Appeal Details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 4699 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-06-2016
Appeal Filed By
Assessee
Bench Allotted
B
Assessment Year
1998-1999
Appeal Filed On
15-02-2010
Judgement Text
ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, KO LKATA BEFORE : SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 341/KOL/2010 A.Y: 1998-99 M/S. SHREE HANUMAN SUGAR VS. ACIT, C.C-XI, KOLKAT A & INDUSTRIES LTD PAN: AAECS 0448M ( APPELLANT) (RESPONDENT) FOR THE APPELLANT ASSESSEE :SHRI S .K. TULSIYAN, ADVOCATE, LD.AR FOR THE RESPONDENT REVENUE: MD. GHAYAS U DDIN, JCIT, LD. SR.DR DATE OF HEARING: 31-03-2016 DATE OF PRONOUNCEMENT: 08 -06-2 016 ORDER SHRI S.S.VISWANETHRA RAVI, JM THIS APPEAL OF THE ASSESSEE IS ARISING OUT OF TH E ORDER OF THE CIT(A), CENTRAL-I, KOLKATA IN APPEAL NO. 06/CC-XI/CIT(A),C- I/09-10 DATED 04-11-2009 FOR THE ASSESSMENT YEAR 1998-99 AGAINST THE ORDER OF ASSESSMENT FRAMED U/S. 143(3)/251/154/154/251/251/154 OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1 FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT (A) WAS WHOLLY WRONG AND UNJUSTIFIED IN DISMISSING THE APPE AL AND CONFIRMING THE A.O'S ORDER OF RECTIFICATION U/S 143(3)/251/154/154 /251/251/154 DT. 30.03.2009 ASSESSING THE BOOK PROFIT OF RS. 29,96,7 95/- U/S 115JA AND ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 2 CHARGING IT TO TAX WITHOUT CONSIDERING THE FACTS TH AT THE SAID ORDER WAS PASSED BY ISSUE OF A DEFECTIVE AND INVALID NOTICE U/S 154 DT. 16.02.2009 IN WHICH THE RECTIFICATION PROPOSED BY THE A.O WAS CLE ARLY CONFINED I RESTRICTED ONLY TO THE 'CALCULATION OF TAX AND INTE REST U/S 115JA' AND NOT TO MAKE ANY ASSESSMENT OF INCOME U/S115JA. THE A.O'S ORDER DT. 30.03.2009 MAKING AN ASSESSMENT OF INCOME NOT PERMISSIBLE U/S 154 AND EVEN IN ABSENCE OF SUCH PRO POSED ACTION MENTIONED IN THE NOTICE U/S 154 BEING WITHOUT JURIS DICTION AND PASSED AGAINST AN INVALID NOTICE U/S 154 AND THE LD. CIT(A )'S ORDER CONFIRMING SUCH INVALID ORDER WERE WHOLLY UNREASONABLE, UNCALL ED FOR, BAD IN LAW AND VOID ABINITIO AND HENCE BOTH THE ORDERS ARE LIA BLE BE QUASHED/ CANCELLED. 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT (A) WAS WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE AFOR ESAID ORDER U/S 154 DT. 30.03.2009 WITHOUT CONSIDERING THE FACTS THAT T HE ISSUE INVOLVED IN THE PROCESS OF RECTIFICATION U/S 154 AND ASSESSMENT OF AN INCOME AFRESH IN A PROCEEDING U/S 154 NOT MENTIONED IN THE NOTICE U/S 154 ARE HIGHLY DEBATABLE AND CONTROVERSIAL ON WHICH THERE CAN DIVE RGENT VIEWS. THE INVALID PROCEEDING INITIATED U/S 154 DT. 16.02. 2009 AND THE CONSEQUENTIAL ORDER PASSED BY THE A.O U/S 154 DT. 30.03.2009 ON A HIGHLY DEBATABLE AND CONTROVERSIAL ISSUE BEING WITHOUT JUR ISDICTION AND VOID ABINITIO AND THE LD. CIT(A)'S ORDER IN CONFIRMING T HE SAME ARE LIABLE TO BE QUASHED 1 CANCELLED. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES THE LD. CIT (A) WAS WHOLLY WRONG AND UNJUSTIFIED IN CONFIRMING THE INTE REST OF RS.3,15,797/- AND RS.39,213/- CHARGED BY THE A.O U/S 234B AND 234 C OF THE ACT WITHOUT CONSIDERING THE FACTS THAT NO SUCH INTEREST WAS PAY ABLE BY THE ASSESSEE AND ALSO THAT THE A.O'S EARLIER ORDER OF RECTIFICAT ION U/S143(3)/251/154/154 DT. 28.02.2005 ASSESSING FOR THE FIRST TIME THE BOOK PROFIT U/S 115JA AND CHARGING INTEREST U/S 234B & 2 34C THEREIN, REFERRED TO BY THE LD. CIT(A) WHILE CONFIRMING THE LEVY OF I NTEREST, WAS ALREADY CANCELLED AS INVALID BY THE HON'BLE ITAT VIDE THEIR ORDER ITA NO. 1718/K/2006 DT.11.04.2008. THE ACTIONS OF THE A.O IN CHARGING INTEREST AND CON FIRMATION OF THE SAME BY THE LD. CIT(A) WERE WHOLLY UNREASONABLE, UNCALLE D FOR AND BAD IN LAW. ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 3 4. FOR THAT YOUR PETITIONER CRANES THE RIGHT TO PUT ADDITIONAL GROUNDS AND/OR TO ALTER/AMEND/MODIFY THE PRESENT GROUNDS BE FORE AS AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY FILED ITS RETURN FOR THE A.Y 1998-99 ON 30.11.1998 SHOWING TOTAL INC OME OF RS. NIL AFTER ADJUSTMENT OF BROUGHT FORWARD UNABSORBED BUSINESS L OSS OF EARLIER YEARS AS PER THE NORMAL PROVISIONS OF THE ACT AND RS.29,96,795/- U/S L15JA OF THE ACT. THE TOTAL INCOME DETERMINED AT RS.2,22,82,421/- BY AN A SSESSMENT ORDER DT: 30.03.2001 U/S 143(3) THE ACT. NO INCOME WAS DETERM INED AND ASSESSED BY THE A.O U/S 115JA OF THE ACT IN THE SAID ASSESSMENT ORD ER U/S 143(3) NOR ANY REFERENCE MADE THEREIN U/S 115JA. ALL THE GROUNDS A BOVE ARE RAISED QUESTIONING THE VALIDITY OF ASSESSMENT WHERE THE AO MADE COMPUT ATION OF INCOME UNDER BOOK PROFIT U/SEC 115JA OF THE ACT, THEREFORE, WITH THE CONSENT OF PARTIES, GROUNDS ABOVE ARE READ AND HEARD TOGETHER AS ONE IS SUE AND ANSWER THE SAME COLLECTIVELY. 4. ON APPEAL PREFERRED BY THE ASSESSEE, THE LD. CIT (A), CENTRAL - ILL, KOLKATA PASSED AN ORDER DT. 28.12.2004 IN APPEAL NO. 154/CC -XI/CIT(A), C-III/04-05 ALLOWING CERTAIN RELIEF IN RESPECT OF THE ADDITIONS MADE WHILE DETERMINING THE TOTAL INCOME IN THE ORIGINAL ASSESSMENT UNDER THE N ORMAL PROVISIONS OF THE ACT. CONSEQUENTLY, AN ORDER U/S 143(3)/251 WAS PASSED BY THE A.O ON 11-01-2005 GIVING EFFECT TO THE APPELLATE ORDER AND REVISING T HE INCOME AT RS. 97,50,220/- UNDER THE NORMAL PROVISIONS OF THE ACT. NEITHER ANY REFERENCE WAS MADE NOR ANY INCOME WAS DETERMINED BY THE A.O U/S 115JA IN THE S AID ORDER. 5. THEREAFTER, THE ASSESSEE FILED A PETITION DT:16. 02.2005 U/S 154 ON 18-02- 2005 REQUESTING THE A.O TO ALLOW THE SET OFF BROUGH T FORWARD UNABSORBED ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 4 DEPRECIATION OF THE EARLIER YEARS AND TO RECTIFY TH E SAME IN ORDER DT:11.01.2005 MADE U/S 143(3)/251 AGAINST THE TOTAL INCOME COMPUT ED THEREIN. CONSIDERING THE RECTIFICATION PETITION THE A.O ALLOWED SET OFF UNAB SORBED DEPRECIATION OF THE EARLIER YEARS BY REVISING THE TOTAL INCOME AT RS. 8 ,11,970/- AND PASSED AN ORDER DT: 18.02.2005 U/S 143(3)/251/154 AND NO REFERENCE WAS MADE THEREIN REFERRING TO INCOME U/S 115JA BY THE A.O. 6. CONSEQUENTLY, THE A.O ISSUED A NOTICE DT. 23.02. 2005 U/S 154 OF THE ACT WHERE HE PROPOSED TO RECTIFY THE ORDER MADE U/S 143 (3)/251/154 ON 18.02.2005 ON THE GROUND REFERRING TO MISTAKE IN CALCULATION O F TAX. IN RESPONSE TO WHICH, THE ASSESSEE AGITATED THAT THE SEC.154 CANNOT BE IN VOKED AS IT IS HIGHLY DEBATABLE LEGAL ISSUE TO CARRY OUT ANY MISTAKES IN CALCULATIO NS BY A LETTER DT. 25.02.2005. THE A.O PASSED AN ORDER DT. 28.02.2005 U/S 143(3)/2 51/154/154 REJECTING THE AFORESAID LETTER OF OBJECTION AND ASSESSED THE TOTA L INCOME AT RS. 29,96,795/- U/S 115JA AT 30% OF THE BOOK PROFIT OF RS. 99,89,318/- FOR THE FIRST TIME AND COMPUTED THE TOTAL INCOME UNDER BOOK PROFIT MADE TH EREOF DEMAND OF RS.14,38,815/- PAYABLE BY THE ASSESSEE. 7. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL AND THE CIT-A UPHELD THE ORDER OF A.O BY HIS ORDER DT. 29.06.2006 AND TH E B BENCH OF TRIBUNAL, KOLKATA UPHELD THE ORDERS OF THE A.O AND THE CIT(A) VIDE ITS ORDER DT.29-12- 2006. BY A MISCELLANEOUS APPLICATION BY THE ASSESSE E U/S 254(2) OF THE ACT THE SAID ORDER OF THE TRIBUNAL WAS RECALLED VIDE ORDER DT. 27-07-2007 AND REFIXED THE SAME. AFTER THE DUE PROCESS THE B-BENCH, KOLKATA T RIBUNAL VIDE ITS ORDER DT.11.04.2008 IN ITA NO.1718/KOL/2006 CANCELLED THE PROCEEDING U/S 154 INITIATED BY THE A.O AND HELD THE A.O'S ORDER U/S 1 43(3)1251/154/154 DT.28.02.2005 AS INVALID BY RELYING ON AN ORDER OF THE CHANDIGARH BENCH OF ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 5 TRIBUNAL IN THE CASE OF ACIT VS. VARINDER AGRO CHEM ICALS LTD REPORTED IN (2007) 107 TTJ (CHD) 842, THEREBY, TO THAT EFFECT A N ORDER DT: 22.05.2008 WAS PASSED U/S 143(3)/251/154/154/154/251/251/254 ASSES SING THE TOTAL INCOME AGAIN AT RS. 8,11,970/- AS WAS THE SAME INCOME THAT AS DETERMINED UNDER THE NORMAL PROVISIONS OF THE ACT. THE REVENUE CHALLENGE D THE ORDER DT.11.04.2008 OF B-BENCH, KOLKATA TRIBUNAL BEFORE THE HONBLE HIG H COURT OF CALCUTTA WHEREIN THE HONBLE HIGH COURT WAS PLEASED TO DISM ISS THE SAME BEING LOW TAX EFFECT. 8. AGAIN THE AO ISSUED A FRESH NOTICE U/S 154 DT.16 .02.2009 PROPOSING TO RECTIFY THE ORDER U/S 143(3) /251/154 DT: 22.05.200 8 ON THE GROUND THAT THERE WAS MISTAKE IN CALCULATION OF TAX & INTEREST U/S 115 JA OF THE ACT. THE ASSESSEE SOUGHT THE COMPLETE DETAILS OF THE ALLEGED MISTAKE AND THE NATURE OF THE RECTIFICATION VIDE ITS LETTERS DT: 05.03.2009, DT. 07-03-2009, 16-03-2009 AND 17- 03-2009 IN RESPONSE TO WHICH THE AO ISSUED LETTER D T:23-03-2009 STATING THAT TO RECTIFY THE ORDER DT:18-02-2005 WHERE THE TAX CALCU LATED AT NORMAL RATE INSTEAD OF U/S 115JA OF THE ACT FIXED FOR HEARING ON 27-03-200 9. THE CONTENTION OF THE ASSESSEE IS REPRODUCED HEREUNDER: IN RESPONSE TO THE A.O'S LETTER DT. 23.03.2009, THE ASSESSEE FILED A LETTER DT. 27.03.2009 REQUESTING HIM TO DROP THE FRESH PROCEED ING U/S 154 ON THE GROUND THAT :- I) THE RECTIFICATION PROPOSED U/S 154 IS BEYOND THE TIME LIMIT OF 4 YEARS PRESCRIBED IN THE ACT SINCE THE MISTAKE PROPOSED TO BE RECTIFIED RELATES BACK TO THE ORDER U/S 143(3) AND HENCE THE PROCEEDI NG SO INITIATED AFRESH U/S 154 IS BAD IN LAW. II) THE HON'BLE ITAT VIDE ITS ORDER DT. 11.04.2008 IN ITA NO. 1718/ KOL/ 2006 HAS ALREADY CANCELLED THE ORDER U/S 154. SINCE THE PROCEEDING ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 6 EARLIER INITIATED U/S 154 HAS ALREADY BEEN CANCELLE D IT CANNOT BE SUBJECTED TO FURTHER PROCEEDING U/S 154 AS PER THE PROVISION OF SEC. 154(1A). FURTHERMORE, THE MATTER IS ALREADY SUB-JUDICED BEFO RE THE HON'BLE CALCUTTA HIGH COURT. 9. CONSIDERING THE SUBMISSIONS MADE ABOVE, THE AO A GAIN PASSED AN ORDER DT: 30.03.2009 ASSESSING THE TOTAL INCOME AT RS. 29 ,96,785/- AS PER THE PROVISION OF SEC. 115JA OF THE ACT AND RAISED DEMAND OF RS. 6 ,61,140/- INCLUDING INTEREST OF RS. 3,15,997/- AND RS. 39,213/- U/S 234B AND U/ S 234C OF THE ACT RESPECTIVELY U/S 143(3)/251/154/154/154/251/251/154 OF THE ACT. 10. AN APPEAL WAS FILED BEFORE THE CIT-A QUESTIONIN G THE ACTION OF AO THE AFORESAID RECTIFICATION U/S. 154 OF THE ACT RAISING DEMAND OF RS.6,61,140/- INCLUDING INTEREST OF RS.3,15,797/- AND RS.39,213/ - CHARGED U/S. 234B AND 234C OF THE ACT RESPECTIVELY AND ORDER OF THE CIT-A OF W HICH REPRODUCED HEREUNDER: (A) SUBMISSIONS OF ASSESSEE BEFORE THE CIT-A AS UND ER: (V) IN THE CASE OF YOUR PETITIONER-COMPANY INCOME U /S. 115JA HAVING BEEN DECLARED IN THE ORIGINAL RETURN FILED BUT IN THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) DATED 30.03.2001, THE AO HAVING FAILED TO COMPUTE INCOME U/S. 115JA, IT WILL BE APPRECIATE D BY YOUR HONOUR THAT THE MISTAKE IF ANY IN COMPUTING THE TOTAL INCO ME U/S 115JA HAD ARISEN IN THE ORIGINAL ASSESSMENT ORDER DATED 30.03 .2001 AND IN THIS CONNECTION REFERENCE MAY KIND1Y BE MADE TO DETAILED DISCUSSION HEREIN ABOVE AND HENCE THE PERIOD OF LIMITATION U/S. 154 E XPIRED IN THIS CASE ON 31.03.2005 AND BY NO SUBSEQUENT ORDER SUCH PERIO D OF LIMITATION CAN BE EXTENDED AND IN THIS REGARD WE SHALL AGAIN D RAW YOUR KIND ATTENTION TO THE DECISIONS OF THE APEX AND OTHER CO URTS AS DISCUSSED IN DETAIL IN HEREIN ABOVE AND HENCE IN VIEW OF THE FAC TS AND IN THE CIRCUMSTANCES THE ENTIRE ORDER U/S. 154 DATED 30.03 .2009 AS BARRED BY LIMITATION AND IS WHOLLY BAD, ILLEGAL AND VOID ABIN ITIO AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES IT IS LIABLE TO BE QUASHED / CANCELLED ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 7 AND IN VIEW OF THE CASE AND IN THE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY.' . (B) FINDING OF THE CIT-A IS AS UNDER: 4: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF TH E L.D A.R . THERE IS NO DISPUTE THAT IN THE CASE UNDER CONSIDERATION RE TURN OF INCOME WAS FILED ON 31.11.1998 DISCLOSING NIL INCOME UNDER NO RMAL PROVISION AND BOOK PROFIT UNDER SECTION 115JA WAS CALCULATED AT R S. 29,96,795/- AND TAX WAS PAID ACCORDINGLY. THE ASSESSMENT WAS COMPLE TED U/S 143(3) ON 30.03.2001 AT TOTAL INCOME OF RS.2,22,82,420/-. SIN CE THE TAX ON THE NORMAL PROVISION WAS MORE THAN THE BOOK PROFIT, TAX WAS HELD PAYABLE ACCORDINGLY. HOWEVER AFTER GIVING EFFECT TO THE C.I .T (A) ORDER AND SUBSEQUENT RECTIFICATION ORDER DT.18.02.2005 ALLOWI NG SET-OFF OF THE BROUGHT FORWARD LOSS THE INCOME UNDER THE NORMAL PR OVISION REDUCED TO RS. 8,11,970/- AND THE TAX WAS CHARGED ACCORDINGLY. SUBSEQUENTLY THE AO REALIZED THE MISTAKE THAT SINCE AFTER THE RECTIF ICATION THE INCOME RETURNED BY THE ASSESSEE UNDER THE MAT PROVISION IS MORE, THE TAX PAYABLE HAS TO BE PAYABLE U/S. 115JA OF THE ACT. A CCORDINGLY THE MISTAKE WAS RECTIFIED VIDE ORDER UNDER SECTION 154 OF THE ACT DT. 28.02.2005 AND THE TAX WAS CHARGED ACCORDINGLY. THE SAID ORDER WAS CONFIRMED BY THE C.I.T (A) & I.T.A.T. HOWEVER SUBSE QUENTLY THE HONBLE TRIBUNAL RECALLED THE ORDER IN RESPONSE TO THE M.A AND HELD THAT THE ORDER UNDER SECTION 154 WAS NOT VALID OH TECHNICAL REASON AS THE SPECIFIC MISTAKE PROPOSED TO BE RECTIFIED IS NO T SPECIFIED IN THE NOTICE. SUBSEQUENTLY FRESH PROCEEDING WAS INITIAT ED AND THE ORDER DT. 18.02:2005 WAS RECTIFIED UNDER SECTION 154 AND TAX AS PER MAT PROVISION WAS CHARGED AS PER PROVISION OF THE ACT. 5. THE SUBMISSION OF THE L.D A.R THAT THE ORDER HAS BEEN PASSED BEYOND THE STATUTORY PERIOD OF LIMITATION OF 4 YEAR S HAS NO MERIT. IN THE CASE UNDER CONSIDERATION THE ORDER SOUGHT TO BE AME NDED WAS PASSED ON 18.02.2005, WHICH IS WITHIN THE TIME LIMIT SPECI FIED IN SUB SECTION 7 OF SECTION 154 OF THE ACT. MOREOVER THIS ISSUE HAS BEEN SETTLED BY THE SUPREME COURT IN THE CASE OF HIND WIRE INDUSTRIES L TD VS CIT 212 ITR 639(S.C), WHERE IT HAS BEEN HELD THAT THE LIMITATI ON UNDER SECTION 154(7) FOR RECTIFICATION WITHIN FOUR YEARS FROM THE ORDER SOUGHT TO BE AMENDED DOES NOT QUALIFY FROM THE ORIGINAL ORDER AS ORDER IN SECTION 154(7) DOES NOT MEAN ORIGINAL ORDER. IT COULD MEAN ANY ORDER INCLUDING AN AMENDED OR RECTIFIED ORDER. FURTHER NON CHARGING OF TAX ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 8 UNDER 115JA WAS A CLEAR MISTAKE IN THE ORDER OF TH E A.O AS HE WAS DUTY BOUND TO COMPUTE TAX AS PER THE PROVISION LAID DOWN U/S. 115JA OF THE ACT. CONSIDERING ABOVE THE GROUND NO 1 & 2 TAKE N BY THE APPELLANT IS DISMISSED. 11. THE PRESENT APPEAL FILED QUESTIONING THE ACTION OF CIT-A IN CONFIRMING THE ORDER OF AO RAISING DEMAND OF RS.6,61,140/- INC LUDING INTEREST OF RS.3,15,797/- AND RS.39,213/- CHARGED U/S. 234B AND 234C OF THE ACT RESPECTIVELY MADE UNDER RECTIFICATION U/S. 154 OF T HE ACT. 12. THE ASSESSEE CONTENDED BEFORE US, THAT THE ORD ER PASSED U/S. 115JA IS SUBSTANTIVE. IT HAS TO BE PASSED ALONG WITH NORMAL ASSESSMENT U/S. 143(3) OF THE ACT. THE AO CANNOT INVOKE SECTION 154 FOR ANY FRESH ADJUDICATION. HE FURTHER ARGUED THAT THE SECTION 115JA IS SUBSTANTIVE AND IN DEPENDENT TO OTHER PROVISIONS OF THE ACT AND IT HAS OVERRIDING EFFECT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TAX EFFECT IS HIGHER IN S ECTION 115JA AND THE SAME IS TO BE ADOPTED BY THE AO. IF IT IS HIGHER IN NORMAL PRO CEEDING U/S. 143(3) OF THE ACT, THE AO HAS TO ADOPT THE SAME. THE IMPUGNED ORDER PA SSED BY THE AO RECTIFYING THE MISTAKE, HE DID NOT MENTION A WHISPER ABOUT COM PUTATION UNDER THE SECTION 115JA. THEREFORE, THE AO CANNOT MODIFY SUCH ORDER U /S. 154 OF THE ACT. 13. IN REPLY, THE LD. DR SUBMITS THE LIMITATION IS SAVED TO RECTIFY THE ORDER AND THE REVENUE HAS AN OPPORTUNITY TO RECTIFY THE O RDER U/S. 154 OF THE ACT. THE AO DID NOT TAKE INTO CONSIDERATION THE COMPUTATION U/S. 115JA FROM THE FIRST INSTANCE ONWARDS. FURTHER, THE AO DID NOT FIND THE SAME WHILE PASSING THE DEMAND NOTICE. HE ALSO SUBMITS THAT JUDGMENT DT:21- 12-2005 OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN APPEAL FILED AGAINST THE ORDER DT: 11-04- ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 9 2008 OF TRIBUNAL NOT TAKEN INTO CONSIDERATION THE M ERITS OF THE CASE AS IT WAS DISMISSED BY THE HONBLE HIGH COURT BEING LOW TAX E FFECT. 14. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE QUESTION THAT WOULD AROSE FOR OUR CONSIDERATION IS AS TO WHETHER THE REVENUE HAS JURISDICTION TO ISSUE A NOTICE DT.16.02 .2009 U/S 154 OF THE ACT PROPOSING TO RECTIFY THE ORDER MADE U/S 143(3) /251 /154 DT: 22.05.2008 AND TO COMPUTE THE INCOME U/SEC 115 JA OF THE ACT FOR THE FIRST TIME AGAINST TO THE ASSESSEMENT MADE UNDER NORMAL PROVISIONS OF THE AC T AND CONSEQUENTLY, RAISE DEMAND THEREAFTER. 15. WE MAY REFER TO THE NOTICE DATED 16-02-2009 IS SUED TO RECTIFY THE ORDER DATED 22.05.2008 BY MENTIONING THAT THERE WAS A MIS TAKE IN CALCULATION OF TAX AND INTEREST. THE SAID ORDER SOUGHT TO BE RECTIFIED BY THE AO WAS AN ORDER PASSED GIVING EFFECT TO THE ORDER OF B-BENCH OF KOL KATA WHERE IT QUASHED THE PROCEEDINGS DT: 28-02-2005 INITIATED U/SEC 154 OF ACT BY DECLARING AS INVALID RELYING ON AN ORDER OF THE CHANDIGARH BENCH OF TRIB UNAL IN THE CASE OF ACIT VS. VARINDER AGRO CHEMICALS LTD REPORTED IN (2007) 107 TTJ (CHD) 842. WE FIND THE OBSERVATION OF THE TRIBUNAL AT PARA-2.3 AT PAGE NO-18 OF PAPER BOOK THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER:- AO HAVING ISSUED NOTICE UNDER S.154 ONLY FOR RECTIF YING MISTAKE IN QUANTIFYING DEDUCTION UNDER S.80-IA, FURTHER RECTIF ICATION AS REGARDS BOOK PROFIT UNDER S.115JA WAS NOT VALID. 16. A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER U/S 143(3) DT. 30.03.2001 OR IN THE ORDER U/S 143(3)/251 DT. 11.01.2005 OR IN THE R ECTIFICATION ORDER U/S 143(3)/251/154 DT. 18.02.2005 THE TOTAL INCOME WAS DETERMINED BY THE A.O UNDER NORMAL PROCEDURE BUT NOT AN WHISPER MADE IN R ESPECT OF COMPUTING THE ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 10 INCOME U/S 115JA AND IT IS PERTINENT NOTE THAT THER E WAS NO REFERENCE TO THE PROVISION OF SEC. 115JA IN THOSE ORDERS. THE REFERE NCE CAME ONLY AFTER THE ORDER OF B-BENCH OF KOLKATA IN ITA 1718/KOL/2006 SUPRA UNDER THE GUISE OF THE ORDER OF TRIBUNAL DID NOT PRECLUDE THE RESPONDENT R EVENUE IN ISSUING THE NOTICE U/SEC 154 OF THE ACT TO RECTIFY THE MISTAKE. 17. IN THIS REGARD THE IMPUGNED ORDER OF THE AO PAS SED IN PURSUANCE OF THE NOTICE DATED 16-02-2009 ISSUED TO RECTIFY THE ORDER DATED 22.05.2008 IS REPRODUCED HERE UNDER: 8. TO RECTIFY SUCH MISTAKE IN THE ORDER DATED 28-0 2-2005; A FRESH NOTICE U/S. 154 WAS ISSUED AND THE CASE WAS RE-FIXED ON 18 -02-2009. IN THE SAID NOTICE IT WAS CLEARLY MENTIONED THAT MISTAKE SOUGHT TO BE RECTIFIED PERTAINS TO 'CALCULATION 'OF TAX AND INTEREST U/S 1 15JA'. TO GIVE THE ASSESSEE ONE MORE OPPORTUNITY OF HEARIN G, A LETTER DTD. 05-03- 2009 WAS ISSUED FIXING THE CASE FOR HEARING ON 13-0 3-2009. ON 09-03- 2009 A LETTER WAS RECEIVED FROM THE ASSESSEE. THE A SSESSEE SOUGHT DETAILS OF SUCH PROPOSED RECTIFICATION. NO ONE APPEARED ON BEHALF OF THE ASSESSEE ON HEARING DATE. A FRESH LETTER DTD.23-03-2009 WAS ISSUED AND SERVE D UPON THE ASSESSEE IN WHICH ENTIRE DETAIL AND PROPOSITION OF THE DEPARTME NT WITH REGARD TO RECTIFICATION SOUGHT WAS MENTIONED. THE CASE WAS AGAIN FIXED ON 27-03-2009.0N SAID DATE OF HEARING THE ASSESSEE FILED A LETTER IN THE DEPARTMENT BUT NO ON E APPEARED TO EXPLAIN THE CONTENTION OF THE ASSESSEE. IN IT'S LETTER, TH E ASSESSEE WITHOUT RAISING ANY SUBSTANTIAL OBJECTION HAS CONTENDED THAT THE D EPARTMENT HAS ALREADY FILED APPEAL AGAINST THE ITAT ORDER AND THAT MISTAK E PERTAINED TO 143(3) ORDER AND WHICH COULD NOT BE RECTIFIED NOW. HOWEVER , NO SUBSTANTIAL POINT IS RAISED AGAINST THE PROCEEDINGS IN QUESTION AND NO CASE LAW IS RELIED UPON BY THE ASSESSEE. ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 11 THE ABOVE NARRATION WOULD CLARIFY THAT AMPLE OPPORT UNITY OF HEARING HAS BEEN GRANTED TO THE ASSESSEE. THE ISSUE IN HAND IS A NEITHER DEBATABLE NOR ANY CONTENTION LIES AGAINST THE LIABILITY OF THE AS SESSEE TO PAY TAXES AS PER MAT PROVISIONS AS PER ASSESSEE'S OWN ADMISSION IN I TS RETURN OF INCOME AS WELL AS CLEAR CUT POSITION OF LAW. THE ASSESSEE' S CONTENTION THAT DEPARTMENT HAS PREFERRED APPEAL U/S. 260A AGAINST T HE ITAT ORDER IN WHICH NOTICE U/S 154 HAS BEEN HELD AS INVALID DOES NOT HOLD ANY SUBSTANCE AS HON'BLE ITAT AS NOT PRECLUDED DEPARTME NT FROM ISSUING A FRESH NOTICE TO RECTIFY THE SAID MISTAKE. 9. IN VIEW OF ABOVE DISCUSSION, MISTAKE IN COMPUTAT ION OF TOTAL INCOME OF THE ASSESSEE AND TAX LIABILITY THEREON IS RECTIFIED AND RECOMPUTED AS UNDER:- TOTAL INCOME AS PER ORDER DATED 13.02.05 RS.8,11,9 70 30% OF BOOK PROFIT RS.99,89,318/- AS PER RETURN OF INCOME FILED BY THE ASSESSEE RS. 29,96,795/- THE INCOME AS PER MAT PROVISIONS IS AT HIGHER SIDE THEREFORE TAX IS TO BE PAYABLE U/S. 115JA ON RS.29,96,795/-, CALCULA TED AS UNDER:- TAX ON BOOK PROFIT RS.29,96,795/- @35% RS. 10,48,8 78/- LESS TDS RS. 5,31,128/- ASSESSED TAX- RS. 5,17,750/- ADD INTEREST U/S. 234B RS.3,15,797 INTEREST U/S. 234C RS. 39,213 RS. 3,55,010/- RS. 8,72,760/- LESS REFUND OF A.Y 1999-2000 RS. 11,620/- BALANCE PAYABLE- RS. 8,61,140/- LESS TAX PAID ON 17-08-06 RS.40,000/- 17-08-06 RS.40,000/- 23-08-06 RS.40,000/- 04-05-06 RS.20,000/- 17-05-06 RS.20,000/- 27-06-06 RS.40,000/- RS.2,00,000/- PAYABLE RS. 6,61,140/- 18. A PERUSAL OF THE ABOVE ORDER SUGGESTS THAT THE ASSESSEE DISCLOSED THE BOOK PROFIT RS.99,89,318/- IN THE RETURN OF INCOME ORIG INALLY FILED BY THE ASSESSEE ON ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 12 30-11-98, BUT, HOWEVER, THE AO DID NOT MAKE ANY REF ERENCE TO U/S. 115JA OF THE ACT, EXCEPT IN THE NOTICE DT:16-02-2009 FOR THE FIR ST TIME 19. IN THIS REGARD, WE MAY REFER TO THE ORDER DATED 24-06-2011 OF THE ITAT KOLKATA, B BENCH, KOLKATA IN THE CASE OF BROOK BO ND LIPTON (I) LTD VS. DCIT, KOLKATA RELEVANT PORTION OF FINDING IS REPRODUCED H EREIN BELOW:- 7.7. AND ALSO ON HON'BLE BOMBAY HIGH COURT IN THE C ASE OF ASHOKA BUILDCON LTD. VS ACIT (2010) 325 ITR 574; 191 TAXMA N 29 HAS HELD AS UNDER :- 10. THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF O F THE REVENUE IS THAT WHEN SEVERAL ISSUES ARE DEALT WITH IN THE ORIGINAL ORDER OF ASSESSMENT AND ONLY ONE OR MORE OF THEM AR E DEALT WITH IN THE ORDER OF REASSESSMENT PASSED AFTER THE ASSES SMENT HAS BEEN REOPENED, THE REMAINING ISSUES MUST BE DEEMED TO HAVE BEEN DEALT WITH IN THE ORDER OF REASSESSMENT. HENCE , IT HAS BEEN URGED THAT THE OMISSION OF THE AD, WHILE MAKING AN ORDER OF REASSESSMENT TO DEAL WITH THOSE ISSUES UNDER S. 143 (3) R/W S. 147 CONSTITUTES AN ERROR WHICH CAN BE REVISED IN EXERCI SE OF THE JURISDICTION UNDER S. 263. THE SUBMISSION CANNOT BE ACCEPTED EITHER AS A MATTER OF FIRST PRINCIPLE, BASED ON A P LAIN READING OF THE PROVISIONS OF SS. 147 AND 263, NOR IS IT SUSTAI NABLE IN VIEW OF THE LAW LAID DOWN BY THE SUPREME COURT. THE SUPREME COURT HAS NOW CLEARLY HELD IN THE DECISION IN ALAGENDRAN FINA NCE LTD. (SUPRA) THAT THE DOCTRINE OF MERGER DOES NOT APPLY WHERE THE SUBJECT-MATTER OF REASSESSMENT AND OF THE ORIGINAL ORDER OF ASSESSMENT IS NOT ONE AND THE SAME. IN OTHER WORDS, WHERE THE ASSESSMENT IS SOUGHT TO BE REOPENED ONLY ONE OR MOR E SPECIFIC GROUNDS AND THE REASSESSMENT IS CONFINED TO ONE OR MORE OF THOSE GROUNDS, THE ORIGINAL ORDER OF ASSESSMENT WOULD CON TINUE TO HOLD THE FIELD, SAVE AND EXCEPT FOR THOSE GROUNDS ON WHI CH A REASSESSMENT HAS BEEN MADE UNDER S. 143(3) R/W S. 1 47. CONSEQUENTLY, AN APPEAL BY THE ASSESSEE ON THOSE GR OUNDS ON WHICH THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED A ND WHICH DO NOT FORM THE SUBJECT OF REASSESSMENT WOULD CONTINUE TO SUBSIST AND WOULD NOT ABATE. THE ORDER OF ASSESSMENT CANNOT BE REGARDED AS BEING SUBSUMED WITHIN THE ORDER OF REAS SESSMENT IN ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 13 RESPECT OF THOSE ITEMS WHICH DO NOT FORM PART OF TH E ORDER OF REASSESSMENT. WHERE A REASSESSMENT HAS BEEN MADE PU RSUANT TO A NOTICE UNDER S. 148, THE ORDER OF REASSESSMENT PR EVAILS IN RESPECT OF THOSE ITEMS WHICH FORM PART OF REASSESSM ENT. ON ITEMS WHICH DO NOT FORM PART OF THE REASSESSMENT, THE ORI GINAL ASSESSMENT CONTINUES TO HOLD THE FIELD. WHEN THE AD REOPENS AN ASSESSMENT ON A PARTICULAR ISSUE, IT IS OPEN TO HIM TO MAKE A REASSESSMENT ON THAT ISSUE AS WELL AS IN RESPECT OF OTHER ISSUES WHICH SUBSEQUENTLY COME TO HIS NOTICE DURING THE CO URSE OF THE PROCEEDINGS UNDER S. 147. THE SUBMISSION OF THE REVENUE IS THAT BY NOT PASSING AN ORDER OF REASSESSMENT IN RESPECT OF OTHER INDEPENDENT ISSUES, THE ORDER OF THE AO CAN BE CONS TRUED TO BE ERRONEOUS AND TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF S. 263. THE SUBMISSION CANNOT BE ACCEPTED IN THE FACTS OF THE PRESENT CASE. THE SUBSTANTIVE P ART OF S. 147 AS WELL AS EXPLN. 3 ENABLES THE AD TO ASSESS OR REASSE SS INCOME CHARGEABLE TO TAX WHICH HE HAS REASON TO BELIEVE HA D ESCAPED ASSESSMENT AND OTHER INCOME WHICH HAS ESCAPED ASSES SMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THE SECTION. THERE IS NOTHING ON THE RECORD OF THE PRESENT CASE TO INDICATE THAT THERE WAS ANY OTH ER INCOME WHICH HAD COME TO THE NOTICE OF THE AD AS HAVING ES CAPED ASSESSMENT IN THE COURSE OF THE PROCEEDINGS UNDER S . 147 AND WHEN HE PASSED THE ORDER OF REASSESSMENT. THE CIT, WHEN HE EXERCISED HIS JURISDICTION UNDER S. 263 , IN THE FACTS OF THE PRESENT CASE, WAS UNDER A BAR OF LIMITATION SINCE LIMITATIO N WOULD BEGIN TO RUN FROM THE DATE ON WHICH THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED. WE MUST HOWEVER CLARIFY THAT THE BAR OF LIMITATION IN THIS CASE ARISES BECAUSE THE REVISIONAL JURISDIC TION UNDER S. 263 IS SOUGHT TO BE EXERCISED IN RESPECT OF ISSUES WHICH DID NOT FORM THE SUBJECT-MATTER OF THE REASSESSMENT PROCEED INGS UNDER S. 143(3) R/W S. 147. IN RESPECT OF THOSE ISSUES, LIMITATION WOULD COMMENCE WITH REFERENCE TO THE ORIGINAL ORDER OF AS SESSMENT. IF THE EXERCISE OF THE REVISIONAL JURISDICTION UNDER S . 263 WAS TO BE IN RESPECT OF ISSUES WHICH FORMED THE SUBJECT-MATTE R OF THE REASSESSMENT, AFTER THE ORIGINAL ASSESSMENT WAS REO PENED, THE COMMENCEMENT OF LIMITATION WOULD BE WITH REFERENCE TO THE ORDER OF REASSESSMENT. THE PRESENT CASE DOES NOT FALL IN THAT CATEGORY. ' ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 14 7.8. KEEPING IN VIEW OF THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE MISTAKE, IF ANY, IS OCCURRING IN THE ORIGINAL ASSES SMENT ORDER PASSED U/S. 143(3) OF THE ACT DATED 29.03.1995 AND THOUGH AO HA S PASSED SUBSEQUENT RECTIFICATION ORDERS HE HAS NOT MADE ANY CORRECTION S ON THE SAID ISSUE BUT HE RESORTED TO RECTIFY THE MISTAKE WHILE PASSING TH E SUBSEQUENT ORDER PASSED U/S 251/154/154/143(3) OF THE IT ACT. UNDER THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT AO IS DUTY BOUND TO MAKE TH E RECTIFICATION ORDER WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEA R I.E. 1994-95. SINCE AO HAS PASSED RECTIFICATION ORDER U/S 154 ON 10.03.200 0 IS BARRED BY LIMITATION AS IT IS BEYOND FOUR YEARS FROM THE ORIG INAL ASSESSMENT ORDER DATED 29.03.1995. THEREFORE, WE QUASH THE ORDERS OF LOWER AUTHORITIES, KEEPING IN VIEW OF THE PROVISIONS OF SECTION 154 (7 ) BY TREATING THE SAME AS BARRED BY LIMITATION. 20. IN THE PRESENT CASE, LIMITATION WOULD BEGIN TO RUN FROM THE DATE I.E 30-03- 2001 ON WHICH THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED U/S 143(3) OF THE ACT FOR THE REASON THE JURISDICTION UNDER S. 154 IS SOUGHT TO BE EXERCISED IN RESPECT OF ISSUES WHICH DID NOT FORM THE SUBJECT-MA TTER OF THE RECTIFICATION PROCEEDINGS UNDER S. 154 DT. 11.01.2005 AND 18.02. 2005 AND THE AO ALSO FAILED TO MAKE ANY REFERENCE OF SEC 115JA IN THE NOTICE DT :23-02-2005 ISSUED SOUGHT TO RECTIFY THE ORDER DT:28-02-2005, BUT, HOWEVER, M ADE COMPUTATION UNDER BOOK PROFIT U/S 115JA OF THE ACT FOR THE FIRST TIME VIDE SEC 154 NOTICE DT:16-02-2009. AS STATED ABOVE AO HAS PASSED SUBSEQUENT RECTIFICAT ION ORDERS AND HE HAS NOT MADE ANY REFERENCE ON THE SAID ISSUE BUT HE RESORTE D TO RECTIFY THE MISTAKE WHILE PASSING THE SUBSEQUENT ORDER PASSED U/S 143(3)/251/ 154/154/251/251/154 OF THE ACT. WE FIND THAT FROM THE END OF THE FINANCIAL YEA R I.E. 1997-98 THE AO IS BOUND TO MAKE THE RECTIFICATION ORDER WITHIN FOUR Y EARS AND IN THIS CASE THE AO HAS PASSED RECTIFICATION ORDER U/S 154 ON 30-03-200 9 IS BARRED BY LIMITATION AS IT IS BEYOND FOUR YEARS FROM THE ORIGINAL ASSESSMENT O RDER DATED 30.03.2001. THEREFORE, WE ARE OF THE OPINION THAT THE IMPUGNED ORDER DT:30-03-2009 PASSED BY THE AO IS HELD TO BE INVALID BY TREATING THE SAM E AS BARRED BY LIMITATION. ITA NO.341/KOL/2010-B-JM M/S.SHREE HANUMAN SUGAR & INDUSTRIES LIMITED 15 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 - 06-2016 SD/- SD/- M.BALAGANESH S.S . VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08 - 06-2016 **PRADIP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT-SHREE HANUMAN SUGAR & INDUSTRIES LTD C /O M/S. SALARPURIA JAJODIA & CO 7, C.R AVENUE, KOLKATA-72. 2 RESPONDENT THE ACIT,CC-XI, KOL/ ITO W 3(1), DWAR LI HOUSE 8/2 ESPLANADE EAST, KOL-69. 3. THE CIT(A) CONCERNED 4. 5. THE CIT CONCERNE D THE D.R 6. GUARD FILE TRUE COPY, BY ORDER ASSTT. REGISTRAR
Mehul