ACIT, Kollam V. G.Krishnan Nair, Kollam

ITA 603/COCH/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1019 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 07-01-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 18-11-2010
• Court: TRIBUNAL
• Department Lawyers: VIVEK C GOVIND
• Assessee Lawyers: S VIJAYAPRABHA
• Keywords: Reopening of assessment; Retrospective amendment; Reassessment proceedings
• Section: 143(3); 80HHC; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 603/COCH/2010 ASSESSMENT YEAR : 2002-03 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-, KOLLAM. VS. SHRI G.KRISHNAN NAIR, KRISHNAN FOOD PROCESSORS, ISWARYA, BEACH ROAD, KOLLAM. [PAN: ABQPN 0251R] (REVENUE-APPELLANT) (ASSESSEE-R ESPONDENT) ASSESSEE BY SMT. S. VIJAYAPRABHA, JR. DR REVENUE BY SHRI VIVEK C. GOVIND, CA DATE OF HEARING 07/01/2013 DATE OF PRONOUNCEMENT 11/01/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10-08-2010 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELATES TO THE ASSESSMENT YEAR 2002-03. 2. THE REVENUE IS ASSAILING THE DECISION OF THE LD. CIT(A) IN HOLDING THAT THE RE- ASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING O FFICER IS BAD IN LAW, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE FACTS RELATING TO THE SAID ISSUE ARE STAT ED IN BRIEF. THE ASSESSEE IS AN INDIVIDUAL AND HIS ASSESSMENT FOR THE YEAR UNDER CO NSIDERATION WAS ORIGINALLY COMPLETED ON 12-07-2004 U/S. 143(3) OF THE ACT. THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80HHC OF THE ACT AND THE SAME WAS ALLOWED IN THE SAID ASS ESSMENT PROCEEDINGS. SUBSEQUENTLY, THE TAXATION LAW (AMENDMENT) ACT, 200 5 BROUGHT IN CERTAIN AMENDMENTS IN SEC. 80HHC OF THE ACT WITH RETROSPECTIVE EFFECT , AS A CONSEQUENT OF WHICH, THE ASSESSING OFFICER FELT THAT THE DEDUCTIO N U/S. 80HHC ORIGINALLY GRANTED TO THE I.T.A. NO.603/COCH/2010 2 ASSESSEE NEEDS TO BE WITHDRAWN. ACCORDINGLY, SHE R EOPENED THE ASSESSMENT BY ISSUING A NOTICE U/S. 148 ON 25-03-2008, I.E., AFTER FOUR Y EARS FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERATION, I.E., ASSESSMENT YEAR 200 2-03. THEREAFTER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY REDUCING THE QU ANTUM OF DEDUCTION U/S. 80HHC OF THE ACT FROM RS. 15,97,860/- TO RS. 1,21,261/-. 4. THE ASSESSEE CHALLENGED THE VALIDITY OF THE RE-O PENING OF THE ASSESSMENT BEFORE THE LD. CIT(A). THE ASSESSEE CONTENDED BEFORE LD C IT(A) THAT THE ASSESSING OFFICER DID NOT PROVE THAT THE INCOME CHARGEABLE TO TAX HAS ESC APED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, APPARENTLY BY PLACING RELIANCE ON THE FIRST PROVISO TO SEC. 147 OF THE ACT. THE LD. CIT(A), ON BEING CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE, HELD THAT THE REOPENING OF ASSESSMENT IS INVALID. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR PLACED HER RELIANCE ON EXPLANATION 1 T O SEC. 147 OF THE ACT WHICH READS AS UNDER:- PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUN T BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE H AVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO D ISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. THE LD. DR SUBMITTED THAT THE FIRST PROVISO TO SEC. 147 SHALL NOT APPLY IN THE FACTS OF THE CASE IN VIEW OF THE EXPLANATION 1 REFERRED SUPRA ABO VE. ON THE CONTRARY, THE LD. AR STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE RECORD. THE UNDISPUTED FACT IS THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFIC ER ORIGINALLY U/S. 143(3) OF THE ACT. AT THE RELEVANT POINT OF TIME, THE RESTRICTIONS THA T WERE PLACED BY THE TAXATION LAWS (AMENDMENT) ACT, 2005 IN SEC. 80HHC OF THE ACT WAS NOT AVAILABLE IN THE ACT. THUS, IT IS CLEAR THAT THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON THE BASIS OF THE BOOKS OF ACCOUNTS AND OTHER INFORMATION AVAI LABLE ON RECORD. APPARENTLY, THE I.T.A. NO.603/COCH/2010 3 ASSESSING OFFICER HAS ISSUED NOTICE U/S. 148 OF THE ACT AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR BY PLACING RELIANCE ON THE AMENDMENT BROUGHT U/S. 80HHC BY TAXATION LAW (AMENDMENT) ACT, 2005. THE RESTRICTIONS THAT WERE BROUGHT IN BY THE ABOVE SAID ACT IN 2005 WITH RETROSPECTIVE EFFECT COULD NOT HAVE BEEN VISUALISED EITHER BY THE ASSESSEE OR THE ASSESSING OFFICER AT THE TIME THE ORIGINAL ASSESSMENT WAS COMPLETED. HENCE, IN OUR VIEW, THE ASSESSING OFFICER WAS NOT RIGHT IN LAW IN ISSUING THE NOTICE OF REOPENING ON THE BASIS OF A SUBSEQUENT AMENDMENT, WITHOUT ESTABLISHING FAULT ON THE PART OF THE ASSES SEE, I.E., WITHOUT DEMONSTRATING AS TO HOW THERE WAS FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN OU R VIEW, THE RELIANCE PLACED BY LD D.R ON EXPLANATION 1 IS MISPLACED, SINCE IT IS NOT A CAS E, WHERE THE CLAIM FOR DEDUCTION U/S 80HHC OF THE ACT WAS NOT ADMISSIBLE AS PER THE PROV ISIONS THAT WERE EXISTING AT THE RELEVANT POINT OF TIME. 7. WE HAVE ALSO CAREFULLY CONSIDERED THE ORDER OF T HE LD. CIT(A) AND THE DECISION TAKEN BY THE LD. CIT(A) IS EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE. I HAVE CONSIDERED THE SUBMISSIONS AND GONE THROUG H THE FACTS OF THE CASE. IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S. 143(3) . THE ASSESSING OFFICER DID NOT FIND ANY FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE PROV ISO TO SEC. 147 IS VERY CLEAR ABOUT THIS FACT 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 IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REA SON FOR THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN. THE CONTENTION OF THE AUTHORISED REPRESENTATIVE IS THAT THE NOTICE WAS ISSUED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AND AS THE ORIGINAL ASS ESSMENT WAS COMPLETED U/S. 143(3) NO REASSESSMENT PROCEEDINGS CAN BE COMMENCE D UNLESS THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL F ACTS NECESSARY FOR ASSESSMENT. IN THE INSTANT CASE THERE IS NO FAILURE ON THE PAR T OF THE APPELLANT AND ALSO THE PROVISIONS OF SECTION 147 HAVE BEEN INVOKED AFTER A PERIOD OF FOUR YEARS I.E. BEYOND THE TIME LIMIT PRESCRIBED BY THE STATUTE. IN VIEW OF THIS I HOLD THAT THE ISSUE OF NOTICE U/S. 148 IN THE INSTANT CASE IS IN VALID. IN THE RESULT, APPEAL ON THIS GROUND IS ALLOWED. I.T.A. NO.603/COCH/2010 4 8. FROM THE FOREGOING DISCUSSIONS, WE ARE OF THE V IEW THAT THE LD CIT(A) HAS TAKEN THE DECISION ON THIS ISSUE IN ACCORDANCE WITH THE L AW AND HENCE DO NOT FIND ANY INFIRMITY IN HIS DECISION ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 11-01-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 11TH JANUARY, 2013 GJ COPY TO: 1. SHRI G.KRISHNAN NAIR, KRISHNAN FOOD PROCESSORS, ISWARYA , BEACH ROAD, KOLLAM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I,TRIVA NDRUM. 4.THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN I.T.A. NO.603/COCH/2010 5