COMMISSIONER OF INCOME TAX vs. M/S.INDIRA INDUSTRIES

T.C.A.No.887 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 08.10.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.887 of 2019 Commissioner of Income Tax, Chennai .. Appellant Versus M/s.Indira Industries, 6 SIPCOT Industrial Complex, Ranipet – 632 403 .. Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai dated 07.05.2013 made in I.T.A.No.1833/Mds/2012 relating to the Asst Year 2004-05. For Appellant :Mr.M.Swaminathan For Respondent : M/s.Arun Karthik Mohan 1/8 http://www.judis.nic.in T.C.A.No.887 of 2019 JUDGMENT [Order of the Court was made by

T.S.SIVAGNANAM

, J.]

This appeal by the Revenue filed under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity) is directed against the order dated 07.05.2013 passed by the Income Tax Appellate Tribunal, ('the Tribunal' for brevity) Madras 'A' Bench, Chennai in I.T.A.No.1833/Mds/2012 for the Assessment Year 2004-05. The Tax Case Appeal was admitted on 22.11.2019 on the following Substantial Questions of Law: “(i)Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in quashing the reassessment proceedings initiated by the revenue, holding that there is no failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment during the original assessment? (ii)Whether based on the material available before it, the Income Tax Appellate Tribunal could have arrived at a conclusion that there is no failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment during the original assessment? 2/8 http://www.judis.nic.in T.C.A.No.887 of 2019 (iii)Whether the Income Tax Appellate Tribunal was right in quashing the reassessment proceedings initiated by the revenue, holding that it is barred by Limitation under Section 147 (1) proviso on the ground that there is no failure on the part of the assessee to disclose fully and truly the material facts necessary for the assessment during the original assessment?” 2. We have elaborately heard Mr.M.Swaminathan, learned Senior Standing Counsel for the appellant-Revenue and M/s.Arun Karthik Mohan, learned counsel appearing for the respondent-assessee. 3. The assessee is engaged in the business of manufacturing industrial noise control equipments. The assessment for the year under consideration AY 2004-05, was completed under Section 143 (3) of the Act by order dated 01.06.2005. Subsequently, the assessment was reopened after a period of four years on the ground that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment for the concerned year. The assessee was called upon to show 3/8 http://www.judis.nic.in T.C.A.No.887 of 2019 cause as to why the assessment should not be reopened for the reasons set out in the notice issued by the Assessing Officer. The assessment was sought to be reopened on the ground that the deduction claimed by the assessee under Section 10(B) is not sustainable and also with regard to the difference in valuation of the closing stock. The explanation offered by the assessee did not find favour with the Assessing Officer, who rejected the same and completed the assessment under Section 143(3) read with Section 147 by order dated 28.12.2011. The assessee being aggrieved, filed an appeal before the Commissioner of Income Tax (Appeals), Chennai, ('CIT(A)' for brevity). Among other things, the assessee questioned the reopening of the assessment under Section 147 of the Act. The assessee contended that the scrutiny assessment was already completed after hearing the assessee, after perusing the return, statements of account furnished by it and after examining the books of accounts maintained for the business carried on by the assessee and there was no failure on the part of the assessee to disclose fully and truly all material facts relevant and necessary for the assessment and therefore, the reopening of the assessment after the expiry of four years is bad in law and invalid. This submission made by the 4/8 http://www.judis.nic.in T.C.A.No.887 of 2019 assessee was tested for its correctness, and CIT(A) held in favour of the assessee by observing that the reopening of the assessment was a case of change of opinion and is not valid in law. The CIT(A) placed reliance on the decision in the case of CIT Vs. Annamalai Finance Ltd., (2005) 287 ITR 25 (Mad) and the decision of the Hon’ble Supreme Court of India in the case of CIT Vs. Dinesh Chandra H.Shah [82 ITR 367 (SC)]. 4. The Revenue challenged the order passed by the CIT(A) by filing an appeal before the Tribunal. The Tribunal, after considering the factual position as culled out by the CIT(A), held that the Assessing Officer, while reopening the assessment and passing the order dated 28.12.2011, did not point out of the details or material facts necessary for the completion of the assessment, which was not disclosed by the assessee in the original assessment proceedings under Section 143(3) of the Act. The Tribunal further held that on going through the orders passed by the Assessing Officer and the CIT(A) and the materials, which was placed before the Tribunal, the Assessing Officer has reopened the assessment based on the materials, which were already available on record and it is a mere change of 5/8 http://www.judis.nic.in T.C.A.No.887 of 2019 opinion. The Tribunal relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd., [320 ITR 561(SC)]. With this finding, the appeal was dismissed. 5. Before us, the Revenue seeks to re-argue the factual position, which is impermissible in an appeal under Section 260A of the Act, where, we are required to decide only Substantial Questions of Law, which arises for consideration. The power conferred on this Court under Section 260 A of the Act is not to act as a third Appellate Court over the orders passed by the Tribunal. We find from the grounds raised before us that there is nothing brought on record by the Revenue to show that the order passed by the Tribunal was factually incorrect or for that matter, the order passed by the CIT(A). Thus, we are convinced that no question of law arises for consideration in this appeal as the entire matter is factual, which were brought on record and analysed by the CIT(A) and re-appreciated by the Tribunal to come to a conclusion. 6. For the above reasons, we find no question of law much less 6/8 http://www.judis.nic.in T.C.A.No.887 of 2019 Substantial Questions of Law arising for consideration in this appeal. Accordingly, the appeal fails and is dismissed. No costs. (T.S.S.,J) (V.B.S.,J) 08.10.2020 Kak Index: Yes / No Internet: Yes / No To The Income Tax Appellate Tribunal, 'A' Bench, Chennai. 7/8 http://www.judis.nic.in T.C.A.No.887 of 2019 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. Kak T.C.A.No.887 of 2019 08.10.2020 8/8 http://www.judis.nic.in