TMI Blog2018 (11) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... TANT MEMBER For The Assessee : Shri K.C. Aneja, Adv For The Revenue : Shri N.K. Bansal, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT (A), karnal dated 01.12.2017 for the Assessment Year 2007-08. 2. The assessee has raised the following grounds of appeal:- 1. That on the facts and in the circumstances of the case proceedings sought to be initiated u/s 148 of the IT Act 1961 are abinitio void and deserve to be quashed. 2. That there was no regular assessment u/s 143 or 144 of the Income Tax Act, 1961. The alleged assessment made u/s 143(1) of the Income Tax Act are wrong and illegal and consequently assessment made u/s 148 is illegal and the ld CIT(A) erred in confirming the same. 3. That two parallel proceedings conducted u/s 154 148 of the IT Act 1961 are not warranted by law and are wrong and illegal. 4. That the appellant a cooperative society is liable to exemptions u/s 80P(2) VI of the Income Tax Act, 1961 to invoke for mutual interest of employment. 3. The appellant assessee is a cooperative society, which is primarily having object of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning. The assessee has relied upon the decision of the honourable Calcutta High Court in case of Berger paints India Ltd versus assistant Commissioner of income tax (2010) 322 ITR 369 of honourable Calcutta High Court which is decided on the identical facts and circumstances of the case setting aside the notice issued under section 148 of the income tax act as under- 2. On December 28, 1999, the petitioner submitted a return of its income for the assessment year 1999-2000 under section 139 of the Income-tax Act, disclosing total income of ₹ 6,76,22,600. The petitioner later filed a revised return on March 29, 2001, disclosing an income of ₹ 3,48,84,790. 3. The reduction of income was, according to the petitioner, by reason of decrease in the value of the stock-in-trade of Rajdoot Paints Ltd., which had been amalgamated with the petitioner, upon change in the accounting method and adoption of the accepted method of valuation of stocks, followed by the petitioner. 4. The Assessing Officer did not issue any notice of inquiry in respect of the return under section 142(1) of the Income-tax Act. Nor did the Assessing Officer issue any notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the show cause, was of the view that rectification of the assessment order was not called for. 12. However, the same officer issued the impugned notice dated August 28, 2003, under section 148 of the Income-tax Act for reassessment of income for the year in question under section 147 of the said Act, and called upon the petitioner to file a revised return. The impugned notice does not disclose the reasons for the belief that income had escaped assessment. 13. By a letter dated September 26, 2003, the petitioner requested the Assessing Officer to withdraw the notice, inter alia, contending that no income of the petitioner had escaped assessment. The petitioner also called upon the Assessing Officer to furnish reasons to the petitioner for the decision to reassess income under section 147 of the Income-tax Act. 14. On September 30, 2003, the petitioner filed its revised return under pro test, pursuant to the impugned notice under section 148. 15. The petitioner was later furnished with reasons for reopening assessment, which are practically the same as the reasons for the notice under section 154 of the Incometax Act, for rectification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d escaped assessment by reason of inadmissible debits in the profit and loss account. 17. The petitioner submitted a detailed representation dealing with each of the grounds disclosed by the Assessing Officer for the impugned notice under section 148 of the Income-tax Act. 18. Dr. Debi Prasad Pal appearing on behalf of the petitioner submitted that the grounds disclosed by the respondents were misconceived, against the settled principles of law and no grounds in law for reopening assessment. 19. As pointed out by Dr. Pal, the first ground, of the difference between the unpaid excise and customs duty on the opening stock at the start of the accounting year and the closing stock at the end of the accounting year, not being deductible was also the first ground for the rectification notice dated December 24, 2002, under section 154 of the Income-tax Act, which had been dropped. Moreover, the decision of this court in CIT v. Berger Paints (India) Ltd. (No. 1)[2002] 254 ITR 498 on which this ground is based, has been reversed by the Supreme Court in Berger Paints ( India) Ltd. v. CIT reported in [2004] 266 ITR 99. 20. Dr. Pal rightly argued that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opted by the assessee consistently from the assessment year 1998-99, we are of the considered view that the said basis adopted by the assessee for allocation of common expenses is a reasonable and scientific basis and does not call for any modification. The basis accepted by the Assessing Officer is arbitrary as he has not stated the reason for rejection of the assessee's method, he has not stated how he arrived at 20 per cent, for allocating common head office expenses which shows he has taken an ad hoc figure and we accept that profit ratio cannot be applied consistently in all years. Moreover, in addition to the audited accounts of the company, the assessee maintains separate accounts for the Pondicherry unit to ascertain its profit and which again is certified by the auditors. The same should be accepted. We are in agreement with the contention of the learned authorised representative which is supported by the decisions of the hon'ble Supreme Court as stated above that once the Department has accepted a decision on a particular issue by not challenging the same before any higher forum it is not open for it to contend in the contrary on the same issue in a later year. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in allocation of expenses. The decision of the Tribunal is binding on the Department. 31. The fourth ground disclosed by the Assessing Officer for reopening assessment, that the petitioner had claimed deduction under section 80-O of 50 per cent, of the gross income in convertible foreign exchange, without deduction of expenses was categorically denied by the petitioner in its reply to the impugned notice. Dr. Pal pointed out that the categorical assertion of the petitioner, that it had claimed deduction of only net income in convertible exchange, computed by exclusion of expenses in accordance with the decision of this court in CIT v. M. N. Dastur and Co. P. Ltd. reported in [2000] 243 ITR 10 (Cal) had not been dealt with by the Assessing Officer. 32. The Assessing Officer had issued the intimation dated November 20, 2001, under section 143(1) of the Income-tax Act and the revised intimation dated March 27, 2002, under the same section, accepting that ₹ 194.6 lakhs deducted towards sales tax in the profit and loss account, had not been realized from customers and there was no excess debit. 33. The petitioner, in dealing with the fifth reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparent from the record which has the effect of enhancing assessment ought to be rectified by resorting to this special and speedy procedure when in the view of the Assessing Officer it is unnecessary to resort to reopening of the assessment. In the field of chargeable income escaping assessment, however, section 147 is very widely worded and would include even escapement due to any mistake in the assessment order. But, when even according to the Assessing Officer himself there is a mistake, apparent from the record as it exists, committed in the order of assessment, which is rectifiable on the basis of the existing record under section 154 being a special provision made for the purpose, and that there is no need to resort to reopening of the assessment as contemplated by section 148 read with section 147 of the Act, then he must resort to the provision and cannot wantonly or arbitrarily and without valid reason resort to reopening of the assessment . . . The function of the Assessing Officer acting under section 147 is not limited, as under section 154, merely to rectifying the result which may have been vitiated due to mistake apparent from the record. It would, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the existing record, which could be rectified under section 154. ... It will not be open to the Assessing Officer to arbitrarily or wantonly resort to the provisions of section 147 where the process of rectification under section 154 fails on the merits. 41. As argued on behalf of the respondents, the Assessing Officer has jurisdiction under section 148 of the Income-tax Act to issue notice of reassessment, upon reason to believe that any income chargeable to tax has escaped assessment. 42. However, if the Assessing Officer is of the view that income has escaped assessment by reason of a mistake apparent from records, and takes recourse to section 154, but finds later, that there is no apparent mistake, then he cannot, in the absence of any other ground on the basis of which he still has reason to believe that the income has escaped assessment, start reassessment proceedings under section 147 of the Act. In other words, the Assessing Officer cannot again start reassessment proceedings on the basis of the same reasons. 43. The Assessing Officer has not disclosed the reasons for the Assessing Officer to still believe that income that was the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the company contends that the conditions precedent for the assumption of jurisdiction under section 34 were not satisfied and came to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal or proper relief under article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. 48. Moreover, in this case, where the writ petition had been entertained and kept pending for about six years and directions issued for filing of affidavits, this court is not inclined to decline relief only on the ground of existence of an alternative remedy of filing an objection before the Assessing Officer and then taking recourse to an appeal upon reassessment. 49. In Raymond Woollen Mills Ltd. v. ITO reported in [1999] 236 ITR 34 (SC) cited by Mr. Bhowmick, the Supreme Court was satisfied on facts that jurisdiction to reassess had validly been assumed. 50. If there are reasons to believe that income has escaped assessment, and juris ..... X X X X Extracts X X X X X X X X Extracts X X X X
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