ACIT, Coimbatore V. Lakshmi Precision Tools Limited, Coimbatore

ITA 879/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68780 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-10-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: K RAGHU
• Keywords: Reopening of assessment; Depreciation; Reason to believe; Unabsorbed depreciation
• Section: 143(3); 80HHC; 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE DR. O.K.NARAYANAN, VICE PRESIDENT AND SHRI S.S. GODARA, JUDICIAL MEMBER] I.T.A.NO. 0879/MDS/2013 ASSESSMENT YEAR : 2004-2005 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), COIMBATORE VS M/S. LAKSHMI PRECISION TOOLS LIMITED, NO.34-A, KAMARAJ ROAD, COIMBATORE-18. [PAN AAACL3522H] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. T.N. BETGERI, JCIT. RESPONDENT BY : SHRI. K. RAGHU, C.A., DATE OF HEARING : 07-10-2013 DATE OF PRONOUNCEMENT : 07-10-2013 O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE EMANATES FRO M THE ORDER DATED 06.02.2013 PASSED BY THE CIT(A)-I, COIMBATORE IN IT A NO.316/2011- 2012 FOR ASSESSMENT YEAR 2004-2005, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 [IN SHORT THE AC T]. I.T.A.NO.0879/MDS/2013 :- 2 -: 2. IN THE COURSE OF HEARING, THE REVENUE REITERATES T HE PLEADINGS AND VEHEMENTLY ARGUES THAT THE CIT(A) HAS ERRED IN QUASHING THE IMPUGNED REOPENING OF ASSESSMENT TAKEN RECOURSE TO THE ASSESSING OFFICER. IT IS THE CONTENTION OF THE REVENUE THAT SINCE INCOME LIABLE TO BE ASSESSED IN ASSESSEES CASE HAD ESCAPED ASSESSME NT, THE ASSESSING OFFICER HAD RIGHTLY REOPENED REGULAR ASSESSMENT AND REDUCED AN AMOUNT OF RS.19,47,637/- IN THE NATURE OF BROUGHT F ORWARD UNABSORBED DEPRECIATION/ LOSSES FROM CURRENT PROFIT S FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80-HHC OF THE ACT. ACCORDI NGLY, ACCEPTANCE OF THE APPEAL HAS PRAYED AT THE BEHEST OF THE REVEN UE. 3. THE ASSESSEE STRONGLY SUPPORTS THE CIT(A) ORDER UND ER CHALLENGE AND PRAYS FOR CONFIRMATION THEREOF. 4. THE ASSESSEE IS A DOMESTIC COMPANY, ENGAGED IN TH E BUSINESS OF MANUFACTURE OF PRECISION TOOLS & SPECIAL PURPOSE MACHINES. ON 22.12.2006, THE ASSESSING OFFICER HAD FINALIZED RE GULAR ASSESSMENT DETERMINING ITS TOTAL INCOME AT RS.71,07,740/-. SUB SEQUENTLY, HE FORMED REASON TO BELIEVE THAT BROUGHT FORWARD DEPRE CIATION LOSSES OF RS.19,47,637/- HAD NOT BEEN REDUCED FROM CURRENT PR OFITS LEADING TO EXCESS ALLOWANCE OF DEDUCTION U/S. 80-HHC OF THE AC T. ACCORDINGLY, THE ASSESSING OFFICER ISSUED REOPENING NOTICE UNDER SEC TION 148 DATED I.T.A.NO.0879/MDS/2013 :- 3 -: 30.03.2011. IN REPLY, THE ASSESSEE REITERATED THE RETURN ALREADY FILED. THEREAFTER, THE ASSESSING OFFICER FINALIZED RE-ASSE SSMENT VIDE ORDER DATED 13.12.2011 REDUCING FROM CURRENT PROFITS BROU GHT FORWARD DEPRECIATION STATED HEREINABOVE. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. VIDE ORDE R UNDER CHALLENGE, THE CIT(A) OBSERVES THAT AFTER FINALIZAT ION OF ASSESSMENT DATED 22.12.2006, THE ASSESSING OFFICER HAD ISSUED NOTICE TO THE ASSESSEE PROPOSING RECTIFICATION UNDER SECTION 154 DATED 16.10.2007, WHICH READ THAT AS PER SECTION 80AB OF THE ACT CARRIED FORWARD DEPRECATION LOSS HAS TO BE DEDUCTED FROM TH E CURRENT PROFITS REGARDING DEDUCTIONS U/S. 80HHC. AS PER THE CIT(A )S ORDER, THEREAFTER ONLY, THE ASSESSING OFFICER ISSUED IMPUG NED NOTICE UNDER SECTION 148 DATED 30.03.2011 AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR. THE CIT(A) RETUR NS A FINDING THAT THE ASSESSING OFFICER HAD ALREADY EXAMINED THE VERY ISSUE OF DEDUCTION UNDER SECTION 80HHC IS THE COURSE OF REGULAR REAS SESSMENT. IT IS IN THIS VIEW OF THESE FACTS THAT HE HOLDS THAT THE ASS ESSEE CANNOT BE HELD TO HAVE NOT DISCLOSED ALL RELEVANT FACTS IN COURSE OF ASSESSMENT WHICH IS AN ESSENTIAL CONDITION FOR ISSUING NOTICE UNDER SECTION 148 BEYOND A I.T.A.NO.0879/MDS/2013 :- 4 -: PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. ACCORDINGLY, THE REOPENING HAS BEEN HELD TO BE BAD IN THE EYES OF LAW. THEREFORE, THE REVENUE IS AGGRIEVED. 6. WE HAVE HEARD BOTH PARTIES AT LENGTH AND PERUSED TH E CASE FILE. WE MAKE IT CLEAR THAT NO PAPER BOOK HAS BEEN FILED BY THE REVENUE SO AS TO DISPEL FINDINGS OF THE CIT(A) THAT THE ASSESS ING OFFICER HAD EXAMINED THE ISSUE OF BROUGHT FORWARD UNABSORBED DE PRECIATION/ LOSSES IN THE COURSE OF REGULAR ASSESSMENT. UND ISPUTEDLY, REOPENING IN QUESTION HAS BEEN INITIATED ON 30.03.2011 AFTER A PERIOD OF FOUR YEARS FROM THE END OF IMPUGNED ASSESSMENT YEAR I.E. 2004-2005 ON 31.03.2005. THE FIRST PROVISO OF SECTION 147 OF THE ACT STIPULATES THAT SUCH A COURSE CAN BE EXERCISED BY THE ASSESSING OFF ICER ONLY IN CASE IT IS FOUND THAT INCOME CHARGEABLE HAS ESCAPED ASSESSM ENT DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL THE RELEVANT FACTS. IT IS NOT THE CASE OF THE REVENUE THAT SUCH CIRCUMSTAN CES EXIST IN THE INSTANT CASE. THEREFORE, WE HOLD THAT THE CIT(A) H AS RIGHTLY HELD THE IMPUGNED REOPENING TO BE BAD IN THE EYES OF LAW. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. I.T.A.NO.0879/MDS/2013 :- 5 -: ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 7 TH OF OCTOBER, 2013, AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE PRESIDENT (S.S. GODARA) JUDICIAL MEMBER DATED:7 TH OCTOBER, 2013 K.V COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR