M/s. Rex Rotary India Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2980/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5003 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 19-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURAI
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Revenue expenditure
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , !' .$%$&, ( ') BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.2980/MDS/2016 & +& / ASSESSMENT YEAR : 2006-07 M/S REX ROTARY INDIA PVT. LTD., NO.6, SHANMUGAM STREET, ROYAPETTAH, CHENNAI - 600 014. PAN : AABCR 3046 H V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 5(3), CHENNAI - 600 034. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI B. RAMAKRISHNAN, FCA /0-. 1 2 / RESPONDENT BY : SHRI DURAI PANDIAN, JCIT 3 1 4( / DATE OF HEARING : 29.03.2017 56+ 1 4( / DATE OF PRONOUNCEMENT : 12.04.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 3, CHENN AI, DATED 30.06.2016 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE FIRST ISSUE ARISES FOR CONSIDERATION IS 2 I.T.A. NO.2980/MDS/16 REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'). REFERRING TO THE ASSESS MENT ORDER, MORE PARTICULARLY THE REASONS FOR REOPENING OF ASSESSMEN T UNDER SECTION 147 OF THE ACT, THE LD. REPRESENTATIVE SUBMITTED TH AT THE ASSESSING OFFICER FOUND THAT IN THE BALANCE SHEET FILED ALONG WITH RETURN OF INCOME, INTEREST ACCRUED BUT NOT DUE WAS DISCLOSED UNDER THE HEAD CURRENT ASSETS LOANS AND ADVANCES. THE ASSESSEE HAS ALSO CLAIMED THIS AS REVENUE EXPENDITURE. THE LD. REPRE SENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION ON 07.12.2006 AND A REVISED RET URN WAS ALSO FILED ON THE SAME DAY. THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 08.12.2008. SUBSEQUENTLY, AFTER EXPIRY OF FOUR YEARS, THE ASSESSING OFFICER ISSUED NOTICE UND ER SECTION 148 OF THE ACT ON 15.03.2013 ON THE GROUND THAT THE INCOME OTHERWISE ASSESSABLE TO TAX ESCAPED ASSESSMENT. THE LD. REPR ESENTATIVE FURTHER SUBMITTED THAT IT IS NOT THE CASE OF THE AS SESSING OFFICER THAT THERE WAS ANY NEGLIGENCE ON THE PART OF THE ASSESSE E IN DISCLOSING ANY PART OF INCOME FOR COMPLETION OF ASSESSMENT. 3. REFERRING TO THE FIRST PROVISO TO SECTION 147 OF THE ACT, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT WHEN THE 3 I.T.A. NO.2980/MDS/16 ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT, AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT UNLESS AND UNTIL IT WAS FOUND THAT T HERE WAS NEGLIGENCE ON THE PART OF THE ASSESSEE IN OFFERING THE PARTICULARS REQUIRED FOR COMPLETING THE ASSESSMENT. IN THE CAS E BEFORE US, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSMENT WAS REOPENED ON THE BASIS OF BALANCE SHEET ALREADY FILED BY THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD. THERE WAS NO NEW MAT ERIAL AVAILABLE BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF AN Y NEW MATERIAL, THE FAILURE OF THE ASSESSEE TO FURNISH THE REQUIRED PARTICULARS FOR COMPLETING ASSESSMENT, IT CANNOT BE SAID THAT THERE WAS NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHING THE REQUI RED PARTICULARS. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS IS BARRED BY LIMITATION IN VIEW OF PROVISO TO SECTION 147 OF THE ACT, HENCE, THE RE OPENING OF ASSESSMENT IS INVALID. 4. ON THE CONTRARY, SHRI DURAI PANDIAN, THE LD. DEP ARTMENTAL REPRESENTATIVE, SUBMITTED THAT ADMITTEDLY THE ASSES SMENT WAS COMPLETED ON 08.12.2008 AND THE NOTICE WAS ISSUED F OR REOPENING 4 I.T.A. NO.2980/MDS/16 THE ASSESSMENT ON 15.03.2013, WHICH IS BEYOND THE P RESCRIBED TIME OF FOUR YEARS PROVIDED UNDER PROVISO TO SECTION 147 OF THE ACT. THE LD. D.R. HAS FAIRLY SUBMITTED THAT NO FRESH MATERIA L IS AVAILABLE ON RECORD AND ONLY ON THE BASIS OF BALANCE SHEET FILED BY THE ASSESSEE ALONG WITH ORIGINAL RETURN OF INCOME, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE EXHIBITED INTEREST ACCRUED BUT NO T DUE UNDER THE HEAD CURRENT ASSETS. THE LD. D.R. HAS ALSO SUBMI TTED THAT THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS FOR COMP LETING ASSESSMENT, HOWEVER, THE ASSESSING OFFICER SUBSEQUE NTLY EXAMINED THE MATERIAL AVAILABLE ON RECORD AND FOUND THAT THE INTEREST INCOME ACCRUED TO THE ASSESSEE WAS NOT BRO UGHT TO TAXATION. THEREFORE, ACCORDING TO THE LD. D.R., TH E ASSESSING OFFICER FOUND THAT THERE WAS ESCAPEMENT OF INCOME F ROM ASSESSMENT, HENCE, HE ISSUED NOTICE FOR ASSESSING T HE INCOME ESCAPED FROM ASSESSMENT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SECTIONS 147 AND 148 OF THE ACT. FOR THE PURPOSE OF REOPENING THE ASSESSMENT UNDER S ECTION 147 OF THE ACT, THE ASSESSING OFFICER HAS TO NECESSARILY I SSUE NOTICE UNDER 5 I.T.A. NO.2980/MDS/16 SECTION 148 OF THE ACT. PROVISO TO SECTION 147 OF THE ACT CLEARLY SAYS THAT WHERE AN ASSESSMENT WAS COMPLETED UNDER S ECTION 143(3) OF THE ACT, THE ASSESSMENT CANNOT BE REOPENE D AFTER EXPIRY OF FOUR YEARS UNLESS THERE WAS ANY NEGLIGENCE ON TH E PART OF THE ASSESSEE IN FURNISHING REQUIRED MATERIAL. IN THE C ASE BEFORE US, FOUR YEARS PERIOD HAS ALREADY EXPIRED. IT WAS ALSO NOT DISPUTED THAT ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WA S PASSED ON 08.12.2008. 6. NOW COMING TO MATERIAL FACTS, THE ASSESSEE HAS F ILED THE BALANCE SHEET ALONG WITH THE RETURN FILED ON 07.12. 2006. THE ASSESSEE HAS DISCLOSED ALL THE INCOME ACCRUED TO IT AND ALSO CERTAIN ITEMS OF INCOME SHOWN IN THE BALANCE SHEET WERE CLA IMED AS REVENUE EXPENDITURE. WHEN THE ASSESSEE HAS DISCLOS ED ALL THE PARTICULARS, INCLUDING THE INTEREST ACCRUED, BUT NO T DUE, IT IS FOR THE ASSESSING OFFICER TO EXAMINE THE SAME AND FOUND OUT WHETHER ANY INCOME ASSESSABLE TO TAX WAS CLAIMED AS REVENUE EXP ENDITURE. THE ASSESSING OFFICER AFTER EXAMINING THE MATERIAL FOUN D ON RECORD, INCLUDING THE BALANCE SHEET, ACCEPTED THE CLAIM OF THE ASSESSEE UNDER SECTION 143(3) OF THE ACT BY AN ORDER DATED 0 8.12.2008. AFTER PASSING THE ASSESSMENT ORDER, THERE WAS NO FRESH MA TERIAL AVAILABLE 6 I.T.A. NO.2980/MDS/16 ON RECORD FOR REOPENING THE ASSESSMENT. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT DISCLOSED ANY MATERIAL FACTS FOR COMPLETING THE ASSESSMENT. IN VIEW OF THE ABOV E, IT IS OBVIOUS THAT THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS REQUIRED FOR COMPLETING THE ASSESSMENT. THEREFORE, THERE WAS NO NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHING REQUIRED PAR TICULARS. IN THOSE FACTUAL SITUATION, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE REOPENING OF ASSESSMENT, AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IS NOT JUSTIFIED. 7. APART FROM THAT, THE ASSESSING OFFICER ON THE BA SIS OF VARY SAME BALANCE SHEET, ALLOWED THE CLAIM OF THE ASSESS EE. THEREFORE, TAKING A DIFFERENT VIEW AFTER REOPENING WOULD AMOUN T TO CHANGE OF OPINION. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UP HOLD THE REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS. ACCORDINGLY, WE HOLD THAT THE REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS IS BARRED BY LIMITATION. HENCE, CONSEQUENTIAL ORDER P ASSED BY THE ASSESSING OFFICER CANNOT STAND IN THE EYE OF LAW. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND T HE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7 I.T.A. NO.2980/MDS/16 ORDER PRONOUNCED ON 12 TH APRIL, 2017 AT CHENNAI. SD/- SD/- ( !' .$%$& ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) ( / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 12 TH APRIL, 2017. KRI. 1 /49: ;:+4 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. 3 <4 () /CIT(A)-3, CHENNAI 4. PRINCIPAL CIT, CHENNAI-5, CHENNAI 5. := /4 /DR 6. & > /GF.