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2016 (6) TMI 334 - ITAT KOLKATA

2016 (6) TMI 334 - ITAT KOLKATA - TMI - Rectification of mistake - period of limitation - assessment of income u/s 115JA - Held that:- In the present case, limitation would begin to run from the date i.e 30-03- 2001 on which the original order of assessment was passed U/S 143(3) of the Act for the reason the jurisdiction under s. 154 is sought to be exercised in respect of issues which did not form the subject-matter of the rectification proceedings under s. 154 dt. 11.01.2005 and 18.02.2005 and .....

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e find that from the end of the financial year i.e. 1997-98 the AO is bound to make the rectification order within four years and in this case the AO has passed rectification order u/s 154 on 30-03-2009 is barred by limitation as it is beyond four years from the original assessment order dated 30.03.2001. Therefore, we are of the opinion that the impugned order dt: 30-03-2009 passed by the AO is held to be invalid by treating the same as barred by limitation - Decided in favour of assessee. - I. .....

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. 143(3)/251/154/154/251/251/154 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. In this appeal, the assessee has raised the following grounds of appeal:- 1 For that in view of the facts and circumstances the Ld. CIT (A) was wholly wrong and unjustified in dismissing the appeal and confirming the A.O's order of rectification u/s 143(3)/251/154/154/251/251/154 dt. 30.03.2009 assessing the Book Profit of ₹ 29,96,795/- u/s 115JA and charging it to tax without conside .....

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on and passed against an invalid notice u/s 154 and the Ld. CIT(A)'s order confirming such invalid order were wholly unreasonable, uncalled for, bad in law and void abinitio and hence both the orders are liable be quashed/ cancelled. 2. For that in view of the facts and circumstances the Ld. CIT (A) was wholly wrong and unjustified in confirming the aforesaid order u/s 154 dt. 30.03.2009 without considering the facts that the issue involved in the process of rectification u/s 154 and assessm .....

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and circumstances the Ld. CIT (A) was wholly wrong and unjustified in confirming the interest of ₹ 3,15,797/- and ₹ 39,213/- charged by the A.O u/s 234B and 234C of the Act without considering the facts that no such interest was payable by the assessee and also that the A.O's earlier order of rectification u/s143(3)/251/154/154 dt. 28.02.2005 assessing for the first time the Book Profit u/s 115JA and charging interest u/s 234B & 234C therein, referred to by the Ld. CIT(A) whi .....

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mpany filed its return for the A.Y 1998-99 on 30.11.1998 showing total income of Rs. Nil after adjustment of brought forward unabsorbed business loss of earlier years as per the normal provisions of the Act and ₹ 29,96,795/- u/s l15JA of the Act. The total income determined at ₹ 2,22,82,421/- by an assessment order dt: 30.03.2001 u/s 143(3) the Act. No income was determined and assessed by the A.O u/s 115JA of the Act in the said assessment order u/s 143(3) nor any reference made the .....

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ions made while determining the total income in the original assessment under the normal provisions of the Act. Consequently, an order u/s 143(3)/251 was passed by the A.O on 11-01-2005 giving effect to the appellate order and revising the income at ₹ 97,50,220/- under the normal provisions of the Act. Neither any reference was made nor any income was determined by the A.O u/s 115JA in the said order. 5. Thereafter, the assessee filed a petition dt:16.02.2005 u/s 154 on 18-02- 2005 request .....

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equently, the A.O issued a notice dt. 23.02.2005 u/s 154 of the Act where he proposed to rectify the order made u/s 143(3)/251/154 on 18.02.2005 on the ground referring to mistake in calculation of tax. In response to which, the assessee agitated that the Sec.154 cannot be invoked as it is highly debatable legal issue to carry out any mistakes in calculations by a letter dt. 25.02.2005. The A.O passed an order dt. 28.02.2005 u/s 143(3)/251/154/154 rejecting the aforesaid letter of objection and .....

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ation by the assessee u/s 254(2) of the Act the said order of the Tribunal was recalled vide order dt. 27-07-2007 and refixed the same. After the due process the B-Bench, Kolkata Tribunal vide its order dt.11.04.2008 in ITA No.1718/Kol/2006 cancelled the proceeding u/s 154 initiated by the A.O and held the A.O's order u/s 143(3)1251/154/154 dt.28.02.2005 as invalid by relying on an order of the Chandigarh Bench of Tribunal in the case of ACIT vs. Varinder Agro Chemicals Ltd reported in (2007 .....

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154 dt.16.02.2009 proposing to rectify the order u/s 143(3) /251/154 dt: 22.05.2008 on the ground that there was mistake in calculation of tax & interest U/S 115 JA of the Act. The assessee sought the complete details of the alleged mistake and the nature of the rectification vide its letters dt: 05.03.2009, dt. 07-03-2009, 16-03-2009 and 17- 03-2009 in response to which the AO issued letter dt:23-03-2009 stating that to rectify the order dt:18-02-2005 where the tax calculated at normal rat .....

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iated afresh u/s 154 is bad in law. ii) The Hon'ble ITAT vide its order dt. 11.04.2008 in ITA No. 1718/ Kol/ 2006 has already cancelled the order U/S 154. Since the proceeding earlier initiated u/s 154 has already been cancelled it cannot be subjected to further proceeding u/s 154 as per the provision of sec. 154(1A). Furthermore, the matter is already sub-judiced before the Hon'ble Calcutta High Court. 9. Considering the submissions made above, the AO again passed an order dt: 30.03.200 .....

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377; 39,213/- charged u/s. 234B and 234C of the Act respectively and order of the CIT-A of which reproduced hereunder: (a) Submissions of Assessee before the CIT-A as under: (v) In the case of your petitioner-company income u/s. 115JA having been declared in the original return filed but in the original Assessment Order u/s. 143(3) dated 30.03.2001, the AO having failed to compute income u/s. 115JA, it will be appreciated by your Honour that the mistake if any in computing the total income u/s 1 .....

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s the entire order u/s. 154 dated 30.03.2009 as barred by limitation and is wholly bad, illegal and void abinitio and in view of the facts and in the circumstances it is liable to be quashed / cancelled and in view of the case and in the circumstances it may kindly be held accordingly." . (b) Finding of the CIT-A is as under: 4: I have carefully considered the submission of the L.d A.r . There is no dispute that in the case under consideration return of Income was filed on 31.11.1998 disclo .....

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der the normal provision reduced to ₹ 8,11,970/- and the tax was charged accordingly. Subsequently the AO realized the mistake that since after the rectification the income returned by the assessee under the MAT provision is more, the tax payable has to be payable u/s. 115JA of the Act. Accordingly the mistake was rectified vide order under section 154 of the Act dt. 28.02.2005 and the tax was charged accordingly. The said order was confirmed by the C.I.T (A) & I.T.A.T. However subsequ .....

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tation of 4 years has no merit. In the case under consideration the order sought to be amended was passed on 18.02.2005, which is within the time limit specified in sub section 7 of section 154 of the act. Moreover this issue has been settled by the Supreme Court in the case of Hind Wire Industries Ltd vs CIT 212 ITR 639(S.C), where it has been held that the limitation under section 154(7) for rectification within four years from the order sought to be amended does not qualify from the original .....

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61,140/- including interest of ₹ 3,15,797/- and ₹ 39,213/- charged u/s. 234B and 234C of the Act respectively made under rectification u/s. 154 of the Act. 12. The assessee contended before us, that the order passed u/s. 115JA is substantive. It has to be passed along with normal assessment u/s. 143(3) of the Act. The AO cannot invoke section 154 for any fresh adjudication. He further argued that the section 115JA is substantive and independent to other provisions of the Act and it h .....

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ctify the order and the revenue has an opportunity to rectify the order u/s. 154 of the Act. The AO did not take into consideration the computation u/s. 115JA from the first instance onwards. Further, the AO did not find the same while passing the demand notice. He also submits that Judgment dt:21-12-2005 of the Hon ble Jurisdictional Calcutta High Court in appeal filed against the order dt: 11-04- 2008 of Tribunal not taken into consideration the merits of the case as it was dismissed by the Ho .....

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and thereafter. 15. We may refer to the notice dated 16-02-2009 issued to rectify the order dated 22.05.2008 by mentioning that there was a mistake in calculation of tax and interest. The said order sought to be rectified by the AO was an order passed giving effect to the order of B-Bench of Kolkata where it quashed the proceedings dt: 28-02-2005 initiated U/Sec 154 of Act by declaring as invalid relying on an order of the Chandigarh Bench of Tribunal in the case of ACIT vs. Varinder Agro Chemic .....

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on order u/s 143(3)/251/154 dt. 18.02.2005 the total income was determined by the A.O under normal procedure but not an whisper made in respect of computing the income u/s 115JA and it is pertinent note that there was no reference to the provision of sec. 115JA in those orders. The reference came only after the order of B-Bench of Kolkata in ITA 1718/Kol/2006 supra under the guise of the order of Tribunal did not preclude the Respondent Revenue in issuing the notice U/Sec 154 of the Act to recti .....

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e opportunity of hearing, a letter Dtd. 05-03- 2009 was issued fixing the case for hearing on 13-03-2009. On 09-03- 2009 a letter was received from the assessee. The assessee sought details of such proposed rectification. No one appeared on behalf of the assessee on hearing date. A fresh letter dtd.23-03-2009 was issued and served upon the assessee in which entire detail and proposition of the department with regard to rectification sought was mentioned. The case was again fixed on 27-03-2009.0n .....

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ve narration would clarify that ample opportunity of hearing has been granted to the assessee. The issue in hand is a neither debatable nor any contention lies against the liability of the assessee to pay taxes as per MAT provisions as per assessee's own admission in its return of income as well as clear cut position of law. The assessee's contention that department has preferred appeal u/s. 260A against the ITAT order in which notice u/s 154 has been held as invalid does not hold any su .....

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e payable u/s. 115JA on ₹ 29,96,795/-, calculated as under:- Tax on book profit ₹ 29,96,795/- @35% ₹ 10,48,878/- Less TDS ₹ 5,31,128/- Assessed Tax- ₹ 5,17,750/- Add Interest u/s. 234B Rs.3,15,797 Interest u/s. 234C ₹ 39,213 ₹ 3,55,010/- ₹ 8,72,760/- Less Refund of A.Y 1999-2000 ₹ 11,620/- Balance payable- ₹ 8,61,140/- Less Tax paid on 17-08-06 Rs.40,000/- 17-08-06 Rs.40,000/- 23-08-06 Rs.40,000/- 04-05-06 Rs.20,000/- 17-05-06 Rs.20,000 .....

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Lipton (I) Ltd vs. DCIT, Kolkata Relevant portion of finding is reproduced herein below:- 7.7. And also on Hon'ble Bombay High Court in the case of Ashoka Buildcon Ltd. vs ACIT (2010) 325 ITR 574; 191 Taxman 29 has held as under :- 10. The submission which has been urged on behalf of the Revenue is that when several issues are dealt with in the original order of assessment and only one or more of them are dealt with in the order of reassessment passed after the assessment has been reopened, .....

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laid down by the Supreme Court. The Supreme Court has now clearly held in the decision in Alagendran Finance Ltd. (supra) that the doctrine of merger does not apply where the subject-matter of reassessment and of the original order of assessment is not one and the same. In other words, where the assessment is sought to be reopened only one or more specific grounds and the reassessment is confined to one or more of those grounds, the original order of assessment would continue to hold the field, .....

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t has been made pursuant to a notice under s. 148, the order of reassessment prevails in respect of those items which form part of reassessment. On items which do not form part of the reassessment, the original assessment continues to hold the field. When the AD reopens an assessment on a particular issue, it is open to him to make a reassessment on that issue as well as in respect of other issues which subsequently come to his notice during the course of the proceedings under s. 147. The submis .....

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h has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. There is nothing on the record of the present case to indicate that there was any other income which had come to the notice of the AD as having escaped assessment in the course of the proceedings under s. 147 and when he passed the order of reassessment. The CIT, when he exercised his jurisdiction under s. 263, in the facts of the present case, was under a bar of limitation sin .....

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ional jurisdiction under s. 263 was to be in respect of issues which formed the subject-matter of the reassessment, after the original assessment was reopened, the commencement of limitation would be with reference to the order of reassessment. The present case does not fall in that category. " 7.8. Keeping in view of the above decisions, we are of the view that the mistake, if any, is occurring in the original assessment order passed u/s. 143(3) of the Act dated 29.03.1995 and though AO ha .....

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