M/s. Ambica Knitting Mills,, Ahmedabad v. The Income tax Officer,Ward-5(1),, Surat

ITA 805/AHD/2007 | 2003-2004
Pronouncement Date: 23-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 80520514 RSA 2007
Assessee PAN AAGFA1108D
Bench Ahmedabad
Appeal Number ITA 805/AHD/2007
Duration Of Justice 3 year(s) 2 month(s) 2 day(s)
Appellant M/s. Ambica Knitting Mills,, Ahmedabad
Respondent The Income tax Officer,Ward-5(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 23-04-2010
Date Of Final Hearing 21-04-2010
Next Hearing Date 21-04-2010
Assessment Year 2003-2004
Appeal Filed On 20-02-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S.SAINI ACCOUNTANT MEMBER DATE OF HEARING : 21.04.2010 DRAFTED ON:21.04.1 0 ITA NO.805/AHD/2007 ASSESSMENT YEAR : 2003-2004 AMBICA KNITTING MILLS C/O. KETAN H. SHAH ADVOCATE 901 SAPPHIRE COMPLEX NEAR CARGO MOTORS C.G.ROAD AHMEDABAD. VS. THE INCOME TAX OFFICER WARD-5(1) SURAT. PAN/GIR NO. : AAGFA 1108 D (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI KETAN H. SHAH AD. RESPONDENT BY: SHRI RAJEEV AGARWAL CIT D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-III SU RAT DATED 29.01.2007. 2. GROUNDS NO.1 2 5 AND 6 ARE AS UNDER:- (1) IN NOT APPRECIATING THE FACTS THAT THE ASSESSEE HAS CORRECTLY RETURNED THE INCOME AT NIL AS AGAINST THE DISPUTED INCOME ASSESSED AT RS.33 34 715/-. (2) THAT THE HON'BLE CIT (A) HAS ERRED IN NO T CONSIDERING THE FACTUAL AS WELL AS LEGAL ASPECTS BR OUGHT ON RECORD AS PER WRITTEN SUBMISSION ALONGWITH ENCLOSUR ES AT PAGE 1 UP TO 43 OF THE SUBMISSION. (5) THUS IT IS PRAYED THAT THE ASSESSEE HAS RIGHTLY RETURNED THE INCOME AT NIL AND THE CLAIM MADE U/S.8 0HHC TO THE EXTENT OF THE NET PROFIT IS TO BE ALLOWED. I N NUTSHELL THE CLAIM MADE WORTH OF RS.1 54 29 164/- MAY PLEASE BE - 2 - DIRECTED TO BE ALLOWED SUBJECT TO THE AVAILABILITY OF NET PROFIT / RETURN INCOME. (6) WITHOUT PREJUDICE THE WHOLE CLAIM U/S.80HHC MAY PLEASE BE SENT BACK TO THE FILE OF THE AO DIRECTING HIM TO DECIDE THE MATTER AFTER DECISION OF HON'BLE SUPREME COURT. 3. AT THE TIME OF HEARING NO ARGUMENTS WERE MADE ON THE ABOVE GROUNDS OF APPEAL BY THE LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE. HENCE THEY ARE DISMISSED FOR WANT OF PRO SECUTION. 4. GROUND NO.3 READS AS UNDER:- (3) IN NOT APPRECIATING THE FACTS THAT WHEN ON E PROCEEDINGS HAS COMMENCED AND HAS NOT BEEN TERMINAT ED THEN THE PARALLEL PROCEEDINGS IS NOT WARRANTED AND AS SUCH THE NOTICE ISSUED U/S. 143(2) IS ITSELF BAD IN LAW AND VOID UNLESS THE EARLIER PROCEEDINGS U/S. 154 (ISSUED ON THE SAME GROUND) HAS BEEN TERMINATED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE RETURN OF INCOME FILED BY THE ASS ESSEE FOR ASSESSMENT YEAR 2003-04 WAS PROCESSED UNDER SECTION 143(1) ON 17.02.2004 BY ISSUE OF AN INTIMATION. THEREAFTER THE LEARNED ASSESSIN G OFFICER ISSUED A NOTICE UNDER SECTION 154 DATED 20..07.2004 FOR RECTIFYING THE INTIMATION ISSUED UNDER SECTION 143(1) ON THE GROUND THAT ALLOWANCE O F DEDUCTION UNDER SECTION 80HHC IN THE INTIMATION WAS A MISTAKE APPA RENT FROM THE RECORD FOR THE REASON MENTIONED IN DETAIL IN HIS LETTER DA TED 20.07.2004. THE LEARNED ASSESSING OFFICER THEREAFTER ISSUED A NOT ICE UNDER SECTION 143(2) ON 13.10.2004 FOR MAKING REGULAR ASSESSMENT. 6. ON THE ABOVE FACTS THE ASSESSEE CONTENDED THAT AS ONE PROCEEDING INITIATED UNDER SECTION 154 WAS PENDING ON 13.10.2004 AND THEREFORE THE NOTICE ISSUED UNDER SECTION 143(2) O N THAT DATE FOR THE SAME - 3 - ASSESSMENT YEAR WAS INVALID AND CONSEQUENTLY THE OR DER UNDER SECTION 143(3) PASSED BY THE LEARNED ASSESSING OFFICER WAS BAD IN LAW. 7 THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND THAT ONCE NOTICE UNDER SECTION 143(2) WAS ISSUED ALL OTHER PROCEEDI NG IN CONNECTION WITH SECTION 143(1) BECOMES NULL AND VOID. 8. BEFORE US THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE REITERATED THE SAME SUBMISSIONS WHICH WERE MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND HAS PLACED RELIANCE ON THE DECISION IN THE CASES OF ANIL GUPTA VS. ASSE SSING OFFICER (2005) 96 TTJ (DEL) 798 GUJARAT POLY-AVX ELECTRONICS LTD. V S. DCIT [222 ITR 140] PANYAM CEMENTS & MINERAL INDUSTRIES LTD. VS. JOINT COMMISSIONER OF INCOME TAX [(2005) 105 TTJ (HYD)TM 909] 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS). 10. WE FIND THAT IN THE CASE OF ANIL GUPTA VS. ASS ESSING OFFICER (SUPRA) THE TRIBUNAL HELD THAT AO HAVING INITIATED PROCEEDINGS UNDER SECTION 154 PROPOSING TO TAX A PARTICULAR INCOME AN D PENDING SAID PROCEEDINGS INITIATING PROCEEDINGS UNDER SECTION 1 47 FOR TAXING THE SAME INCOME PROCEEDINGS UNDER SECTION 147 SUFFERED FROM CHANGE OF OPINION HENCE BAD IN LAW. HOWEVER IN THE INSTANT CASE IT IS OBSERVED THAT NO PROCEEDING UNDER SECTION 147 WAS INITIATED BY THE L EARNED ASSESSING OFFICER. IN THE INSTANT CASE PROCEEDINGS WERE INIT IATED FOR MAKING REGULAR ASSESSMENT BY ISSUANCE OF A NOTICE UNDER SECTION 14 3(2) OF THE ACT. A NOTICE UNDER SECTION 147 IS ISSUED FOR BRINGING TO TAX A PARTICULAR INCOME IN - 4 - RESPECT OF WHICH THE LEARNED ASSESSING OFFICER HAD REASONS TO BELIEVE THAT THE SAME HAS ESCAPED FROM ASSESSMENT WHEREAS THE SC OPE OF ISSUANCE OF NOTICE UNDER SECTION 143(2) IS ENTIRELY DIFFERENT W HICH IS TO ENSURE THAT ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER PAID THE TAX IN ANY MANNER. T HUS IT CANNOT BE HELD THAT NOTICE UNDER SECTION 143(2) WAS ISSUED ONLY TO BRING TO TAX THE VERY SAME INCOME FOR WHICH NOTICE UNDER SECTION 154 WAS ISSUED EARLIER. WE THEREFORE FIND THAT THE ABOVE DECISION RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE IS DISTIN GUISHABLE ON FACTS AND IS NOT APPLICABLE IN THE INSTANT CASE. 11. IN THE CASE OF GUJARAT POLY-AVX ELECTRONICS LT D. VS. DCIT (SUPRA) IT WAS HELD THAT AFTER ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT IT IS NOT OPEN FOR THE ASSESSING OFFICER T O MAKE ADJUSTMENT OR TO PASS ORDER UNDER SECTION 143(1) OF THE ACT BUT HE H AS TO MAKE ASSESSMENT IN ACCORDANCE WITH LAW I.E. UNDER SECTION 143(3) OF THE ACT. THUS IT IS OBSERVED THAT THE ABOVE DECISION DOES NOT SUPPORT T HE CASE OF THE ASSESSEE RATHER IT SUPPORTS THE CASE OF THE REVENUE. IN THE INSTANT CASE IT IS HELD BY THE HON'BLE HIGH COURT THAT ON ISSUANCE OF NOTICE U NDER SECTION 143(2) OF THE ACT THE PROCEEDINGS INITIATED UNDER SECTION 14 3(1) COMES TO AN END AND AFTER THAT THE LEARNED ASSESSING OFFICER HAD NO JUR ISDICTION TO MAKE ANY ADJUSTMENT UNDER SECTION 143(1) BUT THE LEARNED ASS ESSING OFFICER HAD TO PASS AN ORDER OF REGULAR ASSESSMENT UNDER SECTION 1 43(3) AS PER LAW. IT IS AN ESTABLISHED POSITION OF LAW THAT JURISDICTION OF TH E LEARNED ASSESSING OFFICER UNDER SECTION 154 PROCEEDINGS IN RESPECT OF AN INTIMATION ISSUED UNDER SECTION 143(1) IS LIMITED TO THE POWERS GIVEN UNDER SECTION 143(1) AND HE CAN DO ONLY THOSE ADJUSTMENTS UNDER SECTION 154 PROCEEDINGS WHICH HE CAN OTHERWISE DO UNDER SECTION 143(1) OF THE ACT . THEREFORE IN VIEW OF THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH C OURT ON ISSUANCE OF NOTICE UNDER SECTION 143(2) THE PROCEEDINGS UNDER S ECTION 143(1) INCLUDING - 5 - PROCEEDING INTIMATION UNDER SECTION 154 IN RELATION TO THE INITIATION ISSUED UNDER SECTION 143(1) COMES TO AN END AND THEREFORE THE LEARNED ASSESSING OFFICER HAS JURISDICTION TO MAKE REGULAR ASSESSMENT UNDER SECTION 143(3) AS PER LAW. 12. THE LAST DECISION RELIED UPON BY THE LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE WAS IN THE CASE OF P ANYAM CEMENTS & MINERAL INDUSTRIES LTD. (SUPRA) WHEREIN IT WAS HEL D BY THE TRIBUNAL THAT EXERCISE OF POWER UNDER SECTION 143(1) IS NOT PERMI TTED AFTER THE COMMENCEMENT OF PROCEEDINGS UNDER SECTION 143(2). T HUS IN THE INSTANT CASE AFTER ISSUANCE OF NOTICE UNDER SECTION 143(2) THE LEARNED ASSESSING OFFICER HAS NO JURISDICTION TO PROCEED WITH 154 PRO CEEDINGS INITIATED IN RELATION TO INTIMATION ISSUED UNDER SECTION 143(1) OF THE ACT. THUS THERE WERE NO TWO VALID PROCEEDINGS EXISTING SIMULTANEOUS LY AFTER THE ISSUANCE OF NOTICE UNDER SECTION 143(2). THUS THIS DECISION ALSO DOES NOT SUPPORT OF THE CASE OF THE ASSESSEE. 13. IN VIEW OF THE DISCUSSIONS MADE HEREINABOVE I N OUR CONSIDERED OPINION AFTER ISSUANCE OF NOTICE UNDER SECTION 143(2) THE PROCEEDINGS UNDER SECTION 154 READ WITH SECTION 143 (1) COMES TO AN END AND THERE WERE NO TWO VALID PROCEEDINGS PENDING ON ISSUANCE OF NOTICE UNDER SECTION 143(2) AND THEREFORE THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE CANNOT BE ACCEPTED. WE THEREFORE DISMISS THIS GROUND OF APPEAL OF THE ASS ESSEE. 14. GROUND NO.4 READS AS UNDER:- (4) IN NOT APPRECIATING THE FACTS THAT DEPB C LAIM WORTH OF RS.1 99 52 566/- AND OF RS.2 31 628/- IS PART AN D PARCEL OF EXPORT SALES TURNOVER PARTICULARLY IN REFERENCE T O THE AGREEMENT ENTERED INTO WITH OUR OVERSEAS PARTY AS P ER CONTENTION RAISED BEFORE THE A.O. DATED 1071172004 PARA (VII) AS WELL AS COPY OF THE AGREEMENT ENTERED INTO WITH OUR - 6 - OVERSEAS PARTY ENCLOSED BEFORE THE CIT(A) AT PAPER BOOK PAGE 18 TO 21. 15. IN THE INSTANT CASE THE LEARNED ASSESSING OFF ICER DISALLOWED CLAIM OF DEDUCTION UNDER SECTION 80HHC ON THE GROUN D THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC IN R ESPECT OF DEBP AMOUNT. THE LEARNED COMMISSIONER OF INCOME TAX(APPE ALS) CONFIRMED THE ORDER OF THE LEARNED ASSESSING OFFICER. WE FIND THAT THE ISSUE WAS DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS VS. ITO (2009) 125 TTJ (MUM) (SB) 289 ON 11 .08.2009. FURTHER AS THE AFORESAID DECISION OF THE SPECIAL BENCH OF T HE TRIBUNAL WAS RENDERED SUBSEQUENT TO THE DECISION OF THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) IN THE INSTANT CASE THE LOWER AUTHORI TIES DID NOT HAVE THE BENEFIT OF GOING THROUGH THE SAME BEFORE DECIDING T HE ISSUE. THEREFORE IT WOULD BE IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR DECIDING THE SAME AFT ER TAKING INTO ACCOUNT THE DECISION OF THE SPECIAL BENCH IN THE CASE OF TO PMAN EXPORTS (SUPRA) AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE AS PER LAW. WE ORDER ACCORDINGLY. THEREFORE THIS GROUND OF APP EAL IS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 23 RD DAY OF APRIL 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD; ON THIS 23 RD DAY OF APRIL 2010 PARAS - 7 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VIII SURAT. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 21.04.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 22.04.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 22.04.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 22.04.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 22.04.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 23.04.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 23.04.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------