M/s. Barmer Agro Gum Ind., JODHPUR V. ITO, BARMER

ITA 65/JODH/2014

• Counselvise Citation: 6523314 RSA 2014
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN
• Keywords: Reopening of assessment; Period of limitation; Difference of opinion; Time period of passing order; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 234B; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 65/JODH/2014 (A.Y. 2006-07) M/S. BARMER AGRO GUM IND., VS. I TO, BARMER. C/O SHRI U.C. JAIN, ADVOCATE, SHATRUNJAY HARI SINGH NAGAR, PALI ROAD, JODHPUR. PAN NO. AAFFB 3172 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 22/05/2014. DATE OF PRONOUNCEMENT : 10/06/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 18/12/2013 OF LD. CIT(A), JODHPUR. THE FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL:- 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING VALIDITY OF INITIATION OF ASSESS MENT PROCEEDINGS U/S 148/147 ON THE ISSUE WHICH WAS DULY CONSIDERED BY T HE THEN AO WHILE 2 PASSING THE ASSESSMENT ORDER U/S 143(3) AND AS SUCH THE REOPENING OF ASSESSMENT WAS BASED ON CHANGE OF OPINION. 2. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 4,20,667/- BY DISALLOWING THE DEDUCTION U/S 80IB FOR DEPB WHICH WAS ALLOWED IN AS SESSMENT PROCEEDINGS U/S 143(3) CONSIDERING THE JUDICIAL PRO NOUNCEMENT OF THE JURISDICTIONAL HIGH COURT. 3. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF INTEREST CHARGED BY A.O. U/S 234B OF THE I.T. ACT, 1961. 4. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO R AISE ANY ADDITIONAL AND/OR ALTERNATIVE GROUND AT OR BEFORE THE HEARING OF APPEAL. 5. THE PETITIONER PRAYS FOR JUSTICE & RELIEF. 2 GROUND NOS. 4 & 5 ARE GENERAL IN NATURE, SO DO NO T REQUIRE ANY COMMENTS ON OUR PART. VIDE GROUND NO. 1, THE ASSES SEE HAS CHALLENGED THE VALIDITY OF INITIATION OF ASSESSMENT PROCEEDING S UNDER SECTION 148/147 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) BY STATING THAT THE ISSUE WAS DULY CONSIDERED BY THE T HEN ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 14 3(3) OF THE ACT AS SUCH REOPENING WAS BASED ON CHANGE OF OPINION. 3. AS REGARD TO THIS ISSUE, LEARNED COUNSEL FOR THE A SSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE VIDE ORDER DATED 26/06/2013 IN C.O. NO. 01/JODH/201 2 ARISING OUT OF ITA 3 NO. 374/JU/2011 FOR THE A.Y. 2005-06 IN ASSESSEES OWN CASE. COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. 4. IN HIS RIVAL SUBMISSIONS, LEARNED D.R., ALTHOUGH, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, BUT COULD NOT CONT ROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING YEAR I.E. A.Y. 2005-06 IN C.O. NO. 01/JODH/2012 ARISING OUT OF ITA NO. 374/JU/2011 FOR THE A.Y. 2005-06 ORDER DATED 26/06/2013 WHEREIN THE RELEVANT FINDING S HAVE BEEN GIVEN IN PARA 2.9 TO 2.12 WHICH READ AS UNDER:- 2.9 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT FOR THE ASSESSMEN T YEAR 2004-05, THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(5) OF THE ACT WAS ALLOWED AND FOR THE YEAR UNDER CONSIDERATION, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER ISSUED NOTICE U/S 142(1) OF THE ACT, THE COPY OF WHICH IS PLACED AT PAGE NOS 26 TO 28 OF THE ASSE SEE'S PAPER BOOK. IN THE SAID NOTICE DATED 01-08-2006, THE ASSESSING OFF ICER ASKED THE ASSESSEE VIDE POINT NO. 20 AND 22 AS UNDER:- 20. PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF PR OFIT ON SALE OF DEPB SHOWN BY YOU FOR RS. 7,33,654/- 4 22. JUSTIFY THE DEDUCTION CLAIMED BY YOU U/S 80IB O F THE INCOME TAX ACT, 1961. IN THIS REGARD STATE:- (A) WHETHER THE BUSINESS IS FORMED BY SPLITTING UP OF RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. (B) WHETHER THE BUSINESS IS FORMED BY THE TRANSFER TO A NEW BUSINESS OR MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. (C ) WHETHER OR NOT ANY ARTICLE OR THING IS PRODUCE D OR MANUFACTURED WHICH IS NOT SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE. (D) DATE OF COMMENCEMENT OF BUSINESS ALONGWITH DOCUMENTARY EVIDENCE. (E) COPY OF REGISTRATION WITH REGISTRAR OF PARTNERS HIP FIRMS AND WITH REGISTRAR OF SMALL SCALE INDUSTRIES . (F) NO. OF WORKERS EMPLOYED. LIST OF NAMES AND COMPLETE ADDRESS OF THREE WORKERS ALONGWITH AMOUNT OF SALARY PAID TO THEM. BASIS OF EMPLOYMENT GIVEN TO T HESE WORKERS I.E. WHETHER ON CONTRACT BASIS OF OTHERWISE . (G) WHETHER MANUFACTURING IS CARRIED ON WITH THE AI D OF POWEER OR NOT. (H) IN WHICH ASSESSMENT YEAR WAS THE DEDUCTION FIRS T CLAIMED BY YOU AND TILL DATE HOW MANY TIMES THE SAI D DEDUCTION HAS BEEN CLAIMED BY YOU. ALSO FURNISH SUPPORTING DOCUMENTARY EVIDENCE. 2.10 FROM THE ABOVE QUERY, IT IS CLEAR THAT THE ASS ESSING OFFICER SPECIFICALLY ASKED THE ASSESSEE TO PRODUCE THE DOCU MENTARY EVIDENCE IN SUPPORT OF PROFIT ON SALE OF DEPB AMOUNTING TO RS. 7,33,654/- AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT VID E ORDER DATED 30- 10-2007, COPY OF WHICH IS PLACED AT PAGES 35 TO 37 OF THE ASSESSEES COMPILATION. IN THE SAID ASSESSMENT ORDER, NO DISAL LOWANCE WAS MADE ON ACCOUNT OF DEDUCTION CLAIMED U/S 80IB OF THE AC T FOR THE DEPB AMOUNTING TO RS. 7,33,654/-. SO, THERE WAS A CLEAR CHANGE OF OPINION 5 WHEN NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE A SSESSEE FOR REOPENING THE ASSESSMENT ON ACCOUNT OF DEDUCTION C LAIMED BY THE ASSESSEE U/S 80IB OF THE ACT ON ACCOUNT OF DEPB RE CEIPTS. ON A SIMILAR ISSUE, THEIR LORDSHIPS OF HON'BLE SUPREME COURT IN THE CASE OF DCIT VS SIMPLEX CONCRETE PIPES (INDIA) LTD. (COPY OF WHICH IS PLACED AT PAGE 98 OF THE ASSESEE'S COMPILATION) IN CIVIL APPEAL NO. 2 329 OF 2006 VIDE ORDER DATED 11-09-2012 HELD AS UNDER:- WE SEE NO ERROR IN THE OBSERVATION MADE BY THE DI VISION BENCH OF THE HIGH COURT IN THE IMPUGNED JUDGMENT THAT ONC E LIMITATION PERIOD OF FOUR YEARS PROVIDED U/S 147/149(1A) OF TH E INCOME TAX ACT, 1961 [FOR SHORT, THE ACT] EXPIRES THEN THE QUESTI ON OF REOPENING BY THE DEPARTMENT DOES NOT ARISE,. IN ANY EVENT, AT THE RE LEVANT TIME, WHEN THE ASSESSMENT ORDER GOT COMPLETED, THE LAW AS DECL ARED BY THE JURISDICTIONAL HIGH COURT, WAS THAT THE CIVIL CONST RUCTION WORK CARRIED OUT BY THE ASSESSEE WOULD BE ENTITLED TO THE BENEF IT OF SECTION 80HH OF THE ACT, WHICH VIEW WAS SQUARELY REVERSED IN THE C ASE OF CIT VS N.C. BUDHARAJA AND CO. AND ANOTHER REPORTED IN (1993) 20 4 ITR 412. THE SUBSEQUENT REVERSAL OF THE LEGAL POSITION BY THE JU DGMENT OF THE SUPREME COURT DOES NOT AUTHORISE THE DEPARTMENT TO REOPEN THE ASSESSMENT, WHICH STOOD CLOSED ON THE BASIS OF THE LAW, AS IT STOOD AT THE RELEVANT TIME. THE CIVIL APPEALS ARE, ACCORDINGLY, DISMISSED. NO O RDER AS TO COSTS. 2.11 IN THE PRESENT CASE, WHEN THE CLAIM OF THE ASS ESSEE WAS ACCEPTED BY THE ASSESSING OFFICER U/S 80IB(5) OF TH E ACT THEN THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF SARAF SEASONING UDYOG, 13 DTR 109 WAS IN FAVOUR OF THE AS SESSEE. THEREFORE, SUBSEQUENT JUDGMENT OF HON'BLE SUPREME COURT DOES N OT AUTHORISE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT WHICH ST OOD CLOSED ON THE BASIS OF LAW AS IT STOOD AT THE RELEVANT TIME. THER EFORE, THE NOTICE ISSUED U/S 148 OF THE ACT BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT ON 29-10-20 07 WAS NOT JUSTIFIED AND RE-ASSESSMENT FRAMED VIDE ORDER DATED 3-11-2010 WAS INVALID SINCE THE NOTICE U/S 148 OF THE ACT WAS ISS UED ON THE BASIS OF CHANGE OF OPINION. ON A SIMILAR ISSUE, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. , 320 ITR 561 HAS HELD AS UNDER:- 6 THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLI TERATED AFTER THE SUBSTITUTION OF SECTION 147 OF THE INCOME TAX ACT, 1961, BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THA T INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT TH E ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE, AFTER APRIL 1,1989, THE ASSE SSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS T ANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME ASSESSMENT. REASON MUST HAVE A LINK WITH THE INFORM ATION OF THE BELIEF. 2.12 IN THE PRESENT CASE ALSO, AS WE HAVE ALREADY M ENTIONED THAT THE ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER ME RELY ON CHANGE OF OPINION, THEREFORE, THE REASSESSMENT FRAMED BY THE ASSESSING OFFICER ON THE BASIS OF NOTICE ISSUED U/S 148 OF THE ACT WH ICH WAS ON ACCOUNT OF CHANGE OF OPINION, WAS NOT VALID. ACCORDINGLY , THE SAME IS QUASHED. 6 . SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED IN THE A.Y. 2005-06, SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 26/06/2013 IN ASSESSEES OW N CASE IN C.O. NO. 01/JODH/2012 ARISING OUT OF ITA NO. 374/JU/2011, WE HOLD THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS REO PENED BY THE ASSESSING OFFICER MERELY ON CHANGE OF OPINION, SO I T WAS NOT VALID AND ACCORDINGLY THE SAME IS QUASHED. 7 . SINCE WE HAVE QUASHED THE ASSESSMENT ORDER BY ALL OWING THE GROUND NO. 1, THEREFORE, THE GROUND NOS. 2 & 3 BEC OME ACADEMIC IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 7 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 10 TH JUNE, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH JUNE, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.