Graphite India Ltd., Kolkata V. DCIT, CIRCLE 11, KOLKATA, Kolkata

ITA 398/KOL/2008

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5167 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 26-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: VIJAY SHAH ACA
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Validity of assessment; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 80HHC; 147; 148

Judgement Text

I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 1 OF 13 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 398/KOL/ 2008 ASSESSMENT YEAR: 2000-2001 GRAPHITE INDIA LIMITED,............................ ............................APPELLANT 31, CHOWRINGHEE ROAD, KOLKATA-700 016 [PAN : AAACC 0457 C] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ...............RESPONDENT CENTRAL CIRCLE-II, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 & I.T.A. NO. 537/KOL/ 2008 ASSESSMENT YEAR: 2000-2001 DEPUTY COMMISSIONER OF INCOME TAX,................. ...............APPELLANT CENTRAL CIRCLE-II, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- GRAPHITE INDIA LIMITED,............................ ............................RESPONDENT 31, CHOWRINGHEE ROAD, KOLKATA-700 016 [PAN : AAACC 0457 C] APPEARANCES BY: SHRI VIJAY SHAH, ACA AND SHRI SOUMEN ADAK, ADVOCATE , FOR THE ASSESSEE SHRI NIRAJ KUMAR, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DECEMBER 17, 2015 DATE OF PRONOUNCING THE ORDER : JANUARY 08, 2016 I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 2 OF 13 O R D E R PER SHRI P.M. JAGTAP :- THESE TWO APPEALS, ONE FILED BY THE ASSESSEE BEING ITA NO. 398/KOL/2008 AND THE OTHER FILED BY THE REVENUE BEI NG ITA NO. 537/KOL/2008, ARE CROSS APPEALS, WHICH ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XI, KO LKATA DATED 25.01.2008. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF CALCINED PE TROLEUM COKE AND GRAPHITE ELECTRODES. IT IS ALSO ENGAGED IN THE BUSI NESS OF GENERATION OF POWER, WHICH IS CONSUMED CAPTIVELY IN THE MANUFACTU RE OF GRAPHITE ELECTRODES AND ANODES AS WELL AS SOLD TO OUTSIDE CU STOMERS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 29.11.2000 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCT ION, INTER ALIA, UNDER SECTION 80IA AND 80HHC. IN THE ASSESSMENT ORIGINALL Y COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 31.03.2003, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.3,26,30,395/- AFTER ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCT ION UNDER SECTION 80IA TO THE EXTENT OF RS.13,86,09,898/-. SUBSEQUENTLY IT WAS NOTICED BY THE ASSESSING OFFICER FROM THE RECORDS THAT THE DEDUCTI ON ALLOWED TO THE ASSESSEE UNDER SECTION 80IA IN THE ASSESSMENT COMPL ETED UNDER SECTION 143(3) HAS BEEN COMPUTED AFTER TAKING INTO CONSIDER ATION THE SALE PRICE IN RESPECT OF POWER SOLD BY THE COMPANY TO OUTSIDER S AT RS.3.42 PER UNIT AND IN RESPECT OF THE POWERS TRANSFERRED TO OTHER U NIT OF THE COMPANY AT RS.4.35 PER UNIT. HE ALSO NOTED THAT AS PER SUB-SEC TION 8 OF SECTION 80IA, DEDUCTION IN CASE OF GOODS TRANSFERRED TO OTHER BUS INESS CARRIED OUT BY THE ASSESSEE WAS REQUIRED TO BE COMPUTED CONSIDERIN G SUCH TRANSFER AT THE MARKET VALUE OF SUCH GOODS ON THE DATE OF TRANS FER. HE, THEREFORE, WAS OF THE VIEW THAT BY TAKING INTO CONSIDERATION THE R ATE OF TRANSFER OF POWER I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 3 OF 13 AT RS.4.35 PER UNIT INSTEAD OF RS.3.42 PER UNIT IN CASE OF POWER TRANSFERRED TO OTHER UNITS OF THE ASSESSEE, EXCESSI VE DEDUCTION WAS ALLOWED TO THE ASSESSEE UNDER SECTION 80IA, WHICH H AD RESULTED IN ESCAPEMENT OF INCOME. HE, THEREFORE, REOPENED THE A SSESSMENT BY ISSUING A NOTICE UNDER SECTION 148 ON 14.03.2005 AND IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7 VIDE ORDER DATED 31.03.2006, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA WAS RESTRICTED BY THE ASSESSING OFFICER TO RS.3,51, 52,890/-. IN THE SAID ASSESSMENT, HE ALSO DISALLOWED THE CLAIM OF THE ASS ESSEE FOR DEDUCTION UNDER SECTION 80HHC AND COMPUTED THE TOTAL INCOME O F THE ASSESSEE AT RS.17,04,72,490/-. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) READ WITH SECTION 147, AN APPEAL WAS PREFERR ED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THEREIN THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECT ION 143(3) READ WITH SECTION 147 AS WELL AS DISPUTING THE ADDITIONS MADE THEREIN ON ACCOUNT OF DISALLOWANCE OF ITS CLAIM FOR DEDUCTION UNDER SECTI ONS 80IA AND 80HHC. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSES SEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE CHALLE NGING THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER AND DI SMISSING THE APPEAL OF THE ASSESSEE ON THIS ISSUE, HE UPHELD THE VALIDI TY OF ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 147 FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- PERUSAL OF THE ASSESSMENT RECORDS SHOWS THAT NO QU ERIES WERE RAISED ON THE ABOVE ISSUE. IT WAS ALSO NEVER E XAMINED BY THE AO IN ANY OF THE YEARS OF THE ASSESSEE PRIOR TO PASSING ORDER U/S 143(3) FOR THIS YEAR. THIS ISSUE WAS EXAM INED FOR THE FIRST TIME FOR AY 2003-04 IN ASSESSMENT ORDER D ATED 28- 2-2006, AND IN ITAT DECISION FOR AY 1999-2000 AND 2 001-02 DATED 06-12-2007 IN ORDERS MADE BY THE SAME AO BUT AFTER THE ORIGINAL ORDER IN THIS CASE. IT IS NOTEWORTHY T HAT THE CIT(A) AND ITAT IN ABOVE REFERRED ORDERS GAVE A FIN DING THAT THE PRICE OF POWER USED FOR CAPTIVE CONSUMPTION SHO ULD BE AT I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 4 OF 13 PRICES CHARGED BY THE STATE ELECTRICITY BOARD (SEB) LESS THE ELEMENT OF TAX/DUTY ELEMENT, WHICH COMES TO RS 0.20 PAISE PER UNIT. IT MAY OR MAY NOT BE ACCEPTABLE BY REVENU E, BUT NOTHING TURNS ON ITS ACCEPTANCE. SINCE THE ASSESSEE DID NOT DISCLOSE THE ABOVE FACTS IN THE ANNUAL ACCOUNTS AND RETURN OF INCOME THAT THE TRANSFER PRICE ADOPTED FOR CAPTIVE CONSUMPTION OF POWER INCLUDED AN ELEMENT OF DUTY/TA X WHICH IT IN FACT DID NOT PAY OR BEAR, THE SAME WAS OVERST ATED AT LEAST TO THIS EXTENT. PERUSAL OF THE ASSESSMENT ORD ER PARA 17 SHOWS THE TOTAL NUMBER OF UNITS OF POWER FOR CAPTIV E USE AT 4,97,95,700 UNITS ON WHICH DUTY/TAX ELEMENT @ RS 0. 20 PAISE COMES TO RS.99,59,140/-. ALTHOUGH THIS CALCULATION WAS NOT GIVEN BY THE AO IN THE REASONS NOR DID HE QUANTIFY THE AMOUNT OF INCOME IN THE REASONS, HE WAS PRIMA FACIE CONVINCED THAT THE AMOUNT OF UNDER-ASSESSMENT WAS O F SUFFICIENTLY LARGE INCOME TO BE COVERED AS PER THE PROVISIONS FOR ISSUE OF NOTICE U/S 48. IN VIEW OF THE ABOVE, I HOLD THAT THE AO HAD SUFFICIENT REASONS TO HOLD A PRIMA FACIE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT WITHIN THE MEANI NG OF SECTION 147, AND THE SAME HAS BEEN CONFIRMED IN THE FINDINGS OF THE CIT(A) AND ITAT IN THE ASSESSEE'S OWN CASE. THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MAT ERIAL FACT IN THE RETURN OF INCOME THAT SEB PRICE USED AS INDICAT OR OF REALISABLE VALUE OF POWER INCLUDED AN ELEMENT OF TA X/DUTY WHICH IT REALLY DID NOT HAVE TO PAY. THERE IS ALSO NO CHANGE OF OPINION BY THE AO AS THE ISSUE WAS NEVER TOUCHED UPON IN THE ORDERS OF ASSESSMENT OR APPEAL. THE LD. CIT(APPEALS), HOWEVER, ALLOWED PART RELIEF TO THE ASSESSEE ON THE ISSUES RELATING TO THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF ITS CLAIM FOR DEDUCTION UNDER SECTION 80 IA AND 80HHC. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE AND REVENUE BOTH ARE IN APPEALS BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS:- ITA NO. 398/KOL/2008 (ASSESSEES APPEAL) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRE D IN NOT HOLDING THAT REASSESSMENT PROCEEDINGS U/S. 147/148 HAS BEEN INITIATED IN UTTER DISREGARD OF THE EXPRESS PROVISI ON OF THE ACT AND THUS THE ORDER PASSED U/S. 147 IS BAD IN LAW. 2(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(APPEALS) WAS NOT JUSTIFIED AND ERRED IN HOL DING THAT I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 5 OF 13 TAX OR LEVY IS NOT BE INCLUDED IN THE COMPUTATION O F 'TRANSFER PRICE' OF POWER FOR COMPUTATION OF DEDUCTION U/S. 8 0-IA IN RESPECT OF POWER GENERATING UNIT. 2(B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(APPEALS) FAILED TO APPRECIATE THE FACT THAT THE 'TRANSFER PRICE' OF POWER ADOPTED BY THE APPELLANT FOR COMPUTATION OF DEDUCTION U/S. 80-IA IN RESPECT OF P OWER GENERATING UNIT WAS IN ACCORDANCE WITH THE PROVISIO NS OF SECTION 80-IA(8) OF THE INCOME TAX ACT, 1961. 3(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF .THE CASE, LD. CIT(APPEALS) ERRED IN CONFIRMING FURTHER ALLOCA TION OF INTEREST EXPENDITURE FOR RS.3,24,00,000/- TO THE PO WER UNDERTAKING WITHOUT APPRECIATING THE FACT THAT THE APPELLANT MAINTAINS SEPARATE BOOKS OF ACCOUNT FOR BOTH THE PO WER UNITS AS WELL AS FOR OTHER UNITS AND INTEREST EXPENDITURE ATTRIBUTABLE TO THE POWER UNITS HAS ALREADY BEEN CO NSIDERED IN THE SAID ACCOUNTS. 3(B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND WITHOUT PREJUDICE TO GROUND NO. 3(A) TAKEN HERE -IN-ABOVE, THE LD. CIT(APPEALS) ERRED IN QUANTIFYING RELIEF GR ANTED FOR RS.2.10 CRORE INSTEAD OF RELIEF ACTUALLY GRANTED FO R RS.3.24 CRORE THEREBY RESULTING IN EXCESS DISALLOWANCE OF RS.1,14,00,000/-. 4.0 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(APPEALS) ERRED IN CONFIRMING FURTHER ALLOCA TION OF COMMON EXPENDITURE TO THE TUNE OF RS.37,17,127/- TO THE POWER UNDERTAKING WITHOUT APPRECIATING THE FACT THA T THE SAID EXPENDITURE ARE NOT RELATED TO POWER UNITS. 5(A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(APPEALS) WAS NOT JUSTIFIED AND ERRED IN HOLDING THAT DEPB RECEIPTS WHICH FALLS UNDER SECTION 28(IV) ALSO NEED S TO BE REDUCED FROM THE PROFIT OF THE BUSINESS IN TERMS OF EXPLANATION (BAA) TO SECTION 80HHC 5(B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, AND WITHOUT PREJUDICE TO GROUND NO. 5(A) HERE-IN ABOVE, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN NOT CONSIDERING T HE FACT THAT ONLY PROFITS ON TRANSFER OF DEPB FALLS WITHIN THE A MBIT OF SECTION 28(IIID) OF THE ACT. 6(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) WAS WHOLLY UNJUSTIFIED IN HOLD ING THAT 90% OF INTEREST RECEIVED IS TO BE REDUCED FROM THE 'PROFITS AND I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 6 OF 13 GAINS OF BUSINESS AND PROFESSION TO ARRIVE AT THE 'PROFITS OF THE BUSINESS' FOR COMPUTATION OF DEDUCTION U/S 80HH C. 6(B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND WITHOUT PREJUDICE TO GROUND NO. 6(A) TAKEN HERE -IN-ABOVE, THE LD. CIT(APPEALS) ERRED IN REDUCING 90% OF THE G ROSS INCOME, INSTEAD OF 90% OF THE NET INCOME RECEIVED F ROM INTEREST INCOME IN ORDER TO COMPUTE 'PROFITS OF THE BUSINESS' FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S. 80 HHC. 7.0 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRE D IN CONFIRMING THE LEVY OF INTEREST U/S. 234A TO THE TU NE OF RS.4,88,884/- DESPITE THE FACT THAT THE RETURN FILE D IN PURSUANCE TO NOTICE U/S. 148 WAS WITHIN THE TIME LI MIT AS SPECIFIED IN THE SAID NOTICE. ITA NO. 537/KOL/2008 (REVENUES APPEAL) 1. 'WHETHER UNDER THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, LD.CIT(A) WAS JUSTIFIED IN ALLOWING MARKET V ALUE' AS DEFINED IN SEC. 80IA(8) OF THE I.T. ACT AT THE PRIC E AT WHICH POWER WAS PURCHASED FOR KEB IN PLACE OF THE PRICE A T WHICH THE ASSESSEE SOLD SURPLUS POWER TO CUSTOMERS.' 2. 'WHETHER UNDER THE FACTS AND IN THE CIRCUMSTANCE S OR THE CASE, LD.CIT(A) WAS JUSTIFIED IN REDUCING THE INTER EST EXPENDITURE ALLOCATED BY THE A.O. FOR THE PURPOSE O F COMPUTING PROFIT FOR THE PURPOSE OF DEDUCTION U/S. 80IA, ASSU MING THAT ACCUMULATED PROFIT FROM POWER DIVISION WAS RETAINED IN THE POWER UNIT ITSELF WHEREAS IN THE ACCOUNTS OF THE AS SESSEE COMPANY, SUCH PROFIT WAS NOT SHOWN TO HAVE BEEN SEP ARATELY RETAINED.' 3. 'WHETHER UNDER THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, LD. CIT(A) WAS JUSTIFIED IN ALLOWING MAT CRED IT BEFORE CHARGING OF INTEREST U/S.234B WHEN AS PER THE PRESC RIBED RETURN OF INCOME, THE INTEREST HAS TO BE CHARGED BE FORE ALLOWING THE MAT CREDIT. 5. APROPOS THE ISSUE RAISED IN GROUND NO. 1 OF THE ASSESSEES APPEAL CHALLENGING THE VALIDITY OF ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 147, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE COPY OF REASO NS RECORDED BY THE ASSESSING OFFICER AS PLACED AT PAGE 71 OF HIS PAPER BOOK AND POINTED OUT I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 7 OF 13 THAT THE ASSESSMENT ORIGINALLY COMPLETED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) WAS REOPENED BY THE ASSESSING OFFICE R ON THE BASIS OF THE SAME RECORDS AS WERE AVAILABLE WHILE COMPLETING THE ASSESSMENT ORIGINALLY UNDER SECTION 143(3). HE CONTENDED THAT NO NEW FACT OR NEW MATERIAL HAD COME TO THE POSSESSION OF THE ASSESSIN G OFFICER AFTER COMPLETING THE ASSESSMENT ORIGINALLY UNDER SECTION 143(3), WHICH FORMED THE BASIS OF REOPENING AND THUS THE REOPENING OF AS SESSMENT BY THE ASSESSING OFFICER WAS CLEARLY BASED ON A MERE CHANG E OF OPINION. AS REGARDS THE OBSERVATION MADE BY THE LD. CIT(APPEALS ) IN HIS IMPUGNED ORDER WHILE UPHOLDING THE VALIDITY OF REOPENING THA T THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80 IA WAS NOT EXAMINED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT , THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE RELEVANT AUDI T CERTIFICATE PLACED AT PAGE 1 OF HIS PAPER BOOK AS WELL AS OTHER WORKING D ETAILS GIVEN AT PAGES 22, 23, 26 AND 27 OF THE PAPER BOOK TO SHOW THAT AL L THE MATERIAL PARTICULARS RELEVANT TO ITS CLAIM FOR THE DEDUCTION UNDER SECTION 80IA WERE TRULY AND FULLY FURNISHED BY THE ASSESSEE. HE ALSO INVITED OUR ATTENTION TO THE COPY OF NOTICE ISSUED BY THE ASSES SING OFFICER UNDER SECTION 142(1) OF THE ACT ON 13.01. 2003 (COPY PLAC ED AT PAGE 35 OF THE PAPER BOOK) TO SHOW THAT THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA WAS LOOKED INTO AND EX AMINED BY THE ASSESSING OFFICER WITH PARTICULAR REFERENCE TO THE REALISABLE MARKET VALUE OF POWER. HE CONTENDED THAT THE REOPENING OF ASSESS MENT BY THE ASSESSING OFFICER ON THE SAME ISSUE, WHICH WAS EXAM INED DURING THE ORIGINAL ASSESSMENT WITHOUT THERE BEING ANY NEW MAT ERIAL COMING TO HIS POSSESSION THUS WAS BASED ON A CHANGE OF OPINION, W HICH IS NOT PERMISSIBLE IN LAW AS HELD, INTER ALIA, BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- KELVINATOR OF INDIA LIMITED REPOR TED IN 320 ITR 561 AND BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF D EBASHIS MOULIK VS.- ACIT REPORTED IN 370 ITR 660. HE ALSO INVITED OUR A TTENTION TO A LETTER DATED 23.03.2006 ISSUED BY THE ASSESSING OFFICER (C OPY PLACED AT PAGES 73 I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 8 OF 13 & 74 OF THE PAPER BOOK) AND SUBMITTED THAT EVEN THO UGH THE ASSESSING OFFICER HAS MADE AN ATTEMPT TO FURTHER SUPPORT THE REOPENING OF ASSESSMENT BY GIVING ADDITIONAL REASONS, THE SAME I S NOT PERMISSIBLE IN LAW AND THERE IS NOTHING NEW EVEN IN THE SAID LETTE R TO JUSTIFY THE REOPENING OF ASSESSMENT. HE CONTENDED THAT THE LD. CIT(APPEALS) WHILE UPHOLDING THE VALIDITY OF REOPENING HAS RELIED ON T HE APPELLATE ORDERS PASSED IN ASSESSEES OWN CASE SUBSEQUENTLY, WHICH I S NOT IN ACCORDANCE WITH LAW. HE CONTENDED THAT THESE ORDERS WERE NOT R EFERRED TO BY THE ASSESSING OFFICER IN THE REASONS RECORDED FOR REOPE NING AND THE SAME IN ANY CASE HAVING BEEN PASSED SUBSEQUENTLY WERE NOT A VAILABLE TO THE ASSESSING OFFICER AT THE TIME OF RECORDING THE REAS ONS. 6. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE CLAIM FOR DEDUCTION UNDER SECTION 80IA WAS MADE BY THE ASSESS EE IN THE RETURN OF INCOME BY TAKING INTO CONSIDERATION THE VALUE OF PO WER UNIT TRANSFERRED TO ITS OTHER BUSINESS AT THE RATE HIGHER THAN THE M ARKET RATE IN CLEAR VIOLATION OF THE PROVISIONS OF SUB-SECTION 8 OF SEC TION 80IA AND BY ALLOWING THE SAID CLAIM, THERE WAS A MISTAKE THAT H AD BEEN COMMITTED BY THE ASSESSING OFFICER IN ALLOWING EXCESSIVE DEDUCTI ON TO THE ASSESSEE UNDER SECTION 80IA RESULTING IN TO ESCAPEMENT OF IN COME. HE CONTENDED THAT THERE WAS THUS A VALID REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT, WHICH FULLY JUSTIF IED THE REOPENING OF ASSESSMENT UNDER SECTION 147 READ WITH SECTION 148. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F KALYANJI MAVJI & CO. VS.- CIT REPORTED IN 102 ITR 287, HE CONTENDED THA T THE TAX PAYER CANNOT TAKE ADVANTAGE OF THE MISTAKES COMMITTED BY THE AUT HORITY. HE, THEREFORE, STRONGLY RELIED ON THE IMPUGNED ORDER OF THE LD. CI T(APPEALS) UPHOLDING THE VALIDITY OF ASSESSMENT MADE BY THE ASSESSING OF FICER UNDER SECTION 143(3) READ WITH SECTION 147 AND READ OUT THE REASO NS GIVEN BY THE LD. CIT(APPEALS) IN PARAGRAPHS NO. 5 TO 7 OF HIS IMPUGN ED ORDER FOR UPHOLDING THE VALIDITY OF THE ORDER OF THE ASSESSIN G OFFICER. I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 9 OF 13 7. IN HIS REJOINDER, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE SCOPE AND REQUIREMENT OF SECTION 147/ 148 ARE SPECI FIC AND EVERY MISTAKE COMMITTED BY THE ASSESSING OFFICER CANNOT BE CORREC TED BY RECOURSE OF THE SAID PROVISION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN ORDER TO APPRECIATE THE STAND TAKEN BY BOTH THE SIDES ON THE PRELIMINARY ISSUE RA ISED IN THIS CASE REGARDING THE VALIDITY OF REOPENING OF ASSESSMENT B Y THE ASSESSING OFFICER, IT IS RELEVANT TO REFER TO THE REASONS REC ORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT, WHICH ARE AS UNDER:- VIDE THE ASSESSMENT ORDER U/S. 143(3) FOR THE CAPT IONED YEAR, DEDUCTION U/S. 801A HAS BEEN GRANTED AT RS.13,86,09 ,898/- IN COMPUTING THE TOTAL INCOME CHARGEABLE TO TAX UNDER THE REGULAR PROVISIONS OF THE ACT. FROM THE RECORDS IT CAN BE SEEN THAT THE SAID DEDUCTION HAS BEEN COMPUTED CONSIDERI NG THE SALE PRICE IN RESPECT OF POWER SOLD BY THE COMPANY' TO OUTSIDERS AT RS.3.42 PER UNIT AND IN RESPECT OF THE POWER TRANSFERRED TO OTHER UNIT OF THE COMPANY AT RS.4.35 PER UNIT. UNDER THE PROVISIONS OF SECTION 80IA(8) DEDUCTION U /S 80IA IN CASE OF GOODS TRANSFERRED TO OTHER BUSINESS CARRIED OUT BY THE ASSESSEE HAS TO COMPUTED CONSIDERING SUCH TRANSFER AT THE MARKET VALUE OF SUCH GOODS ON THE DATE OF TRANSFER. BY CONSIDERING THE RATE OF TRANSFER OF POWER AT THE RS .4.35 PER UNIT INSTEAD OF RS.3.42 PER UNIT IN CASE OF POWER T RANSFERRED TO OTHER UNITS OF THE ASSESSEE, THE ASSESSEE HAS CLAIM ED HIGHER DEDUCTION U/S. 80IA OF THE ACT. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN SO FAR AS DEDUCTION U/S. 80IA HAS BEEN GRANTED AT A HIGHER VA LUE THAN ACTUALLY ALLOWABLE AS PER ACT. HENCE, REASSESSMENT PROCEEDINGS U/S. 147 HAS BEEN INITIATED AND NOTICE U/S. 148 DATED 14.03.2005 IS ISSUED. IT IS MANIFEST FROM THE REASONS RECORDED BY THE ASS ESSING OFFICER FOR REOPENING THE ASSESSMENT THAT THE ASSESSMENT ORIGIN ALLY COMPLETED UNDER SECTION 143(3) WAS REOPENED BY THE ASSESSING OFFICE R ON THE BASIS OF THE SAME RECORDS AS WAS AVAILABLE BEFORE HIM WHILE COMP LETING THE ORIGINAL I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 10 OF 13 ASSESSMENT UNDER SECTION 143(3) AND THERE WAS NO NE W MATERIAL THAT HAD COME TO HIS POSSESSION ON THE BASIS OF WHICH THE AS SESSMENT WAS REOPENED BY HIM. THE LD. CIT(APPEALS) IN HIS IMPUGN ED ORDER AND THE LD. D.R. AT THE TIME OF HEARING BEFORE US HAS NOT DISPU TED THIS POSITION. THE LD. CIT(APPEALS) WHILE UPHOLDING THE VALIDITY OF RE OPENING HAS RELIED ON THE ASSESSMENT ORDER PASSED IN ASSESSEES OWN CASE FOR A.Y. 2003-04 AS WELL AS THE ORDER OF THE TRIBUNAL PASSED IN ASSESSE ES OWN CASE FOR A.YS. 1999-2000 AND 2001-02 WHEREIN THE SIMILAR ISSUE REL ATING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA W AS DECIDED AGAINST THE ASSESSEE ON MERIT. HOWEVER, AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, ASSESSMENT ORDER FOR A.Y. 2003-04 WAS PASSED ON 28.02.2006, WHILE THE ITATS ORDER FOR A.YS. 1999-2 000 AND 2001-02 WAS PASSED ON 06.12.2007 AND THE BENEFIT OF THE SAME, T HEREFORE, WAS NOT AVAILABLE TO THE ASSESSING OFFICER WHILE RECORDING THE REASONS ON 24.03.2005. THE SAID ORDER THUS CONSTITUTED EXTERIO R MATERIAL THAT WAS NOT EVEN AVAILABLE TO THE ASSESSING OFFICER AT THE TIME OF RECORDING THE REASONS FOR REOPENING AND WE FIND MERIT IN THE CONT ENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAME COULD NOT BE RELIED UPON TO UPHOLD THE VALIDITY OF REOPENING OF ASSESSMENT MADE EARLIE R ON 24.03.2005. 9. WHILE REJECTING THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE WHILE CHALLENGING THE VALIDITY OF REOPENING ON THE GROUND THAT THE SAME WAS BASED ON A MERE CHANGE OF OPINION, THE LD. CIT( APPEALS) IN HIS IMPUGNED ORDER HAS OBSERVED THAT THE PERUSAL OF ASS ESSMENT RECORDS SHOWS THAT NO QUERIES WERE RAISED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE ISSUE RELAT ING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA. HOWEVER, AS DEMONSTRATED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US ON THE BASIS OF RELEVANT MATERIAL PLACED ON RECORD IN HIS PAPER BOOK THAT THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDE R SECTION 80IA WAS NOT ONLY EXAMINED BY THE ASSESSING OFFICER BUT A SPECIF IC QUERY IN THIS I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 11 OF 13 CONTEXT WAS RAISED BY HIM VIDE NOTICE DATED 13.01.2 003 (COPY PLACED AT PAGE NO. 26 OF THE PAPER BOOK) ISSUED UNDER SECTION 142(1) OF THE ACT REQUIRING THE ASSESSEE TO EXPLAIN THE BASIS OF REAL ISABLE MARKET VALUE OF POWER ADOPTED BY THE ASSESSEE. IN OUR OPINION, IT, THEREFORE, CANNOT BE SAID THAT NO QUERY WAS RAISED BY THE ASSESSING OFFI CER ON THIS ISSUE. ON THE OTHER HAND, THE RELEVANT MATERIAL PLACED ON REC ORD BY THE ASSESSEE SHOWS THAT THIS ISSUE WAS SPECIFICALLY EXAMINED BY THE ASSESSING OFFICER AND ON SUCH EXAMINATION, THE CLAIM OF THE ASSESSEE WAS CONSIDERED AND ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3) PARTLY. 10. IN THE CASE OF CIT VS.- KELVINATOR OF INDIA LI MITED REPORTED IN 320 ITR 561 CITED BY THE LD. COUNSEL FOR THE ASSESSEE, THE HONBLE SUPREME COURT HAS HELD THAT AFTER THE AMENDMENT MADE IN SECTION 147 W.E.F. APRI L 01, 1989, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THA T THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION . IT WAS HELD THAT THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS A N IN-BUILT TEST TO CHECK THE ABUSE OF POWER AND HENCE THE ASSESSING OFFICER EVEN AFTER APRIL 01, 1989 HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED TH ERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. 11. IN THE CASE OF DEBASHIS MOULIK VS.- ACIT REPOR TED IN 370 ITR 660, ALL INFORMATION, DOCUMENTS AND OTHER RECORDS RELATI NG TO THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR WERE PLACED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 14 3(3) AND THE ASSESSMENT COMPLETED UNDER SECTION 143(3) WAS SOUGH T TO BE REOPENED BY THE ASSESSING OFFICER ON THE BASIS OF NEW FACTS DISCOVERED FROM THE EXISTING RECORDS AND IN THESE FACTS AND CIRCUMSTANC ES OF THAT CASE, IT WAS HELD BY THE HONBLE CALCUTTA HIGH COURT THAT THE AS SESSMENT WAS I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 12 OF 13 REOPENED BY THE ASSESSING OFFICER MERELY ON THE BAS IS OF CHANGE OF OPINION, WHICH WAS NOT PERMISSIBLE IN LAW. 12. AS ALREADY NOTED BY US, THERE WAS NO NEW MATERI AL THAT HAD COME TO THE POSSESSION OF THE ASSESSING OFFICER AND SINCE T HE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3) WAS REOPE NED BY HIM ON THE BASIS OF SAME MATERIAL, WHICH WAS AVAILABLE AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT UNDER SECTION 143(3), WE ARE OF THE VIEW THAT THE REOPENING OF ASSESSMENT MADE BY THE ASSESSING OFFIC ER MERELY ON THE BASIS OF CHANGE OF OPINION WAS BAD IN LAW. AS REGAR DS THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KALYANJI MAVJI & CO. (SUPRA) CITED BY THE LD. D.R., WE FIND THAT THE SAME ACTUALLY SUP PORTS THE CASE OF THE ASSESSEE AS IT WAS FINALLY HELD THEREIN BY THE HON BLE SUPREME COURT THAT WHERE THE INCOME TAX OFFICER GETS NO SUBSEQUENT IN FORMATION BUT MERELY PROCEEDS TO REOPEN THE ORIGINAL ASSESSMENT WITHOUT ANY FRESH FACT OR MATERIAL, THE REOPENING WOULD BAD IN LAW . AS SUCH TAKING INTO CONSIDERATION THE RELEVANT FACTS OF THE CASE AS WEL L AS THE LEGAL POSITION EMANATING FROM THE JUDICIAL PRONOUNCEMENTS DISCUSSE D ABOVE, WE ARE OF THE VIEW THAT THE REOPENING OF ASSESSMENT BY THE AS SESSING OFFICER IN THE PRESENT CASE ITSELF WAS BAD IN LAW AND THE ASSESSME NT COMPUTED BY HIM UNDER SECTION 143(3) READ WITH SECTION 147 IN PURSU ANCE THEREOF IS INVALID, WHICH IS LIABLE TO BE CANCELLED. WE ORDER ACCORDINGLY AND ALLOW GROUND NO. 1 OF THE ASSESSEES APPEAL. 13. KEEPING IN VIEW OUR DECISION RENDERED ABOVE ON THE PRELIMINARY ISSUE HOLDING THAT THE ASSESSMENT MADE BY THE ASSES SING OFFICER UNDER SECTION 143(3) READ WITH SECTION 147 IS LIABLE TO B E CANCELLED BEING BAD IN LAW, THE OTHER ISSUES RAISED IN THE APPEAL OF THE A SSESSEE AS WELL AS IN THE APPEAL OF THE REVENUE RELATING TO THE ADDITIONS/ DI SALLOWANCES MADE IN THE SAID ASSESSMENT HAVE BECOME INFRUCTUOUS AND WE DO NOT CONSIDER IT NECESSARY OR EXPEDIENT TO ADJUDICATE UPON THE SAME. I.T.A. NO. 398/KOL./2008 ASSESSMENT YEAR: 2000-2001 & I.T.A. NO. 537/KOL/2008 ASSESSMENT YEAR : 2000-2001 PAGE 13 OF 13 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED AS INDICATED ABOVE AND THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 08, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 8 TH DAY OF JANUARY, 2016 COPIES TO : (1) GRAPHITE INDIA LIMITED, 31, CHOWRINGHEE ROAD, KOLKATA-700 016 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XI, KOLKA TA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.