Vean Management Consultants Pvt Ltd., CHENNAI V. ITO, CHENNAI

ITA 325/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9311 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R SIVARAMAN
• Keywords: Reopening of assessment; Depreciation; Unabsorbed depreciation
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.325/MDS/2016 ' (' / ASSESSMENT YEAR : 2007-08 M/S VEAN MANAGEMENT CONSULTANTS PVT. LTD., MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI - 600 004. PAN : AAACS 4928 A V. THE INCOME TAX OFFICER, CORPORATE WARD 3(4), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. R. SIVARAMAN, ADVOCATE ,-*+ . / / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 0 . 1$ / DATE OF HEARING : 13.04.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 12.05.2016 / 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) 11, CHEN NAI, DATED 22.01.2016 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.325/MDS/16 2. SHRI R. SIVARAMAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE FIRST ISSUE ARISES FOR CONSIDERA TION IS WITH REGARD TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE L D. COUNSEL, THE ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR 2007- 08 ON 31.10.2007. IN FACT, THE RETURN WAS PROCESSED UNDE R SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FO R SCRUTINY AND THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED O N 16.12.2009. SUBSEQUENTLY, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF T HE ACT ON 21.03.2014. REFERRING TO THE PROVISO TO SECTION 14 7 OF THE ACT, THE LD.COUNSEL SUBMITTED THAT WHEN THE ASSESSMENT WAS C OMPLETED UNDER SECTION 143(3) OF THE ACT BY ORDER DATED 16.1 2.2009, THE SAME CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHAR GEABLE TO TAX ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR, BY THE REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETING THE ASSESSM ENT. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, IT IS NOBODYS CASE THAT THERE WAS ANY NEGLIGENCE ON THE PART OF THE ASSESSEE IN F URNISHING THE PARTICULARS WHICH ARE REQUIRED FOR COMPLETING THE A SSESSMENT. 3 I.T.A. NO.325/MDS/16 3. REFERRING TO THE REASONS RECORDED FOR REOPENING ASSESSMENT, A COPY OF WHICH IS AVAILABLE AT PAGE 38 OF THE PAPE R-BOOK, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSE SSING OFFICER HAS NOT WHISPERED ANYTHING ABOUT THE NEGLIGENCE OF THE ASSESSEE IN PRODUCING OF NECESSARY MATERIAL BEFORE HIM. ONLY A FTER REFERRING TO THE PROFIT & LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2 007-08, WHICH WAS FILED BY THE ASSESSEE IN THE REGULAR ASSESSMENT , THE ASSESSING OFFICER REOPENED THE ASSESSMENT AND CAME TO A CONCL USION THAT UNABSORBED DEPRECIATION, AS PER THE BOOKS, WOULD BE ONLY ` 51,47,812/-. ACCORDINGLY, HE RECOMPUTED THE BOOK P ROFIT AT ` 45,20,448/-. ACCORDING TO THE LD. COUNSEL, RE-APPR ECIATION OF MATERIAL AVAILABLE ON RECORD AND COMING TO A DIFFER ENT CONCLUSION BY THE ASSESSING OFFICER, WOULD AMOUNT TO CHANGE OF OP INION. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HAS ALREADY APPLIED HIS MIND AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THEREFORE, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT ON THE BASIS OF PROFIT & LOSS ACCOUN T FILED BY THE ASSESSEE IN THE REGULAR COURSE OF ASSESSMENT AND SA Y THAT THE INCOME HAS ESCAPED ASSESSMENT. ACCORDING TO THE LD . COUNSEL, EVEN IF THE INCOME ESCAPED ASSESSMENT, IT CANNOT BE REOPENED 4 I.T.A. NO.325/MDS/16 UNLESS THERE WAS NEGLIGENCE ON THE PART OF THE ASSE SSEE IN FURNISHING THE MATERIAL FACTS WHICH ARE RELEVANT FO R COMPLETING THE ASSESSMENT. IN THE ABSENCE OF ANY ALLEGATION THAT THERE WAS NEGLIGENCE ON THE PART OF THE ASSESSEE, ACCORDING T O THE LD. COUNSEL, THE ASSESSMENT CANNOT BE REOPENED. 4. REFERRING TO EXPLANATION 1 TO SECTION 147 OF THE ACT, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NO T THE CASE OF THE ASSESSING OFFICER THAT HE DISCOVERED ANYTHING ON TH E BASIS OF NEW MATERIAL. THE PROFIT & LOSS ACCOUNT WAS VERY MUCH AVAILABLE BEFORE THE ASSESSING OFFICER AND IF THE ASSESSING OFFICER COULD NOT VERIFY THE SAME, WHICH WAS FILED IN THE REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THAT CANNOT BE A REASON FOR REOP ENING THE ASSESSMENT. THEREFORE, ACCORDING TO THE LD. COUNSE L, THE ERROR OR NEGLIGENCE COMMITTED BY THE ASSESSING OFFICER CANNO T BE A JUSTIFIABLE REASON TO REOPEN THE ASSESSMENT AFTER E XPIRY OF FOUR YEARS. 5. ON THE CONTRARY, SH. P. RADHAKRISHNAN, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSMENT WAS R EOPENED AFTER EXPIRY OF FOUR YEARS. REFERRING TO EXPLANATION 1 T O SECTION 147 OF THE ACT, THE LD. D.R. POINTED OUT THAT PRODUCTION O F PROFIT & LOSS 5 I.T.A. NO.325/MDS/16 ACCOUNT OR OTHER MATERIAL EVIDENCE CANNOT BE CONSTR UED THAT THE ASSESSEE HAS DISCLOSED ALL THE MATERIALS REQUIRED F OR COMPLETING THE ASSESSMENT. ACCORDING TO THE LD. D.R., THERE WAS A CLEAR MISTAKE ON THE PART OF THE ASSESSEE SINCE THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION MUCH MORE THAN WHAT WAS ELIGIBLE FOR S ET OFF DURING THE YEAR UNDER CONSIDERATION. SINCE THE ASSESSEE HAS C LAIMED EXCESS DEPRECIATION, ACCORDING TO THE LD. D.R., THE ASSESS ING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT BY ISSUING NOTICE U NDER SECTION 148 OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSMENT WAS REOPENED AFTER EXPI RY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WE H AVE ALSO GONE THROUGH EXPLANATION 1 TO SECTION 147 OF THE ACT. E XPLANATION 1 TO SECTION 147 OF THE ACT SAYS THAT PRODUCTION OF BOOK S OF ACCOUNT OR OTHER EVIDENCE BEFORE THE ASSESSING OFFICER WILL NO T NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF SECTION 147 OF THE ACT. IN THE CASE BEFORE US, THE ASSESSEE CLAIMS UNABSORB ED DEPRECIATION ON THE BASIS OF PROFIT & LOSS ACCOUNT FILED BEFORE THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT. THE ASSESSING OFFICER OUGHT TO 6 I.T.A. NO.325/MDS/16 HAVE EXAMINED THE SAME. THE PROFIT & LOSS ACCOUNT IS OBVIOUSLY PREPARED ON THE BASIS OF BOOKS OF ACCOUNT MAINTAINE D BY THE ASSESSEE. IF THE PROFIT & LOSS ACCOUNT WAS NOT FIL ED BEFORE THE ASSESSING OFFICER, THEN THE ASSESSING OFFICER MAY C LAIM THAT WITH DUE DILIGENCE HE WOULD NOT HAVE DISCOVERED THE UNAB SORBED DEPRECIATION FROM THE BOOKS OF ACCOUNT. IN THIS CA SE, THE SUMMARY OF BOOKS OF ACCOUNT IS NOTHING BUT THE PROFIT & LOS S ACCOUNT. THEREFORE, WHEN THE SUMMARY OF BOOKS OF ACCOUNT WAS PRESENTED BEFORE THE ASSESSING OFFICER IN THE FORM OF PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER CANNOT CLAIM THAT WITH DILIGE NCE HE COULD NOT FIND OUT THE CLAIM MADE BY THE ASSESSEE WITH REGARD TO UNABSORBED DEPRECIATION. THEREFORE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THERE WAS NO NEGLIGENCE ON THE PART OF THE ASS ESSEE IN DISCLOSING ALL MATERIAL FACTS FOR COMPLETING ASSESS MENT BEFORE THE ASSESSING OFFICER. IF AT ALL THERE WAS ANY NEGLIGE NCE IT IS ON THE PART OF THE ASSESSING OFFICER TO EXAMINE THE MATERIAL FI LED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING. I N THE ABSENCE OF ANY NEW MATERIAL, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT RE-APPRECIATING THE MATERIAL FILED BY THE ASSESSEE IN THE REGULAR ASSESSMENT CANNOT BE A JUSTIFIABLE REASON FOR REOPE NING THE 7 I.T.A. NO.325/MDS/16 ASSESSMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 7. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT REOPENING OF ASSESSMENT IS BARRED BY L IMITATION UNDER PROVISO TO SECTION 147 OF THE ACT. THEREFORE, WE A RE UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORD INGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 12 TH MAY, 2016 AT CHENNAI. SD/ SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 12 TH MAY, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-11, CHENNAI-34 4. PRINCIPAL CIT-3, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.