Opti Products Pvt. Ltd., CHENNAI V. ITO, CHENNAI

MA 229/CHNY/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5395 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: D ANAND
• Keywords: Tangible material; Wrong claim; Difference of opinion; Change of opinion
• Section: 148; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER M.A. NO. 229/MDS/2016 [ IN I.T.A. NO. 1320/MDS/2016] ASSESSMENT YEAR: 2008-09 M/S. OPTI PRODUCTS PVT. LTD., NO.81B, II MAIN ROAD, AMBATTUR INDUSTRIAL ESTATE, CHENNAI 600 028. PAN: AAACO1099E V. THE INCOME TAX OFFICER, COMPANY WARD 5(1), CHENNAI-34. ( APPLICANT) ( / RESPONDENT) APPLICANT BY : SHRI D. ANAND, ADVOCATE RESPONDENT BY : SHRI K. RAVI, JCIT / DATE OF HEARING : 20.01.2017 / DATE OF PRONOUNCEMENT : 02.02.2017 / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THE ASSESSEE FILED THE PRESENT MISCELLANEOUS PETIT ION AGAINST THE ORDER PASSED BY THIS TRIBUNAL IN ITA NO.1320/MDS/ 2016 FOR THE ASSESSMENT YEAR 2008-09. 2. IN THE PETITION FILED BY THE ASSESSEE, THE ASSES SEE RAISED THE FOLLOWING OBJECTIONS: 2 M.A. NO. 229/MDS/2016 7. THE APPEAL OF THE REVENUE CAME UP FOR HEARING BEFORE THE C BENCH OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL, CHENNAI ON 25.07.2016. THE ISSUE RAISED BY THE REVENUE IN THE ABOVE APPEAL IS ONLY PERTAINING TO RE-OPENING OF ASSESSMENT. TO THE SURPRISE OF THE PETITIONER, THE HONBLE INCOME TAX APPELLATE TRIBUNAL HAS PASSED A OR DER DATED 29.07.2016 ALLOWING THE REVENUE APPEAL NOT ONLY ON THE ISSUE OF RE- OPENING BUT ALSO ON MERITS. NEITHER THE CIT(A) ADJU DICATED THE PETITIONERS APPEAL ON MERIT NOR THE REVENUE HAS PRE FERRED AN APPEAL ON MERIT OR RAISED ANY GROUND/ARGUED THE CASE ON MERIT S. 8. FURTHER IT IS HUMBLY SUBMITTED THAT THE FOLLOWING M ISTAKES ARE APPARENT FROM THE ORDER OF THE TRIBUNAL A) IT WAS UNDER SCRUTINY PROCEEDINGS THAT THE PETITION ER COMPANY WAS ALLOWED RELIEF UNDER SECTION 80IB(4)(III). A SPECI FIC QUESTION WITH REGARD TO THE PETITIONERS CLAIM AND DETAILS WITH RE GARD TO CLAIM OF DEDUCTION UNDER SECTION 80IB(4)(III) WAS ASKED. THE PETITIONER COMPANY VIDE ITS LETTER DATED 25.11.2009 HAD SPECIF ICALLY BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT IT HAD ONL Y APPLIED FOR APPROVAL WITH DIPP UNDER MINISTRY OF COMMERCE AND T HAT THE SAID APPLICATION IS UNDER PROCESS. B) THE PETITIONER COMPANY HAD NEVER MADE A CLAIM UNDER 80 IB(4)(III) BY STATING THAT THE PETITIONER COMPANY WAS GRANTED NOTIFICATION BY MINISTRY OF COMMERCE. C) IN FACT THE PETITIONER COMPANY WAS HONEST ENOUGH TO DISCLOSE THAT IT HAD NOT HAVE APPROVAL FROM MINISTRY OF COMMERCE BUT ITS APPLICATION WAS ONLY UNDER PROCESS. (VIDE LETTER DA TED 25.11.2009) D) NON-RECEIPT OF NOTIFICATION (PETITIONERS APPLICATIO N WAS IN PROCESS) WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AS EARLY AS 25.11.2009 DURING THE REGULAR SCRUTINY PROCEEDINGS AND THEREFORE THE 3 M.A. NO. 229/MDS/2016 SAME WOULD NOT CONSTITUTE TANGIBLE MATERIAL FOR THE PURPOSE OF RE- OPENING. E) NON-CONSIDERATION OF LETTER DATED 25.11.2009 BEFORE ARRIVING A FINDING THAT NON-RECEIPT OF NOTIFICATION WOULD CONS TITUTE TANGIBLE MATERIAL IS A MISTAKE OF FACT. F) THUS IT WOULD BE A MISTAKE OF FACT TO STATE THAT THE PETITIONER COMPANY HAS MADE A WRONG CLAIM UNDER SECTION 80 IB( 4)(III) WITHOUT OBTAINING DUE NOTIFICATION FROM THE CENTRAL GOVERNMENT AS REQUIRED UNDER SECTION 80IA(4) WHICH IS A PRECONDIT ION FOR DEDUCTION THAT IT HAS COME TO THE NOTICE OF THE AO ONLY SUBSEQUENTLY AND THAT TOO ONLY DURING THE SCRUTINY PROCEEDINGS FOR THE A.Y. 2009-10 WHEN THE PETITIONER HAD UN AMBIGUO USLY STATED VIDE HIS LETTER DATED 25.11.2009 THAT IT HAD ONLY A PPLIED FOR THE NOTIFICATION TO THE MINISTRY AND IT IS ONLY UNDER P ROGRESS. G) THE HONBLE TRIBUNAL OUGHT TO HAVE SEEN THAT THE AO HAS TAKEN A VIEW ONLY AFTER THE PETITIONERS LETTER DATED 25.11 .2009 AND IT WAS OPEN TO THE DEPARTMENT TO SEEK RELIEF UNDER SECTION 263 IF THE ORDER WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. H) FURTHER THE HONBLE TRIBUNAL OUGHT NOT TO HAVE DECI DED THE ISSUE ON MERITS WHEN THE SAME HAS NOT ARISEN OUT OF THE CIT ( A) ORDER AND WHEN THE DEPARTMENT HAS NOT AGITATED THE ISSUE BEFO RE THE HONBLE ITAT ON MERITS. THE HONBLE ITAT OUGHT TO HAVE REMAN DED THE CASE TO THE FILE OF THE CIT(A) FOR ADJUDICATING THE CASE ON MERIT AFTER GIVING A FINDING ON THE LEGAL ISSUE. I) THE HONBLE TRIBUNAL OUGHT TO HAVE SEEN THAT RE-OPENI NG OF ASSESSMENT OF SAME SET OF FACTS WHICH WAS ORIGINALL Y AVAILABLE AT THE TIME OF SCRUTINY ASSESSMENT WOULD CONSTITUTE A CHAN GE OF OPINION AND THAT IS A SETTLED LAW THAT RE-OPENING OF ASSESS MENT BASED ON CHANGE OF OPINION IS NOT VALID IN LAW. 4 M.A. NO. 229/MDS/2016 3. DURING HEARING THE LD. AR REFERRED PARA 6 OF THE TRIBUNAL ORDER AND STATED THAT HONBLE INCOME TAX APPELLATE TRIBUN AL EXTRACTED THE REASONS FOR REOPENING THE ASSESSMENT FROM THE CIT (A PPEALS) ORDER WHICH WAS RELATED TO THE ASSESSMENT YEAR 2007-08 BU T NOT THE ASSESSMENT YEAR 2008-09 WHICH IS UNDER APPEAL. HOW EVER, TO THE QUERY RAISED BY THE BENCH, THE LD. AR FAIRLY CONCED ED THAT THE REASONS FOR REOPENING OF THE ASSESSMENT FOR 2008-0 9 ALSO WERE THE SAME AND THERE WAS NO CHANGE IN THE REASONS. IN TH E LD.CIT(APPEALS) ORDER IN PAGE NO.15, 2 ND PARAGRAPH , IT WAS STATED AS FLOWS: IN THIS REGARD AO HAS SUPPLIED REASONS FOR REOPENIN G IN THE APPLICANTS CASE FOR A.Y.2008-09 WHICH IS REPROD UCED AS UNDER: WITH REFERENCE TO YOUR REQUEST TO FURNISH THE REAS ON FOR REOPENING THE ASSESSMENT IN YOUR CASE FOR THE ASSESSMENT YEAR 2007-08, THE SAID REASON IS FURNISHED BELOW: THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A. Y. UNDER CONSIDERATION ON 19.10.2007 DECLARING TOTAL INCOME OF NIL UNDER NORMAL COMPUTATION METHOD AND TOTAL INCOME OF RS.3,5 3,44,300 UNDER BOOK PROFITS METHOD. IT WAS SEEN FROM THE RETURN OF INCOME THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80IA(4)(III) OF RS.3,89,01,728. THIS DEDUCTION WAS CLAIMED BY THE ASSESSEE ON PRINC E TATIA INFO PARK, PURPORTEDLY DEVELOPED AND OPERATED BY THE ASS ESSEE COMPANY. TO CLAIM THE SAID DEDUCTION IN RESPECT OF THE INFO PARK, THE ASSESSEE OUGHT TO HAVE SATISFIED THE FOLLOWING CONDITIONS: 5 M.A. NO. 229/MDS/2016 (II) IT SHOULD DEVELOP, DEVELOP AND OPERATE OR MAIN TAIN AND OPERATE AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED NOTIFIED BY THE CENTRAL GOVE RNMENT FOR SUCH PURPOSE. (II) THE INDUSTRIAL PARK SHOULD BEGIN TO OPERATE, D EVELOP, ETC, AT ANY AFTER 1.4.1997 BUT BEFORE 31.3.2007 [IN ACCORDANCE WITH INDUSTRIAL PARK SCHEME, 2002-THE SCHEME UNDER WHICH THE ASSESS EE HAD CLAIMED DEDUCTION U/S 80IA(4)(III). DURING THE COURSE OF SCRUTINY PROCEEDINGS FOR THE A SSESSMENT YEAR 2009-10, IT WAS LEARNT THAT THE ASSESSEES UNDERTAK ING HAS NOT BEEN NOTIFIED BY CENTRAL GOVERNMENT IN ACCORDANCE WITH I NDUSTRIAL PARK SCHEME, 2002. THUS, NOT HAVING SATISFIED THE BASIC CONDITION OF BEING NOTIFIED BY THE CENTRAL GOVERNMENT TO DEVELOP AND O PERATE THE PRINCE TATIA INFO PARK. THE ASSESSEE IS NOT ELIGIB LE FOR THE RELIEF ENVISAGED BY SEC.80IA(4)(III) IS NOT IN ORDER AND RE QUIRES TO BE DISALLOWED. HOWEVER, IN THE SCRUTINY PROCEEDINGS U/S. 143(3), THE ASSESSEE HAD BEEN ALLOWED THIS DEDUCTION OF RS.3,89, 01,728. THIS HAS RESULTED IN ESCARPMENT OF INCOME TO THE TUNE OF RS.3 ,89,01,728. 4. THE TRIBUNAL HAS EXTRACTED THE ABOVE PARAGRAPH FR OM THE ORDER OF CIT(APPEALS) FROM PAGE NO.6 PARA NO.6 FOR THE SAK E OF CONVENIENCE AND CLARITY AND DISCUSSED THE ISSUE IN DETAIL IN SUBSEQUENT PARAGRAPHS AND HELD THAT THE NOTICE ISSU ED U/S 148 IS VALID.. THERE WAS NO CHANGE IN THE FACTS AND THE R EASONS RECORDED FOR REOPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2 008-09. THIS 6 M.A. NO. 229/MDS/2016 FACT HAS BEEN ACCEPTED BY THE AR DURING THE APPEAL. THEREFORE, THIS ARGUMENT OF THE ASSESSEE IS NOT TENABLE AND REJECTE D. 5. NO ARGUMENT WAS ADVANCED BY THE ASSESSEE FOR POI NT NO.8, THOUGH, THE ASSESSEE HAS RAISED VARIOUS OBJECTIONS FROM POINT NO. 8(A) TO( I) DURING THE HEARING OF M.A. ALL THE ISSUES W ERE ADDRESSED IN THE ORDER OF THE ITAT. THE CORE ISSUE IN THIS CASE IS VAL IDITY OF NOTICE ISSUED UNDER SECTION 148 OF THE ACT WHICH WAS ANNUL LED BY THE LD. CIT (APPEALS). THIS TRIBUNAL HAS RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S A.L.A FIRMS VS CIT 102 ITR 622 AND HELD THAT THE NOTICE ISSUED UNDER SECTION 148 IS VALID AND ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT (APPE ALS) ANNULLING THE ASSESSMENT. THEREFORE WE HOLD THAT THERE IS NO MISTA KE IN THE ORDER PASSED BY THIS TRIBUNAL IN UPHOLDING THE NOTICE U/S1 48 OF THE I.T.ACT WHICH NEEDS MODIFICATION. 6. THE NEXT ISSUE RAISED BY THE ASSESSEE WAS THAT TH E HONBLE ITAT HAS PASSED THE ORDER DATED 29.07.2016 ALLOWING T HE REVENUE APPEAL NOT ONLY ON THE ISSUE OF REOPENING BUT ALSO ON MERITS. NEITHER THE CIT (APPEALS) ADJUDICATED THE APPEAL ON MERITS N OR THE REVENUE HAD PREFERRED THE APPEAL ON MERIT. ACCORDING TO TH E LD. AR THE CASE SHOULD BE REMITTED BACK TO THE FILE OF CIT(APPEALS) TO DECIDE ON MERITS. 7 M.A. NO. 229/MDS/2016 7. THIS ISSUE HAS BEEN CONSIDERED BY US AND HEARD THE ARGUMENTS OF BOTH THE PARTIES. AS PER THE ORDER OF THE ITAT, THE ISSUE DECIDED BY THIS TRIBUNAL WAS ONLY IN RELATION TO TH E ISSUE OF NOTICE 148 OF THE ACT BUT NOT ON MERITS. THE ASSESSEE HAS FILE D THE APPEAL BEFORE THE CIT(A) BOTH ON MERITS AND ON TECHNICAL REASONS. THE LD.CIT(A) DECIDED THE TECHNICAL ISSUE BUT NOT DECIDED THE ISS UE ON MERIT. THEREFORE WE MODIFY THE ORDER OF THIS TRIBUNAL IN ITA NO.1320/MDS/2016 RESTORING THE MATTER BACK TO THE C IT (APPEALS) WITH DIRECTION TO DECIDE THE CASE ON MERITS. 8. IN THE RESULT, THE MISCELLANEOUS PETITION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 2 ND FEBRUARY, 2017 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . . ) (D.S. SUNDER SINGH) / ACCOUNTANT MEMBER /CHENNAI, / DATED, THE 2 ND FEBRUARY, 2017. JR. /COPY TO: 1. APPLICANT 2. /RESPONDENT 3. !' ( )/CIT(A) 4. !' /CIT 5. # $ /DR 6. %&' /GF.