THE COMMISSIONER OF INCOME TAX vs. M/S. KANAM LATEX INDUSTRIES PVT. LTD. ,

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY ,THE 29TH DAY OF OCTOBER 2018 / 7TH KARTHIKA, 1940 ITA.No. 1079 of 2009 AGAINST THE ORDER/JUDGMENT IN ITA 507/2004 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 04-08-2005 APPELLANT/S: THE COMMISSIONER OF INCOME TAX KOTTAYAM. BY ADV. SRI PKR MENON SR FOR GOI TAXES SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S. KANAM LATEX INDUSTRIES PVT. LTD. , KOTTAYAM. BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.RAMESH CHERIAN JOHN OTHER PRESENT: THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 29.10.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No.1079/2009 2 JUDGMENT Vinod Chandran, J. The

question

again

arises,

whether

the re-assessment completed after four years, but within six years, can be sustained for reason of non-disclosure of full and true material facts, as per Section 147 of the Income Tax Act, 1961 (for brevity 'the Act'). 2. The facts in the appeal are thus: In the assessment years 1991-92, the assessee claimed deductions under Sections 80-HH and 80-I respectively of Rs.5,69,813/- and Rs.15,14,593/-. Later, deduction claimed could also have been only on the same amount claimed under Section 80-HH. The Assessing Officer, however, allowed the deductions. A re-assessment proceedings was attempted after a period of four years,

ITA No.1079/2009 3 which was set aside by the First Appellate Authority and such deletion confirmed by the Tribunal. 3. The learned Senior Counsel, Government of India (Taxes) refers to the decision in Phool Chand Bajrang Lal v. Income Tax Officer, [1993] 203 ITR 456, to contend that the assessee having not disclosed the actual deduction, there could be rectification made even after four years as provided under Section 147. The learned Counsel appearing for the respondent, however, would submit that there is no reason to place reliance on the aforesaid decision, the facts of which disclose certain loans having been claimed, which later were found to be bogus. 4. Reliance placed by the Senior Counsel on Commissioner of Income Tax v. Parrisons Roller Flour Mills Pvt.Ltd., (ITA No.377/2009) also cannot be accepted, since therein there were payments shown to existing registered dealers in the books of accounts,

ITA No.1079/2009 4 which on further enquiry, were shown to be bogus and the dealers were found to be fictitious. 5. In the present case, we also notice that there was a rectification proceeding initiated against the completed assessment on 08.08.1994, which was set aside by the Appellate Authorities for reason of the issue being debatable. In fact, the deduction claimed under both the heads were very much explicit in the returns and it required no roving enquiry even into the books of accounts. The Assessing Officer had carelessly completed the assessment without noticing the excess claim made under Section 80-I. 6. In this context, we place reliance on Parasuram Pottery Works Co.Ltd. v. ITO, (1977) 1 SCC 408, which was placed before us by the learned Counsel for the respondent. Therein, the excess depreciation allowance granted was on the failure of the Income Tax Officer to include initial depreciation granted, while computing the written down value of the assets, for the relevant

ITA No.1079/2009 5 assessment years. It was held that there was no case of failure by the assessee to disclose fully and truly the material facts for the purpose of assessment. Here also, we notice that the Assessing Officer had not been diligent enough to notice the excess claim made under Section 80-I. In fact rectification proceedings were initiated, within four years, which was set aside by the Appellate Authorities. If a re-assessment was attempted within the four year period it could have been sustained. 7. There could have been re-assessment proceedings validly initiated within the four year period, which the Assessing Officer failed to do. There cannot be found any failure to disclose fully and truly the material facts, on which alone there could be a re-assessment justified after four years. The provision in Section 147 is to get over a non-disclosure by the assessee and not to get over the lack of diligence by the Officers of the Department. We do not find any

ITA No.1079/2009 6 reason to entertain the appeal and we answer the question raised in favour of the assessee and against the Revenue. The I.T.Appeal stands rejected. No order as to costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON dkr JUDGE

ITA No.1079/2009 7 APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE - A COPY OF THE ORIGINAL RETURN OF INCOME. ANNEXURE - B COPY OF THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) DATED 17/02/1994. ANNEXURE - C COPY OF THE REVISED RETURN OF INCOME. ANNEXURE - D COPY OF THE REASSESSMENT ORDER U/S. 143(3) R.W.S. 147 DATED 25/03/2002. ANNEXURE - E COPY OF THE ORDER OF THE CIT (A) IN ITA NO.47/K/CIT-IV/02-03 DATED 10/02/2004. ANNEXURE - F COPY OF THE ORDER OF THE ITAT, KOCHI BENCH IN ITA NO.507/COCH/2004 DATED 04/08/2005.