Sruti Chemicals (P) Ltd., Salem V. ACIT, Salem

ITA 603/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5787 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-11-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARV SREENIVASAN JCIT
• Assessee Lawyers: T VASUDEVAN
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 603/MDS/2017 / ASSESSMENT YEAR : 2006-07 M/S. SRUTI CHEMICALS (P) LTD., 70, SANDAIPETTAI MAIN ROAD, SHEVAPET, SALEM 636 002. [PAN: AAKCS 2995R] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), SALEM. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI. T. VASUDEVAN, ADVOCATE )*% & / RESPONDENT BY : SHRI. ARV. SREENIVASAN, JCIT & /DATE OF HEARING : 23.11.2017 & /DATE OF PRONOUNCEMENT : 27.11.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7, SALEM IN ITA NO. 169/2013-1 4 DATED 29.12.2016 FOR THE ASSESSMENT YEAR 2006-07. :-2-: ITA NO. 603/MDS/2017 2. M/S. SRUTI CHEMICALS (P) LTD., THE ASSESSEE, ENG AGED IN MANUFACTURE OF FOOD GRADE CARBON DIOXIDE GAS. FOR THE ASSESSMENT YEAR 2006-07, ITS ASSESSMENT WAS COMPLETED U/S. 143(3) ON 30.04.2008. THE ASSESSING OFFICER RE-OPENED THE ASSESSMENT BY A NOTICE U/S. 148 ISSUE D ON 25.10.2012 AND COMPLETED THE RE-ASSESSMENT U/S. 143 R.W.S. 147 ON 30.12.2013. WHILE DOING SO, HE WITHDREW THE MAT CREDIT FOR ASSESSMENT YEARS 2004-05 & 2005-06 CLAIMED AT RS. 1,34,529/- IN THE ORIGINAL ASSESSMEN T MADE FOR ASSESSMENT YEAR 2006-07 WHICH WAS ALSO ALLOWED IN THE ORDER U/ S. 143(3) DATED 30.04.2008. AGGRIEVED, THE ASSESSEE FILED AN APPEA L BEFORE THE CIT(A), CHALLENGING THE RE-OPENING OF ASSESSMENT U/S. 147, THE DISALLOWANCE FOR MAT CREDIT AND SET OFF OF BUSINESS LOANS. THE CIT(A) D ISMISSED THE APPEAL. 3. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL WI TH THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPE ALS) DISMISSING THE APPEAL ON JURISDICTION U/S.147 AND ON MERITS OF THE CASE IS CONTRARY TO LAW, ERRONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CAS E. I. REOPENING OF ASSESSMENT: 2. THE CIT(A) ERRED IN UPHOLDING THE REOPENING OF A SSESSMENT UNDER SEC.147 BY NOTICE DATED 25.10.12 ISSUED U/S.148 OF THE ACT. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE REOPENI NG WAS BASED ON ONLY CHANGE OF OPINION BY THE OFFICER AS THE ORIGINAL AS SESSMENT U/S.143(3) WAS FRAMED ON 30.4.08, WHEREIN THE OFFICER HAD CONSIDER ED ALL THE ISSUES ARISING OUT OF RETURN OF ASSESSEE AND HENCE THE REOPENING IS UN TENABLE IN LAW. 4. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT AS PER THE FIRST PROVISO TO SEC.147 REOPENING BEYOND FOUR YEARS IS PERMISSIBLE ONLY IF THERE WAS FAILURE ON THE PART OF ASSESSEE TO DISCLOSE MATERIAL FACTS AND THE OFFICER HAVING REOPENED :-3-: ITA NO. 603/MDS/2017 ONLY ON THE BASIS OF THE RETURN OF ASSESSEE, THE RE OPENING OF ASSESSMENT IS BARRED BY LIMITATION. 5. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE RE WAS NO REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND IN T HE ABSENCE OF ANY FRESH MATERIAL POINTING TO FAILURE ON THE PART OF ASSESSE E TO DISCLOSE PARTICULARS OF INCOME, THE REOPENING IS NOT IN ACCORDANCE WITH LAW AND NEEDS TO BE ANNULLED. II MERITS: 6. THE CIT(A) ERRED IN CONFIRMING THE DENIAL OF THE BENEFIT OF MAT CREDIT OF THE ASSESSMENT YEARS 2004-05 AND 05-06. 7. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E IS STATUTORILY ENTITLED TO THE MAT CREDIT OF TAX PAID U/S.115JB AN D THERE IS NO EMBARGO UNDER THE STATUTE TO DENY THE CLAIM AND HENCE THE DISALLO WANCE OF THE SAME IS UNJUSTIFIED AND UNTENABLE IN LAW. 8. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT DEN YING THE MAT CREDIT IN THE COMPUTATION U/S.115JAA IS BASELESS AND THAT THE AMENDMENT IN 2006 ONLY ENABLES THE ASSESSEE TO TAKE CREDIT FOR TAX PAID AN D DOES NOT RESTRICT THE SAME AND HENCE CONFIRMING THE DISALLOWANCE IS UNJUSTIFIE D AND UNTENABLE IN LAW. 9. THE CIT(A), IN ANY EVENT, OUGHT TO HAVE SEEN THA T THE MAT CREDIT SET OFF AGAINST THE TAX DUE IS WITHIN THE PARAMETERS OF THE PROVISIONS OF THE ACT AND HENCE ALLOWED THE APPEAL BOTH ON REOPENING AND MERI TS OF THE CASE. 4. THE AR PRIMARILY CHALLENGED THE DECISION OF THE CIT(A) ON THE VALIDITY OF RE-OPENING OF THE ASSESSMENT. HE SUBMITTED THAT TH E ORIGINAL ASSESSMENT FOR ASSESSMENT YEAR 2006-07 WAS COMPLETED U/S. 143(3) O N 30.04.2008. HE INVITED OUR ATTENTION TO THE REASON GIVEN FOR RE-OP ENING THE ASSESSMENT BY THE ASSESSING OFFICER IN HIS LETTER DATED 21.11.2013 IS AS UNDER: IT WAS FOUND THAT THE ASSESSEE COMPANY HAD CLAIME D RS. 1,34,529/- FOR THE MAT CREDIT U/S. 115JAA FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. AS PER THE PROVISIONS OF SECTION 115JAA OF THE ACT, MA T CREDIT IS NOT AVAILABLE FOR PAYMENT OF TAX U/S. 115JA FROM ASSESSMENT YEARS 200 1-02 TO 2005-06. :-4-: ITA NO. 603/MDS/2017 IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THA T THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. 4.1 INVITING OUR ATTENTION TO SECTION 147 AND ITS P ROVISO, THE RELEVANT PORTION OF WHICH IS EXTRACTED AS UNDER: INCOME ESCAPING ASSESSMENT: 147. IF THE ASSESSING OFFICER, HAS REASON TO BELIEV E THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, A SSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY B E, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 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 ASSE SSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOU R YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. HE SUBMITTED THAT THE ASSESSING OFFICER RE-OPENED T HE ASSESSMENT MADE U/S. 143(3) AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR 2006- 07 BY ISSUE OF A NOTICE U/S. 147 DATED 25.10.2012. THE REASONS DISCLOSED BY THE ASSESSING OFFICER DID NOT INDICATE ANY FAILURE ON THE PART OF THE ASSESSEE :-5-: ITA NO. 603/MDS/2017 AS REQUIRED IN THE PROVISO, SUPRA, AND HENCE THE A SSESSMENT MADE U/S. 143(3) R.W.S. 147 MAY BE QUASHED. PER CONTRA, THE DR SUPPORTED THE ORDERS OF THE AO AND CIT(A). 5. WE HEARD THE RIVAL CONTENTIONS AND FIND MERITS I N THE SUBMISSION MADE BY THE AR. THE ORIGINAL ASSESSMENT U/S. 143(3) FOR ASSESSMENT YEAR 2006-07 WAS MADE ON 30.04.2008. THE ASSESSING OFFICER RE-O PENED THAT ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR WITHOUT RECORDING ANY FAILURE ON THE PART OF ASSESSEE AND H ENCE, WE HOLD THAT THE ASSESSMENT MADE U/S. 143(3) R.W.S. 147 IS UNTENABLE AND HENCE QUASH IT. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 27 TH DAY OF NOVEMBER, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 27 TH NOVEMBER, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF