L & T Infocity Ltd., Hyd, Hyderabad V. DCIT, Cir-16(1), Hyderabad

ITA 282/HYD/2011

• Counselvise Citation: 28222514 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 24-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: ANITA SUMANTH
• Keywords: Reopening of assessment; Invalid notice; Depreciation; Search and seizure; Principle of natural justice; Bonafide belief; Retrospective amendment; Difference of opinion; Validity of assessment; Assessment record; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 234B; 115JB; 147; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 282/HYD/2011 ASSESSMENT YEAR: 2002-03 L&T INFOCITY LIMITED, MADHAPUR, HYDERABAD-500 082 [PAN: AAACL 5895 R] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SMT. ANITA SUMANTH , FOR REVENUE : S HRI D. SUDHAKAR RAO, CIT DATE OF HEARING : 20 - 11 - 201 4 DATE OF PRONOUNCEMEN T : 16 - 01 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V, HYDERABAD DA TED 15-12-2010 FOR THE ASSESSMENT YEAR 2002-03. THE ISSUES IN THI S APPEAL ARE WITH REFERENCE TO THE JURISDICTION TO COMPLETE ASSESSMEN T AND ADDITION MADE WHILE COMPUTING THE INCOME U/S.115JB OF THE INCOME TAX ACT (ACT). I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 2 -: 2. WE HAVE HEARD LD.COUNSEL FOR ASSESSEE, LD.DR AND PERUSED THE PAPER BOOK PLACED ON RECORD. 3. BRIEFLY STATED, ASSESSEE-COMPANY IS ENGAGED IN T HE BUSINESS OF DEVELOPMENT AND MAINTENANCE OF INFRASTRUCTURE FACIL ITIES FOR IT/SOFTWARE AND RELATED COMPANIES. FOR THE AY.2002-03, THE ASS ESSEE-COMPANY FILED ITS RETURN OF INCOME ON 29-10-2002 ADMITTING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION U/S.80IA OF THE ACT AND THE SAME HAS BEEN PROCESSED U/S.143(1) OF THE ACT. THEREAFTER, THE ASSESSING O FFICER FOUND THAT WHILE ARRIVING AT THE TAX PAYABLE U/S.115JB OF THE ACT, T HE ASSESSEE-COMPANY HAD ADDED PROVISION FOR TAXES OF RS.1,40,98,185/- B UT OMITTED TO ADD PROVISION FOR DEFERRED TAX OF RS.4,55,57,386/- AND ISSUED NOTICE U/S.148 OF THE ACT. ASSESSEE OBJECTED BEFORE THE ASSESSING OFFICER ABOUT THE JURISDICTION AND ADJUSTMENTS BEING MADE, HOWEVER, A O REJECTED THE SAME. ASSESSMENT WAS COMPLETED DETERMINING THE BOOK PROFIT U/S.115JB AT RS.18,42,89,994/. BEFORE THE LD.CIT(A), ASSES SEE HAS RAISED VARIOUS GROUNDS INTER ALIA OBJECTING TO THE ISSUANCE OF NOTICE U/S.143(2), WHI CH ASSESSEE'S CLAIMS TO BE BARRED BY LIMITATION. IN A DDITION TO THAT ASSESSEE ALSO OBJECTED TO THE RE-OPENING OF THE ASSESSMENT O N THE REASON THAT ASSESSING OFFICER COULD NOT HAVE INITIATED PROCEEDI NGS FOR RE-OPENING WHEN THE AMENDMENT TO THE ACT HAS COME UP SUBSEQUEN TLY ON 28 TH FEBRUARY, 2008 WHERE AS PROCEEDINGS WERE INITIATED ON 17 TH MAY, 2007. IT WAS FURTHER CONTENDED THAT RE-OPENING WAS ON MER E CHANGE OF OPINION WITHOUT ANY FACTUAL FOUNDATION. ASSESSEE ALSO CONTE NDED THAT ADJUSTMENTS U/S.115JB CANNOT BE MADE CONSEQUENT TO THE RETROSPECTIVE AMENDMENT. LD.CIT(A) HAS CONSIDERED ALL THESE OBJE CTIONS AND REJECTED THEM. I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 3 -: 4. ON THE ISSUE OF NOTICE U/S.143(2) BEING BARRED B Y LIMITATION THEREBY MAKING ENTIRE PROCEEDINGS NULL AND VOID, LD .CIT(A) CONSIDERED THE SAME AS UNDER: '4.2 DURING APPEAL PROCEEDINGS, THE FIRST ISSUE RAISED W AS THAT THE NOTICE U/S 143(2) ISSUED ON 17.10.2008 WAS BARRED BY LIMITATION. THE APPELLANT CONTENDED THAT THE ORIGINAL RETURN WAS FURNISHED ON 29.10.2002 AND THE REVISED RETURN ON 06.9.2003. THE RETURN IN RESPONSE TO NOTICE U/S 148 WAS FILED ON 11.6.2007. THEREFORE, NOTICE U/S 143(2) COULD HAVE BEEN ISSUED ONLY UPTO 30.9.2008 WHEREAS THE ASSESSING OFFICER ISSUED IT ON 17.10.2008. T HE APPELLANT PLACED RELIANCE ON THE FOLLOWING RATIOS: 1. ACIT VS SMT J YOTI D EVI (2004) 84 TTJ 689 (JD-ITAT) 2. ITO VS SMT SUKHINI P MODI (2008) 112 ITD 1 (AHMD-I TAT) 3. ACLT VS MUTHOOT LEASING & FINANCE LTD (2008) 21 SOT 281 (COCH-ITAT) 4.3 I HAVE CONSIDERED CAREFULLY THE FACTS AND ARGUMENTS . THERE IS NO DOUBT THAT THE NOTICE U/S 143(2) HAS TO BE ISSUED WITHIN 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN OF I NCOME WAS FURNISHED. CLEARLY, THE NOTICE ISSUED ON 17.10.200 8 IS BARRED BY LIMITATION. HOWEVER, WITH EFFECT FROM 01.4.2008, THE FINANCE ACT, 2008 HAS INTRODUCED SECTION 292BB, WHICH IS QUOTED AS BELOW: 'SECTION 29BB: WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING O R CO-OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSE SSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQUIREDTOBESERVEDUPON HIM, HAS BEEN DULY SERVED U PON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN A NY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE NOTICE WAS- (A) NOT SERVED UPON HIM; OR (B) NOT SERVED UPON HIM IN TIME; OR (C) SERVED UPON HIM IN AN IMPROPER MANNER: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY WHERE THE ASSESSEE AS RAISED SUCH OBJECTION BEFORE THE COMPL ETION OF SUCH ASSESSMENT OR REASSESSMENT.' 4.4 A PLAIN READING OF THE ABOVE SECTION WHICH WAS IN FORCE ON 17.10.2008 I.E. ON THE DATE OF ISSUE OF NOTICE U/S 143(2) CLEARLY SHOWS THAT IF AN ASSESSEE HAS NOT RAISED ANY OBJEC TION TO THE ISSUE OF NOTICE DURING THE ASSESSMENT PROCEEDINGS, THEN THAT PLEA CANNOT I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 4 -: BE TAKEN LATER ON DURING APPEAL PROCEEDINGS. AN E XAMINATION OF THE ASSESSMENT RECORD SHOWS THAT AT NO STAGE DURING TH E ASSESSMENT PROCEEDINGS DID THE APPELLANT OBJECT TO THE ISSUE OF NOTICE U/S143(2). IN FACT, ON 29.01.2009, THE APPELLANT WROTE THE FO LLOWING TO THE ASSESSING OFFICER: '3. CONDUCT OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS IT IS REITERATED THAT THE ASSESSEE HAS VOLUNTARILY AND IN GOOD FAITH, MADE FULL AND TRUE DISCLOSURE, IN ITS R ETURN OF INCOME AND BOOKS OF ACCOUNT. FURTHER, THE ASSESSEE HAS VOLUNTARILY EXTENDED FULL CO-OPERATION TO THE REVEN UE AUTHORITIES DURING THE ASSESSMENT PROCEEDINGS. THIS IS PROVED BY THE FACT THAT THE ENTIRE ASSESSMENT IS BASED ON THE FACTS PROVIDED/DISCUSSED BY THE ASSESSEE ITSELF. IT IS NO T OUT OF PLACE TO MENTION THAT THE ASSESSEE CO- OPERATED WITH THE REVENUE AUTHORITIES IN ALL ENQUIRIES RELATING TO TH E SUBJECT ASSESSMENT AND PROVIDED ALL REQUISITE INFORMATION A ND DOCUMENTS IN RESPONSE TO THE VARIOUS QUERIES RAISED , SO AS TO ENABLE A COMPLETE UNDERSTANDING OF THE FACTS RELATE D TO THE CASE . WE RESPECTFULLY SUBMIT THAT THERE IS NO EVIDENCE O N RECORD OF NAY OMISSION ON THE PART OF THE ASSESSEE IN FURNISHING THE PARTICULARS RELEVANT FOR ASSESSMENT OR CONCEALMENT OF INCOME. IN FACT, THE ENTIRE ASSESSME NT HAS BEEN FRAMED BASED ON THE INFORMATION AND PARTICULAR S WHICH WERE FURNISHED BY THE ASSESSEE. FURTHER, THERE WAS NO DELIBERATE ACT OF DEFIANCE OF THE LAW BY THE COMPAN Y AND THE COMPANY'S CLAIM IN ITS RETURN OF INCOME IS BASE D ON THE JUDICIAL PRECEDENTS AND BONAFIDE BELIEF IN THE LEGAL POSITI ON ADOPTED. IN LIGHT OF THE WELL SETTLED AN ESTABLISHED PRINCI PLES OF LAW AS ILLUSTRATED ABOVE, IT IS SUBMITTED THAT INIT IATION OF PENALTY PROCEEDINGS WITHOUT ANY LEGAL FOUNDATION IS NOT SUSTAINABLE'. 4.5 IT IS CLEAR FROM ABOVE THAT THE APPELLANT DID NOT RAISE ANY OBJECTION TO THE ISSUE OF NOTICE U/S143(2) AS DISC USSED EARLIER. THEREFORE, SECTION 292BB INTRODUCED W.E.F.01.4.200 8 IS CLEARLY APPLICABLE TO THE CASE OF THE APPELLANT. ACCORDIN GLY, THE FIRST ISSUE IS DECIDED AGAINST THE APPELLANT AND IN FAVOUR OF THE REVENUE. THE ASSESSMENT PROCEEDINGS ARE NOT VITIATED BY THE ISS UE OF NOTICE U/S 143(2) ON 17.10.2008.' 5. WITH REFERENCE TO THE ISSUE OF RE-OPENING ON THE AMENDMENT SUBSEQUENTLY BROUGHT OUT, LD.CIT(A) NOTICED THAT AS SESSING OFFICER HAS I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 5 -: COMMUNICATED THE REASONS DIFFERENTLY WHEREAS HE HAS RECORDED THE REASONS CORRECTLY. HE HAS EXTRACTED THE REASONS IN PARA 5.2 AND ANALYZED THE FACTS AND DISMISSED THE GROUNDS ON THI S ISSUE. COMING TO THE MERITS U/S.115JB, ASSESSEE'S OBJECTIONS WERE AL SO CONSIDERED AND REJECTED BY STATING AS UNDER: '7.1 I HAVE CONSIDERED CAREFULLY THE AFOREMENTIONED ARGUMENTS AND FACTS AND I FIND THAT THE FOLLOWING RETROSPECTIVE AMENDM ENT WAS INTRODUCED IN SECTION 115JB. 'SECTION 115JB SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COMPANIES (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISION OF THIS ACT, WHERE IN THE CASE OF AN ASSESSEE, BEING A COMPANY, THE INCOME-TAX, PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMME NCING ON OR AFTER THE 1 ST DAY OF APRIL, 2007, IS LESS THAN TEN PER CENT OF I TS BOOK PROFIT, SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF TH E ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF TEN PER CENT. (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PUR POSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PARTS 11 AND III OF SCHEDULE VI TO THE COMPANIES AC T, 1956 (1 OF 1956) : PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT, (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PUR POSE OF PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING I N ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIE S ACT, 1956 (1 OF 1956) : PROVIDED FURTHER THAT WHERE THE COMPANY HAS ADOPTED OR ADOPTS THE FINANCIAL YEAR UNDER THE COMPANIES ACT, 1956 (1 OF 1956), WHICH IS DIFFERENT FROM THE PREVIOUS YEAR UNDER THIS ACT, (I) THE ACCOUNTING POLICIES; I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 6 -: (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL CORRESPOND TO THE ACCOUNTING POLICIES, ACCOUNTING STANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPRE CIATION WHICH HAVE BEEN ADOPTED FO R PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SU CH FINANCIAL YEAR FALLING WITHIN THE RELEVANT PREVIOUS Y EAR. EXPLANATION [L]. FOR THE PURPOSES OF THIS SECTION, BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACC OUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SECTION (2), AS I NCREASED BY A) THE AMOUNT OF INCOME-TAX PAID OR PAYABLE, AND THE P ROVISION THEREFOR: OR B) THE AMOUNTS CARRIED TO ANY RESERVES, BY WHATEVE R NAME CALLED OTHER THAN A RESERVE SPECIFIED UNDER SECTION 33AC; OR C) THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS M ADE FOR MEETINQ LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES; OR D) THE AMOUNT BY WAY OF PROVISION FOR LOSSES OF SU BSIDIARY COMPANIES; OR E) THE AMOUNT OR AMOUNTS OF DIVIDENDS PAID OR PRO POSED; OR F) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 (OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (38) THEREOF) OR SECTION 11 OR SECTION 12 APPLY; OR G) THE AMOUNT OF DEPRECIATION, H) THE AMOUNT OF DEFERRED TAX AND THE PROVISION T HEREFOR, I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FOR DI MINUTION . IN THE VALUE OF ANY ASSET, IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (I) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDUCED BY,]] .................................................. ................................................... ........................... .................................................. ................................................... ............ ........... ' 7.2 A PLAINT READING OF THE ABOVE LEAVES NO DOUBT THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS IN ORDER AND THER E IS NO ROOM FOR ANY I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 7 -: AMBIGUITY OR DISCUSSION ON THE SAME'. 6. ASSESSEE IS AGGRIEVED AND RAISED THE FOLLOWIN G GROUNDS: 1. ERRED IN CONFIRMING THE ORDER PASSED BY THE LD.AO W HICH IS BARRED BY LIMITATION OF TIME AS THE SAME HAS BEEN PASSED P URSUANT TO A TIME BARRED NOTICE U/S.143(2). 1(A) ERRED IN CONFIRMING THAT THE LD.AO ACTED AS PE R LAW, THOUGH REASONS SOUGHT BY THE APPELLANT FOR RE-OPENING THE ASSESSMENT WERE NOT PROVIDED WITHIN A REASONABLE TIME AND DISP OSING THE JURISDICTIONAL CHALLENGE BEFORE PROCEEDING WITH THE ASSESSMENT. THAT THE RE-ASSESSMENT PROCEEDINGS ARE VOID AB-INIT IO AS THE SAME WERE INITIATED ON THE BASIS OF A NON-EXISTENT REASO NS. THE LEARNED AO HAS CITED A NON-EXISTENT AMENDMENT MADE TO SECTI ON 115JB AS REASONS FOR RE-OPENING THE ASSESSMENT. THE AMENDME NT CITED BY THE LEARNED AO WAS TABLED IN THE PARLIAMENT ONLY ON FEBRUARY 28, 2008 WHEREAS THE REASSESSMENT PROCEEDINGS WERE INIT IATED ON MAY 17, 2007. 1(B) ERRED IN CONFIRMING THAT THE LD.AO ACTED AS PE R LAW IN RE-OPENING THE ASSESSMENT ON A MERE CHANGE OF OPINION WITHOUT ANY FACTUAL FOUNDATION OR DOCUMENTARY EVIDENCE ON RECORD TO SU PPORT A VALID REASON IN RELATION TO ESCAPEMENT OF INCOME. 2. ERRED IN CONFIRMING THAT THE ADJUSTMENTS MADE TO TH E BOOK PROFITS OF THE APPELLANT U/S.115JB OF THE ACT BASED ON A RETRO SPECTIVE AMENDMENT AS CORRECT. 3. ERRED IN CONFIRMING THE INTEREST LEVIED U/S.234D OF THE ACT, WHICH IS OTHERWISE APPLICABLE ONLY FROM ASSESSMENT YEAR.2004 -05. 4. THE APPELLANT CRAVES, TO CONSIDER EACH OF THE ABOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER AND CRAVES L EAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GRO UNDS OF APPEAL. 7. LD.COUNSEL REFERRING TO THE FACT SHEET S UBMITTED THAT THE NOTICE ISSUED U/S 143(2) WAS BARRED BY LIMITATION. IT WAS FURTHER SUBMITTED THAT RELIANCE OF LD.CIT(A) ON SECTION 292BB IS NOT CORRECT AS ASSESSEE HAS OBJECTED TO THE JURISDICTION BEFORE AO. REFERR ING TO SUBMISSIONS MADE BEFORE AO VIDE LETTER DT.28-11-2008, LD.COUNSE L SUBMITS THAT ASSESSEE HAVING OBJECTED TO THE TIME BARRED NATURE OF THE NOTICE, THE PROVISIONS OF SECTION 292BB ARE NOT APPLICABLE. SIN CE NOTICE WAS SERVED BEYOND THE TIME PROVIDED UNDER THE ACT, ASSESSMENT U/S.147 IS NOT I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 8 -: VALID. COMING TO THE MERITS OF THE ADDITION, LD.COU NSEL HAS FAIRLY ADMITTED THAT RETROSPECTIVE AMENDMENT MAKES IT OBLI GATORY TO ADD PROVISION FOR DEFERRED TAX., WHEREAS THE SAME PROVI SIONS WERE NOT AVAILABLE AT THE TIME OF FILING RETURN OR AT THE TI ME OF FILING RETURN IN RESPONSE TO NOTICE U/S.147. THEREFORE, ADDITION MA DE BY THE ASSESSING OFFICER IS NOT PROPER. 8. LD.DR IN REPLY, HOWEVER, SUBMITTED THAT THE LETT ER WRITTEN BY ASSESSEE IS NOT CLEAR WHETHER IT WAS RELATING TO TH E SERVICE OF NOTICE U/S.143(2) OR SERVICE OF NOTICE U/S.148. SINCE ASS ESSEE CO-OPERATED BEFORE THE ASSESSING OFFICER, THE OBJECTION RAISED BY ASSESSEE DOES NOT SURVIVE. LD.DR RELIED ON THE DECISION OF THE CO-OR DINATE BENCH IN THE CASE OF M/S.NAVAYUGA SPATIAL TECHNOLOGY PVT. LTD., IN ITA NO.1557/HYD/2010 DT.26-12-2011 FOR THIS PROPOSITION . 9. BEFORE COMING TO THE MERITS AS CONTENDED IN GROU ND NO.2, IT IS NECESSARY TO DEAL WITH GROUND NO.1 ON THE ISSUE OF JURISDICTION. AS RIGHTLY POINTED OUT BY THE LD.CIT(A), THE ASSESSING OFFICER DID RECORD REASONS TO BELIEVE AND INITIATED PROCEEDINGS MUC H BEFORE THE AMENDMENT TO THE ACT WAS CARRIED OUT SUBSEQUENTLY. HOWEVER, SINCE ASSESSEE HAS ASKED FOR THE REASONS SUBSEQUENTLY AFT ER A YEAR, ASSESSING OFFICER INSTEAD OF COMMUNICATING THE EXACT REASONS AS RECORDED BY THE ASSESSING OFFICER IN THE ORDER SHEET, COMMUNICATED IN HIS OWN WAY RELYING ON THE RETROSPECTIVE AMENDMENT. CONSEQUENT LY, ASSESSEE HAS OBJECTED TO THE RE-OPENING BEFORE THE LD.CIT(A). S INCE LD.CIT(A) CLARIFIED ON THE ISSUE OF EXACT NOTING IN THE ORDER SHEET, WE ARE OF THE OPINION THAT THE OBJECTIONS RAISED BY ASSESSEE THAT ASSESSMENT W AS RE-OPENED ON NON-EXISTENT AMENDMENT, RAISED ON GROUND NO.1(A) AN D CHANGE OF OPINION IN GROUND NO.1(B) DOES NOT SURVIVE. TO HAV E A CHANGE OF OPINION, THERE SHOULD BE AN ASSESSMENT U/S.143(3) ORIGINALLY. IN THIS I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 9 -: CASE THERE IS NO ASSESSMENT U/S.143(3) DONE EARLIER AND ONLY AN INTIMATION U/S.143(1) WAS ISSUED. THE HON'BLE SUPR EME COURT OF INDIA IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKERS P. LTD., (291 ITR 500) (SC) HAS HELD THAT AN INTIMATION U/S.143(1) IS NOT AN ASSESSMENT AND THEREFORE, THERE IS NO OCCASION FOR THE ASSESSING O FFICER TO ARRIVE AT AN OPINION. THEREFORE, THESE SUB GROUNDS RAISED AS 1 (A) AND 1B ARE REJECTED. 9.1 COMING TO THE MAIN GROUND RAISED IN GROUND NO.1 THAT THE NOTICE U/S.143(2) ISSUED WAS BARRED BY LIMITATION OF TIME, THE ASSESSEE HAS FURNISHED THE SEQUENCE OF DATES AS UNDER: S.NO. DATE PARTICULARS 01 29-10-2002 ORIGINAL RETURN OF INCOME 02 06-05-2003 INTIMATION U/S.143(1) 03 05-09-2003 REVISED RETURN OF INCOME 04 22-03-2004 SEC.154 ORDER 05 31-03-2004 INTIMATION U/S.143(1) 06 15-05-2007 NOTICE U/S.148 07 11-06-2007 RETURN OF INCOME 08 17-10-2008 NOTICE U/S.143(2) BAR OF LIMITATION THE PROVISO TO SEC. 143(2) STANDS SUBSTITUTED W.E.F.01-04-2008. PRIOR TO SUBSTITUTION, NO NOTICE THEREUNDER MAY B E SERVED AFTER THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED (30-06-2008) W.E.F. 01-04-2008, NO NOTICE MAY BE SERVED AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR WHEN THE RETURN WAS FILED (30-09-2008) I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 10 -: 09 17-10-2008 REASONS FOR REOPENING SOUGHT 10 21-11-2008 REASONS FOR REOPENING SUPPLIED 11 28-11-2008 WRITTEN OBJECTION BEFORE AO ON ASSUMPTION OF JURISDICTION (PG.39, INTERNAL PG.4) WE HAVE SEEN COPY OF THE NOTICE ISSUED BY THE ASSE SSING OFFICER DT.01-10-2008. AS PER SEC 143(2) THE NOTICE HAS TO BE ISSUED WITH IN TWELVE MONTHS FROM THE FILING OF RETURN. HOWEVER, P ROVISO TO SEC.143(2) STANDS SUBSTITUTED W.E.F.01-04-2008. PRIOR TO SUBSTITUTION, NO NOTICE THERE UNDER MAY BE SERVED AFTER THE EXPI RY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED. THAT DATE WAS UPTO 30-06-2008. CONSEQUENT TO SUBSTITUT ION OF PROVISO, PERIOD GOT EXTENDED UPTO 30-09-08 IN THIS CASE. THU S, NOTICE CAN BE SERVED UPTO THE EXPIRY OF SIX MONTHS FROM THE END O F THE FINANCIAL YEAR WHEN THE RETURN WAS FILED IE. UPTO 30-09-2008. THE REFORE AS PER THE STATUTORY PROVISION, THE NOTICE COULD HAVE BEEN ISS UED/ SERVED ON OR BEFORE 30-09-2008. HOWEVER, ASSESSING OFFICER HAS ISSUED THE NOTICE DT. 01-10-2008,WHICH WAS IMMEDIATELY SERVED. ASSESS EE HAS APPEARED ON 17-10-2008. AS THE ASSESSMENT PROCEEDINGS ARE P ENDING AS ON 01-04-2008, THE PROVISIONS OF SECTION 292BB WILL AP PLY. ONLY IN THE CASE WHERE ASSESSEE HAS OBJECTED BEFORE THE ASSESSI NG OFFICER, THE PROVISIONS ARE NOT APPLICABLE. IN THIS REGARD, LD .COUNSEL REFERS TO THE FOLLOWING SUBMISSIONS MADE BEFORE THE ASSESSING OFF ICER TO RELY THAT ASSESSEE HAS OBJECTED TO THE NOTICE. PARA 2 OF THE LETTER ADDRESSED TO ASSESSING OFFICER VIDE LETTER DT. 28-11-2008 IS AS UNDER: '2. OUR SUBMISSION ON JURISDICTION: WE WISH TO SUBMIT THAT THE RE-ASSESSMENT PROCEEDIN GS SUFFER FROM LACK OF JURISDICTION AS THE SAME ARE NOT BASED ON VALID AND SUFFICIENT REASONS, ARE TIME BARRED AND NOT IN CONSONANCE WITH PRINCIPLES OF NATURAL JUSTICE. I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 11 -: YOUR GOODSELF HAS SERVED US WITH A NOTICE ON MAY 1 7, 2007 TO INITIATE ASSESSMENT UNDER SECTION 147 WHILE THE REASONS CIT ED FOR REOPENING OF ASSESSMENT FIRST CAME INTO EXISTENCE ONLY ON FEBRU ARY 28, 2008. ACCORDINGLY YOUR GOODSELF HAD NO REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT WHILE ISSUING THE NOTICE UNDER SECTION 148. FURTHER THE ACTION OF YOUR GOODSELF IS NOT IN CONS ONANCE WITH PRINCIPLES AND PROCEDURES AS LAID DOWN BY THE SUPREME COURT I N GKN DRIVE SHAFT 259 ITR 19 (2003)'. (EMPHASIS SUPPLIED) 9.2 AS CAN BE SEEN FROM THE ABOVE, WHAT ASSESSEE IS OBJECTING AS TIME BARRED IS NOT CLEAR. THE CONTEXT IN WHICH THE ABO VE WAS SUBMITTED TO THE ASSESSING OFFICER INDICATE THAT ASSESSEE IS OBJ ECTING TO THE TIME BARRED NATURE OF THE NOTICE U/S.148 BUT NOT NOTICE U/S.143(2). THE WORD 'TIME BARRED' USED IN THE SECOND SENTENCE IS CLARIF IED BY THE PARA GIVEN BELOW THAT IT REFERS TO NOTICE U/S.148. THERE IS N O REFERENCE TO EITHER SERVICE OF NOTICE BEYOND THE TIME PERIOD NOR EVEN A REFERENCE TO NOTICE U/S.143(2). IN VIEW OF THIS, WE ARE NOT CONVINCED WITH THE LD.COUNSEL'S ARGUMENT THAT THE WORD USED 'TIME BARRED' REFERS TO THE TIME BARRED NATURE OF NOTICE U/S.143(2). IN OUR OPINION, ASSES SEE HAS NOT RAISED ANY OBJECTION ON THE NOTICE U/S.143(2) BEFORE ASSESSING OFFICER AND THEREFORE PROVISIONS OF SECTION 292BB ARE CLEARLY APPLICABLE. 9.3 CO-ORDINATE BENCH AT ITAT,HYDERABAD IN THE CASE OF M/S.NAVAYUGA SPATIAL TECHNOLOGY PVT. LTD., (SUPRA) HAS CONSIDERED SIMILAR ISSUE AND HELD AS UNDER VIDE PARA 5. '5. AS FOR GROUND NO.2(B), WE FIND THAT THE PLEA W ITH REGARD TO BELATED THE SERVICE OF NOTICE UNDER S.143(2), VIZ. MORE THAN 1 2 MONTHS AFTER THE MONTH OF FILING OF THE RETURN, WAS NOT RAISED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, AND SUCH A PLEA IS RA ISED FOR THE FIRST TIME IN THE APPELLATE PROCEEDINGS, THAT TOO BEFORE THIS TR IBUNAL. IN VIEW OF THE PROVISIONS OF S.292BB, MISTAKE ON ACCOUNT OF BELAT ED SERVICE OF NOTICE IS A CURABLE MISTAKE. SINCE THE ASSESSEE HAS NOT RAIS ED SUCH A PLEA BEFORE THE ASSESSING OFFICER, AND FULLY PARTICIPATED IN T HE ASSESSMENT PROCEEDINGS, THE SO-CALLED MISTAKE IN SERVING THE NOTICE UNDER S.143(2) OF THE ACT, STOOD CURED, ON ACCOUNT OF THE ASSESSEES ACTION IN IGNORING THE SAME AND PARTICIPATING IN THE PROCEEDINGS BEFORE T HE ASSESSING OFFICER. I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 12 -: LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED BEF ORE US THAT THE RECENTLY INSERTED PROVISION OF S.292BB, EFFECTIVE FROM 1 ST APRIL, 2008, IS APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2008-09 ONLY, AND SINCE THE PRESENT APPEAL RELATES TO ASSESSMENT YEAR 2005-06, THE SAVING PROVISION OF THAT SECTION DOES NOT COME TO THE RE SCUE OF THE DEPARTMENT. WE ARE AFRAID, SUCH A PLEA CANNOT BE ACCEPTED, FOR THE REASON THAT THE PROVISION OF S.292BB IS ONLY A PROCEDURAL ONE, AND AS SUCH, IT APPLIES TO ALL THE PENDING PROCEEDINGS, IRRESPECTIVE OF THE A SSESSMENT YEARS, TO WHICH THEY RELATE, AS HELD BY THE PUNJAB AND HARYA NA HIGH COURT IN THE CASE OF OM SONS INTERNATIONAL V/S. CIT(2011) 60 DT R (P&H) 393, WHEREIN IT WAS HELD- .THE PROVISION HAS BEEN MADE EFFECTIVE FROM 1 ST APRIL, 2008 AND THEREFORE, SHALL APPLY TO ALL PENDING PROC EEDINGS. THE CBDT ISSUED CIRCULAR NO.1 OF 2009 DT 27 TH MARCH, 2009 ((2009) 222 CTR (ST) 69); (2009)310 ITR (ST) 42) GI VING EXPLANATORY NOTES ON THE PROVISIONS RELATING TO DI RECT TAXES CONTAINED IN FINANCE ACT, 2008. CLAUSE 42.7 (AT P.8 6 OF THE REPORT) IS RELEVANT WHICH RELATES TO APPLICABILITY OF THIS PROVISION AND READS THUS- : 42.7 APPLICABILITY: THIS AMENDMENT HAS BEEN MADE APPLICABLE W.E.F. 1 ST APRIL, 2008. THIS MEANS THAT THE PROVISION OF NEW S.292BB SHALL APPLY TO ALL PROCEED INGS WHICH ARE PENDING ON1ST APRIL, 2008. .. WE ARE ALSO SUPPORTED IN THIS BEHALF BY THE DECIS ION OF THE SPECIAL BENCH OF THE TRIBUNAL IN KUBER TOBACCO PRODUCTS (P) LTD . V/S DY. CIT(117 ITD 273), WHEREIN IT WAS HELD THAT BY INSERTION OF S.2 92BB, RIGHT OF THE ASSESSEE TO CHALLENGE THE VALIDITY OF ASSESSMENT OR REASSESSMENT PROCEEDINGS DURING THE COURSE OF APPELLATE PROCEED INGS HAS BEEN TAKEN AWAY BY THE STATUTE W.E.F. 1.4.2008. IN THIS VIEW OF THE MATTER, WE FIND NO MERIT IN GROUND NO.2(B) OF THE ASSESSEE, WHICH IS ACCORDINGLY REJECTED'. 9.4 HON'BLE SPECIAL BENCH OF ITAT IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD., VS. DCIT (117 ITD 273) (DELHI) CONSIDERED THE PROVISIONS OF SECTION 292BB AND ITS APPLICATION TO THE SERVICES OF NOTICES HELD AS UNDER: ' IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF S ECTION 292BB REFERENCE IS MADE TO SUB-SECTION (2) OF SECTION 143. HOWEVER , THE SECTION DOES NOT LIMIT ITS APPLICABILITY ONLY TO NOTICE UNDER SECTI ON 143(2). THE SCOPE OF SECTION IS THAT WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDINGS OR HAS CO-OPERATED IN ANY INQUIRY RELATING TO THE ASS ESSMENT OR REASSESSMENT, THEN THE CONSEQUENCES THAT WOULD ENS UE WOULD BE THAT IT WILL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION S OF THE ACT WHICH IS I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 13 -: REQUIRED TO BE SERVED ON AN ASSESSEE HAS BEEN DULY SERVED ON HIM AND IT WILL FURTHER BE DEEMED TO HAVE BEEN SERVED IN TIME AND IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE ASSESSEE IS DEBARRE D FROM TAKING THE DEFENCE OR RAISE ANY OBJECTION IN ANY PROCEEDING O R INQUIRY THAT THE NOTICE WAS - (A) NOT SERVED UPON HIM; (B) NOT SERVED UPON HIM IN TIME; AND (C) SERVED UPON HIM IN ANY IMPROPER MANNER. [ PARA 23] THE ASSESSEE HAS A RIGHT OF BEING SERVED WITH THE NOTICE IN CASE PROCEEDINGS ARE TAKEN AGAINST HIM AND IN CASE OF I NVALID NOTICE THE WHOLE PROCEEDINGS TAKEN PURSUANT TO THAT NOTICE WOULD BE VOID AB INITIO (SUBJECT TO PROVISIONS OF SECTION 292B) AND WILL HAVE NO LE GAL CONSEQUENCES. TO OVERCOME SUCH SITUATIONS SECTION 292BB HAS BEEN BR OUGHT ON THE STATUTE AS EXPLAINED IN THE MEMORANDUM EXPLAINING THE PROV ISIONS AS WELL AS NOTES ON CLAUSES. AS EXPLAINED EARLIER, THE APPLIC ABILITY OF SECTION 292BB IS NOT STRICTLY RESTRICTED TO ISSUE OF NOTICE UNDE R SECTION 143(2) BUT IT IS IN RESPECT OF OTHER NOTICES RELATING TO ANY PROVISION S OF THE ACT WHICH INCLUDE NOTICE TO INITIATE REASSESSMENT PROCEEDINGS AND OT HER PROCEEDINGS ALSO. [PARA 30] IT IS WELL-SETTLED THAT WHILE CONSTRUING A DEEMING PROVISION, FULL EFFECT MUST BE GIVEN TO THE STATUTORY FICTION. IT SHOULD ALSO BE CARRIED TO ITS LOGICAL CONCLUSION. TO THAT END, IT WOULD BE PROPER AND EV EN NECESSARY TO ASSUME ALL THOSE FACTS ON WHICH ALONE THE FICTION CAN OPE RATE. THEREFORE, WHERE THE STATUTE UNDER SECTION 292BB DE EMS SERVICE OF NOTICE, IT WILL ALWAYS INCLUDE ISSUE OF NOTICE, AS SERVICE CANNOT BE EFFECTED WITHOUT ISSUANCE THEREOF. THUS, THE ARGUMENT OF THE ASSESSEE, THAT UNLESS TH ERE EXISTS ISSUANCE OF NOTICE, SERVICE THEREOF CANNOT BE PRESUMED OR DEEM ED AND SECTION 292BB WOULD NOT BE APPLICABLE, COULD NOT BE ACCEPTED. [P ARA 32] NO DOUBT, THE ISSUE OF NOTICE AS WELL AS SERVICE O F NOTICE IS A PROCEDURAL SECTION, BUT WHEN THE SAME HAS TIME LIMITATION, TH E OBLIGATION OF THE DEPARTMENT TO ISSUE NOTICE WITHIN A PRESCRIBED TIM E BECOMES THE RIGHT OF THE ASSESSEE TO RECEIVE THAT NOTICE IN TIME TO VAL IDLY COMMENCE THE PROCEEDINGS AND TO VALIDLY COMPLETE THE SAME. [PAR A 33]' IN VIEW OF THIS, WE ARE OF THE OPINION THAT EVEN TH OUGH THE NOTICE WAS ISSUED AND SERVED BEYOND THE TIME, IT IS COVERED BY THE PROVISIONS OF SECTION 292BB. THEREFORE, THE PROCEEDINGS ARE HELD TO BE VALID. THE ORDER OF LD CIT(A) ON THIS IS UPHELD. GROUND NO.1 O F THIS ISSUE IS ACCORDINGLY REJECTED. I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 14 -: 10. COMING TO GROUND NO.2, THIS ISSUE WAS CONSIDERE D BY THE LD.CIT(A), AND HAS ALREADY CRYSTALISED AGAINST ASSE SSEE, CONSEQUENT TO THE RETROSPECTIVE AMENDMENT BROUGHT OUT BY THE FINA NCE ACT, 2008. IN VIEW OF THIS, THE GROUND RAISED BY ASSESSEE HAS NO MERIT. WE ACCORDINGLY UPHOLD THE ORDERS OF THE ASSESSING OFFICER/ CIT(A). 11. GROUND NO.3 PERTAINS TO ISSUE OF DEMAND RAISED U/S.234D. IT WAS THE CONTENTION THAT ASSESSING OFFICER HAS RAISED TH E DEMAND U/S.234D WHICH IS NOT APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR AS IT WAS APPLICABLE FROM AY.2004-05. AS CAN BE SEEN FROM TH E ORDER OF THE ASSESSING OFFICER, ASSESSING OFFICER HAS RAISED INT EREST U/S.234D AT RS.9,91,911/- WITHOUT GIVING ANY WORKING, AS TO HOW THAT AMOUNT WAS ARRIVED AT. ASSESSEE HAS OBJECTED TO THE SAME BEFOR E THE LD.CIT(A). THE LD.CIT(A) UNFORTUNATELY HAS CONSIDERED THE PROVISIO NS OF SECTION 234B AND NOT 234D VIDE PARA 8 OF THE ORDER. 11.1 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE AR E OF THE OPINION THAT THIS ISSUE REQUIRES RE-EXAMINATION BY THE ASSESSING OFFICER. AS SEEN AN INTIMATION U/S.143(1), AS NOTED IN THE ASSESSMENT O RDER, WAS ISSUED ON 06-05-2003 I.E., BEFORE 01-06-2003. THE PROVISIONS U/S.234D WERE INTRODUCED EFFECTIVE FROM 01-06-2003 AND IT WAS ALR EADY HELD BY VARIOUS HIGH COURTS THAT IF THE REFUND IS ISSUED AFTER THAT DATE, INTEREST UNDER SECTION 234D CAN BE LEVIED, EVEN FOR THE ASSESSMENT YEARS PRIOR TO AY.2004-05. THEREFORE, THE CRUCIAL ISSUE TO BE EXA MINED IS WHETHER THE REFUND WAS ISSUED PRIOR TO 01-06-2003 OR LATER. TH IS ASPECT WAS NOT BROUGHT ON RECORD NOR ASSESSING OFFICER GAVE ANY DE TAILED WORKING HOW IT IS APPLICABLE. IN THE INTEREST OF JUSTICE, WE REST ORE THE SAME TO THE FILE OF ASSESSING OFFICER TO CALCULATE THE INTEREST ACCORDI NG TO THE PROVISIONS OF THE ACT AND LAW ON THE SUBJECT. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY AND A DETAILED ORDER SHOULD BE PASSED, SO THAT THE VERACITY I.T.A. NO. 282/HYD/2011 L&T INFOCITY LTD., :- 15 -: OF THE SAME CAN BE EXAMINED BY HIGHER JUDICIAL AUTH ORITIES IF REQUIRED. WITH THESE OBSERVATIONS AND DIRECTIONS, GROUND NO.3 IS SET ASIDE TO THE FILE OF ASSESSING OFFICER AND IS CONSIDERED AS 'ALL OWED FOR STATISTICAL PURPOSES'. 12. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 16 TH JANUARY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH JANUARY, 2015. TNMM COPY TO : 1. L&T INFOCITY LIMITED, 1Q4 - A1, 1 ST FLOOR, CYBER TOWERS, HITECH CITY, MADHAPUR, HYDERABAD-500 082 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 3. CIT(A)-V, HYDERABAD 4. CIT-IV, HYDERABAD 5. D.R. ITAT, HYDERABAD.