M/S NOBLE DRUGS LTD,NASHIK vs. ASST. COMMISSIONER OF INCOME TAX,CIRCLE -2, NASHIK

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ITA 214/PUN/2020Status: DisposedITAT Pune28 July 2022AY 2008-20096 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening was invalid because it was initiated beyond 4 years without any failure on the part of the assessee to disclose material facts. Furthermore, the Tribunal noted that the AO's reasoning for reopening was based on a change of opinion, which is not permissible.

What were the facts?

The assessee's appeal concerns assessment year 2008-09, where the Assessing Officer (AO) reopened the assessment after more than 4 years. The reopening was based on the AO's belief that unabsorbed depreciation from assessment year 2000-01 was carried forward beyond the permissible 8 years.

What were the issues?

Whether reopening of assessment beyond 4 years is valid without failure to disclose material facts, and whether reopening based on a change of opinion is permissible.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM

For Respondent: Shri Arvind Desai
Hearing: 15.06.2022Pronounced: 28.07.2022

आदेश / ORDER PER S. S. GODARA, JM :

1.

This assessee’s appeal for A.Y. 2008-09 is directed against the CIT(A)-2, Nashik’s order dated 14/11/2019 passed in case No. Nsk/CIT(A)-2/295/ 2015-16 involving proceeding u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short "the Act”. Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex-parte.

2.

The assessee pleads the following substantive grounds in instant appeal. 1. On the basis of the facts, in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)- 2, Nashik, is not justified in upholding the issue of notice u/s. 148 after 4 years from the end of the assessment year when there was no failure on the part of appellant to disclose fully & truly all material facts necessary for assessment allowing the issue of notice U/s. 148 of the Act as the proceeding U/s. 148 were initiated merely due to change in opinion of the AO. 2. On the basis of the facts, in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)- 2, Nashik, is not justified in holding that there is no any change in opinion, particularly when the A.O. has allowed the carry forward of the loss pertaining to A.Y. 2000-01 in the assessment proceedings for the year under appeal.

3.

On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)- 2, Nashik, is not justified in upholding the reassessment proceedings when the same were initiated on the basis of Audit Objection. 4. On the basis of the facts and in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals) - 2, Nashik, is not justified in disallowing carry forward of the unabsorbed depreciation pertaining to A.Y. 2000-01 beyond 8 years. The CIT(A) is further not justified in ignoring the decision of Gujrat High Court in the case of General Motors India Pvt. Ltd. vs Dy. CIT (Spl Civil Application No. 1773 of 2012 as well as Supreme Court in the case of Seshsayee Paper & Boards Ltd. Vs Dy. CIT (ITA No.1812-13 of 2005 as well as ITAT, Mumbai Bench in the case of Confidence Petroleum India Ltd. (ITA No.1937/Mum/2012, A.Y. 2007-08)

5. The appellant craves for the addition to, deletion, alteration, modification of the above grounds of appeal

.”

3. We next note that the Assessing Officer had recorded the following reasons of re-opening in instant case:- “The assessee has filed the return of income for the A.Y. 2008-09 on 30.09.2008 showing total income of Rs.63,47,009/-. Assessment proceedings was completed on 10.12.2010. The assessee company is engaged in the business of manufacturing of and job work of pharmaceutical products. Scrutiny records revealed that the assessee had carried forward loss / unabsorbed depreciation of Rs. 8,45,522/- of A. Y. 2000-01 beyond A. Y. 2008-09 which is not in order because any loss can be carried forward for 8 assessment years only from the assessment year in which it was first computed or determined. Further, as per ITAT Mumbai decision of 30.06.2010 in case of M/s Times Guarantee, unabsorbed depreciation can be set off/carried forward for A.Y. 2000-01 up to A. Y. 2008-09 and not beyond that. Hence, carry forward of loss / unabsorbed depreciation of A. Y. 2000-01 beyond A. Y. 2008-09 is not in order and resulted into irregular carry forward of loss / unabsorbed depreciation beyond A.Y. 2008-09. This led to short levy of tax of Rs. 2,61,267/- (Notional/ potential). The assessing officer has not disallowed specifically this carry forward in assessment order in absence of which it is assumed that assessing officer has allowed this carry forward.

Therefore, I have reason to believe that income to the extent of Rs.8,45,522/- has been escaped from assessment in the A. Y. 2008-09. Therefore, the assessment for A. Y. 2008-09 is required to be reopened u/s 147 of the I.T. Act."

4.

Mr. Desai could hardly rebut the clinching fact that we are in assessment year 2008-09 wherein the Assessing Officer had initiated the impugned reopening on 05.01.2015 i.e. beyond a period of 4 years from the end of relevant assessment year. And also that the Assessing officer had earlier completed section 143(3) regular assessment on 10.12.2010. It is thus an instance wherein the Assessing Officer has nowhere attributed the assessee’s failure in disclosing “ fully” and “truly” all material facts necessary for his assessment as per section 147 1st proviso. We therefore adopt stricter approach in light of Commission of Customs V/s Dilipkumar and co. 2018 (9) SCC 1 (SC) (FB) and Hindustan Lever LTd. Vs. R.B. Wadkar (2004) 268 ITR 332 to quash the impugned reopening for this precise reason alone.

5.

That apart, the factual position would hardly any different on merits as well since this tribunal’s Special Bench decision in Times Guarantee case(supra) has already been reversed in General Motors India Pvt. Ltd. V/s DCIT (2012) 25 taxmann.com 364(Guj.) We according quash the impugned re-opening qua the instant latter aspect as well. All other pleadings on merits stand rendered academic.

6.

Delay of six days in filing the instant appeal is condoned since falling in Covid-19 pandemic outbreak period.

7.

This assessee’s appeal is allowed in above terms. Order pronounced in the Open Court on this 28th day of July, 2022.

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