Income Tax Appellate Tribunal - Bangalore
Deepak Cables (I) Ltd.,, Bangalore vs Department Of Income Tax on 21 September, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE 'B' BENCH, BANGALORE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JM
AND
SHRI A. MOHAN ALANKAMONY, AM
ITA Nos.634, 688 to 693(Bang.)/2008
(Asst. years : 1998-99,1999-2000, 2001-02, & 2002-03 to 2005-06 )
The Assistant Commissioner of Income-tax,
Central Circle-2(1),
Bangalore Appellant
Vs
Deepak Cables (I) Ltd.,
No.313, Embassy Centre, 3rd Floor,
Crescent Road,
Bangalore Respondent
Revenue by : Shri M.V.Sheshachala
Appellant by : Shri K.R.Pradeep
ORDER
PER BENCH All these appeals by revenue pertain to same assessee on common issues, so all these appeals are being disposed of by a common order for the sake of convenience and brevity.
2. The revenue in AY: 1998-99 has raised the following grounds:
i. That the CIT(A) erred in holding the assessment concluded u/s 143(3) r.w.s.147, is based on revised return of income filed by the assessee as against the fact that the assessment was concluded on the return filed in response to notice u/s 148.2 ITA Nos.634, 688 to 693(B)/08
ii. The CIT(A) erred in relying on the decision of ITAT in ITA No.116(BNG)/2006 dated 21-09-2007 for the assessment year 2001-02, whereas the order of ITAT itself is under appeal before High Court of Karnataka on the issue. The declared income as per revised return cannot be disputed by the assessee, when the return was filed voluntarily. iii. The CIT(A) ignored the fact that the assessee never produced any evidence with respect to its claim of deduction u/s 80IA. The survey proceedings revealed that the assessee is not eligible for the said deduction in respect of Tumkur Unit. It is only, then the assessee filed a revised return of income withdrawing its claim in respect of Tumkur Unit. iv. The CIT(A) erred in ignoring the fact that the revised return filed was during the course of assessment proceedings on an original return. Only a committed fact by the assessee has been taken into account for disallowing the deduction u/s 80IA on Tumkur Unit.
3. The assessee is a public limited company carrying on the business of manufacturing and supplying ACSR conductors for transmission/distribution of power lines under name and style Deepak Cables (I) Ltd., A survey u/s 133A was conducted on 09-03-2004, a statement u/s 131 was recorded and the assessee was confronted regarding the claim made u/s 80IA at a relevant point of time. 3 ITA Nos.634, 688 to 693(B)/08 According to Assessing Officer, assessee has admitted that the deduction u/s 80IA was wrongly claimed. Subsequently, the assessee voluntarily filed return of income for the assessment year 1998-99 on 22-03-2004 declaring the total income of Rs.1,69,79,582/-. The Assessing Officer observed that the assessee's income for the assessment year 1998-99 was under assessed to the extent of the additional income disclosed in the return file on 22-03-2004. Notice u/s 148 was issued on 08-04-2004. In response to notice issued u/s 148, the assessee in its letter dated 23-062004 stated that the return filed on 22-03-2004 may be treated as filed in response to notice u/s 148 and after notice u/s 143(2) was issued and the assessment was completed. A revised return withdrawing the claim u/s 80IA were not only filed for the assessment year 1998-99, but also for subsequent years upto assessment year 2003-04. The fact that the assessee was not eligible for deduction u/s 80IA was accepted by the assessee in the assessment year 2001-02 observed by Assessing Officer. In assessment year 2001-02, penalty proceedings u/s 271(1)(c) were also initiated by the department. Thereafter, the assessee made various arguments and submitted that the return filed on 22-03-2004 for the assessment year 1998-99 should be ignored.
4 ITA Nos.634, 688 to 693(B)/08
4. The assessee opposed firstly the re-opening of the assessment and secondly the claim u/s 80IA with regard to profits of Tumkur Unit. With regards to re-opening of the case and submitted as under:
a) Nothing incriminating was found during the survey which may warrant re-opening of assessment.
b) As per the Supreme Court decision in 107 ITR 195, the assessee' claim u/s 80IA is perfectly in order.
c) The department should not have acted upon the statement recorded from the Executive Director of the Company during the course of the survey.
d) The return filed on 22-03-2004 was not a valid return and hence no action can be initiated on the basis of an invalid return.
e) As the assessment was re-opened beyond the period of four years, the onus is on the Department to prove that the assessee was guilty of not disclosing the material facts in the earlier assessment proceedings".
5. In response to notice u/s 148, the assessee in its letter dated 23-06-2004 asked to treat the said return filed on 22-03-2004 as the return filed in response to the above referred notice. The Assessing Officer took notice of the return though, it may not be a return u/s 139(10) or 139(4) or otherwise a valid return. The assessee challenged the validity of the return that it had been filed beyond the prescribed time limit. The return filed beyond the prescribed time limit is an invalid return because it was done after the expiry of four years. The Assessing Officer should have pointed out that the assessee did not 5 ITA Nos.634, 688 to 693(B)/08 disclose fully and truly all the materials facts during the earlier assessment proceedings.
6. In the original order u/s 143(3), the assessee claimed deduction u/s 80IA amounting to Rs.36,95,331/-. The Assessing Officer accepted the claim of the assessee on the basis of submission made by the assessee. The Assessing Officer in original assessment raised certain queries regarding computation of deduction u/s 80-IA and held that the manufacturing turnover at Tumkur Unit was eligible for deduction u/s 80-IA. However, the turnover pertaining to the job work carried out at other places was not found eligible for deduction u/s 80-IA. The very basic principle as to whether a new industrial undertaking had been at all set up by the assessee during the year relevant to previous year under consideration was accepted by the Assessing Officer on the basis of the averment that substantial expansion took place and the old unit itself would amount to a new industrial undertaking.
7. According to order sheet entries of the original assessment proceedings, the Assessing Officer called for various details on 08-10- 98 as below on 08-10-1999.
" a) Turnover details
b) Consultancy details
c) Clarification of Rule6(1) 6 ITA Nos.634, 688 to 693(B)/08
d) Managerial remuneration
e) Purchase from related parties
f) Source of funds to increase share capital
g) Secured and unsecured loans etc.
h) Interest netting details
i) Bank charges, commission details etc.
8. The assessee was further asked to furnish details of invoices of machinery purchased, managerial remuneration, correspondence for sale commission etc. on 26-02-2001. But on the basis of survey on 09-
03-2004, the Assessing Officer observed that the assessee had only one manufacturing unit at Tumkur and the unit was 20 years old and had undergone expansion modernization etc. from time tot time. During the financial year 1996-97 and 1997-98, the assessee had undertaken a substantial expansion/modernization project for increasing the manufacturing capacity of Tumkur Unit. This was stated to be admitted by the Executive Director Sri K.Venkateshwara Rao in his statement u/s 131. In this regard assessee submitted that the assessee the claim u/s 80-IA was examined by the Assessing Officer and after the due scrutiny he did not dispute the fact that substantial investment amounted to setting up of a new industrial undertaking. However, the Assessing Officer observed that the assessee's stand is after thought and there is nothing on record to 7 ITA Nos.634, 688 to 693(B)/08 show that assessee had substantial investment at the time of original assessment. Accordingly, re-opening was held justified by the Assessing Officer.
9. Regarding claim of deduction u/s 80-IA, the Assessing Officer observed that the return filed on 22-03-2004 does not claim the deduction u/s 80-IA and the same was treated as return filed n response to notice u/s 148. The income was assessed as per the said return of income of Rs.1,69,79,582/-and no deduction allowed u/s 80- IA. In the original return filed for the assessment year 1998-99, the assessee claimed deduction u/s 80-IA. As discussed earlier the assessee submitted before the Assessing Officer that it had set up a new industrial undertaking during the relevant period. But the Assessing Officer observed that mere expansion of the existing unit cannot be considered a new industrial undertaking. Accordingly, the claim was not accepted by Assessing Officer on this account similar view has taken by Assessing Officer in 1999-2000, 2001-02, 2003 to 2005-06, but in later years after conducting search u/s 132 and after issuing notice u/s 153A of the Act. The same has been opposed before the first appellate authority
10. In appeal, various contentions were raised on behalf of assessee and CIT(A) after taking into consideration various facts and circumstances and mainly relying on the decision of ITAT in ITA 8 ITA Nos.634, 688 to 693(B)/08 No.116(B)/06 for the assessment year 2001-02 dated 21-09-2007, decided the issue in favour of assessee in all three years by observing as under;
" ITA No.116(BNG.)/06 (AY: 2001-02) date of order21-09-2007 "4. Now the short question which falls for determination by the Tribunal is whether the revised return filed by the assessee is beyond limitation prescribed under law. If such a return is time barred, the order of assessment framed on the basis of revised return is invalid or not.
5. We have heard both the sides and perused the materials on record. The undisputed fact in the present case is that the original return was filed on 31.10.2001 claiming deduction u/s. 80-IA of the Act in respect of the Tumkur unit. Thereafter, a survey was conducted in the business premises of Tumkur unit and some statements of officials of the assessee company were recorded. Thereafter, the assessee furnished the revised return on 26.3.2004. For better appreciation of the issue, we are quoting below the provisions of section 139(5) of the Act available at the relevant point of time:
"(5) If any person, having furnished a return under sub-
section (1), or in pursuance of a notice issued under sub- section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier."
6. It is clear from the aforesaid provision that a revised return can be filed at any time before the expiry of one year from the end of relevant assessment year or before the completion of assessment, whichever is earlier. The relevant assessment year in the present case is 2001-02, therefore, one year expires in 2003; whereas the 9 ITA Nos.634, 688 to 693(B)/08 assessment order is dated 31.3.2004. Hence, according to the provisions of section 139(5), the revised return should have been filed before 2003; whereas the same was filed on 26.3.2004. Hence, there is no dispute that the revised return is time barred. Law is very clear on this issue that a revised return has to be a valid revised return on the basis of which an assessment can be framed by the AO. Since the revised itself is a belated return, it cannot be said to be a valid revised return. Therefore, in our opinion, the order of assessment passed by the AO on the basis of this return is a nullity.
7. The ld. DR raised an objection that it is not correct to hold that the assessment was framed on the basis of revised return. The original return was also available with the AO whereas the assessee had withdrawn the relief u/s. 80-IA of the Act subsequently. We find that this argument is not correct. In the present case, only after filing the revised return by the assessee, the assessment was framed on the basis of such revised return, which is apparent from the relevant portion of the assessment order quoted below:
" Assessee has filed a revised return for A.Y. 2001-02 on 26.3.2004, by withdrawing the deduction claimed and by paying self assessment tax of Rs.33,72,388/-.
The other issues that came up during the course of scrutiny are as under and for which the assessee was asked to furnish its response:-
1. Non receipt of confirmation of accounts from M/s. Surya Transmission towards labour payment.
2. The denial by M/s Lakshmi Constructions, Kerala for having undertaken labour contract work for the assessee.
3. Denial by NALCO, Bhubaneswar for having made sales to the assessee company.10 ITA Nos.634, 688 to 693(B)/08
Assessee has subsequently furnished the confirmation of accounts from M/s. Surya Transmission Ltd. The same has been verified and placed on record.
It is submitted that the purchases from NALCO were routed through the National Small Industries Corporation Ltd., Bangalore who are the assessee's consignment agents. Invoices and delivery notes of NALCO was furnished for verification. The same is found to be in order.
Detailed statement of account of Lakshmi Constructions was enclosed for verification. The same is accepted.
Assessee has also furnished site-wise particulars of labour charges received and paid which have been examined and placed on record.
After discussion and keeping in view the above facts, the assessment is finalised as per revised return filed by the assessee.
Total income returned as per revised return Rs.2,27,14,450/-
Tax thereon @ 35% Rs. 79,50,057
Add SC @ 13% RS. 10,33,507
-------------------
Payable Rs. 89,83,564
Less: TDS Rs. 11,84,563
-------------------
Payable Rs. 77,99,001
Add: Int. u/s 234B Rs. 20,90,484
Int. u/s. 234C Rs. 5,90,774
-------------------
Payable Rs.1,04,80,259
Less: 140A paid on
i) 1.10.01 50,00,000
ii) 31.10.01 1,71,392
iii) 26.3.04 33,72,388
------------- Rs. 85,43,780
------------------
Balance payable Rs. 19,36,479
------------------
Issue DN & Challan.
Penalty proceedings us/. 271(1)(c) initiated." (emphasis supplied by us)
8. It is clear from the aforesaid finding of the AO in the assessment order that the order of assessment was based on the total income 11 ITA Nos.634, 688 to 693(B)/08 declared by the assessee in the revised return only. Even if we accept the contention of the ld. DR that the present assessment has been framed on the basis of original return, in that event also, the order of assessment will be time barred u/s. 153 of the Act.
9. Apart from that it is settled law that the revised return can be filed only if there is an omission or wrong statement in the original return. In the case of CIT v. Andhra Cotton Mills Ltd. (219 ITR 404)(AP), the Andhra Pradesh High Court held that in the original return, the profit & loss account containing the provision for depreciation was filed. Subsequently, the claim of depreciation was withdrawn by filing a revised return u/s. 139(5) of the Act. The Hon'ble High Court held that such revised return was not a valid return since there was no omission or wrong statement in the original return. In the present case also, we find that a revised return was filed by the assessee pursuant to the survey as instructed by the revenue authorities. The assessee has been claiming deduction u/s. 80-IA since the financial year 1997-98 onwards and it was being allowed. There is no reasoned order passed by the AO in any of the years on merit of the claim regarding section 80-IA of the Act. In view of the aforesaid circumstances, we hold that the revised return was not a valid return since the same is already time barred as noted above. Consequently, the order of assessment framed by the AO on the basis of such revised return cannot be sustained in law. Hence the same is quashed.
12 ITA Nos.634, 688 to 693(B)/08
10. In the result, the appeal is allowed".
Learned DR could not dispute the same except submitting the revenue has preferred appeal before the jurisdictional High Court. Without being prejudice to the merit of the case, it is not appropriate on part of lower judicial forum to adjudicate on the issue subjudice before the Hon'ble Karnataka High Court. Moreover, we are suppose to respect and follow decisions of co- ordinate bench.
11. Even the Miscellaneous Petition No.38(B)/2008 (AY:2001-02) arising from above said matter in ITA No.116(B)/06 moved on behalf of revenue was dismissed by the ITAT vide order dated 01-07-2008, which reads as under;
""During the course of hearing of the petition, it transpired that against the order of the Tribunal, the department has moved the petition before the Hon'ble High Court of Karnataka on a substantive question of law arising from the order of the Tribunal. Apart from the above, the Tribunal has given a finding in its order that the return that was stated to have been filed u/s 139*(5) is invalid and the assessment having been framed on such an invalid return is also invalid. This being a categorical finding given, the present petition would be seeking review of the same and, therefore, we have to reject this claim of the revenue.13 ITA Nos.634, 688 to 693(B)/08
Even this regard nothing contrary was brought to our knowledge on behalf of revenue. All the respective orders of CIT(A) granting relief to assessee have been opposed before us.
12.. Before us, learned DR with regards to assessment u/s 143(3) read with sec.147 submitted that the CIT(A) erred in holding that the assessment was concluded u/s 143(3) read with sec.147 is passed on revised return of income filed by the assessee as against the fact that the assessment was concluded on the return filed in response to notice u/s 148. The revenue has also opposed the order of CIT(A),who has relied upon the decision of ITAT in ITA No.116(B)/2006 dated 21-09- 2007 for AY: 2001-02(supra) because revenue had gone against the said order before the jurisdictional High Court. It was also submitted that the declared income as per revised return cannot be disputed when return was filed voluntarily. It was also submitted that the CIT(A) has ignored the fact that the assessee never produced any evidence with respect to its claim of deduction u/s 80IA. The survey proceedings revealed that the assessee is not eligible for said deduction in respect of Tumkur Unit. It is only then the assessee filed revised return of income withdrawing its claim in respect of Tumkur Unit. The CIT(A), however not justified in ignoring the fact that the revised return filed during the course of assessment proceedings on original return. Only a committed facts by the assessee has been taken into consideration for 14 ITA Nos.634, 688 to 693(B)/08 disallowance of deduction u/s 80IA on Tumkur Unit. Similar is the stand with regards to relief granted to other assessment years which were concluded u/s 143(3) read with sec.153A of the IT Act. In this regard, the stand of the revenue is that the assessment was concluded on return filed in response to notice u/s 153A. Besides this, learned DR relied on the decision in 203 ITR 456(SC) in the case of Phoolchand Bajrang Lal and Another Vs ITO(1993) 203 ITR 456 and in the case of Sri Krishna Pvt. Ltd.,Etc. Vs ITO(1996) 221 ITR 538.
13. On the other hand, learned AR supported the order of CIT(A) and submitted that the CIT(A) was justified in giving its finding under facts and circumstances including the decisions in assessee's own case in ITA No.116(B)/06 AY: 2001-02. Besides this, learned AR also supported the order of CIT(A) on following case laws cited;
1. CIT & Anr. Vs Foramer France-264 ITR 566(SC)
2. Venkatesh Power Works Vs CIT278 436(Kar.)
3. CIT & Anr. Vs Saipem Spa -300 ITR 133(Uttarakhand)
4. Circular No.549 Dated 31-10-1111989(relevant portion)
5. Circular F.No.286/2/2003-IT(Inv.) dated 10-03-2003
14. After going through the rival submissions and material on record, we find that the assessee submitted original assessment u/s 143(3)in AY: 1998-99 was passed on 16-03-2001 after calling various details and information, the deduction claimed was verified and the 15 ITA Nos.634, 688 to 693(B)/08 same was allowed restricting it to Rs.30,13,535/- against the original claim of Rs.36,95,331/-. However, in pursuant to survey the assessee withdrew the claim of deduction u/s 80-IA and voluntarily filed revised return and paid the tax to the tune of Rs.10,54,737/-. Similar is the stand of assessee in other assessment years. According to learned AR, this was done to avoid protracted litigation and to buy peace.
15 In this connection, a remand report and assessment records were called from the Assessing Officer by the CIT(A) having gone through the assessment order u/s 143(3) dated 16-03-2001 filed before him on behalf of the assessee found that the assessee during the previous year relevant to the assessment year 1998-99 has started a new industrial undertaking at Tumkur which qualifies for deduction u/s 80-IA The assessee produced books of accounts relating to the manufacturing activity of Tumkur. The manufacturing turnover of the assessee at Tumkur unit is a Rs.42,73,14,979/-. Only the manufacturing turnover of the assessee at Tumkur unit is eligible for deduction u/s 80-IA. Again, in para-6.3 of the said assessment order, the Assessing Officer mentioned that in view of the above discussions, the 80-IA deduction claimed by the assessee is reworked out as under;
" Total gross income eligible for deduction u/s 80-IA Rs.1,62,12,320/-
30% of turnover of Tumkur unit Rs. 30,13,535/ "16 ITA Nos.634, 688 to 693(B)/08
16. The CIT(A) also verified the assessment records. From the study of order sheet pages-1 dated 08-10-1999, CIT(A),found that the Assessing Officer clearly asked for details of 80-IA turnover and other seventeen details. The order sheet dated 26-02-2001 revealed that the details called for were furnished. The details regarding claim of deduction u/s 80-IA were thoroughly inquired into and after verification of the books of account relating to manufacturing unit at Tumkur, the same was allowed by the Assessing Officer in his original order u/s 143(3) dated 16-03-2001. This fact has not been disputed by the revenue.
17. The first appellate authority has surprisingly noted that the Assessing Officer who passed the order u/s 143(3) r.w.s.147 on 27-02- 2006 vide para-10 stated that there is nothing on record to suggest that the assessee has disclosed to the erstwhile Assessing Officer that the so called new industrial undertaking at Tumkur was in fact a 20 years old manufacturing unit. The erstwhile Assessing Officer goes on to state that he does not find anything in the record that this type of claim has been made or the facts relevant to such a claim were disclosed during the original assessment.
18. The first appellate authority found that various details were called by the Assessing Officer during original assessment as mentioned below;
17 ITA Nos.634, 688 to 693(B)/08
" a) Turnover details
b) Consultancy details
c) Clarification of Rule6(1)
d) Managerial remuneration
e) Purchase from related parties
f) Source of funds to increase share capital
g) Secured and unsecured loans etc.
h) Interest netting details
i) Bank charges, commission details etc.
19. In this background, the first appellate authority, the Assessing Officer intentionally omitted "80-IA turnover details" and mentioned only "turnover details" which is very evident and clear from the order sheet dated 08-10-999. This fact was verified by the CIT(A) from the original assessment record for the assessment year 1998-99 and observed that the finding of Assessing Officer in re-assessment proceedings were contrary to record.
20. The first appellate authority further analysed whether the revised return filed on 22-03-2004 by the assessee withdrawing the claim of deduction u/s 80-IA was valid one. Further, whether the assessment made on the basis of the revised return disallowing deduction u/s 80-IA was justified. In this regard, the stand of the assessee is that during the course of survey assessee was advised by the survey party accordingly, the assessee filed revised return and 18 ITA Nos.634, 688 to 693(B)/08 withdrew claim of deduction u/s 80-IA. The revised return filed on 22- 03-2004 is an invalid return, because same was filed beyond the time prescribed u/s 139(5). The disallowance made on the basis of the revised return is not justified, because the same was time barred. Under these facts and circumstances and following the decision of the Hon'ble ITAT in the appellant's own case for the assessment year 2001- 02 vide ITA No.116(B)/2006 dated 21-09-2007 discussed above, the CIT(A) was justified to hold that the deduction u/s 80-IA amounting to Rs.30,13,530/- has to be allowed because the Assessing Officer cannot pass assessment order on the basis of the revised return, which is barred by limitation. Accordingly, the disallowance in question were rightly cancelled. We uphold the same. Similar is the situation with regards to action in other year, wherein response to notice u/s 153A of Act deduction u/s 801A were disallowed in other years.
21. With regards to initiation of notice and proceedings u/s 148, we find that the reason for re-opening the assessment u/s 147 by issue of notice is as under:
" During the course of survey u/ 133A of the Income- tax Act on 09-03-2004 the factory premises of M/s Deepak Cables (India) Limited, No.N-1, Industrial Estate, Tumkur. It was found that the assessee was wrongly claiming deduction u/s 80-IA to the tune of Rs.30,13,535/-.19 ITA Nos.634, 688 to 693(B)/08
The same was put forth before the assessee. The assessee accepted the same and has filed the revised return on 22-3-2004 withdrawing the claim of sec.80- IA.
In view of the above, I have reason to believe that by virtue of omission on the art of the assessee to disclose fully and truly all the material facts necessary for computation of income in as much as claim of deduction u/s 80-IA of the Income-tax act, 1961. Hence, I have reason to believe that the assessee's income assessable to tax has escaped assessment within the meaning of sec.147 ".
In this regard stand on behalf of assessee was that no incriminating document/information was found during above mentioned survey. There is no mention in the reasons for re-opening as to whether any materials found during the course of survey with regard to our claim u/s 80-IA. There is nothing on record to suggest that the claim made u/s 80-IA and allowed after verification in original assessment was proved to be wrong during and consequent to survey proceeding. The claim of assessee in accordance with the decision of the Hon'ble Supreme Court in (1997) 107 ITR 195(SC) in Textile Machinery Corporation Ltd Vs CIT, wherein it was observed that the true test is not whether the new industrial undertaking connotes explanation of existing business of assessee, but whether it is all the same as new and 20 ITA Nos.634, 688 to 693(B)/08 identifiable undertaking separate and distinct to from existing business. There must be new emergence of physically separate unit which may exist on its own as a viable industrial unit. In case before us, after modernization and expansion new undertaking has come into existence which is integrated unit by itself. This fact has not been negated by revenue by cogent reasoning.
22. Without prejudice to above, we find that there is no estoppels against legal prepositions. The statement/confession established legal preposition is not justified. Individual is a small person against state. This fact should be kept in mind while dealing with such confession. Revenue has heavily relied on statement recorded during the course of survey u/s 133A of the Income-tax Act on 09-03-2004 from the Executive Director wherein he had accepted for withdrawing the claim u/s 80-IA of the Income-tax Act. The assessment in question was made based mainly on the above statement of the Executive Director and penalty proceeding u/s 271(1)(c )was also initiated. It is settled legal position that assessment can not be made on the basis of statement/confession alone recorded during the course of survey or search. However, in such situation, addition can be made on the basis of corroborating facts/evidence in this regard. The confession for statement can be retracted within reasonable time and with cogent reasoning which has been done in this case. Accordingly, the said 21 ITA Nos.634, 688 to 693(B)/08 statement alone cannot be a reason for reopening the assessment. There was no omission on the part of assessee to disclose fully and truly all material fact necessary for computation of income for computing deduction u/s 801A of the Act.
23. Without prejudice to the above, the assessment made for this year was u/s 143(3) and the notice u/s 147 was issued on 08-04-2004 beyond four years from the end of the relevant assessment year. In terms of proviso to section 147 no action can be taken under this section because in the assessment is u/s 143(3) as we had disclosed all the material facts necessary for assessment. The so-called return filed on 22-03-004 is not a valid return in the eye of law and hence no action can be initiated on the basis of the invalid return.
24. Further, the Hon'ble ITAT in the appellant's own case for the assessment year 2001-02 which assessment has been relied on by the AO to justify the re-opening has held the assessment made based on an invalid return as a nullity and the assessment made based on such revised return cannot be sustained in law and accordingly same as quashed as discussed above.
25. We further find that the original assessment u/s 143(3) has been completed after verification of the claim by the assessee u/s 80- IA. The Assessing Officer in para-6 of the assessment order has extensively discussed and has partially allowed the claim of the 22 ITA Nos.634, 688 to 693(B)/08 assessee. Thus, the assessee has disclosed all the material information that is required to be disclosed on this issue. Accordingly, the limitation for re-assessment in this case is within four years from the end of the assessment year i.e. before 31-03-2003. Whereas in this case, the notice has been issued on 08-4-2004 this is clearly outside the time limit prescribed under the Act. The present re-assessment proceedings is merely based on change of opinion and is an invalid proceedings. This view is fortified by the ratio of the jurisdictional High Court in the case of Venkatesh Power Works Vs CIT (2005) 278 ITR 436 held that after discovery of the primary facts relating to the transactions evidenced by the drafts, it was for the officer to make the necessary enquiries and draw proper inference as to whether the amounts represented by the drafts cannot be treated as part of the total income of the appellant. It could not be said that income chargeable to tax had escaped assessment by reason of omission or failure on the part of the appellant to disclose fully and truly all material facts. The re-opening of assessment after expiry of four years was held barred by limitation under proviso to Sec.147 as discussed above. In view of above discussion, we hold that the Assessing Officer has no jurisdiction to re-open the assessment u/s147. As the issue of notice u/s 148 is barred by limitation, the assessment order passed 23 ITA Nos.634, 688 to 693(B)/08 u/s 143(3) rws 147 is not valid as per law. Same was rightly rejected by the CIT(A). We uphold the same.
26. Similar issue has been raised in other assessment years u/s 143(3) r.w.s. 153A of the IT Act as discussed above. The facts being same, so following the same reasoning, the orders of CIT(A) in all the years are upheld. It is pertinent to mention here that all the case laws relied upon by both parties have been taken into consideration, though the same have not been specifically mentioned.
27. As a result, all the appeals filed by the revenue are dismissed.
Order pronounced in the open court on the 27th November, 2009.
(A. MOHAN ALANKAMONY) (SHAILENDRA KUMAR YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Place: Bangalore
Dated: 27-11-2009
am*
Copy to :
1. The assessee
2. The Revenue
3. CIT(A)
4. CIT
5. DR
6. GF(B'lore)
7. GF(Delhi) By Order
AR, ITAT, BANGALORE
24 ITA Nos.634, 688 to 693(B)/08