Uttarakhand High Court
Commissioner Of Income-Tax vs Clough Engineering Ltd. on 26 October, 2007
Equivalent citations: [2008]300ITR435(UTTARANCHAL)
Bench: P.C. Verma, M.M. Ghildiyal
JUDGMENT
1. This appeal under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is directed against the order dated April 21, 2006, passed by the Income-tax Appellate Tribunal, Delhi Bench "G", New Delhi (for short, "the ITAT"), in I. T. A. No. 1975/D/2005 pertaining to the assessment year 2001-02 by which the Tribunal has allowed the appeal of the respondent/assessee.
2. The following substantial questions of law have been raised in the memo of appeal for consideration by this court:
1. Whether the learned Income-tax Appellate Tribunal was legally correct in law and on facts in setting aside the order under Section 263 dated February 21, 2005, passed by the Commissioner of Income-tax, Dehradun, holding that the assessment order passed by the Assessing Officer was neither erroneous nor prejudicial to the interests of the Revenue?
2. Whether the learned Income-tax Appellate tribunal was legally correct in law and on facts in holding that the Commissioner of Income-tax was not justified in resorting to the provisions of Section 263 of the Act in cancelling the assessment?
3. The facts, in brief, are that the assessee is a non-resident company incorporated in Australia and had entered into contracts with ONGC and Cairn Energy India Pvt. Ltd. They made the payment to the assessee in foreign currency in Perth, viz., Western Australia. The assessee was assessed to tax at Dehradun. The Assessing Officer did not tax the assessee as on the scrutiny of the books of account he found that there was no profit and gain, rather the company has suffered loss. The Commissioner of Income-tax in revision under Section 263 of the Act revised the order of the Assessing Officer on the ground that the books of account were not duly audited by the Indian chartered accountant as required under Section 44AB of the Act and it was not explained to the Assessing Officer properly. The assessee filed an appeal against the order of the Commissioner of Income-tax before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal allowed the appeal of the assessee.
4. Being aggrieved with the aforesaid order of the Income-tax Appellate Tribunal, the Revenue has come up in appeal before us.
5. We have heard Sri Arvind Vashistha, learned standing counsel for the Department, as well as Sri O.P. Sapra; learned Counsel appearing for the assessee and perused the record.
6. The Income-tax Appellate Tribunal has recorded a clear cut finding in paragraphs 13 and 14, which are reproduced as under:
13. Further, it is not in dispute in this case, that the assessee has maintained vouchers, etc., which would have enabled the Assessing Officer to compute its income as per the provisions of the Act. The said vouchers, etc., were also produced before the Assessing Officer and the same were also examined by the Assessing Officer. It is not in dispute that along with the return, the assessee filed the audit report in the prescribed form signed by Price Waterhouse Coopers, Perth, copy of which is placed at pages 58-69 of the paper book. M/s. Devash K. Shah and Co., C.A., of Mumbai, had in their audit report mentioned that the books of account were verified and certified by M/s. Price Waterhouse Coopers, Perth, and as they had not themselves examined the books of account, they refrained from expressing their own opinion on the particulars prescribed in Form No. 3CD but they relied on the audit report of Price Waterhouse Coopers, Perth, and filed the same along with the return. Even if the observations of the Commissioner of Income-tax that such audit reports filed by the appellant along with the return did not fully satisfy the requirement of Section 44AB, then too the assessment order passed by the Assessing Officer under Section 143(3) after examining the vouchers and evidences could not be treated as erroneous and prejudicial to the interests of the Revenue because for non-filing of tax audit report from an Indian C.A., if at all, levy of penalty under Section 271B of the Income-tax Act could be considered but the assessment order passed after making enquiry and looking into the supporting vouchers of receipt and expenses could not be treated as erroneous and prejudicial to the interests of the Revenue and the right of the assessee to get assessed on its real income under Section 143(3) on the basis of the normal computational provision of the law cannot be taken away. It is not the case of the Revenue that income of the assessee for the year under consideration cannot be legally computed as per the provisions of sections 28 to 43C. It has been admitted that Sub-section (3) of Section 44BB is clarificatory in nature. The issue of non-proper filing of the audit report and consequentially the resulting assessment being erroneous has also been decided by the Income-tax Appellate Tribunal, Delhi "C", Bench, in the case of Saipem U.K. Ltd. NRC v. CIT Dehradun I.T.A. No. 853/Del/05 for the same assessment year 2001-02 copy of which is placed at pages 135-141 of the paper book. At page 139 (internal page 5), wherein it was held as under:
Moreover, for non-filing of tax audit report, penalty under Section 271B can be imposed but the assessment order cannot be treated as erroneous.
14. We find that no material could be brought on record by the Revenue to show that the Assessing Officer had passed in the assessment order dated August 22, 2003, in the case of the assessee without proper application of his mind. We find from the order sheet entries of the Assessing Officer, photocopy of which is placed at pages 25-29 with typed copy at pages 30-32 of the paper book that on various dates of hearings, not only Sh. Devesh Shah, C. A., of Mumbai, the assessee's counsel but also Mr. Adrain Cook, Ms. Vicky Lawrence and George Phillip representing the assessee-company appeared on various dates of hearing and given the explanation required by the Assessing Officer. In paragraph 4 of his assessment order, the Assessing Officer has discussed about the receipts in the hands of the assessee and the expenses incurred by it by specifically mentioning that the assessee had claimed the benefit of India-Australia Double Taxation Avoidance Agreement and after discussing sections 5 and 9 of the Income-tax Act and article 7 of the Double Taxation Avoidance Agreement between India and Australia, he accepted the revised loss of Rs. 6,10,30,505 as per the profit and loss account inside India filed by the assessee, copy of which is also placed at page 106 of the paper book as against the loss claimed by the assessee at Rs. 9,39,15,363. On a reading of the relevant assessment order with the order sheet entries of the Assessing Officer, it becomes quite clear that the Assessing Officer had not only verified the correctness of the contract payments made by ONGC and Cairn Energy India Pvt. Ltd., but had also examined and verified the expenses incurred by the assessee-company. The facts deposed by Mr. Adrian Cook, Chief Finance Officer of the assessee-company, in his affidavit dated September 23, 2004, filed before the Commissioner of Income-tax, copy placed at pages 33-42 of the paper book could not be controverted or rebutted by the Commissioner of Income-tax in the impugned order passed under Section 263 of the Income-tax Act. The Assessing Officer had also sent his draft assessment order to the Additional Commissioner of Income-tax, Range-I, Dehradun, for approval on August 18, 2003, and the assessment order dated August 22, 2003, was passed by the Assessing Officer after the draft assessment order was approved by the Additional Commissioner of Income-tax. Therefore, non-application of mind by the Assessing Officer cannot be lightly inferred in such a case and the impugned order of assessment cannot be held erroneous on that ground.
7. This factual finding has not been disputed by bringing any document on record in this revision. Therefore, the matter stands concluded by the finding of the fact. Therefore, in the facts and circumstances, no substantial question of law arises to be answered in this appeal. Accordingly, the appeal is devoid of merit and is dismissed for the reasons recorded above.