Empee Sugars & Chemicals Ltd., CHENNAI V. ACIT, CHENNAI

ITA 511/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90385 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR NISCHAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment; Depreciation
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 511/MDS/2015 ( / ASSESSMENT YEAR: 2005-06) M/S. EMPEE SUGARS & CHEMICALS LTD. EMPEE TOWERS, 59, HARRIS ROAD,PUDUPET CHENNAI-600 002. VS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(2) CHENNAI. PAN:AABCE5658G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : DR.NISCHAL, JCIT /DATE OF HEARING : 13 TH APRIL, 2015 /DATE OF PRONOUNCEMENT : 22 ND MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI DA TED 29.1.2015 FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS THOUGH RAISED SEVERAL GROUNDS O F APPEAL, THE EFFECTIVE TWO GROUNDS FOR ADJUDICATION ARE I) REOPENING OF ASSESSMENT UNDER SECTION 147 AND II) SUSTAINING THE ADDITION OF ` 12,92,646/- MADE BY THE ASSESSING OFFICER TOWARDS UNDISCLOSED INCOME. 2 ITA NO.511/MDS/2015 3. BRIEF FACTS ARE THAT ASSESSEE IS A LIMITED COMP ANY ENGAGED IN MANUFACTURE AND SALE OF SUGAR, MANUFACTU RE AND SALE OF ENA AND OTHER ALLIED PRODUCTS FILED RETURN OF INCOME ON 31.10.2015 DISCLOSING TOTAL LOSS OF ` 59,56,896/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 28.12.2007 DETERMINING THE INCOME AT ` 3,47,11,708/- BEFORE SET OFF OF BROUGHT FORWARD DEPRECIATION AND NIL INCOME AFTER SET OFF OF BROUGHT FORWARD DEPRECIATIO N. LATER NOTICE UNDER SECTION 147 WAS ISSUED AND ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 WAS COMPLETED ON 28.3.2013 DETERMINING THE INCOME AT ` 3,27,43,810/-. WHILE COMPLETING THE ASSESSMENT ASSESSING OFFICER ADDED ` 12,92,646/- AS UNDISCLOSED INCOME BEING DIFFERENCE OF TURNOVER SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACC OUNTS AND AS PER THE ORDER OF COMMERCIAL TAX OFFICER. THE ASS ESSEE ADMITTED THE TURNOVER OF ` 54,16,66,002/- AND SCRAP SALE VALUE OF ` 6,07,098/- IN THE PROFIT AND LOSS ACCOUNT FILED AL ONG WITH THE RETURN OF INCOME. THE GROSS TURNOVER AS PE R CTOS ORDER WAS ` 54,35,65,746/-. THUS THE DIFFERENCE WAS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE BY THE ASSESS ING OFFICER. BEFORE THE COMMISSIONER OF INCOME TAX (AP PEALS), 3 ITA NO.511/MDS/2015 THE ASSESSEE CONTENDED THAT REASSESSMENT MADE BY TH E ASSESSING OFFICER IS BAD IN LAW IN VIEW OF THE 1 ST PROVISO TO SECTION 147 OF THE ACT. THE ASSESSEE CONTENDED THA T THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSIN G FULLY AND TRULY ALL RELEVANT MATERIAL FACTS WITH REFERENCE T O THE INCOME ORIGINALLY FILED. HOWEVER THE CONTENTION OF THE ASS ESSEE WAS REJECTED BY THE COMMISSIONER OF INCOME TAX (APPEALS ) OBSERVING THAT ASSESSING OFFICER HAS ACTED UPON FRE SH MATERIAL I.E. SUPPRESSION OF TURNOVER WHICH WAS NO T AVAILABLE DURING ORIGINAL SCRUTINY PROCEEDINGS COMPLETED ON 28.12.2007. THEREFORE, THE ASSESSEE FAILED TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS WITH REGARD TO ITS TU RNOVER. THUS THE COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ADDITION. 4. COUNSEL FOR THE ASSESSEE SUBMITS THAT ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 28.12.2007 FOR THE ASSESSMENT YEAR 2005-06 WHICH IS UNDER CONSIDERATION. COUNSEL SUBMITS THAT IN VIEW OF THE 1 ST PROVISO TO SECTION 147 WHEN THE ORIGINAL ASSESSMEN T WAS COMPLETED UNDER SECTION 143(3) OF THE ACT, ASSESSME NT 4 ITA NO.511/MDS/2015 CANNOT BE REOPENED BEYOND FOUR YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR, WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT. HE SU BMITS THAT IN THIS CASE REASSESSMENT WAS MADE ON 28.3.201 3 WHICH IS BEYOND FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. COUNSEL SUBMITS THAT ASSESSMENT WAS REOPENED ONLY ON THE BASIS OF COMMERCIAL TAX OFFICERS ORDER AND THEREFORE, BAD IN LAW. HE SUBMITS THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TR ULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSME NT AND THEREFORE REOPENING OF ASSESSMENT IS BAD IN LAW. 5. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTS TH E ORDERS OF LOWER AUTHORITIES IN REOPENING ASSESSMENT . 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. IN THIS CASE, ASSESSMENT WAS ORIGINALLY COMPLETED U NDER SECTION 143(3) OF THE ACT ON 28.12.2007. THE ASSESS MENT WAS REOPENED UNDER SECTION 147 FOR THE REASON THAT THERE IS DIFFERENCE OF TURNOVER AS ADMITTED BY THE ASSESSEE IN PROFIT 5 ITA NO.511/MDS/2015 AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF IN COME AND AS ASSESSED BY COMMERCIAL TAX OFFICER IN HIS ORDER DAT ED 26.11.2007. THUS, DIFFERENCE WAS ARRIVED AT ` 12,92,646/- AND ADDED THIS DIFFERENCE AS UNDISCLOSED INCOME WH ILE COMPLETING THE REASSESSMENT. ON A PERUSAL OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ W ITH SECTION 147 OF THE ACT, WE FIND THAT THE ASSESSEE H AS ADMITTED TURNOVER OF ` 54,16,66,002/- AND SCRAP SALES OF ` 6,07,098/- IN THE PROFIT AND LOSS ACCOUNT FILED ALO NG WITH THE RETURN OF INCOME. DURING THE COURSE OF ORIGINAL ASS ESSMENT PROCEEDINGS, ASSESSEES REPRESENTATIVE FILED COPY OF THE ASSESSMENT ORDER OF COMMERCIAL TAX OFFICER, GUDUR D ATED 26.11.2007, ACCORDING TO WHICH THE GROSS TURNOVER W AS DETERMINED AT ` 54,35,65,746/-. THIS ORDER OF THE CTO DATED 26.11.2007 WAS FURNISHED IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER . THUS, THE OBSERVATION OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ASSESSMENT WAS MADE BY THE ASSESSING OFFICER ON A FRESH MATERIAL WHICH WAS NOT AVAILABL E AT THE TIME OF ORIGINAL SCRUTINY PROCEEDINGS COMPLETED ON 28.12.2007 APPEARS TO BE NOT CORRECT. THE ASSESSEE HAS 6 ITA NO.511/MDS/2015 PRODUCED THIS ORDER BEFORE THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS AS IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF. THUS, WE DO NOT SEE ANY FA ILURE ON THE PART OF THE ASSESSEE IN FURNISHING MATERIALS F ULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION O F ASSESSMENT. THE 1 ST PROVISO TO SECTION 147 SQUARELY APPLIES IN THIS CASE. THUS WE HOLD THAT REASSESSMENT MADE I N THIS CASE IS BAD IN LAW. AS WE HAVE HELD THAT REOPENING OF ASSESSMENT IS BADE IN LAW, WE ARE NOT INCLINED TO G O INTO THE GROUNDS RAISED ON MERITS WHICH IS ONLY OF ACADEMIC EXERCISE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 22 ND MAY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .