DCIT, Circle -8, Kolkata, Kolkata V. M/s Sicpa India Pvt. Ltd., Kolkata

ITA 598/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83063 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 13-04-2012
• Court: TRIBUNAL
• Department Lawyers: M L SARDAR
• Keywords: Reopening of assessment; Depreciation; Bad and doubtful debts; Difference of opinion; Change of opinion
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SRI SHAMIM YAHYA, AM] ITA NO.598/KOL/2012 ASSESSMENT YEAR : 2003-04 ( APPELLANT ) (RESPONDENT) D.C.I.T., CIRCLE-8, .. -VS- M/S.SICPA INDIA PRIV ATE LTD. KOLKATA KOLKATA (PAN:AADCS 6121 L) C.O.NO.105/KOL/2012 ITA NO.598/KOL/2012 ASSESSMENT YEAR : 2003-04 ( CROSS OBJECTOR) (RESPONDENT) M/S.SICPA INDIA PRIVATE LTD. -VS- D.C.I.T., CIRCL E-8, KOLKATA KOLKATA (PAN:AADCS 6121 L) FOR THE DEPARTMENT SHRI M.L.SARDAR, JCIT, SR.DR FOR THE ASSESSEE SHRI SOUMEN ADAK, FCA& SHRI HARISH AGARWAL, ACA DATE OF HEARING : 13.08.2014 DATE OF PRONOUNCEMENT : 27. 8.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE FROM THE ORDER OF LD. C.I.T.(A)- VIII, KOLKATA DT. 05.01 .2012 AND PERTAIN TO ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED IN THE REVENUES APPEAL IS THA T ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO ON THE GROUND THAT THE PROVISION FOR BAD DEBTS AND THE PRO VISION FOR DOUBTFUL DEBTS ARE ASCERTAINED LIABILITY IN THE CASE OF ASSESSEE. ITA.NO.598 &CO.105/KOL/2012 M/S.SICPA INDI A PRIVATE LIMITED A.YR.2003-04 2 2.1. THE ISSUE RAISED IN THE CROSS OBJECTION IS AS UNDER :- I.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN INITIATING REASS ESSMENT PROCEEDINGS U/S 147/148 WITHOUT APPRECIATING THE FACT THAT THE SAME HAS BEE N DONE IN UTTER DISREGARD AS THE EXPRESS PROVISIONS OF THE ACT ON FRESH APPLICATION OF MIND ON THE SAME SET OF FACTS, MORE SO WHEN THERE WAS NO FAILURE ON THE PART OF TH E APPELLANT TO DISCLOSE TRULY AND FULLY ALL THE FACTS NECESSARY FOR COMPLETION OF THE ORIGINAL ASSESSMENT U/S 143(3). 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(APPEALS) ERRED IN NOT HOLDING THAT THE ORDER U/S 143 R.W.S. 147 DATED 31-12-2010 PASSED BY THE AO IS UNJUSTIFIED, ERRONEOUS AND NEEDS TO BE SUMMAR ILY CANCELLED. 3. THAT THE RESPONDENT CRAVES LEAVE, TO ADD, TO AME ND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HERE-IN-ABOVE EI THER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. SINCE THE ISSUE RAISED IN THE CROSS OBJECTION P ERTAINS TO THE JURISDICTION OF THE ASSESSMENT WE ARE ADJUDICATING THE SAME FIRST. 4. IN THIS CASE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T.ACT ON 23.03.2004. SUBSEQUENTLY NOTICE U/S 148 OF THE ACT WAS ISSUED F OR REOPENING OF THE ASSESSMENT. IN THE REASSESSMENT AO NOTED THAT ON EXAMINATION OF AS SESSMENT RECORDS IT IS SEEN THAT UNDER THE PROVISIONS LAID DOWN IN SECTION 36(1)(VII ) OF INCOME TAX ACT, 1961, AMOUNT OF BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE SHALL NOT INCLUDE ANY PROVISION FOR BAD AN D DOUBTFUL DEBTS MADE IN THE ACCOUNTS OF THE ASSESSEE. 4.1. THAT IT APPEARED FORM THE COMPUTATION OF INCOM E FILED WITH THE RETURN AND PROFIT AND LOSS A/C THAT THE ASSESSEE COMPANY CLAIM ED DEDUCTION FOR PROVISION FOR BAD DEBT AND PROVISION FOR DOUBTFUL DEBT AMOUNTING T O RS.21,50,152/- AND RS.45,10,941/- RESPECTIVELY FROM THE PROFIT AS PER P&L ACCOUNT FOR THE FINANCIAL YEAR 2002-03 RELEVANT TO THE ASSESSMENT YEAR 2003-04 IN COMPUTATION OF TOTAL INCOME AND THE SAME WAS ALLOWED IN REGULAR ASSESSMENT. THAT SI NCE THE AMOUNT OF PROVISIONS UNDER THE AFORESAID ITEMS CHARGED TO ACCOUNTS DID N OT JUSTIFY THAT THE QUANTUM OF PROVISIONS HAD BEEN QUANTIFIED/ASCERTAINED, THE ALL OWANCE OF SUCH DEDUCTION WAS NOT REGULAR UNDER THE PROVISIONS OF INCOME TAX ACT, 196 1. IN THE INSTANT CASE, ALLOWANCE OF DEDUCTION OF UNASCERTAINED LIABILITY OF RS.21,50 ,152/- AND RS.45,10,941/- RESPECTIVELY IN COMPUTATION OF TAXABLE INCOME RESUL TED IN UNDERASSESSMENT OF INCOME. THE AO ASKED THE ASSESSEE TO EXPLAIN THE ABOVE TO W HICH IT FILED REPLY. BUT THE AO DID ITA.NO.598 &CO.105/KOL/2012 M/S.SICPA INDI A PRIVATE LIMITED A.YR.2003-04 3 NOT FIND IT TENABLE. HE HELD THAT THE ASSESSEE HAS NOT DISCLOSED FACTS FULLY AND TRULY AND HAS CONCEALED INCOME TO THE TUNE OF RS.66,61,093/-. THE SAME IS ADDED BACK. 5. AGAINST THE ABOVE ORDER ASSESSEE APPEALED BEFORE LD. CIT(A). THE ASSESSEE RAISED THE GROUNDS BOTH PERTAINING TO REOPENING AS WELL AS MERITS OF THE CASE. AS REGARDS THE REOPENING OF THE CASE THE LD. CIT(A) HE LD THAT THE SAME WAS VALID FOR THE FOLLOWING REASONS :- (I) AFTER CAREFUL EXAMINATION OF THE ORIGINAL ASSESSME NT IT IS NOTICED THAT THE A.O. HAD NOT EXAMINED THE MATTER AND DEALT WITH THE ISSUES UNDER CONSIDERATION, SO THERE IS NO QUESTION OF CHANGE OF OPINION. (II) ON PERUSAL AND EXAMINATION OF THE REASONS RECORDED BY THE A.O. IT IS OBSERVED THAT THERE IS PRIMA FACIE MATERIAL AND R EASONS TO REOPEN THE CASE. HENCE, THE REOPENING OF THE CASE BY THE AO IS HELD VALID AND ISSUES ARE BEING DECIDED ON MERITS. 6. IN THIS REGARD THE ASSESEE BY WAY OF CROSS OBJEC TION HAS CHALLENGED THE DECISION OF LD. CIT(A). THE SUBMISSIONS OF THE ASSE SSEE IN THIS REGARD ARE AS UNDER :- ASSESSMENT FOR THIS YEAR WAS MADE U/S 143(3) VIDE ORDER DATED 24.03.06 [REFER PG.45- 51 OF PB]. NOTICE U/S 148 HAS BEEN ISSUED ON 05-03-2010 [REFER PG.52 OF PB] ALTHOUGH THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. REASONS FOR REOPENING THE ASSESSMENT [REFER PG.58 O F PB] WERE NON-ADJUSTMENT OF THE FOLLOWING : PROVISIONS FOR DOUBTS DEBTS WRITTEN BACK IS AN UNAS CERTAINED LIABILITY AND HENCE THE SAME SHOULD NOT BE ALLOWED AS DEDUCTION (RS.66,61,093/). THE ASSESSEE HAS OFFERED TO TAX PROVISION FOR DOUBT FUL DEBTS DEBITED IN THE P&L A/C OF RS.21,57,440/- AND HAS CLAIMED EXCLUSION OF PROVISI ON FOR DOUBTFUL DEBTS NO LONGER REQUIRED AND WRITTEN BACK AMOUNTING TO RS.45,10,941 /- AND RS.21,50,151/- RESPECTIVELY [REFER PG.2 OF PB] IN THE AUDITED ACCOUNTS, THE SAM E IS SHOWN UNDER SCHEDULE-17 MANUFACTURING, SELLING AND OTHER EXPENSES AND SCH EDULE-14 OTHER INCOME. [REFER PG 3-7 OF PB]. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO VIDE NOTICE U/S 142(1) DTD. 17-10- 05, AT QUERY NO.14 & 22 HAS SPECIFICALLY ASKED THE ASSESSEE TO SUBMIT THE DETAILS OF PROVISIONS FOR DOUBTFUL DEBTS CREATED AND WRITTEN B ACK DURING THE YEAR [REFER PG.12-18 AT PG.14-15 OF PB]. IN RESPONSE TO THE SAME, THE AS SESSEE VIDE LETTER DATED 21-11-2005 [REFER PG.19 TO 31 OF PB] AND 22-02-2006 [REFER PG. 33 TO 40 OF PB] SUBMITTED DETAILS OF PROVISIONS FOR DOUBTFUL DEBTS CREATED AND WRITTE N BACK DURING THE YEAR. IN THIS REGARD IT IS TO BE NOTED THAT RE-OPENING OF ASSESSMENT U/S 147 IS INVALID AS : ITA.NO.598 &CO.105/KOL/2012 M/S.SICPA INDI A PRIVATE LIMITED A.YR.2003-04 4 I) ALL THE MATERIALS WERE AVAILABLE ON RECORD. II) NO FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. III) NO NEW MATERIAL/INFORMATION CAME TO THE POSSESSION OF THE AO IV) IT IS MERELY FRESH APPLICATION OF MIND TO THE SAME SET OF FACTS. V) REASSESSMENT IS BASED ON MERE CHANGE OF OPINION. THE ABOVE PROPOSITION IS COVERED BY THE DECISION IN THE CASE OF :- - CIT VS KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) - G.N.SHAW (WINE) (P) LTD. VS ITO (2003) 260 ITR 513 (CAL) - EXIDE INDUSTRIES LTD. VS DCIT (2012) 134 ITD 351 (K OL) - DCIT VS JUGGILAL KAMLAPAT UDYOG LTD [ITA NO.1415/14 16/KOL/2010, ORDER DTD.25- 04-2011] FURTHER, REOPENING OF ASSESSMENT FOR MERE CHANGE OF OPINION IS NOT PERMISSIBLE AS HELD IN :- - CIT VS USHA INTERNATIONAL LTD. (2012) 348 ITR 485 ( DEL(FB) - ASIAN PAINTS LTD VS DCIT (2009) 308 ITR 195 (BOM). IN VIEW OF THE ABOVE THE LD. COUNSEL OF THE ASSESSE E SUBMITTED THAT REOPENING IS BAD. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF REOPENING. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE CAN GAINFULLY REFER TO PROVISION OF SECTION 147 AND PROVISO AS UNDER :- 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BEL IEVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTION 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME 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 ALLOWANC E, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTIO N AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR). PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIALS FACTS NEC ESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. 7.1. NOW WE NOTE THAT IN THIS CASE ASSESSMENT WAS E ARLIER MADE U/S 143(3) OF THE ACT FOR THE CONCERNED A.YR.2003-04. THEREAFTER AFTE R EXPIRY OF FOUR YEARS FROM THE END OF A.YR. NOTICE WAS ISSUED FOR REOPENING. NOW T HE PROVISO TO SECTION 147 MANDATES THAT IN SUCH SITUATION ACTION CANNOT BE TA KEN FOR REOPENING UNLESS INCOME ITA.NO.598 &CO.105/KOL/2012 M/S.SICPA INDI A PRIVATE LIMITED A.YR.2003-04 5 CHARGEABLE TO TAX ESCAPED ASSESSMENT BY REASON OF F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. NOW THE REOPENING IN THIS CASE HAS BEEN MADE ON THE REASONI NG THAT PROVISION FOR DOUBTFUL DEBTS ARE WRITTEN BACK IS AN ASCERTAINED LIABILITY AND HENCE THE SAME SHOULD NOT BE ALLOWED AS DEDUCTION. NOW THE DETAIL IN REGARD TO D OUBTFUL DEBTS WERE FULLY DISCLOSED IN THE RETURN OF INCOME. ASSESSEE HAS OFFERED TO TA X PROVISION FOR DOUBTFUL DEBTS DEBITED IN THE P&L A/C OF RS.21,57,440/- . THE ASSE SSEE HAS CLAIMED EXCLUSION OF PROVISION FOR DOUBTFUL DEBTS NO LONGER REQUIRED AND WRITTEN BACK AMOUNTING TO RS.45,10,941/- AND RS.21,50,151/- RESPECTIVELY. IN THE AUDITED ACCOUNTS, IT IS DULY SHOWN UNDER SCHEDULE-17 MANUFACTURING, SELLING AND OTHER EXPENSES AND SCHEDULE- 14 OTHER INCOME. FROM THE ABOVE IT IS APPARENT TH AT ASSESSEE HAS FULLY AND TRULY DISCLOSED ALL THE MATERIALS IN THIS REGARD. SO IT C ANNOT BE SAID THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. HENCE MANIFESTLY THIS REOPENING IS HIT BY THE PROVISO TO SECTION 147 OF THE ACT AND IN THE LIGHT THEREOF REOPENING IS NOT S USTAINABLE. 7.2. FURTHERMORE WE NOTE THAT IN THE REASSESSMENT I T IS THE CASE OF THE ASSESSEE THAT IT IS A MERE CHANGE OF OPINION WHICH IS NOT PERMISS IBLE UNDER LAW. IN THIS REGARD IT HAS BEEN SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) THE AO VIDE NOTICE U/S 142(1) OF THE ACT DATED 17.10.2005 AT QUERY NO.14 AND 22 HAS SPECIFICALLY ASKED THE ASSESSEE TO SUBMIT THE DETAI LS OF PROVISIONS FOR DOUBTFUL DEBTS CREATED AND WRITTEN BACK DURING THE YEAR. IN RESPON SE TO THE SAME THE ASSESSEE VIDE LETTER DATED 21.11.2005 AND 22.02.2006 SUBMITTED DE TAILS OF PROVISIONS FOR DOUBTFUL DEBTS CREATED AND WRITTEN BACK DURING THE YEAR. THU S AFTER FULLY EXAMINING THE ISSUE IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT THE AO H AS ALLOWED THE PROVISION. NOW UNDER REOPENING WHEN THE AO IS DISALLOWING THE SAME CLAIMING THAT IT IS UNASCERTAINED LIABILITY IT IS MANIFESTLY A CHANGE OF OPINION AND HENCE REOPENING ON THE BASIS OF CHANGE OF OPINION IS NOT PERMISSIBLE UNDER LAW. THU S WE FULLY AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE THAT REOPENING OF ASSESSMENT U/S 147 OF THE ACT IS INVALID IN AS MUCH AS THERE WAS NO FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE MATERIALS NECESSARY FOR ASSESSMENT ITA.NO.598 &CO.105/KOL/2012 M/S.SICPA INDI A PRIVATE LIMITED A.YR.2003-04 6 WERE AVAILABLE ON RECORD. RE-ASSESSMENT WAS MADE ME RELY ON CHANGE OF MIND TO THE SAME SET OF FACTS AND HENCE THE REASSESSMENT IS BAS ED ON MERE CHANGE OF OPINION. HENCE THE SAME IS NOT VALID. IN THIS REGARD THE CAS E LAW REFERRED TO BY THE LD. COUNSEL OF THE ASSESSEE AS UNDER ALSO SUPPORT THE CASE. - CIT VS KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) - G.N.SHAW (WINE) (P) LTD. VS ITO (2003) 260 ITR 513 (CAL) - EXIDE INDUSTRIES LTD. VS DCIT (2012) 134 ITD 351 (K OL) - DCIT VS JUGGILAL KAMLAPAT UDYOG LTD [ITA NO.1415/14 16/KOL/2010, ORDER DTD.25- 04-2011] - CIT VS USHA INTERNATIONAL LTD. (2012) 348 ITR 485 ( DEL(FB) - ASIAN PAINTS LTD VS DCIT (2009) 308 ITR 195 (BOM). 7.3. IN THE BACKGROUND OF THE AFORESAID DISCUSSION WE HOLD THAT REOPENING IN THIS CASE IS BAD AND INVALID AND AS SUCH IT IS NOT SUSTA INABLE. HENCE WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND HOLD THAT THE RE-AS SESSMENT IS INVALID. 8. SINCE WE HAVE ALREADY HELD THAT RE-ASSESSMENT IS INVALID THE REVENUES APPEAL PERTAINING TO THE ALLOWANCE OF CLAIM ON THE MERITS OF THE CASE IS NOW OF ACADEMIC INTEREST HENCE WE ARE NOT ADJUDICATING THE SAME AS THE SAME IS INFRUCTUOUS. 9. IN THE RESULT THE CROSS OBJECTION OF THE ASSESSE E IS ALLOWED AND THE REVENUES APPEAL IS HELD TO BE INFRUCTUOUS. ORDER PRONOUNCED IN THE COURT ON 27.08.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27.08.2014. R.G.(.P.S.) ITA.NO.598 &CO.105/KOL/2012 M/S.SICPA INDI A PRIVATE LIMITED A.YR.2003-04 7 COPY OF THE ORDER FORWARDED TO: 1. SICPA INDIA PRIVATE LIMITED, (FORMERLY KNOWN AS SIC PA INDIA LTD.) C/O NEWBY TEAS OVERSEAS (P)LTD., 9A, 2 ND FLOOR, 23A, N.S.ROAD, KOLKATA-700001. 2 D.C.I.T., CIRCLE-8, KOLKATA. 3 . CIT(A)-VIII, KOLKATA. 4. CIT KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES