TAKE Solutions Limited, CHENNAI V. ACIT, CHENNAI

ITA 857/CHNY/2015

• Counselvise Citation: 85721714 RSA 2015
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2015
• Court: TRIBUNAL
• Assessee Lawyers: R SIVARAMAN
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.857 /MDS./2015 ( !' #' / ASSESSMENT YEAR :2006-07) M/S.TAKE SOLUTIONS LTD., OLE NO.18B, NEW NO.8B,ADYAR CLUB GATE ROAD, CHENNAI 600 004. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1), CHENNAI. PAN AABCT 3684 M ( / APPELLANT ) ( / RESPONDENT ) $% & ' / APPELLANT BY : MR.R.SIVARAMAN,ADVOCATE ()$% & ' / RESPONDENT BY : DR.B.NISCHAL,JCIT, D.R * + & ,- / DATE OF HEARING : 07.09.2015 .# & ,- /DATE OF PRONOUNCEMENT : 06.11.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: ITA NO. 857/MDS/2015 2 THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-11, CHENNAI D ATED 29.01.2015 IN ITA NO.129/2014-15 PASSED UNDER SEC.1 43(3) SEC.147 READ WITH SECTION SEC. 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVEN ELABORATE GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT:- I) THE LD.CIT(A) ERRED IN HOLDING THAT REOPENING OF ASSESSMENT BY THE LD. AO UNDER SECTION 147 OF THE ACT IS CORRECT AND JUSTIFIED AND THEREBY ASSESSMENT MADE UNDER SECTION 148 IS VALID. II.) THE LD. CIT(A) ERRED BY SUSTAINING THE DISALL OWANCE OF DEDUCTION CLAIMED U/S.10A OF THE ACT `. 1,29,86,121/-. III) THE LD.CIT(A) ERRED IN NOT HOLDING THAT THE AS SESSEE HAS RECEIVED THE SALE PROCEEDS IN CONVERTIBLE FOREIGN EXCHANGE W ITHIN THE EXTENDED TIME LIMIT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A COMPANY, ENGAGED IN THE BUSINESS OF IT ENABLES SERVICES & SO FTWARE DEVELOPMENT, FILED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEAR 2006- ITA NO. 857/MDS/2015 3 07 ON 29.11.2006 ADMITTING ITS TOTAL INCOME OF ` 1,38,22,198/-. SUBSEQUENTLY, THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 12.12.2008 WHEREIN THE LD. ASSESSING OFFICER MAD E DISALLOWANCE ON PRODUCT DEVELOPMENT EXPENSES OF RS.4,98,51,371/- . THEREAFTER, THE ASSESSMENT WAS ONCE AGAIN REOPENED BECAUSE IT C AME TO LIGHT THAT OUT OF THE TOTAL EXPORT TURNOVER OF RS.6,64,94 ,627/-, A SUM OF RS.1,84,45,952/- WAS ONLY RECEIVED IN CONVERTIBLE F OREIGN EXCHANGE WITHIN THE TIME PRESCRIBED U/S.10A(3) OF THE ACT AN D THIS AMOUNT ALONE WAS ELIGIBLE FOR THE BENEFIT U/S.10A OF THE A CT. THEREFORE NOTICE U/S.148 OF THE ACT DATED 08.02.2013 WAS ISSU ED TO THE ASSESSEE AND IN RESPONSE, THE ASSESSEE STATED THAT THE RETURN FILED ON 29.11.2006 MAY BE TAKEN TO THE NOTICE U/S.148 AN D REQUESTED THE LD. ASSESSING OFFICER TO COMMUNICATE THE REASONS FO R RE-OPENING THE ASSESSMENT. THEREAFTER, THE LD. ASSESSING OFFICER C OMMUNICATED THE REASONS RECORDED IN FILE TO THE ASSESSEE VIDE LETTE R DATED 14.06.2013 AND COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 29.03.2014 WHEREIN THE LD. ASSESSING OFFICER DISALLOWED THE DE DUCTION CLAIMED U/S.10A OF THE ACT TO THE EXTENT OF ` 1,29,86,121/-. FURTHER IT WAS ITA NO. 857/MDS/2015 4 OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSE SSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 10A(5) OF T HE ACT. 4.1 ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER WITH RESPECT TO REOPENING OF ASSE SSMENT BY OBSERVING AS UNDER:- 7.1 THE CASE, LAWS RELIED UPON BY THE AO & THE APPE LLANT WERE AREFULLY CONSIDERED. I AGREE WITH THE VIEW OF THE AO THAT TH ERE HAS BEEN NO CHANGE OF OPINION. IN THE INITIAL, ORDER, THE AO HAS NOT A PPLIED HIS MIND WHILE PASSING THE ORDER. FURTHER, JUST BECAUSE INFORMATIO N HAS BEEN FURNISHED TO PRESUME THAT THE SAME WAS LOOKED INTO AND ALLOWED I S NOT CORRECT. RELIANCE IS PLACED 4)N THE FOLLOWING CASE LAWS: 1. IN THE CASE OF SIEMENS INFO. SYSTEMS LTD. VS. A CIT, RANGE-&(2), BOMBAY REPORTED IN 343 1TR 188 AND 207 TAXXRNANN 13 2 (BORN), THE HONBLE BOMBAY HIGH COURT HELD THAT JUST BECAUSE 10 A WAS ALLOWED BY THE AO WITHOUT SPECIFICALLY DEALING WITH ELIGIBILITY OF ASSESSEE TO SAID CLAIM, THE ASSESSMENT CAN BE REOPENED TO DEAL WITH THE ISS UE. 2. IN THE CASE OF CIT (CENTRAL CIRCLE) VS. S C FINA NCE LTD. (KARNATAKA HIGH COURT) REPORTED IN 207 LTAXMANN 136, THE HONBLE HI GH COURT HELD THAT IF THERE IS SOME CHARGEABLE INTEREST AND ASSESSEE HAS NOT INDICATED THAT INTEREST AT ALL IN THE RETURN OF INCOME, IT AMOUNTS TO NON DISCLOSURE OF CHARGEABLE INTEREST. MERE FILING OF COPY OF P&L ACC OUNT WITH RETURN DOES NOT MAKE ANY DIFFERENCE. 3. IN THE CASE OF INDIAN HUMEPIPE CO. LTD. VS. ACIT (CENT. CIRCLE), BOMBAY REPORTED IN 207 TAXMANN 136, IT IS HELD AS F OLLOWS: ITA NO. 857/MDS/2015 5 EXPLANATION-I TO SEC.147: MERE PRODUCTION OF ACCOUN TS BOOK OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DU E DILIGENT COULD HAVE BEEN DISCOVERED BY THE AO DOES NOT NECESSARILY AMOU NT TO A DISCLOSURE WITHIN MEANING OF FIRST PROVISO TO SECTION 147 N ECESSARY 79 ITR 582 (SC) FOLLOWED. 4. IN THE CASE OF SAMITI LTD. VS. UNION OF INDIA RE PORTED IN 204 TAXMANN 373 PLVPBESS, THE HONBLE HIGH COURT DISCUSSED, T RULY AND FULLY MATERIAL FACTS TO COME TO CONCLUDE THAT THE REOPENI NG IS VALID. 5. IN THE CASE OF CIT VS. SUNANTA BAI REPORTED IN 3 44 ITR 271 (KERALA HIGH COURT), 80HH ALLOWED IN ORIGINAL ASSESSMENT, N ON RESTORATION OF CLAIM BY THE ASSESSEE ALLOWED IN THE PROCEEDINGS YE ARS, REOPENING HELD TO BE VALID. 6. IN THE CASE OF CIT VS. RATCHAND NAHER REPORTED I N 295 ITR 403 (RAJASTHAN HIGH COURT), THE HONBLE HIGH COURT DISC USSED ADEQUACY OR SUFFICIENT OF MATERIAL ABOUT FAILURE OF ASSESSEE. 7.3. RESPECTFULLY RELYING ON THE DECISIONS CITED S UPRA, THE APPELLANTS CONTENTION WITH REGARD TO THE RE-OPENING IS NOT ACC EPTABLE AND THE RE- OPENING U/S.147 IS UPHELD. THE GROUNDS ARE DISMISSE D. ON MERITS, LD. CIT (A) DIRECTED THE LD. ASSESSING O FFICER TO DISPOSE OFF THE PETITION FILED BY THE ASSESSEE U/S.154 OF T HE ACT FOR VERIFYING WHETHER THE FOREIGN EXCHANGE REMITTANCE WAS REALIZE D WITHIN THE TIME LIMIT ALLOWED BY THE RBI AND PASS APPROPRIATE ORDER ON MERITS TAKING INTO CONSIDERATION OF SECTION.10A(3), 10A(5), 154, 155(11A) OF THE ACT. ITA NO. 857/MDS/2015 6 5. THE LD. A.R. VEHEMENTLY ARGUED BEFORE US BY RE LYING IN THE DECISION CITED IN 371 ITR 222, 370 ITR 611, 367 ITR 534, 241 ITR 672 WHILE AS THE LD. D.R RELYING IN THE DECISION CI TED IN 237 ITR 13 (SC), 241 ITR 248(CHENNAI), 285 ITR 369. HOWEVER AF TER PERUSING THOSE DECISIONS, WE DO NOT FIND THE SAME APPLICABLE TO THE CASE OF THE ASSESSEE. IN THE CASE OF THE ASSESSEE, IT CAME TO ALIGHT THAT THE ASSESSEE HAD NOT COMPLIED WITH THE PROVISIONS OF SE CTION-10A(5) OF THE ACT. THEREFORE THE LD. ASSESSING OFFICER HAD RE -OPENED THE ASSESSMENT AFTER FURTHER OBSERVING THAT THE REMITTA NCE IN FOREIGN EXCHANGE WAS NOT REALIZED BY THE ASSESSEE WITHIN TH E STIPULATED TIME. THEREFORE, WE HEREBY UPHOLD THE DECISION OF THE LD. CIT (A) IN REGARD TO REOPENING OF THE ASSESSMENT U/S.147 OF THE ACT. FURTHER ON MERITS WE FIND THAT THE LD. CIT (A) HAS DIRECTED THE LD. A SSESSING OFFICER TO DISPOSE OF THE PETITION FILED UNDER SECTION-154 (WI TH DIRECTIONS AS MENTIONED HEREIN ABOVE) WHICH IS PENDING BEFORE THE LD. ASSESSING OFFICER. IT WOULD HAVE BEEN MORE APPROPRIATE ON THE PART OF THE LD. CIT (A) TO REMIT BACK THE MATTER TO THE FILE OF LD. ASSESSING OFFICER WITH SIMILAR DIRECTIONS. THEREFORE, WE HEREBY REMI T BACK THE MATTER TO ITA NO. 857/MDS/2015 7 THE FILE OF LD. ASSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTION 10A(5) OF T HE ACT AND ALSO REALIZED THE FOREIGN EXCHANGE WITHIN THE TIME LIMIT ALLOWED BY THE RBI AND PASS APPROPRIATE ORDER AS PER LAW AND MERIT TAK ING INTO CONSIDERATION OF THE PROVISIONS OF THE ACT . 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED ON 6 TH NOVEMBER, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 6 TH NOVEMBER, 2015. K S SUNDARAM. & (,/0 1 0#, /COPY TO: 1. $% /APPELLANT 2. ()$% /RESPONDENT 3. * 2, ( ) /CIT(A) 4. * 2, /CIT 5. 05 (,6! /DR 6. 7' 8+ /GF