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Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI CHANDRA POOJARI]
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal of the assessee is directed against the order of the Principal Commissioner of Income-tax, Trichy, dated 30.03.2017 for the assessment year 2007-2008.
ITA No.845/Mds/2017. :- 2 -:
Brief facts of the case are that the assessee 2. company filed its return of income for the AY 2007-08 on 26/10/2007, admitting a business loss of � 65,22,677/- and carry forward loss of �18,39 ,06,826 / - which included unabsorbed depreciation of �17,73,84,149/-. The case was selected for scrutiny and notice u/s 143(2)was issued on 18/09/2008 and the assessment order u/s.143(2) was issued on 22/12/2009 accepting the loss return of �65,22,677/ - and determining the loss carry forward for set off against future profits at �18,39,06,826/- . The assessing officer proposed to withdraw the depreciation allowed to be carried forward to the tune of �.13,71,60,209/- by invoking Section 154 of the Income tax Act by stating that unabsorbed depreciation relating to the Assessment Years 1989-90 to 1998-99 are not eligible to be carried forward after a period of eight assessment years. The assessing officer has stated that the ineligible carry forward of unabsorbed depreciation relating to the Assessment Years 1997-98 and 1998-99 are required to be withdrawn (�13,71,60,209/- for the Assessment Years 1989-90 to 1998-99). The assessee filed a letter dated 22/03/2011 objecting to the proposed rectification under Section 154 as ITA No.845/Mds/2017. :- 3 -: this in the opinion of the assessee is not a "Mistake apparent on record". Based on the objection the assessing officer dropped the proceedings under Section 154 of the Income Tax Act, 1961. The assessing officer issued a notice u / s 148 for the assessment year 2007-08 on 23/03/2011 and which was served on the assessee on 28.03.2011 citing the same reason as in the proposal u/s 154 of the Income Tax Act 1961 initiated earlier. In pursuance of this notice u/s.148, the assessment order was framed by the assessing officer on 29/12/2011 and the carry forward loss was restricted to �4,67,46,621/-. The assessee against this withdrawals and interalia, relied also on the decision of Devesh Metcast Ltd vs. JCIT(2011) 338 ITR 130 (Guj)., which stated the law relating to the understanding of the effect of restoration after change in law relating to unabsorbed depreciation. This however was not accepted by the Assessing officer. The withdrawn, unabsorbed depreciation to the tune of �13,71,60,209/- as stated in the Assessment order dated 29/ 12/2011, for the Assessment Year 2007 -08, pertains to Assessment years 1997-98 and 1998-99 and the set off is not granted. Consequently, the assessed returned loss was determined at �24,67,46,621/-.
ITA No.845/Mds/2017. :- 4 -:
Aggrieved, the assessee moved in appeal before 3. ld. Commissioner of Income Tax (Appeals) but did meet with any success.
Against this, assessee filed an appeal before the Tribunal. The Tribunal vide order 5th May, 2014 in held as under:- ‘’8.Therefore, it is to be seen that wherever unabsorbed depreciation was not allowed to be set off against the profits arising after the period of eight years, should be again considered to be set off, after the amendment. When the quantum of unabsorbed depreciation is computed after the amendment, whatever balance of unabsorbed depredation is available to the credit of the assessee, must be determined as unabsorbed depreciation eligible for carry forward and set of! The interregnum restriction of limiting of the claim for eight-year period does not take away the right of an assessee to claim the balance of unabsorbed depreciation, forever. The balance of unabsorbed depreciation revives back into life and becomes eligible for carry forward and set off along with the other part unabsorbed depreciation available to the credit of the assessee.
4.1 The Revenue had appealed against the Tribunal order before the Jurisdictional High Court in TCA No.62 of 2015, which is still pending.
ITA No.845/Mds/2017. :- 5 -:
4.2 The ld. Assessing Officer passed an order dated 25.09.2014 giving effect to the order of the Tribunal with the carry forward loss determined at �18,39,06,826/- as follows:-
Total loss assessed as per order dated �65,22,677 29.12.2011 Add: Brought forward loss of earlier years �17,73,84,149 Losses carried forward for set off against future �18,39,06,826 profits.
4.3 The Principal Commissioner of Income Tax issued a show cause notice dated 26.12.2016 u/s. 263 of the Act against giving effect order of the ld. Assessing Officer dated 25.09.2014 granting the brought forward loss of �17,73,84,149/- and passed order u/s. 263 of the Act on 30.3.2017 and giving directions as under:-
‘’The order of the Assessing Officer is thus erroneous and prejudicial to the interest of revenue, since the same has been passed without enquiry or verification. The order passed is only a stereotyped order, simply accepting what the assessee has stated in his return without making enquiries which are called for in the circumstance of the case. The Assessing Officer ought to have made further enquiries without merely restoring the original order. As held by the Hon'ble Madras High Court in K.A.Ramasamy Chettiar Vs CIT (l996) 220 ITR 657, when the Officer is expected to make an enquiry of income and if he does not make an enquiry as expected, it is to be a ground to interfere with the order
ITA No.845/Mds/2017. :- 6 -: passed by the Assessing Officer since such an order passed by the officer is erroneous and prejudicial to the interest of revenue.
In as much the order in C.No. PAN: AADCS0189E/CIR- l(1)TRY/2014-15 dated 25.09.2014 of the Assessing Officer, giving effect to the order of the ITAT in dated 05.05.2014 was without making enquiries or verification or computation which should have been made, I consider the order passed by the AO is both erroneous and prejudicial to the interests of revenue as per section 263(1) of the lncome tax Act, 1961.
Therefore the order in C.No. PAN:AADCS 0189E/CIR- 1(1)/TRY/2014-15 dated 25.06.2014 of the Assessing Officer, giving effect to the order of the ITAT in dated 05.05.2014 is set aside to the file of the Assessing Officer with a direction to re-do the assessment after causing necessary enquiries and verification regarding the points mentioned above. It is needless to say that sufficient opportunity shall be afforded before passing the order.
Against this, the assessee is in appeal before us.
The main contention of the ld. Authorised Representative is that the Tribunal had already decided the issue in dispute in for the same assessment year vide order dated 05.05.2014 in favour of the assessee as under:-
‘’7. On going through the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals), we find that both the authorities have considered different case laws not relevant for the issue in hand. It is true that for an interregnum period, the eligibility of unabsorbed depreciation to be carried forward was limited for a period of eight years. But, the old position that unabsorbed depreciation becomes the current depreciation under ITA No.845/Mds/2017. :- 7 -:
Section 32(2) and therefore eligible for carry forward and set off without any limitation, was restored by the amendment brought in with effect from the assessment year 2002-03.
Therefore, it is to be seen that wherever unabsorbed depreciation was not allowed to be set off against the profits arising after the period of eight years, should be again considered to be set off, after the amendment. When the quantum of unabsorbed depreciation is computed after the amendment, whatever balance of unabsorbed depreciation is available to the credit of the assessee, must be determined as unabsorbed depreciation eligible for carry forward and set off. The interregnum restriction of limiting of the claim for eight-year period does not take away the right of an assessee to claim the balance of unabsorbed depreciation, forever. The balance of unabsorbed depreciation revives back into life and becomes eligible for carry forward and set off along with the other part unabsorbed depreciation available to the credit of the assessee.
9. Therefore, we set aside the orders of the lower authorities on this issue and direct the Assessing Officer to re-determine the unabsorbed depreciation eligible for carry forward and set off in the above lines’’.
and consequently , ld. Assessing Officer passed giving effect order of the Tribunal in dated 05.05.2014 on 25.09.2014.
ITA No.845/Mds/2017. :- 8 -:
5.1 Further, ld. Authorised Representative submitted that Assessing Officer passed above order in conformity with the findings of the Tribunal (supra) and cannot be any chance for revision by Principal Commissioner of Income Tax u/s. 263 of the Act.
On the other hand, ld. Departmental Representative 6. submitted while completing the assessment, the Assessing Officer has not made any enquiry or verification about the assessment year wise unabsorbed depreciation eligible to be carried forward, which should have been made with regard to the directions of the Hon 'ble ITAT before giving effect to the order of the Hon'ble ITAT. The Assessing Officer has simply restored the original order passed u/s 143(3) dated
12.2009. While doing so the Assessing officer has even not mentioned the Assessment Year wise amount of business loss and unabsorbed depreciation loss which were allowed to be carried forward. Since, the order giving effect to the ITAT was completed by the Assessing Officer without application of mind and without any computation / enquiry, the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue in terms of Section 263 of the Income Tax Act, 1961 and hence prayed for dismissing the appeal.
ITA No.845/Mds/2017. :- 9 -:
We have heard both the parties and perused the material on record. We have carefully gone through the order of the Tribunal (cited supra). In this case, the Tribunal had given a finding in para 9 as under:-
‘’9. Therefore, we set aside the orders of the lower authorities on this issue and direct the Assessing Officer to re-determine the unabsorbed depreciation eligible for carry forward and set off in the above lines’’.
This finding of the Tribunal was not complied by the ld. Assessing Officer while giving effect to the Tribunal order. As seen from the above, there was a direction given by the Tribunal in its order to ld. Assessing Officer to re-determine the unabsorbed depreciation eligible for carry forward and set off as discussed in para 7 & 8 of its order. To that extent, ld. Commissioner of Income Tax (Appeals) is justified in invoking the provisions of Sec. 263 of the Act on this issue so as to give direction to ld. Assessing Officer to pass fresh order.
When such direction was given by the Tribunal, it is incumbent on the part of the ld. Assessing Officer to enquiry about that issue and come to a conclusion. In the present case, ld. Assessing Officer being a Quasi- Judiciary authority has not made an enquiry on this issue. He cannot take a view, either against or in favour of the assessee, without making proper enquires and without proper examination of the claim made by the assessee in the light of the applicable law. Ld. CIT is ITA No.845/Mds/2017. :- 10 -: empowered to initiate suo-motu proceedings u/s. 263 of the Act either where ld. Assessing Officer took a wrong decision without considering available material on record or he took decision without making an enquiry into the matters, where such enquiry prime facie warranted.
In the present case, ld. Assessing Officer absolutely closed his eyes, accepted the claim of the assessee as though there was a specific direction by the Tribunal as discussed in its order in para 9. Thus, ld. CIT required the ld. Assessing Officer to cause necessary enquiry and therefore he directed the ld. Assessing Officer to carry further enquiry on this matter. Being so, we do not find any infirmity in invoking revisionary power vested with the ld. CIT u/s. 263 of the Act. This ground of the assessee is rejected.
Ld. Authorised Representative also raised another ground 8. with regard to order passed u/s. 263 of the Act by the ld. CIT is time barred. In the present case, the ld.CIT passed the revision order u/s. 263 of the Act with regard to give effect to the order of the Tribunal in dated 05.05.2014 which was passed by the ld. Assessing Officer on 25.09.2014. The time limit available to the ld. CIT u/s. 263 of the Act to be computed from the assessment order dated 25.09.2014 and not from any earlier order relating to assessment year 2007-2008. Being so, we do not find any merit in the ITA No.845/Mds/2017. :- 11 -: argument of the ld. Authorised Representative. Accordingly, this ground of the assessee is also dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced on Monday, the 19th day of June, 2017, at Chennai.