TMI Blog2019 (12) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings, the Asseessee will be entitled to lead fresh material and evidence to prove his entitlement to claim deduction under Section 80-IC for the AY 2009-10, before the AO, and this order does not in any way abrogate or limit his rights to justify his claim before the AO. The present petition is dismissed in the above terms. - W.P.(C) 11452/2017 - - - Dated:- 16-12-2019 - VIPIN SANGHI AND SANJEEV NARULA JJ. Petitioner Through: Mr. M.S. Syali, Senior Advocate with Mr. Bharat Beriwal, Mr. Mayank Nagi, Mr. Tarun Singh and Mr. Pulkit Verma, Advocates. Respondent Through: Mr. Zoheb Hossain, Senior Standing Counsel with Mr. Deepak Anand, Mr. Piyush Goyal, Mr. Vivek Gurnani and Mr. Agni Sen, Advocates. JUDGMENT SANJEEV NARULA, J. 1. The present petition filed under Article 226 of the Constitution of India inter alia seeks issuance of a writ of certiorari for quashing the notice dated 25.03.2017 issued by the Respondent under section 148 of the Income Tax Act, 1961 (hereinafter 'the Act') in relation to Assessment Year (AY) 200910 and the order dated 07.12.2017 passed by the Respondent disposing of the objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed. The order of CIT (A), was challenged by the Revenue, before the Income Tax Appellate Tribunal (hereinafter 'ITAT'). 5. In the meanwhile, Petitioner's case for AY 2009-10 was also selected for scrutiny on the same ground i.e. deductions claimed under Section 80-IC of the Act. Petitioner requested the concerned AO to follow the order of CIT (A), as the same was binding upon him. The concerned AO acceded to Petitioners request and completed the assessment for the AY 2009-10 under Section 143(3) of the Act, without disallowing deduction under Section 80IC of the Act. 6. Subsequently, vide order dated 16.01.2017, ITAT reversed the findings of the CIT (A) w.r.t. AY 2008-09 and allowed departmental appeal in favour of the Revenue. 7. In this background, the AO issued the impugned notice dated 25.03.2017, under Section 147 / 150 of the Act, for reassessment of the return filed by the Petitioner for the AY 2009-10, requiring the Petitioner to file the return for the said AY. Petitioner complied with the notice and sought reasons for re-opening the assessment, which were provided to it by the Revenue. Thereafter, the Petitioner vide letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n various legal propositions that have been taken into account and dealt with appropriately while giving our analysis and findings. Case of the Respondent: 9. Per contra, Mr. Zoheb Hussain, learned senior standing counsel for the Revenue, contends that the order passed by the ITAT, holding the Petitioner not eligible to claim benefit of deduction under Section 80-IC of the Act, is binding for the AY 2009-10 as well, and reopening of the assessment under Section 148 read with Section 150 is valid and proper. He contends that the provision of Section 150(1) and 153(3) are clear and unambiguous as to the power of Revenue to reopen assessments, in consequence of, or to give effect to, any finding or direction of an appellate authority. The assessee is not eligible for any benefit under Section 80-IC and as per its own submissions during the course of assessment proceedings in the relevant year, the assessee agreed that the order of the ITAT for AY 2008-09 will be binding for AY 2009-10. Thus, the reopening under section 148 read with 150 is in accordance with law. Moreover, Section 150 does not contemplate finality of orders and has a non-obstante clause specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; *** *** *** 148. (1) Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 : *** *** *** 150. (1) Notwithstanding anything contained in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining to the AY 2008-09. The reasons as provided to the Petitioner are indicated in the letter dated 15.09.2017. Reference thereto is essential for deciding the present petition and the same is extracted herein below:- In response to your letter dated 22.06.2017, you are hereby provided the reasons for reopening as under: In this case, the return for Ay was filed by the assessee on 29-09-2009 declaring total income of ₹ 21895890. The assessee has claim deduction of ₹ 2536835 being the profit from its industrial unit of Selaqui u/s 80IC during the AY 2009-10. The return was processed under section 143 (1) on same income. The case was selected for scrutiny u/s 143 (3) and the returned income was accepted. In this case of the assessee the return of the income for AY 2008-09 was filed by the assessee declaring income of ₹ 15282400. The assessee claimed deduction of ₹ 31309690 from its gross total income u/s 80IC of the Income Tax Act being the profit from a new industrial unit at Selaqui in Uttarakhand claim to have commenced the manufacturing and production during the year. The entire manufacturing of assessee was done upto AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. Now, the Hon ble ITAT in its order dated 16-01-2017 allowed the appeal of the Revenue and sustained the addition made by the AO for the AY 2008-09 by holding that it is a case of splitting up/re-construction of the business already in existence for which the assessee is not eligible for deduction u/s 80IC. The AO allowed of deduction of ₹ 2536835 u/s 80IC for AY 2009-10 by considering the submissions made by the assessee following the order of the CIT (A) in assessee s own case for AY 2008-09 which was in assessee s favour. Now that ITAT has held that the assessee is not at all eligible for any benefit u/s 80IC. Now, as per the assessee s own submission made during the proceeding for AY 2009-10, the directions of the ITAT in 2008-09 is also binding for the AY 2009-10. I have independently examined all the material and reached on the conclusion that the case is squarely covered by Section 150 of the Income Tax Act which states as under: Notwithstanding anything contained in the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or re-computation in consequence of or to gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound by the findings of the ITAT, the question arises as to whether it is legally permissible to reopen the assessment pertaining to AY 2009-10 in light of the decision of ITAT pertaining to AY 2008-09. 13. The main plank of Petitioner s argument is that Section 150 mandates the existence of finding or direction for the re-assessment of the year for which the action is taken. Mr. M.S. Syali has argued, that the finding or direction must relate to AY 2009-10, and a finding in respect of AY 2008-09 would not suffice. In this regard, Mr. Syali has firmly relied upon the judgment of the Supreme Court in Income Tax officer v. Murlidhar Bhagwan Das, (1964) 52 ITR 335 (SC), wherein it has been held as under:- It is important to remember that the proviso does not confer any fresh power upon the Income-tax Officer to make assessments in respect of escaped incomes without any timelimit. It only lifts the ban of limitation in respect of certain assessments made under certain provisions of the Act and the lifting of the ban cannot be so construed as to increase the jurisdiction of the tribunals under the relevant section. The lifting of the ban was only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether connected or not with the assessee, whose income for any year has escaped assessment; but this construction cannot be accepted, for the said expression is necessarily circumscribed by the scope of the subject-matter of the appeal or revision, as the case may be. That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. A combined reading of section 30(1) and section 31(3) of 1922 Act indicates the cases where persons other than the appealing assessees might be effected by orders passed by the Appellate Commissioner. Modification or setting aside of assessment made on a firm, Joint Hindu family, association of persons, for a particular year may affect the assessment for the said year on a partner or partners of the firm, member or members of the HUF or the individual, as the case may be. In such cases though the latter are not eo nomine parties to the appeal, their assessments depend upon the assessments of the former. It is not necessary to pursue the matter further. It was, therefore, to be held that the expression any person in the setting in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (1967) 66 ITR 586 (SC). The question formulated by the Tribunal raised the point whether the AAC could convert the provisions of section 147(1) into those of section 153(3)(ii) of the Act. In view of section 153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point. (emphasis supplied) 15. Petitioner also relied upon Gujarat Power Corporation Ltd. vs. ACIT, (2013) 350 ITR 266 , wherein it has been held as under:- 41. The powers under section 147 of the Act are special powers and peculiar in nature where a quasi-judicial order previously passed after full hearing and which has otherwise become final is subject to reopening on certain grounds. Ordinarily, a judicial or quasi-judicial order is subject to appeal, revision or even review if statute so permits but not liable to be re-opened by the same authority. Such powers are vested by the Legislature presumably in view of the highly complex nature of assessment proceedings involving large number of assessees concerning multiple questions of claims, deductions and exemptions, which assessments have to be completed in a time frame. To protect th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng purpose behind enactment of sub-section (2) to Section 150 and Explanations 2 and 3 to Section 150 of the Act were referred to. Reference was also made to sub-section (3), clause (ii) of Section 153 of the Act and thereafter it was opined:- 12. When the Income Tax Act, 1961 was enacted, Section 153 did not contain the Explanations 2 and 3. Those explanations were introduced subsequently in 1964 after the Supreme Court decision in Murlidhar Bhagwan Das (supra). It is therefore, apparent that the two explanations were added so as to supersede the view taken by the Supreme Court in respect of the 1922 Act. Explanation 2 in Section 153 makes it clear that even where any income is excluded from the total income of the assessee from a particular assessment year, then an assessment of such income for another assessment year shall, for the purpose of Section 150 as also of Section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order. In other words, a finding in respect of a different year can also be used for the purposes of invoking the provisions of Section 150 of the said Act, by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby any income is excluded from the total income of an assessee for an assessment year, then an assessment of such income for another assessment year shall be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order for the purpose of section 150 or section 153. Thus, for the purpose of resorting to the exception provided under sub-section (3)(ii), it is not necessary that there should be any specific finding or direction contained in the said order with regard to assessment of income for another assessment year in light of the deeming provision in Explanation 2 below section 153 of the Act. The very fact that income has been excluded from the total income of the assessee for an assessment year by virtue of an order referred to in clause (ii) of sub-section (3) would be sufficient for the purpose of making an assessment of such income in another year and for the purpose of section 150 and section 153, the same would be deemed to have been made in consequence of or to give effect to any finding or direction contained in the said order. 18. Another contention raised on behalf of the petitioner is that a finding in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the amendments noted above. It is also argued that Revenue cannot take recourse to the judgment of P.P Engineering (supra) as it applies only to the situations that are covered by the Explanation to Section 153. However, we find that subsequent to the decision of the Supreme Court in Murlidhar Bhagwan Das (supra), the position in law has undergone change, in view of the enactment of Sub-Section (2) to Section 150 and Explanations 2 and 3 added to Section 153. Now, there cannot be any doubt that a finding in respect of a different year can also be used for the purpose of invoking the provisions of Section 150 of the said Act. Our observations are not to be construed to mean that the ratio of the Supreme Court in Murlidhar Bhagwan Das (supra) has lost relevancy. However, certainly the observations made therein have to be examined in light of the changed legal position. The explanation inserted subsequent to the said judgment has to be weighed in the facts of each case. The explanation has to be read so as to harmonize with, and clear up any ambiguity in the main provision. In this regard it is useful to refer to the decision of the Supreme Court in S. Sundaram Pillai v. V.R. Pattab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT (A) is undated Secondly, the CIT (A) has proceeded in haste in entertaining the undated affidavit in the evidence in violation of Rule 46A of the Income-tax Rules, 1962 (for short 'the Rules') to believe the averment made by the assessee in the affidavit as gospel truth. Thirdly, there was no mention of telephone number, tele-fax and internet facility at the Selaqui unit because in the purchase order dated 05.07.2007 telephone number of Kala Amb unit is given and tele-phone number, of Head Office, Delhi of the assessee has been given Fourthly documents transporting the machinery purchased from Grip Engineers Pvt. Ltd., and ABB, Faridabad are not tallying with the material receipt dated 03.05.2007 regarding transportation of 21 electrical motors through truck no. DL 1M 1252 whereas 21 electrical motors were alleged to have been transported by ABB through truck no. HR35J5393 on 28.04.2007. All these facts go to prove that the Selaqui unit was just a drop box address and no manufacturing activities are being carried out in the same. 18. Assessee stated to have purchased the machinery from M/s. Grip Engineers Pvt. Ltd., Ballabhgarh and ABB, Faridabad on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be transferred by the assessee from Kala Amb unit to Selaqui unit, it was never put to use to carry out the manufacturing activities to qualify for exemption under Section 80-IC. 20. We may note that the aforesaid order has been upheld by this Court in ITA No. 72/2019, decided on 28th January 2019 , and the matter is stated to be pending challenge before the Supreme Court. 21. Petitioner has argued that since the deduction under Section 80-IC of the Act has to be claimed on year to year basis, it is possible for the Assessee to be denied deduction in one year, but to be allowed deduction in another year. In support of this submission reliance has been placed on, CIT v. Seeyan Plywoods, 190 ITR 564 (Ker), CIT v. Satellite Engineering Ltd., 113 ITR 208 (Guj), CIT v. Suessin Textile Bearing Ltd., 135 ITR 443 (Guj), HCL Technologies v. ACIT, 377 ITR 483 (Del), Deputy Commissioner of Income Tax, Circle-11(1) Bangalore v. Ace Multiaxes Systems Ltd., 400 ITR 141. While, this position may be correct, however, one cannot ignore the fact that the finding given by ITAT strikes at the foundation of the claim of the Petitioner that Selaqui unit is entitled to deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Petitioner did not claim that each year is to be assessed separately and, therefore, the finding of the CIT (A) for AY 2008-09 is not relevant for assessment of income for AY 200910. The Petitioner is now somersaulting in its submission and is clearly approbating and reprobating, which is not permissible. Thus, in view of the facts in the present case, where the Petitioner categorically agreed to be bound by the order of the ITAT, the finding rendered by the ITAT is sufficient and Revenue would be entitled to avail the benefit of Section 150. 23. Additionally, Petitioner has harped that there was no ground for reassessment of the AY 2009-10 and the subject matter of the appeal before ITAT was confined to AY 2008-09. The grounds of appeal, discussion and decisions relied upon before the ITAT, all concentrate on the said year only. Reliance was placed on CIT vs. Greenworld Corporation, (2009) 314 ITR 81 (SC), wherein issue arose with respect to giving effect to directions of CIT under Section 263 of the Act. While, deciding the said question, the Court held, a finding is held to be one, to which effect needs to be given, to comply with the order of the authority c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is such a finding. Reopening could be done in consequence of or to give effect to such a finding . The findings of the ITAT in the aforenoted order are not incidental observations. These are categorical findings of fact which are germane for determination of the claim of the Assessee, for deduction under Section 80-IC of the Act. Section 150 also uses the expression in consequence of , which means that there may be a situation that warrants reopening in view of the finding given by the Appellate/Revisional authority. These findings fall within the scope of Section 150, as it is a finding, which was necessary for disposal of the appeal before the Appellate authority for AY 2008-09. 26. Adverting now to the ground of limitation raised by the Petitioner, a plain reading of Section 150 reveals that it deals with a situation where an assessment or re-assessment for a particular year or for a particular person is necessitated by an order passed by appellate or revisional authority or on a reference. In such cases, it may not be possible for the Revenue to adhere to the time limits prescribed under Section 149, as the order of appeal, reference or revision or by a Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if his jurisdiction had ceased due to the bar of limitation. If the issuing of a notice for assessment or reassessment for a particular assessment year had become time-barred at the time of the order, which was the subject-matter of the appeal, the provisions of section 150(1) cannot be invoked to the aid of the Revenue for making an assessment or reassessment. 25. In the light of the provisions contained in sub-section (2) of section 150, it cannot be said that the notices issued by the Assessing Officer to the petitioners under section 148 of the Act on March 1, 1996, were within the period of limitation. Even if it is assumed that the order of assessment was the subject-matter of appeal before the Tribunal, that would also not help the Revenue. The orders of assessment in the cases of both the assessees for the assessment year 1978-79 were passed on January 30, 1989. Thus, the relevant date on which the period of limitation must be available is January 30, 1989. However, sub-section (2) of section 150 refers to the subject-matter of the appeal, reference or revision. In that light, it is actually the appellate order of the Commissioner which can be said to be the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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