, 2011 SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDI CIAL MEMBER. ( ) DATE: 4 TH APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : MANGALAM TIMBERPRODUCTS LTD., 278, CUTTACK ROAD.RUEHIKA MARKET, LAXMI SAGAR,BHUBANESWAR 2 / THE RESPONDENT: COMMISSIONER OF INCOME - TAX, BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.