HANIL ERA TEXTILES LTD, RAIGAD V. ASST CIT CIR 6(3), MUMBAI

ITA 3575/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101147 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Keywords: Wrong claim; Reason to believe
• Section: 143(3); 10B; 147; 148; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND PAWAN SINGH , JM ./ I.T.A. NO . 3575 / MUM/20 1 3 ( / ASSESSMENT YEA R : 2004 - 05 ) HANIL ERA TEXTIL ES LTD, VILLAGE VANIVALI, TALUKA KHALAPUR, DIST RAIGAD, MAHARASHTERA - PIN - 410220 / VS. ASSTT. COMMISSIONER OF INCOME TAX - 6(3), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAACH2154D / APPELLANT BY NONE / R EVENUE BY SHRI L K S DEHIYA / DATE OF HEARING : 2 3 .9 . 201 5 / DATE OF PRONOUNCEMENT: 2 3 . 9. 201 5 / O R D E R P ER B R BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 14.2.2013 PASSED BY THE LD.CIT(A) - 12, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2004 - 05. 2. THE ASSESSEE IS CHALLENGING THE DECISION RENDERED B Y THE LD. CIT(A) ON THE FOLLOWING ISSUES : A) REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961; B) DISALLOWANCE CLAIMED FOR SET UP OFF BROUGHT FORWARD LOSSES. 3 . NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH NOTICES W ERE SENT BY RPAD ON EARLIER OCCASIONS. W E FURTHER NOTICE THAT THE AUTHORIZED REPRESENTATIVE , VIZ., M/S V V MEHENDALE AND CO. HAS WITHDRAWN THE LETTER ITA NO. 3575 / MUM/20 1 3 2 OF AUTHORITY GIVEN TO THEM. THE ASSESSEE HAS NOT TAKEN ANY STEPS TO APPOINT ANY OTHER AUTHORIZED REPRE SENTATIVE. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX - PARTE, WITHOUT THE PRESENCE OF THE ASSESSEE 4. WE HEARD THE LD.DR AND PERUSED THE RECORD. THE ASSESSMENT OF YEAR UNDER CONSIDERATION WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT ON 24.3. 2006. SUBSEQUENTLY, THE AO REOPENED THE ASSESSMENT BY ISSUING THE NOTICE UNDER SECTION 147 OF THE ACT AND THE SAID ASSESSMENT WAS COMPLETE D ON 14.12.2009. SUBSEQUENTLY, THE AO REOPENED THE ASSESSMENT AGAIN BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 29.3.2011. HOWEVER , THE ASSESSEE DID NOT CO - OPERATE WITH THE AO AND HENCE, HE COMPLETED THE ASSESSMENT TO THE BEST OF HIS JUDGMENT UNDER THE PROVISIONS SECTION 144 OF THE ACT R.W.S.147 OF THE ACT . THE ASSESSEE CHALLENGED THE SAME BY FILING THE APPEAL BEFORE THE LD.CIT(A) AND THE FIRST APPELLATE AUTHORITY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5 . THE FI R ST ISSUE RELATES THE VALIDITY OF REOPENING OF THE ASSESSMENT. WE NOTICE THAT THE LD.CIT(A) HAS DISMISSED THIS GROUND RAISED BEFORE HIM WITH THE FOLLOWING OBSERVATIONS : 4.1 A READING OF THE ASSESSMENT ORDER DATED 14.12.2009 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 CLEARLY STATES THAT ON PERUSAL OF THE RECORDS OF T HE APPELLANT AS W ELL AS CERTIFICATE FILED FOR CLAIMING DEDUCTION UNDER SE CT ION 10B OF THE INCOME TAX ACT, IT WAS SEEN THAT THE UNDERTAKING ON WHICH THE ASSESSEE HAD BEEN CLAIMING THE SAID DEDUCTION UNDE R SECTION 10B HAS STARTED MANUFACTU RING/PRODUCTION FROM 1 ST JANUARY 1994 THAT IS RELEVANT TO THE ASSESSMENT YEAR 1994 - 95. THE PERIOD OF 10 CONSECUTIVE ASSESSMENT YEA R S AS PER THE PROVISION OF SECTION 10B HAD EXPIRED IN AY 2003 - 04. AS PER THE PROVIS I ONS OF INCOME TAX A CT THE ENTIRE CLAIM OF EXEMPTION/ DEDUCTION UNDER SECTION 10B MADE BY THE ASSESSEE FOR THE AY 2004 - 05 WAS NOT ALLOWABLE. AS DUE TO THIS CLAIM THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT THE ITA NO. 3575 / MUM/20 1 3 3 ASSESSMENT NEEDED TO BE REOPENED U/S 147 OF THE INCOME TA X A CT BY WAY OF ISSU E OF NOTICE U/S 148. 4.2 I HAVE CAREFULLY CONSIDERED THE ABOVE SAID FAC T S AND I FIND THA T T HE CONTENTION OF THE APPELLANT CARRIED NO WEIGHT AND CANNOT BE ACCEPTED. IT IS SEEN THAT A WRONG CLAIM HAD BEEN PUT FORTH BY THE APPELLANT AND HAD BEEN WRONGLY AL LOWED BY THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS VIDE ORDER DA T ED 24.3.2006. SECTION 147 (B) (2) CLEARLY STA T ES THAT THE AO IS LEGALLY CORRECT IF HE REOPENS THE CASE OF THE APPELLANT WHEREIN ANY EXCESS EXEMPTION OR DEDUCTION HAS BEEN ALLOWED SO AS TO MEAN THAT INCOME HAS ESCAPED ASSESSMENT. TO THIS EXTENT, I FIND THAT THE ASSESSING OFFICER ON APPRECIATION OF FACTS PLACED BEFORE HIM HAD CLEAR REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT DUE TO INCORRECT ALLOWANCE OF AN EXCEPTI ON /REDUCTION U/S 10B OF THE INCOME T A X ACT AND THEREFORE WAS JUDICIALLY CORRECT IN INVOKING SECTION 147 READ WITH SECTION 148 OF THE INCOME TAX ACT IN THE CA S E OF THE APPELLANT. I FIND THAT THE AOS ACTION OF CORRECTING AN ASSESSMENT WRONGLY MADE BY IN VOKING SECTION 147 OF THE IT ACT CAN NOT BE HELD AS INCORRECT OR ILLEGAL. IT IS ALSO TO BE CONSIDERED HERE THAT THE AO WHILE PASSING THE ORDER UNDER SECTION 143(3) OF THE IT ACT DATED 24.3.2006 HAD RE CORDED THAT THE UNIT HAD STARTED MANUFACTURING FROM 1994 - 95, BUT INADVERTENTLY HAD CONSIDERED THE ALLOWABILITY OF BENEFIT UNDER SECTION 10B FROM AY 1997 - 98 AS CLAIMED BY THE APPELLANT HOLDING T HAT AS IT HAD CLAIMED SECTION 10B BENEFIT FOR THE FIRST TIME IN AY 1997 - 98 AND AS THE BENEFIT IS ALLOWED FOR 10 C ONSECUTIVE YEARS, HIS BEING THE 8 TH YEAR THE SAME IS TO BE ALLOWED. THEREFORE, I FIND THAT AS WRONG CLAIM HAD BEEN ALLOWED, THE AO HAD ALL REASON TO BELIEVE TH A T INCOME HAD ESCAPED ASSESSMENT. I FIND THAT THE AO HAS COMPLIED WITH ALL THE PROVISIONS OF T HE INCOME TAX ACT REGARDING REASSESSMENT OF A CASE I.E. IN SECTIONS 147 TO 153 OF THE IT ACT. THE ACTION OF THE AO IS THEREFORE UPHELD AS IT IS FOUND TO BE IN TANDEM WITH THE PROVISIONS OF THE INCOME TAX ACT AND LAW. THE GROUNDS OF APPEAL FILED ARE T HEREFORE DISMISSED A CAREFUL PERUSAL OF THE ORDER OF THE LD. CIT(A) ON THIS ISSUE WOULD SHOW THAT THE FIRST APPELLATE AUTHORITY HAS ADJUDICATED THIS ISSUE IN A PROPER PERSPECTIVE AND HENCE , WE DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE L D. CIT(A) ON THIS ISSUE. ITA NO. 3575 / MUM/20 1 3 4 6 . THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF CLAIM OF CARR IED FORWARD LOSSES. THE LD. DR SUBMITTED AN IDENTICAL ISSUES WAS CONSIDERED BY THE CO - ORDINATE BENCH OF THIS T RIBUNAL IN THE ASSE S SE E S OWN CASE RELATING TO THE A SSESSMENT Y E AR 2005 - 06 IN ITA NO.1789/MUM/2009 (AY - 2005 - 06) DATED 3.5.2012, AND THE TRIBUNAL HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE. HENCE BY FOLLOWING THE SAID DECISION WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUES. 7 . IN THE RESULT, TH E APPEAL FILE BY THE AS S ES SEE IS DISMISSED . PRONOUNCED ACCORDINGLY ON 2 3 - 09 - 2015. 2 3RD SEPT , 2015 SD SD ( PAWAN SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 2 3RD SEPT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI