M/s. Edelweiss Financial Advisors Ltd., Ahmedabad V. The ACIT.,Circle-3, Ahmedabad

ITA 810/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9784 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 12-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 115JB; 147

Judgement Text

IT A NO. 810 / AHD/ 201 2 ASSESSMENT YEAR: 200 4 - 05 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM] I TA NO. 810 /AHD/201 2 A SSESSMENT Y EAR : 20 0 4 - 05 EDELWEISS FINANCI A L ADVISORS LTD . .APPELLANT ( F ORMERLY KNOWN AS ANAGRAM SE CURITIES LTD. ) ANAGRAM HOUSE, NR. COMME R CE SIX R OADS, NAVRANGPURA, AHMEDABAD 380 009 [ PAN: A A B CA 2916 K ] VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3, AHMEDABAD . RESPONDENT APPEARANCES BY: VIJAY RANJAN , FOR THE A PPELLANT R .K. GUPTA , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING: OCTOBER 30 , 201 5 DATE OF PRONOUNCING THE ORDER : JANUARY 29 , 201 6 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE A SSESS EE APPELLANT HAS CHALLENGED CORRECTNESS OF THE OR DER DATED 11 TH JANUARY, 201 2 , PASSED BY THE LEARNED CIT(A), UNDER SECTION 143(3) READ WITH SECTION 14 7 OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 200 4 - 05 , ON THE FOLLOWING GROUNDS : - 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN UPHOLDING THE VALIDITY OF THE REASSESSMENT PROCEEDING INITIATED BY THE ASSESSING OFFICER U/S.147. 2 . ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE LEARNED CIT(A) ERRED IN CONFIRMING THE A DDITION OF UNABSORBED DEPRECIATION ALLOWANCE OF RS.1,71,93,720/ - MADE BY THE ASSESSING OFFICER WHILE COMPUTING BOOK PROFIT U/S.115JB IT A NO. 810 / AHD/ 201 2 ASSESSMENT YEAR: 200 4 - 05 PAGE 2 OF 5 3 . ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED C IT (A) ERRED IN REJECTING THE GROUND OF APPEAL RAISED BE FORE HIM BY THE ASSESSEE - COMPANY TO THE EFFECT THAT CHARGING OF INTEREST U/S. 234 A , U/S. 234B , U/S. 234C & U/S. 234D OF THE I.T. ACT ON THE BASIS OF THE PROFITS COMPUTED U/S. 115JB OF THE I.T. ACT WAS BAD IN LAW. 2. WE WILL FIRST TAKE UP THE FIRST GROU ND OF APPEAL WHICH DEALS WITH THE VALIDITY OF THE REASSESSMENT PROCEEDINGS. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. IN THIS CASE, SCRUTINY ASSESSMENT WAS COMPLETED ON 29 TH DECEMBER 2006. WHILE REGUL AR INCOME WAS ASSESSED AT NIL AMOUNT, THE TAX WAS LEVIED ON THE BOOK PROFIT UNDER SECTION 115JB AT RS 1,99,52,457. ON 22 ND NOVEMBER 2007, HOWEVER, THE ASSESSING OFFICER DECIDED TO REOPEN THE ASSESSMENT BY RECORDING HIS REASONS FOR DOING SO. IT WAS NOTED THAT WHILE COMPUTING BOOK PROFIT YEAR WISE, LEAST OF LOSS OR DEPRECIATION IS TO BE CONSIDERED FOR NEGATIVE ADJUSTMENT TO WORK OUT THE BOOK PROFIT AS THE WORD LOSS AND DEPRECIATION IS USED IN SINGULAR FORM AND THE WORDS TOTAL ACCUMULATION OR PROGRESSIVE LOSS AND DEPRECIATION HAVE BEEN USED IN THE SECTION IBID AND, ACCORDINGLY, CORRECT BOOK PROFIT UNDER SECTION 115B COMES TO RS 3,71,46,177 . IT WAS ALSO NOTED THAT THE AMOUNT SHOWN AND OFFERED TOV TAX, AS BOOK PROFIT UNDER SECTION 115JB, WAS ONLY RS 1,99, 52,457 - AS AGAINST THE BOOK PROFIT SO COMPUTED AT RS 3,71,46,177. THE ASSESSING OFFICER CONCLUDED THAT AN INCOME OF RS 1,71,93,270 THUS ESCAPED THE ASSESSMENT. IT WAS IN THIS BACKDROP THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED. THE ASSESSEE DID OBJE CT TO THIS REOPENING OF ASSESSMENT AND CONTENDED THAT IT S ONLY A CHANGE OF OPINION WHICH CANNOT BE A LEGALLY SUSTAINABLE REASON FOR REOPENING THE ASSESSMENT. WHEN THE REASSESSMENT ORDER WAS FRAMED, THE ASSESSEE ALSO RAISED AN ISSUE REGARDING THE VALIDITY OF REASSESSMENT PROCEEDINGS BEFORE THE CIT(A) AS WELL. IT DID NOT YIELD ANY SUCCESS EITHER. THE CIT(A) WAS , INTER ALIA , OF THE VIEW THAT NOT A SINGLE QUESTION HAS BEEN RAISED ON THE COMPUTATION OF BOOK PROFITS DURING THE COURSE OF THE ORIGINAL ASSESS MENT PROCEEDINGS, AND THAT ANY DETAIL AVAILABLE ON THE FILE BEFORE ITO DOES NOT, BY ITS MERE PRESENCE OR AVAILABILITY, BECOME AN ITEM OF INFORMATION; IT IS TRANSMUTED INTO AN ITEM OF INFORMATION ONLY, IF AND WHEN, ITS EXISTENCE IS REALIZED AND ITS IMPLICA TIONS ARE RECOGNIZED . HE WAS OF THE VIEW THAT MATERIAL AVAILABLE ON RETURNS BUT FAILURE TO TAKE NOTICE WILL ALSO CONSTITUTE A NEW INFORMATION . HE FURTHER NOTED THAT THE QUESTION OF CHANGE OF OPINION WILL ARISE ONLY WHERE THERE ARE ARE TWO OR MORE PLAU SIBLE OPINIONS ON A SET OF FACTS OR LAW HE WAS OF THE VIEW THAT THE ASPECT IT A NO. 810 / AHD/ 201 2 ASSESSMENT YEAR: 200 4 - 05 PAGE 3 OF 5 OF BOOK PROFIT HAS NOT BEEN CONSIDERED AT ALL AND THAT THE ASSESSING OFFICER, IN THE ORIGINAL ASSESSMENT PROCEEDINGS, HAVE NOT EVEN STATED THAT HE AGREES WITH THE BOOK PROFIT DE CLARED . LEARNED CIT(A) THUS HELD THAT AS THERE WAS NO CONSCIOUS CONSIDERATION OF MATERIAL ON RECORD, THERE COULD BE NO CHANGE OF OPINION . IT WAS IN THIS BACKDROP THAT THE REASSESSMENT PROCEEDINGS WERE SUSTAINED BY THE LEARNED CIT(A). THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 4. LEARNED COUNSEL S BASIC CONTENTION IS THAT IT IS NOT REALLY CORRECT THAT THIS ASPECT OF THE MATTER HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER AT ALL. AS EVIDENT FROM PAGE 11 OF THE PAPERBOOK, AT ITEM NO. 18 OF THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER, THERE IS A SPECIFIC REFERENCE TO TH E DETAILS OF BUSINESS LOSS/ UNABSORBED DEPRECIATION AND LONG TERM CAPITAL LOSS ON THE BASIS OF LATEST ASSESSMENT COMPLETED IN YOUR CASE . THESE DETAILS WERE FURNISHED VIDE LETTER DATED 14 TH OCTOBER 2006, AND BASED THEREON BOOK PROFITS WERE COMPUTED BY TH E ASSESSEE. HOWEVER, IT IS NOT EVEN HIS CASE THAT THESE DETAILS WERE SOUGHT OR CONSIDERED IN THE CONTEXT OF COMPUTATION OF BOOK PROFITS. NOTHING REALLY, THEREFORE, TURNS ON THE REQUISITION MADE BY THE ASSESSING OFFICER - SO FAR AS VALIDITY OF REASSESSMENT P ROCEEDINGS ARE CONCERNED. WE ARE UNABLE TO SEE ANY REFERENCE TO THE COMPUTATION OF BOOK PROFITS OR ANY EFFORTS BY THE ASSESSING OFFICER TOWARDS APPLICATION OF MIND IN THIS CONTEXT. THE MERE FACT THAT THIS INFORMATION WAS AVAILABLE TO THE ASSESSING OFFICER, AS LEARNED CIT(A) RIGHTLY NOTES, DOES NOT HELP THE CASE OF THE ASSESSEE. WHILE DEALING WITH THIS ASPECT OF THE MATTER AND IN THE CASE OF PRAFUL CHUNILAL PATEL VS ACIT [(1999) 236 ITR 832 (GUJ)], HON BLE JURISDICTIONAL HIGH COURT HAS OBSERVED AS FOLLOWS: WHEN, AT THE FIRST ASSESSMENT ALL THE RELEVANT ASPECTS ARE CONSIDERED AND THERE IS PROPER APPLICABILITY OF MIND FOR ASCERTAINMENT OF THE AMOUNT OF TAXABLE INCOME AND OF THE TAX PAYABLE THEREON, THEN IN THE ABSENCE OF ANY ERROR OR MISTAKE BEING DISCOVERED OR FOUND, THE AO LATER ON CANNOT MERELY FOR THE SAKE OF GIVING A DIFFERENT OPINION, CHANGE THE EARLIER OPINION. HOWEVER, IN CASES WHERE AN ERROR OR MISTAKE IS DETECTED, IT CAN NEVER BE SAID THAT THERE IS ONLY A MERE CHANGE OF OPINION. THE MISTAKE OR ERROR WHICH IS DETECTED AND WHICH CONSTITUTED A VALID DECISION OR CAUSE TO FORM A BELIEF IN THE FIRST ASSESSMENT AS A RESULT OF WHICH THE INCOME HAS ESCAPED IT A NO. 810 / AHD/ 201 2 ASSESSMENT YEAR: 200 4 - 05 PAGE 4 OF 5 ASSESSMENT, WOULD CONSTITUTE A REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT AND SUCH CASES W HERE MISTAKES AND ERRORS ARE DETECTED AND WHICH CONSTITUTE A VALID JUSTIFICATION OR CAUSE TO FORM A BELIEF SOUGHT TO BE CORRECTED, CANNOT BE SAID TO BE CASES OF MERE CHANGE OF OPINION. 5. IN THE PRESENT CASE ALSO, AS THERE IS NO EVIDENCE TO SUPPORT THE ASSESSING OFFICER S APPLICATION OF MIND ON COMPUTATION OF BOOK PROFITS AND AS THERE WAS SEEMINGLY AN ERROR IN COMPUTATION OF BOOK PROFITS, RESORTING TO REASSESSMENT PROCEEDINGS CANNOT BE FAULTED WITH. IT IS INDEED NOT A CHANGE OF OPINION INASMUCH AS THERE WAS NO FORMATION OF OPINION IN THE FIRST PLACE. 6. IN THIS VIEW OF THE MATTER, WE ARE UNABLE TO SEE ANY MERITS IN LEARNED COUNSEL S OBJECTIONS TO THE REASSESSME4NT PROCEEDINGS. WE REJECT THE SAME AND DECLINE TO INTERFERE ON THIS ISSUE. 7 . GROUND NO. 1 I S THUS DISMISSED. 8. AS FOR THE MERITS, NO SPECIFIC ARGUMENTS WERE ADVANCED BEFORE US. THE OTHER TWO GROUNDS, I.E. GROUND NOS. 1 AND 2, ARE, THEREFORE, TREATED AS NOT PRESSED AND DISMISSED AS SUCH. 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED I N THE OPEN COURT TODAY ON 29 TH DAY OF JANUARY 2016 . SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 29 TH DAY OF JANUARY , 201 6 . PBN/ * IT A NO. 810 / AHD/ 201 2 ASSESSMENT YEAR: 200 4 - 05 PAGE 5 OF 5 COPIES TO : (1) THE APPE LLANT ( 2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD