Gujarat Industries Power Co.Ltd., Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 642/AHD/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5911 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-06-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH HEARING CONCLUDED O
• Keywords: Reopening of assessment; Rectification of order; Reason to believe; Reassessment proceedings
• Section: 143(3); 115JB; 154

Judgement Text

ITA NO.642/AHD/2011 ASSESSMENT YEAR: 2001-02 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO.642/AHD/2011 ASSESSMENT YEAR: 2001-02 GUJARAT INDUSTRIES POWER COMPANY LIMITED ..................APPELLANT P.O. PETROCHEMICALS, BARODA 391 346. [PAN : AAACG 7277 Q] VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), BARODA . ............................RESPONDENT APPEARANCES BY SANJAY R. SHAH FOR THE APPELLANT V.K. SINGH FOR THE RESPONDENT HEARING CONCLUDED ON: 20.12.2017 ORDER PRONOUNCED ON : 19.03.2018 O R D E R PER PRAMOD KUMAR, AM: 1. THIS APPEAL FILED BY THE ASSESSEE APPELLANT IS D IRECTED AGAINST ORDER DATED 14.12.2010, PASSED BY THE LEARNED CIT(A), IN THE MA TTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961 (THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR 2001-02. 2. IN GROUND NOS.1, 2, 2.1, 2.2. & 2.3, WHICH WE WI LL TAKE UP TOGETHER, THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCES:- 1. THE ORDER OF THE LEARNED CIT (APPEALS) IN UPHOL DING THE REASSESSMENT IS BAD IN LAW AND REQUIRES TO BE QUASHED. IT BE SO DO NE NOW. 2. THE LEARNED CIT (APPEALS) WHILE UPHOLDING THE RE OPENING OF ASSESSMENT ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLA NT HAD OFFERED TO TAX THE INTEREST INCOME IN RECTIFICATION APPLICATION AND THE AO DID NOT HAVE ANY OTHER REASON TO REOPEN THE ASSESSMENT. IT IS SUBMITTED IT BE SO HEL D NOW. 2.1 THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN UPHOLDING THE EXERCISE OF WIDER POWERS U/S 147 OF THE ACT WHERE T HE INCOME COULD HAVE BEEN BROUGHT TO TAX BY PASSING AN ORDER U/S 154 OF THE A CT. IT IS SUBMITTED THAT IT BE SO HELD NOW. ITA NO.642/AHD/2011 ASSESSMENT YEAR: 2001-02 PAGE 2 OF 5 2.2 THE LEARNED CLT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE REOPENING OF ASSESSMENT INSPITE OF THE FACT THAT TH E ADDITION IN RESPECT OF THE INCOME FROM SHAW WALLACE & CO. LTD. WAS DELETED BY HIM WHICH WAS THE SOLE REASON FOR REOPENING OF ASSESSMENT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.3 THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT EXPLANATION 3 TO SECTION 147 WAS APPLICABLE TO THE CASE OF THE APPELLANT. IT IS SUBMITTED THAT SINCE THE REOPENING OF ASSESSMENT IS BAD IN LAW EXPLANATION 3 TO SECTION 147 IS NOT APPLICABLE TO THE CASE OF THE AP PELLANT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT. THE REASONS F OR REOPENING, AS CONVEYED TO THE ASSESSEE VIDE LETTER DATED 27.09.2004, ARE AS FOLLO WS :- NO. ACIT 1(1)/BRD/GIPCL/04-05 OFFICE OF TH E ASSTT. COMMISSIONER OF INCOME- TAX CIRCLE 1(1), 1 ST FLOOR, AYKAR BHAVAN, RACE COURTSE, BARODA. DATED: 27-9-2004 TO THE PRINCIPAL OFFICER, M/S. GUJARAT INDUSTRIAL POWER COMPANY LIMITED, PO PETROCHEMICALS, DIST. BARODA. SIR, SUB: REASONS FOR REOPENING U/S.148 IN THE CASE OF M/S. GUJARAT INDUSTRIAL POWER COMPA NY LIMITED A.Y. 2001-02 REGARDING WITH REFERENCE TO THE ABOVE, THE REASONS FOR REOPEN ING THE ASSESSMENT ARE AS FOLLOWS : THE ASSESSEE VIDE ITS LETTER DATED 4-4-2002 STATED AS UNDER : THE INTEREST INCOME OF RS.3975000/- CREDITED BY SHA W WALLACE & CO. LTD. AND ON WHICH TAX OF RS.888810/- IS DEDUCTED HA S NOT BEEN CONSIDERED IN THE ACCOUNTS OF THE ASSESSEE COMPANY FOR FINANCI AL YEAR 2000-2001. HENCE, YOU MAY CONSIDER THE SAID INCOME BY PASSING THE RECTIFICATION ORDER AND GIVE US DUE CREDIT FOR THE TAX DEDUCTED AT SOUR CE BY SHAW WALLACE & CO. YOURS FAITHFULLY, ITA NO.642/AHD/2011 ASSESSMENT YEAR: 2001-02 PAGE 3 OF 5 SD/- (NEELAM SHUKLA) ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 1(1), BARODA. 4. VIDE ORDER DATED 14.12.2010, HOWEVER, LEARNED CI T(A) DELETED THE RELATED ADDITION BY OBSERVING AS FOLLOWS :- 8. THE SEVENTH AND EIGHTH GROUNDS RELATE TO THE INCREASE IN BOOK PROFIT U/S 115JB BY RS.3975000/- BEING INTEREST FROM SHAW WALL ACE & CO. THE NINTH GROUND IS AGAINST NON-GRANTING OF TDS RATE OF RS.88 8810/- ON INTEREST FROM SHAW WALLACE & CO. 8.1 THE AO NOTICED THAT THE ASSESSEE HAD NOT DISCL OSED THE INTEREST INCOME OF RS.3975000/- FROM SHAW WALLACE & CO. IN THE ORIG INAL RETURN. THE SAME WAS INCLUDED IN ITS RETURN OF INCOME IN RESPONSE TO NOT ICE U/S 148. THE ASSESSEE FAILED TO FURNISH DETAILS IN RESPECT OF ACCRUED INT EREST RECEIVED DURING THE YEAR OR ANY COGENT REASON FOR NOT DISCLOSING THE INTEREST I NCOME. THUS THE INTEREST INCOME OF RS.3975000/- WAS INCLUDED IN THE AMOUNT O F BOOK PROFIT. FURTHER, THE AO DID NOT GIVE CREDIT FOR TDS AS THE INTEREST INCO ME WAS NOT DECLARED IN THE RETURN. 8.2 IN APPEAL IT IS ARGUED THAT THE APPELLANT HAD ADVANCED LOAN TO SHAW WALLACE & CO. HOWEVER, THE SAID COMPANY WENT INTO RED. NEITHER THE REPAYMENT OF PRINCIPAL NOR INTEREST WAS RECEIVED. APPELLANT T HEREFORE DID NOT PROVIDE FOR INTEREST IN THE BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION. NOR HAD IT OFFERED THE SAID INCOME TO TAX UNDER THE NORMAL PRO VISIONS OF THE ACT. THE APPELLANT HAD RECEIVED FROM SHAW WALLACE ON 13.8.20 01, A TDS CERTIFICATE PERTAINING TO INTEREST INCOME FOR THE YEAR UNDER CO NSIDERATION. THE APPELLANT ACCORDINGLY FILED THE SAID CERTIFICATE ON 22,8.2001 . THE APPELLANT SUBMITS THAT SUBSEQUENTLY DURING THE FINANCIAL YEAR 02-03 (AY 03 -04) THE APPELLANT ENTERED INTO MEMORANDUM OF UNDERSTANDING WITH THE SAID PART Y. ACCORDINGLY THE APPELLANT HAS ACCOUNTED AND OFFERED TO TAX THE INTE REST INCOME RECEIVED AS PER MEMORANDUM OF UNDERSTANDING IN AY 03-04. IT IS ARGU ED THAT THE APPELLANT HAD ALREADY OFFERED FOR TAX THE INTEREST INCOME UNDER N ORMAL PROVISIONS AS WELL AS U/S 115JB FOR AY 03-04 AND THAT IT WOULD BE UNFAIR TO T AX THE INCOME TWICE. IT IS ALSO SUBMITTED THAT IF THE INTEREST IS TREATED AS INCOME OF THE YEAR THE AO MAY BE DIRECTED TO GRANT TDS ON SUCH INTEREST INCOME AND D IRECTION BE GIVEN TO EXCLUDE THE SAME FROM TOTAL INCOME OF AY 03-04. 8.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT AND THE REASSESSMENT ORDER. A PERUSAL OF THE MEMORANDUM OF UNDERSTANDING DT. 26.3.2002 REVEALS THAT THE OUTSTA NDING AMOUNT FROM SHAW WALLACE & CO. (SWC) AS ON 30.11,2001 WAS ADMITTED A T RS.4,90,31,192/- INCLUSIVE OF PRINCIPAL OF RS.3 CRORES AND THE BALAN CE OF INTEREST AND THAT SWC HAD DEDUCTED AND DEPOSITED TDS OF RS.69,62,368/- ON THE INTEREST ACCRUED FOR VARIOUS YEARS STARTING FROM F.Y. 1995-96 TO 2000-01 . IT IS ALSO SUBMITTED THAT THE TDS CERTIFICATES WERE HANDED OVER TO THE APPELLANT BEFORE SIGNING OF MOD, THE PAYMENT SCHEDULE IS ALSO INDICATED IN THE MOD AND O N PROGRESSIVE RECEIPT OF THE INSTALLMENTS THE APPELLANT HAS PROMISED TO WITHDRAW PERIODICALLY THE COMPLAINTS ITA NO.642/AHD/2011 ASSESSMENT YEAR: 2001-02 PAGE 4 OF 5 FILED AGAINST, THE SWC. IT IS IMPRESSED BY THE APP ELLANT THAT INTEREST OF RS.105 LAKHS WAS RECEIVED IN A.Y. 03-04 AND WAS OFFERED FO R TAXATION IN THAT YEAR UNDER THE HEAD PRIOR PERIOD INCOME. CONSIDERING THAT THE INTEREST WAS NOT RECEIVED FROM SWC RIGHT FROM F.Y. 95-96 AND LEGAL PROCEEDINGS WER E ALSO INITIATED AND THAT ONLY AFTER SIGNING OF MOD, RIGHT AND CLAIM TO RECEI VE INTEREST FINALLY CRYSTALLIZED, IN MY VIEW IT WOULD BE FAIR TO TAX THE ENTIRE INTEREST INCOME IN A.Y. 03-04 AS OFFERED BY THE APPELLANT AND CORRESPONDING TDS CREDIT MAY A LSO BE ALLOWED. FOR THE SAME REASON, THE INTEREST INCOME SHOULD NOT BE INCL UDED IN THE BOOK PROFIT FOR THE CURRENT ASSESSMENT YEAR. GROUNDS NO.7 & 8 ARE ALLOW ED AND GROUND NO.9 IS DISMISSED. 5. THE GROUND ON WHICH THE REASSESSMENT WAS DONE DI D NOT FIND APPROVAL OF THE LEARNED CIT(A) AND WE ARE INFORMED THAT THE MATTER RESTS THERE IN THE SENSE THE ASSESSING OFFICER IS NOT IN APPEAL AGAINST THE AFOR ESAID ORDER OF THE LEARNED CIT(A). 6. LEARNED COUNSEL FOR THE ASSESSEE NOW SUBMITS THA T ONCE THE VERY INCOME, FOR THE ALLEGED ESCAPEMENT OF WHICH THE IMPUGNED REASSESSME NT PROCEEDINGS ARE TAKEN, IS DELETED BY THE LEARNED CIT(A) AND THE MATTER RESTS THERE, THE REASSESSMENT PROCEEDINGS CANNOT BE SAID TO BE SUSTAINABLE IN LAW . IN SUPPORT OF THIS PROPOSITION, HE RELIES UPON THE JUDGEMENT OF HONBLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. JET AIRWAYS INDIA LIMITED (331 ITR 236) WHICH HAS BEEN REFERRED TO, WITH APPROVAL, BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF G ANESH HOUSING CORPORATION LIMITED VS. DCIT (341 ITR 312). LEARNED DEPARTMENTAL REPRE SENTATIVE, ON THE OTHER HAND, DUTIFULLY RELIES UPON THE STAND OF THE AUTHORITIES BELOW BUT DOES NOT POINT OUT ANY SPECIFIC INFIRMITY IN THE PROPOSITIONS CANVASSED BY THE LEAR NED COUNSEL FOR THE ASSESSEE. 7. THE PLEA OF THE LEARNED COUNSEL IS INDEED WELL T AKEN. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GANESH HOUSING CORPORATION LIM ITED (SUPRA) HAVE OBSERVED AS FOLLOWS :- 13.2 IT IS NEEDED TO BE MENTIONED HERE FURTHER TH AT ESSENTIALLY ONLY ONE REASON IS GIVEN WHILE REOPENING THE ASSESSMENT. IT IS CONTENDED BY LEARNED COUNSEL MR. BHATT THAT OTHER INCOME ALSO ARE NOTICE D TO HAVE ESCAPED ASSESSMENT AS WAS NOTICED DURING THE COURSE OF REAS SESSMENT. BOTH THE SIDES HAVE ARGUED ON THIS ASPECT AS TO WHETHER, IF THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAS ESCAPED AS SESSMENT, IN FACT DID NOT ESCAPE ASSESSMENT AND HIS NOTICE FALLS ON THAT PART ICULAR GROUND, WHETHER ADDITIONAL GROUNDS ARE AVAILABLE TO HIM FOR OTHER I NCOME WHICH DO NOT FIND PLACE IN THE NOTICE OR NOT. RELIANCE IS ALSO PLACED BY THE LEARNED COUNSEL OF THE PETITIONER ON THE JUDGMENTS OF BOMBAY HIGH COUR T IN CASE OF CIT VS. JET AIRWAYS (I) LTD. (2011) 239 CTR (BOM) 183 : (20 11) 52 DTR (BOM) 71 : (2011) 331 ITR 236 (BOM); AND OF DELHI HIGH COURT I N CASE OF RANBAXY LABORATORIES LTD. VS. CIT (2011) 242 CTR (DEL) 117 : (2011) 57 DTR (DEL) 281 : (2011) 336 ITR 136 (DEL). THE ISSUE HERE IS ESSEN TIALLY AND CENTRALLY THE ITA NO.642/AHD/2011 ASSESSMENT YEAR: 2001-02 PAGE 5 OF 5 ONE WHICH HAD BEEN EXAMINED AND DISCUSSED ELABORATE LY. MOREOVER, AS NOTED HEREINABOVE, BY VIRTUE OF THE DECISION OF THI S COURT, THE VERY EDIFICE OF REOPENING IS COMPLETELY GONE. NOTICE FOR REOPENI NG ITSELF IS THEREFORE REQUIRED TO BE QUASHED. IF NOTICE WAS HELD VALID AN D ASSESSMENT PERMITTED IN WHICH ADDITIONS OTHER THAN THOSE FOR WHICH NOTIC E WAS ISSUED COULD HAVE BEEN MADE OR NOT IS AN ISSUE NOT ARISING IN THIS PE TITION AND WE WOULD THEREFORE NOT LIKE TO COMMENT UPON THE SAME. 8. IN THIS VIEW OF THE MATTER AND HAVING REGARD TO THE FACT THAT THE ADDITION RELATING TO THE POINT ON WHICH ASSESSMENT WAS REOPENED STANDS D ELETED AND THE MATTER RESTS THERE, THE REASSESSMENT IS UNSUSTAINABLE IN LAW. WE , THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. AS REASSESSMENT ITSELF I S QUASHED, ALL OTHER ISSUES ARE RENDERED ACADEMIC. 9. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERM S INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MARCH, 2018. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) DATED: 19 TH MARCH, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD