Niko Resources Ltd., Baroda V. The ACIT., Circle-6, Baroda

MA 217/AHD/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7659 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1998-1999
• Appeal Filed On: 21-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VISPI T PATEL; RAJESH S ATHAVALE ARS
• Keywords: Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 147; 148

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY - AM M A NO.217/AHD/2011 [ARISING OUT OF ITA NO.93/AHD/2007] (ASSESSMENT YEAR:-1998-99) NIKO RESOURCES LIMITED, 4 TH FLOOR, LAND MARK, RACE COURSE CIRCLE, BARODA V/S THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-6, BARODA [APPLICANT] [ORIGINAL APPELLANT] [RESPONDENT] [ORIGINAL RESPONDENT] ASSESSEE BY :- MR. VISPI T PATEL AND MR. RAJESH S ATHAVALE, ARS REVENUE BY:- SHRI VINOD TANWANI, SR. DR DATE OF HEARING:- 24-02-2012 DATE OF PRONOUNCEMENT:- O R D E R PER D K TYAGI (JM) :- THIS MISCELLANEOUS APPLICATION OF THE ASSESSEE HAS ARISEN OUT OF THE ORDER DATED 25-11-20 11 PASSED BY THE ITAT AHMEDABAD BENCH-C IN ITA.NO.93/AHD/2007 FO R THE AY 1998-99. 2 AT THE TIME OF HEARING, ISSUES RAISED IN PARAS 4 AND 5 OF THE MISCELLANEOUS APPLICATION WERE NOT PRESSED AND THE ASSESSEES SUBMISSIONS WERE MADE ONLY IN RESPECT OF PARAS 2 & 3 OF THE MISCELLANEOUS APPLICATION. 2 3 THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THA T IN RESPECT OF GROUND NO.2 ON THE VALIDITY OF THE ASSES SMENT PROCEEDINGS INITIATED U/S 147 OF THE ACT, THE ASSES SEE HAS TAKEN THE FOLLOWING THREE POINTS OF ARGUMENTS:- (A) REASONS FOR REOPENING THE ASSESSMENT WERE COMMUNICA TED TO THE APPELLANT BEYOND A PERIOD OF 6 YEARS FROM THE E ND OF THE ASSESSMENT YEAR AS PER SECTION 149(1)(B) OF THE ACT . (B) ASSESSMENT CANNOT BE REOPENED IF THERE IS A CHANGE OF OPINION. (C) REASSESSMENT CANNOT BE REOPENED AFTER A PERIOD OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR IN THE CASE OF ASSES SMENT BEING DONE UNDER SECTION 143(3) IF THE ASSESSEE DISCLOSES FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 4 HOWEVER, ON PERUSAL OF THE ORDER DATED 25-11-201 1, IT WAS OBSERVED THAT THE TRIBUNAL HAS ADJUDICATED ONLY TWO POINTS MENTIONED AT (A) AND (C) ONLY AND HAS OMITTED TO AD JUDICATE THE POINT NO.(B) WHICH CONSTITUTES A MISTAKE APPARENT F ROM RECORD AND THE SAME MAY BE RECTIFIED BY CONSIDERING THE PO INT NO.(B) OF THE ARGUMENTS. 5 THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT ONCE IN PARA-15 AT PAGE-50 OF THE TRIBUNALS ORDER WHILE AD JUDICATING THE POINT (C), IT HAS BEEN HELD THAT IN THE FIRST ROUND OF ASSESSMENT ALL FACTS MATERIAL TO THE COMPUTATION OF INCOME WERE NO T DISCLOSED BY THE ASSESSEE, THEN, ADJUDICATING PLEA (B) OF THE ASSESSEE REGARDING THE CHANGE OF OPINION BECOMES INFRUCTUOUS . THIS IS SO AS IT HAS ALREADY BEEN HELD THAT IN THE FIRST ROUND MATERIAL REQUIRED TO FORM AN OPINION REGARDING CORRECTNESS O F DEDUCTION 3 U/S 42 WERE NOT BEFORE THE AO AT ALL. ONCE IT IS SO HELD, THEN BY NATURAL APPLICATION, THE PLEA (B) OF THE ASSESSEE I .E. DECIDING WHETHER THE JURISDICTION U/S 147 WAS ASSUMED ON THE BASIS OF CHANGE OF OPINION, STANDS REJECTED. THEREFORE, THER E IS NO MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL AND THE MISCELL ANEOUS APPLICATION FILED BY THE ASSESSEE DESERVES TO BE DI SMISSED. 6 HOWEVER, AFTER GOING THROUGH THE RECORDS, WE FIND THAT PLEA (B) TAKEN BY THE ASSESSEE HAS NOT BEEN ADJUDICATED BY US. THEREFORE, TO RECTIFY THIS MISTAKE, BOTH THE PARTIE S WERE HEARD ON MERITS. 7 THE LEARNED COUNSEL OF THE ASSESSEE PLACING RELIA NCE ON THE SUBMISSIONS MADE AT THE TIME OF HEARING OF THE ORIG INAL APPEAL, SUBMITTED THAT THE CLAIM OF THE ASSESSEE U/S 42 HAD BEEN ACCEPTED IN SCRUTINY ASSESSMENT PROCEEDINGS FOR THE AYS 1997 -98, 1999- 2000, 2000-01 AND 2001-02 AFTER SEEKING DETAILS IN SUPPORT OF CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 42 OF THE A CT. NOT ONLY THIS, DURING THE ASSESSMENT PROCEEDINGS FOR THE AY 2001-02 A COPY OF THE PSC WAS ALSO FILED BEFORE THE AO AND TH E AO PASSING AN ORDER U/S 143(3) ALLOWED PARTIAL DEDUCTION U/S 4 2 OF THE ACT. IT WAS FURTHER ARGUED THAT IT WAS FOR THE FIRST TIME T HAT THE LEARNED CIT(A) ENHANCED THE ASSESSMENT FOR AY 2001-02 BY WA Y OF DISALLOWANCE OF THE ASSESSEES CLAIM U/S 42 AS THE EXPENSES CLAIMED WERE NOT SPECIFIED IN THE PSC. THIS WAS FOR THE FIRST TIME THAT IN ASSESSEES CASE THE CLAIM FOR DEDUCTION U/S 42 WAS DENIED. FOLLOWING THIS ORDER OF THE LEARNED CIT(A), NOTICE U/S 148 WAS ISSUED FOR AYS 1997-98, 1999-2000 AND 2000-01. THER E WAS NO 4 NEW MATERIAL WHICH HAS COME TO THE POSSESSION OF TH E AO EXCEPT THE CIT(A)S ORDER. SINCE THE AO HAD ALLOWED DEDUCT ION U/S 42 IN THE EARLIER YEARS AFTER DUE APPLICATION OF MIND, THE REOPENING BASED ON SUBSEQUENT DECISION OF THE LEARNED CIT(A) AMOUNTS TO CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN LAW. FOR MAKING THIS SUBMISSION, HE PLACED HEAVY RELIANCE ON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVIN ATOR OF INDIA LTD. (2010) 320 ITR 561 (SC). 8 THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT THE RATIO LAID DOWN IN THE CASE OF KELVINATOR INDIA LTD. (SUP RA) IS THAT RE- ASSESSMENT CANNOT BE DONE MERELY ON THE BASIS OF CH ANGE OF OPINION AND THUS FOR ASSUMING JURISDICTION U/S 147, THE AO SHOULD BE IN THE POSSESSION OF NEW TANGIBLE MATERIA L HAVING DIRECT NEXUS WITH THE ESCAPED INCOME. IN THIS CASE, THE AO IN NOTICE U/S 142(1) (PAGE 35 OF THE ASSESSEES PAPER BOOK) HAD ASKED THE ASSESSEE TO FURNISH REASONS AS TO HOW EXP ENSES CLAIMED U/S 42 WERE ELIGIBLE FOR DEDUCTION. AS PER THE STAT UTORY PROVISIONS ITSELF VERY BASIS OF DEDUCTION U/S 42 IS THE AGREEMENT BETWEEN ASSESSEE AND CENTRAL GOVERNMENT YET INSPITE OF A SPECIFIC QUERY, IN THE FIRST ROUND OF ASSESSMENT, T HIS AGREEMENT WAS NOT PRESENTED BEFORE THE AO. IT WAS FURTHER SUB MITTED THAT FROM THE PERUSAL OF THE REASONS FOR REOPENING THE A SSESSMENT AS REPRODUCED ON PAGE 4 OF THE TRIBUNALS ORDER, IT IS CLEAR THAT THE REOPENING HAS BEEN DONE ON THE BASIS OF THE FACT TH AT IN THE AGREEMENT BETWEEN THE ASSESSEE AND CENTRAL GOVERNME NT, DEDUCTION U/S 42 WAS NOT SPECIFIED. CONCLUDING HIS ARGUMENTS THE LEARNED DR SUBMITTED THAT IT IS CLEAR THAT WHILE RE CORDING THE 5 REASONS FOR REOPENING THE ASSESSMENT, THE AO IN AY 1998-99 WAS FOR THE FIRST TIME IN POSSESSION OF NEW TANGIBLE MA TERIAL I.E. AGREEMENT AND THIS MATERIAL HAD DIRECT BEARING ON T HE COMPUTATION OF ASSESSEES INCOME AND THEREFORE, EVE N AS PER THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT, THE ASSUMPTION OF JURISDICTION U/S 147 WAS CORRECT AND DESERVES TO BE UPHELD. 9 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT T HE ASSESSEES CLAIM OF DEDUCTION U/S 42 WAS ALLOWED BY THE AO IN AYS 1997- 98, 1999-2000 AND 2000-01 WITHOUT AGREEMENT BETWEEN THE ASSESSEE AND CENTRAL GOVERNMENT BEING ON RECORD. FO R AY 2001- 02 ALSO THOUGH THE COPY OF THE AGREEMENT WAS ON REC ORD, THE AO ALLOWED PARTIAL DEDUCTION BUT HE DID NOT VERIFY THA T THE EXPENSES CLAIMED U/S 42 WERE NOT SPECIFIED IN THE AGREEMENT. IT WAS ONLY AT THE APPELLATE STAGE THAT THE LEARNED CIT(A) FOR THE FIRST TIME NOTICED THAT THE CLAIM OF DEDUCTION U/S 42 WAS NOT AS PER LAW, THE SAME NOT BEING SPECIFIED IN THE AGREEMENT. IN VIEW OF THIS ADMITTED POSITION, WE FIND THAT THE AO WAS IN POSSE SSION OF THE TANGIBLE MATERIAL IN THE FORM OF AGREEMENT BETWEEN THE ASSESSEE AND THE CENTRAL GOVERNMENT TO COME TO THE CONCLUSIO N THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT IN THIS CA SE WHILE RECORDING REASONS FOR REOPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL AND, THEREFORE, IT CAN NOT BE SAID THAT RE-ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED BY THE AO DUE TO CHANGE OF OPINION. THIS VIEW ALSO GETS SUPPORT F ROM THE 6 FOLLOWING FINDINGS OF THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA):- THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLI TERATED AFTER THE SUBSTITUTION OF SECTION 147 OF THE INCOME-TAX ACT,1 961, BY THE DIRECT TAX LAWS (AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT TH E ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE ASSE SSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS T ANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMAT ION OF THE BELIEF. IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT THE REOPE NING OF THE ASSESSMENT BY AO HAS RIGHTLY BEEN UPHELD BY THE LEA RNED CIT(A). 10 THE MISCELLANEOUS APPLICATION IS DISPOSED OF AS INDICATED ABOVE. ORDER PRONOUNCED IN THE COURT TODAY ON 07-03-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 07-03-2012 COPY OF THE ORDER FORWARDED TO: 1. NIKO RESOURCES LIMITED, 4 TH FLOOR, LAND MARK, RACE COURSE CIRCLE, BARODA 7 2. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-6, BARODA 3. CIT CONCERNED 4. CIT(A)-VI, BARODA 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD