COAL INDIA LIMITED, Kolkata v. J.C.I.T (OSD) Cir - 5,kolkata., Kolkata

ITA 357/KOL/2013 | 2004-2005
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 35723514 RSA 2013
Assessee PAN AABCC3929J
Bench Kolkata
Appeal Number ITA 357/KOL/2013
Duration Of Justice 3 year(s) 7 month(s) 7 day(s)
Appellant COAL INDIA LIMITED, Kolkata
Respondent J.C.I.T (OSD) Cir - 5,kolkata., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 28-09-2016
Date Of Final Hearing 20-09-2016
Next Hearing Date 20-09-2016
Assessment Year 2004-2005
Appeal Filed On 21-02-2013
Judgment Text
1 ITA NO. 357 & 1320/KOL/2013 COAL INDIA LIMITED. AY 2004-05 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI P.M. JAGTAP AM & SHRI K. NARASIMHA C HARY JM] I.T.A NO. 357/KOL/2013 ASSESSMENT YEAR: 2004-05 COAL INDIA LIMITED VS. JOINT COMMISSIONER OF I NCOME-TAX (OSD) (PAN:AABCC3929J) CIRCLE-5 KOLKATA. ( APPELLANT ) ( RESPONDENT ) & I.T.A. NO.1320/KOL/2013 ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX VS. COAL INDIA LIMITED CIRCLE-5 KOLKATA. (APPELLANT) (RESPONDENT) DATE OF HEARING: 20.09.2016 DATE OF PRONOUNCEMENT: 28.09.2016 FOR THE ASSESSEE: SHRI AKASH MANSINGKA FOR THE RESPONDENT: SHRI ANGAN SHAIZA CIT ORDER PER SHRI K. NARASIMHA CHARY JM: BOTH THESE APPEALS BY ASSESSEE AND REVENUE ARE ARIS ING OUT OF COMMON ORDER OF CIT(A)-VI KOLKATA VIDE APPEAL NO. 255/CIT(A)-VI/CI R-5/11-12/KOL DATED 12.12.2012. ASSESSMENT WAS FRAMED BY JCIT (OSD) CIRCLE-5 KOLK ATA U/S. 143(3)/147 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR AY 2004-05 VIDE HIS ORDER DATED 30.12.2011. FOR THE SAKE OF CONVENIENCE BOTH THES E APPEALS ARE DISPOSED OF TOGETHER. 2. BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING FORMED BY THE CENTRAL GOVERNMENT ORDER DATED 27.09.1975. FOR AY 2004-05 RETURN OF INCOME WAS FILED ON 25.10.2004 BY THE ASSESSEE DECLARING A TOT AL INCOME OF RS. NIL AND BOOK PROFIT OF RS.289.77 CR. AN ORDER U/S. 143(3) OF THE ACT WAS PASSED ON 24.01.2006. THE AO MADE AN ADDITION OF RS.105 99 93 000/- U/S. 14A OF THE ACT AGGRIEVED BY WHICH THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) IN APPEA L NO. CIT(A)-5/KOL/163/CIR-5/09-10 AND BY WAY OF AN ORDER DATED 04.06.2008 THE LD. CIT (A) DELETED THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SECTION 14A OF THE ACT. 2 ITA NO. 357 & 1320/KOL/2013 COAL INDIA LIMITED. AY 2004-05 3. WHILE THE MATTER STOOD THUS ON 21.03.2011 THE A O ISSUED A NOTICE U/S. 148 OF THE ACT AND BY AN ORDER DATED 30.12.2011 THE AO CONCLUDED T HAT THERE WAS UNDER ASSESSMENT OF INCOME TO A TUNE OF RS.98.49 CR. AND TO THAT EXTENT INCOME HAD ESCAPED ASSESSMENT. CHALLENGING THIS ORDER REOPENING THE ASSESSMENT TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) VIDE APPEAL NO. 255/CIT(A)-VI /CIR-5/11-12/KOL AND THE LD. CIT(A) BY ORDER DATED 12.12.2012 I.E. THE IMPUGNED ORDER HELD THAT THE REOPENING OF ASSESSMENT U/S. 147 OF THE ACT WAS BAD IN LAW. HOW EVER HE ALSO HELD THAT ANY DISALLOWANCE U/S. 14A OF THE ACT HAS TO BE ADDED BACK U/S. 115JB OF THE ACT. HENCE CHALLENGING THE SAID FINDINGS BOTH THE ASSESSEE AND REVENUE APPROACHED THIS TRIBUNAL IN THESE APPEALS. CHALLENGING THE QUASHING OF REASSESSMENT REVENUE F ILED ITA NO. 1320/KOL/2013 WHEREAS CHALLENGING THE FINDING OF LD. CIT(A) THAT THE DISA LLOWANCE MADE U/S. 14A OF THE ACT IS LIABLE TO BE ADDED WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT THE ASSESSEE FILED ITA NO. 357/KOL/2013 ON THE FOLLOWING GROUNDS: REVENUES GROUND OF APPEAL 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW IN QUASHING THE REASSESSMENT MADE U/S. 147/143(3) TRE ATING THE SAME AS BAD IN LAW. ASSESSEES GROUND OF APPEAL 1(A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN HOLDING THAT DISALLOWANCE UNDER SECTION 14A OF THE ACT IS L IABLE TO BE ADDED WHILE COMPUTING BOOK PROFITS UNDER SECTION 115JB OF THE ACT. 1(B) THAT THE FINDING OF THE LD. CIT(A) IS CONTRAR Y TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. AT THE TIME OF HEARING LD. AR ARGUED THAT THE RE ASSESSMENT PROCEEDINGS INITIATED AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMEN T YEAR ARE BAD AND SINCE THERE IS NO TANGIBLE MATERIAL OR INFORMATION THAT HAS COME TO T HE POSSESSION OF THE AO SUBSEQUENT TO THE ORDERS U/S. 143(3) OF THE ACT THE REASSESSMENT PRO CEEDINGS ARE VOID AB INITIO. HE FURTHER CONTENDED THAT SINCE THE ADDITION U/S. 14A OF THE A CT WAS THE ISSUE DIRECTLY AND SUBSTANTIALLY INVOLVED IN THE APPEAL BEFORE THE LD. CIT(A) AFTER CONCLUSION OF SUCH AN APPEAL THE AO DOES NOT HAVE JURISDICTION FOR REASSESSMENT IN SO F AR AS SECTION 14A OF THE ACT IS CONCERNED. HE FURTHER SUBMITTED THAT SINCE THE REASSESSMENT IT SELF IS BAD THE OBSERVATIONS OF LD. CIT(A) THAT WHATEVER MAY BE THE ADDITIONS THAT ARE SOUGHT TO BE MADE U/S. 14A OF THE ACT HAVE TO BE ADDED BACK U/S. 115JB OF THE ACT CANNOT BE COUNTENA NCED. 5. THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LD. AO. 3 ITA NO. 357 & 1320/KOL/2013 COAL INDIA LIMITED. AY 2004-05 6. NOW THE QUESTIONS THAT ARISE FOR OUR CONSIDERATI ON ARE (I) WHETHER THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THE REASSESSMENT FRAMED U/S. 14A OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED? AND (II) WHETHER THE AMOUNT SO DISALLOWED U/S. 14A OF THE ACT HAS TO BE ADDED BACK U/S. 115JB OF THE ACT? ISSUE NO. (I) 7. AS COULD BE SEEN FROM THE RECORD IN THIS MATTER THE ASSESSEE FILED ITS RETURN OF INCOME ON 25.10.2004 AND AN ORDER U/S. 143(3) OF TH E ACT WAS PASSED ON 24.01.2006. APPEAL PREFERRED AGAINST SUCH AN ORDER WAS DISPOSED OF ON 04.06.2008 AND SUCH AN ORDER ATTAINED FINALITY. HOWEVER THE AO ISSUED A NOTICE U/S. 148 OF THE ACT ON 21.03.2011 I.E. ALMOST SIX YEARS AFTER THE END OF THE RELEVANT ASSE SSMENT YEAR AND DISPOSED OF THE MATTER BY ORDER DATED 30.12.2011 WITH THE FOLLOWING OBSERVATI ONS: 'DURING THE COURSE OF SCRUTINY ASSESSMENT EXPENSES ATTRIBUTABLE TO DIVIDEND INCOME U/S.14A WAS DISALLOWED OF RS.10599.93 LACS. IN THE COMPUTAT ION INTEREST EXPENSES WAS TAKEN AS RS.2750.18 LAKHS WHICH AS PER SCHEDULE-L3 ATTACHED WITH THE P&L A/C WAS NOT THE TOTAL EXPENSES RS..3716.01LACS AND RS.12373.99 LACS WERE DEDUCTED FROM THE TOTAL INTEREST EXPENSES ON ACCOUNT OF INTEREST RECEIVED FROM DEPOS ITS AND INTEREST RECOVERED FROM SUBSIDIARIES. THUS THE ACTUAL INTEREST EXPENSES WOU LD BE INCREASED BY RS.16090.00 LACS (RS.3716.01 + RS.12373.99) LACS. AS A RESULT THE TO TAL COMMON EXPENSES WOULD ALSO BE INCREASED BY THE SAME AMOUNT SINCE THE COMMON EXPEN SES WOULD INCLUDE TOTAL INTEREST EXPENSES AND THUS THE EXPENSES PERTAINING TO DIVIDE ND WOULD BE &.20441.80 LACS. TOTAL COMMON EXPENSES WOULD BE RS.(17329.33 + 16090 .00) LACS I.E. RS.33419.33 LACS EXPENSES PERTAINING TO DIVIDEND INCOME WOULD BE RS.48527.52 *33419.33 RS.20441.80 LACS 79335.35 THUS THERE WAS AN UNDER ASSESSMENT OF INCOME FOR RS .9841.87 IACS THEREFORE 1 HAD REASON TO BELIEVE THAT 'INCOME CHA RGEABLE TO TAX' FOR AY: 2004-05 HAS ESCAPED ASSESSMENT '. 8. IT IS PERTINENT TO NOTE THAT THERE IS NO AVERMEN TS OR ALLEGATIONS THAT THE ASSESSEE HAS NOT FURNISHED ANY PARTICULARS IN HIS ORIGINAL RETUR N OF INCOME OR THAT ANY NEW MATERIAL OR INFORMATION HAS COME TO LIGHT OR POSSESSION OF THE AO. ON THE OTHER HAND THE AO IN HIS ORDER FURTHER OBSERVED THAT WHILE COMPUTING THE DIS ALLOWANCE U/S. 14A OF THE ACT THE TOTAL INTEREST EXPENSES WAS NOT CONSIDERED BY MISTAKE SO NO NEW VIEW WAS BEING TAKEN IN THE ORDER U/S. 147 OF THE ACT BUT TO COMPUTE THE ACTUA L EXPENSES RELATING TO INVESTMENT AS PROVIDED IN RULE 8D(2) OF THE RULES READ WITH SECTI ON 14A OF THE ACT THE EXERCISE U/S. 147 4 ITA NO. 357 & 1320/KOL/2013 COAL INDIA LIMITED. AY 2004-05 OF THE ACT WAS TAKEN UP. SO IT MAKES THE THINGS CR YSTAL CLEAR THAT THE AO WANTED TO RECTIFY THE MISTAKE APPARENT FROM RECORD. 9. LD. AR PLACED RELIANCE ON THE DECISION REPORTED IN HINDUSTAN UNILEVER LTD. VS. DCIT (2010) 325 ITR 0102 (BOM.) FOR THE PRINCIPLE T HAT PROCEEDINGS U/S. 147 OF THE ACT CANNOT BE INITIATED TO RECTIFY MISTAKE WHICH ARE AP PARENT FROM RECORD. SECTION 147 OF THE ACT CLEARLY READS THAT IF THE AO HAS REASON TO BELIEVE THAT NO INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR HE ASSES SED SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS. ON THIS ASPECT THE JUDICIAL PRONOUNCEMENTS ARE TO THE EFFECT THAT FOR TAKING AN ACTION U/S. 147 OF THE ACT IT IS NECESSARY FOR THE AO TO HAVE VALID REASONS FOR REOPENING THE ASSESSMENT AND SUCH REASONS SHOULD NOT BE BASED MERELY ON CHANGE OF OPINION BUT THEY HAVE TO BE BASED CONCRET ELY ON THE BASIS OF SOME TANGIBLE INFORMATION OR DOCUMENTS THAT HAVE COME TO HIS POS SESSION SUBSEQUENT TO THE COMPLETION OF PROCEEDINGS U/S. 143(3) OF THE ACT. WHERE NO NEW FA CTS ARE BROUGHT ON RECORD ANY NEW INFERENCE THAT IS DRAWN BY THE AO ON THE EXISTING S ET OF FACTS WOULD AMOUNT TO CHANGE OF OPINION WHICH IS NOT PERMISSIBLE. THIS PRINCIPLE H AS BEEN JUDICIALLY ACCEPTED BY SEVERAL COURTS INCLUDING THE HONBLE APEX COURT IN THE FOLL OWING CASES: (I) CIT VS. KELVINATOR INDIA LTD. 320 ITR 561 (SC) (II) COCA-COLA EXPORT CORPORATION VS. ITO (1990) 23 1 ITR 200 (SC) (III) CIT VS. BHANJI LAVJI (1971) 79 ITR 582 (SC) (IV) MERCURY TRAVELS LTD. VS. DCIT 258 ITR 533 (CAL ) AND (V) BALLARPUR PAPER & STRAW BOARD MILLS LTD. 101 IT R 55 (CAL). 10. HERE IN THIS CASE THE ORDER OF THE AO ITSELF READS THAT IT WAS APPARENT THAT WHILE COMPUTING THE DISALLOWANCE U/S. 14A OF THE ACT THE TOTAL INTEREST EXPENSES WAS NOT CONSIDERED BY MISTAKE. IT GOES WITHOUT SAYING THAT THE MISTAKE IS NOT ATTRIBUTABLE TO THE CONDUCT OF THE ASSESSEE EITHER IN NOT FURNISHING TH E INFORMATION OR FURNISHING ANY INACCURATE INFORMATION. BUT IT WAS THE MISTAKE ON THE PART OF THE AO NOT TO CONSIDER EFFECTIVELY THE MATERIAL FACTS AVAILABLE ON RECORD. IN SUCH A SITU ATION REOPENING OF ASSESSMENT U/S. 147 OF THE ACT IS IMPERMISSIBLE. 11. IT IS ALSO BORNE ON RECORD THAT ON THE ORDER DA TED 04.06.2008 IN THE APPEAL PREFERRED BY THE ASSESSEE ON ACCOUNT OF ADDITIONS OF RS.105.9 9 CR. THE LD. CIT(A) CONSIDERED THE ADDITIONS U/S. 14A OF THE ACT. WHEN THE MATTER WAS DISPOSED OF ON 04.06.2008 AND ATTAINED 5 ITA NO. 357 & 1320/KOL/2013 COAL INDIA LIMITED. AY 2004-05 FINALITY ALMOST THREE YEARS THEREAFTER ON 21.03.201 1 THE AO ISSUED NOTICE U/S. 148 OF THE ACT AGAIN TO CONSIDER THE VERY SAME ASPECT OF DISALLOWA NCE U/S. 14A OF THE ACT. 12. PROVISO 3 TO SECTION 147 OF THE ACT SPEAKS THAT THE AO MAY ASSESS OR REASSESS THE INCOME OTHER THAN IN THE INCOME INVOLVING MATTERS W HICH ARE THE SUBJECT OF ANY APPEAL REFERENCE OR REVISION WHICH IS CHARGEABLE TO TAX AN D HAS ESCAPED ASSESSMENT. LD. AR PLACED RELIANCE ON A DECISION REPORTED IN PRASHANT PROJECT S LTD. VS. ACIT (2011) 333 ITR 0368 (BOM) FOR AY 2002-03 WHEREIN IT IS CLEARLY HELD THA T WHEN THE VERY ISSUE ON WHICH THE ASSESSMENT IS SOUGHT TO BE REOPENED WAS CANVASSED I N APPEAL AND WAS DETERMINED IN THE APPELLATE PROCEEDINGS BY THE LD. CIT(A) IN TERMS OF PROVISO TO SECTION 147 OF THE ACT THE ASSESSMENT COULD NOT HAVE BEEN REOPENED. THIS PROVI SO CLEARLY OUSTS JURISDICTION OF THE AO TO INVOKE THE PROVISIONS U/S. 147 R.W.S. 148 OF THE ACT. 13. LASTLY IT IS A CLEAR CASE OF THE AO INVOKING T HE PROVISIONS OF SECTION 147 OF THE ACT AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSES SMENT YEAR THAT TOO WITHOUT ANY NEW TANGIBLE INFORMATION OR MATERIAL COMING INTO HIS PO SSESSION SUBSEQUENT TO EITHER THE ORDER PASSED U/S. 143(3) OF THE ACT OR THE APPELLATE ORDE R. THE FIRST PROVISO TO SECTION 147 OF THE ACT CLEARLY STIPULATES THAT NO ACTION U/S. 147 OF T HE ACT SHALL BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY A RE ASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S. 139 OR IN RESPECT TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OF THE ACT OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. NONE OF T HESE CONDITIONS IS SATISFIED IN THIS MATTER SO AS TO ENABLE THE AO TO INVOKE SECTION 147 OF THE ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ORDER OF THE AO CLEARLY READS THAT THE AO CONSIDERED WHATEVER THE PARTICULARS THAT WERE ALREA DY FURNISHED EARLIER AND FOUND THAT BY MISTAKE TOTAL EXPENSES WERE NOT CONSIDERED. THIS G OES WITHOUT SAYING THAT THE FULL AND TRUE PARTICULARS WERE FURNISHED BY THE ASSESSEE ALONG WI TH THE RETURN OF INCOME BUT THE MISTAKE THAT OCCURRED WAS ATTRIBUTABLE TO THE AO BUT NOT TO THE ASSESSEE. NO NEW FACTS HAVE COME TO THE POSSESSION OF THE AO THEREFORE THE REASSESSME NT PROCEEDINGS ARE BAD UNDER FIRST PROVISO TO SECTION 147 OF THE ACT. THIS PRINCIPLE OF LAW HAS HAD JUDICIAL ACKNOWLEDGEMENT IN FOLLOWING CASES: (I) CALCUTTA DISCOUNT CO. LTD. VS. ITO (1961) 41 IT R 191 (SC) (II) JAY SHREE TEA & INDUSTRIES LTD. VS. DCIT 245 I TR 567 (CAL) 6 ITA NO. 357 & 1320/KOL/2013 COAL INDIA LIMITED. AY 2004-05 (III) TANTIA CONSTRUCTION CO. LTD. VS. DCIT (2002) 257 ITR 0084 (CAL) (IV) PRASHANT PROJE CTS LTD. VS. ACIT (2011) 333 IT R 0368 (BOM) AND (V) IPCA LABORATORIES LTD. VS. DCIT (2001) 251 ITR 0416 (BOM). 14. VIEWED FROM ANY ANGLE THE REOPENING OF ASSESSM ENT U/S. 147 OF THE ACT BY THE AO IN THIS MATTER CANNOT BE SUSTAINED. THE REASONING GIV EN BY THE LD. CIT(A) TO REACH A CONCLUSION THAT THE REASSESSMENT WAS LIABLE TO BE Q UASHED AS THEY WERE BAD IN LAW IS IMPECCABLE AND BASED ON SOUND FACTUAL AND LEGAL PR OPOSITIONS. WE THEREFORE UPHOLD THE FINDING OF THE LD. CIT(A) ON THE ASPECT OF LEGALITY OF SECTION 147 PROCEEDINGS AND DISMISS THE APPEAL OF THE REVENUE. ISSUE NO. (II): 15. IN VIEW OF OUR FINDING ON ISSUE NO. (I) IN RESP ECT OF PROCEEDINGS U/S. 147 OF THE ACT ARE NONEST IN THE EYE OF LAW AS STATED ALL OTHER CO NTENTIONS LIKE THEIR ELIGIBILITY TO BE ADDED BACK U/S. 115JB OF THE ACT FOR TWO GROUNDS AND ANY DISCUSSION ON THAT ASPECT WOULD BE SIMPLY ACADEMIC AND NOT NECESSARY. WE ANSWER THE I SSUE ACCORDINGLY IN FAVOUR OF THE ASSESSEE. 16. IN THE RESULT THE APPEAL OF REVENUE IS DISMISS ED AND THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2016 SD/- SD/- (P. M. JAGTAP) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28TH SEPTEMBER 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT COAL INDIA LIMITED 10 NETAJI SUBHAS R OAD KOL- 700001. 2 RESPONDENT JCIT (OSD) CIR-5 KOLKATA. 3 . THE CIT(A) KOLKATA 4. 5. CIT KOLKATA DR KOLKATA BENCHES KOLKATA / TRUE COPY BY ORDER ASSTT. REGISTRAR .