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TMI Blog2015 (11) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... off of brought forward business losses and unabsorbed depreciation of the amalgamating companies amounting to Rs. 12,42,43,556/- in the hands of the assessee company. The Revenue in its appeal has raised a solitary ground challenging the order of Commissioner of Income Tax (Appeals) in deleting the addition made on account of employees contribution to PF after due date, in contravention of the provisions of section 36(i)(va) of the Act. 2. The brief facts of the case as emanating from records are : The assessee is a company engaged in the business of construction, development, operation and maintenance of infrastructure facilities. The assessee filed its return of income for the impugned assessment year on 01-11-2004 declaring total income of Rs. 2,81,67,780/-. The case of the assessee was selected for scrutiny. Accordingly, notice u/s. 143(2) was issued to the assessee on 02-08-2005. The Hon'ble Bombay High Court vide order dated 03-12-2004 approved the scheme of amalgamation in the case of assessee, whereby M/s. Ashoka Info Pvt. Ltd., Ashoka Infra Pvt. Ltd., Ashoka Vastu Pvt. Ltd., Ashoka Vastushilp Pvt. Ltd., Ashoka Shilpvikas Pvt. Ltd. and Ashoka Construction Engineers Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of employee contributions to PF and ESIC. 3. Shri Nikhil Pathak appearing on behalf of the assessee submitted that the assessee is engaged in the development and construction of infrastructure facilities and is operating under BOT Scheme. During the period relevant to the assessment period under consideration, six companies were amalgamated in the assessee company. The assessee claimed set off and carry forward of brought forward business losses and unabsorbed depreciation of the amalgamating companies by filing revised return of income. The Assessing Officer thoroughly examined the claim of the assessee in scrutiny assessment proceedings and allowed the same. The Assessing Officer, thereafter, invoked the provisions of section 147 of the Act. Though reassessment is within the period of 4 years, but the reassessment proceedings are initiated merely on the basis of 'change of opinion'. No fresh tangible material was available with the Assessing Officer so as to invoke the provisions of section 147 of the Act. There is no allegation by the Assessing Officer that the assessee has failed to make true and full disclosure. A perusal of reasons for re-opening which are at pages 205 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Hon'ble Supreme Court of India has reversed the findings of Hon'ble Bombay High Court in the said case. The ld. AR further submitted that the Commissioner of Income Tax (Appeals) has erred in withdrawing the deduction allowed u/s. 80IA(4) thereby enhancing the assessed income without issuing show cause notice. In the revised return of income, the assessee had claimed deduction 80IA of the Act. The Assessing Officer during the assessment proceedings wrongly computed the amount of deduction. The assessee raised this ground before the Commissioner of Income Tax (Appeals) in appeal. The Commissioner of Income Tax (Appeals) without issuing show cause notice withdraws the deduction claimed u/s. 80IA by the assessee. The Commissioner of Income Tax (Appeals) has violated the principles of natural justice. It is a well settled law that before withdrawing any deduction that has been allowed by the Assessing Officer, the Commissioner of Income Tax (Appeals) is duty bound to issue show cause notice. 3.2 The ld. AR raised an additional ground that the Commissioner of Income Tax (Appeals) has erred in not allowing the benefit of set off and carry forward of brought forward busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The issue relating to admissibility of assessee in claiming set off of brought forward losses and unabsorbed depreciation allowances of the amalgamating companies was never raised during the scrutiny assessment proceedings. The ld. DR further contended that amalgamating companies of the assessee are not industrial undertaking as define u/s. 72A of the Act. Hence, the assessee has wrongly claimed set off of unabsorbed business loss and depreciation in respect of amalgamating companies. 4.2 As far as the appeal of the Department is concerned, the ld. DR submitted that the assessee has failed to deposit employees share of contribution towards PF and ESIC within the stipulated time as prescribed under the respective laws. Therefore, the assessee is not eligible to claim the amount deposited after the due date. 5. The ld. AR of the assessee while rebutting the contentions of the ld. DR submitted that, in the return of income the assessee had stated about the amalgamation. During the course of scrutiny assessment proceedings, the assessee had given the details of the nature of business carried on by the amalgamating companies. The assessee had not only given primary information bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka Construction Engineers Pvt. Ltd. were amalgamated with the assessee company w.e.f. 01-04-2003. To give effect to this merger and amalgamation sanctioned by the Hon'ble Bombay High Court, the assessee filed revised return of income on 30-10-2005 declaring Nil income. In the return of income, the assessee had claimed set off of brought forward business losses and unabsorbed depreciation of earlier years in respect of amalgamating companies. In scrutiny assessment proceedings, the Assessing Officer after considering the fact of amalgamation raised certain enquiries and thereafter framed assessment order. Since, the assessment was made under the provisions of section 143(3) the entire set of documents, books of account, etc. were available before the Assessing Officer for examination. It is presumed and expected that before passing order, the Assessing Officer has applied his mind on all the deductions and expenses claimed by the assessee in its return of income. 7. The Assessing Officer on 06-03-2007 issued notice u/s. 148 to the assessee. The reasons for reopening show that the provisions of section 147 r.w.s. 148 has been invoked on the basis of material already available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distribution of electricity or any other form of Power; or (iv) the business of providing telecommunication services, whether basic or cellular, Including radio paging, domestic satellite service, network of trunking broadband Network and internet services; or] (v) mining; or (vi) the construction of ships, aircrafts or rail systems;]" In view of the above observations the A.O. has reason to believe that the assessment has been made but excessive loss and depreciation allowance under this Act has been computed and allowed and also the income of the assessee has been made the subject of excessive relief under this Act. A.O. is of the opinion that as per explanation 2 to section 147 of the I.T. Act, 1961 it is to be deemed to be a case wherein income chargeable to tax has escaped assessment, namely :- because as an assessment has been made, but (i) Such income has been made the subject cf excessive relief under this Act. (ii) Excessive toss or depreciation allowance or any other allowance under this Act has been computed. As the assessee has given set off to brought forward losses and depreciation, he has paid the taxes u/s 115 JB, the Minimum Alternate Tax. Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the amalgamating companies the Assessing Officer was duty bound to refer to the provisions of section 72A, which he has failed to do or after considering the same has granted relief to the assessee. 9. The legislature in its wisdom has not granted power to Assessing Officer to review its order. The provisions of Income Tax Act has provided various weapons in the hands of the Department to tackle the situation where the income has escaped assessment either due to nondisclosure or concealment of income on the part of the assessee or on account of any mistake or error committed by the Assessing Officer. However, the remedies provide under the Act have to be used diligently and appropriately depending upon the situation under which the income has escaped assessment. Reassessment proceedings are not a panacea for all income escaping assessments. The Hon'ble Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. (supra) has held: "14. It is well settled principle of interpretation of statute that entire statute should be read as a whole and the same has to be considered thereafter chapter by chapter and then section by section and ultimately word by word. It is not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as their mistake. All the information regarding the alleged manufacturing process of the assessee was before them. After the time limit for making an assessment or reassessment had long expired, the revenue could not turn round, take recourse to an extraordinary provisions, which is section 147 and attempt to reopen concluded assessments. If such exercise is permitted that would be quite contrary to the intention of the Act. In that case, there would be no finality to any assessment and at any point of time after expiry of time, the Assessing Officer could reopen assessment. That would plainly be against the statutory policy. 12. The Hon'ble Bombay High Court in the case of Asian Paints Ltd. Vs. DCIT (supra) set aside the reassessment proceedings where the Assessing Officer had failed to apply his mind to the relevant material in making the assessment order and took recourse to the provisions of section 147 to rectify his mistake. The Hon'ble Court held that the Assessing Officer cannot take advantage of his own wrong and reopen the assessment under the provisions of section 147. The Legislature has not conferred power on the Assessing Officer to review its own order. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion which is not permissible under law. At the time of scrutiny assessment all the information was available before the Assessing Officer. The Assessing Officer had an opportunity to examine and raise query. A perusal of the assessment order passed u/s. 143(3) shows that the Assessing Officer was well aware of the fact about the amalgamation of the companies with the assessee company. The Assessing Officer had raised certain queries on the depreciation claimed by the assessee on 'license to collect toll' in respect of amalgamating companies. Thus, it is evident that the Assessing Officer had knowledge about the amalgamation of the companies as well as issues relating thereto. A perusal of the reasons for reopening further strengthen our view wherein the Assessing Officer has categorically stated, 'On perusal of the material available on record.....' the Assessing Officer has reasons to believe that the amalgamating companies does not satisfy the definition of Industrial Undertaking u/s. 72A. From the documents on record, it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible under the Act. Therefore, reopening of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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