ACIT, New Delhi V. M/s Technofab Engineering Ltd., New Delhi

ITA 5137/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74145 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 27-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: AMIT GOEL
• Keywords: Depreciation; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 115JB; 147; 148; 139

Judgement Text

ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NOS. 5137 & 5138/DEL/2012 A.YRS. : 2004-2005 & 2005-06 ACIT, CIR CLE 16 (1), CR BLDG., NEW DELHI VS. M/S TECHNOFAB ENGINEERING LTD., 502, ROSE APARTMENT, 56, NEHRU PLACE, NEW DELHI- 110 019 (PAN/GIR NO. : AAACT3829R) AND C.O. NOS. 449 & 450/DEL/2012 (IN ITA NOS. 5137&5138/ DEL/2012) A.YRS. 2004-05 & 2005-06 M/S TECHNOFAB ENGINEERING LTD., VS. ACIT, CIRCLE 16( 1), 502, ROSE APARTMENT, 56, CR BLDG., NEW DELHI NEHRU PLACE, NEW DELHI- 110 019 (PAN/GIR NO. : AAACT3829R) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. A MIT GOEL, FCA DEPARTMENT BY : SH. SAMEER SHARMA, SR. D.R. ORDER ORDER ORDER ORDER PER PER PER PER BENCH: BENCH: BENCH: BENCH: THESE APPEALS BY THE REVENUE AND CROSS OBJECTION B Y THE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR A.YRS. 2004-05 & 2005-06. THE APPEALS WERE HEARD TOGETHER AND THEY ARE BEING CONSOLIDATED FOR THE S AKE OF CONVENIENCE AND DISPOSED OF BY THIS COMMON ORDER. ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 2 2. THE COMMON ISSUE RAISED IN THE REVENUES APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO WHILE COMPUTING THE BOOK PROFIT U/S. 115JB OF THE I.T. ACT ON ACCOU NT OF INTEREST ACCRUED BUT NOT PAID BY THE ASSESSEE. 3. IN THE CROSS OBJECTION THE ASSESSEE HAS CONTENDED THAT LD. CIT(A) ERRED IN HOLDING THAT THE NOTICE UNDER SECTION 148 ISSUED IN THIS CASE WAS ILLEGAL, VOID AND WITHOUT JURISDICTION AND BARRE D BY LIMITATION AND ACCORDINGLY, ASSESSMENT ORDER PASSED ON THE FOUNDAT ION OF SUCH NOTICE WAS LIABLE TO BE QUASHED. ASSESSEES CROSS OBJECTIONS ASSESSEES CROSS OBJECTIONS ASSESSEES CROSS OBJECTIONS ASSESSEES CROSS OBJECTIONS 4. IN BOTH THESE CASES ORIGINAL ASSESSMENT WAS COMPLE TED UNDER SECTION 143(3) OF THE I.T. ACT. SUBSEQUENTLY, NOTIC E UNDER SECTION 148 WAS ISSUED, AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THESE CIRCUMSTANCES, ASSESSEE S COUNSEL HAS REFERRED TO SECTION 147 OF THE IT ACT UNDER THE PRO VISO THERETO AND HAS CONTENDED THAT THE INCOME HAS NOT ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FUL LY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT IN THAT ASSESSME NT YEAR. HENCE, HE PLEADS FOR QUASHING OF THE ASSESSMENTS. THE ASSESSE E HAS RAISED THIS ISSUE BEFORE THE LD. CIT(A). HOWEVER, LD. CIT(A) D ECIDED THE ISSUE ON MERITS IN FAVOR OF THE ASSESSEE AND HENCE DID NOT AD JUDICATE THE PRELIMINARY ISSUE OF JURISDICTION. 5. SINCE THE FACTS ARE IDENTICAL, WE ARE ADJUDICATI NG THE ISSUE WITH REFERENCE TO THE FACTS AND FIGURES OF ASSTT. YEAR 2004-05. 6. AT THE OUTSET, WE CAN GAINFULLY REFER THE PROVIS IONS OF SECTION 147 OF THE I.T. ACT AND THE PROVISO THERETO, WHICH READ AS UNDER:- ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 3 INCOME ESCAPING ASSESSMENT - 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER I NCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERN ED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS T HE RELEVANT ASSESSMENT YEAR). PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION( 3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY O F FOUR YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REA SON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECT ION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION(1) OF SECTION 1 42 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR.' 7. THUS, IT IS EVIDENT THAT THE REOPENING CANNOT B E RESORTED TO WHERE THE ASSESSMENT HAS BEEN FRAMED UNDER SECTION 1 43(3) OF THE I.T. ACT, AFTER THE EXPIRY OF 4 YEARS UNLESS THE SA ME IS DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 8. NOW WE MAY REFER THE REASONS RECORDED IN THE REOP ENING FOR ASSTT. YEAR 2004-05. ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 4 ASSESSMENT IN THIS CASE WAS COMPLETED VIDE ORDER DATED 8.12.2006 PASSED U/S. 143(3) BY THE AO, CENTRAL CIRCLE 10, NEW DELHI AT NIL INCOME, AFTER ADJUSTING BF LOSSES TO THE TUNE OF RS. 2,10,46,454/- , UNDER NORMAL PROVISIONS OF THE IT ACT. HOWEVER, UND ER SPECIAL PROVISIONS OF MAT UNDER SECTION 115JB, INCOME WAS ASSESSEE AT RS. 10,37,890/-. WHILE WORKING OUT INCOME UNDER MAT U/S. 115JB, THE AO REDUCED INTEREST ACCRUED FROM BANKS AMOUNTING TO RS. 1,71,77,395/- FO R THE F.Y. 2003-04, BEING NOT PROVIDED IN THE BOOKS. HOWEVER, THE AMOUNT OF INTEREST, FORMING PART OF TOTA L INCOME, SHOULD HAVE BEEN INCLUDED IN THE TOTAL INCO ME WHILE CALCULATING INCOME U/S. 115JA OF THE ACT, 196 1. THIS OMISSION HAS RESULTED IN UNDERASSESSMENT OF BOOK PROFIT OF THE TUNE OF RS. 1,71,77,395/-. THUS , INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 1,71,77,395/- HAS ESCAPED ASSESSMENT IN A.Y. 2004- 05. IT CAME TO NOTICE THAT INCOME TO THE EXTENT OF RS. 1,71,77,395/- HAS ESCAPED ASSESSMENT ON ACCOUNT OF THE ASSESSEE NOT DISCLOSING FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR THE ASSESSMENT PROCEEDINGS AT T HE TIME OF ASSESSMENT U/S. 143(3). 8.1 THE REASONS FOR THE ASSTT. YEAR 2005-06 ARE SIMI LAR EXCEPT FOR THE FIGURES AND DATES. 8.2 A READING OF THE ABOVE REASONS MAKES IT CLEAR T HAT NO FURTHER INFORMATION HAS COME TO THE NOTICE OF THE AO OTHER T HAN THAT FILED BY ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 5 THE ASSESSEE IN THE RETURN. AO BY ONLY REFERRING TO THE ASSESSEES RETURNS HAS NOW COME TO THE CONCLUSION THAT THERE IS OMISSION IN THE ASSESSMENT. IN THE REASONS, IT HAS BEEN NOTED THAT WHILE WORKING OUT INCOME UNDER MAT U/S. 115JB, THE A O REDUCED INTEREST ACCRUED FROM BANKS AMOUNTING TO RS. 1,71,77, 395/- FOR THE F.Y. 2003-04, BEING NOT PROVIDED IN THE BOOKS. HOWEVER, THE AMOUNT OF INTEREST, FORMING PART OF TOTAL INCOME, SHOULD HAVE BEEN INCLUDED IN THE TOTAL INCOME WHILE CALCULATING INCOME U/S. 115JA OF THE ACT, 1961. THUS, IN THE REASONS RECORDED, REVENUE HAS ITSELF A CCEPTED THAT ON THE BASIS OF THE RETURNS SUBMITTED BY THE ASSESSEE AND DISCLOSURE MADE THEREIN, AO HAS REDUCED INTEREST WHICH WAS NOT PROV IDED IN THE BOOKS. THUS, AO HAD EARLIER MADE A CONSCIOUS DECISION AND NOW IT IS ONLY A MATTER OF CHANGE OF OPINION WHICH IS NOT SUSTAINAB LE. 8.3 IN THIS REGARD, LD. COUNSEL OF THE ASSESSEE HA S TAKEN US TO THE ASSESSMENT ORDER OF THE CONCERNED ASSESSMENT YEARS. IN THE RETURNS THE COMPLETE DETAILS WERE FURNISHED AND AO IN HIS A SSESSMENT ORDER HAS ALSO MADE COMPUTATION UNDER SECTION 115JB IN WHI CH HE HAS EXPLICITLY REDUCED INTEREST ACCRUED FOR FINANCIAL YEAR 2003-04, BUT NOT PROVIDED IN THE BOOKS. THUS, AO HAS ACCEPTED THE A SSESSEES PRACTICE BEING FOLLOWED FORM EARLIER YEARS. HENCE, IT IS VERY CLEAR THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, ON THE IMPUGNED ISSUE OF PROFIT UNDER SECTION 115JB, AO HAS CLEARLY PASSED T HE ASSESSMENT ORDER U/S. 143(3) DETAILING THEREIN THE ADDITIONS AND DEL ETIONS TO THE BOOKS ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 6 PROFIT. HENCE, NOW THE AO IS RESORTING TO CHANGE O F OPINION ON THE SAME SET OF FACTS WHICH IS NOT SUSTAINABLE. 8.4 THUS, THE REOPENING IN THIS CASE IS CLEARLY HIT BY THE PROVISO TO SECTION 147. AS ALREADY HELD BY US AS ABOVE, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS. HENCE, THE REOPENING IN THIS CASE AFTER 4 YEARS U NDER SECTION 148 IS NOT VALID. ACCORDINGLY, THE ASSESSMENT FRAMED IN T HIS CASE ARE HENCE, LIABLE TO BE QUASHED AND THEY ARE QUASHED AS SUCH. 8.5 FURTHERMORE, AS HELD BY US ABOVE, THERE IS ALSO CHANGE OF OPINION ON THE PART OF THE AO WHICH IS ALSO NOT PERMISSIBLE AND THE ASSESSMENT ON THIS ACCOUNT IS ALSO LIABLE TO BE QUASHED. IN THIS REGARD, WE ALSO REFER TO THE HONBLE APEX COURT DECISION IN THE C ASE OF FORAMER FORAMER FORAMER FORAMER FRANCE : 264 ITR 566 (SC) FRANCE : 264 ITR 566 (SC) FRANCE : 264 ITR 566 (SC) FRANCE : 264 ITR 566 (SC) , WHEREIN IT WAS HELD THAT REASSESSMENT CANNOT BE INITIATED ON THE BASIS OF CHANGE OF OPINI ON. 9. ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT, WE HOLD THAT THE ASSESSMENT ORDER PASSED IN THIS CASE UNDER RE-ASSESSMENT IS VOID AND HENCE, THE SAME IS QUASHED. 10. SINCE WE HAVE ALREADY QUASHED THE REASSESSMENT THE ADJUDICATION ON THE MERITS OF THE CASE IS ONLY OF A CADEMIC INTEREST AND HENCE THE SAME IS NOT RESORTED TO. HENCE, THE REVENUE APPEALS ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 7 ON MERITS HAVE ACCORDINGLY BECOME INFRUCTUOUS AND TH EY ARE DISMISSED AS SUCH. 11. IN THE RESULT, BOTH THE ASSESSEES CROSS OBJEC TIONS ARE ALLOWED AND REVENUES APPEALS ARE DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 31/1/2014 SD/- SD/- [ [[ [R RR RAJPAL YADAV AJPAL YADAV AJPAL YADAV AJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 31/1/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY COPY COPY COPY FORWARDED TO: FORWARDED TO: FORWARDED TO: FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NOS. 5137&5138/DEL/2012 & CO NO. 449&450/DEL/2012 8