DCIT, Circle - 11, Kolkata, Kolkata V. M/s. Anirox Pigments Ltd., Kolkata

ITA 454/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4652 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-08-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 26-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DULAL CHAND MANDAL
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 80HHC; 147; 148; 139

Judgement Text

ITA NO.454 /KOL/2012 M/S. ANIROX PIGMENTS LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C, KOLKATA (BEFORE SHRI N.V.VASUDEVAN, J.M. &DR.A.L.SAINI, A.M .) ITA NO. 454/KOL/2012 : ASSTT. YEAR : 1998-9 9 D.C.I.T., CIRCLE-11, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069 VS M/S. ANIROX PIGMENTS LTD., 7/1, LORD SINHA ROAD, KOL-69 PAN: AACCA 3928L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DULAL CHAND MANDAL, JCIT, SR .DR RESPONDENT BY: NONE DATE OF HEARING : 01.08.2016 DATE OF PRONOUNCEMENT :-10/8/16 ORDER PER DR. A.L.SAINI, A.M .: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAININ G TO ASSESSMENT YEAR 1998-99, IS DIRECTED AGAINST THE ORDER PASSED BY TH E LD. COMMISSIONER OF INCOME- TAX (A) -XIX, KOLKATA IN APPEAL NO.102/CIT(A)-XIX/D CIT, CIR-11/KOL/11-12 DATED 04/11/2011, WHICH IN TURN ARISES OUT OF AN OR DER PASSED BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), DATED 28/02/ 2006. 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUEREAD A S UNDER: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROCEEDINGS U/S 147 W AS BAD IN LAW. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN NOT ADJUDICATING ON THE DISALLOWANCE O F ASSESSEES CLAIM OF DEDUCTION U/S. 80-IA. ITA NO.454 /KOL/2012 M/S. ANIROX PIGMENTS LTD. 2 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN NOT ADJUDICATING ON THE DISALLOWANCE O F ASSESSEES CLAIM OF DEDUCTION U/S.80HHC AMOUNTING TO RS.2,22,73,949/ - WITHOUT EXCLUDING EXPORT INCENTIVE OF RS.75,08,792/- RECEIV ED AS SUPPORTING MANUFACTURER AS SHARE OF DUTY ENTITLEMENT PASS BOOK SCHEME FOR EXPORT OF GOODS THROUGH M/S. PRIYA CHEMICALS. 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE F IRST GROUND RELATES TO VALIDITY OF REOPENING OF ASSESSMENT PROCEEDINGS UNDER SECTION 1 47 OF THE ACT. THE ASSESSMENT FOR ASSESSMENT YEAR 1998-99 WAS COMPLETED UNDER SEC TION 143(3) ON 21 ST MARCH, 2001 AND INCOME WAS ASSESSED AT RS.13,35,280/- AND TAX OF RS.18,81,019/- WAS LEVIED UNDER SECTION 115JA ON A TOTAL INCOME OF RS. 53,74,340/-. THE DEDUCTION WAS ALLOWED UNDER SECTION 80HHC FOR RS.2,22,73,949/- AN D UNDER SECTION 80-IA FOR RS.70,08,516/-. THE ASSESSMENT WAS RE-OPENED UNDER SECTION 148 AS THERE WAS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE FOLLOWING REASONS: (1) EXPORT INCENTIVE OF RS,75,08,792/- WAS ALLOWED IN COMPUTATION OF DEDUCTION U/S,80HHC RECEIVED BY THE ASSESSEE AS A SUPPORTING MANUFACTURER HAS SHARE OF DEPB SCHEME OF THE CENTRA L GOVT. FOR EXPORT OF GOODS MANUFACTURING BY THE ASSESSEE THROU GH M/S. PRIYA CHEMICALS. AS THE ASSESSEE HAS SUPPORTING MANUFACTU RER, THE DEDUCTION ON DEPB SCHEME IS NOT ALLOWABLE, AND LEA D TO EXCESS DEDUCTION OF RS.48,41,040/-. (2) DEDUCTION U/S.80-IA WAS ALLOWED FOR COMMERCIAL PRODUCTION OF BLACK IRON OXIDE FROM THE BYE-PRODUCE IRON-SLUDGE O BTAINING THE PROCESS FROM ANILINE MANUFACTURING IN THE ASSESSEE' S ANILINE PLANE SINCE THE CONVERSION OF IRON SLUDGE INTO BLACK IRON OXIDE DID NOT CONSTITUTE ANY MANUFACTURING ACTIVITY AND DEDUCTION OF RS.70,08,516/- WAS ALLOWED IN EXCESS. 3.1 THE REASSESSMENT WAS COMPLETED BY THE AO BY MAK ING THE DISALLOWANCE UNDER SECTION 80-HHC AT RS. RS.48,41,040/- AND U/S 80-IA RS.70,08,516. AGGRIEVED FROM THE ORDER OF THE AO, THE ASSESSEE FI LED AN APPEAL BEFORE THE LD. ITA NO.454 /KOL/2012 M/S. ANIROX PIGMENTS LTD. 3 COMMISSIONER OF INCOME-TAX, KOLKATA-XIX, WHO HAS HE LD THAT REOPENING OF ASSESSMENT U/S 147 IS NOT VALID AND CONSEQUENTLY DE LETED THE ADDITION. NOT BEING SATISFIED WITH THE ORDER OF THE LD. CIT(A), THE REV ENUE IS IN FURTHER APPEAL BEFORE US. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE, EVEN TH OUGH NOTICE OF HEARING WAS SENT TO IT BY REGISTERED POST ON MORE THAN ONE OCCA SION. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX PARTE . 5. THE LD. DR FOR THE REVENUE HAS STATED THAT THE L D. CIT(A) HAS ERRED IN HOLDING THAT THE PROCEEDING UNDER SECTION 147 OF TH E ACT WAS BAD IN LAW IN SPITE OF VALID REASONS RECORDED BY THE AO. THE LD. DR FURTHE R STATED THAT THE ASSESSEE IS A SUPPORTING MANUFACTURER, THEREFORE, THE DEDUCTION O N DEPB SCHEME IS NOT ALLOWABLE AND THE ASSESSEE HAS CLAIMED EXCESS DEDUC TION UNDER SECTION 80-HHC AT RS.48,41,040/-. HE ALSO STATED THAT THE DEDUCTION U NDER SECTION 80-IA AT RS.70,08,516/- WAS ALLOWED IN EXCESS AS THE ASSESSE ES ACTIVITIES DO NOT FALL WITHIN THE DEFINITION OF MANUFACTURING ACTIVITY. THEREFORE , THE INCOME HAS ESCAPED ASSESSMENT AND REOPENING UNDER SECTION 147 IS VALID . 6. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E ORDER PASSED BY THE LD. CIT(A) AND NOTICED THAT ORIGINAL ASSESSMENT WAS COM PLETED UNDER SECTION 143(3) OF THE ACT ON 21.03.2001 WHICH WAS REOPENED BY ISSU ING NOTICE UNDER SECTION 148 ON DATED 31.12.2004 FOR THE REASON THAT THE DEDUCTI ON UNDER SECTION 80-HHC WAS ALLOWED IN EXCESS AND THE ASSESSEE COMPANY IS NOT E NTITLED FOR DEDUCTION UNDER SECTION 80-IA, WHICH WAS ALLOWED IN THE ORIGINAL OR DER UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE COMPANY STATED BEFORE THE LD.CIT( A) THAT THE PROCEEDINGS UNDER SECTION 147 ON ACCOUNT OF CLAIMS ALLOWED UNDER SECT ION 80-HHC AND 80-IA OF THE ACT HAS BEEN INITIATED ON MERELY CHANGE OF OPINION AND ARE NOT ON THE BASIS OF ANY ITA NO.454 /KOL/2012 M/S. ANIROX PIGMENTS LTD. 4 INFORMATION OR ON ACCOUNT OF FAILURE TO FILE FULL A ND TRUE PARTICULARS BY THE ASSESSEE COMPANY. IT WAS SUBMITTED BEFORE THE AO THAT THE AS SESSEES CLAIM UNDER SECTION 80-IA WAS ALLOWED FROM ASSESSMENT YEAR 1995-96 TO 2 000-01. FOR THE FIRST TIME, THE CLAIM OF THE ASSESSEE WAS DISALLOWED IN ASSESSM ENT YEAR 2001-02 AND THEREAFTER THE ASSESSMENT FOR ASSESSMENT YEAR 2000-01 WAS REOP ENED TO WITHHOLD THE CLAIM UNDER SECTION 80-IB OF THE ACT. FOR THESE TWO YEARS , THE ASSESSEE PREFERRED APPEALS BEFORE THE LD. CIT-X, KOLKATA, WHO ALLOWED THE APPE ALS OF THE ASSESSEE VIDE HIS ORDER DATED 18.04.2005 FOR ASSESSMENT YEAR 2000-01 AND DATED 04.10.2004 FOR THE ASSESSMENT YEAR 2001-02. THE DEPARTMENT PREFERRED A SECOND APPEAL BEFORE THE HONBLE ITAT, KOLKATA WHO DISMISSED THE APPEAL OF T HE DEPARTMENT FOR BOTH THE YEARS AND HAS UPHELD THE DECISION OF THE CIT(A) IN RESPECT OF THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IA. 6.1 FURTHER, THE CLAIM OF THE ASSESSEE BEING THE SU PPORTING MANUFACTURER IS ALLOWABLE IN VIEW OF THE DECISION OF THE ITAT IN CA SE OF EASTERN LEATHER PRODUCTS PVT. LTD. VS- DCIT IN 65 TTJ 603. IT WAS CONTENDE D BY THE ASSESSEE BEFORE THE AO THAT THE PROCEEDINGS UNDER SECTION 147 CANNOT BE INITIATED FOR ASSESSMENT YEAR 1998-99 BECAUSE THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AND AS PER THE FIRST PROVISO TO SECTION 147, NO ACT ION SHALL BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSME NT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER SECTION 139 OR IN RESPONSE TO NOTICE ISSUED UNDER SECTION 142(1) OR SECTION 1 48 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, FOR TH AT ASSESSMENT YEAR. IN THE CASE OF THE ASSESSEE UNDER CONSIDERATION, NONE OF THE CONDI TIONS IS SATISFIED AND HENCE, THE ASSESSMENT CANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. ITA NO.454 /KOL/2012 M/S. ANIROX PIGMENTS LTD. 5 7. WE HAVE GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE AND HEARD THE LD. DEPARTMENTAL REPRESENTATIVE. WE NOTICED THAT THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE BEFORE THE LD. CIT(A), AS THE PROPOSIT IONS CANVASSED BY THE ASSESSEE ARE SUPPORTED BY THE FACTS CITED ABOVE. IT IS CLEAR THAT THE AO WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT , AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR BECAUSE THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AND THE A O WAS NOT ABLE TO BRING ANY MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE COMPA NY HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSME NT. THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE AO AFTER CONSIDERING ALL THE MATER IAL FACTS AND THE CLAIMS UNDER SECTION 80-HHC AND 80-IA OF THE ACT WAS ALLOWED BY HIM BEING SATISFIED WITH THE CLAIMS OF THE ASSESSEE ON THE BASIS OF THE CERTIFIC ATE ISSUED BY THE CHARTERED ACCOUNTANT IN THE PRESCRIBED FORMS AND ENCLOSED WIT H THE RETURN OF INCOME. THEREFORE, BASED ON THE ABOVE CITED FACTS AND CIRCU MSTANCES, WE DO NOT HESITATE TO DISMISS THE APPEAL FILED BY THE REVENUE. 8. SINCE THE APPEAL IS DISMISSED ON LEGAL GROUND CI TED ABOVE, THEREFORE, GROUNDS OF APPEAL NOS. 2 AND 3 RAISED BY THE REVENUE ARE NO T ADJUDICATED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.8.2016 SD/- SD/- (N.V.VASUDEVAN) (DR. A.L.SAINI) JUDICIALMEMBER ACCOUNTANT MEMBER DATED: 10/8/2016 TALUKDAR (SR.PS) ITA NO.454 /KOL/2012 M/S. ANIROX PIGMENTS LTD. 6 COPY OF THE ORDER FORWARDED TO: 1. REVENUE 2 ASSESSEE 3. THE CIT-I, 4. THE CIT (A)-I, 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES