DCIT CIR 6(2), MUMBAI V. CLASSIC STRIPES P.LTD, MUMBAI

ITA 3033/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3526 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA SINDHU
• Assessee Lawyers: REEPAL G TRALSHAWALA; MANISH JAJUAR
• Keywords: Difference of opinion; Revised return; Change of opinion
• Section: 143(3); 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H MUMBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER A ND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3033/MUM/2013 (ASSESSMENT YEAR : 2004-05) DY. CIT-6(2) ROOM NO.563, AAYAKAR BHAVAN M.K. ROAD, CHURCHGATE MUMBAI-400020. VS. M/S. CLASSIC STRIPES PVT. LTD. 164, SENAPATI BAPAT MARG, MATUNGA (W) MUMBAI-400 016. PAN/GIR NO.: AAA CC 5076 F ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI RAVINDRA SINDHU (DR) ASSESSEE BY : SHRI REEPAL G. TRALSHAWALA & MANISH JAJU-AR DATE OF HEARING : 22/02/2016 DATE OF PRONOUNCEMENT: 29/02/2016 O R D E R PER PAWAN SINGH, JM: THE PRESENT APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS) -12, MUMBAI DATED 02.01.2013 IN RESPECT OF ASSESSMENT YEAR 2004- 05. THE GROUNDS RAISED BY THE REVENUE ARE AS FOLLOW S:- 1. 'ON. THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING ASSESSEE'S GROUND THAT REOPENING OF ASSESS MENT WAS NOT AS PER LAW. THE LD. CIT(A) FAILED TO APPRECIATE THAT CASE WAS COVERED B Y EXPLANATION 1 TO SEC. 14 7 WHICH CLEARLY PROVIDES THAT PRODUCTION BEFORE THE AO OF A CCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HA VE BEEN DISCOVERED BY THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEA NING OF THE FOREGOING PROVISO OF SECTION 147. 2.1 ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE LD. CIT(A) ERRED IN ALLOWING ASSESSEE'S CLAIM U/ S.80 IB OF RS.1,25, 73,581/ -. 2.2 ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION U/ S. 80 IB, WITH REGARD TO INSURANCE REF UND, INSURANCE CLAIMED RECEIPT AND CREDIT RECEIPT FROM MSEB WHEN THESE RECEIPTS ARE NO T 'DERIVED' FROM INDUSTRIAL UNDERTAKING. 3033/13-CLASSIC STRIPES PL 2 3. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 2. THE BRIEF FACTS OF THE CASE ARE, THAT THE ASSESS EE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 30.04.2004 DECLARING TOT AL INCOME AT RS.16,96,14,593/- .THE ASSESSEE HAS FILED REVISED RETURN OF INCOME ON 28.3 .2005 AND DECLARED TOTAL INCOME AT RS.17,02,21,020/-. THE ASSESSMENT WAS COMPLETED U/S . 143(3) ON 15.9.2005 ASSESSING TOTAL INCOME OF THE ASSESSEE AT RS.17,02,79,020/-. THE AS SESSMENT WAS RE-OPENED BY ORDER SHEET DATED 19.3.2009 AND NOTICE DATED 20.3.2009 U/S.148 WAS ISSUED TO THE ASSESSEE .IN RESPONSE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.17,02,79,020/-. 3. THE ASSESSEE DEMANDED REASONS RECORDED FOR RE-OP ENING OF ASSESSMENT WHICH WERE PROVIDED TO THE ASSESSEE ON 01.04.2011 AND READ AS UNDER :- '....... IT IS SEEN FROM THE RECORDS THAT THE PROFI T. OF UNDERTAKING WAS INCLUSIVE OF RS. 10,44,616/- BEING INSURANCE REFUND, RS. 3,99,40,031 /- BEING INSURANCE CLAIM RECEIVED AND RS. 9,27,190/- BEING CREDIT RECEIVED FROM MSEDC ON SALE OF UNIT ELECTRICITY GENERATED BY WIND MILLS. SINCE THESE INCOME CANNOT BE TERMED AS DERIVED FROM INDUSTRIAL UNDERTAKING AND HENCE SHOULD HAVE BEEN E XCLUDED FROM THE PROFIT OF UNDERTAKING BEFORE ALLOWING DEDUCTION UNDER SECTION 80IB. OMISSION TO DO SO HAS RESULTED IN EXCESS ALLOWANCE OF DEDUCTION OF RS. 1, 25,73,581/- (BEING 30% OF RS. 4,19,11,937). ' 4. THE ASSESSING OFFICER WHILE MAKING ASSESSMENT MA DE AN ADDITION OF RS.1,25,73,581/- ON ACCOUNT OF DEDUCTION U/S. 80IA (BEING 30% OF RS. 4,19,11,937/-) AND COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT VIDE A SSESSMENT ORDER DATED 23.12.2011. AGAINST THE ORDER OF ASSESSMENT, THE ASSESSEE HAS FILED AN APPEAL CHALLENGING THE ORDER OF THE ASSESSING OFFICER BEFORE THE FAA/CIT(A) REASONING T HAT THE RE-OPENING OF ASSESSMENT WAS AFTER EXPIRY OF FOUR YEARS OF THE ORIGINAL ASSESSME NT, THAT THE ASSESSMENT IS NOT VALID AND THAT THE SAME WAS ISSUED WITHOUT RECORDING REASONS AND T HAT ANY ALLEGATION TO THE FACT THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS, THAT THE ASSESSING OFFICER HAS NOT RECORDED THE FINDING THAT SUCH ESCAPEMENT WAS ON ACCOUNT OF OMISSION OR COMMISSION OR FAILURE TO DISCLOSE ALL M ATERIAL FACTS BY THE ASSESSEE . 3033/13-CLASSIC STRIPES PL 3 5. THE CIT(A) WHILE DISPOSING OFF THE APPEAL OF TH E ASSESSEE, HAS ACCEPTED THE GROUND RAISED IN THE APPEAL, IN THE IMPUGNED ORDER, DATED 17.01.2012 AGAINST WHICH THE PRESENT APPEAL IS FILED BEFORE US BY THE REVENUE. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E (DR) AS WELL AS THE LD. AUTHORISED REPRESENTATIVE (AR). THE DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT REASONS RECORDED BY THE ASSESSING OFFICER WERE SUPP LIED TO THE ASSESSEE AND THE INCOME WHICH ESCAPED ASSESSMENT WAS CHARGEABLE TO TAX AND ADDITION MADE IN THE ASSESSMENT WAS IN ACCORDANCE WITH LAW. THE LD. AR ARGUED THAT ALL THE MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER AND THERE WAS NO NEW MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER MAY ARRIVE AT A CONCLUSION THAT ANY INCOME WHICH WAS CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT. THE LD. AR FURTHER ARGUED THAT RETURN OF INCOME WAS FILED O N 30.4.2004 AND NOTICE OF RE-OPENING WAS ISSUED ON 20.3.2009 WHICH WAS BEYOND THE PRESCRIBED PERIOD OF FOUR YEARS AND RE-OPENING IS INVALID, HENCE THE ORDER PASSED BY THE ASSESSING OF FICER BECOMES VOID ABINITIO 7. LD. CIT(A) WHILE DEALING WITH THIS ISSUE HAS CON CLUDED THAT ASSESSING OFFICER HAS RE- OPENED THE CASE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD FROM TIME TO TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS AND, FURTHER CONCLUDED THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THAT THE RE-ASSESSMENT IN ITS CASE BY ISSUING A NOTICE U /S. 148 ON 15.2.2011 CANNOT BE HELD AS VALID, AS THE SAID RE-ASSESSMENT IS ON THE BASIS OF CHANGE OF OPINION. THERE WAS NO NEW MATERIAL FACT IN POSSESSION OF THE ASSESSING OFFICE R, THE MATERIAL WHICH WAS AVAILABLE HAS BEEN RE-EXAMINED BY THE ASSESSING OFFICER AND HELD THAT THE ASSESSMENT DONE U/S. 147 OF THE ACT CANNOT BE UPHELD DUE TO THE FACT THAT THE ISSUE OF SAID NOTICE WAS CONTRARY TO THE PROVISIONS OF SAID SECTION AND THE ASSESSING OFFICE R HAD NOWHERE BROUGHT ON RECORD THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, DU E TO THE FAILURE ON PART OF THE ASSESSEE, TO DISCLOSE ALL TRUE FACTS OF EACH CASE, AND ALLOW TH E GROUNDS AGAINST THE REVENUE. 8. WE HAVE FURTHER NOTICED THAT THE ASSESSEE HAS PL ACED ON RECORD COPY OF THE ANNUAL ACCOUNT, COMPUTATION OF THE TOTAL INCOME, AUDIT REP ORT U/S. 80IB FOR THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER HAS NOT DISCLOSED OR BR OUGHT ANY NEW MATERIAL OR INFORMATION ON THE BASIS OF WHICH IT CAN BE CONCLUDED THAT ANY INC OME HAS ESCAPED ASSESSMENT. HENCE, THE RE-OPENING U/S. 147 WAS INVALID. 3033/13-CLASSIC STRIPES PL 4 9. IN THE ABOVE DISCUSSION, WE DO NOT FIND ANY ILL EGALITY OR INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A), AS SUCH GROUND NO.1 RAISED IN TH E PRESENT APPEAL, IS DISMISSED. SINCE, RE- OPENING OF THE ASSESSMENT HAS ALREADY BEEN HELD INV ALID BY THE LD. CIT(A) AND WHICH HAS BEEN UPHELD BY US, SO, THE ADDITION MADE IN THE IMP UGNED ASSESSMENT ORDER U/S. 155(3) R.W.S. 147 AUTOMATICALLY BECOMES INFRUCTUOUS, HENCE, OTHER GROUNDS RAISED IN THE PRESENT APPEAL DO NOT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29/ 02/2016. SD/- SD/- ( D.KARUNAKARA RAO ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 29 /02/2016 JV, SR.PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/