Clarion Technologies Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 331/PUN/2016

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0180 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Set aside
• Section: 148; 154; 143(3); 142(1); 10B; 153

Judgement Text

आयकर अपीऱीय अधिकरण “ए” न्यायपीठ प ु णे म ें । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपीऱ सं. / ITA No.331/PUN/2016 नििाारण वषा / Assessment Year : 2009-10 Clarion Technologies Pvt. Ltd., 4 th Floor, Tower S-4, Cybercity, Magarpatta, Hadapsar, Pune – 411028 PAN : AABCC8321Q ......अऩीऱाथी / Appellant बिाम / V/s. Dy. Commissioner of Income Tax, Circle – 1(1), Pune ......प्रत्यथी / Respondent आयकर अपीऱ सं. / ITA No.421/PUN/2016 नििाारण वषा / Assessment Year : 2009-10 Dy. Commissioner of Income Tax, Circle – 1(1), Pune ......अऩीऱाथी / Appellant बिाम / V/s. Clarion Technologies Pvt. Ltd., 4 th Floor, Tower S-4, Cybercity, Magarpatta, Hadapsar, Pune – 411028 PAN : AABCC8321Q ......प्रत्यथी / Respondent Assessee by : Shri V.K. Shridhar Revenue by : Shri Deepak Garg स ु नवाई की तारीख / Date of Hearing : 20-10-2021 घोषणा की तारीख / Date of Pronouncement : 13-01-2022 2 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : These cross appeals filed by the assessee and Revenue against the common order dated 11-12-2015 passed by the Commissioner of Income Tax (Appeals)-1, Pune [„CIT(A)‟] for assessment year 2009-10. 2. Since, the issues raised in both the cross appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear both the cross appeals together and to pass a consolidated order for the sake of convenience. 3. First, we shall take up appeal in ITA No. 331/PUN/2016 for A.Y. 2009-10 filed by the assessee. 4. The assessee, despite main grounds of appeal in Form No. 36, also filed concise grounds of appeal and it was submitted by the ld. AR that the concise grounds of appeal may be taken up by ignoring the main grounds. Accordingly, upon hearing both the parties, we shall take up concise grounds of appeal ignoring the main grounds of appeal of Form No. 36. 5. Ground Nos. 1 and 2 raised by the assessee challenging the action of CIT(A) in holding the assessment passed u/s. 143(3) r.w.s. 144A r.w.s. 147 of the Act dated 30-03-2015 is valid under law. 6. The brief facts of the case are that the assessee is a company engaged in the business of computer Software Development and providing 3 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 IT-enabled Services. The assessee filed return of income declaring a total income of Rs.1,05,000/- after claiming deduction of Rs.7,39,07,383/- u/s. 10B of the Act. Under scrutiny, the AO finalized the assessment by allowing deduction u/s. 10B of the Act in respect of Pune Unit and disallowed in respect of Ahmedabad and Bangalore Units being not approved under STPI vide its order dated 16-12-2011 u/s. 143(3) of the Act. The assessee challenged the said order before the CIT(A), wherein, the CIT(A) confirmed the deduction in respect of Pune Unit and restricted the disallowance u/s. 10B of the Act at 20% of the expenditure incurred towards Ahmedabad and Bangalore Units. The ITAT allowed the claim of assessee in respect of Ahmedabad and Bangalore Units in entirety vide its order dated 28-12-2012. 7. As matter stood thus, the AO noticed that the assessee claimed deduction u/s. 10B of the Act without there being approval/ratification of Development Commissioner and Board by holding that the claimed amount was escaped assessment and issued notice u/s. 148 of the Act to that effect. In reassessment proceedings u/s. 148 of the Act, the AO completed the reassessment vide its order dated 30-03-2015, wherein, the entire claimed deduction of Rs.7,39,07,383/- u/s. 10B of the Act was disallowed for not having approval by Development Commissioner. The AO also rejected the alternative claim made by the assessee u/s. 10A of the Act. The assessee preferred an appeal before the CIT(A), wherein the CIT(A) upheld reopening of assessment u/s. 147 of the Act and disallowed claim u/s. 10B of the Act by placing reliance in the order of ITAT for A.Y. 2010- 11, however, remanded alternative claim u/s. 10A of the Act to the file of 4 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 AO for its fresh consideration. Against the order of CIT(A), now, the assessee is before us by above said concise grounds of appeal. 8. The ld. AR, Shri V.K. Shridhar requested us to take up ground Nos. 1 and 2 raised challenging the action of CIT(A) in holding the assessment order passed u/s. 143(3) r.w.s. 144A r.w.s. 147 of the Act is bad under law as a preliminary issue. The ld. AR submits that the AO issued notices u/s. 143(2) and 142(1) of the Act along with questionnaire on 16-08-2011 calling for details on 39 points in the original scrutiny assessment proceedings and raised several questions with respect to the claim made u/s. 10B of the Act and in response to which, the assessee had filed all the details as sought by the AO. He submits that the AO examined the claim of assessee u/s. 10B of the Act and argued that it is not the case the claim went unnoticed or un-scrutinized. It was submitted that the assessee has been granted certification by STPI under the Software Technology Parks Scheme and it was open to the AO if such certificate was inadequate, examine further the issue to reject the claim of assessee in entirety. The AO then accepted and held the certificate as sufficient compliance with statutory requirements and argued that the AO examined the issue in detail minutely and allowed the claim of assessee in respect of Pune Unit and disallowed for Ahmadabad and Bangalore Units. He further submits that the AO omitted to state the entire reasons recorded for reopening and he mentioned only one paragraph of the reasons recorded. The CIT(A) without referring to the assessment records confirmed the reassessment made u/s. 147 of the Act. Further, he submits that the reassessment was completed without disposing off the objections to reopening and vehemently argued that a mistake in original assessment cannot be 5 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 rectified u/s. 147 of the Act. There was no fresh material claimed to have been found by the AO and reasons recorded cannot further be modified or supplanted. He argued by reading of reasons recorded by the AO clearly shows that only on the subsequent decision of Hon‟ble High Court of Delhi in the case of Regency Creation which is not permissible, is bad under law and it is a change of opinion. 9. The ld. AR placed reliance in the case of Indra Co. Ltd. Vs. Income Tax Officer reported in 80 ITR 559 (Cal.) and argued that the Hon‟ble High Court of Calcutta quashed the notice issued for reopening of assessment on the ground that when the assessee disclosed all the primary facts in the original assessment proceedings and the AO had no jurisdiction to issue notice during reopen the assessment proceedings. We note that the assessee therein is a company dealing in shares. The assessee claimed loss in respect of share dealing business for A.Y. 2015-16. The AO disallowed the said loss by holing it did not arise in the normal course of assessee‟s business. The Appellate Commissioner allowed the entire claim of loss. Thereafter, the AO issued notice u/s. 154 of the Act for rectifying the assessment as the profit from the sale of said bogus shares had been under assessed. We note that the AO attempted for reassessment in view of the decision of Hon‟ble Supreme Court in the case of CIT Vs. Dalmia Investment Co. Ltd. reported in 52 ITR 567 wherein the Hon‟ble Supreme Court directed the cost of bonus shares to decide in a certain manner. The Hon‟ble High Court of Calcutta held the decision of Hon‟ble Supreme Court was an information perfectly justified to take proceedings u/s. 147 within four years of the end of the assessment year, by holding so quashed the proceedings initiated u/s. 154 of the Act for reassessment. We note that in 6 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 the present case, the AO completed the original assessment on 16-12-2011 and the decision of Hon‟ble High Court of Delhi in the case of Regency Creation is on 17-09-2012 and the notice u/s. 148 is on 13-03-2014. Therefore, in our opinion, the decision of Hon‟ble High Court of Delhi in the case of Regency Creation is a source of information and basing on which the AO issued notice u/s. 148 of the Act within the prescribed time limit as provided u/s. 148 of the Act i.e. within four years. Therefore, we hold that the notice issued u/s. 148 of the Act is valid. 10. The ld. AR also placed on record decision of Hon‟ble High Court of Delhi in the case of Prabhat Agarwal and submitted that the AO in the present case passed order on 30-03-2015 by incorporating the directions of CIT dated 31-03-2015 u/s. 144A of the Act and argued that the AO passed order on 30-03-2015 incorporating the directions of subsequent date and the order passed by the AO is not maintainable in the eyes of law. On perusal of the decision of Hon‟ble Delhi High Court in the case of Prabhat Agarwal, we note that the AO initiated reassessment proceedings u/s. 147 of the Act on 28-05-2007. It was claimed that in the reasons recorded the AO mentioned share transfer from carrying sale on 26-03-2004. The said share transfer form was furnished by the assessee only on 25-03-2008 and to the AO on 21-04-2008. It was contended that the assertion in the reasons to believe shows reasons to believe have been anti-dated. We note that the Hon‟ble High Court held the reasons were not recorded before the impugned notice issued u/s. 148 of the Act and quashed the said reassessment notice. In the present case, we note that the AO passed order on 30-03-2015 incorporating directions dated 31-03-2015 u/s. 144A of the Act of CIT. 7 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 11. The ld. DR, Shri Deepak Garg submits that the AO given adequate reasons for reopening the assessment on the basis of a fresh finding that the entire claim of deduction u/s. 10B was not allowable due to the absence of requisite approval by the concerned Board which was discovered after completion of original assessment. The AO clearly mentioned this fact in the reasons recorded and also in order disposing objections. The change of opinion comes to rescue of assessee only when AO has taken the permissible view at the time of original proceedings and wrong application of law cannot be held as permissible view and that can always be changed for appreciating law. He submits that the provisions u/s. 147 speaks that if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year and he may subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently. He submits that if an assessment was made u/s. 143(3) of the Act and no action can be taken u/s. 147 of the Act after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reasons of the failure on the part of the assessee to disclose all material facts necessary for his assessment for that assessment year and in the present case, the AO issued notice u/s. 148 of the Act within four years from the end of the A.Y. 2009-10 and the order of CIT(A) in this regard is correct. 12. Further, the ld. DR, Shri Deepak Garg placed on record the decisions in the cases of Kartikeya International Vs. CIT reported in 10 taxmann.com 607 (Allahabad), CIT Vs. Novapan India Ltd. reported in 103 Taxman 56 8 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 (AP), Kumar Engineers Vs. CIT reported in 98 Taxman 103 (Punjab & Haryana), CIT Vs. Raghunath Pr. Poddar reported in 96 ITR 316 (Calcutta), ITO Vs. Saradbhai M. Lakhani reported in 122 Taxman 111 (SC) and argued that the reassessment proceedings could be initiated on the basis of the information which was received by the AO and in the present case the information which was received by the AO was the decision of Hon‟ble High Court of Delhi in the case of Regency Creation. The AO became aware of that decision which is an information u/s. 147(b) of the. The CIT(A) rightly held the view of AO in reopening the original assessment on the basis of information by way of a decision of Hon‟ble High Court of Delhi is a valid information for initiating reassessment proceedings. 13. In the case of Kartikeya International (supra), we note that the Hon‟ble High Court of Allahabad opined that the fundamental question involved in the preset writ petition for consideration is whether the subsequent decision of Hon‟ble Supreme Court constitutes material and the assessment can be reopened u/s. 147 of the Act vide Para No. 8. The Hon‟ble High Court was pleased to consider the decision of Hon‟ble Supreme Court in the case of A.L.A. Firm Vs. CIT reported in 189 ITR 285 (SC) which held the information by way of a decision of High Court comes to the knowledge of AO subsequently constitutes an information and material to reopen the proceeding u/s. 147 of the Act. The Hon‟ble High Court also considered the decision of Hon‟ble Supreme Court in the case of ITO Vs. Saradbhai M. Lakhani reported in 243 ITR 1which held the decision of High Court would constitute an information and the initiation of reassessment proceeding on the basis of the decision of the High Court is held to be justified. In the case of Ess Ess Kay Engineering Co. (P.) Ltd. 9 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 Vs. CIT reported in 247 ITR 818 which held that the Income Tax Officer is not precluded from reopening of the assessment of an earlier year on the basis of his finding of fact made on the basis of the fresh material in the course of assessment of the next assessment year. Considering the above three decisions of Hon‟ble Supreme Court it was held by the Hon‟ble High Court of Allahabad that the decision of the Hon‟ble Supreme Court which declares the law from the very beginning of the existence of the provision itself constitute material to reopen the proceeding u/s. 147 of the Act and the said material itself constitutes a belief that there is an escaped assessment. 14. The Hon‟ble High Court of Andhra Pradesh in the case of Novapan India Ltd. (supra) answered the question “Whether, on the facts and in the circumstances of the case, the ITAT is justified in upholding the CIT(A) orders that the reassessment proceedings are not valid?” The Hon‟ble High Court by referring to decision of Hon‟ble Supreme Court in the case of Maharaj Kumar Kamal Singh Vs. CIT reported in 35 ITR 1 (SC) which held that the word 'information' in section 34(1)(b) includes information as to the true and correct state of the law and so would cover information as to relevant judicial decisions. The Hon‟ble High Court of Andhra Pradesh held the decision come to the knowledge of Income Tax Officer after the assessment is made is an information within the meaning of section 147(b) of the Act and negatived the question as mentioned above. 15. The Hon‟ble High Court of Punjab and Haryana in the case of Kumar Engineers (supra) the question therein was “Whether, on the facts and in the circumstances of the case, the Tribunal has erred in law in taking into 10 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 consideration the further facts which had been put up before the Departmental authorities?” The Hon‟ble High Court of Punjab and Haryana considered the judgment of Hon‟ble Supreme Court in the case of V. Jaganmohan Rao Vs. CIT reported in 75 ITR 373 (SC) which held the action of Income Tax Officer in reopening the reassessment proceedings in view of subsequent decision of privy council. Further, also considered the decision of Hon‟ble High Court of Bombay in the case of CIT Vs. A.J. Zaveri reported in 68 ITR 594 which held that the decision of appellate authority on the same facts may constitute information within the meaning of section 34(1)(b) of the Act. Considering the same the Hon‟ble High Court of Punjab and Haryana answered the question in affirmation and held the decision of appellate authority is a source of information and the case reopened on the basis of such information can provide enough reason to the ITO for resorting to sections 147 and 148 of the Act to reopen the already completed assessment. 16. Coming to the decision of Hon‟ble High Court of Calcutta in the case of Raghunath Pr. Poddar (supra) the question therein was "Whether the order of the Tribunal in Annexures "C-1" and "C-2" constitute „information' within the meaning of section 34(1)(b) so as to justify the assessment in this case being reopened?" The Hon‟ble High Court referred to the decision of Hon‟ble Supreme Court in the case of CIT Vs. Gurbux Rai Harbux Rai reported in 83 ITR 86 (SC) which held that the ITO would have jurisdiction to initiate proceedings u/s. 34(1)(b) of the Act, if he had acted on an information received from the superior authorities or the Court even in the assessment proceedings and answered the question in affirmative in favour of the Revenue. 11 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 17. Further, in the case of Income Tax Officer Vs. Saradbhai M. Lakhani reported in 122 Taxman 111 (SC) which held that on the basis of the information which is received by the ITO, reassessment proceedings can be initiated, when the ITO became aware of the decision of Court, he could initiate the proceedings u/s. 147(b) of the Act. 18. Having considered the submissions of ld. AR and ld. DR along with the decisions relied on by them in respect of validity of reassessment order dated 30-03-2015 containing directions dated 31-03-2015 of Addl. CIT issued u/s. 144A of the Act. It was argued by the ld. AR that the assessment order containing directions of Addl. CIT which were issued subsequent to the date of reassessment order is not maintainable. The ld. DR argued that it is a typographical error and is rectifiable. Further, he has stated that the assessee is very much in the knowledge of the same. In view of the same, we shall examine the relevant provision contained in sub- section (2) of section 153 of the Act which provides the time limit for completion of assessment and reassessment which is reproduced here-in- below for better understanding : “Time limit for completion of assessment and reassessments 153 (1) .......... (a) .......... (b) .......... Provided .......... Provided further .......... (i) .......... (ii) .......... (1A) .......... (1B) .......... (2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of one year from the end of the financial year in which the notice under section 148 was served.” 19. On perusal of sub-section (2) of section 153 of the Act explains that no order of assessment, reassessment or recomputation shall be made u/s. 12 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 147 of the Act after the expiry of one year from the end of the financial year in which the notice u/s. 148 of the Act was served. In the present case, we note that the notice u/s. 148 of the Act was served on the assessee on 30- 03-2014 i.e. F.Y. 2013-14, thus, the time limit for reassessment is available with the AO is upto 31-03-2015. The AO passed pre-dated order on 30-03-2015 incorporating the directions dated 31-03-2015 issued by the Addl. CIT, directions of which are subsequent to the assessment order. The ld. DR submits that is a mistake the date was mentioned as 30-03- 2015 in place of 31-03-2015 and argued that the date of order may be treated as passed on 31-03-2015 as it is a rectifiable mistake. We are not convinced with the argument. In the ordinary circumstances, it is not possible that the direction of the Addl. CIT u/s. 144A, having been signed by him on 31-03-2015 which the AO on the same date; he dictated the order on same date after considering everything; it got typed on that date; and got signed by the AO also on 31-03-2015. This shows that the order was passed by the AO somewhere in April, 2015 and signed by pre-dating it as 30-03-2015. The order was actually passed after 31-03-2015, it was barred by limitation. We therefore, set aside the assessment order as time barred and the consequential first appellate proceedings. 20. In the result, the appeal of assessee is allowed. Now, we shall take up the appeal in ITA No. 421/PUN/2016 for A.Y. 2009-10 filed by the Revenue. 21. This appeal by the Revenue challenging the action of CIT(A) in directing the AO to allow alternative claim raised by the assessee for deduction u/s. 10A of the Act vide through 6 grounds. 13 ITA Nos.331 & 421/PUN/2016, A.Y. 2009-10 22. Since, we have taken a view in quashing the assessment order in ITA No. 331/PUN/2016 for A.Y. 2009-10 by the assessee as time barred as consequential first appellate proceedings thereto, we find the issues raised in present appeal by the Revenue becomes infructuous and are dismissed as such. 23. In the result, the appeal of Revenue in ITA No. 421/PUN/2016 is dismissed. 24. To sum up, the appeal of the assessee is allowed and the appeal by the Revenue is dismissed. Order pronounced in the open court on 13 th January, 2022. Sd/- Sd/- (R.S. Syal) (S.S. Viswanethra Ravi) VICE PRESIDENT JUDICIAL MEMBER ऩ ु णे / Pune; ददनाांक / Dated : 13 th January, 2022. रवव आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : 1. अऩीऱाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(A)-1, Pune 4. The Pr. CIT-1, Pune 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, “ए” बेंच, ऩ ु णे / DR, ITAT, “A” Bench, Pune. 6. गार्ड फ़ाइऱ / Guard File. //सत्यावऩत प्रतत// True Copy// आदेशान ु सार / BY ORDER, वररष्ठ तनजी सधचव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩ ु णे / ITAT, Pune