THE COMMISSIONER OF INCOME-TAX vs. M/S. ANU CAHEWS

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON WEDNESDAY, THE 13TH DAY OF JUNE 2018 / 23RD JYAISHTA, 1940 ITA.No. 15 of 2013 ---------------------- AGAINST THE ORDER/JUDGMENT IN ITA 242/COCH/2009 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 20-01-2012 APPELLANT(S)/APPELLANT: ---------------------- THE COMMISSIONER OF INCOME-TAX THIRUVANANTHAPURAM. BY ADV.SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S)/RESPONDENT: ------------------------ M/S. ANU CAHEWS PARAMESHWAR NAGAR, KOLLAM - 691 001. R1 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1 BY ADV. SRI.P.GOPINATH R1 BY ADV. SRI.P.BENNY THOMAS R1 BY ADV. SRI.K.JOHN MATHAI R1 BY ADV. SMT.PREETHA S.NAIR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 13-06-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA.No. 15 of 2013 ------------------ APPENDIX APPELLANT(S)' ANNEXURES: ----------------------- ANNEXURE A COPY OF THE ORDER OF THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT DATED 02-09-2008. ANNEXURE B COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 11-02-2009 ANNEXURE C COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 20-01-2012. ANNEXURE A1 COPY OF THE RETURN ALONG WITH STATEMENT. ANNEXURE A2 COPY OF THE INTIMATION U/S 143(1) DATED 08-03-2004. ANNEXURE A3 COPY OF THE ORDER U/S 143(3) R/W S.147 DATED 30-08-2006. RESPONDENT(S)' ANNEXURES: ------------------------ NIL /TRUE COPY/ PA TO JUDGE dkr

K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- I.T.A. No. 15 of 2013 ------------------------------------------- Dated this the 13th day of June, 2018 J U D G M E N T Vinod Chandran, J. The appellant is the Commissioner of Income Tax, who is aggrieved with the order of the Tribunal, which set aside the re- assessment under Section 147 read with Section 148 of the Income Tax Act, 1961, on the ground of there being no suppression of material facts. The re-assessment proceedings were admittedly taken for the four year period as provided under Section 147. Such re-assessment could have been done only if the income chargeable to tax had escaped assessment for reason, inter alia, of failure to disclose fully and truly all material facts necessary for that assessment year; which sole ground the revenue relies on in the present case. 2. The assessee filed a return produced as Annexure A1 which was processed under Section 143(1). By Annexure A2 within the four year period, the assessment was re-opened for escapement of income under Section 147 read with Section 148 concluding

ITA 15/2013 2 eventually with Annexure A3 order. Again, further re-assessment was proposed on 13-03-2008 after the four year period stipulated in Section 147. The assessee filed a return in response to the notice under Section 148 on 15-04-2008 and a further notice under Section 143(2) on 24-02-2008 was issued. The reasons recorded for re-opening of assessment was communicated to the assessee and an order was passed as Annexure A; reducing considerably the deduction granted under Section 80HHC. Aggrieved by such order, the assessee was before the first appellate authority which stood rejected as per Annexure B. A further appeal to the Tribunal went in favour of the assessee on the ground that there could be no proceedings initiated under Section 147 after four years since there is discernible no absence of disclosure of true and complete material facts. 3. The Revenue is in appeal on the following questions of law: “1. Whether, on the facts and in the circumstances of the case and in the light of the decision of this Hon'ble Court in the connected appeal filed against the order in C.O.24/Coch/2009 in ITA.242/Coch/2009 dated 20-01-2012 should not the Tribunal decide the appeal of the Revenue on merits ?

ITA 15/2013 3 2. Whether, on the facts and in the circumstances of the case and the pronouncement of the judgment by the Hon'ble Supreme Court in Ravindranathan Nair's case being declaration of the law from the very inception and always retrospective: i. Is not the return originally filed by the assessee inconsistent with the declaration of the law by the Supreme Court ? ii. The original return being inconsistent with the decision of the Supreme Court from the inception of filing the return, is not the return filed not fully and truly disclosing material facts ? iii. Is not the original return, understood in the light of the principle laid down in Ravindranathan Nair not one filed under section 139 of the Income Tax Act as laid down by the Hon'ble High Court in ITR 30 of 1977 (unreported) ?” 4. The assessing authority had reduced 90% of the gross processing charges and added the processing charges to the total turnover. The first appellate authority directed reduction of 90% of only net processing charges. The Department was in appeal and the assessee filed a cross-objection. The appeal filed by the Department was rejected against which the present appeal is filed. The cross-objection was allowed granting the relief by setting aside the orders of the lower authorities finding that re-assessment could not be taken up under Section 147. Hence as of now there is no appeal from the order which interfered with

ITA 15/2013 4 assessment and the first appellate order, on grounds of invalidity of a re-assessment under Section 147. 5. We also notice that the returns originally filed was in accordance with the declaration of law of this Court in CIT v. K.Rajendranathan Nair, [2004] 265 ITR 35. The said decision was reversed by the Honourable Supreme Court in CIT v. K.Ravindranathan Nair, [2007] 295 ITR 228 (SC). There could hence be no suppression found as held by the Honourable Supreme Court in Deputy Commissioner of Income Tax v. Simplex Concrete Piles (India) Ltd., (2013) 11 SCC 373. In such circumstances, we refuse to answer the questions of law, especially on the ground that there is no appeal filed from the order which allowed the cross-objection of the assessee. The instant Appeal would thus stand dismissed.

Sd/- K. VINOD CHANDRAN Judge Sd/- ASHOK MENON Judge dkr