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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri P.M Jagtap, AM & Shri S.S. Godara, JM]
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH : KOLKATA [Before Hon’ble Shri P.M Jagtap, AM & Shri S.S. Godara, JM] I.T.A No. 1789/Kol/2016 Assessment Year : 2006-07 DCIT, Circle-8(1), Kolkata -vs- M/s Gujrat NRE Coke Ltd. [PAN: AABCG 6225 H] (Appellant) (Respondent)
For the Appellant : Shri Robin Chowdhury, Addl. CIT For the Respondent : Shri Ravi Tulsiyan, Ld. AR
Date of Hearing : 17.09.2018 Date of Pronouncement : 12.10.2018
ORDER Per S.S. Godara, JM
This Revenue’s appeal for assessment year 2006-07 arises against the CIT(A)-4, Kolkata’s order dated 20.06.2016 passed in case no. 1265/CIT(A)-4/Circle- 12/Kol/2014-15 question of reopening/ reassessment in issue involving proceeding u/s 147 / 251 / 143(3) of the Income Tax Act, 1961 (in short the ‘Act’). Heard both the parties. Case file perused.
Both the parties take us to the CIT(A)’s findings under challenge holding the impugned reopening / reassessment to be invalid as with the following detailed discussion:
2 ITA No.1789/Kol/2016 M/s Gujrat NRE Coke Ltd. A.Yr. 2006-07 “3.2. This ground is directed against the action of the AO in reopening the assessment of the assessee, which was completed u/s 143(3) of the Act, u/s 147 of the Act and thereafter completing the assessment u/s 143(3). In this regard, the relevant portion of the AR’s submission during the appellate proceeding is replicated as follows: "The above-mentioned appeal is against the re-assessment order passed by the Ld. AO. u/s 147/251/143(3) of the I. T. Act dated 24.03.2014 relating to Asstt. Year 2006- 07. The Appellant has taken only two effective grounds in this appeal. By a letter dated 09.06.2016 submitted in the office of the Ld. CIT(A) (copy encl), it has prayed for admission of an additional ground. Before discussing the grounds of appeal. the brief facts of the case are discussed below. The Appellant Company is engaged in the business of manufacturing and sale of Low Ash Metallurgical Coke. For Asstt. Year 2006-07 its assessment was completed by a scrutiny assessment order on 31.12.2009 on a total income of Rs. 117,25,23,307. The Assessee filed an appeal against the said assessment order and the Ld. CIT(A)-XII Kol partly allowed the appeal. Thereafter, the Ld. A 0. issued a notice u/s 148 of the I. T. Act on 27.02.2013 reopening its assessment for the said Asstt. Year. He has passed a re-assessment order u/s 147/251/143(3) on 24.03.2014 in which he has made two disallowances of RS.2,34,33,610 and Rs.80,00,000/-. The Assessee has filed this appeal against the aforesaid two disallowances.
In a letter dated 09.06.2016 (copy enclosed) filed before the Ld. CIT(A) with a copy to the Ld. A.O the assessee has prayed for admission of an additional ground. In this additional ground, it has been submitted that the Ld. A. O. reopened the assessment of Asstt. Year 2006-07 by a notice u/s 148 dated 27.02.2013 which was issued after four years from the end of the said assessment year. As per 1st proviso to Sec. 147, an assessment which was completed u/s 143(3) can be reopened only when the escapement of income was on account of the failure of the Assessee to disclose fully and truly all material facts necessary for its assessment. From the reason recorded by the Ld. A O. before issuing the notice uls148 dated 27.02.2013 which has been reproduced in the assessment order itself, it may kindly be seen that he has nowhere alleged that the escapement of income was on account of failure of the Assessee to disclose a/l material facts. For this reason alone, the reopening of assessment is considered bad in law as held by the Hon'ble Bombay High Court in the case of Hindusthan Lever Ltd. -vs.- Wadkar reported in 268-ITR-339. A copy of this order is enclosed. It is therefore prayed that the reopening of the assessment of the assessee for Asstt. Year 2006-07 may kindly be cancelled and consequently the reassessment order passed by the ld. AO for the Astt. Year 2006-07 may kindly be annulled.”
3.3. I have carefully considered the submission of the AR of the appellant and taking into consideration the totality of the facts of the issue at hand to determine the validity of the impugned order passed by the AO. I find that the AO had issued notice u/s 148 'of the Act dated 27.02.2013 after a lapse of more 2
3 ITA No.1789/Kol/2016 M/s Gujrat NRE Coke Ltd. A.Yr. 2006-07 than four years from the relevant assessment year i.e. AY 2006-07 in the absence of any finding recorded by him that there was a failure on the part of the assessee to fully and truly disclose all material facts in the return of income filed with the department in tune with the provisions of section 147 of the Act. On this count, I find that there was no failure on the part of the assessee to disclose all material facts in the return of income filed before the AO which would warrant reopening of the case u/s 147 of the Act. For this reason alone, the reopening of assessment is considered bad in law as held by the Hon'ble Bombay High Court in the case of Hindusthan Lever Ltd. vs. Wadkar reported in 268-ITR-339. The relevant portion of the ruling is replicated as follows: "While deciding Writ. Petn. No. 1505 Of 2003, the impugned notice issued under s. 148 of the Act dated. 5th Nov., 2002, for reopening assessment of the asst. yr. 1996-97 was quashed and set aside by us holding that the said notice was without jurisdiction as the AO did not record in the reasons that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year. While disposing off that petition we emphasized the necessity of recording reasons and quality thereof and held that unless the reasons disclose that the income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year, it is not open for the AO to reopen the concluded assessment after expiry of four years.” 3.4. Going by facts and law on the issue at hand, I find that the action of the AO in reopening of the case of the appellant on extraneous factors which are also found to be antithetical to the provisions of section 147 of the Act, will not hold good in any manner in view of the facts of the matter as discussed in the foregoing. Under such circumstances and facts of the case as well as considering the judicial precedence as cited (supra), I am of the considered opinion that on both facts and law, the AO has not made out his case with any convincing counter material that the reopening of assessment was on valid ground. In the circumstances, the impugned assessment cannot be endorsed in any manner as a valid order since the proceeding u/s 147 of the Act is considered as time barred and for which any subsequent proceeding pursuant thereto also becomes a nullity. Consequently, the order passed pursuant to the impugned proceeding u/s 147 of the Act can only be held to be nugatory in nature and hence annulled. In view of this, the remaining grounds in this appeal no longer have any relevance which can only be passed off as infructuous and , hence not dealt with. The Additional ground is allowed.”
It is vehemently contended at the Revenue’s behest that the CIT(A) has erred in law as well as on facts in annulling the impugned assessment after holding that there was no 3
4 ITA No.1789/Kol/2016 M/s Gujrat NRE Coke Ltd. A.Yr. 2006-07 failure on the taxpayer’s part to disclose “fully and truly” all necessary facts in its return of income. Learned Departmental Representative’s case is that the assessee had wrongly included land cost in its windmill depreciation claim and therefore, its disclosure made in assessment proceedings does not satisfy the latter lines of truly ‘ in section 147 1st proviso’ in the Act. There is no dispute first of all that the Assessing Officer’s reopening reasons did not specifically indicate the assessee’s failure in not having disclosed all the relevant facts “fully and truly” at the first instance. Hon’ble Bombay high court’s decision (supra) holds that such an omission on part of an Assessing Officer is fatal to validity of the reopening in issue. We further find as per assessee’s particulars of depreciation allowable in respect of block of assets in the relevant previous year that it had nowhere included land cost of Rs. 20,000,000/- for the purpose of the relief in issue. This clinching fact has gone unrebutted at the Revenue’s behest during the course of hearing. We therefore affirm the CIT(A)’s findings holding the impugned reopening to be not sustainable in the eyes of law. The Revenue fails in its sole legal ground.
This Revenue’s appeal is dismissed.
Order pronounced in the Court on 12.10.2018
Sd/- Sd/- [P.M Jagtap ] [ S.S.Godara ] Accountant Member Judicial Member
Dated : 12.10.2018
SB, Sr. PS
5 ITA No.1789/Kol/2016 M/s Gujrat NRE Coke Ltd. A.Yr. 2006-07
Copy of the order forwarded to: 1. DCIT, Circle-8(1), Kolkata, Aayakar Bhawan, 5th Floor, P-7, Chowringhee Square, Kolkata-700069. 2. M/s Gujrat NRE Coke Ltd., 4, 22, Cammac Street, Block-C, 5th Floor, Kolkata-70001 3..C.I.T(A).- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.