M/s. Pankaj Diamonds,, Surat v. The Dy.CIT., Circle-9,, Surat

CO 129/AHD/2009 | 2001-2002
Pronouncement Date: 25-10-2013 | Result: Allowed

Appeal Details

RSA Number 12920523 RSA 2009
Assessee PAN AADFP5145L
Bench Ahmedabad
Appeal Number CO 129/AHD/2009
Duration Of Justice 4 year(s) 3 month(s) 24 day(s)
Appellant M/s. Pankaj Diamonds,, Surat
Respondent The Dy.CIT., Circle-9,, Surat
Appeal Type Cross Objection
Pronouncement Date 25-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-10-2013
Date Of Final Hearing 14-10-2013
Next Hearing Date 14-10-2013
Assessment Year 2001-2002
Appeal Filed On 01-07-2009
Judgment Text
ITA NO 1974/AHD/09 CO . NO 129/AHD/09 A.Y. 2001- 02 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI N.S. SAINI A.M. & SHRI KUL BHARAT J.M.) I.T. A. NO. 1974/AHD/2009 & C.O. NO. 129/AHD/09 (ASSESSMENT YEAR: 2001-02) D.C.I.T CIRCLE-9 SURAT (APPELLANT) VS. M/S. PANKAJ DIAMOND 4-7 KRISHNA DIAMOND PARK KAPODARA VARACHHA ROAD SURAT (RESPONDENT) M/S. PANKAJ DIAMOND 4-7 KRISHNA DIAMOND PARK KAPODARA VARACHHA ROAD SURAT (APPELLANT) VS. D.C.I.T CIRCLE-9 SURAT (RESPONDENT) PAN: AADFP5145L APPELLANT BY : SHRI O.P. BATHEJA SR. D.R . RESPONDENT BY : SHRI VIJAY RANJAN A.R. ( )/ ORDER DATE OF HEARING : 14-10- 201 3 DATE OF PRONOUNCEMENT : 25 -10-2013 PER SHRI N.S. SAINI A.M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OB JECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-V SURAT D ATED 31.03.2009. ITA NO 1974/AHD/09 CO . NO 129/AHD/09 A.Y. 2001- 02 . 2 2. IN THE REVENUES APPEAL THE SOLE ISSUE INVOLVED I S THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 12 70 813/- F OR WHICH THE ASSESSEE FAILED TO FURNISH EVIDENCE PROVING THE MODE OF ACQU IREMENT OF IMPORT LICENSES. 3. IN THE CROSS OBJECTION THE SOLE GROUND OF CROSS OB JECTION TAKEN BY THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN UPHOLD ING THE VALIDITY OF RE- ASSESSMENT PROCEEDING INITIATED BY THE A.O. UNDER S ECTION 147 OF THE I.T. ACT AND THE CONSEQUENTIAL RE-ASSESSMENT ORDER DATED 26.12.2008. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME SHOWING INCOME OF RS. 76 43 210/- AFTER CLAIMING DE DUCTION UNDER SECTION 80HHC ON SALE OF IMPORT LICENCE FOR RS. 23 11 555/-. THE SAME WAS ALLOWED IN THE ASSESSMENT COMPLETED UNDER SECTI ON 143(3) ON 8 TH MARCH 2004. SUBSEQUENTLY THE A.O. ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 03.04.2007 FOR RE-OPENING OF THE ASSESSM ENT ON THE GROUND THAT THE ASSESSEE HAD SHOWN RECEIPT OF RS. 23 11 55 5/- AS LICENCE PREMIUM AND HAS CLAIMED DEDUCTION UNDER SECTION 80H HC ON THE SAME WHICH IS NOT ALLOWABLE AS PER CLAUSE (BAA) WHICH PR OVIDES FOR REDUCTION OF 90% OF RECEIPTS BY WAY OF SALE OF LICENCE PREMIU M. THUS THE ASSESSEE WAS ALLOWED EXCESS DEDUCTION FOR RS. 16 25 034/-. 5. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) CHALL ENGING THE RE-OPENING OF THE ASSESSMENT WHICH WAS CONFIRMED BY THE CIT(A) BY OBSERVING AS UNDER:- I HAVE GIVEN A CAREFUL CONSIDERATION TO THE RELEVA NT FACTS AND CIRCUMSTANCES LEADING TO REOPENING OF THE ASSESSMENT U/S.147 AND HAVE ALS O CONSIDERED THE DETAILED SUBMISSION MADE BEFORE ME. THERE IS NO DISPUTE THAT AT THE TIME OF THE ORIGINAL ASSESSMENT ALL MATERIAL FACTS WERE PLACED BEFORE TH E A.O. THE BOOKS OF ACCOUNT OF THE ITA NO 1974/AHD/09 CO . NO 129/AHD/09 A.Y. 2001- 02 . 3 ASSESSEE ARE STATUTORILY AUDITED AND THE RETURN OF INCOME WAS ACCOMPANIED BY COPIES OF AUDITED ACCOUNTS AND THE COMMENTS OF AUDITORS IN THE PRESCRIBED FORM. THE DEDUCTION CLAIMED U/S. 80 HHC WAS DULY SUPPORTED BY THE AUDITORS REPORT IN FORM NO. 10 CCAC. HOWEVER IT IS TO BE UNDERSTOOD EVEN IF THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNT AND THE ASSESSING OFFICER FAILED T O DETECT THE MISTAKE IT WILL NOT NECESSARILY DEBAR THE ASSESSMENT FROM BEING REOPENE D IN ORDER TO BRING TO TAX THE ESCAPED INCOME. AN INCOME-TAX OFFICER ACQUIRES JURISDICTION TO REOP EN AN ASSESSMENT UNDER SECTION 147(A) READ WITH SECTION 148 OF THE INCOME-TAX ACT 1961 ONLY IF ON THE BASIS OF SPECIFIC RELIABLE AND RELEVANT INFORMATION COMING TO HIS POSSESSION SUBSEQUENTLY HE REASONS WHICH HE MUST RECORD TO BELIEVE THAT BY REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A TRUE AND FULL DISCLO SURE OF ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT DURING THE CONCLUDED ASSESSMENT PROCEEDINGS ANY PART OF HIS INCOME PROFITS OR GAINS CHARGEABLE TO INCOME-TAX A ND ESCAPED ASSESSMENT. HE MAY START REASSESSMENT PROCEEDINGS EITHER BECAUSE SOME FRESH FACTS HAD COME TO LIGHT WHICH WERE NOT PREVIOUSLY DISCLOSED OR SOME INFORMA TION WITH REGARD TO THE FACTS PREVIOUSLY DISCLOSED COMES INTO HIS POSSESSION WHIC H TENDS TO EXPOSE THE UNTRUTHFULNESS OF THOSE FACTS. IN CASES WHERE THE ASSESSING OFFICER HAD OVER-LOOKE D SOMETHING AT THE FIRST ASSESSMENT THERE CAN BE NO QUESTION OF ANY CHANGE OF OPINION WHEN THE INCOME WHICH WAS CHARGEABLE TO TAX IS ACTUALLY TAXED AS IT OUGHT TO HAVE BEEN UNDER THE LAW BUT WAS NOT DUE TO AN ERROR COMMITTED AT THE FIRST ASSESSMENT. IN VIEW OF THE DISCUSSION GIVEN ABOVE I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAD REASONS TO BELIEVE THAT THE D EDUCTION CLAIMED BY THE ASSESSEE WAS NOT CORRECT AND AS SUCH A PART OF HIS INCOME C HARGEABLE TO INCOME-TAX HAS ESCAPED ASSESSMENT. ACCORDINGLY THE ASSESSING OFFI CER VALIDLY REOPENED THE ASSESSMENT (AROUND NO 1 & 2 OF THE APPELLANT BEING REASSESSMENT VOID IS QUASHED. 6. THE LD. A.R. FOR THE ASSESSEE ARGUED AND SUBMITTED THAT THE ASSESSMENT YEAR IN QUESTION IS 2001-02. NOTICE UNDER SECTION 1 48 OF THE ACT WAS ISSUED ON 03.04.2007 WHICH WAS BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ORIGINA L ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON 08.03.2004. HE SUBM ITTED AS PER PROVISO TO SECTION 147 OF THE ACT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSME NT YEAR NO ACTION SHALL BE TAKEN UNDER SECTION 148 OF THE ACT AFTER T HE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY ITA NO 1974/AHD/09 CO . NO 129/AHD/09 A.Y. 2001- 02 . 4 REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. HE SUBMITTED THAT THE LD. CIT(A) IN THE YEAR HAS QU OTED THE REASONS FOR RE-OPENING OF THE ASSESSMENT AT PAGE 2 OF HIS ORDER AND READING OF THE SAME WILL SHOW THAT THERE IS NO WHISPER IN THE REAS ONS RECORDED BY THE A.O. ABOUT THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT ASSESSMENT YEAR. HE THEREFORE SUBMITTED THAT THE ISSUE OF NOT ICE UNDER SECTION 148 OF THE ACT WAS BAD IN LAW AND THE CONSEQUENTIAL ASSESS MENT ORDER FRAMED UNDER SECTION 147 OF THE ACT WAS ALSO BAD IN LAW AN D LIABLE TO BE QUASHED. 7. THE LD. D.R. RELIED ON THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN T HE INSTANT CASE THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS FRAM ED ON 08.03.2004 AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 03.04.2007 WHICH IS BEYOND THE PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2001-02. THE A.O. HAS ISSUED NOTICE UNDER SEC TION 148 OF THE ACT FOR RE-OPENING OF THE ASSESSMENT BY RECORDING THE F OLLOWING REASONS:- THE REASONS FOR RE-OPENING THE CASE OF PANKAJ DIAM OND IS THAT THE ASSESSEE HAS SHOWN RECEIPT OF RS 23 11 555/- AS LICENCE PREMIUM IN PROFIT AND LOSS ACCOUNT AND CONSIDERED THE SAME AS EXPORT INCENTIVE FOR EXPORT INCENTIVES FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 80HHC. HOWEVER AS PER SEC TION 80HHC BUSINESS PROFIT HAS TO BE COMPUTED BY REDUCING 90% OF RECEIPTS BY WAY O F SALE OF LICENCE PREMIUM (CLAUSE BAA) AND NO DEDUCTION SHOULD BE ALLOWED ON SUCH RECEIPTS. THERE IS NOTHING ON RECORDS TO SHOW THAT THE LICENCE WAS PURCHASED B Y THE ASSESSEE FROM THE OPEN MARKET OR RECEIVED AS INCENTIVE AGAINST THE EXPORT. BY NOT OBSERVING THE ABOVE PROVISION THE ASSESSEE WAS ALLOWED EXCESS DEDUCTIO N OF RS 16 25 034/- ITA NO 1974/AHD/09 CO . NO 129/AHD/09 A.Y. 2001- 02 . 5 9. A READING OF THE ABOVE QUOTED REASONS SHOWS THAT IN THE ABOVE RECORDED REASONS THERE IS NOT A WHISPER BY THE A.O. THAT THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEAR WHICH LED TO ALLOWING EXCESS DE DUCTION UNDER SECTION 80HHC OF RS. 16 25 034/-. THE HON. DELHI HIGH COURT IN THE CASE OF E.I. DUPONT INDIA PVT. LTD. AND ANOTHER (2013) 351 ITR 2 90 (DEL) HAS HELD THAT NOTICE UNDER SECTION 148 AFTER 4 YEARS WITHOUT AN ALLEGATION IN NOTICE OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE ANY MATERIAL FACTS NECESSARY FOR THE ASSESSMENT THE SAID NOTICE IS NOT VALID. TO THE SAME EFFECT IS THE DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF PARLE SALES AND SERVICES PVT. LTD. VS. ITO (2011) 337 ITR 203 (GUJ) WHERE IT WAS HELD THAT IN THE ENTIRE REASONS RECORDED THERE WAS NOTH ING TO INDICATE THAT THERE WAS ANY FAILURE TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS ON THE PART OF THE ASSESSEE. IN THE CIRCUMSTANCES THE BA SIC REQUIREMENT OF INVOKING THE PROVISIONS OF SECTION 147 AFTER THE EX PIRY OF PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT YEAR WAS NOT SAT ISFIED. HENCE THE A.O. COULD NOT HAVE VALID JURISDICTION UNDER SECTION 147 OF THE ACT. THE NOTICE UNDER SECTION 148 OF THE ACT FOR RE-OPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT THEREFORE COULD NOT BE SUST AINED. 10. IN THE INSTANT CASE ALSO IT IS AN UNDISPUTED FACT THAT CLAIM FOR DEDUCTION UNDER SECTION 80HHC ON RECEIPT FROM SALE OF IMPORT LICENCE WAS ALLOWED IN AN ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT AND THEREAFTER NOTICE WAS ISSUED UNDER SECTION 148 OF THE ACT. TH ERE IS NO WHISPER ABOUT THE FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE TRULY AND FULLY ALL MATERIALS FACTS FOR THE ASSESSMENT BY THE ASSESSEE. THUS THE BASIC INGREDIENT FOR INVOKING THE PROVISIONS OF SECTION 1 47 AFTER THE EXPIRY OF A ITA NO 1974/AHD/09 CO . NO 129/AHD/09 A.Y. 2001- 02 . 6 PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR WAS NOT SATISFIED AND HENCE THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS BAD IN LAW AND THE CONSEQUENTIAL RE-ASSESSMENT MADE IN PURSUANCE TO SUCH A NOTICE IS ALSO BAD IN LAW AND HENCE WE QUASH THE RE-ASSESSMENT ORDER PASSED UNDER SECTION 147 OF THE ACT ON 26 TH DECEMBER 2008. THUS THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWE D. 11. IN VIEW OF OUR ABOVE DECISION IN THE CROSS OBJECTI ON FILED BY THE ASSESSEE THE APPEAL OF THE REVENUE ON THE MERITS O F THE ADDITION HAS BECOME INFRUCTUOUS AND HENCE THE SAME ARE DISMISSED . 12. IN THE RESULT THE CROSS OBJECTION FILED BY THE ASS ESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY OF 25 TH OCTOBER 2013 AT AHMEDABAD SD/- SD/- (KUL BHARAT) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHM EDABAD