Income Tax Appellate Tribunal - Pune
Samriddhi Industries Limited, Sangli vs Assessee on 26 November, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES "B", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND SHRI G.S. PANNU, ACCOUNTANT MEMBER
ITA Nos. 211 to 213/PN/2011
(Assessment Years : 2003-04 to 2005-06)
Samriddhi Industries Limited,
Plot No. J-98, MIDC, Kupwad,
Sangli.
PAN : AABCM8805D .... Appellant
Vs.
CIT (Appeals), Kolhapur. .... Respondent
Appellant by : Mr. M. K. Kulkarni
Respondent by : Mr. A. K. Modi
Date of hearing : 26-11-2013
Date of pronouncement : 29-11-2013
ORDER
PER G. S. PANNU, AM
The captioned three appeals relate to the same assessee and involve a common issue, therefore they have been clubbed and heard together and a consolidate order is being passed for the sake convenience and brevity.
2. The aforesaid captioned appeals are directed against an order of the Commissioner of Income Tax (Appeals), Kolhapur dated 29.10.2010 which, in turn, has arisen from an order dated 13.11.2009 passed by the Assessing Officer, u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short "the Act"), pertaining to the assessment years 2003-04 to 2005-06.
3. In all the appeals, the substantive dispute raised by the assessee is with regard to the action of the income-tax authorities in denying the claim for deduction u/s 80IB of the Act. In all the appeals, the reason advanced by the Assessing Officer to deny the claim of deduction is on account of the fact that the 'Industrial Undertaking' of the assessee does not qualify to be a 'Small Scale Industrial Undertaking' within the meaning of section 11B of the 2 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 Industries (Development and Regulation) Act, 1951 (in short "the IDR Act"). In terms of a Notification No. SO-857(E) dated 10.12.1999 issued by the Central Government in exercise of powers conferred by section 11B(1) of the IDR Act, the total investment in Plant & Machinery should not exceed Rupees one crore in the case of 'Small Scale Industrial Undertaking'. In the case of the assessee on the last day each of the previous year corresponding to the three captioned assessment years, it is not in dispute that the total investment in Plant & Machinery as understood in the IDR Act exceeds Rupees one crore.
In view of the aforesaid, in terms of section 80IB(14)(g) of the Act, the 'Industrial Undertaking' of assessee no longer remains a 'Small Scale Industrial Undertaking' and therefore, the profit and gains derived from such an 'Undertaking' becomes ineligible for deduction u/s 80IB(3) of the Act.
Notably, section 80IB(2) enumerates the conditions which are required to be fulfilled before an 'Industrial Undertaking' is eligible for deduction u/s 80IB of the Act and in the context of the present controversy it would suffice to observe that as per the Revenue, the condition prescribed in clause (iii) to section 80IB(2) of the Act is not fulfilled, in the absence of assessee's 'Industrial Undertaking' being a 'Small Scale Industrial Undertaking'.
4. The Assessing Officer as well as the CIT(A) held the assessee ineligible for deduction u/s 80IB of the Act for the aforesaid reasoning, which is similar to the stand of the Revenue for assessment year 2006-07 in the assessee's own case. At the time of hearing before us, it was a common point between the parties that the stand of the Revenue for assessment year 2006-07 on the same issue has been adjudicated by the Tribunal in the assessee's own case vide ITA No.1002/PN/2009 dated 31.03.2011 against the assessee. It is also not in dispute that the facts and circumstances and the reasoning which has prevailed with the income-tax authorities to deny the relief u/s 80IB of the Act in the captioned assessment years stand on identical footing to that of assessment year 2006-07, which was the subject-matter of appeal before the Tribunal in its order dated 31.03.2011 (supra). As a result, 3 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 the claim of deduction u/s 80IB of the Act for the captioned assessment years is liable to be adjudicated in the said light.
5. So, however the learned counsel for the assessee has sought to rely on a judgment of the Hon'ble Delhi High Court in the case of CIT vs. Delhi Press Patra Prakashan Ltd., (2013) 89 DTR 393 (Del) to say that once deduction has been allowed in the initial assessment year, it cannot be denied in the subsequent years. In order to appreciate the said argument the following discussion is relevant. The primary plea of the assessee before the income-
tax authorities as well as before the Tribunal has been that in the initial assessment year i.e. the assessment year in which the 'Industrial Undertaking' of the assessee was set-up, it fulfilled the condition of being a 'Small Scale Industrial Undertaking' and was allowed deduction u/s 80IB of the Act. Once the assessee fulfills the prescribed condition in the initial assessment year then the assessee would be eligible for the grant of deduction in each of the subsequent years without the condition being tested again in the subsequent year. The aforesaid argument of the assessee has been dealt with by the Tribunal in its order dated 31.03.2011 (supra) in the following words :-
"6. We have carefully considered the rival submissions. We have also carefully perused the orders of the authorities below and also the case laws cited at Bar as also those referred in the orders of the authorities below. The dispute relates to deduction claimed under section 80IB of the Act in relation to the profits derived by the assessee from its industrial undertaking. Before proceeding to adjudicate the controversy, we find it expedient to reproduce the relevant portion of section 80-IB and note its salient features:
"80IB(1): Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11), (11A) and (11B) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:-
(i) it is not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of an industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section;4 ITA Nos. 211 to 213/PN/2011
A.Ys. 2003-04 to 2005-06
(ii) it s not formed by the transfer to a new business of machinery or plant previously used for any purpose;
(iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India:
Provided that the condition in this clause shall, in relation to a small scale industrial undertaking or an industrial undertaking referred to in sub-section (4) shall apply as if the words "not being any article or thing specified in the list in the Eleventh Schedule" had been omitted. Explanation I:......
Explanation 2: .....
(iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power.
..........................................
14. For the purposes of this section,--
(g) "small-scale industrial undertaking" means an industrial undertaking which is, as on the last day of the previous year, regarded as a small scale industrial undertaking under section 11B of the Industries (Development and Regulation) Act, 1951 (65 of 1951)."
7. Section 80-IB prescribes deduction in respect of profits and gains from certain industrial undertakings. As per sub-section (1) of section 80IB where gross total income of an assessee includes any profits and gains derived from the eligible business prescribed in the sub-sections thereof, there shall be allowed in computing the total income of the assessee deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years in accordance with and as specified in the said section. Sub-section (2) of section 80-IB, which is the source of controversy before us, prescribes that the section applies to any industrial undertaking which fulfills all the conditions stated therein. Clauses (i) to (iv) of section 80- IB(2) prescribe the conditions required to be fulfilled by an industrial undertaking to claim a deduction under section 80-IB. Clause (i) prescribes that the eligible industrial undertaking is not formed by splitting up or the reconstruction of a business already in existence; clause (ii) prescribes that the industrial undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose; clause (iii) provides that the industrial undertaking manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule to the Act, a proviso to this clause clarifies that such prohibition of not manufacturing or producing any article or thing specified in Eleventh Schedule shall not apply in relation to a "small scale industrial undertaking". Explanations 1 and 2 below clause (iii) are not relevant for our purpose and therefore are not being referred to. Clause (iv) prescribes a condition that where the industrial undertaking manufactures or produces articles or things, it shall employ ten or more workers in a manufacturing process carried on with the aid of power; or twenty or more workers in a manufacturing process carried on without the aid of power. The other sub-sections are not quite relevant for our purpose and are not being referred to. In any case, we may refer to sub-section (14), clause (g) which prescribes the meaning of "small scale industrial undertaking"
as an industrial undertaking which is, as on the last day of the previous year, regarded as a small scale industrial undertaking under section 11B of the Industries (Development & Regulation) Act, 1951 (65 of 1951) (hereinafter referred to as IDR Act).5 ITA Nos. 211 to 213/PN/2011
A.Ys. 2003-04 to 2005-06
8. It is not in dispute that the industrial undertaking of the assessee is engaged in the manufacture of plastic products which is one of the items in the Eleventh Schedule. Therefore, in terms of proviso to clause
(iii) of section 80-IB, assessee could enjoy the benefit of deduction under section 80-IB only in case it is a small scale industrial undertaking within the meaning of section 80-IB(14)(g) of the Act. It is not disputed that in the initial assessment year, i.e. the year in which the industrial undertaking began to manufacture or produce article or thing, the said unit qualified to be a small scale industrial undertaking. The factum of the assessee being allowed the claim under section 80-IB in the initial year is not disputed. Factually, during the year under consideration the assessee does not qualify to be a "small scale industrial undertaking" within the meaning of section 11B of the IDR Act and thus it does not comply with the proviso to clause (iii) of sub-section (2) of section 80-IB of the Act. The factual matrix till now is undisputed. The difference between the Revenue and the assessee starts from here. As per the Revenue, since the assessee no longer remains a "small scale industrial undertaking" and it being engaged in the manufacture of an article listed in Eleventh Schedule, its claim for deduction under section 80-IB has to fail. In other words, as per the Revenue, assessee does not fulfill the condition prescribed in clause (iii) of sub-section (2) of section 80-IB and, therefore, the claim of deduction under section 80-IB is liable to be denied. On the other hand, as per the appellant the claim cannot be denied even if the said condition is not fulfilled in this year, because the assessee has fulfilled the condition in the initial year. As per the appellant, the conditions of section 80- IB are required to be examined only in the initial assessment year and the same having been examined and accepted, it could not be examined again by the Assessing Officer during the year under consideration.
9. We have carefully examined the rival contentions and find ourselves unable to acquiesce to the plea of the assessee company. No doubt, the conditions prescribed in sub-section (2) of section 80-IB are required to be examined in the initial assessment year, however, there is nothing in the phraseology of sub-section (2) to suggest that the condition in clause (iii) thereof has to be examined only in the initial assessment year. We are in agreement with the position of the appellant that in so far as conditions prescribed in clauses (i) and (ii) are concerned, the same relate to a point of time which can only be examined in the course of the initial assessment year. Clause (i) requires an examination as to whether the industrial undertaking is formed by splitting up or reconstruction of a business already in existence. Clause (ii) relates to examining whether the industrial undertaking is formed by the transfer to a new business of machinery or plant already used in business. Evidently, the conditions in clauses (i) and (ii) can only be examined at the time of formation of a unit, which is the initial year. Clause (iii), which is under consideration, does not imply any such interpretation. In our considered opinion, the import of the condition prescribed in clause (iii) is that the industrial undertaking ought to be a small scale undertaking in the year of claim of deduction, be it be the initial year or any of the subsequent years, so long as it manufactures products listed in the Eleventh Schedule. Quite clearly, in this case admittedly the assessee is manufacturing articles or things stated in the Eleventh Schedule and it does not quality to be a small scale industrial undertaking in the instant year and, thus, the said condition is not fulfilled.
10. Much has been argued by the appellant to the effect that the conditions are to be verified only in the initial year and such examination is not intended by the Legislature to be carried out in the subsequent years by the Assessing Officer. For this proposition, heavy reliance has been placed on the judgment of the Hon'ble Gujarat High Court in the case of Saurashtra Cement 6 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 & Chemical Industries Ltd (supra). We have perused the said decision. In the case of Saurashtra Cement & Chemical Industries Ltd. (supra), the facts were as follows. The assessee was carrying on business of manufacturing cement and the capacity of the first cement plant was 600 tons per day. In the year relevant to the assessment year 1968-69, the capacity was expanded and it was raised to 1600 tons per day. The assessee company therefore made a claim for relief under section 80J of the Act with reference to the capital employed in the expansion of the plant and machinery. The Assessing officer allowed the said claim for the assessment year 1968-69. However, in the assessment year 1969-70 the Assessing Officer disallowed the assessee's claim, as in his opinion, the expansion of cement manufacturing unit did not amount to setting up a new industrial undertaking, inasmuch as the activities of the expanded part of the unit as well as those of the original units were much inter-connected. Thus, he disallowed the claim on the ground that no new unit can be said to have been set up separate from the existing unit on account of mere expansion. The Appellate Commissioner, in appeal, held that in the absence of there being any specific provision in the Act that the new unit should be altogether distinct and even physically at a distance from the old unit, and that, if the relief was admissible for assessment year 1968-69, in respect of the expanded unit of the assessee company, that relief would continue to be available to the assessee for the subsequent period of four years. The Tribunal also upheld the order of the Appellate Commissioner granting relief to the assessee since in the opinion of the Tribunal unless the assessment for the assessment year 1968-69 was disturbed by withdrawal of the relief, there could be no substance or justification in the Revenue's attempt to withdraw the claim under section 80J of the Act for the subsequent year, i.e. assessment year 1969-70. The Hon'ble High Court held that if the relief of tax holiday was granted to the assessee for the assessment year 1968-69, the assessee was entitled to continuance of that relief for the subsequent four years and the Assessing Officer would not be justified in refusing to continue the allowance for the assessment year 1969-70, without disturbing the relief for the initial year. In the words of the Hon'ble High Court, --"No doubt, the relief of tax holiday under section 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds. But without disturbing the relief granted in the initial year, the ITO cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted."
11. As the aforesaid discussion shows, the matrix of the dispute in Saurashtra Cement & Chemicals Ltd. (supra) stood on an altogether different footing. The assessment year in dispute was 1969-70, which was the second year of claim of deduction under section 80J of the Act. In the initial assessment year of 1968-69 the claim was allowed by treating the expansion in capacity as formation of a new industrial undertaking. Whether expansion in capacity amounted to formation of a new industrial undertaking was a condition required to be examined only in the initial year, and which was done in the course of assessment for the assessment year 1968-69, being the initial year. In the assessment year 1969-70, the Assessing Officer sought to deny the deduction on the ground that expansion of manufacturing capacity did not amount to setting up of a new industrial undertaking. In other words, a condition which was relevant only at the time of formation of unit, was examined and accepted in the assessment year 1968-69 and the same was sought to be reviewed by the Assessing Officer in the course of the assessment for the subsequent assessment year 1969-70 and arrive at a different conclusion. This action was negated by the Hon'ble High Court with aforesaid observations that without disturbing the relief granted in the initial year, the Revenue cannot examine 'the question again' to deny the relief in subsequent year. In our considered opinion, in the instant case matrix stands 7 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 differently, inasmuch in the instant case the Assessing Officer is not attempting to review a position accepted with reference to the initial year. In fact, in the present case on account of changed condition namely the industrial undertaking of the assessee loosing the status of a small scale industrial undertaking under the IDR Act, the Assessing Officer seeks to hold that the said condition is not satisfied during the year under consideration. The said action cannot be interpreted to mean that there is an attempt by the Revenue to review an accepted position of the initial assessment year which was the case before the Hon'ble Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Ltd. (supra). In the case of Saurashtra Cement & Chemical Industries Ltd. (supra) once having accepted in the initial assessment year that the expansion in capacity amounted to setting up of a new unit, the same was sought to be reviewed in the subsequent year by holding differently. In fact, the Hon'ble Gujarat High Court itself envisaged that the relief of tax holiday under section 80J can be withheld, provided the relief granted in the initial year is disturbed or changed on valid ground. In the present case, it is quite clear that on account of events subsequent to the initial assessment year the assessee fails to fulfill the impugned condition and, therefore, it is ineligible for the claim of deduction in this year. In our considered opinion, the ratio of the judgment of the Hon'ble Gujarat High Court in the case of Saurashtra Cement & Chemicals Ltd. (supra) does not help the assessee in the present case.
12. The next decision relied upon by the appellant is in the case of Paul Brothers (supra) wherein the facts were as follows. In the case of Paul Brothers (supra), the issue related to jurisdiction assumed by the Commissioner under section 263 of the Act for assessment years 1981-82 and 1982-83 which was quashed by the Tribunal, which was appealed by the Revenue before the Hon'ble High Court. The facts were that the assessee firm had branches in backward areas carrying on the business of construction of buildings, transportation and manufacture and supply of bricks. For the use in construction activity, assessee also manufactured windows, concrete slabs etc. For assessment years 1980-81 and 1981-82 it claimed deduction under section 80HH of the Act, which was allowed for the assessment year 1980-81 by the Assessing Officer without discussion and such assessment had become final. In the assessment year 1981-82 also the deduction was allowed by the Assessing Officer and while allowing deduction, reliance was placed on the judgment of the Hon'ble Orissa High Court in the case of CIT v N.C. Budharaja & Co 121 ITR 212 (Ori) which was the only decision then operating in the field. For the assessment year 1981-82, the assessee had preferred an appeal before the Commissioner of Income-tax (Appeals) on certain other issues. Again for assessment year 1982-83 the Assessing Officer allowed deduction under section 80HH of the Act. The Commissioner exercising jurisdiction under section 263 of the Act quashed the orders of the Assessing Officer for assessment years 1981-82 and 1982-83. As per the Tribunal, (i) since the assessment order for assessment year 1981-82 was merged in the appellate order, section 263 jurisdiction could not be exercised by the Commissioner; (ii) since the assessment was based on a binding decision of the High Court, it could not be interfered under section 263 of the Act; (iii) unless deduction allowed in the assessment year 1980-81 on the same ground was withdrawn, they could not be denied for the subsequent years. The Hon'ble High Court affirmed the approach of the Tribunal on all the three counts. Before us, the learned Counsel for the appellant pointed out that the parity of reasoning approved by the High Court to the effect that unless deduction allowed in a preceding year on the same ground is withdrawn, similar relief for the subsequent years could not be withheld. Secondly, the learned Counsel also referred to the observations of the Hon'ble High Court that in sections 80HH or section 80J there is no provision for withdrawal of 8 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 special deduction for the subsequent years for breach of conditions. It was pointed out that similar is the situation with regard to the provisions of section 80-IB and therefore in the instant case the relief under section 80-IB could not be denied in this year.
13. In our considered opinion, the ratio of the aforesaid judgment also does not help the assessee in the instant case. The factual matrix in the aforesaid case was that in earlier year the benefit stood allowed to the assessee and without any changed circumstances, the said claim was sought to be denied in a subsequent year, and such an attempt was negated by the Hon'ble High Court. In the instant case, as we have noted earlier the circumstances have changed after the initial assessment year and therefore, the claim is sought to be denied on valid grounds and without disturbing the claim in the initial year because the circumstances in the initial year have not undergone any change. Therefore, the decision is inapplicable to the instant case.
14. In the result, we hereby affirm the orders of the authorities below denying relief to the assessee under section 80-IB of the Act. The assessee fails."
6. Ostensibly, the Tribunal has considered similar argument as is being advanced before us, by the learned counsel. The condition in dispute before us is contained in clause (iii) to section 80IB(2) of the Act. Factually speaking, it is not in dispute that for the assessment years before us as well as in assessment year 2006-07 considered by the Tribunal in its order dated 30.03.2011 (supra), the 'Industrial Undertaking' of the assessee does not comply with the condition prescribed in clause (iii) to section 80IB(2) of the Act. The plea of the assessee that the deduction has been allowed in the initial assessment year when it complied with the said condition and therefore, the same cannot be denied in the subsequent assessment years, has also been appropriately dealt with in the above precedent. In the context of the aforesaid argument, the Tribunal explained the position with regard to the various conditions prescribed inasmuch as the conditions prescribed in clauses (i) and (ii) of sub-section (2) of section 80IB of the Act, were found to be with reference to a particular point of time i.e. at the time of formation of the unit and thus could only be examined in the initial assessment year, and, the proposition of the assessee may be relevant in the said context; so however, in so far as clause (iii) to sub-section (2) of section 80IB of the Act is concerned, which is the bone of contention before us, the same does not lend itself to such an interpretation. Therefore, the condition prescribed in clause 9 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06
(iii) to sub-section (2) of section 80IB of the Act was not found amenable for interpretation in the light of the proposition being advanced by the assessee.
The detailed reasoning has already been discussed in our order dated 31.03.2011 (supra) and is not being repeated for the sake of convenience.
7. However, the learned counsel has relied upon the judgment of the Hon'ble Delhi High Court in the case of Delhi Press Patra Prakashan Ltd.
(supra) to again support the proposition that if the Assessing Officer has accepted the claim of the assessee of deduction in the initial assessment year, it would not be open for the Assessing Officer to deny the deduction in a subsequent year on the ground of non-fulfillment of the condition prescribed without disturbing the assessment for the initial assessment year. We have perused the said judgment, and find that the issue before the Hon'ble Delhi High Court pertained to the claim of deduction u/s 80I of the Act and the condition in dispute was to the effect that the unit ought to have not been formed by splitting up or the reconstruction of a business, a condition which is pari-materia to condition prescribed in clause (i) to sub-section (2) of section 80IB of the Act. Ostensibly, the condition before the Hon'ble Delhi High Court was to be examined only at the time of formation of the unit, which was in the initial assessment year, and therefore it was in this context that the judgment of the Hon'ble Delhi High Court has to be understood. The aforesaid judgment of the Hon'ble Delhi High Court is concurrence with the judgment of the Hon'ble Gujarat High Court in the case of Saurashtra Cement and Chemical Industries vs. CIT, 123 ITR 669 (Guj) and also the judgment of the Bombay High Court in the case of CIT vs. Paul Brothers, 216 ITR 548 (Bom), which have already been considered by the Tribunal and found inapplicable in the case of the assessee while determining the issue in assessment year 2006-07 (supra). Therefore, present plea of the assessee, based on the Hon'ble Delhi High Court in the case of Delhi Press Patra Prakashan Ltd.
(supra) does not provide any reason to depart from the decision rendered by the Tribunal in its order dated 31.03.2011 (supra), which is squarely applicable 10 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 for the year under consideration before us. At this point, we may also pertinently mention that the decision of the Tribunal in assessment year 2006-07 has not been altered by any higher authority and continues to hold the field, as stated by the learned counsel for the assessee at Bar.
8. Therefore, in view of the aforesaid discussion having regard to the precedent in the assessee's own case for assessment year 2006-07, and in the absence of any change in the facts and circumstances in the captioned assessment years, we affirm the orders of the authorities below denying assessee's claim for deduction u/s 80IB of the Act.
9. Another issue which has been raised by the assessee is to the effect that reopening of assessment made by the Assessing Officer by issuance of notice u/s 148 of the Act is bad-in-law. In this context, it is relevant to note that assessments for the captioned assessment years were reopened by issuance of notice u/s 148 of the Act on the ground that certain income had escaped assessment inasmuch as the deduction u/s 80IB(3) of the Act has been wrongly allowed for the reasons noted by us in earlier paragraphs. Before us, the only reason on the basis of which the assessment is canvassed to be bad in law is on account of the fact that the Assessing Officer did not pass a separate order on the objections raised by the assessee to the notice u/s 148 of the Act but the same has been decided along with the assessment order.
The learned counsel has pointed out that the aforesaid infirmity would render the assessment order null and void and in support reliance has been placed on the judgment of the Hon'ble Gujarat High Court in the case of General Motors India P. Ltd. vs. DCIT, (2013) 354 ITR 244 (Guj). In our considered opinion, the aforesaid objection raised by the assessee does not empower the Tribunal to hold the impugned assessment as null and void, especially in the face of the situation that the objections of the assessee to the notice u/s 148 of the Act have indeed been dealt with, albeit in the assessment order. The Hon'ble Gujarat High Court was considering a Writ Petition preferred by the 11 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 assessee under Article 226 of the Constitution of India challenging the notice issued by the Assessing Officer u/s 148 of the Act as also the consequent assessment order. After considering the varied submissions made before it, the first question which the Hon'ble High Court considered was as to whether the Writ Petition challenging the notice u/s 148 of the Act and the reassessment was maintainable or was liable to be dismissed as adequate alternative remedy of filing of an appeal was available. In appreciating the aforesaid question, the following observations of the Hon'ble Gujarat High Court are relevant :-
"From the aforesaid discussion, we are of the considered opinion that the writ petition under article 226 of the Constitution of India is maintainable where no order has been passed by the Assessing Officer deciding the objection filed by the assessee under section 148 of the Act and assessment order has been passed or the order deciding an objection under section 148 of the Act has not been communicated to the assessee and assessment order has been passed or the objection filed under section 148 has been decided along with the assessment order. If the objection under section 148 has been rejected without there being any tangible material available with the Assessing Officer to form an opinion that there is escapement of income from assessment and in the absence of reasons having direct link with the formation of the belief, the writ court under article 226 can quash the notice issued under section 148 of the Act. The writ petition filed by the petitioner is maintainable. The Assessing officer is mandated to decide the objection to the notice under section 148 and supply or communicate it to the assessee. The assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the Assessing Officer may pass the reassessment order. We hold that it was not open to the Assessing Officer to decide the objection to notice under section 148 by a composite assessment order. The Assessing Officer was required to, first decide the objection of the assessee filed under section 148 and serve a copy of the order on the assessee. And after giving some reasonable time to the assessee for challenging his order, it was open to him to pass an assessment order. This was not done by the Assessing Officer, therefore, the order on the objection to the notice under section 148 and the assessment order passed under the Act deserves to be quashed."
10. As per the Hon'ble High Court, the Writ Petition was maintainable in various situations enumerated therein and one of the situations was where the objections filed to the notice u/s 148 of the Act was decided alongwith the assessment order. In our considered opinion, the observations of the Hon'ble High Court have to be understood in the context of what was being decided namely, the maintainability of the Writ Petition. As per the Hon'ble High Court, the Assessing Officer was mandated to decide the objection to the notice u/s 12 ITA Nos. 211 to 213/PN/2011 A.Ys. 2003-04 to 2005-06 148 of the Act and indicate it to the assessee so that assessee gets an opportunity to challenge the order in a Writ Petition and thereafter the Assessing Officer may pass the reassessment order. This is not the situation before us inasmuch as the assessee does not have a right of appeal against a mere issue of notice u/s 148 of the Act. Notably, in the appellate procedure prescribed under the Act, no separate appeal is provided against the order required to be passed by the Assessing Officer deciding the objections to the notice u/s 148 of the Act. The same is liable to be challenged in the appeal preferred against the order of the reassessment passed by the Assessing Officer, before the appellate authorities prescribed under the Act. Thus, in the course of the appellate procedures prescribed under the Act, with which we are presently concerned with, the appeal has only been provided against an assessment order, and no separate appeal is provided against the order passed by the Assessing Officer to decide the objection to the notice u/s 148 of the Act raised by the assessee. In the present case before us, in the context of the appellate jurisdiction provided in terms of the Act, assessee has a remedy to challenge the order of the Assessing Officer deciding the objection to the notice issued u/s 148 of the Act alongwith the assessment order only and, accordingly the assessee is free to raise a Ground challenging the order of the Assessing Officer deciding the objection to notice issued u/s 148 of the Act. Pertinently, assessee has not raised any plea on the merits of order of Assessing Officer deciding the objections raised against the notice issued u/s 148 of the Act. Under these circumstances, in our view, the parity of reasoning considered by the Hon'ble Gujarat High Court in the case of General Motors India P. Ltd. (supra) does not render the assessment order as null and void. Accordingly, we do not find any merit in the plea of the assessee against the reopening of assessments by issuance of notice u/s 148 of the Act for the captioned assessment years. Thus, on this aspect also, assessee fails.
13 ITA Nos. 211 to 213/PN/2011A.Ys. 2003-04 to 2005-06
11. In the result, the three captioned appeals of the assessee are dismissed.
Order pronounced in the open Court on 29 th November, 2013.
Sd/- Sd/-
(SHAILENDRA KUMAR YADAV) (G. S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated : 29 th November, 2013
Sujeet
Copy of the order is forwarded to: -
1) The Assessee;
2) The Department;
3) The CIT(A), Kolhapur;
4) The CIT, Kolhapur;
5) The DR, "B" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True Copy//
Sr. Private Secretary
I.T.A.T., Pune