Income Tax Appellate Tribunal - Chandigarh
Assistant Commissioner Of Income Tax, ... vs Roper Distt. Co-Op. Producers' Union ... on 12 December, 2005
Equivalent citations: [2006]7SOT451(CHD)
ORDER
M.A. Bakshi,V.P. Appeal of the revenue for assessment year 1994-95 is directed against the order dated 30-12-2002 of the Commissioner of Income Tax (Appeals), Chandigarh, We have heard the parties and perused the records.
2. The relevant facts briefly stated are that assessee had filed the return of income for assessment year 1994-95 on 31-10-1994, which was processed under section 143(1)(a) on 31-3-1995. The assessee had revised the return of income on 27-10-1995 in order to claim the set off of brought forward losses. The assessment was made under section 143(3) vide order dated 28-12-1995. In the return of income, assessee had claimed deduction under section 80-I for the first time, as in earlier years, there were no profits. The assessing officer in para 3 of the assessment order recorded as under :
"The claim of the assessee under section 80-I of the Income Tax Act has been made for the first time this year since this is the sixth year of the assessee after commencing production and prior to this there has beenno income."
Subsequently, assessment was made for assessment year 1995-96 and claim under section 80-I disallowed for that assessment year. Consequently to the investigation and framing of assessment for assessment year 1995-96, the assessing officer issued a notice under section 148 for assessment year 1994-95 in response to which assessee filed the return of income on 5-3-1999 declaring income of Rs. 37,69,485. The assessing officer completed the assessment under section 143(3) read with section 147 at Rs. 47,11,857.
3. Assessee appealed to the Commissioner of Income Tax (Appeals) and the latter vide para 2.3 of the order held as under :
"The submissions of the appellant have been considered carefully and I am of the opinion that the assessing officer only changed his opinion when he made a fresh assessment. The issue of deduction under section 80-I had been present in the mind of the assessing officer right from the beginning. The proceeding cannot be justified since it has never been the case of the assessing officer that there was non-availability of any of the particulars that constitute primary facts in the nature of materials necessary for proper assessment. It is only on the basis of changed view that the assessing officer proceeded in the case under section 148. Considering the facts and circumstances of the case and respectfully following the order of Calcutta High Court in the case of ITO v. Jiyajeerao Cotton Mills Ltd, 164 CTR 619, I am of the view that the reassessment proceedings are illegal and cannot stand in the test of justice. The addition made by the assessing officer, by invoking the provisions of section 148 on account of disallowing the deduction under section 80-I is, therefore, ordered to be deleted."
No reason was, however, recorded by the Commissioner of Income Tax (Appeals) on merits. Revenue is in appeal.
4. The learned Departmental Representative contended before us that the Commissioner of Income Tax (Appeals) has wrongly cancelled the assessment made under section 143(3), read with section 147. It was contended that though assessment under section 143(3) had been made by the assessing officer, the assessee had not disclosed the relevant facts relating to the taking over of the entire plant from the Punjab Dairy Development Corporation Ltd., and had wrongly claimed deduction under section 80-I. According to the learned Departmental Representative, there is no change of opinion in so far as the assessing officer had not expressed any opinion in regard to the facts found subsequent to the assessment. Reliance was placed on the decision of the Punjab & Haryana High Court in the case of Venus Industrial Corpn. v. Assistant CIT (1999) 236 ITR 742 (Punj & Har), in support of the contention that reopening of assessment is valid if in subsequent year new facts are found justifying the reopening of assessments in earlier years. Reliance was also placed on the following decisions to support the contention that reopening of assessment is permissible on the basis of facts found in subsequent assessment year :
(i) Gurera Gas Cylinders (P) Ltd. v. CIT (2002) 258 ITR 170 (P&H);
(ii) Swaraj Engine Ltd. v. Assistant CIT (2003) 260 ITR 202 (P&H);
(iii) Happy Forging Ltd. v. CIT (2002) 253 ITR 413 (P&H);
(iv) Babu Ram Nagar Mal v. ITO (1996) 222 ITR 450 (P&H);
(v) Kumar Engineers v. CIT (1997) 223 ITR 18 (P&H);
(vi) Sukhjit Starch & Chemicals Ltd. v. Deputy CIT (2004) 85 TTJ (Asr) 218.
It was further contended that in this case notice under section 148 had been issued within four years and, therefore, the restriction for reopening of assessment after four years under section 147 is inapplicable. It was accordingly pleaded that the order of the Commissioner of Income Tax (Appeals) may be set aside and that of the assessing officer restored.
5. The learned counsel for the assessee, on the other hand contended that the assessing officer had made the assessment under section 143(3) and allowed deduction under section 80-I and, therefore, subsequent withdrawal of the same by issue of notice under section 148 was invalid. It was contended that change of opinion on same set of facts is not permissible under section 147. For this, reliance was placed on the following decisions :
(i) Mercury Travels Ltd. v. Deputy CIT (2002) 258 ITR 533 (Cal);
(ii) Duli Chand Singhania v. Assistant CIT (2004) 269 ITR 192 (P&H);
(iii) Vikas Printery v. Assistant DIT (Inv.) (2004) 270 ITR 68 (Guj).
It was further contended that the Commissioner of Income Tax (Appeals) in this case has not decided the issue on merits though raised before him. It was pointed out that for assessment year 1995-96, the appeal of the assessee was dismissed by the Commissioner of Income Tax (Appeals) on merits against which appeal was filed in the Tribunal. The Tribunal has decided the appeal ex parte for want of prosecution. When it was suggested to the learned counsel that the matter could be kept pending or taken up along with the appeal for assessment year 1995-96, it was contended that the issue in the present appeal can be decided without waiting for the outcome of the appeal for assessment year 1995-96. We have accordingly proceeded, to dispose of this appeal for assessment year 1994-95.
6. We have given our careful consideration to the rival contentions. In this case, assessment had been made by the assessing officer under section 143(3) and deduction under section 80-I allowed. Copy of assessment order is on record. The assessing officer has simply pointed out that this is the sixth year of commencement of production by the assessee and since there were no profits in earlier years the claim has been made in the year under appeal for the first time. Thereafter, the assessing officer has allowed deduction under section 80-I. Even in assessment year 1995-96, as per the finding recorded in the assessment order, investigation was carried out by the ITO which showed that the milk plant reflected by the assessee in the balance-sheet situated at Mohali was actually constructed by Punjab Dairy Development Corporation Ltd. prior to financial year 1983-84. The further facts were collected from the income-tax file of Punjab Dairy Development Corporation Ltd. and assessee was confronted with the facts found in course of such investigation. The assessee had claimed deduction under section 80-I in assessment year 1994-95 as if the plant had been constructed by the assessee. The assessing officer had allowed the deduction on the same basis without any investigation. Since subsequently, some facts had come to the notice of the assessing officer on the basis of which prima facie belief that income of the assessee had escaped assessment was justified. The assessing officer had accordingly issued notice under section 148. The mere fact that assessment had earlier been made under section 143(3) does not debar the reopening of the assessment under section 147 if some fresh facts come to the notice of the assessing officer or if the assessee had failed to disclose primary facts before him. in this case, the fact that the plant had actually been constructed by Punjab Dairy Development Corporation Ltd. was not disclosed by the assessee in the course of original assessment for assessment year 1994-95. The assessing officer accordingly, did not consider the claim of the assessee under section 80-I with reference to the said fact. Subsequently, during the course of assessment proceedings for assessment year 1995-96, these facts were discovered on investigation. There was thus valid reason for the assessing officer to issue notice under section 148 as the information found by the assessing officer was sufficient for perceiving reasonable belief that income of the assessee had escaped assessment.
7. In the case of Gurera Gas Cylinders (P) Ltd. v. CIT (2002) 258 ITR 170 (Punj & Har), their Lordships of the Punjab & Haryana High Court upheld the issue of notice under section 148 where deduction under section 80-I had been claimed by the assessee without disclosing complete facts relevant for allowance of deduction under section 80-I. It was further held by the High Court that if the assessing officer had material in his possession for reaching a prima facie opinion that income of the assessee had escaped assessment, the sufficiency or correctness of the material relied upon by the assessing officer cannot be investigated by the court. Their Lordships of Punjab & Haryana High Court relied upon the following decisions of the Hon'ble Supreme Court for arriving at the decision :
(i) Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC);
(ii) Raymond Woollen Mill Ltd. v. ITO (1999) 236 ITR 34 (SC).
8. The decision of the Punjab & Haryana High Court in the case of Duli Chand Singhania v. Assistant CIT (2004) 269 ITR 192 (Punj & Har), relied upon by the learned counsel for the assessee, in our view, is inapplicable to the facts of this case. In that case, their Lordships of the High Court held that assessee had disclosed entire material facts necessary for assessment and, therefore, even if excess deduction had been allowed reopening was not valid. In the present case, the facts are distinguishable insofar as the assessing officer, during the course of assessment proceedings for assessment year 1995-96, had discovered certain facts on investigation, which had not been disclosed by the assessee in the course of assessment proceedings for assessment year 1994-95.
9. Moreover, the finding of the Commissioner of Income Tax (Appeals) that the assessing officer had reopened the assessment merely on change of opinion is also unwarranted insofar as the assessing officer had not decided the claim of the assessee under section 80-I on the basis of the facts as collected after investigation during the course of assessment proceedings for assessment year 1995-96. In the light of these facts, we are of the considered view that the decision of the Commissioner of Income Tax (Appeals) in holding the reopening of assessment as invalid is contrary to the decision of the Hon'ble jurisdictional High Court of Punjab & Haryana. We therefore, set aside the order of the Commissioner of Income Tax (Appeals). So, however, no decision has been recorded by the Commissioner of Income Tax (Appeals) on merits. Whereas reopening of assessment may be valid, it is still open to the assessee to show that there was no escapement of income.
The learned counsel for the assessee insists that assessee is entitled to deduction under section 80-I even on the facts found in the course of assessment proceedings for assessment year 1995-96 coupled with some other facts which are relevant for deciding the issue. Since the Commissioner of Income Tax (Appeals) has failed to decide the issue on merits we restore the appeal to his file for recording his decision on merits of this case after giving reasonable opportunity of being heard to the assessee and, if necessary, to the assessing officer as well.
10. For statistical purposes, appeal of the revenue is allowed.