Asstt. Commissioner of Income Tax-II, Kanpur V. M/s Rupani Products, Kanpur

ITA 922/LKW/2014

• Counselvise Citation: 92223714 RSA 2014
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 29-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K KAPOOR
• Keywords: Wrong claim; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS. 922 & 923/LKW/2014 ASSESSMENT YEARS 2006-07 & 2007-08 M/S RUPANI PRODUCTS, 123/794, FAZAL GANJ, KANPUR-208012 VS ASSTT. COMMISSIONER OF INCOME TAX-II, KANPUR. PAN AACFR 7632 P (RESPONDENT) (APPELLANT) SHRI RANJAN SRIVASTAVA, DR APPELLANT BY SHRI P.K. KAPOOR, CA RESPONDENT BY 16/09/2015 DATE OF HEARING 07 / 10 /2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(APPEAL)-II, INTERALIA ON THE FOLLOWING GROUNDS: ITA NO.922/LKW/2014 IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I I, KANPUR HAS ERRED IN LAW AND FACTS IN TREATING THE PROCEEDI NG U/S 147/143(3) AS ULTRAVIRES. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITION OF RS.3,29,228/- WHERE THERE IS WRONG DEDUCTION CLA IMED BY ASSESSEE AND THERE IS ESCAPEMENT OF INCOME. MOREOVE R, THE ISSUE OF NON DEDUCTION OF TDS U/S 194H HAS COME UP AFTER THE NATURE OF RS. 10,69,280/- WAS EXPLAINED BY THE ASSE SSEE AS COMMISSION PAID WHICH WAS NOT AVAILABLE AT THE TIME OF ORIGINAL PROCEEDINGS. 2 3. THAT THE AO HAS RIGHTLY TAKEN THE RECOURSE OF S ECTION 147/148 TO DISALLOW THE WRONG CLAIM OF DEDUCTION U/S 80 IA MADE BY THE ASSESSEE OF RS. 3,29,228/- AND TO INVOKE THE SE CTION 40(A)(IA) ON COMMISSION AMOUNT OF RS. 10,69,280/-. 4. THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTI ON U/S 80IA AS HE WAS NOT COVERED UNDER ANY OF THE CRITERION MENTI ONED FOR THE DEDUCTION. 5. THAT THE CIT (A)-II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 3,29,228/- STATING THA T BENEFIT SHALL BE AVAILABLE TO THE ASSESSEE AS PER CIRCULAR NO. 779 OF CBDT ISSUED ON 14.07.1999. 6. THAT THE AO RIGHTLY ADDED BACK THE AMOUNT OF R S. 10,69,280/- U/S 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS U/ S 194H ON COMMISSION PAID. 7. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH G ROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. ITA NO.923/LKW/2014 IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- II, KANPUR HAS ERRED IN LAW AND FACTS IN TREATING THE PROCEEDING U /S 147/143(3) AS ULTRAVIRES. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPE ALS)-II, KANPUR HAS ERRED IN LAW AND ON FACTS IN. DELETING THE ADDI TION OF RS. 8,96,343/- WHERE THERE IS WRONG DEDUCTION CLAIMED B Y ASSESSEE AND THERE IS ESCAPEMENT OF INCOME. MOREOVE R, THE ISSUE OF NON DEDUCTION OF TDS U/S 194H HAS COME UP AFTER THE NATURE OF RS. 14,71,214/- WAS EXPLAINED BY THE ASSE SSEE AS COMMISSION PAID WHICH WAS NOT AVAILABLE AT THE TIME OF ORIGINAL PROCEEDINGS. 3. THAT THE AO HAS RIGHTLY TAKEN THE RECOURSE OF SECTION 147/148 TO DISALLOW THE WRONG CLAIM OF DEDUCTION U/S 80 IA MADE BY THE ASSESSEE OF RS. 8,96.343/- AND TO INVOKE THE SE CTION 40(A)(IA) ON COMMISSION AMOUNT OF RS. 14,71,214/-. 4. THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCT ION U/S 801A AS HE WAS NOT COVERED UNDER ANY OF THE CRITERION MENTI ONED FOR THE DEDUCTION. 3 5. THAT THE CIT (A)-II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 8,96,343/- STATING THA T BENEFIT SHALL BE AVAILABLE TO THE ASSESSEE AS PER CIRCULAR NO. 77 9 OF CBDT ISSUED ON 14.07.1999. 6. THAT THE AO RIGHTLY ADDED BACK THE AMOUNT OF RS. 14,71,214/- U/S 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS U/ S 194H ON COMMISSION PAID. 7. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH G ROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE REOPENING OF THE ASS ESSMENT IS BAD IN LAW AS THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT A FTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITHOUT RECORDI NG A SATISFACTION THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E. LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION THAT THE IMP UGNED ASSESSMENT YEAR INVOLVED ARE 2006-07 & 2007-08 AND THE REASONS FOR REOPENING WAS RECORDED ON 04.03.2013. THEREFORE, REOPENING WAS DONE AFTER FOUR YEARS. HE HAS ALSO INVITED OUR ATTENTION THAT IN THE ASSESSMENT ORDER THE ISSUE ON WHICH AO REOPENED THE ASSESSMENT WAS ALSO EXAMINED BY THE AS SESSING OFFICER WHILE ALLOWING THE SAME THEREFORE, THE REOPENING IS ON AC COUNT OF CHANGE OF OPINION. IN SUPPORT OF HIS CONTENTION, HE PLACED RE LIANCE UPON THE JUDGMENTS IN THE CASES OF ARUN GUPTA VS. UNION OF INDIA REPOR TED IN 371 ITR 394 (ALLD.), TAO PUBLISHING (P.) LTD. VS. DCIT REPORTED IN 53 TA XMANN.COM 146 (BOMBAY) AND IN THE CASE OF ACI OILS (P.) LTD. VS. DCIT REPO RTED IN 57 TAXMANN.COM 260 (ALLD.). 3. LD. DR ON THE OTHER HAND, HAS PLACED A RELIANCE UPON THE ORDERS OF THE CIT(A). 4. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD IN THE LIGHT OF RIVAL SUBMISSION, WE FIND THAT 4 UNDISPUTEDLY, THE ASSESSMENT ORDERS INVOLVED ARE 20 06-07 & 2007-08 AND THE REOPENING WAS DONE VIDE NOTICE DATED 04.03.2013. TH E REASONS RECORDED WERE PROVIDED TO THE ASSESSEE VIDE LETTER DATED 04. 03.2013 AND FROM ITS CAREFUL PERUSAL, WE FIND THAT THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION THAT INCOME CHARGEABLE TO TAX HAS ESCA PED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE. MOR EOVER, THE REASONS FOR REOPENING THE ASSESSMENT RELATE TO THE EXCESS CLAIM OF DEPRECATION AND EXCESS DEDUCTION AND BOTH THE ISSUES WERE EXAMINED BY THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT. THEREFORE, WE ARE OF THE VIEW THAT ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM THE R ELEVANT ASSESSMENT YEARS. 5. WE HAVE ALSO CAREFULLY PERUSED THE JUDGMENTS REF ERRED TO BY THE ASSESSEE IN THE CASE OF ARUN GUPTA VS. UNION OF IND IA (SUPRA) APPEARING AT PAGE 2 TO 16 OF THE COMPILATION IN WHICH IT HAS BEE N CATEGORICALLY HELD THAT PROVISION OF SECTION 147 & 148 OF THE ACT INDICATE THAT THE ASSESSING OFFICER HAS WIDE POWERS TO REOPEN THE ASSESSMENT, IF HE HAS REASONED TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH EIR LORDSHIP FURTHER HELD THAT WIDE POWER IS CIRCUMSCRIBED AND DOES NOT GIVE JURISDICTION TO THE ASSESSING OFFICER TO REOPEN A COMPLETED ASSESSMENT ON A MERE CHANGE OF OPINION. THE REASONS TO BELIEVE CANNOT BE BASED OR BE AN OUTCOME OF THE CHANGE OF OPINION. IT WAS ALSO FURTHER HELD THAT TH E PROVISO TO SECTION 147 INDICATES THAT IF MORE THAN FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IN ADDITION TO THE SATISF ACTION OF THE ASSESSING OFFICER THAT HE HAS REASONS TO BELIEVE, HE MUST ALS O INDICATE THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF A NOTICE U/ S 148 HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 BEING AVAILABLE TO THE ASSESSING OFFICER, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WOULD BE WITHOUT JURISDICTION AND WOULD BE LIABLE TO BE QUASHED IN A WRIT JURISDICTION. SIMILAR VIEWS WERE EXPRESSED IN THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN 5 THE CASE OF TAO PUBLISHING (P.) LTD. VS. DCIT (SUPR A) AND THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AC I OILS (P.) LTD. VS. DCIT (SUPRA). 6. UNDISPUTEDLY IN THE INSTANT CASE, NOTHING HAS BE EN MENTIONED BY THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE. MOR EOVER, THE ISSUE ON WHICH ASSESSMENT WAS REOPENED WAS ALREADY DISCUSSED BY TH E AO IN THE ORIGINAL ASSESSMENT. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT WAS REOPENED WITHOUT THE JURISDICTIONAL FOUNDATION U/S 147 OF THE ACT. THEREFORE, THE NOTICE U/S 148 AND SUBSEQUENT P ROCEEDINGS ARE WITHOUT JURISDICTION AND LIABLE TO BE QUASHED, WE ACCORDING LY FOLLOWING THE AFORESAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT QUASH THE ASSESSMENT FOR BOTH THE YEARS AND DELETE ALL THE ADDITION MADE THEREIN. SIN CE, THE ASSESSMENTS ARE QUASHED WE FIND NO JUSTIFICATION TO ADJUDICATE THE ISSUE ON MERIT. 7. IN THE RESULT, APPEALS OF THE REVENUE STAND DISM ISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07/10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR