Income Tax Appellate Tribunal - Delhi
Central Electronics Ltd., New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'B' NEW DELHI
BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER
AND
SHRI KULBHARAT, JUDICIAL MEMBER
I.T.A .NO.- 484/Del/2011
(ASSESSMENT YEAR-2002-03)
DCIT Vs. Central Electronics Ltd.
Circle 3(1), 781, Desh Bandhu Gupta Road,
New Delhi. Karol Bagh, New Delhi
PAN-AAACC1261G
(APPELLANT) (RESPONDENT)
Appellant by: Sh. R.S.Singhvi, CA
Respondent by: Sh. Aroop Kr. Sinha, Sr. DR
Appeal heard on-04.09.2012
Order pronounced on-14.09.2012
ORDER
PER KULBHARAT, JM
This appeal of the revenue is directed against the order dated 31.11.2010 of Ld. CIT(A)-VI, New Delhi.
2. The revenue has raised following grounds of the appeal:-
1. "The Ld. CIT(A) has erred on facts and in law in annulling the order u/s 143(3)/147 of the I.T.Act while holding invalid the reopening u/s 147 ignoring that where transaction itself, on the basis of subsequent information is found to be bogus transaction, mere disclosure of that transaction at time of original assessment proceedings cannot be said to be a disclosure of the "true" and "full"2 I.T.A .NO.- 484/Del/2011
facts in the case and ITO would have jurisdiction to reopen concluded assessment in such a case. Reliance is placed on the decision of the Hon'ble Supreme Court in Phool Chand Bajrang Lal vs ITO (1993) 203 ITR 456 (SC);
Bawa Abhai Singh vs DCIT 253 ITR 83 (Del); 142 CTE (Delhi) 272 & 225 ITR 496; Ram Prasad vs ITO (1995) 82 Taxman 199 (All.).
2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal."
3. The only effective ground in this appeal is against the annulling the order u/s 143(3)/147 of the Income Tax Act, 1961 . The facts in brief are that the scrutiny assessment was completed on 25.01.2005 at an assessed loss of Rs. 25,73,517/-. Subsequently, from the perusal of records, the Assessing Officer observed that in the Profit & Loss Account under the head 'provisions and write off' the assessee has debited an amount of Rs. 17,42,426/- as capital expenditure which is not allowable. Similarly, a provisions of Rs. 3,82,976/- for non/slow moving assets, stores and spares has also been claimed which again is not an allowable deduction. This has resulted in escapement of income as over assessment of loss of Rs. 21,25,402/-. Under these facts and circumstances, the case was reopened and a notice was served upon the assessee company.
4. The Assessing Officer after considering various case laws made assessment u/s 143(3) read with section 147 of the Act whereby the amount 3 I.T.A .NO.- 484/Del/2011 of Rs. 21,25,402/- was added back to the income of the assessee company. Against this, the assessee filed an appeal before Ld. CIT(A), inter alia, challenging the reopening of the case u/s 147/148 of the Act. The Ld. CIT(A) after considering the submissions and examining judicial pronouncements, came to conclusion that the reopening of assessment beyond the period of 4 years, without establishing the assessee's failure to disclose the material facts and by merely using the same material which was available on record and was subject matter of scrutiny assessment, is beyond the scope of section 147. Hence, the reopening in this case was held to be invalid. Against this finding, the revenue is in appeal before this Tribunal.
5. Ld. DR strongly relied on the order of Assessing Officer and the decisions of Hon'ble Supreme Court in the case of Phool Chand Bajrang Lal vs ITO (1993) 203 ITR 456 (SC); Bawa Abhai Singh vs DCIT 253 ITR 83 (Del); Ram Prasad vs ITO (1995) 82 Taxman 199 (All.). On the contrary, Ld. AR submitted that reopening of the assessment was bad in law and the entire material was available during the original assessment. He submitted that the reopening of assessment was made after 4 years and such reopening was made without establishing the assessee's failure to disclose the material facts. He submitted that the case is squarely covered by the decision of the Hon'ble Delhi High Court as well as the Hon'ble Apex Court rendered in the 4 I.T.A .NO.- 484/Del/2011 case of Satnam Overseas Ltd. vs Addl. CIT 188 Taxman 172 and CIT vs Kelvinator of India Ltd. 187 Taxman 312.
6. We have heard the rival submissions perused material available on record and the judgement cited. We find that the ld. CIT(A) has relied upon the judgement of the Hon'ble Supreme Court and in the case of CIT vs Kelvinator of India Ltd. (supra) wherein Hon'ble Supreme Court has observed as under :-
"One needs to give a schematic interpretation to the words 'reason to believe' failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptional difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power of the Assessing Officer."
7. Ld. CIT(A) has taken note of the decision of the Hon'ble Delhi High Court rendered in the case of Satnam Overseas Ltd. vs. Addl. CIT (supra), wherein it has been held by the Hon'ble Delhi High Court that since reasons given for reopening assessment simply relied upon record which was available for Assessing Officer while completing the assessment proceedings u/s 143(3) of the Act, there was no scope for reassessment 5 I.T.A .NO.- 484/Del/2011 proceedings and, therefore, the impugned notices were liable to be quashed. In the case in hand also undisputed facts are that the reopening of the assessment is beyond the period of 4 years and the Assessing Officer has not established the assessee's failure to disclose the material facts. The entire facts were available during the scrutiny assessment. Hence, in our considered opinion, the case laws as relied by the revenue, are not applicable on the facts and circumstances of the present case.
8. In this view of the matter, we do not find any infirmity in the order of Ld. CIT(A), hence this ground of the revenue's appeal is dismissed.
9. In the result, the appeal of the revenue is dismissed.
Order pronounced in the Open Court on14.09.2012.
Sd/- Sd/-
(S.V.MEHROTRA) (KULBHARAT)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 14/09/2012
*Amit Kumar*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
6 I.T.A .NO.- 484/Del/2011