Uttarakhand High Court
Commissioner Of Income Tax And Anr. vs Saipem Spa And Atlas Offshore Services on 21 September, 2007
Equivalent citations: (2008)214CTR(UTTRANCHAL)138, [2008]300ITR133(UTTARANCHAL)
Bench: P.C. Verma, M.M. Ghildiyal
JUDGMENT
1. All these appeals have been preferred by the Revenue under Section 260A of the IT Act, 1961. Appeal Nos. 19 of 2007, 20 of 2007, 31 of 2007 and 32 of 2007 pertaining to asst. yrs. 1991-92, 1993-94, 1994-95 and 1995-96 respectively have been filed against the consolidated judgment dt. 9th June, 2006 of the Income-tax Appellate Tribunal, New Delhi (for short, the Tribunal) passed in ITA Nos. 1710 to 1713/Del/2004. Appeal No. 70 of 2007 pertaining to asst. yr. 1992-93 has been filed against the judgment dt. 2nd Nov., 2006 of the Tribunal passed in ITA No. 1577/Del/2004 and Appeal No. 37 of 2007 pertaining to asst. yr. 1993-94 has been preferred against the judgment dt. 9th March, 2006 of the Tribunal passed in ITA No. 1399/Del/2003. Vide the impugned judgment the Tribunal has confirmed the order the CIT(A) and dismissed the grounds taken by the Revenue.
2. Since these appeals are based on common set of facts involving common question of law, therefore, they are being decided by one and common judgment. We will refer to the facts in IT Appeal No. 20 of 2007 for brevity.
3. Briefly stated facts of the case are that the assessee is a non resident company engaged in the business of activities related to oil and gas exploration. The original assessments for above assessment years were completed as under:
Asst. yr. Assessment made Date of Order Total income
under section assessed
1991-92 143(3) 4.3.1994 Rs. 2,72,96,943
1993-94 143(3) 21.2.1995 Rs. 3,09,59,540
1994-95 143(3) 19.2.1997 Rs. 1,77,00,620
1995-96 143(3) 19.2.1997 Rs. 2,47,06,410
4. The said assessments were revised under Section 154 and a tax rate of 65 per cent (tax 50 per cent + surcharge 15 per cent) was applied for the asst. yrs. 1991-92, 1993-94 and 1994-95. Later on it was noticed by the AO that since the assessee is a foreign company, therefore, rate of tax at 65 per cent is applicable for the asst. yrs. 1991-92, 1993-94 and 1994-95 and 55 per cent is applicable for the asst. yr. 1995-96. He, therefore, issued notice under Section 148 on 29th May, 2001 for the asst. yrs. 1991-92, 1993-94 and 1994-95 and for the asst. yr. 1995-96 notice under Section 148 was issued on 8th Feb., 2002.
5. In response, it was submitted by the assessee that the original return Be treated as return filed in response to notice under Section 148 of the IT Act. The AO after considering the assessee's submissions submitted in response to notice under Section 143(2) completed the assessment on the same income as was assessed under Section 143(3)/154 for the asst. yrs. 1991-92, 1993-94 and 1994-95 and under Section 143(3) for the asst. yr. 1995-96. However, he charged tax at the rate of 65 per cent for the asst. yrs. 1991-92, 1993-94 and 1994-95 and at the rate of 55 per cent for the asst. yr. 1995-96.
6. Appeals preferred against the order of the AO were allowed by the CIT(A) by holding that the conditions prescribed in proviso to Section 147 were not fulfilled by the AO for initiating the proceedings under Section 147/148 of the, IT Act. The Tribunal also affirmed the order of the CIT(A).
7. The Tribunal having rejected the contentions of the Department in this regard, the Revenue has come up in appeal before us.
8. We have heard Sri Arvind Vashistha, learned standing counsel for the Department and perused the record. Affidavit of service has been filed in each appeal except IT Appeal No. 19 of 2007, but despite service none turned up on behalf of the respondents to contest the appeal.
9. The question which arises before us is as to whether in the facts and circumstances of the case, the Tribunal was justified in not affirming the order of assessment and confirming the order of the CIT(A) by dismissing the appeal before it?
10. From the perusal of the facts it is clear that there was no fault of the assessee. Therefore, the Tribunal and CIT(A) were right on the application of Expln. 2(c)(ii) of Section 147 of the IT Act. Even if it is deemed to be the escaped assessment within the meaning of Expln. 2(c)(ii) of Section 147, then in view of the undisputed fact that there was no fault of the assessee, the delay could not be condoned. Limitation comes to an end even under the proviso appended to Section 147. Limitation of four years had already been expired. Therefore, the amendment in the original assessment order was time barred. We agree with the view taken by the Tribunal.
11. Learned Counsel for the Revenue vehemently argued that the limitation provided under proviso is attracted in case of failure on the part of the assessee and the reassessment is required on that failure then limitation is only of four years, otherwise excluding the proviso there is no limitation for reopening of the assessment where such income has escaped assessment made at too low a rate. In other words, submission of the Asstt. Solicitor General is that reopening of assessment on account of failure on the part of the assessee is open only for reassessment within four years.
12. It is settled law that proviso does not restrict the application of the main provision but are used to provide explanation or exception. Here the application of section is subjected to proviso as the proviso is qualified by the word "provided that". Therefore, by virtue of proviso, the whole application of Section 147 is dependent on the failure on the part of the assessee for the escaped assessment. It is not available where the fault is of the AC). That could be corrected under Section 154 where also limitation of four years is provided for its application. Therefore, even the correction, if not termed as reassessment, is also barred by time.
13. It has been settled by the Hon'ble apex Court in the case of Ishikawajma Harima Heavy Industries Ltd. v. Director of IT , that consideration of deeming provision depends on the object sought to be achieved by such legal fiction and here the escaped assessment made at too low a rate and for which failure is there on the part of the assessee, only then deeming provision will be attracted.
14. In view of our foregoing discussion, all these appeals preferred by the Revenue are dismissed. The judgment of the Tribunal is affirmed. The question is answered against the Revenue and in favour of the assessee.