Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-7, Salem in dated 29.12.2016 for the assessment year 2006-07.
:-2-: ITA No. 603/Mds/2017
M/s. Sruti Chemicals (P) Ltd., the assessee, engaged in manufacture of food grade Carbon dioxide gas. For the assessment year 2006-07, its assessment was completed u/s. 143(3) on 30.04.2008. The Assessing Officer re-opened the assessment by a notice u/s. 148 issued on 25.10.2012 and completed the re-assessment u/s. 143 r.w.s. 147 on 30.12.2013. While doing so, he withdrew the MAT credit for assessment years 2004-05 & 2005-06 claimed at Rs. 1,34,529/- in the original assessment made for assessment year 2006-07 which was also allowed in the order u/s. 143(3) dated 30.04.2008. Aggrieved, the assessee filed an appeal before the CIT(A), challenging the re-opening of assessment u/s. 147, the disallowance for MAT credit and set off of business loans. The CIT(A) dismissed the appeal.
Aggrieved, the assessee filed this appeal with the following grounds:
“1. The order of the Commissioner of Income-tax(Appeals) dismissing the appeal on jurisdiction u/s.147 and on merits of the case is contrary to law, erroneous and unsustainable on the facts of the case. I. Reopening of Assessment: 2. The CIT(A) erred in upholding the reopening of assessment under sec.147 by notice dated 25.10.12 issued u/s.148 of the Act.
3. The CIT(A) failed to appreciate that the reopening was based on only change of opinion by the officer as the original assessment u/s.143(3) was framed on 30.4.08, wherein the officer had considered all the issues arising out of return of assessee and hence the reopening is untenable in law.
4. The CIT(A) further failed to appreciate that as per the first proviso to sec.147 reopening beyond four years is permissible only if there was failure on the part of assessee to disclose material facts and the officer having reopened
:-3-: ITA No. 603/Mds/2017 only on the basis of the return of assessee, the reopening of assessment is barred by limitation.
5. The CIT(A) further failed to appreciate that there was no reason to believe that income had escaped assessment and in the absence of any fresh material pointing to failure on the part of assessee to disclose particulars of income, the reopening is not in accordance with law and needs to be annulled. II Merits: 6. The CIT(A) erred in confirming the denial of the benefit of MAT credit of the assessment years 2004-05 and 05-06.
The CIT(A) failed to appreciate that the assessee is statutorily entitled to the MAT credit of tax paid u/s.115JB and there is no embargo under the statute to deny the claim and hence the disallowance of the same is unjustified and untenable in law.
The CIT(A) further failed to appreciate that denying the MAT credit in the computation u/s.115JAA is baseless and that the amendment in 2006 only enables the assessee to take credit for tax paid and does not restrict the same and hence confirming the disallowance is unjustified and untenable in law.
The CIT(A), in any event, ought to have seen that the MAT credit set off against the tax due is within the parameters of the provisions of the Act and hence allowed the appeal both on reopening and merits of the case.”
The AR primarily challenged the decision of the CIT(A) on the validity of re-opening of the assessment. He submitted that the original assessment for assessment year 2006-07 was completed u/s. 143(3) on 30.04.2008. He invited our attention to the reason given for re-opening the assessment by the Assessing Officer in his letter dated 21.11.2013 is as under:
“It was found that the assessee company had claimed Rs. 1,34,529/- for the MAT credit u/s. 115JAA for the assessment years 2004-05 and 2005-06. As per the provisions of section 115JAA of the Act, MAT credit is not available for payment of tax u/s. 115JA from assessment years 2001-02 to 2005-06.
:-4-: ITA No. 603/Mds/2017
In view of the above, I have reason to believe that the income chargeable to tax has escaped assessment within the meaning of section 147 of the I.T. Act, 1961.”
4.1 Inviting our attention to section 147 and its proviso, the relevant portion of which is extracted as under:
“ income escaping assessment:
If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year):
Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year.”
He submitted that the Assessing Officer re-opened the assessment made u/s. 143(3) after the expiry of four years from the end of assessment year 2006- 07 by issue of a notice u/s. 147 dated 25.10.2012. The reasons disclosed by the Assessing Officer did not indicate any failure on the part of the assessee
:-5-: ITA No. 603/Mds/2017 as required in the proviso, supra, and hence the assessment made u/s. 143(3) r.w.s. 147 may be quashed. Per contra, the DR supported the orders of the AO and CIT(A).
We heard the rival contentions and find merits in the submission made by the AR. The original assessment u/s. 143(3) for assessment year 2006-07 was made on 30.04.2008. The Assessing Officer re-opened that assessment after the expiry of four years from the end of the assessment year without recording any failure on the part of assessee and hence, we hold that the assessment made u/s. 143(3) r.w.s. 147 is untenable and hence quash it.
In the result, the assessee’s appeal is allowed.
Order pronounced on Monday, the 27th day of November, 2017 at Chennai.