Shri Jayeshkumar Hasmukhlal Vasa, RAJKOT-GUJARAT V. The Asstt. Commr. Income Tax, Circle-5, RAJKOT-GUJARAT

ITA 8/RJT/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0177 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHHATRE
• Assessee Lawyers: RANJIT LALCHANDANI
• Keywords: Difference of opinion; Assessment record; Change of opinion
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 08/RJT/2015 (ASSESSMENT YEAR: 2005-06) SHRI JAYESHKUMAR HASMUKHLAL VASA. PROOP. OF M/S. JAIN STEEL INDUSTRIES, C/O. M/S. LOTUS JEWELLERY MANDVI CHOWK DERA SHRI, RAJKOT-360001 V/S THE ACIT, CIRLCE-5, RAJKOT (APPELLANT) (RESPONDENT) PAN: AARPV9783E APPELLANT BY : SHRI RANJIT LALCHANDANI, A.R. RESPONDENT BY : SHRI D.R. CHHATRE, SR. D.R. ( )/ ORDER DATE OF HEARING : 08 -08-201 6 DATE OF PRONOUNCEMENT : 1 -08-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A)-IV, RAJKOT DATED 13.11.2014 PERTAINING TO A. Y. 2005-06. ITA NO. 08/R JT/2015 . A.Y.2005-06 2 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. THE COMMISSIONER OF INCOME [APPEALS] ERRED IN CONFI RMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN REOPENING THE ASSESSMENT U/S.1 47 R.W.S. 148 OF THE INCOME TAX ACT. NO INCOME HAD ESCAPED ASSESSMENT WITHIN THE ME ANING OF SECTION 147 OF THE ACT. THE REOPENING OF THE ASSESSMENT IS UNWARRANTED AND UNJUSTIFIED 2. WITHOUT PREJUDICE TO GROUND NO. 1 THE ORDER OF ASSE SSMENT U/S. 143(3) R.W.S. 147 OF THE ACT IS NOT VALID IN VIEW OF THE FACT THAT THE A SSESSING OFFICER DID NOT PASSED AN SPEAKING ORDER ON OBJECTIONS TO REASONS FOR REOPENI NG OF THE ASSESSMENT FILED BY THE APPELLANT ON 30-03-2010. [BY LETTER DATED 27-03-201 0] 3. WITHOUT PREJUDICE TO GROUND NO. 1 AND 2 THE COMMISS IONER OF INCOME [APPEALS] ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSES SING OFFICER IN WITHDRAWING THE CLAIM OF DEDUCTION U/S. 80IA AMOUNTING TO RS.100339 2/- ON THE GROUND THAT IT WAS ALLOWABLE FOR 7 YEARS AND NOT FOR 10 YEARS. THE APP ELLANT IS ENTITLED TO THE DEDUCTION FOR 10 YEARS AS PER THE SUBMISSIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. THE COMMISSIONER OF INCOME [APPEALS] ERRED IN CONFI RMING THE ACTION OF LEARNED ASSESSING OFFICER IN CHARGING INTEREST U/S.234B AMO UNTING TO RS.237892/- AND 234C AMOUNTING TO RS.5334/-OF THE ACT. THE CHARGING OF I NTEREST IS NOT JUSTIFIED. 3. WITH GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER MADE U/S. 143(3) R.W.S. 147 OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AT LENGTH. HAVI NG HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW. IN THIS CASE, THE ORIGINAL ASSESSMENT ORDER WAS MADE U/S. 143(3) OF THE ACT VIDE ORDER DATED 18.12.2007. IN T HE ORIGINAL ASSESSMENT, THE RETURN OF INCOME DECLARING TOTAL IN COME AT RS. 47,74,020/- WAS CONSIDERED AND DURING THE COURSE OF THE SCRUTINY ITA NO. 08/R JT/2015 . A.Y.2005-06 3 ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASS ESSEE HAS CLAIMED DEDUCTION U/S. 80IA AT RS. 10,03,392/-. 5. DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEE DINGS VIDE ORDER SHEET ENTRY DATED 20.11.2007, THE A.O. ASKED THE AS SESSEE, INTERALIA, TO FURNISH DETAILS IN RESPECT OF ELIGIBILITY OF ALL OWANCE U/S. 80IA(4) AND VIDE REPLY DATED 06.12.2007, THE ASSESSEE FILED NEC ESSARY DETAILS FOR THE ELIGIBILITY OF ALLOWANCE CLAIMED U/S. 80I. AFTE R PERUSING THE DETAILS AND AFTER EXAMINING THE ELIGIBILITY OF THE ASSESSEE , THE A.O. ALLOWED THE CLAIM AND COMPLETED THE ASSESSMENT. 6. THE REASONS FOR RE-OPENING THE ASSESSMENT READ AS U NDER:- NO. ACIT/CIR.5/JHV/2009-10 DATED 21/03/201 0 TO, SHRI JAYESH H. VASA RAJKOT SIR SUB: REASONS FOR REOPENING THE ASSESSMENT FOR A.Y . 2005-06 KINDLY REFER TO THE ABOVE, 2, IN THIS CONNECTION THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT FOR A.Y. 2005-06 IS REPRODUCED AS UNDER. AS PER SECTION 801(1) OF THE IT ACT ' WHERE THE G ROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFIT AND GAINS DERIVED FROM AN INDUSTRIAL UNDERTAKING OR A SHIP OR THE BUSINESS OF A HOTEL {OR THE BUSINESS OF A REPAIRS TO OCEAN GOING VESSELS OR OTHER POWERED CRAFT} TO WHICH THIS SECTI ON APPLIES THERE SHALL IN ITA NO. 08/R JT/2015 . A.Y.2005-06 4 ACCORDANCE WITH & SUBJECT TO THE PROVISIONS OF THIS SECTION BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFIT AND GAINS OF AN AMOUNT EQUAL TO TWENTY FIVE PERCENT THE REOF' FURTHER AS PER SECTION 801(5) OF THE IT ACT , 'THE DEDUCTION SPECIFIED IN SUB SECTION(L) SHALL BE ALLOWED IN COMPUTING THE TOTAL INCOME IN RESPECT OF A. Y. RELEVANT TO THE PREVIOUS YEAR IN WHICH THE INDUSTRI AL UNDERTAKING BEGINS TO MANUFACTURE/PRODUCE ARTICLES OR THING FOR SEVEN ASS ESSMENT YEARS IMMEDIATELY SUCCEEDING THE INITIAL A. Y.' SCRUTINY OF ASSESSMENT RECORDS REVEALED THAT IN THI S CASE ' THE DATE OF STARTING THE MANUFACTURE BY THE 'A' WAS 03/05/1995 AND SINCE 'A' HAS STARTED CLAIMING DEDUCTION U/S 801 A.Y. 1996-97. SINCE THE FIRST A.Y . IS TO BE COUNTED FROM A.Y. 1996-97 THE 'A' MAY GET DEDUCTION U/S 801 FOR SEVEN MORE YEARS I.E. UPTO A.Y. 2003-04 ONLY. BUT THE 'A' HAS CLAIMED AND WAS ALLOW ED DEDUCTION U/S 80I OF RS. 1003392/- FOR THE A.Y. 2005-06 WHICH WAS NOT ALLOWA BLE. 7. VIDE REPLY DATED 27.03.2010; THE ASSESSEE CHALLENGE D THE VALIDITY OF THE REOPENING OF THE ASSESSMENT. WE FIND THAT THE S AID OBJECTION OF THE ASSESSEE HAS NOT BEEN DISPOSED OF BY THE A.O. 8. A PERUSAL OF THE REASONS GIVEN FOR THE REOPENING OF THE ASSESSMENT SHOWS THAT THE A.O. IS OF THE STRONG BELIEF THAT TH E ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80I. SINCE, THE DATE OF STARTING THE MANUFACTURE BY THE ASSESSEE IS 03.05.1995 AND SINCE THE ASSESSEE HAS STARTED CLAIMING DEDUCTION SINCE A.Y. 1996-97, THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION FOR 7 YEARS ONLY. THIS R EASON GIVEN BY THE A.O IS ITSELF CONTRARY TO THE PROVISIONS OF THE LAW BECAUSE U/S. 80I, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN RELATION TO A NY PROFITS AND GAINS DERIVED, INTERALIA, FROM AN INDUSTRIAL UNDERTAKING WHICH BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, OR TO OP ERATE ITS COLD ITA NO. 08/R JT/2015 . A.Y.2005-06 5 STORAGE PLANT OR PLANTS ON OR AFTER THE 1 ST DAY OF APRIL, 1990 BUT BEFORE THE 1 ST DAY OF APRIL, 1991. THE REVENUE AUTHORITIES HAVE M ENTIONED THAT THE ASSESSEE HAS STARTED THE MANUFACTURING ACT IVITIES FROM 03.05.1995 AND THE FIRST YEAR OF CLAIM WAS A.Y. 199 6-97. THEREFORE, THE VERY BASIS FOR REOPENING THE ASSESSMENT IS ERRO NEOUS. THEREFORE, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSEE NEVER CLAIMED DEDUCTION U/S. 80I BUT CLAIMED DEDUCTION U/S. 80IA(4) OF THE ACT BY WHICH IT IS ELIGIBLE FOR DEDUCTION FOR 10 YEARS. 9. FURTHER, AS MENTIONED ELSEWHERE, A SPECIAL QUERY WA S RAISED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TO WHICH S PECIFIC REPLY WAS FILED ALONG WITH NECESSARY DETAILS. THEREFORE, THE A.O CANNOT REOPEN THE ASSESSMENT AS IT AMOUNTS TO MERELY A CHANGE OF OPINION AND IS AGAINST THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR INDIA LTD. 320 ITR 561. 10. MOREOVER, AS MENTIONED ELSEWHERE, THE REOPENING IS BASED ON A WRONG ASSUMPTION OF THE SECTION, THEREFORE, IN OUR CONSIDERED OPINION; THE NOTICE ISSUE U/S. 148 DESERVES TO BE QUASHED. W E, ACCORDINGLY, QUASH THE ASSESSMENT ORDER MADE U/S. 143(3) R.W.S. 147 OF THE ACT AND SINCE, WE HAVE QUASHED THE REASSESSMENT ORDER, WE DO NOT FIND IT NECESSARY TO GO INTO THE MERITS OF THE CASE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11 - 08 - 2016 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD TRUE COPY