HAFFKINE BIO PHARMACEUTICAL CORPORATON LTD, MUMBAI V. DCIT CIR 7(1)(2), MUMBAI

ITA 7542/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4074 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DROP SINGH MEENA
• Keywords: Depreciation; Period of limitation; Tangible material; Time period of passing order; Unabsorbed depreciation
• Section: 143(3); 142(1); 133(6); 143(2); 271B; 13; 148; 139

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, J M & SHRI S. RIFAUR RAHMAN, AM ./ I.T.A. NO . 7542 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. ACHARYA DHONDE MARG, PAREL, MUMBAI - 400 012 / VS. D CIT CIRCLE - 7(1)(2) , MUMBAI PIN - ./ ./ PAN NO. AAACH 0965 N ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI DHARMESH SHAH, AR / RESPONDENTBY : SHRI DROP SINGH MEENA , DR / DATE OF HEARING : 06.02.2020 / DATE OF PRONOUNCEMENT : 26.02.2020 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) 13 , THANE IN SHORT REFERRED AS LD. CIT(A) , MUMBAI, DATED 28.09.2016 FOR A SSESSMENT YEAR (IN SHORT A Y ) 2012 - 13. 2 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. 2 . THE BRIEF FACTS OF THE CASE ARE , ASSESSEE IS A PUBLIC SECTOR CORPORATION WHOLLY OWNED BY GOVT. OF MAHARASHTRA. IT WAS NOTICED BY THE AO THAT ASSESSEE HAD NOT FILED ITS RETURN OF INCOME FOR AY 2012 - 13, ACCORDINGLY NOTICE U/S 148 OF THE ACT WAS ISSUED ON 08.08.13 ASKING THE ASSESSEE TO FILE ITS RETURN OF INCOME. IN RESPONSE, ASSESSEE SUBMITTED THAT ITS FINAL ACCOUNT HAS BEEN AUDITED AND AWAITING FOR APPROVAL OF BOARD OF DIRECTORS AS THE BOARD ITSELF HAS NOT BEEN CONSTITUTED AND ASSESSEE REQUESTED FOR TIME TO FILE ITS RETURN OF INCOME. FURTHER, AO ISSUED NOTICE U/S 142(1) OF THE ACT DATED 22.10.13 ASKING THE ASSESSEE TO FILE BASIC DETAILS AND AR OF THE ASSESSEE FILED THE RELEVANT INFORMATION ON 11.11.13. THEREAFTER, AO ISSUED NOTICE U/S 142(1) OF THE ACT ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESS MENT SHOULD NOT BE COMPLETED EX - PARTE. IN RESPONSE, ASSESSEE FILED A LETTER DATED 28.05.14 INFORMING THE AO THAT ASSESSEE HAD FILED ITS RETURN OF INCOME ELECTRONICALLY ON 21.03.14 AND ALSO FILED A COPY OF ACKNOWLEDGMENT AND ASSESSEE DECLARED A LOSS OF RS. 5,19,28,801/ - . THE AO ISSUED A NOTICE U/S 143(2) R.W.S. 147 OF THE ACT ON 30.05.14 AND AFTER CONSIDERING THE SUBMISSION OF ASSESSEE, AO ASSESSED THE INCOME U/S 143(3) OF THE ACT AT A LOSS 3 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. OF RS. 5,91,28,801/ - . FURTHER, AO ACKNOWLEDGE THE LOSS RETURN, HOWEV ER THE LOSS RETURN WAS FILED BY THE ASSESSEE BELATEDLY, THEREFORE BUSINESS LOSS DECLARED BY THE ASSESSEE WAS NOT ALLOWED TO CARRY FORWARD. 3. AGGRIE VED WITH THE ABOVE ORDER , ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND SUBMITTED BEFORE HIM THAT THE AO ERRED IN NOT ALLOWING THE BUSINESS LOSS DECLARED BY THE ASSESSEE TO BE CARRIED FORWARD TO THE EXTENT OF 5.19 CRORES AND AT THE SAME TIME ASSESSEE ALSO BROUGHT TO NOTICE THAT THE BUSINESS LOSS ASSESSED INCLUDES UNABSORBED DEPRECIATION TO THE EXTENT OF RS. 3.6 CRORES AND THE BALANCE IS REGULAR BUSINESS LOSS . FURTHER, ASSESSEE SUBMITTED THAT AO INITIATED PENALTY U/S 271B OF THE ACT. 4. AFTER CONSIDERING THE SUBMISSION OF ASSESSEE, LD. CIT(A) ALLOWED THE ASSESSEE TO CARRY FORWARD UNABSORBED DEPRECIATION AND SUSTAINED THE FINDINGS OF AO WITH REGARD TO CARRY FORWARD OF BUSINESS LOSS TO THE EXTENT OF RS. 1.58 CRORES. WITH REGARD TO INITIATION OF PENALTY, ASSESSEE HAS NOT PRESSED THIS GROUND SINCE PENALTY IS NOT EMANAT ING FROM THE ASSESSMENT ORDER PASSED BY THE AO. 4 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. 5 . AGGRIEVED BY THE O RDER OF THE LD. CIT(A), ASSESS EE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN INTERPRETING THE SUBMI SSION OF THE APPELLANT AND UPHOLDING THE DECISION OF LD. AO BY NO ALLOWING CARRY FORWARD OF BUSINESS LOSS OF RS. 1,58,32,539/ - AS DECLARED BY THE APPELLANT. 2. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, ALTER OR DELETE ANY OF THE GROUNDS OF APPEAL. 6 . APART FROM ABOVE, ASSESSEE ALSO FILED ADDITIONAL GROUNDS OF APPEAL WITH A PRAYER TO ADMIT THE SAME BY RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VRS. CIT (229 ITR 383) (SC). 7. AFTER CONSIDERING THE SUBMISSION OF ASSESSEE , WE ACCEPT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE FOR ADJUDICATION BEING A LEGAL IN NATURE. 8. BEFORE US, LD. AR OF THE ASSESSEE BROUGHT TO OUR NOTICE AT PAGE 6 OF THE PAPER BOOK WHICH IS NOTICE U/S 143(2) R.W.S. 147 O F THE ACT ASKING THE ASSESSEE TO APPEAR BEFORE HIM IN CONNECTION WITH RETURN OF INCOME AND IN THE SAME NOTICE, THE REASONS FOR 5 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. REOPENING WAS ALSO EXPLAINED THAT ASSESSEE HAS NOT FILED ITS RETURN OF INCOME FOR AY 2012 - 13. HE SUBMITTED THAT THE REASONS FOR RE OPENING IS NOT PROPER AND REOPENING WAS MADE WITHOUT ANY TANGIBLE MATERIAL AND ALSO NOTICE IS NOT VALID BY REASONING TO THE NOTICE ISSUED ON 30 TH MAY 2014 U/S 143(2) R.W.S. 147 O THE ACT. HE AGREED THAT ASSESSEE HAS NOT FILED ITS RETURN OF INCOME WITHIN TH E DUE DATE AND ALSO HE AGREED THAT ASSESSEE HAS FILED RETURN OF INCOME ONLY AFTER ISSUE OF NOTICE U/S 148 OF THE ACT DATED 08.08.13 AND HE ACKNOWLEDGED THAT ASSESSEE HAS FILED ITS RETURN OF INCOME ONLY ON 21.03.14. HE FURTHER SUBMITTED THAT AO REOPENED THE ASSESSMENT MERELY BECAUSE ASSESSEE HAS NOT FILED ITS RETURN OF INCOME THAT ALONE SHOULD NOT BE THE REASON FOR REOPENING AND HE REFERRED TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GENERAL ELECTORAL TRUST VRS. ITO (2016) 289 CTR BOM 284. 9. ON MERIT, LD. AR SUBMITTED THAT ASSESSEE IS A PUBLIC SECTOR COMPANY OWNED BY THE GOVT. OF MAHARASHTRA AND SUBMITTED THAT THE DELAY IN FILING THE RETURN OF INCOME IS BEYOND THE CONTROL OF THE ASSESSEE DUE TO NON - APPOINTMENT OF BOARD OF DIRECTORS B Y THE 6 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. GOVT. OF MAHARASHTRA, THEREFORE, AO IS NOT PROPER IN DENYING THE BUSINESS LOSS DECLARED BY THE ASSESSEE. 10 . ON THE OTHER HAND, LD. DR BROUGHT TO OUR NOTICE THE FACTS OF THE CASE AND SUBMITTED THAT ASSESSEE HAS FILED ITS RETURN OF INCOME BELATEDLY A ND AS PER THE PROVISION OF LAW, ASSESSEE CANNOT CARRY FORWARD BUSINESS LOSS IRRESPECTIVE OF THE FACT THAT ASSESSEE IS A PUBLIC OR PRIVATE LIMITED COMPANY AND FURTHER, HE RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES. 11 . CONSIDERED T HE RIVAL CONT ENTIONS AND THE MATERIAL PLACED ON RECORD, WE NOTICE FROM THE RECORD THAT ASSESSEE IS A PUBLIC SECTOR COMPANY AND DUE TO INTERNAL EXIGENCIES, ASSESSEE HAS FILED ITS RETURN OF INCOME ONLY ON SERVING OF NOTICE U/S 148 OF THE ACT AND THERE IS NO DISPUTE AS FA R AS THE DATE OF FILING OF RETURN OF INCOME AND ASSESSEE HAS FILED ITS RETURN OF INCOME BELATEDLY EVEN THOUGH ASSESSEE HAS TO DECLARE HUGE LOSS. WE FURTHER NOTICE THAT IT IS MANDATORY ON THE PART OF THE ASSESSEE TO FILE ITS LOSS RETURN IN ORDER TO CARRY FO RWARD LOSS. WITH REGARD TO SUBMISSION OF LD. AR THAT AO CANNOT INITIATE THE PROCEEDINGS U/S 147 OF THE ACT FOR THE REASON THAT ASSESSEE HAS NOT FILED ITS RETURN OF INCOME AND THAT 7 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. REASON ALONE CANNOT BE PROPER TO INITIATE PROCEEDINGS U/S 147 OF THE ACT BY RELYING UPON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GENERAL ELECTORAL TRUST VRS. ITO (SUPRA). 12. ON CAREFUL READING OF THE RATIO OF THE ABOVE DECISION, WE NOTICE THAT HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED IN THE CASE OF TRUST THAT INCOME OF THE ASSESSEE IS NOT DETERMINABLE WHETHER IT HAS TAXABLE INCOME AND AS PER THE PROVISION OF SECTION 139 OF THE ACT, ASSESSEE IS OBLIGATED TO FILE ONLY IT HAS TAXABLE INCOME AND AO CAN COLLECT THE INFORMATION U/S 133(6) OF THE ACT. HOWEVER, WE NOTICE THAT IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND AS FAR AS TRUST IS CONCERNED, IT IS OBLIGATED TO FILE RETURN OF INCOME ONLY WHEN IT HAS TAXABLE INCOME, WHEREAS IN THE CASE OF A COMPANY, IT IS OBLIGATED TO FILE IT S RETURN OF INCOME WHETHER IT HAS PROFIT EARNED OR NOT AND EVEN ON CARRY FORWARD LOSS IS CONCERNED, ASSESSEE HAS TO FILE ITS LOSS RETURN WITHIN THE LIMITATION PERIOD IN ORDER TO AVAIL THE BENEFIT OF CARRY FORWARD LOSS. THEREFORE, THE CASE RELIED UPON BY LD. AR IS DISTINGUISH ABLE AND IN OUR CONSIDERED VIEW, THE PROCEEDINGS INITIATED BY AO U/S 8 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. 147 IS PROPER. ACCORDINGLY, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED . 13. WITH REGARD TO MERIT OF THE CASE, WE NOTICE THAT THERE IS NO DISPUTE THAT ASSESSEE HAS FILED ITS RETURN OF INCOME BELATEDLY AND AS PER THE PROVISIONS OF THE INCOME TAX ACT, ASSESSEE CANNOT AVAIL THE BENEFIT OF CARRY FORWARD WITHOUT FILING THE RETURN OF INCOME ON TIME. WE FURTHER NOTICE THAT LD. CIT(A) HAS ALREADY CONSIDERED THAT THE LOSS RETURN F ILED BY THE ASSESSEE INCLUDES UNABSORBED DEPRECIATION AND BUSINESS LOSS AND HE RESTRICTED THE DENIAL OF CARRY FORWARD LOSS ONLY TO THE EXTENT OF ACTUAL BUSINESS LOSS. THEREFORE, ASSESSEE DOES NOT HAVE A PROPER CASE FOR AVAILING THE BENEFIT OF CARRY FORWARD LOS S BY NOT FOLLOWING THE RESPECTIVE PROVISION OF FILING RETURN WITHIN THE DUE DATE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 14 . IN THE NET RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEB 2020 . SD/ - SD/ - ( VIKAS AWASTHY ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 26 . 02 .2020 SR.PS . DHANANJAY 9 I.T.A. NO. 7542 /MUM/201 6 M/S HAFFKINE BIO PHARMACEUTICAL CORPORATION LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI