M/s Indira Export Pvt. ltd., V. The ACIT, 5(1),

ITA 391/IND/2007

• Counselvise Citation: 39122714 RSA 2007
• Duration Of Justice: 4 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-05-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 12-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: MANISH VAIDYA CAS
• Keywords: Reopening of assessment; Audit objection; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 147; 148; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AAACI3883Q I.T.A.NO.391, 338/IND/2007 & 294/IND/2006 A.Y. : 1999-2000, 2000-01 & 2002-03 INDIRA EXPORTS PRIVATE LIMITED, ACIT, 5(1), C/O AJAY TULSIYAN & CO., C.A., 6 TH FLOOR, SILVER ARC PLAZA, 20/1, NEW PALASIA, INDORE. VS INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI AJAY TULSIYAN AND SHRI MANISH VAIDYA, CAS RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 16.09.2011 DATE OF PRONOUNCEMENT : 31.10.2011 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF CIT(A)-II, INDORE, FOR THE ASSESSMENT YE ARS 1999- -: 2: - 2 2000, 2000-01 AND 2002-03 IN THE MATTER OF ORDER PA SSED U/S 147/143(3) OF THE INCOME-TAX ACT, 1961. 2. BROADLY, FACTS IN ALL THE YEARS ARE COMMON, WE, THEREFORE, HEARD ALL THE APPEALS TOGETHER AND NOW D ECIDE THE SAME BY THIS CONSOLIDATED ORDER. 3. IN THE ASSESSMENT YEAR 1999-2000, RETURN OF INCOME WAS FILED U/S 139(1) ON 29.12.1999 DECLARING NIL TO TAL INCOME, COPY OF AUDIT REPORT ALONGWITH RELEVANT ANNEXURES I N FORM NO. 10CCAC WITH WORKING FOR CLAIMING DEDUCTION U/S 80HH C WERE ENCLOSED WITH THE RETURN. RETURN WAS PROCESSED U/S 143(1)(A) ACCEPTING THE RETURNED INCOME. THEREAFTER, NOTICE U /S 263 WAS ISSUED BY CIT-II ON 22.02.2002 STATING THAT DEDUCTI ON U/S 80HHC WAS NOT PROPERLY ALLOWED AND PF/ESIC PAYMENTS WERE NOT ALLOWABLE U/S 43B. IT WAS PROPOSED THAT ORDER P ASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ASSESSEE HAD OBJECTED TO ISSUANCE OF NOTICE U/S 263. AFTER CONSIDERING THE A SSESSEES SUBMISSION, ORDER WAS PASSED BY THE CIT U/S 263 FOR ASSESSMENT YEAR 1998-99 TO 2000-01 AFTER DUE DELIBE RATION IN THE MATTER ON 16.10.2002. IN THE ORDER SO PASSED, T HE LD. CIT -: 3: - 3 HELD THAT DEDUCTION U/S 80HHC AS CLAIMED BY THE ASS ESSEE WAS PROPER AND HENCE COULD NOT BE DISALLOWED, AND T HAT DEDUCTION U/S 43-B IN RESPECT OF DELAYED PAYMENT OF ESI/P.F. WAS NOT ALLOWABLE. IT IS CLEAR FROM THE ORDER OF TH E CIT THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S 80HHC WAS FOUND TO BE CORRECT. THEREAFTER, NOTICE U/S 154 WAS ISSUED ON 3 .6.2003 PROPOSED TO WITHDRAW THE DEDUCTION ALLOWED U/S 80HH C FOR THE IMPUGNED ASSESSMENT YEAR. HOWEVER, ON 27.2.2004 , A NOTICE U/S 148 WAS ALSO ISSUED. THE ASSESSEE FILED RETURN UNDER PROTEST DECLARING TOTAL INCOME AT NIL AFTER C LAIMING DEDUCTION U/S 80HHC. OBJECTIONS WERE RAISED TO THE INITIATION OF PROCEEDINGS U/S 148 AND REASONS FOR REOPENING WA S ALSO REQUESTED FORM THE AO THROUGH THE NOTES FILED ALONG WITH RETURN. AFTER ALMOST A YEAR, REASONS DATED NIL FOR REOPENING OF ASSESSMENT WERE SERVED UPON THE ASSESSEE ON 3.2.200 6. THE ASSESSEE OBJECTED THE LEGALITY OF PROCEEDINGS U/S 1 48 ON THE BASIS OF REASONS SO PROVIDED. THEREAFTER, THE ASSES SMENT ORDER U/S 147 READ WITH SECTION 143(3) WAS PASSED ON 27.3 .2006. THE LD. CIT(A) VIDE ORDER DATED 30 TH MARCH, 2007, UPHELD THE VALIDITY OF REOPENING U/S 147, HOWEVER, ON MERITS H E PARTLY -: 4: - 4 ALLOWED THE ASSESSEES APPEAL. THE ASSESSEE IS IN F URTHER APPEAL BEFORE US. THE BASIC GRIEVANCE OF THE ASSESS EE NOW BEFORE US IS THAT THE PROCEEDINGS INITIATED U/S 147 AND CONSEQUENT ASSESSMENT ORDER IS BAD IN LAW. CONTENTI ON OF THE LD. AUTHORIZED REPRESENTATIVE WAS THAT PROCEEDINGS U/S 263 WERE INITIATED ON THE ISSUE OF DEDUCTION U/S 80HHC. THE ENTIRE ISSUE WAS DEALT IN DETAIL BY THE CIT IN HIS ORDER U/S 263 AFTER CALLING A REPORT FROM AO. THE ISSUE HAVING BE EN EXAMINED BY THE HIGHER AUTHORITIES CANNOT BE SUBJEC T MATTER OF REVIEW BY THE LOWER AUTHORITIES. AS PER THE LD. AUTHORIZED REPRESENTATIVE, THE MOOT QUESTION IS WHETHER ORDER PASSED U/S 263 IS AMENABLE TO REOPENING BY THE ASSESSING OFFIC ER U/S 147 AND CONTENDED THAT THIS IS A UNIQUE CASE OF BREACH OF JUDICIAL HIERARCHY AND AO HAS NO JURISDICTION TO REOPEN AN A SSESSMENT WHEN THE PROCEEDINGS U/S 263 HAVE BEEN INITIATED ON THE SAME ISSUE AND EVEN AFTER DUE DELIBERATION THE SAME HAVE BEEN DROPPED. FOR THIS PURPOSE, THE RELIANCE WAS PLACED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF ASEA BR OWN BOVERI LIMITED VS. ADDL. CIT, 2010-TIOL-190-I.T.A.T.-BANG. -: 5: - 5 4. IT WAS ALSO ARGUED BY THE LD. AUTHORIZED REPRESENTA TIVE THAT PROCEEDINGS INITIATED U/S 154 DATED 3.6.2003 W AS ALSO PENDING BEFORE THE AO, THEREFORE, PROCEEDINGS U/S 1 47 CANNOT BE INITIATED ON THE SAME ISSUE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS :- A. I.T.A.T. DELHI A BENCH, MAHINDER FREIGHT CARRIERS VS. DCIT, 56 DTR 247. B. I.T.A.T. DELHI A BENCH S.M. OVERSEAS, (P) LTD VS. ACIT, 23 DTR 29 C. I.T.A.T. MUMBAI H BENCH, JETHALAL K. MORBIA VS. ACIT, 109 TTJ 1. D. HIGH COURT OF BOMBAY, WESTERN OUTDOOR INTERACTIVE(P) LTD VS. ITO, 286 ITR 620. E. I.T.A.T. JAIPUR BENCH, ASHUTOSH BHARGAVA VS. DCIT, 47 DTR 162. 5. IT WAS ALSO ARGUED BY THE LD. AUTHORIZED REPRESENTA TIVE THAT REOPENING WAS BASED ON THE AUDIT OBJECTION, WH ICH CANNOT BE MADE THE BASIS FOR AOS CONCLUSION THAT INCOME H AS ESCAPED ASSESSMENT AND FOR THIS PURPOSE RELIANCE WA S PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPERS SOCIETY, 119 ITR 996. -: 6: - 6 6. LD. AUTHORIZED REPRESENTATIVE ALSO ARGUED THAT REOPENING WAS BASED ON CHANGE OF OPINION AS THE ISS UE WAS THOROUGHLY EXAMINED UNDER PROCEEDINGS INITIATED U/S 263 BY CIT. HE INVITED OUR ATTENTION TO THE FINDINGS RECOR DED IN 263 ORDER, WHEREIN AFTER CONSIDERING THE DETAILED REPOR T OF THE AO, IT WAS HELD THAT CLAIM OF DEDUCTION U/S 80HHC HAS B EEN CORRECTLY MADE BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT EVERY TIME THE CASE H AS BEEN EXAMINED/REVIEWED FROM THE ANGLE OF SECTION 80HHC, THEREFORE, REOPENING OF ASSESSMENT BY THE DEPARTMEN T IS BASED ON MERE CHANGE OF OPINION. HE FURTHER PLEADED THAT CLAIM ALLOWED EARLIER ON THE BASIS OF INTERPRETATIO N OF LAW EXISTING AT THE TIME OF FILING OF RETURN IS GOOD LA W AND REOPENING MERELY ON CHANGE OF OPINION IS BAD IN LAW . RELIANCE IS PLACED ON THE FOLLOWING DECISIONS :- A. I.T.A.T., INDORE BENCH, M/S. PATEL PRAVAH, NEEMUCH VS. ITO, 4 ITJ 302. B. I.T.A.T. DELHI ( FB) CIT VS. KALVINATOR OF INDIA LIMITED, 256 ITR 1. -: 7: - 7 C. SUPREME COURT OF INDIA, CIT VS. KALVINATOR OF INDIA LIMITED, 320 ITR 561. 7. THE LD. AUTHORIZED REPRESENTATIVE ALSO DREW OUR ATTENTION TO THE REASONS SO RECORDED AS WELL AS PRO CEEDINGS INITIATED U/S 154 AND 263, WHICH CLEARLY INDICATE T HAT THE VERY BASIS OF REOPENING WAS THE CLAIM OF DEDUCTION U/S 8 0HHC IN THE LIGHT OF DECISION IN THE CASE OF ALPINE SOLVEX. HE SUBMITTED THAT THE NOTICE ISSUED U/S 154 AS WELL AS THE REAS ONS RECORDED FOR 147 ARE IDENTICALLY WORDED AND BASED O N THE DECISION IN THE CASE OF ALPINE SOLVEX LIMITED PROPO SED TO WITHDRAW THE DEDUCTION ALLOWED U/S 80HHC OUT OF BOO K PROFIT U/S 115JA. HE CONTENDED THAT THE DECISION OF ALPINE SOLVEX DOES NOT DEAL WITH 115JA AT ALL. OUR ATTENTION WAS FURTHER INVITED TO THE FOLLOWING OBSERVATIONS IN THE ORDER U/S 263, WHICH READS AS UNDER :- THE ORDER U/S 263 STATES TO THE EXTENT THAT THE DECISION IN THE CASE OF ALPINE SOLVEX LIMITED IS TH E LAW. THERE IS NO SCOPE FOR ANY REMEDIAL ACTION WHAT SO EVER NOW AFTER THE SUPREME COURT OF INDIA HAS -: 8: - 8 GIVEN ITS VERDICT. IN FACT, TAKING SO CALLED REMEDI AL ACTION NOW MAY BE TANTAMOUNT TO THE CONTEMPT OF THE HON'BLE APEX COURT. 8. IN VIEW OF THE ABOVE ARGUMENTS, THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT THE DEPARTMENT HAVING NOT SUCCEEDED IN THE PROCEEDINGS U/S 263 HAD TAKEN RECO URSE TO SECTION 154 & 147 PROCEEDINGS, WHICH IS NOT ONLY UN FAIR BUT ALSO AGAINST THE SETTLED PROCEDURE SET OUT IN THE S TATUTE, FOR THE PURPOSE OF ASSESSMENT/REASSESSMENT AND REVISION . 9. ON THE OTHER HAND, THE LD. SENIOR D.R. RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT AFTER RECORDING REASONS, THE AO WAS JUSTIFIED IN REOPENIN G THE ASSESSMENT AS THE CLAIM OF DEDUCTION U/S 80HHC WAS NOT FOUND TO BE CORRECT. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE CASE LAWS CITED BY LOWER AUTHORI TIES IN THEIR RESPECTIVE ORDERS AS WELL AS REFERRED TO BY THE LD. AUTHORIZED REPRESENTATIVE DURING THE COURSE OF PROCEEDINGS BEF ORE US. FROM THE RECORD, WE FOUND THAT THE ISSUE WITH REGAR D TO CLAIM -: 9: - 9 OF DEDUCTION U/S 80HHC WAS FIRST TIME WRACKED UP BY CIT U/S 263 VIDE ITS ORDER DATED 16.10.2002 FOR THE ASSESSM ENT YEARS 1998-99,1999-2000 AND 2000-01. IN HIS ORDER U/S 163 , THE LD. CIT AT PAGE 8, HAS CONSIDERED THE DETAILED REPORT D ATED 7.10.2002 FILED BY THE ASSESSING OFFICER AND HELD T HAT THERE IS NO REASON TO DISALLOW ANY PORTION OF DEDUCTION ALL OWED U/S 80HHC OF THE INCOME-TAX ACT, 1961, TO THE ASSESSEE FOR THE THREE ASSESSMENT YEARS UNDER CONSIDERATION. 11. IN THIS ORDER, THE LD. CIT HAS OBSERVED THAT THE IS SUE WITH REGARD TO DEDUCTION U/S 80HHC HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF ALPINE SOLVEX LIMITED IN FA VOUR OF THE ASSESSEE AND AGAINST THAT DECISION, THE DEPARTMENT HAS MOVED TO THE HIGH COURT. HE FURTHER OBSERVED THAT HON'BLE HIGH COURT HAS DISMISSED REVENUES APPEAL AND LATER ON DEPARTMENT MOVED TO THE HON'BLE SUPREME COURT THROU GH SLP, WHICH HAS ALSO BEEN DISMISSED BY THE HON'BLE S UPREME COURT. THUS, THE ISSUE WITH REGARD TO CLAIM OF DEDU CTION U/S 80HHC STANDS FINALLY SETTLED. THE LD. CIT FURTHER O BSERVED THAT DECISION GIVEN IN THE CASE OF ALPINE SOLVEX LIMITED IS THE LAW AND NOW THERE IS NO SCOPE FOR REMEDIAL ACTION WHATS OEVER AFTER -: 10: - 10 THE DECISION OF HON'BLE SUPREME COURT. HE FURTHER O BSERVED THAT TAKING ANY SO CALLED REMEDIAL ACTION NOW MAY T ANTAMOUNT TO CONTEMPT OF THE HON'BLE APEX COURT. THEREAFTER, CONSIDERING THE REPORT OF THE AO DATED 7.2.2002, THE LD. CIT DR OPPED THE PROCEEDINGS INITIATED WITH RESPECT TO CLAIM OF DEDU CTION U/S 80HHC. THE REASONS GIVEN FOR REOPENING RELATE TO CL AIM OF DEDUCTION U/S 80HHC AND IN THE REASONS SO RECORDED, THE RELIANCE WAS PLACED ON THE DECISION OF TRIBUNAL IN THE CASE OF ALPINE SOLVEX LIMITED I.T.A.NO. 510 & 1026/IND/1997 ORDER DATED 26 TH FEBRUARY, 1999. 12. THUS, IT IS CLEAR FROM THE ORDER OF THE LD. CIT U/S 263 THAT THE ASSESSEES CLAIM OF DEDUCTION U/S 80HHC WA S CORRECT. THE ISSUE WITH REGARD TO DEDUCTION U/S 80HHC HAVING BEEN EXAMINED BY THE HIGHER AUTHORITIES CANNOT BE SUBJEC T MATTER OF REVIEW BY THE LOWER AUTHORITIES. I.T.A.T., BANGA LORE A BENCH IN THE CASE OF ASEA BROWN BOVERI LIMITED VS. ADDL. CIT, 2010- TIOL-190-I.T.A.T.-BANG, RELYING ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF RAMCHANDRA HATCHERIES, 30 5 ITR 117 OBSERVED THAT THE AO HAS NO JURISDICTION TO REO PEN THE ASSESSMENT U/S 147, SO AS TO CIRCUMVENT THE ORDER O F THE CIT -: 11: - 11 WHICH HAS BECOME FINAL. AS THERE WAS NO NEW FACTS C OMING TO THE NOTICE OF THE AO OTHER THAN THE FACTS KNOWN TO THE DEPARTMENT WHILE INITIATING THE PROCEEDINGS U/S 263 , THE REOPENING OF ASSESSMENT WAS NOT JUSTIFIED ON THE SA ME FACTS, WHICH WERE ALREADY DECIDED BY THE CIT IN HIS ORDER U/S 263. 13. IN THE INSTANT CASE ALSO, WE FOUND THAT THE ISSUE WITH REGARD TO CLAIM OF DEDUCTION U/S 80HHC WHICH HAD BE EN DEALT WITH BY THE LD. CIT BY ISSUING NOTICE U/S 263 WAS D ROPPED AFTER CONSIDERING AOS REPORT DATED 7.10.2002 AND I T WAS HELD THAT CONSIDERING THIS REPORT AND THE LEGAL POSITION THERE IS NO REASON TO DISALLOW ANY PORTION OF THE DEDUCTION ALL OWED U/S 80HHC OF THE INCOME-TAX ACT, 1961, FOR ALL THE THRE E YEARS UNDER CONSIDERATION. AS THE ISSUE HAS ALREADY BEEN EXAMINED AND HELD IN FAVOUR OF THE ASSESSEE BY THAT LD. CIT ON THE BASIS OF REPORT OF THE AO, WE DO NOT FIND ANY MERIT IN TH E INITIATION OF PROCEEDINGS U/S 147 BY THE SAME AO. THE REOPENING O F ASSESSMENT ON THE SAME REASONS AS WERE RECORDED FOR INITIATION OF PROCEEDINGS U/S 263 IS NOT PERMISSIBL E, PARTICULARLY IN THE ABSENCE OF ANY NEW MATERIAL ON THE BASIS OF REASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMEN T. -: 12: - 12 14. IN THE ASSESSMENT YEAR 2002-03, REOPENING WAS MADE ON THE SAME REASONING AS WAS GIVEN IN THE PROCEEDIN GS U/S 154, WHICH WAS PENDING WHEN NOTICE U/S 148 WAS ISSU ED TO ASSESSEE. HERE WE DEAL WITH THE CONTENTION OF THE L D. AUTHORIZED REPRESENTATIVE TO THE EFFECT THAT WHEN P ROCEEDINGS U/S 154 IS PENDING ON THE SAME ISSUE, PARALLEL PROC EEDINGS U/S 147 INITIATED BY THE ASSESSING OFFICER ARE INVA LID AND VOID AB INITIO. ON THIS ISSUE I.T.A.T., MUMBAI BENCH IN THE CASE OF MAHINDER FREIGHT CARRIERS, 56 DTR 247, HELD THAT WH EN PROCEEDINGS U/S 154 WERE PENDING AND THE AO WAS NOT SURE WHETHER THE ISSUE IN CONTROVERSY COULD BE SUBJECT M ATTER OF SECTION 154 OR THE SAME CAN BE SUBJECT MATTER OF PR OCEEDINGS U/S 147, THERE IS NO JUSTIFICATION FOR ISSUE OF NOT ICE U/S 148. 15. I.T.A.T. DELHI BENCH IN THE CASE OF S.M. OVERSEAS P RIVATE LIMITED, 23 DTR 29 HELD THAT DURING PENDENCY OF REC TIFICATION PROCEEDINGS U/S 154, IT WAS NOT OPEN TO THE AO TO I NITIATE REASSESSMENT PROCEEDINGS ON THE SAME ISSUE AND FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF MUM BAI BENCH IN THE CASE OF JETHALAL K. MORBIA, 109 TTJ 1. I.T.A .T. MUMBAI BENCH IN THE CASE OF JETHALAL K. MORBIA, HELD THAT INITIATION OF -: 13: - 13 REASSESSMENT PROCEEDINGS DURING PENDENCY OF RECTIFI CATION PROCEEDINGS, ON THE SAME ISSUE IS INVALID. IT WAS O BSERVED THAT PENDING RECTIFICATION U/S 154, IT COULD NOT BE SAID THAT ASSESSMENT WAS COMPLETED AND UNLESS ASSESSMENT IS COMPLETED, THERE CANNOT BE ANY QUESTION OF ANY INCO ME ESCAPING ASSESSMENT. WHILE ARRIVING AT THIS CONCLUS ION, THE TRIBUNAL RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TRUSTEES OF H.E.H THE NIZAMS SUPPLEMEN TAL FAMILY TRUST VS. CIT, (2000) 242 ITR 381 (S.C.) AN D THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ANDERSON MARINE AND SONS PVT.LTD., (2004) 266 ITR 6 94 (BOM). 16. IN THE INSTANT CASE ALSO, WE FOUND THAT THE PROCEEDINGS U/S 154 WAS INITIATED ON THE VERY SAME ISSUE OF CLAIM OF DEDUCTION U/S 80HHC, WHICH WAS PENDING BEF ORE THE AO. UNDER THESE CIRCUMSTANCES, INITIATION OF PROCEE DINGS U/S 147 WAS NOT JUSTIFIED IN VIEW OF THE ABOVE DECISION S. 17. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE INITIATION OF PROCEEDINGS U/S 147. -: 14: - 14 18. IN THE RESULT, APPEALS OF ALL THE THREE ASSESSMENT YEARS ARE ALLOWED ON THE ISSUE OF INITIATION OF REASSESSM ENT PROCEEDINGS. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER , 2011. CPU* 31.10