M/s U.P State Bridge Corporation Ltd., Lucknow V. Dy. Commissioner of Income Tax-6, Lucknow

ITA 305/LKW/2015

• Counselvise Citation: 30523714 RSA 2015
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B P YADAV COST ACCOUNTANT
• Keywords: Depreciation; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 317 /LKW/2015 ASSESSMENT YEAR 2005-06 M/S U.P. STATE BRIDGE CORPORATION LTD. LUCKNOW PAN AAACU 3258 K VS DY. COMMISSIONER OF INCOME TAX, RANGE-VI, LUCKNOW. ITA NO. 305 /LKW/2015 ASSESSMENT YEAR 2005-06 DY. COMMISSIONER OF INCOME TAX, RANGE-VI, LUCKNOW. VS M/S U.P. STATE BRIDGE CORPORATION LTD. LUCKNOW PAN AAACU 3258 K APPELLANT RESPONDENT DR. A.K. SINGH, CIT DR. APPELLANT BY SHRI B.P. YADAV, COST ACCOUNTANT RESPONDENT BY 22/09/2015 DATE OF HEARING 01 / 10 /2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE A S WELL AS REVENUE AGAINST THE ORDERS OF THE CIT(A) PERTAINING TO THE AY 2005-06 & 2009-10. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF REFERENCE WE EXT RACT THE GROUNDS OF APPEAL RAISED BY THEM. 2 ITA NO. 317/LKW/2015 FOR AY 2005-06 (REVENUES APPE AL) IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APPEAL) HAS E RRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,06,37,641 /- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IA OF TH E I.T. ACT, IGNORING THE LEGAL POSITION ENUMERATED IN EXPLANATI ON-3 & 4 OF SECTION 147 THAT THE ASSESSING OFFICER CAN ASSESS O R REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED A SSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS U/S 147, NOTWITHSTANDING THAT THE REASO NS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDE D UNDER SUB- SECTION (2) OF SECTION 148. 2. THAT THE APPELLANT CRAVE LEAVES TO ADD OR AMEN D ANY ONE OR MORE OF THE GROUNDS OF APPEALS, AS STATED ABOVE, AS AND WHEN NEED TO DO SO ARISES WITH THE PRIOR PERMISSION OF THE COURT . ITA NO. 305/LKW/2015 FOR AY 2005-06 (ASSESSEES APP EAL) IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-LL, LUCKNOW (HEREINAFTER REFERRED TO AS THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE LD. A.O. IN INITIATING THE PROCEEDINGS U/S 148 OF THE ACT AND PASSING THE ASSESSMENT ORDER U/S 147/144 OF THE I.T. ACT 1961 WITHOUT APPRECIATING THE FACT THAT TH ERE HAS NOT BEEN ANY FAILURE ON THE PART OF THE ASSESSEE IN MAKING T RUE AND FULL DISCLOSURE OF THE MATERIALS FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALREADY CARRIED OUT U/S 143(3) OF THE A CT AND THE NOTICE ISSUED U/S 148 IS BARRED BY LIMITATION. 2. ON THE UNDER NOTED FACTS, THE LD. CIT(A) WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. A.O. IN INITIATING THE REASSESSMENT PROCEEDINGS U/S 148 OF THE ACT AND PASSING THE ASSE SSMENT ORDER U/S 148/143(3) OF THE ACT. (I) BECAUSE THE ASSESSEE HAS ALREADY BEEN SUBJECTE D TO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT. (II) BECAUSE NOTICE U/S 148 HAS BEEN ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 3 (III) BECAUSE IN THE REASON TO NOTICE ISSUED U/S 1 48 OF THE ACT, THERE HAS NOT BEEN ANY SUCH FINDING THAT THERE HAS BEEN F AILURE ON THE PART OF THE ASSESSEE IN MAKING FULL AND TRUE DISCLO SURE OF THE MATERIAL FACTS. (IV) BECAUSE THE LD. A.O. WAS NOT IN POSSESSION OF ANY INDEPENDENT MATERIALS TO FORM HIS BELIEF THAT THERE WAS ESCAPEM ENT OF INCOME. (V) BECAUSE NOTICE U/S 148 OF THE ACT WAS ISSUED ON THE BASIS OF CASE AUTHORITIES DELIVERED BY HIGH COURT AND NOT ON ANY BELIEF OF THE LD. A.O. OF HIS OWN. 3. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CON FIRMING THE ADDITION 5,53,31,477/-MADE BY THE LD. A.O. IN THE HANDS OF T HE APPELLANT IGNORING THE FACTS OF THE INSTANT CASE THAT THE EXP ENSES INCURRED BY THE APPELLANT ON TEMPORARY ERECTION /ACCOMMODATION IS FULLY ALLOWABLE EXPENDITURE . 4. ON THE UNDERNOTED FACTS, THE LD. CIT(A) WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE ADDITION OF RS.5,53,31,477/-:- (I) BECAUSE IT WAS THE FIRST YEAR WHEN DISALLOWANCE OF TEMPORARY SITE ACCOMMODATION EXPENSES WAS MADE. (II) BECAUSE THE ASSESSEE IS A WHOLLY OWNED GOVERNM ENT UNDERTAKING WHICH IS SUBJECTED TO CAG AUDIT AND THE RE HAS NOT BEEN ANY ADVERSE FINDING EITHER BY THE GAG OR S TATUTORY AUDITORS. (III) BECAUSE IN EACH OF THE PREVIOUS YEARS AS WELL AS IN THE ORIGINAL ASSESSMENT ORDER FOR THE RELEVANT YEAR EXP ENSES UNDER THE HEAD TEMPORARY SITE ACCOMMODATION HAD BEE N ALLOWED. (IV) BECAUSE THERE HAS NOT BEEN ANY CHANGE IN THE M ETHOD OF ACCOUNTING DURING THE CURRENT YEAR BEING FOLLOWED B Y THE ASSESSEE CORPORATION SINCE LONG. 5. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ADDITION 8,78,96,032/-MADE BY THE LD. A.O. IN THE H ANDS OF THE APPELLANT IGNORING THE FACTS OF THE INSTANT CASE TH AT THE EXPENSES 4 INCURRED BY THE APPELLANT ON TOOLS, MINOR EQUIPMENT S, SCAFFOLDING, ERECTING ETC ARE FULLY ALLOWABLE EXPEN DITURE. 6. ON THE UNDERNOTED FACTS, THE LD. CIT(A) WAS N OT AT ALL JUSTIFIED IN CONFIRMING THE ADDITION OFRS.8,78,96,032/-:- (I) BECAUSE IT WAS THE FIRST YEAR WHEN DISALLOWAN CE OF SHUTTERING, SHELTERING AND SCAFFOLDING EXPENSES WAS MADE. (II) BECAUSE THE ASSESSEE IS A WHOLLY OWNED GO VERNMENT UNDERTAKING WHICH IS SUBJECTED TO CAG AUDIT AND THE RE HAS NOT BEEN ANY ADVERSE FINDING EITHER BY THE CAG OR STATUTORY AUDITORS. (III) BECAUSE IN EACH OF THE PREVIOUS Y EARS AS WELL AS IN THE ORIGINAL ASSESSMENT ORDER FOR THE RELEVANT YEAR EXP ENSES UNDER THE HEAD 'SHUTTERING, SHELTERING AND SCAFFOLD ING 'HAD BEEN ALLOWED. (IV) BECAUSE THERE HAS NOT BEEN ANY CHAN GE IN THE METHOD OF ACCOUNTING DURING THE CURRENT YEAR BEING FOLLOWED B Y THE ASSESSEE CORPORATION SINCE LONG. 7. THE LD. A.O. ERRED ON FACTS AND IN LAW IN NOT PROVIDING THE APPELLANT REASONABLE AND SUFFICIENT OPPORTUNITY TO HAVE ITS SAY AND TO MAKE COMPLIANCES OF THE REASONS BEING RELIED UPON BY HIM IN MAKING ADDITION IN THE HANDS OF THE APPELLAN T. 8. THE APPELLANT RESERVES IT RIGHT TO ADVANCE SUCH OTHER GROUNDS BEFORE OR AT THE HEARING, WHICH IT MAY CONSIDER FIT AND APPROPRIATE, FOR WHICH IT CRAVES LEAVES TO AMEND, A LTER OR OTHERWISE MODIFY THE GROUNDS APPEARING HEREINBEFORE WITH THE KIND PERMISSION OF THE HON'BLE BENCH. 2. ITA NO. 305/LKW/2015 FOR AY 2005-06 (ASSESSEES APP EAL) THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS RAISED PRELIMINARY OBJECTI ON IN THIS APPEAL WITH REGARD TO REOPENING OF THE ASSESSMENT U/S 147 OF TH E ACT WITH THE SUBMISSION THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSM ENT AFTER A PERIOD OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR WITHOUT BRI NGING ANYTHING ON RECORD 5 THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT ON ACCOUNT OF THE FAILURE ON THE PART OF THE ASSESSEE. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE REOPENING OF THE ASS ESSMENT IS BAD IN LAW AS THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT A FTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITHOUT RECORDI NG A SATISFACTION THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E. LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION THAT THE IMP UGNED ASSESSMENT YEAR INVOLVED IS 2005-06 AND THE REASONS FOR REOPENING W AS RECORDED ON 27.07.2012. THEREFORE, REOPENING WAS DONE AFTER FOU R YEARS. HE HAS ALSO INVITED OUR ATTENTION THAT IN THE ASSESSMENT ORDER THE ISSUE ON WHICH AO REOPENED THE ASSESSMENT WAS ALSO EXAMINED BY THE AS SESSING OFFICER WHILE ALLOWING THE SAME THEREFORE, THE REOPENING IS ON AC COUNT OF CHANGE OF OPINION. IN SUPPORT OF HIS CONTENTION, HE PLACED RE LIANCE UPON THE JUDGMENTS IN THE CASES OF ARUN GUPTA VS. UNION OF INDIA REPOR TED IN 371 ITR 394 (ALLD.), TAO PUBLISHING (P.) LTD. VS. DCIT REPORTED IN 53 TA XMANN.COM 146 (BOMBAY) AND IN THE CASE OF ACI OILS (P.) LTD. VS. DCIT REPO RTED IN 57 TAXMANN.COM 260 (ALLD.). 4. LD. DR ON THE OTHER HAND, HAS PLACED A RELIANCE UPON THE ORDER OF THE CIT(A). 5. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD IN THE LIGHT OF RIVAL SUBMISSION, WE FIND THAT UNDISPUTEDLY, THE ASSESSMENT ORDER INVOLVED IS 2005 -06 AND THE REOPENING WAS DONE VIDE NOTICE DATED 27.07.2012. THE REASONS RECORDED WERE PROVIDED TO THE ASSESSEE VIDE LETTER DATED 27.07.2012 AND FR OM ITS CAREFUL PERUSAL, WE FIND THAT THE ASSESSING OFFICER HAS NOT MADE OUT A CASE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE. MOREOVER, THE REASONS FOR REOPENIN G THE ASSESSMENT RELATE 6 TO THE EXCESS CLAIM OF DEPRECATION AND EXCESS DEDUC TION AND BOTH THE ISSUES WERE EXAMINED BY THE AO WHILE FRAMING THE ASSESSMEN T U/S 143(3) OF THE ACT. THEREFORE, WE ARE OF THE VIEW THAT ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM THE RELEVANT ASSESSMENT YEARS. 6. WE HAVE ALSO CAREFULLY PERUSED THE JUDGMENTS REF ERRED TO BY THE ASSESSEE IN THE CASE OF ARUN GUPTA VS. UNION OF IND IA (SUPRA) APPEARING AT PAGE 2 TO 16 OF THE COMPILATION IN WHICH IT HAS BEE N CATEGORICALLY HELD THAT PROVISION OF SECTION 147 & 148 OF THE ACT INDICATE THAT THE ASSESSING OFFICER HAS WIDE POWERS TO REOPEN THE ASSESSMENT, IF HE HAS REASONED TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH EIR LORDSHIP FURTHER HELD THAT WIDE POWER IS CIRCUMSCRIBED AND DOES NOT GIVE JURISDICTION TO THE ASSESSING OFFICER TO REOPEN A COMPLETED ASSESSMENT ON A MERE CHANGE OF OPINION. THE REASONS TO BELIEVE CANNOT BE BASED OR BE AN OUTCOME OF THE CHANGE OF OPINION. IT WAS ALSO FURTHER HELD THAT TH E PROVISO TO SECTION 147 INDICATES THAT IF MORE THAN FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IN ADDITION TO THE SATISF ACTION OF THE ASSESSING OFFICER THAT HE HAS REASONS TO BELIEVE, HE MUST ALS O INDICATE THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF A NOTICE U/ S 148 HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 BEING AVAILABLE TO THE ASSESSING OFFICER, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WOULD BE WITHOUT JURISDICTION AND WOULD BE LIABLE TO BE QUASHED IN A WRIT JURISDICTION. SIMILAR VIEWS WERE EXPRESSED IN THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TAO PUBLISHING (P.) LTD. VS. DCIT (SUPR A) AND THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AC I OILS (P.) LTD. VS. DCIT (SUPRA). 7. UNDISPUTEDLY IN THE INSTANT CASE, NOTHING HAS BE EN BROUGHT OUT BY THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE AS T HE ASSESSEE HAS DECLARED ALL 7 THE DETAILS AND RAISED A CLAIM OF 100% DEPRECIATION . MOREOVER, THE ISSUE ON WHICH ASSESSMENT WAS REOPENED WAS ALREADY EXAMINED BY THE AO WHILE ALLOWING THE CLAIM IN THE ORIGINAL ASSESSMENT. IN T HE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT WAS REOPENED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 OF THE ACT. THERE FORE, THE NOTICE U/S 148 AND SUBSEQUENT PROCEEDINGS ARE WITHOUT JURISDICTION AND LIABLE TO BE QUASHED, WE ACCORDINGLY FOLLOWING THE AFORESAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT QUASH THE ASSESSMENT AND DELETE ALL THE ADDITION MA DE UNDER THIS ASSESSMENT. 8. SINCE WE HAVE HELD THAT THE REOPENING OF THE ASS ESSMENT U/S 147 OF THE ACT IS BAD AND WE HAVE ANNULLED THE ASSESSMENT, WE FIND NO JUSTIFICATION TO DEAL THE ISSUE ON MERIT. SIMILAR IS A POSITION I N THE REVENUES APPEAL. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01/10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR