Claas India Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4644/DEL/2009

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6890 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 09-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Difference of opinion; Condonation of delay; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE : JUDICIAL MEMBER ITA NO. 4644/DEL/2009 U/S 2001-02 CLAAS INDIA PVT. LTD., VS. ACIT CIRCLE 3(1), [FORMERLY KNOWN AS ESCORTS NEW DELHI. CLAAS LTD.], A-39, FIRST FLOOR, NEW FRIENDS COLONY, NEW DELHI. 110025 PAN: AAACE 0762 A (APPELLANT) ( RESPONDENT) APPELLANT BY : SHRI ALKESH BABBAR CA RESPONDENT : SHRI ANIL KUMAR SAROHA SR. DR DATE OF HEARING : 14/09/2016. DATE OF ORDER : 20/09/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 1 1.05.2009 PASSED BY THE LD. CIT(APPEALS)-VI, NEW DELHI IN APPEAL NO. 68 /08-09 RELATING TO AY 2001-02. 2 2. AT THE OUTSET WE MAY POINT OUT THAT AS PER REGI STRYS REPORT, THERE WAS DELAY OF 111 DAYS IN FILING THE APPEAL BEFORE THE I TAT. THE ASSESSEE IN ITS APPLICATION DATED 4.12.2009 FOR CONDONATION OF DELA Y SUBMITTED AS UNDER: DECEMBER 4.2009 THE HON'BLE MEMBER INCOME TAX APPELLATE TRIBUNAL 10 TH FLOOR, LOK AYAK BHAWAN KHAN MARKET NEW DELHI 110003 DEAR SIR, RE: CONDONATION OF DELAY - APPEAL FOR ASSESSMENT YE AR 2001- 02 THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VI, NEW DELHI WAS PASSED ON 11.5.2009 A ND WAS RECEIVED BY THE ASSESSEE IN JUNE 2009. THE ASSESSEE DECIDED NOT TO FILE THE APPEAL IN VIEW OF CONFLICTING JUDGMENTS OF THE COURTS. THE APPEAL IS BEING FILED NOW AS A RESULT OF A FAVOURABLE JUDGMENT OF THE DELHI HIGH C OURT DATED 18TH AUGUST, 2009 REPORTED IN 318 ITR 295. IT HAS B EEN PUBLISHED IN PART 3 DATED 9TH NOVEMBER, 2009. THE CASE OF THE ASSESSEE IS EXACTLY SIMILAR TO THE ABOVEMENTIONED CASE DECIDED BY THE DELHI HIGH COURT . AS SUCH, THE ABOVE JUDGMENT FULLY APPLIES TO THE ASSES SEE. IT LAYS DOWN THAT THE NOTICE ISSUED U/S 148 IS NOT VALID AS THE ACTION TAKEN BY THE ASSESSING OFFICER AMOUNTED TO C HANGE OF OPINION. IT IS HUMBLY REQUESTED THAT THE DELAY IN FILING THE APPEAL BE KINDLY CONDONED IN THE LIGHT OF ABOVE. 3 THANKING YOU, YOURS FAITHFULLY, FOR CLAAS INDIA PRIVATE LIMITED 2.1. IN SUPPORT OF AFOREMENTIONED CONTENTION THE A SSESSEE ALSO FILED AFFIDAVIT OF PRADEEP KUMAR MALIK, MANAGING DIRECTOR OF THE COMPANY, AS UNDER: I, PRADEEP KUMAR MALIK DO HEREBY SOLEMNLY AFFIRM AN D DECLARE AS UNDER: 1. THAT THE ORDER OF CIT (APPEAL) - VI FOR ASSESSME NT YEAR 2001-02 RELATING TO PROCEEDINGS INITIATED U/S 147 O F THE INCOME TAX ACT, 1961 WAS RECEIVED IN MAY, 2009 BY THE ASSE SSEE. 2. THAT THE ISSUE ON WHICH THE CASE WAS REOPENED WA S IN REGARD TO RELIEFS U/S 80-HHC AND U/S 80-1 B OF THE INCOME TAX ACT, 1961 HAVING BEEN GIVEN BY THE ASSESSING OFFICER ON THE SAME PROFIT FIGURE INSTEAD OF SECTION 80-HHC RELIEF BEIN G GIVEN ON PROFITS REMAINING AFTER GRANTING THE DEDUCTION U/S 80-18 OF THE ACT. 3. THAT THE ASSESSEE WAS ADVISED ON 22ND JUNE 2009 THAT NO APPEAL BE FILED TO ITAT AS THE FAVOURABLE HIGH COUR T DECISIONS ON THE ISSUE INVOLVED HAD BEEN REVERSED BY AN ITAT DECISION IN WHICH THE AMENDMENT TO THE ACT HAD BEEN FULLY DISCU SSED AND THAT THE SAID AMENDMENT HAD NOT BEEN GONE INTO BY T HE HIGH COURTS 4. THAT IN EARLY DECEMBER, 2009, THE ASSESSEE WAS I NFORMED THAT A DELHI HIGH COURT DECISION IN THE CASE OF CAR LTON OVERSEAS PRIVATE LIMITED [31 R ITR 2951 HAD BEEN RE PORTED WHICH FULLY APPLIED TO THE CASE OF THE ASSESSEE AND THEREFORE THE ASSESSEE WAS ADVISED TO FILE ALL APPEAL TO THE HON' BLE ITAT. THE SAID JUDGMENT WAS PUBLISHED IN PART 3 OF 318 ITR ON 9 TH NOVEMBER, 2009. 4 5. THAT THE ASSESSEE THEREAFTER, WITHOUT ANY LOSS O F TIME FILED THE APPEAL ON 9TH DECEMBER, 2009 WITH AN APPL ICATION FOR CONDONATION OF DELAY. 2.2. IN REPLY, LD. DR FILED WRITTEN SUBMISSIONS STA TING THAT THERE WAS NO REASONABLE CAUSE FOR CONDONATION OF DELAY. LD. DR H AS ALSO RELIED ON VARIOUS CASE LAWS AS MENTIONED IN THE WRITTEN SUBMISSIONS. 2.3. HAVING CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE OPINION THAT SINCE DELAY IN FILING THE APPEAL WAS ON ACCOUN T OF LEGAL ADVICE, THEREFORE, THERE BEING REASONABLE CAUSE FOR THE DELAY, WE CONDONE TH E DELAY IN FILING THE APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED RETURN OF INCOME DECLARING INCOME OF RS. 8,10,12,600/-. REGULAR ASSE SSMENT U/S 143(3) WAS COMPLETED ON 24.2.2004 AT AN INCOME OF RS. 8,91,11, 357/-. SUBSEQUENTLY, THE AO NOTICED THAT ASSESSEE HAD CLAIMED AND WAS AL LOWED DEDUCTION OF RS. 3,02,00,144/- U/S 80IA ON THE TOTAL PROFIT OF BUSIN ESS OF RS. 126557837/- AND FURTHER CLAIMED AND WAS ALLOWED DEDUCTION OF RS. 70,73,012/- U/S 80HHC ON THE SAME PROFIT OF BUSINESS OF RS. 3,02,00,144/- WITHOUT REDUCING THE PROFIT BY RS. 3,02,00,144/-, ATTRIBUTED TO MANUFACT URING BUSINESS. HE NOTED THAT U/S 80IA(9) OF THE I.T. ACT, IT WAS PROVIDED T HAT W.E.F. AY 1999-2000 WHERE ANY AMOUNT OF PROFITS AND GAINS OF AN INDUSTR IAL UNDERTAKING OR ENTERPRISE IN THE CASE OF AN ASSESSEE WAS CLAIMED AND ALLOWED UNDER ANY OTHER PROVISIONS OF CHAPTER VI-A UNDER THE HEADING C-DEDUCTIONS IN 5 RESPECT OF CERTAIN INCOMES AND IN NO CASE WOULD EXCEED THE ELIGIBLE PROFIT OF THE INDUSTRIAL UNDERTAKING OR ENTERPRISES, AS TH E CASE MAY BE. HE, THEREFORE, CONCLUDED THAT DEDUCTION U/S 80HHC HAD B EEN EXCESS CLAIMED AND ALLOWED. ACCORDINGLY, THE CASE WAS REOPENED U/S 147 , AFTER RECORDING REASONS AND AFTER OBTAINING APPROVAL FROM COMMISSIO NER. THE ASSESSMENT WAS, ACCORDINGLY, COMPLETED AT A TOTAL INCOME OF RS . 9,08,21,207/-. LD. CIT(A) CONFIRMED THE ACTION OF AO. AGGRIEVED, THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX [APP EALS] VI HAS GROSSLY ERRED IN LAW AND ON FACTS. (A) IN CONFIRMING THE ORDER PASSED U/S 147 OF THE I NCOME TAX ACT BY THE ASSESSING OFFICER THOUGH THE ASSESSE E HAD TAKEN THE GROUND THAT THE ORDER PASSED U/S 147 IS B AD IN LAW AND ON FACTS. (B) IN NOT QUASHING THE ORDER OF' THE ASSESSING OFF ICER U/S 147 WHEN NO NEW FACTS HAD COME ON RECORD AND THE NOTICE MERELY BASED ON CHANGE OF OPINION ON THE BAS IS OF THE SAME MATERIAL WHICH WAS ALREADY AVAILABLE WITH THE ASSESSING OFFICER AT THE LIME OF MAKING THE INITIAL ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT. 1961. 2. THAT ANY CONSEQUENTIAL RELIEF TO WHICH THE ASSES SEE MAY BE ENTITLED UNDER THE FOREGOING GROUNDS OF APPEAL MAY BE KINDLY GRANTED TO THE ASSESSEE. 6 4. AT THE OUTSET LD. COUNSEL SUBMITTED THAT UNDER T HE GIVEN FACTS THE REASSESSMENT PROCEEDINGS CANNOT BE INITIATED BECAUS E IT AMOUNTS TO CHANGE OF OPINION. HE POINTED OUT THAT THE ISSUE OF SIMULT ANEOUS CLAIM OF DEDUCTION U/S 80HHC AND U/S 80IA OF THE ACT AND SUBSEQUENT RE OPENING OF THE ASSESSMENT HAS BEEN DEALT BY THE HONBLE DELHI HIGH COURT IN A NUMBER OF CASES AND THE COURT HAS HELD AS UNDER: CARLTON OVERSEAS PVT. LTD. [318 ITR 295]- THE CASE WAS 100% SIMILAR TO THAT OF THE APPELLANT. HOWEVER, IN THIS CASE A WRIT WAS FILED. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTIONS 80HHC AND 80-IB. ASSESSING OFFICER AFTER MAKING NECESSARY QUERIES PASSED AN ORDER OF ASSESSMENT ALLOWING DEDUCTIONS CLAIMED. SUBSEQUENTLY, ON THE BASIS OF AN OBJECTION OF AUDIT PARTY, HE ISSUED A NOTICE UNDER SECTION 147/148 TO ASSESSEE ON THE GROUND THAT DEDU CTION ALLOWED TO IT UNDER SECTION 80-IA WAS NOT DEDUCTED FROM PROFIT OF BUSINESS FOR PURPOSE OF CALCULATING DEDUCTION UNDER SECTION 80HH C. THE COURT HELD THAT IT IS SETTLED LAW THAT MERE CHA NGE OF OPINION CANNOT FORM THE BASIS FOR ISSUING OF A NOTICE UNDER SECTION 147/148 OF THE ACT AND THE COURT QUASHED THE NOTICE ISSUED U/S 148 ON THE GROUND THAT IT CONSTITUTED CHANGE OF OPINION. DATE OF DECI SION: AUGUST 9, 2009 II. . SATNAM OVERSEAS [329 ITR 237] - THE COURT HE LD THAT NEW OPINION FORMED BY THE AO BASED ON THE EXISTING FACT S WAS NOTHING BUT A CHANGE OF OPINION AND WAS NOT A VALID GROUND FOR REASSESSMENT. THIS CASE IS ALSO SIMILAR TO THE CASE OF THE APPELL ANT. DATE OF DECISION: DECEMBER 11, 2009 III. RAJKUMAR MAHAJAN [340 ITR 570] - THE ASSSESSE E CLAIMED DEDUCTION UNDER SECTIONS 80HHC AND 80-IALIB. SUBSEQ UENTLY, ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 O N THE GROUND THAT ASSESSEE HAD CLAIMED EXCESS DEDUCTION UNDER SECTION 80HHC THE COURT HELD THAT REASSESSMENT ON THE GROUND OF DEDUC TION U/S 80 7 HHC/80 IA WRONGLY CLAIMED WAS NOTHING BUT A CHANGE OF OPINION AND WAS NOT A VALID GROUND FOR REASSESSMENT. THIS CASE IS ALSO SIMILAR TO THE CASE OF THE APPELLANT. DATE OF DECISION: JANUAR Y 4, 2012 IV. PUROLATOR INDIA LTD. [343 ITR 155] THE ASSESS MENT WAS COMPLETED UNDER SECTION 143(3) . SUBSEQUENTLY, REAS SESSMENT PROCEEDINGS WERE INITIATED AFTER EXPIRY OF FOUR YEA RS FROM END OF RELEVANT ASSESSMENT YEAR ON THE GROUND THAT DEDUCTI ON UNDER SECTION 80HHC WAS ALLOWED WITHOUT REDUCING DEDUCTION CLAIME D AND ALLOWED UNDER SECTION 80-LB. THE TRIBUNAL HELD THAT THERE W AS NO FAILURE ON PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS, OPINED THAT REASSESSMENT PROCEEDINGS WERE HIT BY PROVISO T O SECTION 147. THE HIGH COURT HELD THAT SINCE IT WAS NOT REVENUE'S CASE THAT ASSESSEE HAD SUPPRESSED, MISREPRESENTED OR FALSIFIED RECORD/ FACTS, THE ORDER PASSED BY TRIBUNAL WAS UPHELD AND THE APPEAL BY THE REVENUE WAS DISMISSED. THIS CASE IS ALSO SIMILAR TO THE CASE OF THE APPELLANT. DATE OF DECISION: NOVEMBER 28, 2011 5. LD. DR SUBMITTED THAT NO GROUND CHALLENGING THE REASSESSMENT PROCEEDINGS WAS TAKEN BEFORE THE CIT(A). 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT BEFO RE LD. CIT(A) THE ASSESSEE HAD, INTER ALIA, TAKEN A GROUND THAT THE ORDER OF L D. ACIT PASSED U/S 147/143(3) WAS BAD IN LAW AND ON FACTS. IT IS TRUE THAT NO SPECIFIC GROUND WAS TAKEN BUT ASSESSEE HAD CHALLENGED THE ASSESSMENT OR DER BEING BAD IN LAW. BE THAT AS IT MAY, THIS BEING A LEGAL GROUND, CAN BE T AKEN AT ANY STAGE OF PROCEEDINGS BEING JURISDICTIONAL IN NATURE. FURTHER , WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISIONS RELIED UPON BY LD . COUNSEL FOR THE ASSESSEE, 8 WHEREIN IT HAS BEEN HELD THAT WHERE ASSESSEE HAD CL AIMED DEDUCTION U/S 80HHC AND 80IA AND, AO, AFTER MAKING NECESSARY QUER IES, PASSED THE ASSESSMENT ORDER ALLOWING DEDUCTION, THEN SUBSEQUEN TLY REASSESSMENT PROCEEDINGS CANNOT BE INITIATED ON THE GROUND THAT DEDUCTION ALLOWED TO IT U/S 80IA WAS NOT DEDUCTED FROM PROFITS OF BUSINESS FOR PURPOSE OF CALCULATING OF DEDUCTION U/S 80HHC. WE, THEREFORE, RESPECTFULLY FO LLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, NOTED SUPRA, ALL OW THE ASSESSEES APPEAL. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 20/09/2016. SD/- SD/- (SUCHITRA KAMBLE) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20/09/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.