The DCIT, Circle-2(1), Guntur v. M/s BM Exports, Tanguturu

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.523/VIZAG/2009 ASSESSMENT YEAR : 2001-02 THE DCIT CIRCLE-2(1) GUNTUR M/S. B.M. EXPORTS TANGUTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AACFB 1965H APPELLANT BY: SHRI G.S.S. GOPINATH DR RESPONDENT BY: N O N E ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER:- 1. THE LD. CIT(A) ERRED IN BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN INVALIDATING THE NOTICE ISS UED U/S 148 WHICH WAS ISSUED TO BRING TO TAX THE INCOME THA T HAS ESCAPED ASSESSMENT CONSEQUENT TO THE RETROSPECTIVE AMENDMENT BROUGHT TO SECTIONS 80HHC(3) AND 28(IIIA) OF THE IT ACT. 3. THE LD. CIT(A) ERRED IN IGNORING THE FACTS THAT SEC .151(1) PROVIDES FOR ISSUE OF NOTICES U/S 148 EVEN AFTER TH E TIME LIMIT OF 4 YEARS WITH THE APPROVAL OF CCIT/CIT. 4. THE LD. CIT(A) ERRED IN IGNORING THE MERITS OF THE CASE AND THEIR RIGHTEOUSNESS IN RESTRICTING THE CLAIM MADE B Y THE ASSESSEE U/S 80HHC TO THE EXTENT IT RELATES TO DEPB LICENSES. 5. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE CONDITIO N PRECEDENT FOR INVOCATION OF THE POWERS U/S 147 R.W. S. 148 AND 149 ARE FULFILLED IN THE ASSESSEES CASE WHEREI N THE REASSESSMENT PROCEEDINGS ARE INITIATED IN VIEW OF T HE THIRD PROVISO TO SEC.80HHC (3) WHICH HAS BEEN INSERTED W. E.F. 1.4.1998. 6. THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE C OULD NOT BE AWARE OF THE PROSPECTIVE CHANGE IN LAW WHICH QUE STIONS THE AUTHORITY OF THE STATUTE MAKER. 7. THE LD. CIT(A) FAILED TO TAKE NOTE THAT THE AO IS A LSO EQUALLY UNAWARE OF A FUTURE CHANGE IN LAW WITH A RETROSPECT IVE EFFECT 2 TO RESTRICT THE ASSESSEES DEDUCTION AT THE ORIGINA L ASSESSMENT STAGE TO SUITE WITH THE CHANGED LAW. 8. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 2. THOUGH THE REVENUE HAS RAISED VARIOUS GROUNDS OF APPEAL BUT THEY ALL RELATE TO THE VALIDITY OF THIS NOTICE ISSUED U/S 14 8 TO TAX THE INCOME THAT HAS ESCAPED ASSESSMENT CONSEQUENT TO THE RETROSPECTIVE AMENDMENT BROUGHT TO SECTION 80HHC(3) AND 28(3A) OF THE I.T. ACT. THIS APPEAL CAME UP FOR HEARING ON 23 RD MARCH 2010 BUT NONE APPEARED ON BEHALF OF THE ASS ESSEES. ON PERUSAL OF RECORD WE FIND THAT IT CAN BE HEARD EVEN IN THE ABSENCE OF THE ASSESSEES. ACCORDINGLY THE REVENUE WAS HEARD. 3. ON PERUSAL OF RECORD WE FIND THAT THE NOTICE WA S ISSUED AFTER 4 YEARS THOUGH WITH THE APPROVAL OF CCIT/CIT. THE ASSESSEE HAS QUESTIONED THE VALIDITY OF THE RE-OPENING OF THE ASSESSMENT AS IT WAS DONE AFTER 4 YEARS WITHOUT BRINGING ON RECORD THAT THE INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE. THE CIT(A) WAS CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE S AND HELD THE RE- OPENING OF THE ASSESSMENT TO BE INVALID. NOW THE R EVENUE IS BEFORE US AND PLACED A RELIANCE UPON THE ORDER OF THE ASSESSING O FFICER. 4. DURING THE COURSE OF HEARING OUR ATTENTION WAS I NVITED TO THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOGINENI TOBAC CO ITA 482/VIZAG/2008 IN WHICH THE IDENTICAL ISSUE WAS EXAMINED AND TRIBUNAL HAS HELD THAT THE RE- OPENING OF THE ASSESSMENT UNDER THESE CIRCUMSTANCES ARE INVALID. THE RELEVANT OBSERVATION OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: WE HAVE HEARD THE PARTIES AND ALSO PERUSED THE RECO RD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E NOTICES U/S 148 WERE ISSUED AFTER FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEARS AND THE ORIGINAL ASSESSMENTS WERE COMPLETED U/S 143(3). THERE IS ALSO NO DISPUTE WITH REGARD TO TH E FACT THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLO SE FULLY AND TRULY ALL THE FACTS WHICH ARE MATERIAL TO THE COMPUTATION OF INCOME. AS NOTICED BY LD. CIT(A) THE NOTICES WERE ISSUED ON T HE STRENGTH OF A SUBSEQUENT AMENDMENT WHICH COULD NOT HAVE BEEN VISU ALIZED BY ANYBODY ON THE DATE OF ASSESSMENT. IN VIEW OF THE FOREGOING WE ARE OF THE OPINION THAT THE LD. CIT(A) HAS DECIDED THE ISSUE ON 3 PROPER APPRECIATION OF FACTS AND ON CORRECT APPLICA TION OF LAW. ACCORDINGLY WE UPHOLD THE ORDER OF LD. CIT(A). 5. SINCE NOTHING HAS BEEN BROUGHT ON RECORD TO ESTA BLISH THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEES WE ARE OF THE VIEW THAT RE-OPENIN G OF THE ASSESSMENT IS NOT PROPER. FOLLOWING THE AFORESAID ORDER OF THE TRIBU NAL WE CONFIRM THE ORDER OF THE CIT(A) WHO HAS RIGHTLY DECLARED THE RE-OPENI NG OF THE ASSESSMENT AS INVALID. PRONOUNCED IN THE OPEN COURT ON 13.4.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 13 TH APRIL 2010 COPY TO 1 DCIT CIRCLE-2(1) GUNTUR 2 M/S. B.M. EXPORTS KONDEPI ROAD TANGUTUR PRAKAS AM DISTRICT. 3 THE CIT GUNTUR 4 THE CIT(A) GUNTUR 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM